finance project

APROJECT REPORTONWORKING CAPITAL MANAGEMANTForKISHOR INDUSTRY PVT LTD

SUBMITTED TO

UNIVERSITY OF PUNE

IN THE PARTIAL FULFILLMENT OF THE REQUIREMENT OFMASTER OF BUSINESS ADMINISTRATION (M.B.A.)

UNDER THE GUIDANCE OFPRF M. YAWALKAR

-SUBMITTED BY-JADHAV PRAVIN KISAN

Submitted to

MATOSHRI COLLEGE MANAGEMENT (Yeola)Department of MBA 2013-2015

MATOSHRI COLLEGE MANAGEMENT, YeolaDEPT. OF MBA

Certificate

This is to certify that Mr. _JADHAV PRAVIN KISAN_ has submitted a summer project on WORKING CAPITAL MANAGEMEN_( to University of Pune for the partial fulfillment of Master of Business Administration (M.B.A.).We further certify that to the best of our knowledge and belief, the matter presented in this project has not been submitted to any other Degree or Diploma course.

M.YAWALKAR HOD

ACKNOWLEDGEMENT

I wish to express my sincere appreciation & gratitude to all those with whom I interacted & whose thoughts & insights me add value to my knowledge. My grateful acknowledgement to Mr. Kamal Kishor Kabra. Managing Director, KISHOR INDUSTRY PVT LTD for giving me an opportunity & guides me during my training.My deepest sense of gratitude to Prof. Yawalkar sir my internal project guide, for extending his valuable guidance & support, without his project would not have assumed its shape. I would also like to thank all the staff from .Kishor Industry Pvt Ltd who helped me in my work.I would also like to extend my acknowledgement to my family & friends whose encouragement & co-operation helped me complete this project successfully.

PRAVIN JADHAV MBA- 2013-15

Declaration

I undersigned hereby declares that, the project titled A Study on Working Capital Management is executed as per the course requirement of Two year full time MBA program of University of Pune. This report has not submitted by me or any other person to any other University or Institution for a degree or diploma course. This is my own and original work.

Place: Sd. JADHAV PRAVIN KISAN Date: - MBA-2013-15

p INDEX

Sr. No.Chapter NamePage No.

1Introduction4

2industry profile

3COMPANY PROFILE

4PRODUCT PROFILE

5objective of the study

6Research Methodology

6.1primary data

6.2secondary data

6.3LIMITATIONS OF THE STUDY

7THEoReTICAL BACKGROUND

8DATA ANALYSIS AND INTERPRETATION

9FINDINGS

10SUGGESTION

11CONCLUSION

12ANNEXURE

1) BIBLIOGRAPHY

INTRODUCTION

1.1 OBJECT OF THE PROJECT In master of Business Administration theoretical knowledge is not sufficient. Practical knowledge got by the project is very useful in our future. MBA has to play quite responsible role as a manager, so that practical knowledge is must for management student.During the project we come across different real life problems. This practical knowledge helps us in future to overcome such problems in the corporate world.The objective of the project work is as follows:

1. To enable the MBA student to test their theoretical knowledge in practical.

2. To provide training to student by the company, this is very useful in their future.

3. Preparation of project report is mandatory for every MBA student, that is why the primary objective of any project is fulfill the requirement of the syllabus with the grasping the knowledge.

1.2 SELECTION OF THE TOPIC

Topic selection is one of the important aspects of my project. As it decides the course of action is to be followed. The topic given by my project guide was study of working capital Management by The Kishor industry. Any Nationalize Company, private sector Kishor industry etc. provides working capital management goods and serves to the organizations or companies. The working capital is required for each and every industry and unit for their day to day operation. Company helps to meet their financial need by financing them, so that they can run their business unit smoothly wit out any scarcity of working capital.In our economy companies are the golden source which can help us to fulfilling our demand by providing us financial service i.e. loan for a certain period of time then we have to repay the sum in installments with interest or as per the rule held by the company. Analyzing, how Kishor industry working capital to business unit is important topic for the management students who may have an opportunity to work in companies. Under this study, I analysis the financial position of the companies or orgniasations to whom Kishor industry was going to finance. This analysis was very essential for the sanctioning of the required fund to the business unit.

INTRODUCTION OF PROJECT

The current study contributes to the literature by examining impact of working capital management on the operating performance and growth of new public companies. The study also sheds light on the relationship of working capital with debt level, firm risk, and industry. Using a sample of a manufacturing, the study finds a significant positive association between higher levels of accounts receivable and operating performance. The study further finds that maintaining control (i.e. lower amounts) over levels of cash and securities, inventory, fixed assets, and accounts payables appears to be associated with higher operating performance, as well. We find that the firms which are experiencing unusually high growth tend not to perform as well as those with low to moderate growth. Further firms which are experiencing high growth tend to hold higher levels of cash and securities, inventory, fixed assets, and accounts payables. These findings tend to suggest that firms are willing to sacrifice performance (accept low or negative operating returns) to increase their growth levels. The higher level of growth is also associated with higher operating and financial risk. The findings of this study suggest that perhaps the firms should stay more focused on their operating performance than on maintaining high growth levels.

Working capital policy refers to the firm's policies regarding 1) target levels for each category of current operating assets and liabilities, and 2) how current assets will be financed. Generally good working capital policy (i.e. under conditions of certainty) is considered to be one in which holdings of cash, securities, inventories, fixed assets, and accounts payables are minimized.

