financial survy

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Meghmani Finechem Ltd. 1


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BACKGROUND OF THE COMPANY

It was in 1986, when Gujarat Industries was established as a partnership firm in

Gujarat, India to manufacture pigments. High productivity and profitability

transformed Gujarat Industries to a joint stock company, under the name of

Meghmani Organics Limited, by 1995. Since then Meghmani Organics Limited has

diversified its business interests to include a range of pesticides and other

pigments products as well.

Today, Meghmani Organics Limited is leading manufacturer of pigments and

pesticides products in the country and is the recipient of several prestigious

awards in recognition of its outstanding business performance.

Meghmani group of industries today is one of the leading exporters of dyes and

pigments from the India. Meghmani group of industries consist of:-


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HOLDING COMPNEY

Related Companies

Magmani organics limited

Maghmani finechem limited

Ashish Chemicals

Meghmani Pigments

Meghmani Industries Limited

Matangi Industries

Meghmani Dyes & Intermediates &

Meghmani Industries Limited

Matangi industries

Mansi chemicals


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Other related company

Meghmani Europe BVBA

Meghmani Energy Ltd

Meghmani Organics Inc. USA

PT Meghmani Indonesia

Chemtech Ltd

Ashish Chemicals

Ashish Chemicals (EOU)

Alpanil Industries Meghmani Infrastructure

Vidhi Global Chemical Ltd


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MFL, DAHEJ.

In 2008, MOL set up a subsidiary chlor-alkali project at Dahej with an

investment of US$125 million with part investment made by the International

Finance Corporation Limited to manufacture caustic soda/chlorine under

Meghmani Finechem Limited banner.

The plant, with a manufacturing capacity of 1,10,000 tpa of caustic soda

is located at Dahej in Gujarat. The unit also houses a 40 MW captive power plant.

The project has been funded with equity of Rs 185 crore and a debt of Rs 370

crore provided by a consortium of State Bank of India.

Sited in a 161-acre piece of land in Dahej, the proposed plant will be set

up under a special purpose vehicle (SPV), Meghmani Finechem Limited (MFL),

employing the latest membrane cell technology to provide a ready and captive

source of basic chemicals as the Group consumes significant quantities of caustic

soda, chlorine gas and derivatives of chlorine gas for our pigments and

agrochemicals operations.

FORM OF ORGANISATION

Meghmani Finechem Ltd. is the public limited company.


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Project description

Meghmani Organics Limited (MOL or the sponsor), a manufacturer of specialty

chemicals in Gujarat, India has set up a new company - Meghmani Finechem

Limited (MFL or the company), which will construct and operate a 110,000 tons

per annum (tpa) chlor-alkali plant together with a 40MW captive power plant,

both at a greenfield site at Dahej, Gujarat. The proposed project supports the

efforts of MOL to improve its competitiveness by partial backward integration of

its operations while using environment-friendly membrane cell technology. The

chlor-alkali plant is expected to become operational in CY2009.

MOL views MFL as the vehicle for the future investments and growth which will

build on MOLs technical expertise and existing operations. After the project,

which represents Phase I, is complete, the shareholders hope to move into Phase

II, which would focus on downstream chlorine derivatives such as PVC, ECH,

mono-chloro acetic acid, cyanuric chloride, aluminum chloride, calcium chloride,

methyl chloride, hydrogen peroxide and others.


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Project sponsor and major shareholders of Project Company

MOL, the project sponsor (initially named Gujarat Industries Limited) was

established in 1986 by Mr. Jayanti Patel, Mr. Ashish Soparkar, Mr. Natu Patel, Mr.

Ramesh Patel and Mr. Anand Patel (known as the Promoters). MOL established its

first manufacturing facility for pigments at Vatva in Gujarat. Subsequently, three

other plants were also established in Gujarat: in 1995 an agrochemical plant in

Chharodi, in 1998 a pigment plant in Panoli, and in 2003 an agrochemical plant in

Ankleshwar. MOLs products are divided into two segments, each accounting for

about half of its sales:

- agro-chemicals and pesticides manufactured in the Ankleshwar and Chharodi

plants and

- color pigments, manufactured in Vatva and Panoli plants. For the fiscal year

ended March 31, 2007, MOL reported sales of $108 million and net income of

about $9 million.

MOL is 48.8% owned by the controlling shareholders and their families. The rest is

owned by the public and by private equity investors through Singapore

Depositary Shares (30.1%) and through direct listing in Bombay Stock Exchange(21.1%). MOL first became a publicly listed company on the Singapore Stock

Exchange in 2004 and was listed on the NSE/BSE in June 2007.


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Total project cost and amount and nature of IFC's investment

The project, which is expected to cost about $125 million, will be financed with

about $40-42 million in equity and $82-85 million in long-term debt. IFC is to

provide financing of up to $30 million, including about $8-10 million in equity and

up to $20 million in debt.


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Location of project and description of site

MFL will construct a 110,000 tpa chlor-alkali plant and a 40 MWH captive power

plant at a Greenfield site at Dahej, Gujarat. The success of the chlor-alkali plant

will largely depend on the economic availability of salt and power. Dahej is one of

the largest producers of salt in Gujarat. Coal, the key source of fuel for the captive

power plant, can be easily imported through Dahej port.


