Submitted By:

Varun Kabaria (221061)

Navya Purwar (221075)
Priyanka Charaya (221099)
Rajat Gupta (221112)
Rithik S. Chandran (221116)
Romil Goel (221118)
NET CASH FLOW
Why did the cash balance decrease when the company made a net
profit for the period?

How did the company finance the acquisition of fixed assets?

How did the company utilize the proceeds of the equity issue?

Is the capacity expansion straining the companys cash?

Does the company enjoy a fair degree of financial flexibility?

What inferences can we draw from the statement about companys
ability to generate future cash flows, to repay its borrowings and to
pay dividends?


Despite of getting a good profit and amortization
value and depreciation, the net cash balance has
decreased.
Paid off liabilities of Rs.540.99 crores.
Paid dividends of approximately 73% of profit.
Investing activities not affecting decrease in net
cash balance.
The acquisition of investments and fixed assets
and the advances paid for the future acquisition of
fixed assets has been financed through the sale of
investments.

Sales/Purchases(NET) of investments generates an
inflow of Rs Rs.1443.02 crores which is much
higher than the amount spent on acquisition and
advances of fixed assets i.e. Rs.565.05 crores.



No application by the company for issuing shares.

Indicates the ability of the company to finance their
investing activities on their own.

No. The scale of expansion not too large to adopt
any external sources of financing and thus has
been covered by the companys own operating and
investing activities.

No loan pressures or restrictions.
No issuing of shares in the current or last fiscal.
Thus company has the flexibility to go for these options
in the future.
Net cash from operating activity large enough to:
Pay off debtors, loans.
Carry day to day activities.
Also, in case of contingent liabilities, the
company:
Can rely on its cash from operating activities or
Rely on external sources of funding.






Has paid huge dividends as compared to its operational cash
flow.
This indicates company is confident about future flows.

Investing activities show large advances for acquiring fixed
assets.
This is likely to reduce future cash requirements for investing into fixed
assets. These advances also indicate expansion which is likely to increase
the yields in future.

We see company paying dividends to shareholders, indicating
strong confidence in its operations
High operational profits also indicate strong operations.
All of this indicates company is capable to generate cash.

Cash flows also indicate that the company has made substantial
investments in current assets, which may reap benefits in future.
Net cash March 31,2012 March 31,2011
Operating activity 2358.78 2254.16
Investing Activity 82.78 (1322.31)
Financial Activity (2458.18) (955.23)
March
31,2012

March
31,2011

Difference

Net Profit before tax 2864.71 2404.76 459.95
Sale/purchase of investment 1443.02 (999.40) 2442.42
Dividend paid 2096.72 599.06 1497.66
Payment to deferred creditors 816.66 - 816.66
Financing policy indicates low levels of debt.
Company has been debt free for 5 years (2001 to 2005).
Policies skewed towards meeting financing requirements through
internal sources, reason why cash flow shows low interest costs.
Thus current cash flows are very much aligned with companies
financing policies.
Also it has liberal dividend policies.
Company rolled out 5250% dividend in 2010-11.
As per Mr. Ravi Sood (CFO, Hero Honda), company generates
Rs.2000 crores every year, enough to maintain their liberal
dividend policy.
He is of the opinion that the two wheeler industry is not very
capital intensive and hence the liberal dividend policy.
The same policy followed this year as well, with dividends
forming 73% of companys profits.

THANK YOU!!!