248

“A STUDY ON FUNDS FLOW ANALYSISOF

FOODS AND INNS LTD, CHITTOOR”Project Report

Submitted in partial fulfillment of the requirementFor the award of the Degree

Of

MASTER OF BUSINESS ADMINISTRATION(JAWAHARLAL NEHRU TECHNOLOGICAL UNIVERSITY)

By

N.MANJUNATHReg. No.: 07751E0054Under the guidance of

Mrs.T. HIMABINDU, M.F.M.,Assistant Professor, Dept of M.B.A.

SREENIVASA INSTITUTE OF TEHNOLOGYAND MANAGEMENT STUDIES

(Affiliated To Jawaharlal Nehru Technological University, Hyderabad)#74, Thimma Samudram, Bangalore –Tirupati Bye-Pass Road

Chittoor – 517 1282007-2009

Sreenivasa Institute of Technology and Management Studies(Affiliated to Jawaharlal Nehru Technological University, Hyd)

Murukambattu, CHITTOOR – 517 127

CERTIFICATE This is to certify that the project report entitled “A STUDY ON FUNDS FLOW ANALYSIS OF FOODS & INNS LTD, CHITTOOR.ana” submitted by Mr.N. MANJUNTH(07751E0054) in partial fulfillment of the requirement for the award of the degree of “Master of Business Administration” under JNTU, Hyderabad, is a record of independent work under taken by him/her during the academic year 2008-2009. This project report has not been submitted earlier either in part or whole for the award of any other degree/diploma of any university. PROJECT GUIDE DIRECTOR Mrs. T. HIMABINDU, M.F.M. Dr .S.E.V.SUBRAMANYAM, M.B.A, PhD., Department of MBA Department of MBA DECLARATION I, N. Manjunath declare that the study conducted on “A STUDY OF FUNDS FLOW ANALYSIS OF FOODS & INNS LTD, CHITTOOR” is submitted by me to the department of business management, Sreenivasa Institute of Technology And Management Studies (JNTU), is of my own and is not submitted to any university or published at any time before.

PLACE: DATE:

N.MANJUNATH Reg. No.: 07751E0054 ACKNOWLEDGEMENT I am very much grateful to FOODS & INNS LTD for allowing me to carry out my project work. I am thankful to D.S.N.MURTHY (Financial Manager) for giving me the permission to do my project work in Foods & inns Ltd. I would like to thank our principal Dr. T. SAIRAMA M.E., PhD, for his valuable guidance and enthusiasm shown to me. I owe a special thanks to our Head of the Department, Prof.S.E.V. SUBRAHMANYAM, M.B.A., PhD I would like to express my deep gratitude to my guide Mrs. T. HIMA BINDU, M.F.M, for her guidance and motivation.

(N.MANJUNATH) Reg. No.: 07751E0054

STATEMENT OF THE PROBLEM

Funds flow statement summarizes for a particular period the resources made available to finance the activities of an enterprise and the uses to which such resources have been put.

Funds flow statement is based on accrual concept of profit. The Company prepares a statement of funds flow to cater Purchase of fixed assets and investments, redemption of debentures and preference shares and repayment of loans, payment of dividend, payment of tax, and increase in working capital.

It is the responsibility of the organization to maintain a standard level of funds flow neither excess or deficit.

FINANCIAL MANAGEMENT

Management of funds is an important aspect of financial management. Management of funds acts as the primary concern whether it may be in a business undertaking or in an educational institution. Financial management, which is simply meant dealing with management of money matters.

According to Phillippatus, "Financial management is concerned with the managerial decisions that result in the acquisition and financing of short term and long term credits for the firm".

PROCUREMENT OF FUNDS

1. As funds can be obtained from different sources so procurement of funds is considered as an important problem of business concerns.

2. Funds procured from different sources have different characteristics in terms of risk, cost and control.

3. Funds issued by the issue of equity shares are the best from risk point of view for the company as there is no question of repayment of equity capital except when the company is under liquidation.

4. From the cost point of view equity capital is most expensive source of funds as dividend expectations of shareholders are normally higher than prevalent interest rates.

5. Financial management constitutes risk, cost and control. The cost of funds should be at minimum for a proper balancing of risk and control

MEANING AND CONCEPT OF ‘FLOW OF FUNDS’

The term ‘flow means movement and includes both ‘inflow’ and ‘outflow’. The term flow of funds means transfer of economic and values from one asset of equity to another. Flow of funds is said to have taken place when any transaction makes changes in the amount of funds available before happening of the transaction. If the effect of transaction results in the increase of funds it is called source of funds and if it results in the decrease of funds it is known as an applications of funds the term flow of funds refers to the movement of funds in the working capital it is said to be a source or inflow of funds and if it results in the decrease of working capital, it is said to be an application or outflow of funds.

MEANING AND DEFINITION OF FUNDS FLOW STATEMENT

Funds flow statement is a method by which we study changes in the financial position in the business enterprise between beginning and ending financial statement dates. It is a statement showing sources and uses of funds for a period of time.

“A statement of sources and applications of funds is a technical device designed to analyze the changes in the financial condition of a business enterprise between two dates”.

