Introduction of The Study: 9849458383 Bhaskar (Type Text)

INTRODUCTION OF THE STUDY
The Funds flow statement is the changes in financial position are prepared to determine
only the sources and uses of working capital between dates of two balance sheets. working
capital is defined as the difference between current assets and current liabilities. Working capital
determines the liquidity position of the firm. As a historical analysis, the statement of changes in
working capital reveals to management the way in which working capital was distained and used
with the insight management can prepare the estimate of the working capital flows. A statement
reporting the changes in working capital is useful in addition to the financial statements. A
projected statement of changes in working capital is immensely useful in the firms long range
planning management, for example, wants to anticipate the working capital flows in order to plan
the repayment schedules, its long- term debt for a fast growth and expansion, a firm needs larger
on long- term assets are also required to determine whether or not adequate working capital will
be generated to meet the firms expansion, if not the firm can make arrangements in advance to
procure funds from outside to meet its needs.
The study will provide a use full model to the financial analysts and corporate planners to
enable them to determine the effects of the various funds on the assets holding patterns. With the
help of such a model, one can quantify the impacts of the change in employed capital on the
fixed assets and working capital of a firm.
In the study we want to test the
statistical relation between the change
in the
components of working capital and the fixed assets of a company. Such a study may also be
useful in investment and financing decisions.
Funds flow statement is defined as the statement of changes in financial position, Prepare
to determine only the sources and the uses of working capital between the dates of two balance
sheets.
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SOURCES OF FUNDS
Issue of additional share capital or debentures for cash
Borrowings made by the firm for a long term.
Non operating incomes such as income from investment or profit from the sale of assets /
investment
APPLICATION OF FUNDS
If there is business loss to the firm then this tantamount to decrease or use of funds
The redemption of preference share capital or decrease during a year also utilize the
funds
Repayment of a long term loan during the year.
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SIGINIFICANCE OF THE STUDY

The basic need is to complete a project work for the partial fulfillment of my Masters
degree. With this need the search started for the topic that was appealing and that would make
most of my skills and abilities.
The project work is carried out by me in Regency Ceramics Limited, Yanam. The aim of
project is to analyze the funds flow analysis of the company.
For a better understanding of the enterprise it is essential to identify movement of funds
during the year and their consequent effect on its financial position. This information is made
available in the statement of change in financial position.
The funds flow statement provides an analysis of changes in the firms working capital
position. Funds flow statement is also known as statement of sources and application of funds or
management of funds statement
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OBJECTIVES OF THE STUDY
The primary objective of the study is to evaluate the financial position of

REGENC CERAMICS LIMITED.
To asses the present profitability and operating efficiency of
REGENCY
CERAMICS
LIMITED as a whole as well as for it
different departments.
To find out relative importance of different components of the financial position
of the firm through funds flow analysis.
To identify the reasons for change in the profitability financial position of the
firm.
To asses how effectively the company is using its resources.

To offer suggestions for improvement in relevant aspects.
To make overall view on the theoretical approach of funds flow analysis.
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METHODOLOGY OF THE STUDY
SOURCES OF DATA:
The data that is necessary for doing this project should be collected through two sources.
1. Primary data
2. Secondary data
PRIMARY DATA:
The primary data comprises of information obtained by the candidate during discussions
with head of the departments and from the meeting with officials and staff of the Regency
Ceramics Limited.
SECONDARY DATA:
The secondary data has been collected from the information through annual reports,
Public report and other printed materials supplied by the Regency Ceramics Limited.
Data also has been collected from kotaris industry directory, journals, weekly magazines
related to commerce and industry and business newspapers like economic times and business
lines.
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LIMITATIONS OF THE STUDY
The study is based on the past five annual reports of the REGENCY CERAMICS LTD.
The study mainly has been carried out based on the secondary data i.e., financial
statements.
The time given to complete this project is very limited.
The funds flow are generally calculated from the post financial statement and as show
they are not the indications of future.
The Analysis is made from the information given by an organization.
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INDUSTRY PROFILE
HISTORY AND DEVELOPMENT OF CERAMIC CULTURE:
Ceramic Industry is one of the oldest Legacies in the world. It dates back to human
civilization. The legacy of ceramic Industry can be claimed to have come from ancient pottery
industry. The area of pottery is a part of Indian culture and still practiced as tradition in Indian
sub continent . But before Indians could claim as their own, the developed countries gave a new
dimension to this industry by mechanizing and computerizing the production with a wide
application.
Ceramics, which finds various applications in both industrial and construction, had a
significant presence in the construction sector. Ever since India began economic planning after
independence the trusts for infrastructure have always been felt. One of the basic needs for the
people, that is Shelter have always been deprived in India. Since liberalization in the eighties the
raising levels in the income and the Govt. encouragement in inserting the infrastructure and the
reduction in interest rates have a boom to housing standards. The increasing activity of real estate
business and increasing in life style have increased the business of ceramic tiles.
In India the industry was born in 1958 when H&R JOHNSON with the collaboration of
Johnson (U.K) . Set up the first plant for manufacturing wall and then followed by SPL
(Formerly so many Millington). Spartan Ceramics entered in 1985 and the revolution is on the
anvil with the instruction of floor tiles for the first time in India.
With many advantages and wider range of colors than the traditional mosaic tiles demand for
floor tiles boomed. This encourages the entry of many other players like Regency Ceramic, Ka
jaria Ceramics, Murudeswar Ceramics, Bell Ceramics etc., into the floor tiles segments.
The government continued to lower the excise duty by on Ceramic tile from as high as
54% in 1995-96 budgets in 2002-03 budgets. This is due to the fact that Ceramic tiles are viewed
as luxury items in the past. Since the excise duty comes down the price of ceramic tiles have
been cheaper. The luxury items of rich people have become the necessity of middle- income
people.
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INDUSTRY CHARACTERSTICS:
1. Working Capital Intensive:
The raw materials have to be stored in advance. The clay has to be stocked for at least
four to six months as mixing is not possible during rainy season and also could be heavier for
transportation at that time due to adsorption. The costly glazes that are imported also have
to be stored for about four months.
Credit periods are also so long for the institution caters about 90 to 100 days as
apposed to the 30 to 35 days for those serving in the retail segment. The industry being
subject to varying tastes, tiles in variety of sizes and colors have to be stocked.
The minimum being 20 to 25 designs. These entire mean that the working capital
cycle of about seven and half month of sales.
2. Capital Intensive:
With the minimum economic sizes having shot up from 12000 Mt in 1986 to 85000
Mt investment of Rs.1.60 crores to set up the new plant. The capital intensive nature can also
be gagged form the fact the asset turnover ratio is low 0.70. The capacity utilization should
be as 75% break even.
3. Power and Fuel intensive:
These account for about 20% of the manufacturing cost. Wall tiles consume more
fuel, as they are double tired. Generally natural gas LPG and naphtha are used as fuel for
firing the tiles. Cost wise natural Gas is lowest, followed by Naphtha and LPG. Currently,
players in north and west like KHALARIA and BELL are an advantage as they asses to
natural gas of HBG pipeline. Regency Ceramics to have an advantage of basing their plant
near Godavari basin and have an access to tatipalli gas pipeline.
4. Location near Markets:
As transportation over a long distance is costly and profit comes from returns to the
markets plays an important role in profitability, KHAJARIA and SPL dominate the north
while H & R JHNSON, BELL and SPL rule the west ; MRUDESWAR, REGENCY AND
SPARTEK share the south.
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5. Brand image/Distribution Network:

Strong brand image is definitely an entry barrier. A large dealer network not only helps in
popularizing the brand also protects the margins , as realizations are higher and faster in the retail
segment.
6. Production Techniques:
These are broadly two techniques used. The newer dingle firing and older double fast firing.
A third double fast firing is also used less frequently.
Generally, double firing is batch processing and batch takes about 45 hours. Advantagesare
that the size and color variation are minimum. Strength is higher and the glass is good but the
fuel consumption is more leading to higher production cost. There are further three methods in
double firing. They are
Roller/ roller
Tunnel/ tunnel
Tunnel/roller
While the roller technology is for continue production. The tunnel technology is
for batch production. Single firing was introduced for the first tine in India for their
floor tile manufacturing process. Its fuel consumption is also lower.
Floor tiles are usually manufacturing by the single roller technique. Wall tiles can
also be produced by the same technology is used in bigger size tiles while the tunnel
technology is for smaller size tiles.
SOCIO- ECONOMIC ENVIRONMENT AND INDUSTRIL SCENARIO:
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The Ceramic industry during the past few years was registering a fare growth, despite the
challenges it faced form the unorganized sector and cheap import. The advanced technology has
seen a sustained growth in installed capacity in this sector. The demand for tiles form different
countries has highlighted that the India industry needs to concentrate on quality on a large scale
basis or match the international standards.
Ceramic happens to be an energy intensive industry and fuel is an important component
that calls for furnaces with clean fuels having less pollution emission to attain high quality and
productivity. India has abundant qualitative raw materials
required for making advanced
ceramic tiles and also cheap efficient manpower. Its geographical location is highly suitable for
international trade. But the major deterrents are the high energy and distribution costs along with
the import of glazes and colors and appropriate advanced technologies. Now the Govt. has
opened up the imports, there a threat off other assign countries dumping their products in India.
MARKET STRUCTURE:
Ceramic tiles are being manufactured both in large and small scale sectors, with great
variance in sizes, quality and standards. There are about 25 units in organized sector. The
organized sector caters to the needs of various states: the unorganized sectors caters to the needs
of only local markets. The states, which are having these small scale sectors, are Gujarat,
Kerala etc.,
Ceramic tiles market can also be classified in to floor and wall tiles. The floor tiles
production and consumption works out to about 40% of the total demand and the balance 60%
for wall tiles production and consumption.
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INDIAN MARKET INSTALLED CAPADITIES:

The major players in the ceramic tiles industry and their installed capacities are given
below.
INSTALLED CAPACITIES (IN MPTA)

S.No Company
Floor Tiles
Wall Tiles
Bell Ceramics
40,000
55,000
H.R.Johnson
1,00,000
95,000
Kajaria Ceramics
80,000
50,000
SPL
45,000
42,000
Madusudan Inds
--
25,000
Oriental Ceramics
--
50,000
Spartek
60,000
--
EI Parry
--
24,000
NITCO
1,20,000
2,40,000
10
Murudeswar
25,000
25,000
11
Regency
90,000
--
Total
5,60,000
6,06,000
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CONSUMPTION PATTERN AND DEMAND:

In India the Ceramics Industry is estimated of having a turnover of Rs.1,500
crores and this is expected to reach Rs.2,000 crores by 2003.In Indai the per capital
consumption of Ceramics tiles is only 0.05 Sq.Mts. Compared to 0.25 Sq.Mts in China
and 2 Sq.Mts in European Countries. The estimated growth of ceramic consumption is in
range of 25.03% per annum, compounding . By 2003 the consumption is exempted to
rise to 40.00 lakh MPTA. Though there are little In the growth rate the overall growth
rate holds good. More are less all players in the industry are either having plans or
implementing expansions.
The consumption pattern region wise in India is as below:

Zone
State Covering
Consumption Share
South
A.P., TAMILNADU, KARNATAKA & 30%

KERALA
WEST
MAHARASTRA,
GUJARAT,
MADHYA PRADESH
EAST
GOA
& 45%
HIGHLY
COMPETATIVE ZONE
WEST BENGAL, ASSAM, BIHAR,UP, 10%

ORISSA
NORTH DELHI,
PANJAB, 15%
HARYANA,RAJASTAN,
JAMMUKASMIR & HP
COMPETATORS MARKET SHARE:
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The following is the list of market share occupied by different

companies.
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COMPANY
MARKET SHARE
Murudeswar
16%
Kajaria
15%
Regency
13%
Spartek
14%
HR Johnson
10%
Somany
11%
Bell
11%
Others
11%
Total
100%
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CYCLICAL TRENDS IN THE INDUSRTY:

Ceramic tiles Industry is subjected only to moderate cyclically, that too in terms of
price fluctuations of both inputs and outputs.
GOVERNMENT CONTROLS AND REGULATORY FRAME WORK:

The ceramic industry is not a pollution generating industry. However , it is subject to
clearance from pollution control board . There are no specific controls and
regulations to hamper the growth of ceramic industry.
PRICE SENITIVITY:
The market forces influence the prices of ceramic tiles. The prices of ceramic tiles
have fallen by about 20% in the last three years, as the industry is facing the price
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war and extended the credit period among major payers. However this is only a
temporary phenomenon and the companies with their strength of lower cost of
production are confident of protecting their margins.
INDUSTRY SCENARIO AND FUTURE PROSPECTS:

The growth in the industry is mainly on account of the following.
a) Reduction in excise duty from 55% to 16%.
b) The increased awareness among the Indian middle class of the need for hygiene
at the house and public places.
The industry is expected to grow at 25% due to the following factors:

1. The expected further reduction in excise duty rates in ceramic tiles.
2. Increased trend of shift towards ceramic tiles traditional mosaic flooring.

3. Substantial reduction in interest rate on housing finance.
4. Proposed amendment in the urban land (ceiling and regulation) Act,1976 which
would add to the housing stock of the country.

5. Shortage of 9.5 million houses in the urban segment and 23.5 million in the rural
segment.
6. Increase in replacement market in the middle class segment, where they are going
in for ceramic tiles for flooring and tiles in kitchen and bathrooms, not only up to
5/6 feet, but also up to the roof top, with latest designs and colors.
7. The middle class segment is replacing flooring and in case of new construction
going with ceramic tiles , in view of
Low gestation
Easy to lay the tiles
Vast range of designs and colors.
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Better properties in term of hygiene, abrasion, resistance, acid resistances

and scratch proof
EXPORT MARKET:
The ceramic tile production In the world is around three billion sq. Mts. per year. And
the per capital ceramic tile consumption is also showing an increased trend. There are many
countries in the world, which are depending on the other countries for their requirement of
ceramic tiles. The major countries among them are Gulf , U.S.A. , Australia and CIS countries.
Though the competition is very severe among many exporting countries in India, there
lay the vast market for ceramic tiles.
Even at the competitive price, 20-30% of Indian production is being exported. As the
domestic consumption is expending the Indian manufacturers are having a lukewarm approach
towards exports. However in the long run, due to increase in capacitates and increase in
competition in domestic market, Indian manufacturers are
going to increase their export
volumes.
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PROFILE OF THE REGENCY CERAMICS LIMITED

HISTORY OF THE COMPANY:
Ever since the industry was de-license provided they set up their units
in backward areas. There had been a space of registration with directorate,
general of technical development followings a boon in housing activity. The
hellion period in late eighties has pushed many entrepreneurs to enter in to
ceramic tiles industry. Though ceramic tiles are viewed as luxury items till
recently by the Government. There is substantial increase demand thanks to
the improved standard of living.
Not with standing the difficulties faced by the industry there is scope
for setting up units in Andhra Pradesh, Gujarat, Utter Pradesh and
Tamilnadu. Andhra Pradesh particularly Godaari test, is ideal say a seniors
officials of A.P State Industrial Development
belt, is ideal says is senior
official of A.P State Industrial Development Corporation which has sanctioned

term loans are particulars in equity capital of many units.
Regency Ceramics Limited is one of such industry established in the
year 1985 at Yamuna (integral part of Union Territory of Pondicherry) on the
Godavari River belt of E.G.Dt of Andhra Pradesh.
The company has established on 4 acres of land to manufacture glazed
and unglazed ceramic floor and wall tiles.
The plant is constructed with technical collaboration of Wello
industry of Italy, with a initial capacity of 40000 Sq.mt per day.
The initial investments were 12 crores.
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The plant commercial production was started in the year 1986 with a
capacity of 4000 Sq.mt per day. The company took up expansions in 1991 in
order to meet the growing demand for the product in the export and
domestic market. 1991-4500Sqm. 1996-6000Sqm, 2000-2400Sqm and 200112000Sqm.
The output for expansion was Rs. 28 crores with an additional
production capacity of 21000 Mt. per annum. Thus, bring the total plant
capacity of 46000 Mt. per annum (25000+21000Mt).
The increased demand and acceptability of regency Ceramic Tiles as
further prompted the company to extent further production facility to 2 lakhs
meter in a phased manner with divorced products in wall and porcelain tiles.
The plant started up as on 100% export oriented unit and later got the
permission to service the Indian market as well. Thus, substantial revenue is
generated by way of sales tax, excise duty and infrastructure facilities at
Yanam.
PROCESS DESCRIPTION:
The process description is different from tiles to wall tiles.
FLOOR TILES:
Raw material such as ball clay, Feldspar and black clay are weighted in
proportion in batch quantities and transferred to ball mill through a belt
conveyor. On the conveyer mantic separators are provided to remove tramp
iron particulars. The raw materials are around in ball mill along with water to
from slip. The slip is transferred and stores in storage tanks. From the
storage tanks the slip is pumped is to pray drier by high pressure pump in
autopsied the sherry falls down. It becomes dry granulate power with 6%
moisture content, the dried power is stored in silos. Form the silos the
powder transforms required sizes. The green tiles coming out of the presses
are conveyed automatically feedings systems transfers the tiles from drier to
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glaze lines where different glasses and colorants are applied. Preparation of
glazes is carried out in wet mills with porcelain lining.
The tiles with the application of glazes and colorants are then
conveyed automatically in to the single layer fast firing kiln, where the tiles
fired at above 1150 degree Celsius approximately. The fired tiles coming out
of the kiln are checked as per the quantity parameters. Sorted out of
different grades by strapping machine for exports and placed on pallets. The
pallets are transferred to the finished to the finished product godown.
CERAMIC TECHNOLOGIES FOR THE PRODUCTION TILES:

1.
CLASSIFICATION
Floor tiles
Wall tiles
A)
1. Porcelain tiles (water absorption<0.01%)

2.Glazed / unglazed stoneware (water absorption <3%)
3. Glazes semi stoneware (water absorption 3-:6%)
B)
1. Monoperosa (water absorption 10-:18%)
2. Fast double fired tiles (water absorption 19-:18%)

The aforesaid classification divides tiles into the most important
groups, according to the enclosed UNI table, which has introduced in 1984,
this method of classification by referring to water absorption (porosity) ad
shaping (pressing of extrusion)
2.
RAW MATERIAL FOR BODIES:
Clays, plastic materials:

They are characterized by a very fine particle size distribution, which
grant them the hygroscopic characteristics necessary to bind with the water,
by becoming plastic.
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In fact, they are utilized in bodies, in substantial percentage, so as

grant the pieces shaping both by pressing and extrusion.
Lean or inert material:
The lean materials include fluxes, such as sodic or potassic feldspars,
utilized in floor tiled bodied, and carbon materials utilized in wall tile bodies,
which beside being fluxes, confer high porosity on the body, because of their
out grassing during firing.
3.
RAW MATERIAL FOR GLAZES AND ENGOBES:

Partly composed pf the above mentioned minerals and partly of
chemical products. Minerals shall fire white or very light colored and
shall be selected and practically constant both with regard to their
chemical, physical and mineral composition, but also to their particle
size distribution of utilization.
Kaolins and clays must moreover be washed (i.e.: filter pressed water
suspensions) and dried.
The max. grains of hard materials (i.e.: quartz, feldspars) must be
lower than 125 microns.
Chemical products shall be at least of technical degree.
THE MAIN COMPONENTS OF GLAZES AND ENGOBES ARE:
Washed kailin
Washed clay
Potassic feldspar
Sodic feldspar
Potassic sodic feldspar
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Quartz
Calcine alumina
Calcium carbonate
Dolomite
Barium carbonate
Zinconium silicate flour and micronized
Wollastonite
Borax
Boric acid
Lithium carbonate
Potassium carbonate
Sodium carbonate
Inc oxide
Minium
Series of ceramic stains for glazes and vitreous china

bodies:
Carbon methyl cellulose
Fixing agents
Various deflocculates
Screen printing ink vehicles
4. CERAMIC BODIES:
Ceramic bodies can be divided in two main classes.
A) NON CALCAREOUS FOR FLOOR TILES.
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This class of bodies differs from the previous one, become it does not
contain carbonates, which are, if at all, present in very low percentage.
As a matter of fact, their low water absorption as well as their high
nitrification degrees, typical of wall tiles, excludes their use.
On the contrary, feldspatchi, sodic and or potassic fluxes (i.e.: alibite,
pegmatite.) which are produce at stronger verification degrees and high
temperatures are used.
B) CALCAREOUS FOR WALL TILES:
Called this way, because of their high content of carbonates brought

about by various minerals dolomite, calcite and so on or by pure CaCO3.
These minerals act as flixes, but give a high porosity of the tiles after
firing due to the strong out gassing of Co3 group at about 900 Deg. C, such
as to contain also the shrinkage (contraction) of material, avoiding any
possible geometrical defect.
The other materials utilized, are common for both bodies, thats to say,
for clays white and colored (according to the producers choice) which grant
plasticity and aloe the piece shaping.
Whereas interests, such as quartz, pyrophyllite. Are added too confer
skeleton on materials and to color the linear expansion coefficient of the
support, which be in accordance with glaze in order to avoid defects such as
peeling or crazing, convexity or concavity of pieces resulting form a wrong
connection between support and glaze alphas.
SINGLE FIRING
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Glazed / unglazed stoneware
water absorption >3%
Glazed / unglazed semi stoneware

Monoporosa
water absorption3-:6%
water absorption 10-: 18%
5. PRODUCTION PROCESS:
Wall / floor tiles.
(These productions can be described together as they differ only with
regard to the body composition already described and the maximum firing
temperature Deg. C)
1) GRINDING:
The grinding of raw materials compounding ceramic body is carried out
in wet conditions through rubber or silica lined rotary mills and with grinding
load composed of silica pebbles.
Raw materials are weighted in a weighing bin and by means of a
conveyor loaded inside the mill, according to a predetermined formula. Then
a 50% quantity of water and a low percentage of deflocculates are added to
the dry product, in order to allow a better flowing of the slip inside the mill.
The grinding process finished when the particle size distribution of raw
materials reaches the requested fineness; this being determined through the
dry residue found on a screen made up of determined meshes.
2) SPRAY DRYING:The slip, coming from grinding and ready for spray drying process, so
as to have the powder prepared for the pressing phase, is then stored inside
big underground tanks.
The slip is pumped at about 20 bar, by nozzles which spray it in micro
spheres, inside a chamber where in counter current it meets with a flow of
hot air (about 400 Deg. C at the entry:- 100 Deg. C at the exit)
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Which provides for the drying of the slip spheres by leaving only a residual
humidity (4-:6%) necessary for the pressing phase.
Thus the dried spheres falling towards the spray dryer cone exit hole
are stored, by means of a belt, inside a series of soils for at least 24 hours.
Necessary time to homogenize the residual humidity from the middle
towards the edges of the spray dried power spheres. Thereafter the power
is ready to be pressed.
3) PRESSING:
this is the phase of tiles shaping. Tiles were obtained by loading the
power in to a die set having variable cavities, according to the requested
sized and then pressed with a determined to pressing power.
This power, given by the oleo dynamic press, divided by the total
pressing surface (total surface of tiles is called specific pressing pressure and
changes according to the type of product (wall tiles about 210 Kgs/sq cm
floor tiles about 350 kgs/sq cm porcelain tiles about 400 kgs/sq cm) the
problems and the technological characteristics of the process.
4) DRYING:
Drying of tiles is called out by using the stream of hot air which by
convection, warms up the tiles by allowing the gradual evaporation of a
water percentage of 4:-6% (residual humidity) still present in the pieces after
pressing.
Two different kinds of spray dryer are usually utilized for his process:
vertical and horizontal.
In both dryer, hot air is let into an insulated channel and through gates,
let into tiles channel from where it is then sucked up close to the material
inlet area in order to create a growing temperature (Deg. C) curve towards
the end of the drying cycle, at about 140 Deg. C.
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Otherwise, a too high temperature (Deg. C) at the beginning of the

process could damage the pieces with cracks formed by a too rapid
evaporation.
5) GLAZING:
With regard to wall and floor Monoporosa the tiles coming out from the
dryer are sent, still hot to the glazing line, reaching the first application at
temperature (Deg. C) of about 80 Deg. C. So as to allow the evaporation of
most of the water contained in the glazes.
Otherwise, thats to say if tiles are could, there will be the complete
absorption of glazes water in the support making it friable and requiring a
further drying process before firing.
The first application is given by the encode, which is a suspension
similar to the glaze, but much more refractory utilized as insulator between
support and glaze.
The second application is given by the glaze, which grants the basically
characteristics to the product. Polished semi matt, matt, colored and so on..
For what concerns floors tiles, two double disk cabins are usually used
for the first two applications whilst for all tiles, its advisable to make use to
two bell shaped spreaders are utilized because by forming a glaze film,
they make it possible to obtain a smother and mirror like surface in the
finished product.
Following these two basic application there is the choice of decorations
which can consists of drawings made by silk screen printing machines,
mottling of colored glazes through spray guns, dripping of glaze obtained by
utilized the cabins with a very low disks speed, so as to spray dry the glaze
less, or by applying granules of frits or dry glaze by means of suitable
equipments.
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At the end of glazing the material can automatically be stored in layer

trucks or be fed directly into the kiln for the final firing phase.
6) FIRING:
It is carried out inside rapid continuous cycle roller kilns.

