FUNDS FLOW STATEMENT

INTRODUCTION

The basic financial statements i.e., the Balance Sheet and Profit & Loss A/c or Income

Statement of business reveals the net effect of various transactions on operational and financial

position of the company. The balance sheet gives a summary of the assets & liabilities of an

undertaking at a particular point of time.

There are many transactions that take place in an undertaking and which do not operate

Profit & Loss A/c. Thus another statement has to be prepared to show the change in Assets &

Liabilities from the end of one period of time to the end of another period of time. The statement

is called a statement of changes in financial position or a Funds Flow Statement.

The Funds Flow Statement is a statement which shown the movement of funds and is a

report of financial operations of business undertaking. In simple words it is a statement of

source and application of funds.

MEANING & CONCEPT OF FUNDS

The term “Fund” has been defined and interpreted differing by different experts. Broadly

the term fund refers to all the financial resource of the company on the other extreme fund has

been understood as cash only. The most acceptance meaning of the “fund” is “working capital”.

Working Capital is excess of current assents over current liability. The term fund has a

variety of meaning.

A) CASH FUND OR NARROW SENSE

In a narrow sense, funds mean only cash. ‘Cash flow statement portrays net effect of

various business transactions cash into account receipts & disbursement of cash.

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The concept of preparing funds from statement is not accepted, as there are many such

transactions that do not affect cash but represent the flow of fund.

For Ex:

Purchase of furniture on credit does not affect cash but there is flow of fund.

B) CAPITAL FUND (or) BROADER SENSE

Here funds means all financial resources used in business, whether in the form of men,

money, material, machine & others.

C). NET WORKING CAPITAL (or) POPULAR SENSE

Networking capital means differences between current assets & liabilities. A fund

generally refers to cash or cash equipment or to working capital.

In any business we cannot under estimate the flow of funds from two operations. The

business runs with funds but the organization knows how to flow of funds.

The Funds Flow Statement is concerned with sources and applications of organization.

Statement of changes in working capital shows the increase or decrease in the working

capital.

“Funds from Operations” statement shows how much funds from operations.

Funds Flow Statement

In every concern, the funds flow in form different sources and similarly funds are

invested in various sources of investment. It is continuous process. The study and control of this

funds-flow process (i.e., the uses and sources of funds) is the main objective of financial

management to assess the soundness and the solvency of the enterprise.

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The funds-flow-statement is a report on financial operations changes, flow or

movements during the period. It is a statement which shows the sources an application of funds

or it shows how the activities of a business are financed in a particulate period. In other words,

such a statement shows how the financial resources have been used during a particular period of

time. It is, thus, a historical statement showing sources and application of funds between the two

dates designed especially to analyses the changes in the financial conditions of an enterprise. In

the words of Fouke, it is-

“A statement of Sources and Application of Funds is a technical device designed to analyses

the changes in the financial condition of business enterprises between two dates.”

Funds Flow Statement is not an income statement. Income statement shows the items of

income and expenditure of a particular period, but the Funds flow statement is an operating

statement as it summaries the financial activities for a period of time. It covers all movements

that involve an actual exchange of assets.

Various titles are used for this statement such as 'Statement of sources and Application of

Funds', 'Summary of Financial operations,' 'Changes in Financial Position', 'Fund received and

Disbursed', 'Funds Generated and Expended', Changes in Working Capital”, “Statement of Fund'

etc. Title of Funds Flow Statement has been modified from time to time. Really it is very

difficult to find a short time for such statement which carries much to the readers regarding its

contents and functions.

A new interpretation of the term 'funds, has now been adopted as to include assets or

financial resourceful which do not flow through the working capital accounts. It seems to be the

most suitable meaning fort the term 'funds' but the most commonly used interpretation of the

term 'funds' is 'working capital'

Distinction Between funds Flow Statement and Balance Sheet

There is also a difference between meaning, purpose and importance of Funds Flow

Statement and Balance Sheet although both are prepared with the same accounting data.

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A summary of main points of differences between these two is give below:-

a) Balance sheet is a statement showing the financial position of the concern on a particular

date. The asset side portrays the development of resources in various types of properties a

liabilities side indicates the manner in which these resources are obtained. It shows all

assets and liabilities whether current or fixed, tangible or intangible etc., while Funds

Flow Statement shows the changes in current assets an current liabilities during a

particular period of time.

b) Balance Sheet shows the total financial position on a particular date and in this way, it is

of a historical nature and therefore, its utility is very limited for the management. On the

other hand, Funds Flow Statement is a comparative statement of assets and liabilities and

depicts the changes in working capital during the period of two Balance sheets.

c) Funds Flow Statement is an analysis and control device for the management.

Management can ensure the long term on the short term solvency of the firm by studying

the internal funds flow cycles. It is a modern technique of knowing the inflows and

outflows of funds during a particular period. Balance Sheet represents the balance of

various assets and liabilities and does not present analysis of any kind.

d) There are two views of h financial position of the firm-long term a short-term. Short-

term financial position means the technical solvency of the firm in the near future while

on the other hand, long-term financial position means future financial structure of the

firm. Both are inter-relate but there is a differences in their analysis. The short-term view

of the financial position of the firm ca not is had from the Balance Sheet.

Distinction between funds flow statement and cash flow statement

We have fully explained the meaning and importance of both the statements-Funds Flow

a Cash Flow statements.

A distinction between these two statements may be briefed as under:-

(I) Funds Flow Statement am concerned with all items constituting funds (Working

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Capital) for the business while Cash Flow Statement deals only with cash transactions. In

other words, a transaction affecting working capital other than cash will affect Funds

statement, and not the Cash Flow Statement.

(ii) In Funds Flow Statement, net increase or decrease in working capital is recorded

while in Cash Flow Statement; individual item involving cash is taken into account.

(iii) Funds Flow statement is started with the opening cash balance and closed with the

closing cash balance records only cash transactions.

(iv) Cash Flow Statement is started with the opening cash balance and closed with ht

closing cash balance while there a no opening or closing balances in Funds Flow

Statement.

A fund flow statement, better known as a cash flow statement, is an important document

in the accounting world. A fund flow statement shows a company's inflows and outflows of

funds. It is used to show investors, stakeholders or owners where the company's money came

from and where it went.

RULE

The flow of funds occurs when a transaction changes on one hand a non-current A/c and

on the other a current A/c and Vice-versa. According to working capital concept of funds the

term “Flow o Funds” return to movement of funds in working capital.

If any transaction results in increase in working capital.It is said to be a “source” or

“inflow of funds” and if it results in decrease of working capital, it is said to be “application” or

“out flow of funds”.

CURRENT ASSETS

Current Assets are those assets, which in the ordinary course of business can be or will be

converted into cash within a short period of normally one accounting year.

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CURRENT LIABILITIES

Current liabilities are those liabilities which are intended to be paid in ordinary course of

business with in short period of normally one accounting year out of the current assets or the

income of the business.

Differences between current liabilities & current assets

CURRENT LIABILITIES CURRENT ASSETS

1. Bills Payable 1. Cash in Hand

2. Sundry Creditors 2. Cash at Bank

3. Accrued or O/s Expenses 3. Bills Receivable

4. Dividends Payable 4. Sundry Debtors or A/c’s receivable

5. Bank Overdraft 5. Short term loans & advances

6. Short term loans, advances & deposits 6. Short term investment

7. Provision for taxation. 7. Inventories or stock

8. Proposed Dividend 8. Prepaid Expenses

9. Accrued incomes.

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MEANING & DEFINITION OF FUNDS FLOW STATEMENT

Funds Flow Statement is a method by which we study changes in the financial position of

business enterprise beginning & ending financial statement dates. It is a statement showing

sources & uses of funds for a period of time.

FOUIKE DEFINES

“A statement of sources & application of funds is technical devices designed to analyses

the changes in the financial condition of business enterprise between two dates’

ANTHONY DEFINES

“The Funds Flow Statement describes the sources from which additional funds were

derived and the use to which these sources were put.

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NEED AND IMPORTENCE OF STUDY

Many business owners disregard the importance of Funds flow statements because they

unwittingly believe that their current financial standing can be construed from other financial

reports and projections. Unfortunately, however, a Funds flow statement is necessary to

adequately assess the incoming and outgoing flow of Funds and other resources in a business.

Not only will a business owner with a Funds flow system be more aware of his or her

financial standing, but it will also help investors to make educated decisions on future

investments. A business with regular and reliable Funds flow statements shows more economic

solvency, and is more attractive to investors.

A Funds flow statement documents the incoming and outgoing Funds in plain terms.

Future sales and sales made for credit (unless they have been paid off) are not included in the

funds flow statement, and most of the data will come from core operations. Payables and

receivables should be expressly defined, as should depreciation of product value and inventory

that has not yet been moved.

This will allow a business owner to compare past periods with the current financial

standing and determine whether your receivables have increased or decreased.

This can also help to track your investments next to your receivables and payables. Are

your investments increasing or decreasing in value? And has your inventory moved at a steady

pace? New or expanding businesses can expect to see a decrease in Funds flow, but this doesn’t

mean that the business is going under. More stables businesses should see a steadily increase in

Funds flow over a period of several months or years.

There are typically five different sections in a Funds flow statement, though large

businesses might have more complex Funds flow systems as required.

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OBJECTIVES OF THE STUDY

(a) To know the operational efficiency of Zuari cements Ltd

(b) To study & prepare Funds Flow Statements.

(c) To analyze the movement of funds between the dates of two balance sheets in period

of study 2010-2014.

(d) To identify the changes in the elements of focus and uses of working capital in

between above mentioned year.

(e) To improve the financial performance of the company.

RESEARCH METHODOLOGY

PRIMARY DATA

The present study is mainly based on primary and secondary sources of Data collection.

The primary data was directly collected by observations, Interviews questionnaire etc.

SECONDARY DATA

The secondary data was collected form already published sources such as annual reports,

returns and internal records.

THE DATA COLLECTION INCLUDES

a. Data collected from annual reports of Zuari cements Ltd.

b. Reference form textbooks relating to financial management.

