A

STUDY ON
“FUND FLOW STATEMENT”
With Reference to
“BHARAT HEAVY ELECTRICALS LIMITED”
VISAKHAPATNAM

A Project Report Submitted to J N.T University, Gurajada

Vizianagaram
In Partial Fulfilment for the Award of Degree of

MASTER OF BUSINESS ADIMINISTRATION

Submitted by
KV SATISH KUMAR
Regd. No: 23811E0042
Under the Esteemed Guidance of
Mrs V.CHINNI KAMAKSHI Professor

DEPARTMANT OF MANAGEMANT STUDIES

Avanthi Institute of Engineering and Technology
(Approved by AICTE, Recognized by the Govt. of A.P. &
Affiliated to JNT University, gurajada Vizianagaram),
Narsipatnam, Visakhapatnam.
(2023-2025)
 CERTIFICATE

This is certify that the project report entitled “A STUDY ON FUNDS FIOW
STATEMENT” being submitted by KV SATISHKUMAR in partial
fulfillment for the award of degree of MBA In AVANTHI INSTITUTE
ENGINEERING AND TECHNOLOGY J.N.T.UNVERSITY
GURAJADA(VIZIANAGARAM) is a record of confide work carried out by
him under my guidance and supervision.

PROJECT GUDIE

V.CHINNI KAMAKSHI
 DECLARATION

I hereby declare that the project work entitled "A STUDYON FUNDS
FLOW ANALYSIS "with reference to BHEL is a bonafide record work
by me in the partial fulfillment of requirements for the award of the
degree of MASTERS OF BUSINESS ADIMINISTRATION by
JAWAHARLAL NEHRU TECHNOLOGICAL UNIVERSITY. I
assure you that this project work is the result of my own effort and that
has not been submitted to any other university or institution for the award
of any degree or diploma.

All the endeavors out in the fulfillment of the task are genuine and
original to the best of my knowledge.

Place: MAKAVARAPALEM Signature Of Candidate

DATE: KV SATISHKUMAR
H.T.NO: 23811E0042
 CONTENTS

Page No.
Chapter – I
1.1 Introduction 7-9
1.2 Need For the Study 10
1.3 Objectives of the Study 11
1.4 Methodology of the Study 12
1.5 Limitations of the Study 13
Chapter – II 14
2.1 Industrial Profile 15-16
2.2 Company Profile 17-33
Chapter – III 34
Theoretical Framework 35-43
Chapter – IV 44

Data Analysis & 45-61

Interpretation
Chapter – V 62
5.1 Summary 63
5.2 Findings 64
5.3 Suggestions 65
5.4 Conclusion 66
Bibliography
 CHAPTER 1

INTRODUCTION
NEEDFOR THE
STUDY
OBJECTIVE OF THE STUDY
METHODOLOGY OF THE STUDY
LIMITATIONS OF THE STUDY

Page 1
 INTRODUCTION

FINANCIAL MANAGEMENT:
The planning and control of a company's financial resources is the focus of the
managerial activity known as financial management. Up until 1980, it was a
subfield of economics, and it was only recently established as a distinct
academic field. Even yet, it lacks a distinct body of knowledge of its own and
still primarily borrows theoretical ideas from economics. Theoretical and
analytical insights related to financial management enable competent decision-
making about an organization's finances.

Definitions of financial management:

“Financial management is concerned with the efficient use of an important
resource namely, capital funds”. –EZRA SOLOMAN

“Financial management is concerned with the managerial decisions that result

in the acquisition and financing of long-term and short-term credits for
the firm”. – PHILLIPPATUS.

“Financial management is that business activity which is concerned with

the acquisition and conservation of capital funds in meeting financial
needs and overall objectives of a business enterprise”. – WHEELER

These definitions we can understand the functions of the financial management.

Those are procurement of funds and effective utilization, and part of these
functions use different techniques.

Page 2
 OBJECTIVES OF FINANCIAL MANAGEMENT:

Quite obviously, the objective of the firm should be the maximization of its
value of the shareholders. The price of shares in the market indicates the value
of the firm. Factors like investment, financing and dividend exercise an
influence on the market price of the shares. The main objectives of financial
management can be said as:

PROFIT MAXIMIZATION:
The objective of every organization is profit maximization. Profit
Maximization means maximizing the rupee income of firms. Profit is
considered as the most appropriate measure of a firm’s performance.

WEALTH MAXIMIZATION:
It is a long - term objective. Wealth maximization is nothing but
increasing the wealth of the shareholders by way of contributing to the net
worth of the shareholders.
For attaining these above said objectives financial manager makes crucial
decisions relating to investment in different projects, dividend decisions ,
debt equity mix decisions, source of finance, analysis of ratios and working
capital management.
BHPV was founded in 1966 in Visakhapatnam, Andhra Pradesh, as a
Public Sector Undertaking under the Department of Heavy Industry (DHI) with
the technical assistance of SKODA Export, Czechoslovakia, to manufacture
and supply custom-built process plant equipment for Core Sector Industries
like Fertilizers, Oil Refineries, Petrochemicals, Steel Plants, Nuclear, Space,
Defense, and Power Sectors. The company is situated in Visakhapatnam,
Andhra Pradesh, close to the sea port, railway station, and airport on NH-5. The
entire area of the company is 386 acres.
BHEL-HPVP is a premier Organization specializing in design,
fabrication, supply and erection of Heat Exchangers, Columns, Storage

Page 3
Spheres, Throughout the past forty years, the nation has benefited from the
production of reactors and strippers, multilayer vessel reactor regenerator
packages, air separation plants, purge gas recovery units, oxygen plants,
nitrogen plants, hydrogen plants, sulfur recovery units, crude stabilization
units, mounded storage systems, compact heat exchangers, on board oxygen
generating systems, etc. to oil refineries, fertilizer plants, steel plants, defense
sector, etc. The company has a high chance of meeting the expanding demands
in the nuclear, oil and gas, power, and other vital industries in the future. In
addition to having ISO 9001:2000 certification, BHEL-HPVP is well known
for the quality and dependability of its products and holds a number of
national and international quality accreditations.
BHPV started production in the year 1971-72 with a turnover of just
Rs.1.95 Cr and crossed Rs.300 Cr in the year 1996-97. The Company
contributed more than Rs. 650 Cr to the national exchequer during the past 20
years.
BHPV is the largest fabricator of process equipment in India for the
petroleum, fertilizer, chemical and allied industries. It is a subsidiary of a
Navaratnam Central Public Sector Enterprise – Bharat Heavy Electrical
Limited and is managed by an autonomous separate board of directors.

Situated in the city of destiny of Visakhapatnam on the western see

coast of the Deccan plateau, BHPV is accessible by road, rail, sea and is well
connected to all metropolitan cities by air.

Page 4
 NEED FOR THE STUDY

BHEL-HP&VP (BHPV) has emerged as one of the leading heavy

engineering Industries after its incorporation, in the year 1966 to manufacture
custom Built capital equipment required by the process industries like
fertilizers, Petro chemical & chemical industries.

BHEL, As soon as BHPV was taken over in 2008, critical areas were
addressed, including maximizing plant capacity utilization, paying close
attention to financial discipline, resolving HR-related issues, capital
expenditures, etc. Beginning in 2008, the firm relaunched its operations with
fresh ideas, diversification, and customer-focused approach. This resulted in
strong financial results and a path back to the company's former glory.

