A

PROJECT REPORT

On

“Study of Cash Flow of Kirloskar Brothers Ltd. Dewas”

Submitted by

Dipti Maheshwari

In partial fulfillment for the award of the degree of MBA

inFinance Management

Guided by

Internal Guide External GuideProf. Kshemendra Arya Mr. M. K. Jain

ACKNOWLEDGEMENT

I wish to express my sincere gratitude to “KIRLOSKAR BROTHERS LIMITED DEWAS” for providing me an opportunity to do my project works on “Ratio analysis & concept of sap”. I got the opportunity to expose myself to real world of business where we can implement the theoretical knowledge.

I sincerely thank to my project guide Prof. Kshemen Arya sir, Department of Management Mahakal institute of technology & science College, Ujjain for guidance and encouragement in carrying out this project work.

My special thanks to Mr. M.K.Jain, MANAGER (ACCOUNTS) of the company. For their kind Co-operation to the completion of my project works. Last but not least I wish to avail myself of this opportunity, express a sense of gratitude and love to my friends and my beloved parents for their manual support, strength, and help for everything.

I also wish to express my gratitude to the officials and other staff members of “KIRLOSKAR BROTHERS LIMITED DEWAS” who rendered their help during the period of my project work.

It is very difficult to understand each &every aspect of the subject in a short span of few days. But I have tried my best to understand the subject and tried to cover the relevant information in report. I hope that the things, which I have included in my report, are appropriate to the subject.

Once again I repeat my sincere thanks to the dignitaries name for there kind cooperation.

DIPTI MAHESHWARI Date: (MBA final year) MITS, UJJAIN (M.P.)

2

PREFACE

To make aware of life of business, every MBA student has to undergo for a summer training program where he has actual expose of real work situation of business under the supervision of professional managers. This report has-been prepared as a part of my summer training at “KIRLOSKAR BROTHERS LIMITED, DEWAS”.

Today in this highly competitive market each and every organization requires a very sound financial capital so as to invest in new ventures as well as launching of new product and also to invest more in research and development department as well as to make happy the shareholders. For the overall functioning an organisation requires capital that is finance. The meaning of finance refers for different works in same organisation. Like for starting a new work or to increase a product line needs finance. As the plans in any organisations are made for above-mentioned works directly affected part of finance is working capital of organisation.

The scope of this study on the topic working capital management reflects the different approaches for raising the fund for the smooth functioning of any organisation to raising fund and especially the working capital on credit.I sincerely hope this report will fulfil the objective and expectation of the requirements of the curriculum for summer training report.

DIPTI MAHESHWARI (MBA Final Year) MITS, UJJAIN (M.P.)

3

DECLARATION

I Dipti Maheshwari, Student of MBA III rd sem. 2009-2010 Studying at MAHAKAL INSTITUTE OF TECHNOLOGY & MANAGEMENT Ujjain, declare that the project work entitled “Cash Flow Statement of Kirloskar Brothers Ltd. Dewas” Was carried by me in the partial fulfillment of MBA program under the University of Ujjain.

This project was undertaken as a part of academic curriculum according to the university rules and norms and it has not commercial interest and motive. It is my original work. It is not submitted to any other organization for any other purpose.

Date: -

Place:-Ujjain

4

CONTENT

KBL HEAD OFFICE 7 KBL DEWAS PLANT LAYOUT 8 KBL LOGO 9

A. INTRODUCTION

o Introduction of KBL 11o General Profile 12o Corporate Profile 15o Quality Practices 19o SBG Review 22o KBL Journey 27o Organization Relationship 33o Vision ,Mission ,Services of KBL 35o Material Planning &Control 36o Plant Location 37

B. RESEARCH METHEDOLOGY

o Meaning 39o Research Process 40o Criteria of Research Design 41

C. CASH FLOW STATEMENT

o Meaning 43o Stages 45o Operating Activities 46o Investing Activities 47o Financing Activities 48o Purpose of cash flow statement 49

5

o Balance Sheet 50o P&L Account 51 o Financial Result 52

D. SWOT ANALYSIS & INTERPRETATION

o SWOT Analysis 54o Interpretation 58

E. SUGGETIONS & CONCLUSION 61 F. REFERANCES 62

6

(KBL PUNE Head office)

7

8

9

KBL’S LOGO

10

INTRODUCTION

11

KIRLOSKAR BROTHERS LIMITED

INTRODUCTION

KBL is the large and established distribution network. Years of established -1888

Years of Incorporation -1920

Main product -Pumps

All plants ISO 9001 Certified and some ISO 14001 & OHSAS 18001 Certified. Manufacturing plant at DEWAS years of established 1962.

