AMAR Project 1

8/6/2019 AMAR Project 1

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CHAPTER I

INTRODUCTION

1.1 WORKING CAPITAL ANALYSIS

1.1.1 MEANING AND CONCEPT OF WORKING CAPITAL

Maintaining adequate working capital is not just important in the short-term.

Sufficient liquidity must be maintained in order to ensure the survival of the business in

the long term as well.

Every business needs adequate liquid resources in order to maintain day-to-day

cash flow. It needs enough cash to pay wages and salaries as they fall due and pay

creditors if it is to keep its workforce and ensure its supplies.

Therefore, when businesses make investment decisions they must not only

consider the financial outlay involved with acquiring the new machine or the new

building, etc, but must also take account of the additional current assets that are uaually

involved with any expansion of activity.

The term of 'working capital Analysis' includes both 'Analysis' and

'Interpretation'. A distinction should, therefore, be made between the two terms. While

the term 'Analysis' is used to mean the simplification of financial data by methodical

classification of the data given in the working capital.' Interpretation' means, 'explaining

the meaning and significance of the data so simplified.' However both Analysis and

Interpretation are interlinked and complimentary to each other. Analysis is useless

without interpretation and interpretation without analysis is difficult or even impossible.

Even a profitable business may fail if it does not have adequate cash flow to meet

its liabilities as they fall due.


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1.2 COMPANY PROFILE

Chettinad Cement Corporation Limited (CCCL) was launched three decades ago

by one of the Indias most illustrious sons Dr.Raja Sir. Muthiah Chettiar. The company

continues to uphold and illustrates today under the dynamic leadership of

Dr.M.A.M.Ramaswamy, Chairman and M.A.M.R.Muthiah, Managing Director.

Chettinad Cement Corporation Limited was started in the year 1967. Initially the

Cement was manufactured in the wet process technology. Due to hike in the fuel prices

the company went for expansion in the year 1989 to produce cement with the latest dry

process technology.

CCCL has acquired most of its critical equipments, from Europe, USA and Japan

and utilized foreign technological expertise to installed and commissioned these

equipments.

The vertical roller mill from Loesche for grinding Lignite, the first of its kind in the

country is commissioned for processing the fuel requirement. The company with the

installation of OK Mill, the worlds most sophisticated and Hi-Tech cement mill ( a

vertical roller mill), the production capacity has quantum leaped and expected to touch a

million mark. CCCL, apart from manufacturing cement, is also into wind energy farms.

This includes harnessing power from 66 windmills setup at Poolavadi with various

capacities. CCCL has taken elaborate measures for pollution control spending almost 10

crores in this field. Many of the electrostatic precipitators and several filters and bag dust

collector in cement mill are installed all over the plant. STP is also working to take care

of water pollution. For Occupational Health & Safety, CCCL has institutionalized a

Safety Committee working group, promoted the use of Personal Protective Equipment

(PPE) in key work areas and subjecting the employees

for regular health check-up.


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Chettinad Cement Corporation Ltd., Puliyur Cement Factory has won

international Recognition by getting IS/ISO 9001:2000 Quality Management System

Certification And IS/ISO 14001:2004 Environmental Management System Certification.

The company is having its captive mines for limestone about 40kms from factory

(Seethainagar Limestone Mines). It is fully mechanised with latest sequential blasting

technology. The limestone after blasting is handled and transported to crusher by means

of heavy (earth moving equipments like shovel, dumpers, pay loaders. The limestone is

unloaded to the impact crusher through hopper for crushing. This crusher helps in

reducing the size of the limestone to the required size for further processing. The crushed

limestone is transported by belt conveyors to bunker where the loading of the limestone

takes place. The loading is done systematically by pneumatic gates provided below the

bunkers to the wagons. The transportation of limestone is being done by our own wagons

and locomotives. We have our own MG railway line with the intermediate station. The

wagons containing limestone are unloaded by the wagon tippler in the factory and

transported to the stockpile.

The Stacker reclaimed is a linear stock pile which helps to blend the material by

forming layers and while extracting material by reclaimed is right angle to the formation.

This ensures blending of material. The stacker & reclaimer was supplied by Elecon and

having a capacity of2 x 24,000 M.T. Stacking capacity. The limestone reclaimed from

the stock pile Bauxite and Iron Ore as additives to compensate deficiencies of the

limestone are filled in the hoppers. These materials are weighed and extracted to the

vertical roller mill for grinding.

The Vertical Roller Mill for raw material grinding is a highly energy efficient mill

having the latest process controls. The material is ground to a fine powder and is

collected in an Electrostatic Precipitator and transported to blending silos by means of

bucket elevator. There are two silos for storing the ground raw material (Raw meal)

which are also used for blending. The blended raw meal is extracted from the silo bottom

and after weighment; it is transported to preprocessing section.


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The blended raw meal is transported by bucket elevators to the top of preheated

where there are sets of five cyclones to transfer the heat or to preheat the raw meal by

means of kiln and precalciner exhaust gases. The preheated raw meal is sent to

precalciner where fuel is fired to calcine the material. The calcined raw meal is sent to

kiln where further fuel is fired to convert the raw meal to clinker. The entire

pyroprocessing is supplied by Fuller - USA.

Coal / Lignite is used as fuel which again is ground to a fine power for handling and easy

burning by means of vertical Roller Mill and stored in the coal bins. These are weighed

and extracted at the bottom by screw conveyors, fired in the precalciner and kiln as

mentioned above The clinker after formation is cooled in a CIS/CFG cooler and the

cooled clinker is stored in the two silos.

The clinker from the silos are extracted by conveyors and are transported to hoppers

along with flyash and gypsum (Retarder) to convert into a final product.

The weighed Quantity of clinker , Flyash, and gypsum are ground by vertical

roller mill (OK mill) supplied by ONODO-KOBE Japan. This is one of the biggest mill

in India with the latest sophistication. The ground cement is transported to the silos as per

the type of cement by bucket elevators. The cement is extracted from the silo bottom and

are packed in automatic packers. There are four automatic packers which helps to pack

the cement in 50kg per bag and are transported to the destination by means of trucks and

wagons. We have latest sophisticated

1.2.1 SITE DESCRIPTION AND SITE PLAN

CCCL is located at Puliyur village in Karur (Dt.) Tamil Nadu,

Trichy- Karur Highway 65km away from Trichy and 13 Km before Karur. It is situated at

the elevation of approx 110 m Mean sea level. The Ambient temperature is 42 deg C max

and 25 deg C Min with an average rainfall of 600-800mm in a year. The relative

Humidity is 80-85% max and 50% min. The Maximum wind velocity is 50Km/Hr Max

during the windy seasons.


