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Funds Flow Analysis

INTRODUCTION

Finance is the lifeblood of every business activity without which the wheels of

modern business organization system cannot be greased. Finance management is

managerial activity, which is concerned with planning and controlling of the firm's

financial Resources. Finance is a scarce resource and it has to be managed efficiency

for the successful functioning of any company. Several companies have come to grief

mainly because of inefficient management of finance, in spite of other favorable

conditions.

The funds flow statement is a statement which shows the movement of funds

and is a report of financial operations of the business undertaking. It indicates various

means by which funds were obtained during a particular period and the ways in which

these funds where employed. In simple words it is a statement of sources and

applications of funds.

The funds flow is designed to analyze the changers in the financial condition

of a company between two periods. This statement will highlights the sources from

which funds are received and the uses to which these have been put and it enables to

know with reasons the basic causes of changes in net working capital. This statement

is also termed as “Statement of changes in the financial position on working capital

base

Funds flow statement is an important tool and is widely used in the hands of

financial analysts and managers for analyzing the financial management of a

company. Funds keep on moving in a business, which itself based on going concern

concept. In a narrow sense, it means inflow and out flow of cash only and a flow

statement prepared on this basis is called as "cash flow statement". Such a statement

enumerates net effects of the various business transactions on cash and takes into

account receipts and disbursement of cash. In a broader sense, the term fund refers to

money values in whatever form it may exists

VCR Institute of Management Studies, Chittoor Page 1

Funds Flow Analysis

Definition:

"A statement of sources and Application of Funds is a technical device

designed to analyze the changes in the financial condition of a business enterprise

between two dates".

- R. A. Foulk

“Funds Flow Statement as statement either prospective or retrospectives

setting out the sources and application of funds of an enterprise. The purpose of

statement is to indicate clearly the requirement of funds.

- I.C.W.A

The funds flow analysis describes the sources from which additional funds

were derived and the uses to which these funds were put.

- Robert Anthony

In simple, the funds flow statement is a statement of sources and application of

funds. In short, it is a technical device designed to high light the change in the

financial condition of a business enterprise between tow Balance Sheets.

Funds flow statement is widely used by the financial analyst and credit

granting institution and financial managers in performance of their jobs. It has

become a useful tool in their analytical kit. This is because the financial statement like

income statement and• balance sheet have limited role to perform.

Income statement measures flows restricted to transaction that pertain to

rendering of goods and services to customers. The balance sheet is merely a static

statement's these statements do not sharply focus those major financial transactions,

which have behind the balance sheet changes.

General Rule:

The flow of funds occurs when a transaction changes on the one hand a non-

current account and vice versa.


Funds Flow Analysis

1. A current asset and a fixed asset.

2. A fixed asset and a current liability.

3. A current asset and a fixed liability. A fixed liability and a current liability.

Different names of funds Flow Statement:

A statement of sources and Uses of funds.

A statement of Sources and Application of funds.

Where got and where gone Statement.

Inflow and out flow of funds statement.

Main purpose of funds Flow Statement:

To help to understand the changes in assets and which are not evident

Financial statements or I the income statement.

To inform on to how the loans to the business has been used.

To point out the financial strengths and weakness of the business.

To help in planning sound dividend policy.

Procedure for preparing a Funds Flow Statement:

The preparation of funds flow statement consists of 2 parts.

Statement or schedule of changes in working capital.

Statement of sources and Applications of funds.

Statement or Schedule of changes in Working Capital:

Working capital means the excess of current assets over current liabilities.

Statement of changes in working capital is proposed to show the changes in the

working capital between two balance sheets data. This statement is prepared with the

help of current assets and current liabilities derived from two balance sheets.

Working Capital = Current Assets – Current Liabilities


Funds Flow Analysis

While preparing a schedule of changes in working capital, it should be note that

a) Increase in Current Assets, Increases the Working Capital.

b) Decrease in Current assets, Decreases the Working Capital.

c) Increase in Current Liabilities, Decreases the working capital.

d) Decrease in Current Liabilities, Increases the Working Capital.


Funds Flow Analysis

INDUSTRY PROFILE

OVERVIEW OF FOOD PROCESSING INDUSTRY

The food processing industry plays a vital role in the diversification and

commercialization of agriculture by ensuring value addition to agricultural produce,

generating employment, enhancing the income of farmers and creating markets for

export of agro foods. In short, the food processing industry provides linkages and

synergies between the industrial and agricultural sector. Change in lifestyle and food

consumption patterns and increase in the disposable income are some of the key

growth drivers for the industry.

FRUITS AND VEGETABLE PROCESSING

The total installed capacity of fruits and vegetables processing industry has

increased from 1.1 mn tones in January 1993 to 2.5 mn tones in January 2007. The

processing of fruits and vegetables is estimated to be around 2.2% of the total

production in the country.

MEAT and POULTRY PROCESSING

In meat and poultry processing sector, poultry meat is one of the fastest

growing animal proteins in India. Through 1991-2005, the estimated production was

1.5 mn tones, which has grown at a CAGR of 13%. Per capita consumption has grown

from 870 grams in 2000 to about 1.68 kg in 2005 and is expected to grow to 2 kg in

2009.

PULP and PULP PRODUCTS

India is the largest Pulp producing country in the world. According to the

Annual Report FY07 of Ministry of Food Processing Industries of India, Indian

production stands at 91 mn tones, having grown at a CAGR of 4%. Approximately 70

mn rural Indian households, primarily, small and marginal farmers and landless

laborers, are engaged in the business of Pulp production.


Funds Flow Analysis

Marine Products

The country has a long coast line of over 8000 kms, 50600 sq kms of

continental shelf area and 2.2 mn kms of exclusive Economic Zone. Of the total value

of exports, 63.5% is contributed by frozen shrimps.

Among all, the US is the largest importer of Indian marine products,

contributing to 13% in quantity and 30% in value of total exports, as per the Ministry

of Food Processing Industries.

Grain Processing

Milling of rice, wheat and pulses form a part of the grain processing industry.

India is self reliant in grain production. It is the second largest rice producer in the

world, with a 20% share in the global production. Every year, India produces about

200 mn tones of different food grains. All major grains, such as paddy, wheat, maize,

barley, millets like jowar (great millet), bajra (pearl millet) and ragi (finger millet) are

produced in the country.

Alcoholic Beverages

India is the third largest market for alcoholic beverages in the world. The

demand for beers and spirits is estimated to be around 373 mn cases, according to the

Annual Report FY07 of Ministry of Food Processing Industries of India. The

alcoholic beverages industry provides considerable employment opportunities in the

agro – processing industry.

Consumer Food Industry

Consumer food industries include packaged / convenience food aerated soft

drink and packaged drinking water. Packaged food consists of ready-to-eat and ready-

to-cook products, pastas, breads, cakes, pastries, biscuits, rice flakes, bun rolls,

noodles etc. As per the Ministry of Food Processing Industries, bread and biscuits

constitute the largest segment of consumer food with the production of about 4 mn

tones p.a. Of the total production of bread, 40% is produced in the organized sector

and the remaining in the unorganized sector. In production of biscuits, the organized

sector produces about 80% of the total production.


Funds Flow Analysis

Policy Initiatives

The Government has undertaken several policy measures and initiatives. Some

initiatives can be named as follows:

Most of the processed food items have been exempted from the purview of licensing

under the Industries (Development and Regulation) Act, 1951.

In order to ease the availability of finance, the industry is included in the list of

priority sector.

Excise duty levied on the ready-to-eat products, instant food mixes, aerated drinks

and fruits and vegetables processing units is reduced.

Foreign equity up to 100% for most of the processed items except for alcoholic

beverages and those reserved for the small-scale units.

A large number of foreign collaborations have been approved.

Excise Duty of 16% on dairy machinery has been fully waived off and excise duty on

meat, poultry and fish products has been reduced from 16% to 8%.

Future Outlook

India has the potential of being the biggest producer within the food and

agricultural sector. In this respect, the country is endowed with a large production

base for a variety of food crops due to its varied agro-climatic conditions. The

Government of India under the Ministry of Food Processing Industries has adopted a

Vision 2015 which envisages:

Trebling the size of the processed food sector

Increasing level of processing of perishables from 6% to 20%

Value addition to increase from 20% to 35%

Share in global food trade to increase from 1.5% to 3%

The areas identified to develop the food processing industries in India are -

establishing mega food parks, modernization of abattoirs, cold chain/value addition

and preservation infrastructure, upgrading safety and quality of street food and

establishment / up gradation of quality control laboratories.

Policy reforms in the food processing sector are already in their advanced

phase, and have prompted several corporate like Reliance, ITC, Bhatia and Godrej to


Funds Flow Analysis

invest in this sector. The growth in food processing industries would not only help in

the growth of agricultural sector, but also in the growth of these segments that may

have remained marginalized for a long time.