KBL Strengths - Human Resources- Foundry- Machine shop- Design, Research and Development- Assembly and Testing- System

Facilities - Manufacturing pattern shop- Foundry- Machining Testing- Quality Assurance - Project management

Manufacturing Plant at Dewas Produces

- Industrial Pumps- Agriculture Pumps- Domestic Pumps

12

General Profile

Works: Kirloskarvadi, Dewas, Shirval, Kondapuri

Registered & Corporate Office: Udyog Bhavan, Tilak Road Pune: - 411002 (M.H.) Email: Kbii@kbl.co.in

Chairman & managing Director: Sanjay Kirloskar

Director (Whole Time): R.K.Shrivastava J.P.SapreDirectors: Company secretary: G.P.Kulkarni

Vice Chairman: Gautam Kulkarni

Auditor: M/S P.G. Bhagwat Bankers: -Bank of India

-Canara Bank -HDFC Bank

13

Functional Departments

The management of planning, organizing, motivating, controlling are exercised through the

following departments.

Design and Development and central planning.

Foundry.

Machine Shop.

Assembly.

Production Services. (Industrial engineering, Quality and Reliability)

Vendor Development.

Procurement and Subcontract.

Material Planning and Stores.

Marketing.

Finance and Accounts.

Personal and Administrative or HR Departments.

KBL is the world's leading manufacturer and supplier of Domestic, Industrial,

Agriculture, Standard industrial Pumps and Engineered Pumps having state of the art

manufacturing plants across India.

Domestic and Agricultural Pump range includes Domestic Monobloc Pump,

End Suction Pump, Bore well Submersible Pump, Open well Submersible

Pump

14

Standard Industrial Pump range includes End Suction Pump, Horizontal

Multistage Pump, Vertical Multistage Pump, Inline Monobloc Pump, Process

Pump, Submersible Sewage Pump, Dewatering Pump, Solid Handling Non

Clog Pump and Vacuum Pump

Customized and Engineered Pump range includes Axially Split Casing Pump,

Vertical Mixed and Axial Flow Pump, Metallic Volute Pump, Concrete Volute

Pump, Condensate Extraction Pump, Canned Motor Pump.

Induction Motors include Single Phase Motors and Three Phase Motors

15

Corporate profile

KBL Established in 1888 and incorporated in 1920, Kirloskar Brothers Limited (KBL) is the

flagship company of the $1.2 billion Kirloskar group. The core businesses of KBL are large

infrastructure projects (Water Supply, Power Plants, and Irrigation), Project and Engineered

Pumps, Industrial Pumps, Agriculture and Domestic Pumps, Valves and Hydro turbines.

KBL Sales in 2009-2010 exceeded US $ 590 Million with a market capitalization of more

than US $ 650 million.

KBL is India’s largest manufacturer and exporter of pumps and also the largest

infrastructure pumping project contractor in Asia. To its credit KBL has created the world’s

largest pumping scheme which will irrigate more than two million hectares of land and

supply water to 4620 towns and villages in the state of Gujarat in India (Sardar Sarovar

Narmada Nigam Scheme). KBL also commissioned a water pumping scheme called The

Devadula Scheme in Warangal a town in Andhra Pradesh with the world’s second highest

head, supplying water to 4 drought prone socio-economically backward districts which will

bring about a green revolution there.

KBL is one of the world’s leaders in pump technology.

KBL is one of the three manufacturers in the world who have manufactured and installed

200 kW Canned motor pumps for nuclear application.

KBL is the first company to introduce Concrete Volute Pumps in India.

Our subsidiary company in England, SPP Pumps Limited (Acquired in 2003) is the

undisputed leader in the Fire-fighting and Water Supply segments in Europe and the Middle

East. They have recently launched lowest life cycle cost pumps in the UK successfully with

large players like Thames Water preferring these energy efficient products. Together KBL

and SPP represent the world’s largest fire fighting pump business for onshore and offshore

applications.

16

Backward Integration

We are backward integrated to foundries and iron ore mines and offer all materials of

constructions such as cast iron, alloy steels, non-ferrous metals, Duplex and Super Duplex to

name a few.

Forward Integration

We are also forward integrated to water treatment, waste-water treatment, pipelines and also

the civil construction required in handling EPC contracts.

This has been done through –

The acquisition of Gondwana Engineers Limited (a leader in Water and Sewage

Treatment)

The acquisition of ABAN Constructions (now Kirloskar Constructions and

Engineers Limited), the flagship company of the Chennai based ABAN group.

Kirloskar Corrocoat Limited is another subsidiary of KBL which produces glass

flake coating thus increasing the efficiency of pumps as well as of pipes and

ensuring no corrosion. This is a patented product developed by Corrocoat, UK.