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For 6 month wind direction is East- west and for the next 6 months west-

east. Topographically the firm is generally flat. Amaravathi river which is tributory to

river Cauvery, is situated about 2 Km away from the Factory. We have

provided a school for our employees and for our near by society behind our colony. It is

well connected by road in Tamil Nadu and Broad gauge Railway throughout India.

The Chettinad Cement Corporation Limited (CCCL) is one of the most modern

cement plant in the country located at Puliyur in Karur district, Tamil Nadu.

1967 - 4 lac tonnes per annum cement production capacity with wet process

1989 - Dry process kiln of 1700 TPD commissioned with vertical roller mill for

fuel & limestone grinding.

1990 - 2 Nos. of KVA Capacity WARTSILA DG set installed.

1994-96 - 66 Nos. of wind electric Generator of total capacity 17.3 Mw installed

at Poolavadi Udumaplet Taluk.

1995 - ISO 9001 Certificate received.

1996 - Stacker & Reclaimer for Limestone.

1996-97 - Belt Elevator for Raw mill and Kiln feed installed.

1997 - A) Impact Crusher for lime stone crushing at mines installed.

B) Bag filter for coal mill grinding system.

1998 - Vertical roller mill for cement grinding installed. Additional ESP installed

for Klin / Raw mill to handle excess process gases.

2000 - A) CIS / CFG Cooler installed. Low pressure Cyclone installed. Latest

Technology LV- Tech Classifier installed in Raw mill Kiln capacity increased to

2800 TPD. B) Green field Cement Plant with capacity of 1.1 Million was

commissioned at Karikkali works

2001- Rock breaker ( Terminator ) installed in mines.

2003 - ISO 14001:2004 is implemented


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2004 - Environment Management Service Certificate option.

2004 - Fly Ash Silo construction work 5,000MT Capacity started

2005 - Fly Ash Silo construction work completed.

2006 - IS:ISO 18001:2000 is implemented

2007 - Bag House installed in Raw Mill/Kiln Circuit

2007- 15 MW Captive Power Plant erection work started

1.2.2 The product offered by CCCL is as given below:

ORDINARY PORTLAND CEMNT OPC-43, OPC-53

PORTLAND POZZOLANA CEMENT (PPC)

SULPHATE RESISTING PORTALND CEMENT

PORTLAND SLAG CEMENT

1.3 INDUSTRY PROFILE;

Cement industry is one of the major industries in the industrial sector which affects

the activities of industrial and constructional sector to great extent in India and world.

Over this industry is also a part of the economical growth of our country.

In the 18th

century a British engineer named JOHN SEMEATIOR invited how to

make cement for construction of the time. cement from process of lime and the roman

invented volcanic ashinancient days.

In the early 19th

century the British engineer named joseph aspdin developed a

kind of cement Portland .the newly developed cement and hence become popular in the

market. In 1916 the Portland association was formal in Chicago.


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TYPES OF CEMENT;

The various types of cement are produced in India

Ordinary Portland cement

Portland POZZOLANA cement

Portland blast furnace slag cement

Sulphate resistant Portland cement

White cement

1. Ordinary Portland cement

it is also know as grey cement .it is manufactured by combining limestone,

bauxite, and ironers and calking in a preheated kiln to produce clinker which is

grounded with gypsum in a given proportion to produce opc .

this cement is combined the proposition of clinker, and gypsum. The ratio is

clinker 95%, and gypsum 5%.

2. Portland pozzolana cement

Using fly ash. whish is got a waste material makes this from thermal

plants with clinker and gypsum in a different ratio. The ratio for clinker is 75% fly

ash is 20%and gypsum5%

3. Portland blast furnace slag cement

This is manufacture by using slag. The standard mix of PBFSC is

47.5% clinker 47.5% slag and gypsum5%.

4. Pulphate resistant Portland cement

This is a special type of cement mainly used in seashore area and sculpture

content soil areas.


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Chapter-II

2.1 Review of literature

Abdul raheman and Mohamed nasr conducted a study on working capital

management and profitability is a very important component of corporate finance

because it directly affects the liquidity and profitability of the company. It deals with

current assets and liabilities. Working capital management important due to many

reasons. for one thing, the current assets typical manufacturing firm accounts for over

half of its total assets. For a distribution company , they account for even more.

Excessive in a firms realizing substandard return on investment. However firms with too

few current assets may incur shortages and difficulties in maintaining smooth operation

(horne and wachowicz,2000).efficient working capital management involves planning

and controlling

Net working capitals commonly defined as the difference between current assets and

current liabilities. Efficient working capitals management requires that firms should

operate with some amount of NWC. The exact amount varying from industry and

depending among others things, on the nature of industry.

The total working capitals requirements of a firm is determined by a variety of factors. It

should be, however noted that these factors affects different enterprises differently. They

also vary from time to time. In general, the following factors are involved in a proper

assessment of the quantum of working capital requirements. An undertaking about the

concepts in working capital was the results of reading from pillai. R.S.N.Bhagavathi,

Management Accounting, and Dr.S.N.Maheswari Problems & Solutions in management

Accounting & Financial Accounting.

The working capital requirements of an enterprise are basically related to the conduct of

the business. Some business need more working capital and vice versa. For example, the

percentage of current assets was found to be lowest in hotels, restaurants and eating


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house(10-20%),but in the case of construction and trading groups, it is to be expected a

high working capital(80-90%). The various financial ratios play a significant role in

revealing the financial healthiness of the organization. The ratios and its illustration were

adapted from David Alexander& Anne Britton, Financial Reporting and

Dr.Varna&Agar val, Financial Management.

Production cycle was the key factor which has a bearing on the quantum of working

capital is the production cycle. The term PRODUCTION CYCLE refers to the time

involved the manufactures of goods. It covers the time span between the procurement of

raw materials and the completion of production process. Funds or working capital is

required in these stages.

The working capital requirement are also determined by the nature of the business cycle.

Business fluctuations lead to cyclical and seasonal changes which in turn, cause a shift in

the working capital position, particularly temporary working capital requirement.

The quantum of working capital is also determined by production policy. In the case of

certain lines of business ,the demand for products is seasonal, i.e., it will be purchased

during certain the need of more capital. An undertaking on the production process and

key issues in production was achieved through readings from M.Y.Khan & P.K.Jain,

Financial Management and Vinod K.M, Management Accounting.

The level of working capital is also determined by credit policy which relates to sales and

purchases. The credit policy influences the requirement of working capital in two ways

a)Through credit terms granted by the firm to its customers.

b)Credit terms available to the firm from its customers.

These two will affect the working capitals need.


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As a company grows. It is logical to expect that a larger amount of Working capital will

be required. It is , of course, difficult to determine precisely the relationship between the

growth in the volume of business of a company and the increase in its working capital.

