CHAPTER-1

INTRODUCTION

TO THE

TOPIC

1
Meaning of Fund Flow
The financial statement of the business indicates assets, liabilities and capital on a particular
date and also the profit or loss during a period. But it is possible that there is enough profit in
the business and the financial position is also good and still there may be deficiency of cash or
of working capital in business. If the management wants to find out as to where the cash is being
utilized, financial statement cannot help.

Therefore, a statement is prepared of the sources and applications of funds from where Working
Capital comes and where it is utilized. This is called Fund Flow statement. A fund flow
statement is a summary of a firm's inflow and outflow of funds. It tells us from where funds
have come and where funds have gone. Fund flows statement can indicate whether sourcing of
funds and their use match in sense and also reveal the prudence or otherwise of a firm's financing
and investment decisions.

The financial statement of the business indicates the assets, liabilities and capital on a particular
date and also the profit or loss during a period. But it is possible that there is enough profit in
the business and the financial position is also good and still there may be deficiency of cash or
of working capital in business. If the management wants to find out as to where the cash is being
utilized, financial statement cannot help. Therefore, a statement is prepared of the sources and
applications of funds from where Working Capital comes and where it is utilized. This is called
Fund Flow statement.

Funds Flow Statement is an analytical tool in the hands of financial manager. The basic purpose
of this statement is to indicate on historical basis the changes in the working capital i.e., where
funds came from and where they are used during a given period. Fund flow statement shows
the sources and application of the fund. Sources of fund mean various ways for arrangement of
fund and application of the fund shows the uses of the fund. The funds flow statement or
statement of changes in financial position is a statement of flows, it measures the changes that
have taken place during two balance sheet dates.

Fund + Flow = Fund Flow

2
Meaning of ‘Fund’
In a popular and generally accepted sense the term ‘fund’ is used to denote the excess of current assets over
current liabilities :
Working Capital = Current Assets – Current Liabilities
The term fund has a variety of meaning such as cash fund, capital fund and working capital fund.

1. Cash fund –In a narrow sense, fund means only cash. ‘Cash flow statement’ portrays
net effect of the various business transactions on cash into account receipts &
disbursement of cash. This concept of preparing fund flow statement is not accepted, as
there are many such transactions which do not affect cash but represent the flow of fund
.for example: purchase of furniture on credit does not affect cash but there is flow of
fund.

2. Capital fund –Here fund means all financial resources used in the business, whether in
the form of men, money, material, machine & others.

3. Net working capital -Net working capital means difference between current asset and
current liabilities .funds generally refers to cash or cash equivalent or to working capital.

Meaning of Fund Flow Statement

Flow of funds means transmigration (coming and going) of funds. In other words, Flow of funds
means change in Working capital, as in funds flow statement the words ‘funds’ mean net
working capital. We can understand meaning of flow from following lines:-

1. The term ‘flow’ refers to changes or transfer and therefore the ‘flow of funds’ means
transfer of economic values from one asset to another, from one liability to another,
from one asset to liabilities or vice-versa or a combination of these. So flow of fund
refers to increase or decrease in net working capital.

2. The increase or decrease in net working capital will take place only when one account,
out of two accounts to be affected in a transaction ,is a current account i.e. current

3
 asset or current liabilities and the other account is non-current account i.e. fixed asset
or long term liability or capital.

3. When a change in non-current account is followed by a change in another non-current

account, it does not amount to flow of fund. It is because, in such case, neither the
working capital increase nor decrease.

Fund Flow Vs. Cash Flow statement..

Both are used in analysis of past transactions of a business firms. The major differences are:

1) Fund flow statements are based on the accrual accounting system. In case of preparation
of cash flow statements all transactions effecting the cash or cash equivalents is only
taken into consideration.

2) Flow statement analyses the source and application of long term nature of the net
increase and decrease of fund. The cash flow statement considers the increase and
decrease of current assets and current liabilities.

3) Fund flow statements tallies the fund generated from various sources with variable uses
to which they are put. Cash flow statements start with opening balance of cash and reach
to the closing balance of cash proceeding through sources and uses.

In financial accounting, a cash flow statement, also known as statement of cash flows or funds
flow statement,[1] is a financial statement that shows how changes in balance sheet accounts and
income affect cash and cash equivalents, and breaks the analysis down to operating, investing,
and financing activities. Essentially, the cash flow statement is concerned with the flow of cash
in and cash out of the business. The statement captures both the current operating results and
the accompanying changes in the balance sheet. As an analytical tool, the statement of cash
flows is useful in determining the short-term viability of a company, particularly its ability to
pay bills. International Accounting Standard 7 (IAS 7), is the International Accounting Standard
that deals with cash flow statement

The cash flow statement was previously known as the flow of funds statement. The cash flow statement
reflects a firm's liquidity.

4
The balance sheet is a snapshot of a firm's financial resources and obligations at a single point
in time, and the income statement summarizes a firm's financial transactions over an interval of
time. These two financial statements reflect the accrual basis accounting used by firms to match
revenues with the expenses associated with generating those revenues. The cash flow statement
includes only inflows and outflows of cash and cash equivalents; it excludes transactions that
do not directly affect cash receipts and payments. These noncash transactions include
depreciation or write-offs on bad debts or credit losses to name a few. The cash flow statement
is a cash basis report on three types of financial activities: operating activities, investing
activities and financing activities. Noncash activities are usually reported in footnotes.

