funds flow nagaraju2013

INDUSTRY PROFILE

MBA PROGRAMME Y.S.R.SPINNING MILLS PVT.LTD

introduction

Financial management is a process of identification, accumulation, analysis, preparation, interpretation communication of financial information and communication of financial information to plan, evaluate, and control business firms.

Financial management is the specialized function of general management, which, is relates to the procurement of finance, and its effective utilization for the achievement of the goal of the organization.

MEANING AND DEFINITIONS OF FINANCIAL MANAGEMENT

MEANING Financial Management is an organizational activity that is concerned with the management of financial resources. In common parlance is described as providing monetary resources at the time they are required. But financial management covers the mobilization and effective utilization of funds.

DEFINITIONS(1) Financial Management is defined as that business activity which is concerned with the acquisition and conservation of capital funds in meeting the financial needs and overall objectives of business enterprises

-WHEELER.(2) Business finance can be broadly defined as the activity concerned with the planning, raising, controlling and administrating the funds used in the business.-GUTHMANN AND DOUGALL.

(3) Finance Management is concerned with the efficient use of an important economic resources, namely capital funds.

- SOLOMON(4) Financial management is an area of financial decision making harmonizing individual motives and enterprises goals.

-WESTON & BRIGHAN.

Financial management is concerned with the effective use of an economic resource namely capital fund.

FUNDS FLOW ANALYSISThe following are the definitions of funds flow statement.

R.N. ANTONY

"The funds flow statement described the sources from which additional funds were derived and the used to which these funds are put."

R.N. Foulk"A Statement of sources and application of funds in technical device designed to analyze the charges in the financial condition of a business between two dates.BIERMAN"It is a statement which highlights the underlying financial movements and explains the changes of working capital from one point of time to another."These, funds flow statement is report which summarizes the events taking place between the two accounting periods. It spells out the sources from which funds were derived and the use to which these funds were put. This statement in essentially derived from an analysis of the changes that have occurred in assets and liabilities item between two balance sheets dates. In this statement only the net changesare shown that the outcome of a transaction on of a series of transactions upon the financial conditions of a business enterprise in reflected more sharply.CONCEPTS OF FUNDS The term 'funds' have a variety of meaning. Some people take funds synonymous to cash, and to them there is no difference between a cash flow statement prepared on the basis and a fund flow statement. While other include marketable securities and cash to constitute business funds. How ever the most common definition of the term 'Fund' is 'working capital' or net 'current assets'. Thus the difference between current and current liabilities is called funds.

Definitions The funds flow statement described the sources from which additional funds were derived and the used to which these fund are put.

R.N.Antony

The fund flow statement is an important device for brining to light the underlying financial movements the ebb and flow of funds.

Paton & Paton

USES OF FUNDS FLOW STATEMENT

Funds flow statement helps the financial analyst in having a more detailed analysis and understanding of changes in the distribution of resources between two balance sheet dates. In case such study is required regarding the future working capital position of the company, a projected funds flow statement can be prepared. The uses are as follows. It explains financial consequences of balances operationFunds flow statement provides a ready access or many conflicting Situations such as. Why the liquidity position of business is becoming more and more unbalanced How was it possible to distribute dividends in excess of current earnings or in the presence of net loss for the period. Where have the profits gone. How the business could have good liquid position in spite of business making losses (or) acquisition of funds assets. It answers intricate queriesThe financial analyst can find out answers to a number of intricate Questions.

What are the sources of payment of loan taken. What is the overall credit worthiness of the enterprise. How much funds are generated through normal business operation. In what way the management has utilized the funds in the part and what are going to be likely uses of funds. It Acts an instruments for allocation of resourcesA projected funds flow statement will help the analyst in finding out how the management is going to allocate the scare resources for meeting the productive requirements of business. The use funds should be phased in such as order that the valuable resources are put to the best use of the enterprise.

SIGNIFICANCE OF FUNDS FLOW STATEMENTFunds flow statement is an important tool of financial analysis. The utility of the funds flow statement stems form the fact that it enable management, shareholder, investors, creditors and other interested in the enterprise to evaluate the user of funds by the enterprise to evaluate the user of funds by the enterprise to evaluate the user of funds by the enterprise and to determine how these funds are financed.

USEFUL IN DECISION MAKING TO THE MANAGERThe funds flow statement services as valuable tool of financial analysis to the finance manager. It helps in understanding the financial stability and efficiency of financial policies of management. Decision relating to FinancingWith the help of the funds flow statement, the analyst can evaluate the financing pattern of the enterprise. An analysis of the major sources of funds in the part reveals what portion of the growth was finance internally and what portion externally. The statement is also measuring for judging whether the company has grown as too fast a rate, credit has increased out of proportion to expansion in current assets and sales. If trade credit has increased at relatively high rate one would wish to evaluate the consequences of slowness in trade payments on the credit standing of the company and its ability to finance in future. Decision of capitalization :The funds flow statement serves as hand maid to the financial manager in deciding the making up of capitalization. Estimated user of funds for new fixed assets, working capital, dividends and repayment of debt are made for each of several futures years. Estimates are made for each of several future years. Estimate is made of the funds to be provided by operations and the balance must be obtained by barrowing or issuance of new securities. If the indicated amount of new funds required is greater than what the financial Manager thinks possible to raise, then plans for new fixed assets acquisition and the dividend policies are re-examined so that the use of the funds can be brought into balance with the anticipated sources of financing them. In particular funds statements are very useful in planning intermediate and long tern financing.USES OF FUNDS FLOW STATEMENT

Funds flow statement helps the financial analyst in having a more detailed analysis and understanding of changes in the distribution of resources between two balance sheet dates. In case such study is required regarding the future working capital position of the company, a projected funds flow statement can be prepared. The uses are as follows. It explains financial consequences of balances operationFunds flow statement provides a ready access or many conflicting Situations such as. Why the liquidity position of business is becoming more and more unbalanced How was it possible to distribute dividends in excess of current earnings or in the presence of net loss for the period. Where have the profits gone. How the business could have good liquid position in spite of business making losses (or) acquisition of funds assets. It answers intricate queriesThe financial analyst can find out answers to a number of intricate Questions.

What are the sources of payment of loan taken..What is the overall credit worthiness of the enterprise..How much funds are generated through normal business operation..In what way the management has utilized the funds in the part and what are going to be likely uses of funds. It Acts an instruments for allocation of resourcesA projected funds flow statement will help the analyst in finding out how the management is going to allocate the scare resources for meeting the productive requirements of business. The use fundsShould be phased in such as order that the valuable resources are put to the best use of the enterprise.

Funds Flow Statement

MEANING AND TYPES OF FINANCIAL STATEMENTSA financial statement is an organized collection of data. According to logical and consistent accounting procedures its purpose is to convey and understanding or some financial aspects of business firm. It may show a position at a moment of time as, in the case of a balance sheet or may reveal a series of activities ones a given period of time, as in the case of an Income statement.

Financial statement analysis when used carefully, can produce meaningful insights about a company's financial information and its prospects for the future. However, the analyst must be aware of certain important considerations about financial statements and the use of these analytical tools. For example, the dollar amounts for many types of assets and other financial statement items are usually based on historical costs and thus do not reflect replacement costs or inflationary adjustments. Furthermore, financial statements contain estimates of numerous items. John Myer, "Financial Statement analysis is largely a study of relationship among the various financial factors in a business as disclosed by single set of statements and a study of the trend of these factors as shown in a series of statements.Thus the financial statement generally refers to, four financial statements. Income Statement Balance Sheet Of course a business may also prepare profit & loss account. Statement of retained earnings, A statement of changes in financial position. Financial Statement

STATEMENT OF CHANGES IN FINANCIAL POSITION

The Balance Sheet shows the financial condition of the business at a particular moment of time, while the income statement discloses the result of operating of business ones a period of time. How ever for a better understanding of the affairs of the business it is essential to identify the movement of working capital or cash in and out of the business this information is available in the statement of changes in financial position of the business. Change in working capital position in such a case the statement in termed (SCFP) or funds flow statement, Change in cash position in such a case the statement in termed as SCFP (or) cash flow statement, Change in overall financial position. In such a case the statement is termed as statement of changes in financial position.The technique of funds flow analysis is widely used by the financial analysis, credit granting institutions and financial managers in performance of their jobs. It has become a useful tool in their analytical kit. This is because the financial statement i.e. income statement and the "Balance Sheet" have a limited role to perform. Income statement measure flows restricted to transactions that pertain to rendering of goods or services to customers. The Balance Sheet is merely a static statement. It is the statement of assets and liabilities of business as a particular date. It does not supply focus those major financial transactions which have been believed the Balance Sheet changes. One has to draw inferences from the Balance sheet about major financial transactions only after comprising the Balance sheet of two periods.

