You are on page 1of 27

WORKING CAPITAL AND FUND FLOW STATEMENT OF MODEST INFRASTUCTURE LTD.

Submitted By: Pratik L. Katariya Enrolment Number:107960592074

INTRODUCTION The MODEST GROUP OF COMPANIES is reputed in the Indian shipping services. MODEST INFRASTRUCTURE LTD distinguishes itself as a leading ship builder on the West coast of India, specializing in design, construction, repair and conversion of ship for specific applications. The main working of the company is the design analysis, drafting for ship to be fabricated and the actual fabrication of every part of the ship and finally quality control. MODEST INFRASTRUCTURE LTD. situated in old port, Bhavnagar, which was established in February 2006. The directors of the modest group with the initial investment of 10 crores started the Modest Infrastructure.

Modest group has ISO9001:2000 certificates from British Standard Institution and the IRQS (Indian Register Quality System) to Modest infrastructure Ltd. The Modest Infrastructure is a large-scale industry as its initial investment in plant and machinery was about 200 Crores. The company has the capacity to built 9 ships simultaneously.

QUALITY POLICY
In Modest Infrastructure Ltd. have committed to achieve customer satisfaction by:

Meeting with the requirements regarding Quality Cost effectiveness in shipbuilding & ship repair services. Timely delivery of ship PRICING POLICY
Pricing is one of the important elements of marketing strategy for a product. The managers invariably feel that price formulation is their secret weapon to fight the battle of market share and achieve organizational objective. Marketing manager & production manager remain present they follow below price structure. Total cost = Production cost + Taxes or other expenses + Profit

The other expenses are: Dealers commission Cost of transport General commission etc.

ACHIEVEMENTS During their tenure, the organization has already delivered 5 vessels and 10 are under construction and shortly expect delivery of another 2 to 3 vessels. Company repaired 9 vessels.

PRODUCT The main product of the company can be classified in a two groups:

1. FRP
45 ft. petrol launches Class c boats Jet boats Pilot launches Rowing boats Pleasure craft

2. Steels Pontoons Oil tanker

Fishing trawlers
Split burge Passenger vessels Tourist launches Ammonia carrier Cargo launches

Flood relief boat


60 passenger life boats

FINANCIAL INFORMATION
Financial management is study about the prices of processing the financial resource with its judicious use of financial resource with a view of maximizing the value of the firm. Financial management is concerned with Identifying of estimating the need of finance. Effective utilization of these resources. Indicating the sources of finance.

CAPITAL STRUCTURE Any company must have to become careful in deciding capital structure of the firm otherwise; it would lead to winding up of the company. Usually, capital structure suggests the resources from which the funds are acquired. As Stretch Bands is a private limited, the company needs not to get funds from public. The capital structure of the company is as follows: Secured loans Unsecured loans The company has not issued any kinds of bonds, debentures or preference share capital. In this way, the company has acquired a fair capital structure.

WORKING CAPITAL MANAGEMENT One of the executive functions of the finance is Working Capital Management or taking liquidity decisions. Working capital signifies required for day-to-day operations of an organization. No business can run without the provision of adequate working capital. The requirement of working capital may be differ from organization to organization. There are mainly two concepts of the working capital: 1. Gross Working Capital 2. Net Working Capital WORKING CAPITAL Working capital is required for smooth running of the business and also to avoid problems in turn over. It affects many factors of finance department. The main problem in holding working capital is that it should be in good proportion with manufacturing and other main factors or it will earn nothing and reduce profit indirectly. Working capital can be classified into these three groups: 1. Inventories 2. Cash and bank balance 3. Receivables

FINANCIAL PLANNING To achieve the basic objects of the firm, some financial activities are to be planned in advance. Through financial planning, maximum utilization of financial resources and limited fund can be made possible. Modest infrastructure Ltd is showing great performance and advisable results only due to its great finance department. They have never faced scarcity of finance. They prepare short term and long-term budgets. It also prepares future projects and if they find any mistake, they rectify it. Modest company has not faced any shortage of funds as it prepares short term and long-term plan.
FUND FLOW STATEMENT It explains changes in funds or changes in working capital. It explains the working capital position of the company, which gives an idea to the top management about the liquidity position of the company. It is one of the statements prepared by finance manager to do the analysis of total fund invested in the business that means here finance manager can do comparison of how much total fund realized in a co. And how much total fund utilized by the co. For doing such thing he will prepare FUND FLOW SATEMENT.

The objective of preparing such a statement is to show to the management and other interested parties, what funds have come into the business and how they have been applied. A balance sheet is a static statement showing the conditions of assets and liabilities on a particular date. While the fund flows statement is dynamic statement showing changes that have been taken place during the year. The fund statement is therefore necessary to supplement the two basic financial statements. 1. Preparation of working capital statement that explains increase or decrease in working capital. 2. Preparation of funds flow statement that shows various sources and application of fund

For preparing such a working capital statement, we have to follow one rule that positive situation for current assets and negative situation for current liability.