The importance of the study, Financial Statement Analysis in BHPV,

Visakhapatnam presupposes that one very important reasons for which Public
sector Enterprises in India has suffered financial strains in the late 80s and in
90s or earned low Level of profit may relate to the misconstruing of the
financial aspects. Had these Enterprises managed the overall finance operations
in an efficient manner, they would have generated resources for its growth as
well as economic growth.

Page 5
 OBJECTIVES OF THE STUDY

This study of BHPV has been undertaken to evaluate the financial

efficiency of the organization by establishing the following objectives.
 (a)To know about the various sources of finances, working capital to
BHEL.
 (b)To judge the financial position, i.e. the short-term liquidity position
and the long-term solvency of BHEL-HPVP (BHPV).
 (c)To measure the operational efficiency of BHEL-HPVP (BHPV)To
determine the profitability trends of BHEL-HPVP (BHPV)
 (d)To assess the overall financial position of the company through
various established techniques.

Page 6
 METHODOLOGY

The analysis of the project was based on the available information. Any
information about the topic is called the data. The data was gathered from
various sources i.e., Primary and Secondary sources.
Type of Data:
Primary Data
Secondary Data
Primary Data:
Any information that is collected afresh and for the first time is called
Primary data .The primary data happen to be original in character. The
Information is gathered from concerned employees. The employees and
manager of the financial department have provided the information needed for
the study.

Secondary Data:
Information which has previously been processed and gathered with a specific
goal by another individual or organization is referred to as secondary data. The
BHEL-HP&VP (BHPV) balance sheets, profit and loss accounts yearly reports,
and other documents and manuals provided the secondary data for the study.

Page 7
 LIMITATIONS OF THE STUDY

Every The study is carried out with some restrictions. Other aspects are
not taken into consideration; the study primarily refers to financial data. The
study is only conducted for a month at a time. It was impossible to obtain
information that was 100% accurate. The research was conducted using data
from official yearly reports and information from relevant departments. The
supplied research only looks at data from the last five years. On this
foundation, the analysis will be conducted.

2018-2019
2019-2020
2020-2021
2021-2022
2022-2023

Page 8
 CHAPTER-2

INDUSTRIAL PROFILE
COMPANY PROFILE

Page 9
 INDUSTRY PROFILE
Experienced in design of columns, multi layer vessels, heat exchangers, liquid
oxygen & nitrogen unit, evaporation plants, digesters, mounded vessels,
Sulphur recovery unit, gas dehydration, desalters, heater treaters, crude
stabilizations unit, storage vessels etc., backed by technology absorption &
adoption from the world leaders.
1. Skoda export, Czechoslovakia.
2. L’Air liquid, France.
3. KAMYR - AB Sweden
4. ARAMCO
5. NRDC,India
6. Hahn & Clay, USA.ETC.
BOILERS:
BHPV absorbed technology from BHEL for industrial boilers
Design, Engineering, Manufacture, Erection, Testing & Commissioning of
Boilers with horizontal transfer of technical know – how from BHEL.
Capacities up to 200 TPH in low, medium and high pressure ranges with
superheat up to 540 degree centigrade equipped with all modern features like.
1. FSSS (Furnace Safeguard Supervisory System)
2. Oil storage, pumping & heating units
3. Fire fighting system
4. Erection & Commissioning of STGs.
5. Dynamic simulation of power plant.
Fired Heaters:
Technology absorption from ABB Lummus heat transfer (LHT) for design
and manufacture, Erection & Commissioning of Fired Heaters in the
following types;
1.Crude and Vacuum Heaters
2.Coker Heaters
3.Hot Oil Heaters
4.Charge Heaters
Page 10
5. Recycle Heaters
MARKET PROFILE:
In addition to BHPV legacy products such as process plants, combustion
systems, boilers, cryogenic equipment for refineries, fertilizer plants, steel
pants etc, with the takeover of the company by BHEL, the company diversified
into manufacturing equipment’s required for power generation plants in and
abroad.

CUSTOMER PROFILE:
BHEL-HPVP (BHPV) clientele includes- Public, Private, Co-operative
Sector organizations in almost all the core sector of economy such as all the
fertilizer plants, petroleum refineries and steel plants in India and abroad.
Now, with the diversification all major power plants in India. Other major
customers are from paper, chemicals, defense, space sectors

COMPETITOR PROFILE:
In the area of process plant: L&T, GR Engg, Lloyds steel,
ISGEC, John Thomson, Godrej etc

In the area of cryogenics: ICCP, INOX, Shanghai’s oxygen,

L&T, Linde, VJU, Essar, LINDE,
Air products, Kobe, Hitachi, HOPM,
Praxair

In the area of combustion system: ISGEC, Babcock Thermax, Ignifluid

boilers, ABL L&T KTI, Thermax etc

CORPORATE OFFICE: - New-Delhi.

PLANT OFFICE: - Visakhapatnam, Andhra Pradesh

Page 11
 COMPANY PROFILE

Bharat Heavy Plates and Vessels Ltd, The company is a public limited
one. It's a shop/job order production sector. It creates a variety of items based
on the demands and specifications of the consumer. recognizing early on the
necessity for the nation to build distinctive factory equipment in order to
become less reliant on imports and more self-sufficient. In order to fulfill the
needs for process equipment for essential sectors such fertilizers,
petrochemicals, petroleum, and other chemical industries, BHPV was founded
in 1966. Pressure vessels, heat exchangers, columns, internal trays, and other
built-in equipment were produced and provided by BHPV utilizing a variety of
materials. Following the fulfillment of many significant orders, BHPV LTD
won the trust of all clients, opening the door for it to enter the cryogenic and
pulp industries.

INTRODUCTION ABOUT BHEL-HPVP (BHPV):

In the India's economy has liberalized, and in the age of globalization,
businesses need to reconsider their goals and all of their operational plans. In
the days of "business as usual," organizations could only prosper by combining
creative ideas with sound financial management. Today, however, they find
themselves racing in a race where the laws and road signs keep them behind.
Thus, it should come as no surprise that today's successful businesses are those
that have good financial management and foresight. Effective financial
management involves capital structure, working capital, and capital budgeting
decisions. In the end, generating value, creating new goods, and improving
living standards are what finance is greatest at. One of any country's main
advantages is the heavy engineering sector.

Page 12
 In India these heavy engineering industries occupy a crucial role in its
economic development in view of the huge investment as well as the critical
importance to nation. These industries are mostly confined to the public sector
only. BHPV Ltd. is the largest fabricator of process equipment in India for the
petroleum, chemical and allied industries. It is fully owned by the government
of India and is managed by an autonomous board of directors.
BHEL-HPVP (BHPV), Visakhapatnam is a public sector undertaking BHEL-
HPVP has been selected for the study. The topic selected is “A study on

Financial Statements Analysis:

Bharat Heavy plates & Vessels Ltd., began as a completely owned

government company in 1966 with the goal of designing, manufacturing, and
supplying capital equipment needed for process industries in the core sector,
including petrochemicals, oil refineries, and fertilizers. On January 8, 1967, in
Visakhapatnam, the then-Minister of Industry, Sri D. Sanjeevayya, lay the
foundation stone. The Ministry of Industry's Department of Heavy Industry is
in charge of it. In 1968, it received technical assistance from the Czechoslovak
SKODA Export Company, which provided knowledge and direction for project
establishment and the design and production of different process equipment.
BHPV was acquired by Bharat Heavy Electricals Ltd. as a completely owned
subsidiary.

Licensed 23210MT of capacity is installed. It will cost Rs. 17.5 crores to start.
Heat exchangers, columns, pressure vessels, storage vessels, pipes, and other
items were included in the product mix. The turnover was just Rs 5 lakhs in
1971–1972, the year of its commercial manufacturing. Its all-time high
turnover of Rs 29998 lakhs was registered in 1996–1997. Productions from the
past five years are produced here.