The level of accounts receivables should be used as a means of stimulating sales and other income. Previous literature on working capital management has found a negative association, overall, between level of working capital and operating performance as measured by operating returns and operating margins (Peterson and Rajan,). Under conditions of certainty (i.e. sales, costs, lead times, payment periods, and so on, are known), firms have little reason to hold more working capital than a minimum level. The management of working capital plays an important role in the maintaining the financial health of the firm during the normal course of business.A study of working capital is of major importance of internal and external analysis because of its relationship with the current day to day operations of business. The study of management of working capital covers areas like cash management, Accounts receivables, inventory and other concerned areas. Thus, working capital is of paramount importance to a firm's financial performance.In working capital analysis the direction of change over a period of time is of crucial importance. Working capital is one of the important fields of management. It is therefore very essential for an analyst to make a study about the trend and direction of the working capital. The working capital trend analysis represents a picture of variation in current assets, current liabilities and working capital over a period of time. Such an analysis enables us to study the upward and downward trend in current assets and current liabilities and its effect on the working capital position.

OBJECTIVES OF THE STUDY

To study the methods of working capital Management by Kishor industry pvt.ltd to required business unit.1. To have a comprehensive understanding of the organization.2. To know its product profile as well as organizational structure.3. To study the working capital management of Kishor industry Pvt Ltd. To Determining the relationship between the current assets and current liabilities and hence liquidity is determined. 4. To study the optimum level of current assets and current liabilities of the company.

SCOPE The scope of study project repot on topic working capital management to manage to all Important point of view

1) The management of working capital helps us to maintain the working capital at a satisfactory level by managing the current assets and current liabilities. It also helps to maintain proper balance between profitability, risk and liquidity of the business significantly.

2) By managing the working capital, current liabilities are paid in time. If the firm makes payment to it creditors for raw material in time, it can have the availability of raw material regularly, which doesnt t cause any obstacles in production process. Adequate working capital increases paying capacity of the business but the excess working capital causes more inventories, increases the possibility of delay in realization of debts.

3) On the other hand, absence of adequate working capital leads to decrease in return on investment. The goodwill of the firm is also adversely affected due to the inability to pay current liabilities in time.

4) Hence, the management of working capital helps to manage all the factors affecting the working capital in the most profitable manner.

INDUSTRY PROFILE

The Indian plastic industry has taken great strides. In the last few decades, the industry has grown to the status of a leading sector in the country with a sizable base. The material is gaining notable importance in different spheres of activity and the per capita consumption is increasing at a fast pace. Continuous advancements and developments in polymer technology, processing machineries, expertise, and cost effective manufacturing is fast replacing the typical materials in different segments with plastics.

On the basis of value added, share of India's plastic products industry is about 0.5% of India's GDP. The export of plastic products also yields about 1% of the country's exports. The sector has a large presence of small scale companies in the industry, which account for more than 50% turnover of the industry and provides employment to an estimate of about 0.4 million people in the country. Approximately Rs 100 billion are invested in the form of fixed assets in the plastic processing industry.

HistoryIndian plastic industry has made significant achievements in the country ever since it made a promising beginning with the start of production of polystyrene in 1957. The industry is growing at a rapid pace and the per capita consumption of plastics in the country has increased several times as compared to the earlier decade. The chronology of production of polymers is summarized as under - 1957 - Polystyrene 1959 - LDPE 1961 - PVC 1968 - HDPE 1978 - Polypropylene Currently, the Indian plastic industry is highly fragmented with an estimate of around 25,000 firms and over 400,000 employees. The top 100 players of Indian plastic industry account for just 20% of the industry turnover. Barring 10 to 15% of the firms that can be categorized as medium scale enterprises, most of the units operate on a small scale basis.

The immense potential of Indian plastic industry has motivated Indian manufacturers to acquire technical expertise, achieve superior quality standards and build capacities in different facets of the booming plastic industry. Substantial developments in the plastic machinery sector coupled with matching developments in the petrochemical sector, both of which support the plastic processing industry, have facilitated the plastic processors to develop capacities to cater both the domestic as well as overseas exports.

Exports In the calendar year 2006, the value of world plastic export was US$ 375 billion. However the share of India was less than 1 % with exports of worth US$ 3.187 billion. The percentage of growth in export was 21 %. During this trend of growth in exports, the export of plastics raw material increased from 55 % to 60 % of the total export of plastic goods, while the export of processed plastic goods has registered a negative growth from 45 % to 9 %. According to recent reports, the industry is said to be losing an opportunity of USD 300 million through value addition on the raw materials that are exported.

Indian plastic exports were valued at about US$ 532 million during FY 2004 (1st half FY2005 exports US $ 295 million). With significant capacity additions leading to over-capacity in domestic markets during FY2001 and beyond, polymer exports have increased considerably. However, due to the lower competitiveness of the plastic products industry, polymers have been exported directly. Indian plastic industry ProductsThe major plastic products that India export are -

Raw Materials - PVC, polypropylene, polyethylene, polystyrene, ABS, polyester chips, urea / phenol formaldehyde, master batches, additives, etc

Packaging - PP / HDPE woven sacks / bags / fabrics, poly-lined jute goods, box strapping, BOPP tapes, a range of plastic sheeting / films (of PVC, PP, HDPE, nylon, FRP, PTFE, acrylic, etc.), pouches, crates, bottles, containers, barrels, cans, carboys, shopping / carrier / garbage bags.Films - Polyester film, BOPP film, mesh, metalized / multilayer films and photo films

Consumer Goods - Toothbrushes, cleaning brushes, hair brushes, nail / cosmetic brushes, combs, molded furniture (chairs, tables, etc.) house ware, kitchenware, insulated molded house ware, microwave re-heatable containers, mats and mattresses, water bottles, gifts and novelties, a range of stationery items like files, folders, mathematical instruments, etc. Writing Instruments - Pens, ball pens, markers, sign pens, refills, etc. Travel ware - Molded luggage, soft luggage, a range of bags like school bags / ladies handbags, wallets, etc. Leather Cloth / Artificial Leather Floor Coverings - Vinyl floor coverings and linoleums

Foam Boards Drip Irrigation Systems / Components Pipes & Pipe Fittings - Made of PVC, HDPE, PP, FRP, nylon Water Storage Tanks Toys and Games Engineering Plastics - Auto components, parts for various machinery / equipment in telecommunications, railways, electronics, etc.Electrical Accessories FRP / GRP Products - Safety helmets / equipment, pipes, storage tanks, etc.Sanitary Fittings - Cisterns, toilet seats, bathroom fittings, etc. Construction - PVC profiles, doors, windows, etc. Tarpaulins Laminates Fishnets / Fishing Lines Cordage / Ropes / Twins Eyewear - Lenses, spectacle frames, goggles, etc. Laboratory Ware Surgical / Medical - Disposable syringes, blood / urine bags, I.V. sets, etc.