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, where came in and where gone out statement, where got, where gone statement; movement of working capital statement movement of funds statement, funds received and

disbursed statement; funds generated and expended statement, funds statement etc.

LIMITATIONS OF FUNDS FLOW STATEMENT

The funds flow statement has a number of uses, how ever 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 additional information as regards changes in working capital.

2. It can not reveal continuous changes.

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

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

5. Changes in cash are more important and relevant for financial management than the working capital.

RELATIONSHIP BETWEEN BALANCE SHEET AN AND PROFIT & LOSS ACCOUNT

The balance sheet and the profit & loss account are not two separate and independent statement but they are related to each other. The profit & loss account is a link between the balance sheet at the beginning of the period and the balance sheet at the end of the period. We can easily realize the impact of profit & loss account if we remember that revenue is an inflow of assets (or outflow of liabilities) and expenses are an out flow of assets (or inflows of liabilities).

Generally, the profit and loss account is prepared to compute net profit. Net profit can also be computed by comparing the balance sheet at beginning and the end of the period. This fact

emphasizes the role of the profit and loss account as a link between consecutive statements of financial position. Net profit (or net loss) for a period is equal to the change in owner’s equity during that period. Thus, as a starting point, the difference in beginning and ending owner’s equity is the net profit (or net loss).

PROFIT AND LOSS ACCOUNT

Balance sheet is considered as a very significant statement by bankers and other lenders because it indicates the firm’s financial solvency and liquidity, as measured by its resources and obligations. However, creditors, particularly bankers and financial analysis in India have recently started paying more attention to the firm’s earning capacity as a measure of its financial strength. The earning capacity and potential of a firm are reflected by its profit and loss account. The profit and loss account is a “score board” of the firms performance during a period of time. The generally accepted convention is to show one year events in the profit and loss account. Since the profit and loss account reflects the results of operations for a period of time. It is a flow statement.

BALANCE SHEET

Balance sheet is the most significant financial statement. It indicates the financial condition or the state of affairs of a business at a particular moment of time. More especially balance sheet contains information about resources and obligations of a business entity and about its owner’s interests in the business at a particular point of time. Thus, the balance sheet reveals the firms financial position on specific date. In the language of accounting balance sheet communicates information about assets, liabilities and owners equity for a business firm as on a specific date. It provides a snapshot of the financial position of the firm at the firms accounting period. The balance sheet is a stock or status statement as it shows assets, liabilities and owners equity at a point of time.

LIST OF NON CURRENT OR PERMANENT CAPITAL ACCOUNTS

Non-current or permanent liabilities Non-current or permanent assetsEquity share capital GoodwillPreference share capital LandRedeemable preference share capital BuildingDebenture Plant & MachineryLong term loans Furniture & fittings

Share premium account Trade Marks

Share forfeited account Patent rights

Profit & loss account Long-term investment

Capital reserve Debit balance of Profit & loss account

Capital redemption reserve Discount on issue of shares

Provision for depreciation against fixed assets Discount on issue of debentures

Appropriate of profits

a. General reserve b. Dividend equalization fund c. Insurance fund d. Compensation fund e. Sinking fund f. Investment fluctuation fund g. Provision for taxation h. Proposed dividend

Preliminary Expenses

Other differed expenses

LIST OF CURRENT OR WORKING CAPITAL ACCOUNTS

Current liabilities Current assets

Bills payable Cash in hand

Sundry creditors or accounts payable Cash at bank

Accrued or outstand expenses Bills receivable

Dividends payable Sundry debtors or accounts receivable

Bank overdraft Short-term loans and advances

Short term loans, advances and deposits Temporary or marketable investments

Provision against current assets Inventories or stocks such as

a. Raw materials b. Work in process c. Stores and spares d. Finished goods

Provision for taxation if it does not amount to appropriation of profits.

Prepaid expenses

Proposed dividend(may be current/non-current liability)

Accrued incomes

PROCEDURE FOR PREPARING A FUNDS FLOW SATEMENT

Funds flow statement is a method by which we study changes in the financial position of a business enterprise beginning and ending financial statements dates, hence the funds flow statement is prepared by comparing two balance sheets and with the help of such other information derived from the accounts as may be needed. Broadly speaking the preparation of a funds flow statement consists of two parts:

1. Statement or Schedule of changes in working capital funds. 2. Statements of sources and application of funds.

Working capital = Current assets – Current liabilities

1. An increase in current assets increases working capital. 2. A decrease in current assets decreases working capital. 3. An increase in current liabilities decreases working capital and. 4. A decrease in current in current increases working capital.

USES, SIGNIFICANCE AND IMPORTANCE OF FUNDS FLOW STATEMENT

It helps in the analysis of financial operations. It throws light on many perplexing questions of general interest. It helps in the formation of realistic dividend policy. It helps in the proper allocation of resources. It acts as a future guide. It helps in a appraising the use of working capital. It helps knowing the overall credit worthiness of a firm.

