Summer Project Report

ASUMMER PROJECT REPORT

ON“FUNDS FLOW STATEMENT”

INHINDUSTAN AERONAUTICS LIMITED

Hindustan Aeronautics LimitedEngine Division - KoraputPo - Sunabeda, 763002

Dist - Koraput (Odisha) India

SUBMITTED BYBhagyapriya Sethi

Batch: 2009-11

In partial fulfillment for the award of the degree

OfMaster of Business Administration

Berhampur University

CERTIFICATE

This is to certify that Miss Bhagyapriya Sethi, a student of Master of Business Administration (MBA) at Berhampur University, has successfully completed her project on “Funds Flow Statement” in HAL, Koraput Division during the period of 27th May to 10th July 2010.

She has shown excellence in completion and presentation of data in a brief and organized manner. She is very sincere and hard working. I am sure that she would prove herself an asset to the organization that employs her.

I wish her success in all her future endeavors.

PROJECT GUIDE

B. SenapatiSr. Manager (Accounts) HAL, Engine Division

Koraput

DECLARATION

I do hereby declare that the project is entitled “A Study on Analysis of Funds Flow of HAL, Koraput Division”. This project report submitted in the outcome of my own efforts in the training which I have undergone as a part of curriculum leading to the award of Master of Business Administration, Berhampur University, under the guidance of Mr. A.K. Sahu, faculty member, Berhampur University and Mr. B. Senapati, Sr. Manager (Accounts) HAL, Koraput division. This report has not been submitted for the award of any other degree of either this university or any other university.

Thanking you.

Date: Place: Signature

ACKNOWLEDGEMENT

After completion of this project, it gives me immense pleasure to express my gratitude and heartfelt thanks to all those, whose help went a long in completion of this project. There are several people who deserve more than a written acknowledgement of exemplary help.

It is with a sense of deep gratitude; I wish to thank my faculty guide Mr. A.K. Sahu for giving me an opportunity to do my project as a part of MBA.

I would like to express my sincere gratitude to Mr. B. Senapati, Sr. Manager(Accounts), HAL, Koraput Division for his valuable suggestion, advises and guidance in carrying out this project.

Finally, I am gratefully thanking all the members of the Finance Department for their generous help in various ways for completion of this project.

MBA BERHAMPUR UNIVERSITY

PREFACE

Finance as a subject of study has received widespread support from both the academic and business segment people.

The topic “Funds Flow Statement” in HAL was selected as to understand the financial needs and important with special reference to HAL, Engine Division, Koraput.

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

The study of funds flow statement with reference to HAL helped me to analyze the changes in the financial condition of enterprise between two periods. It helped me to know the various sources through which organization gathers its funds and utilizes it in order to achieve the organizational objective.

This training attends me an opportunity to make a study and analysis the system adopted by the organization. It enables me to build the practical knowledge acquired during the class study with practical training received during my project study.

CONTENTS

CHAPTER – 1 Introduction Objective of the study Purpose of the study Research methodology Limitation

CHAPTER – 2 Company profile

CHAPTER – 3 Organizational structure

CHAPTER – 4 Theoretical perspective

CHAPTER – 5 Analysis and Interpretations

CHAPTER – 6 Summary Conclusion Suggestion Annexure Bibliography

CHAPTER – 1“INTRODUCTION”

INTRODUCTION TO THE STUDY Financial management is that managerial activity which is

concerned with the planning and controlling of the firm’s financial resources. Financial management provides immense knowledge to the various people like the practioners, the outsiders, the academicians etc.

Finance is termed as the universal lubricant that keeps the enterprise dynamic in nature and helps in the smooth running of the business. Any concern whether it’s new or an existing requires finance.

Financial management is helpful when it is used in a best possible and profitable way in every type of organization irrespective of its size, kind of nature. Finance is helpful in:

Proper utilization and allocation of funds. Making sound financial decisions. Increasing the wealth of the investors. Minimizing the cost of acquisition when required. An enterprise to promote successfully. A better financial planning.

The basic financial statements of funds flow statement are the balance sheet and profit & loss account of business reveal the net effect of the transactions on the operational and financial position of the company. The balance sheet gives a summary of the assets and liabilities of an undertaking at a particular point of time revealing the financial status of the company.

The profit & loss account reflects the results of the operational for a period of time. It contains a summary of the expenses incurred and the revenue realized in an accounting period.

NEED FOR THE STUDY In any organization when any transaction happens then the

transaction makes some changes in the amount of funds available before happening of the transaction. To know the net financial position of the firm at the end of the year the two financial statements provide very useful information regarding the business of

the firm. These statements are through light upon the changes in assets, liabilities and the shareholders during the year.

The balance sheet which deals with the financial position gives only the static view of the end financial position and fails to indicate the movements and the cause of the changes in assets and liabilities during the year.

Similarly the income statement shows the profit or loss resulting out the operations of the firm during the years. This income statement in fact reflects the changes in shareholder wealth.

OBJECTIVE OF THE STUDY A few studies have already been conducted on various aspects

of HAL. At present duty an attempt is made to analyze the financial statement. Hence the study sets the following objectives before it:

Helps in the analysis of financial operations. Helps in the formation of a realistic dividend policy. Helps in the proper allocation of resources. Acts as a future guide. Helps knowing the overall creditworthiness of a firm.

METHODOLOGY The data which is presented in this report has been taken from

secondary source. The data of HAL, engine division, Koraput for the year 2006–07, 2007–08, 2008–09, 2009–10 used in this report have been taken from the financial statements i.e., the Income Statement, Balance Sheet for the relevant year for comparison of two balance sheets. The procedural details have been collected from respective manuals, booklets etc. Some principles, procedures including various aspects of analysis have been presented in this report by information discussion with the concerned authority of this division.

For analyzing the performance of the organization we had studied two statements i.e.

Statement of schedule of changes in working capital. Statement of Sources and Application of funds.

RESEARCH DESIGN The research design that has been adopted for the study offers

a basis of drawing conclusion from the data collected from a firm which is a descriptive research.

COLLECTION OF DATA Primary Data – The primary data has been collected from

finance officers and finance managers of the company through personal interview.

Secondary Data – The secondary sources are collected through the official records, various publications of the organization, annual report and audited financial statements.

Period of study – The research period was from 27th of May to 10th of July 2010.

SCOPE OF THE STUDY Keeping the magnitude of the work in mind, the scope of the

study has been determined. It covers at the outset, a description of the role played by the corporation in improving financial strength of the 10 organizational Odisha. The study has emphasized financial statement analysis and its application in different enterprise.

LIMITATIONS The data collected was purely a secondary source of data. This study was restricted to the extent possible of data

received as HAL was a Defense Sector. Detailed information about certain parameters could not

be obtained due to confidentiality. Time factor was a limitation as only a stipulated period has

been ascertained to me while the personnel had little time to my queries due to their daily busy schedule.