The important detail on credit policy and plant for growth and expansion was generated

from companys internal sources and records.

An approach to research, The design, structure from reading from peasant Chandra,

Financial Management Theory & Practice and Harrison Horngren, Financial

Accounting.

The data analyses method, tools used and processing of data based on standard statistical

tools suggested in I.M.Pandey, Financial Management and R.Narayanaswamy ,

Financial Management.

The company profile was gathered from internal publications and internal records of the

company.


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Chapter-III

RESEARCHMETHODOLOGY

3.1 AIM FOR THE STUDY

To improve the working capital management of the company

3.2.2Primary objectives:-

To study the working capital management of chettinad cement corporation ltd

for the period of2004-2009

3.2.3 Secondary objectives:-

To study the change in the working capital.

To study composition of Current Assets and Current liabilities.

To find out the growth value of working capital .

To find out how current assets have been financed.

To find out the variable and fixed component of working capital .

3.3 RESEARCH DESIGN

A research design is the arrangement of conditions for collection analysis of

data is a manner that aims to complain relevance to the research purpose with economy in

procedure. Research methodology of the study is only depends up on the following table.

Nature of working statements

Period of the study


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3.3.1Nature working statement;

The term recorded facts refers to the data taken out from accounting

records.facts that have not been recrded in the financial books are not depicted in the

financial statement

3.3.2Period of the study :

The study analyzing the working capital management of CHETTINADU

CEMENT CORPORATION Ltd covers the financial years from 2004-05 to 2008-2009

3.4 DATA COLLECTION

3.4.1Secondary data:

Secondary data has been collected from the annual reports of the company .The collected

data has been processed and interpreted with financial tools and graphs . The tools used

for the purpose of analysis the ratio analysis and schedule of changes in working capital

3.5 RESEARCH TOOLS :

Ratios

Common size statement

Schedule of changes in working capital management

Operating cycle

3.5.1RATIOS;

Ratio analysis is a techniques of analysis and interpretation of financial

statement. It is a process of establishing and interpretation of various ratio for helping in

making certain decisions.

However, ratio analysis is not an end itself. It is only a means of better understanding

of financial strengths and weaknesses of a firm.

CURRENT RATIO

QUICK RATIO

DEBTOR TURN OVER RATIO

NET PROFIT RATIO


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3.5.2COMMON SIZE STATEMENTS

Under this method the changes in the figures of two years is calculated and

percentage change is calculated by converting all the figures in terms of total liabilities or

total assets.In other words the base to calculate the percentage change is kept the

same;either Total Liabilities or Total Assets

RATIO ANALYSIS

Ratios represent the relationship between two or more variables.It is a technique of

analyzingand interpreting the financial statements.It helps to find out the liquidity

position and the solvency position of the firm.It indicates short-term as well as long-

term solvency position of the firm it is the process of determination of various ratios

for the purpose of decision-making.

3.5.3WORKING CAPITALMANAGEMENT

Capital required for purchase of raw material, and for meeting the day-to-

day expenditure on salaries,wages ,rents advertising ect.,is called working capital. In

other words, working capital refers to that part of a firms capital which is employed for

short-term operations.

THE length of the operating cycle of a manufacturing firm is the sum of

1. inventory conversion period, and

2. book debts conversion period

the inventory conversion period is the total time needed for producing

and selling the product. Typically it includes,

a) raw materials conversion period

b) work-in-progress

c) finished goods conversation period

the book debts conversation period is the required to collect outstanding

amount from customers. The total of inventories conversion period and book debts

conversion period is sometimes referred to as gross operating cycle.


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FINANCIAL CURRENT ASSETS

Three of financial may be distinguished

1. Long term

2. Short-term financing

3. Spontaneous financing

The important source of long term financing are share, debentures, preference

shares, retained earnings and long term debt from financial institutional short-tem

financing refers to those sources of short term credit than the firms must average in

advance. These sources include short term bank loans, commercial papers, factoring

receivable and public deposit Spontaneous financing refers to the automatic sources of

short term funds arising in the normal course of a business.

3.5.4 OPERATING CYCLE

Operating cycle is the time duration required to convert sales after the

conversation of resources into inventories, into cash. The Operating cycle of a

manufacturing company involve five phase:


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OPERATING CYCLE A MAUNFACTURING FIRM

Sales of the product either for cash or on credit. Credit sale creates book debts for

collection.

Debtors Sales

CashFinished Goods

Raw materialWork in progress


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1. CURRENT RATIO

Current Ratio is the relationship between current Asset and Current Liability. A

current ration of2:1 is considered ideal. The current ratio of a firm measures its short

term solvency. It indicates the availability of current asset in rupees for every one rupee

of current liability.

Current Assets

Current Ratio = --------------------------

Current Liabilities.

2.QUICK RATIO

Quick Ratio is also called as acid-test ratio or liquid ratio because; it is the acid

test concerns financial soundness. It is the relationship between quick assets and quick

liabilities. Quick assets are those assets which are readily converted into cash. The

include cash and bank balance, bills receivable, debtors, short term investments. Quick

liabilities include creditors, bills payable, outstanding expanses.

Quick assets

Quick ratio = --------------------

Quick liabilities.


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CONTROL OF WORKING CAPITAL

Working capital turnover ratio indicates the velocity of the utilization of net working.

This ratio indicated the number of times the working capital is turned over in the course

of a year. This ratio measures the efficiency with the working capital is being used by a

firm.

Net sales

1. working capital turnover ratio = --------------------------

Net working capital

Gross working capital

2. Gross working capital to fixed assets = ---------------------------

Fixed assets

Gross working capital

3. Gross working capital to sales = ---------------------

Sales

Net working capital

4. Net working capital to net worth = -----------------------------

Net worth


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CONTROL OF RECEIVABLEMANEGMENT

A concern may sell goods on cash as well as on credit. Credit is one of the important

element of sales promotion. The volume of sales can be increased by following a liberal

credit policy. But the effect of liberal credit policy may result in typing up substantial

funds of a firm in the forms of receivables.

Annual credit sales

1. Receivables turnover ratio =---------------------------------

Average receivable

Receivables at the end

2. Receivable to sales = -------------------------------* 100

Sales

Receivables

3. Receivable as a % of current assets =---------------------------* 100

Current assets

DEBTORS TURNOVER RATIO;

Debtors turnover ratio measures the number of times the receivables are rotated

in a year in terms of sales. This ratio also indicates the efficiency of credit collection and

efficiency of credit policy. This ratio is helpful in determining the operational efficiency

of a business concern and the effectiveness of its credit policy. Debtors turnover ration

can be calculated as follows:

=Net Credit Sales / Average Receivables

=Average Debtor =Opening Balance of Debtors + closing Balance of Debtors


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CONTROL OF CASH MANAGEMENT

sales

1. cash turnover ratio =--------------------

Cash balance

Cash balances

2. cash as a % of current assets =----------------------*100

current assets

NET PROFIT RATIO;

This ratio measures the relationship between net profit and net sales. It indicates the

efficiency of the overall operations of the firm. It shows what percentage of sales is left

to the ratio year after is an indication of improving working conditions and vice versa.

