|
CASH FLOW
Sudha Swaminathan
Bhadrachalam Paperboards Ltd. (ITCB)
Background : ITCB was promoted in 1975
by ITC Ltd. to manufacture paper. Located in A.P. ITCB’s range of
packaging paper include duplex boards and kraft paper from which it
earns a major portion of its revenue. It is the market leader in the
domestic duplex boards and kraft paper segments. ITCB is the sole
manufacturer of high quality cast coated boards targeted at the premium
segment of the market. It also manufactures a small quantity of writing
paper. Its turnover in March 2001 was Rs.6106 millions (Rs.4438 millions
in previous year) with around 12-13% coming from exports.
Paper sector is highly capital intensive and the business is also
subject to cyclicality. The global paper market has been in a downtrend
since mid 95. Lower wood pulp prices and higher supply of paper led
to a substantial fall in paper prices. ITCB’s performance has been
hit over the last few years not only due to lower paper price realisation
but also due to an increase in the fixed charges due to the commissioning
of its expanded capacity.
The company’s Profit and loss account and Balance sheet are given
below.
TASK : PREPARE & ANALYSE THE CASH FLOWS OF THE COMPANY OVER
THE LAST FOUR YEARS AND COMMENT ON THE PROFITABILITY AND CASH FLOW
POSITION.
Balance
Sheet (Rs mn)
|
Period
ended
|
03/97
|
03/98
|
03/99
|
03/00
|
03/01
|
|
SOURCES
OF FUNDS
|
|
|
|
|
|
|
Equity
capital
|
686.2
|
686.2
|
877.4
|
877.4
|
877.4
|
|
Preference
capital
|
-
|
-
|
257.2
|
257.2
|
257.2
|
|
Share
premium account
|
2,208.3
|
2,214.7
|
3,266.3
|
3,266.3
|
3,266.3
|
|
P
& L/General reserve
|
NA
|
707.0
|
(272.3)
|
(593.5)
|
(244.6)
|
|
Other
reserves
|
NA
|
98.3
|
98.3
|
98.3
|
98.3
|
|
Total
Debt
|
3,585.4
|
5,004.9
|
4,234.8
|
4,279.3
|
4,021.1
|
|
Capital
employed
|
NA
|
8,712.0
|
8,462.7
|
8,186.0
|
8,276.7
|
|
APPLICATION
OF FUNDS
|
|
Gross
block
|
2,841.1
|
2,841.1
|
8,165.7
|
8,292.3
|
8,501.5
|
|
Accumulated
depreciation
|
NA
|
(1,014.4)
|
(1,390.0)
|
(1,776.9)
|
(2,157.6)
|
|
Capital
work in progress
|
4,044.9
|
5,140.6
|
66.8
|
209.8
|
337.9
|
|
Total
fixed assets
|
NA
|
6,967.3
|
6,842.5
|
6,725.3
|
6,681.8
|
|
Investments
|
708.5
|
687.7
|
584.3
|
463.3
|
429.6
|
|
Sundry
debtors
|
314.3
|
280.3
|
405.2
|
561.8
|
592.0
|
|
Cash
and bank balance
|
478.5
|
478.4
|
517.7
|
2.2
|
5.3
|
|
Total
loans and advances
|
362.7
|
635.7
|
761.0
|
681.9
|
784.5
|
|
Sundry
creditors
|
494.4
|
(626.4)
|
(662.5)
|
(617.1)
|
(522.3)
|
|
Other
liabilities
|
(106.1)
|
(489.8)
|
(718.5)
|
(643.7)
|
(597.2)
|
|
Net
current assets
|
1,052.2
|
998.6
|
998.4
|
971.5
|
1,148.0
|
|
Misc.
expenditure
|
66.5
|
58.3
|
37.4
|
26.0
|
17.3
|
Capital
deployed
|
NA
|
8,712.0
|
8,462.7
|
8,186.0
|
8,276.7
|
Profit
& loss account (Rs. mn)
|
Period
ended
|
03/98
|
03/99
|
03/00
|
03/01
|
|
Net
sales
|
1,863.8
|
2,789.3
|
3,922.9
|
5,343.6
|
|
Other
income
|
34.4
|
102.0
|
132.5
|
127.6
|
|
Total
income
|
1,898.2
|
2,891.3
|
4,055.4
|
5,471.2
|
|
Cost
of material
|
837.0
|
1,538.1
|
2,033.9
|
2,864.8
|
|
Employee
cost
|
186.1
|
220.7
|
247.6
|
305.2
|
|
Power
& fuel
|
295.5
|
417.6
|
409.6
|
396.4
|
|
Advertising
/ promotion
|
7.0
|
5.2
|
6.6
|
8.0
|
|
Other
expenses
|
319.6
|
519.3
|
587.6
|
723.8
|
|
Interest
& finance charges
|
217.2
|
682.1
|
671.7
|
418.5
|
|
Depreciation
|
118.8
|
387.0
|
399.6
|
405.7
|
|
PBT
|
(82.9)
|
(878.9)
|
(301.2)
|
348.9
|
|
Extraordinary
items / Prior year adj.
|
(406.7)
|
(100.4)
|
(20.0)
|
-
|
|
Adjusted
PAT
|
(489.6)
|
(979.2)
|
(321.2)
|
348.9
|
S
O L U T I O N
Cash
flow statement (Rs mn)
|
Period
ended
|
03/98
|
03/99
|
03/00
|
03/01
|
|
PBT
and other income
|
(117.3)
|
(980.9)
|
(433.7)
|
221.3
|
|
Depreciation
|
| |
