ambuja working capital 2016

7/25/2019 Ambuja Working Capital 2016

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Working capital management

Chapter 1

Introduction:

Working capital management involves the relationship between a firm's short-term

assets and its short-term liabilities. The goal of working capital management is to ensure that

a firm is able to continue its operations and that it has sufficient ability to satisfy both

maturing short-term debt and upcoming operational expenses. The management of working

capital involves managing inventories, accounts receivable and payable, and cash.

The process of managingactivitiesandprocessesrelated to working capital. This

level of managementservesas a check andbalancessystemto ensure that

the amountof cashflowing into thebusinessis enough to sustain thecompany'soperations.

This is an ongoing process that must be evaluatedusingthe currentlevel

of assetsandliabilities. Working capital management may involve implementing short-

termdecisionsthat may or may not carry over from one earningsperiodto the next.

The need for working capital fluctuates from time to

time. However, to carry on day-to-day operations of the business without any

obstacles, a certain minimum level of raw materials, work-in-progress, finished goods and

cash must be maintained on a continuous basis. The amount needed to maintain current assets

on this minimum level is called permanent or regular working capital. The amount involved

as permanent working capital has to be meet from long-term sources of finance, e.g.

!i" #apital

!ii" $ebentures

!iii" %ong-term loans

The firm should maintain a sound working capital

position. &t should have adeuate working capital to run its business operations. (oth

excessive as well as inadeuate working capital positions are dangerous from firm's point of

view. )xcessive working capital means holding costs and idle funds which earn no profit for

the firm. *aucity of working capital not only impairs the firm's profitability but also results in

production interruptions and inefficiencies and sales disruption

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INDUSTRY PROFILE

&n the most general sense of the word, a cementis a binder, a substance which

sets and hardens independently, and can bind other materials together. The word 1cement1

traces to the 2omans, who used the term 1opus caementicium1 to describe masonry which

resembled concrete and was made from crushed rock with burnt limeas binder. The volcanic

ash and pulveri3ed brick additives which were added to the burnt lime to obtain a hydraulic

binder were later referred to as cementum, cementum, cement and cement. #ements used in

construction are characteri3ed as hdrau!icor non"hdrau!ic.

The most important use of cement is the production of mortar and concrete4the

bonding of natural or artificial aggregates to form a strong building material which is durable

in the face of normal environmental effects.

#oncreteshould not be confused with cement because the term cementrefers only to

the dry powder substance used to bind the aggregate materials of concrete. 5pon the addition

of water and6or additives the cement mixture is referred to as concrete, especially if

aggregates have been added.&t is uncertain where it was first discovered that a combination of hydrated non-

hydraulic limeand apo33olanproduces a hydraulic mixture !see also7 *o33olanic reaction",

but concrete made from such mixtures was first used on a large scale by 2oman

engineers.They used both natural po33olans !trassorpumice" and artificial po33olans !ground

brick or pottery" in these concretes. any excellent examples of structures made from these

concretes are still standing, notably the huge monolithic dome of the *antheonin 2omeand

the massive (aths of #aracalla. The vast system of 2oman aueductsalso made extensive use

of hydraulic cement. The use of structural concrete disappeared in medieval )urope,

odern cement

odern hydraulic cements began to be developed from the start of the &ndustrial

2evolution!around 89::", driven by three main needs7

Hydraulic rendersfor finishing brick buildings in wet climates

Hydraulic mortars for masonry construction of harbor works etc, in contact with sea

water.

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De#e!opment o$ %tron& concrete%'

&n (ritain particularly, good uality building stone became ever more expensive

during a period of rapid growth, and it became a common practice to construct prestige

buildings from the new industrial bricks, and to finish them with a stuccoto imitate stone.

Hydraulic lines were favored for this, but the need for a fast set time encouraged the

development of new cements. ost famous was *arker's 12oman cement.1 This was

developed by ?8> minutes. The success of 12oman #ement1 led other

manufacturers to develop rival products by burning artificial mixtures of clay and chalk.

>-=" in the )nglish

#hannel. He needed a hydraulic mortar that would set and develop some strength in the

twelve hour period between successive high tides. He performed an exhaustive market

research on the available hydraulic lines, visiting their production sites, and noted that the

1hydraulicity1 of the lime was directly related to the clay content of the limestone from which

it was made. +meaton was a civil engineerby profession, and took the idea no further.

pparently unaware of +meaton's work, the same principle was identified by %ouis icatin

the first decade of the nineteenth century. icat went on to devise a method of combining

chalk and clay into an intimate mixture, and, burning this, produced an 1artificial cement1 in

898;. : C#, they

contained no alite, which is responsible for early strength in modern cements. The first

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cement to consistently contain alite was made by


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content, early strength can also be maintained. Where good uality cheap fly ash is available,

this can be an economic alternative to ordinary *ortland cement.

Port!and po))o!an cementincludes fly ash cement, since fly ash is apo33olan, but

also includes cements made from other natural or artificial po33olans. &n countries where

volcanic ashes are available !e.g. &taly, #hile, exico, the *hilippines" these cements are

often the most common form in use.

Port!and %i!ica $ume cement. ddition of silica fumecan yield exceptionally high

strengths, and cements containing >-A:F silica fume are occasionally produced. However,

silica fume is more usually added to *ortland cement at the concrete mixer.

*a%onr cement%are used for preparing bricklaying mortarsand stuccos, and must

not be used in concrete. They are usually complex proprietary formulations containing

*ortland clinker and a number of other ingredients that may include limestone, hydrated lime,

air entrainers, retarders, waterproofers and coloring agents..

Cement Indu%tr in India

&ndia is the world's second largest producer of cement according to the #ement

anufacturers ssociation.

$uring +eptember A:8:, the cement production touched 8A.>B million tonnes !T",

while the cement despatches uantity was 8A.>0 T during the month. The total cement

production during pril-+eptember A:8:-88 reached 98.>B T as compared to ;;.AA T

over the corresponding period last fiscal. @urther, cement despatches also witnessed an

upsurge from ;0.>: T during pril-+eptember A::=-8: to 98.8: T during pril-

+eptember A:8:-88.

oreover, the government's continued thrust on infrastructure will help the key

building material to maintain an annual growth of =-8: per cent in A:8:, according to &ndia's

largest cement company, ##.

&n :

million tonne cement capacity in A:8:, taking the total to around G:: million tonne.

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@urther, speaking at the reen #ementech A:8:, a seminar Iointly organised by the

#onfederation of &ndian &ndustry !#&&" and the #ement anufacturer's ssociation in

Hyderabad in ay A:8:, >B.GA million to set up

two greenfield cement plants in Darnataka and eghalaya.

(harathi #ement plans to double its production capacity by the end of

the current financial year by expanding its plant in ndhra *radesh, with an

investment of 5+J 8B=.=; million.

adras #ements %td is planning to invest 5+J 8;9.B million to

increase the manufacturing capacity of its riyalur plant in Tamil /adu to B.> T

from A T by pril A:88.

y Home &ndustries %imited !H&", a >:7>: Ioint venture ! mtpa by A:80. The company would undertake this

capacity expansion at a cost of 5+J 8 billion.

