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INTRODUCTION OF THE STUDY
Introduction To Financial Management
Financial management is the Managerial activity which is concerned with planning and controlling of the firm’s financial resources. Through it was a branch of economics till 1890, as a separate activity or discipline it is of recent Origin. Still, it has no unique body of knowledge of its own, and draws heavily on economics for its Historical concepts today. The subject of financial management is of immense interest to both academicians and Practicing Managers. It is of great interest to academicians because the Subject is still developing, and there are still certain areas where controversies exist for which no unanimous solutions have been reached as yet. Practicing Managers are interested in this subject because among the most crucial decisions of the firm are those which related to the finance, and an understanding of the theory of financial management provides them with conceptual and analytical insights to make those decisions skillfully.
Although, it may be difficult to separate the finance functions from production, marketing and other functions, yet the functions themselves can be readily identified. The functions of raising funds, investing them in assets and distributing returns earned from assets to share holders are respectively known as financing, investment and dividend decisions. While performing these functions, a firm attempts to balance cash inflows and outflows. This is called liquidity and we may add it to the list of important finance decisions or functions. Finance functions or decisions include: • Investment or long-term assets-mix Decision. • Financing or capital mix decisions. • Dividend or profit allocation decision.
• Liquidity or short-term asset-mix decision. A firm performs finance functions simultaneously and continuously in the normal course of the business. They do not necessarily occur in a sequence. Finance functions call for skilful planning, control and execution of a firm’s activities.
Investment decision or capital budgeting involves the decision of allocation of capital or commitment of funds to long-term assets that would yield benefits in future. Two important assets of investment decision are: a) The evaluation of prospective return on new investments and b) The measurement of a cut-off rate against the prospective (profitability) return of new investments should be compared. These investment decisions involves risk. So the financial Managers evaluate the investment proposals in terms of both return and risk.
Financing decision is the second important function to be performed by the financial manager. Broadly, he or she must decide when, where and how to acquire funds to meet the firm’s investment needs. The central issue before him or her is to determine the proportion of equity and debt. The mix of debt-equity is known as firm’s capital structure. The financial manager must strive to obtain the best financing mix or the optimum capital structure for his or her firm. Once the manager is able to determine the best combination of debt and equity, he or she must raise the appropriate amount through the best available sources.
If the shareholders are not different to the firm’s dividend policy. or retain them. Need for the study 4 . If the firm does not invest sufficient funds in current assets. The optimum dividend policy is one that maximizes the market value of firm’s share. and retain the balance.Dividend decision is the major financial decision. in addition to the management of long-term assets. growth. the financial manager should develop sound techniques of managing current assets. The dividend policy should be determined in terms of its impact on the shareholder’s value. or distribute a portion. He or she should estimate firm’s needs for current assets and make sure that funds would be made available when needed. as idle current assets would not earn anything. LIQUIDITY DECISION: Current assets management that affects a firm’s liquidity is yet another important finance function. Current assets should be managed efficiently for safeguarding the firm against the dangers of illiquidity and solvency. But it would lose profitability. the financial manager must determine the optimum dividend-pay-out ratio. profitability and risk of the firm. ultimately the value of the firm. So we may conclude that these finance functions may affect the size. The financial manager should also consider the questions of dividend stability. The financial manager must decide whether the firm should distribute all profits. The pay out ratio is equal to the percentage of dividends to earnings available to share holders. bonus shares and cash dividend in practice. it may become illiquid. In order to ensure that neither insufficient nor unnecessary funds are invested in current assets.
and to provide the basis for cash flow management. and financing activities. The cash flow statement is a cash basis report on three types of financial activities: operating activities. The cash flow statement reflects a firm's liquidity or solvency. These two financial statements reflect the accrual basis accounting used by firms to match revenues with the expenses associated with generating those revenues. Noncash activities are usually reported in footnotes. investing activities. These noncash transactions include depreciation or write-offs on bad debts to name a few. Improve the comparability of different firms' operating performance by eliminating the effects of different accounting methods 4.Cash flow statement analysis is the study of the cycle of business’ cash inflows and outflows. it excludes transactions that do not directly affect cash receipts and payments. The cash flow statement was previously known as the statement of changes in financial position or flow of funds statement. Provide information on a firm's liquidity and solvency and its ability to change cash flows in future circumstances 2. liabilities and equity 3. and the income statement summarizes a firm's financial transactions over an interval of time. The balance sheet is a snapshot of a firm's financial resources and obligations at a single point in time. Indicate the amount. The cash flow statement includes only inflows and outflows of cash and cash equivalents. timing and probability of future cash flows 5 . with the purpose to know how a firm maintaining an adequate cash flow in their business. The cash flow statement is intended to 1. Provide additional information for evaluating changes in assets.
OBJECTIVES OF THE STUDY 6 . Cash flow analysis involves examining the components of the business that affect cash flow. accounts payable. you'll be able to more easily identify cash flow problems and find ways to improve your cash flow. By performing a cash flow analysis on these separate components. inventory. such as accounts receivable. such as various timeframes for depreciating fixed assets.The cash flow statement has been adopted as a standard financial statement because it eliminates allocations. which might be derived from different accounting methods. and credit terms.
To know how effectively the company is using its financial resources. Company profile. To make an overall view on theoretical approach of cash flow statements. To offer suggestions for improvement in the relevant aspects.FATS AND FERTILISERS Ltd. To measure the extent to which the company has been financing its needs through borrowing. SCOPE OF THE STUDY The study has been conducted to understand the position of the industry and various functional areas of the company and their operations.Objectives of the study: The main objective of the study is to study the overall financial position of the company from 2006-2011. To study about the profile of the oil industry and the FOODS. The study mainly focuses on Funds flow analysis of the company. 7 . To find out the financial stability of the firm. To study the sources and applications to the cash. To study the financial performance of the company.
Profit / Loss account. b) Records & Documents: These consists of 1. 2.Secondary data. Secondary data: Secondary data has been collected by referring to various annualreports and records / documents of the company. Primary data.Balance sheet 2. Primary data: Primary data was collected on the basis of personal observations discussions and through interviews. 8 . 1. By referring the previous annual reports. a)Annual Reports: These are one of the important sources of information in collecting secondary data.Methodology: The data used for preparing this report is through 2 sources. the financial position of the company and its requirement of funds for ratio analysis has been arrived.
9 . The analysis is made from the information given by the organization. The study was conducted with limited data available and analysis was done accordingly. The study is based on accounting information. The complexity and confidentiality of various operations is also a limitation to this study.Limitations of the study: The time given to complete this project is very limited.