Trends in Indian Export of Plastic Products -

Future ForecastThe Indian plastic industry clearly has th e potential to continue its fast growth. However, over the next few years, competition in the industry is expected to increase considerably, as a result of global trends, which will become applicable to the liberalizing economy of country. To survive the competition, both polymer manufacturers and processors will need to adopt radically new methods and approaches to reduce costs, improve market and customer service and management of performance.

The per capita consumption of plastics in India is well below the world average. However it also reflects the many years of growth ahead, as the country's economy continues to grow and upgrade the usage of products. Translating the expected growth rate into incremental demand, it is obvious that the country will remain one of the largest sources of additional demand for almost all kinds of plastics.

Hence, it is clear that plastics will continue to be a growth industry, with boosting prospects for fresh investments in polymerization and downstream processing capacity. This is in contrast to the situation in various other countries, where growth prospects are limited, either because of stagnant demand or due to the historical over building. In such countries, the overall outlook would be far less promising, with the key imperatives being Brief introduction The Indian Plastic industry is facing severe demand crunch in the domestic industry for quite some time. Demand for major polymers was 10% lower in Q2 this financial year as compared to the same period last year. The slowdown demand is adversely affecting the industry comprising of 15 raw material producers and there are about 26,000 processing units in the country with adverse impact on the employment of 3.3 million people associated with this industry. The contribution of the plastic industry in the economic growth of countries the world has been great.

With a population over one billion where 40% are under age 15, opportunities for plastics producers in India include near-term rapid growth in the nation's internal consumption of plastic products and the Indian middle class is 300 million and rising, and the annual GDP growth rate is 8%.

COMPANY PROFILE

ORGANISATION STRUCTURE

CHAIRMAN

BOARD OF DIRECTOR

MANAGING DIRECTORS

REQISTAR OF-OPERATIVE SOCIETY

GENERAL MANAGERGENERAL MANAGERGENERAL MANAGER

MARKETING MANAGEMENTFINANCE MANAGERHUMAN RESOURCE MANAGERFINANCE MANAGER

SALES MANAGERPARCHASE MANAGERADVERTISING MANAGERHUMAN RESOURCE EXICUTIVE

History:- THE COMPANY ;- KISHOR INDUSTRY established in 1986 kishor industry earned a good name for making highly productive and reliable moulds we design & manufacture plastic injection moulds for clamping tonnages up to 500 our tram of experienced technicians machinists &die make contributes more than 100 man years experience to ensure technically sound moulds for you We have made quality moulds for components in polycarbonates polyamides abs polyacental pc abc blends glass & mine filled nylons PB t\ etc

Experience:- Modal design Die costing tool man manufacture Modal flow analysis Modal manufactureOur Strengths :

Fast deliveries- we can make an averagely complex mould within 25 days. On-time deliveries Complete service from mould design to in-house validation. Our experience with a wide variety of polymers and applications

Core Capabilities :

Creation of 3D models from proto samples Mould Design Design validation: Mould flow analysis Manufacturing and assembly of moulds Mould Validation

Other Services :

Mould bases/ die sets Die casting dies Press tools Plastic parts Engineering assemblies

Machines DMC 63V Deckel Maho Vertical Machining Center. X=630; Y=500; Z=500, Table Size 800 X 600 VF - 3 HAAS Vertical Machine Center X = 1016; Y = 508; Z = 635 - 2 nos. VF - 6 HAAS Vertical Machine Center X = 1618; Y = 850; Z = 635 - 1 nos. +GF+ AgieCharmilles Roboform 23UP Die Sinking CNC EDM. Work size 630 x 400. +GF+ AgieCharmilles CNC Wire EDM Machine CUT 20P. EDM drilling machine: 0.3mm to 10mm holes, up to 300 mm depth. ZNC Spark Erosion with Orbital Attachment, Tank Size 1000 x750. Spark Erosion with Orbital Attachment Tank Size 1500 x 1200. Wire Cut EDM Machine Spark Erosion Machine. Bed Milling Machine size - 2000 X 1000 Jig Boring Machine size - 1500 X 1000 Bed Milling Machine, HMT FN3 Heavy duty milling, HMT G17 Cylindrical Grinding, Proth surface grinder 1200 x 350, Jig boring 800 x 400, Perfect brand Surface Grinding Machine 700 X 1500 , Lathe and other conventional machines. Mounding machines with clamping tonnages ranging from 15 to 400. Orbital Riveting machine. Softwares Pore Wildfire 5 Think3 Power shape VISI Unigraphics CATIA

Special Facilities MoldeX 3D: software for mould flow analysis Rapid-I: Sophisticated 3D profile projector, Magnification 65X, accuracy 5.