CHAPTER – 2“COMPANY PROFILE”

INTRODUCTION TO THE COMPANY

Hindustan Aeronautics Limited (HAL) came into existence on 1st October 1946. The company was formed by the merger of Hindustan aircraft with aeronautics India limited and aircraft manufacturing depot, Kanpur.

The company traces its roots to the pioneering efforts of an industrialist with extraordinary vision, the Late Seth Walchand Hirachand, who set up Hindustan Aircraft Limited at Bangalore in association with the erstwhile princely state of Mysore in December 1940, the government of India became a shareholder in March 1941 and took over the management in 1942.

Today, HAL has 19 production units and 9 research and design Centers in 7 locations in India. The company has impressive product track record–12 types of aircraft manufactured with in house R & D and 14 types produced under license. HAL has manufactured over 3550 aircraft, 3600 engines and overhauled over 8150 aircraft and 27300 engines.

In August 1962 an agreement was signed with the Soviet Union for the manufacture of MIG–21, E7–FL aircraft under license. The aero engine factory at Koraput, the airframe factory at Nasik, and avionics factory at Hyderabad have been set up to meet this requirement under the name of the aeronautics India limited which was formed on 1st April 1964. This company was merged with Hindustan Aircraft Limited on 1st October 1964 and a new company under the name of HAL was formed. In July 1970 a helicopter division was established as a part of Bangalore complex for the manufacture of Chetak and Cheetah Helicopters under the license from France.

Over the first five decades HAL has spread its wings to cover the various activities in the area of design, development, manufacture and maintenance of light aircraft, piston and jet engine of imported category was delivered to HAL, Nasik division in the year 1978–79.

To become a globally competitive Aerospace Industry while working as an instrument for achieving self reliance in design manufacture and maintenance of Aerospace Defense equipment and diversifying to related areas managing the business on commercial lines in a climate of growing professional competence.

In August 1982, government approved the proposal for setting up an advanced systems division at Korwa. A major milestone 1983 was the formulation of a design perspective plan, which envisages design, and development of a portfolio of projects including the basic turbo trainer, advanced jet trainer Hindustan pressurized light transport (30–35 seats) light component aircraft etc. in the period 1984 to 1994.

DIVISIONS AND COMPLEXES 1. Bangalore division (Karnataka) Barakpur division (West Bengal) 2. Nasik division (Maharashtra) 3. Koraput division (Odisha) 4. Hyderabad division (Andhra Pradesh) 5. Lucknow division (Uttar Pradesh) 6. Kanpur division (Uttar Pradesh) 7. Korwa division (Uttar Pradesh)

HAL has four main complexes in India 1. Bangalore complex 2. MIG complex 3. Accessories complex 4. Design complex

BANGALORE COMPLEX Aircraft division – Manufacturing Jaguar Aircrafts. Engine division – Manufacturing Jaguar Engines. Helicopter division – Manufacturing Helicopters. Forge and foundry division – Manufacturing high precision. Overhaul division – Overhaul of Jaguar and other engine. Space division – Manufacturing of launching of pads and

common satellites for common services to all divisions.

MIG COMPLEX Nasik division – Manufacturing and overhauling of

airframes Koraput division – Manufacturing and overhauling of MIG

engines

ACCESSORIES COMPLEX Hyderabad division – Manufacturing of electronics and

navigational equipment

Kanpur division – Manufacturing of passenger aircraft and gliders

Lucknow division – Manufacturing of hydraulic pumps, fuel pumps and stator Generator

Korwa division – Manufacturing of advanced navigational equipment

DESIGN COMPLEX Bangalore division – Modification of any component or unit

of an engine

HEAD OFFICE The head office of HAL is located at Bangalore and another at

New Delhi under the ministry of defense.

INDEGENIOUS NAMES OF HAL PRODUCTSSL. NO AIRCRAFT ENGINE INDIGENOUS

1. MIG – 2FL R11–F2S BADAL2. MIG – ZIM/MF R11–2S/F2SK TRISHUL3. MIG – ZIBIS R–25 VIKRAM4. MIG – 23MF R–29 RAKSHAK5. MIG – 23BN R–29B VIJAY6. MIG – 25 R–29B GARUD7. MIG – 27M R–29B BAHADUR8. MIG – 29 RD–33 VAJ9. GNAT ORPHEUS–701 MARUT10. HF – 24 ORPHEUS–703 KIRAN11. HJT – 16 VIPER–2 SHAMSHER12. JAGUAR ADOUR MK–80 VAJRA13. MIRAGE – 2000 M–53 CHITRA14. HS – 748 DART–531 CHEETAH15. ALLOUTEE ARTOUSTE–3B SUTLUJ16. AN – 32 SUTLUJ17. MI – 8 PRATAP18. MI AKBAR19. HPT – 32 PISTON ENGINE20. Su30 AN31F

ENGINE DIVISION Hindustan Aeronautics Limited (HAL), Koraput division is

located a very advantageous position. This company is situated at Sunabeda in Koraput district, Odisha. HAL, Koraput division, Sunabeda, moreover the factory is adjacent to the national highway no: 43 linking Vishakhapatnam – Raipur. The nearest railway link is

at Koraput (16km from Sunabeda). An airfield is located at Jeypore, 39km from Sunabeda. There is a helipad facility at HAL Township and also a proposed form is being constructed of a permanent airfield.

Engine division – Koraput, a unit of HAL’s vast network, was set up in April 1964 to manufacture R11 – F2S turbo jet engine of MIG – 21 FL aircraft under license from the erstwhile USSR, subsequently, the division took up, under various license agreements, manufacture of R – 11 series engines of MIG – 21 FL and MIG – 27M aircraft, R – 25 series engines of MIG – 21BIS aircraft and R – 29B engines for MIG – 27 aircraft. Simultaneously, facilities were set up for overhaul of R – 11 and R – 25 series engines, which started in 1971 and 1983 respectively. Starting from 1997 – 98 we have also undertaken overhaul of RD – 33 engines of MIG – 29 aircrafts.

The division has stepped into diversification by signing an MOU with GTRE for supply of components belonging to three modules (gear box, fan and turbine modules) of Kaveri engine meant for LAC.

This division has also entered the export market by overhauling R25 engines for Vietnam, supply of helicopters gears for MH1, Japan and supply of spares for Egypt. The division has bagged an order from m/s allied signals, USA for mechanizing of castings.

The division has a long term plan to undertake manufacture of AL – 31FP engines for Su – 30MKI aircraft under license.

Today HAL has a rich and enviable experience of manufacturing more than 1000 aero engines and overhaul of nearly 4500 power plants.

The division has the unique distinction of manufacturing almost all types of components required for manufacture and overhaul of engines and spares for service exploitation. The division is equipped with modern forge a d foundry shops which cater to the requirements of prevision forgings and castings.