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Anticipated development impact of the project

The project will help establish international standards of environmental and social

performance for MFLs facilities using the environmentally friendly membrane

cells technology. The benefits can be expected to have a positive demonstration

effect on its competitors, thus encouraging other Indian chemical companies to

improve competitiveness in the global markets and at the same time adopt the

modern technology and environment-friendly operating standards. In addition,

the project is expected to have the following measurable developmental benefits:

- Once operational, the project is expected to create about 500 new jobs on

permanent basis which would be available for locals. Indicator: number of jobs at

the plant starting at 2010.

- During construction period, the project is expected to create 200 to 1000

temporary construction jobs depending on the construction phase. Indicator:

number of construction workers employed 2009.

- The project generate downstream economic impact in the local economy as the

company will planning to source its main feedstock (raw salt) from local

producers, primarily SMEs, in Dahej area. Indicator: value of raw materials

sourced from local producers.


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Environmental and social issues - Category B

This is a Category B project according to IFCs Environmental and Social Review

procedures because a limited number of specific environmental and social

impacts may result which can be avoided or mitigated by adhering to generally

recognized performance standards, guidelines or design criteria. Mitigation

measures for the potential environmental and social impacts are identified and

incorporated in the Environmental and Social Action Plan (ESAP).


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VISION AND MISSION STATEMENTS

Vision:

To become a global leader in the chemicals and allied industries

Mission:

We will lead by:-

Empowered work environment speed of decision making honoring

commitments focusing on result innovation and efficiency.

Values:

A carrying member of the society an equal opportunity provide fair to our

stakeholder and a preferred source for our invaluable customers.

INVESTMENT IN PLANT AND MACHINARY

The investment in plant & machinery is Rs. 555 crores. [US$191.3million]


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MFL BOARD OF DIRECTOR

PHOTO

PROFILE

Mr Jayanti Meghjibhai Pate1 is the Executive Chairman of our

Company. Together with our Managing Director Mr Ashish N.

Soparkar, our Managing Director Mr Natwarla l M. Pate1 and our

Executive Directors Mr Ramesh M. Pate1 and Mr Anand I. Patel,

he was a co-founder and partner of MIS Gujarat Industries , which

was subsequently converted to our Company in 1995. He

currently oversees the international marketing of our Company

and is responsible for all major policy decisions.

Mr Jayanti M. Patel has more than 29 years experience in the

dyes and Pigments industry, and more than 10 years experience

in the Agrochemicals industry. Mr Jayanti M. Pate1 was a ppointed

as our Executive Chairman since the incorporation of our

Company in 1995.

Mr Jayanti M. Pate1 holds a Bachelors of Chemical Engineering

degree fkom Maharaja Saya jirao University, Baroda.

Mr Ashish Natwarlal Soparkar is the Managing Director of our

Company. Together with our Executive Chairman Mr Jayanti M.

Patel, our Managing Director Mr Natwarlal M. Pate1 and our

Executive Directors Mr Rarnesh M. Pate1 and Mr Anand I. Patel,

he was a co-founder and partner of M/s Gujarat Industries, which

was subsequently converted to our Company in 1995. He was

responsible for pioneering the export division of our Company. He

currently oversees the corporate affairs and finance matters of

our Company.

Mr Ashish N Soparkar, has more than 29 years experience in the

dyes and Piments industry, and more than 10 years experience in

the Agrochemicals industry. Mr Ashis h N soparkar was appointed

as our Managing Director since the incorporation of our Company

in 1995.

Mr Ashis h N. Soparkar holds a Bachelors of Chemical Engineering

degree fkom Maharaja Sayajirao Universit y of Baroda.


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Mr Anand Ishwarbhai Pate1 is the Executive Director of our

Company. Together with our Executive Chairman Mr Jayanti M.

Patel, our Managing Directors Ashish N. Soparkar and Mr

Natwarlal M. Pate1 and our Executive Director Mr Ramesh M.

Patel, he wa s a co-founder and partner of MIS Gujarat Industries ,

which was subsequently converted to our Company in 1995. Mr

Anand I. Pate 1 was a ppointed as Whole time Director in 1995 andredesignate d as Executive Director in 2004. He currently oversees

the manufacturing of Pigments as wel l as the domes tic marketing

of Pigments.

Mr Anand I. Pate1 has 20 years experience in the Pigments

Industry. Mr. Anand I Patel, was appointed as our Executive

Director since the incorporation of our Company in 1995.He holds

a Bachelor of Science degree from the Gujarat University.

Mr. Chinubhai Shah, 69 years, was appointed as a Director of our

Company on April 13,2000 and ha s been on our Board since then.

He holds a Masters degree in Arts and a Masters degree in Law.