Net profit

1. Net profit ratio =------------------------*100

Sales

Net profit(after interest& tax)

2. Return on shareholders investment =----------------------------

Shareholders funds


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CONTROL OF INVENTORY MANAGEMENT

Every firm has to maintain a certain level of inventory of finished goods so as to

be able to meet the requirement of the business. But the level of inventory should neither

be too high nor too low. It is harmful to hold more inventories. On the other hand, too

low inventory may loss business opportunities. It is very essential to keep sufficient stock

in business.

Inventory Turnover Ratio indicates the number of time the stock has been turned

over during the period and evaluated the efficiency with which a firm is able to manage

its inventory. Inventory turnover ratio measures the velocity of conversion of stock into

sales.

Total inventory

Ratio of inventory to sales =-------------------------

Sales

Net sales

Inventory turnover ratio =---------------------------

Inventory

Inventory

Inventory of current assets =--------------------------

Current assets

Sundry creditors

Sundry creditors to inventory =-------------------------------

Inventory

Inventory

Inventory to net working capital =---------------------------


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Net Working capital

OPERATING CYCLE

Average of RM

Raw materials =------------------------------------ *360

Cost of materials

Average of W.I.P

Work in progress =----------------------------- *360

Cost of production

Average stock of FG

Finished goods = -------------------------------- *360

Cost of good sold

Average debtors

Debt collection period = ------------------------------- *360

Credit sales

Creditors

Credit deferred period = ------------------------------ *360

Credit purchase


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3.6 SCOPE OF THE STUDY:

1. The annual reports of2004-05,2005-06,2006-07,2007-08 and 2008-09 were

analyzed.

2. Standered financial ratio was used to analyze the financial healthiness of

the company.

3. The contributors from experts and professional were used in the study to

arrive inferences and suggestions.

3.7 LIMITATION OF THE STUDY:

1. Annual reports might be window dressed.

2. Cross verification and inner breakup of the data were not gathering for

analyses.

3. Day to day working capital management would be a better indicator for

estimating efficiency of working capital management. But the study was not able

to perform the study on these directions.


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CHAPTER IV

TABLE SHOWING CURRENT RATIO

TABLE 4.1 (Rs. In lakhs)

YEAR CURRENT ASSETS CURRENTLIABILITIES RATIO

2004-05 11396 6934 1.64

2005-06 16435 7928 2.07

2006-07 17986 10768 1.67

2007-08 21789 17296 1.26

2008-09 40469 35837 1.13

Sources: Annual report

Inference;

From the above table, it is found that in the year2005-2006 there was a

satisfactory ratio after that there was an unsatisfactory ratio in 2004-2005 to 2008-2009.

CHART SHOWING CURRENT RATIO

CHART 4.1

1.64

2.07

1.67

1.261.13

0

0.5

1

1.5

2

2.5

ratio

2004-05 2005-06 2006-07 2007-08 2008-09year

current ratio

RATIO


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TABLE SHOWING QUICK RATIO


YEAR QUICK ASSETS QUICK LIABILITIES RATIO

2004-05 5392 6934 0.78

2005-06 6538 7928 0.82

2006-07 7939 10768 0.74

2007-08 13962 17296 0.81

2008-09 23852 35837 0.67


Inference;

The quick ratio of the company shows less than one similarly it was below

the standard level from the year of 2004-2009 because the standard ratio is

1:1

CHART SHOWING QUICK RATIO

CHART 4.2

0.780.82

0.740.81

0.67

0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

0.9

2004-05 2005-06 2006-07 2007-08 2008-09

RATIO


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TABLE SHOWING WORKING CAPITAL


Period Net Sales Net Working Capital Ratio

2004-05 40258 4462 9.02

2005-06 47853 8507 5.63

2006-07 58417 7218 8.09

2007-08 84647 4493 18.84

2008-09 110720 4632 23.90


Inference;

The above table reveals that the working capital turnover ratio during the period

2004-05 to 2008-2009. the position increasing 9.02%in the first year and then it has bean

decreasing to5.63%in the year 2005-06 which has been increasing in the year2007-

07to2008-2009.

The above table we can understand that the maximum position of the working capital is

23.90% in the year2008 09

CHART SHOWING WORKING CAPITAL

CHART 4.3

9.02

5.638.09

18.84

23.90

0.00

5.00

10.00

15.00

20.00

25.00

ratio

2004-05 2005-06 2006-07 2007-08 2008-09

year

working capital turnover

Ratio


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TABLE SHOWING GROSS WORKING CAPITAL TO FIXED ASSETS


Period

Gross Working

Capital Fixed Assets Ratio

2004-05 11396 42208 0.27

2005-06 16435 44511 0.37

2006-07 17986 48228 0.37

2007-08 21789 52344 0.42

2008-09 40469 84608 0.48


Inference;

From the above table it reveals that the net working capital during the period of

2004-05to2008-09 it shows a constant increased to 0.27%,0.37%,0.37%0.42%,0.48%

during these periods it increased respectively

The above table we can understand that the maximum position of the gross working

capital is 0.48% in the year2008-09.

CHART SHOWING GROSS WORKING CAPITAL TO FIXED ASSETS

CHART 4.4

0.27

0.37 0.370.42

0.48

0.000.050.100.15

0.200.250.300.350.400.450.50

Ratio

2004-05 2005-06 2006-07 2007-08 2008-09

year

Gross working capital to fixed assets

Ratio


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TABLE SHOWING NET WORKING CAPITAL TO NET WORTH


Period

Net Working

Capital Net worth Ratio

2004-05 4462 13295 9.02

2005-06 8507 14746 5.63

2006-07 7218 17442 8.09

2007-08 4493 26324 18.84

2008-09 4632 39249 23.9

Source; Annual report

Inference;

The above table reveals that the net working capital to net worth during

the period 2004-05 to 2008-09. In the year2004-05 it has been 9.02% it has been

decreased to 5.63% during the year2006-07 it has been increased to 8.09% and

finally it increased to 23.9% the above table we can understand that the maximum

position of the net working capital to net worth is 23.9% in the year2008-09.