RESEARCH TOOLS: Funds Flow Statement

Tools of Analysis

Various statistical tools such as percentages averages were used to process the date, of

effectiveness of funds flow in organization & management in Zuari cements Ltd.

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Research Design: Analytical Study

Data Sources : Secondary Data

SCOPE OF THE STUDY

Financial analysis consists of ratio analysis and funds flow analysis. To know funds flow

from one to one, as the time available is very li8mite3d and the subjects are very vast, the study

is continued to overall financial condition of a firm. This study is to know working capital

increase or decrease funds from operation, sources and application of funds of M/S Zara

cements Ltd.

Financial analysis consists of funds flow analysis. To know funds flow from one to one,

as the time available is very limited and study is continued to overall financial condition of a

firm. The study to know working capital increase or decrease, funds from operation, source and

application of funds

LIMITATIONS OF THE STUDY:

The study is only pertaining to Zuari cements Ltd.

(a) The period of study is of 5 years and the performance evaluation is also limited to 5

years.

(b) The study is purely based on the data available the form of annual reports...

(c) Analysis is only means and not an end itself; different people interpret the same

analysis in different ways.

(d) The overall financial performance is taken into consideration without taking into

account the minute values or individual values.

ORGANIZATION OF THE STUDY

Organization of the study deals with the arrangement of the entire study10

Chapter-I:

It Deals with need and Importance, Object of the study and scope of the study and also

the methodology of the study and limitations of the study.

Chapter-II:

Present frame work regarding research design of the study

Explore a Study on funds flow Statement in Zuari cements Ltd, Hyderabad.

Chapter-III:

The profile of the company:

It explains the total process of organization and also the history including the future in the

organization

Chapter-IV:

Data Analysis and Interpretation:

It explains the total Practical analysis of our raw data given by the organization with the

help of formulas and theory’s.

Chapter-V:

Highlight summary of findings and conclusions

INDUSTRY PROFILE

Cement industry in India

Introduction

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The Indian cement industry is directly related to the country's infrastructure sector and

thus its growth is paramount in determining the development of the country. With a current

production capacity of around 366 million tons (MT), India is the second largest producer of

cement in the world and fueled by growth in the infrastructure sector, the capacity is expected to

increase to around 550 MT by FY20.

India has a lot of potential for development in the infrastructure and construction sector

and the cement sector is expected to largely benefit from it. Some of the recent major

government initiatives such as development of 100 smart cities are expected to provide a major

boost to the sector.

Expecting such developments in the country and aided by suitable government foreign

policies, several foreign players such as the likes of Lafarge, Holmic and Vicar have invested in

the country in the recent past. Another factor which aids the growth of this sector is the ready

availability of the raw materials for making cement, such as limestone and coal.

Market Size

According to data released by the Department of Industrial Policy and Promotion (DIPP),

cement and gypsum products attracted foreign direct investment (FDI) worth US$ 2,984.29

million between April 2000 and September 2014.

In India, the housing sector is the biggest demand driver of cement, accounting for about

67 per cent of the total consumption. The other major consumers of cement include infrastructure

at 13 per cent, commercial construction at 11 per cent and industrial construction at nine per

cent.

To meet the rise in demand, cement companies are expected to add 56 MT capacities

over the next three years. The cement capacity in India may register a growth of eight per cent by

next year end to 395 MT from the current level of 366 MT. It may increase further to 421 MT by

the end of 2017. The country's per capita consumption stands at around 190 kg.

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A total of 188 large cement plants together account for 97 per cent of the total installed

capacity in the country, while 365 small plants account for the rest. Of these large cement plants,

77 are located in the states of Andhra Pradesh, Rajasthan and Tamil Nadu. The Indian cement

industry is dominated by a few companies. The top 20 cement companies account for almost 70

per cent of the total cement production of the country.

Investments

On the back of growing demands, due to increased construction and infrastructural activities,

the cement sector in India has seen many investments and developments in recent times. Some of

them are as follows:

Lafarge and Holmic plans to request for the European Commission's approval for their

possible merger. The two companies had earlier unveiled plans in April 2014 to create

the world's biggest cement group with US$ 44 billion in yearly sales.

JSW cement plans to enter the Kerala market to cash in on the construction frenzy in the

state. JSW is presently building three million tons per annum (MTPA) capacity plant at

Chitrapur in Karnataka to add to the current 5.4 MTPA capacity in South India.

Zuari Cement through its subsidiary Gulbarga Cement Limited (GCL) plans to set up a

3.23 MT cement plant in Gulbarga, Karnataka. The company along with the cement plant

is setting up a 50 MW captive power plant in the region.

Malabar Cements plans to set up an automated cement handling and bagging unit as well

as raw materials import facility in the Kochi port. Malabar Cements has projected a

minimum throughput of 300,000 tons per annum which can be extendable up to 600,000

tons per annum, apart from intermediate products and raw materials such as clinker,

limestone and coal.

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Reliance Cement Company (RCC), a subsidiary of Reliance Infrastructure, has entered

into the cement market of Bihar where the demand for the building material is on the rise

due to a realty boom. RCC presently has plants with total installed capacity of 5.8 MTPA.

Government Initiatives

In the 12th Five-year Plan, the government plans to increase investment in infrastructure

to the tune of US$ 1 trillion and increase the industry's capacity to 150 MT.

The Cement Corporation of India (CCI) was incorporated by the Government of India in

1965 to achieve self-sufficiency in cement production in the country. Currently, CCI has 10 units

spread over eight states in India.

In order to help the private sector companies thrive in the industry, the government has been

approving their investment schemes. Some such initiatives by the government in the recent past

are as follows:

The Andhra Pradesh State Investment Promotion Board (SIPB) has approved proposals

worth Rs 9,200 core (US$ 1.48 billion) including three cement plants and concessions to

Hero Monocarp project. The total capacity of these three cement plants is likely to be

about 12 MT per annum and the plants are expected to generate employment for nearly

4,000 people directly and a few thousands more indirectly.

India has joined hands with Switzerland to reduce energy consumption and develop

newer methods in the country for more efficient cement production, which will help India

meet its rising demand for cement in the infrastructure sector.

The Government of India has decided to adopt cement instead of bitumen for the

construction of all new road projects on the grounds that cement is more durable and

cheaper to maintain than bitumen in the long run.

Road Ahead

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With the Government of India providing a boost to the infrastructure and various housing

projects coming up in urban as well as rural areas, the cement sector has enough scope for

development in the future.

Market Size

The Indian cement sector is expected to witness positive growth in the coming years,

with demand set to increase at a CAGR of more than 8 per cent in the period FY 2013-14 to FY

2015-16, according to the latest report titled ‘Indian Cement Industry Outlook 2016’ by market

research consulting firm RNCOS. The report further observed that India’s southern region is

creating the maximum demand for cement, which is expected to increase more in future.

The cement and gypsum products sector has attracted foreign direct investments (FDI)

worth US$ 2,656.29 million in the period April 2000–August 2013, according to data published

by the Department of Industrial Policy and Promotion (DIPP).

Investments

Prism Cement Ltd has become the first Indian company to get the Quality Council of

India's (QCI) certification for its ready-mix concrete (RMC) plant in Kochi, Kerala. The

company received the certification from Institute for Certification and Quality Mark

(ICQM), a leading Italian certification body authorized to oversee QCI compliance.

UltraTech Cement, an Adyta Birla Group Company, has acquired the 4.8 million tons per

annum (MTPA) Gujarat unit of Jayvee Cement Corp for Rs 3,800 core (US$ 595.61

million).

ACC Ltd plans to invest Rs 3,000 core (US$ 470.22 million) to expand its capacity by

nearly 4 MT a year in three eastern region states, over the next three years.

Reliance Cements Co Put Ltd will set up a 3 MTPA grinding unit at an estimated cost of

Rs 600 crore (US$ 94.04 million). The unit is likely to come up at Raghunathpur in

Perugia, West Bengal.

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Reliance Cement Co, a special purpose vehicle (SPV) of Reliance Infrastructure Ltd, is

commissioning its first 5 MTPA plant in Madhya Pradesh. The project has been

implemented at a cost of approximately Rs 3,000 crore (US$ 470.22 million).

Zuari Cement plans to set up a cement grinding unit at Audi (Amerada) and Shingadgaon

villages in Sholapur, Maharashtra. The new unit will have a production capacity of 1

MTPA and is expected to be operational by the second quarter of 2015.

JSW Steel has acquired Heidelberg Cement India's 0.6 MTPA cement grinding facility in

Raged, Maharashtra, for an undisclosed amount.

Government Initiatives

Giving impetus to the market, the Indian government plans to roll out public-private

partnership (PPP) projects worth Rs 1 trillion (US$ 15.67 billion) over the next six months. The

Principal Secretary in the Prime Minister's Office (PMO) will monitor these projects.

Also, the steering group appointed by Dr Man Mohan Singh, Prime Minister of India, to

accelerate infrastructure investments, has set deadlines for the awarding of projects such as

Mumbai rail corridor and Navy Mumbai Airport, among others.

The Goa State Pollution Control Board (GSPCB) has signed a memorandum of

understanding (Moue) with Vasavdatta Cement, a company with its plant in Karnataka. The firm

would use the plastic waste collected by the state agencies and village panchayats from Goa as

fuel for its manufacturing plant.

Road Ahead

The globally-competitive cement industry in India continues to witness positive trends

such as cost control, continuous technology up gradation and increased construction activities.

Furthermore, major cement manufacturers in India are progressively using other

alternatives such as bioenergy as fuel for their kilns. This is not only helping to bring down

production costs of cement companies, but is also proving effective in reducing emissions.16

With the ever-increasing industrial activities, real estate, construction and infrastructure,

in addition to the various Special Economic Zones (SEZs) being developed across the country,

there is a demand for cement.

It is estimated that the country requires about US$ 1 trillion in the period FY 2012-13 to

FY 2016-17 to fund infrastructure such as ports, airports and highways to boost growth, which

promises a good scope for the cement industry.

The 4th Annual India Cement Sector Business Sentiment Survey is nearly out and the

India Construction & Building Materials Journal provides the opportunity of an exclusive look at

the survey’s results before their sharing with the wider audiences. We are glad to be able to

present here some of the survey highlights and provide our readers with before-hand data

regarding the views and expectations of cement industry professionals.