VISION “To make HAL a dynamic, vibrant, value based learning

organization with human resources exceptionally skilled, highly motivated and committed to meet the current and future challenges.

This will be driven by core values of the company fully embedded in the culture of the organization”.

MISSION Enable all those working for HAL to give out their best to ensure

there all round growth as well as that of the organization.

Achieving excellence in the manufacture of aero engines and spare parts.

Offering matchless overhaul and repair services. Providing total customer support through continuing pursuit

of technical excellence, understanding product quality, reliability and service.

Striving constantly self – reliance & self – sufficiency in all operations.

Becoming the Asian leader in Aero Engine production, ready to share technical know how for setting up projects a board. Maintaining & developing a team of highly motivated trained professionals.

Making forays into the expert market as on ISO – 9002 company.

CHAPTER – 3“ORGANIZATIONAL

STRUCTURE”

FINANCE AND ACCOUNTING FUNCTIONS IN HALKORAPUT DIVISION

Finance and accounting both play an important role in any business organizational setup. The main function of any finance and

accounting of an organization are funds management, cost monitoring, cost reduction and financial appraisal. Money is a very scarce resource and is the most sought after commodity because all the transaction of human society is settled in terms of money.

Money and Finance are of not one and the same things. Money stored in vaults or kept in the shape of gold bars or an ornament is not finance. Money is a static value expressed in currency of the country, where as, finance is an expression of dynamic function of money.

Depending upon the requirements and close monitoring of expenditure HAL, Koraput division has formed the following section for the smooth running of the finance and accounts departments and to maintain the liquidity position of the company.

1. Bills payable section 2. Payroll section 3. Provident fund section 4. Cash office section 5. Finance section 6. Material section 7. Costing section 8. Bills receivable section 9. Book – keeping section

BILLS PAYABLE SECTION This section is mainly divided in three sub division. Such as:

Bills payable (Inland) – This section deals with the payment & accounting of supplies & services rendered to the company.

Bills payable (Civil work) – This section deals with the service rendered by the contractor of the company.

Bills payable (Foreign) – This section deals with the payment & accounting of supplies & services rendered by foreign collaborators to the company.

PAYROLL SECTION The main functions of the Payroll cover the following:

Placement of time punching cards in the card rack for the recording attendance.

Receipt of approval leave application, over time authorization, attendance sheets & employees gate pass etc.

Maintenance of leaves records & feeding of attendance data to computer.

Disbursement of salary & wages. Payment & recovery of advances. Recovery of dues from employees. Accounting of all Payroll transactions. Maintenance of employees punching cards etc.

PROVIDENT FUND SECTION This section mainly deals with the transaction preparing to PF

such as: Account of Provident Fund Transaction. Remittance of amounts recovered from employee to a

fund called provident fund trust fund. Providing refundable & nonrefundable & adjustment

thereof.

CASH OFFICE This section is responsible for all receipt & payment of

cash/cheque & accounting of the same in the book. The main functions are as follows:

Receipt of cash, cheque, bank draft & issue receipt for the same.

Banking of all receipt. Drawl of cash from bank to cater for daily needs. Payment of vouchers by cash/cheque. Writing cash/bank books. Preparing of Bank Reconciliation Statement. Safe Custody of cash, cheque books, bank guarantees,

fixed deposits receipts & other investments etc.

FINANCE SECTION The main functions are: Security & Financial concurrent as per

the delegation of power of proposal for:

Capital expenditure

Revenue expenditure Purchase of material, stores tools & other services Manpower requirements Incentives Write off – of losses Cases involving relaxation of rules Sales of company assets Contracts enter into with

suppliers/collaboration/subcontractors. Estimates & errors of contracts in respect of Civil/

Electrical/ Plant order.

MATERIALS SECTION This section covers the following:

Maintenance of material ledger cards for all materials held in stores.

Accounting of receipts of all materials by various classes & issue of all materials draws on work order & expenses accounts.

Reconciliation of balance with general ledger. Quality reconciliation of Bin Card balances with materials

ledge balances. Accountings of inter divisional transfer of Materials & its

reconciliation. Scrutiny of slow, non – moving inventories.

COSTING SECTION The main functions of this section are:

Fixation of fixed cost quotation. Fixation of standard man – hour rate. Preparation of operating statement. Accounting & adjustment of differed revenue expenditure. Accounting of non – production of overhead. Preparation of man – hour rate. Accounting of work in progress. Setting of sales. Submission of monthly reports to various agencies.

BILLS RECEIVABLE SECTION This section is responsible for preparation & submission of

invoices to customer for the supplier made & services rendered & follow up for recovery of the amount & accounting of the same.

BOOKKEEPING SECTION This section is the section in which the financial position of the

organization can be reflected through the preparation of profit & loss account and balance sheet. It is the apex section of the finance & accounts department, which cover the following important function.

Co – ordination of all section for relevant information. Maintenance of Journal & general ledger. Preparation of Trial balance, Profit & Loss account, Balance

sheet. Maintenance of Capital Asset Ledger. Preparation of Fixed Asset & Depreciation schedule. Furnishing of data for determining of Income tax liability. Preparation of performance budget. Dealing with sales tax matters. Disposal of surplus/ condemned plant & Machinery and

other assets. Reconciliation of control account of other

division/corporate office. Liaison with audit authority. Submission of various types of reports/Returns as & when

required by corporate office/MD (MIG) & other agencies. Updating the accounting policies/ Procedure upon the

guide lines issue by the corporate office.

ACCOUNTING POLICIES FOLLOWED BY HAL FIXED ASSETS Land received from the state government till 31st March

1969 has not been valued. Such land which has been taken over by the company after 1st April 1969, have been valued at estimated fair price ruling on the date of taking possession. Land other than above has been capitalized at cost to the company and no accounts has been taken of by the cost borne by the state government expenditure on the development is shown under land.

Fixed assets acquired with financial assistance/ subsidy from outside agencies either wholly or partly is capitalized at net cost of the company.

Minor civil work including addition, alterations etc. costing individually Rs.50000/- and below not resulting in additional floor space are charged to revenue.

Where the actual costs of the fixed/current assets are not readily ascertainable, they are accounted initially on

provisional basis but adjusted subsequently to cost when ascertained.

Assets declared surplus are discarded and are retained in the books at cost and depreciation provided till the end of the month, proceeds from sales of assets in excess of net book value are credited to profit and loss account.

Standards of performance based on the technical assessment are not capitalized.

Cost of the initial pack of spaces procures with plant, machinery and equipment is capitalized and depreciated in the same manner as plant, machinery and equipment.