STATEMENT OF SCHEDULE OF CHANGES IN WORKING CAPITALPARTICULARS PREVIOUS

YEARCURRENT YEAR

EFFECT ON WORKING CAPITALINCREASE DECREASE

CURRENT ASSETS

Cash in hand

Cash at Bank

Bills receivable

Sundry Debtors

Temporary investments

Stocks/Inventories

Prepaid expenses

Accrued Incomes

Total Current Assets

CURRENT LIABILITIES

Bills payable

Sundry creditors

Outstanding expenses

Bank overdraft

Short-term advance

Dividend payable

Proposed dividends*

Provision for taxation*

Total current

liabilitiesWorking Capital (CA-CL) Net increase or decrease in working capital

* May or may not be a current liability

PROFORMA OF A FUDS FLOW STATEMENT

Statement of Sources and Application of Funds

Sources: Rs

A.Issue of share capital B.Issue of Debenture C.Institutional Loans D.Sale of Investment and other fixed assets E. Trading profit or funds from operations.

Total_______

Applications:

a) Payment of share capital

b) Repayment of institutional loans.

c) Redemption of debentures

d) Purchase of Investment and other fixed assets.

e) Non-trading payments

Total_______

INDUSTRIAL PROFILE

BACKGROUND OF MANGO INDUSTRY

The lack of mango market development globally opens a large untapped opportunity for India to make an organized entry in the fresh mango and mango pulp market. India is well positioned to capitalize on this opportunity with a very large national production of mangos, including leading varieties like Alphonso. India has the potential to create a long–term global market position and to capitalize on the fast growth of mango as a preferred ingredient for the natural package food industry.

Additionally, mango is a preferred fresh fruit within the Indian domestic market, as well as globally. Mango is in strong demand within the worldwide retail sector. The total market value of Indian mango and mango pulp represents 25% of the value of agricultural and processed food products exported by India. Moreover, the consumption growth for mangos in the United States and Europe has average 10–15% per year during the last 5 years. Collectively, these factors indicate a strong opportunity to position Indian mango and mango products to meet a growing international demand.

This accounts for 41% of the estimated worldwide mango production of 25.56 million metric tons in 2003. Despite this large mango production, India is a minor exporter of mango and mango products at this time. During the five–year period from 1998–2002, exports of fresh mangos from India averaged approximately 42.4 thousand metric tons, or only about 0.4% of mango production during this time frame. Data on exports of Indian mango pulp and juice products are more limited. Data from 1995 indicated that India exported 37.7 thousand metric tons of mango pulp. Data from 2001 indicated that India exported 3.2 thousand metric tons of mango juice, but also imported 2.2 thousand metric tons of mango juice. Collectively, these observations indicate that, despite being by far the world’s largest mango producer, India exports less than 1% of its mango crop as fresh mangos or processed mango products. These observations with mango are consistent with aggregate data available on Indian fruit and vegetable exports.

One barrier to efficient development of the Indian mango industry is an exceedingly complex supply chain. Within the value chain, a number of buyers and other aggregators operate at local Minds and APMC to assemble larger lots from the many small producers in any given region. Associated with this inefficient aggregation process is the application of numerous commissions as fresh agricultural products trade hands. Numerous stakeholders in India have expressed concern that this overly complex value chain is a hindrance to effective marketing of Indian mangos and mango products.

A recent report from the Indian Ministry of Food Processing Industries further details the overly complex supply chain and its contribution to costs and post–harvest losses. This report concludes that it is imperative to streamline the mango supply chain in order to reduce wastage and raw material costs. (Sources: India Ministry of Food Processing Industries and Rambo bank Report).

INDIA MANGO & MANGO PULP INDUSTRY DEVELOPMENT

Through partnerships with mango growers, processors, export organizations, and Indian government organizations, among others, PFID—F&V is working to strengthen the small and medium mango grower base by providing capacity building at all levels.

Education and training in Good Agricultural Practices and other sanitary standards, as well as employment of certification systems, will lead to better yields, pesticide use in accordance with regulations, and a more efficient supply chain. PFID—F&V partnerships will also help identify and facilitate resources necessary for enhancing the mango supplychain such as cold storage facilities, improved packing and grading facilities, testing facilities, and logistics management. Furthermore,

A further approach will target reduction of waste in the fresh mango chain by developing high–value mango products and enhancing processing capacity for the domestic market. Ultimately, these steps will help stabilize prices, increase farmer incomes, and development the farmer base at commercial and social levels.

MANGO PULP INDUSTRY HOPES

o Mango pulp production to reach 75,000 tones by 2010 o Mango is raised in 36,000 hectares in Krishna Giri district

o Mango pulp processed annually is 50,000 tones o Farmers have to go to Bangalore, as there is no testing facility in Krishnagiri o Farmers are not getting fair price, even if there is a rise in prices in global market

MANGO MARKET DEVELOPMENT

PFID-F&V India has continued to forge and strengthen public and private partnerships to the point that, now, just over one year from project start-up, notable results are beginning to show in the form on increasing contributions from partnership members.

Dr. Thiagarajan, MSU/PFID-F&V, together with our two India-based coordinators, recently met with the Agricultural Product Export Development Authority (APEDA) as well as the Federation of Indian Chambers of Commerce (FICCI) and the National Institute of Marketing Boards (NIAM) to follow up on each of their commitments to promote the Indian Mango Industry.

