Amit Final Inplant Report

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NAVALOOR DAIRY PRODUCTS, HUBLI
EXECUTIVE SUMMARY
India is the worlds highest milk producer and all set to become the worlds
largest food factory. The milk industry in India is witnessing a stupendous
growth. The production of liquid milk touched a high of 85 million tones in
200!02 placing the industry first in the world.
"#$#%&&' (#I') *'&(+,T- company was incorporate on 5 april
..5/ situated in 0ubli. The founder of a dairy is 1r.#nant.2."a3aloor. It is a
pri3ate company in 4#'"#T4# state. "a3aloor (airy *roducts is pioneer
milk factory in 4arnataka. The total area of industry is 5 acres. This plant
handles about 25/000 liters of milk per day.
It has two companies in one is all carry "a3aloor (airy *roucts tag. It is
mainly milk producing company where 3arieties of milk and product like
Toned milk/ (ouble toned milk/ -tandard 1ilk/ ,urd/ 6utter milk/ %assi/ ,old
,offee/ 7hee/ *aneer/ ,hakka/ khoa are producing.
The main motto of the company is increase in its sales. The "a3aloor (airy
*roducts group belie3es that the e8cellence is the only bench mark hence it is
always sought are obtained the 3ery best technologies to ensure top class
manufacturing.
It is I-& certified company. This company also got the award of 69-T
-1#%% -,#%9 ,&1*#") I" 2002.
To study how best the working capital is utili:ed in the company and working
capital management of a company. The effecti3eness of credit management of
the company/ to study the short! term liquidity positions of company/ to study
the changes in working capital position of the company. To suggest necessary
methods by which future impro3ement may be made in its management of
working capital.
K.L.E.Ss COLLEGE OF BUSINESS ADMINISTRATION
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The ,ampus is neatly maintained.
The milk manufacturing process is good.
The working capital requirement is increased in the year 200; due
to increase in debtors/ loans/ and decrease in the liabilities.
The sales are increasing year by year.
'eco3ery of milk crates should be done perfectly.
There is intensi3e need of cost analysis and cost control to impro3e
profitability by reducing the cost.
The company has to try to impro3e the cash balances.
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INDUSTRY PROFILE
India is the worlds highest milk producer and all set to become the worlds
largest food factory. The milk industry in India is witnessing a stupendous
growth. The production of liquid milk touched a high of 85 million tones in
200!02 placing the industry first in the world.
-ince ../ after liberali:ation/ anybody and e3erybody ha3e been free to
enter the dairy industry and to reap benefit from the markets that (omestic
federations created and nurtured with their sweat and blood. 1ultinationals/
backed by their surplus capital/ are seeking a hefty share of Indian milk and
milk products market. #t the same time/ regional pri3ate companies ha3e been
able to penetrate markets on the strength of aggressi3e pricing made possible
by ca3alier treatement of ta8ation laws and quality standards.
(airy is a place where handling of milk and milk product is done and
technology refers to the application of scientific knowledge for practical
purpose. (airy technology has been defined as that branch of dairy science/
which deals with the processing of milk and manufacturing of milk producing
on an industrial scale.
In de3eloped countries such as +-# the year 850 is seen as di3iding line
between firm and factories scale production. $arious factors contributed to
this change in countries concentration of population in cities where <obs were
plentiful/ rapid industriali:ation impro3ement of transportation facilities/
de3eloped machines. =here as the rural areas selected from the location of
milk processing plants/ and product manufacturing factories.
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1ilk may be defined as the whole/ fresh/ clean/ lacteal secretion obtained by
the complete milking of one or more healthy milk >1ilk gi3ing? animals. It is
an almost an ideal food. #lthough milk is commonly thought as a be3erage/ it
is "ature most nearly *refect food and contains more actual solids than many
so called solid foods/ especially 3egetables. 1ilk is the only food/ which is
designed by the nature solely as food. It ser3es as the foundation of as
adequate diet. It supplies bodybuilding protein bone forming minerals and
health gi3ing 3itamins and furnishes energy gi3ing lactose and milk fat. #ll
these properties make milk important for pregnant mothers/ growing children/
adolescents/ adults/ in3alids/ con3alescents and proteins alike. #n adequate
consumption of milk can correct dieting deficiencies for most people to ha3e
strong and healthy goodies. It is a delicious and appeti:ing food for all ages as
well as being healthful.