CHART SHOWING NET WORKING CAPITAL TO NET WORTH

CHART 4..5

9.02

5.63

8.09

18.84

23.9

0

5

10

15

20

25

30

2004-05 2005-06 2006-07 2007-08 2008-09


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TABLE SHOWING GROSS WORKING CAPITAL TO SALES


Period

Gross Working

Capital Sales Ratio

2004-05 11396 40258 0.28

2005-06 16435 47853 0.34

2006-07 17986 58417 0.31

2007-08 21789 84647 0.26

2008-09 40469 110720 0.37


Inference;

The above table reveals that the gross working capital to sales during the period

2004-2005 to 2008-2009. this position increasing up to 0.28% and 0.34% d in the last two

years and then it has been decreasing from 2006 to 07 it had been decreasing 0.31%and

0.26%then it has been increasing last year 0.37

The above table we can understand that the maximum position of the working

capital is0.37% in the year2008-09

CHART SHOWING GROSS WORKING CAPITAL TO SALES

CHART 4.6

0.28

0.340.31

0.26

0.37

0.00

0.05

0.10

0.15

0.20

0.25

0.30

0.35

0.40

Ratio

2004-05 2005-06 2006-07 2007-08 2008-09

year

Gross working cabital to sales

Ratio


29/72

29

TABLE SHOWING DEBTORS TURNOVER RATIO


Period Credit sales

Average

receivables Ratio

2004-05 40258 1505 26.75

2005-06 47853 1907 25.09

2006-07 58417 1744 33.50

2007-08 84647 1699 49.82

2008-09 110720 1487 74.46


Inference;

The above table reveals that the Debtor turnover ratio during the period 2004-05

to 2008-09. Debtor turnover ratio of the firm it has been increased trend till the period

2004-09 it has been increased up to 74.46% in the year2008-2009 respectively

The above table we can understand that the maximum position of the Debtors

turnover ratio is 74.46%in the year2008-09.Hence the credit collection is efficient.

CHART SHOWING DEBTORS TURN OVER RATIO

CHART4.7

26.75 25.09

33.50

49.82

74.46

0.00

10.00

20.00

30.00

40.00

50.00

60.00

70.00

80.00

Ratio

2004-05 2005-06 2006-07 2007-08 2008-09

YEAR

Ratio


30/72

30

TABLE SHOWING DEBTORS TO SALES


PERIOD DEBTOR SALES RATIO

2004-05 1395 40258 3.47

2005-06 1709 47853 3.57

2006-07 2149 58417 3.68

2007-08 2825 84647 3.34

2008-09 2585 110720 2.33


Inference;

The above table reveals that the debtor to sales during the period 2004-05 to 2008-09.

In the year 2006-2007 it has been increasing up to 3.68% and for the following

subsequent years it follows a decrease trend which comes down up to 2.33% in the year

2008-09 respectively

The above table we can understand that the maximum position of the

Debtors to sales is 3.68 % in the year2006-2007.

CHART SHOWING DEBTORS TO SALES

CHART 4.8

0

0.5

1

1.5

2

2.5

3

3.5

4

2004-05 2005-06 2006-07 2007-08 2008-09

3.47 3.573.68

3.34

2.33

RATIO


31/72

31

TABLE SHOWING THE DEBTORS OF CURRENT ASSETS

TABLE 4.9 Rs.In.Lakhs

PERIOD DEBTOR CURRENT

ASSETS

RATIO

2004-2005 1395 11396 12.24

2005-2006 1709 16435 10.40

2006-2007 2149 17986 11.95

2007-2008 2825 21789 12.97

2008-2009 2585 40469 6.35


Inference;

The above table reveals that the debtor as a percentage of assets during the period 2003-

04 to 2007-08. In the year2003-04 it has been 12.24% and for the following subsequent

years it follows a decrease trend which comes down up to 6.39% in the year2007-08

respectively


Debtors as a % of assets is 12.24% in the year2003-04.

CHART SHOWING THE DEBTORS OF CURRENT ASSETS

CHHART 4.9

12.24

10.40

11.9512.97

6.39

0.00

2.004.00

6.00

8.00

10.00

12.00

14.00

Ratio

2004-05 2005-06 2006-07 2007-08 2008-09

year

debtors as a % of current assets

RATIO


32/72

32

TABLE SHOWING CASH TURNOVER RATIO


Period Sales cash balances Ratio

2004-05 40258 1395 28.86

2005-06 47853 1709 28.00

2006-07 58417 2149 27.18

2007-08 84647 2825 29.96

2008-09 110720 2585 42.83

Sources: Annual reports

Inference;

The above table reveals that the cash turnover ratio during period 2004-05 to

2008-09.In the year2004-05 it was 28.86it has bean decreased in the year2005-07 as

28 and 27.18 thereafter in the year2007-08 which is increased 29.96 and 42.83 in the

year2008-09.

The above table we can understand that the maximum position of the cash

turnover ratio is 42.83% in the year2008-09

CHART SHOWING CASH TURNOVER RATIO

CHART 4.10

28.86 28.00 27.1829.96

42.83

0.00

5.00

10.00

15.00

20.00

25.00

30.00

35.00

40.00

45.00

Ratio

2004-05 2005-06 2006-07 2007-08 2008-09

year

cash tunover ratio

Ratio


33/72

33

TABLE SHOWING CASH AS APERCENTAGE OF CURRENT ASSETS


Period cash balances

current

assets Ratio

2004-05 1395 11396 12.24

2005-06 1709 16435 10.40

2006-07 2149 17986 11.95

2007-08 2825 21789 12.97

2008-09 2585 40469 6.39


Inference;

The above table reveals that the cash as a % current assets of firm has been

fluctuating trend during period 2004-05 to 2008-09.when the current assets increased

and profit also increased .In the year2004-05 the ratio was 12.24 and the next year

which has been decreased as 10.40. Thereafter the ratio has been increasing tread.

The above table we can understand that the maximum position of cash as a

percentage of current is 12.97% in the year2007-08

CHART SHOWING CASH AS APERCENTAGE OF CURRENT ASSETS

CHAART 4..11

12.24

10.4

11.9512.97

6.39

0

2

4

6

8

10

12

14

2004-05 2005-06 2006-07 2007-08 2008-09

Ratio


34/72

34

TABLE SHOWING POSITION OF INVENTIRIES


Period Inventories

Gross working

capital Ratio %

2004-05 6004 11396 53

2005-06 9897 16435 60

2006-07 10017 17986 56

2007-08 7827 21789 36

2008-09 16617 40469 41


Inference;

The table reveals that the position of inventory in Gross working capital from

the year2004-05 to 2008-09 . In the year2005-06, the percentage of inventory in Gross

working capital has increased and thereafter the same has been decreased respectively in

the year2007 2008 to 2008-2009 it has increased


inventory is 60% in the year2005 06

CHART SHOWING POSITION OF INVETORIES

CHARRT 4.12

5360

56

36 41

0

10

20

30

40

50

60

Ratio

2004-05 2005-06 2006-07 2007-08 2008-09Year

Invetories

Ratio %


35/72

35

TABLE SHOWING POSITION OF SUNDRY DEBTORS


Period

sundry

debtors

Gross working

capital

Ratio

%

2004-05 1505 11396 13

2005-06 1907 16435 12

2006-07 1744 17986 10

2007-08 1699 21789 8

2008-09 1487 40469 4


Inference;

The table showing the position of Sundry Debtors in Gross working capital

from the year2004-05 to 2008-2009 . In the year2004-2005 it is 13% and thereafter in

the year2008-09 it decreased to 4% respectively

The above table we can understand that the maximum position of the Sundry

Debtors is 13% in the year2004 2005.