For example, if fixed assets worth Rs.3,00,000 are purchased during he current year by raising share capital of Rs.3,00,000 the balance sheet simply shows a higher capital figure and higher fixed assets figure. In case, One compares one year balance sheet with the previous year balance Sheet then only one can draw an inference that fixed assets are acquired by raising share capital of Rs.3,00,000 similarly, Certain important transitions which might (Occur during the course of the accounting) not find any place in the Balance Sheet. For example, if a loan of Rs.3,00,000 was raised and paid in the accounting year, the balance sheet will not depict this transaction. However, a financial analyst must know the purpose for which loan was utilized and the source from it was raised. This will help him in making better estimates about the company's financial position and policies.FINANCIAL ANALYSIS Financial analysis is highly essential to understand the efficiency and financial position of the center prise.The term 'Analysis' means methodical clarification of the data provided in the financial statements. 'Analysis' and 'Interpretation' are complementary to each other Interpretation requires analysis, while analysis is useless without interpretation. The term 'Analysis' to cover the meanings of analysis and interpretation, since analysis involves interpretation.

Myres States"Financial statement analysis is largely a study of the relationship among the various financial factors in a business as disclosed by a single set of a statements and a study of the trend of these factors as shown in a series of statements".

TYPES OF FINANCIAL ANALYSISWe can classify various types of financial analysis in to different categories depending upon. The material used The method of operation fallowed in the analysis of the modus operand! Of analysis.

ON THE BASIS OF MATTERIAL USEDAccording to material used financial analysis can be classified two types. External analysis Internal analysis. EXTERNAL ANALYSISIt is the analysis by outsiders who don't have access to the detailed internal accounting records of the business firm, these outsiders include investors, Potential investors, Potential creditors and government agencies, credit agencies and the general public. For the financial analysis, the external parties to the firm depend almost entirely on the published financial statements. External analysis only serves for limited purpose. How ever the recent changes in the Government regulations requiring business firm to make available more detailed information to the public through audited published account have considerably improved the position of the External analysis. INTERNAL ANALYSISThe analysis conducted by person who has access to the financial accounting records of a business firm is known as internal analysis. Such an analysis can therefore be performed by executive and employee of the organization as well as Government agencies which have statutory power rested in these financial analysis for managerial purpose is the internal type of analysis that can be affected depending upon the purpose be achieved.

WORKING CAPITALIt refers to that part of total working capital which required by business over and above permanent working capital. The extra working capital needed to support the changing production and sales activities. It is also called 'Variable working capital'.

ELEMENTS IN WORKING CAPITAL (a) CURRENT ASSETSThe term current asset includes assets which are acquired with the intention of converting them in to cash during the normal business operation of the company. However, the definition of the current assets has been given by Grady in the following words.For accounting purpose, the term Current assets is used to designatecash and other assets or resources commonly identified on those which are reasonable expected to be realized in cash or sold or consumed during the normal operating cycle of the business.The current assets are Cash including fixed deposit with bank Account receivables Inventory Advance receivables Prepaid expensesIt should be noted that short term investment should be included in the definition of the term current assets while loose tools should be excluded from the category of current assets. Of course, this is not strictly accordingly to the requirements of the companies Act regarding presentation of financial statement where investments even though held temporarily are to be shown separately from current assets while loose tools are shown separately from current assets while loose tools are shown under the category of current assets. Current LiabilitiesThe term Current Liabilities is used principally to designate such Dligation whose liquidation is reasonably expected to require the use of ssets classified as current assets in the same balance sheet or the operation : other current liability of those expected to be satisfied with in a relatively a iort period of time usually one year. Account payable

Outstanding expenses Bank overdraft Short term loans Advance payment received by business

PROVISIONS AGAINST CURRENT ASSETS

Provision for doubtful debts, provision for loss on stock, provision for scount on debtors etc, are treated as current liabilities. Since they reduce le amount of current assets.

NON-CURRENT ASSETSAll assets other than current assets come within the category of noncurrent assets include goodwill, land building, machinery, furniture long term investment, Patent rights, Trader marks, debt balance of the profit & loss iccount, discount on issue of debentures and preliminary expenses etc.

NON-CURRENT LIABILITIES

All liability other than current liability comes with in the category of Non-current liabilities. They include share capital, long term loans, debentures, hare premium, credit balance in the profit & loss Account. Revenue and capital reserve, dividend equalization fund, debentures sinking fund.

PREPARATION OF FUNDS FLOW STATEMENT Schedule of changes in working capital Funds flow statementSCHEDULE OF CHANGES IN WORKING CAPITALThe schedule of changes in working capital can be prepared by computing the current asset and current liabilities of two different balance sheet dates.

SCHEDULE OF CHANGES IN WORKING CAPITALItemsAs OnAs OnChanges

Increase Decrease

Current assets :-

Cash BalanceXXXXXXXXX XXX

Bank BalanceXXXXXXXXX XXX

Marketable SecuritiesXXXXXXXXX XXX

Account receivablesXXXXXXXXX XXX

Stock in tradeXXXXXXXXX XXX

Prepaid expensesXXXXXXXXX XXX

Current Liabilities :-XXXXXXXXX XXX

Bank OverdraftXXXXXXXXX XXX

Outstanding expensesXXXXXXXXX XXX

Accounts payableXXXXXXXXX XXX

Net Increase (or) decrease XXXXXXXXX XXX

Decrease in Working CapitalXXXXXXXXX XXX

RULES FOR PREPARING THE SCHEDULE Increase in a current assets, result in increase in working capital, Decrease in a current asset result in decrease in working capital, Increase in a current liability results in decrease in working capital, Decrease in a current liability results in increase in working capital.FUNDS FLOW STATEMENTWhile preparing a funds flow statement current assets and current liabilities are to be ignored attention is to be given to change in fixed assets fixed liabilities. The statement may be prepared in fare following form.There will be no flow of funds if there transition involves Current assets and fixed assets

Ex : Purchasing of building for cash Current assets and capital

Ex : issue of shares for cash. Current assets and fixed liability

Ex : Redemption of debentures in cash Current liabilities and fixed liabilities

Ex : Credit paid off in debenture Current liability and capital

Ex : Creditors paid of in shares Current liability and fixed assets

Ex : Building transferred to creditors in satisfaction of their claim.

There will be no flow of funds if these transactions involves, Current assets and current liability

Ex. Pay to creditors

Fixed assets and fixed liabilityEx. Building purchased and payment made in debentures

Fixed assets and capital.Ex. Building purchased and payment made in debentures.

MEANING OF FUNDS FLOWS The term "Flow" means change and there fore the term "Flow of funds" means change in "Funds" or change in "Working capital" in other words any increase or decrease in working capital means "Flow of Funds".:Funds Flow statement is also called as a "Statement of Source and Application of Funds" summary of financial operation etc.In business several transactions take place some of the transactions increase the funds while other decrease the funds some may not make any change in the funds position. In case a transaction results increase of funds. It will be termed as source of funds. In case a transactions results in decrease of funds it will be taken as an application or use of funds.PREPARATION OF FUNDS FLOW STATEMENTIn order to prepare a Funds flow statement if it is necessary to find out the sources and "Application" of funds.

SOURCES OF FUNDSSources of funds can be divided in to two types Internal source

External source

INTERNAL SOURCEFunds from operation is the only internal source of funds how ever, the following adjustment will be required in the figure of net profit for finding our real funds from operation. Depreciation on Fixed assets Preliminary expenses and good will written / off. Contribution to debentures redemption fund transfer to general reserve. Loss on sale of fixed assets.

Provision for tax proposed dividend.

EXTERNAL SOURCES Funds from long term loans Long term loan such as debentures borrowing from financial institutions will increase the working capital and therefore, there will be Flow of Funds. However if the debenture have been issued in consideration of some fixed assets, there will be no flow of funds.

State of fixed assetsSale of land, Building Long term investment will result in generation of funds.