Continues to be the name of the game for the Indian cement industry a function of long-

term trends as well as human nature. But on a closer look, the survey shows that the optimism

only runs skin deep and that it has already been eroded by an increasing percentage of industry

members who feel dissatisfied with the overall performance of the field last year.

For instance, the percentage of those who believe the industry performed “well” dropped

from 43 percent in 2012 to 26 percent in 2013, while the number of respondents who believe the

industry performed poorly almost tripled from 8 percent last year to 22 percent in 2013.

Regarding the future evolution of the industry, survey participants continue to be on the

optimistic side and hope for a “somewhat better” or “much better” performance compared to the

last 6 months.

China tackles pollution and overcapacity

2013 has been the year that China's central planners took action against cement

production overcapacity and pollution. Consolidation plans for the industry followed falling

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profits for cement producers in 2012. However, record air pollution levels in Beijing in early

2013 shut the city down, raised public awareness and gave the government a strong lever to

encourage further industry consolidation through environmental controls. By the middle of year

profits of major producers were up but production was also up. Finally in December 2013, China

started to launch its emissions trading schemes (ETS), led by Guangdong province, to create

what will be the second largest carbon market in the world after the EU ETS.

India faces a sticky wicket

Meanwhile, the world's second largest cement producing country has faced poor profits

and growth for cement producers blamed on paltry demand, piddling prices and proliferating

production costs. Compounding that, the Indian Rupee fell to a historic low relative to the US

Dollar in mid-2013, further putting pressure on input costs. Holcim reacted to all of this by

releasing plans to simplify its presence in the country between Holmic India, Abuja and ACC.

Sub-Saharan Africa draws up the battle lines

Competition in sub-Saharan Africa is set to intensify when Nigeria's Denote Cement

opens its first cement plant in South Africa in early 2014. It is the first time Africa's two largest

cement producers, Denote and South Africa's PPC, will produce cement in the same country.

Future clashes will follow across the region as each producer increasingly advances toward the

other.

The Kingdom needs cement... and workers

Saudi Arabian infrastructure demands have created all sorts of reverberations across the

Middle Eastern cement industry and beyond as the nation pushes on to build its six 'economic'

cities amongst other projects. Back in April 2013 King Abdullah bin Abdul-Aziz Al Saud of

Saudi Arabia issued an edict ordering the import of 10Mt of cement. Then some producers

started to report production line shutdowns in the autumn of 2013 as they buckled under the

pressure, although they consoled themselves with solid profit rises. Now, cement sales have

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fallen following a government crackdown on migrant workers that has hit the construction

sector.

Competition concerns in Europe

Europe may be slowly emerging from the economic gloom but anti-trust regulators have

remained vigilant. An asset swap between CEMEX and Holmic over units in the Czech

Republic, Germany and Spain has received attention from the European Commission. In the UK

the Competition Commission has decreed that further action is required for the cement sector

following the creation of new player Hope Construction Materials in 2012. Lafarge Tarmac may

now have to sell another one of its UK cement plants to increase more competition into the

market. Elsewhere in Europe, Belgium regulators took action in September 2013 and this week

we report on Polish action against cartel-like activity.

Don't forget South-East Asia, Brazil or Russia!

Growth continues to dominate these regions and major sporting tournaments are on the

way in Brazil and Russia, further adding to local cement demand. Votorantim may have

cancelled its US$4.8bn initial public offering in August 2013 but it is still has the highest cement

production capacity in Brazil. Finally, Indonesia may not have had any 'marquee' style story to

sum up 2013 but it continues to regularly announce cement plant builds. In July 2013 the

Indonesian Cement Association announced that cement sales growth had fallen to 'just' 7.5% for

the first half of 2013.

In the most general sense of the word, cement is a binder, a substance which sets and

hardens independently, and can bind other materials together. The word "cement" traces to the

Romans, who used the term "opus caementicium" to describe masonry which resembled concrete

and was made from crushed rock with burnt lime as binder. The volcanic ash and pulverized

brick additives which were added to the burnt lime to obtain a hydraulic binder were later

referred to as cementum, cemented, cement and cement. Cements used in construction are

characterized as hydraulic or non-hydraulic.

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The most important use of cement is the production of mortar and concrete the bonding

of natural or artificial aggregates to form a strong building material which is durable in the face

of normal environmental effects.

Concrete should not be confused with cement because the term cement refers only to the

dry powder substance used to bind the aggregate materials of concrete. Upon the addition of

water and/or additives the cement mixture is referred to as concrete, especially if aggregates have

been added.

It is uncertain where it was first discovered that a combination of hydrated non-hydraulic

lime and a pozzolan produces a hydraulic mixture (see also: Pozzolanic reaction), but concrete

made from such mixtures was first used on a large scale by engineers. They used both natural

pozzolans (tress or pumice) and artificial pozzolans (ground brick or pottery) in these concretes.

Many excellent examples of structures made from these concretes are still standing, notably the

huge monolithic dome of the Pantheon in Rome and the massive Baths of Caracalla. The vast

system of Roman aqueducts also made extensive use of hydraulic cement. The use of structural

concrete disappeared in medieval Europe, although weak pozzolanic concretes continued to be

used as a core fill in stone walls and columns.

Modern cement

Modern hydraulic cements began to be developed from the start of the Industrial

Revolution (around 1800), driven by three main needs:

Hydraulic renders for finishing brick buildings in wet climates

Hydraulic mortars for masonry construction of harbor works etc, in contact with sea water.

Development of strong concretes.

In Britain particularly, good quality building stone became ever more expensive during a

period of rapid growth, and it became a common practice to construct prestige buildings from the

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new industrial bricks, and to finish them with a stucco to imitate stone. Hydraulic lines were

favored for this, but the need for a fast set time encouraged the development of new cements.

Most famous was Parker's "Roman cement." This was developed by James Parker in the 1780s,

and finally patented in 1796. It was, in fact, nothing like any material used by the Romans, but

was”Natural cement" made by burning sectarian - nodules that are found in certain clay deposits,

and that contain both clay minerals and calcium carbonate. The burnt nodules were ground to a

fine powder. This product, made into a mortar with sand, set in 5–15 minutes. The success of

"Roman Cement" led other manufacturers to develop rival products by burning artificial

mixtures of clay and chalk.

John Seaton made an important contribution to the development of cements when he was

planning the construction of the third Eddy stone Lighthouse (1755-9) in the English Channel.

He needed a hydraulic mortar that would set and develop some strength in the twelve hour period

between successive high tides. He performed an exhaustive market research on the available

hydraulic lines, visiting their production sites, and noted that the "hydraulicity" of the lime was

directly related to the clay content of the limestone from which it was made. Seaton was a civil

engineer by profession, and took the idea no further. Apparently unaware of Seaton’s work, the

same principle was identified by Louis Vicar in the first decade of the nineteenth century. Vicar

went on to devise a method of combining chalk and clay into an intimate mixture, and, burning

this, produced”artificial cement" in 1817. James Frost, working in Britain, produced what he

called "British cement" in a similar manner around the same time, but did not obtain a patent

until 1822. In 1824, Joseph Aspin patented a similar material, which he called Portland cement,

because the render made from it was in color similar to the prestigious Portland stone.

All the above products could not compete with lime/pozzolan concretes because of fast-

setting (giving insufficient time for placement) and low early strengths (requiring a delay of

many weeks before formwork could be removed). Hydraulic lines, "natural" cements and

"artificial" cements all rely upon their belie content for strength development. Belie develops

strength slowly. Because they were burned at temperatures below 1250 °C, they contained no

elite, which is responsible for early strength in modern cements. The first cement to consistently

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contain elite was made by Joseph Aspin’s son William in the early 1840s. This was what we call

today "modern" Portland cement. Because of the air of mystery with which William Aspin

surrounded his product, others (e.g. Vicar and I C Johnson) have claimed precedence in this

invention, but recent analysis of both his concrete and raw cement have shown that William

Aspin’s product made at North fleet, Kent was a true elite-based cement. However, Aspin’s

methods were "rule-of-thumb": Vicar is responsible for establishing the chemical basis of these

cements, and Johnson established the importance of sintering the mix in the kiln.

William Aspin’s innovation was counter-intuitive for manufacturers of "artificial

cements", because they required more lime in the mix (a problem for his father), because they

required a much higher kiln temperature (and therefore more fuel) and because the resulting

clinker was very hard and rapidly wore down the millstones which were the only available

grinding technology of the time. Manufacturing costs were therefore considerably higher, but the

product set reasonably slowly and developed strength quickly, thus opening up a market for use

in concrete. The use of concrete in construction grew rapidly from 1850 onwards, and was soon

the dominant use for cements. Thus Portland cement began its predominant role. It is made from

water and sand

Types of modern cement

Portland cement

Cement is made by heating limestone (calcium carbonate), with small quantities of other

materials (such as clay) to 1450°C in a kiln, in a process known as calcinations, whereby a

molecule of carbon dioxide is liberated from the calcium carbonate to form calcium oxide, or

lime, which is then blended with the other materials that have been included in the mix . The

resulting hard substance, called 'clinker', is then ground with a small amount of gypsum into a

powder to make 'Ordinary Portland Cement', the most commonly used type of cement (often

referred to as OPC).

22

Portland cement is a basic ingredient of concrete, mortar and most non-specialty grout.

The most common use for Portland cement is in the production of concrete. Concrete is a

composite material consisting of aggregate (gravel and sand), cement, and water. As a

construction material, concrete can be cast in almost any shape desired, and once hardened, can

become a structural (load bearing) element. Portland cement may be gray or white.

Portland cement blends

These are often available as inter-ground mixtures from cement manufacturers, but

similar formulations are often also mixed from the ground components at the concrete mixing

plant.

Portland blast furnace cement contains up to 70% ground granulated blast furnace slag, with

the rest Portland clinker and a little gypsum. All compositions produce high ultimate strength,

but as slag content is increased, early strength is reduced, while sulfate resistance increases and

heat evolution diminishes. Used as an economic alternative to Portland sulfate-resisting and low-

heat cements.