CHART SHOWING POSITION OF SUNDRY DEBTORS

CHARRT 4.13

1312

108

4

024

68

101214

Ratio

2004-05 2005-06 2006-07 2007-08 2008-09Year

Sundry Debtors

Ratio%


36/72

36

TABLE SHOWING POSITION OF CASH&BANK


Period

Cash& Bank

Balances

Gross

working

capital

Ratio

%

2004-05 1395 11396 12

2005-06 1709 16435 10

2006-07 2149 17986 12

2007-08 2825 21789 13

2008-09 2585 40469 6

Inference;

The above table analysis we can see the contribution of cash on the firm current

asset. The cash position was decreasing in the year2008 2009 and then same has been

finally it has been increased to 13 percentage and finally it has been decreased to 6

percentage in the year2008 2009 respectively

The above table we can understand that the maximum position of the Cash is 13

percentage in the year2007 08.

CHART SHOWING POSITION OF CASH&BANKCHART 4.14

1210

12 13

6

0

2

4

6

8

10

1214

Ratio

2004-05 2005-06 2006-07 2007-08 2008-09year

cash&Bank balance

Ratio %


37/72

37

TABLE SHOWING CASH AS A NET PROFIT RATIO


YEAR NET PROFIT SALES RATIO

2004-05 1396 40258 3.47

2005-06 2796 47853 5.84

2006-07 4006 58417 6.86

2007-08 11471 84647 13.55

2008-09 16377 110720 14.79


Inference;

It indicates the efficiency of the overall operations of the firm. From the

above graph it was clear that the net profit has constant growth in the prescribed years so

we conclude that an increase in net profit ratio year after year is an indication of

improving working conditions and vice versa.

CHART SHOWING NET PROFIT RATIO

CHART 4.15

Net profit ratio

3.475.84 6.86

13.55 14.79

0

2

4

6

8

10

12

14

16

2004-05 2005-06 2006-07 2007-08 2008-09year

Ratio

RATIO


38/72

38

TABLE SHOWING POSITION OF LOANS AND ADVANCES


PERIOD LOAN&ADVANCES GROSS

CAPITAL

WORKING

RATIO %

2004-05 2462 11396 22

2005-06 2904 16435 18

2006-07 4072 17986 22

2007-08 9434 21789 43

2008-09 19780 40669 49


Inference;

The above table analysis we can see the contribution of Loans and Advances on

the firm current asset. The Loans And Advances position has increased as 22% . In the

first years and then the same has been decreased to 18% and in the subsequent year it has

been increased up to22%&43%&49%in the year2006-07 to 2008-09 respectively


Loans and Advances is 49% in the year2008 2009.

CHART SHOWING POSITION OF LOANS AND ADVANCES

CHART 4.16

2004-052005-06 2006-07

2007-082008-09

Ratio%

2218 22

4349

0

10

20

30

40

50

year

loans&advance

Ratio%


39/72

39

TABLE SHOWING COMPOSITION OF CURRENT ASSETS FOR THE YEAR

(2004-05 TO 2008-09) TABLE NO4.17

articular

2004-

05

2005-

06

2006-

07

2007-

08

2008-

09

Inventories 53 60 56 36 41

Sundry debtors 13 12 10 8 4

Cash& bank

balances 12 10 12 13 6

Loans&

advances 22 18 22 43 49

Total 100 100 100 100 100


Inference;

The above table it is found that the Debtors has been at the maximum of 13%

during the year2

004 05 , stock maximum contribution is 60% in the year2

005-06 ,cash and bank balance maximum contribution is 13% in the year2007-08 and Loans and

Advances maximum contribution is 49.% in the year2008-09

The above table we can clearly understand maximum contribution of 60%

inventories in current assets.


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40

CHART SHOWING COMPOSITION OF CURRENT ASSETS FOR THE YEAR

2004-05 TO 2008-09

CHART 4.17

53 13 12 22

60 12 10 18

56 10 12 22

36 8 13 43

41 46 49

0 20 40 60 80 100

Ratio

2004-05

2005-06

2006-07

2007-08

2008-09

year

composition of current assets

Inventories

Sundrydebtors

Cash&bankbalances

Loans&advances


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41

TABLE SHOWING POSITION OF SUNDRY CREDITORS

TABLE NO4.18 (Rs. In lakhs)

Period sundry creditors Total liabilities Ratio %

2004-05 3657 6934 52.74

2005-06 3433 7928 43.30

2006-07 4608 10768 42.79

2007-08 4197 17296 24.27

2008-09 11282 35837 31.48


Inference;

The above table reveals that the position of sundry current liabilities from the

period 2004-05 to 2008-09. In the year2004-09, the percentage of sundry creditors in

total current liabilities has been decreased to 43% it has bean increased 44%

respectively in the year2008-2009


Liabilities is 52.74% in the year2004-05

CHART SHOWING POSITION OF SUNDRY CREDITORS

CHART 4.18

5360

56

36 41

0

10

20

30

40

50

60

Ratio

2004-05 2005-06 2006-07 2007-08 2008-09Year

CREDITORS

Ratio %


42/72

42

TABLE SHOWING POSITION OF OTHER LIABILITIES

TABLE NO4.19 (Rs. In lakhs)

Period other liabilities Total liabilities Ratio %

2004-05 2166 6934 31.24

2005-06 2401 7928 30.29

2006-07 3151 10768 29.26

2007-08 3260 17296 18.85

2008-09 4358 35837 12.16


Inference;

The above table reveals that the position of other liabilities from the period 2004-

05 to 2008-09. In the year2004-09, the percentage of creditors in total current liabilities

has been decreased to 12.16% it has bean respectively in the year2008-2009

The above table we can understand that the maximum position of the Liabilities is

31.24% in the year2004-05.