Cluster Insights

Cluster Insights are aimed at highlighting the performance and expectations of

the small and medium enterprises operating in the food processing sector in the

Kolkata cluster. The sample considered for this analysis are the food processing firms

profiled in this publication; the variables considered for analysis include operational

structure, business practices, and future plans.

Key characteristics of the Kolkata food processing cluster

Average revenue growth of the food processing companies in the last two years was

around 24%.

24% of the companies possessed quality certifications such as ISO 9000: 2000 and

others.

55% of the companies were involved in exports.

41% of the profiled companies generated more than 50% of their total revenue from

the international market

Asia (excluding Middle East) is the most preferred export destination.

On an average, the companies operated at a capacity utilization of around 87%.

59% of the companies were established prior to 1990. Around 38% and 3% of the

companies were established between1990-2000 and post 2000 respectively.

Ownership Pattern

The ownership pattern of food processing companies was inclined more

towards public limited companies.

Around 60% of the public limited companies fall in the Rs 10 – 100 mn turnover

bracket.

Private limited companies in the Kolkata cluster recorded an average revenue growth

of 25% in the last two years.


Funds Flow Analysis

Sub Segment

Most of the companies in the Packaged / convenience foods segment fall in

the turnover bracket of Rs 10 – 100 mn, followed by Pulp and Pulp products segment.

60% of the companies in packaged / convenience foods segment were

involved in exports.

Companies dealing in Pulp and Pulp products operated at an average of 87%

of their installed capacity.

Turnover Bracket

25% of the companies in the turnover bracket of Rs 10 – 100 mn earned more

than 50% of their revenue from the overseas market.

The companies in the turnover bracket of Rs 100 - 250 mn operated at an

average of 88% of capacity utilization.

Growth and Future Plans

The food processing companies in Kolkata cluster expect an average revenue

growth of 33% in the next two years.

Notably, 17% of the profiled companies are expecting more than 50% revenue

growth in the next two years.

Most of the companies have envisaged future plans. The plans range from

capacity expansion and modernization, to enter into new markets and

diversification. For instance, 40% of the companies are planning to tap new

markets while 30% are willing to expand the plant capacity.

Cluster benefits and hindrances

Marketing initiatives, quality up gradation and funding from the financial

institutions were the dominant benefits derived by the companies operating in the

cluster.

Changing face of the Indian food processing industry

While India's food processing industry features an array of products like fruit

and vegetables, meat and poultry, Pulp and Pulp products; other consumer product

groups like confectionary, chocolates and cocoa products, soya-based products,

mineral water and high protein food also falls under its purview. As per the figures


Funds Flow Analysis

given by the National Committee on Food Processing and Regulatory Affairs, the

food processing sector received investments worth USD 144 million between 2007

and 2008, as against USD 5.7 million in the previous year. During April 2008 -

January 2009, the sector received USD 760 million worth of investments.

The Food Processing Industry: In Retrospect With an aim to streamline the meat

and poultry processing industry in India, the government has launched the National

Meat and Poultry Processing Board (NMPPB) in New Delhi on February 2009. The

new board will have 19 members and will address issues related to the production of

clean and hygienic meat and meat products. The board will also go a long way in

helping the rural economy through employment generation. Further, NMPPB will

work towards raising domestic standards in meat and poultry processing to

international levels, developing uniform and effective meat quality testing systems

and addressing environmental pollution issues arising out of the conditions, which is

now prevalent in the meat industry. The cabinet had given the approval for the board's

set up, with an outlay of Rs 14.64 crore (Rs 146.4 million)

Setting up Mega Food Parks

Similarly a sum of Rs 3,700 crore has been assured in order to set up 10 mega

food parks in the first phase of the 11th five-year Plan. This includes Rs 2,500 crore-

investment from individual units, Rs 700 crore from special purpose vehicles (SPVs)

and the Centre contributing Rs 500 crore. A total of 30 mega food parks are expected

to be set up during the 11th Plan. Each food park is expected to have 30 units, which

are collectively expected to attract Rs 250 crore. The SPV, which will require an

investment of Rs 120 crore, will include the government's contribution of Rs 50 crore.

Hence, each park will attract an investment of Rs 370 crore. Apart from private

entities, government agencies are also allowed to be part of the SPV.

The parks will be set up in Chittoor (AP), Chikmagalur (Karnataka),

Dharmapuri (Tamil Nadu), Pune (Maharashtra), Jalandhar (Punjab), Jangipur (West

Bengal), Rai Bareilly (Uttar Pradesh), Haridwar (Uttarakhand), Nalbari (Assam) and

Ranchi (Jharkhand). Private partners, who have taken part in the SPV, include


Funds Flow Analysis

Patanjali Ayurved of Ramdev fame in Uttarakhand, Shrei Infrastructure in West

Bengal, Unity Infra in Punjab and Chordia Food Products in Maharashtra. For the

SPV to be approved, it should have a minimum of five members, out of which one

should be from the food processing industry.

Some staggering facts

India has 184 million hectares of cultivable land and the country produces 90

million tones of Pulp (highest in the world), 150 million tones of fruit and vegetables

(second largest), 485 million livestock (largest in the world), 204 million tones food

grain (third largest), 6.3 tones fish (third largest), 489 million poultry and 45,200

million eggs. In spite of having a vast production base, the processing level is low -

two per cent in fruits and vegetables, 26 per cent for marine products, six per cent for

poultry and 20 per cent for buffalo meat. With only 1.5 per cent share of India's

export of processed food in global trade; there lies immense potential for investment

and development in this sector.

Indian Grape Processing Board

In early 2009, the government launched the Indian Grape Processing Board

(IGPB) in Pune, Maharashtra. This board will provide a platform for the advocacy of

the Indian wine sector. The board's major objectives are to formulate a vision and

action plan for the Indian wine sector's growth including research and development

for quality up gradation in new technologies/processes; to collaborate and advise

wine-grape growers, the wine processing industry, central and state governments on

commercial, regulatory and technical issues related to the Indian wine sector,

including best practices in viticulture; to increase farmers' income and employment

generation, with a particular focus on rural areas; to encourage cluster farming,

contract farming and farm diversification; to bring the benefits of value addition to the

farming community and farmers fetching remunerative prices for their produce;

coordinating with premier Research and Development (RandD) institutes in order to

identify and develop appropriate root-stock and wine varieties of grapes suited for

different geo-climatic regions of India.


Funds Flow Analysis

Research and Development

In August 2009, Sahai said that the government was planning to formulate a

separate policy for India's food processing industry and develop RandD activities in

the sector. The minister addressed this topic at a workshop on 'New Perspectives in

Research and Development in the Food Processing Sector,' jointly organized by the

ministry and the Federation of Indian Chambers of Commerce and Industry (FICCI).

The proposed new policy would lay special emphasis on PPP for giving a commercial

orientation to RandD activities in this sector. The ministry intends to chart out a

roadmap for scaling up RandD activities in the sector. It will also focus on technical

capacity building for research with the ultimate aim of increasing the processing of

perishables from the 2007 - 08 level of 10 per cent to 20 per cent by 2015 and raise

value addition (of agricultural produce) from 25 per cent to 35 per cent.

Acceptance and Future

Food service industry professionals opine that the product expectations have

increased from institutional clients, suppliers and retailers, especially with regards to

the new technology that augments itself within the food processing sector. Food

service players find it relatively easier to gain ground, now, within the market, thanks

to the spurt of trade shows and exhibitions, which showcase the latest offerings within

the FandB sector. "I believe there is a paradigm shift in the way end consumers and

the industry perceives the food processing industry. For example, we have observed

that people are willing to accept processed frozen foods now. A few institutional

players have also changed/modified their style of operations, food preparation and

service to match the prerequisites of processed food. One cannot rely on the seasonal

availability of certain exotic fruits and vegetables, hence, frozen foods serve as the

most ideal option for such requirements," explained, Hrishikesh Bhatjiwale, Vice

President - Sales and Marketing, Tastee Choice.

Absence of a market strategy, inadequate export infrastructure and unstable

supply base are giving Indian mango growers a run for their money, more Soils,

Nutrition, and Fertilizer in the international markets where the Indian king of fruits is

still to take its place. While India produces over 11m metric tones of mangoes


Funds Flow Analysis

annually around 63% of world produce, its export share is just 0.11%. However,

APEDA has identified UK, Germany, the Holland, France, Italy and Belgium for

mango exports and plans aggressive marketing strategies there. APEDA is making all

efforts to make available latest packaging and processing technology for our produce

India is one of the largest producers of Tropical fruits in the world and has

established the image in the international market. Due to its own advantages in

climatic conditions, India can produce wide variety of fruits and vegetables.

Unfortunately, the processing technologies and storage facilities, available are still

primitive and enough importance has not been accorded for this industry, which has

tremendous growth potential. Only recently, both the central and state governments

have realized the importance and taken steps through wide variety of measures for the

growth of the industry. Andhra Pradesh, where the plant is coming up, is known for

variety of quality fruits particularly for Mango, Papaya, Guava, etc.,

With the support of Govt. bodies, many small-scale industries (overall

capacity of upto 1000M.Tons of fruit pulp by canning process) have been established

since 1970 by leading formers and fruit traders for processing the tropical fruits. In

the early 1970’s India started exporting this tropical fruit products to Gulf countries.