TOOLS AND EQUIPMENTS Expenditure on special purpose tools, jigs and fixture including

those specific to the project/product is initially capitalized for amortized over production on technical assessment and to extent not amortized is carried forward as on assets. Expenditures on maintenance, rework, reconditioning, periodical inspection, referencing of tooling, replenishing of cutting tools and work of similar nature is charged to revenue act at the time of issue.

RESEARCH AND DEVELOPMENT Research and Development Reserve is built up by the

appropriation from profit. It is debited to the Profit and Loss account.

To the extent the expenditures are met out of the Research and Development Reserve amounts to that extent which are transferred from Research and Development Reserve to the Profit and Loss account.

Expenditures on training/foreign technical fees and expenses, pre production expenses etc. specific to projects/products is amortized over production on technical estimates and to the extent not amortized is carried forward.

DEFERRED DEBTS Unpaid installment payments under deferred payment terms for

the cost of imported material and tooling content of the equipments/products sold are accounted as deferred debt from the customers and are recovered as and when the installment are paid.

SUNDRY DEBTORS

Disputed /time barred debts from the government departments are generally not treated as doubtful debts.

INVENTORIES Raw materials, components, stores and spare parts are

valued at cost. Work in progress/stock in trade is valued at lower of cost

on realizable value. Adjustment is not made for under/over observation of cost

on jobs, if the extent of under/over observation in a year does not exceed 0.5% of the net operating expenses.

Customs duty where applicable is loaded to cost of goods when cleared and passed through customs.

Stationary, uniform, medical and canteen, stores and charged to revenue at the time of receipt.

Semi perishable, welfare and miscellaneous equipments (other then fixed assets) costing individually Rs.20000/ and below are charged to revenue at the time of issue and those costing above.

Rs.20000/ is written off to revenue in two years including the year of issue.

Provision for redundancy is maintained at a suitable percentage/ level of the value of closing inventory of Raw Materials and components, stores and spares parts and construction materials less the value of inventory to be borne by the customer and the value of the inventory for the initial phase of the new projects. Besides, where necessary, adequate provision is made for redundancy of such materials in respect of completed/ specific project and other surplus/ redundant material pending transfer to salvage stores.

Stores declared surplus/unserviceable/redundant are charged to revenue.

Material issued from main stores and lying unused at the end of the year is not reckoned as inventory.

INDIRECT EXPENSES ON EXPANSIONS Expenses on administration and supervision in respect of

expansion facilities/new projects at the existing division are charged to revenue.

SALES Sales are set up on completion of contracted work on the basis

of signaling out/acceptance by the customer’s inspection of the product. Where sale price are not established, sales are set up on provisional basis at price likely to be realized. Research and Development Expenditure financed by the customer is billed and accounted as sales.

RETIREMENT BENEFITS Liabilities towards gratuity provided on yearly actuarial

valuation in respect of all employees is remitted to a trust progressively.

Provision for vocation leave is made on accrual basis and unutilized leave at the year end is restated as if such benefits is payable at the close of the year.

Employer’s contribution of provident fund for the year is provided for at the government stipulated rate and are remitted to the trust.

INTEREST Interest on loan/borrowing for different projects is charged to

Profit and Loss account as the revenue.

DEPRECIATION Depreciation on fixed assets is charged on “Straight Line

Method”. The rate of depreciation on assets acquired on prior to 01.04.1989 is on the basis of estimated life. The rate of depreciation is as prescribed in such XIV act to the company’s act 1956 for assets capitalized after 01.04.1989. However, pro rata depreciation charges to the assets from the first day of the month of addition. Fixed assets costing Rs.10000/– and below are depreciated fully in the year of purchase. Where cost of internal partitions exceeds Rs.50000/–, they are depreciated within period of five years or the lease period of premises, whichever is less.

CLAIM ON SUPPLIERS/UNDERWRITERS/CARRIERS, ETC.Claim on suppliers/underwriters/carriers towards loss or

damage and claims on customs department for refund are accounted when claims are preferred.

DISPOSABLE SCRAP

Saleable/disposable scrap is valued at estimated realized value.

FOREIGN CURRENCY TRANSACTIONS These transactions are recorded and reported as per the

requirement of the accounting standards II of ICAI, except in respect of liability of Deferred Payments on supplies/services from the Russian Federation arising in terms of inter Government agreement entered into between Government of India and USSR Government of Russian Federations.

CHAPTER – 4 “THEORETICAL PERSPECTIVE”

INTRODUCTIONThe basic financial statements that are the balance sheet and

the profit & loss account reveal the net effect of the various transactions on the operational and the financial position of the company. The balance sheet gives a summary of the assets and liabilities of an undertaking at a particular point of time. It reveals the financial position of the business. The assets side of the balance sheets shows the uses of resources of an undertaking while the liability side indicates the manner in which these resources were obtained. The profit & loss account contains the summary of the expenses incurred and the revenue realized in an accounting period which reflects the results of the business operations.

The balance sheet does not disclose the causes for changes in the assets and liabilities between two different points of time. The profit & loss account also does not disclose some transaction that operates through an undertaking. Therefore, another statement is to be prepared to show the changes in the assets and liabilities between two balance sheet dates. This statement is called as the statement of changes in financial position or funds flow statement. It indicates that where from these funds were obtained and the ways in which these funds were employed. It can also be said as the statement of sources and application of funds.

MEANING AND CONCEPT OF FUNDSThe terms ‘funds’ has been defined in number of ways:

In a narrow sense, it refers to only cash and fund flow statement prepared on this basis can be called as cash flow statement. For this various transactions relating to receipts and payments are shown.

In a broader sense, it refers to money values in whatever form it may be.

In a popular sense, it means working capital that is the excess of the current assets over the current liabilities.

But these concepts have failed to reveal the changes in the overall financial resources of the firm. For e.g. Purchase of building in exchange of shares, purchase of one asset in exchange of another asset.

MEANING AND CONCEPT OF ‘FLOW OF FUNDS’

The term ‘Flow’ means movement and includes both ‘inflow’ & ‘outflow’. The term ‘Flow of Funds’ means transfer of economic values from one asset of equity to another. Flow of funds is said to happen when any transaction makes any changes in the amount of funds before happening of the transaction. If the effect of the transaction results in the increase of the funds, it is called as sources of funds and if it results in decrease of funds, it is called as application of funds. Some transactions do not affect in funds do not result in the flow of funds.

A transaction results in flow of funds when on one hand it is a non current account and on the other it is a current account or on the other it is a current and on the other it is a non current. So, when a change in a non current account like fixed assets, long term liabilities, reserves and surpluses, fictitious assets are followed by a change in another non current account, it does not amount to flow of funds this is because of the fact that according to the working capital concept there is no movement of funds in the working capital. As similar to this when one current account results in a change to another current account it does not result in flow of funds. In simple, funds move when a transaction affects

A current asset and a permanent asset A current liability and a permanent liability A current liability and a permanent asset A current asset and a permanent liability

CURRENT ACCOUNTS AND NON – CURRENT ACCOUNTCurrent accounts include both current assets and current

liabilities and non–current accounts include both non–current assets and non–current liabilities.