Funds from increase in share capitalIssue of share for cash or for my other current assets result in increase in working capital and hence will be a flow of funds.

APPLICATION OF FUNDS:-The uses to which funds are called application of funds. Following are same of the purpose for which funds may be used.

PURCHASE OF FIXED ASSETSPurchase of fixed assets such as land, Building Plant, Machinery long term investments etc, results in decrease of current assets. With out any decrease in current liabilities. Hence there will be a flow of funds. But in the case of debentures are issued for acquisition of fixed assets, there will be no Flow of funds.

PAYMENT OF DIVIDENDPayment of dividend result in decrease of fixed liability and therefore it affects funds generally recommendations of directors regarding declaration of dividends is simply taken as an appropriation of profit and not as an item effecting the working capital.

PAYMENT OF FIXED LIABILITYPayment of long term liability such as redemption of debentures of redemption of redeemable preference shares results in reduction of working capital and hence it is taken as application of fund.

PAYMENT OF TAX LIABILITYProvision for taxation is generally taken as an appreciation of profit and not as an application fund. But if the tax has been paid it will be taken as an application. INCREASE IN WORKING CAPITALWorking capital is increased. If current assets increase and current liability decrease. Funds are required in both the case i.e. in order to acquire more current assets or paying current liabilities and thus funds are said to have been applied or used.

STATEMENT OF SOURCES AND APPLICATION OF FUNDS

FUNDS FROM OPERATIONS

It is an internal sources of funds. A fund from operation is to be calculated as per this method.Funds from operation is the only internal source of funds some adjustments are to be made in calculating funds from operation to the net profit given in the financial statement.

USEFUL AS CONTROL DEVICEThe funds flow statement also serves as a control device in that the statement. Compared with the budgeted figures will show to what extent the funds were put to use according to plan. This enables the financial manager to find out deviation form the planned course of action and taken remedial steps to correct the deviation

USEFUL TO THE EXTERNAL PARTIESThe outside parties can have a clear knowledge about the financial policies that the company had purchased in the light of the information so supplied by the statement, the outsider can decide whether or not to invest in the enterprise and on what terms funds have to be invested. The funds flow statement provides an insight into the financial operation of a business enterprise an insight immensely Valuable to the finance manager in analyzing the part and future expansion plans of the enterprise and the impact of these plans on its liquidity. He can debuct imbalance in the use of funds and undertake remedial actions.

STATEMENTS SHOWING OF FUNDS FROM OPERATIONS

Trading profits or the profits from operations of the business are the most important and major sources or inflow of funds in the business as they increase assets but at the same time funds flow out of business for expenses and cost of goods sold. Thus the net effect of operation will be a sources of funds if inflow from sales exceeds the outflow for expanses and cost of goods sold and vice-versa but it must be remembered that funds from operation do not necessarily mean the profit as shown by the profit & loss of a firm because there are many non- fund (or) Non operating items which may have been either debited or credited to profit & loss Account.

The examples of such items on the debt side of a profit & loss Account are amortization of fictitious and intangible assets such as good will, preliminary expenses and discount on issue of share & debentures written off. Appreciation of retained earnings such as transfer to reserve etc, depreciation and depletion loss and sale of fixed assets, payment of dividend etc. The Non-fund items are those which may be operational expenses but they do not affect funds of the business.

E.g. for depreciation charged to profit & loss account funds really don't move out of business non operating items are those which although may result in the outflow of funds but are not related to the trading operations of business such as loss on sale of machinery or payment of dividends the method of calculating funds from operation have been discussed.

METHOD OF CALCULATING FUNDS FROM OPERATION The first method is to prepare the Profit & loss A/c a fresh by taking in to Consideration only funds and operational items, which involve funds, are related to normal operation of the business. The balancing figures in this case will be either funds generated from operations or funds in operations depending up on. The income or audit side (or) profit & loss a/c Exceeds the expenses or debit side of profit & loss a/c or vice versa.

The second method which is generally used to precede from figure of net profit & loss account already prepared Funds from operations by this method can be calculated as under.ADJUSTED PROFIT AND LOSS ACCOUNTParticularsAmount

Particulars

Amount

To Depreciation on Fixed assets

xxxx

By Opening Balance

xxxx

To Good Will written off

xxxx

By Dividend received

xxxx

To preliminary Expenses

xxxx

By Profit on sale of assets

xxxx

To Transfer to general reverseTo Payment of proposed dividend

xxxx

xxxx

By Funds from operations

(Balancing Figure)

xxxx

To Provision for tax

xxxx

To Loss on sale of assets

xxxx

To Closing Balancexxxx xxxx

FUNDS FLOW STATEMENTSources of funds

Amount

Application of funds

Amount

Issue of shares

Issue of debentures

xxxx

xxxx

Redemption of redeemable Preferencesharesxxxx

Long term barrowing

Sale of fixed assets

Operating Profit

xxxx

xxxx

xxxx

Payment of equity shares capitalRedemption of debenturesxxxx

xxxx

Decrease in working capital

xxxx

Payment of other long term loan

Purchase of fixed assetsOperating Loss

xxxx

xxxx

Payment of dividend and tax

xxxx

xxxx

Net increase in working capital

xxxx

TREATMENT OF ADJUSTMENTSSome times the factors affecting the funds from operation may not be given in the problem directly and there may be some hidden information as such some of the transactions have to designed our using the additional information provided as adjustments to the balance sheet there items include. Provision for tax Proposed dividend Sale (or) Purchase of fixed assets

PROVISION FOR TAXIt is a current liability while preparing on funds flow statement there are two options available. Provision for Tax may be taken as a current liability. In such a case, where provision for tax is made there transaction involves profit and loss appropriation Account which is a fixed liability and provision for Tax Account. Which is a current liability it will thus decrease the working capital on payment of tax there will be no change in working capital because it will involve one current liability and other a current assets. Provision for tax may be taken only as on appropriation of profit. It means that will no change in working capital position when provision for tax is made since it involves two fixed liabilities, i.e. profit and loss appropriation a/c and provision for tax account however what tax is paid it will be taken as application of funds because it will when involves provisions for tax account which has been taken as a fixed liability and bank account which is a current asset. PROPOSED DIVIDENDWhat ever has been said about the 'Provision for Tax' is also applicable to "Proposejj dividends" proposed dividend can also be death with in two ways. Proposed dividend may be taken as a current liability since declaration of dividends by the share holders in simply a formality. One the dividends are declared in the general meeting, they will have to be paid with in 42 days their declaration. Income proposed dividend is taken as a current liability, it will appear as one of the item decreasing working capital in the schedule of change in working capital it will not be shown as an application of funds when dividends is paid later on. Proposed dividends may simply be taken as an appropriation of profits. In such as case proposed dividend for the current year will be added back to current year's profit in order to find out funds from operations if such amount of dividend has already been charged to profits payment of dividend will be shown as an "Application of Funds". SALE OR PURCHASE OF FIXED ASSETS

For arriving at the final figure we have to prepare the assets depreciation account as sets, sold or purchased account.OBJECTIVES OF THE STUDY

The following objectives have been formulated to make in the study.

To assess the Working Capital position of the company from 2006-2008 to 2012-2013.

To identify sources and uses of the funds of the company from 2006-2008 to 2012-2013.

To examine the sources and applications of the funds through cash basis from. 2008-2009 to 2012-2013. To know the operational efficiency.

To study and prepare funds flow statements.

To study the profile of the company

To study the allocation of funds and working capital in the organization.

The study the use of long term debt as well as owner funds. Need fOR the study The need for the study is analyze the financial position of the company

To find out the liquidity or short term solvency of the company.

To allow relationship among various aspects in such a way that it allows conclusion about the performance, strength and weakness of the company.

To know how finance works in the typical organization structure.

To know how working capital covers all the current assets and liabilities. To know the short term surveying ability of the company.

Scope of the study

.

An extensive study is done on the financial position of the company. The study covers the historical financial information of the company and finds growth of the company. The study covers all the transactions of the company and the funds flow statements. The company covers the measurement of profitability of firm and the operating efficiency and relationship among different financial aspects. Thus a good deal of ground he covered in the study, including the trends of various compounds of working capital. So, as to find the effect of component on working . METHODOLOGYMethodology describes the method of achieving objectives through collection of data. The data collected can be either primary or secondary.