Page 13
 2022-23 2021-22 2020-21 2019-20 2018-19
Description

15458.0 21019
GTO (Net of 9042.95 9290.20 7539
8 .81
I Excise Duty)

Value Added ( I- 6104.11 3950.96 11081

7012.63
II II) 3291 .70
-5499.41 -8240.90 -8674 -
3279.
Gross 18415.1
26
III Margin(PBDIT) 5

-7251.25 -9622.85 -9304 -

3186.
Gross 18557.2
15
IV Profit(PBIT) 2

Extra Ordinary 414.3

V 0.00
Income 5
-7742.31 -10279.51 -9242 -
3503.
Profit before Tax 18655.1
97
VI (PBT) 8

VII Income Tax 0.00 0.00 0.00 0.00 0.20

-7742.31 -10279.51 -9242 -
3503.
18655.1
77
VIII Profit after Tax 8

Page 14
 PHYSICAL OUTPUT
Licenced Installed T/o (Rs-
Sl Year Cap Capacity Achieved Crs)
1 2017-18 23210 MT 23210 MT 11551MT 240
2 2018-19 23210 MT 23210 MT 10180MT 156
3 2019-20 23210 MT 23210 MT 3187MT 70.45
4 2020-21 23210 MT 23210 MT 4600MT 84
5 2021-22 23210 23210 5360 108

Page 15
 HISTORY OF BHEL-HPVP (BHPV)

Granted permission to commence plant construction in Visakhapatnam

in 1966, BHPV faced several challenges, including water issues and frequent
power outages throughout both the project's earliest stages of development.
Despite all of those challenges, the civil and structural construction was mostly
finished by the end of March 31, 1967.23210 MT is the installed and permitted
capacity. The first investment amounts to Rs. 17.5 crores. Subsequently, once
the installation work was finished, BHPV obtained orders for the first time for
equipment construction and delivery from M/S BOKARO steel factory and
Fertilizer Corporation of India Ltd. Initially, the plant had lost money on
equipment manufacturing and customer delivery because of delays withinThe
facility was initially supposed to start production in July 1967, but the company
didn't start commercial production until 1971 because of a backlog of mostly
finished building work. The first production was started in 1970 by Sir K.C.
Panth, the Minister of State for Steel and Heavy Engineering at the time. Prior
to this, some manufacturing facilities had been set up by installing welding and
bending roll equipment and other fabrication gear. The firm lost Rs 27.47 lakhs
in its first year of production, mostly as a result of fixed expenses that might be
allocated to production, such as establishment depreciation. Up to 1978–1979,
the same losing position was maintained. Because of its ongoing losses, BHPV
is not like a profit-seeking business.

Page 16
 BHEL-HPVP (BHPV) saw a number of noteworthy events in 1979–
1980, both in terms of output and finances. In contrast to the initial projection
of a net loss of Rs 129 lakhs, BHEL-HPVP (BHPV) achieved a marginal profit
of Rs 33.09 lakhs, marking the first time in its years of commercial production
that the company had reached the break-even point. For the second year in a
row, the company's activities generated a net profit (after taxes) of Rs 48.21
lakhs in 1980–81. This year, BHEL-HPVP (BHPV) operations included
producing very important and complex machinery for key industries. Once
more, the business's activities in 1981–1982 produced a net profit of Rs 60.19
lakhs compared to a projected loss of Rs 20 lakhs. This year, the major
outstanding interest on the GOI loan was paid off. In contrast to the projected
loss of Rs 95 lakhs, BHEL-HPVP (BHPV) achieved 100% goal output in
1982–1983 and generated a net profit of Rs 103.71 lakhs. BHPV exceeded its
production goal and generated a net profit of Rs 575 lakhs from its operations
thanks to major work orders from the Visakhapatnam Steel Plant for the
delivery of air and gas separation systems. Once more, BHPV's projects were
completed successfully in 1987–1988. The company saw an increase in
earnings, with PAT of Rs 290 lakhs from its activities. For 1988–1989, it was
anticipated that BHPV's profits would show a rising trend.

However, The Company suffered enormous losses in 2002–03 and

2003–04 as a result of changes in the economy brought about by the entry of
global players into the market in the 1990s, increased competition in the private
sector, customers' introduction of the LSTK concept, and government policies
towards PSUs, such as the implementation of VRS and proposals for
disinvestment. As a result, the company's whole net value decreased. As a
result, in August 2004, the corporation was sent to BIFR.

Various revival proposals tried after 2004 for rehabilitation of the

company through outright sale, merging with other PSUs, stand alone revival
etc. However, due to change in Government policy after 2005 and considering
the potential of BHPV, GOI has finally made the company as subsidiary of

Page 17
BHEL, a Navaratna PSU.

Page 18
AN OVERVIEW OF TOP MANAGEMENT:
From May 2008 the company became subsidiary of BHEL. At
Corporate level the company’s affairs are managed by the Board consist of full
time Managing Director and CMD, BHEL as the chairman of the board. In
addition, 1 Ex officio Director from DHI (administrative ministry) & 2
functional Directors also constitute the Board.

Technology & Market Issues :

The present plant & machinery & infrastructure utilizing by the
company is of 30 years old and have been fully depreciated. At present the
internal lead time is high when compare to competitors. Similarly in the areas
of engineering the lead time required for design and drawings is to be reduced
which requires implementation of sophisticated process design software.

Product Diversification:
The company has undertaken several EPC contracts on EPC/LSTK basis at
various locations in India and abroad. The Company R&D Department has
developed technology for manufacture of compact Heat Exchanger for the light
Combat Aircraft (LCA) under the funding by Aeronautical Development
Agency (ADA). BHPV now with the technology acquired from BHEL
(Holding Company), diversified into power plant equipment, namely
HRSG Boilers, Deaerators etc.

Page 19
Revival and Turnaround of the company:
The salient features of revival scheme are as below.
(As per the Govt. of India, Ministry of Heavy Industries & Public
Enterprises, Department of Heavy Industry, letter F.No. 1 (11) / 2004 – PE
(IV) Dated 07.05.2008)
1. GOI will waive and write off loan and interest amounting to
Rs.415.61CR
2. GOI to provide guarantee amounting to Rs.250 Crs to enable BHPV
to raise bonds from the domestic market subject to the conditions as
intimated vide this office letter of even no. dated 29.04.2008
3. The entire paid up capital of BHPV to the tune of Rs. 33.79 Crs would
be transferred to BHEL at a notional value of Re. 1/-.
4. BHEL will take over both the assets and liabilities (including contingent
liabilities) of BHPV as a going concern.
5. The takeover will entail the following concessions from the
6. Government of Andhra Pradesh:
a) Transfer of title of land measuring 386.73 acres in possession of
BHPV as gift along with waiver of registration and stamp duty.
b) Waiver of Sales Tax arrears amounting to Rs.42.16 Crs
c) Waiver of NALA Tax of Rs.43 lakhs and
d) Waiver of dues towards Water Tax, Property Tax, and Vacant Land
Tax of Rs.3.96 Crs.
7. The consortium of Bankers has agreed for One-Time-Settlement BHEL
may take timely advantage of the offer.
8. BHEL will infuse at least Rs.34 Crs as additional Equity Capital and
adequate funds for up-gradation of manufacturing facilities, Capex and
Working Capital.
9. BHEL will take over BHPV with all its employees.
10. DHI will assist BHEL in settling the disputed demands relating to
excise, customs, income-tax etc., on a case to case basis.

