Solution Of Case Study

Triveni Textiles Ltd. Operating Statement (In 000's) Year.2 Year.3

Year.1 1 Gross Sales a) Domestic Sales b) Export Sales Total 2 Less Excise Duty and Trade Discount 3 Net Sales (1-2) 4 %age Rise (+) or fall (-) in net sales as compared to the previous year 5 Cost of Sales a) Raw Materials I ) Imported ii ) Indigenous Purchased + Opening Stock - Closing Stock iii) Raw material Consumed b) Other Spares I ) Imported ii ) Indigenous c) Power and Fuel d) Direct Direct labour Labour, Factory wages and Salaries e) Other Manufacturing Exp.and Repair & Maintenance f) Depreciation g) Sub Total (a to f) h) Add: Opening Stocks in Process I ) Deduct: Closing Stocks in Process j) Cost of Production k ) Add: Opening Stock of finished goods m ) Deduct closing stock of finished goods o ) SUB TOTAL ( TOTAL cost of Sales) Gross Profit 6 Selling General and Administrative expenses 7 SUB TOTAL ( 5+6 ) 8 Operating profit before interest ( 3-7) 9 Interest 10 Operating profit after interest (8-9) 11 a) Add other non operating income I ii Sub Total ( income) b) Deduct other non operating expenses I ii Sub Total ( expenses) c) Net of other non operating income/expenses Net of 11 (a) and 11 (b) 12 Profit before tax/loss 10+11 (b) 13 Provision for taxes 14 Net profit/Loss ( 12-13)

12009 0 12009 535 11474

15965 0 15965 708 15257 32.97

24982 0 24982 1015 23967 57.09

0 8588 883 1201 8270

0 12414 1201 1506 12109

0 20273 1506 2809 18970

0 443 363 1037 37 203 10353 92 152 10293 283 323 10253 1221 379 10632 842 550 292

0 526 666 1359 60 423 15143 152 575 14720 323 1962 13081 2176 562 13643 1614 942 672

0 1023 1124 1916 70 639 23742 575 695 23622 1962 4273 21311 2656 663 21974 1993 1186 807

284 0 284

59 0 59

95 0 95

0 0 0

0 0 0

0 0 0

284 576 180 396

59 731 350 381

95 902 300 602

Triveni Textiles Ltd. BALANCE SHEET Year.1 Year.2 1

Year.3

Current Laibilities Short term borrowings from banks (include bills purchased

10

discounted & excess borrowings placed on repayment basis) i) From N.I.Bank ii) From other banks iii) (of which BP & BD) Sub Total (A) Short Term borrowings from others Sundry creditors (Trade) Advance payments from customers/deposits from dealers Provision for Taxation Dividend Payable Other Statutory liabilities (due within one year) Deposits/installments of terms loans/DPG's/Debentures etc, due within one year) Other current liabilities & provisions (due within one year) (Specify major items) Sub Total (B) Total current liabilities (Total of Sub-Totals A & B)

11 12 13

Term Liabilities Debentures (not maturing within one year) Preference shares (redeemable after one year) Term Loans (excluding instalments payable within one year)

977 0 0 977 0 610 0 200 0 0

2279 0 0 2279 0 1676 0 550 0 0

4715 0 0 4715 1000 3694 0 850 0 0

0 0 193

0 0 223

0 0 245

1003 1980

2449 4728

5789 10504

0 0 8700

0 0 10000

0 0 9000

14 15 16 17 18

Deferred payment Credits (Exclude instalments due within 1 yr.) 0 Term Deposits (repayble after 1 yr.) 0 Other term liabilities 1100 Total term Liabilities (Total of 11 to 16) 9800 Total Outside Liabilities (10 + 17) 11780

0 0 1350 11350 16078

0 0 1425 10425 20929

19 20 21 22 23 24

Net worth Ordinary share capital Share Premium Account Reserves Other Reserves (excluding provisions) Surplus (+) or deficit(-) in profit or loss account Net worth

4400 880 650 0 0 5930

4400 880 977 0 0 6257

4400 880 1525 0 0 6805

25

Total Liabilities (18 + 24)

17710

22335

27734

2 3 4 5 6 7 8 9

Current Assets 26 Cash and Bank balances 27 Investments (other than long term investments I Govt. and other Trustee securities ii Other Securities 28 I Receivables other than deferred & exports (incl. Bills purchased &discounted by banks) ii Exports receivables (incl.bills purchased/discounted by banks) 29 Instalments of deferred receivables (due within one year) 30 Inventory I Raw materials (include stores & other items used in the process of manufacture) a) Imported b)Indigenous ii Stocks in process iii Finished Goods iv Other consumables spares a) Imported b)Indigenous 31 Advance to suppliers of raw materials & stores/spares 32 Advance payment of taxes 33 Other current Assets 34 Total Current Assets of (26 to 33)