CHART SHOWING POSITION OF OTHER LIABILITIES

CHART 4.19

52.74

43.30 42.79

24.27

31.48

0.00

10.00

20.00

30.00

40.00

50.00

60.00

Ratio

2004-05 2005-06 2006-07 2007-08 2008-09

year

Ratio%


43/72

43

TABLE SHOWING POSITION OF PROVISION


Period Provision

Total

Liabilities Ratio %

2004-05 851 6934 12

2005-06 1872 7928 24

2006-07 3009 10768 28

2007-08 9839 17296 57

2008-09 20197 35837 56


Inference;

The table shows the position in total current liabilities from the period 2004-2005

to 2008-2009 . in the year 2004 05 it is12% and subsequent year the same has bean

increased to 24%,28%,57%,and finally decreased 56%in the year2008-09 respectively .

The above table we can understand that the maximum position of the provision is

57% in the year2007-08.

CHART SHOWING POSITION OF PROVISION

CHART 4.20

provision

12

24

28

57

56 2004-05

2005-05

2006-07

2007-08

2008-09


44/72

44

TABLE SHOWING COMPOSITION OF CURRENT LIABILITES FOR THE

YEAR 2004-05 TO 2008-09 TABLE 4.21

Particular 2004-05 2005-06 2006-07 2007-08 2008-09

sundry

creditors 52.74 43.3 42.79 24.27 31.48

other

liabilities 35.26 30.29 29.21 18.73 12.16

Provision 12 26.41 28 57 56.36

Total 100 100 100 100 100


Inference;

The above table it is found that the sundry creditors has been at the maximum of88% during the year2004-05 , provisions maximum contribution is 57% during the year

2007-08.

The above table we can clearly understand maximum contribution of 88% sundry

creditors in current liabilities

CHART SHOWING COMPOSITION OF CURRENT LIABILITES FOR THE

YEAR 2004-05 TO 2008-09

CHART 4.21

52.74 35.26 12

43.3 30.29 26.41

42.79 29.21 28

24.27 18.73 57

31.48 12.16 56.36

0 20 40 60 80 100

ratio

2004-05

2005-06

2006-07

2007-08

2008-09

yearsundarycreditors

otherliabilities

Provision


45/72

45

TABLE SHOWING GROWTH VALUE OF WORKING CAPITAL


Period Net working capital Growth value

2004-05 4462 0

2005-06 8507 1.91

2006-07 7218 0.85

2007-08 4493 0.62

2008-09 4632 1.03


Inference;

The above table reveals that the growth value of the working capital during the

period 2004-05 to 2008-09. In the year2005-06 it was 1.91% and it shows a decreasing

trend up to 0.62% and it has increasing 1.03%in 2008-09 respectively.

The above table we can understand that the growth value of the

working capital is 1.91% in the year2005-2006

CHART SHOWING GROWTH VALUE OF WORKING CAPITAL

CHART 4.22

Growthvalue

0

1.91

0.85

0.62

1.03

0

0.5

1

1.5

2

2.5

2004-05 2005-06 2006-07 2007-08 2008-09

year

Growth value

Growthvalue


46/72

46

TABLE SHOWING OPTIMUM LEVEL OF CURRENT ASSETS


Period short-term financing long term financing

2004-05 6934 46670

2005-06 7928 53018

2006-07 10768 53807

2007-08 17296 56895

2008-09 35837 89298


Inference;

The above table shows the optimum level of current assets and liabilities for the

year 2003-04 to 2007-08 .the short term financing starts with Rs 6934 and it shows a

uptrend throughout the year and similarly it happened same for short term financing

CHART SHOWING OPTIMUM LEVEL OF CURRENT ASSETS

CHART 4.23

0

20000

40000

60000

80000

100000

120000

140000

2004-05 2005-06 2006-07 2007-08 2008-09

year

Assets

short-term financing longterm financing


47/72

47

TABLE SHOWING VARIABLE COST

TABLE 4.24

Period Variable w/c Total w/c Fixed w/c

2004-05 14012 11396 2616

2005-06 45720 16435 29285

2006-07 15651 17986 2335

2007-08 42105 21789 20316

2008-09 225494 40469 185025

CHART SHOWING VARIABLE COST

CHART 4.24

0

50000

100000150000

200000

250000

2004-052005-062006-072007-082008-09

year

cost

totalw/c fixedw/c


48/72

48

Variable cost for the year 2004-05

11396-9663

Variable cost =--------------------

127-113

1733

=-----------

14

=124*113

Variable cost =14012/-

Total cost =11396/-

Fixed cost = variable cost total cost

= 14012-11396

= 2616/-


49/72

49


16435-11396

Variable cost =--------------------

127-113

5039

=-----------

14

=360*127


Total cost =16435/-


= 45720-16435

= 29285/-


50/72

50


17986-16435

Variable cost =--------------------

141-127

1551

=-----------

14

=111*141


Total cost =17986


= 15651-17986

= 2335


51/72

51


21789-17986

Variable cost =--------------------

155-141

3803

=-----------

14

=271


Total cost =21789


= 42105-21789

= 20316


52/72

52


40469-21789

Variable cost =--------------------

169-155

18680

=-----------

14

=1334*169


Total cost =40469/-


= 225494-40469

= 185025/-


53/72

53

Changes of working capital for theyear 2004-05 to 2005-06

(Rs. In lakhs)

Current assets 2004

-05 2005-06 Increase Decrease

Inventories 6004 9897 3893

Sundry debtors 1505 1907 402

Other current assets 30 18 12

Cash& bank balances 1395 1709 314

Loans &advances 2462 2904 442

Total current assets 11396 16435

Current liabilities

Liabilities 6083 6056 27

Provision 851 1872 1021

Total Current

liabilities

6934 7928

Net working capital 4462 8507 4095

Total 8507 8507 5078 5078


Inference:

The above table it is clear that the working capital has increased Rs.4045, in the year of

2005-06.

The analysis of the table it is clearly understood that the current liabilities have been

decreased by Rs.1021 in the year2005-06.

The analyzed table we can clearly understand that working capital has been

Increased by Rs. 4,045 in the year2005-2006


54/72

54


(Rs. In lakhs)

Current assets 2005-06 2006-07 Increase Decrease



Other current assets 18 4 14




Current liabilities


Provision 1872 3009 1137

Total Current

liabilities

7928 10768


Total 85087 8507 3017 3017


Inference:

The above table, it is clear that the working capital has decreased to Rs.1289 in

the year of2006-07 because the sundry debtors and other current assets Rs. 163 and 14

have been decreased. In the mean while the current liabilities have bean decreased by Rs.

2,840.

The above table shows the changes of working capital as decreased by Rs. 1289 in the

year2006-07.