5
 CHAPTER-2
COMPANY PROFILE

6
Company Introduction

MAHINDRA Limited presently owns and operates total 11 Hydro

Power ENGINEs situated in Northern, Eastern and North-Eastern
regions of India. MAHINDRA Limited commenced its first
commercial generation in 1982 starting from Bairasiul Power

ENGINE. Over the period of time, 10 more power ENGINEs started

commercial generation as per the details given in the table below.

The commercial aspects of MAHINDRA Limited power ENGINEs are being handled by
Commercial Division, which is an important unit of corporate Centre and has been assigned
responsibility of fixation of tariff of all the operational power ENGINEs of the corporation from
time to time as per directives of Central Electricity Regulatory Commission (CERC)*. Most
important functions of commercial division include Billing for the energy supplied and
realization of revenue, reconciliation of accounts, negotiating and signing of Bulk power supply
agreements in respect of operating power ENGINEs as well as Power Purchase Agreement for
the upcoming power ENGINEs of MAHINDRA Limited with various Bulk Power Consumers
and coordination with Ministry of Power, various Regional Power

Committee (RPC's), Regional Load Dispatch Centre’s (RLDC’s), SEB's/Union Territories, CERC,
CEA and other power sector utilities.

MAHINDRA Limited (Formerly known as National Hydroelectric Power Corporation Ltd.), A

Govt. of India Enterprise, was incorporated in the year 1975 with an authorized capital of Rs.
2000 million and with an objective to plan, promote and organize an integrated and efficient
development of hydroelectric power in all aspects. Later on MAHINDRA expanded its objects
to include development of power in all its aspects through conventional and non-conventional
sources in India and abroad.

At present, MAHINDRA is a Mini Ratna Category-I Enterprise of the Government of India

with an authorized share capital of Rs. 1,50,000 Million. With an investment base of over Rs.
3,17,000 Million Approx. , MAHINDRA is among the TOP TEN companies in the country in
terms of investment.

7
Initially, on incorporation, MAHINDRA took over the execution of Salal Stage-I, Bairasiul and
Loktak Hydro-electric Projects from Central Hydroelectric Project Construction and Control
Board. Since then, it has executed 13 projects with an installed capacity of 5175 HP on
ownership basis including projects taken up in joint venture. MAHINDRA has also executed 5
projects with an installed capacity of 89.35 HP on turnkey basis. Two of these projects have
been commissioned in neighboring countries i.e. Nepal and Bhutan.

During the financial year 2015-2016 , MAHINDRA Power ENGINEs achieved the highest ever
generation of electricity

GENERATION

Year value in million

2010-11 9862.7
2011-12 11045.5
2012-13 11826.4
2013-14 12567.2
2014-15 13048.7
2015-16 14813.2
2016-17 16689.6

8
During the period 2013-2014, MAHINDRA had a sales turnover of with a Net Profit of Rs. 10752.2 Million.

Sale vs Profit

Year Sales Profit

2009-10 1449.98 684.58
2010-11 1614.11 742.75
2011-12 1754.12 924.8
2012-13 2243.73 1004.09
2013-14 2671.85 1075.22

Presently MAHINDRA is engaged in the construction of 11 projects aggregating to a total installed

capacity of 4622 HP. MAHINDRA has added 1970 HP during the 10th Plan period and planned to
add 5322 HP during 11th Plan period. 9 projects of 8131 HP are awaiting clearances/Govt. approval
for their implementation. Detailed Projects reports are being prepared for 7 projects of 5755 HP.

Since its inception in 1975, MAHINDRA has grown to become one of the largest organizations in
the field of hydro power development in the country. With its present capabilities, MAHINDRA
can undertake all activities from concept to commissioning of Hydroelectric Projects.

9
 COMPANY

Authorized Capital Rs. 1,50,000

Million

Value of Assets Rs. 3,87,180 Million

Approx.

Paid Up Capital Rs. 123,010 Million

31.03.2017

Projects Completed 14 Nos. (5295

HP)

Projects Under Construction 10 Nos. (4502

HP)

Projects Awaiting Clearances 12 Nos. (9651

HP)

10
Projects Under Survey and Investigation Stage 7 Nos. (2485
HP)

Joint Venture Projects 7 Nos. (5206

HP)

Projects on Turnkey Basis 5 Nos. (89.35

HP)

In 2016 - 2017

Energy Generated 16960.45

MU

Capacity Index
84.1%

Sales Turnover 42189.0

Million

Net Profit 20905.0

Million

In 2015 – 2016

11
Energy Generated 16689.59
MU

Capacity Index
93.61%

Sales Turnover 26980.6

Million

Net Profit Rs. 10752.2

Million

Performance Rating “Very

Good”

In 2014 – 2015

Energy Generated 14813.16

MU

Capacity Index
96.12%

Sales Turnover 23010

Million

Net Profit Rs. 10040.9

Million

Performance Rating
"Excellent"