Page 20
The Sanctioned Rehabilitation-cum-Take-over Scheme:
The Revival Scheme envisages take-over of Bharat Heavy Plate and
Vessels Limited (BHPV), a Government of India Enterprise and Subsidiary of
Bharat Yantra Nigam Limited (under The Ministry of Heavy Industries and
Public Enterprises) by Bharat Heavy Electricals Limited (BHEL), a
Government of India Enterprise, which functions as a subsidiary of the
Ministry of Heavy Industries and Public Enterprises. The whole BHPV project
will be handed to BHEL as a subsidiary in accordance with the plan. At a
nominal value of Re 1/-, the full Rs 33.79 Cr paid-up capital will be handed to
BHEL. As a continuing business, BHEL will assume all of BHPV's obligations,
including contingent obligations. BHPV and all of its workers will be acquired
by BHEL. In order to upgrade production facilities, CAPEX, and working
capital, BHEL would provide at least Rs 34 Crs in extra equity capital. The
"Sanctioned Rehabilitation–over-Scheme" mentioned above has been approved
by all secured creditors and employees.
Above scheme was approved by BIFR in October 2010.
Synergy of Business between BHEL and BHPV:
In addition to improvement in present business of BHPV, the take-over by
BHEL will have the following advantages:
 Managerial and marketing support from BHEL.
 Diversification into High Pressure Power Boilers.
 Technological Support for new products.
 Financial Support for up – gradation of manufacturing facilities,
Capex and Working Capital Requirements.
 Ensured flow of new orders.
 Synergy between the two organizations in view of similarity of
products/technologies.
 Business advantage due to excellent Brand Image of BHEL.

Page 21
Factors for revival of BHPV through takeover by BHEL:
BHEL on its part has worked out the viability of the BHPV takeover,
taking into consideration the points:
BHEL to strengthen BHPV's current business of providing process
equipment to industries including oil, petrochemicals, fertilizers, etc. in order to
expand on its strengths. Furthermore, BHPV's skills and capacity in the areas of
industrial boilers, heat exchangers, condensers, etc. will be improved by
BHEL.A capital investment of Rs. 235 Crs is planned for the necessary facility
upgrades. anticipated expansion of the market for BHPV's goods, particularly
in cryogenics and process equipment. According to industry estimates, the
engineering and fabrication sector is likely to get orders worth Rs. 1700 Crs.
year from oil refineries and petrochemical projects over the course of the next
five years.
With a market share of BHPV of 15% – 18% in the past in this segment, BHPV
can become more confident in addressing this market overcoming its financial
constraints by participating in some of the tenders with BHEL support. As
such, BHPV’s financial weakness would be mitigated once its restructuring is
completed and BHEL takes over its functioning. Based on predicted 12%
industrial growth in the upcoming years, the market sector for captive power
projects (CPP) and industrial boilers is forecast to rise from around Rs. 1800
Crs in 2007–08 to an estimated level of Rs. 2400 Crs in the following five
years. BHPV can aim for a 25%–30% market share, given that the market's
expectations regarding pricing and delivery are met. Due to a high volume of
boiler orders from the utility sector, BHEL's Trichy plant is now unable to fully
pursue the industrial boiler market. In this sense, BHEL can establish BHPV as
a speciality center for industrial boilers. By the fifth year, it's anticipated that
this segment's sales turnover would reach Rs. 800 Crs.

Page 22
BHEL-HPVP (BHPV): AN O V E R V I E W .
1. INTRODUCTION:
Incorporation of the Company : 1966
Primary Objective : To manufacture custom built
. ..process of Industries such as
Fertilizers, Petrochemicals,
Petroleum Refineries, and
Chemicals etc.

Collaboration Technical provided by : SKODA,

Czechoslovakia.
Commencement of Construction : 1968
Completion of Construction : 1971
Commencement of Production : 1971
Initial Project Cost : Rs. 17.5 crores
Initial Product Mix : Heat Exchangers,
columns,
Pressurevessels, Technological
: Installed Capacity : 23, 210 M.T.
Turnover for the year 2018-19 : Rs. 108 crores

2. RESOURCES PRODUCTION FACILITIES:

Factory Area : 197 Acres
Total Covered Area : 90,000 sq. Meters
Covered area of Production Shops : 56,000 sq. Meters
Power Requirement : 3,000 KW from APSEB
No. of Ancillary Units : Around a Dozen

Page 23
IMPORTANT MACHINERY:
Although the crane's maximum lifting capability is 120 tons, with little
ingenuity, weights up to 250 tons may be hoisted. In cold conditions, the
maximum rolling capacity is 60 mm, while in hot conditions, it is 170 mm.
With dimensions of meters in width, 5.5 meters in height, and 36.5 meters in
length, BHPV boasts the biggest heat treatment furnace in India. An additional
200-ton furnace with a 15-meter-long bogie has been installed. A single spindle
CNC deep hole drill machine with a gun drilling attachment and two deep
drawing hydraulic presses with a 1600T capacity are among the other essential
pieces of equipment that BHPV offers. CNC drilling equipment that is capable
of using traditional drills. HMT has built a second CNC deep hole drill
machine.several welding rotators with a maximum capacity of 250 tons.
equipment for manual arc welding, submerged arc welding, TIG, MIG, and
plasma as well as the newest, most productive equipment for tune head
submerged arc welding and bi-cathode TIG welding.Fining machine tube.
Several boring machines, both horizontal and vertical, with maximum
capacities of 200 mm spindle diameter and 5 meters dia, respectively. Various
kinds of non-destructive testing apparatus. Chemical and physical laboratories
with excellent equipment. 118 personal computers, 56 CAD machines, one
HCL Super-Mini computer, two mini computers, and other items in the
metrology division.

MANPOWER (As on 1st April, 2023)

 Workmen / Staff : 720
 Supervisors : 96
 Executives : 198
 Total : 1014
 Apprentices 95
 Contract Labour 395

Page 24
 EMPLOYEE WELFARE AMENITIES

 Township Area - 151 Acres

 No. of Quarters - 1192
 20 bed Hospital
 Protected Water Supply
 Underground drainage system
 English medium school with CBSE Syllabus
 Telugu medium school with AP State Syllabus
 Special school for mentally handicapped children.
 Vocational training centre for mentally handicapped
 Community center for cultural activities & sports – open air theatre
facilities
 Kalyana Mandapam.

By absorbing know-how from various world renowned collaborators,

BHPV upgraded its status from a mere fabricator of process equipment to that
of an engineering company of international repute.

Page 25
PROJECTS OF NATIONAL IMPORTANCE EXECUTED/UNDER
EXECUTION
S.NO. CUSTOMER PROJECT/EQUIPMENT

1. IOCL Paradip Boiler III & Boiler Drums -2 No’s

IV
2. HRSG Modules& MRSG Module12No
KRIBHCO & OPAL 3&
3. PCL Chennai Nitrogen storage tanks

4. BHEL Haridwar 80 No’s support plates for conducer

5. TISCO&RINL Vizag 200 M3 oxygen, Nitrogen, & Argon

Buffer vassals
6. BHEL, Chennai Higher Diameter pipe bends

7. NRL,Numaligarh 600 Nm3/hr HPN plant

8. HPCL, Visakhapatnam CDU Heater with APH System/VDU

Heater
9. HPCL, VREP – II Clad/CS Columns/CS heat Exchangers
Visakhapatnam etc
10. HPCL, Visakhapatnam Co-boiler

11. HPCL, Visakhapatnam Revamping of 50TPH oil & gas fired

boiler
12. HPCL, Mumbai 50 TPH Boiler

13. BPCL, Mumbai Nitrogen Plant

14. Hyundai Heavy Industries, Cryo Nitrogen plant

New Delhi
15. Space application centre, 505m Dia thermal vacuus system
Ahmedabad
16. TECHNIMONT ICB LTD. Nitrogen plant
Mumbai
17. OSWAL CHEMI FERTILI Waste Heat LP boilers

Page 26
 As a part of total quality management program, BHPV has acquired ISO
9001 certification during the year 1993-94, particularly to boost up its exports
and to be competitive in the international market.
 Re-certification of ISO 9001 has been obtained in September, 1996.
 In recognition of high standards of our quality, confederation of Indian
industry (CII), Southern Region, AP presented the Quality Award.