3981

11

42

103 0 184

106 0 294

107 0 917

0

0

0

0

0

0

1201 152 323

1506 575 1962

2809 695 4273

310 0 0 456 6710

483 0 0 964 5901

912 0 0 1820 11575

10990 1118 9872

16301 1546 14755

16670 2185 14485

400 10

700 10

1070 10

378

595

151

0 0

0 0

0 0

41 Total other non current assets (38 to 40)

788

1305

1231

42 Intangible Assets

340

374

443

17710 5590 4730 3.39

22335 5883 1173 1.25

27734 6362 1071 1.10

Fixed Assets 35 Gross Block (land, building, machinery, work in progress) 36 Depreciation to date 37 Net Block (35-36) Other Non current Assets 38 Investments/book debts/advances/deposits which are not Current Assets I a) Investments in Subsidiary companies/affiliates b) Other investments ii Advances to suppliers of capital goods & contractors iii Deferred receivables (maturity exceeding 1 yr.) iv Others 39 Non consumables stores and spares 40 other non current assets (incl. Dues from directors)

43 Total Assets (total of 34,37,41 and 42) 44 Tangible net worth (24-42) 45 N W C [ (17+24) - (37+41+42)] to tally with (34-10) 46 Current ratio (34/10)

47 Total outside Liabilities/Tangible Net worth (18/44)

2.11

2.73

3.29

Triveni Textiles RATIO ANALYSIS Year.1

Year.2

Year.3

ACTUALS A) Liquidity Current Ratio

3.39

1.25

1.10

Quick Ratio

5.02

0.76

0.66

2.11

2.73

3.29

B)Solvency Debt Equity Ratio C) Activity/Turnover Percentage rise (+) or fall (-) in Sales

'''''''

32.94

56.48

71.51

77.76

81.15

Other manufacturing expenses/sales

0.31

0.38

0.28

Selling, General, Administrative/Expenses/Sales%

3.16

3.52

2.65

38.21

36.03

42.78

Raw Materialsconsumption/sales%

Raw Materials-No of days consumption Stock-in-process- No. of days cost of production

4.84

13.76

10.58

10.27

46.94

65.07

5.85

7.03

13.97

25.93

49.28

66.51

Net Sales/Total Tangible Assets (Capital Turn Over)

0.66

0.69

0.88

Net Sales/Tangible Net Woth

2.05

2.59

3.77

Finished Goods-No. of days cost of sales Sundry Debtors-No. of days' sales Sundry Creditors-No. of days purchases

D) Profitability Return on Sales: a) Gross Profit/Net Sales (%)

10.64

14.26

11.08

b) Operating Profit/Net Sales (%)

2.54

4.40

3.37

c) Net Profit/NetSales (%)

3.45

2.50

2.51

Return on Tangibale Net Worth (%)

7.08

6.48

9.46

Earning Capacity

1.68

3.06

2.96

Triveni TextilesLtd. Method of Lending

1996

1997

1998

Total Current Assets

6710

5901

11575

Other Current Liabilities (Excluding Bank Borrowings)

1003

2449

5789

Working Capital Gap

5707

3452

5786

1677.5

1475.25

2893.75

Min. Stipulated NWC (25% of the Total Current assets incl. Export receivables Actual/Projected NWC

4730

1173

1071

(3) -(4)

4029.5

1976.75

2892.25

(3)- (5)

977

2279

4715

Max Permissible Bank Finance (Lower of 6 & 7)

977

1976.75

2892.25

Excess Borrwings representing shortfall in NWC

0

-302.25

-1822.75

Form IV

Triveni TextilesLtd. Funds Flow Statement

Year.1-2

Year.2-3

1. SOURCES a) Net profit(after tax)

381

602

b) Depreciation

423

639

0

0

1550

0

c)Increase in Capital d) Increase in term liabilities, include public deposits e) Decrease in: I Fixed Assets

0

0

II Other non - current assets

0

74

f) Others (including intangible assets) g) Total

0

0

2354

1315

2. USES a) Net Loss

0

0

b) decrease in Terms Liabilities, incl public deposits

0

925

5306

369

517

0

c) Increase in : I Fixed Assets II Other non current Assets d) Dividend Payment e) Others( including intangible assets) f) Total 3. Long term surplus/Deficit

0

0

34

69

5857

1363

-3503

-48

4. Increase/decrease in current assets

-809

5674

5. Increase/decrease in current liabilities other than

1446

3340

bank borrowings. 6. Increase/decrease in working capital gap.

-2255

2334

7.Net Surplus(+) / Deficit(-)

-1248

-2382

8. Increase/decrease in Bank borrowings.

1302

2436

9. Increase/Decrease in Net Sales

3783

8710

2000 (Proj.)