However, could not able to meet advanced international market requirements to enter

into Europe and American countries due to inferior product quality. Even the response

in the GULF countries has not seen the potential growth year by year due to quality

related issues. From the year 1995, Indian manufacturers realized on the technological

gap in meeting the international standards when compared with competitive producers

of same products from North America, Peru, Brazil and Egypt. Necessary steps were

then initiated in establishing the new technologies called Aseptic Fruit Pulp to

compete in international markets. Nevertheless, today there are many small scale

industries producing low quality fruit pulps (canned pulp) and struggling to approach

advanced international markets. Though, the successful organizations like Foods and

Inns, Clean foods…etc could establish Aseptic process with latest technologies at that

point of time, the plants have not been designed completely to meet international

standards.


Funds Flow Analysis

Mango, the most important fruit of India, is grown in an area of 1.23 million

ha with an annual production of 10.99 million tonnes, which accounts for 57.18 per

cent of the total world production. This paper presents information on area and

production, cultivars, hybrids and clone, agro techniques, disorders, insect pests and

diseases, harvest and postharvest management, export, problems and prospects of

growing mango in India.

Top producers of Mangoes, Mango grafts,

Guavas, 2010-11

CountryProduction in

millions of tons

India ~ 13.6

People's Republic of China 4.2

Thailand 2.5

Indonesia 2.2

Mexico ~ 1.9

Pakistan ~ 1.8

Brazil ~ 1.2

World total 34.9

Key ~ 2011 data

India ranks second, next only to China, with a production of 47 million tonnes

from an area of 4.13 million ha during the year 2011 and accounting for 8.04 per cent

of the total area under fruits in the world (51.36 mill ha) and 9.34 per cent of the total

world fruit production (503.28 million tonnes). However, Banana, orange grapes and

apple were the major fruits of the world accounting for 14.45, 13.23, 13.01, 12.36 per

cent of total world fruit production. Mango accounted for only 3.11 of the total area

under the fruits and 2.15 per cent of the total world fruit production. The total

production of mango in the word was 26.11 million tonnes out of which India alone

produced 10.02 million tonnes, accounting for 38.38 per cent and ranked first. The

total area production of mango in the world was 26.574 million tonnes from an area of


Funds Flow Analysis

3.69 million ha out of which India alone accounted for 40.64 per cent in terms of

production and 43.36 per cent in terms of occupied area, making it the largest

producer of mangoes in the world. China, Thailand, Mexico, Pakistan, Indonesia,

Philippines and Brazil were other important mango producers accounting for 13.48,

6.40, 5.65, 4.10, 3.79,3.64 and 3.20 per cent of the total world mango production,

respectively. Amongst the commercial producers of mango, the highest productivity

of mango was found to be in Brazil, followed by Pakistan, Mexico and China. Highest

productivity of mango was observed in Cape Verde Is. (45.00 MT/ha), followed by

Samoa (40.00 MT/ha), Guatemala (26.75 MT/ha), Palestine (25.00 mt/ha), Peru

(22.76 MT/ha) and Israel (20.00 Mt/ha). However, the productivity was lower in the

countries producing mangoes commercially. Amongst the commercial producers of

mangoes, the Brazil had highest productivity viz. 12.50 Mt/ha followed by Pakistan

(10.37 MT/ha), Mexico (8.65 Mt/ha) and China (8.56 Mt/ha). The productivity in

India was only 6.75 MT/ha, which was considerably lower vis a-vis other countries of

the world. Concerted efforts are to be made to increase the productivity of mango to

meet national standards and increase its availability for the domestic as well as export

market.

Area, Production and productivity of mango in major mango producing

countries of the world during 2011

Sl.

No.Countries

Area Production Productivity

Mill. haProp.

(%)

(Mill.

tons)

Prop.

(%)MT/ha

1 India 1.6 43.36 10.8 40.64 6.75

2 China 0.419 11.35 3.582 13.48 8.56

International Markets for Indian Mango


Funds Flow Analysis

Asian producers find it easier to expand sales to the European Union.

Europe’s acceptance of different varieties is greater, because of a large demand from

Asian immigrant groups. Phytosanitary restrictions are less stringent. Transportation

costs are not as big a factor in exporting mangoes to the European Union as in

exporting to the United States market: for example, India and Pakistan are able to

compete with non-Asian suppliers to the European Union, whereas proximity gives

Mexico and Haiti a clear advantage in supplying to the United States market.

Fifty-four percent of European Union imports enter during the periods May to

July and November to December, with peak imports in June. French imports reach

peak in April and May, whereas United Kingdom imports are concentrated during the

May to July. German imports are spread more evenly throughout the year. Of the top

suppliers, Brazil provided chiefly during the period November to December, the

United States during June to October, South Africa during January to April and

Venezuela during April to July. Pakistan supplies the majority of its exports to the

European Union during June and July; Indian exports take place mainly during the

month of May. Although a lion’s share of Indian mango goes to the Gulf countries,

efforts are being made to exploit

European, American and Asian markets. About 13,000 MT of Alphonso

variety is exported to Middle East, UK and Netherlands every year.

The different products of mango which are exported include mango chutney,

pickles, jam, squash, pulp, juice, nectar and slices. These are being exported to U.K.,

U.S.A., Kuwait and Russia. Besides these, the fresh mangoes are being exported to

Bangladesh, Bahrain, France, Kuwait, Malaysia, Nepal, Singapore and U.K.

Hyderabad, March 31: Despite an expected low production of mangoes this

year, the total exports of mangos from Andhra Pradesh is likely to see a 100 per cent

jump over last year. Unlike last year, due to adoption of better pest management

techniques and awareness of qualitative produce, the mango growers from the state

are hoping for better price realization from other countries during this season.


Funds Flow Analysis

"Last year, the total production of mangoes was about 32 lakh tonnes with

instances of three times of flowering during the season. This led to good production

but this year the output is expected to fall by about one-third over last yearand#8217;s

production," according to sources. "But low volume in production will not reflect on

the exports," said APEDA officials. However, it is too early to predict on exports. The

production is based on the rate of flowering and climatic conditions during harvest

period, they said. The reasons...

MANGO PRODUCING STATES IN INDIA

STATE/UT'S MANGO


Funds Flow Analysis

Area (ha) Prod.(Mt)ANDAMAN NICOBAR 0.30 2.60

ANDHRA PRADESH 480.40 4058.30

ASSAM 4.60 46.50

BIHAR 146.00 995.90

CHANDIGARH 0.00 0.40

CHHATISHGARH 43.30 191.80

D and N HAVELI 1.20 12.50

GOA 4.60 7.60

GUJARAT 121.50 856.70

HARYANA 9.10 64.60

HIMACHAL PRADESH 38.70 24.00

JAMMU and KASHMIR 10.70 12.10

JHARKHAND 15.10 254.30

KARNATAKA 153.80 1694.00

KERALA 63.80 373.20

MADHYA PRADESH 14.20 127.80

MAHARASHTRA 474.50 597.00

NAGALAND 0.30 0.40

ORRISA 177.60 577.50

PONDICHERRY 0.40 6.80

PUNJAB 6.40 93.50

RAJASTHAN 5.90 93.00

TAMIL NADU 132.70 636.30

TRIPURA 4.30 13.20

UTTAR PRADESH 276.40 3588.00

UTTRANCHAL 38.40 120.80

WEST BENGAL 88.10 578.00

TOTAL 2312.30 15026.80

COMPANY PROFILE


Funds Flow Analysis

History of Food and Inns Pvt. Ltd.

The division combines people with vast experience in agric-trading with

the FOODS AND INNS (P) Ltd Group’s credibility to justify its premier standing

in the trading arena. The division was set up in 1967 and since then has handled a

wide range of products - such as Sesame Seeds, Processed Fruits, Food grains,

Aqua etc.

FOODS AND INNS (P) Ltd began its fruit processing operations in early

70s.However fruit processing operations have been given a special thrust since the

last season with an emphasis on developing strategic partnerships across the value

chain especially fruit procurement and processing. FOODS AND INNS (P) Ltd has

established it's presence as a reliable and competitive exporter to Coca Cola, USA,

Western Europe, Far East, Middle East etc.

Background of Food and Inns Pvt. Ltd

Situated at Chittoor in Andhra Pradesh, the mango belt in India, FOOD

AND INNS (P) Ltd (FIL) is a 100% Export Oriented Unit (EOU) processing

Tropical Fruit Purees, Concentrates and Fresh Fruits FOOD AND INNS Ltd was

started keeping in mind the local farming community wealth. The farming

community is an integral part and forms the backbone of the organization. In its

effort to be a forerunner in the chosen areas of business in terms of best practices

in quality and technology, FIL plans to benefit armors, the industry and the nation

in a phased manner.