From a technological point of view, kiln are dividend into five sections.
1) PRE-KILN
2) PRE-HEATING
3) FIRING
4) COOLING/CONTROLLED SECTION
5) FINAL COOLING
7) SORTING OR CLASSIFICATION:
At the kiln exit the material is transferred to the sorting line, where an
operator classifies the pieces according to the possible surface defects, size
flatness.
The classification includes three qualities plus scrap:
1st quality: no visible defects at about 1.5 distances
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2nd quality: small visible defects

3rd quality: evident defects
Scrap: broken, cracked pieces and so in.
Europen standards exactly state the lux with which tiles shall be lit
up the observation angle and the examination distance for tiles to the
classified.
A part from surface defects visible only to the necked eye, there are
automatic machines, such as surface and size testers which automatically
classify pieces according to their flatness and dimensions.
Following the aforesaid operations, tiles are boxes, noted with quality
mark and factory name and then palletized and stored ready for sale.
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FLOW CHARTS
Manufacturing
process flow chart for floor tiles
RAW MATERIAL
RAW MATERIALS
RAW
PRESSER
WEIGHING HOOPER
DRIER
WEIGHT SCALE
BAR MILLS
GLAZE LINE
GLAZE MILLS
SPRY DRYER
UNIVERSAL LOADING
STORAGE TANK
BODY SLIP SEPARATOR
SORAGE CARS
UNIVERSAL UNLOADING
SLIP STORAGE TANK
KLIN
SERVIE TANK
SPRAY DRIER
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STORAGE LINE
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Manufacturing Process Flow Chart for

Wall Tiles
RAW MATERIALS
PRESSER
RAW MATERIAL
WEIGHING HOOPER
BISCUIT KLIN
WEIGHT SCALE
BALL MILLS
STPRAGE SYSTEM
GLAZE MILLS
BODY SLIPN SEPARATOR
GLAZE LINE
STORAGE TANK
SLIP STORAGE TANK
BOX LOADING
STORAGE CARS
SERVIE TANK
BOX UNLOADING
SPRAY DRIER
GLAZE FIRING KLIN
STORAGE LINE
POWSER STORAGE SIOLS
STOCK YARD
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CONCEPTUAL FRAME WORK

FUNDS FLOW STATEMENT
INTRODUCTION
The basic financial statement i.e., the balance sheet and profit and loss account (or) income
statement of business, reveal the net effect of the various transaction on the operational and
financial position of the assets and liabilities of an undertaking at particular point of time. It
reveals the financial status of the company. The assets side of a balance sheet shows of the
deployment of resources of an undertaking while the liabilities side indicates its obligation i.e.,
the manner in which these resources were obtained. The profit and loss account reflects the
results of the business operations for a period of time. It contains a summary of expenses
incurred and the revenues realized in a accounting period. Both these statement provide the
essential basic information on the financial activities of a business. The balance sheet give a
static view of the resources (liabilities) of a business and uses (assets) to which these resources
have been but at a certain point of time. It does not disclose the cause for changes in the assets
and liabilities between two different points of time. The profit and loss account, in a general way,
indicates the resources provided by operations. But there are many transactions that take place in
an undertaking and which do not operate through profit and loss account. Thus another statement
has to prepare to show the change in the assets and 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 statements.
The funds flow statement in a statement which shows the movement of funds and a report
of the financial operations of the business undertakings. It indicates various cans by which funds
were obtained during a particular period and the way to which these funds were employed. In
simple words. It is a statement of sources and applications funds.
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MEANING AND CONCEPT OF FUNDS:

The term Funds has variety of meanings. There are people who take it synonyms to
cash and to them there is no difference between a Funds Flow statement and cash flow statement.
While others include marketable securities besides cash in the definition of the term funds.
The term funds has been defined in a number of ways.
a.
In a narrow sense, it means cash only and a funds flow statement prepared on this
basic is called a cash flow statement such a statement enumerates net effects of
business transactions in cash and takes into account receipts and

b.
various
disbursements of cash.
In a broader sense the term funds refers to money values in whatever form it may
exist. Here funds means all financial resources used in business whether in the form of
men, material , money, machinery and other.
c.
In a popular sense the term funds means working capital i.e., the excess of current
assets over current liabilities, the working capital concept of funds has emerged due to
the fact that total resources of business are invested partly in fixed assets in the form of
fixed capital and partly kept inform of liquid or hear liquid form as working capital.
The statement can be classified into four:

Income statement
Funds Flow Statement
Statement of changes in financial position
Cash Flow statement.
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1. Income Statement:
As already indicated in an earlier chapter then an income statement measure the inflow of
assets resulting from rending of gods or services customers over a period of time.
2. Funds Flow Statement:
The statement measures the inflows and the out flows of working Capitals that
results from any type of business activity.
3. Statement of changes in financial position:
This statement has wider meaning than Funds Flow statement. It measures
changes both in Working Capital and non-Working Capital.
4. Cash Flow statement:
The statement measures in flows and the out flows of cash on account of any type
of business activity.
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 values from one assets 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 a source of funds and if it results in the decrease of funds, it is known as an
application of funds. Further, in case the transaction does not change funds. It is said to have not
resulted in the flow of funds. According to the working capital concept of funds, the term flow
of funds refers to the movement of funds in the working capital. If any transaction results in the
increase in working capital it is said to be a source or inflow of funds and it results in decrease of
working capital, it is said to be an application or outflow funds. In simple language funds move
when a transaction affects.
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A current assets and a fixed assets, or
ii.
A fixed and a current liability.
iii,
A current assets and a fixed liability.
iv.
A fixed liability and current liability.

And funds do not move when the transaction affects fixed assets and fixed liability or
current assets and current liabilities.

Kenneth medley and Ronald Gibers define the term funds as one used in the sense of
spending power, it refers to the value embedded in assets. According to Bonneville and Dewey
funds constitute the prime importance in sharing and operating any business enterprise. In the
ordinary parlance. Funds mean cash only, but it has got several different concepts as mentioned
below.
Funds may mean:
a. Cash only
b. Net working capital i.e., current assets less current liabilities.
c. Total resources or total funds.
d. Internal resources only.
e. Net worth i.e., owners equity capital plus reserves.
WORKING CAPITAL:
There are 2 concepts in Working Capital
Gross Working Capital
Net Working Capital
Gross Working Capital refers to the firms investment in current assts while the term net
Working Capital means excess of current assets over current liabilities i.e.,
Gross Working Capital = Total Current Assets
Net Working Capital = Current Assets Current Liabilities.
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CURRENT AND NON-CURRENT ACCOUNTS:

To understand flow of funds it is essential to classify various accounts and balance sheet
items current and non-current categories. Current accounts can either be current assets or
current liabilities. Non current
accounts can either be non-current assets or non-current
liabilities.
Current Assets:
Current assets are those assets which in the ordinary course of business can be or will be
converted into cash with in a short period of normally one accounting year.
Definition according of Glady:
For accounting purpose , the term Current Assets is used to designate cash and other
assets or resources commonly identified as those which are reasonable expected to be realized in
cash or sold or consumed during the normal operating cycle of the business.
The Current Assets are:
Cash including fixed deposit with banks.
Accounts receivable.
Trade Debtors
Bills Receivable.
Raw material
Work in Progress.
Finished Goods.
Inventory.
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Stores and spare parts.

Advances recoverable i.e., the advances given to supplier of goods and services
or deposit with government or other public authorities.
Prepaid expenses.
Current liabilities:
Current liabilities are those liabilities which are intended to be paid in the ordinary course
of business within a short period of normally one accounting year out of the current assets or the
income of the business.
Current liabilities are
Accounts payable i.e.
Bills payable
Creditors
Outstanding expenses i.e., expenses for which services have been received by the
business but for which the payment has not been made.
Bank Overdraft
Short term loans i.e., Loans from Banks.
Advanced payments received by the business for the service to be rendered or goods to
be supplied in future.
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Current maturities of long-term i.e., long-term debts due within a year of the balance
sheet date.
Non- Current Assets:
All assets other than current assets come within the category of non-current assets. Such
assets including
Goodwill
Land &Building
Machinery
Furniture
Long-term investments
Payments rights
Trade marks
Debit balance of profit & Loss account.
Non Current Liabilities:
All liabilities other than current liabilities come within the category of Non-current
assets.
General reserves.
Dividend equalization
Debentures sinking fund
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Capital redemption reserve.
FUNDS FLOW STATEMENT:

The following is the list of current or working capital accounts:
List of current or working capital accounts:
Table -3.1
Current Liabilities
Current Assets
1. Bills payable
1. Cash in hand
2. Sundry creditors or account payable
2. Cash at bank
3. Accrued or out standing expanses
3. Bills receivable
4. Dividends payable
5. Bank overdraft
6. Short term loans advances and
deposits
7. Provisions against currents assets
4. Sundry debtors or accounts

receivable
5. Short term loans and advance
6. Temporary or marketable
investments
7. Inventories or stocks such as
(A)Raw materials
(B)Work in progress
(C)Stores and spares.
8. Provision for taxation, if it does not
(D)
Finished goods
8.Pre paid expenses
amount to appropriation of profits.