He als o has a Diploma in Labor Practice and Diploma in Taxation

practice, both from Gujarat University. He is a fellow member of

the Institute of Company Secretaries of India and fellow

membership for life was also conferred on him by All India

Management Association, New Delhi. Mr. Chinubhai Shah was

twice elected as the President of the Institute of Companies

Secretaries of India. He was als o elected as the President of All

India Management Association. He was a visiting professor and a

member of the Board of Governors of the Indian Institute of

Management, Ahmedabad. He was the President of the Gujarat

Chamber of Commerce and Industry and was also a member of

the Comvanv Law Advisow Committee in the Government ofIndia. He i s prese ntiy a-member of th;secondary Market Advisory

Committee of SEBI. He has had more than 42 years experience in

the area s of management, finance a nd accounting. Mr. Chinubhai

Shah headed Torrent Pharmaceuticals and Torrent Exports

Limited of Torrent Group as Executive Director in charge of

finance and Corporate affairs from 1991 to 1998. From 1999 to

2000 he wa s the Managing Director of Ahmedabad Electricity Co.

Limited (presently Torrent Power Limited). His last assignment

was with Torrent Investment Limited as Executive Director in

charge of finance matter. He is on the Board of Directors of

leading business groups like Adani, Cadila, Nirma, Tata and

others.


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Mr. Balkrishna Thakkar, 69 years, was appointed as a Director of

our Company on April 13, 2000. He holds a Bachelor of Commerce

degree from Gujarat University and i s a lso a fellow member of the

Institute of Chartered Accountants of India. Since 1974, after

qualifying as Chartered Accountant, he started his own practice.

He is currently practi cing as a Chartered Accountant in the name

and style of Ballcrishna Thakkar & Co., a sole proprietorship thathe founded in 1975, a nd his primary practice areas are audit and

taxation.

Mr. Jayaraman Vishwanathan, 49 years, was appointed as a

Director of our Company on July 17,2003. He has more than 22

years of experience in industry, banking, private equity and

entrepreneurial related as signments, both in India as well as inother countries. He was the Director and the Head of Direct

Investments in Jardine Fleming India Securities Limited ("JF

Electra") (now Electra Partners Asia Limited "Electra Asia") from

December 1995 to July 1999 and has rejoined Electra Partners in

February 07,2005. He holds a Bachelors of Commerce (Honours)

degree from the University of Delhi, India. He is also a qualified

Chartered Accountant and also a Management Accountant from

the Chartered Institute of Management Accountants, London,

United Kingdom.

Mr. Foo Meng Tong, 64 years, was appointed as a Di rector of ourCompany on March 5, 2004. Prior to joining the private sector in

1993, he was with the Economics Development Board ("EDB") for

26 years from 1963 to 1993. His la st appointment was as Director

(Industry) and concurrently General Manager, EDB Investment

Pte. Limited where he was involved in industrial planning and

development as wel l as venture capital investment. From 1994 to

1997, he s erved as the Ambassador in Paris, accredited to France

and concurrently to Spain, Portugal, Switzerland (from 1994 to

1996) and Israel (from 1996 to 1997). He holds a Diploma in

Electrical Engineering from Singapore Polytechnic. He was

awarded the Publi c Administration Medal (Silver) in 1986 and the

French Government conferred him as a Chevalier in the Order of

the Palmes Academiques in 1998. He is a fellow member of theInstitute of Engineers in Singapore.


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Mr. Pankaj Shah, 59 years, was appointed on March 28, 2005, as

an Additional Di rector on our Board. Prior to joining our Board, he

served for 3 1 years primarily in the senior executive positions in

business management, marketing and operations. He served as

Chairman and Chief Executive of Du Pont India Limited from

1998- 2004 and as Regional Managing Director of Du Pont

Automative business at Seoul, South Korea from 1996- 1998. Heholds a Bache lors of Science (Chemical Engineering) degree from

Banaras Hindu University, India. He also holds a Master of Science

(Chemical Engineering) degree from University of South Western

Louisiana a nd als o Masters in Business Administration from the

University of Northeast Louisia na USA.


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AWORD AND ACHIVEMENT OF MEGHMANI

Year Award

1994-1995 National export award from the President, Government of India

Award from Basic Chemicals, Pharmaceuticals & Cosmetics Export

Promotion Council (CHEMEXCIL), Mumbai

Certificate of merit for outstanding export performance from the

Ministry of Commerce, Government of India

Award for excellent export performance from the Government of

Gujarat

1995-1996 National export award from the President, Government of India.