+hree #ement, plans to invest 5+J =;.8G million this year to set up a

8.> million T clinker and grinding unit in 2aIasthan. oreover, in


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+wiss cement company Holcim plans to invest 5+J 8 billion in setting

up A-G greenfield manufacturing plants in the country in the next five years to serve

the rising domestic demand. Holcim is present in the country through ## and

mbuIa #ements and holds around B0 per cent stake in each company. While ##

operates 80 cement plants, mbuIa #ements controls five plants in &ndia. The ditya

(irla group is the largest cement-making group by capacity in the country and

controls rasim &ndustries and Kuari #ement.

,o#ernment Initiati#e%

The cement industry is pushing for increased use of cement in highway and road

construction. The inistry of 2oad Transport and Highways has planned to invest 5+J G>Bbillion in road infrastructure by A:8A. Housing, infrastructure proIects and the nascent trend

of concrete roads would continue to accelerate the consumption of cement.

&ncreased infrastructure spending has been a key focus area. &n the 5nion (udget

A:8:-88, 5+J G;.B billion has been provided for infrastructure development.

The government has also increased budgetary allocation for roads by 8G per cent to

5+J B.G billion.

uIarat plans to treble its cement production capacity in G-> years. *roposals have

been invited from cement companies such as ##, (, mbuIa #ement, )mami,

&ndiabulls, dani group, 5ltratech and %LT and the state hopes to raise its capacity from A:

million tonnes per annum to ;: million tonne. The state will host the biennial ibrant uIarat

lobal +ummit in


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the context of the nations socioeconomic development.

Prior To Independence

The first endeavor to manufacture cement dates back to 899= when a #alcutta based

company, (ut the first endeavor to manufacture cement in an organi3ed way commenced in

adras. +outh &ndia &ndustries %imited began manufacture of *ortland cement in 8=:B.(ut

the effort did not succeed and the company had to halt production.

@inally it was in 8=8B that the first licensed cement manufacturing unit was set up by

&ndia #ement #ompany %td at *orbandar, uIarat with an available capacity of 8:,::: tons

and production of 8::: installed. The @irst World War gave the impetus to the cement

industry still in its initial stages. The following decade saw tremendous progress in terms of

manufacturing units, installed capacity and production. is

$uring the earlier years, production of cement exceeded the demand. +ociety had a biased

opinion against the cement manufactured in &ndia, which further led to reduction in demand.

The government intervened by giving protection to the &ndustry.

&n 8=A;, the #oncrete ssociation of &ndia was formed with the twin goals of creating

a positive awareness among the public of the utility of cement and to propagate cement

consumption.

-$ter Independence

the growth rate of cement was slow around the period after independence due to

various factors like low prices, slow growth in additional capacity and rising cost. The

government intervened several times to boost the industry, by increasing prices and providing

financial incentives. (ut it had little impact on the industry.

Period O$ Re%triction .1/0/"1/23

The cement industry in &ndia was severely restrained by the government during this

period. overnment hold over the industry was through both direct and indirect means.

overnment intervened directly by exercising authority over production, capacity and

distribution of cement and it intervened indirectly through price control.

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&n 8=;; the government authori3ed higher prices for cement manufactured by new units or

through capacity increase in existing units. (ut still the growth rate was below par.

&n 8=;= the government introduced a three tier price system. *rices were different for cement

produced in low, medium and high cost plants.

However the price control did not have the desired effect. 2ise in input cost, reduced profit

margins meant the manufacturers could not allocate funds for increase in capacity.

Partia! Contro! .1/2"1//3

To give impetus to the cement industry, the overnment of &ndia introduced a uota

system in 8=9A. uota of 00.0:F was imposed for sales to overnment and small real estate

developers. @or new units and sick units a lower uota at >:F was effected. The remaining

GG.B:F was allowed to be sold in the open market.thes changes

These changes had a desired effect on the industry. *rofitability of the manufacturers

increased substantially, but the rising input cost was a cause for concern.

-$ter Li(era!i)ation

&n 8=9= the cement industry was given complete freedom, to gear it up to meet the

challenges of free market competition due to the impending policy of liberali3ation. &n 8==8

the industry was de licensed.

This resulted in an accelerated growth for the industry and availability of state of the art

technology for moderni3ation. ost of the maIor players invested heavily for capacity

expansion.

To maximi3e the opportunity available in the form of global markets, the industry laid

greater focus on exports. The role of the government has been extremely crucial in the growth

of the industry.

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Compan Pro$i!e

Ambuja Cements Ltd, a part of the global conglomerate LafargeHolcim, is one of the

leading cement companies in the Indian cement industry.

Operating for over 2 years, Ambuja has proved to be the best cement for construction

and the best cement manufacturing company in India !ith its uni"uely sustainable

development projects. Its environment friendly initiatives have played a #ey role in

India$s efforts to become a green state. %he sustainable constructions and rene!ableenergy projects underta#en by it have a lion$s share in creating a blueprint for

sustainable development in India$s bright future.

&y virtue of its hassle'free customer support ( home building solutions and its uni"ue

cement sustainability initiatives such as %rue )alue and *ater +ositive, Ambuja$s

business has seen a rapid gro!th in the past decade. %he company has a significant

presence across !estern, eastern and northern mar#ets of India as a brand for Ordinary

+ortland Cement O+C- and +oolana +ortland Cement ++C-.

Currently, Ambuja has a cement capacity of 2/.0 million tonnes !ith five integrated

cement manufacturing plants and eight cement grinding units across the country. It is

the first Indian cement manufacturer to build a captive port !ith four terminals along the

country$s !estern coastline to facilitate timely, cost effective and environmentally cleaner

shipments of bul# cement to its customers.

About LafargeHolcim

*ith a !ell'balanced presence in 1 countries and a focus on Cement, Aggregates and

Concrete, LafargeHolcim 3I4 3!iss 56change, 5urone6t +aris7 LH8- is the !orld

leader in the building materials industry. %he 9roup has ::, employees around the

!orld and combined net sales of CH; 20 billion- in 2:?. LafargeHolcim

is the industry benchmar# in >(@ and serves from the individual homebuilder to the

largest and most comple6 project !ith the !idest range of value'adding products,

innovative services and comprehensive building solutions. *ith a commitment to drive

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sustainable solutions for better building and infrastructure and to contribute to a higher

"uality of life, the 9roup is best positioned to meet the challenges of increasing

urbaniation.

Product 4 Ser#ice%

High Strength. High Performance.

Ambuja Cement is committed to ma#e high strength cement that !ould enable our

customers build strong and durable structures.

Ambuja Cements Limited, formerly #no!n as Gujarat Ambuja Cement

Limited, is a major cement producing company in India.NAO%he 9roups

principal activity is to manufacture and mar#et cement and clin#er for both

domestic and e6port mar#ets.