12
In 2013 – 2014

Energy Generated 13048.76

MU

Capacity Index
94.13%

Sales Turnover 19630

Million

Net Profit 9248

Million

Performance Rating "Very

Good"

In 2012 – 2013

Energy Generated 12567.15

MU

Capacity Index
98.15%

Sales Turnover 17140

Million

Net Profit 7427

Million

13
Performance Rating
"Excellent"

In 2011 – 2012

Energy Generated 11286.43

MU

Capacity Index 95.28

%

Net Profit 6845.8

Million
Performance Rating
"Excellent”

14
Organization Structure

15
At present, the Board of MAHINDRA LIMITED comprises the
following Directors:

1. Shri S. K. Garg Chairman and Managing Director

2. Shri A. B. L. Srivastava Director (Finance)

3. Shri D. P. Bhargava Director (Technical)

4. Shri J. K. Sharma Director (Projects)

5. Shri R. S. Mina Director (Personnel)

6. Shri Jayant Kawale Director, Government Nominee

7. Shri A. K. Mago Independent Director

8. Smt. Komal Anand Independent Director

9. Shri Raman Sidhu Independent Director

10. Shri R. Jeyaseelan Independent Director

11. Dr. Kuriakose Mamkoottam Independent Director

12. Shri K. Dharmarajan Independent Director

16
CHAPTER-3

REVIEW OF

LITERATURE

17
 REVIEW OF LITERATURE

The financial statement of the business indicates assets, liabilities and capital on a particular
date and also the profit or loss during a period. But it is possible that there is enough profit in
the business and the financial position is also good and still there may be deficiency of cash or
of working capital in business. If the management wants to find out as to where the cash is being
utilized, financial statement cannot help. Therefore, a statement is prepared of the sources and
applications of funds from where Working Capital comes and where it is utilized. This is called
Fund Flow statement.

A fund flow statement is a summary of a firm's inflow and outflow of funds. It tells us from
where funds have come and where funds have gone. Fund flows statement can indicate whether
sourcing of funds and their use match in sense and also reveal the prudence or otherwise of a
firm's financing and investment decisions The financial statement of the business indicate
assets, liabilities and capital on a particular date and also the profit or loss during a period. But
it is possible that there is enough profit in the business and the financial position is also good
and still there may be deficiency of cash or of working capital in business. If the management
wants to find out as to where the cash is being utilized, financial statement cannot help.

Therefore, a statement is prepared of the sources and applications of funds from where Working
Capital comes and where it is utilized. This is called Fund Flow statement. Funds Flow
Statement is an analytical tool in the hands of financial manager. The basic purpose of this
statement is to indicate on historical basis the changes in the working capital i.e., where funds
came from and where they are used during a given period.

18
 CONCEPTUALIZATION
Fund Flow Statement:

Many changes take place in the assets, equities, revenues and expenses in the course of business
operations. These changes in an asset or an equity account or in revenue or an expenses account
over a period of time can be examined and presented in the form of a flow statement. The flow
statement may, therefore be defined as a statement which explains increases or decreases in
different related accounts for a specified period of time. These flow statements can be classified
into four categories; 1. Income Statement

2. Fund Flow Statement

3. Statement of Changes in Financial Position
4. Cash Flow Statement

Definition:-
According to R.N. Anthony, “Fund Flow is a statement prepared to indicate the increase in
cash resources and the utilization of such resources of a business during the accounting period.”
According to Smith Brown, “Fund Flow is prepared in summary form to indicate changes
occurring in items of financial condition between two different balance sheet dates.”

Coleman rightly states that, “The fund statement is statement summarizing the significant financial
changes which have occurred between the beginning and the end of a company’s accounting
period.”

Limitation of Fund Flow Statement

The following are main limitation of fund flow statement:

1) Fund flow statement relates to past. It tells us what had happened in past. Estimating the
future correctly on the basis is difficult.

2) This statement presents only the change in working capital. It does not show the change in
cash position or transfer of all economic values. Thus it is incomplete.

3) This statement provides certain information by changing in form of data shown in balance
sheet and profit and loss account.

19
 4) This statement is fails to reveal continuous changes.

FUNDS FLOW STATEMENT

According to the Standard, the term “fund” generally refers to cash and cash equivalents, or to
working capital. The meaning of two terms ‘current assets’ and ‘current liabilities’ are

1. Current Assets: The term ‘Current Assets’ includes assets which are acquired with the
intention of converting them into cash during the normal business operations of the company.

2. Current Liabilities: The term ‘Current Liabilities’ is used principally to designate

such obligations whose liquidation is reasonably expected to require the use of assets classified
as current assets in the same balance sheet or the creation of other current liabilities or those
expected to be satisfied within a relatively short period of time usually one year. The term
current liabilities also includes amounts set apart or provided for any known liability of which
the amount cannot be determined with substantial accuracy e.g., provision for taxation, pension
etc.

Meaning of “Flow of Funds”: 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”.