Export award from Gujarat Dyestuffs Manufacturers' Association

(GDMA), Ahmedabad

1996-1997 Award for excellent performance in exports by the Federation of

Indian Export Organization, Government of India

Trophy for export performance from GDMA, Ahmedabad

Certificate of merit for outstanding export performance from the

Ministry of Commerce, Government of India

1997-1998 Award for direct export of self manufactured dyes by GDMA,

Ahmedabad

Award for export performance from GDMA, Ahmedabad

2000-2001 Award for excellent performance from CHEMEXCIL, Mumbai

Award for appreciation of export performance from GDMA,

Ahmedabad

Six Sigma award from General Electric

2002-2003 Award in appreciation of export performance from GDMA,

Ahmedabad


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2002-2003 "First Award"for outstanding export performance from Chemexcil,

Mumbai

2003-2004 Certificate of Excellence - the Niryat Shree award in the Chemicals,

Drugs, Pharma and Allied products - Non-SSI Category, fromthe Federation of Indian Export Organisations (FIEO)for itsoutstanding export performance

2003-2004 Certificate of Excellence - the Niryat Shree award in the Chemicals,Drugs, Pharma and Allied products - Non-SSI Category, from

the Federation of Indian Export Organisations (FIEO)for its

outstanding export performance

2004-2005 Silver Trophy - the Niryat Shree award in the Chemicals, Drugs,

Pharma and Allied products - Non-SSI Category, from theFederation

of Indian Export Organisations (FIEO)for its outstanding exportperformance

2005 Certificate of Appreciation for Safety Records rom the Gujarat Safety

Council (Ankleshwar site)

SIAS Investors Choice Award for the most transparent company

2006 SIAS Investors Choice Award for the most transparent company


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MLESTONES SINCE INCEPTION

Year Description

1995 MOl company set up its faculty at chharodi, ahemdabad, to

manufacture insecticides, agrochemicals

1996 J F Electric (Mauritius) limited (JFE), now known as electra

partners Mauritius limited invested Rs.200 million

Along with pisces pte limited investing Rs.180 million and our

promoters investing Rs.57 million.

1996 Company expanded its pigment business by purchasing land at GIDC,

panoli near ankleshwar.

1998 Commencements of commercial production of pigment blue at the

panoli plant.

1999 Company was awarded the ISO 9001-2000 certification for the

achievement of the quality assurance in production, purchasing,

marketing and distribution in relation to vatva, panoli and chharodi

plant.

2003 Comapney acquired assets of unit II from rallis india limited(Rallis)

situated on plot no. 5001/B at GIDC ankles war for expansion o

agrochemical production and started commercial production of

agrochemicals at the ankleshwar

2006 Expansion of cyper methric acid chloride (CMAC) plant at the

ankleshwar unit with an investment of Rs. 180 million and

commencement of commercial operation of the palnt.

2008 MOL company set up meghmani finechem ltd at dahej.


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PRESENT PROFILE

COMPANY NAME MEGHMANI FINECAHEM LIMITED

PLANT LOCATION:- Plot no. CH1/CH2,

Dahej GIDS industrial estate

Opp. Luna chemical , dahej

Dist. Bharuch 392 130

Gujarat, india.

REGISTERED OFFICE:- Plot no. CH1/CH2,

Dahej GIDS industrial estate

Opp. Luna chemical , dahej

Dist. Bharuch 392 130

Gujarat, india.

BOARD OF DIRECTORS:- Mr. Jayanti M Patel

Mr. Ashish N Patel

Mr. Natwarlal M patel

Mr. Ramesh M Patel

Mr. Anand I Patel

Mr. Chinubhai R Shah

Mr. Balkrishna T Thakkar

PRINCIPAL BANKERS:- ICICI BANK

SBI BANK

BANK OF MAHARASTRA

BANK OF INDIA


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COMPARATIVE SCENARIO

The product manufactured by maghmani finechem Ltd. Are available in

domestic market as well as foreign market and this achieved through an extensive

distribution network of the branch officer and retailers of the company.

OVERALL ORAGANIZATION CULTURE

In Mehghmani finechem Ltd. Employees are abide of the policies of the

company. They strictly follow the rules and regulation. In the return they get good

facilities. Here, employees are co-operative to one another on their duty. The

relationship between superior and subordinate in Meghmani organics Ltd. Is good

productive.

STRATEGIES FOR FUTURE GROWTH AND DEVELOPMENT

To position itself better from increased demand from local market, the

company has increased the production capacity of its caustics and chlorine to

meet the demand of its global customers base, the company is in the process of

introducing new range of high performance caustic and chlorine.


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DEPARTMENTAL STRUCTURE

V.P (UNIT HEAD)

MR. M. A. HANIA

H.O.D.

(HEAD OF DEPARTMENT)

MR. NANDLAL MR. JITESH VAGANI

SHIFT INCHARGE

(4 PAERSIONS)

D C S ENGINEER

(4 PERSONS)

SENIOR

SUPERVISOR

OPERATORS

(25 PERSONS)


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ACTIVITIES

Collection of production orders from the marketing department

Analysis for availability & procurement of raw material

Yield & efficiency analysis

Material information reports generation

System development

Co ordination with various department

Planning of manpower for daily operation

Receiving raw material from stores department Co-ordination with purchase department for purchase of raw material in

case of non availability in stores

Daily planning of production activity

To ensure and maintain production quality

To achieve production target

To ensure optimum utilization of resources

TYPES OF PRODUCT & SPECIFICATIONS

MAIN PRODUCT BY PRODUCT

CAUSTIC SODA LYE 48%

(NaOH)

HYDROGEN

(H2)

CAUSTIC SODA FLAKES 98.5(NaOH)

HYDROCHLORIC ACID(HCL)

CAUSTIC SODA FLAKES 98.5

(NaOH)