A&O=% AB&=A C5B58%

Ambuja Cements Ltd ACL-, a part of a global conglomerate Holcim, is one of

India$s leading cement manufacturers and has completed over 2 years of

operations. %he company, initially called 9ujarat Ambuja Cements Ltd, !as

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founded by 8arotam 3e#hsaria in :1/< in partnership !ith 3uresh 8eotia.

9lobal cement major Holcim ac"uired management control of Ambuja in 2D.

%he Company has also made strategic investments in ACC Limited.

Customer segments

%his function has been !or#ing !ith our sta#eholders for over t!o decades no! in

5ducating ( empo!ering users ( Influencers, Onsite guidance on right construction

practices, )alue added services for building strong houses, %raining ( certification of

uns#illed E semis#illed manpo!er, Fno!ledge transfer on advancement of materials (

technology, @eveloping simple tools ( methods for improving construction practices and

@eveloping Customers ( Influencer engagement programs.

%he Company has created many such platforms under !hich the engagement programs,

customied as per customer segments, are carried out by the Customer 3upport 9roup.

It is a continuous endeavor to upgrade the programs and ma#e it more sustainable.

The Company has been creating sustainable impact beyond business

transaction.A team of 2 e6perienced graduate civil engineers is engaged in creating

sustainable impact through +roducts ( 3ervices. This includes

%raining ( certification of more than 10000masons

%raining ( certification of more than 5000contractors

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Bodular curing services to more than 1200IH&s

Conserving !ater more than 18 million liters!ater

>eplacing conventional clay bric#s !ith more than 100 millioneco friendly bric#s

3etting up 14Ambuja Fno!ledge centers throughout the country and starting

another 14Ambuja Fno!ledge centers by @ec. 2:?

VAL! A""!" S!#V$C!S

Sustainability

Sustainable construction can contribute to en%ironment protection

%he food !e eat and the air !e breathe has all come to a point !here it is no more

consumable. =rbaniation has led to environmental challenges !hich have a negative

effect on our planet. %hese effects need to be treated at the earliest. %he one factor that

is triggering such a haardous effect is the construction industry.Sustainable

Construction in $ndiais perhaps one of the most fre"uently used but the least

understood usages in the cement industry. It is an approach !hich doesn$t have a

negative impact on the environment throughout its life time and even after it. %he

Cement 3ustainability Initiative C3I- is trying to do just the same.

%he !orld is progressing at a lightning speed and due to such a rapid progress the

needs and priorities of the people have also changed. 3uch a progress is good, but !e

should ma#e sure that it doesn$t reach a point !here !e affect the needs of our future

generations by being highly dependent on natural resources and depleting its overall

supply. %hat is !hy the need for Sustainable "e%elopment Projects in $ndiais the

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need of the hour. 8e! and innovative methods to implement it have to be realied !hich

can be used in the long run. %he society should be educated about such a sustainable

approach so that it becomes a part of people$s lives.

Sustainable "e%elopment in $ndiais not only good for the environment but is also

important for the economic development of the nation. %he environmental effects that it

has are pretty amaing. %he indoor "uality of air drastically increases and hence

provides healthier air to breathe. It reduces the energy consumption by nearly


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o 03Corporate 3ocial >esponsibility +olicy

o 04

9reen +rocurement +olicy

o 05Corporate 5nvironment +olicy

Sustainable "e%elopment

3ustainability

C3>

5nvironmental 3ustainability

Health ( 3afety

A;>

>ene!able 5nergy +rojects in India

3ustainable 3upply Chain Banagement

%rue )alue Approach

3ustainability >eports

Policy and Goals

*e believe the vision of sustainable development and environment conservation can be

achieved more effectively through a structured and systematic approach. ACL is

empo!ered by the overarching GCorporate 5nvironment +olicy$ along !ith unit specific

policies. %he corporate policy is in conformance !ith the Binistry of 5nvironment and

;orests guidelines. In addition, !e also have various specific policies li#e Corporate

3ustainability +olicy, Climate Change Bitigation +olicy and 9reen +rocurement +olicy

!hich mention Company$s approach on 3ustainable @evelopment,Climate Change

Bitigation and 9reening of 3upply Chain.

All our manufacturing locations have environment team, e"uipped !ith laboratory

facilities to enable the complete monitoring of stac# emissions, ambient air "uality, noise

level and !ater "uality. %hese teams are also responsible for implementing various

environment initiatives at the units.

o 013ustainability +olicy

o 02Climate Change Bitigation +olicy

o 03Corporate 3ocial >esponsibility +olicy

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o 049reen +rocurement +olicy

o 05

Corporate 5nvironment +olicy

Sustainable "e%elopment

3ustainability

C3>

5nvironmental 3ustainability

Health ( 3afety

A;>

>ene!able 5nergy +rojects in India

3ustainable 3upply Chain Banagement

%rue )alue Approach

3ustainability >eports

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Chapter 2

Re#ie+ o$ Literature/#)2 !8=00"i The first and foremost formals study conducted and compiled on

working capital management in &ndia was by the /ational council of applied )conomic

2esearch !/#)2" in 8=00. The council published a report on P+tructure of Working

#apitalQ which confined to the analysis of the composition of working capital with special

reference to fertili3ers, #ement and +ugar industries. The prime obIective of the study was to

examine as to The study revealed that working capital management practices were highly

unplanned and hence the establishment of suitable accounting policies, costupuring systemand inventory controlling techniues in the above-mentioned industries. This study highlights

the significance of suitable and appropriate working capital management policies in the

success of the business.

isra !8=;>"ii has studied the problem of working capital in a selected six public

enterprises for a period of 8=0:-08 to 8=0; ? 09. The importance and findings of the study

are 7 8" +elected enterprises are not able to utili3e working capital efficiently. A" &n all

enterprises excess inventory is noticed which is due to lack of inventory control, defective

inventory management and also due to a congenial organi3ation. &nordinate delays in the

releases of foreign exchange and issue of import licenses are also some reasons for overstock

of inventory. &t is found that receivable turnover ratio is very low due to the generous credit

granting and inadeuate collection policy. &n all the selected enterprises, the si3e of cash is

found to be very much high on account of improper planning and control of cash.

iIaya !8=;;"iii study conducted on working capital management in six cooperative

and seven private sector companies in the sugar industry of Tamil nadu found that the growth

in current assets had registered more than that of sale indicating poor working capital

management. The application of correlation analysis revealed that there was a negative

correlation between return on investment and working capital.

angadhar !8=98"iv study examined the statistical trends in working capital position

among medium, large and small public, private limited companies in the &ndian corporate

sector during 8=08 ? ;0. The application of second parabola revealed that the current assets

formed relatively higher proportion of total net assets in private limited companies than that

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of public limited companies. This study also revealed that in case of medium and large scale

publics limited companies there appeared to be a lead ? lag relationship between gross fixed

assets and current assets over the study period.

hosh !8=9G"v study proves in to the existing practice of working capital in crane

manufacturing industry in &ndia. The study findings indicate that the management of

individual components of working capital was erratic. The collection mechanism followed by

the sample companies was very unplanned and the companies took more time that allowed in

collecting the cash from the customers. The study also revealed that payable to the suppliers

were eually delayed keeping highest portion of payable pending for more than allowed

period. The study recommended the immediate need for streamlining the working capital

management practices.

kkihal !8=9B"vi study of =B small scale industries in Hubli $harwad unicipal

#orporation !H$#" in the state of Darnataka revealed that he management of working

capital in sample industries was found to be highly unplanned. The study concentrated on the

ratios like current ratio, inventory turnover ratio, fixed assets turnover ratio, total assets

turnover ratio, earnings power and gross profit margin. The application of ratio analysis has

revealed that the mismanagement of working capital had adverse effect on the performance of

the industries.