The above information is carried on with the co-operation of the management of Y.S.R. SPINNING & WEAVING MILLS PVT. LTD.

Primary data:

Primary data is the data, which has been collected directly from the people of the organization it is also called as first hand data. The primary data is collected by discussions with the functional managers, officers, staff and other members of the organization.

Secondary data:

Secondary data is those which have been already collected by some agency and which have been processed. Secondary data for the present study has been collected from margins, journals and annual reports, published books, reference books, websites and any other in direct.

The secondary data is obtained from annual report and financial statement that is balance sheet and profit and loss account, annual reports, and from the textbooks of financial management. Here the project is done on secondary data.Methods of data collection:

The data collected from the company files, financial assets, balance sheet and other library book and other articles and from the corporate websites e.t.c.Data analysis

The analyses used in the study are tabulation of data charts and graphs and mathematical tools or representation and schedule of ratio, cash flow, and fund flow.

Diagrammatic representation of the research and methodologyLIMITATIONS OF STUDY

The study is based on the information available in the latest balance sheets of the company, these balance sheets suffers a few limitations. The study is based on the working capital analysis only. The study is made only through secondary source of data. Normally this will not facilitate to undertake a deeper study on the subject taken into consideration.

The study is limited to a period of five years for analysing the data.

This study of working capital does not reflect the whole financial position of the organization.

INDUSTRY PROFILEThe Indian textile industry has a significant presence in the economy as well as in the international textile economy. Its contribution to the Indian economy is manifested in terms of its contribution to the industrial production, employment generation and foreign exchange earnings. It contributes 20 percent of industrial production, 9 percent of excise collections, 18 percent of employment in the industrial sector, nearly 20 percent to the countries total export earning and 4 percent to the Gross Domestic Product.In human history, past and present can never ignore the importance of textile in a civilization decisively affecting its destinies, effectively changing its social scenario. A brief but thoroughly researched feature on Indian textile culture.

HISTORY OF TEXTILE INDUSTRY

India has been well known for her textile goods since very ancient times. The traditional textile industry of India was virtually decayed during the colonial regime. However, the modern textile industry took birth in India in the early nineteenth century when the first textile mill in the country was established at fort gloster near Calcutta in 1818. The cotton textile industry, however, made its real beginning in Bombay, in 1850s. The first cotton textile mill of Bombay was established in 1854 by a Parsi cotton merchant then engaged in overseas and internal trade. Indeed, the vast majority of the early mills were the handiwork of Parsi merchants engaged in yarn and cloth trade at home and Chinese and African markets.The first cotton mill in Ahmedabad, which was eventually to emerge as a rival centre to Bombay, was established in 1861. The spread of the textile industry to Ahmedabad was largely due to the Gujarati trading class.The cotton textile industry made rapid progress in the second half of the nineteenth century and by the end of the century there were 178 cotton textile mills; but during the year 1900 the cotton textile industry was in bad state due to the great famine and a number of mills of Bombay and Ahmedabad were to be closed down for long periods.The two world War and the Swadeshi movement provided great stimulus to the Indian cotton textile industry. However, during the period 1922 to 1937 the industry was in doldrums and during this period a number of the Bombay mills changed hands. The second World War, during which textile import from Japan completely stopped, however, brought about an unprecedented growth of this industry. The number of mills increased from 178 with 4.05 lakh looms in 1901 to 249 mills with 13.35 lakh looms in 1921 and further to 396 mills with over 20 lakh looms in 1941. By 1945 there were 417 mills employing 5.10 lakh workers.The cotton textile industry is rightly described as a Swadeshi industry because it was developed with indigenous entrepreneurship and capital and in the pre-independence era the Swadeshi movement stimulated demand for Indian textile in the country. The partition of the country at the time of independence affected the cotton textile industry also. The Indian union got 409 out of the 423 textiles mills of the undivided India. 14 mills and 22 per cent of the land under cotton cultivation went to Pakistan. Some mills were closed down for some time. For a number of years since independence, Indian mills had to import cotton from Pakistan and other countries.After independence, the cotton textile industry made rapid strides under the Plans. Between 1951 and 1982 the total number of spindles doubled from 11 million to 22 million. It increased further to well over 26 million by 1989-90.CURRENT POSSITION OF TEXTILE INDUSTRY IN INDIA

Textile constitutes the single largest industry in India. The segment of the industry during the year 2000-01 has been positive. The production of cotton declined from 156 lakh bales in 1999-2000 to 1.40 lakh bales during 2000-01. Production of man-made fibre increased from 835 million kgs in 1999-2000 to 904 million kgs during the year 2000-01 registering a growth of 8.26%. The production of spun yarn increased to 3160 million kgs during 2000-01 from 3046 million kgs during 1999-2000 registering a growth of 3.7%. The production of man-made filament yarn registered a growth of 2.91% during the year 1999-2000 increasing from 894 million kgs to 920 million kgs. The production of fabric registered a growth of 2.7% during the year 1999-2000 increasing from 39,208 million sq mtrs to 40,256 million sq mtrs. The production of mill sector declined by 2.6% while production of handloom, powerloom and hosiery sector increased by 2%, 2.7% and 5.1% respectively. The exports of textiles and garments increased from Rs. 455048 million to Rs. 552424 million, registering a growth of 21%. Growth in the textile industry in the year 2003-2004 was Rs. 1609 billion. And during 2004-05 production of fabrics touched a peak of 45,378 million squre meters. In the year 2005-06 up to November, production of fabrics registered a further growth of 9 percent over the corresponding period of the previous year.With the growing awareness in the industry of its strengths and weakness and the need for exploiting the opportunities and averting threats, the government has initiated many policy measures as follows.The Technology Upgradation Fund Scheme (TUFS) was launched in April 99 to provide easy access to capital for technological upgradation by various segments of the Industry.The Technology Mission on Cotton (TMC) was launched in February 2000 to address issues relating to the core fibre of Cotton like low productivity, contamination, obsolete ginning and pressing factories, lack of storage facilities and marketing infrastructure

A New Long Term Textiles and Garments Export Entitlement (Quota) Policies 2000-2004 was announced for a period of five years with effect from 1.1.2000 to 31.12.2004 covering the remaining period of the quota regime. In the current year Budget 2006-2007 states the measures for Textile Industry as follows Allocation to the Technology Upgradation Fund (TUF) enhanced from Rs4.4bn to Rs 5.4bn.

Provision for the interest subsidy on term loans to the handloom sector to be increased from Rs2.0bn to Rs 2.4bn.

Rs1.9 bn to be provided for the scheme for integrated Textiles Parks (launched in October 2005 with the intention of creating 25 textile parks)

Excise duty on all man-made fibre yarn and filament yarn to be reduced from 16% to 8%

Import duty on all man-made fibers and yarns to be reduced from 15% to 10%.

FUTURE PROSPECTS:

The future outlook for the industry looks promising, rising income levels in both urban and rural markets will ensure a rising market for the cotton fabrics considered a basic need in the realm of new economic reforms (NER) proper attention has been given to the development of the textiles industry in the Tenth plan. Total outlay on the development of textile industry as envisaged in the tenth plan is fixed at Rs.1980 crore. The production targets envisaged in the terminal year of the Tenth plan are 45,500 million sq metres of cloth 4,150 million kg of spun yarn and 1,450 million kg of man made filament yarn. The per capita availability of cloth would be 28.00 sq meters by 2006-2007 as compared to 23.19 sq meters in 2000-01 showing a growth of 3.19 percent. The export target of textiles and apparel is placed at $32 billion by 2006-2007 and $50 billion by 2010.

Vision India 2010 for Textiles

Textile economy to grow to $ 85 bn. by 2010.

Creation of 12 million new jobs in Textile Sector.

To increase Indias share in world trade to 6% by 2010.

Achieve export value of $ 40 Billion by 2010.

Modernisation and consolidation for creating a globally competitive industry.

STRUCTURE OF INDIAS TEXTILE INDUSTRY

The textile sector in India is one of the worlds largest. The textile industry today is divided into three segments:

Cotton Textiles

Synthetic Textiles

Other like Wool, Jute, Silk etc.

All segments have their own place but even today cotton textiles continue to dominate with 73% share. The structure of cotton textile industry is very complex with co-existence of oldest technologies of hand spinning and hand weaving with the most sophisticated automatic spindles and loom. The structure of the textile industry is extremely complex with the modern, sophisticated and highly mechanized mill sector on the one hand and hand spinning and hand weaving (handloom sector) on the other in between falls the decentralised small scale powerloom sector.