SODIUM HYPOCHLORIDE

(NaOCl)


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SPECIFICATION OF MAIN PRODUCT

CAUSTIC SODA LYE 48%

CONS 48+- .5%W/W NaOHCOMPOSITION

NaCl 63 WT PPM MAX

NaClO3 30 WT PPM MAX

IRON PICKUP 1 WT PPM MAX

NICKEL PICKUP 0.6 WT PPM MAX

TEMPRETURE 45.6 WT PPM MAX

CAUSTIC SODA FLACKS 98.5%

Liquid Chlorine (Cl2)

Chlorine Content 99.80 min

Moisture 0.01 max

CONS NaOH 9805% MW TOTAL SOLID

COMPOSITION

NaCl 162 Wt PPM MAX

NaClO3 0.15% Wt PPM MAX

IRON PICKUP 5 Kt PPM MAX

NICKL PICKUP 0.8, 1.5 MMSIZE APPROY 0.3-1 CM2

BULK DENSITY APPROY 0.8-0.9 TON

TEMPERETURE 60C


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DEPARTMENTAL STRUCTURE

(UNIT HEAD)

VICE PRESIDENT

MR.M A HANIA

H.O.D

(DEPUTY MANAGER)

MR. HITESH BHATIA

MARKETING OFFICER

MR. UMESH SHAH

MARKETING ASSISTANS

MR.AMIT

PATEL

MR.HARDIK

RATHOD

MR.TUSHAR

CHAUHAN

MR. BHAVESH

PATEL

MR.LAXMA

N


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Marketing:

Marketing is an activity. Marketing activities and strategies result in making

products available that satisfy customers while making profits for the companies

that offer those products.

MFL Marketing activities:

Marketing activities are numerous and varied because they basically include

everything needed to get a product off the drawing board and into the hands of

the customer. The broad field of marketing includes activities such as:

Designing the product so it will be desirable to customers by using tools

such as marketing research and pricing.

Promoting the product so people will know about it by using tools such as

public relations, advertising, and marketing communications.

Setting a price and letting potential customers know about your product and

making it available to them.

The need of recognition of customer.

Entertaining and materializing their requirement.

Vehicle weighing and physical dispatch of the product.

Identify customer.

Co-ordination with user and distribution channel.


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Region wise segmentation

MFL has divides its whole market in to the four segmentation i.e.

a. North zone

b. East zone

c. South zone

d. West zone

Customer wise segmentation

MFL has the many valuable customers which are frequently in the touch with the

company for the purpose of the purchase order. So the company has divide its

whole marketing department on the basis of the valuable customer.

The other reason is that the person who assign for particular customer

consistently in touch with customer on the behalf of the company so it can build

the valuable relationship.


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Distribution channel

1. Zero level

2. One level

3. Two level

4. Three level

Meghmani use above two types of distribution channel (1) zero level and (2) One

level. They are deal B2B marketing. Meghmani majority customer is industrial unit

because they use the MFL chemical product and making their own products.

MFL Company Customer

MFL Company Retailer/wholesaler Customer

MFL Company Wholesaler Retailer Customer

MFL Agent Wholesaler Retailer Customer


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Position of the MFL in product life cycle


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BUDGETORY CONTROL METHOD/SYSTEM

1. BUDGET MANUAL

In MFL budget means the estimation about cost, here different officer

estimates cost, so the budget is fixed earlier to start the financial year. So

the source of money also supply up to the estimated budget. If the actual

cost increase form budget, the financial officers have to report to its

manager. These are all noted in budget manual.

MFL prepared budget manual by head office.

2. BUDGET PERIOD

MFL budget period is prepared on yearly basis from 1 April to 31st

March.

3. PRINCIPAL BUDGET FACTOR

The factors which the company takes into consideration while

preparing budget are as follows-

Marketing/Sales

Capacity of the plant

Funds available

Expansion of the plant

Seasonal factors


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4. BUDGET CENTERS:

Production

Material

Marketing

Finance

Personnel & Administration

ACCOUNTING METHOD/SYSTEM

1. MFL follows mercantile accounting method/system.


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LITERATURE REVIEW

Cash flow is the life blood of a business which plays a vital role in an entire

economic life. Cash flows refers to actual movement of cash into and out of an

organization. In other words, the movement of cash inclusive of inflow cash and

outflow of cash. When the cash flow into the organization, it represents inflow of

cash. Similarly when the cash flows out of the business concern, it called as cash

outflow.

In order to ensure cash flows are adequate to meet current liabilities such

as tax payments, wages, amounts due to trade creditors, it is essential to prepare

a statement of changes in the financial position of a firm on cash basis is called as

cash flow statement. This statement depicting movement of cash position from

one period to another.

Cash flow statement is a statement of inflows and outflows of cash and

cash equivalents in an enterprise during a specified period of time. While the

primary objective of the cash flows statement is to provide information regarding

cash receipts and cash payments of an enterprise for an accounting period.