Dhandelwal !8=9>"vii carried on half ? complete empirical research initiated by late

/. garwal, among forty small scale industries in ? 8=9:. The study revealed that the sample firms held

more investments in inventories than reuired and management of receivables constituted as

much as >:F of total current assets. Highlighting the sickness in "viii in his study among a few selected public enterprises in &ndia,

tried to examine the working capital policies adopted by the sample units. He attempted to

assess the degree of effective management of working capital components with a special

emphasis on inventories. The study revealed that no samples company clearly defined

working capital policies and hence maIority of them could not achieve efficiency in working

capital management. The study also revealed that the investment in inventories in sample

units soared up from 0GF in 8=;8 -;A to 00F in 8=;0-;;. &t was further found out that

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maIority of such investment was made in finished goods inventory which indicated that the

units did not manage the working goods inventory which indicated that the units did not

manage the working capital in a planned way. The study recommended to recogni3e prudent

management of working capital as a vital part of financial management

ukerIee !8=90"ix in his study on Pmanagement of working capital in public

)nterprisesQ in respect of central government industrial undertakings, and covering a period

from 8=;B ? ;> to 8=;9-;= has found that, the current assets increased due to the

accumulation of inventories and current liabilities increased due to increase in financing

through payables, the Everall +i3e of the workings capital had been significantly influenced

by the overall si3e of sales and output, the working capital reuirement of the units were not

ascertained based on the considerations as suggested for prudent financial management, there

was a significant negative correlations between overall profitability and si3e of working

capital, there was an over investment in structural determinants and huge si3e of working

capital and due to faulty financial policies adopted by the units, the liuidity and profitability

has a very significant negative correlations.

*anda !8=90"x study of small scale units in the state of Erissa, examines the issues

like optimum investment of funds in current assets, relationship between sales growth and

working capital needs, the role of banks in meeting working capital reuirements. The study

revealed that management of working capital was neglected by maIority of sample units,

which lead to incurrence of loss. &t was found that long ? term funds were highly limited to

the firms and hence maIority of small scale industries depended on short ? term credit in

meeting working capital reuirements.

Eppendahl and 2ichard !8==:"xiii essay expressed capital budgeting proIects

consumes much of the time of a firms management group to the detriment of the uality of

the working capital decision. &t emphasi3ed determinant of the uality of the working capital

decision. &t emphasi3ed that the business executives must become more cogni3ant of the

working capital decision that their firms face every day. The stress in this essay has been laid

on two most important components of working capital called accounts receivables and

marketable securities. The essay revealed that the managers have to be very cautious in

accounts receivables and marketable securities decision.

ohan !8==8"xiv study examines various issues related to working capital

management among selected !six companies" private large ? scale companies in the state of

ndhra *radesh during the period from 8=;; ? 8=90. The study revealed that investments in

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current assets in sample companies was more than that of fixed assets and inventories

constituted highest percentage of total current assets in the sample companies. nalysis

revealed that the liuidity and solvency position of sample units was found to be highly

unsatisfactory because the companies carried with lesser balance sheet working capital than

cash working capital. He based on his findings, suggested the dire need for improvement of

liuidity and solvency position of sample companies failing which the situation would lead to

serious liuidity crunch.

2ao and 2ao !8==8"xv in their study among a few public enterprises belonging to

manufacture sector in the state of Darnataka, have attempted to probe in to the capacity of the

various techniues & evaluating working capital efficiency of business enterprises. The study

revealed that the investment working capital was considerably high when compared to the

total investment.

The Tandon #ommittee norms were found to be yielding better results among the

surveyed companies. However, the study also revealed that the working capital planning and

control was found to be disorderly and ineffective and hence, the urgent need for full focus on

working capital management.


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like ietnam. #oncentrating exclusively on borrowing as a source of financing working

capital reuirement in the corporate sector in &ndia.

anIumdar !8==B"xviii has carried out an empirical analysis among A: corporate

companies in &ndia !8: from private sector and 8: from public sector" for the period from

8=98 to 8==:. The study revealed that the share of public deposits to total borrowings on an

average was only 0F in public limited companies and this was only :.:9F in private sector

companies. The results indicated that the public deposits were not a significant source of

working capital finance among the selected sample companies during the study period. The

study revealed that current ratio in private corporate limited companies was 8.G9, which

indicated aggressive policy. &n government companies the current ratio wasB.GA indicating

conservative policy adopted by them which in turn resulted in higher debt euity ratio. En

overall basis, this comparative study indicated that working capital management in public

sector companies was better than that of private sector companies. +iddharth and $as

!8==B"xix in his study on

FIN-NCI-L *-N-,E*ENT INTRODUCTION

@inance management has always vital and integrated part of business management.

@inancial management is concerned with the planning and controlling of the firms financial

resources. &t is often said that the financial management has received less emphasis as

compared to topics like production and marketing. However, the task of financial planning

and controlling will assume relative more important role than in the past due to certain

changes that have taken place in economy. @actors such as increasing pace of

industriali3ation, technological innovation land inventories, raising price levels, increasing

influence of government in financial matters etc.

De$inition o$ Financia! *ana&ement:

P@inancial management as an application of general managerial principles to the area

of financial decision-making.Q

- HEW2$ /$ 5*TE/

P@inancial management is the operational activity of the business that is responsible

for obtaining and effectively utili3ing the funds necessary for effectively utili3ing the funds

necessary for efficient operations.Q -


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P@inancial management is an area of financial decision making harmoni3ing

individual motives and enterprises goals.Q

- W)+T)2/ L (2&H

O(5ecti#e% o$ Financia! *ana&ement:

The financial obIectives of company are to maximi3e owners economic welfare.

However, there is disagreement as to how the economic welfare of owners can be maximi3ed

They are mainly two points discussed.

8. *rofit aximi3ation.

A. Wealth aximi3ation.

1' Pro$it *a6imi)ation:

aximi3ation of profit is generally regarded as the main obIectives of business

enterprises. )ach collects its finances by way of issue of shares to the public. &nvestors

purchase these shares in the hope getting maximum profits the company whose goal is to

earn maximum profit out its available recourses.

@inancial management evaluates how the funds are used and procured. &t involved a

sound Iudgment combined with all logical approach to decision making. This calls for

evolution of the condition of the alternative used of funds and allocation of resources after

consideration of production and marketing interrelationships. +o, profit maximi3ation will

depend upon several aspects, which are mentioned below.