GOALS OF INDIA MANGO MARKET DEVELOPMENT

Currently, only 1% of the total mango production in India is exported. One reason contributing to this poor export performance is that overseas buyers have stricter standards than are currently accepted within the Indian domestic market. PFID—F&V will facilitate the development and implementation of quality and safety standards which will meet the demands of the export market.

o PFID—F&V will partner with relevant Indian organizations in establishing a global image for the Indian mango starting with the establishment of quality standards and Good Agricultural Practices (GAPs) standards for India.

o PFID partnerships in India can facilitate the development of a distribution network in European and other countries where the value realizations for mango and mango pulp are the highest.

o PFID partnerships can assist mango growers and processors in developing an "India" brand image for fresh mango and processed mango products that meet consumer preferences. The predominant mango varieties grown in India make this product unique in country and abroad.

o After demonstrated success in developing a strengthening the market development of mangoes, PFID India liaisons can easily adapt this approach to the further development of other fruit and vegetable products in India.

FOOD PROCESSING

Food processing involves any type of value addition to agricultural or horticultural produce and also includes processes such as grading, sorting, and packaging which enhance shelf life of food products. The food processing industry provides vital linkages and synergies between industry and agriculture. The Food Processing Industry sector in India is one of the largest in terms of production, consumption, export and growth prospects. The government has accorded it a high priority, with a number of fiscal relief’s and incentives, to encourage commercialization and value addition to agricultural produce, for minimizing pre/post harvest wastage, generating employment and export growth. India's food processing sector covers a wide range of products fruit and vegetables; meat and poultry; milk and milk products, alcoholic beverages, fisheries, plantation, grain processing and other consumer product groups like confectionery, chocolates and cocoa products, Soya-based products, mineral water, high protein foods etc.

COMPANY PROFILE

HISTORY OF FOOD AND INNS Ltd.

The division combines people with vast experience in agric-trading with the FOODS AND INNS Ltd Group’s credibility to justify its premier standing in the trading arena. The division was set up in 1967 and since then has handled a wide range of products - such as Sesame Seeds, Processed Fruits etc.

FOODS AND INNS Ltd began its fruit processing operations in early 70s.However fruit processing operations have been given a special thrust since the last season with an emphasis on developing strategic partnerships across the value chain especially fruit procurement and processing. FOODS AND INNS Ltd has established it's presence as a reliable and competitive exporter to Coca Cola, USA, Western Europe, Far East, Middle East etc.

BACKGROUND OF FOOD AND INNS Ltd .

Situated at Chittoor in Andhra Pradesh, the mango belt in India, FOOD AND INNS Ltd (FIL) is a 100% Export Oriented Unit (EOU) processing Tropical Fruit Purees, Concentrates and Fresh Fruits FOOD AND INNS Ltd was started keeping in mind the local farming community wealth. The farming community is an integral part and forms the backbone of the organization. In its effort to be a forerunner in the chosen areas of business in terms of best practices in quality and technology, FIL plans to benefit armors, the industry and the nation in a phased manner.

FOODS AND INNS Ltd believes in empowering farmers by providing technical assistance from research institutes in the food industry to support the farmers in achieving better quality and higher yields by developing the gardening and harvesting techniques. Further to educating farmers with latest horticultural techniques, FOODS AND INNS LTD is encouraging farmers to mobilize the fruits directly to the factory, thereby minimizing the fruit handling damages and high value realizations.

PRINCIPAL MANUFACTURING DIVISIONS AND PRODUCT RANGE

DIVISION

PRODUCT RANGE

Aseptic

Purees and concentrates of Mango, Guava & Papaya

Canning

Institutional packs of mango products, Guava & Papaya Paste.

Consumer packs of Indian vegetables & catering packs for mango Chutneys.

Frozen

Frozen fruit purees & IQF chunks, frozen IQF vegetables & frozen Indian snacks like Samosa and Ptras.

Spray Drying

Fruit powder like Mango, Banana, Orange, Tomato and beat root.

BOARD OF DIRECTORS

S.No Name of the Director

1 Mr.Utsav Dhupelia Director

2 Mr. D.B. Engineer Solicitor3 Mr.Raymond Simkins Foreign Director

4 Mr.C.M.Maniar Solicitor5 Mr. D.D. Trivedi Ex. IIM Professor6 Mr. M. B. Dalal Director

Mr. Utsav Dhupelia , a Chartered Accountant from U.K., looking after the routine affairs of the company, is the brain and brawl for taking the company’s turnover from Rs.5 crores (USD1.1 MIO) to Rs.160 Crores (USD 16 MIO) giving the status of government recognized EXPORT HOUSE..

With the back up of technical and managerial support staff, the state of art technology implementation, innovative R & D and Lab facilities, the doyen guidance of Mr.Utsav coupled with the contribution of other directors, the company is poised for a steady and continuous growth graph moving upwards in all Para meters.