,&"-TIT+9"T- &@ 1I%4 *9',9"T#79
=#T9' 8A.0B
6+TT9' @#T C.0B
,#-9I" 2.8B
#%+1I" 0.5B
%#,T&-9> 1I%4 -+7+'? 5.0B
1I"9'#%- 0.AB
1ilk constituents are di3ided into two groups namely/ water and solids. The
constituents other than water are called the total solids >T-?. The total solids
minus the butterfat are termed as the solids!non!fat >-"@?. #ll the constituents
e8cept the butterfat are known as the milk serum. The casein and albumin
make up most of the protein of the milk serum. The casein and albumin make
up most of the protein of the milk. #ctually about 0.055 globulin is also
present.
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The ma<or constituents of milk are water/ butterfat/ protein/ lactose and
minerals. The minor constituents are 3itamins/ pigments such as carotene/ fat!
soluble pigment lactofla3in/ and water!soluble pigment lactofla3in/
cholesterol/ phospholipids >lecithin?/ and sterols/ en:ymes sucha s lipase/
galactose/ diastase etc. gases such as carbon dio8ide/ o8ygen and nitrogen and
nitrogenous substances such as uric acid/ ureas nitrogen and traces of amino
acids. The true constituents are milk fat/ casein and lactose.
1ilk is absolutely essential for the welfare of the human race/ the cow has
been rightly called Dthe foster mother of the human raceE and she is found in
most of the ci3ili:ed countries of the world.
In India/ dairying has been practiced as a rural cottage industry since the
remote past/ -emi commercial dairying started with the establishment of
military dairy farms and co!operati3e milk unions throughout the country
towards the eand of the nineteenth century/ howe3er/ market milk technology
may be considered to ha3e commenced in .;5 with the establishment of
#1+% (airy.
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GROWTH & DEVELOPMENT OF THE
INDUSTRY
+ntil the .C0/ there was 3ery little published information on the method of
preparation and use of these products. The credit for the first publication on
the sub<ect goes to (r. =.6. (a3is/ the first director of the industry research/
Indian (iary research Institutes >now "ational?/ 6angalore. =ithin the span of
these four decades since his book appeared/ considerable research has been
places in indigenous (airy products.
It is beyond doubt to mention that the organi:ed dairy industry has done a
splendid <ob by transforming itself from an import!dependent enterprise to
self!sufficient industry and the embarking on e8port of 3arious products. #nd/
now it is poised for another wa3e of e8pansion of undertaking large!scale
production of milk in the organi:ed sector.
0uman population F .C billion
1ilk production F AC.5 million tones
#3erage annual growth rate F 5.;B
*er capital milk a3ailability F 2C gGday or A8 kgGyear
1ilk animals F 5A millions cows/ 5. million buffaloes
1ilk yield per breed able bo3ine in Hmilk F 2550 crores
(airy plants through put F 20 ml pd
$alue of output of milk groups F 's 5005 crores
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MILK PRODUCTION
.50!A 1I%%I&" T&"9-
.;; !A0.81I%%I&" T&"9-
..A!AC.5 1I%%I&"- T&"9-
2020!2C0 1I%%I&" T&"9-
Indian contribution to world milk production rise from 2!5 and it will
increase up 50!55 B to 2020.
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COMPANY PROFILE
"#19F "#$#%&&' (#I') *'&(+,T-
#(('9--F *lot "o 2 I 5 / opp 6ig 6a:aar 7okul 'oad 0ubli
580050
'9-I-T9'9( &@@I,9 F "a3aloor (airy *roducts/
"ear ,ity 6us stand/
,6T 0ubli
)9#' &@ 9-T#6%I-019"T F 5 #pril ..5
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T&* 1#"#7919"T 1r.#nant "a3aloor >1anaging (irector?
1r.'a<u "a3aloor >98ecuti3e (irector?
79"9'#% 1#"#79' 1r. 7irish .1.6
(9*#'T19"T- *roduction/ *roducts -tores G
*urchase / 0'/ #ccounts
T&T#% 91*%&)99- .0
*'&(+,T- 1ilk/ ,urd/ %assi/ 1asala 6utter 1ilk/ ,old
,offee/
6utter/ 7hee/ ,ream/ 4hoa/ *eda/ *aneer.