Cash flow statement is additional information to user of financial

statement. This statement exhibits the flow of incoming and outgoing cash. This

statement is one of the tools for assessing the liquidity and solvency of the

enterprise. The cash flow statement is prepared on the basis of AS-3.this standard

applies to the following enterprise.

Which has turnover more than rs.50 crores in a financial year


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Listed companies-shares of these companies listed in stock Exchange, cash

flow statement of listed companies shall be presented only under indirect

method as prescribed in AS-3.

REQUIREMENTS FOR STATEMENT:

There are following requirements:-

COMPARATIVE BALANCE SHEET:-

Balance sheets at the beginning and end of the accounting year indicates

that the amount of change taken place in assets, liability and capital, and balance

sheet of MFL for last 3 years(i.e. 2007-08, 2008-09, 2009-10)

PROFIT & LOSS ACCOUNT:-

The profit & loss account determine the amount of cash provided in

operations during the accounting period after making the adjustments for non

cash, current assets and liabilities, and profit and loss account for MFL of last 3

years.

ADDITIONAL DATA:-

Additional data are collected to determine how cash has been provided or

used, and discussing with finance head of the company.


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COMPONENTS:-

EXPENSE REPORT:-

Company needs a monthly expense report. This report would include

companys daily payment activities. If company purchases something for business

then company would document the purchase in expense report. Company should

prepare monthly expense report because company can easily record transactions

of that month in expense report.

INCOME REPORT:-

Company also needs monthly Income Report. This report would include

companys daily receipt activity. If company would sale something for business

then company would document the sale in income report. Company should

prepare monthly income report because company can easily record transactions

of that month in income report.


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2) INVESTMENT ACTIVIES:

Investing activities are the acquisition and disposal of long term assets and

other investments not included in cash equivalents.

Examples of cash flow arising from investing activities are,

a) Cash payment to acquire fixed assets (including intangibles).including

capitalized research development costs and cost of self constructed

fixed assets.

b) Cash receipts form disposals of fixed assets including intangibles

c) Cash payment to acquire shares debentures etc. of other enterprises

and interest in joint ventures (other than investment held for dealing

or trading purposes)

d) Cash receipts form disposal of such shares debentures etc.

e) Cash advances and loans made to third parties (other than advances

& loans made by a financing co.)

f) Cash receipts from repayments of such advances and loans made to

third parties.

g) Cash payment for future contracts, forward contracts, option etc.

except when the contracts are held for dealing or trading purposes.

h) Cash payment from such future contracts, forward contracts etc.


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3) FINANCING ACTIVITIES :

Financing activities are activities that result in changes in changes in the

size and composition of the owners capital (including preference share

capital in the case of co.) and borrowing of enterprise.

Examples of cash flows arising from financing activities are:

a) Cash proceed from issuing shares or other similar instruments.

b) Cash proceed from issuing debentures, loans, notes, bonds and other

short or long term borrowings.

c) Cash repayment of amount borrowed, redemption of

shares/debenture.


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DISCLOSURE REQUIREMENTS OF SOME ITEMS

1)Interest and dividends:

In cash of non finance enterprises, interest and dividends are not related to

operating activities of the enterprise and therefore, are not shown as a part of

cash flows from operating activities. Cash outflows arising from interest and

dividend paid are excluded from cash flow from operations and are classified as

cash outflows from financing activities. Similarly, interest and dividend received

are classified as none operating and reported as cash inflows from investing

activities. Net profit is adjusted for non operating expenses and incomes to

calculate operating profits.

INTEREST

Interest received

Received from investment. It is in investment activities.

Received from shot-term investment classified as cash equivalents

should be considered as cash inflow from operating activities.

Received on trade advances and operating receivables should be in

operating activities

Interest paid

On loans/debts are in financing activities

capital loan and any other loan taken to finance operating activities

Dividend received


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For financial enterprises in operating activities.

Dividend paid

Always classified as financing activates.

2)Income tax

3)Extraordinary items

4)Cash flow from foreign currency transaction

5)Non cash transaction

6)Disclosure of cash and cash equivalents


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CASH FLOW STATEMENT

LIABILITIES ASSETS

CURRENT LIABILITIES

(OPERATING ACTIVITIES)

CURRENT ASSETS

(OPERATING ACTIVITIES)

NON-CURRENT LIABILITIES

(FINANCIAL ACTIVITIES

NON-CURRENT ASSETS

(FINANCIAL ACTIVITIES)

CASH vs. CASH FLOW:-

Cash is a ready money in the bank or in the business. I t is not inventory, accounts

receivable and property. These can potentially be converted to cash but cannot

be used to pay suppliers or employees. Profit growth does not mean more cash

on hand. Profit is the amount of money you expect to make over a given period of

time, while cash is what you must have on hand to keep your business running.

You cannot spend profit but you can only spend cash.

While Cash flow refers to the movement of cash into and out of a business. Cash

inflows and outflows are the most important part for any business. The outflow of

cash includes payment to suppliers, creditors and employees salaries. The inflow

includes the cash you receive from customers and investors.


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TYPES OF CASH FLOW:-

There are two types of cash flow:-

POSITIVE CASH FLOW:-

If cash inflow exceeds the outflow, a company has a positive cash flow. A positive

cash flow is a good sign of financial health. Company is in a position to borrow

more and purchase assets and meet its liability.