KBL’s wide range of centrifugal pumps i.e. end suction, split case, submersible, vertical

turbine, self priming, multistage etc. cater to various applications including irrigation, water

supply, sewage, drainage, fire fighting, booster services, cooling towers, sugar-industries,

paper industries, chemical and fertilizer plants, power generation and refinery and

petrochemical sectors.

KBL’s wide range of centrifugal pumps i.e. end suction, split case, submersible, vertical

turbine, self priming, multistage etc. cater to various applications including irrigation, water

supply, sewage, drainage, fire fighting, booster services, cooling towers, sugar-industries,

17

paper industries, chemical and fertilizer plants, power generation and refinery and

petrochemical sectors.

The key differentiation areas at KBL

KBL has set up a well equipped Projects Division to implement pumping projects on a

single source responsibility basis, having following strengths:

A wide range of products and packages manufactured under one roof

Capability to design and execute techno-economic systems

Efficient project management through PERT/CPM soft ware

Sales and Service Network.

Advantage India

Easy cultural compatibility with the West and the East

Widespread English proficiency

Corporate Governance Norms and regulatory mechanisms world class

Many Kirloskar Group companies, including KBL are listed in Mumbai and National

Stock Exchange

Exchange Relationship of Indian Rupee in forex market is market driven

Indian private sector is fast placed, professional and compared to best in the world

Better product engineering capabilities due to high intensity of technology transfer

and collaborations since 1950’s

India trusted for “Knowledge based manufacturing” based on better competence in

flexible manufacturing process, quality, research and development.

18

Balance of Cost v/s Quality, Indian manufacturers are increasingly recognized for

reasonable cost, but with high quality.

Software and service industry is well developed and at world class levels.

People policy

We believe in achieving organizational excellence by developing human assets and

following a “professional” approach to leverage the potential of our people to accomplish

the organization’s Mission in the dynamic, volatile and competitive business scenario.

To be the preferred choice of customers and our people, we are committed to:

Attain organizational excellence by benchmarking best practices, developing and

utilizing the true potential of our human capital and providing opportunities for

growth and enrichment.

Institutionalize Recognition and Reward systems to foster performance based

culture.

Create a value based organization by adopting ethical people practices.

Attract and nurture talent and retain knowledge for organizational effectiveness.

Creating an ambience for enhancing creativity, learning and teamwork.

Align business priorities with the aspirations of our people leading to development

of empowered, responsive, motivated and competent human capital.

Build and enhance competencies through holistic learning and providing

challenging opportunities.

Establish and deploy communication processes at all levels for achievement of

common objectives.

Strengthen customer orientation both internally and externally.

Create a culture of fairness, trust, equal opportunities and individual dignity.

Protect health & safety of our people and environment at large and enhance the

quality of life of employees and their families.

Go beyond statutory requirements.

19

Discharge Corporate Social Responsibility with a focus on health, education and

community welfare.

QUALITY PRACTICES

We are committed towards TQM (TOTAL QUALITY MANAGEMENT)

All our works are ISO 9001 Certified

1. ISO 9001 2008-Kirloskarvadi

2. ISO 9001:2008 (Kondhapuri)

3. ISO 9001:2008 (Shirval & Dewas)

4. ISO 9001 2008-Projects

5.

Some of our works are ISO 14001 Certified

1. ISO 14001 (Kirloskarvadi)

2. ISO 14001 (Shirwal & Dewas)

3. ISO 14001 (Kondhapuri)

Some of our works are OHSAS 18001 Certified

1. OHSAS 18001 (Shirwal & Dewas)

20

2. OHSAS 18001 (Kirloskarvadi)

3. OHSAS 18001 (Kondhapuri)

CORPORATE SOCIAL RESPONSIBILITY (CSR)

Man is a social animal – a truism we all accept. If we are social, then, as a corollary, we are

bound to affect and create social reality – we cannot do otherwise. Therefore, we have a

responsibility to the social order we are creating and perpetuating.... For that responsibility is

no different from the responsibility to ourselves!

Corporate Social Responsibility (CSR) is thus, not an after thought of an ‘enlightened

person’. It is a fundamental part of being true to what one is. We care about things, not out

of largesse, but because we care about ourselves.

What we do is nothing but a drop in the ocean; but if we don’t do it, the ocean would be a

drop less. This is the very essence of the Corporate Social Responsibility initiatives

undertaken by KBL – be they in the field of Health, Education, Disaster Management,

Culture or Sports. These initiatives are implemented by our employees, or by agencies in the

KBL fold, like Vikas Charitable Trust, Sou. Radhabai Kirloskar Maternity Trust, and

external NGO’s or, in collaboration with other corporate entities.