O(5ecti#e% o$ Pro$it *a6imi)ation:

8. n individual or firm performing any economic activity rationally aims at utility

maximi3ation. 5tility can be measured in term of profit.

A. *rofit maximi3ation ensures the use of resources the best of their advantage to gain

maximi3e out of them.

G. &t maximi3es the social economic welfare.

2' 7ea!th *a6imi)ation:

ccording to prof. +ol man, maximi3ation of Wealth provides useful and meaningful

obIectives as basic guideline by which financial decision should be evaluated.

Wealth maximi3ation means the net present value of a course of action to share

holders. The net present value of a course of action is differences between the net present

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value its benefits and present value of the cost. The negative present value should be

reIected.

7OR8IN, C-PIT-L *-N,E*ENT:

-3 *E-NIN,:

The management and control of working capital is of vital important to companies

and firms and maIor load function of finance personnel, besides all other factors. &t is capital,

which is reuired to meet the day-to-day operations of the business. The working capital of

any business is the capital reuired to find its current assets. #urrent assets are defined as

either cash or those assets that can be converted into cash with in the current fiscal year,

including marketable securities, account receivables and inventories. &t is also a very essential

feature and task of finance manager to maintain an appropriate level of working capital i.e.,

an appropriate level of current assets to meet the current liabilities. The inadeuacy of

working capital may lead the company into difficulties in meeting its regular day-to-day

operations smoothly. )ssential outlays may have to be postponed for want of funds.

Eperating plans will go out of hand and there by not be able to accomplish the

companys overall obIectives. There is a danger of extinction of the external sources like

suppliers and creditors because they may have to wait for longer period for collection of their

payments and in case of default by the company the creditors may not extend further credit to

the company. En the other hand excess holding of working capital is an indication of the

companys lack of boldness in expanding and diversifying the business. This redundant

working capital is in turn due to the excessive, unchecked accumulation of inventories, too

liberal credit policy and slack collection procedures. Thus it is a primary reuirement of

finance manager to manage the working capital efficiently and effectively for successful

working of a business concern.

DEFENITION:

9-n acui%ition o$ $und% +hich increa%e the current a%%et%; increa%ed +or


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9The interaction (et+een current a%%ent% and current !ia(i!itie% i%; there $ore the

main theme o$ the theor i$ +or


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8. *ermanent working capital.

A. Temporary working capital.

1' Permanent or $i6ed +or


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concern having adeuate working capital, high solvency and good credit standing

can arrange loans from banks and others on easy and favorable terms.

@' Ca%h di%count:

deuate working capital also enables a concern to avail cash discounts on the

purchase and hence it reduces costs.

A' Re&u!ar %upp! o$ ra+ materia!:

+ufficient working capital ensures regular supply of raw materials and continuous

production.

0' Re&u!ar pament% o$ %a!arie%; +a&e% and other da"to"da commitment%:

company which as sample working capital can make regular payments of salaries,

wages and other day-to-day commitments which raises the morale of its employees, increases

their efficiency wastages and costs enhances production and profits.

B' E6p!oitation o$ $a#ora(!e maruic< and re&u!ar return on in#e%tment%:

)very investor wants a uick and regular return on investments. +ufficiency of

working capital enables a concern to pay uick and regular dividends to its invertors as there

may not be much pressure to plough back profits. This gains the confidence of its investors

and creates a favorable market to raise additional funds in the future.

1' i&h mora!e:

deuacy of working capital creates an environment of security, confidence, and high

morale and creates overall efficiency in a business.

E6ce%% or inadeuate +or


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Di%ad#anta&e% o$ redundant or e6ce%%i#e +or. When there is excessive working capital, relations with banks and other financial

institution may not be maintained.

0. $ue to low rate of return on investments, he value of shares may also fall.

;. The redundant working capital gives raise to speculative transaction.

Di%ad#anta&e% or dan&er o$ inadeuate +or. &t becomes impossible to utili3e efficiency the fixed assets due to non-availability of

liuid funds.

0. The rate of return on investments also falls with the shortage of working capital.

The need $or o(5ecti#e% o$ +or


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G. To incur day-to-day expenses and overhead costs such as fuel, power and office

expenses

B. To meet the selling costs as packing, advertising, etc.

>. To provide a credit facility to the customers.

0. To maintain the inventories of raw material, work-in-progress, stores and spares and

finished stock.

Determinant% o$ +or


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!$". debentures

!)". deposits from public

E%timated +or. loans and advances !granted by the company"

Component% o$ current !ia(i!itie%:

8. +undry creditors !also known as bills payable and account payable"

A. trade advances !given to the company for supply of goods"

G. short-term borrowings from banks and others

B. *rovisions !for taxes, bas debts, exchange rate fluctuations, etc."

(etter business sense, however, calls for keeping the current assets at the minimal level,

whereby minimum sources of funds, !both current and non-current liabilities", may be

reuires to finance them, and thereby, the Pinventory carrying costsQ, and the Pinterests

outgoQ may as well be kept the minimal level.

7h +or


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Working capital management is highly flexible in nature, so much so that it can

very easily be adapted to suit even extreme conditions, like raising and falling demands in

peak and off season, buoyant and sluggish economic and market condition, etc. further, if

some inappropriate policy or procedure is detected at a later stage, remedial and right steps

can be adopted henceforth, any time. This however, is not position in the case of proIect

management.

.23' Le#e! o$ in#e%tment in #ariou% component% o$ current a%%et%:

&nvestments in current assets constitute a very substantial percentage !usually

more then >:F" of the total investment in most of the &ndian companies and firms.

.?3' Critica!it:

The under mentioned fact itself can bring home the extent of criticality of

working capital management.

Ene of the components of the working capital can make such a dramatic

difference, the importance of meticulous management of all the components of the working

capital !vi3. current assets, current liabilities and even a portion of the differed liabilities" can

vary well be imagined and appreciated.

.@3' >uantum o$ e$$ort% and time:

)mpirical study and observations have revealed that a maIor portion of the time

of the finance managers, in most of the companies, is devoted !and rightly so" towards the

management of the various components of the working capital, with a view to maximi3ing

their profitability, and the prospects and prosperity therewith.

Tpe% o$ 7or


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A. /et Working #apital7

The net working capital refers to the difference between the current assets and current

liabilities. &t is a ualitative concept.

. &t indicates the liuidity position of the firm.

(. &t suggests the extent to which working capital needs may be financed by

permanent sources of funds.

7OR8IN, C-PIT-L CURRENT -SSETS CURRENT LI-GILITIES

Therefore,

8. n increase in current assets increases working capital.A. n increase in current liabilities decreases working capital.

G. decrease in current assets decreases working capital.

B. decrease in current liabilities increases working capital.

The change in the amount of any current asset or current liability in the current balance

sheet as compared to that of previous balance sheet either results in an increase or decrease,

in working capital.

Therefore, the statement of changes in finance position based on changes in working

capital position is a useful tool for highlighting the changes that have occurred in the

financial operation between two balance sheet dates.