CHAPTER-2 10 .
rapeseed. the Targets set for production were realized after this no impressive achievement was recorded. By virtue if they’re high nutritive content. These can be processed in to Edible flavors. Soap paints and varnish industries from the bulk of non-food applications. Our country has a highly developed oil based industry. provide oil cakes. second agriculture in India is still subject to the vagaries of monsoon which makes for 11 . In spite of their national importance. in rain fed areas is being used for their cultivation resulting inevitable in low productivity. second in respect of castor seeds. first only marginal land.Some including castor oil are mostly non-edible and some of the edible oils like Ground Nut and Coconut are finding increasing industrial applications as in cosmetic. soap making etc. production of food grains has been suffering a negative growth rate all these years. It is essential a food-oil industry accounting for four fifths of the total supply of Vegetable Oils. the term ‘Vegetable Oils’ is almost synonymous with ‘Edible Oils’ and land is not used as cooking media. India accounts for a tenth of the world out put of Vegetable Oils and fats. Only during the first plan period. The main contributory factors are two fold. Oil seeds occupy an important position as the agriculture map pf and rank second after food grains as a farm commodity crop.INDUSTRY PROFILE INTRODUCTION TO EDIBLE OIL INDUSTRY In the Indian context. which are rich in proteins. It is the largest produces of Ground Nut. Providing gainful employment to nearly 15 million persons besides another half a million engaged in milling and processing units. fourth in cotton seed and fifth in line seed. However it is important to keep this distinction in mind not all Vegetable Oils are Edible . Edible oils from a major source of nutrition. The fatty acids in Edible Oils are required by the body as a vehicle for carrying vitamins. mustard and sesame. third in coconut. are important source of animal nutrition. which are by-product of the oil extraction process.
/ groundnut. line seed and castor seed and is estimated to be around 90 lakes tones. As a result. Argentina (1153. an equally dismal one percent.erratic production.000 tones.6 lakes hectors under a liberalized pattern of central.) and China (1148. provisional estimates Placed at 10.) The following table would give picture of Indian’s placing in the world settings. and yet showing the lowest yield. At 2 lack tones castor seed production has also registered a decrease of 30. However actual coverage was only 36 lake hectares and the short fall was attributed to serve Brought conditions in several states during the kharrif season.000 tones. domestic industry could not meet the consumption needs respect of edible oils. the state12 . target for oil-seed production had been fixed at 11 million tones. India has the dubious distinction of having the highest acreage under oil seeds and recording the highest output.2 million tones. Production of live major oil seeds viz. Viewed in the global context. sesame and line seed have however. which is about 13 percent higher than the previous year’s production. sesame.58 Kg). rare seed mustard. of growth of oil-seed production for the decade 1965-1976 was a mere 1. Rapeseed. The total edible and supplies from indigenous sources were estimated at about 30 lake tones in 1981-82 (which however higher than the previous year’s levels of 25 lakes tones). India’s yield per hectare is lower than that of Nigeria (1615. It is little wonder therefore that the annual rate.2 percent while that of oil seed productivity. For the year 1980-81. at 736 kg.38 Kg) U. Production estimates of groundnut at 57 lake tones however show decline of 70. Consequently. (91474. assistance. with. actual production however lagged behind.A.55 kg. A centrally sponsored scheme for an intensive oil seed development programmed was operated in 14 states with a coverage target 40. The central Government therefore took various measures to increase production of oil seeds. The gap of 10 lake tones had to be filled only through imports. registered increase over the previous year’s production levels.49 Kg. Short falls in production persisted in the oil year 1981-82 as well.S.
In India where fats of animal origin such as fish oil are seldom used as cooking media. kardi seed. The genera-based international trade center has projected import f 13 million tones of Vegetable Oils in 1985. PROFILE OF THE OIL INDUSTRY: The power and strength of the company depends on how strong and secure it is on the food front. cotton seed and a number of minor seeds of tree origin oil seeds takes their place. soya beans. The term “vegetable oils” is used as a synonym for “edible oils”. other nuts and castor oil by 1985. which are finding increasing. The country is moving away from a situation of scarcity and huge import bills to one of self-sufficiency and possibly even export of vegetable oils. In trying to achieve this goal. nigerseed. soap making etc… edible oils are a major source of nutrition for the 13 . The cultivation of oil seeds in India is spread over various states with a distinct regional pattern covering about 19 to 20 million hectares. Industrial applications such as in cosmetics. rape and mustard. sunflower seeds. castor seed.trading corporation was asked to import a million tones of Edible Oils during the oil year 1981-82. the oil seed scenario in the country has undergone a substantial charge during the post few years. The trend of imports in expected to continue in the year to come despite the best efforts of the union agriculture ministry to raise oil seed output. linseed. next only to food grains. as the second largest agricultural crop. which accounts for about 11 percent of the total land under cultivation in the country. India ranks high among the oil seeds producing countries in the world with perhaps the larges number of commercial varieties of oil seeds such as ground not. The allotment of imported Edible Oils was also pruned in a bid to ensure more supplies through fair price shops. on the one hand vegetables oils such as castor. As for exports. it is anticipated that India would export 15 Lake Tones of oil equivalent of hand picked-selected groundnut. sesame. copra. However it needs to be recommended that there are. groundnut and coconut oils.
However it remains essentially food oil.8% in urban areas as well as rural areas. 14 . FMCG majors have been planning their hopes on branded staple foods to deliver rapid top line extension. Hydrogenated oil c. Negative growth in the oils and fats business has been instruments in restraining top line growth for the FMCG. Industry accounting for a much as 83% of the total supply of vegetable oil in the country. Vanaspathi is obtained by hydrogenation of edible oil. PRODUCTS: Broadly edible oil or fat products can be categorized as fallows. edible oils has one of the highest penetration of 98% in urban as well as in rural areas penetration of all these 3 cooking medium is very high at 99. Oil cakes that are by-products of the oil extraction process are an important source of animal nutrition. They can also be processed in to protein rich edible. Faced with major demand for their conventional products. The major non-food users of oil are soap. Vegetable refined oil b.people in the country. snacks including biscuits. cakes etc… CONSUMER AWARENESS AND PENETRATION: Among FMCG products. It can also be refined to have higher purity other oils such as soya has to be refined to make them edible. India has a highly developed oil based industry employing more than 15millon persons. It is used as a suitable for ghee by some segments of sources and also for making sweets. paint and vanish industries. Bakery fats Expelled ground oil of good quality can be directly consumed. a.
Sesame oil is widely used in the north. This had led to different consumer habits southern consumer prefer refined oil cooking medium as compared to ghee or vanaspathi. Sweet meat makers in the unorganized sector. This has led to surplus ghee production in these areas and higher ghee consumption. There are also regional and cultural differences in the type of edible oil used for cooking. loose as well as branded oil is available.6kg p. significantly lower than 8. In metros refined edible oil is a relatively popular cooking medium. sunflower oil etc.a in 1997-98. and Indian food habits show a strong preference for fried vegetables and several other fixed snacks. ground nut oil.4% at all India level. The per capita vegetables oil consumption in the country was 7. has preference for vegetable oil as cooking medium. In the south there has been abundant availability of edible oils. Similarly the eastern region. CONSUMER HABITS AND PRACTICES: Edible oil is one form or other is consumed is almost every household. which is milk deficient. mustard oil in the north and east while there is an over whelming preference for groundnut oil is in the west. It is highest in medium size towns of 0.5-1mm population of 34. 15 .Vanaspathi penetration averages 17. namely coconut oil. significantly higher at 28.5 kg p.3% in metros and towns.a during 1996-97. Most consumers. particularly in the north represent one of the largest user segments for vanaspathi. especially in the rural areas buy edible oil in loose form. In medium sized towns. Traditionally the north and west have been milk surplus regions in the country. For instance kerala uses more of coconut oil for cooking.8% in urban areas and 13% in rural areas. Where as in large metros loose oil is scarcely available as retailers find it difficult to handle the same. The lower ends of the society which can not afford ghee consume vanaspathi.