PRODUCTS

PRODUCTS OF FRUITS

ALPHONSO TOTAPURI GUAVA PAPAYA

PRODUCTS OF VEGETABLES

FRUIT SEASONS

Jan

Feb

Mar

Apr

May

June

July

Aug

Sept

Oct

Nov

Dec

Mango

Papaya

Guava

Market Presence

o European Union o United States of America o Canada o Australia o Middle East including Iran & North Africa o Japan & South Korea

SAHER OF COUNTRIES MARKET

FACILITY

FOODS AND INNS Ltd processing facility is located in Chittoor, spread over an area of 15 acres. This place has been earmarked to host Integrated Food Complex of International standards. The facility currently has a tropical fruit Puree / Concentrate processing plant and the pack house for preparing the Fresh Fruits & Vegetables.

CUTTING EDGE TECHNOLOGY

FOODS AND INNS Ltd plant is equipped with state-of-the-art fruit puree processing aseptic filling line of SIG- Mizzen, Italy to produce natural fruit pulps & concentrates. The plant has one of the India's single largest fruit processing lines -10 TPH ripen fruit processing with Aseptic Packaging.

INITIATIVES SPAN THE FOLLOWING DISCIPLINES

o PLC operated equipments for better control over monitoring and operations with supervisory units.

o Two stage washing of fruits to ensure HACCP quality requirement. o Two-stage sterilization to retain the natural flavor and aroma. o High speed advanced Mono block aseptic filling machine supplied by SIG

Mizzen. o Integrated Enterprise Resources Planning system is in place to automate business

processes and provide data for analysis and reporting, allowing a closer control on quality and operations.

EFFICIENT PLANT LAYOUT

o Minimal drop in power and steam transfer. o Straight-line process flow design to maintain the hygiene• and control in

respective areas. o Special food grade self-leveling epoxy flooring to maintain optimum hygienic

conditions. o Curved corners and food grade epoxy painted walls to avoid dust accumulation

and to facilitate easy washing. o Advanced high raise insulated roofing with double layer GI Sheeting with air

extractors to maintain temperature inside the plant. o Utility lines are routed outside the plant to keep the interiors free from dust

accumulation.

VALUABLE INDUSTRIAL EXPERTISE

FOOD AND INNS Ltd is backed with strong support and service from its team of highly qualified technical personnel and domain experts with perceptive knowledge and skill. Powered by priceless hands-on experience these professionals are upgrading themselves continuously to identify and introduce improved and innovative product offerings that would delight customers worldwide and comply with the leading global quality standards.

PURE & CONCENTRATE FACILITY

The fruit processing aseptic line is from SIG-Mazzini of Italy. The line has a capacity to process 10 metric tones per hour ripened fruits. The processing line is fully integrated and controlled by PLC.

PACK HOUSE

FOODS AND INNS (P) Ltd has a set up a Fresh fruit and Vegetable processing facility from Grief, Spain. Fresh fruits including mangoes, bananas are processed along with tropical vegetables like Okra, Egg plant, Lemon, Bitter gourd etc. The facility also holds ripening chambers, pre cooling chambers and cold storage to handle fresh fruits and vegetables.

VAPOUR HEAT TREATMENT

To enable Fresh Mango exports to countries like Japan and Korea, FOOD AND INNS Ltd has commissioned the VHT facility. This ensures irradiation of the fruit flies in the fresh fruit. FOOD AND INNS Ltd is the first private organization to set up this facility in the country.

WATER MANAGEMENT

Water is an essential & precious natural resource. It is a nature’s gift. Without water there is no life on the earth. It is as important to the fruit processing industry as to the living being. But, water is becoming scarce year by year due to increase n its consumption in industries & agriculture sectors & indiscriminate use /wastage by human beings, therefore, it needs a integrated& scientific approach for its management to use it so that undesirable wastage is avoided which helps us to save water for right utilization .

STAGE OF USE OF WATER TO THE BEST EFFECT IN OUR FACTORY

Our main source of water is bore wells. The water is potable. Water from all bore wells is collected in a sump. From there it is pumped to over head tank to supply to various locations of use. To manage appropriately & conserve the water, we are taking following steps at various locations of its use:

o FRUIT WASHING

The water is re-circulated after filtration up to it becomes dirty. This water is chl0rinated to control the contamination by continuous dosing of chlorine in the washing tub.

o STEAM GENERATION

Water for boiler feeding is treated in water softener to reduce the hardness. The steam condensate of evaporator is recycled to boiler to save water & energy as condensate will have high temperature.

OUR CERTIFICATIONS INCLUDE

o HACCP (FOOD SAFETY CERTIFICATION) BY TUV, GERMANY o ISO 9001:2000 (QUALITY MANAGEMENT SYSTEM) BY TUV,

GERMANY o KOSHER BY STAR-K, USA o SURE GLOBAL FAIR (SGF) o HALAL CERTIFICATION

CUSTOMER FOCUS

Loyalty and a strong relationship in business are built out of years of experience in a particular industry. FOODS AND INNS Ltd expertise in the business and its contacts with Agents\Brokers, Blender-bottlers, End User, Off-shore logistical service providers has made the supply chain process extremely competitive. Given our renewed emphasis on this product line we are strengthening relationships in key markets across the buyer spectrum, understanding unique requirements and delivering value to select global customers. FUTURE PLANS

Development of the Indian market for foods and inns. Thrust of exports. Expansion in 4th Aseptic manufacturing capacity. Use of IT as a tool to further Business goals. Setting up of a Central R&D lab.