2000 0.00 0 0.00 0.00 0.00 0.00 0 0.00 0

1999-2000

Work Sheet 2

Balance Sheet Analysis(Operating Statemen Particulars 1. Gross Sales Less: Returns Less: Trade discount Less: excise duty 2. Net Sales 3. Cost of production i. Raw material purchased ii. Stores/Spares

1st Year 2nd Year 3rd Year 12,009 15,965 24,982 89 446 11,474

89 619 15,257

132 883 23,967

8588

12414

20273

443 363 1037

526 666 1359

1023 1124 1916

16 21 203 883

33 27 423 1201

28 42 639 1506

92

152

575

Sub-Total

11646

16801

27126

Less: Closing stock of raw material

1201 152 10293

1506 575 14720

2809 695 23622

10293

14720

23622

283 10576 323 10253

323 15043 1962 13081

1962 25584 4273 21311

11,474

15,257

23,967

10253

13081

21311

1,221

2,176

2,656

232 318

221 721

286 900

iii. Power & Fuel iv. Direct Labour v. Repairs and maintenance vi. Other manufacturing expenses – ESIC vii. Depreciation Add: Opening stock of raw materials Add Opening stock of stocks in process

Less: Closing stocks of stocks in process Total Cost of Production 4. Cost of Sales Cost of production Add: Opening stock of finished goods Sub-Total Deduct: Closing stock of finished goods Cost of Sales 5. Gross Profit Net Sales Deduct: Cost of Sales Gross Profit 6. Operating Profit i. Interest on long term loan Others-Interest

ii. Administrative expenses a) Rent

13

17

21

b) Rates & Taxes

2

4

7

c) Directors’ Fees

16

19

24

110 5 186 47 929 1,221 929 292

118 7 292 105 1504 2,176 1504 672

123 8 268 212 1849 2,656 1849 807

292 284 576

672 59 731

807 95 902

576 180 396

731 350 381

902 300 602

d) Insurance e) Auditor’s Remuneration f) Misc. Expenses iii. Selling expenses Sub-Total (Operating expenses) Gross Profit Deduct Operating expenses Operating Profit 7. Net Profit before tax Operating Profit Add: other income Sub-Total Deduct: Other expenses Net Profit before Tax 8. Provision for tax Net Profit after Tax

ork Sheet 2

(Operating Statement)

Triveni Textiles Item of Financial Statement 1. Net Sales 2. RM Purchased 3. Opening RM 4. Closing RM 5. RM Consumed(2+3-4) 6. Cost of Production (COP) 7. Cost of Sales (COS) 8. Operating Expenses 9. Manufacturing Expenses 10. Mfg. & Cash Expenses (8+9) 11. Credit Enjoyed 12. Advance Payment received

Year. I Year. II Year. III 11,474 15,257 23,967 8,588 12,414 20,273 883 1201 1506 1,201 1,506 2,809 8,270 12,109 18,970 10,293 14,720 23,622 10,253 13,081 21,311 929 1504 1849 1,437 2,085 3,110 2,366 3,589 4,959 344.58 478.08

504.54 635.71

790.42 998.63

Traditional/Operating Cycle Method(Year.1) Basis

Item of Current Asset

Holding Period

Gross Requirement

Net Requirement

(Lower of Market Practice & Borrower’s Practice)

(GR)

(GR-Credit & Advance Payment Available)

Margin

%age

RM

RMC

1 month

689.17

344.59

25%

SIP/ SFG

COP

½ month

428.88

428.88

40%

FG Receiv/ Debtors

COS 1 month Net Sales 1½ months

854.42 1434.25

854.42 956.17

25% 25%

Cash

Mfg. Exp. 1 month

197.17

197.17

100%

Grand Total

3,603.89 2,781.23

Traditional/Operating Cycle Method(Year.2) Basis

Item of Current Asset

Holding Period

Gross Requirement

Net Requirement

(Lower of Market Practice & Borrower’s Practice)

(GR)

(GR-Credit & Advance Payment Available)

Margin

%age

RM SIP/ SFG FG Receiv/ Debtors

RMC 1 month COP ½ month COS 1 month Net Sales 1½ months

1009.08 613.33 1090.08 1907.13

504.54 613.33 1090.08 1271.42

25% 40% 25% 25%

Cash

Mfg. Exp. 1 month

299.08

299.08

100%

Grand Total

Traditional/Operating Cycle Method(Year.3) Basis

Item of Current Asset

4,918.70 3,778.45 11,474.0 0

Holding Period

Gross Requirement

Net Requirement

(Lower of Market Practice & Borrower’s Practice)

(GR)

(GR-Credit & Advance Payment Available)

Margin

%age

RM SIP/ SFG FG Receiv/ Debtors

RMC 1 month COP ½ month COS 1 month Net Sales 1½ months

1580.83 984.25 1775.92 2995.88

790.41 984.25 1775.92 1997.25

25% 40% 25% 25%

Cash

Mfg. Exp. 1 month

413.25

413.25

100%

Grand Total

7,750.13 5,961.08

Margin

PBF

Structuring of the Limit

Amt.

86.15

258.44 Hypothecation

171.55

257.33 Hypothecation

213.61 239.04

640.81 Hyp./ Pledge 717.13 Bills Purchased/ Discounted

197.17

0

907.52

1873.71

-

Margin

PBF

Structuring of the Limit

Amt.

126.14 245.33 272.52 317.86

378.40 Hypothecation 368.00 Hypothecation 817.56 Hyp./ Pledge 953.56 Bills Purchased/ Discounted

299.08

0

1260.93

2517.52

Margin

PBF

-

Structuring of the Limit

Amt.

197.60 393.70 443.98 499.31

592.81 Hypothecation 590.55 Hypothecation 1331.94 Hyp./ Pledge 1497.94 Bills Purchased/ Discounted

413.25

0

1947.84

4013.24

-