FOODS AND INNS Ltd believes in empowering farmers by providing

technical assistance from research institutes in the food industry to support the

farmers in achieving better quality and higher yields by developing the gardening

and harvesting techniques. Further to educating farmers with latest horticultural

techniques, FOODS AND INNS LTD is encouraging farmers to mobilize the fruits

directly to the factory, thereby minimizing the fruit handling damages and high

value realizations. The first phase has been completed, by setting up of state-of-the-

art fruit processing plant to produce natural tropical fruit puree and concentrates.


Funds Flow Analysis

Board of Directors

S. No Name of the Director

1 Field Marshal Sam Manekshaw - M.C. Chairman

2 Mr.Utsav Dhupelia Director

3 Mr. D.B. Engineer Solicitor

4 Mr.Raymond Simkins Foreign Director

5 Mr.C.M.Maniar Solicitor

6 Mr. D.D. Trivedi Ex. IIM Professor

7 Mr. M. B. Dalal Director

Mr. Utsav Dhupelia , a Chartered Accountant from U.K., looking after the

routine affairs of the company, is the brain and brawl for taking the company’s

turnover from Rs.5Crores (USD1.1 MIO) to Rs.70Crores (USD 16 MIO) giving the

status of government recognized EXPORT HOUSE.

With the back up of technical and managerial support staff, the state of art

technology implementation, innovative R and D and Lab facilities, the doyen

guidance of Mr. Utsav coupled with the contribution of other directors, the company

is poised for a steady and continuous growth graph moving upwards in all Para

meters.


Funds Flow Analysis

Market Presence

European Union

United States of America

Canada

Australia

Middle East including Iran and North Africa

Japan and South Korea

Share of Countries Market

Country Name Market Share

Europe 55%

North America and Middle East 25%

USA and Canada 10%

Japan and South Korea 10%

Facility

FOODS AND INNS Ltd processing facility is located in Chittoor, spread

over an area of 15 acres. This place has been earmarked to host Integrated Food

Complex of International standards. The facility currently has a tropical fruit Puree /

Concentrate processing plant and the pack house for preparing the Fresh Fruits and

Vegetables.

Cutting Edge Technology

FOODS AND INNS (P) Ltd plant is equipped with state-of-the-art fruit

puree processing aseptic filling line of SIG- Mizzen, Italy to produce natural fruit

pulps and concentrates. The plant has one of the India's single largest fruit

processing lines -10 TPH ripen fruit processing with Aseptic Packaging.


Funds Flow Analysis

Initiatives Span the Following DisciplinesPLC operated equipments for better control over monitoring and

operations with supervisory units.

Two stage washing of fruits to ensure HACCP quality requirement.

Two-stage sterilization to retain the natural flavor and aroma.

High speed advanced Mono block aseptic filling machine supplied by

SIG Mizzen.

Integrated Enterprise Resources Planning system is in place to automate

business processes and provide data for analysis and reporting, allowing

a closer control on quality and operations.

Efficient Plant Layout

Minimal drop in power and steam transfer.

Straight-line process flow design to maintain the hygiene• and control in

respective areas.

Special food grade self-leveling epoxy flooring to maintain optimum

hygienic conditions.

Curved corners and food grade epoxy painted walls to avoid dust

accumulation and to facilitate easy washing.

Advanced high raise insulated roofing with double layer GI Sheeting

with air extractors to maintain temperature inside the plant.

Utility lines are routed outside the plant to keep the interiors free from

dust accumulation.

Valuable Industrial Expertise

FOOD AND INNS (P) Ltd is backed with strong support and service from

its team of highly qualified technical personnel and domain experts with perceptive

knowledge and skill. Powered by priceless hands-on experience these professionals

are upgrading themselves continuously to identify and introduce improved and

innovative product offerings that would delight customers worldwide and comply

with the leading global quality standards.


Funds Flow Analysis

Pure and Concentrate Facility

The fruit processing aseptic line is from SIG-Mazzini of Italy. The line has a

capacity to process 10 metric tones per hour ripened fruits. The processing line is

fully integrated and controlled by PLC.

Pack House

FOODS AND INNS (P) Ltd has a set up a Fresh fruit and Vegetable

processing facility from Grief, Spain. Fresh fruits including mangoes, bananas are

processed along with tropical vegetables like Okra, Egg plant, Lemon, Bitter gourd

etc. The facility also holds ripening chambers, pre cooling chambers and cold

storage to handle fresh fruits and vegetables.

Vapor Heat Treatment

To enable Fresh Mango exports to countries like Japan and Korea, FOOD

AND INNS (P) Ltd has commissioned the VHT facility. This ensures irradiation of

the fruit flies in the fresh fruit. FOOD AND INNS (P) Ltd is the first private

organization to set up this facility in the country.

Water Management

Water is an essential and precious natural resource. It is a nature’s gift.

Without water there is no life on the earth. It is as important to the fruit processing

industry as to the living being. But, water is becoming scarce year by year due to

increase n its consumption in industries and agriculture sectors and indiscriminate

use /wastage by human beings, therefore, it needs a integratedand scientific approach

for its management to use it so that undesirable wastage is avoided which helps us to

save water for right utilization .

Stage of Use Of Water To The Best Effect In Our FactoryOur main source of water is bore wells. The water is potable. Water from all

bore wells is collected in a sump. From there it is pumped to over head tank to supply

to various locations of use. To manage appropriately and conserve the water, we are

taking following steps at various locations of its use:


Funds Flow Analysis

Fruit WashingThe water is re-circulated after filtration up to it becomes dirty. This water is

chl0rinated to control the contamination by continuous dosing of chlorine in the

washing tub.

Steam GenerationWater for boiler feeding is treated in water softener to reduce the hardness.

The steam condensate of evaporator is recycled to boiler to save water and energy as

condensate will have high temperature.

The Best Effect in Our Factory

Steam condensate from other heating equipments and Vapour condensate from

pulp concentration is collected in a tank to use in crate and floor cleaning.

Floor and equipments are cleaned by compressed water jet to conserve the

water.

Treated effluent is used for civil construction and gardening.

Flow meters are installed at location of major use to have control over water

utilization.

UV sterilizer is installed on main line of water, which feed to processing to

sanitize the water.

The water to be used for blending in product is treated in r o plant.

Drinking water is passed through zero-b filter.

Waste Management

Our factory is equipped with aerobic effluent treatment plant of 250kl

capacity. Effluent from all locations of water use is collected through inter connected

drains in ET plant. It is aerated here and transferred to settlement tank for

sedimentation of solid particles. The treated effluent is sent to oxidation pond. From

pond, water is used for gardening and civil construction. The sludge is transferred to

drying bed. The dried sludge is used as manure in our garden. The main feature of our

company is that no effluent treated or untreated is released in public drains and

therefore, does not pose any danger to surrounding environment and public.


Funds Flow Analysis

Solid Waste Management

Seeds of fruits

Stem ends and skin/peel of fruits and vegetables

Pumice-consists of fibbers and embedded pulp.

Spoiled fruits and vegetables

The seeds and peels of good fruits are passed second time through a pulped to

remove the remaining pulpy portion. The pulp extracted so and pumice are mixed and

given an enzymatic treatment and centrifuge to remove the extraneous materials so

that pulp can be used for making concentrate. This helps in improving the recovery

out of fruits.

Certifications Of International Quality Standards

FIL's quality and business objectives are designed to challenge the

organization through continual improvement and a zeal for results. At FIL quality

determines not only the end product but processes and operations at all levels. The

company's laboratory is equipped with the latest testing facilities to perform all

necessary tests. Frequent and stringent quality checks are carried out for Physical,

Chemical, Organoleptic and Microbial parameters and immediate corrective

measures are carried out on detection of variance in parameters, assuring a high

quality end product. As a mandatory procedure, all finished products are analyzed

with extreme care before clearance by FIL's quality assurance staff.

Our Certifications Include

HACCP (Food Safety Certification) by TUV, Germany

ISO 9001:2000 (Quality Management System) by TUV, Germany

Kosher by Star-K, USA

Sure Global Fair (SGF)

Halal Certification


Funds Flow Analysis

Mango Pulp Industry Hopes

Mango pulp production to reach 75,000 tones by 2010

Mango is raised in 36,000 hectares in chittoor district

Mango pulp processed annually is 50,000 tones

Farmers have to go to Bangalore, as there is no testing facility in Chittoor

Farmers are not getting fair price, even if there is a rise in prices in global market

Customer Focus

Loyalty and a strong relationship in business are built out of years of

experience in a particular industry. FOODS AND INNS (P) Ltd expertise in the

business and its contacts with Agents\Brokers, Blender-bottlers, End User, Off-

shore logistical service providers has made the supply chain process extremely

competitive.

Given our renewed emphasis on this product line we are strengthening

relationships in key markets across the buyer spectrum, understanding unique

requirements and delivering value to select global customers.