NEED:

)very business needs some amounts of working capital. The need for working capital

arises due to the time gap between production and reali3ation of cash from sales. There are

time gaps in purchases of raw material and production, production and sales, and sales and

reali3ation of cash.

F-CTORS DETER*ININ, TE 7OR8IN, C-PIT-L

1'RE>UIRE*ENTS:

The working capital reuirement of a concern depends on a large number of factors.

These factors affect different enterprises differently. They also vary from time to time.

The following are important factors generally influencing the working capital

reuirements.They are7-

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8. /ature and si3e of industry.

A. Eperation efficiency.

G. ccessibility with money market.

B. (usiness fluctuations.

>. anufacturing cycle.

0. *roduction policy.

;. #redit policy.

9. #redit terms available from suppliers.

=. rowth and expansion proposals.

8:. *rofit margin.

88. *rice level changes.

8A. Tax liability.

8G. 2etention policy and dividend policy.

8B. $epreciation policy.

Thus, in working capital planning, a finance executive should take into ccount the different

influencing factors, to obtain an optimum level of working capital.

2' OPER-TIN, CYCLE

(usiness activity is a continuous process, and so a firm needs funds to run the day-to-

day business activities. &t has to invest enough funds in current assets, as sales do not convert

into cash immediately. There is a time lag between the sales and the receipt of cash. This time

period is the Eperating #ycle or the #ash #ycle. The Eperating #ycle can be said to be at the

heart of the need for working capital.

PThe continuing flow from cash to suppliers, to inventory, to ccounts receivable and

back into cash is called the Eperating #ycleQ.

Thus Eperating cycle is the time lag defers from firm depending on the nature of the

business. The Eperating #ycle of the manufacturing company involves three phasesS

8. #onversion of cash into inventory

cuisition of resources such as 2aw aterials, %abour, power and @uel etc.

A. #onversion of &nventory into @inished oods.

anufacturing process includes conversion 2aw aterials into Work-&n-

*rogress and finished goods.

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G. #onversion of 2eceivables into #ash.

+ales of the product either for cash or credit. #redit sales create (ook $ebts for

collection. This phase completes the Eperating #ycle.

There is a need of #urrent ssets as the Eperating #ycle is a continuous process.@irms have to invest short-term liuid securities or hold cash to meet obligations when due.

+imilarly firms must have adeuate inventory for smooth production. @irms sell goods on

credit to retain the customers and to maintain ccounts receivables. &t is in this way that an

adeuate level of Working #apital has to be maintained. The following figure will clearly

illustrate the Eperating #ycle.

OPER-TIN, CYCLE

?' *-N-,E*ENT OF C-S

#ash is the important current asset for the operation of the business. #ash is the basic

input needed to keep the business roaring on a continuous basis. The firm should keep

sufficient cash, neither more nor less. #ash is the item that influences the solvency, liuidity

and profitability of a company. &f the company has got a greater proportion of cash in the

current assets, the company is said to be highly liuid, as a company is said to be highly

liuid, as a company has got sufficient cash balance as its disposal.

The company has got sufficient funds, its solvency position is considered to be good.

En the other hand a company holding more cash implies that it is losing the opportunity cost

of investing that cash in the profitable investment categories.

#ash management is concerned with managing of7-

8. #ash flows into and out of the firm.

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A. #ash flows within the firm, and

G. #ash balances held by the firm at a point of time by financing deficit or investing

surplus cash.

C-S *-N-,E*ENT CYCLE

+ales generate cash that has to be disbursed. The surplus cash has to be invested while deficit

has to be borrowed. #ash management seeks to accomplish this cycle at a minimum cost at a

minimum cost. t the same time, it also seeks to achieve liuidity and control.

Therefore, the aim of cash management is to maintain adeuate control over cash

position to keep the firm sufficiently liuid and to use excess cash in some profitable way. &n

order to resolve the uncertainty about cash flow prediction and lack of synchroni3ation

between cash receipts and payments, the firm should develop appropriate strategies of cash

management.

Ca%h P!annin&:

#ash inflows and outflows should be planned to proIect cash surplus or deficit for

each period of the planning period. #ash budget should be prepared for this purpose.

1' *ana&in& the ca%h $!o+:

The flow of cash should be properly managed. The inflows should be accelerated

while, as far as possible, devaluating the cash flows.

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2' Optimum Ca%h Le#e!:

The firm should decide about the appropriate level of cash balances. The cost of

excess cash and danger of cash deficiency should be matched to determine the optimum level

of cash balances.

?' In#e%tin& Surp!u% Ca%h7

The surplus cash balances should be properly invested to earn profits. The firm should

decide about the division of such cash balance between bank deposits, marketable securities

and inter-corporate lending.

R-TIO -N-LYSIS

2atio analysis is a form of financial statement analysis that is used to obtain a uick

indication of firms financial performance in several key areas. The ratios are categori3ed as

short?term solvency ratios. $ebt management ratios, asset management ratios, profitability

ratios and market value ratios.

2atios analysis as a tool possesses several important features. The data, which are

provided by financial statements, are readily available. The computation of ratios facilitates

the comparison of firms which differ in si3e. 2atios can be used to compare a firms financialperformance with industry average. &n addition, ratios can be used in a form of trend analysis

to identify areas where performance has improved or deteriorated over time.

(ecause ratio analysis is based upon accounting information, its effectiveness is

limited by the distortions which arise in financial statements due to such things as historical

cost accounting and inflation. Therefore, ratio analysis should only be used as a first step in

financial analysis, to obtain a uick indication of a firms performance and to identify areas

which need to be investigated further.

CL-SSIFIC-TION OF R-TIOS:

#lassification from the point of financial management is as follows7

8. %iuidity ratios

A. %everage ratios

G. ctivity ratios

B. *rofitability ratios

LI>UIDITY R-TIOS:

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Current ratio%:

The current ratio is calculated by dividing current assets by current liabilities. #urrent

assets that the firm expects to convert in to cash in the coming year and current liabilities

which have to be paid in cash in the coming year. The appropriate value for this ratio dependson the characteristics of the firms industry and the composition of its current assets. How

ever at a minimum the current ratio should be greater than once.

Current a%%et%

Current ratio """"""""""""""""""

Current !ia(i!itie%

>UIC8 R-TIO:

The uick ratio recogni3es that, for many firms, inventories can be rather liuid. &f

these inventories had to sold off in a hurry to meet an obligation the firm might have

difficulty in finding a buyer and the inventory items would likely have to be sold at a

substantial discount from their fair market value. This ratio attempts to measure the ability of

the firm to meet its obligations relying solely on its more current asset accounts such as cash

and accounts receivable. This ratio is calculated by dividing current assets less inventories bycurrent liabilities.

Current a%%et% in#entor

>uic< ratio """""""""""""""""""""""""""""""""

Current !ia(i!itie%

C-S POSITION R-TIO:

#ash is the most liuid assetS a financial analyst may examine cash ratio and itseuivalent to current liabilities. Trade investment or marketable securities are euivalent of

cashS therefore, they may be included in the computation of cash ratio.