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PRODUCT PROFILE

The company product profile produce qualitative product

RESEARCH METHODOLOGYDefinition: Is defined as highly intellectual human activity used in the investigation of nature & matter & deals specifically with the manner in which data is collected, analyzed & interpreted. A careful investigation or inquiry especially through search for new facts in any branch of knowledge. Research methodology is a process to systematically solve the research problem. It may be understood as a science of studying how research is done scientifically. Why a research study has been undertaken, how the research problem has been defined. In what way and why the hypothesis has been formulated, what data have been collected and particular method has been adopted. Why particular technique of analyzing data has been used and a host of similar other questions are usually answered when we talk of research methodology concerning a research problem or study. A research design serves as a bridge between what has been established (the research objectives) and what is to be done, in the conduct of the study. In this project research done is of conclusive nature. Conclusive research provides information that help in making a rational decision.Descriptive design was choose to measure the satisfaction level of customers on the basis of different parameters such as quality, price, features, technology, after sale services etc. This design ensured complete clarity and accuracy. It also ensured minimum bias in collection of data and reduced the errors in data interpretation. Statistical method was followed in this research because the data was of descriptive nature and it also enabled accurate generalizations.The present study is outcome of systematic procedures adopted by the researcher, which include primary data collection as well as secondary data collection. They are explained below:

What is Research?Research is any organized enquiry carried out to provide information for solving problems. Research is a systematic enquiry that provides information to guide decisions. More specifically, it is a process of determining, acquiring, analyzing and synthesizing, and disseminating relevant data, information and insights to decision makers in ways that mobilize the organization to take appropriate actions that, in turn, maximize business performance. 1) Primary data The primary data those which are collected and for the first time thus happened to be original in character. There are various methods to collect that data some are as follows.I. ObservationII. Direct communicationIII. Content analysisIV. Interviews In my study, primary data has been gathered through interaction and discussion with the executives working in the division. Some important information has been gathered through couple of unstructured interview of executives. 2) Secondary Data :-1) The Auditors Reports & Annual Report for last 2 years used for the study of secondary data.2) Cash conversion cycle used for the classification & presentation of the data.3) The reference book, websites & periodicals used for the study of the cash conversion cycle.

REASERCH DESIGN:Definition:Research design is the master plan of methods, approaches, techniques, variables, data source, evaluation methodology, timing and costing of all research activities etc. Research design is the logical and systematic planning and directing of a piece of research. - American Marketing Association

Research Method Used in the Report: Descriptive MethodReason for selecting this method: Descriptive design is used to get an accurate description of a situation, it helps to minimize the bias and maximize the reliability. Descriptive Research provides facts or details of a particular event or situation. It gives a description of the state of affairs as it exists of a particular situation. It includes surveys and fact-finding enquiries to study a particular situation or event. The researcher has no control over the situation or event. He can only report what has happened or what is happening. As opposed to exploratory research, descriptive research should define questions, people surveyed, and the method of analysis prior to beginning data collection. In other words the who, what, where, when, why, and how aspects of the research should be defined.

LIMITATIONS

1. The study is to be completed within a period of two months, so the scope of study is determined in such a way that it will be completed successfully in such time limit. 2. The study is limited only to working capital management aspect of the Kishor Industry Pvt Ltd. Aurangabad 3. The information and data, which is made available by the personnel working in the organization is only used for this study.4. During the study the data and information collected by me from company and I have to rely on it. 5. The confidentiality of data was a concern for the organization. so, the data is based only on the data provided , i.e. the annual reports

THEoReTICAL BACKGROUND

Conceptual Background of Working Capital

Introduction:- The financial management of business firms involves: the management of long term assets, fixed assets, management of capital and management of short term assets and liabilities. The first of three functions is the capital budgeting, the second is the management of capital structure and the last but not the least is the management of working capital.

Meaning & Definition: -Working capital. Management is the process of planning and controlling the level and mix of the current assets of the firm as well as financing these assets.

"The portion of firm's current assets which are financed with long term fundsConcepts:-The concept of working capital has been a matter of great controversy among the financial experts.There are two concepts of working capital i.e.a) Gross Conceptb) Net Concept

a) Gross Concept:-The Gross concept of working capital deals with firms current assets. The sum total of current assets of firm is termed as working capital.From the perspective of working capital needs, Gross concept of working capital is - the investment in circulating assets or in inventory and accounts receivables, comprising the opening cycle of a manufacturing firm. which includes cask short term securities, debtor, bills receivable and inventories.

b) Net Concept:-Net concept of working capital refers to current assets less current liabilities. That means, working, capital is the difference between resources in cash or readily convertible into cash i.e. current assets and organizational commitments for which cash will soon be required i.e. current liabilities.

Net Working Capital = Current Assets - Current Liabilities

Current liabilities are those claims of outsiders which are expected to mature for payment within an accounting year and include creditors, bills payable, bank overdrafts and outstanding expenses.Thus, according to net concept of working capital represents excess of current assets over current liabilities.So, there is no universal concept of working capital that is accepted widely. Some have made it quite simple stating it is the difference between current assets and current liabilities. Others consider it as being equal to the total of current assets.

CONSTITUENTS OF CURRENT ASSETS:-1) Cash in hand and cash at bank2) Bills receivables3) Sundry debtors4) Short term loans and advances.5) Inventories of stock as:6) Temporary investment of surplus funds. 7) Prepaid expenses 8) Accrued incomes. 9) Marketable securities. In a narrow sense, the term working capital refers to the net working. Net working capital is the excess of current assets over current liability, or, say: Working capital can be positive or negative. When the current assets exceeds the current liabilities are more than the current assets. Current liabilities are those liabilities, which are intended to be paid in the ordinary course of business within a short period of normally one accounting year out of the current assts or the income business.CONSTITUENTS OF CURRENT LIABILITIES1. Accrued or outstanding expenses.2. Short term loans, advances and deposits.3. Dividends payable. 4. Bank overdraft.5. Bills payable.6. Sundry creditors. The gross working capital concept is financial or going concern concept whereas net working capital is an accounting concept of working capital. Both the concepts have their own merits. The gross concept is sometimes preferred to the concept of working capital for the following reasons:

It enables the enterprise to provide correct amount of working capital at correct time. 1) Every management is more interested in total current assets with which it has to operate then the source from where it is made available.2) It take into consideration of the fact every increase in the funds of the enterprise would increase its working capital.