21

/ /

22

23

SBG REVIEW

STRATEGIC BUSINESSGROUP REVIEW

24

MANAGEMENT REVIEW

DEPARTMENTAL MEETING

(Department level cell/ function owner)

WORKERS MEETING

At shop floor (Workman level-workman)

UNION MEETING

(Union leaders level –union

Representative)

CROSS FUNCTONAL

MEETING (Cross function

level cell/ function owner)

25

INDUSTRIAL PUMPS LEAFLET

Kirloskar Mixed Flow Non-Clog Pumps - Type MF / MF-E / MF-B / MF-V

Kirloskar Split Case Pumps - Type iHT

Kirloskar Fire Fighting Pumps and Packages (Handouts)

Kirloskar Fire Fighting Pumps and Packages

KBL has been supplying Fire Protection Pumps and Packages for many decades.

The most important aspect of its fire protection package is the reliability of the fire

pumping system to ensure adequate water supply at required pressure at

emergency conditions.

Kirloskar Submersible Sewage Pumps - Type NS

these are single stage, single suction pumps with overhung non - clogging

impeller.

Kirloskar Canned Motor Pumps - Type KCS / CAN

Canned Motor Pump is a centrifugal pump with pump and hermetically sealed

electric motor mounted on single shaft.

Kirloskar Horizontal Axaially Split Casing Pumps - Type UP / UPL / UPH

These are horizontal axially split casing, single stage double suction or single

suction, single volute or double volute type pumps with horizontal shaft.

Kirloskar Process Pumps - Type KPD / KPD-QF

KPD / KPD-QF pumps are as per DIN 24256 and ISO 2858 and generally

conform to API 610 (7th Edition). The design is of back pull out type. Large

variety of models are available to operate at 1450 rpm and 2900 rpm at 50 Hz and

1750 rpm and 3500 rpm at 60 Hz.

26

Kirloskar End Suction Pumps - Type DB

these are single stage, single suction, horizontal shaft type pumps. They are made

in accordance with DIN 24255. DBHS are similar to DB pumps but with heavy

duty bearings. Models are available to operate at 1450 rpm and 2900 rpm at 50 Hz

and 1750 rpm and 3500 rpm at 60 Hz.

Kirloskar Solid Handling Non Clog Pumps -Type SHM/SHS/SHV/SHVT

SHM are horizontal non clog pumps having single stage, single suction with back

pull out type design. SHS are vertical non clog pumps for wet pit applications.

SHV are vertical non clog pumps for dry pit applications in vertical orientation to

be given by vertical flange mounted motor which is directly coupled.

Kirloskar Multistage Pumps - Type MN/MHA/MLA

these are single suction, horizontal shaft, high pressure multistage pumps,

consisting of ring section diffuser casings bolted between suction and delivery

casing. Various models are available to operate at 1450 rpm and 2900 rpm at 50

Hz and 1750 rpm and 3500 rpm at 60 Hz depending upon model.

Kirloskar Horizontal Axially Split Casing Pumps - Type DSM

These are single suction, horizontal shaft, high pressure multistage pumps,

consisting of ring section diffuser casings bolted between suction and delivery

casing. Various models are available to operate at 1450 rpm and 2900 rpm at 50

Hz and 1750 rpm and 3500 rpm at 60 Hz depending upon model.

Kirloskar Horizontal Axially Split Casing Pumps - Type SCT

These are horizontal axially split casing, single stage, double suction or single

suction pumps with horizontal shaft and detachable stuffing box called Insert.

Variety of models are available to operate at 50 Hz and at 60 Hz.

Kirloskar Multistage Pumps - Type RKB

these pumps consist of a number of ring section diffuser casings bolted between

suction and delivery casing. Various models are available to operate at 1450 rpm

27

and 2900 rpm at 50 Hz and 1750 rpm and 3500 rpm at 60 Hz at 60 Hz power

supply frequency.

Kirloskar Vertical Multistage In Line Pumps - Type IL

These are in line, vertical multistage, high pressure, centrifugal pumps in ring

section design with wetted parts in stainless steel as a standard.