has set up a technology mission on oil seeds.In the last few years popularity of branded oil has been increasing particularly with the introduction of low cost poly packs with the government ordering compulsory packaging of edible oil in the wake of dropsy deaths in the country due to use of adulterated mustard oil. the smaller one are unable to important huge quantities of crude either low capacity or lack of financial resources. It produces the largest number of commercial varieties of oil seeds over nearly 28. to increase production of other oil seeds and oil and to reduce dependence on imports. etc. It has the world’s fourth largest edible oil economy. The bulk of edible oil. soya. India accounts for 9. and may be forced to close down or sell out to the bigger ones in the fore cable future. India ranked as the world’s largest importer of edible oils.3% of world oil seed production. 16 . the wage of branded oils is expected to witness phenomenal growth. castor seed. India imports under the open general license is RBD palmolein of Malaysian and Indonesian origin. India is the world’s second largest production of groundnut. Groundnut was the most widely consumed and traded edible oil determining edible oil economics. contributing to 9. The govt. In 1999. The major edible oils produced in India are ground nut. sesame seed. but is now being displaced by others. 60-70% of which are in the small scale unlike the bigger refiners. displacing china. castor seed and soya. India has approximately 300 edible oil refining units.3% world oil seed production. next only to china. cottonseed. sunflower seed. rapeseed.4 million hectares of land. India is today the world’s third largest producer of rapeseed and cottonseed and the largest producer of caster seed. sunflower. The strategy followed was to • Increase productivity with better inputs and practices • Increase area under oil seed crop This led to a sharp increase in oil seed production driven mainly by rapeseed. India is one of the worlds leading producer of oil seeds and oil.
5% market share (6% in sunflower oil segment) and Postman with around 8% market share. The market is highly fragmented among various brands. The edible oil industry is one sector in India that will see considerable reform in the foreseeable future. Ahmed mills. import duty on the oil seeds is lower than that on oils.2% share and saffola has 7. The industry wants the duty to be lowered from the present 40% to 50%. The installed capacity of oil mills is around 36 million tones annually. Godrej foods (Godrej cooklite sunflower) with 11% market share. Marico Industries. Major players in refined edible oils in the organizational sector are the ITC Agrotech. The duty on both was 65% duty was then slashed to 30% for both then to 20% in 1996 and 15 % in the 1999-2000 budgets. Sundrop refined Sunflower oil brand with around 13l market share/ ITC Agrotechs other edible oil brands include Real Gold mustard oil. The import of refined palm oil was put under OGC (Open general license) in March 1994. In Feb 98. The vanaspathi HLL’s Dalda is the oldest and largest brand with close to 36% market share. Sweekar sunflower oil marketed by marica has an 8.Originally there was no discrimination between refined and non-refined edible oil as far as import duty was concerned. but capacity utilization is only 40% solvent extraction plants shows only 33% capacity utilization of vegetable oil refineries 40% utilization. HLL’s flora with 2. 17 . Crystal refined oil and Sudan unrefined mustard oil. Other edible oils were put under OGC in April 1995 when an item is brought under OGC. HLL and NDDB. Its brand extension Dalda manpasand was launched in 1996.Another major problem is the low capacity utilization.5% market share other leading edible oil brands include NDDB’s Dhara rape seed oil. it is higher 40%. Godrej foods. In most parts of the world. But in India. That is why no import of oil seeds (or) oil-bearing material has taken place in India. Edible oil prices in the Indian market have crashed owe to large imports by multinational trading houses. it means that the item can be imported without seeking any approval.
IMPORT OF EDIBLE OILS: It has not been done away completely. The present export scenario shows that the trade is in a beyond mood of achieving a formidable target. The present import is significant compared to the napping to 19. according to the sources in the trade. EXPORT Export of oil mill. This basically enacts from bumper oil seeds output of 215 lakh tones in the offing. Although in the context of exceptionally large oil seeds production during the current year. moreover has compelled the union ministry of commerce to raise the current years export target for the oil seeds from Rs 1250 crore over Rs 1300 crore. According to the estimates made by the central coordination committee. the exports of oil mills. with increased export earning in the current year. Madhusudan industries Rasui and Pioneer Agro. Besides the country is to receive 50. oil seed and minor oils and are expected to gather momentum following the enouncement regarding the full float of rupee on the trade account. This expectation of a bumper crop.000 tones of soya been oil from the U. IVP. India has signed a memorandum of understanding with Malaysia for an annual import of two lakh tones of palm oil for two years. oil seeds and minor oils during the current year would be more than 18 . there is hardly and need for import.S. Amrit Vanaspathi. but whenever import is now made is largely a measure of precaution than out of any composition from 1988-89. The edible oils import has been drastically cut down/ In 1996-97. as a gift for meeting social objectives. import totaled 3 lakh tones valued at Rs 250 crores during the next 2 years it is expected around the same level. the country may avail the option to import for building a buffer stock to meet the needs of public distribution system during the lean period. Other major vanaspathi manufacturers are Wipro.45 lakh tones imported value at Rs 969 crore in 1997-98.HLL launched another brand variant dalda feel light.
If the performance matches the expectations. When a better offer comes along those who are highly satisfied are much less ready to switch. CUSTOMER SATISFACTION: Satisfaction is a persons feeling of pleasure (or) disappointment resulting from comparing a products perceived performance in relation to his (or) her expectation. As this definition makes clear satisfaction is a junction of perceived performance and expectations. High satisfaction (or) delight creates an emotional affinity with the brand.3. The request is high customer loyalty. the customer is dissatisfied. PROFILE OF THE ORGANIZATION 19 . oil seeds and minor oil during the period April 1996 to Jan 1998 stood at over 24 lakhs tones valued at more than Rs 1000 crores. Many companies are aiming for high satisfaction because customers who are just satisfied still find it easy to. not just a rational preference.3 lakh tones with a value of Rs 1362 crore as against 30 lakhs tones with the value of Rs 1043 crore achieved during the year 1996-97 the export of oil meals. the customer is satisfied or delighted. If the performance falls short of expectation.
It is well known as Foods&Fats but the West Godavari farmers call it as a tawdu factory.Foods Fats and Fertilizers Limited Foods Fats and Fertilizers limited Tadepalligudem is a family owned organization. Where he is with his brother export of handloom fabrics in due course. Mr. The wheel of fortune has turned a full circle for Mr.K.Goeanka the architect of FFF LTD. The Goenka family established and respected in Industry and Trade. he was not fully satisfied and asked his brother Mr. This organization is professionally carrying the business activity by “Goenka”family. he established a textile business. It is having branches in Chennai. Historical background of Foods Fats and Fertilizers Limited were conceived in 1959 born in 1960 and were on its beet by 1962. kolkata and Baroda.Goenka who was in Japan to study in Europe to study the process of Hurgi of Germany and Dr smith of Belgium. the Japanese invaded Burma and Mr. Goenka has to abandon his business and return to India. Today Foods Fats and Fertilizers LTD has matured into a conglomerate of its industrial units spread over 40 acres contently buzzing with activity and providing employment to over 800 persons. Simultaneously his brother in Rangoon informed him of plans being setup with Japanese and German technologists for extracting oil from rice bran Mr. In 1959. Mumbai.B.Goenka to Chennai in 1943. Kakinada. Goenka held deliberation with Dr Raghunathprasad and visited Burma with him to study the relevant technology better.G. born and bred in Burma.Goenka’s mill was avidly sought as a mal feed and wrapping papers used for sampling could this oil extracted. G. 20 .Raghunath Prasad of central food technological institution of Mysore that oil could be extracted from bran using alcohol as a catalyst. The company was established in the year 1962. Hyderabad. Goenka read on article by Dr. his restless enterprising zeal brought Mr. Being an optimist is transformed the adversity into opportunity by his grit and after a brief spell in his native land in Rajasthan. The rice bran from Mr. These questions have to wait because in 1942.