This concept is also useful in determining the rate of return on investments in working capital. The net working capital concept, however, is also important for following reasons: 1) It is qualitative concept, which indicates the firms ability to meet to its operating expenses and short-term liabilities. 2) It indicates the margin of protection available to the short term creditors. 3) It is an indicator of the financial soundness of enterprises. 4) It suggests the need of financing a part of working capital requirement out of the permanent sources of funds.

Types of Working Capital:-The term working capital is broadly classified under two heads as under:- a) On the basis of concepts b) On the basis of time(a) On the basis of Concepts:-On the basis of concepts the working capital is divided in two types. They are: i) Gross Working Capital:-The gross working capital refers to investment in all the current assets taken together. The total of investments in all current assets is known as gross working capital.

ii) Net Working Capital:-The term net working capital refers to excess of total current assets over total current liabilities.

b) On the basis of time:-From the point of view of time, the working capital can be divided into two categories:

i) Permanent Working Capital:-It also refers to Hard core working capital. It is that minimum level of investment in the current assets that is carried by the business at all the times to carry over minimum level of its activities.

ii) Temporary Working Capital:-It refers to that part of working capital, which is required by a business over & above permanent working capital. It is also called variable working capital. Since the volume of temporary working capital keeps on fluctuating from time to time according to business activities it may be financed from short-term sources.

Factor of working capital:-The total working -capital requirement is determined by a wide variety of factors. It should be noted that these factors affect different enterprises differently.The following is the description of the factors, which generally influence the working capital requirements of the firms.

A) Internal Factors:-1) Nature of Enterprise-The working capital requirements of a firm basically influenced by the nature of its firm. For example, trading and financial firms require a lower investment in working capital but in the case of manufacturing concern. Have to invest substantially in working capital. 2) Production CycleLonger the manufacturing process the higher would be the requirements of working capital. This is the reason why highly capital-intensive industries require a large amount of working capital to run their sophisticated and long production process.

B) External Factors:-1) Business Cycle Fluctuations-Business fluctuations lead to cyclical and seasonal changes in production and sales and affect the working capital requirements. Most firms experience seasonal and cyclical fluctuations in the demand for their products and services.These business variations affect specially the temporary working capital requirements of the firm.

2) Supply Conditions-The inventory of raw materials, spares and stores depends on the condition of supply. If the supply is prompt and adequate the firm can manage with small inventory hence the lower requirements of working capital.If the supply is unpredictable the firm, would have to acquire stocks as and when they are available and carry the inventory for longer period. This policy is followed when the raw material is available only seasonally.

3) Technological Development-Changes in technologies may lead to improvements in processing raw materials, minimizing wastages, greater productivity, more speed of production. All these improvements may enable the firm to reduce investments in inventory. Thus changes in technology affect the requirements of working capital.

Importance of working capital:-

The management of working capital plays an important role in the maintaining the financial health of the firm during the normal course of business.A study of working capital is of major importance of internal and external analysis because of its relationship with the current day to day operations of business.

The study of management of working capital covers areas like cash management, Accounts receivables, inventory and other concerned areas. Thus, working capital is of paramount importance to a firm's financial performance.

Operating Cycle: -The term operating cycle is also known as 'Cash Cycle'. The term capital cycle or operating cycle refers to the length of time between the firms paying cash for raw materials, applying those materials into production process, stock and inflow of cash from debtors.The operating cycle is the average time between purchasing or acquiring inventory and receiving cash proceeds from the sale of finished products.The operating cycle consists of the following events which continues throughout the life of business Conversion of cash into raw materials; Conversion of raw materials into work in progress; Conversion of work in progress into finished products; Conversion of finished products into account receivables through sales; Conversion of account receivables into cash

Account Receivables (S. Debtors) Sales Cash Finished Production

Raw Materials Work in process

Operating Cycle of Working CapitalThus there is complete cycle form cash to cash wherein cash gets converted into raw materials, work-in-progress, finished products, debtors and finally into cash again.

CASH CONVERSION CYCLE IN MANUFACTURING INDUSTRY

DATA ANALYSIS

Introduction: -

The calculation of Working capital is considering the following way. There are several ratios at the disposal of an analyst but their group of ratio he would prefer depends on the purpose and the objective of analysis. While a detailed explanation of ratio analysis is beyond the scope of this section, we will focus on a technique, which is easy to use. It can provide you with a valuable investment analysis tool.

Data analysis: - It is a simple arithmetical expression of one number to another. The technique of ratio analysis can be employed for measuring short term liquidity or position of the firm. The following analysis may be calculated for this purpose:-

LIQUIDITY RATIOS. PROFITABILITY RATIOS BASED ON SALES. COVERAGE RATIOS. OVERALL RETURN/PROFITABILITY RATIOS WORKING CAPITAL ANALYSIS OF KISHOR INDUSTRY PVT LTD

LIQUIDITY RATIOS:-Current Ratio:- Current Assets Current Ratio = ------------------------------ Current Liabilities Particulars2012-132011-12

Current Assets33169.7026904.30

Current Liabilities19225.6623659.45

Current Ratio=1.72:51.14:1

Figure No. 1

2012-13 2011-12

INTERPRETATION1) The standard of current ratio of industry is 2:1 but here we can see the current ratio of THE Kishor Industry .ltd Kishor Industry has higher than the ratio.2) But as the point of view of the company the current ratio is increasing and its the good sign that company want to maintain standard .3) The major point of increasing current ratio is the current assets increased more proportionate than the current liabilities

2. Quick Ratio:- Quick AssetsQuick Ratio= ----------------------- Quick Liabilities Particulars2012-132011-12

Quick Assets15899.4512371.89

Quick Liabilities19225.6615744.29

Quick Ratio=0.82:10.78:1

TABAL 2

2012-13 2011-12

2012-13 2012-11 2011-1211111213121112INTERPRETATION1) The Quick Ratio of the Company shows the very good liquidity position of the company.2) Creditors point of view this ratio is very good, because company. maintain this ratio over the standard.