Portland flash cement contains up to 30% fly ash. The fly ash is pozzolanic, so that ultimate

strength is maintained. Because fly ash addition allows lower concrete water content, early

strength can also be maintained. Where good quality cheap fly ash is available, this can be an

economic alternative to ordinary Portland cement.

Portland pozzolan cement includes fly ash cement, since fly ash is a pozzolan, but also includes

cements made from other natural or artificial pozzolans. In countries where volcanic ashes are

available (e.g. Italy, Chile, Mexico, and the Philippines) these cements are often the most

common form in use.

Portland silica fumes cement. Addition of silica fume can yield exceptionally high strengths,

and cements containing 5-20% silica fume are occasionally produced. However, silica fume is

more usually added to Portland cement at the concrete mixer.

23

Masonry cements are used for preparing bricklaying mortars and stuccos, and must not be used

in concrete. They are usually complex proprietary formulations containing Portland clinker and a

number of other ingredients that may include limestone, hydrated lime, air entertainers, retarders,

water proofers and coloring agents. They are formulated to yield workable mortars that allow

rapid and consistent masonry work. Subtle variations of Masonry cement in the US are Plastic

Cements and Stucco Cements. These are designed to produce controlled bond with masonry

blocks.

Expansive cements contain, in addition to Portland clinker, expansive clinkers (usually

sulfoaluminate clinkers), and are designed to offset the effects of drying shrinkage that is

normally encountered with hydraulic cements. This allows large floor slabs (up to 60 m square)

to be prepared without contraction joints.

White blended cements may be made using white clinker and white supplementary materials

such as high-purity met kaolin.

Colored cements are used for decorative purposes. In some standards, the addition of pigments

to produce "colored Portland cement" is allowed. In other standards (e.g. ASTM), pigments are

not allowed constituents of Portland cement, and colored cements are sold as "blended hydraulic

cements".

Very finely ground cements are made from mixtures of cement with sand or with slag or other

pozzolan type minerals which are extremely finely ground together. Such cements can have the

same physical characteristics as normal cement but with 50% less cement particularly due to

their increased surface area for the chemical reaction. Even with intensive grinding they can use

up to 50% less energy to fabricate than ordinary Portland cements.

Non-Portland hydraulic cements

Pozzuoli-lime cements. Mixtures of ground pozzolan and lime are the cements used by the

Romans, and are to be found in Roman structures still standing (e.g. the Pantheon in Rome).

24

They develop strength slowly, but their ultimate strength can be very high. The hydration

products that produce strength are essentially the same as those produced by Portland cement.

Slag-lime cements. Ground granulated blast furnace slag is not hydraulic on its own, but is

"activated" by addition of alkalis, most economically using lime. They are similar to pozzolan

lime cements in their properties. Only granulated slag (i.e. water-quenched, glassy slag) is

effective as a cement component.

Super sulfated cements. These contain about 80% ground granulated blast furnace slag, 15%

gypsum or anhydrite and a little Portland clinker or lime as an activator. They produce strength

by formation of ettringite, with strength growth similar to a slow Portland cement. They exhibit

good resistance to aggressive agents, including sulfate.

Calcium aluminates cements are hydraulic cements made primarily from limestone and

bauxite. The active ingredients are monocalcium aluminates CaAl2O4 (CA · Al2O3 or CA in

Cement chemist notation, CCN) and magenta Ca12Al14O33 (12 CA · 7 Al2O3, or C12A7 in CCN).

Strength forms by hydration to calcium aluminates hydrates. They are well-adapted for use in

refractory (high-temperature resistant) concretes, e.g. for furnace linings.

Calcium sulfoaluminate cements are made from clinkers that include ye'elimite (Ca4

(AlO2)6SO4 or C4A3 in Cement chemist's notation) as a primary phase. They are used in

expansive cements, in ultra-high early strength cements, and in "low-energy" cements. Hydration

produces ettringite, and specialized physical properties (such as expansion or rapid reaction) are

obtained by adjustment of the availability of calcium and sulfate ions. Their use as a low-energy

alternative to Portland cement has been pioneered in China, where several million tons per year

are produced. Energy requirements are lower because of the lower kiln temperatures required for

reaction, and the lower amount of limestone (which must be endothermic ally decarbonizes) in

the mix. In addition, the lower limestone content and lower fuel consumption leads to a CO2

emission around half that associated with Portland clinker. However, SO2 emissions are usually

significantly higher.

25

"Natural" Cements correspond to certain cements of the pre-Portland era, produced by burning

argillaceous limestone at moderate temperatures. The level of clay components in the limestone

(around 30-35%) is such that large amounts of belie (the low-early strength, high-late strength

mineral in Portland cement) are formed without the formation of excessive amounts of free lime.

As with any natural material, such cements have highly variable properties.

Geopolymer cements are made from mixtures of water-soluble alkali metal silicates and

aluminosilicate mineral powders such as fly ash and met kaolin.

COMPANY PROFILE

26

Italcementi Group History

Founded in 1864, Italcementi was quoted for the first time on the stock markets, at the

Milan Stock Exchange, in 1925, under the name of “Societal Bergamasca per la Fabrication del

Cement e Della Calve Idraulica” and has been operating since 1927 under the name of

Italcementi Spa.

Zuari Cement is part of the Italcementi Group, the fifth largest cement producer in the

world and the biggest in the Mediterranean region. With net sales over 6 billion Euros in 2009

and a capacity of 70 million tones. Italcementi Group combines the expertise, know-how and

culture of a number of companies from more than 22 countries in 4 continents. This includes an

industrial network of 63 cement plants, 15 grinding centers, 5 terminals, 134 aggregates quarries

and 613 concrete batching units. In India, with its inherent strengths, Italcementi Group's Zuari

Cement is committed to give the building industry cement that is truly international.  

A commitment to customer satisfaction has seen Zuari Cement grow from a modest 0.5

million ton capacity in 1995 to 3.5 million ton today. Zuari Cement is in the process of

increasing this capacity to 6 million ton by 2009 through setting up of a new 5500 ton per day

clinker line at Yerraguntla and a grinding center at Chennai. A captive power plant with a

capacity of 43 MW has already been set up at the Company's cement manufacturing facility at

Sitapuram.

With a 6% market share in the south Indian cement market and sales of about Euro 188

million in 2009, Zuari Cement has chalked out ambitious plans for the future. This includes

strengthening its presence in the Maharashtra, Orissa and West Bengal markets. While

technology is just one of its strengths, there are many other factors that contribute equally to

Zuari's success.  These include a high-level organization and decentralized quality assurance

teams to guarantee the full compliance with the customers' expectations.

27

Our History

Strong foundations for a company of strength.

Zuari entered the Cement business in 1994 to operate the Texaco Cement Plant. In 1995,

Texaco’s Plant at Yerraguntla was taken over by Zuari and a Cement Division was formed. The

fledging unit came into its own in the year 2001 when Zuari Industries entered into a Joint

Venture with the Italcementi Group, the 5th largest producer of Cement in the world, Zuari

Cement Limited was born. Zuari Cement took over Sri Vishnu Cement Limited in 2002. Today,

the Company is amongst the topmost cement produces in South India.

Zuari and Italcementi. The strength of two

Zuari Cement is one of the leading cement producers in South India. A fully owned

subsidiary of the Euro 6 billion Italcementi Group, Commitment to customer satisfaction has

seen Zuari Cement grow from a modest 0.5 million ton capacity in 1995 to 3.5 million tones

today. And earned a place among the most reliable cement producers in the country.

Thanks to a careful plan of investments and take-over’s of other cement producers, the

company expanded, quickly reaching a strong position on the market and becoming the leading

cement manufacturer in Italy.

After several acquisitions abroad, in 1992 Italic ementi achieved important international

status with its take-over of Cements François, one of the main global cement producers.

In 1997 Italic cement consolidated its verticalisation strategy with the acquisition of

Calcestruzzi, thus becoming Italian leader in the ready-mixed concrete sector.

In March 1997, all the international companies of the Group gathered under one single

corporate identity.

28

Since 1998 Italcementi Group has been pursuing its internationalization strategy by

acquiring new cement works in Bulgaria, Kazakhstan, Thailand, Morocco, India, Egypt and the

United States.

Our Management:

While professional management and quality workforce ensure superior results, the role

played by the core management should not be discounted. With their vision and experience, they

make sure that Zuari Cement moves in the right direction. Towards becoming one among the

leading cement producers in India.

Nabila Francis

Managing Director

Carlo Forgone

Director Technical

Sunnier Ly 

Chief Financial Officer

S.SURESH

Vice President HR & IR

Appotiment of Director

Zuari Industries Ltd has informed BSE that the Board of Directors at its meeting held on

January 21, 2011 have appointed Mr. Suresh Krishnan, as Additional Director of the Company.

With an annual production capacity of approximately 70 million tons of cement, Italcementi

Group is the world’s fifth largest cement producer.

29

The Parent Company, Italcementi Spa., is one of Italy’s 10 largest industrial companies

and is included in S&P/MIB Index of the Italian Stock Exchange.

Italcementi Group’s companies combine the expertise, knowhow and cultures of 22

countries in 4 Continents boasting an industrial network of 63 cement plants, 13 grinding

centers, 5 terminals, 125 aggregates quarries and 614 concrete batching units.

In 2009 the Group had sales amounting to almost 6 billion Euros.

Italcementi, founded in 1864, achieved important international status with the take-over

of Cements François in 1992.

Following a period of re-organization and integration that culminates in the adoption of a

single corporate identity for all Group subsidiaries, the newly-born Italcementi Group began to

diversify geographically through a series of acquisitions in emerging countries such as Bulgaria,

Morocco, Kazakhstan, Thailand and India, as well as operating in North America. As part of the

plan to further enhances its presence in the Mediterranean area, in 2005 the Group boosted its

investments in Egypt becoming the market leader.