9.Proposed dividends (may be a
9.Accrued incomes
current, non current Liability).
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List of non-Current (or) permanent Capital Accounts:
Table -3.2
Non-current or permanent
Liabilities
1. Equity share capital
2.
Preference share capital
3.
Redeemable preference share
capital
Debentures
Long term loans
Share premium account
Share forfeited account
Profit and loss accounts
Non- current or permanent

assets
1. Good will
2. Land
3. Building
4.
5.
6.
7.
8.
Plant and Machinery

Furniture and Fittings
Trade Marks
Patent Rights
Long term investment
9.
Debit balance of profit and
Capital redemption reserve
loss account
Discount on issue of shares
11.
Provision for depreciation
0.
1
Discount on issues of shares
12.
against fixes assets

Appropriation of profits
1.
1
Other Deferred expenses
4.
5.
6.
7.
8.
(balance of profit ie., credit

9.
10.
Balance)
Capital reserve
2.
(a) General reserve
(b)Dividend equalization Fund
(c) Insurance fund
(d)Compensation fund
(e) Sinking fund
(f) Investment fluctuation
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(g)Provision for taxation

(h)Proposed dividend

Funds flow statement is the statement of sources and application of
funds. It is also called as funds where got and where gone statement
Almond
Coleman
observed.
The
funds
statement
in
statement
summarizing the significant financial changes which have occurred between

the
beginning
and
the
end
of
companys
accounting
period.
There are 4 steps involving in preparation of funds flow statement:

a. Ascertain the funds from operations.
b. Preparation of statement of changes.
c.
Computation of any missing figures as to profit or loss on Sale of
fixed assets
purchases or sale of fixed assets and the amount of
depreciation on fixed assets etc.

d.
Finally preparation of funds flow statement.
Foulke defines this statement as:

A statement of sources and appreciation of funds in technical
device designed to analyse the changes in the financial condition of a
business
enterprise
between
two
dates
In the words of Anthony the funds flow statement describes the sources
from which additional funds were derived and the use to which these sources
were
put.
F.C.W.A. in glossary of management accounting terms defined funds
flow statement as a statement either prospectus or retrospects, setting out

the sources and applications of the funds of an enterprise. The purpose of
the statement is to indicate clearly the requirement of funds and how they
are proposed to be raised and the efficient utilization and application of the
same.
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Thus funds flow statement in 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 that period. The term
funds used here means working capital i.e., the excess of current assets over
current liabilities.
Need for funds flow statement:

The funds flow statement is widely used by the financial analyst and
credit granting institutions and financial managers in performance of their
jobs. It has become a useful tool in their analytical Kit. This is because the
financial statements i.e. Income Statement and the balance sheet have a
limited role to perform. Income statement measures flow restricted to
transactions that pertain
to rendering of goods or services to customers.
The balance sheet of assets and liabilities as on particular date. It does not
sharply focus those major financial transactions, which have been behind the
balance sheet changes. One has to draw inferences from the balance sheet
about major financial transactions only after comparing the balance sheet of
two periods.
Importance of Funds Flow Statement:

Funds Flow analysis is an invaluable analytical tool for a financial
manager or a creditor for evaluation of the employment of funds by a firm
and in determining the sources for such funds. In addition to studying past
flow by means of funds-statements based upon forecasts. Such a statement
provides an efficient method to the financial manager to assess the growth
of the firm and it results in the financial needs, and to determine the best
way to those needs. In particular, Funds Flow analysis is very useful in
planning intermediate and long term financing.
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The traditional package to final of final accounts and statement through

very significant statements has such a limited role to play in financial
analysis. The balance sheet is a statement of assets and liabilities on a
particular date. Similarly the income statement will show in more detail only
the profit or loss, change in owners equity arising during accounting period
as a result of the productive and commercial activities in that period. The
main criticism against the balance
sheet of two periods shown
in a
separate of source and application of funds. Where got and where gone
statement. Statement simply called Funds Statements.
Sources of funds:
In business several transactions take place. Some of these transactions
increase the funds while others decrease the funds. Some may not make any
change in the fund position. In case a transaction result in increase in funds,
it will be termed as a Sources of Funds.
Applications of Funds:
In case transaction result in decrease in funds, it will be termed as an
Application of funds.
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(1) It helps in the analysis of financial operations:

The financial statements reveal the net effect of various transactions
on the operational and financial position of a concern. The balance sheet
gives a static view of the resources of a business and the uses to which
these resources have been put at a certain point of time. But it does not
disclose the causes for changes in assets and liabilities between two
different point of time. The funds flow statement explains causes for such
changes and also the effect of these changes no the liquidity position of the
company. Sometimes a concern may operate profitably and yet its cash
position may become more and more course. The funds flow statement gives
a clear answer to such a situation explaining what has happened to the profit
of the firm.
(2) It throws li2ht on many perp1exin questions of 2eneral interest:
Which other wise may be difficult to be answered, such as:
a. Why were the net current assets lesser inspite of higher profits and
vice-verse.
b. Why more dividends could not be declared inspite of available Profit?
c. How was it possible to distribute more dividends than the Present
earning?
d. What happened to the net profit? Where did they go?
e. What happened to the proceeds of sale of fixed assets or issue of
Shares, debenture
etc?
(3) It helps in the formation of a realistic dividend policy:

Sometime a firm has sufficient profit available for distribution as
dividend but yet it may not be advisable to distribute dividend for lack of
liquid or cash resources. In such causes, a funds flow statement helps in the
formation
of
realistic
dividend
policy.
(4) It helps in the proper allocation of resources:

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The resources of a concern are always limited and it works to make the
best use of these resources. A projected funds flow statement constructed
for the future help in making managerial decision. The firm can plan the
deployment of its resources and allocate them among various application
(5) It acts as a future guide:

A project funds flow statement also acts as a guide for future to the management. The
management can come to know the various problems it is going to funds can be projected well in
advance and also the timing of these needs. The firm can arrange to finance these needs more
effectively
and
avoid
future
problem.
(6) It helps in appraising the use of working capital:

A funds flow statement helps in explaining how efficiently the management has used its
working capital and also suggests way to improve working capital position of the firm.
(7) It helps knowing the overall credit worthiness fo a firm:
The financial institutions and banks such as state financial institutions, industrial
development corporation, industrial finance corporation of India, industrial development bank of
India etc., all ask for funds flow statement constructed for a number of years before granting
loans to know the credit worthiness and paying capacity of the firm. Hence, a firm seeking
financial assistance from these institutions has no alternative but to prepare funds flow
statements.
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 additional information as
regards
changes in working capital.

2.
It cannot reveal continuous changes.
3.
It is not a original statement but simply a re-arrangement of data given in the `

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

5.
Changes in cash are more important and relevant for financial management than the
working capital.
Despite these limitation the information supplied by the Funds Flow statement is really
invaluable and the management in planning capital expenditure, devising dividend and other
financial policies etc. Taken in conjunction with ratio analysis provides a rich sources of
information regarding possible managerial uses.
Procedure for Preparing a Funds Flow Statement:
Funds flow statement is a method by which are study changes in financial position of a
business enterprise between beginning and ending financial statement 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 of schedule of changes in working capital
2. Statement of sources and application of funds.
(1) Statement of schedule of changes in working capital.
Working capital means the excess of current assets over current liabilities. Statement of
changes in working capital between the two balance sheet dates. This statement is prepared with
the help of current assets and current liabilities derived from the two balance sheets.
As working capital =current assets - current liabilities.