RESEARCH & DEVELOPMENT:
Research & Development department was established in 1975 and is
well equipped with high tech equipment to cater to Applies Research and
Product Development. R&D has developed 136 Projects so far. Some of the
products commercialized include:
 Titanium Anodes
 Titanium Air Bottles
 Cryogenic Vats
 Individual Quick Freezing Unit
 Super Insulated Piping.
 Super Insulated Cryogenic Storage tanks
 D.M. Water Plants

A prestigious order for Development of Heat Exchangers for Light
Combat Aircraft (LCA) Phase-II has been received from Aeronautical
Development Agency, Bangalore.
 Some of the Awards received for excellence in R&D include:
 CIS Award for R&D achievement in 1992-93.

Page 27
ANCILLARISATION:
BHPV has developed some ancillary industries in its vicinity to cater to
its requirements. Apart from offering sufficient work load to these industrial
units, BHPV has been assigning work to a number of small sector industries.
BHPV provides material, transportation and inspection services to the
Ancillaries to help them rise to its quality requirements.
PRESENT STRENGTHS
 Financial, Managerial, Technical back-up and support of Navaratna
PSU, BHEL
 Excellent Design & Engineering capabilities.
 State –of –the – Art Manufacturing facilities.
 Accomplished image as a supplier of Quality Products in the domestic
and international markets.
 High degree of customer confidence.
 Technological tie-up arrangements.
 Well trained and qualified work force and Engineers.
 Sound work culture & harmonious Industrial Relations.
 Extensive computerization.
 Capability to supply Projects & Systems on turnkey basis.
 Project Management Skills.
PLANS & STRATEGIES
 To grow as an Engineering, Procurement and Construction Company.
 To enlarge Export Business.
 To resort to extensive computerization and Automation for reduction of
cycle time, improvement of quality and reducing costs.
 To forge strategic business alliances with International Companies to
derive technological and marketing advantages.
 To strive for continuous updating of technologies to be on par with
International Companies.
 To focus on Human Resources Development.
 To change the work culture to be compatible with market demands.

Page 28
CONSTRAINTS
 Non computerization / No ERP
 High average age of employees / no executive recruitment since 1998
 Working capital constraints
 Replacement/updating of machinery

Page 29
 CHAPTER- 3
THEORETICAL FRAMWORK

Page 30
Meaning:
Generally One definition of a fund is operating capital. Fund flow is hence a
change in working capital. Therefore, variations in working capital are referred
to as flows, which can be either inflows or outflows. There are two definitions
of working capital: net working capital and gross working capital. Net working
capital is the amount that current assets exceed current liabilities, whereas gross
working capital is the sum of all current assets. The net working capital concept
is used to create and evaluate the fund flow statement. A funds flow statement
is a summary of the various financial flows for a certain time period that is
measured and presented analytically.
Importance of funds flow statement:
Funds flow statement is an important tool; it helps in the planning, deployment
and controlling of funds year after year. The following are the benefits of funds
flow statement. It provides a detailed analysis and understanding of changes
between two balance sheet dates.. It displays the channelization and
mobilization of funds. Making future financial estimates is helpful. It is a
helpful method to gauge the amount of money required for a business to run
effectively. Having a thorough understanding of the company's financial
activities is the main goal of compiling the statement. It examines the prior
acquisition and utilization of the cash. In this way, it's a useful tool for the
financial manager to examine the company's history, present, and future
intentions and how they affect liquidity. He is able to determine the causes of
the disparities in previous financial utilization and implement the required
remedial measures. When examining the company's financial status, the Funds
Flow Statement provides
1. Why were the net current assets of the firm down, though the net income
was up or vice versa?
2. How was it possible to distribute dividends in absence of or in excess of
current income for the period ?
3. How was the sale proceeds of plant and machinery used ?
4. How was the sale proceeds of plant and machinery used ?
5. How were the debts retired ?
Page 31
6. What became to the proceeds of share issue or debenture issue ?
7. How was the increase in working capital financed ?

8. Where did the profits go?

Though it is not an easy job to find the definite answerers to such questions
because funds derived from a particular source re rarely used for a particular
purpose. However, certain useful assumptions can often be made and
reasonable conclusions are usually not difficult to arrive at.

(2) Evaluation of the Firm's Financing: One important use of the statement is
that it evaluates the firm' financing capacity. The analysis of sources of funds
reveals how the firm's financed its development projects in the past i.e., from
internal sources or from external sources. It also reveals the rate of growth of
the firm.

(3) An Instrument for Allocation of Resources. Large-scale modern

businesses always struggle with resource allocation, and there are never enough
finances available for expansion initiatives. Therefore, in order to implement
their growth programs, which are scheduled appropriately, a hierarchy of
priorities must be developed. Funding must also be set up as the various
program phases progress. The finance department will use the Funds Flow
Statement to predict the amount of funding that will be available for these
projects. This keeps the company from being the defenseless target of
unforeseen events..

(4) A Tool of Communication to Outside World. Money Movement

Statement aids in compiling the business's financial conditions. It provides an

understanding of how the current financial situation has evolved and addresses
the question, "Where have our resources been moving?" In the current credit
financing environment, it offers helpful information about the amount of loan
needed, its proposals, the conditions of payback and sources for loan
repayment, among other things, to bankers, creditors, financial institutions, and
the government. Examining Funds Flow gives the financial manager a sense of
Page 32
confidence.Statement. In fact, it carries information regarding firm's financial policies to the
outside world.

(5) Future Guide. A thorough examination of the Funds Flow Statements over
a number of years provides the financial management with important insights
for forecasting the firm's future financial needs and determining whether those
needs will be short-, long-, or mid-term. The information obtained from the
examination of these statements can be used by management to develop its
financial policies. Based on this information, the financial management may
more efficiently reorganize the company's financing, taking into account the
anticipated adjustments to trade payables and the different accruals. It assists
management in better organizing its funding in this way.
Fund Flow Analysis:
Fund may be interpreted in various ways as
(a) Cash,
(b) Total current assets,
(c) Net working capital,
(d) Net current assets.

For the purpose of fund flow statement the term means net working capital.
The flow of fund will occur in a business, when a transaction results in a
change i.e., increase or decrease in the amount of fund.
According to Robert Anthony the funds flow statement describes the sources
from which additional funds were derived and the uses to which these funds
were put. In short, it is a technical device designed to highlight the changes in
the financial condition of a business enterprise between two balance sheets.