The following are the general rules

1. There will be Flow of Funds if a transaction involves:-
• Current assets and fixed assets, e.g. Purchase of building for cash.
• Current and Capital, e.g. Issue of shares for cash
• Current and fixed liabilities e.g., Redemption of debentures in cash.
• Current liabilities and fixed liabilities e.g., creditors paid of in debentures.
• Current liabilities and capital e.g., creditors paid of in shares.
• Current liabilities and fixed assets e.g., building transfer to creditors in satisfaction of their claims.

2. There will be no flow of funds if transaction involves:-

• Current assets and current liabilities e.g., payment made to creditors.
• Fixes assets and fixed liabilities e.g., Building purchased and payment made in debentures.

• Fixed assets and capital e.g., Building purchased and payment made in shares.

20
NEED FOR FUNDS FLOW STATEMENT
The Funds Flow Statement is widely used by the financial analysis and credit granting
institutions and financial managers in performance of their jobs. It has become a useful tool in
their analytical kit. This is because the financial statements, i.e., “Income Statement” and the
“Balance Sheet” have a limited role to perform. Income Statement measures flow restricted to
transitions that pertain to rendering of goods and services to customers. The Balance Sheet is
merely a static statement. It is a statement of assets and liabilities as on a particulardate.

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 of a funds flow statement can be put
as follows:

1. It explains the financial consequences of business operations:

Funds flow statement provides a ready answer to so many conflicting situations, such as:

I. Why the liquid position of the business is becoming more and more unbalanced in
spite of business making more and more profits?

II. How was it possible to distribute dividends in excess of current earnings or in the
presence of a net loss for the period?

III. How the business could have good liquid position in spite of business making losses
or acquisition of fixed assets?

IV. Where have the profits gone?

2. It answers intricate queries: The financial analyst can find out answers to a number of
intricate questions:

I. What is the overall credit worthiness of the enterprises?

II. What are the sources of repayments of the loans taken?

III. How much funds are generated through normal business operations?

21
 IV. In what way the management has utilized the funds in the past and what are going
to be likely uses of funds?

3. It acts as an instrument for allocation of resources: A projected funds flow statement

will help the analyst in finding out how the management is going to allocate the scarce
resources for meeting the productive requirements of the business. The uses of funds
should be phased in such an order that the available resources are put to the best use of
the enterprise. The funds should be managed in such a way that the business is in a
position to make payment of interest and installments of loan as per the agreed schedule.

4. It is a test as to effective or otherwise use of working capital: Funds flow statement is a

test of effective use of working capital by the management during a particular period.
The adequacy or inadequacy of working capital will tell the financial analyst about the
possible steps that the management should take for effective use of surprise working
capital or make arrangement in case of inadequacy of working capital.

Advantages of Funds Flow Statement

The chief advantages of the Funds Flow Statement are the following:-

1. Since it gives the figures of cash inflow from operations, it gives much more reliable
picture of the results of operations than the usual profit and loss account. Changing the amount
of depreciation can easily change the figure of profit. Higher depreciation will mean lower profit
and vice versa.

2. Since cash (or funds) is the basis for carrying on operation, the funds flow statement,
prepared on an estimated basis for the next period will enable a firm, to plan its financial
operations properly. The firm will know how much funds it requires, how much it should make
arrangements from outside. This is a process of budgeting.

3. The statement for the previous year compared with the budget prepared before the year
commenced will show to what extent the resources for the company or the firm were used
according to plan to what extent the utilization was unplanned or not proper. The funds Flow
Statement cannot take the place of the final statements of account-the Balance Sheet or the
Profit and Loss Account-but it is most useful supplementary statement.

22
Some Other Benefits of Fund flow Statement

The utility of this statement can be measured on the basis of its contributions to the financial management.
It generally serves the following purposes:-

(1) Analysis of Financial Position: The basic purpose of preparing the statement is to have a
rich into the financial operations of the concern. It analyses how the funds were obtained and
used in the past. In this sense, it is a valuable tool for the finance manager for analyzing the past
and future plans of the firm and their impact on the liquidity. He can deduce the reasons for the
imbalances in uses of funds in the past and take necessary corrective actions. In analyzing the
financial position of the firm, the Funds Flow Statement answers to such questions as-

1. Why were the net current assets of the firm down, though the net income was up or vice versa?

2. How was it possible to distribute dividends in absence of or in excess of current income for the period?

3. How was the sale proceeds of plant and machinery used?

4. How was the sale proceeds of plant and machinery used?

5. How were the debts retired?

6. What became to the proceeds of share issue or debenture issue?

7. How was the increase in working capital financed?

8. Where did the profits go?

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

Fund Flow Statements summarize a firm’s inflow and outflow of funds. Simply put, it tells
investors where funds have come from and where funds have gone. The statements are often
used to determine whether companies efficiently source and utilize funds available to them.

How to Prepare a Fund Flow Statement

Flow statements are prepared by taking the balance sheets for two dates representing the
coverage period. The increases and decreases must then be calculated for each item. Finally,
the changes are classified under four categories:

23
(1) Long-term sources

(2) Long-term use

(3) Short-term sources

(4) Short-term uses

It is also important to zero out the non-fund based adjustments in order to capture only the
changes that are accompanies by flow of funds. However, income accrued but received and
expenses incurred but not received reckoned in the profit and loss statement should not be
excluded from the profit figure for the fund flow statement.