NEGATIVE CASH FLOW:-

If cash outflow exceeds the inflow, a company has a negative cash flow. Reasons

for negative cash flow include obsolete inventory and poor collections on

accounts receivable. At this point company can't borrow additional cash. It may

be a sign of serious trouble.

ADVANTAGES OF CASH FLOW STATEMENT:-

It is an indicator for the cash flows in the future period. It helps the

management in forecasting the future needs and plans.

It helps in efficient management of cash.

It reveals the liquidity positions of the company.

It is very useful in evaluating financial policies and cash positions.

It highlights the trend of the movement of cash.

It helps to compare the present value of the future cash flow of different

enterprises.


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LIMITATIONS CASH FLOW STATEMENT:-

Cash flow statement only reveals the inflow and outflow of cash. The cash

balance disclosed by this statement may not be predicting the true liquid

positions.

Cash flow statement cannot be compare with the income statement. An

income statement takes into account both cash and non cash items. Cash

fund does not mean net income of business.

Working capital being a wider concept of funds, fund flow statement

presents a more complete picture than cash flow statement.

DIFFERENCE BETWEEN FUND FLOW STATEMENT & CASH FLOW

STATEMENT:

Fund Flow statement & Cash Flow statement are two useful tools of

financial analysis and interpretation of financial statements. But at the same time

both the statement differ from each other in the following manner:

1. Fund Flow statement helps to measure the causes of change in

working capital.

Whereas cash flow statement focuses on the causes for the

movement of cash during a particular period.

2. Fund flow statement is prepared on the basis of fund or all financial

recourses.

While Cash Flow statement is based on cash basis of accounting.


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3. Cash flow statement guides to the management for short term

financial planning.

While fund Flow analysis helps to management for intermediate and

long term financial planning.

4. Statement of changes in working capital is required for the

presentation of Fund Flow statement.

While for cash Flow statement no such statement is required.

1)FUND FLOW STATEMENT

A statement of sources and application of funds is a technical device designed to

analyse the change in the financial condition of a business enterprise between

two dates.- by Foulke.In brief it may be said that fund statement focuses on

flow of funds between the various assets and equity items during the accounting

period. And analysis base4d on this statement is generally called fund flow

statement.

Meaning of fund:

The term fund refers t cash, to cash equivalent or to work ing capital and all

financial resources which are used in business.

Meaning of flow of fund :

The term flow of funds refers to change or movement of funds or change in

working capital in the normal course of business transactions.


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2)CASH FLOW STATEMENT

There are two methods used for preparing the cash flow statements. They are as

Follows:-

DIRECT METHOD:-

Under the direct method cash receipts from operating revenues and cash

payments for operating expenses are arranged and presented in the cash flow

statements. The difference between cash receipts and cash payments is the net

cash flow from operating activities. Under cash flow statement each cash

transactions is analyses separately and the total cash receipts and payments for

the eriod are determined. The data can be obtained from the financial statements

and additional information. Under cash flow statement we convert accrual basis

of revenues and expenses into equivalent cash receipts and payments.

Examples of cash receipts and payments:-

Cash sales of goods and services,

Cash collected from debtors,

Cash receipts of interest,

Cash receipts of royalties, commission,

Cash payments to creditors.

Cash payments for operating expenses,

Cash payments for wages, taxes, and salaries.


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FORMAT OF DIRECT METHOD

PARTICULAR AMOUNT

Cash flow from operating activities

Cash receipt from customer

LESS: cash payment to supplier

Cash receipt from operation

NET CASH FLOW FROM OPERATION( A )

Cash flow from investing operation

LESS: Purchase of fixed assets

ADD: sale of fixed assets

LESS: Purchase of securities

ADD: sale of securities

ADD: dividend received

ADD: interest received

CASH FLOW FROM INVESTING ACTIVITIES ( B )

Cash flow from financing activities

ADD: Issue of sharesLESS: redemption in shares

ADD: issue of debenture

LESS: redemption of debenture

LESS: dividend paid

LESS: interest paid

NET CASH FLOW FROM FINANCING ACTIVITIES ( C )

Net cash or cash equivalent from the activities (A+B+C)

ADD: opening balance of cash

XXXX

XXXX

XXXX

XXXX

XXXX

XXXX

XXXX

XXXX

XXXX

XXXX

XXXX

XXXX

XXXX

XXXX

XXXXXXXX

XXXX

XXXX

XXXX

XXXX

XXXX

XXXX

XXXX

Closing balance of cash flow XXXX


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INDIRECT METSHOD:-

In this method net profit is used as the base and it convert it to net cash provided

by operating activities. The indirect method adjusts net profit for items that

affected net profit but did not affect cash. Non cash and non operating charges in

the profit and loss account are added back to the net profit while non cash and

non operating credits are deducted to calculate operating profit before working

capital changes. It is the partial conversion of accrual basis profit to cash basis

profit. Necessary adjustments are made for increase and decrease in current

assets and liabilities to obtain net cash flow from operating activities.