Different names of Fund-Flow Statement:

A Funds Statement
A statement of sources and uses of fund
A statement of sources and application of fund
Where got and where gone statement
Inflow and outflow of fund statement
Page 33
Objectives of Fund Flow Statement
The main purposes of FFS are –

 To help to understand the changes in assets and asset sources which are
not readily evident in the income statement or financial statement.
 To inform as to how the loans to the business have been used.
 To point out the financial strengths and weaknesses of the business.
Format of Fund Flow Statement Sources Applications:
Fund from operation
Fund lost in operations
Non-trading incomes
Non-operating expenses
Issue of shares Redemption of redeemable preference share
Issue of debentures
Redemption of debentures
Borrowing of loans Repayment of loans
Acceptance of deposits
Repayment of deposits
Sale of fixed assets
Purchase of fixed assets
Sale of investments (Long Term)
Purchase of long term investments
Decrease in working capital
Increase in working capital
Steps in preparation of Fund Flow Statement:
1. Preparation of schedule changes in working capital (taking current items
only).
2. Preparation of adjusted profit and loss account (to know fund from or fund
lost in operations).
3. Preparation of accounts for non-current items (Ascertain the hidden
information).

Page 34
Preparation of the fund flow statement:
There is a plenty of business transactions which results in flow of funds or
which cause changes in working capital. For this purpose, all the business
transactions classified into (a) those transactions which increase funds i.e.
sources of funds (b) those transactions which decrease funds i.e. application of
funds. Identification of transactions causing for increase or decrease in funds is
essential for funds flow statement analysis. The following transactions do not
affect the flow of funds. These are

Transactions between two current assets. (For ex. conversion of stock into
cash)

1. Transactions between two current liabilities.

2. Transactions between current assets and current liabilities.
3. Transactions between two non-current or fixed assets.
4. Transactions between two long-term liabilities.
5. Transactions between non-current assets and long-term liabilities.

It is clear from above, transactions between a current account (non-current

account) and another current account (non-current account) does not affect
flow of funds.
The first three is connected with current account; the last three belongs to non-
current account. As against this concept, any transaction between a current
account and a non-current account affect funds. These are;

1. Transaction between a long term liability and a current asset.

2. Transaction between a long term liability and a current liability.
3. Transaction between a non-current asset and a current asset.
4. Transaction between a non-current asset and a current liability.

Page 35
Step - 1: Preparation of Schedule of Changes in Working Capital:
It reveals the difference between the current assets and liabilities. Increase in
current assets and decrease in current liability will increase the working capital
amount. At the same time decrease in current assets and increase in current
liability will decrease the working capital amount.
Statement or schedule of changes in working capital
_
Particulars Previous year Current year Effect on working capital
Increase Decrease

Current Assets
Þ Cash in hand
Þ Bills receivable
Þ Sundry debtors
Þ Temporary investments
Þ Stocks / inventories
Þ Prepaid expenses

Total current assets.

Particulars Previous year Current year Effect on working capital
Increase Decrease

Current liabilities
Þ Bills payables
Þ Sundry creditors
Þ Bank overdraft
Þ Short term advances
Þ Dividends payables

Total current Liabilities

Working capital = CA- CL
Net increase or decrease in working capital =

Page 36
Step – 2: Preparation of Adjusted P&L Account – to find fund from
operations
Because is the source of fund and will show in fund flow statement’s source
side. So before making fund flow statement, we must make statement showing
the fund from operation.
Operation means business activity and fund from operation means profit from
business activity. So, you will easy understand that profit from business
activity between two accounting period must be the source of fund.
Statement of fund from operations / Adjusted P/L Account
_
Closing balance of profit and loss account or retained earnings
as given in the Balance sheet
_ _
ADD: non –fund and non operating items which have been already
Debited to profit and loss account
1. Depreciation
2. Amortization of fictitious and intangible assets
Þ goodwill
Þ patents
Þ trade marks
Þ preliminary expenses
Þ discount on issue of shares
3. Appropriation of retained earning such as
Þ Transfer to general reserve
Þ Dividend equalization fund
Þ Transfer to sinking fund
Þ Contingency reserve etc.
4. Loss on sale of any non-current or fixed assets such as
Þ Loss on sale of land and building
Þ Loss on sale of machinery
Þ Loss on sale of furniture
Þ Loss on sale of long term investments
Page 37
 5. Dividends including
Þ Interim dividend
Þ Proposed dividend (If it is an appropriation of profit and not taken as
current liability)
6. Provision for taxation (if it is not taken as current liability)
7. Any other non fund / non operating items which have been debited to P/L
account
Total (A)

LESS: Non –Fund or non operating items which have already been
credited to profit and loss account

1. Profit or gain from the sale of non current / fixed assets such as
Þ Profit on sale of land and building
Þ Profit on sale of plant and machinery
Þ Profit on sale of long term investment etc.
2. Appreciation in the value of fixed assets such as increase in the value of
land if it has been credited to profit and loss account
3. Dividends received
4.Excess provision retransferred to profit and loss account or written back .
5. Any other non operating item which has been credited to profit and loss
account
6. Opening balance of profit and loss account or retained earnings as given
in the balance sheet

Total (B)
_
Funds received from operation or business activities = total (A) – Total (B)

Page 38
Step – 3: Funds Flow Statement for the year ending……

A) Source of funds
1.Fund from operation (balance of second step)
2.Issue of shares capital
3.Issue of debentures
4.Raising of long term loans
5.Receipts from partly paid shares, called up
6.Amount received from sales of non current or fixed assets
7.Non trading receipts such as dividend received
8.Sale of investments (Long term)
9.Decrease in working capital as per schedule of changes in working capital
_
Total

B) Applications or uses of funds

_
1. Funds lost in operations (Balance negative in second step)
2. Redemption of preference share capital
3. Redemption of debentures
4. Repayment of long term loans
5. Purchase of long term loans
6. Purchase of long term investments
7. Non trading payments
8. Payment of tax
9. Payment of dividends
10. Increase in working capital (As per positive balance of 1st step)-
__
Total

Page 39
 CHAPTER-4
DATA ANALYSIS AND INTERPRETATION

Page 40
 Statement showing changes in working capital(Rs.in lakhs)

Effect of working increase decrease

capital
Particulars 2021- 2022-2023 Rs Rs
2022
Current assets 21844.47 17850.03 - 3994.44

21844.47 17850.03
Total current assets
31246.19 26411.34 4834.85 -
Current liabilities
31246.19 26411.34
total current liabilities
-9401.72 -8561.31 - 840.41
Net working capital(CA-CL) 840.41
NET Decrease in working 9401.72 9401.72 4834.85 4834.85
capital

FUND FLOW STATEMENT

Source Amount application amount

- Purchase of fixed assets 1781.64

Share holder funds
5721.23 Unsecured loans 4780
Funds from operation
Un secured loans -

Net Decrease in working 840.41

Capital
6561.64 6561.64

Page 41
 Adjusted P&L A/C
particulars amount particulars amount

To depreciation 1770.27 By funds from 5721.23

operation
To accumulated loss 3951.03

5721.23 5721.23

Interpretation:

The company's short-term financial situation is far from adequate; working

capital, which was $9401.72 in 2020–21, is now just -8561.31 in 2021–22,
indicating that significant action is required to improve the company's liquidity
position.
According to our funds flow statement, we were able to raise a source amount
of Rs. 6561.64, which we would use to pay off many loan accounts or purchase
some fixed assets. Selling fixed assets is never a smart idea for a business. The
management of the firm has to take action to enhance both the short- and long-
term financial situation because the company's overall performance in these
(2020–21 to 2021-22) years is completely unsatisfactory.