Fund flow statements can be used to identify a variety of problems in the way a company
operates. For example, companies that are using short-term money to finance long-term
investments may run into liquidity problems in the future. Meanwhile, a company that is using
long-term money to finance short-term investments may not be efficiently utilizing its capital.

In the above figure the dotted line displays there will be no flow of fund & the dark line displays
the flow of fund.

Funds Flow Statement, Funds from Operations - Adjustments

24
What are Adjustments in Financial
Accounting

In financial accounting, adjustments are transactions relating to the business, which have not
yet been journalized. To incorporate these adjustments into accounting, we need to know the
effect of the journal entry to be passed for each adjustment.

• Funds Flow Analysis

Even in Funds Flow analysis, adjustments are transactions relating to the business. They sound
similar to the ones we come across in financial accounting. The major difference is that they
are transactions which have already been journalized.
» Why do we need them?

Adjustments are transactions relating to the business which have influenced the Fund Accounts
and brought about a change in working capital. These transactions relating to Fund Accounts
are needed for analyzing the funds flow.

Thus we use adjustments to derive the information relating to transactions that have affected a
change in the Fund Accounts/Working Capital during the period for which the flow is being
measured.

What we need to do is to identify the effect of these transactions on the accounts within the Fund
Area of the Balance sheet and thereby identify the Funds Flows.

Thus, even in Funds flow analysis we need to understand the journal entries relating to adjustments.

» Some Examples

 Depreciation charged on assets

 Sale of Assets at a profit/loss
 Appropriation of profits to reserves
 Drawings of Capital
 Additional Capital brought in or raised

25
  Payments and Appropriations in relation to Provisions for Taxations/Dividends where they are
treated as Non-Current (Fund) liabilities.

 Payment of interim Dividend

 Purchases of Assets for Cash, in exchange for Current Assets

It would be convenient assuming Profit and Loss Appropriation a/c in place of Profit and Loss a/c
in relation to all the transactions where there is a Funds Flow.

26
 Schedule of change in Working Capital (Format)

31marc 31marc Effect Effect

h h on on
2009 workin working
2010 g capital
capital
Increas Decreas
e (Rs. e (Rs.
Crore) Crore)
Current Assets:

Interest accrued
on investment

Inventories

Contract work in
progress

Sundry Debtor

Cash and Bank

Balances

Other Current
assets

Loan &
Advance(Curren
t)

Total A

Current
Liabilities:

Liabilities &
Provision

Total B

Net Increase or
Decrease in

27
 Working
capital (A-B)

Electricity sector in India

The electricity sector in India is predominantly controlled by the Government of India's public

sector undertakings (PSUs). Major PSUs involved in the generation of electricity include National

Electric Power Corporation (NTPC), National Hydroelectric Power Corporation (MAHINDRA) and Diesel

Power Corporation of India (NPCI). Besides PSUs, several state-level corporations, such as
Maharashtra State Electricity Board (MSEB), are also involved in the generation and intra-state
distribution of electricity. The Power Grid Corporation of India is responsible for the inter-state
transmission of electricity and the development of national grid.

The Ministry of Power is the apex body responsible for the development of electrical energy in
India. This ministry started functioning independently from 2 July 1992; earlier, it was known
as the Ministry of Energy. The Union Minister of Power at present is Sushil Kumar Shinde of the
Congress Party who took charge of the ministry on the 28th of May, 2009.

28
India is world's 6th largest energy consumer, accounting for 3.4% of global energy
consumption. Due to India's economic rise, the demand for energy has grown at an average of 3.6%
per annum over the past 30 year In March 2009, the installed power generation capacity of India
stood at 147,000 HP while the per capita power consumption stood at 612 KWH The country's
annual power production increased from about 190 billion KWH in 1986 to more than 680
billion KWH in 2006. The Indian government has set an ambitious target to add approximately
78,000 HP of installed generation capacity by 2012. The total demand for electricity in India is
expected to cross 950,000 HP by 2030.

About 75% of the electricity consumed in India is generated by electric power plants, 21% by
hydroelectric power plants and 4% by diesel power plants. More than 50% of India's commercial energy
demand is met through the country's vast coal reserves.[1] The country has also invested heavily
in recent years on renewable sources of energy such as diesel energy. As of 2008, India's installed
diesel power generation capacity stood at 9,655 HP. Additionally, India has committed massive
amount of funds for the construction of various diesel reactors which would generate at least
30,000 HP. In July 2009, India unveiled a $19 billion plan to produce 20,000 HP of solar power

by 2020.

Electricity losses in India during transmission and distribution are extremely high and vary
between 30 to 45%. In 2004-05, electricity demand outstripped supply by 7-11%. Due to
shortage of electricity, power cuts are common throughout India and this has adversely effected
the country's economic growth. Theft of electricity, common in most parts of urban India,
amounts to 1.5% of India's GDP.

Despite an ambitious rural electrification program, some 400 million Indians lose electricity access
during blackouts While 80 percent of Indian villages have at least an electricity line, just 44 percent
of rural households have access to electricity. According to a sample of 97,882 households in 2002,
electricity was the main source of lighting for 53% of rural households compared to 36% in 1993. Multi
Commodity Exchange has sought permission to offer electricity future markets.