PROFITABILITY RATIOS BASED ON SALES

1 Gross Profit Ratio:- Gross Profit Ratio= (Gross Profit/Sales)*100(Particulars2012-132011-12

GrossProfit16229.5213626.78

Sales121786.5100286.88

GP Ratio13.58%13.32%

TABAL 3

2012-13 2011-11 (Graph)NO 3

INTERPRETATION1) Gross Profit of KISHOR INDUSTRY pvt.ltd. has showing increase in 2012-20132. Net Profit Ratio:-

Net Profit Ratio=(Net Profit/Sales)*100 Particulars2012-132011-12

Net Profit After Tax8748.57241.51

Sales121786.7100286.88

NP Ratio=7.22%7.18%

2012-13 2011-12 GRAPA 5

INTERPRETATIONNet profit margin of Kishor Industry. Increasing means Kishor Industry .ltd. has very good return to owners. In year 2012-2013, Net profit margin of. Kishor Industry Increase.

Inventory Turnover Ratio Inventory Turnover Ratio= (Cost of Goods Sold/Average Inventory).

Particulars2012-132011-12

Material Cost & Operating Expenses88350.5172794.12

Average15901.1913403.61

Inventory Turnover ratio5.555.43

(Graph )

2012-13 2011-12

GRAPE NO

INTERPRETATION1) Inventory turnover ratio has shown that, company utilize inventory very fast year by year.2) Inventory turnover is increasing in 2012-2013 year because; the cost of goods sold has increased. 3) The reason of cost of goods sold increased i.e. increasing in sales which is very good as point view of the Kishor Industry

Inventory Holding Period=

Inventory Holding Period= (Inventory * 365days/COGS) (Table )Particulars2012-132012-13

Inventory*365Days3151820.622652115.5

COGS44175.2536397.06

IHP Ratio=30Days32Days

(Graph )

2013-12 2012-11

INTERPRETATION1) Here Inventory ratio has showing the fluctuation trend.2) we can see inventories has increased more proportionate than cost of goods sold , thats mean KISHOR INDUSTRY PVT LTD.ltd. had more inventory hold.3) In the year 2011-2012 the inventories has increased by where as the cost of goods sold has increased by thats in this year the number of days has decrease3 . Working Capital Turnover Ratio=Working Capital Turnover Ratio= ( Net Sales/Net Working Capital)

Particulars2012-132011-12

Sales121786.7100286.88

Net Working Capital6972.026489.16

WC Ratio=17.4615.45

2012-13 2011-12

GRAPE NO

INTERPRETATION2) The working capital turnover ratio had increased in the year 2012-13

3) The working capital turnover ratio of the year 2011-12 has decreased net working capital has increased more proportionate than sales although working capital turnover ratio has decreased in the 2011-2012 but as the point of view of the liquidities has increase

5 Debtors Turnover RatioDebtor Turnover Ratio= (Credit Sales/Average Accounts Receivable) Particulars2012-132011-12

Total Sales121786.7100286.88

Debtors7111.3716176.85

Debtors Turnover ratio17.1216.23

2013-12 2011-12

INTERPRETATION Debtors Turnover Ratio has shown the increasing trend. If we see the debtors turnover ratio of Kishor Industry is good because of sales increasing year by year. Kishor Industry Pvt Ltd provides different credit facility to their different type of customer, as we see it is slowly collect fund from debtors. Debtors Turnover ratio increasing is good at the point of view of the company Kishor Industry Pvt Ltd .ltd. Company is collecting debt from its customers rapidly. So, it will help save the bad debt. 4) OVERALL RETURN/PROFITABILITY 1 Total Assets Turnover Ratio=Total Assets Turnover Ratio= ( Sales/Total Assets) (Table )Particulars2012-132011-12

Sales121786.7100286.88

Total Assets54017.2833854.79

TA Turnover Ratio2.252.96

2012-13 2011-12(Graph)

INTERPRETATION1) Here we can see total assets has increased more proportionate than sales hence the ratio has decreased.

2012-13 2011-12

INTERPRETATIONKishor Industry pvt ltd net working capital has increasing year by year.1. Kishor Industry Pvt Ltd has expanding thats why working capital increasing continuously.2. Increasing working capital means Kishor Industry Pvt Ltd liquidity position improving.3. In year 2012-13 current assets increased by 46.85% whereas, current liabilities increased by 9.37%. It means percentage of net working capital of this year increased than previous year.4. In the year 2012-2013current assets has increased by 23.28% whereas the current liabilities has decreased by 18.74% and thats the net working capital of this year has increased than previous year.

DEBTORS=

Particulars

2012-132011-12

DEBTORS7650.616572.12

INCREASE/ DECREASE BY16.41%13.66%

GRAPA

INTERPRETATIONKishor Industry Pvt Ltd debtors have showing increased trend which is very good as point of view of the company.Kishor Industry Pvt Ltd debtors have increased because Kishor Industry Pvt Ltd. kept trust on their customers.