In 2007 Italcementi acquired full control of the activities in India and signed an

agreement to strengthen its position in Kazakhstan while, in 2008, it further strengthened its

presence in Asia and the Middle East through the operations in China, Kuwait, Saudi Arabia. In

2009 the Group signed a joint venture in Libya to build a 4 million tons/year

As a member of the World Business Council for Sustainable Development (WBCSD)

Italcementi Group has signed the Cement Sustainability Initiative’s Agenda for Action, the first

formal commitment that binds a number of world cement industry leaders to an action plan that

aims at satisfying present-day needs at the same time as safeguarding the requirements of future

generations.

To further confirm its commitment on these issues, the Group has taken over the co-

Chairmanship of the Cement Sustainability Initiative for the period 2007-2008.

30

Our Products

Cement for every kind of task

Zuari Cement manufactures and distributes its own main product lines of cement .We aim

to optimize production across all of our markets, providing a complete solution for customer's

needs at the lowest possible cost, an approach we call strategic integration of activities.

Cement is made from a mixture of 80 percent limestone and 20 percent additives. These

are crushed and ground to provide the "raw meal”, a pale, flour-like powder. Heated to around

1450° C (2642° F) in rotating kilns, the “meal” undergoes complex chemical changes and is

transformed into clinker. Fine-grinding the clinker together with a small quantity of gypsum

produces cement. Adding other constituents at this stage produces cements for specialized uses.

Blended Cements

Zuari Blended Cement the eco-friendly, user-friendly cement

Zuari Blended Cement has been developed in response to today’s need for environment-

friendly products that are cost-effective, durable and have minimal by-products.

Durability is a very important property in concrete. And durability here means concrete

that ensures the long life span of structures like homes and residences that are lifetime

investments. Since distress of concrete and early failure of structures is a common phenomenon,

research over a period of time helped develop various remedial measures that improved

durability and cost economics. One of them being blended Portland cement, with complementary

pozzolanic and cementations materials like fly ash, blast furnace slag, etc. And Zuari Blended

Cement is a fine example of it.

Our Products

Portland cement

31

Zuari OPC is high quality cement prepared from the finest raw material. Owing to

optimum water demand, it contributes to a very low co-efficient of permeability of the concrete

prepared. This improves the density of the concrete matrix and increases the durability of the

concrete. Zuari OPC is high performance cement far exceeding the coal requirement of BIS.

It is this very durability that translates into long - lasting residential and commercial

constructions of a wide variety.

Zuari’s edge

With these unique advantages, Zuari Cement comes to you in two grades - 43 Grade OPC

and 53 Grade OPC.

Zuari OPC is high quality cement prepared from the finest raw material. Owing to

optimum water demand, it contributes to a very low co-efficient of permeability of the concrete

prepared. This improves the density of the concrete matrix and increases the durability of the

concrete. Zuari OPC is high performance cement far exceeding the coal requirement of BIS.

It is this very durability that translates into long - lasting residential and commercial

constructions of a wide variety.

Zuari 43 & 53 Grade Ordinary Portland cement (OPC) - Strong cements for long-

lasting constructions.

Higher compressive strength

Better soundness

Lesser consumption of cement for M-20 grade concrete and above

Faster DE shuttering of form work

Reduced construction time

Primo Concrete Cement - Concrete Redefined

Primo - The success story In 2008 Zuari Cement launched its high-strength cement under the 32

brand name 'Primo Concrete Cement' in Bangalore City. 'Primo' improves the density of the

concrete matrix and increases the durability of the concrete, making it an immediate hit

among construction and infrastructure projects undertaken in and around Bangalore. Recently

Primo was also launched in Kochi and Chennai. An extensive marketing and distribution

network across south India concretes Zuari Cement's success story.

New products, on the line of the extremely successful 'Primo' launch, will play a

significant role in key markets.

Primo Concrete Cement - Concrete Redefined

Primo concrete cement is high quality cement prepared from the finest raw material. Owing

to optimum water demand, it contributes to a very low co-efficient of permeability of the

concrete prepared. This improves the density of the concrete matrix and increases the durability

of the concrete. Primo is a high performance cement far exceeding the coal requirement of IS

12269-1987. It is this very durability that translates into long-lasting residential and commercial

constructions of a wide variety, such as dams, canals, highways, roads and flyovers.

Higher compressive strength

Better soundness

Lesser consumption of cement for M-20 Concrete grade

and above

Faster DE shuttering of form work

Reduced construction time

Italcementi GroupItalcementi Group at a glance

With an annual production capacity of approximately 70 million tons of cement,

Italcementi Group is the world’s fifth largest cement producer.

33

The Parent Company, Italcementi Spa., is one of Italy’s 10 largest industrial companies

and is included in FTSE/MIB Index of the Italian Stock Exchange.

Italcementi Group’s companies combine the expertise, knowhow and cultures of 22

countries in 4 Continents boasting an industrial network of 59 cement plants, 15 grinding centers,

5 terminals, 373 concrete batching units and 92 aggregates quarries.

In 2009 the Group had sales amounting to over 5 billion Euros.

Italcementi, founded in 1864, achieved important international status with the take-over

of Cements François in 1992

Following a period of re-organization and integration that culminates in the

adoption of a single corporate identity for all Group subsidiaries, the newly-born Italcementi

Group began to diversify geographically through a series of acquisitions in emerging countries

such as Bulgaria, Morocco, Kazakhstan, Thailand and India, as well as operating in North

America. As part of the plan to further enhance its presence in the Mediterranean area, in 2005

the Group boosted its investments in Egypt becoming the market leader

In 2006 Italcementi acquired full control of the activities in India and signed an

agreement to strengthen its position in Kazakhstan while, in 2007, it further strengthened its

presence in Asia and the Middle East through the operations in China, Kuwait, Saudi Arabia.

As a member of the World Business Council for Sustainable Development (WBCSD)

Italcementi Group has signed the Cement Sustainability Initiative’s Agenda for Action, the first

formal commitment that binds a number of world cement industry leaders to an action plan that

aims at satisfying present-day needs at the same time as safeguarding the requirements of future

generations.

To further confirm its commitment on these issues, the Group has taken over the co-

Chairmanship of the Cement Sustainability Initiative for the period 2011-2012. Moreover,

Italcementi has been included in “The Sustainability Yearbook 2012” the most comprehensive

publication on corporate sustainability released yearly by SAM (Sustainable Asset

Management).

34

FUNDS FLOW STATEMENT

INTRODUCTION

The basic financial statements i.e., the Balance Sheet and Profit & Loss A/c or Income

Statement of business reveals the net effect of various transactions on operational and financial

position of the company. The balance sheet gives a summary of the assets & liabilities of an

undertaking at a particular point of time.

There are many transactions that take place in an undertaking and which do not operate

Profit & Loss A/c. Thus another statement has to be prepared to show the change in Assets &

Liabilities from the end of one period of time to the end of another period of time. The statement

is called a statement of changes in financial position or a Funds Flow Statement.

The Funds Flow Statement is a statement which shown the movement of funds and is a

report of financial operations of business undertaking. In simple words it is a statement of

source and application of funds.

MEANING & CONCEPT OF FUNDS

The term “Fund” has been defined and interpreted differing by different experts. Broadly

the term fund refers to all the financial resource of the company on the other extreme fund has

been understood as cash only. The most acceptance meaning of the “fund” is “working capital”.

Working Capital is excess of current assents over current liability. The term fund has a

variety of meaning.

A) CASH FUND OR NARROW SENSE

In a narrow sense, funds mean only cash. ‘Cash flow statement portrays net effect of

various business transactions cash into account receipts & disbursement of cash.

35

The concept of preparing funds from statement is not accepted, as there are many such

transactions that do not affect cash but represent the flow of fund.

For Ex:

Purchase of furniture on credit does not affect cash but there is flow of fund.

B) CAPITAL FUND (or) BROADER SENSE

Here funds means all financial resources used in business, whether in the form of men,

money, material, machine & others.

C). NET WORKING CAPITAL (or) POPULAR SENSE

Networking capital means differences between current assets & liabilities. A fund

generally refers to cash or cash equipment or to working capital.

In any business we cannot under estimate the flow of funds from two operations. The

business runs with funds but the organization knows how to flow of funds.

The Funds Flow Statement is concerned with sources and applications of organization.

Statement of changes in working capital shows the increase or decrease in the working

capital.

“Funds from Operations” statement shows how much funds from operations.

Funds Flow Statement

In every concern, the funds flow in form different sources and similarly funds are

invested in various sources of investment. It is continuous process. The study and control of this

funds-flow process (i.e., the uses and sources of funds) is the main objective of financial

management to assess the soundness and the solvency of the enterprise.

36

The funds-flow-statement is a report on financial operations changes, flow or

movements during the period. It is a statement which shows the sources an application of funds

or it shows how the activities of a business are financed in a particulate period. In other words,

such a statement shows how the financial resources have been used during a particular period of

time. It is, thus, a historical statement showing sources and application of funds between the two

dates designed especially to analyses the changes in the financial conditions of an enterprise. In

the words of Fouke, it is-

“A statement of Sources and Application of Funds is a technical device designed to analyses

the changes in the financial condition of business enterprises between two dates.”

Funds Flow Statement is not an income statement. Income statement shows the items of

income and expenditure of a particular period, but the Funds flow statement is an operating

statement as it summaries the financial activities for a period of time. It covers all movements

that involve an actual exchange of assets.

Various titles are used for this statement such as 'Statement of sources and Application of

Funds', 'Summary of Financial operations,' 'Changes in Financial Position', 'Fund received and

Disbursed', 'Funds Generated and Expended', Changes in Working Capital”, “Statement of Fund'

etc. Title of Funds Flow Statement has been modified from time to time. Really it is very

difficult to find a short time for such statement which carries much to the readers regarding its

contents and functions.

A new interpretation of the term 'funds, has now been adopted as to include assets or

financial resourceful which do not flow through the working capital accounts. It seems to be the

most suitable meaning fort the term 'funds' but the most commonly used interpretation of the

term 'funds' is 'working capital'

Distinction Between funds Flow Statement and Balance Sheet

There is also a difference between meaning, purpose and importance of Funds Flow

Statement and Balance Sheet although both are prepared with the same accounting data.