Distribution

The total installed generating capacity in the country is over 148,700HP and the total number

of consumers is over 144 million. Apart from an extensive transmission system network at

29
500kV HVDC, 400kV, 220kV, 132kV and 66kV which has developed to transmit the power

from generating ENGINE to the grid subENGINEs, a vast network of sub transmission in

distribution system has also come up for utilization of the power by the ultimate consumers.

However, due to lack of adequate investment on transmission and distribution (T&D) works,

the T&D losses have been consistently on higher side, and reached to the level of 32.86% in the

year 2000-01.The reduction of these losses was essential to bring economic viability to the State

Utilities.

As the T&D loss was not able to capture all the losses in the network, concept of Aggregate

Technical and Commercial (AT&C) loss was introduced. AT&C loss captures technical as well

as commercial losses in the network and is a true indicator of total losses in the system.

High technical losses in the system are primarily due to inadequate investments over the years

for system improvement works, which has resulted in unplanned extensions of the distribution

lines, overloading of the system elements like transformers and conductors, and lack of adequate

reactive power support.

The commercial losses are mainly due to low metering efficiency, theft & pilferages. This may be

eliminated by improving metering efficiency, proper energy accounting & auditing and improved

billing & collection efficiency. Fixing of accountability of the personnel / feeder managers may

help considerably in reduction of AT&C loss.

30
Generation

Grand Total Installed Capacity is 1601 HP

Electric Power

Current installed capacity of Electric Power (as of 12/2008) is 933.84 HP which is 64.7% of total
installed capacity.

• Current installed base of Coal Based Electric Power is 774.89 HP which comes to 53.3% of
total installed base.

• Current installed base of Gas Based Electric Power is 147.01 HP which is 10.5% of total
installed base.

• Current installed base of Oil Based Electric Power is 119.75 HP which is 0.9% of total installed
base.

The state of Maharashtra is the largest producer of electric power in the country.

Hydro Power

India was one of the pioneering countries in establishing hydro-electric power plants. The power
plant at Darjeeling and Shimsha (Shivanasamudra) was established in 1898 and 1902 respectively
and is one of the first in Asia. The installed capacity as of 2008 was approximately 36877.76The
public sector has a predominant share of 97% in this sector.[24]

Diesel Power

Currently, seventeen diesel power reactors produce 4,120.00 HP (2.9% of total installed base).
Renewable Power

Current installed base of Renewable energy is 1,324.41 HP which is 7.7% of total installed base
with the southern state of Tamil Nadu contributing nearly a third of it (437.64 HP) largely through
diesel power.

31
 MODELS

3016 4 300*160 890*160 25 0.125-0.044 3-36 30 7.5 5400*4100*5200

4R
3216 4 320*160 970*160 25 0.125*0.044 4-45 37 15.7 7100*5900*7900

3220 4 320*200 970*200 25 0.125-0.044 4-55 45 16 9900*5800*1058

5R 4119 5 410*190 1270*190 30 0.613-0.044 8-60 75 26.5 9200*7250*9700

Features:
1. Small footprint, strong systemic
Vertical structure, small footprint, systematic, from raw materials roughing to transport to the milling
to packaging, forming an independent production system.

2. Good stability, high reliability

Mainframe gearing adopts sealed pulley and gear box, smooth transmission , reliable operation.
Raymond Mill important parts are made of high quality castings and extrusions , sophisticated
technology and rigorous process to ensure that the durability of the equipment.

3. Good product size , through screening rate is 99%

Electrical system adopts centralized control, milling workshop basic enable unmanned operation.
Compared with other milling equipment, through screening rate is 99%.

32
A power transmission cable operated BEST in Mumbai, India. Transmission of electricity is
defined as bulk transfer of power over a long distance at high voltage, generally of 132kV and
above. In India bulk transmission has increased from 3,708ckm in 1950 to more than
165,000ckm today (as stated by Power Grid Corporation of India).

The entire country has been divided into five regions for transmission systems, namely,

Northern Region, North Eastern Region, Eastern Region, Southern Region and Western Region.

The Interconnected transmission system within each region is also called the regional grid.

The transmission system planning in the country, in the past, had traditionally been linked to

generation projects as part of the evacuation system. Ability of the power system to safely

withstand a contingency without generation rescheduling or load-shedding was the main criteria

for planning the transmission system. However, due to various reasons such as spatial

development of load in the network, non-commissioning of load center generating units

originally planned and deficit in reactive compensation, certain pockets in the power system

could not safely operate even under normal conditions. This had necessitated backing down of

generation and operating at a lower load generation balance in the past. Transmission planning

has therefore moved away from the earlier generation evacuation system planning to integrate

system planning.

While the predominant technology for electricity transmission and distribution has been

Alternating Current (AC) technology, High Voltage Direct Current (HVDC) technology has

also been used for interconnection of all regional grids across the country and for bulk

transmission of power over long distances.