Current assets are those assets which in the ordinary course of business can be converted into cash within a short period of time that is one accounting period. Current liabilities are those liabilities which in the ordinary course of business are to be paid in an accounting period.

LIST OF CURRENT OR WORKING CAPITAL ACCOUNTSCurrent Assets Current Liabilities1. Bills Payable 1. Cash in Hand2. Sundry Creditors 2. Cash at Bank

3. Outstanding Expenses 3. Bills Receivable4. Bank Overdraft 4. Sundry Debtors5. Short term Loans & Advances 5. Short term Loans & Advances6. Provision against Current Assets

6. Marketable Security (Short term)

7. Provision for Taxation 7. Inventory8. Proposed Dividend 8. Prepaid Expenses

LIST OF NON–CURRENT OR PERMANENT CAPITAL ACCOUNTSNon–Current Liabilities Non–Current Assets1. Equity Share Capital 1. Goodwill2. Preference Share Capital 2. Land & Buildings3. Redeemable Preference Share Capital

3. Plant & Machinery

4. Debentures 4. Furniture & Fittings5. Long Term Loans 5. Trade Marks6. Share Premium Accounts 6. Patent Rights7. Capital Reserve 7. Long Term Investment8. Capital Redemption Reserve 8. Discount on Issue of Shares9. Provision for Depreciation Against Fixed Assets

9. Discount on Issue of Debentures

10. Appropriation of Profits General Reserve Dividend Equalization Fund Sinking Fund Compensation Fund

10. Preliminary Expenses

11. Profit and Loss Account (Credit Balance)

11. Profit and Loss Account (Debit Balance)

12. Share Forfeited Accounts

MEANING AND DEFINITION OF FUNDS FLOW STATEMENTFunds flow statement is a method by which we study changes

in the financial position of a business between beginning and ending financial statement dates. In short, funds flow statement can be said as a statement of sources and application of funds in a technical device designed to analyze the changes in the financial condition of a business enterprise between two dates. Funds flow statement is called as sources and application of funds; statement of changes in financial position; summary of financial operation; where came in and where gone out statement; movement of working capital statement; funds received and disbursed statement; funds

generated and expanded statement; sources of increase and application of decrease; funds statements etc.

Generally, there is a confusion that fund flow statement, income statement and balance sheet all three are of some category. In the original sense, fund flow statement highlights the changes in the financial position of a business and also reveals the means by which these funds were obtained and the ways they were utilized in a particular period. But an income statement does not reveal the inflows and outflows rather it shows the items of expenditure and incomes for a particular period. Fund flow statement considers both revenue and capital items but income statement takes only revenue items.

Fund flow statement shows the sources and uses of funds in a particular period of time, whereas balance sheet shows the assets and liabilities of a concern at a particular point of time. The fund flow statement helps the management in making decisions but balance sheet does not give much help to management for making decision. Before preparing the fund flow statement, usually a statement of schedule of changes in working capital is prepared. But while preparing the balance sheet schedule of changes in working capital is not required rather profit & loss account is to be prepared.

USES AND IMPORTANCE OF FUNDS FLOW STATEMENTThe fund flow statement is an essential tool for the analysis of

financial data and is of primary importance to the financial management. The basic purpose of funds flow statement is to reveal the changes in two balance sheets. Therefore, it is being used by various financial analysts, credit granting institutions and etc… This statement results in the financial needs and in determining the best way of financing these needs. By making use of funds flow statements, the management can come to know the adequacy or inadequacy of use of short term funds in advance. According to this one can plan for the financing of short as well as long term funds.

The importance of funds flow statement is as follows: Helps in analysis of financial statements Helps in the information of dividend policy Helps in the proper allocation of resources Acts as a future guide Helps knowing the creditworthiness of the firm

Helps in throwing light on perplexing questions

PROCEDURE FOR PREPARING A FUND FLOW STATEMENTFund flow statement is a method by which we study changes in

the financial position of a business between beginning and ending financial statement dates. So, the fund flow statement is prepared by comparing two balance sheets and with the help of such other information derived from the accounts as may be needed. This preparation of a fund flow statement consists of two parts:

Statement or schedule of changes in working capital Statement of sources and application of funds

Statement or schedule of changes in working capitalWorking capital means the excess of current assets over

current liabilities. This statement is prepared to show the changes in the working capital between two balance sheet dates. For this two balance sheets are required.

Working Capital= Current Assets – Current LiabilitySo,

An increase in current assets increases working capital An increase in current liabilities decreases working capital A decrease in current assets decreases working capital A decrease in current liabilities increases working capital

It is very important that the schedule of changes in working capital is prepared only from the information of current assets and current liabilities from the balance sheet and no other information is required for preparing this statement. So, the changes in the amount of any current asset or any current liability in the current year balance sheet as compared to the previous year balance sheet may either result in increase or decrease in working capital. Each difference is recorded in the individual current asset or current liability.

When the current asset in the current year is more than in the previous year, it is a case of increase in working capital and it is recorded in the increase column. But if a current liability in the current year is more than in the previous year, the effect is decrease in working capital and it will be recorded in the decrease column or vice versa.

After this the total increase and decrease columns are compared and the difference shows the net increase and decrease in the working capital. A form of statement of schedule of changes in working capital is as follows:

Statements of Schedule of Changes in Working CapitalEffect on Working Capital

Particulars Previous Yr.

Current Year

Increase Decrease

Current AssetsCash in handCash at bankBills receivableSundry debtorsInvestmentsInventoriesPrepaid expenseAccrued income

Total

Current liabilitiesBills payableSundry creditorsOutstanding expBank overdraftShort term adv.Dividend payableProposed dividendProvision for tax.

TotalWorking capitalNet increase/

decrease in W.C

Total

Statement of sources and application of fundsFunds flow statement is a statement which indicates various

sources from which funds have been obtained during a certain period and the uses or applications to which these funds have been put during that period. Generally, this statement is prepared in two formats:

Report form T form or Account form or Self balancing form

The specimen of both the statements is follows:

Specimen of report form of funds flow statement

Amounts (Rs.)