1#2&' ,+-T&19'- (omestic/ 'esorts/ 0otels and 'estraurants/
Institutional markets.
'#= 1#T9'I#% (9T#I% -kimmed 1ilk *owder/ 'aw 1ilk and potable
water.
1I%4 ,0I%%I"7 ,9"T9' -higgoan/ 0irekerur/ 4ittur
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This plant handles about 25000 liters of milk per day. This company has
helped almost 000 families to earn to their li3ing besides creating direct
employment to local in the plant.
INTRODUCTION
"a3aloor (airy *roducts was set up by 1r. #nant .2. "a3aloor/ 1anaging
director of "(*/ to produce the best quality products which can hold their
own position in the highly competiti3e national market and bring the benefit
milk producers. The plant states the art of Technology/ 9quipments and
1anufacturing process.
LOCATION
The plant is situated 0 km away from 0ubli on #irport 'oad (ist H(harwad
>4#'"#T#4#?. &n the 0ubli!6angalore highway ha3ing a pollution free
en3ironment which helps to maintain its hygiene quality and a rich source of
cows and buffaloes milk with a possibility of increasing its quality and
handling / at present 25000 ltrs G day.
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HISTORY
6efore Indian economy opened up in ..2/ "a3aloor (airy *roducts group
opened the doors of the first pri3ate sector dairy in the state of 4arnataka
called "a3aloor (airy *roducts/ in .8. at a remote 3illage of (e3ar
-higihalli/ 6aihongal (istrict. This dairy initially engaged in procurement
processing and distribution of raw milk in 7oa -tate and 6elgaum (istrict of
4arnataka. #t the time when "a3aloor (airy *roducts/ commenced its
acti3ities/ the dairy sector was dominated by co!operati3e milk unions ha3ing
substantial support from the state and central go3ernment with agencies
engaged in promoting the said industry. It was not an easy task indeed to
complete with mighty co!operati3e sector and sustain in the industry without
any support. 0owe3er/ there has been no looking back e3er since.
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"a3aloor groups constant search for pioneering acti3ities made them promote
many companies engaged in 3arious inno3ati3e products as always for first
time in the region. (eccan *lateu of India has a small industrial de3elopment
area in the state of 4arnataka/ which consists of three districts touching
northwards to beautiful 6elgaum and embracing at (a3angere and left is 7oa
7ods own country. This he3eanly part of the world was depri3ed of good
quality milk. The "a3aloor family of ancient (e3ar -higihalli $illage led by
1r.2innappa "a3aloor had a 3ision to pro3ide fresh and quality milk to all
citi:ens in north 4arnataka. "a3aloor 7orup H a brain child of the ,hairman
1r. 2innappa "a3aloor H was brought to reality by the dedicated hard work of
"a3aloor brothers under the leadership of 1r. 2aipal "a3aloor.
#midst the protected economy/ "a3aloor brothers 3entured into setting up the
@irst *ri3ate -ector (airy in 4arnataka in ..5 at 0ubli and 6elgaum in the
name and style "a3aloor (airy *roducts. "ow "a3aloor (airy *roducts has
build a solid foundation in the market as well as in the hearts of consumers. It
has made a mark in the pouch milk brand.
The unique feature of all companies promoted by "a3aloor group is adherence
to quality/ right price and con3enience and thereby ensuring customer
satisfaction. In India cow is the symbol of prosperity and %ord 4rishna is
considered to be the guardian of cows and milk. 0ence the promoters of
"a3aloor 7roup selected D#nandE as the brand of their sachet milk.
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Company Mission
To impro3e quality and quantity of products and ser3ices by promoting
healthy practices with economical operations and with an aim to ser3ice
ultimate consumers.
To their utmost satisfaction at affordable price with an optimi:ation of groups
wealth.
Company Vision
&3er the "a3aloor (airy *roducts has gained considerable with farmers and
consumer hence the prospects of the company are bright in the near future.
The company has a 3ision of di3ersifying in 3arious other businesses. It is
planning to 3enture into chemical and allied industries and its identified
products.
Objectives of the Company
1inimi:e number of consumer complaints with regard to food
safety. J
@ood safety #wareness programme with the raw milk producers
suppliers.