Funds Flow Analysis

PRODUCT PROFILE

Fruit Products

Alphonso Totapuri Guava Papaya

Products Of Vegetables

Fruit Seasons

Jan Feb Mar Apr May June July Aug Sept Oct Nov Dec

Mango

Papaya

Guava

NEED FOR THE STUDY

The sources of funds for a business could be from both the long term and short

term. Any business to survive and growth in the competitive market, funds are needed


Funds Flow Analysis

not only to meet its long-term financial needs but also short-term requirements. The

long-Term sources comprising of share capital, long term debt inclusive of debentures

etc., while the short term sources comprises of the short term loans, working capital

collection from commercial banks, loans from the call money market and among

these fall the sales which has two phases the cash sales and the credit sales.

The study is aimed at analyzing the financial position of Food and Inns P. Ltd., and

also identifying the inflow and outflows of funds i.e., source and application of funds.

This study will evaluate the way of the firm’s financial condition how effectively the

funds are mobilized and utilized in the company for the financial year ending 31.3.07,

31.3.08 and 31.3.09. 31.03.10This study will thus help the company in maintaining

better financial performance, which is followed by a blend of findings and

suggestions.


Funds Flow Analysis

OBJECTIVES OF THE STUDY

To assess the inflow and outflow of the Organization.

To study and analyze the changes those have taken place in the financial

position of the company.

To analyze the funds flow operations.

To identify sources and applications of the funds.

To find out operating efficiency of the organization.


Funds Flow Analysis

SCOPE OF THE STUDY

The scope of the study covers the previous five years financial reports of the

company.

An extensive study is done on the investment made FOOD AND INNS

PVT LIMITED on its funds flow statements and its adequacy, and the

factors determining that investment.

The study concentrates on the liquidity position of the firm and the brief

study.

The technique used by the firm of the management of its current assets and

sources though which the finance of the funds flow statement in availed

for the firm.

The study covers all the financial information of the firm.


Funds Flow Analysis

LIMITATIONS OF THE STUDY

The funds flow analysis of the organization fully depends upon the secondary

data. The primary data were used only to throw light on the company's history and

growth. Thus the following are the main limitations of the study.

These statements were over all reports (2005, 2006, 2007, 2008.2009).

Hence it is a postmortem analysis of the financial statement.

The figures taken from the financial statement like profits and loss

accounts and balance sheets were historical in nature.

Time value of money is not being considered.


Funds Flow Analysis

RESEARCH METHODOLOGY

Research Design

To analyze the working capital, trends and for the purpose of ratio analysis,

Financial Analysis has to be carried out. Financial analysis is the analysis and

interpretation of financial statements and a proper financial analysis can give the users

better insight about financial strengths and weakness of the firm. Financial analysis is

the starting point for making plans, before using any sophisticated forecasting and

planning procedure.

For the purpose first the required information has to be collected like for ratio

analysis and owing capital management analysis, income statements, trading and

profit and loss accounts, balance sheet, funds flow statement, etc. are to be collected

the, the data in the statements is to be properly organized and arranged and then

relationship is established between financial statements and finally conclusions are

drawn from the interpreted information and presented in the form of reports.

Research Methodology

Research involves getting tools, ideas from texts, journals, books, records,

Websites. The collection of data is an important aspect of Research.

The sources of information fall under two categories.

Internal Sources

Every company keeps certain records such as accounts, records, reports, etc.

These records provide sample information for research.

External Sources

When internal records are insufficient and required information is not available

the organization the organization depends on eternal sources.

The external sources of data are:

Primary Data

Secondary Data


Funds Flow Analysis

Primary Data

The data collected for a purpose in original and for the first time is known as

primary data. The data collected by the researcher himself to study a particular

problem.

The primary data of the study is collected through interaction and discussion with the

officials and the staff at FOODS AND INNS, CHITTOOR.

Secondary Data

The data which is collected from the published sources that is for the first time

is called secondary data.

The secondary data for the study is collected from the annual reports of

FOODS AND INNS from 2006 to 2009.

Data Analysis

Data analysis is done by implementing various tools like fund flow analysis,

trend analysis, etc.


Funds Flow Analysis

REVIEW OF LITERATURE

MEANING OF FUNDS FLOW STATEMENT

The basis for financial planning, analysis and decision-making is the counting

reports. Two basics financial statements prepared for the purpose of external

reporting to owners, investors and creditors are; balance sheet \annual report \

statement of financial position and profit and loss account \income statement)

THE BALANCE SHEET

The Balance sheet shows the financial condition or the state of affairs of a firm

at a particular point of time. More specifically the Balance sheet contains detailed

information about the firms Assets and Liabilities. Assets represents economic

resources possessed by the firm while the liabilities are the amounts payable by the

firm. The Balance sheet gives concise summary of firm resources and obligations and

measures the firm’s liquidity and solvency.

PROFIT AND LOSS ACCOUNTS

The profit and Loss A\c shows the profitability of the firm by giving details

about income and expenses. It is simply income and expenditure account. Revenues

are benefits, which customers contribute to the firm in exchange of goods and

services. The cost of economics resources used in providing goods and services to the

customer are called expenses. Profit and Loss Account provides a concise summary of

firm’s revenues and expenses during the period of time and measures its profitability.

The above two statements provide useful information regarding the operations

of the firm. They fail to explain the financial data required for financing and investing

decisions by the management i e causes for changes in Assets and Liabilities and

Owner’s equities. They do not indicate the movement of funds between Sources and

uses from the end of the period to the end of next periods. It is therefore, necessary to

prepare an additional called Funds Flow Statements’ to overcome the above

difficulties.


Funds Flow Analysis

FUNDS FLOW STATEMENTS

‘The statement showing the sources and Application of the funds known as

Funds Flow Statement’. It is a condensed report of the how the financial resources

have been used during the periods covered by the statement as it summarizes the

financial activities for period of time.

NEED AND IMPORTANCE OF FUNDS FLOW STATEMENT

ANALYSIS OF FINANCIAL OPERATION

A Funds Flow Statement shows how the resources have been obtained and the

uses to which they are put.

The funds statements determining the financial consequences of business

operation. It also useful ion guiding whether the firm has expanded at too fast rate and

whether financing is strained, it also point out to the effectiveness with which the

management has handled working during the period under review.

EVALUATION OF THE FIRMS

This statement can consist the financial manager in planning intermediate and

long-term finance for obtaining sources in the further and determining how they are to

be used. That is analysis of the major sources of funds in the past reveals what

positions of the firms growth was financed internally and what position externally.

COMPARISON WITH THE BUDGET

The statement defines the past flow of funds and gives insight in to the

evolution of the present situation. It provides certain useful information about the

firms. Financial policies to the outside world like bankers, government, etc;

Funds Flow statement is becoming popular with; the management because it

helps to explain why in spite of earning sizable amount of profits, the company is

experiencing difficulty in making payments to creditors, the rate of dividend on

equity; shares can not be increased and the bank balance is getting thinner.


Funds Flow Analysis

The Funds flow Statements has an analytical value and is an important

planning tool. It helps in guiding the destiny of the business by enabling the

executives to visualize the movements of funds that constantly takes place.

This statement also helpful in working capital requirements. It highlights the

future need for funds and provides sample time to work out suitable arrangements.

The funds flow statement shows what portion externally.

The analysis of funds flow statement for the future is externally available to

the executive in planning the intermediate and long term financing of the firm.

USES OF FUNDS FLOW STATEMENT

It helps in the analysis of financial operations of the company.

It reveals the financing and investing policies followed by the company.

It answers many un answered questions of general interests.

It helps in proper allocation of resources.

It is an important management tool for the financial planning.

It helps in knowing the overall credit worth users of the firm.

Procedure for Preparing Funds Flow Statement

The Fund Flow Statement consists of the following

1. Preparation of statement of changes in Working Capital.

2. Calculation of Funds / (loss) From operations.

3. Finding out the hidden transactions or changes in non-current assets and non-

current liabilities.

4. Preparation of statement showing Sources and Application of Funds.


Funds Flow Analysis

Statement of Changes of Working Capital

The increase or decrease in Working Capital can be calculated by preparing

the schedule of changes in working capital.

Working Capital represents the excess of current assets over current liabilities.

Several items of all current assets and current liabilities are the components of

Working Capital. In order to ascertain the Working Capital at the beginning and at the

end of the period and to measure the increase or decrease therein it is necessary to

prepare a Statements or Schedule of Changes Working Capital.

particulars Previous year Current

year

Effect on Working Capital

A. Current assets

Cash in hand

Cash at bank

Sundry debtors

Loans and

advances

A. Total current Assets

B.Current liabilities

Bills payable

Income tax payable

Bank OD

Provisions

Trade creditors

Rs. Rs. Increase Decrease

XXXX XXXX Rs. Rs.

XXXX XXXX

XXXX XXXX

XXXX XXXX

XXXX XXXX

XXXX XXXX

TOTAL XXXX XXXX XXX XXXX


Funds Flow Analysis

While preparing a schedule of changes in Working Capital it should be noted

that:

1. (a) An increase in Current Assets increase in Working Capital.