Ca%h ratio ca%h mar


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The inventory turnover and days inventory ratios measure the firms management of

its inventory. &n general, a higher inventory turnover ratio is indicative of better performance

since this indicated that the firms inventories are being sole more uickly. How ever, if the

ratio is too high then the firm may be losing sales to competitors due to inventory shortages.

The inventory turnover ratio is calculated by dividing cost of goods sold by inventory. When

comparing one firms inventory turnover ratio with that of another firm it is important to

consider the inventory valuation method used by the firms. +ome firms us @&@E ! first in first

out" and some use %&@E ! last in first out"

In#entor turno#er ratio %a!e% H a#era&e in#entor

The days inventory ratio is calculated by dividing the number of days in a year, G0>

by the inventory turnover ratio. There fore the days inventory indicates how long, on average

an inventory item sits on the shelf until it is sold.

FIJED -SSETS TURNOER R-TIO:

The fixed assts turnover ratio measures how productively the firm is managing its

fixed assets to generate sales. This ratio is calculated by dividing sales by net fixed assets.

When comparing fixed assets turnover ratios of different firms it is important to keep in mid

that the values for net fixed assets reported on the firms balance sheets are book values which

can very different from market values.

Sa!e%

Fi6ed a%%et% turno#er ratio """""""""""""""""""""""""

Net $i6ed a%%et%

TOT-L -SSETS TURNOER R-TIO:

The total assets turnover ratio measures how productively the firm is managing all of

its assets to generate sales. This ratio is calculated by dividing sales by total assets.

-nnua! Sa!e%

Tota! a%%et turno#er """"""""""""""""""""

Tota! a%%et%

7OR8IN, C-PIT-L TURNOER R-TIO:

This ratio makes clear whether the business is being carried on with small or largeamount of working capital in relation to sales.

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7or


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Chapter "?

RESE-RC *ETODOLO,Y

ethodology of research can be divided into two types. Ene of the sources of data is

called primary data and a second source of data is called secondary data. The primary data

which means collection of data with a uestioner form the employees, the customers and the

sources. The secondary data which means collection of information from the books records

Iournals maga3ines of the organi3ations.

Statement o$ the pro(!em:

Working capital is an important aspect of financial management. &t plays an essential

role in organi3ations financial success. The nature of such working capital is very liuid.

aluation of working capital elements like cash, debtors, stock and creditors itself is a

difficult task for any organi3ation. +o there arises a reuirement for assessing working capital

reuirements, monitoring and managing it, from time to time for greater efficiencies.

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NEED FOR TE STUDY

@inance is said to be life blood of economic and &ndustrial activities. anagements of

every organi3ation is &nterested to know the strengths and weaknesses. &t can be possible

through financial performance analyses. &t can be possible through financial performance

analysis is useful to make either best use of the financial strength to overcome the

weaknesses. The future plans of the organi3ations should be laid down in view of the starting

point for making plans before using nay sophisticated forecasting and paining procedures.

5ndertaking the post prereuisite for anticipating in the future. enerally the users of

financial analysis like trade creditors, suppliers of long term debt, &nvestors management etc,

are &nterested to know the financial performances of the firm.

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OGKECTIE OF TE STUDY

The present study in (5. To interpret the results for various ratios.0. To study and evaluated the cash, receivables and inventory management performances.

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SOURCES OF TE STUDY

Primar Data: The primary information and data related to the proIect has been obtained by

interviewing the dministrator, anager, ccountants, &ndustrial guides and other concerned

executives constitute the primary data.

Secondar Data: +econdary $ata is collected from the * L % ccount, (alance sheet, (ooks

and company website.

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SCOPE OF TE STUDY

The scope of the study is defined below in terms of concepts adopted and period under

focus.

8. @irst, the study of working capital management is confined only to the ambuIacement.

A. +econdly, the concepts of the working capital i.e., ross and /et are used in

measuring the liuidity and profitability performance and also to arrive at various

obIectives of the study,

G. Thirdly, the study is based on the annual reports of the company for a period of >

years from A:88-A:8>. $ue to time constraint the study period is restricted.

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TOOLS FOR -N-LYSIS:

To analy3e the data acuired from the secondary sources the following tools are used7

+tatement of changes in working capital.

%iuidity 2atio analysis.

+tatistical Tools ! (are #harts and Tables"

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LI*IT-TIONS OF TE STUDY

a" The &nformation used is primarily from annual reports available to the public

and the same doesnt indicate the current situation of the firm.

b" $etailed analysis could not be carried for the proIect work because of the

limited time span.

c" +ince financial matters are sensitive in nature the same could be acuired

easily.

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Chapter " @

D-T- -N-LYSIS -ND INTERPRET-TION

T-GLE 1'1 Statement o$ chan&e% in 7or the total #urrent assets are increase by 2s >>G.G=

and the Total #urrent liabilities are increased by 2s 99.>>. Hence the working capital

increased by 2s, B0B.9B.

T-GLE 1'2; Statement o$ chan&e% in 7or8


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Working Capital Management 2013 ---2014

Particulars 31-Mar-14 31-Mar-13

Increas

e Decrees

Current Assets

current investment 0 0 0

Inventories !3" "33!"4 -45!55

$un%r& De'tors 22(!" 231!51 -3!53

Cas) an% *ank *alance 245!12 2341!0" 11(!03

+oance an% A%vances 30!32 2"!41 1!"1

ot)er Current Assets 45!4 5(!15 -11!(5

.otal 5""5!21 553(!04 45!1(

Current +ia'ilities 0

$)ort term *orro,ings 0 0 0

tra%e pa&a'les #1!4" "(4!52 -35#!03

%eerre% .a/ +ia'ilities 1342!3 ("2!3" 550!44

t)er +ong .erm +ia'ilities 11(#!22 10(#!2" ""!"3

.otal current +ia'ilities 313(!54 243!2 2"4!34

Working Capital 25(!#( 2#"3!4240#!1(

FOR*UL-:Working #apitalM #urrent ssets"#urrent %iabilities.

INFERENCE:

The above tables in the year A:8B the total #urrent assets are increase by 2s

B>9.8; and the Total #urrent liabilities are increased by 2s A=B.GB. Hence the working capital

increased by 2s AB:0.8;.

T-GLE 1'?; Statement o$ chan&e% in 7orA


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,orking Capital 2012 -- 13

Particulars 31-Mar-13 31-Mar-12Increase Decrees

Current Assets


Inventors "33!"4 "3!"3 -4"!""

$un%r& De'tors 231!51 213!3( 1!14

Cas) an% *ank *alance 2341!0" 2253!(2 (!3(

+oance an% A%vances 2"!41 24!" 40!43

ot)er Current Assets 5(!15 32!5( 24!5

.otal 553(!04 52(#!4 2#0!#4



tra%e pa&a'les "(4!52 "34!54 3"!"