Unlike other major textile-producing countries, Indias textile industry is comprised mostly of small-scale, nonintegrated spinning, weaving, finishing, and apparel-making enterprises. This unique industry structure is primarily a legacy of government policies that have promoted labor-intensive, small-scale operations and discriminated against larger scale firms:Composite Mills.

Relatively large-scale mills that integrate spinning, weaving and, sometimes, fabric finishing are common in other major textile-producing countries. In India, however, these types of mills now account for about only 3 percent of output in the textile sector. About 276 composite mills are now operating in India, most owned by the public sector and many deemed financially sick. In 2003-2004 composite mills that produced 1434 m.sq mts of cloth. Most of these mills are located in Gujarat and Maharashtra.

Spinning.

Spinning is the process of converting cotton or manmade fiber into yarn to be used for weaving and knitting. This mills chiefly located in North India. Spinning sector is technology intensive and productivity is affected by the quality of cotton and the cleaning process used during ginning. Largely due to deregulation beginning in the mid-1980s, spinning is the most consolidated and technically efficient sector in Indias textile industry. Average plant size remains small, however, and technology outdated, relative to other major producers. In 2002/03, Indias spinning sector consisted of about 1,146 small-scale independent firms and 1,599 larger scale independent units.

Weaving and Knitting.

The weaving and knits sector lies at the heart of the industry. In 2004-05, of the total production from the weaving sector, about 46 percent was cotton cloth, 41 percent was 100% non-cotton including khadi, wool and silk and 13 percent was blended cloth. Three distinctive technologies are used in the sector handlooms, powerlooms and knitting machines. Weaving and knitting converts cotton, manmade, or blended yarns into woven or knitted fabrics. Indias weaving and knitting sector remains highly fragmented, small-scale, and labour-intensive. This sector consists of about 3.9 million handlooms, 380,000 powerloom enter-prises that operate about 1.7 million looms, and just 137,000 looms in the various composite mills. Powerlooms are small firms, with an average loom capacity of four to five owned by independent entrepreneurs or weavers. Modern shuttleless looms account for less than 1 percent of loom capacity.

Fabric Finishing.

Fabric finishing (also referred to as processing), which includes dyeing, printing, and other cloth preparation prior to the manufacture of clothing, is also dominated by a large number of independent, small-scale enterprises. Overall, about 2,300 processors are operating in India, including about 2,100 independent units and 200 units that are integrated with spinning, weaving, or knitting units.

Clothing.Apparel is produced by about 77,000 small-scale units classified as domestic manufacturers, manufacturer exporters, and fabricators (subcontractors).

INDIAS MAJOR COMPETITIORS IN THE WORLD

To understand Indias position among other textile producing the industry contributes 9% of GDP and 35% of foreign exchange earning, Indias share in global exports is only 3% compared to Chinas 13.75% percent. In addition to China, other developing countries are emerging as serious competitive threats to India. Looking at export shares, Korea (6%) and Taiwan (5.5%) are ahead of India, while Turkey (2.9%) has already caught up and others like Thailand (2.3%) and Indonesia (2%) are not much further behind. The reason for this development is the fact that India lags behind these countries in investment levels, technology, quality and logistics. If India were competitive in some key segments it could serve as a basis for building a modern industry, but there is no evidence of such signs, except to some extent in the spinning industry.

Indias Competitive Position in Stages of Textile Manufacture

PROBLEM FACED BY THE TEXTILE INDUSTRY IN INDIA

The cotton textile industry is reeling under manifold problems. The major problems are the following:

Sickness:

Sickness is widespread in the cotton textile industry. After the engineering industry, the cotton textile industry has the highest incidence of sickness. As many as 125 sick units have been taken over by the Central Government. Sickness is caused by various reasons like the problems mentioned below.Obsolescence: The plant and machinery and technology employed by a number of units are obsolete. The need today is to make the industry technologically up-to-date rather than expand capacity as such. This need was foreseen quite sometime back and schemes for modernization of textile industry had been introduced. The soft loan scheme was introduced a few years back and some units were able to take advantage of the scheme and modernise their equipment. However, the problem has not been fully tackled and it is of utmost importance that the whole industry is technologically updated. Not many companies would be able to find resources internally and will have to depend on financial institutions and other sources.

Government Regulations:

Government regulations like the obligation to produced controlled cloth are against the interest of the industry. During the last two decades the excessive regulations exercised by the government on the mill sector has promoted inefficiency in both production and management. This has also resulted in a colossal waste of raw materials and productive facilities. For example, the mills are not allowed to use filament yarn in warp in order to protect the interest of art silk and powerloom sector which use this yarn to cater to the affluent section of society.

Low Yield and Fluctuation of Cotton Output:

The cotton yield per hectare of land is very low in India. This results in high cost and price. Further, being largely dependent on the climatic factors, the total raw cotton production is subject to wide fluctuation causing serious problems for the mills in respect of the supply of this vital raw material.

Competition from Man-made Fibres:

One of the serious challenges facing the cotton textile industry is the competition from the man-made fibres and synthetics. These textures are gradually replacing cotton textiles. This substitution has in fact been supported by a number of people on the ground that it is not possible to increase substantially the raw cotton production without affecting other crops particularly food crops.

Competition from other Countries:

In the international market, India has been facing severe competition from other countries like Taiwan, South Korea, China and Japan. The high cost of production of the Indian industry is a serious adverse factor.

Labour Problems:

The cotton textile industry is frequently plagued by labour problems. The very long strike of the textile workers of Bombay caused losses amounting to millions of rupees not only to the workers and industry but also to the nation in terms of excise and other taxes and exports.Accumulation of Stock:

At times the industry faces the problems of very low off take of stocks resulting in accumulation of huge stocks. The situation leads to price cuts and the like leading to loss or low profits.

Miscellaneous:

The industry faces a number of other problems like power cuts, infrastructural problems, lack of finance, exorbitant rise in raw material prices and production costs etc.EXPORT AT GLANCE:

Textile exports plays a crucial role in the overall exports from India.Throught export friendly government policies and positive efforts by the exporting community, textile exports increased substantially from US$ 5.07 billion in 1991-92 to US$ 12.10 billion during 2000-01. The textile export basket contributing over 46 percent of total textile export. In world textile trade has risen to 3.1 percent in 1999-2000 as against 1.80 percent in early nineties. Exports have grown at an average of 11 percent per annum over the last few years, while world textile trade has grown only about 5.4 per cent per annum in the same years. During the year 2000-01 Indias textile export was US$ 12014.4 million. It was increased the year 2004-05 US$ 13038.64 million. The exports of textiles (including handicrafts, jute, and coir) formed 24.6% of total exports in 2001-2002, however this percentage decreased to 16.24% during 2004-2005. The textile exports recorded a growth of 15.3% in 2002-2003 and 8.7% in 2003-2004. Textile exports during the period of April-February 2003-2004 amounted to $11,698.5 million. During 2004-05 textile exports were US$ 13,039.00 million, recording a decline of 3.4% as compared to the corresponding period of previous year. However, during April-November, 2005, the textile exports have shown growth of 8.2% as compare to the corresponding period of previous year. Against a target of US$ 15,160 million during 2004-05, the textile exports were of US$13039 million, registering a shortfall of 14% against the target. The overall export target for 2005-06 has been fixed at US$ 15,565 million. In 2005 textile and garments accounted for about 16% of export earning. Indias textile export to the US have shown a good rise of 29.5% between January and June 2005.

INVESTMENT IN TEXTILE INDUSTRY

Investment is the key for Indian textiles to make rapid strides. The Vision Statement prepared by the Indian Cotton Mills federation has projected that the industry has the potential to reach a size of $85 billion by 2010 from the current level of $ 36 billion. Further, the vision statement has estimated that textile exports could touch $40 billion by 2010 from $ 11 billion in 2002. In the process, Indias share in the global textile and clothing trade is expected to double from three percent in 2002 to six percent by 2010.

To reach these these ambitious target, it is estimated that new investment to the tune of Rs.1, 40,000 crores will be needed in the next five years. After analysing the capacity and technology levels in various segments of textile Industry and the need for modernisation, funds required for various segments have been below.