Backward integration for improved quality of raw materials using contract farming/ organic cultivation.

METHODOLGY

The data is of two type:

Primary data Secondary data

PRIMARY DATA:

Personal interview and discussion was conducted for the collection of data.

SECONDRY DATA:

Secondary Data are already present one and it is second hand information. We collect through books magazines, newspaper, journals & websites etc.,

In this study, the secondary data was collected from the company like

1. From financial department of the company retaining to the last 4 years. 2. Annual reports of the company during 2004-2008. 3. Financial statement of the company. 4. Company records related to financial management. 5. From various financial management next books.

OBJECTIVES

1. To analyze the changes in assets and liabilities from the end of one period of the time to the end of another period of time

2. To know various needs for which funds were obtained during a particular period based in which these funds where employed.

3. To understand flow of funds in current or non-current accounts.

4. To find out the sources from which additional funds were derived and the use to which their sources were put.

5. To analyze the changes of financial position of Foods and Inns Limited enterprises between two dates.

SCOPE OF THE STUDY

The present study focuses as sources of funds and application of funds for a period of time. The study is confirmed to find out the changes in the financial position of the Foods and Inns Limited between the beginning and ending financial date.

It is a technical device designed to analyze the changes in the financial condition of the business enterprises between two dates.

This funds flow statement is a statement which indicates various means by which the funds have been obtained during a certain period and the ways to which these funds have been used during the period.

The term funds used here means working capital that is the excess of current assets over current liabilities. It is an essential tool for the financial analysts and is of primary importance to the financial management.

Now a days it is being widely used by the financial analyst credit granting institutions and financial managers. The basic purpose of the funds flow statement is to reveal the changes in the working capital on the two balance sheet dates. It helps in the analysis of financial operations. It helps in the formation of realistic dividend policy. It helps in the proper allocation of resources. It helps in appraising the use of working capital and finally it acts as future guide.

LIMITATIONS

1. It should remember that a funds flow statement is not a substitute of an income statement or a balance sheet.

2. It provides only some additional information as regards changes in working capital

3. It cannot reveal continuous changes.

4. The study based on the available annual reports and internal information only

STATEMENT OF CHANGES IN WORKING CAPITAL

Particulars 2004 2005 Effect on Working CapitalIncrease Decrease

Current Assets(C.A): Inventories

S- debtors

Cash & bank b/s

7,13,67,793

4,29,93,288

74,19,293

12,81,66,354

7,53,95,773

1,31,16,915

5,67,98,561

3,24,02,485

56,97,622

Loans & Advances

Investment

12,08,62,668

2,00,37,665

12,43,06,658

2,02,53,865

34,43,990

2,16,200

Total C.A 26,26,80,707 36,12,39,565 Current Liabilities(C.L):

Current Liabilities 7,89,31,000 9,76,61,293 1,87,30,293Provisions 62,60,500 87,66,558 25,06,058Total C.L 8,51,91,500 10,64,27,851 Net Working Capital(W.C) (C.A-C.L)

17,74,89,207

25,48,11,714

Increase in W.C 7,73,22,507 7,73,22,507TOTAL 25,48,12,714 25,48,12,714 9,85,58,858 9,85,58,858

TABLE NO: 4.1

FUNDS FLOW STATEMENT FOR THE YEAR 2005

TABLE NO: 4.2

Sources Amount Applications AmountReserves & Surplus 2,56,90,675 Purchase of Fixed Asset 5,81,19,086Deferred Tax Liability 27,07,963 Secured &Unsecured Loans 10,12,39,341 Increase in Working Capital 7,73,22,507

Miscellaneous

Deferred Tax Assets

Capital W-I-P

4,25,968

75,060

53,02,586

Decrease in Working Capital ----

13,54,41,593 13,54,41,593

Interpretation:

Comparing the year 2004 and 2005 the statement of changes in working capital shows the increasing balance. In the particular year the current assets are increased then the current liabilities.

As a result the funds flow statements, the main sources of funds are secured and unsecured loans, differed tax asset and liabilities. The firm utilizing this fund for the purchasing of fixed assets. The financial position of FOODS AND INNS LTD in this particular year is good


TABLE 4.3



S- debtors

Cash & bank b/s

12,81,66,354

7,53,95,773

1,31,16,915

12,97,31,772

8,38,39,716

1,90,38,055

15,65,418

84,43,943

59,21,140

Loans & Advances 12,43,06,658 16,95,49,938 4,52,43,280

Investment 2,02,53,865 2,07,12,685 4,58,820Total C.A 36,12,39,565 42,28,72,166 Current Liabilities(C.L):

Current Liabilities 9,76,61,293 12,60,94,310 2,84,33,017Provisions 87,66,558 1,36,95,608 49,29,050Total C.L 10,64,27,851 13,97,89,918 Net Working Capital(W.C) (C.A-C.L)