37

A summary of main points of differences between these two is give below:-

e) Balance sheet is a statement showing the financial position of the concern on a particular

date. The asset side portrays the development of resources in various types of properties a

liabilities side indicates the manner in which these resources are obtained. It shows all

assets and liabilities whether current or fixed, tangible or intangible etc., while Funds

Flow Statement shows the changes in current assets an current liabilities during a

particular period of time.

f) Balance Sheet shows the total financial position on a particular date and in this way, it is

of a historical nature and therefore, its utility is very limited for the management. On the

other hand, Funds Flow Statement is a comparative statement of assets and liabilities and

depicts the changes in working capital during the period of two Balance sheets.

g) Funds Flow Statement is an analysis and control device for the management.

Management can ensure the long term on the short term solvency of the firm by studying

the internal funds flow cycles. It is a modern technique of knowing the inflows and

outflows of funds during a particular period. Balance Sheet represents the balance of

various assets and liabilities and does not present analysis of any kind.

h) There are two views of h financial position of the firm-long term a short-term. Short-

term financial position means the technical solvency of the firm in the near future while

on the other hand, long-term financial position means future financial structure of the

firm. Both are inter-relate but there is a differences in their analysis. The short-term view

of the financial position of the firm ca not is had from the Balance Sheet.

Distinction between funds flow statement and cash flow statement

We have fully explained the meaning and importance of both the statements-Funds Flow

a Cash Flow statements.

A distinction between these two statements may be briefed as under:-

(I) Funds Flow Statement am concerned with all items constituting funds (Working

38

Capital) for the business while Cash Flow Statement deals only with cash transactions. In

other words, a transaction affecting working capital other than cash will affect Funds

statement, and not the Cash Flow Statement.

(ii) In Funds Flow Statement, net increase or decrease in working capital is recorded

while in Cash Flow Statement; individual item involving cash is taken into account.

(iii) Funds Flow statement is started with the opening cash balance and closed with the

closing cash balance records only cash transactions.

(iv) Cash Flow Statement is started with the opening cash balance and closed with ht

closing cash balance while there a no opening or closing balances in Funds Flow

Statement.

A fund flow statement, better known as a cash flow statement, is an important document

in the accounting world. A fund flow statement shows a company's inflows and outflows of

funds. It is used to show investors, stakeholders or owners where the company's money came

from and where it went.

RULE

The flow of funds occurs when a transaction changes on one hand a non-current A/c and

on the other a current A/c and Vice-versa. According to working capital concept of funds the

term “Flow o Funds” return to movement of funds in working capital.

If any transaction results in increase in working capital.It is said to be a “source” or

“inflow of funds” and if it results in decrease of working capital, it is said to be “application” or

“out flow of funds”.

CURRENT ASSETS

Current Assets are those assets, which in the ordinary course of business can be or will be

converted into cash within a short period of normally one accounting year.

39

CURRENT LIABILITIES

Current liabilities are those liabilities which are intended to be paid in ordinary course of

business with in short period of normally one accounting year out of the current assets or the

income of the business.

Differences between current liabilities & current assets

CURRENT LIABILITIES CURRENT ASSETS

1. Bills Payable 1. Cash in Hand

2. Sundry Creditors 2. Cash at Bank

3. Accrued or O/s Expenses 3. Bills Receivable

4. Dividends Payable 4. Sundry Debtors or A/c’s receivable

5. Bank Overdraft 5. Short term loans & advances

6. Short term loans, advances & deposits 6. Short term investment

7. Provision for taxation. 7. Inventories or stock

8. Proposed Dividend 8. Prepaid Expenses

9. Accrued incomes.

40

MEANING & DEFINITION OF FUNDS FLOW STATEMENT

Funds Flow Statement is a method by which we study changes in the financial position of

business enterprise beginning & ending financial statement dates. It is a statement showing

sources & uses of funds for a period of time.

FOUIKE DEFINES

“A statement of sources & application of funds is technical devices designed to analyses

the changes in the financial condition of business enterprise between two dates’

ANTHONY DEFINES

“The Funds Flow Statement describes the sources from which additional funds were

derived and the use to which these sources were put.

41

I.C.W.A IN GLOSSARY OF MANAGEMENT ACCOUNTING

TERMS DEFINES FUNDS FLOW STATEMENT

Funds Flow Statement as “a statement either prospective or retrospective setting out of

sources & application of the funds of an enterprise.

The purpose of statement is to indicate clearly the requirement of funds and how they are

proposed to be raised and efficient utilization & application of the same.

Funds Flow statement is called by various names such as sources and application of

funds, statement of changes in financial position, sources and uses of funds, summary of

financial operations, movement of working capital, movement of funds statement,

sources of increase and application of decrease etc…

USES, SIGNIFICANCE AND IMPORTANCE OF FUNDS FLOW STATEMENT

A Funds Flow Statement is an essential tool for the financial analysis and is of primary

importance to financial management. Now a day it is being widening used by the financial

analysis.

The basic purpose of funds flow statement is to reveal the changes in working capital on

2 balance sheets

42

DIFFERENCE BETWEEN FUNDS FLOW STATEMENT & CASH FLOW

STATEMENT

BASIS OF DIFFERENCE FUNDS FLOW STATEMENT CASH FLOW STATEMENT

1.Basis of concept It is based on a wider concept

Of funds, i.e., working capital.

It is based on a narrower concept of

funds, i.e., cash.

2. Basis of Accounting It is based on accrual basis of

accounting

It is based on cash basis of

accounting.

3. Schedule of changes in

working capital

Schedule of changes in working

capital is prepared to show the

changes in current assets and

Current liabilities.

No such Schedule of changes in

working

Capital is prepared.

4. Method of preparing Funds flow statement reveals

the sources and applications of

Funds. The net difference between

sources and applications of funds

represent net increase or decrease

In working capital.

It is prepared by classifying all

Cash inflows and outflows in terms of

operating, investing and financing

activities. The net difference

represents the net Increase or decrease

in Cash and cash equivalents.

A5. Basis of usefulness. It is useful in planning

intermediate and long term

Financing.

It is more useful for short-term

analysis and cash planning of the

business.

43

LIMITATIONS OF FUNDS FLOW STATEMENT

The funds flow statement has a number of uses; however, it has certain limitations also, which

are listed below.

1. It should be remembered that a funds flow statement is not a substitute of an income

statement or a balance sheet. It provides only some additions information as regards charges

in working capital.

2. Cannot reveal continuous changes.

3. It is not an original statement but simply is arrangement of data given in financial

statements.

44

4. It is essentially historic in nature and projected funds flow statement cannot be prepared with

much accuracy.

5. Change in cash is more important & relevant for financial management than the working

capital.

PROCEDURE FOR PREPARING A FUNDS FLOW STATEMENT

Funds flow Statement is a method by which we study changes in financial position of business

enterprise between beginning & ending financial statement dates. Hence the funds flow

statement is prepared by comparing two balance sheets and any of such other information

derived from the Accounts as may be needed

The preparation of funds flow statement consists of two parts.

A. Statement or schedule of changes in working capital.

B. Statement of sources & application of fund.

A.) STATEMENT OR SCHEDULE OF CHANGES IN W.C.

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

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

working capital between two balance sheet dates.

This statement is prepared with help of current assets and current liabilities

derived from two balance sheets.

Working capital = Current Assets – Current Liabilities

An increase in current assets increases W.C.

A decrease in current assets decreases W.C.

An increase in current liabilities decreased W.C.

A decrease in current liabilities increases W.C.

45

STATEMENT OF SCHEDULE OF CHANGES IN WORKING CAPITAL

ParticularsPrevious Year

Current Year

Effect of W.C.

IncreaseDecrease

Current Assets :Cash in Hand Xx Xx xxCash at Bank Xx Xx xxBills Receivable Xx Xx XxSundry Debtors Xx Xx XxTemporary investments Xx Xx xxStock / Inventions Xx Xx xxPrepaid Expenses Xx Xx xxAccrued Incomes Xx Xx XxTotal Current Assets Xxx XxxCurrent Liabilities :Bills Payable Xx xx xxSundry Creditors Xx xx XxOutstanding Expenses Xx xx XxBank Overdraft Xx xx xxShort term Advances Xx xx xxDividend Payable Xx xx XxProposed Dividend Xx xx XxProvision for Taxation Xx xx XxTotal Current Liabilities Xxx xxxWorking Capital (C.A. – C.L.) Xxx xxx

Net increase or decrease in W.C

Xxx Xxx

Xxxx xxxx xxxx Xxxx

46

STATEMENT OF SOURCES & APPLICATION OF FUNDS. :

Funds flow statement is a statement, which indicates various sources from which funds (W.C.)

have been obtained during a certain period and uses or applications to which these funds have

been put during that period.

Generally this statement is prepared in two formats.

a) T Form (or) An A/c Form (or) Self Balancing Type

b) Report Form.

a.) T FORMS AN ACCOUNT FORM

FUNDS FLOW STATEMENT

(For the year ended)

Sources Rs. Applications Rs.