MERGERS & ACQUISITIONS

KBL acquires 100% equity capital of Gondwana Engineers Pvt. Ltd.Monday, 10

September 2007

KBL takes over the management of The Kolhapur Steel Limited. Monday, 10

September 2007

KBL acquires 100% equity capital in Aban Constructions Pvt. Ltd. (Now known as

Kirloskar Constructions and Engineers Limited) Friday, 29 September 2006

KBL acquires a pump company in UK Saturday, 08 November 2003

28

KBL’s Journey

KIRLOSKAR BROTHERS’S JOURNEY AT 1960-2007

29

MARKET SERVED

30

MARKETING

Points cover under this are:-

1. Area of operation

2. Competitors

3. Customers

4. Market share

5. Advertisement & sales promotion.

Main Competitors:

1. In Agriculture sector- CRI, Taxmo, Lubi.

2. In Domestic sector - Crompton, Sharp and CRI.

3. In Industrial sector - Stork, Beacon, Grundfos.

Customers:

1. In Agriculture sector - Farmers

2. In Domestic sector - Domestic users, Builders, Contractors.

3. In Industrial sector - Industries, Contractors.

Market Share:

1. In Agriculture sector –

YEAR(2006-2007) YEAR(2007-2008)

31

2. In Domestic sector -

YEAR(2006-2007) YEAR(2007-2008)

3. In Industrial sector -

YEAR(2006-2007) YEAR(2007-2008)

Network

FINANCE

Points covered under this are-

Regulatory Requirement

Cost accounting system

Regulatory Requirement:

KBL proactively with all the Regulatory requirement related to work, health, safety,

social security etc. the applicable acts are given below-KBL are the first pump company in

India to be accredited with ISO-14001 EMS.(EMS like vermin-bed, maintaining

greenery).and most of the products are ISI marked.

Cost accounting system:

KBL’S All the Accounting is done through SAP system. A system calculates and

provides cost of production. The system calculates cost and desired below-

1. Material Cost

2. Labor Cost

3. Overheads

Material Cost:

In a SAP system purchases register not prepared. The material consumption is

calculated by back flash method. At the end of the period the inventory value is calculated

32

based on this the purchase are calculated. Any differences in value/consumption in system as

‘material price variance’.

Labor Cost:

Department wise records of wages are maintained. These records used for calculating

department wise direct.

Overheads:

Expenses other than direct material and direct wages are analysis. These records are

basis for apportionment of direct expenses to various departments is fixed by considering the

nature of expenses. Other expenses are classified into manufacturing, selling and

administration overheads.

INTERNAL CONTROL SYSTEM

The company has adequate internal control system. Regular Audits are being conducted to

examine the efficiency and adequacy of internal controls. Professional firm’s auditors review

and evaluate the internal controls, which directs management to have appropriate actions.

33

34

ORGANISATIONAL RELATIONSHIP

35

CHAIRMAN&MANAGING DIRECTOR

EXECUTIVE

EXECUTIVE

VP(CHRM&C)

VP (CIC)

VP(FINANCE)

MGT. REPRE SENTIVE

VP(CFA&PA)

VP(CID)

HRM&C

FINANCE &A/C

UTILITIESQUALITY SYSTEM

SBG HEAD ADPBG

FOUNDER

MANUFACTURING

PRODUCTDEVELOPMENT

36

VISION,MISSION&SERVICES OFFERED BY KBL

Vision:

Kirloskar Brothers Limited shall be amongst the first five pump

companies in the world, by becoming the preferred choice of Customers as well

as Employees.

Mission:

Kirloskar Brothers Limited shall be known globally as a reliable,

innovative and cost effective solution provider in Hydraulic Machines &

Systems and in Water Business.

Services Offered:

Health

Educational

Social

Environmental

Employee Welfare

Addiction

Emergency Situations- Like Flood, Fire

Others

At KBL offering – products and services of the best quality; confidence in

their value; and confidence that they can deliver what we say they can.

The ‘Kirloskar’brand spells affordability, adaptability and appropriateness

37

that everyone at KBL is oriented to; along with the tag line – Enriching

Lives.

38

PURCHASE

MATERIAL REQ. PLAN BASIS

THROUGH SYSTEM

ACTUAL REQUIRMENT

PURCHASE ORDER

FOLLOW UP

RECEIPT

COUNTING

INSPECTION

STAKING

RE ORDER POINT BASIS

SYSTEM

BASED ON CONSUMPTION

MATERIAL PLANNING & CONTROL

39

Plant Location

1. Kirloskarvadi

Kirloskarvadi- 416308

Dist. Sangli

Tel no (02346) 222301-05

2. Dewas

Opposite railway station,

Ujjain Road, Dewas-455001.

Tel no (7272)227402/227341

3. Shrival

Gat no. 117, Shindevadi

Tal.Khanala,

Dist.Satara-412801

Tel no(02169)244360/244370

4. Khonhapuri

Gat no.252/2+254/2

Khonhapuri,

Tal Shirur,Dist.Pune412208

Tel no (02137)270217/270116

40

RESEARCH METHDOLOGY

41

RESEARCH METHDOLOGY

Research can be defined as the search for knowledge or any systematic investigation to

establish facts. The primary purpose for applied research (as opposed to basic research) is

discovering, interpreting, and the development of methods and systems for the advancement

of human knowledge on a wide variety of scientific matters of our world and the universe.