(name and address.Whole Time Director .Director No Collaboration of collabaration etc.S. with a built up area of aprx.) Sri Vinod kumar saraogi .Whole Time Director . supported by team of highly educated and committed professional having wide range of experience in the field of oils. DEPARTMENTS IN FFF. period -Managing Director -Whole Time Director .nature of collaboration.Goenka Sri G.Whole Time Director .Director 21 .Goenka Sri Bharat Goenka Sri Sitarama Goenka Sri Sushil Goenka Sri Shiv Kumar jatia Sri Anand choradi 2. 4 lack sft . Personnel department Production department Marketing department Accounts department.K..Goenka and Sri sushil Goenka at the helm of affairs as whole time Directors at factory.Names of present Directors : Sri B.Whole Time Director . located in the vicinity of Tadepalligudem Mandal & Muncipality in West Godavari District of Andhra Pradesh.Director .P. 1.Whole Time Director . Research & Development MANAGEMENT: The manufacturing activities of the company are managed by Sri O.LOCATON: The Company is a conglomerate of various industrial units spread over 40 acres of land.Goenka Sri S.P. derivatives and allied fields.Particulars of present collaboration if any.Goenka Sri O.B.
64 Crs 22 .03.3. The company is a closely held industrial houses with no public investment in the form of equity share capital.Name of chief Executive Sri B.64 Crs. Share Capital : Loaned funds: (Including Reserves) (Secured Loans) (Unsecured Loans) TOTAL BANKERS: STATE BANK OF INDIA [CHENNAI] STATE BANK OF HYDERABAD [CHENNAI] ANDHRA BANK [TADEPALLIGUDEM] CENTREL BANK OF INDIA [CHENNAI] INDUSTRIAL DEVELOPMENT BANK OF INDIA LTD [CHENNAI] KARUR VYSYA BANK LTD [TADEPALLIGUDEM] BRANCHES: MUMBAI HYDERABAD 41.Finance is very much needed to any business so finance is as heart to the business the company was incorporated kin the year 1960.51 Crs 130.49 Crs 17. the original share capital subscribed is RS 5 lakhs. 71. Goenka CAPITAL STRUCTURE: . K.06. Following is the capital structure as on 31.
mango. . soybean. Refinery. etc. The plants have facilities to process a wide variety of oil seeds/oil cakes like rice bran. sesame. rapeseed. sunflower. 23 . Niger. Solvent Extraction plant 4 [fabricated and installed by oilex India and engineering division of 3f group] The above four extraction plants provide versatility of operation in processing different oil seeds/oil cakes at the same time and hence are highly advantageous in marketing.[wurster&Sanger USA and engineering division of 3f group] High pressure splitting of oil into fatty acids and sweet water. Belgium/India] Solvent Extraction plant 3 [fabricated and installed by engineering division of 3f group.[sharpels USA and engineering division 3f group] High quality refining of a variety of vegetable oils. Fat Splitting Plant. .KAKINADA NEW DELHI MULTIFARIOUS PROGRESS: Starting with a solvent extraction plant in 1962 units was continuously added year after year to form a wide spectrum of products. groundnut. Germany] Solvent Extraction Plant 2 [desmet. continuous upgradation of manufacturing process through in house and world wide research is our hallmark. Current manufacturing activities comprise of Solvent Extraction Plant 1 [lurgi. sal.
Stearic acid plant: -[engineering of 3f group] Hydrogenation of fatty acids into stearic acid flakes.margarine division: -[fabrication and installed by engineering division of 3f group] Production of vanaspati shortening high quality bakery fats and margarine from refined oils.[wurster & Sanger USA]Processing of sweet water obtained from fat splitting plant into various grades of refined glycerin.[yoshinoi technology and engineering division of 3f group] Refining of high free fatty acid oils by steam distillation. Physical refinery: . Leading manufacturers in this field of activity all over the world are our customers. . Turnkey engineering division: . Canning division: -[fabrication and installation by engineering division of 3f group] Processing of fruits into pulp. India is the second largest producer of rice with a large potential of crude rice bran oil to be processed and turned into a fine cooking medium to satisfy the requirements of an 24 . Fractionation plant: . and bars.This division produces high quality oleins and stearines from various edible fats for use in manufacture of chocolate confectionery and cosmetics. . Juice. Hydrogenation plant: . our engineering division has installed and commissioned five plants of a total project cost of RS. Vanaspati-shortening. Switzerland] High quality distillation of crude fatty acids obtained from the splitting plant. Glycerin plant.In collaboration with yoshino Seisakusho co LTD Japan who have done pioneering work in developing process and technical know-how for refining high FFA rice bran oil. High quality distillation of crude fatty acids obtained from the splitting plant. 170 million in south India.[luwa.[Bernardino Italy and engineering division of 3f group] Hydrogenation of fats and fatty acids for industrial use.Fatty Acid Distillation Plant.
edible oils. Culture leading us to a steady upward movement.immense Indian market. required infrastructure at our command and international trading experience of over 40 years the 3f group has set up high standards and achieved substantial growth in international trading of commodities like rice. Under comprehensive extension services provided by us the maturing of plantation is expected to be ideal mean while the group has set up plant and machinery along with suitable infrastructure to crush the palm fruits and kernels into oil and process the same into refined oils olien stearine and a host of other products. industrial fats. a research and development new product is being done on a continuous basis for enriching the international trading in both quality and volumes. tapioca. maize. SEARCH AND RESEARCH: .Besides the export of the manufactured products with large warehouse for dry cargo bulk storage installation for liquid cargo at the ports. SERVICE TO SOCIETY: .plantation of oil palm to progressively cover 25000 hectares in Andhra Pradesh and Karnataka the southern states of India is sponsored by us. The group has been a pioneer in introducing various Indian products manufactured by us to new international markets and has won awards for our performance. High yielding variety of sprouted seeds from India and abroad is grown in our nursery and seedlings are regularly supplied for planting to the farmers to cover the targeted area. Total project outlay is estimated to be df1 billion Indian rupees. However. 3f group engineering division is equipped to set up any vegetable oil and derivative processing project.Research and development is the pivot of our activities and has made us to stand in good steady continuous upgradation of production process with the help of a well-equipped R&D laboratory at Hyderabad and diversification in new research based projects in our corporation.The 3f group is involved in a large way in social service activities the goenka family trust runs Arts and Science college for women in Andhra 25 . hps groundnut kernels dyes and chemicals. International trading: . Oil palm project: .