CREDITORS= Particulars

2012-132011-12

CREDITORS16518.1720596.20

DECREASE 4078.03

GRAPE

INTERPRETATION1. Kishor Industry pvt ltd creditors have decreased in year 2012-2013.2. Increasing trend of creditors is showing that Kishor Industry pvt ltd good name in the market. 3. Thats why Kishor Industry Pvt Ltd get more credit in market. 4. Increasing trend also showing that all creditors trust Kishor Industry Pvt Ltd

5) KISHOR INDUSTRY PVT LMT

WORKING CAPITAL ANALYSIS (Table)PARTICULARS2012/132011/12

A. CURRENT ASSETS

Inventories17270.2514532.14

Sundry Debtors7650.616572.12

Cash & Bank Balances697.66912.61

Loans & Advances7551.184871.15

Total current assets(A)33169.7026904.03

B. CURRENT LIABILITIES

Current Liabilities16518.1720596

Provisions2707.483063.25

total Current Liabilities (B)19225.6623659.45

NET WORKING CAPITAL (A-B)13944.04

3244.58

INCREASE10699.46

Grape 2012-13 2011-12 INTERPRETATION1) Kishor Industry Pvt Ltds net working capital has increasing year by year.2) Kishor Industry Pvt Ltd has expanding thats why working capital increasing continuously.3) Increasing working capital means Kishor Industry Pvt Ltd liquidity position improving.4) In the year 2012-13 current assets has increased whereas the current liabilities has decreased and thats the net working capital of this year has increased than previous year.

FINDING

1) Working capital of the company was increasing and showing positive working capital each year.2) Positive working capital indicates that company has the ability of payments of short terms liabilities.3) Working capital increased because of increment in the current assets is more than increase in the current liabilities.4) Companys current assets were always more than requirement and it affected on profitability of the company.5) Kishor Industry Pvt Ltd good pay very rapidly to its creditors, it is positive point of Kishor Industry.6) Looking to the annual reports & analysis Kishor Industry Pvt .Ltd. is good progressing and bright future of the company.7) When comparing Working capital is compared with net sales it is in increasing trend indicating the effective utilization of the net working capital.

SUGGESTIONS:-

1) The present study observed that the position of Kishor Industry Pvt Ltd. Industries. Is satisfactory except in cash management. Considering the significant role of Kishor Industry Pvt. Ltd. Industries. In the economic life of Aurangabad area, the study recommends the following suggestions.

2) The variations were very high in the cash position of Kishor Industry. Ltd. Industries ltd. and the cash resources are not use properly. So the study suggests that the cash resources must be used effectively and by better way. 3) The study suggests that the other factor of working capital management like Inventory Management, Receivables Management, and Payables. Management are running effectively in Kishor Industry Pvt Ltd. Industries ltd. So the efforts must be given to maintain the current trend in future.

Conclusion:-

As I made the project on Working Capital Management within two months, I found it a very challenging task.A study of the Working Capital Management is of major importance to internal and external analysis because of its close relationship with the day to day operations of a business. Working Capital may be regarded as the life blood of the company or a business. Its effective provision can do much to ensure the success of a business while its inefficient management can lead not only to loss or profit, but also to the ultimate downfall of otherwise might be considered as this promising concern.

ANNEXURE Kishor industry Pvt Ltd BALANCE SHEET Rs. ( 000) ParticularsFor Year Ended 31/3/2013For Year Ended31/3/2012

SOURCES OF FUNDS

SHAREHOLDERS FUNDS

Share Capital1270.271270.27

Reserves & Surplus23208.2417639.28

LOAN FUNDS24478.51859.55

Secured Loans17661.0319036.4

Unsecured Loans7900.833869.62

DEFERRED TAX LIABILITY (Net)1988.453492.19

APPLICATION OF FUNDS

FIXED ASSETS54017.28

Gross Block60099.0548293.39

Less : Depreciation23016.5920163.2

Net Block37082.2428132.38

Add : Capital W-I-P2617.061308.36

Add: Assets held for disposal76781.99290.0657858.80

INVESTMENTS3364.493361.63

CURRENT ASSETS,


Sundry Debtors7650.616532



Less : CURRENT LIABILITIES & PROVISIONS33169.7026904.03

Creditors16518.1720596.19


1394.046489.16

19225.6667709.59

Profit & loss account ParticularsFor Year Ended 31.3.2013For Year Ended 31.3.2012

INCOME

Sales121786.7100286.88

Other Income2147.331621.55

EXPENDITURE12393.03101097.65

Cost of Materials7960.896578.62

Manufacturing, Selling & Other Expenses105579.41585819.51

PROFIT BEFORE INTEREST, DEPRECIATION & TAX18354.6115278.14

Interim Dividend Paid on Equity Shares825.67635.13

Proposed Dividend on Equity Shares1905.41651.35

Corporate Dividend Tax Paid137.13107.94

Provision for Corporate Dividend Tax309.10274.27

Transferred to General Reserve5571.184572.81

Kishor Industry WORKING CAPITALPARTICULARS2012-132011-12

A. CURRENT ASSETS


Sundry Debtors7650.616572.12



Total current assets(A)33169.7026904.03

B. CURRENT LIABILITIES

Current Liabilities16518.1820596.19


Total Current Liabilities(B)19225.6623659.45

NET WORKING CAPITAL (A-B)13944.043244.58

INCREASE10699.46

BIBLIOGRAPHY

1) Financial Management- Prasanna Chandra.2) Financial Management- Satish Inamdar.3) Annual Report of 2011-124) Annual Report of 2012-20135) Website arewww.google/working capital .com

OF ABBREVIATION 1. C.A. = CURRENT ASSEST.2. C.L. = CURRENT LIABILITIES.3. G.P.= GROSS PROFIT.4. N.P = NET PROFIT.5. W.I.P. = WORK IN PROCESS.6. W.C. = WOKING CAPITAL.7. T.A. = TOTAL ASSETS.8. O.P.= OPERATING PROFIT.9. C.O.G.S. = COST OF GOOD SOLD.