The Multi-Fibre Agreement (MFA)

The Multi-Fibre Agreement (MFA), that had governed the extent of textile trade between nations since 1962, expired on 1 January 2005. It is expected that, post-MFA, most tariff distortions would gradually disappear and firms with robust capabilities will gain in the global trade of textile and apparel. The prize is the $360 bn market which is expected to grow to about $600 bn by the year 2010 barely five years after the expiry of MFA. National Textile Policy 2000

Faced with new challenges and opportunities in a changing global trade environment, the GOI unveiled its National Textile Policy 2000 (NTP 2000) on November 2, 2000. The NTP 2000 aims to improve the competitiveness of the Indian textile industry in order to attain $50 billion per year in textile and apparel exports by 2010.86 The NTP 2000 opens the countrys apparel sector to large firms and allows up to 100 percent FDI in the sector without any export obligation.

Export Promotion Capital Goods (EPCG) Scheme

To promote modernization of Indian industry, the GOI set up the Export Promotion Capital Goods (EPCG) scheme, which permits a firm importing new or Secondhand capital goods for production of articles for export to enter the capital goods at preferential tariffs, provided that the firm exports at least six times the c.i.f. value of the imported capital goods within 6 years. Any textile firm planning to modernize its operations had to import at least $4.6 million worth of equipment to qualify for duty-free treatment under the EPCG scheme.

Export-Import Policy

The GOIs EXIM policy provides for a variety of largely export-related assistance to firms engaged in the manufacture and trade of textile products. This policy includes fiscal and other trade and investment incentives contained in various programs.

Duty Entitlement Passbook Scheme (DEPS)

DEPS is available to Indian export companies and traders on a pre- and post-export basis. The pre-export credit requires that the beneficiary firm has exported during the preceding 3-year period. The post-export credit is a transferable credit that exporters of finished goods can use to pay or offset customs duties on subsequent imports of any unrestricted products.

The Agreement on Textiles and Clothing (ATC)

The Agreement on Textiles and Clothing (ATC) promises abolition of all quota restrictions in international trade in textiles and clothing by the year 2005. This provides tremendous scope for export expansion from developing countries.Guidelines of the revised Textile Centres Infrastructure Development Scheme (TCUDS) TCIDS Scheme is a part of the drive to improve infrastructure facilities at potential Textile growth centres and therefore, aims at removing bottlenecks in exports so as to achieve the target of US$ 50 billion by 2010 as envisaged in the National Textile Policy, 2000.Under the Scheme funds can be given to Central / State Government Departments/ Public Sector Undertakings/ Other Central /State Governments agencies / recognized industrial association or entrepreneur bodies for development of infrastructure directly benefiting the textile units. The fund would not be available for individual production units.Technology Upgradation Fund Scheme (TUFS)

At present, the only scheme through which Government can assist the industry is the Technology Upgradation Fund Scheme (TUFS) which provides for reimbursing 5% interest on the loans/finance raised from designated financial institutions for bench marked projects of modernisation. IDBI, SIDBI, IFCI have been designed as nodal agencies for large and medium small scale industry and jute industry respectively. They have co-opted 148 leading commercial banks/cooperative banks and financial institutions like State Finance Corporations and State Industrial Development Corporation etc.

Scheme for Integrated Textile Parks (SITP)

To provide the industry with world-class infrastructure facilities for setting up their textile units, Government has launched the Scheme for Integrated Textile Parks (SITP) by merging the Scheme for Apparel Parks for Exports (APE) and Textile Centre Infrastructure Development Scheme (TCIDS). This scheme is based on Public-Private Partnership (PPP) and envisages engaging of a professional agency for project execution. The Ministry of Textiles (MOT) would implement the Scheme through Special Purpose Vehicles (SPVs).National Textile Corporation Ltd. (NTC)

National Textile Corporation Ltd. (NTC) is the single largest Textile Central Public Sector Enterprise under Ministry of Textiles managing 52 Textile Mills through its 9 Subsidiary Companies spread all over India. The headquarters of the Holding Company is at New Delhi. The strength of the group is around 22000 employees. The annual turnover of the Company in the year 2004-05 was approximately Rs.638 crores having capacity of 11 lakhs Spindles, 1500 Looms producing 450 lakh Kgs of Yarn and 185 lakh Mtrs of cloth annually.

Cotton Corporation of India Ltd. (CCI)

The Cotton Corporation of India Ltd (CCI), Mumbai, is a profit-making Public Sector Undertaking under the Ministry of Textiles engaged in commercial trading of cotton. The CCI also undertakes Minimum Support Price Operation (MSP) on behalf of the Government of India.

The Ministry of Textiles

The Ministry of Textiles is responsible for policy formulation, planning, and development export promotion and trade regulation in respect of the textile sector. This included all natural and manmade cellulose fibers that go into the making of textiles, clothing and handicrafts.

Powerloom development and export promotion councilPowerloom development and export promotion council, set up by the ministry of textiles government of India. PDEXCIL provide some export assistance as follows Exploration of overseas market.

Identification of items with export potential.

Market survey and up-to-date market intelligence.

Contact with protective buyers to interest them in your products.

Providing your company's profile to overseas buyers and vice- versa.

Advice on international marketing.

Display of selected product groups.

Cotton Textile Export Promotion Council (TEXPROCIL):

The Council looks after the export promotion of cotton fabrics, cotton yarn and cotton made-ups. Its activities include market studies for individual products, circulation of trade enquiries, participation in exhibitions, fairs and seminars at home and abroad, in order to boost exports.

Company ProfileIntroductionWelcome to the flourishing world of Y.S.R. Spinning & Weaving Mills Pvt. Ltd. We were established in 1999, with a spindle capacity of 4500 spindles. After expansion made in 2003 and 2006, it was now 25514 spindle and 1030 rotors and 8 numbers of air jet weaving machines to produce 5 tons of ring spun, 2 tons of open end, 1.5 tons of ring doubling and 2000 meters of fabric per day. In spinning department the mill has a complete range of LMW, Trumac machines from blow room to spinning departments and in weaving department PICANOL omniplus air jet weaving machine.

Our best quality products are the key of our success and fame. The quality of our products has helped us in standing amongst the major companies in this field. The company has a strong clients based at different regions of Andhra Pradesh, Gujarat, Karnataka, Maharashtra, West Bengal, Orissa and Tamil Nadu. We are known as one of the best cotton yarn manufacturers in India due to the fine quality of our cotton yarn. We provide genuine quality cotton blended yarn, which is used to make superior quality garments. We are also widely renowned as one of the best cotton fabric suppliers in India. Our cotton fabric is highly admired by our clients due to its durability and supreme quality.

We give the topmost priority to our customers and strive to provide them the best quality fabrics. We know the value of the time and thus deliver our products within the stipulated time. You can avail our products easily at reasonable prices, which would not affect your pocket. Due to the superior quality of our products we deal with various reputed companies located in India and China. Our chief motive is to maintain a long lasting relationship with our honored clients.

We have achieved a great height of success due to the hard work of Mr. Y. Sridhar Reddy, the chairman and Mr. Y. Srinivasulu Reddy, the managing director of the company. We have a highly skilled team of employees, who carries loads of experience in this field. We have a strong infrastructural base, which is well equipped with the advanced machineries. We always endeavor to provide the best and pure fabrics to our customers and thus always check the quality content of the fabric.

We are engaged in the manufacturing of a wide range of fine cotton fabrics. Our fine cottons fabrics have a remarkable characteristic of providing smoothness and softness to the body. We are reckoned as one of the leading cotton fabrics manufacturers, based in India. Our cotton fabric is used by big companies for production of various types of garments. We have also become one of the foremost organic cotton yarn suppliers in India. Our organic cotton is grown without the use of any harmful pesticides & chemicals and thus this leads to the increase in its quality.

Name of CEO

:Mr. Y. Sridhar Reddy

Primary Business Type

:Manufacturer

Establishment Year

:1999

No. of Employees

:300

Market Cover

:China

Annual Sale

:Rs.30.00 Crores

Products we Offer

:Cotton Yarn & Fabric

Chairmen desk

Mr. Yerram Sridhar Reddy started his business as cotton commission agent in 1977 at his native place Idupulapadu, Inkollu Mandalam, Prakasam District, Andhra Pradesh, and planned to forward integration of Ginner in 1983. He started a firm Sri Srinivasa Trading Company in 1989, supplied cotton bales to various spinning mills in Tamilnadu and Andhra Pradesh.