Imported from Argentina and refined in the most modern refinery contains high puff.Refined sunflower oil. A general purpose cooking oil. open communication and transparency of action. a Higher Secondary School in Myanmar and a multistory building in Tamilnadu. • Commitment to welfare-driven initiatives that make a qualitative difference to the lives of marginalized people. The 3f group stands for: • An intrinsic commitment to its people • A culture of trust. SUN DELITE: . These values are common language that binds all its people.Refined rice bran oil A multi purpose-cooking medium judged as the safest cooking oil in the world. It lowers cholesterol. • Indian values with a global mind set. Contains tocopherol and oryzanol that reduce cholesterol. providing accommodation to Tourist’s and Social functions with a library and reading room. . It is extensively used in Japan an evidence for the Japanese larger living. ETHICS: The 3f group is proud of its inherent values.Pradesh and a Higher Secondary School in Rajasthan. we have listed a few of our products here. Packing 15kg/1litre flex pouch. which are. 26 . mutual respect. • An environment-conscious group through its eco-friendly units. medical and social service institutions. persuade relentlessly to drive it towards sustainable growth. 3f groups manufacture a variety of products including vanaspati granite readymade garments computer software etc. TANDUL. In addition to the above projects the group has also being regularly contributing to several educational. It has a established a boys college in Andhra Pradesh.
15kgbag-in-box/15kg tin/15kg jar.Bakery shortening. Margarine made from the choicest of refined oils for bakery industries recommended by the best bakers in the country for cake cream pastry biscuits icing and cookies. Packing. Ideal because it is not colored and not flavored. . A blend of specially formulated and textured hydrogenated fats to provide excellent plasticity. MELLO. The largest selling brand in south India for manufacturing cakes breads biscuits filling cream cookies also used for shallow and deep-frying. 15kg tin/15 liter tin/1litre flex pouch/500.Packing. 15kgtin/15litre tin/5litre jar/1litre flex pouch. Packing.Vanaspati 100% granulated vegetable fat. A must for all festival cooking and sweet preparations. Packing. Packing. 15kg bags-in-box. 15kg bag-in-box/15kg tin/15kg jar. A favourite of south Indian housewives for cooking and deep-frying.200 and 100 ml flex pouch. SURABHI: .Margarine. Multipurpose bakery shortening creamy white and bland in taste. 27 . Multi utility fat widely used all over the country. 3F: . BAKER’S PET: .Vanaspati An economical vegetable fat for small-scale bakeries.
15kg bag-in-box. Packing.Industrial white –IW Chemically pure-CP 28 . GOLDEN SPREAD: . Best for premium biscuits and cookies. 15kg bag-in-box. PALM DELITE. . 15kg bag-in-box. Packing. Grades available--. BAHAAR: .Mango bar A papad made from mango pulp favorite mouth tingler for the young and the old.Imported R&D palmolein. puff with a good life. 3F GLYCERINE: . .Packing. Uniform dispersion of nitrogen gas in the fat produces a superior bakery shortening [contains 10% v/wt nitrogen] specially used for filling cream and icing. Packing. A refined bleached and deodorized palm olein imported from Malaysia. There is already a great demand for these margarine for its superior quality.BISCREME: . An in house development to produce a smooth fat designed for use in puff pastry products. BAKERS DELITE.Margarine for puffs Specially formulated product for puffs. 15kg tin/1litre flex pouch/ 500 ml flex pouch. 20gms sachet.Aerated bakery shortening.Puff pastry fat.Refined glycerin made from sweet water obtained in fat splitting. Packing. which gives a flaky. A specialty fat. Economical oil supplied all over the country directly from our ports on the east and west.
110kg in plastic carboys for liquids 50 kg woven hdpe lined bags for hardened quality in flake form. Raw material for cosmetic premium soap lubricants chemical industries rubber and PVC formulations. Rice bran oil wax may substitute wax like carnauba. .Indian pharmacopeia-IP Packing. Refined rice bran oil wax: . TRIFFA: . OTHERS. Mango stearine [mangifera India] Shea stearine. 29 . contract farming by farmers. 250kg plastic drums. Packing. oil-bulk. Refined palms oil-bulk. Custom made formulations available on order.mango olien Shea olien. Standard and hardened quality distilled fatty acids made from rice bran palm coconut sunflower rapeseed Soya and linseed oil.Crude palm. An important nontimber forest produce. We provide imported seedlings after acclimatizing know how for growing is provided to the farmers.Fatty acids/stearic acids. Cosmetic ingredients ---.Used in various industries like paper coating candles water proofing floor shoe and furniture polish cosmetics carbon paper printing inks fruit and vegetable coatings and pharmaceuticals. Refined kokum fat [garcenia] Sal stearine [shorea robusta] Produced from forest sources. Specialty fats.
000 units. Importers of.Supplier for double solvent refining of high FFA oils up to 20% such as Rica bran oil solvent extracted high FFA oils.00. GRANITE EXPORTERS . Turnkey project .Packing.Indian rice [non-basmati] De oiled rice bran De oiled salseed meal -pellets non. Palm oil and its fractions. Exporters of: . West coast Kochi and Mangalore east coast gopalpur Kakinada and nagapattinam.We export woven garments to United States of America. The refined oil obtained is of excellent quality as per food standards. Our customer span ranges from chain stores mail order boutiques and wholesalers order sizes vary from 1000 to 1. GARMENT EXPORTERS.We initially started exporting rough blocks and have expanded by exporting cut-to-size slabs and random slabs. Later we shifted towards manufacturing of finished products like monument artifact items and fireplaces. . 25kg in lined paper bags.–dusty. United kingdom Canada Germany Japan Chile France and Australia. Presence in all minor ports in India. 30 . Have sea-worthy barges for unloading from ships when anchored near shallow water ports. Crude sunflower oil Crude soybean oil.
Web gardening 3.SOFTWARE DEVELOPMENT: . IT applications in power sector 5. 31 . 1. Smart card based solutions. Conformance services. The 500 square meters of software development center at Hyderabad has been designed to provide the state of art infrastructure for software professionals. 4. 2.Goenka InfoTech limited provides the full range of IT solutions and services in the following segments. Software maintenance and web enabling of legacy applications.
CHAPTER-3 32 .
it may have drained out for some other purposes. a concern operates profitably and yet it becomes very difficult to pay taxes and dividend. cash is to a business enterprise. another statement. but their usefulness is limited for analysis and planning purpose. provided the essential basic information on the financial activities of a business. The balance sheet does not disclose the causes for changing in the assets and liabilities between two different points of time. interest and dividend. “Financial reporting should provide information to help present and potential 33 . U. was prepared to show the changes in the assets and liabilities from the end of one period of time to the end of another period of time. It is very essential for a business to maintain an adequate balance of cash. In fact. The two basic financial statements. called Funds Flows Statements.. what blood is to a human body. This may because (i) Although huge profits have been earned yet cash may not have been received or (ii) Even if cash has been received. Thus.CONCEPTUAL FRAME WORK OF CASH FLOW STATEMENT Introduction: Cash plays a very important role in the entire economic life of a business.e. i. wages. A firm needs cash to make payments to its suppliers.. This movement of cash is of vital importance to the management. There was a need for cash flow statement prepared in standard format The Financial Accounting Standard Board. to incur day-to-day expenses and to pay salaries. the balance sheet and profit & loss account.S. The profit and loss account also fails to disclose the reasons for shortage of cash in spite of positive net income.A. To underline the importance of funds statements was prepared to show the changes in the assets and liabilities from the end of one period of time to the end of another period of time. etc. But many times. has emphasis the need for cash flow statement as.