Training on good manufacturing practices to all employees.
Training on 0a:ard #nalysis ,ritical ,ontrol *oints #wareness to
super3isors and operators.
1aintaining G 9nsuring @actors hygiene and *ersonnel 0ygiene at
all times.
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AC!I"V"M"NT#
69-T -1#%% -,#%9 I"(+-T') #=#'( in the year ...!2000
from 7o3t. of 4arnataka.
I-& 22000!2005 ,9'TI@I,#T9 @&' @&&( -#@9T)
1#"#7919"T
"(*s promoter 1r.#nant "a3aloor award in 200 from Indian
achie3ers forum for 98cellence in %eadership/ inno3ation/ and
commitment to 3alues in enterprise.
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COMPANY POLICIES
$OOD #A$"T% POLIC%
=e at "a3aloor (airy *roducts are committed to procure/ process and deli3er
safer quality products to consumer at all times by strictly adhering to
following measures.
9nsure food safety I quality through effecti3e implementation of
food safety management system.
,onforming to statutory/ regulatory and consumer requirements.
&"'"LL"R% POLIC%
=e at "a3aloor (airy *roducts are committed to ensure that D<ewelleryE H
,ostume 2ewellery/ "ecklaces/ ,hains/ rings G =atches/ 9arrings and other
<ewellery are not worn in critical areas/ which may affect food safety and other
work place safety.
,ritical areas are F
! 'aw milk reception
! *rocessing
! (ehydration and @ermentation G coagulation process
! @illing and *acking
! ,old storage
! *roducts handling
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(LA## POLIC%
=e at "a3aloor (airy *roducts are committed to ensure that 7lass breakages/
including window glasses/ equipments/ gauges/ test instruments/ bulbs and
other glass made materials are not affecting any food products safety.
#ll potential sources of glass breakages will continuously be identified and
protected. #s a part of glass policy/ glass breakage in critical areas are taken
up seriously and corrected with utmost care. The product will be analy:ed and
corrected in case of doubt.
)UALIT%
Kuality is ne3er an #ccident it is always the result of high intention/ sincere
efforts/ intelligent direction I skill full e8ecution.
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&'7#"I-#TI&" -T'+,T+'9
Ca!"#a$
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Ma$age"
R + D S)a,
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Sa*es Ass!s)a$)
Ma$age"
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RESPONSIBILITIES OF AUTHORITY
79"9'#% 1#"#79'
To e8ercise responsibilities and authorities of food safety.
&3er all administration of (airy.
To ensure effecti3e and efficient utili:ation of production facilities.
To ensure effecti3e resource management in respect of production
requirement of dairy.
To co!ordinate with *rocurement and input and marketing for
establishing effecti3e supply.
To ensure consistency and impro3ement in product quality.
Te delegate responsibilities I authorities as required to supporting
members in order to ensure smooth and effecti3e running of
system.
To enhance efficiency of @ood safety.
*'&(+,TI&" 1#"#7919"T
To e8ercise responsibilities of @ood safety.
1onitor/ re3iew and suggests impro3ement methods for enhancing
performance.
To identify and e8ecute new pro<ects.
To monitor/ re3iew/ control and ensure effecti3e management of
supply needs.
To appraise top management I suggest means and methods for
effecti3e resource management.
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-ales #sst 1anager
(ay today supply the milk product to the market or agent
-ending the report of the sales to the top mgt.
1arketing #sst 1anager
1aking ad3ertisement of the product.
%ooking to the marketing change.
%ooking to the needs I wants of the customer.
%ooking the opportunity to launching a new product.
98pand of the market.
,ontrol the ad3ertisement cost.
@I"#",9 G #,,&+"T 1#"#79'
Implementation of financial policies I procedures adopted by the
union.
To appraise top management regarding financial implications and
finance management requirements in respect of *roposal made for
di3ersification/ capital equipment purchase/ Technology up
gradation.
To ensure smooth functioning of system in matters concerning all
interested parties.
To ensure ,ompliance with all applicable statutory and regulatory
requirements.
To delegate responsibilities and authorities as required to
supporting members in order to ensure smooth and effecti3e
functioning of the system.
To ad3ice top management with regard to pricing of 1ilk I 1ilk
products.