It was in the year 1999, he established a Spinning Mill at Ganapavaram village with a capacity of 4500 spindles. His hardwork, innovative thoughts and strategic approach has made Y.S.R. Spinning & Weaving Mills Pvt. Ltd., turn in to one of the leading suppliers of 100% cotton yarns to many domestic and exported oriented weaving mills in and around the country.

Mission

To manufacture a high quality yarn thereby withstanding high level of competitiveness.

Developing a long term relationship with our customers and suppliers.

To use latest technological strategies during production thereby forming an innovative approach.

To provide a safe, fulfilling and rewarding work environment for our employees.

Servicing and supporting the communities in which we operate

Vision

The company has a vision to excel in all fields of textile industry and agriculture produce basis.

We will be intensely customer focused and will offer products and services which provide the best value for our customers.

HISTORY

Mr.Yerram Sridhar reddy started his business as cotton commission agent in 1977 at his native place idupulapadu, inkollu mandalam , prakasam district, Andhra Pradesh, and planned to forward integration of ginner in 1983. He started a firm sri srinivasa trading company in 1989,supplied cotton bales to various spinning mills in tamilnadu and Andhra Pradesh.

It was in the year 1999 he established a spinning mill at ganapavaram village with capacity of 4500 spindles, his hard work, innovative thoughts and strategic approach has made Y.S.R. sinning & weaving mills PVT.LTD., turn in to one of the leading suppliers of 100% cotton yearns to many domestic and exported oriented weaving mills in and around the country.

Growth

Y.S.R spinning & weaving mills PVT.LTD was established in 1999,with a spindle capacity of 4500 spindles . after expansion made in 2003 and 2006, it was now 25514 spindle and 1030 rotors and 8 numbers of air jet weaving machines to produces 5 tons of ring spun ,2tons of open end, 1.5 tons of ring doubling and 2000 meters of fabric per day.

In spinning department the mills has a complete range of LMW , turmac machines from blow room to spinning department and in weaving department PICANOL omni plus air jet weaving meachine.

Quality

Policy

Quality is intergral to everything at Y.S.R We adopt holistic quality assurance system and an integrated system which covers the entire production process. All lots are tested before giving to the mixing.

We believe quality is a continual process. With a focus clearly an delivering quality products and services, we integrate to constantly innovate and excel. As a result our clients are assured of top notch quality that is consistent across our product range.Value:By a clear comprehension of the market dynamics and the assimilation of the cutting edge technology we assure the highest quality standards are met at all times.

Products

We offer an exclusive collection of white cotton fabrics of all sizes. Our white cotton fabric is made up of pure cotton. We also deal with the manufacturing and supplying of organic cotton yarn. We provide organic cotton yarn in all shades. We use environment friendly procedure for producing our organic cotton yarn. Below listed are the two divisions that look after our manufacturing processes.Cotton fabrics

Cotton yarn

Cotton Fabrics

We are happy to acquaint ourselves as one of the salient cotton fabric manufacturers in India. Our cotton fabrics include organic cotton fabrics and white cotton fabrics. We use pure and good quality yarn for making the fabric. Our fabric provides immense comfort to the users. It gives soothing effect to the body and will be the right choice in the hot and sweaty summers. Our cotton fabrics are light in weight in comparison to its thickness. Our cotton fabric is easily washable and its significant feature is its durability. We ensure our customers to provide good quality cotton fabric on time and that too at moderate prices.

Cotton Yarn

We provide the best quality cotton yarn that includes organic cotton yarn and cotton blended yarn. Cotton yarn is produced from genuine quality fiber, which is obtained from the seed hair of the cotton plant. Our cotton yarn is used to manufacture genuine quality cotton fabrics. The significant feature of our cotton yarn is its high tensile strength and its superior quality. Our cotton yarn is used by various industries for manufacturing the best quality garments. We are widely known as one of the prominent cotton yarn suppliers from India.

Process

Spinning division

Y.S.R. Spinning & Weaving Mills Pvt. Ltd., has installed state of art machines and has a capacity to produce wide range of cotton yarns. Our machinery lines up using the most equipment sourced from the best vendors.Currently the company produces 8.5 tons of 100% cotton yarn per day, with a capacity of 25514 spindles and 1050 rotors.

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Waving division

Y.S.R. Spinning & Weaving Mills Pvt. Ltd., has installed 8 nos PICANOL Omniplus Airjet Weaving Machines to produce Grey fabric.Spinning Division:

Our major counts range from 24s to 80s both carded and combed cotton yarns. Adding to these counts we have the setup of doubling of yarns in Ring Doubling yarns.Production CapacityRing Spun Yarns5 tons

Open End Spinning2 tons

Ring Doubling1.5 tons

Weaving Division:

We are having Air jet weaving machines, which we can produce all types of constructions as per buyer requirements. Presently we are producing 2000 meters of 40sCX40Sc-132X72-63 grey fabric and available this fabric in finished form also.SWOT ANALYSIS OF INDIAN TEXTILE INDUSTRY

Indian textile industry has several Strengths

Abundant Raw Material Availability

Low Cost Skilled Labour

Presence across the value-chain

Growing Domestic Market

Indian textile industry has several Weaknesses

Fragmented industry

Effect of Historical Government Policies

Lower Productivity and Cost Competitiveness

Technological Obsolescence

Indian textile industry has several Opportunities

Post 2005 challenges

Research and Development and Product Development

Indian textile industry has several Threats

Competition in Domestic Market

Ecological and Social Awareness

Regional alliances

StrengthsAbundant Raw Material Availability:

Allowing the industry to control cost and reduce over all lead-times across the value chain.Low Cost Skilled Labour

Low cost skilled labour providing a distinct competitive advantage for the industry.Presence across the value-chain

Presence across the value-chain providing a competitive advantage when compared to countries likes Bangladesh, Srilanka, who have developed primarily as garmenters.

Reduced Lead-times:

Manufacturing capacity present across the entire product range, enabling textile companies and garmenters do source their material locally and reduce lead-time.Super Market:

Ability to satisfy customer requirements across multiple product grades- small and large lot sizes specialized process treatments etc.

Growing Domestic Market

Growing Domestic market which could allow manufacturers to mitigate risks while allowing them to build competitiveness.WeaknessesFragmented industry

Fragmented industry leading to lower ability to expand and emerge as world-class players. Effect of Historical Government Policies- Historical regulations thought relaxed continue to be an impediment to global competitiveness.Lower Productivity and Cost Competitiveness

Labour force in India has a much lower productivity as compared to competing countries like china, Srilanka etc.

The Indian industry lacks adequate economies of scale and is therefore unable to compete with china, and other countries etc.

Cost like indirect takes, power and interest are relatively high.

Technological Obsolescence

Large portion of the processing capacity is obsolete

While state of the art integrated textile mills exist majority of the capacity lies currently with the power loom sector.

This has also resulted in low value addition in the industry.

OpportunitiesPost 2005 challenges

During the year 2005 is a huge opportunity that needs to be capitalized.

Research and Development and Product Development

Indian companies needs to increase focus on product development.Newer specialized fabric- smart Fabrics , specialized treatement etc.

Faster turn around times for design samples Investing in design centers and sampling labs.

Increased use of CAD to develop designing capability in the Organisation and developing greater options.

Investing in trend forecasting to enable growth of the industry in India. ThreatsCompetition in Domestic Market

Competition is not likely to remain just in the exports space, the industry is likely to face competition from cheaper imports as well.

This is likely to affect the domestic industry and may lead to increased consolidation.

Ecological and Social Awareness

Development in the form of increased consumer consciousness on issues such as usage of child labour unhealthy working conditions etc.

The Indian industry needs to prepare for the fall out of such issues by issues by improving its working practices.Regional alliances

Reginal trade blocs play a significant role in the global garment industry with countries enjoying concessional tariffs by virtue of being members of such blocs/ alliances.Indian industry would need to be prepared to face the fall out of the post 2005 scenarious in the form of continued barriers for imports.Data analysis and interpretationSCHEDULE OF CHANGES IN WORKING CAPITAL FOR THE YEAR 2008-2009ParticularsPrevious year 2008Current year 2009Working capital

Increase Rs.Decrease Rs.