S -3 Revised: Cash flows statements in March. the Securities and Exchange Board of India (SEBI) amended clause 32 of the Listing Agreement requiring every listed company to give along with the balance sheet and profit and loss account. showing separately cash flows from operating activities.S -3 changes in Financial Statements Position. Such a statements enumerated net effects of the various business transactions on cash and its equivalents and takes onto account receipts and disbursements of cash. MEANING Cash flow statement is a statement which describes the inflows (sources) and outflows (uses) of cash and cash equivalents in an enterprise during a specified period of time.” In June 1995. Cash comprises cash on hand and demand deposits with banks. the Institute of Chartered Accountants of India (ICAI) issued. 34 . timing and uncertainty of prospective cash receipts from dividends or interest and proceeds from the sales. 1997. The revised accounting standard supersedes A.investors and creditors and to her users in assessing the amounts. cash equivalents and cash flow are used in this statement with the following meanings: 1. A. redemption or maturity of securities or loans. a cash flow statement prepared in the prescribed format. Recognizing the importance of cash flow statements. to reinvest in operations and to pay cash dividends. A cash flow statement summarises the causes of changes in cash flow Statement and should present it for each period for which financial statement are prepared. The prospects for those cash receipts are affected by an enterprise’s ability to generate enough cash to meet the obligations when due and its other operating needs. investing activities and financing activities. The terms cash. issued in June 1981.
3. 2. three months or less from the date of acquisition. cash flows are classified into three main categories: 1. highly liquid investments that are readily convertible into known amounts of cash and which are subject to an insignificant risk of changes in value. an investment normally qualifies as a cash equivalent only when it has a shortmaturity. Investments in shares are excluded unless they are. If the effect of transaction results ion the increase of cash and its equivalents. CLASSIFICATION OF CASH FLOWS : According to AS-3 (Revised). in substance. of say. cash equivalents: for example. Cash flows from financing activities. Cash are held for the purpose of meeting short-term cash commitment rather than for investment or other purposes. it must be readily convertible to a known amount of cash and be subject to an insignificant risk of change in value. Flow of cash is said to have taken place when any transaction makes changes in the amount of cash and cash equivalents available before happening of the transaction. For an investment to qualify as a cash equivalent. Cash flows from investing activities. 3. investing and financing activities. Cash flow are inflows and outflows of cash and cash equivalents. Cash equivalents are short term. Therefore. Thus. it is known as outflow (use) of cash.2. 35 . preference shares of a company acquired shortly before their specified redemption date (provided there is only an insignificant risk of failure of the company to repay the amount at maturity). the cash flow statement should report cash flows during the period classified by operating. it is called an inflow (source) and if it results in the decrease of total cash. Cash flows from operating activities.
1. The separate disclosure of cash flows arising from financing activities is important because it is useful in predicting claims on future cash flows provided 36 . they generally result from the transactions and other events that enter into the determination of net profit or loss. Therefore. and. make new investments without recourse to external sources of financing. Cash flows from operating activities: operating activities are the principal revenue-producing activities of the enterprise and other activities that are not investing or financing activities. in forecasting future operating cash flows. 3. pay dividend. Cash flows from investing activities: Investing activities are the acquisition and disposal of long-term assets and other investments not included in cash equivalents. repay loans. Cash flows from operating activities are primarily derived from the principal revenue-producing activities of the enterprise. in conjunction with other information. 2. The amount of cash flows arising from activities is a key indicator of the extent to which the operations of the enterprise have generated sufficient cash flows to maintain the operating capability of the enterprise. Cash flows from financing activities: Financing activities are activities that result in changes in the size and composition of the owner’ capital (including preference share capital in the case of a company and borrowing of the enterprise). Information about the specific components of historical operating cash flows is useful. The separate disclosure of cash flows arising from investing activities is important to generate future income and cash flows.
Thus the optimum cash balance is to be arrived by matching the transaction costs and opportunity costs Similar to EOQ formula. The chief advantages of cash flow statement are as follows: 1. 2. By preparing this statement a firm can come to know as to how much cash will be needed into the firm and how much cash will be needed to make various payments and hence the firm can well plan to arrange for the future requirements of cash. which involves an opportunity cost. Uses and significance of cash flow statement. its liquidity position is affected. Cash flow statement is of vital importance to the financial management.of funds (both capital and borrowings) to the enterprise. it is very useful in the evaluation of cash position of a firm. 3. Since a cash flow statement is based on the cash basis of accounting. 37 . For urgent payments it has to sell some marketable securities incurring penal interest and transaction costs. But the profitability will be higher by utilizing the released funds If the firm maintains the higher cash balance its liquidity will improve but profitability will decline by lasting the interest on it. Optimum Cash Level: If the firm maintains lower cash balance. It is an essential tool of financial analysis for short-term planning. A projected cash flow statement can be prepared in order to know the future cash position of a concern so as to enable a firm to plan and coordinate its financial operations properly. optimum cash balance is the amount of cash balance at which the sum of both the transaction costs and opportunity costs will be minimum. A comparison of the historical and projected cash flow statements can be made so as to find the variations and the deficiency or otherwise in the performance so as to enable the firm to take immediate and effective action.
It further helps in answering some intricate questions like what happened to the net profit? Where did the profits go? Why more dividends could not be paid in spite of sufficient available profit? 7. investing and activities. cash flows statements is more useful than the funds statements. The funds statements even when prepares on cash basis. 10. 5. replacement of fixed assets and other similar long-term planning of cash. cash flow statements suffer from the following limitations: 38 . 8. It better explains the causes for poor cash position in spite of substantial profits in a firm by throwing light on various applications of cash made by the firm. 9. did not disclose cash flows from such activities separately. Limitation of Cash Flow Statement: Despite a number of uses. Cash flow statement provides information of all activites classified under operating.4. It is also 6. Cash flows analysis is more useful and appropriate than funds flow analysis for short –term financial analysis as in a very short period it is cash which is more relevant then the working capital for forecasting the ability of the firm its immediate obligations. A series of intra-firm and inter-firm cash flow statements reveal whether the firm’s liquidity (short-term paying capacity) is improving or deteriorating over a period of time and in comparison to other firms over a given period of time. Thus. Cash flow statement helps in planning the repayment of loans. significant for capital budgeting decisions. Cash flow statement prepared according to AS-3 (Revised) is more suitable for making comparisons than the funds flow statements as there is no standard format used for the same.
It is difficult to precisely define the term “cash”. There are controversies over a number of items like cheques, stamps, postal orders, etc. to be included in cash.
A cash flow statement reveals the inflow and outflow of cash but the exclusion of near cash items from cash obscures the true reporting of the firm’s liquidity position.
c. d. e. f.
Working capital being a wider concept of funds, a funds flow statement presents a more complete picture than cash flow statement. As cash flow statements are based on cash basis of accounting, it ignores the basic accounting concept of accrual basis. Some people feel that as working capital is a wider concept of funds, a fund flow statement provides a more complete picture than cash flow statements. Cash flow statements are not suitable for the judging the profitability of the firm as non-cash charges are ignored while calculating cash flows from operating activities.
Determinants of Cash flow:
The following factors will determine the cash flow : a. b. c. d. e. f. Operating decisions-operating expenses, sales revenue and net profit. Capital expenditure decisions-investment decisions, expansion etc. Credit policy-credit period allowed to customers and followed by suppliers. Inventory decisions-inventory control and management. Tax on profits-tax planning, investment in IDBI etc. Payment of Interest, dividends and issue of bonus shares.