Scientific research relies on the application of the scientific method, a harnessing of

curiosity. This research provides scientific information and theories for the explanation of

the nature and the properties of the world around us. It makes practical applications possible.

Scientific research is funded by public authorities, by charitable organizations and by private

groups, including many companies.

Artistic research, also seen as 'practice-based research', can take form when creative works

are considered both the research and the object of research itself. It is the debatable body of

thought which offers an alternative to purely scientific methods in research in its search for

knowledge and truth.

Historical research is embodied in the scientific method. The historical method comprises

the techniques and guidelines by which historians use historical sources and other evidence

to research and then to write history.

RESEARCH PROCESS

Generally, research is understood to follow a certain structural process. Though step order

may vary depending on the subject matter and researcher, the following steps are usually

part of most formal research, both basic and applied:

42

Formation of the topic

Hypothesis

Conceptual definitions

Operational definition

Gathering of data

Analysis of data

Test, revising of hypothesis `

Conclusion, iteration if necessary

Types of Research

The goal of the research process is to produce new knowledge, which takes three main forms

(although, as previously discussed, the boundaries between them may be obscure.):

Exploratory research, which structures and identifies new problems

Constructive research, which develops solutions to a problem

Empirical research, which tests the feasibility of a solution using empirical

evidence.

Research can also fall into two distinct types:

Primary research (collection of data that does not already exist)

Secondary research (summary, collation and/or synthesis of existing research)

In social sciences and later in other disciplines, the following two research methods

can be applied, depending on the properties of the subject matter and on the

objective of the research:

Qualitative research (understanding of human behavior and the reasons that

govern such behavior)

43

Quantitative research (systematic empirical investigation of quantitative

properties and phenomena and their relationships)

Criteria of Research Design

It should cover Objective.

It should be Original.

It should be neither very general nor very specific.

It should solvable.

It should be feasible.

44

CASH FLOW STATEMENT

45

CASH FLOW STATEMENT

In financial accounting, a cash flow statement, also known as statement of cash flows or

funds flow statement, 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 company.

CASH FLOW ACTIVITIES

The cash flow statement is partitioned into three segments, namely: cash flow resulting from

operating activities, cash flow resulting from investing activities, and cash flow resulting

from financing activities.

The money coming into the business is called cash inflow, and money going out from the

business is called cash outflow.

Operating activities

Operating cash flows include:

Receipts from the sale of goods or services

Receipts for the sale of loans, debt or equity instruments in a trading portfolio

Interest received on loans

Dividends received on equity securities

Payments to suppliers for goods and services

Payments to employees or on behalf of employees

Interest payments

Depreciation (loss of tangible asset value over time)

Deferred tax

Investing activities

46

Investing activities includes:

Purchase or Sale of an asset (assets can be land, building, equipment, marketable

securities, etc.)

Loans made to suppliers or received from customers

Payments related to mergers and acquisitions

Financing activities

Items under the financing activities section include:

Sale or repurchase of the company's stock

Net borrowings

Dividends paid

Payment of dividend tax.

47

Stages of Cash Flow Analysis

KIRLOSKAR BROTHERS LIMITED

48

CASH FLOW STATEMENT

Cash flow from operating activities 2008Rupees

2007Rupees

% %C changeC

Net profit before taxation and extraordinary items

1500406123 3750135323 59.9

Adjustment For-Depreciation and amortization 182800160 121180507 50.26

Profit/Loss on sale of fixed assets (3954533) (21559413) 81.6

Profit/Loss on sale of Investment - (1814242178) 100

Profit and Loss Account ( Net) 44034642 - 100

Provision for doubtful debt & advances 18549702 7360580 152

Interest income (113036296) (75545793) 49.6

Dividend income (168772378) (345871196) 51.2

Interest expenses 168854653 83734544 101.6

Operating profits before working capital changes

1628170073 1705192374 4.5

(Increase)/decrease in trade and others receivables

(2071064136) (1703309475) 21.5

(Increase)/decrease in inventories (459073762) (213457829) 115

(Increase)/decrease in sundry creditors 1791688542 851017108 110.5

Cash generated from operations 889720717 639442178 39.1

Income tax (paid)/refused (410223674) (316161127) 29.75

Net Cash flow from operating activities 479497043 323281051

KIRLOSKAR BROTHERS LIMITED

49

CASH FLOW STATEMENT

Cash flow from investing activities 2008Rupees

2007Rupees

%change

Purchase of fixed assets (498,521,559(772,092,366)