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@ormulation I implementation of cost reduction G control
programmes.
To ensure costing and monitoring of all functions of the
organi:ation.
MANAGEMENT RESPONSIBILITY &
COMMITMENT
Top 1anagement of "a3aloor (airy *roducts is committed to the
de3elopment and implementation of the food safety management system and
continually impro3ing by effecti3eness byF
-howing food safety is supported by the business ob<ecti3es of the
organi:ation.
,ommunicating throughout the organi:ation the importance of
meeting requirements of this International -tandard/ any statutory
I regulatory requirements and as well as consumer requirements
relating to food safety.
9stablishing the food safety policy.
,onducting management re3iews/ and
9nsuring the a3ailability of resource.
-trict adherence to/ and following of documented procedures/ periodical audit
of product and processes/ monitoring and e3aluation of defined measurable
ob<ecti3es set at department le3el/ initiation of necessary actions to o3ercome
deficiency in any of the abo3e by the concerned department G functional head
will form the means of achie3ing the set food safety policy and business
ob<ecti3es G measurable ob<ecti3es.
The management re3iew committee re3iews the policy at appropriate time >at
least once a year? for its continuing suitability. To form a basis for re3iew/
"a3aloor (airy *roducts willF
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93aluate the e8pected le3el of consumer satisfaction relati3e to
competition in its market place.
,onsider the balance between the needs of interested parties to be
satisfied and contribution from each interested party to
achie3ement of organi:ations goals.
93aluate risks against achie3ing the organi:ational ob<ecti3es.
93aluate opportunities and need for continual impro3ement.
Identify resources needed and capabilities of suppliers.
$UNCTIONAL D"PARTM"NT#

DEPARTMENTS
P"%&/()!%$
De0a")#e$)
P"%&/() De0a")#e$)
H R De0a")#e$) A((%/$)
De0a")#e$)
M.) + Sa*es
De0a")#e$)
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PRODUCTION
*roduction department ensures that the minimum stock of milks is maintained
at processing and dispatch department as decided by 7eneral 1anager H (airy
from time!to!time/ which is dependent on sales and inflow trend.
&n receipt of requirements from marketing/ 7eneral 1anager H (airy shall
plan for the days production and this shall be communicated to *roduction In
charges.
*%#""I"7 @&' *'&(+,TI&"F
. *roduction department ensures that the minimum stock of 1ilk is
maintained at processing and dispatch department as decided by
the 7eneral 1anager H (airy from time Hto H time/ which is
dependent on sales and inflow trend.
2. &n receipt of requirements from 1arketing/ 7eneral 1anager H
(airy shall plan for the days production and this shall be
communicated to *roduction In charges.
5. *roduction In charge G K# In charge discusses with the 7eneral
1anger H (airy in order to re3iew the raw milk a3ailability and
adequacy. =here required 7eneral 1anager H (airy shall arrange
for raw milk from any of the appro3ed source.
C. 7eneral 1anager H (airy re3iews the status of maintenance of
production facilities for their impact on days required production.
If required/ they shall inform 1arketing about the best possible
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production for the day to enable 1arketing to inform the customers
where dispatch could get affected substantially.
5. 1aintenance Incharge ensures health of production machinery and
equipment to achie3e smooth functioning of production processes.
;. *roduction Incharge updates the days production details on the
board.
A. *roduction H Incharge in consultation with 71 H (airy plans the
manpower resource allotment and details are entered in the -hift
'egister.
MILK PROCESS
@irst they will collect the milk. Then it is taken to organoleptic test >taste/
colour/ smell? and chemical test. Then it is taken to milk tank. Then process
starts. 0ere firstly the milk is taken to grading some milk is taken to prepare
paneer rest of the milk is taken to chilling process.
#fter chilling process it is under taken to pasteuri:ation. %ater fermentation
process will continue. (uring pasteuri:ation the cream will be separated.
,ream is con3erted into butter and ghee. #fter fermentation curd/ mango lassi/
buttermilk is produced.
-ome amount of grading milk is con3erted into khoa and pedha by
e3aporation process.
Then e3ery product will go packing department then they are dispatched.
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FLOW DIAGRAM OF MILK
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PRODUCT
P"%&/() Ma$age"
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@+",TI&"-
Taking initiati3e.