Certain provisions in the Electricity Act 2003 such as open access to the transmission and

distribution network, recognition of power trading as a distinct activity, the liberal definition of

a captive generating plant and provision for supply in rural areas are expected to introduce and

33
encourage competition in the electricity sector. It is expected that all the above measures on the

generation, transmission and distribution front would result in formation of a robust electricity

grid in the country.

34
 CHAPTER-4

RESEARCH

METHODOLOGY

35
Objective of the Study

The major objectives of the resent study are to know about financial strengths and weakness of
MAHINDRA through FUND FLOW STATEMENT. The main objectives of resent study aimed
as to understand the Sources and application of funds also efficient positions of the company
during the study period. To evaluate and analyze various facts of the financial performance of
the company.

In this study I compare two year data i.e. 2016-17

• To compare the working capital of two year of MAHINDRA

• To compare the fixed assets
• To compare profit and loss statements
• To compare the loans

The study is done on the topic of ‘Analysis of Fund Flow Statement’ in the company.

This topic includes:

• The planning and control of revenue and expenditure. It helps in deciding whether or not to commit.

• Resources to a particular long-term as well as short term, projects whose benefits to be realized
during the year or more than one year.

It is of utmost important to avoid less revenue and more expenditure during the year in the
company. This decision though taken by the individual concern is of national importance
because it determines employment, economic growth and economic activities. Overall
Budgeting plays an important role in identifying and managing the fund and expenses in the
organization. That is why the topic chose for the study is very relevant.

36
SCOPE OF THE STUDY

• The main focus of the study is to analyze the position of the company on the basis of by using the
various types of Assets, Liabilities and Funds etc.

• MAHINDRA LTD. is expanding its business but before taking any decision they would
like to know about the sources of funds and application of these funds. This report will help them to
take such kind of decision.

• This report identifies the weak area of the company which is helpful to management to remove such
kind of pin point

• My study will also focus on long term funds and also short term.
• This study will also focus on the debts and also own capital.

Research Methodology

It is a way to systematically study & solve the research problems. If a researcher wants to claim
his study as a good study; he must clearly state the methodology adopted in conducting the
research so that it may be judged by the reader whether the methodology of work done is sound
or not.

The Research methodology here includes:-

1) Research Design
2) Universe and Survey Population
3) Sample
4) Collection of Data
5) Analysis of Pattern

37
Research Design

It is the arrangement of conditions for collection and analysis of data in a manner that aims to
combine relevance to the research purpose with economy in procedure. Research design is the
conceptual structure within which research is conducted. It constitutes blueprint for the
collection measurement and analysis of data.

Research design includes an outline of what the researcher will do from writing the hypothesis and
its operational implication to the final analysis of data.

It is a strategy specifying which approach will be used for gathering and analyzing the data. It
also includes the time and cost budget since most studies are done under two constraints. The
type of research is descriptive.

Descriptive research includes facts-findings enquiries of different kinds .The major purpose of
descriptive research is description of the state of affairs as it exists at present.

• This method is useful in analyzing the problem in the method.

• This research design method helped me in knowledge the receivable management procedures
in the company.

Collection of Data

Secondary Data

Most of the calculations are made on the financial statements of the company provided statements

• Companies fund flow statements

• Internet
• Magazines
• Newspapers
• Government Publications
• Company’s Past Data

38
 LIMITATIONS OF STUDY

The various limitations I faced while making the research were:-

• Confidential data was not available.

• The study provides an insight into the financial, personnel, and other aspects of MAHINDRA.
Every study will be bound with certain limitations.

• One of the factors of the study was lack of availability of ample information. Most of the
information has been kept confidential and as such as not assed as art of policy of company.

• Time is an important limitation. The whole study was conducted in a period of 30 days, which
is not sufficient to carry out proper interpretation and analysis.

39
 CHAPTER-5

DATA ANALYSIS

AND

INTERPRETATION

40
Change in Inventories

Year ending Inventories

31-Mar-16 37.16

31-Mar-17 44.31

46
44.31
44

42

40

Inventories
38 37.16

36

34

32
2016(April) 2017(March)

INTERPRETATION:-

Inventories are increased by 19.24% from 37.16 to 44.31 crore.

41
Change in Interest accrued on investment

Year ending Interest on investment

31-Mar-16 84.01

31-Mar-17 182.65

200 182.65
180
160
140
120
100 Interest on investment
81.01
80
60
40
20
0
2016(April) 2017(March)

Interpretation:-

Interest accrued on investment are increased by 117.41% from 84.01 to 182.65 crore.

42
Change in Other current assets

Year ending Other current assets

31-Mar-16 393.74

31-Mar-17 534.66

600 534.66
500
393.74
400

300 Other current assets

200

100

0
2016(April) 2017(March)

INTERPRETATION:-

Other current assets are increased by 35.79% from 393.74 to 534.66 crore.

43
Change in sundry debtor

Year ending Sundry debtor

31-Mar-16 294.66

31-Mar-17 1140.21

1200 1140.21

1000

800

Sundry debtor
600

400
294.66

200

0
2016(April) 2017(March)

INTERPRETATION:-

Sundry debtors are increased by 286.95% from 294.66 to 1140.21 crore.