35.43

Proceeds from sale of fixed assets 7,689,416 57,963,14786.73

(Purchase)/Sale of investments (95,966,717) (548,357,922)82.49

Interest received 111859096 44309071 152.4

Dividends received 168370778 357346196 52.88

Advance to subsidiaries (16678639) (44182320) 62.25

Net cash from investing activities (323247625) (905014194)

50

KIRLOSKAR BROTHERS LIMITED

CASH FLOW STATEMENT

Cash flow from financing activities 2008

Rupees2007Rupees

%change

(Repayment)/proceeds of / from long term borrowings(net)

70336072 310497984 77.34

(Repayment)/proceed of / from other borrowings (net)

433048779 840416093 48.47

Interest paid(151718631) (104346093) 45.39

Dividends paid(208045196) (413238312) 49.65

Tax on dividend paid (35949304) (59333804) 39041

Net cash used in financing activities107671720 573995868 81.24

Net increase in cash and cash equivalents263921138 (7737275) 3311.4

Cash and cash equivalents at the beginning of the year 494807619 502544894

Cash and cash equivalents at the end of the year758728757 494807619

PURPOSE OF CASH FLOW STATEMENT

51

Provide information on a firm's liquidity and solvency and its ability to change

cash flows in future circumstances

Provide additional information for evaluating changes in assets, liabilities and

equity

Improve the comparability of different firms' operating performance by eliminating

the effects of different accounting methods

KIRLOSKAR BROTHERS LIMITED

52

KIRLOSKAR BROTHERS LIMITED

53

54

55

SWOT ANALYSIS

56

SWOT ANALYSIS

SWOT analysis is a strategic planning method used to evaluate the Strengths, Weaknesses,

Opportunities, and Threats involved in a project or in a business venture. It involves

specifying the objective of the business venture or project and identifying the internal and

external factors that are favorable and unfavorable to achieve that objective. The technique is

credited to Albert Humphrey, who led a convention at Stanford University in the 1960s and

1970s using data from Fortune 500 companies.

A SWOT analysis must first start with defining a desired end state or objective. A SWOT

analysis may be incorporated into the strategic planning model. Strategic Planning has been

the subject of much research.

Strengths: attributes of the person or company that is helpful to achieving the objective(s).

Weaknesses: attributes of the person or company that is harmful to achieving the

objective(s).

Opportunities: external conditions those are helpful to achieving the objective(s).

Threats: external conditions which could do damage to the objective(s).

Identification of SWOTs is essential because subsequent steps in the process of planning for

achievement of the selected objective may be derived from the SWOTs.

First, the decision makers have to determine whether the objective is attainable, given the

SWOTs. If the objective is NOT attainable a different objective must be selected and the

process repeated.57

The SWOT analysis is often used in academia to highlight and identify strengths,

weaknesses, opportunities and threats. It is particularly helpful in identifying areas for

development.

STRENTH-

Agriculture and domestic business group has a strong distribution network to

provide products to the customers.

KBL believes in building up a culture of learning by doing. So, the employees are

given ample opportunities to take up challenges jobs and sharpen their skills.

In build Quality control in manufacturing to reduce the cycle time, rejection and WIP

and all the cell owners and functions heads of manufacturing, products development

and quality system meet together to review the plan and thus, resulting in faster

response to market demand in terms of quality, cost and delivery.

Internet & Intranet facilities have been established to aid communication and together

information through which they can communicate faster and more efficiently.

ADPBG has strategically positioned it’s products highlight “Energy efficiently” and

“capability to operate in wide voltage range” features. These features are the

competitive and more efficiently.

For creating “A performance” oriented culture in organization.

1. The leadership style adopted by the leaders in ADPBG is redirecting itself from

directive management to participate management to participative management.

2. Issues of vital importance such as annual operating plan, departmental key

result areas etc are disused in terms and decisions are arrived.

To ensure safe and effective operation leaders at all levels concerns for safety,

housekeeping, energy conservation & expenses time to time.

Team working is a way of life at KBL Dewas. Leaders are encouraged to develop

multi-skilling & multi-development and broaden their vision beyond the

department. Similarly, through joint improvement project.

58

Leaders at all levels interact with customers, partners and representatives of

society. Similarly to provide necessary inputs for formulations of policy and

strategy HRM & C interact with external statutory bodies and proactively collects

the future legal and environment requirement. Similarly, CSPS (Corporate

strategies planning service),

Vendors Development and Accounts functions proactively and the

macroeconomics indicators related to their business.

The way of working has been continuously improved day by day providing

employees with latest software and technology to work.

WEAKNESS –

Recoveries to debtors were not possible on time because of weak follow up strategies

of the marketing department.