Page 42
Statement showing changes in working capital(Rs.in lakhs)

Particulars Effect of working capital increase decrease

2020-2021 2021-2022 Rs Rs
Current assets 31112.08 21844.47 - 9267.61

Total current assets 31112.08 21844.47

Current liabilities 43189.85 31246.19 11943.66 -

Total current liabilities 43189.85 31246.19

Net working capital -12077.77 -9401.72 - 2676.05

2676.05
Net decrease in working 12077.77 12077.77 11943.66
Capital 11943.66

Fund flow statement

Particulars Amount Particulars Amount

Share holders fund - Funds lost in operation 18398.46

Unsecured loans 11683.31

Sale of fixed assets 4039.12

Net decreasing in working 2676.03

capital
18398.46 18398.46

Page 43
Adjusted P&L A/C
particulars amount Particulars amount

To depreciation 1092.13 To accumulated loss 19490.59

To funds lost in operation 18398.46

19491 19491

Interpretation:

The short term liquidity position of the company is not all satisfactory where
as working capital in 2019-20, 12077.77 is reduced to 9401.72 in the year
2020-21, that means the company should take necessary steps to salvage its
weak liquidity position.
Funds flow statement shows that we raised appalication amount of
Rs.18398.46,wich is not a good sign for an enterprise.
Overall performance of the company is not at all satisfactory in these (2019-20
to 2020-21) years.so the management has to take action regarding the
improvement of its weak liquidity position

Page 44
Statement showing changes in working capital (Rs. In lakhs)
Effects of Working Increase Decrease
Particulars capital
2019-20 2020-21 Rs. Rs.
29445.50 31112.08 1666.58 -
Current assets
29445.50 31112.08
Total current assets
45376.54 43189.85 2136.69 -
Current Liabilities
45376.54 43189.85
Total current liabilities
- - 3853.27
Net working capital = (CA-CL) 15881.04 12077.77
15881.04 15881.04 3853.27 3853.27
Net decrease in working capital

Fund Flow Statement

Sources Amount Application Amount

Share holder fund Redemption of secured loans 20165.98

Depreciation of fixed Redemption of unsecured

825.99 19193.50
assets loans

Funds from operation

34679.7

Net decrease in working

3853.27
capital

39359.4 39359.4

Page 45
Adjusted P & L A/C

Particulars Amount Particulars Amount

To miscellaneous 2583.87 By Funds from 34679.72

expenses operation

To, accumulated loss 32115.87

34679.72 34679.72

Interpretation:
The short term financial position of the company is not at all satisfactory where
as working capital in 2018 – 19, -15931.04 is reduced to -12077.77 in the year
2020 – 2021, that means the company has to take drastic steps to increase its
liquidity position.

As per operation of funds we raised a source amount of Rs 34679.72 with that

we have to settle various loan accounts or buy some fixed assets as per our
funds flow statement. Sale of fixed assets is not at all a good sign for a
company.

Overall performance of the company is not at all satisfactory in these (2019–20

to 2020 –21) years so the management has to take action regarding the
improvement of short term as well as long term financial position.

Page 46
 Statement showing changes in working capital (Rs. In lakhs)

Effects of Working capital Increase Decrease

Particulars
2018 – 19 2019 - 20 Rs. Rs.

Current Assets 19756.64 26014.07 6257.43 -

Total current assets 19756.64 26014.07

Current Liabilities 11305.55 20189.06 - 8883.51

Total current liabilities 11305.55 20189.06

Net working capital = (CA- 8451.09 5825.01 2626.08 -

CL) 2626.08

Net decrease in working 8451.09 8451.09 8883.51 8883.51

capital

Page 47
 Fund Flow Statement

Sources Amount Applications Amount

Share holder fund NIL Funds lost in operation 5001.84

Raising of secured loans 80.32

Raising of unsecured loans 2208.08

Depreciation of fixed asset 87.36

Adjusted P & L A/C

Particulars Amount Particulars Amount

To, miscellaneous expenses 602.97 By, accumulated loss 5604.81

To, funds lost in operation 5001.84

5604.81 5604.81

Page 48
Interpretation
The short term liquidity position of the company is not at all satisfactory where
as working capital in 2017 – 18, 8451.09 is reduced to 5825.01 in the year 2018
– 19, that means the company should take necessary steps to salvage its weak
liquidity position.

Funds flow statement shows that we raised application amount of Rs. 5001.84
which is not a good sign for an enterprise

Overall performance of the company is not at all satisfactory in these (2017 –

18 to 2018 – 19) years so the management has to take action regarding the
improvement of its weak liquidity position.

Page 49
Statement showing changes in working capital (Rs. In lakhs)
Effects of Working capital Increase Decrease
Particulars
2017-18 2018-19 Rs. Rs.

26488.21 31934.12 5445.91

Current Assets

26488.21 31934.12
Total current assets

22574.81 24216.67 1641.86

Current Liabilities

22574.81 24216.67
Total current liabilities

3913.40 7717.45
Net working capital = (CA-
CL)
3804.05 3804.05
Net increase in working
capital

Page 50
 Fund Flow Statement

Sources Amount Applications Amount

3379.78 3804.05
Share holder fund Net increase in working
capital
19226.66
Raising of secured loans 2722.23 Funds lost in operation

1166.3
Raising of unsecured
loans

15762.4
Depreciation of fixed
asset
23030.71 23030.71

Adjusted P & L A/C

Particulars Amount Particulars Amount

To,miscellaneous expenses 27896.67 By, accumulated loss 47123.33

To, Funds lost in operation 19226.66

47123.33 47123.33

Page 51
Interpretation
The short term liquidity position of the company is good, in the year 2016 –
17, working capital 3913.40 is increased to 7717.45 in the year 2017 – 18,
which indicates the company has improved its liquidity position.

According to Funds flow statement the company incurred losses in its

operations which is not a good symbol for an enterprise

performance of the company is some what satisfactory in these (2017 – 18 to

2018– 19) years but the position can be improved in the future.

Page 52
 Funds Flow Statement

Particulars As on 31-03-20
Cash flow from operating activities

Net profit for the year 9635.52

Adjustments for:
Depreciation charge for the year 848.30
Adjustment for:

Increase/ Decrease in inventory -499.92

Decrease in loans and advances 3032.41

Increase/ Decrease in debtors 3078.63

Increase in deferred revenue expenditure 2563.87

Increase/Decrease in liabilities -95.46

Increase/Decrease in provisions -157.51

Net cash flow from operating activities 18405.84

Purchase of fixed assets -22.31

Increase/Decrease in investments 0.00

Cash flow from investing activities -22.31

Increase in secured loans -21815.24

Increase in unsecured loans -19193.50

GOI Loan waiver 22480.33

Cash flow from financing activities -18528.41
Net increase in cash and cash equivalents -144.88

Cash and cash equivalents OB 585.57

Cash and cash equivalents CB 440.69

Page 53
 As on 31-03-19
Particulars
Cash flow from operating activities

Net profit for the year -5604.84

Adjustments for:
Depreciation charge for the year 142.46
Adjustment for:

Increase/ Decrease in inventory -297.89

Decrease in loans and advances 3843.22

Increase/ Decrease in debtors -2396.93

Increase in deferred revenue expenditure 602.97

Increase/Decrease in liabilities -937.37

Increase/Decrease in provisions -1535.37

Net cash flow from operating activities -3113.01

Purchase of fixed assets -55.09

Increase/Decrease in investments 0.00

Cash flow from investing activities -55.09
Increase in secured loans 80.33

Increase in unsecured loans 2208.08

GOI Loan waiver 0.00
Cash flow from financing activities 2288.41
Net increase in cash and cash equivalents -879.69
Cash and cash equivalents OB 1465.26