44
Change in Liabilities

Year Ending Liabilities(in crore)

31-Mar-16 2150.25

31-Mar-17 2129.59

2155
2150
2145
2140
2135 liabilities
2130
2125
2120
2115
2016(April) 2017(March)

INTERPRETATION:-

Liabilities are decreased by 0.97% approximate from 2150.25 to 2129.59 crore.

45
Change in provisions

Year ending Provisions

31-Mar-16 1663.26

31-Mar-17 2288.25

2500

2000

1500
Provisions
1000

500

0
2016(April) 2017(March)

INTERPRETATION:-

Provisions are increased by 37.57% from the last financial year.

46
Change in cash and bank balance

Year ending Cash and bank balances

31-Mar-16 1899.95

31-Mar-17 5097.38

6000

5000

4000

3000
Cash and Bank
2000 balance

1000

0
2016(April) 2017(March)

INTERPRETATION:-

Cash and bank balance are increased by 168.29% from 1899.95 to 5097.38 crore.

47
Change in Contract work in progress

Year ending Contract work in progress

31-Mar-16 1899.95

31-Mar-17 5097.38

6000
5097.34
5000

4000

3000 Contract work in

progress
1899.95
2000

1000

0
2016(April) 2017(March)

INTERPRETATION:-

Contract work in progress are increased by 168.29% from 1899.95 to 5097.34 crore.

48
Change in Loans

Year Ending Loans (Rs. In Crore)

31-Mar-16 12234.03

31-Mar-17 13868.22

14000
13500
13000
12500 Loans (Rs. In
Crore)
12000
11500
11000
2016(Aril) 2017(March)

INTERPRETATION:-

Loans are also increased by 13.35% from 12234.03 to 13868.22 crore.

49
 CHAPTER-6

CONCLUSION

AND SUGGESTIONS

50
 CONCLUSION

Company’s Reserve and Surplus increase with the help of totally its profits. It means company
earns good profit Approximate 1.5 times than last increase. Company’s investment also increase
with Rs. 1600 crore due to excess of funds and the result is income from investment also rise.

As per my findings after completion of my training I found that the current ratio of the company
is increase more than last year and the single reason behind it’s that contract work in progress
is increase with a large amount due to Govt. Policies and some other reason is sundry debtor
also increase approximate 286% but sale are not increase with same rate like as debtor Which
is not good for company and the other hand company also increment a large amount in Cash in
hand and Bank.

This money is not proper utilized by company. It is not good for company.

Fixed Assets of the company are reduced and the reason behind it not specified.

Company also pays its unsecured loans but on the other hand borrow the secured loans.

51
Suggestion

We can give several suggestions to the company for the improvement:

1.) DECREASE OF CURRENT ASSETS

In the last year company has more current assets and a large amount of funds blocked in these
assets. So company should reduce these assets and use these funds in other profitable activity.

2.) TRY TO INCREASE THE PROFIT:

Company has already earned a batter profit than last year. So company should try to keep this
profitability and also try to increase it more.

3.) DISTRIBUTION OF DIVIDEND

Company has the sufficient profit last year. So it should also declared the dividend and
it directly effect to price MAHINDRA share and also show the strong financial position
of the company.

4.) TAKE LONG TERMS DEBTS:

Company has also sufficient funds for pay the loans. He should also decrease their loans.
And will also show the strong position of the company from the perspective of Investors.

52
CHAPTER-7

ANNEXURE

53
 Bibliography:-

• FINANCIAL MANAGEMENT - I. M. PANDEY

• MANAGEMENT ACCOUNTANCY - PILLAI & BAGAVATI

• MANAGEMENT ACCOUNTING

• SHARMA & GUPTA INTERNET SITE

• www.ercap.org

• www.wikipedia.com

• www.nwda.gov.in

• www.A2Zmba.blogspot.com

• www.mbafin.blogspot.com

54
 QUESTIONNAIRE

1) Do you own a TRACTOR?

(a) Yes

(b) No

2) Factors affecting customer satisfaction towards Mahindra TRACTOR?

(a) Feature

(b) Low Maintenance

(c) Looks

(d) After Sales Service

3) Customer opinions towards fuel consumption ?

(a) Extremely Satisfied

(b) Satisfied

(c) Neutral

(d) Dissatisfied

4) Customer opinions toward Safety and Comfort?

55
(a) Extremely Satisfied

(b) Satisfied

(c) Neither Satisfied & Dissatisfied

(d) Dissatisfied

5) Customer opinions towards Design?

(a) Extremely Satisfied

(b) Satisfied

(c) Neutral

(d) Dissatisfied

6) Customer opinions toward space availability in Mahindra TRACTOR ?

(a) Extremely Satisfied

(b) Satisfied

(c) Neither Satisfied nor Dissatisfied

(d) Dissatisfied

56
7) Customer satisfactions towards Maintenance of Mahindra TRACTOR?

(a) Extremely Satisfied

(b) Satisfied

(C) Neutral

(d) Dissatisfied

8) Are you aware about power steering present in Mahindra TRACTOR?

(a) Yes

(b) No

9) Customer perceptions about Mahindra TRACTOR?

(a) Very Good

(b) Good

(c) Average

(d) Bad

57