Funds from operations Xx Funds lost in operations Xx

Issue of share capital Xx Redemption of preference share Xx

Issue of Debentures Xx Capital Xx

Raising of long term loans Xx Redemption of debentures Xx

Sale of non current (fixed)

assets

XxRepayment of long term loan

Xx

Non-trading receipts such as

dividends

Xx Purchase of long term

investments

Xx

Scale of long term investments Xx Non-trading payments Xx

Net decrease in working capital Xx Payment of Dividends Xx

47

Xx Payment of Tax Xx

Xx Net increase in working capital Xx

Xxx Xxx

REPORT FORM OF FUNDS FLOW STATEMENT

SOURCES OF FUNDS

Funds from Operation Xx

Issue of Share Capital Xx

Raising of long term loans Xx

Receipts from partly paid shares Xx

Sale of non-current (fixed) assets Xx

Non trading receipts, such as dividends Xx

Sale of investment (long term) Xx

Decrease in working capital Xx

Total Xxx

APPLICATION OR USES OF FUNDS :

Funds lost in operations Xx

Redemption of preference share capital Xx

Redemption of debentures Xx

Repayment of long term loans Xx

Purchase of non-current (fixed) assets Xx

Purchase of long term investments Xx

Non-trading payment Xx

Payment of dividends Xx

Payment of tax Xx

48

Increase in working capital Xx

Total Xxx

There are two methods of calculating funds from operation.

a. Funds from operation.

b. Adjusted Profit & Loss A/c

FUNDS FROM OPERATION

Closing Balance of Profit & Loss A/c Xxx

Add: Non-fund or Non-operating items Depreciation Xx

Loss on sale of fixed assets Xx

Under Writing Commission Xx

Discount on issue of shares & debentures Xx

Preliminary exp. Written off Xx

Deferred revenue expenses Xx

Goodwill Written off Xx

Patent or trade mark Xx

Provision for taxes Xx

Proposed Dividend Xx

Transfer to resume Xx

Provision for doubtful debts. Xx

Less: Non-operating Income Xx

Profit / Gain on sale of fixed assets Xx

Dividend Received Xx

Dividend Received Xx

Interest Received on Investments Xx

Profit on revaluation of assets Xx

49

Fund from operations Xxx

FUNDS FLOW STATEMENT IN ZUARI CEMENT INDUSTRIES LTD

ANALYSIS AND DISCUSSIONS

TABLE-4.1

Composition of current Assets

(All the amounts are in Cr)

Particulars 2010-11 2011-12 2012-13 2013-14 2014-15 Avg.

Inventory 683.24 901.86 924.97 954.27 1024.57

4488.91Sundry Debtors 152.2 128.18 240.85 296.64 915.57

1733.44Cash and Bank 116.64 198.4 175.43 209.64 234.39

934.5Loans & Advances

292.65 422.61 674.03 711.34 801.51

2902.14Other current Assets

764.04 1549.77 1895.8 1987.51 2258.84

8455.96Total 2008.77 3200.82 3911.08 4159.4 5234.88

18515

50

CHART-4.1

Inventory  Sundry Debtors

Cash and Bank

Loans & Advances

Other current Assets

Total0

1000

2000

3000

4000

5000

6000

7000

8000

9000

The income statement is also called as income statement, it is considered to be the most

useful of all financial statements. It prepared by a business concern in order to know the profit

earned and loss sustained during a specified period. It explains what has happened to a business

as a result of operations between two balance sheet dates. For this purpose it matches the

revenues and cost incurred in the process of earning revenues and shows the net profit earned or

loss suffered during a particular period.

The nature of Income which is a focus of the income statement can be well understood if

business is taken as an organization that uses “Input” to produce “Output”. The output of the

goods and services that the business provides to its customers. The values of these outputs are

the goods and services that the business provides to its customers. The values of these outputs art

the amounts paid by the customers for them. These amounts are called “revenues” in the 51

accounting. The inputs are the economic resources used by the business in providing these goods

and services. These are termed “expenses” in accounting.

TABLE-4.2

STATEMENT OF CHANGES IN WORKING CAPITAL IN YEAR 2010-11.

RS in crores

Particulars 2010 2011 Effect of W.C.

Total current Assets Increase Decrease

Inventories 683.24 939.75 256.51

Sundry Debtors 224.6 152.2 72.4

Cash and Bank Balances 123.73 116.64 7.09

Other Current Assets 728.11 764.04 35.93

Loans and Advances 351.82 292.65 59.17

Total 2111.5 2265.28

Total Current Liabilities

Current Liabilities 1412.55 1582.32 169.77

Provisions 470.56 674.04 203.48

219.47

Total 1883.11 2256.39

Net working capital 228.39 8.92 511.91 511.91

Increase\decrease in net working capital 219.47

52

CHART-4.2

Working capital turn

over ratio 2010

Working capital turn

over ratio

Inventories

Cash and Bank Balances

Loans and Advances To

tal

Provisions

Total

Net working capital

-500

0

500

1000

1500

2000

2500

3000

Series1Series2Series3

Sources: we have taken this information from zuari cements from 2010-2011

Interpretation:

The networking capital of Zuari cements Ltd has been decreased to 237.31 Cr the

financial position i.e. the performance of Zuari cements Ltd has increased and the current assets

defects its current liability.53

TABLE-4.3

STATEMENT OF SOURCES AND APPILICATION OF FUNDS FOR THE PERIOD

(2010-11)

Rs in crores

Source Rs. Application Rs.

Issue of share capital 304.74 Funds lost in operation 0.00

Raising of long term loans 100.00Repayment of long term

loan loans2784.09

Sale of non-current (fixed)

assets290.69

Purchase of long term

investments-1124.34

Non-trading receipts 0.00

Sale of investment 727.01

Decrease in working capital 237.31

1659.75 1659.75

54

Sources: we have taken this nformation from zuari cements from 2010-2011

CHART-4.3

55

1 2 3 4 5 6

-1500

-1000

-500

0

500

1000

1500

2000

2500

3000

0 0 0 0 0 0304.74

100290.69

0

727.01

237.31

1659.75

0 0 00

2784.09

-1124.34

1659.75

f(x) = 416.12818867389 ln(x) − 32.579993618969

Source Rs. Logarithmic (Rs.)Application Rs.

Analysis:

From the table it is observed that the working capital of company shows increased trend.

The current Asset of the company has increased Rs 237.51 in 2010-2011 is 2368.01. But the item

cash balance showing increasing trend. The current liabilities of company are decreased in 2010

2011.In the net working capital of company stood -1124.34 It is increased in 2010-11. The

increasing net working capital.

Regarding the application of funds 21.54 % used for investment in fixed assets and funds

used for working capital purpose. Constitute 28.67 % respectively

INTERPRETATION

It is concluded that during the period 2010-11 Increasing gross block and net increasing

in working capital.

TABLE-4.4

56

STATEMENT OF CHANGES IN WORKING CAPITAL IN 2011-12

Rs in crores

Particulars 2011 2012 Effect of W.C.

Total current Assets Increase Decrease

Inventories 939.75 901.86 - 37.89

Sundry Debtors 152.2 128.18 - 24.02

Cash and Bank Balances 116.64 198.4 81.76 -

Other Current Assets 764.041549.7

7785.73 -

Loans and Advances 292.65 422.61 129.96 -

Total 2265.283200.8

2

Total Current Liabilities

Current Liabilities 1582.321893.9

8- 311.66

Provisions 674.041096.5

7- 422.53

- 201.40

Total 2256.362990.5

5

Net working capital 8.92 210.32 1253.34 1253.34

Increase\decrease in net working capital 201.40

57

CHART-4.4

Working capital turn

over ratio 2011

Working capital turn

over ratio

Inventories

Cash and Bank Balances

Loans and Advances To

tal

Provisions

Total

Net working capital-500

0

500

1000

1500

2000

2500

3000

3500

Series1Series2Series3

Sources: we have taken this information from zuari cements, from 2011-2012

Interpretation:

The networking capital of Zuari cements has been decreased to 37.27 Cr the financial

position i.e. the performance of Zuari cements Ltd has increased and the current assets defects its

current liability.

58

TABLE-4.5

STATEMENT OF SOURCES AND APPILICATION OF FUNDS FOR THE PERIOD

(2011-12)

Rs in crors

59

Source Rs. Application Rs.

Issue of share capital 305.97 Funds lost in operation 0.00

Raising of long term loans 0.00Repayment of long term

loan loans3151.07

Sale of non-current (fixed)

assets238.27

Purchase of long term

investments-2018.15

Non-trading receipts 0.00

Sale of investment 625.95

Decrease in working capital -37.27

1132.92 1132.92

Sources: we have taken this information from zuari cements, from 2011-2012

CHART-4.5

1 2 3 4 5 6

-3000

-2000

-1000

0

1000

2000

3000

4000

0 0 0 0 0 0305.97

0238.27

0

625.95

-37.27

1132.92

0 0 00

3151.07

-2018.15

1132.92 SourceRs.ApplicationRs.Logarithmic (Rs.)

Analysis:

From the table it is observed that the working capital of company shows decreased trend.

The current Asset of the company has increased Rs 3200.82 in 2011-2012 is 2008.77. But the item

cash balance showing increasing trend. The current liabilities of company are decreased in 2012 .In

the net working capital of company stood -2018.15. It is decreased in 2011-12. The decreasing net

working capital is Rs 37.27

Regarding the application of funds 33.71% used for investment in fixed assets and funds

used for working capital purpose. Constitute 30.77% respectively

60

INTERPRETATION

It is concluded that during the period 2011-12 Increasing gross block and net Decreasing

in working capital.

TABLE-4.6

STATEMENT OF CHANGES IN WORKING CAPITAL IN 2012-13

Rs in Crors

Particulars 2012 2013 Effect of W.C.

Total current Assets Increase Decrease

Inventories 901.86 924.97 23.11 -

Sundry Debtors 128.18 240.85 112.67 -

Cash and Bank Balances 198.4 175.43 -- 22.97

Other Current Assets 1549.77 1895.8 346.03 -

Loans and Advances 422.61 674.03 251.42 -

Total 3200.82 3911.08

Total Current Liabilities

Current Liabilities 1893.98 2314.49 -- 420.51

Provisions 1096.57 1106.11 -- 9.54

-- 280.16

Total 2990.55 3420.6

Net working capital 210.32 490.48 733.23 733.23

61

Increase\decrease in net working capital 280.16

CHART-4.6

Working capital turn

over ratio 2012

Working capital turn

over ratio

Inventories

Cash and Bank Balances

Loans and Advances To

tal

Provisions

Total

Net working capital

0500

10001500200025003000350040004500

Series1Series2Series3

Sources: we have taken this information from zuari cements, from 2012-2013

Interpretation:

62

The networking capital of Zuari cements Ltd has been increased to 280.16 Cr the

financial position i.e. the performance of Zuari cements Ltd has increased and the current assets

defects its current liability.

\

TABLE-4.7

STATEMENT OF SOURCES AND APPILICATION OF FUNDS FOR THE PERIOD

(2012-13)

Rs in crors

63

Source Rs. Application Rs.