1aintain the quality of product.
,ontrol the cost of production.
,ontrol wastage of milk.
PRODUCT PRO$IL"
T)*9- &@ 1I%4 #"( 1I%4 *'&(+,T-
1%".e"s
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@%+I( 1I%4- F
The basic difference among the milks like #nand/ 4eny standard/ 4eny Toned
milk/ #mit (ouble Toned 1ilk is @at I -"@ contents. #ll these products are
ha3ing the *@# standards.
T)*9 &@ 1I%4 @at >B? -"@ >B?
#nand C.5 8.5
4eny std 5.5 8.5
4eny Toned 5.0 8.5
#mit (ouble Toned .5 ..0
#nandG4eny -td
It contains C.0B fat and minimum 8.5B -"@. This is pasteuri:ed and semi!
homogeni:ed/ packed in %itre and 500 ml foodgrade polythene pouches.
4eny Toned 1ilk
It contains 5.0B fat and minimum 8.5B -"@. This is pasteuri:ed and packed
in %itre and 500 ml food grade polythene pouches.
#mit (ouble Toned milk is also marketed where in fat content is toned down
to .5B only while keeping minimum ..0B -"@. This is recommended for
calorie conscious people and otherwise also for all age groups for direct
consumption as a source of adequate lactose plus all milk proteins minerals
and 3itamins.
1ilk *roducts are F ,urd/ %assi/ 1asala/ 6utter 1ilk/ 6utter/ 7hee/ 1ango
%assi/ ,ream/ 4hoa and *aneer.
,urds
It is produced and packed in 500 ml and 200 ml. food grade polythene
pouches is made from "a3aloor (airy *roducts with .5B ! 2.0B fat and
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percentage of -"@ ad<usted to minimum 0B so as to gi3e a firm body and
te8ture.
*ot ,urds
It is packed in earthen pots in order to preser3e the natural taste/ te8ture and
fla3or of curds. This ,urd is made from #nandG4eny milk with CB @at and
-"@ ad<usted to 0B. The rich creamy te8ture of this curd makes it a
premium quality curd.
1asala 6utter 1ilk
It is produced by churning "a3aloor (airy *roducts curds added with table
salt/ green chili/ coriander lea3es/ green ginger and optional spices so as to
offer a blend of pungent taste which is bound to beat the summer heat in the
"orth 4arnatka towns and gi3e refreshing unique e8perience to the consumer.
This is offered in 200 ml food grade polythene pouches.
%assi
It is produced from "a3aloor (airy *roducts curds added with cane sugar for
sweet taste and other additi3es that make it thick and gi3e mouthfulness and
lingering taste and feel to the palate long after it is consumed. This is offered
in 200 ml food grade polythene.
*ure 7hee
It is produced from ripened fat rich cream G butter after boiling them at
controlled temperature to a critical point when the resultant ghee <ust appear
like a homemade product gi3ing typical aroma and colour. =hen filtered and
cooled it de3elops granular te8ture.
!UMAN R"#OURC"
1en/ 1aterial/ 1oney are regarded as the three significant factors of a
production. 0uman beings constitute the organi:ation at all le3els and
regarded as the only dynamic factor of production. The management means an
effort to co!ordinate the 0' in such a way that &rgani:ational ob<ecti3es are
achie3ed.
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0' department is a part of management/ which is concerned with people at
work and their interpersonal relations. It is preliminary concerned with the
efficient utili:ation and conser3ation of these resources.
It is also concerned with the formulation of personal policies with regard to
recruitment/ selection/ <ob e3aluation/ merit rating/ performance appraisal/
working condition.
@+",TI&"- &@ 0' (9*T.
'ecruitment and -election.
Training for new employees.
=ages determination.
%abour =elfare.
Transfer promotion and demotion.
71 heads the 0' (epartment. +nder him 0' 1anager/ training officer will
work. '9,'+IT19"T #"( -9%9,TI&"
'ecruitment is a process of searching candidates and stimulating them to
apply for <ob.
0' dept. in "(* uses both e8ternal and internal sources.