The review and improvement of various approaches used for reward and recognition

were not done. This is required to sustain the high performance culture and level of

participation and development.

The methodologies were not developed for assessment and review of approaches for

assets and utilities management.

Structured strategy and methodology is to be developed to evaluate alternatives and

emerging technology in light of their impact on business.

Knowledge management process is to be developed so as to reduced/eliminate person

dependent knowledge.

OPPORTUNITIES –

59

ADPBG has accredited with ISO: 14001 certification for environment

management system in 1999, which symbolizes their commitment to conserve

environment through optimizing consumption.

Quantum jumps in submersible business.

It has the opportunity to export its product countrywide.

THREATS –

Threats of cheaper imports.

Competition with unorganized sector (low prices products).

Threats of multi-national companies setting up manufacturing base in India.

Free power to farmers.

Continuous price rise in basis inputs and inability to pass on to customers.

Attracting and retaining talent.

Improvement of productivity.

Seasonality of demand and response.

60

CASH FLOW STATEMENT

INTERPRETATION

Cash flow from operating activities:

Net profit before taxation and extraordinary items changes from 3750135323 to

1500406123 i.e. increase of 59.9%

Depreciation and amortization changes from 121180507 to 182088160 i.e. increase of

50.26 %

Profit/Loss on sale of fixed assets changes from 21559413 to 3954533 i.e. decrease of

81.6 %

Profit/Loss on sale of Investment changes from 1814242178 to nil i.e. decrease of

100%

Profit and Loss Account ( Net) changes from nil to 44034642 i.e. increase of 100 %

Provision for doubtful debt & advances changes from 7360580 to 18549702 i.e.

increase of 152 %

Interest income changes from 75545793 to 113036296 i.e. increase of 49.6 %

Dividend income changes from 345871196 to 168772378 i.e. decrease of 51.2 %

Interest expenses changes from 83734544 to 168854653 i.e. increase of 101.6 %

Operating profits before working capital changes changes from 1705192374

to1628170073 i.e. decrease of 4.5 %

(Increase)/decrease in trade and others receivables changes from 1703309475to

2071064136 i.e. increase of 21.5 %

61

(Increase)/decrease in inventories changes from 213457829 to 459073762 i.e. increase

of 115 %

(Increase)/decrease in sundry creditors changes from 851017108 to 1791688542 i.e.

increase of 110.5 %

Cash generated from operations changes from 639442178 to 889720717 i.e. increase

of 39.1%

Income tax (paid)/refused changes from 316161127 to 410223674 i.e. increase of

29.75 %

Because of these changes net cash flow from operating expenses changes from 323281051

to 479497043.

Cash flow from investing activities

Purchase of fixed assets changes from 772092366 to 498521559 i.e. decrease of 35.43

%

Proceeds from sale of fixed assets changes from 57963147 to 7689416 i.e. decrease of

86.73%

(Purchase)/Sale of investments changes from 548357922 to 95966717 i.e. decrease of

82.49%

Interest received changes from 44309071 to 111859096 i.e. increase of 152.4%

Dividends received changes from 357346196 to 168370778 i.e. decrease of 52.8%

Advance to subsidiaries changes from 44182320 to 16678639 i.e. decrease of 62.25%

Because of these changes net cash from investing activities has change from 905014194 to 323247625.

Cash flow from financing activities

(Repayment)/proceeds of / from long term borrowings(net) changes from 310497984

to 70336072 i.e. decrease of 77.34%

(Repayment)/proceed of / from other borrowings (net) changes from 840416093 to

433048779 i.e. decrease of 48.47%

62

Interest paid changes from 104346093 to 151718631 i.e. increase of 45.39%

Dividends paid changes from 413238312 to 208045196 i.e. decrease of 49.65%

Tax on dividend paid changes from 59333804 to 35949304 i.e. decrease of 39.41%

Net cash used in financing activities changes from 573995868 to 107671720 i.e.

decrease of 81.24%

Net increase in cash and cash equivalents changes from 7737275 to 263921138 i.e.

increase of 3311%

Because of these changes cash & cash equivalents at the beginning of the year has change

from 502544894 to 494807619.

Cash and cash equivalents at the end of the year has change from 494807619 to

758728757.

i.e. company has facing increase in cash & equivalence.

63

Suggestions &Conclusion

After going through all the studies regarding the financial ratios, there analysis and

interpretation including the organizational climate and functioning certain inferences can be

drawn as follows: -

The inventory level should be maintained properly.

The recovery from debtors should be made on time.

The operating cost should be reduced to maintain the level of profit.

The liquidity position should be maintained at least same as earlier.

Same as the recovery the payment should also do not on time.

64