Liquidity gaps – arising out of delay in cash realisation, utilization of working capital for capital expenditure, high fixed charges obligation and finally low generation of internal resources which may be due to lower production and sales etc…
Procedure for preparing a Cash Flow Statement. Cash flow statement shows the impact of various transaction on cash position of
firms. It is prepared with the help of financial statements, i.e., balance sheet and profit and loss account and some additional information. A cash flow statement starts with the opening balance of cash and balance at bank, all the inflows of cash are added to the opening balance and the out flows of cash are deducted from the total. The balance i.e., opening balance of cash and bank balance plus inflows of cash minus outflows of cash is reconciled with the closing balance of cash. The preparation of cash flow statement involves the determining of: a. b. Inflow of cash Out flows of cash
[a] Sources of cash Inflows: The main sources of Cash flows are: 1. 2. 3. 4. Cash flow form operations Increase in existing liabilities or creation of new liabilities. Reduction in or Sale of Assets. Non-trading Receipts.
[b] Application of cash or cash flows: 1. 2. 3. 4. Cash lost in operations. Decrease in or discharge of liabilities. Increase in or purchase of assets. Non-trading payments.
Generally cash flow statement is prepared in two forms. a. Report form
b. T form or an account form or self-Balancing types.
Format Of Cash Flow Statement Approved By SEBI Cash Flow Statement ( for the year ended ------------) XYZ Limited A. Cash Flow From Operating Activities Net profit/loss before tax and extraordinary items Adjustments for: Depreciation Gain/loss on sale of fixed assets Foreign exchange Miscellaneous expenditure written off Investment income Interest Dividend Operating profit before working capital changes Adjustments for : Trade and other receivables Inventories Trade payables Cash generated from operations Interest paid Direct taxes paid Cash flow before items Net cash from operating activities B. Cash Flow From Investing Activities Purchase of fixed assets Sales of fixed assets Purchase of investments Sale of investments Interest received Dividend received Net cash from /used in investing activities C. . Cash Flow From Financing Activities Proceeds from issue of share capital Proceeds from long-term borrowings/banks Payments of long-term borrowings Dividend paid Net cash from/ used in financing activities Net increase / decrease in cash and cash equivalents Cash and cash equivalents as at ---------( opening balance ) 42 Rs.
43 . Rs.Cash and cash equivalents as at --------( closing balance ) T FORM OR AN ACCOUNT FORM OF CASH FLOW STATEMENT Rs.
Cash balance in the beginning Xxx Out flow of cash xxx ADD: Cash Inflows: Cash flow from operations Sales of assets xxx Redemption of Preference shares xxx xxx Redemption of dentures Payment of Loans xxx Issue of shares Issue of debentures Raising of loans Collection from debtors Dividends received Refund of tax xxx Payment of dividends Payment of tax xxx xxx Cash lost in operations xxx xxx xxx xxx xxx xxx xxx xxx xxx Cash balance at the end Xxx 44 .
CHAPTER-4 CASH FLOW STATEMENT FOR THE YEAR ENDED 45 .
31ST MARCH 2006-07 Cash Flow Statement ( for the year ended 2007-) Foods Fats & Fertilizers Limited Rs. Cash Flow From Financing Activities interest paid increase /(decrease) in long term borrowings increase /(decrease) in unsecured loans 46 2006-07 Rs. A. 56407087 31856107 64304282 3441539 (1515867) (9559873) 23758 88549946 144957033 39311985 (49315411) 101866649 91863223 236820256 (8096802) 228723454 (175857713) (100442215) 12140640 0 2988510 9559873 (16109754) -267720659 -66628765 83089936 26754511 . Cash Flow From Operating Activities Net profit before tax Depreciation Interest (net) loss on sale of assets profit on sale of assets assets written off Dividend received provision for leave encashment Operating profit before working capital changes Adjustments for Working capital changes Inventories Trade and other receivables Trade payables Cash generated from operations Direct taxes paid Net cash from operating activities B. Cash Flow From Investing Activities Purchase of fixed assets increase in capital Works in progress Sales of fixed assets Sale of investments Interest received Dividend received Purchase of investments Net cash from /used in investing activities C.
A. Cash Flow From Operating Activities Net profit before tax Depreciation interest (net) loss on sale of assets profit on sale of assets assets written off Dividend received provision for leave encashment Operating profit before working capital changes less :adjustments for Working capital changes inventories trade and other receivables 47 2007-08 Rs.issue of equity shares share premium received Dividend paid tax on dividend Net cash from/ used in financing activities Net increase / decrease in cash and cash equivalents Cash and cash equivalents as at ---------( opening balance ) Cash and cash equivalents as at --------( closing balance ) 2884600 13419600 -5000000 -701250 53818632 14821427 37385785 52207212 CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST MARCH 2007-08 Cash Flow Statement ( for the year ended-2008) Foods Fats & Fertilisers Limited Rs. 132256042 49259510 101170028 336278 -47520 55223 -664838 75054 150183735 282439777 -659939857 32125894 .
trade payables Cash generated from operations Direct taxes paid Net cash from operating activities B. Cash Flow From Investing Activities Purchase of fixed assets increase in capital Works in progress Sales of fixed assets Sale of investments Interest received Dividend received Purchase of investments Net cash from /used in investing activities C. Cash Flow From Financing Activities interest paid increase /(decrease) in long term borrowings increase /(decrease) in unsecured loans Dividend paid tax on dividend Net cash from/ used in financing activities Net increase / decrease in cash and cash equivalents Cash and cash equivalents as at ---------( opening balance ) Cash and cash equivalents as at --------( closing balance ) 375180792 -252633171 29806606 -20410969 9395638 -283141340 282907496 1981855 100000 4270113 664838 -11512750 -4729788 -105155246 100233880 31240013 -10382265 -1456113 14480269 19146119 52207212 71253331 48 .
Cash Flow From Operating Activities Net profit before tax Depreciation interest (net) loss on sale of assets profit on sale of assets Assets written off Dividend received provision for leave encashment 57333045 129168630 929712 -59135 45848 -8109 0 187409991 430329581 2008-09 Rs. Cash Flow From Financing Activities Interest paid Increase /(decrease) in long term borrowings Increase /(decrease) in unsecured loans 49 -629318282 -209901035 430615593 -408603724 21725857 -48509383 -26783526 -71040267 -49565238 3206869 691450 10606433 8109 -28363150 -134455794 -140411398 342058431 27807685 . Cash Flow From Investing Activities Purchase of fixed assets increase in capital Works in progress Sales of fixed assets Sale of investments Interest received Dividend received Purchase of investments Net cash from /used in investing activities C. A. 242919590 Operating profit before working capital changes less :adjustments for Working capital changes inventories trade and other receivables trade payables Cash generated from operations Direct taxes paid Net cash from operating activities B.CASH FLOW STATEMENTS FOR THE YEAR ENDED 31ST MARCH 2008-09 Cash Flow Statement ( for the year ended-2009) Foods Fats &Fertilizers Limited Rs.
Dividend paid Tax on dividend Net cash from/ used in financing activities Net increase / decrease in cash and cash equivalents Cash and cash equivalents as at ---------( opening balance ) Cash and cash equivalents as at --------( closing balance) -15925088 -2706469 210823161 51850936 71353331 123204267 CASH FLOW STATEMENTS FOR THE YEAR ENDED 31ST MARCH 2009-10 Cash Flow Statement ( for the year ended-2010) Foods Fats &Fertilizers Limited Rs. A. Cash Flow From Operating Activities Net profit before tax Depreciation interest (net) loss on sale of assets profit on sale of assets Assets written off Dividend received provision for leave encashment 230152 207744722 50 2009-10 Rs. 251213606 61410133 156397727 508968 (1231297) 589 (4717257) .