Sources of fundsFunds from operationsIssue of share capitalRaising of long term loansReceipts from partly paid sharesSale of Fixed AssetsSale of long term investmentsNon trading receiptsDecrease in working capitalTotal Application of fundsFunds lost in operationsRedemption of preference share capitalRedemption of debenturesRepayment of long term loans Purchase of fixed assetsPurchase of long term investmentsNon trading paymentsPayments of dividendsPayments of taxIncrease in working capitalTotal

The specimen for statement of sources and application in a T form is as follows:

Sources Rs. Applications Rs.Funds from operationsIssue of debentureIssue of share capitalRaising of long term loansReceipts from partly paid sharesSale of Fixed Assets

Sale of long term investmentsNon trading receiptsNon decrease in working capital

Funds lost in operationsRedemption of debenturesRedemption of share capitalPayments of long term Loans

SOURCES OF FUNDSSources of funds means from where generally funds flow come

into the business. The following are the sources:

Funds from operations: Funds from operations or the trading profits of the business are

the most important and major source of funds. Sales are the main source of inflow of funds into the business as they increase current assets but at the same time funds flow out of the business for expenses and the cost of goods sold. Thus, the net effect of operations will be a source of funds if inflow from sales exceeds the outflow for the expenses and the cost of goods sold. The net effect of operations will be an application of funds if inflow of sales is less than the outflow of the expenses and the cost of goods sold.

But it is not only that funds from operations are not the real profit as shown by the profit & loss account, because there many non fund or non operating items which may have been either debited or credited to profit & loss account. The items of such type at the debit side are: amortization of fictitious and intangible assets such as goodwill, preliminary expenses and discount on issue of shares and debentures written off; appropriation of retained earnings, such as transfers to reserves, depreciation and depletion; loss on sale of fixed assets; payments of dividends, 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 the business, such as loss on sale of machinery or payment of dividends. The methods for calculating funds from operations are as follows:

There are two methods for calculating funds operations, they are:

To prepare the profit & loss account again by taking into account only fund and operational items which involve funds and are related to the normal operations of the business. Hence, while balancing this we may either get funds generated from operations or funds lost in operations which is again depended on the income side or expenditure side whichever is more.

By proceeding with the net profit figure or the net loss figure as arrived at the profit & loss account already prepared.

Funds from operations can be calculated in the following:Calculation of funds from operation Amount

(Rs.)Closing balance of P&L a/c or retained earningsAdd: non fund and non operating items which have been debited to P&L a/c:

1. Depreciation and depletion2. Amortization of fictitious and intangible assets

such as: a. Goodwill b. Patents c. Trademarks d. Preliminary expenses e. Discount on issue of shares

3. Appropriation of retained earnings, such as:a. Transfer to general reserveb. Dividend equalization fundc. Transfer to sinking fundd. Contingency reserve

4. Loss on sale of any non current assets such as:a. Loss on sale of land and buildingb. Loss on sale of machineryc. Loss on sale of furnitured. Loss on sale of long term investment

5. Dividends including:a. Interim dividendb. Proposed dividend

6. Provision for taxation7. Any other non fund/non operating items which are

debited to P&L a/cTOTAL (A)

Less: non fund or non operating items which have been credited to P&L a/c:

1. Profit or gain from the sale of non current assets such as:

2. Appropriation in the value of fixed assets, such as increase in the value of land if it has been credited to P&L a/c

3. Dividend received 4. Excessive provision retransferred to P&L a/c or

written off5. Any other non operating item which has been

credited to P&L a/c6. Opening balance of P&L a/c or retained earning

(as given in B/S)TOTAL (B)

Total (A) – Total (B)=funds generated by operations

Funds from operations calculated by preparing adjusted Profit & Loss A/c.

Adjusted Profit & Loss AccountTo depreciation & depletion of amortization of fictitious and intangible assets such as: goodwill, patents, trademark, preliminary expenses

Rs. By Opening balanceBy Transfer from excess provisionBy Appreciation in the value of fixed assetsBy Dividend receivedBy Interest on

Rs.

To Appropriation of retained earnings such as:Transfer to general reserve, dividend equalization fund, sinking fund.

To Loss on sale of any non current or fixed assetTo DividendTo Proposed dividendTo Provision for taxationTo Closing balanceTo Funds lost in operations (b/f)

investmentsBy Profit on sale of fixed or non current assetsBy Funds from operations (b/f)

CHAPTER 5“ANALYSIS AND

INTERPRETATION”

FUNDS FLOW STATEMENT OF 2006 – 07

(A) Statement of Schedule of Changes in Working CapitalParticulars Previous

Year 2006(Rs. In lakhs)

CurrentYear 2007(Rs. In lakhs)

Effect of change in W.C(Increase) (Decrease)

Current AssetsInventoriesDebtorsCash & bank balancesLoans & advances

Total

46492.566569.35

34.1239221.07

94149.295029.00

14.3633798.19

47656.731540.35

19.765422.88

92317.1 132990.84

Current LiabilitiesSundry creditorsNon interest bearingAdvances from other customersOther liabilitiesInterest accrued but not dueProvisions

Total

Net working capital

Decrease in W.C

17341.38

11923.00

39425.51

486.581201.55

4978.48

11411.40

218352.00

500.0029632.00

2928.11

23334.40

257777.51

986.5830833.55

7906.59

262823.51 320838.63

(170506.41) (187847.79)

17341.38

Total (170506.41)

(170506.41)

64998.11

64998.11

INTERPRETATIONFrom the above statement, we analyze that the net working

capital of HAL engine division for the year 2006 – 07 is negative. Here, it suggests that HAL could not utilize its fixed assets efficiently due to non availability of liquid funds which in other ways affects the profitability or the rate of return of the concern.

(B) Statement of Sources and ApplicationSources Amounts

(Rs.)Application Amounts

(Rs.)Issue of share capitalHead office control acc.Funds from operationsSecured loansDeferred tax liability

(38599.00)8180.42

572.000

(29846.5

Purchase of: Fixed assets Special tools & Equipments Increase in intangible assetsChange in current assets

35395.1193136.28

29470.03

(187848.00)

Total8) Total (29846.5

8)

Working Notes: calculation of funds from operations

Particulars Amounts (Rs.)


To provisionTo debenture redemption reserveTo R &D reserveTo proposed dividendTo funds from operations

0

000

8180.42

By net profit 8180.42

Calculation of fixed assets during the year 2006 – 07Particulars Amounts

(Rs.)Closing balance of gross block Less : depreciation Net blockAdd : capital work in progressFixed assets/ purchase of new block

42940.0717448.0025492.07

9902.1235394.19

Calculation of depreciation during the year 2006 – 07Particulars Amounts(Rs

.)Closing balance of depreciation Less : opening balance of depreciation

17448.0015349.00

Add : fixed assetsTotal depreciation during the year

2099.008.00

2107.00

ANALYSISA comparison of sources and applications reveals that the main

sources of funds HAL, Koraput is liable to pay to the head office control account and the secured loan of amount of (Rs. 38599) & (Rs. 572) lakhs are respectively payable to the outsiders for some of the security.

The funds applied are mainly invested in fixed assets and special tools and equipments of the amount of (Rs. 35394.19) & (Rs.