6#-I, '9K+I'919"T-
1#%9 @91#%9
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#ppearance 0ealthy 0ealthy
#ge 8!25 years 8!25 years
0eight 5!; feet C.. H 5.5 feet
=eight 50 kg C0 kg
Kualification A
th
pass G fail A
th
pass G fail
%anguage 1arathi/ kannada I
hindi
1arathi/ kannada I
hindi
TRAININ( $OR N"' "MPLO%""#
The company pro3ides training for both skilled and unskilled employees.
=#79- (9T9'1I"#TI&"
=ages determination is the responsibility of the top management. The
organi:ation follows the time wages system. i.e./ wages paid on the bais of
time de3oted to the factory rather than the goods purchased.
%#6&+' =9%@#'9
The facilities pro3ided to the employees are ,anteen/ 'est room/ 0ealth care.
T'#"-@9' *'&1&TI&" #"( (91&TI&"
*romotion is based on performance of the employees I not on e8perience.
Marketi! a" Sa#e$
1arket
The production is depends on market demand. #s I when they get demands
they produce and dispose in the market. The sales turno3er is appro8imately
.2 lakhs per year.
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The company is not directly in3ol3ed in marketing to final consumer but the
product is sent through distributor are in3ol3ed in selling the product. The
produced milk products are sent to.
7adag
#nnigeri
0ospet
(a3angere
0ubli
1undagod
4ushtagi
)ellapur
6hatkal
#nkola
(harwad
Di$%at&'
The packing department prepares daily packing and sent to the dispatch in
charge. The dispatch head which is authenticated by the central e8cise office
will prepare daily production report. Then the packing department to e8cise
godown on an a3erage daily production is nearly 25000 liter. In one truck
nearly 2000 liter can be dispatched.
In3oice systemF
1oderate in3oice is must/ without it the transport 3ehicle is not allowed to
unload. This is also called as transport copy. &riginal copy is sent to the dept
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and e8tra copies are sent with the transport 3ehicle/ gate pass is gi3en for the
securities for the clearance of truck or tankers from the premises.
Cons*me+ ,ist+ib*to+ channe-
The companys distribution channel for a consumer market is
P()#i&it* +,r -arketi!
(epending upon the sales promotion needs or as part of planned strategies/
marketing may plan for the publicity of products through ad3ertisements in
news media/ t3 etc.
Fia&e.A&&,(t "e%art-et

Ma(+a&t(rer
A!et$
Fia#
C,$(-er
Retai#er$
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In this department the financial accounts of the company and transactions are
properly maintained. 1ost of the accounting work is done on the computers is
maintain accuracy of the accounts. The accounting procedure is based on the
usual accounting principles. The day book with cash and bank columns are
maintained. They also maintained the <ournal/ ledger and subsidiary books.
,losing the accounts is done on 5
st
march e3ery year. #t the end of the
accounting period trading account/ profit and loss account balance sheet is
prepared to ascertain the profit or loss made by the company in the particular
year. The final accounting reports are submitted to the management. The
company auditors do finance auditing.
@unctions of accounting manager
0e maintains financial record.
1aking annual report for the financial matter.
-ending weekly or daily report to the top le3el management.
Ot'er "e%art-et$
-tores
# separate room is pro3ided for storing all materials systematically. There are
two employees they only handle the stores departments. They through the all
required records and ensures supply of materials to the departments trough
proper procedure. They report directly to the gm.
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They are following fifo method to issue the materials. They will issue the
materials first purchased. =hile purchasing material they will take permission
of gm. They will record each material of purchase and issue in bin card
system.
@unctions of store department
1inimum stock le3el has to be maintained.
*arty payment should be clear.
4eeping food items in good situation.
=ithout material requisition slip they not issue the materials.
Maitea&e "e%art-et
1aintenance of equipmentsF
! 1aintenance in charge will identify 5the all the machineG equipments
as per the identification code assigned by stores department.
! *repare the list of machines. 9quipments used in 3arious departments
by maintenance in charge.
! The history of machine G equipments like description of machine G
equipment/ make etc in machine history card will be maintained.
! The maintenance acti3ity of machine G equipments is classified into
two categories pre3enti3e maintenance and breakdown maintenance.
#ec*+ity ,epa+tment
If a company has to grow then security department staffs will keep an eye on
the theft and other safety in the organi:ation.
@unctions of security
! ,hecking of each person while entering the premises.