Cash and cash equivalents CB 585.57

Page 54
Particulars As on 31-03-18
Cash flow from operating activities

Net profit for the year -3469.87

Adjustments for:
Depreciation charge for the year 134.54
Adjustment for:

Increase/ Decrease in inventory 981.48

Decrease in loans and advances 991.39

Increase/ Decrease in debtors 173.9

Increase in deferred revenue expenditure 615.98

Increase/Decrease in liabilities -6280.59

Increase/Decrease in provisions 19.74

Net cash flow from operating activities -6833.43

Purchase of fixed assets -0.29

Increase/Decrease in investments 0.00

Cash flow from investing activities -0.29

Increase in secured loans 1808.56

Increase in unsecured loans 5653.75

GOI Loan waiver 0.00

Cash flow from financing activities 7462.31
Net increase in cash and cash equivalents 628.59

Cash and cash equivalents OB 836.67

Cash and cash equivalents CB 1465.26

Page 55
Particulars As on 31-03-17

Cash flow from operating activities

Net profit for the year -7137.9

Adjustments for:
Depreciation charge for the year 151.14
Adjustment for:

Increase/ Decrease in inventory 1465.27

Decrease in loans and advances -1876.41

Increase/ Decrease in debtors -45.35

Increase in deferred revenue expenditure 589.97

Increase/Decrease in liabilities -1038.74

Increase/Decrease in provisions -140.02

Net cash flow from operating activities -8032.04

Purchase of fixed assets -36.61

Increase/Decrease in investments .02

Cash flow from investing activities -36.59

Increase in secured loans 427.82

Increase in unsecured loans 7555.52

GOI Loan waiver 0.00

Cash flow from financing activities 7983.34
Net increase in cash and cash equivalents -85.29

Cash and cash equivalents OB 921.96

Cash and cash equivalents CB 836.67

Page 56
Particulars As on 31-03-16
Cash flow from operating activities

Net profit for the year -7823.35

Adjustments for:
Depreciation charge for the year 185.40
Adjustment for:

Increase/ Decrease in inventory -3598.69

Decrease in loans and advances 1635.08

Increase/ Decrease in debtors -1166.54

Increase in deferred revenue expenditure -58.51

Increase/Decrease in liabilities 1172.95

Increase/Decrease in provisions -35.39

Net cash flow from operating activities -9689.05

Purchase of fixed assets -79.72

Increase/Decrease in investments 0.02

Cash flow from investing activities -79.70

Increase in secured loans 515.64

Increase in unsecured loans 8922.62

GOI Loan waiver 0.00

Cash flow from financing activities 9438.26
Net increase in cash and cash equivalents -330.49

Cash and cash equivalents OB 1252.45

Cash and cash equivalents CB 921.96

Page 57
CHAPTER 5

SUMMARY
FINDINGS
SUGGESTIONS
CONCLUSION

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 SUMMARY

o A funds flow statement officially called as statement of changes in

financial position, provides information about an enterprise's investing
and financing activities during the accounting period.
o Though there are many concepts of funds, the working capital concept
of funds has been used in this lesson.
o Flow of funds results only when there is a cross transaction i.e., only
when a transaction involves a fixed asset or liability and a current asset
or liability.
o The main sources of funds are: funds from operations, issue of shares
and debentures and sale of non-current assets.
o The main uses of funds are repayment of long-term liabilities including
redemption of preference shares and debentures, purchase of non-current
assets and payment of dividends.
o Funds flow statement helps the financial analyst in having a more
detailed analysis and understanding of changes in the distribution of
sources between two balance sheet dates.
o In addition to funds flow statement concerns are also preparing cash
flow statement which is the outcome of cash flow analysis.
o Cash flow analysis is based on the movement of cash and bank balances
and the cash flow statement is a statement depicting changes in cash
position from one period to another period.

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 FINDINGS

o The short term financial position of the company is not at all satisfactory
where as working capital in 2021-22, is decreased to 840.41 in the year
2022-23.

o The short term liquidity position of the company is not all satisfactory
where as working capital in 2020-21, is decreased to 2676.05 in the year
2021-22.

o The short term financial position of the company is not at all satisfactory
where as working capital in 2018 – 19, is decreased to 3853.27 in the
year 2020 – 2021.

o The short term liquidity position of the company is not at all satisfactory
where as working capital in 2018 – 19, is decreased to 2626.08 in the
year 2019 – 20.

o The short term liquidity position of the company is good, in the year
2017– 18, working capital is increased to 3804.05 in the year 2018– 19.

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 SUGGESTIONS

 Overall performance of the company is not at all satisfactory in these

(2021-2022 to 2022-2023) years so suggest the management to improve
the short term financial position by through identify and reduce
unnecessary expenses.
 The firm has to improve liquidity Position during (2018-19 to 2019-20)
by inventory management and negotiating favorable payment terms with
suppliers.
 The current liability of the company was also increasing during the above
said period. It is suggested that the company will try for reducing current
liabilities. In case the requirements of funds has to be mobilized from
long term sources that is good for the company. On the other hand the
companies will redemption of short term liabilities with in the near
future. It is not good for the company because of the business is
uncertainty
 It is also suggested that the working capital position of the company was
also good. As a result the company will make a plan for efficient usage
of these funds towards discharge its financial obligation promptly.

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 CONCLUSION

The finds flow statement highlights the amounts raised from various
sources of finance during a period and then explains how that finance
has been used in the business. It analyzes the net increase or decrease in
working capital in to changes in the constituent item that is Stock,
Debtors, Creditors, and Cash etc.

It is an analysis of funds flow between two balance sheets along with

funds flow statement. Another statement is also prepared to analyze the
impact of funds flow working capital position.

The funds flow statement list out the sources from which working
capital has been derived during the accounting period and the ways
in which working capital has been used up.

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 BIBLIOGRAPHY

AUTHOR TITLE OF THE BOOK PUBLISHER

I.M. PANDEY FINANCIAL VIKAS PUBLISHING

MANAGEMENT PVT.LED.,

M.Y. KHAN& FINANCIAL TATA MC. GRAW

P.K. JAIN MANAGEMENT PUBLISHING CO.LTD.

PRASANNA CHANDRA FINANCIAL TATA MC. GRAW

MANAGEMENT PUBLISHING CO.LTD.

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Date Friday, November 24, 2023
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FUNDS FIOW STATEMENT� being submitted
by D. BALARAM SATISH in partial fulfillment
A STUDY ON �FUND FLOW STATEMENT� With Reference to �BHARAT HEAVY for the award of degree of MBA In AVANTHI
ELECTRICALS
LIMITED� VISAKHAPATNAM / A Project Report Submitted to J N.T University, Gurajada INSTITUTE ENGINEERING AND TECHNOLOGY
J.N.T.UNVERSITY GURAJADA(VIZIANAGARAM)
Vizianagaram In Partial Fulfilment for the Award of Degree of MASTER OF BUSINESS is a
ADIMINISTRATION Submitted by D.BALARAM SATISH Regd. No: 22811E0012 Under the record of confide work carried out by him
under my guidance and supervision.
Esteemed Guidance of Mr.T. GOPI (Professor)
PROJECT GUDIE Mr. T.
DEPARTMANT OF MANAGEMANT STUDIES Avanthi Institute of Engineering and
Technology (Approved by AICTE, Recognized by the Govt. of A.P. GOPI / DECLARATION I hereby declare that
the project work entitled "A STUDYON
& Affiliated to JNT University, gurajada Vizianagaram), Narsipatnam, Visakhapatnam.
FUNDS FLOW ANALYSIS "with reference to
(2022-2024) CERTIFICATE This is certify that the project report entitled �A STUDY ON
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