A) Current assets:

1) Inventories17225632118793401215677691

2) Sundry Debtors24937024268605401923516

3) cash & bank balance33465753605903727406716

4) other current assets286568164867984620023030

5) Loans & Advances14928012117230193204993

Total Current Assets274243926281256454

B) Current liabilities:

1) Current Liabilities10839143113962418431232753

2) Provisions for taxation7256927120189604762033

Total Current Liabilities115648358151643144

Net working capital (A-B)158595568129613310

Decrease in working capital2898225828982258

Total 1585955681585955686660649566606495

Source: Compiled from annual reports of the company

ADJUSTED PROFIT & LOSS ACCOUNT FOR THE YEAR 2008-09Dr.

Cr.

ParticularsAmount Rs.ParticularsAmount Rs.

To Depreciation A/c105478021By Opening Balance of Reserves and surplus A/c135167525

To Closing Balance of Reserves and surplus A/c130270036By Funds from operations100580532

235748057235748057

Source: Compiled from annual reports of the companyTable 5.3

FUNDS FLOW STATEMENT FOR THE YEAR 2008-2009SourcesAmount Rs.ApplicationsAmount Rs.

Raising unsecured loans23688279Payment on secured loan74848773

Funds from operations100580532Purchase fixed assets79411683

Sale of investment736800


Increase in differed tax272587

154260456154260456


INTERPRETATION:

It is observed from table 5.4. That the net increase in working capital for the year 2008-2009 is Rs 2,89,82,258. The current assents of the company are decreased comparing with previous year results. The current liabilities of the company are increased comparing the previous results. To find the table 5.5, the company gains profit from the operation to an extent Rs 10,05,80,532. It shows the table 5.6, net decrease in working capital is Rs 2,89,82,258. This year raising the unsecured loans and selling some investments. This year changes in differed tax increased, the company paying some funds to secured loans holders.SCHEDULE OF CHANGES IN WORKING CAPITAL FOR THE YEAR 2009-2010ParticularsPrevious year 2009Current year 2010Working capital


A) Current assets:

1) Inventories18793401223988007551946063

2) Sundry Debtors26860540359926869132146



5) Loans & Advances1172301912529745806726







Increase in working capital2405711524057115

Total 1536704251536704258688224586882245

Source: Compiled from annual reports of the company Table 5.4

Table 5.5


Cr.




296170094296170094



Increase in differed tax451322Payment on secured loan10888974


Payment Unsecured loan6198613


166351380166351380


INTERPRETATION:It is observed from table 5.7. That the net increase in working capital for the year 2009-10 is Rs 2,40,57,115. The current assents of the company are increased comparing with previous year results. The current liabilities of the company are decreased comparing the previous results. To find the table 5.8, the company gains profit from the operation to an extent Rs 16,59,00,058. It shows the table 5.9, net increase in working capital is Rs 2,40,57,115. This year company is paying unsecured loans, at present time no change in investments. And this year change in differed tax increased and the company pay some funds to secured loan holders. Table 5.7

SCHEDULE OF CHANGES IN WORKING CAPITAL FOR THE YEAR

2010-2011ParticularsPrevious year 2010Current year 2011Working capital


A) Current assets:

1) Inventories2398800752369757622904313

2) Sundry Debtors3599268636258591265905



5) Loans & Advances12529745108641191665626








Total 2117518722117518727515792075157920


Table 5.8


Cr.




376691884376691884



Raise secured loans99207205Payment on unsecured loan111445151


Decrease in differed tax723545


324762132324762132

Source: Compiled from annual reports of the companyINTERPRETATION:

It is observed from table 5.10. That the net increase in working capital for the year 2010-11 is Rs 5,80,81,447. The current assents of the company are increased comparing with previous year results. The current liabilities of the company are decreased comparing the previous results. To find the table 5.11, the company gains profit from the operation to an extent Rs 22,55,54,927. It shows the table 5.12, net increase in working capital is Rs 5,80,81,447. This year changes in differed tax decreased and the company raising some funds to secured loan holders.

Table 5.10

SCHEDULE OF CHANGES IN WORKING CAPITAL FOR THE YEAR

2011-2012ParticularsPrevious year 2011Current year 2012Working capital


A) Current assets:

1) Inventories23697576232741254390436781

2) Sundry Debtors362585912236149813897093



5) Loans & Advances10864119139666913102572








Total 354979800354979800226404641226404641



Cr.

ParticularsAmount

Rs.ParticularsAmount

Rs.



564402703564402703


FUNDS FLOW STATEMENT FOR THE YEAR 2011-12SourcesAmount

Rs.ApplicationsAmount

Rs.

Raise unsecured loans1790474Payment on secured loan49556343


Increase in differed tax36627902Increase in working capital143227928

408620921408620921


INTERPRETATION:

It is observed from table 5.13. That the net increase in working capital for the year 2011-12 is Rs 14,32,27,928. The current assents of the company are increased comparing with previous year results. The current liabilities of the company are decreased comparing the previous results. To find the table 5.14, the company gains profit from the operation to an extent Rs 37,02,02,545. It shows the table 5.15, net increase in working capital is Rs 14,32,27,928. This year is paying unsecured loans comparing with previous year. This year changes in differed tax increased, the company raising some funds from secured loan holders.

Table 5.13

SCHEDULE OF CHANGES IN WORKING CAPITAL FOR THE YEAR 2012-13ParticularsPrevious year 2012Current year 2013Working capital


A) Current assets:

1) Inventories32741254334190686814494325

2) Sundry Debtors223614988301315860651660



5) Loans & Advances13966691162186252251934







Decrease in working capital208146767------208146767

Total 563126567563126567245179678245179678



Cr.

ParticularsAmount

Rs.ParticularsAmount

Rs.



681413039681413039


FUNDS FLOW STATEMENT FOR THE YEAR 2012-13SourcesAmount

(Rs)ApplicationsAmount

(Rs)

Raise unsecured loans171565663Payment on secured loan31648312


Increase in differed tax335511968Increase in working capital208146767

Decrease in capital work in process1550361

513460576513460576


INTERPRETATION:

It is observed from table 5.13. That the net increase in working capital for the year 2012-13 is Rs 20,81,46,767. The current assents of the company are increased comparing with previous year results. The current liabilities of the company are decreased comparing the previous results. To find the table 5.14, the company gains profit from the operation to an extent Rs 33,55,11,968. It shows the table 5.15, net increase in working capital is Rs 20,81,46,767. This year the company is rais1ng funds through secured loans, differed tax increased and decrease in capital work in process. This year The Company spend funds for purchasing of fixed assets and unsecured loans CHANGES IN WORKING CAPITAL DURING THE PERIOD

2008-2009 TO 2012-13YearsChanges in Working CapitalAmount in lakhs

2008-09Decrease289.82

2009-10Increase 240.57

2010-11Increase580.81

2011-12Decrease143.22

2012-13Decrease 208.14

INTERPRETATION:

Comparing the five years data the changes in working capital is in this year. In the year i.e., 2008-2009 working capital decreases to 289.82 lakhs.

The next year 2009-10 working capital also increased to Rs 240.57 lakhs. Working capital has decreased it indicates the current assets are increased and the current liabilities are decreased.

The working capital is increased it indicates the current assets are decreased and the current liabilities are increased.

The year 2011-12 the working capital is 143.22 lakhs and the financial year 2012-13 the working capital is also decreased. ADJUSTED PROFIT& LOSS ACCOUNT DURING THE PERIOD2008-2009 TO 2012-13YearsAdjusted Profit &Loss a/cAmount in Lakhs

2008-09 Profit from business operation1005.80





Interpretation:

The Financial position in Y.S.R. SPINNING & WEAVING MILLS PVT. LTD in 2008-09 is in good condition, profit from business operation by Rs.1005.8 lakhs.

In 2009-2010 it is better condition Rs.1659.00 lakhs. In the year 2010-11 the profit from business operations increased Rs.2255.54 lakhs.

The company leads to better position in the year 2011-12 financial year. The year 2012-13 the profit has decreased to Rs.3355.11 lakhs.

Funds flow and cash flow statement during the period 2008-2009 to 2012-13YearsFunds Flow Statement

(Rs in lakhs)

2008-091542.60

2009-101663.51

2010-113247.62

2011-124086.20

2012-135134.60

INTERPRETATION:

During the year from 2008-2009 to 2012-13 the company has various sources of funds and the uses of the funds are done for purchasing of fixed as

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