If Current Assets Increase = Working Capital Increase If Current Assets Decrease = Working Capital Decrease If Current Liability Increase = Working Capital Decrease If Current Liability Decrease = Working Capital Increase

OBJECTIVE OF RESEARCH Research refers to collecting, formulating and analysis data on specific topic or to achieve a particular goal for which the study is carried out and find out the solutions. Though every research study its own specific objective. The purpose of research study is to discover answer to find out the fact of particular topic. The main objectives of my research study are as under: To know the Modest behavior for the market To Study the current scenario of Market To analysis the level of satisfaction of the buyers To know the reason behind low performance and dissatisfaction with the services of the company

METHODOLOGY The research methodologies that I have in the used in these reports are two ways: 1. Primary data 2. Secondary data 1. PRIMARY DATA: Primary data are collected through the interviews and information given by the financial management as well as the top authority. 2. SECONDARY DATA: Secondary data is collected from the annual report and financial statement of Modest Infrastructure Ltd from head branch at Mumbai. Collect the information by daily visits of the company and gathering data for comparison of last two years so that it can be useful for the analysis.

FINANCIAL RATIO ANALYSIS AND INTERPRTATION Financial ratio analysis defined as the systematic use of ratio to interrupts the financial statement. So that the strength and weakness of the firm as well as its historical preformed and current condition can be determined. We divided into following categories. Current Ratio Acid Test Ratio Inventory Turn Over Ratio Working Capital Turn Over Ratio Inventory Holding Period Net Fixed Asset

Current Ratio :

Year 09 : = 1115728246 663946772 = 1.68

Year 10 : = 1584834190 1244394843 = 1.27

The current ratio in the year 2009 is 1.68 and 2010 is 1.27 so it shows the current ratio is decrease as compared to 2009.

Acid Test Ratio :

Year 09 : = 562430072 663946772 = 0.85

Year 10 : = 843283805 1244394843 = 0.67

The acid-test ratio in the year 2009 was .85 and in 2010 it was .67 so it was decrease in 2010. it shows that current assets were less than current liabilities.

Inventory Turn Over Ratio :

Year 09 : = 562430072 647424280 = 0.87

Year 10 : = 961706757 647424280

= 1.49

The inventories turnover ratio in 2009 was .87 and in 2010, it was 1.49 it was increase in this ratio shows the efficient and measurement of inventories and beneficial for the company.

Working Capital Turn Over Ratio :

Year 09 : = 916969717 450325474 = 2.04

Year 10 : = 770313448 338983347 = 2.27

The working capital turnover ratio was 2.04 in 2009, and 2.27 in 2010, so it shows the greater efficiency and increase the rate of profit. a very high ratio may signify the potential of situation of short of working capital, so it is indicate better performance of the company.

Net Assets Value :

Year 09 : = 208788000 23753800 = 8.78

Year 10 : = 208788000 23278800 = 8.97

Net assets value ratio was 8.78 in 2009 and 8.97 in 2010, so it was increase in this ratio shows the more asset compare to 2009.

Inventory Holding Period :

Year 09 : = 553298174 890132332 = 227 Days

365

Year 10 : = 741550385 961706757 = 286 Days

365

Inventory holding period ratio was 227 days in 2009 and 286 days in 2010 so it will shows less efficient to convert inventory into cash compare to 2009.

Net Fixed Asset :

Year 09 : = 890132332 344188325 = 2.58

Year 10 : = 961706757 452638056 = 2.12

Net fixed assets turnover ratio was 2.58 in 2009 and 2.12 in 2010, thus the net fixed asset is lower than 2009.

STATEMENT SHOWING IN WORKING CAPITAL OF MODEST INFRASTRUCTURE LIMITED (DATA ANALYSIS)


Particular Current Assets Cash and Balances Inventories Sundry Debtors Loans & Adv. 148075257 553298174 71927226 340971589 283992598 741550385 468447530 89387677 135917341 188252211 396520304 251583912 2009 2010 INC. DEC.

Total Current Liabilities Current Liabilities Provisions

1114272246

1583378190

469105944

652637437 11309335

1193330600 51064244

540693163 39754909

Total Increase in working capital (Asset -Liabilities)

663946772 450325474

1244394844 338983346

580448072 -

111342128

CONCLUSION Training in real sense creates and develops new and true talent, which adds to the true education and experience. Training in Modest Infrastructure Ltd. was really a good experience as it taught me how to manage regular operation of bank. Fund Flow statement helps to analyze financial position of the company. Company as recognized their revenue as per the Accounting Standard seven issued by the institute of charted accountant of India. All works are accordingly performed with the help of computer and expert employer The general manager takes all the essential and final financial decision. There is a very strong relationship between the workers and the management.

SUGGESTION Modest Infrastructure Limited is found to be one of the very popular leading INDUSTRY producing industrial as well as ship construction. It is manufacture ship for domestic as well as foreign country. Still there is good scope for the expansion of this company. For Modest Infrastructure Ltd. there is following suggestion, The company should take advantage of all the favorable factors, which helps in developing and expanding the activity and thereby increasing the production, which ultimately results in increasing, turnover and profit.

LIMITATION OF THE STUDY The collection of data is the main feature of any research study. Generally the data collection is made by the sample size and only from the particular unit. Therefore there are several limitations. The main limitation of this study is that the data was collected only from human being changes takes place in the way of thinking so the result based on this information may go wrong. The feedback provided by the client may not be right fully, it may be proven wrong. It is not necessary that the same situation for this topic will be same in the organizations in future. The review of client may change with time.

REFERENCES Reference Books: Financial Accounting For Management -Amrish Gupta Costing For Management Accounting Paresh Shah Finance Management B.S. Shah Prakashan Annual Report Of The Company Data From Head Office Of The Company

------------------------

You might also like