55/72

55


(Rs. In lakhs)




Other current assets 4 4




Current liabilities


Provision 3009 9839 6830

Total Current

liabilities

10768 17296


Total 7218 7218 9065 9065


Inference:

The above table, it is clear that the working capital has decreased to Rs.2,725 in

the year of2

007-08 because the inventories and sundry debtors Rs.2

,190 and 45 have been decreased. In the mean while the current liabilities have bean decreased by Rs.

6,830.

The above table shows the changes of working capital as decreased by Rs. 2,725 in the

year2007-08.


56/72

56


(Rs. In lakhs)




Other current assets 4 4




Current liabilities


Provision 9839 20197 10358

Total Current liabilities 17296 35837


Total 4632 4632 19136 19136

Source; Annual reportInference

The above table it is clear that the working capital has increased Rs.139, in the

year of2008-09.

The analysis of the table it is clearly understood that the current liabilities, provision

have been decreased by Rs.8183,10358 in the year2008-09.


Increased by Rs. 139 in the year2008-2009


57/72

57

OPERATING CYCLE (2004-05 )

Average of RM

Raw materials =------------------------------------ *360

Cost of materials

802

= ________ *360

4667

= 62 days

Average of W.I.P

Work in progress =----------------------------- *360

Cost of production

880

= --------------------------- *360

32043

= 10 days


58/72

58

Average stock of FG

Finished goods = -------------------------------- *360

Cost of good sold

229*360

= ----------------------------

40258

=2 days

Average debtors


Credit sales

2476 *360

=---------------------

20258

=44 days

Creditors

Credit deferred per = ------------------------------ *360

Credit purchase

913 *360

=---------------------

8997

=37


59/72

59

OPERATING CYCLE ( 2005-06 )

Average of RM

Raw materials =------------------------------------ *360

Cost of materials

641

=________ *360

6522

=35 days

Average of W.I.P

Work in progress =----------------------------- *360

Cost of production

942

=----------------------------- *360

38432

= 9 days

Average stock of FG

Finished goods = -------------------------------- *360

Cost of good sold


60/72

60

288

= ---------------------------- * 360

47853

=2 days

Average debtors


Credit sales

1907 *360

=---------------------

23926

= 29 days

Creditors


Credit purchase

1165 *360

=---------------------

11477

=37 days


61/72

61


Average of RM

Raw materials =------------------------------------ *360

Cost of materials

1296

=________ *360

8379

=55 days

Average of W.I.P

Work in progress =----------------------------- *360

Cost of production

280

=------------------------- *360

46516

= 2 days

Average stock of FG

Finished goods = -------------------------------- *360

Cost of good sold


62/72

62

3437

= ---------------------------- * 360

58417

=21 days

Average debtors


Credit sales

1744 *360

=---------------------

58417

= 21 days

Creditors


Credit purchase

4020 *360

=---------------------

15539

= 93 days


63/72

63


Average of RM

Raw materials =------------------------------------ *360

Cost of materials

2114

=________ *360

11026

=69 days

Average of W.I.P

Work in progress =----------------------------- *360

Cost of production

3847

=-------------------------- *360

60714

=23 days

Average stock of FG

Finished goods = -------------------------------- *360

Cost of good sold

1971

= ---------------------------- * 360

84647

= 8 days


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64

Average debtors


Credit sales

1699*360

=---------------------

42323

= 14 days

Creditors


Credit purchase

4402 *360

=---------------------

21376

= 74 days


Average of RM

Raw materials =------------------------------------ *360

Cost of materials

140092

=________ *360

3964069

=13 days

Average of W.I.P

Work in progress =----------------------------- *360

Cost of production


65/72

65

3536

=-------------------------- *360

76027

=17 days

Average stock of FG

Finished goods = -------------------------------- *360

Cost of good sold

3646

= ---------------------------- * 360

110720

= 54 days

Average debtors


Credit sales

1487*360

=---------------------

110720

= 10 days

Creditors


Credit purchase

7739 *360

=---------------------

30438

= 92 days


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66

Table showing Summary of operating cycle for the year

2004 05 to 2008 09

Particular 2005 2006 2007 2008 2009

operating cycle

ICP

RMCP 62 35 55 69 13

WIPCP 10 9 2 23 17

FGCP 2 74 2 46 21 78 8 100 54 84

Add;

Debtors covered period 44 29 21 14 10

Lees ;

Credit deferred period 37 37 93 74 92

Net operating 81 38 6 40 2


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67

Inference;

The above table shows that the inventory conversion period (icp), debtors

collection period and creditors deferred period

If we compare the inventory conversion period in 2008 inventory conversion

period (84days) and the debtors collection period has 10 days to collect the debt as it was

low when compare to other years ,the creditors deferred period has been increased to 92

days


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68

5.1 FINDINGS:

The analyzed data we can inferred that the working capital has increased finally to

rs 139 lakhs this shows the best utilization of cash


Increased by Rs. 4,045 in the year2005-2006

The analyzed table shows the changes of working capital as decreased by Rs.

1289 in the year2006-07.

The analyzed table shows the changes of working capital as decreased by Rs.

2,725 in the year2007-08.


Increased by Rs. 139 in the year2008-2009.

The analyzed table we can understand that the maximum position of the inventory

is 60% in the year2005 06

The analyzed table we can understand that the maximum position of the Sundry

Debtors is 13% in the year2004 2005

The analyzed table we can understand that the maximum position of the Cash is

13% in the year2007 08.

The analyzed table we can understand that the maximum position of the Loans

and Advances is 49% in the year2008 2009.


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69

The analyzed table we can clearly understand maximum contribution of 60%

inventories in current assets.

The analyzed table we can understand that the maximum position of the

Liabilities is 88% in the year2004-05

The analyzed table we can understand that the maximum position of the provision

is 57% in the year2007-08.

The analyzed table we can clearly understand maximum contribution of 88%

sundry creditors in current liabilities.

The analyzed table we can understand that the growth value of the working

capital is 1.91% in the year2004-2005.

The overall Net operating cycle concludes that the creditors deferred period is

better than debt collection period.


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70

5.2 SUGGESTIONS:

To have a good return the company should reduce the manufacturing expenses.

The company can increase its Net Profit level which has been increased indicating

a better performance by the company

The company has invested more in Fixed Assets rather they can diversify their

investment which will bring more profit to the Company.

The company should maintain the current ratio in a consistence manner because

the ratio reflected the ability of the company to meet its current ability.


71/72

71

5.3 CONCLUSION

According to this study, the working capital management of

Chettinad Cement Corporation limited has a better position. The variables

chosen for the study helped in determining the position of the concern

consequently for the past five years. The companys position in terms of

finance is satisfactory.


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AMAR Project 1

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Transcript of AMAR Project 1