PARTICULAR AMOUNT


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Cash flow from Operating Activities

Profit made during the year

ADD: NON-OPERATING ITEMS (EXPENSES)

Depreciation on Building

Depreciation on Machinery

Depreciation on Machinery sold

Increase in Provision for doubtful debts

Dividend paid

Transfer to Reserves

Goodwill Written off

Preliminary Expenses written offOther tangible assets written off

Loss on sale of disposable fixed assets

LESS: NON- OPERATING ITEMS (INCOME)

Profit on sale of investment

Profit on sale of machinery

OPERATING PROFIT BEFORE WORKING CAPITAL CHANGES

ADD: Increase in Current LiabilitiesADD: Decrease in Current Assets

LESS: Increase in Current Liabilities

LESS: Decrease in Current Assets

CASH GENERATED FROM OPERATING ACTIVITIES

LESS: Income tax paid(last year)

NET CASH FLOWS FROM OPERATING ACTIVITIES (A)

CASH FLOWS FROM INVESTING ACTIVITIES

ADD: sale of Investments

Sale of Machine

LESS: Purchase of Buildings

Purchase of Machinery

XXXXX

XXXXX

XXXXX

XXXXX

XXXXX

XXXXX

XXXXX

XXXXX

XXXXX

XXXXX

XXXXXXXXXX

XXXXX

XXXXX

XXXXX

XXXXX

XXXXX

XXXXX

XXXXX

XXXXX

XXXXX

XXXXX

XXXXX

XXXXX

XXXXX

XXXXX

XXXXX

XXXXX


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RESEARCH OBJECTIVES

1) Operating activity of the company

Cash receipt from sale of goods and rendering services

Cash receipt from royalties, fees commission and other revenues

Cash payment to the suppliers for goods and services

Cash payment to and on behalf of employees

2) Investing activity of the company

Cash receipts form disposals of fixed assets including intangibles.

Cash receipts form disposal of such shares debentures etc.

Cash advances and loans made to third parties (other than advances &

loans made by a financing co.)

3) Financing activity of the company

Cash proceed from issuing shares or other similar instruments.

Cash proceed from issuing debentures, loans, notes, bonds and other

short or long term borrowings.

Cash repayment of amount borrowed, redemption of shares/debenture.

4) Comparison of activities current data with previous data

Analysis of last 3 years data for Growth of MEGHMANI FINECHEM

LIMITED.


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Comparison of operating activities of MEGHMANI with previous

data

YEAR OPERATING ACTIVITIES

2007-08 0

2008-09 (486,575,775)

2009-10 174,000,786

DESCRIPTION OF ABOVE OPERATING ACTIVITIES CHART (finding)

MEGHMANI FINECHEM LIMITED newly started in 2008 at DAHEJ, MFL

company having establish in wide land of dahej to manufacturing chemical plant,

so that at initial stage of stating new plan lots on capital are invested in that

process that why year 2007-08 operating activity of cash flow is 0.

0 (STATING STAGE)

(486,575,775)

174,000,786

2007-08

2008-09

2009-10

OPERATING ACTIVITIESoperating activities


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Comparison of Investment Activities of MEGHMANI with

previous year.

YEAR INVESTMENT ACTIVITIES

2007-08 (1,185,365,019)

2008-09 (3,366,368,545)

2009-10 (266,172,330)

DESCRIPTION OF ABOVE INVESTMENT ACTIVITIES CHART(finding)

INVESTMENT ACTIVITIES of MEGHMANI FINECHEM LIMITED different to other,

and MEGHMANI newly stated company so that operating activates are 0, that

directly affected to the INVESTMENT ACTIVITIES because of that in 2007-08

investment are at -1,185,365,019.

(1,185,365,019)

(3,366,368,545)

(266,172,330)

2007-08

2008-09

2009-10

INVESTMENT ACTIVITIESINVESTMENT ACTIVITIES


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Comparison of Financial Activities of MEGHMANI with previous

year.

YEAR FINANCIAL ACTIVITIES2007-08 1,466,592,879

2008-09 3,653,395,013

2009-10 22,209,523

DESCRIPTION OF ABOVE FINANCIAL CHART(finding)

In MEGHMANI FINECHEM LIMITED has stared in financial year 2007-08, and for

that lot of capital are borrowed from outsides the company. When MFL Company

earns enough cash flow in organization so that company has to pay their debts

and interest charging on capital that why in 2009-10 cash flow are so less i.e.

22,209,523.

1,466,592,879

3,653,395,013

22,209,523

2007-08

2008-09

2009-10

FINANCIAL ACTIVITIES

FINANCIAL ACTIVITIES


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BIBLIOGRAPHY

http://www.meghmani.com

I M Pandey, Financial Management Ninth Edition (Vikas

Publishing House)

Annual Report Of MEGHMANI FINECHEM LIMITED 2007-2010

G. Sudarsana Reddy, Financial Management (Himalaya

Publishing House)

Ambrish Gupta, Financial Accounting for Management Third

edition (Pearson)

financial survy

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