Cash Flow From Investing Activities Purchase of fixed assets increase in capital Works in progress Sales of fixed assets Sale of investments Interest received Dividend received Purchase of investments Net cash from /used in investing activities C. Cash Flow From Financing Activities Interest paid Increase /(decrease) in long term borrowings Increase /(decrease) in unsecured loans Dividend paid Tax on dividend Net cash from/ used in financing activities Net increase / decrease in cash and cash equivalents Cash and cash equivalents as at ---------( opening balance ) Cash and cash equivalents as at --------( closing balance) 65178537 (21233450) (3608625) 653814967 (123209646) (532968038) 458958328 (2362716) 456595612 (79900730) 376694882 (142131138) 29653864 4852979 0 25268526 4717257 (98959042) (176597555) (173719225) (63725952) (197108714) 2988613 123204267 126192880 51 .Operating profit before working capital changes less :adjustments for Working capital changes inventories trade and other receivables trade payables Cash generated from operations Direct taxes paid Net cash from operating activities B.
Cash Flow From Investing Activities Purchase of fixed assets increase in capital Works in progress Sales of fixed assets Sale of investments Interest received Dividend received 52 2010-11 Rs. 281559223 68732377 129179291 453814 (104041) 0 204411814 485971037 (98070526) 11423538 541971467 (455324479) 941295516 (105060924) 836234592 (165063711) 16510186 2053384 0 30968867 0 . Cash Flow From Operating Activities Net profit before tax Depreciation interest (net) loss on sale of assets profit on sale of assets Assets written off 0 Dividend received provision for leave encashment 395093 Operating profit before working capital changes less :adjustments for Working capital changes inventories trade and other receivables trade payables Cash generated from operations Direct taxes paid Net cash from operating activities B. A.CASH FLOW STATEMENTS FOR THE YEAR ENDED 31ST MARCH 2010-11 Cash Flow Statement ( for the year ended-2011) Foods Fats &Fertilizers Limited Rs.
Cash Flow From Financing Activities Interest paid Increase /(decrease) in long term borrowings Increase /(decrease) in unsecured loans Dividend paid Tax on dividend Net cash from/ used in financing activities Net increase / decrease in cash and cash equivalents Cash and cash equivalents as at ---------( opening balance ) Cash and cash equivalents as at --------( closing balance) (63321110) (178852384) (153527898) (553174226) 90398069 0 0 (616304055) 41078153 126192880 167271033 Cash flows over the five years period of the firm Business Year income ( sales ) 210763380 2006-07 8 7 Net profit 5640708 228723454 267720659 53818632 business cash flows Investment CFs Financial cash flows 2007-08 2008-09 3053159161 4563870619 132256042 242919590 53 9395638 -26783526 -4729788 -134455794 14480269 210823161 .Purchase of investments Net cash from /used in investing activities C.
This surge in the sales shows the good positive signal for the firm’s future growth. from the year 2009 power had been joined this portfolio. the reason behind this was the increase in the turnover of the goods such as the refined oil. Vanaspati.2009-10 2010-11 4781788930 5007498552 251213606 281559223 376694882 836234592 176597555 178852384 197108714 616304055 6000000000 5000000000 4000000000 3000000000 2000000000 1000000000 Financial cash flows 0 20 06 20 08 -0 20 9 09 -1 20 0 10 -1 1 -0 20 7 07 -0 8 Business income ( sales ) Net profit business cash flows Investment CFs -1000000000 Fig :1 cash flows over the five years period of the firm INTERPRETATION: The graph fig no: 1 explains the cash flows for the past five years. fatty acids. Even though the firm shows the good potential in sales the net profit shows very little margin to the firm the firm P&L account in the year 2006-07 shows the profit of 4.6 crs to 456 cr from the year 2006-07 to 2010-11. sales are the major source of the cash inflows for any firm shows the continuous increase of 259. Profit was 54 .08cr in the next year.95 cr and it was stand at 2. here is caused by the decrease in the sales.
and increase In the non. it shows the negative operating flows in the years 200607 and 2010-11.49 cr correspondingly again in the year 2010-11 there is a surge in the financial flows of the firm. 55 . and adjusted working capital changes. Financing activities are activities that result in changes in the size and composition of the owner’s capital the firm financial cash flows in the year 2006-07 was 10.29 cr from the year 2006-07to 2009-10. Investment activities are the acquisition and disposal of long-term assets and other investments.operating incomes such as the dividend received.8cr and preceding years 2008-09 and 2009-10 it marked in the decreased cash flows while comparing the previous year it was amounted as 5. accretion in the inventories. increase in trade and other receivables.increased from 20. and subtract the non-operating incomes. Business cash flows or the cash from the operating activities are obtained by adding non-cash/ non –operating expenditure to the net profit. Positive investment cash flows are shown in the year 2006-07 instance remaining years were shown in negative cash flows it caused for the increase in the investment outflows over the inflows. Remaining year’s shows positive operating cash flows.38cr and 1. on the left side of the profit it was very small margin while comparing the sales of the firm.7 cr it was increased in the year 2006-07 to 12.08cr to 24. but on the right of the profit is it shows continuous increase shows the potential of the firm.
and adjusted working capital changes.6 crs to 456 cr from the year 2006-07 to 2010-11.Chapter-5 FINDINGS Firm has good growth in their sales. and subtract the non-operating incomes. fatty acids. the reason behind this was the increase in the turnover of the goods such as the refined oil. Business cash flows or the cash from the operating activities are obtained by adding non-cash/ non –operating expenditure to the net profit. Vanaspathi. from the year 2009 power had been joined this portfolio. sales been continuous accelerated from 259. it shows the 56 .
.e. It occupies approximately 84% of the total financial out flows. here is caused by the decrease in the sales. increase in trade and other receivables. The net profit before tax is 2. Remaining year’s shows positive operating cash flows Even though the firm shows the good potential in sales the net profit shows very little margin.390. In the year i.. Finally the payment of the interest was the major component in the total financial cash out flows. The liquidity position i. short term solvency of the company is not satisfactory.e.95 cr and it was stand at 2. Cash from unsecured loans were increased 22.72. 2007-2008. Firm’s P&L account in the year 2006-07 shows the profit of 4.negative operating flows in the years 2006-07 and 2010-11. After adjustments cash from operating activities is 6. 86. accretion in the inventories.08.lakhs to 278 laths within the five years from 2006-11. and increase In the nonoperating incomes such as the dividend received. the company is using more sources from secured and unsecured loans.08cr in the next year. It is decreased by 58% compared to 2006-2007. 37.988. 57 .
So. Cash from operations is very high. 2. 3. 4. 58 . Investments are very high. So it should be reduced. Adequate promotional activities should be taken. The firm has to maintain the adequate liquidity position.SUGGESTIONS 1. decrease in the working capital when obtaining loans from banks.
P.S. Financial Management . Text & Problems – M.Y KHAN .MAHESWARI 4. PANDEY 2.K. Financial Management – I. Financial Management.CHAPTER-6 BIBLIOGRAPHY 1. JAIN 3.N. Annual reports of Foods Fats & Fertilizers LTD Tadepalligudem 60 .M.
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