25,48,11,714

28,30,82,248

Increase in W.C 2,82,70,534 2,82,70,534 28,30,82,248 28,30,82,248 616,32,601 61,63,601


TABLE NO : 4.4

Sources Amount Applications AmountReserves & Surplus 1,72,91,856 Deferred Tax Liability 1,01,57,385 Purchase of Fixed Asset 94,43,100Secured &Unsecured Loans 1,11,00,748 Capital W-I-P 11,06,355Miscellaneous 2,70,000 Increase in Working Capital 2,82,70,534Decrease in Working Capital ---- 3,88,19,989 3,88,19,989

Interpretation:


As a result the funds flow statements, the main soureces of funds are secured and unsecured loans, differed tax liabilities. The firm utilizing this fund for the purchasing of fixed assets and capital WIP and the financial position of FOODS AND INNS LTD in this particular year is good.

STATEMENT OF THE CHANGES IN WORKING CAPITAL

TABLE NO: 4.5



S- debtors

Cash & bank b/s

12,97,31,772

8,38,39,716

1,90,38,055

16,29,75,024

8,28,77,911

2,08,44,726

3,32,43,252

18,06,671

9,61,805

Loans & Advances

Investment

16,95,49,938

2,07,12,685

14,47,75,180

3,13,12,685

1,06,00,000

2,47,74,758


Current Liabilities 12,60,94,310 10,20,16,222 2,40,78,088 Provisions 1,36,95,608 2,92,82,571 1,55,86,963Total C.L 13,97,89,918 13,12,98,793 Net Working Capital(W.C) (C.A-C.L)

28,30,82,248

31,14,86,733

Increase in W.C 2,84,04,485 2,84,04,485 31,14,86,733 31,14,86,733 6,97,28,011 6,97,28,011


TABLE NO: 4.6

Sources Amount Applications AmountReserves & Surplus 2,71,37,838 Deferred Tax Liability 57,47,268 Purchase of Fixed Asset 5,11,30,616Secured &Unsecured Loans 5,41,02,778 Capital W-I-P 74,52,783

Miscellaneous ---- Increase in Working Capital 2,84,04,485Decrease in Working Capital ---- 8,69,87,884 8,69,87,884

Interpretation:


As a result the funds flow statements, the main sources of funds are secured and unsecured loans, differed tax liabilities. The firm utilizing this fund for the purchasing of fixed assets and capital WIP and the financial position of FOODS AND INNS LTD in this particular year is good



S- debtors

Cash & bank b/s

16,29,75,024

8,28,77,911

2,08,44,726

19,61,81,156

7,51,71,661

4,93,33,939

3,32,06,132

2,84,89,213

77,06,250

Loans & Advances

Investment

14,47,75,180

3,13,12,685

14,98,42,311

2,17,12,685

50,67,130 96,00,000


Current Liabilities 10,20,16,222 19,48,90,704 9,28,74,482Provisions 2,92,82,571 6,64,510 2,86,18,061 Total C.L 13,12,98,793 19,55,55,214

Net Working Capital(W.C) (C.A-C.L)

31,14,86,733

29,66,86,538

decrease in W.C 1,48,00,196 1,48,00,196 31,14,86,733 31,14,86,733 11,01,80,732 11,01,80,732


TABLE NO: 4.7


TABLE NO: 4.8

Sources Amount Applications AmountReserves & Surplus 2,74,91,433 Purchase of Fixed Asset 3,32,46,513Deferred Tax Liability 34,11,085 Secured &Unsecured Loans

8,01,93,229Increase in Working Capital --------

Decrease in Working Capital

1,48,00,196

31,14,86,734 31,14,86,734

Interpretation:

Comparing the year 2007 and 2008 the statement of changes in working capital shows the decreasing balance. In the particular year the current assets are decreased then the current liabilities.

As a result the funds flow statements, the main sources of funds are secured and unsecured loans, differed tax liabilities. The firm utilizing this fund for the purchasing of fixed assets. The financial position of FOODS AND INNS LTD in this particular year is good

FINDINGS

1. The working capital is increased year by year except last year. Apart to this the surplus funds also increased.

2. It is founded that the company is holding share capital stably.

3. The differ tax liability is increased in 2005-2006.Then it fall down.

4. The company was highly purchased the fixed assets in the year 2005&2007.Then in 2006&2008 the company used low funds for purchasing of fixed assets.

5. The company receives the secured and unsecured loans indicate fluctuating position.

6. The working capital is increased in 2005 to 2007 with a low variation in the year the working capital will be decreased.

7. The working -in- progress rapidly increased by large variation with the amount.

8. The investment is increased year by year up to 2007. In 2008 it is decreased.

SUGGESTIONS

The company may increase their share capital it helps to get more strength in financial position.

In 2008, the statement shows decreasing working capital in the company. It is to require raising short terms funds to solve the financial problems.

Tax liabilities should also be maintained in a standard manner. Regularly use funds in purchase of fixed asset it make profitability.

CONCLUSION

It can be concluded that in FOODS & INNS PRIVATE LTD The working capital in increased year by year except last year. And its main sources of funds are deferred tax liability, secured& unsecured loans. The main applications of funds are purchase of fixed assets & capital W.I.P.The over all performance of FOODS &INNS PVT LTD is very good.