93136.28). The management can come to know the adequacy of inadequacy of working capital in advance and can plan the intermediate and long term financing of the firm, repayment of long term debts etc.







Total

Current LiabilitiesSundry creditorsNon interest bearingAdvances from other customersOther liabilitiesProvisions

Total

Net working capital

Decrease in W.C

94149.295028.62

14.3633798.20

94998.365883.47

19.9851617.16

849.07854.85

5.6217818.96

44.06

65183.71

140.08

70162.64

4601.639851.92

132990.47 152518.97

23334.40

257777.52

986.5830833.55

7906.59

23474.48

327940.16

942.5235435.1817758.51

320838.64 405550.85

(187848.17) (253031.88)

65183.71

Total (187848.17)

(187848.17)

84756.27

84756.27

INTERPRETATIONFrom the above statement, we can say that the working capital

is again negative value which signs bad to the concern that the

funds are not available to pay its short term liabilities that are creditors, other liabilities etc. So, the concern must have a full sufficient balance for covering the short term obligations in time without using any reserves or provisions. Here, the cash and bank balance is very low as compared to the obligations. So, it says that the financial position of the company is very low.



(Rs.)Head office control acc.Funds from operationsSecured loansDeferred tax liability

Total

(89880.19)12631.00

468.560

76780.63

Purchase of: Fixed assets Special tools & Equipments Increase in intangible assetsChange in current ass.

Total

35758.81

110774.82

29717.62(253031.8

8)

76780.63

Working Notes: calculation of funds from operationsParticulars Amounts

(Rs.)Particulars Amounts

(Rs.)To provisionTo debenture redemption reserveTo R &D reserveTo proposed dividendTo share fundTo funds from operations

0

0000

12630

By net profit 12630

Calculation of fixed assets during the year 2007 – 08Particulars Amounts (Rs.)Closing balance of fixed assetsLess : depreciationNet blockAdd : capital work in progress

46430.0919817.2326612.86

9145.97

Fixed assets/ purchase of new block 35758.83

Calculation of depreciation during the year 2007 – 08Particulars Amounts

(Rs.)Closing balance of depreciation Less : opening balance of depreciationTotal depreciation during the year

19817.2317447.67

2369.56







TotalCurrent LiabilitiesSundry creditorsNon interest bearingAdvances from other customersOther liabilitiesProvisions

TotalNet working capitalIncrease in W.C

94998.365883.47

19.9851617.16

154197.2714655.86

11.9589141.87

59198.918772.39

37524.718.03

8789.67

7617.22

1624.292722.624779.64

79954.54

152518.97 258006.95

23474.48

327940.16

942.5235435.1817758.50

32264.15

335557.38

2566.8138157.8022538.14

405550.84 431084.28(253031.87)

79954.54(173077.33)

. Total (173077.33)

(173077.33)

105496.01

105496.01

INTERPRETATION

The above statement shows the net working capital of HAL for the year 2008 – 09 has been showing negative. This means that the company has not sufficient funds for covering its short term obligations. It has no sufficient balance of cash for payment and has utilized the advances from the outsiders and the non interest bearing debts.(B) Statement of Sources and Application

Sources Amounts (Rs.)

Application Amounts (Rs.)

Head office control AccountFunds from operationsSecured loansDeferred tax liability

Total

4712.7511968.86

259.750.44

16941.80

Purchase of: Fixed assets Special tools & EquipmentsIncrease in intangible assetsChange in current assets

Total

44074.16

113380.82

32564.15

(173077.33)

16941.80




To provisionTo debenture redemption reserveTo R &D reserveTo proposed dividendTo share fundTo funds from operations

0

0000

11968.86


Calculation of fixed assets during the year 2008 – 09Particulars Amounts (Rs.)Closing balance of gross block Less : depreciationNet blockAdd : capital work in progress

60432.5523502.1436930.41

7143.75




23502.1419817.23

3684.91







Total

Current LiabilitiesSundry creditorsNon interest bearingAdvances from other customersOther liabilitiesProvisions

Total

Net working capitalDecrease in W.C

154197.2714655.86

11.9589141.87

256533.4723918.95

16.8895198.45

102336.20

9263.09

4.936056.58

5262.95

2554.61

101896.18

6047.483513.38

14021.32

258006.95 375667.75

32264.15

335557.38

2566.8138157.8022538.14

27001.20

437453.56

12.2044205.2826051.52

431084.28 534723.76

(173077.33)14021.32

(159056.01)

Total (159056.01)

(159056.01)

125478.36

125478.36

INTERPRETATIONFrom the above statement, we can say that the working capital

of HAL for the year 2009 –10 has been showing negative. Here the cash and bank balance is very low as compared to the obligations.



(Rs.)Head office control acc.Funds from operationsSecured loans

Total

16992.3712934.88

364.54

30291.79

Purchase of: Fixed assets Special tools & Equipments Increase in intangible assetsChange in current ass.

Total

42841.55

115159.33

31356.78(159065.8

7)30291.79




To provisionTo debenture redemption reserveTo R &D reserveTo proposed dividendTo share fundTo funds from operations

0

0000

12934.88


Calculation of fixed assets during the year 2009 – 10Particulars Amounts (Rs.)Closing balance of fixed assetsLess : depreciationNet blockAdd : capital work in progress

67432.4427738.4839693.96

3147.59




27738.4823502.14

4236.34

CHAPTER 6 SUMMARY CONCLUSION SUGGESTIONS ANNEXURE BIBLIOGRAPHY

SUMMARYWith the doors of liberalization opened up in the Indian

economy, the country is witnessing rapid changes on all its spheres of activity. For this, HAL also took their step in the growth of the economy. They had geared up in the mobilizing the steps in lending operation such as hire purpose, leasing etc.

The report includes the significance, introduction part and purpose of the study. The major objective of the study is about the analysis of the investment and understands the different operations of Hindustan Aeronautics Limited.

The report is also the company profile of Hindustan Aeronautics Limited, Engine division, Koraput; in this the major financial transaction of HAL was discussed in details. It is includes the organizations hierarchy of HAL. This also includes the different financial highlights of HAL from the year 2006 – 10.

Funds flow analysis is the process or statement report the flow through firm during the year it shows the sources and uses of working capital between two balance sheet dates. Primary objective of the Funds flow statement attempts to explain the changes in

financial position from one balance sheet of the year to another year balance sheet to know the changes in funds or the working capital position of the firm and to insight of the financial strength and weakness of the company.

The analysis and interpretation of profit & loss is essential to bring out the mystery behind the figure in the profit & loss account. This account is an account is an attempt to determine the significance and meaning of the profit & loss data. So, that forecast may be made of the future earning, ability to pay interest and debt maturities, profitability and sound dividend policy.