So,
i. An increase in current assets increase working capital

ii. A decrease in current assets decreasing working capital.
iii.An increase in current liabilities decreasing working capital;
iv. A decrease in current liabilities increases working capita
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2. Statement of Sources and application of Funds:
In order to prepare a Funds Flow statement , it is necessary to find out Sourse and
application of funds.
Sources of Funds:
The sources of funds can be both internal & External
Internal Sources:
Funds from operations are the only internal source of funds. However following adjustments will
be requires in the figure of net profit for finding out real finds from operations.
Add: The following items, as they do not result in outflow of funds:
Depreciation of fixed assts
Preliminary expences or goodwill etc written off
Contribution to debenture redemption fund, transfer to general reserves, etc.
Provision for taxation and proposed dividend.
Loss on sale of fixed assets.
Deduct: The following items, as they do not increase funds.
Profit on sale of fixed assets.
Non- operating incomes such as dividend received or accured dividend, refund of income tax,
rent received or accured rent.
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Exrenal Sources:
Funds from long-term loans.
Sale of fixed assets
Funds from increase in share capital.
Application of funds.
The uses to which funds are put are called application of funds.
Following are some of the pupose for which funds may be used:
Purchase of Fixed Assets.
Payment of dividend.
Payment of fixed Liability.
Payment of Tax Liability.
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CASH FLOW STATEMENT (CFS):
The statement showing sources and uses of funds, popularly known as the funds flow
statement, is a condensed report of how the activities of the business have been financed and
how the financial resources have been used during the period covered by the statement. It is an
operating statement as it summarizes the financial activities for a period of time. But it performs
a function different from the income statement which is primarily a presentation of revenue and
expenses items and the computation of the net income for the period. The funds flow statement is
a report of the financial operations of a business undertaking. It shows the ebb and flow of funds
into and out of a business. It covers all movements book-keeping adjustments are not reported. It
discloses the results or the policies followed by the financial management in a way which
probably makes it more understandable to most readers than are the other financial statements.
In financial accounting a cash flow statement is a financial statement that shows a
companys incoming and outgoing money (sources monthly or quarterly). The statement shows
how changes in balance sheet and income accounts affected cash and cash equivalents, and
breaks the analysis down according to operating, investing and financing activities. As an
analytical tool the statement of cash flows is useful in determining the short-term viability of a
company y, particularly its ability to pay bills.
People and groups interested in cash flow statements include.
Accounting personnel, who need to know whether the organization will be able to cover
payroll and other immediate expenses.
Potential lenders on creditors, who want a clear picture of a companys ability to
repay.
Potential investors, who need to judge whether the company is financially sound.
Potential employees or contractors, who need to know whether the company will be able to
afford compensation.
Definitions:
Cash:
Cash comprises cash on hand and demand deposit with banks.
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Cash equivalents: Cash

Cash equivalents are short term, highly liquid investments that are readily
convertible in to known amounts of cash and which are subject to an insignificant risk of changes
in value. Examples of cash equivalents are treasury bills, commercial paper etc., Cash flow:
Cash flows are inflows and outflows of cash equivalents. It means the movement of cash
in to the organization and movement of cash out of the organization. The difference
between the cash inflows and cash out flows is known as net cash flow which can be either net
cash inflow or net cash out flow.
Type of cash flow

While preparing a Cash Flow statement , two types of cash Flows viz., Actual Cash Flow
and National Cash Flow are identified.
Actual Cash Flow refers to actual movements of cash into out of the business. Purchase
of fixed assets, borrowings from bank of financial institutions, trading profits and redemption of
debenture are all examples of actual Cash Flow.
National Cash Flows results only in the cash of Increase or decrease in current assets.
National Cash Flow result indirect cash movements into or out of business, for Example,
increase in the balance of debtors does not result in any actual cash outflow since it is part of
credit sales. But form of material costs, labour cost, overheads etc., looked up in the goods sold
on credit.
Classification of cash flows:
Operating activities:
Operating activities include the production sales and delivery of the companys product as
well as collecting payment from its customers. This could include purchasing raw materials,
building inventory, advertising and shipping the product.
Items which are added back to the net income figure (which is found on the income
statement) to arrive at cash flows from operations generally include.
Depreciation (loss of tangible asset value over time)
Deferred tax
Amortization (loss of intangible asset value over time)
Any gains or losses associated with an asset sale (unrealized gain losses are also added back
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from the income statement)

Investing Activities:
Investing activities focus on the purchase of the long-term assets a company needs in
order to make and sell its products, and the selling of any long term assets that are no longer
needed by the company.
Items under investing activities include:
Capital expenditures which purchases (and sales) of property, plant and equipment.
Investment:
Financin2 Activities:
Financing activities include the inflow of cash from investors such as banks and
shareholders, as well as the outflow of cash to shareholders as dividends as the company
generates income. Other activities which impact the long-term liabilities and equity of the
company are also listed in the financing activities section of the cash flow statement.
Items under the financing activities section include:
Dividends paid
Sale or repurchase of the companys stock.

Net borrowings
BASIC INFORMATION FOR PREPARATION OF CFS:

The following basic informations are required to prepare a CGF:
1. Comparative BS: The first and the foremost requirement is the comparative
BS in the beginning and at the end of the period to find out the changes taking place in
different items of the BS.
2. Is for the period under consideration: The IS of the period is also required to
find out the cash generated or used in the operation of the firm.
3.Additional Information: Together with BS and IS other relevant information
is also required to identify the hidden information, if any.
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Limitations of Cash Flow analysis:

Cash Flow analysis is a useful tool of financial analysis. However, its own limitations.
These limitations are as under:
1.Cash Flow statement cannot be equated with the income statement. An income statement takes
into account both Cash as well as non- cash items and , therefore, net Cash flow does not
necessarily mean net income of the business.
2. The cash balance as disclosed by the Cash Flow statement may not represent the real liquid
position of the business since it can be easily influenced by postponing purchased and other
payments.
3.Cash Flow statement cannot replace
the income statement or the Funds Flow statements .
Each of them has a separate function to perform.
STEP BY STEP PROCEDURE TO PREPARE CFS:

1.
Calculate
the net
increase
or decrease
in
cash
and
cash
equivalents:
For this purpose the opening balance of total cash and equivalents is compared
with the closing balance of cash and equivalents. The net increase/decease as
shown
here is the figure to be explained by the CFS. The table explains the procedure for this.
Increase/Decrease in Cash and Cash Equivalent:
Opening Balance
Closing
Cash in Hand
****
****
Cash at Bank
****
****
Short term Investments
****
****
****
****
Balance
Total
The difference between the totals of opening and closing balance will be the increase or
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decrease in cash and equivalents during the period.

2. Net cash flow from operating activities:
On the basis of the information contained in the comparative Balance Sheets and the IS
and the additional information, the net cash flow generated or used by operating activities may
be ascertained
3. Calculating of cash provided by financing and investment Activities:

All other items (except current accounts already considered in step 2 above) are analyzed
in the light of additional information to find out the resultant cash flow it any. For this purpose,
different items and informations are classified into financing activities and investment activities.
4. Preparation of CFS:
On the basis of information collected and calculations made in the above steps, now the
CFS can be prepared as per any of the formats given earlier. The net cash flow provided by
operating activities plus financing activities plus investment activities is equal to the net change
in cash and equivalents (as calculated in step 1).
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Sources and uses of cash:

The following are the sources of cash
1. The profitable operations of the firm
2. Decrease in assets (except cash)
3. Increase in liabilities (including debentures or bonds)
4. Sales proceeds from an ordinary preference shares issue
The following are the uses of cash:
1. The loss from operations
2. Increase in assets (except cash)
3. Decrease in liability (including redemptions of debentures or bonds)
4. Redemptions of redeemable preference shares
5. Cash dividends.
FFS and CFS:

The cash flow statement (CFS) is different from the FFS in its approach. The difference
between the two can be summarized as follows:
1. The FFS is based on the concept of WC where as, the CFS is based on cash which is
only one of the element of working capital (WC). Thus, the CFS provides details of cash
movements where as the FFS provides the details of funds movements.
2. The CFS considers only the actual movements of cash as FFS considers the movement
as the funds on accrual basis
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STATEMENT SHOWING CHANGES IN WORKING CAPITAL2005-06

Table 4.1
Particulars
Rs. In Lakhs
2005 (Rs)
2006 (Rs)
Increase
Decrease
Inventories
3849.09
4333.89
484.8
--
Sundry Debtors
3227.02
2620.87
--
606.15
Cash on Bank
979.44
1053.99
74.55
--
Other Current Assets
117.54
144.56
27.02
--
Loans & Advances
935.06
900.81
--
34.25
Total
9108.15
9054.12
--
Liabilities & provision
2853.28
3216.35
--
363.07
Total
2853.28
3216.35
--
--
Working Capital
6254.87
5837.77
--
--
Current Assets:-
Current Liabilities:-
CA-CL
Decrease in Working
Capital
417.1
6254.87
6254.87
417.1
1003.47
1003.47
Sources from Annual Report of Regency Ceramics Limited
Interpretation:
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There is a net decrease in Working Capital due to decrease of current

assets in inventories, cash on bank.
Sundry debtors, loans and advances are increase position .
Company has the increase inventory due to increase in production

demand.
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FUNDS FLOW STATEMENT FOR 2005-2006

Table 4.2
Rs. In Lakhs
Sources of fund
Amount
Application of Fund
Amount
Rs.
Rs.
Share Capital
1359.68
Investments
211.53
Reserves
5262.91
Fixed Assets
14534.19
Secured Loans
11643.49
Miscellaneous Expenditure
101.02
Unsecured Loans
288.96
Net Current Assets
5837.77
Deferred Tax
2129.47
Liabilities
Decrease in Working
4171.1
Capital
20684.51
20684.51
Sources from Annual Report of Regency Ceramics Limited.