Income statement of Foods and Inns Limited for the years

31-3-2004 and 31-3-2008

(Rupees)

Particulars 31-3-2004 31-3-2005 31-3-2006 31-3-2007 31-3-2008Net sales 61,98,28,811 79,52,51,258 97,41,37,384 1,21,85,00,922 1,46,20,02,142(-)Cost of goods sold 31,47,24,651 44,44,35,161 51,01,55,033 68,84,37,718 93,40,28,168

Gross profit 30,51,04,160 35,08,16,097 46,39,82,351 53,00,63,204 52,79,73,974(-)Operating expenses 29,47,64,297 29,84,58,636 45,37,28,308 48,18,88,406 52,84,66,511

1,03,39,863 5,23,57,461 1,02,54,043 4,81,74,798 (4,92,537)(+)Operating income 11,96,588 16,64,640 4,74,36,825 4,53,99,528 7,97,63,278

Operating profit 1,15,36,451 5,40,22,101 5,76,90,868 9,35,74,326 7,92,70,741

(-)Non-operating expenses

2,80,73,160 3,24,92,176 3,80,14,076 4,79,42,843 5,43,35,870

(1,65,36,709) 2,15,29,925 1,96,76,792 4,56,31,483 2,49,34,871(+)Non-operating income

39,63,754 95,26,969 1,19,34,020 54,39,562 2,27,48,838

Profit / loss before tax (1,25,72,955) 3,10,56,894 3,16,10,812 5,10,71,045 4,76,83,709

(-)Provision for tax 55,92,616 48,06,581 1,32,12,385 2,13,78,471 1,75,17,595

Profit / loss after tax (1,81,65,571) 2,62,50,313 1,83,98,427 2,96,92,574 3,01,66,114

Balance Sheet of Foods and Inns ltd.for the year

31-3-2004 and 31-3-2008

(Rupees)

Particulars 31-3-2004 31-3-2005 31-3-2006 31-3-2007 31-3-2008

ASSETS: 1.Currentassets loans&advances

Inventories 7,13,67,793 12,81,66,354 12,97,31,772 16,29,75,024 19,61,81,156

Sundry debtors 4,29,93,288 7,53,95,773 8,38,39,716 8,28,77,911 7,51,71,661

Cash&bank balances 74,19,293 1,31,16,915 1,90,38,055 2,08,44,726 4,93,33,939

Loans & advances 12,08,62,668 12,43,06,658 16,95,49,938 14,47,75,180 14,98,42,311

TOTAL CA 24,26,43,042 34,09,85,700 40,21,59,481 41,14,72,841 47,05,29,0672.Fixed assets 20,69,24,175 26,50,43,261 27,44,86,361 32,56,16,977 35,88,63,490 Capital work in progress 61,74,275 8,71,689 19,78,044 94,30,827 10,19,80,257 TOTAL FA 21,30,98,450 26,59,14,950 27,64,64,405 33,50,47,804 46,08,43,7473.Invesments 2,00,37,665 2,02,53,865 2,07,12,685 3,13,12,685 2,17,12,6854.Deffered tax assets 75,060 - - - -5.Miscellanious expenditure 6,95,968 2,70,000 - - -TOTAL ASSETS(1+2+3+4+5) 47,65,50,185 62,74,24,515 69,93,36,571 77,78,33,330 95,30,85,499LIABILITIES: 6.Current liabilities, provisions: Current liabilities 7,89,31,000 9,76,61,293 12,60,94,310 10,20,16,222 19,48,90,704 Provisions 62,60,500 87,66,558 1,36,95,608 2,92,82,571 6,64,510 TOTAL CL 8,51,91,500 10,64,27,851 13,97,89,918 13,12,98,793 19,55,55,2147.Loan funds: Secured loans 18,94,68,368 29,65,15,257 30,98,19,235 37,06,83,028 44,54,90,381 Unsecured loans 4,54,67,688 3,96,60,141 3,74,56,910 3,06,95,896 3,60,81,772 TOTAL 23,49,36,056 33,61,75,398 34,72,76,145 40,13,78,924 48,15,72,1538.Share holders funds: Share capital 1,22,58,200 1,22,58,200 1,22,58,200 1,22,58,200 1,22,58,200 Reserves & surplus 14,41,64,429 16,98,55,104 18,71,46,960 21,42,84,798 24,17,76,231 TOTAL 15,64,22,629 18,21,13,304 19,94,05,160 22,65,42,998 25,40,34,4319.Deffered tax liabilities - 27,07,963 1,28,65,348 1,86,12,616 2,19,23,701TOTAL LIABILITIES(6+7+8+9) 47,65,50,185 62,74,24,515 69,93,36,571 77,78,33,330 95,30,85,499

BIBLIOGRAPHY

The following books and websites have been referred by me during my project work.

1. Financial Management

I.M.PANDY

2. Financial Management

KHAN AND JAIN

3. Management Accounting

M.Y.KHAN

WEB SITES

WWW.GOOGLE.COM

WWW.FOODSANDINNS.COM