SUGGESTIONThe company has to improve its utilization of current assets and

be well acquainted with investment purpose to improve their investment decision. The company has to improve the latest technology to monitor the market. To use new investment purposes it must use its long term funds and also maintain good relations with their customers. The company has to maintain a proper cash balance to maintain its day to day operation with out fail.

CONCLUSIONFrom this above analysis we may conclude that the reserves

and surplus of the division has grown up. So, the company has to utilize its reserve and surplus in the payment of dividends and any other long term obligations.

Working capital of the firm is in negative. It shows that the organization has advances from customers which are kept at the head office which is debited to share capital. This is a defense related firm, so production is based on contract basis. The division

follows a good inventory management technique and the overall liquidity position of the company is found good.

ANNEXURE

Balance Sheet for the year ended 2006-07 and 2007-08, HAL, Koraput Division (Rs. In Lakhs)

Particulars 2006-07 2007-08Sources of fundsShare holders fund: Head office control a/c Reserve & surplus

(38598.67)8180.42

(89880.19)12630.29

(30418.25) (77249.90)Loan funds: Secured loans Unsecured loans

571.640

468.560

571.64 468.56Deferred liabilities (Net)Deferred tax liabilities

1.510

0.740

Total sources of funds (29845.09) (76780.61)Application of fundsFixed assets: Gross block Less: Depreciation

42940.0717447.67

46430.0919817.23

Net block 25492.40 26612.86Capital work in progress 9902.12 9145.97

35394.52 35758.83Special tools & equipmentsInvestmentsDeferred tax assets

93138.2800

110774.8200

Current assets, loan & advances:Inventories Sundry debtorsCash & bank balanceLoans & advances

94149.295028.61

14.3633798.19

94998.365883.47

19.9851617.16

132990.47 152518.97Less: Current liabilities & provisions Liabilities Provisions

312932.057906.59

387792.3517758.50

320838.65 405550.85Net current assets (187848.17) (253031.88)Intangible assets: Gross carrying amountLess: Cumulative amortization & impairment loss

35200.95

5730.68

38257.78

8540.16

Net carrying amount 29470.27 29717.62Total application of funds (29845.09) (76780.61)PROFIT & LOSS A/C for the year ended 2006-07 and 2007-08, HAL, Koraput Division (Rs. In Lakhs)

Particulars 2006-2007 2007-2008Income Sales Transfer to the divisional unitsCharges in WIP/SIT/ScrapOther incomeCharges received on inter divisional transfer

86716.06192.03

20020.951090.53

19.20

140816.78312.82

(9121.13)2406.65

31.28

Total 108038.77 134446.40Expenditure Consumption of raw material, componentsAmortizationSalaries and wagesOther expensesCharges paid on inter divisional transfersInterestDepreciationProvisionsInter services/ common servicesTransfer of IDT

79574.476132.129779.66

10841.2913.17

6.582107.085122.60

945.75(10904.61)

64227.0011164.1814095.42

7697.322.044.06

2369.5511459.64

1116.8116110.35

Total 103618.11 128246.37Less: expenditure relating to capital a/c & others Net expenditure

3759.78 6430.2699858.37 121816.11

Profit for the yearLess: provision for current taxation (MAT)Provision for deferred taxationProvision for taxation of earlier year no longer required withdrawn

8180.4200

0

12630.29

00

0Profit after tax 8180.42 12630.29Balance brought forward from last year 0 0Profit available for appropriation 8180.42 12630.29AppropriationDebenture redemption reserveResearch & development reserveProposed dividendTax on distributed profits

8180.42000

12630.29000

Total of appropriation 8180.42 12630.29Balance Sheet for the year ended 2008-09 and 2009-10, HAL, Koraput Division (Rs. In Lakhs)

Particulars 2006-07 2007-08Sources of fundsShare holders fund: Head office control a/c Reserve & surplus

4712.7511968.86

16992.3712934.88

16681.61 29927.25Loan funds: Secured loans Unsecured loans

259.750

364.540

259.75 364.54Deferred liabilities (Net)Deferred tax liabilities

0.440

0.120

Total sources of funds 16941.80 30291.91Application of fundsFixed assets: Gross block Less: Depreciation

60432.5523502.14

67432.4427738.48

Net block 36930.41 39693.96Capital work in progress 7143.75 3147.59

44074.16 42841.55

Special tools & equipmentsInvestmentsDeferred tax assets

113380.8200

115159.3300

Current assets, loan & advances:Inventories Sundry debtorsCash & bank balanceLoans & advances

154197.2714655.86

11.9589141.87

256533.4723918.95

16.8895198.45

258006.95 375667.75Less: Current liabilities & provisions Liabilities Provisions

408546.1422538.14

508682.1026051.52

431084.28 534733.62Net current assets (173077.33) (159065.87)Intangible assets: Gross carrying amountLess: Cumulative amortization & impairment loss

44467.53

11903.38

46904.69

15547.79

Net carrying amount 32564.15 31356.90Total application of funds 16941.80 30291.91PROFIT & LOSS A/C for the year ended 2008-09 and 2009-10, HAL, Koraput division (Rs. In Lakhs)

Particulars 2008-2009 2009-2010Income Sales Transfer to the divisional unitsCharges in WIP/SIT/ScrapOther incomeCharges received on inter divisional transfer

140991.83754.03

36766.734748.82

75.40

133541.4658.47

62722.614337.46

5.85

Total 183336.81 200665.85Expenditure Consumption of raw material, componentsAmortizationSalaries and wagesOther expensesCharges paid on inter divisional transfersInterestDepreciation

123733.7715214.5121104.93

8461.993.301.41

3686.469218.99

139591.4714942.8418003.49

9367.9518.46

0.124242.485914.89

ProvisionsInter services/ common servicesTransfer of IDT

1585,900

940.120

Total 183011.26 193021.82Less: expenditure relating to capital a/c & others Net expenditure

11643.31 5290.85171367.95 187730.97

Profit for the yearLess: provision for current taxation (MAT)Provision for deferred taxationProvision for taxation of earlier year no longer required withdrawn

11968.8600

0

12934.8800

0

Profit after tax 11968.86 12934.88Balance brought forward from last year 0 0Profit available for appropriation 11968.86 12934.88AppropriationDebenture redemption reserveResearch & development reserveProposed dividendTax on distributed profits

11968.86000

12630.29000

Total of appropriation 11968.86 12934.88

BIBLIOGRAPHY

FINANCIAL MANAGEMENT I.M PANDEY

FINANCIAL MANAGEMENT M.Y.KHAN &P.K.JAIN

FINANCIAL MANAGEMENT R.K.SHARMA &S.K.GUPTA

FINANCIAL MANAGEMENT PRASANNA CHANDRA

WEBSITE

www.halindia.comwww.defensediscovery.comwww.google.com

http://www.google.com/

http://www.defensediscovery.com/

http://www.halindia.com/

Documents

Summer Project Report