Interpretation:: In current asset of Loans and advances has appreciation to Rs.34.25 Lakhs and current
liabilities & Provisions of current liabilities has been decreased Rs.363.07 Lakhs.
During the year the company in borrowings taken secured loans Rs.11643.49 Lakhs. The
huge amount invested in assets Rs. 14534.19 lakhs.

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Table 4.3
Particulars
Rs. In Lakhs
2006 (Rs)
2007 (Rs)
Increase
Decrease
Inventories
4333.89
5010.35
676.46
--
Sundry Debtors
2620.87
3378.97
758.1
--
Cash on Bank
1054.00
845.93
--
2081.07
144.50
189.30
44.8
--
Loans & Advances
900.81
752.22
--
148.59
Total
9054.13
10176.77
--
--
3216.35
3900.90
--
684.55
Total
3216.35
3900.90
--
--
Working Capital
5837.78
6275.87
--
--
Current Assets:-
CA-CL
Increase in Working
438.09
438.09
Capital
6275.87
6275.87
1479.3
1479.3
Interpretation:
There is a increase in working Capital due to increase of current assets in inventories
, sundry debtors .
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In the inventories (Raw materials ,packing materials ,work in process, finished

goods, stores, spares and consumables , materials in transit, tools and implements.)
In this year the situation is reversed that means currents assets are increased and
current liabilities are increased. In this year the company has the increasing
inventory due to increase production demand.

Table 4.4
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Rs. In Lakhs
Sources of fund
Amount
Application of Fund
Amount
Rs.
Rs.
Share Capital
1359.68
Investments
212.47
Reserves
4895.67
Fixed Assets
13726.46
Secured Loans
11326.44
77.25
Unsecured Loans
725.81
Net Current Assets
6275.86
Deferred Tax
1895.45
Increase in Working
438.09
Liabilities
Capital
20293.05
20293.05
Interpretation:: In current asset of Loans and advances has deppreciation to Rs.148.59 Lakhs and current
liabilities & Provisions of current liabilities has been increased Rs.684.55 Lakhs.

Table 4.5
Rs. In
Lakhs
9849458383
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Particulars
2007 (Rs)
2008 (Rs)
Increase
Decrease
Inventories
5010.34
4390.10
--
620.24
Sundry Debtors
3378.97
2596.89
Cash on Bank
845.93
965.14
119.21
--
189.30
227.71
38.41
--
Loans & Advances
752.22
1000.85
248.63
--
10176.76
9180.69
--
--
3900.90
3828.58
72.32
--
Total
3900.90
3828.58
--
--
Working Capital
6275.86
5352.11
--
--
923.75
923.75
6275.86
1402.32
Current Assets:-
Total
782.08
CA-CL
Decrease in Working
Capital
6275.86
1402.32
Interpretation:
There is a decrease in working capital due to decrease of current assets in

inventories, sundry debtors and also decrease the current liabilities.
Cash on bank , loans and advances are increase position.

9849458383
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[Type text]


Table 4.6
Rs. In Lakhs
Sources of fund
Amount
Application of Fund
Rs.
Share Capital
9849458383
1359.68
Amount
Rs.
Investments
212.69
BHASKAR
[Type text]
Reserves
3353.73
Fixed Assets
12709.18
Secured Loans
9939.00
53.48
Unsecured Loans
2025.26
Net Current Assets
923.75
Deferred Tax
1649.79
Liabilities
Decrease in Working
923.75
Capital
18327.46
18327.46


Table 4.7
Rs. In
Lakhs
Particulars
2008 (Rs)
2009 (Rs)
Increase
Decrease
Inventories
4390.10
3233.11
--
1156.99
Sundry Debtors
2596.89
2646.55
49.66
--
Current Assets:-
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Cash on Bank
965.14
1247.54
282.4
--
227.71
248.33
20.62
--
Loans & Advances
1000.85
1736.65
735.8
--
Total
9180.69
9112.18
--
--
3828.58
2825.46
1003.12
--
Total
3828.58
2825.46
--
--
Working Capital
5352.11
6286.72
--
--
CA-CL
Increase in Working
934.61
934.61
Capital
6286.72
6286.72
2091.6
2091.6
Interpretation:
There is increase in working capital due to increase of current assets in sundry

debtors , cash on bank , loans and advances.
9849458383
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[Type text]
Inventories are decrease position .


Table 4.8
Rs. In Lakhs
Sources of fund
9849458383
Amount
Application of Fund
Amount
BHASKAR
[Type text]
Rs.
Rs.
Share Capital
1359.68
Investments
206.42
Reserves
1870.62
Fixed Assets
11690.25
Secured Loans
11561.41
29.71
Unsecured Loans
2170.11
Net Current Assets
2686.77
Deferred Tax
1251.33
Increase in Working
934.61
Liabilities
Capital
18213.15
18213.15
amount invested in assets Rs. 11690.25 lakhs.

Table 4.9
Rs. In
Lakhs
Particulars
2009 (Rs)
2010 (Rs)
Increase
Decrease
Current Assets:Inventories
9849458383
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Sundry Debtors
Cash on Bank
Loans & Advances
Total
Current Liabilities:Liabilities & provision
Total
Working Capital
CA-CL
Increase in Working
Capital

Table 4.10
Rs. In Lakhs
Sources of fund
Amount
Application of Fund
Rs.
Rs.
Share Capital
Investments
Reserves
Fixed Assets
Secured Loans
Unsecured Loans
9849458383
Amount
Net Current Assets
BHASKAR
[Type text]
Deferred Tax
Increase in Working
Liabilities
Capital
SUMMARY
Financial management in a broad sense and provides a conceptual
analytical framework for financial decision making which covers both
acquisitions of funds as well as their allocation. Thus, apart from the issues
involved in acquiring external funds, the main concern of financial
management is the efficient and wise allocation of funds to various users,
Defined in a broad sense, it is viewed as an integral part of overall
management.
Funds flow statement is prepared to know the changes in assets,
liabilities and owners equity between dates of two balance sheets. It is a
statement of sources and uses of funds.
Funds flow statement is also known as statement of sources and
application of funds or management of funds statement etc... Funds flow
9849458383
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[Type text]
statement reveals both inflow and outflow of funds. The inflow of funds is
known as sources of funds and the out flow funds mean uses or application
of the funds.
In other words financial statement gives detailed analysis of changes in
the distribution of resources between two dates.
It is very useful tool in the financial manager's analytical kit. It provides
a summery management decisions on finance actives the firm investment
policy.
In the present study 174th of the total information is from primary data and
the rest is from the secondary data of company Annual reports.
The analysis is made basing only on the past 5 annual reports of the
REGENCY CERAMICS LIMITED.
The funds flow are generally calculated from the post financial statement
and as show thy are not the indicators of future.
PREPARATION OF FUNDS FLOW STATEMENT:

Schedule of changes in working capital Rules
1. compare current year value with previous year note down the change as
increase or decrease
2. consider current assets changes only (non-CA or fixed assets are not to be
considered)
3. consider only current liabilities (non - CL or long term liabilities and owners
equity are not to be considered)
9849458383
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4. apply the following equation to find out the changes in working capital.
The statement of changes in financial position, prepare to determine only the

sources and the uses of working capitol between the dates of two balance
sheet is known as funds flow statement.
SOURCES OF FUNDS:
Issue of additional share capitol or debentures for cash.
Borrowings made by the firm for a long term.
Non operating incomes such as income from investment or profit from
the sale of assets/ investment.