(b) A decrease in Current Assets decrease in Working Capital.

(c) A increase in Current Liabilities decrease in Working Capital

(d) A decrease in Current Liabilities increase in Working Capital.

(e) An increase in Current Assets and increase in Current Liabilities does not

affect Working Capital.

(f) A decrease in Current Assets and decrease in Current Liability does not affect

Working Capital.

(g) Changes in fixed (no-current) assets and fixed (non-current) liabilities affect

working capital.

2. The changes in all current assets and current liabilities are merged into one

figure only either an increase or decrease in working capital over the period

for which funds statements has been prepared. If the working capital at the

end of the period is more than the working capital at the beginning thereof.

3. The difference is expressed as’ increase in working capital’. On the other

hand, if the working capital at the end of the period is less than at the

commencement, the difference is called ‘decrease in working capital’.

Working Capital = Current Assets – Current Liabilities

Current Assets

The expression ‘current assets’ denotes those assets, which are continually on

the move. Since they are constantly in motion, they are also known as the circulating

capital of the business. These assets can or will be converted into cash during a

complete operating cycle of the business. Current Assets include.

a. Stock-in-trade or inventories

b. Debtors


Funds Flow Analysis

c. Payments in advance or prepaid expenses

d. Stores

e. Bills receivable

f. Cash at bank

g. Cash in hand

h. Work-in-progress, etc.

Current Liabilities:

‘Current liabilities’ are those liabilities, which are to be paid in the near future, i.e.,

during a complete operating cycle of the business. Such liabilities include:

a. Trade Creditors

b. Accrued or outstanding expenses

c. Bills Payable

d. Income-tax payable

e. Dividends declared

f. Bank overdraft.

Note:- Some experts are of the opinion that as bank overdraft has a tendency to

become more or less permanent source of financing, and hence it need not be included

among current liabilities.

Statement of Sources and Application of Funds

1. Funds from Operations

It is an internal source of funds. Funds from operations are to be calculated as

per the method stated above.

2. Funds from long-term loans

Long-term loans such as debentures, borrowings from financial institutions

will increase the working capital and therefore, there will be inflow of funds.


Funds Flow Analysis

However, if the debentures have been issued in consideration of some fixed assets,

there will be no inflow of funds.

3. Sale of fixed assets

Sale of land, buildings, and long-term investments will result in generation of

funds.

4. Funds from increase in share capital

Issue of shares for cash or for any other current asset or in discharge of current

liability is another sources of funds. However, shares allotted in consideration of

some fixed assets will not result in funds. However, it is recommended that such

purchase of fixed assets as well as issue of securities to pay for them be revealed in

Funds Flow Statement.

5. Decrease in Working Capital

Decrease in working capital is the result of decrease in current asset or

increase in current liabilities. In both the cases inflow of funds takes place. Suppose

stock, a current asset reduces from Rs.15,000 to Rs.12,000 the decrease of Rs.3,000 is

assumed to be due to the disposal of stock which undoubtedly brings funds into the

business. In the same way, increase in current liabilities mean lesser payment, so

retaining funds is also a source.


Funds Flow Analysis

Funds Flow Statement

Sources Rs. Applications of Funds Rs.

Issue of Shares

Issue of Debentures

Long term

Borrowings

Sale of Fixed Assets

Operating Profit

Decrease in Working

Capital

xxx

xxx

xxx

xxx

xxx

xxx

xxx

xxxx

Redemption of Redeemable

Preference Shares

Redemption of Debentures

Payment of Other Long-term loans

Purchase of Fixed Assets

Operating Loss

Payment of Dividends taxes, etc.

Increase in Working Capital (*)

xxx

xxx

xxx

xxx

xxx

xxx

xxxx

(*) Only one will be there.


Funds Flow Analysis

DATA ANALYSIS AND INTERPRETATION

STATEMENT SHOWING CHANGES IN WORKING CAPITAL OF

FOODSandINNS LTD FROM 2006-07 and 2007-08

Particulars 2006-07 2007-08 Increase Decrease

CURRENT ASSETS

Inventories 332,233,960 371,247,722 39,013,762 - - - - - - -

Sundry Debtors 722,483,822 808,181,529 85,697,707 - - - - - - -

Cash and Bank balances 143,559,640 219,098,209 7,558,659 - - - - - -

Loan and Advances 804,005,122 102,194,526 217,089,404 - - - - - -

Total Current Assets (A) 2002282544 2419622076 - - - - - -

CURRENT LIABILITIES

and PROVISIONS

Liabilities 735,857,902 698,440,243 37,417,659 - - - - - - - -

Provisions 386,040,967 553,386,010 - - - - - - - - 167,345,043

Total Current Liabilities

(B)112,189,863 1,243,129,253

Net working Capital (A-B) 880,383,675 1,176,492,823

Increase in Working Capital 296,109,148 296,109,148

TOTAL 1,176,492,823 1„ 176,492,823 314,451,140 314,451,140


Funds Flow Analysis

INTERPRETATION:

Current assets: (2006 -07 to 2007 -08)

Inventory is increased.

Sundry debtors are increased.

Cash and bank balances are increased.

Loans and advances are increased.

As per our report totally current assets is increased.

Current liabilities: (2006 -07 to 2007-08)

Current liabilities are increased.

Provisions are increased.

As per our report totally current liabilities are increased.

COMPARISION:

Current assets of 2006 -07 more than current liabilities of 2006 -07.

Current assets of 2007 -08 more than current liabilities of 2007-08.


Funds Flow Analysis

STATEMENT OF SOURCES AND APPLICATIONS OF FUNDS FOR

THE YEAR ENDING AT 31STMARCH 2006.

SOURCES AMOUNT APPLICATIONS AMOUNT

Issue of shares

Secured Loans

Differed Tax liability

20,799,300

142,596,183

1,151,273

Re pay of Un-Secured

Loans Purchase of Fixed

assets Purchase of

Investments

Work In Progress

338,938,224

1,590,197,890

152,967,291

36,539,650

Funds from

operation:

2,250,205,447 Increase in working capital 296,109,148

2,414,752,203 2,414,752,203

INTERPRETATION:

It is evident from the above table that the total flows during the period

from 2005- 06 amounts Rs. 2,414,752,203. In the total funds 1% of funds were

received through share capital, 6% of funds received through the securing loans

and the remaining 93% of funds received from funds from operation.

Regarding application of the funds the 66% were invested in fixed assets

i.e. purchase of fixed assets, 6%of funds were invested in Investments I.e.

purchase of investments, 14% funds were used to re- pay the un-secured loans,

2% were used in capital work in progress and remaining 12% were utilized for

working capital.


Funds Flow Analysis

STATEMENT SHOWING CHANGES IN WORKING CAPITAL

OF FOODS and INNS LTD FROM 2007-08 and 2008-09

PARTICULARS 2007-08 2008-09 INCREASE DECREASE

CURRENT ASSETS:

Inventories 371,247,722 457,180,349 85,932,627 -------

Sundry Debtors 835,144,733 890,363,906 55,219,173 -------

Cash and Bank balances 219,098,299 364,394,283 145,295,984 -------

Loans and Advances 994,131,322 1,835,560,490 841,429,168 -------

TOTAL CURRENT ASSETS: (A)

2,419,622,076 3,547,499,028

CURRENT LIABILITIES and PROVISIONS:

Liabilities 698,440,243 1,009,874,344 ------- 311,434,131

Provisions 553,386,010 893,076,142 ------- 339,690,132

TOTAL CURRENT LIABILITIES: (B)

1,251,826,253 1,902,950,486 ------- -------

working capital (a-b) 1,167,795,823 1,644,548,542 ------- -------

Net working capital 476,752,719 ------- 476,752,479

TOTAL 1,644,548,542 1,644,548,542 1,135,123,883 1,135,123,883


Funds Flow Analysis

INTERPRETATION:











COMPARISION:




Funds Flow Analysis

STATEMENT OF SOURCES AND APPLICATIONS OF FUNDS

FOR THE YEAR ENDING-AT 31st MARCH 2007.


Issue of shares 90,000,000 Re - pay of loans:

Differed Tax liability 14,541,818 Secured 351,256,362

Un-secured 188,575,000

Purchase of Fixed assets 3,890,424,233

Purchase of Investments 1,667,282,201

Funds from operation: 6,557,239,535 Work In Progress 87,490,838

Increase in working capital 476,752,719

6,661,781,353 6,661,781,353

INTERPRETATION:It is evident from the above table that the total flows during the period from

2006- 07 amounts Rs. 6,661,781,353. In the total funds 1.4% of funds were received

through share capital, 0.2% of funds received through the differed tax liability and the

remaining 98.4% of funds received from funds from operation.

Regarding application of the funds the 58% were invested in fixed assets i.e.

purchase of fixed assets, 25%of funds were invested in Investments I.e. purchase of

investments, 6% funds were used to re- pay the secured loans, 3% were used to re -

pay of un secured loans, 1% were used in capital work in progress and remaining 7%

were utilized for working capital.