Issue of share capital 306.87 Funds lost in operation 0.00

Raising of long term loans 0.00Repayment of long term

loan loans3515.83

Sale of non-current (fixed)

assets347.46

Purchase of long term

investments-1506.71

Non-trading receipts 0.00

Sale of investment 864.31

Decrease in working capital 490.48

2009.12 2009.12

Sources: we have taken this information from zuari cements, from 2012-2013

CHART-4.7

1 2 3 4 5 6

-2000

-1000

0

1000

2000

3000

4000

0 0 0 0 0 0306.87

0347.46

0

864.31490.48

2009.12

0 0 00

3515.83

-1506.71

2009.12SourceRs.ApplicationRs.Logarithmic (Rs.)

Analysis:

From the table it is observed that the working capital of company shows increased trend.

The current Asset of the company has increased Rs 3911.08 in 2012-3is 3200.82. But the item cash

balance showing increasing trend. The current liabilities of company are decreased in 2012- 2013..In

the net working capital of company stood 3420.60 It is decreased in 2012-13. The decreasing net

working capital.

Regarding the application of funds 32.65 % used for investment in fixed assets and funds

used for working capital purpose. Constitute 29.64 % respectively

64

INTERPRETATION

It is concluded that during the period 2012-13. Increasing gross block and net increasing

in working capital.

TABLE-4.8

STATEMENT OF CHANGES IN WORKING CAPITAL IN 2013-14

Rs in Crors

particulars 2013 2014 Effect of W.C.

Total current AssetsIncreas

eDecrease

Inventories 924.97 954.27 29.3 -

Sundry Debtors 240.85 296.64 55.79 -

Cash and Bank Balances 175.43 209.64 34.21 -

Other Current Assets 1895.8 1987.51 91.71 -

Loans and Advances 674.03 711.34 37.31 -

Total 3911.08 4159.4

Total Current Liabilities

Current Liabilities 2314.49 2451.88 - 137.39

Provisions 1106.11 1365.21 - 259.1

148.17

65

Total 3420.6 3817.09

Net working capital 490.48 342.31 396.49 396.49

Increase\decrease in net working capital 148.17

CHART4

Working capital turnover ratio 2012

Working capital turnover ratio

Total current Assets

Inventories

Sundry Debtors

Cash and Bank Balances

Other Current Assets

Loans and Advances To

tal

Total Current Liabilities

Current Liabilities

Provisions

Total

Net working capital

Increase\decrease in net working capital

0

1000

2000

3000

4000

Series1Series2Series3

Sources: we have taken this information from zuari cements, from 2013-2014

Interpretation:

The networking capital of Zuari cements Ltd has been increased to 342.31 Cr the

financial position i.e. the performance of Zuari cements Ltd has increased and the current assets

defects its current liability.

66

TABLE-4.9

STATEMENT OF SOURCES AND APPILICATION OF FUNDS FOR THE PERIOD

(2013-14)

Rs in crores

Source Rs. Application Rs.

Issue of share capital 315.54 Funds lost in operation 0.00

Raising of long term loans 0.00Repayment of long term

loan loans3658.87

Sale of non-current (fixed)

assets358.64

Purchase of long term

investments-1868.98

Non-trading receipts 0.00

Sale of investment 967.54

Decrease in working capital 148.17

67

1789.89 1789.89

Sources: we have taken this information from zuari cements, from 2013-2014

CHART-4.9

68

1 2 3 4 5 6

-3000

-2000

-1000

0

1000

2000

3000

4000

0 0 0 0 0 0315.54

0358.64

0

967.54

148.17

1789.89

0 0 00

3658.87

-1868.98

1789.89

SourceRs.ApplicationRs.Logarithmic (Rs.)

Analysis:

From the table it is observed that the working capital of company shows increased trend. The

current Asset of the company has increased Rs 3658.89 in 2013-2014. But the item cash balance

showing increasing trend. The current liabilities of company are decreased in 2013-2014.In the net

working capital of company stood 1789.89 It is decreased in 2013-14. The decreasing net working

capital.

Regarding the application of funds 35.68 % used for investment in fixed assets and funds used

for working capital purpose. Constitute 32.67 % respectively

INTERPRETATION

It is concluded that during the period 2013-14 increasing gross block and net increasing

in working capital

69

TABLE-4.10

STATEMENT OF CHANGES IN WORKING CAPITAL in 2014-15

Rs in Crores

Particulars 2014 2015 Effect of W.C.

Total current Assets Increase Decrease

Inventories 954.27 1024.57 70.3 -

Sundry Debtors 296.64 915.57 618.93 -

Cash and Bank Balances 209.64 234.39 24.75 -

Other Current Assets1987.5

12258.84 271.33 -

Loans and Advances 711.34 801.51 90.17 -

Total 4159.4 5234.88

Total Current Liabilities

Current Liabilities2451.8

83256.12 - 804.24

Provisions1365.2

11453.57 - 88.36

182.88

Total3817.0

94709.69

Net working capital 342.31 525.19 1075.48 1075.48

Increase\decrease in net working capital 182.88

70

CHART-4.10

Working capital turn

over ratio 2014

Working capital turn

over ratio

Inventories

Cash and Bank Balances

Loans and Advances To

tal

Provisions

Total

Net working capital

0100020003000400050006000

Series1Series2

Sources: we have taken this information from zuari cements, from 2014-2015

Interpretation:

The networking capital of Zuari cements Ltd has been increased to 182.88 Cr the

financial position i.e. the performance of Zuari cements Ltd has increased and the current assets

defects its current liability.

71

TABLE-4.11

STATEMENT OF SOURCES AND APPILICATION OF FUNDS FOR THE

PERIOD (2014-15)

Rs in crores

Source Rs. Application Rs.

Issue of share capital 315.54 Funds lost in operation 0.00

Raising of long term loans 0.00Repayment of long term loan

loans3984.61

Sale of non-current (fixed)

assets395.67

Purchase of long term

investments-2095.28

Non-trading receipts 0.00

Sale of investment 995.24

increase in working capital 182.88

1889.33 1889.33

72

Sources: we have taken this information from zuari cements, from 2014-2015.

CHART-4.11

1 2 3 4 5 6

-3000

-2000

-1000

0

1000

2000

3000

4000

5000

0

3984.61

-2095.28

1889.33 SourceRs.ApplicationRs.Logarithmic (Rs.)

Analysis:

From the table it is observed that the working capital of company shows increased trend. The

current Asset of the company has increased Rs 3984.61 in 2013-2014. But the item cash balance

showing increasing trend. The current liabilities of company are decreased in 2014-2015.In the net

working capital of company stood 1889.33 It is increased in 2014-15. The increasing net working

capital.

Regarding the application of funds 39.67 % used for investment in fixed assets and funds used

for working capital purpose. Constitute 35.61 % respectively

73

INTERPRETATION

It is concluded that during the period 2014-15increasing gross block and net increasing in

working capital.

TABLE-4.12

NET DECREASE IN WORKING CAPITAL

Rs in Lacks

Year Increase/Decrease Amount

2010-11 Decrease 247.59

2011-12 Increase 210.32

2012-13 Increase 490.48

2013-14 Decrease 148.17

2014-15 Increase 182.88

74

CHART-4.12

2010-11 2011-12 2012-13 2013-14 2014-150

100

200

300

400

500

600

247.59210.32

490.48

148.17182.88

NET DECREASE IN WORKING CAPITAL

AMO

UNT

IN LA

KHS

INTERPRETATION:

From the above analysis we can analyzes that net decrease in working capital in the year has

highest 2011-12 and decreased working capital in 20009-10. And it has decreased in the year

2012-13 and its moving average working capital in the year 2013-14

75

FINDINGS

(a) The networking capital of Zuari cements Ltd has been increased to 182.88 Cr the

financial position i.e. the performance of Zuari cements Ltd has increased and the

current assets defects its current liability.

(b) The networking capital of Zuari cements has been decreased to 525.19 Cr the

financial position i.e. the performance of Zuari cements Ltd has increased and the

current assets defects its current liability.

(c) The networking capital of Zuari cements Ltd has been increased to 445.04 Cr in

2012-2013 the financial position i.e. the performance of Zuari cements Ltd has

increased and the current assets defects its current liability

(d) In 2009-10 would be decreased by Rs. 24.75 .In the year 2010-11 the working capital

has been increased by Rs. 21.02. In the year 2010-11 the working capital is Rs.

210.32. In 2013-14 Rs.18.28 has increased the working capital.

(e) The current Asset of the company has increased Rs 3984.61 in 2013-2014. But the item

cash balance showing increasing trend. The current liabilities of company are decreased

in 2013-2014.In the net working capital of company stood 1889.33 It is increased in

2013-14. The increasing net working capital.

76

SUGGESTIONS

(a) Net working capital is high; it is suggested to maintain sufficient net working capital.

(b) Effective inventory management is needed in the company

(c) The firm should increase investment in current assets to create sufficient securities for the

current liabilities

(d) For the improving the financial performance of the company the following suggestions

are made.

(e) In order to reduce the outside borrowings in the company has to acquire. The capital from

equity sources. Keeping in view the debt equity the proportion as normal.

(f) The liquidity of the company should be improved by maintaining the optimum current

assets and liquid assets according to standard norms.

(g) The quantum of the sales generated should be improved impressively in order to attain

higher return on investment.

(h) To improve the financial health of the company and maximizing the time between the

source mobilization and utilization the management must introduce the new cost saving

techniques.

CONCLUSION

The Zuari cements Ltd net working capital is satisfactory between the years since it shows

increasing trend; but after that it is in declining position Profit Margin of Zuari cements Ltd is

decreasing and showing negative profit because there is increase in the price of copper The Zuari

cements Ltd Net Working Capital expenses Improve position funds should be utilized properly.

77

Better Awareness to increase the sales is suggested. Cost cut down mechanics can be employed.

Better production technique can be employed.

BIBLOGRAPHY

FINANCIAL MANAGEMENT - I.M.PANDEY

FINANCIAL MANAGEMENT - PRASANNA CHANDRA

FINANCIAL MANAGEMENT - KHAN & JAIN

ADVANCED MANAGEMENT - R.K. SHARMA

ANNUAL REPORTS OF ZUARI CEMENTS LTD 2010-2014.

WEB SITES

www.zuari.com

www.italialcement.com

www.indiancements.com

78