APPLICATION OF FUNDS:
If there is business loss to the firm then this tantamount to decrease or
use of funds.
The redemption of preference share capitol or debenture during a year
also utilize the funds.
Repayment of a long term loan during the year.
Finally through the funds flow statement the overall performance of the
organization is satisfactory.
FINDINGS:
Reserve has been decreasing during all the four years since 2005.
The company debt capital raised more from secured loans & unsecured loans.
Operating cash is increased in 2006 due to increase of trade & payables.
The company uses more debt than their own funds to finance fixed assets. It has to pay a
lot of interest from profits.
In the year 2009 the changes in working capital increased.
9849458383
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SUGGESTIONS
The company invest huge amount at a time in the year 2005. It is better to invest subsequent years rather than to invest at a time.
The Raw material should be maintained for meeting the short term operations.
It is better to raise debt-capital more from preferential share holders than secured and
unsecured loans for reduce interest.
9849458383
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[Type text]
The company is better to maintain stable debt equity to reduce the cost of debt.
The company may further reduce its collection period to increase profitability using lock
box system of collection.
9849458383
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[Type text]
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[Type text]
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[Type text]
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[Type text]
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[Type text]
9849458383
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[Type text]
BIBLIOGRAPHY
NAME OF THE BOOK
NAME OF THE AUTHOR
YEAR AND
PUBLICATION OF BOOK
1. Financial
M.Y.KHAN & P.K.JAIN
Tata Mc. Graw Hill, New

Delhi 1998
Management
2. Financial Management
PRASANNA CHANDRA
Tata Mc. Graw Hill, New

Delhi 1998
I.M.PANDEY
VIKAS PUBLICATIONS, 8TH

EDITION, NEW DELHI 1999
JAMES C. VAN HORNE
VIKAS PUBLICATIONS, 8TH

EDITION, NEW DELHI 1999
5. Management
Accounting &
S.N.MAHESWARI
Sultan Chand & Sons

New- Delhi 1997
Financial Management
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CHAPTER I
INTRODUCTION OF THE STUDY
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CHAPTER II
INDUSTRY PROFILE&COMPANY PROFILE
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CHAPTER-III
CONCEPTUAL FRAMEWORK OF
FUNDS FLOW ANALYSIS
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CHAPTER IV
DATA ANALYSIS & INTERPRETATION
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CHAPTER V
SUMMARY AND SUGGESTIONS

ANNEXURE, BIBLIOGRAPHY
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ANNEXURE
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CONTENTS
PAGE No:
CHAPTER I
INTRODUCTION
1-6
Significance of the study

Objectives of the study
Methodology of the study
Limitations of the study
CHAPTER-II PROFILE OF THE REGENCY CERAMICS
7-30
LIMITED
Profile of the Ceramics tiles industry
Profile of the REGENCY CERAMICS LIMITED
CHAPTER-III
31-39
Conceptual frame work of funds flow analysis

CHAPTER-IV
40-49
Data analysis and interpretation of REGENCY CERAMICS LIMITED

CHAPTER-V
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50-53
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Summary and suggestions

ANNEXURES
54-59
Annual reports
BIBLIOGRAPHY
59-60
LIST OF TABELS
TABLE NO
NAME OF THE TABLE
PAGE NO
2.1
Indian Market- Installed capacities
13
2.2
The consumption pattern region wise in India
14
2.3
Competitors Market share
15
3.1
Proforma of schedule of changes in working capital
36
3.2
Proforma of funds flow statement
37
3.3
Specimen of report from funds flow statement
39
4.1
Statement of changes in working capital 2004-2005
40
9849458383
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4.2
Funds flow statement for 2004-2005
41
4.3
42
4.4
43
4.5
44
4.6
45
4.7
46
4.8
47
4.9
48
4.10
49
9849458383
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[Type text]
FUNDS FLOW ANALYSIS

A study with reference to the
REGENCY CERAMICS LIMITED
YANAM
project Report
Submitted to the Department of Commerce and Management
Studies Andhra University, Visakhapatnam
In Partial fulfillment for the requirement for the award of the
SCHOOLS OF MANAGEMENT STUDIES
Submitted by:
M.D.BHASKARA RAO
Regd No: 09A21E0054
Under the guidance of
Ms.NAIDU, M.B.A Phd
9849458383
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[Type text]
Project submission in partial fulfillment for the award of the

degree of
MASTER OF BUSINESS ADMINISTRATION
By
SWARNANDHRA COLLEGE Of ENGNEERING & TECHNOLOGY

(Seetharamapuram)
J.N.T.U, Kakinada
2009-2011
DECLARATION
I here by declare that the project work on FUNDS FLOW

ANALYSIS in REGENCY CERAMICS LIMITED, YANAM. Is Originally
Prepared and Submitted by me to JNTU KAKINADA inpartial Fulfillment of
the requirements for the award of degree of MANAGEMENT
OF
BUSINESS ADIMISTRATION . The empirical findings in the report are

based on the data collected by myself while preparing this report. It has not
been submitted to any other university or publication at any time before.
9849458383
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[Type text]
Place:
M.D.BHASAKARA RAO
Date:
Regd.no: 09A21E0054
CERTIFICATE
This is to certify that, this project report entitled FUNDS FLOW

ANALYSIS with reference to REGENCY CERAMICS LIMITED,YANAM. Is
being submitted by Mr.M.D.BHASAKARA RAO, Regd No: 09A21E0054
in partial fulfillment for the award of The Degree of Master of Business
Administration to JNTU, KAKINADA. It is a bonafide work carried by her
under my guidance and supervision.
9849458383
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[Type text]
Place:
VENKATA REDDI NAIDU
Date:
DR. B.
(PROJECT GUIDE)
ACKNOWLEDGEMENT
.
The completion of this project makes me to recall with

gratitude several persons who extended their cooperation in one
way or the other in this venture.
I am very much thankful to the principal
Dr.M.Muralidhara Rao SCET(Seetharampuram), for permitting me to
pursue my project.
I express my sincere thanks to Head of the Department

MBA programmer Dr.P.G.Ramanujam, for his encouragement.
9849458383
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[Type text]
I owe a sense of gratitude to DR. B. VENKATA REDDI

NAIDU, my project guide, for his friendly cooperation at each and
every point of my work, for his patience and immense Support for
the completion of the project.
Finally I wish to express my thanks to all faculty

members of Department of MBA for their suggestions in bringing
out my project in most successful manner.
9849458383
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9849458383
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[Type text]

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INTRODUCTION OF THE STUDY

statistical relation between the change

Issue of additional share capital or debentures for cash

Borrowings made by the firm for a long term.

Repayment of a long term loan during the year.

SIGINIFICANCE OF THE STUDY

OBJECTIVES OF THE STUDY

The primary objective of the study is to evaluate the financial position of

LIMITED as a whole as well as for it

To asses how effectively the company is using its resources.

METHODOLOGY OF THE STUDY

LIMITATIONS OF THE STUDY

The time given to complete this project is very limited.

The Analysis is made from the information given by an organization.

5. Brand image/Distribution Network:

SOCIO- ECONOMIC ENVIRONMENT AND INDUSTRIL SCENARIO:

required for making advanced

INDIAN MARKET INSTALLED CAPADITIES:

INSTALLED CAPACITIES (IN MPTA)

CONSUMPTION PATTERN AND DEMAND:

The consumption pattern region wise in India is as below:

A.P., TAMILNADU, KARNATAKA & 30%

WEST BENGAL, ASSAM, BIHAR,UP, 10%

COMPETATORS MARKET SHARE:

The following is the list of market share occupied by different

CYCLICAL TRENDS IN THE INDUSRTY:

GOVERNMENT CONTROLS AND REGULATORY FRAME WORK:

INDUSTRY SCENARIO AND FUTURE PROSPECTS:

The industry is expected to grow at 25% due to the following factors:

2. Increased trend of shift towards ceramic tiles traditional mosaic flooring.

would add to the housing stock of the country.

Better properties in term of hygiene, abrasion, resistance, acid resistances

going to increase their export

PROFILE OF THE REGENCY CERAMICS LIMITED

belt, is ideal says is senior

official of A.P State Industrial Development Corporation which has sanctioned

CERAMIC TECHNOLOGIES FOR THE PRODUCTION TILES:

1. Porcelain tiles (water absorption<0.01%)

1. Monoperosa (water absorption 10-:18%)

2. Fast double fired tiles (water absorption 19-:18%)

RAW MATERIAL FOR BODIES:

Clays, plastic materials:

In fact, they are utilized in bodies, in substantial percentage, so as

RAW MATERIAL FOR GLAZES AND ENGOBES:

THE MAIN COMPONENTS OF GLAZES AND ENGOBES ARE:

Potassic sodic feldspar

Zinconium silicate flour and micronized

Series of ceramic stains for glazes and vitreous china

Carbon methyl cellulose

Screen printing ink vehicles

B) CALCAREOUS FOR WALL TILES:

Called this way, because of their high content of carbonates brought

Glazed / unglazed stoneware

water absorption >3%

Glazed / unglazed semi stoneware

water absorption 10-: 18%

Otherwise, a too high temperature (Deg. C) at the beginning of the

At the end of glazing the material can automatically be stored in layer

It is carried out inside rapid continuous cycle roller kilns.

2nd quality: small visible defects

BODY SLIP SEPARATOR

Manufacturing Process Flow Chart for

BODY SLIPN SEPARATOR