Funds Flow Analysis


OF FOODS andINNS LTD FROM 2008-09 and 2009-10

PARTICULARS 2008-09 2009-10 INCREASE DECREASE

CURRENT ASSETS:

Inventories 457,180,349 551,945,670 94,765,321 -------

Sundry Debtors 890,363,906 978,920,391 88,556,485 -------

Cash and Bank balances 364,394,283 644,035,217 279,640,934 -------

Loans and Advances 1,835,560,490 1,847,079,300 11,518,810 -------

TOTAL CURRENT ASSETS: (A)

3,547,499,028 4,021,980,578

CURRENT LIABILITIES and PROVISIONS:

Liabilities

Provisions

1,009,874,344

893,076,142

1,254,576,474

912,057,630

-------

-------

244,702,130

18,981,488

TOTAL CURRENT LIABILITIES: (B)

1,902,950,486 2,166,634,104 ------- -------

working capital (a-b) 1,644,548,542 1,855,346,474 ------- -------

Net working capital 210,797,932 ------- ------- 210,797,932

TOTAL 1,855,346,474 1,855,346,474 532,359,479 532,359,479


Funds Flow Analysis

Interpretation:










As per our report totally current liabilities are increased

COMPARISION:

Current assets of 2008 -09more than current liabilities of 2008 -09.



Funds Flow Analysis

STATEMENT OF SOURCES AND APPLICATIONS OF FUNDS FOR THE

YEAR ENDING AT 31ST MARCH 2008.


Issue of shares 10,399,650 Purchase of Fixed assets 4,592,187,940

Loans and Advances: Purchase of Investments 499,649,066

Secured 589,904,165 Work In Progress 296,055,890

Un - Secured 24,186,000 Increase in working capital 210,797,932

Differed Tax liability 20,443,681

Funds from operation: 4,953,757,332

5,598,690,828 5,598,690,828

Interpretation:

It is evident from the above table that the total flows during the period from

2007-08 amounts Rs. 5,598,690,828. In the total funds 0.2% received from issue of

shares, 11% funds were received through secured loans, 0.5% of funds received

through the unsecured loans, 0.3% were received through differed tax liability and the

remaining 88% of funds received from funds from operation.


purchase of fixed assets, 9% were invested in Investments i.e. purchase of

investments, 5% were utilized for capital work in progress and remaining 4% of funds

were utilized for working capital.


Funds Flow Analysis


OF FOODS and INNS LTD FROM 2009-10 and 2010-11


CURRENT ASSETS

Inventories 551,945,5,670 790,890,463 238,944,793 -------

Sundry Debtors 978,920,391 1,261,586,026 282,665,635 -------

Cash and Bank balances 644,035,217 1,045,572,862 401,537,645 -------

Loan and Advances 1,847,079,300 2,721,098,393 874,019,093

Total Current Assets (A) 4,021,980,578 5,819,147,744

CURRENT LIABILITIES

and PROVISIONS

liabilities 1,254,576,474 1,402,934,365 ------- 148,357,891

b) Provisions 912,057,630 1,404,755,444 ------- 492,697,814

Total Current Liabilities (B) 2,166,634,104 2,807,689,809 ------- -------

Net working Capital (A-B) 1,855,346,474 3,011,457,935 ------- -------

Increase in Working Capital 1,156,111,461 ------- ------- 1,156,111,461

TOTAL 3,011,457,935 3,011,457,935 1,872,190,8 10 1,872,190,810


Funds Flow Analysis

INTERPRETATION:











COMPARISION:




Funds Flow Analysis

STATEMENT OF SOURCES AND APPLICATIONS OF FUNDS FOR THE

YEAR ENDING AT 31ST MARCH 2009.


Issue of shares

Secured loans

Differed Tax liability

Funds from operation:

147,571,185

1,624,446,444

19,061,407

9,400,899,786

Un- Secured loan paid

Purchase of Fixed assets

Purchase of Investments

Work In Progress Increase

in working capital

9,902,000

5,911,720,852

3,830,506,625

283,737,884

1,156,111,461

11,191,978,822 11,191,978,822

INTERPRETATION:


2008-09 amounts Rs. 11,191,978,822. In the total funds 1.3% received from issue of

shares, 14.50% funds were received through secured loans, 0.2% was received

through differed tax liability and the remaining 84% of funds received from funds

from operation.


purchase of fixed assets, 34% were invested in Investments i.e. purchase of

investments, 3% were utilized for capital work in progress and remaining 10% of

funds were utilized for working capital.


Funds Flow Analysis


OF FOODS and INNS LTDFROM 2010-11 and 2011-12

(In Millions)


CURRENT ASSETS

Inventories 790.9 1,088.4 297.5 -------

Sundry Debtors 1,261.6 1,607.4 345.8 -------

Cash and Bank balances 1,045.6 655.9 ------- 389.7

Loan and Advances 2,721.1 3,704.8 983.7 -------

Total Current Assets (A) 5819.2 7056.5

CURRENT LIABILITIES

and PROVISIONS

liabilities 1,402.9 1,536.8 ------- 133.9

Provisions 1,404.8 1,501.0 ------- 96.2

Total Current Liabilities (B) 2807.7 3037.8 ------- -------

Net working Capital (A-B) 3011.5 4018.7 ------- -------

Increase in Working Capital 1007.2 ------- ------- 1007.2

TOTAL 4018.7 4018.7 1627 1627


Funds Flow Analysis

INTERPRETATION:




Cash and bank balances are decreased.


As per our report totally current assets is increased only Loans and Advances

are decreased.





COMPARISION:




Funds Flow Analysis

STATEMENT OF SOURCES AND APPLICATIONS OF FUNDS FOR

THE YEAR ENDING AT 31ST MARCH 2010.


Issue of shares 15.5 Un- Secured loan paid 5.1

Secured loans 1443.5 Purchase of Fixed assets 6943.1

Differed Tax liability 36.9 Work In Progress 1679.8

Sale of Investments 794.3 Increase in working

Funds from operation: 7345 Capital 1007.2

9635.2 9635.2

INTERPRETATION:


2009-10 amounts Rs. 9635.2 Millions. In the total funds 0.2% received from issue of

shares, 15% funds were received through secured loans, 0.4% was received through

differed tax liability, 8.2% was received from sale of Investments and the remaining

76.2% of funds received from funds from operation.


purchase of fixed assets, 17.5% were utilized for capital work in progress and

remaining 10.5% of funds were utilized for working capital.


Funds Flow Analysis

THE STATEMENT SHOWING THE WORKING CAPITAL FROM 2008-12

Year Increase Decrease

2007-08 482,827,009 -------

2008-09 296,109,148 -------

2009-10 476,752,719 -------

2010-11 210,797,932 -------

2011-12 1,156,111,461 -------

Changes in working capital in chart form:

2007-08 2008-09 2009-10 2010-11 2011-120

200,000,000

400,000,000

600,000,000

800,000,000

1,000,000,000

1,200,000,000

1,400,000,000

482,827,009

296,109,148

476,752,719

210,797,932

1,156,111,461

CHANGES IN WORKING CAPITAL

Year

INTERPRETATION:

The above diagram clearly shows that the net working capital of the Foods and

Inns Ltd showing an increase with a decreasing trend. As the net working capital for

the year 2007-08 is 482,827,009 after 2007-08 the net working capital of the firm was

decreasing at a 4400.02, 296,109,148, after it increased to 476,752,719. Again for

next year 2010-11 the net working capital. Decreased to 210,797,932. For 2011-12 the

net working capital increased very highly to 1,156,111,461.


Funds Flow Analysis

The Statement of showing funds from Operations from 2008-20012

Year Funds from Operations Funds lost in Operations

2007-08 1,446,490,556 -------

2008-09 2,250,205,447 -------

2009-10 6,557,239,535 -------

2010-11 4,953,757,332 -------

2011-12 9,400,899,786 -------

Statement of Funds flow in the form of chart:

2007-08 2008-09 2009-10 2010-11 2011-120

1,000,000,000

2,000,000,000

3,000,000,000

4,000,000,000

5,000,000,000

6,000,000,000

7,000,000,000

8,000,000,000

9,000,000,000

10,000,000,000

1,446,490,556

2,250,205,447

6,557,239,535

4,953,757,332

9,400,899,786

STATEMENT OF FUNDS FLOW

Year

INTERPRETATION:

The above diagram clearly shows that Foods andInns Ltd funds from

operations from 2007-2012. From above we can know that funds from operation are

constantly increasing. In 2007 1,446,490,556/- were cam through funds from

operations this amount is every year increased in organization the funds from

operations amount at 2011-12 were 9,400,899,786/-.


Funds Flow Analysis

FINDINGS

In 2007-2008 the Organization again majorly funds received through

Operation activities only. In this year Foods and Inns Ltd received 98%

through funds from operations.