%eerre% .a/ +ia'ilities ("2!3" #55!( 13#!52

t)er +ong .erm +ia'ilities 10(#!2" 130!"3 -232!#4

.otal Current +ia'ilities 243!2 2""!34 -5#!14

,orking Capital 2#"3!4 23((!0# 31#!(

FOR*UL-:

Working #apitalM #urrent ssets"#urrent %iabilities.

INFERENCE:

The above tables in the year A:8G the total #urrent assets are increase by 2s A0:.0B

and the Total #urrent liabilities are decreased by 2s >0.8B. Hence the working capital

increased by 2s G80.;9.

T-GLE 1'1 Statement o$ chan&e% in 7orG


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,orking Capital 2011-12

Particulars 31-Mar-12 31-Mar-11 Increase Decrees

Current Assets


Inventories "3!"3 "24!"( 5!"#

$un%r& De'tors 213!3( 240!5 -2(!4

Cas) an% *ank *alance 2253!(2 20(1!23 12!4"

+oance an% A%vances 24!" 5#(!#1 -31!#3

ot)er Current Assets 32!5( 23!## !"1

.otal 52(#!4 32!32 144!0



tra%e pa&a'les "34!54 0 "34!54

%eerre% .a/ +ia'ilities #55!( 15!13 -"32!2#

t)er +ong .erm +ia'ilities 130!"3 110#!11 202!2

.otal current +ia'ilities 2""!34 2#"4!24 205!1

0

,orking Capital 23((!0# 1134!0 1242!"

FOR*UL-: Working #apitalM #urrent ssets-#urrent %iabilities.

INFERENCE: The above tables in the year A:8A the total #urrent assets are increase by

2s 8BB9.:9 and the Total #urrent liabilities are increased by 2s A:>.8:. Hence the working

capital increased by 2s 8ABA.=9.

NET 7OR8IN, C-PIT-L

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uick ssetsuick 2atio M #urrent liabilities

Table A.A uick ratio of mara 2aIa (atteries %td., company for the year A::9-A:8A.

&ear uick AssetCurrent

+ia'ilitiesuick atio

31-Mar-15 5#53!15 322#!0" 1!(5

31-Mar-14 510#!2 313(!54 1!#3

31-Mar-13 4#03!10 243!20 1!#2

31-Mar-12 42"2!4( 2""!34 1!4

31-Mar-11 35"#!1 2#"4!24 1!33

Ta(!e no' @'0 >uic< ratio

Fi& no' @'0 >uic< ratioINFERENCE:

mbuIa #ement has maintained uick 2atio. &n the yearA:88 2atio is 8.GG, in the year A:8A ratio is 8.B9, in the year A:8Gratio is 8.0A, in the year A:8B ratio is 8.0G and in the year A:8> ratio is8.;>.C-S R-TIO

@ormula7 #+H 2T&E

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#ash 2atio M #urrent liabilities

Table A.A uick ratio of mara 2aIa (atteries %td., company for the year A::9-A:8A.

Year% >uic< -%%et%

RS

Current Lia(i!itie% RS Ratio .3

31-Mar-15 5#53!15 322#!0" 1!(531-Mar-14 510#!2 313(!54 1!#331-Mar-13 4#03!10 243!20 1!#231-Mar-12 42"2!4( 2""!34 1!431-Mar-11 35"#!1 2#"4!24 1!33

Ta(!e no' @'0 Ca%h Ratio

Fi& no' @'0 Ca%h Ratio

INFERENCE:

mbuIa #ement has maintained #ash 2atio. &n the year A:882atio is 8.GG, in the year A:8A ratio is 8.B9, in the year A:8G ratio is8.0A, in the year A:8B ratio is 8.0G and in the year A:8> ratio is 8.;>.

Current ratio%:

Current a%%et%

Current ratio """"""""""""""""""

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Current !ia(i!itie%

Table A.A #urrent 2atio

&ear Current Asset Currentlia'ilities Current atio

31-Mar-15 #54!#0 322#!0" 2!03

31-Mar-14 5""5!21 313(!54 1!"1

31-Mar-13 553(!04 243!20 1!"5

31-Mar-12 52(#!40 2""!34 1!2

31-Mar-11 32!32 2#"4!24 1!42

Ta(!e no' @'0 Ca%h Ratio

Fi& no' @'0 >uic< ratio

INFERENCE:

mbuIa #ement has maintained net working capital ratio. &nthe year A:88 2atio is 8.BA, in the year A:8A ratio is 8.9A, in the yearA:8G ratio is 8.=>, in the year A:8B ratio is 8.=8 and in the year A:8>ratio is A.:G.

Chapter "A

FINDIN,S

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En the detailed study and analysis and evolution of the ratio, trends funds flowstatements the following were drawn.

The above tables in the year A:8> the total #urrent assets are increase by 2s

>>G.G= and the Total #urrent liabilities are increased by 2s 99.>>. Hence the

working capital increased by 2s, B0B.9B. The above tables in the year A:8B the total #urrent assets are increase by 2s

B>9.8; and the Total #urrent liabilities are increased by 2s A=B.GB. Hence the

working capital increased by 2s AB:0.8;. The above tables in the year A:8G the total #urrent assets are increase by 2s

A0:.0B and the Total #urrent liabilities are decreased by 2s >0.8B. Hence the

working capital increased by 2s G80.;9. The above tables in the year A:8A the total #urrent assets are increase by 2s

8BB9.:9 and the Total #urrent liabilities are increased by 2s A:>.8:. Hence the

working capital increased by 2s 8ABA.=9. mbuIa #ement has maintained net working capital ratio. &n the year A:88

2atio is 0.>A, in the year A:8A ratio is B.:;, in the year A:8G ratio is G.G;, in

the year A:8B ratio is G.B; and in the year A:8> ratio is A.9A. mbuIa #ement has maintained uick 2atio. &n the year A:88 2atio is 8.GG, in

the year A:8A ratio is 8.B9, in the year A:8G ratio is 8.0A, in the year A:8B ratio

is 8.0G and in the year A:8> ratio is 8.;>. mbuIa #ement has maintained #ash 2atio. &n the year A:88 2atio is 8.GG, in

the year A:8A ratio is 8.B9, in the year A:8G ratio is 8.0A, in the year A:8B ratio

is 8.0G and in the year A:8> ratio is 8.;>. mbuIa #ement has maintained net working capital ratio. &n the year A:88

2atio is 8.BA, in the year A:8A ratio is 8.9A, in the year A:8G ratio is 8.=>, in

the year A:8B ratio is 8.=8 and in the year A:8> ratio is A.:G.

SU,,ETIONS

The company should maintain huge inventories, which results in high inventory

carrying cost.

The company should increase the current assets.

The company should maintain sales increases to every year respectively.

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The firm need to maintain sufficient working capital.

The firm go to the short term deposits are investment for surplus of uick ssets

CONCLUSION

The net working capital is sufficient, but the total assets, inventories are decreased.

The bank balance is less. &n the mbuIa #ement there was increase the assets, inventoryL

bank balance. &f there is high properties they can face many problems. The net working

capital is high. The total properties are ery high in.

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GIGLIO,R-PY

8. +.*.


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G. +.*.

ambuja working capital 2016

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