COMPANY NAME: - KISHORE INDUSTRIS PVT LTD . LOCATION: - C-32, 33, MIDC, Waluj, Aurangabad - 431 136 (MS) INDIAAurangabad - 431 136

PRODUCTION :- PLASTIC PRODUCT.AREA OF COMPANY :- 40*50 Meter.COMPANYOWNER :- Mr. Jugalkishore Kabra

Our Strengths :

Fast deliveries- we can make an averagely complex mould within 25 days. On-time deliveries Complete service from mould design to in-house validation. Our experience with a wide variety of polymers and applications

Core Capabilities :

Creation of 3D models from proto samples Mould Design Design validation: Mould flow analysis Manufacturing and assembly of moulds Mould Validation

Other Services :

Mould bases/ die sets Die casting dies Press tools Plastic parts Engineering assemblies

Machines DMC 63V Deckel Maho Vertical Machining Center. X=630; Y=500; Z=500, Table Size 800 X 600 VF - 3 HAAS Vertical Machine Center X = 1016; Y = 508; Z = 635 - 2 nos. VF - 6 HAAS Vertical Machine Center X = 1618; Y = 850; Z = 635 - 1 nos. +GF+ AgieCharmilles Roboform 23UP Die Sinking CNC EDM. Work size 630 x 400. +GF+ AgieCharmilles CNC Wire EDM Machine CUT 20P. EDM drilling machine: 0.3mm to 10mm holes, upto 300 mm depth. ZNC Spark Erosion with Orbital Attachment, Tank Size 1000 x750. Spark Erosion with Orbital Attachment Tank Size 1500 x 1200. Wire Cut EDM Machine Spark Erosion Machine. Bed Milling Machine size - 2000 X 1000 Jig Boring Machine size - 1500 X 1000 Bed Milling Machine, HMT FN3 Heavy duty milling, HMT G17 Cylindrical Grinding, Proth surface grinder 1200 x 350, Jig boring 800 x 400, Perfect brand Surface Grinding Machine 700 X 1500 , Lathe and other conventional machines. Moulding machines with clamping tonnages ranging from 15 to 400. Orbital Riveting machine. Softwares ProE Wildfire 5 Think3 Power shape VISI Unigraphics CATIASpecial Facilities MoldeX 3D: software for mould flow analysis Rapid-I: Sophisticated 3D profile projector, Magnification 65X, accuracy 5.

ORGANIZATION STRUCTURE :

Chairman:

Managing Director:

Directors:

Financial Institution:

Listing:

Bankers:

Share Transfer Committee:

Shareholder grievance:

Committee

PLASTIC INDUSTRY

HISTORY:

Ever since 1957, the Plastics Industry in India has made significant achievements as it made a modest but promising beginning by commencing production of Polystyrene. The chronology of manufacture of Indian polymers is summarised as under:- 1957-Polystyrene , 1959-LDPE, 1961-PVC , 1968- HDPE ,1978-Polypropylene. Such potential Indian market has motivated the entrepreneurs in the country to acquire technical expertise, achieve high quality standards and build capacities in various facets of the booming plastic industry. The Phenomenal developments in the plastic machinery sector are coupled with the developments in the petrochemical sector, both of which support the plastic processin.

In India, plastics consumption grew exponentially in the 1990s. During the last decade, the total consumption of plastics grew twice as fast (12% p.a.) as the gross domestic product growth rate based on purchasing power parities (6% p.a.). The current growth rate in Indian polymer consumption (16% p.a.) is clearly higher than that in China (10% p.a.) and many other key Asian countries. The average Indian consumption of virgin plastics per capita reached 3.2kg in 2000/2001 (5kg if recycled material is included) from a mere 0.8kg in 1990/1991. However, this is only one-fourth of the consumption in China (12kg/capita, 1998) and one sixth of the world average (18kg/capita). This consumption led to more than 5400 tonnes of plastics waste being generated per day in 2000/2001 (totalling 2 million tonnes per annum).The increasing quantities of plastics waste and their effective and safe disposal has become a matter of public concern. The increasingly visible consequences of indiscriminate littering of plastic wastes (in particular plastic packaging wastes and discarded bags) has stimulated public outcry and shaped policy. Littering also results in secondary problems such as drains becoming clogged and animal health problems (both domesticated and wild)

BRIEF INTRODUCTION:

Indian Plastic industry is facing severe demand crunch in the domestic industry for quite some time. Demand for major polymers was 10% lower in Q2 this financial year as compared to the same period last year. The slowdown demand is adversely affecting the industry comprising of 15 raw material producers and there are about 26,000 processing units in the country with adverse impact on the employment of 3.3 million people associated with this industry.

. The contribution of the plastic industry in the economic growth of countries the world has been great.

MARKET CAPITALIZATION:

Typically, in an emerging market, demand growth for plastics is 2 to 2.5 times the GDP growth. Sadly this is not the case in India where the growth at times has been lower than the GDP growth. The per capita consumption of plastics in India at 5kg is much lower than that of China which averages 25kg. But India could see very soon improvement in the production of Plastic. India today represents range of highly promising opportunities for growth of plastics producers worldwide. The fragmented plastics industry in India is beginning to consolidate, governmental regulations and trade barriers are coming down due to India's recent admission to the WTO, and some large North American plastics manufacturers have already begun doing business.

ROLE OF PLASTIC INDUSTRY IN INDIAN ECONOMY

2005 2015

@ 15% CARG, Consumption of Plastic Polymers 4.7 Million Tonnes 18.9 Million Tonnes

Employment In Plastic Industry (Direct+ Indirect)2.5 Million9.5 Millions

Plastic Industry's TurnoverRs. 35,000 Crores Rs. 1,33,245 Crores

Export of Plastic Products @ 30% CARG US$ 1900 MillionsUS $ 10215 Millions

Contribution of Polymers and Plastic Products to the Exchequer Rs. 6200 CoresRs. 15990 Crores

Top players in the Indian Plastic Industry:

Finolex Industries Limited Plastiblends India Limited AGA Group International Corporate Resource Group ACRY Plus Kay Kay Global Suppliers Heropolyvins

finance project

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