In 2007-2008 the Organization utilizes the funds through purchase of fixed assets. In

this period Foods and Inns Ltd spent 58% of funds for purchase of fixed assets and

25% of funds for purchase of investments.

In 2008-2009 the Organization once again major funds were received from

Operations only. In this financial year Foods and Inns Ltd received nearly

88% funds from Operational activities.

In 2008-2009 the Organization utilizes the major funds to Purchase of fixed assets. In

this period Foods and Inns Ltd spent nearly 82% funds to purchase of fixed assets.

In 2009-2010 the Organization majorly funds received from Operational

activities. In this financial year Foods and Inns Ltd received 84% of funds

through Operational activities and 14.5% were received from Secured loans.

In 2009-2010 the Organization majorly utilizes its funds for the purchase of fixed

assets and Investments. In this period Foods and Inns Ltd spent 53% of funds for

purchase of fixed assets and 34% funds are utilizes to purchase of Investments.

From 2008-2012 the Organizations working capital positions are satisfactory

at now.


Funds Flow Analysis

SUGGESTIONS

From 2008-2012 between this 5 years period the Organizations over all

financial position are good. But between this 5 years, Year - Year the amounts

having some un-certainty i.e. in 2007-08 increase in working capital amount

was 482,827,009 but in next year 2008-09 the increase decrease to

296,109,148. So management need to take a steps avoid this type of

uncertainty.

Foods and Inns Ltd mainly and majority of funds are receiving from Operation

activities only.

Foods and Inns Ltd needs to increase the share capital from this it invite the

funds from public.

Foods and Inns Ltd., needs to increase income from investment activities.


Funds Flow Analysis

CONCLUSION

It can be concluded that funds flow performance of the Organization is

reasonably satisfactory. In certain area the Organization has to focus more.

Foods and Inns Ltd is a Service Oriented Organization. In this Service motive

also the Organization are getting good financial results.


Funds Flow Analysis

BIBLIOGRAPHY

James C.Vann Home Financial Management, 9th edition Prentice - Hall of

India Private Limited, New Delhi, 1994.

Pandey I.M., Financial Management, 7th Edition, Vikas Publishing House Pvt.

Ltd., New Delhi, 1995.

Maheswari S.N., Financial Management, 4th Edition, Sultan Chand and Sons,

New Delhi. 1997.

Man Mohan and Goyal S.N., Principles of Management Accountings 6th

Edition, Sathiya Bhavan, Agra, 1998.

Prasanna Chandra, Financial Management, 3rd Edition, Tata Mc.Graw-Hill

Publishing Co., Ltd., New delhi, 1984.

Website:

www.foodsandinns.com www.google.com


Funds Flow Analysis

FOODS and INNS LTD BALANCE SHEET FOR THE YEAR ENDED 2006-07

I. Sources of funds 2007 2006

(1) Share holders funds:

Share capital A 395,186,880 395,186,880

Reserves and Surplus B 2,071,555,641 1,864,558,995

(2) Loans and Advances:

(a) Secured Loans C 916,261,993 1,118,302,314

(b) Unsecured Loans D 647,625,224 607,106,641

Deferred Tax Liability 534,498,611

TOTAL 4,565,128,349 3,985,154,830

II. Application of funds:

Fixed assets:

A) Gross Block 3,946,247,611 3,600,839,133

B) Less: Depreciation 1,232,187,391 1,061,446,007

Net Block 2,714,060,220 2,539,393,126

Capital Work In Progress 4,495,248 67,397,336

Investment 909,703,681 917,015,658

Current assets. Loans and Advances:

A) Inventories 332,233,960 292,610,725

B) Sundry Debtors 722,483,822 682,835,869

C) Cash and Bank Balance 143,559,640 95,180,182

D) Loans and Advances 804,005,122 917.015,658

Less: Current liabilities:

A) Current Liabilities 735,857,902 654,124,079

B) Provisions 386,040,967 738,083,452

Net Current Assets 880,383,675 397,556,415

Miscellaneous Expenditure 56,485,525 77,933,863

TOTAL 4,565,128,349 3,985,154,830



Funds Flow Analysis

III. Sources of funds 2008 2007


Share capital A 415,986,180 395,186,880



(a) Secured Loans C 1,058,858,176 916,261,993


Deferred Tax Liability 535,649,884 534,498,611

TOTAL 5,181,394,704 4,565,128,349

IV. Application of Funds:

Fixed assets:

A) Gross Block 4,304,258,110 3,946,247,611


Net Block 2,876,545,912 2,714,060,220


Investment 1,062,670,972 909,703,681


A) Inventories 371,247,722 332,233,960

B) Sundry Debtors 835,144,733 722,483,822


D) Loans and Advances 94,131,322 804,005,122

Less: Current liabilities and provisions:

A) Current Liabilities 698,440,243 735,857,902

B) Provisions 553,386,010 386,040,967

Net Current Assets 1,167,795,823 880,383,675


TOTAL 5,181,394,704 4,565,128,349


V. Sources of funds 2009 2008


Funds Flow Analysis

Share holders funds:

Share capital A 505,986,180 415,986,180


Loans and Advances:

707,601,814 1,058,858,176



TOTAL 7,922,720,745 5,181,394,704

VI. APPLICATION OF FUNDS

Fixed assets:

A) Gross Block 5,084,477,000 4,304,258,110


Net Block 3,401,953,855 2,876,545,912


Investment 2,729,953,179 1,062,670,972


A) Inventories 457,180,349 371,247,722

B) Sundry Debtors 890,363,906 835,144,733


D) Loans and Advances 1,835,560,490 94,131,322

Current Liabilities and Provisions:

A) Current Liabilities 1,009,874,344 698,440,243

B) Provisions 893,076,142 553,386,010

Net Current Assets 1,644,548,542 1,167,795,823


TOTAL 7,922,720,745 5,181,394,704


VII. Sources of funds 2010 2009



Funds Flow Analysis

Share capital A 584,981,080 505,986,180



(a) Secured Loans C 1,297,505,979 707,601,814



TOTAL 9,545,721,673 7,922,720,745

VIII. APPLICATION OF FUNDS

Fixed Assets

A) Gross Block 6,011,264,062 5,084,477,000


Net Block 4,028,386,328 3,401,953,855


Investment 3,229,602,239 2,729,953,179

(3) Current Assets, Loans and Advances:

A) Inventories 551,945,670 457,180,349

B) Sundry Debtors 978,920,391 890,363,906


D) Loans and Advances 1,847,079,300 1,835,560,490

(4) Current liabilities and Provisions:

A) Current Liabilities 1,254,576,474 1,009,874,344

B) Provisions 912,057,630 893,076,142



TOTAL 9,545,721,673 7,922,720,745

FOODS and INNS LTD BALANCE SHEET FOR THE YEAR ENDING 2010-11

1. Sources of funds 2011 2010



Funds Flow Analysis

Share capital A 732,552,265 584,981,080



(a) Secured Loans C 2,921,952,423 1,297,505,979



TOTAL 16,026,417,485 9,545,721,673

II. Application of funds:

Fixed Assets:

A) Gross Block 7,591,784,175 6,011,264,062


Net Block 5,243,461,170 4,028,386,328


Investment 7,060,108,864 3,229,602,239

Current Assets, Loans and Advances:

A) Inventories 790,890,463 551,945,670

B) Sundry Debtors 1,261,586,026 978,920,391

C) Cash and Bank Balance 1,045,572,862 644,035,217

D) Loans and Advances 2,721,098,393 1,847,079,300

Less: current Liabilities and Provisions

A) Current Liabilities 1,402,934,365 1,254,576,474

B) Provisions 1,404,755,444 912,057,630



TOTAL 16,026,417,485 9,545,721,673

FOODS and INNS LTD BALANCE SHEET FOR THE YEAR ENDING 2011-

2012

1. Sources of funds 2012 2011


Funds Flow Analysis

(1) Share holders fund:

Share capital A 679.5 732.6

Reserves and Surplus B 13,499.0 11,647.8

(2) Loans and Advance:

(a) Secured Loans C 4,365.5 2,922.0

(b) Unsecured Loans D 129.3 134.4

Deferred Tax Liability 626.6 589.7

TOTAL 19,299.8 16,026.4

II. Application of funds

Fixed assets:

A) Gross Block 9,406.7 7,591.8

B) Less: Depreciation 2,779.9 2,348.3

Net Block 6,626.8 5243.5

Capital Work In Progress 2,388.1 708.3

Investment 6,265.8 7,060.1

Current Assets:

A) Inventories 1,088.4 790.9

B) Sundry Debtors 1,607.4 1,261.6

C) Cash and Bank Balance 655.9 1,045.6

D) Loans and Advances 3,704.8 2,721.1

Current Liabilities:

A) Current Liabilities 1,536.8 1,402.9

B) Provisions 1,501.0 1,404.8

Net Current Assets 4,018.7 3,011.5

Miscellaneous Expenditure 0.5 3.1

TOTAL 19,299.8 16,026.4


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