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! "oting the kilometer reading of a dairy 3ehicle.
! If there is any emergency issuing materials from stores.
! ,hecking the dispatch report of 3ehicle while gi3ing gate pass.
Na/a#,,r Dair* Pr,"(&t$ isLL.
%ife is a search for satisfaction and achie3ing e8cellence. It is necessary to
find out what makes any manufacturing unit to be successfully in international
market. (airy is a place where handling of milks and milk product is done and
technology refers to the application of scientific knowledge for practical
purposes. The dairy sector in India has shown remarkable de3elopment in past
decade.
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6efore Indian economy opened in ..2/ "a3aloor 7roup opened "a3aloor
(airy *roducts.
"a3aloor (airy *roducts is based on the quality of the product.
! In "a3aloor (airy *roducts it is obser3ed that constant growth and
e8cellent inter departmental co!ordination has pro3ided a 3ery good
foundation for its future growth and long term plans.
! "a3aloor (airy *roducts is running successfully. This should
encourage other organi:ations to setup their manufacturing facilities in
rural areas there by generating more employment.
! The organi:ation has a good employee and employer relationship
which will help the company to achie3e its long term and short term
ob<ecti3es.
! #s per my obser3ation in this company there is 3ery good sense of
team spirit is created among employees.
! It is fully automated company.
! It is the first company came into e8istence before globali:ation.
INTRODUCTION TO $INANCIAL MANA("M"NT
6ackground of the studyF
@inancial is the lifeblood and ner3e system of any business organi:ation. 2ust
as circulation of blood is necessary in the human body to maintain life finance
is 3ery essential to the business organi:ation for smooth running of the
business.
The study is carried out at 4arnataka soaps and detergents limited. 6angalore/
go3ernment of 4arnataka owns the company. It is well establishment
company/ which is in the business of manufacturing sandal soap and
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detergents. It has got I-&F.002 certificate. In this company senior manager is
the head of the finance department. +nder him there are fi3e deputy managers
and also there is an account officer/ who is not under the direct control of
senior manager.
@inancial management in3ol3es managerial acti3ities concerned with the
acquisition puff fund for the business purpose. The finance function does with
procurement of money taking consideration of today as well as future need
and finance is required to purchase a machinery and raw materials/ to pay
salaries and wages and also for day to day e8penses.
@inancial managementF
&ne cannot think of any business acti3ity in isolation from its financial
implication. @inancial management is an appendage to the finance function.
=ith the creation of comple8 industry structure/ the function has grown to
3ery great heights.
(efinitionF
@inancial management refers to that part of the management acti3ity/ which is
concerned with planning and controlling of firms financial resources. It deals
with 3arious.
-ources of raising funds for the firm which are suitable and economical for the
need of the business/ appropriate employment of funds thee of and business
has financial implication/ financial management is applicable to e3ery type of
organi:ation/ irrespecti3e of si:e/ kind of nature.
Objectives of financia- mana.ement/
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@inancial management pro3ides a framework for selecting a course of action
and deciding an economically 3iable stratify.
The main ob<ecti3e of a business is to ma8imi:e the owners welfare. This
ob<ecti3e can be achie3ed by!
'ea-th ma0imi1ations/
=ealth ma8imi:ation is the appropriate ob<ecti3e for an enterprise. @inancial
theory assets wealth ma8imi:ation is the single substitute for the stockholders
utility. The concept of wealth ma8imi:ation tells the 3alue of assets in terms of
benefits it can produce. #ny financial action can be <udged in items of benefits
it produces then the cost of action/ this concept is based on the cash flows
generated in the business. The concept of wealth ma8imi:ation uni3ersally
accepted in financial decision H making. If a financial decisions results in
more cash inflows than outflows than the pro<ect is considered 3iable.
=hile pursuing the ob<ecti3e of wealth ma8imi:ation al efforts must be put in
for ma8imi:ing the current present 3alue of any particular course of action.
93ery financial decision should be based on cost benefits analysis. There is
rational in applying wealth ma8imi:ation policy is an operating financial
management policy. It ser3ices the interest of the suppliers of loan capital/
employees management and society.
P+ofit ma0imi1ation/
*rofit earning is the primary concern of e3ery economic acti3ity. # business
being an economic institution is supposed to profits to co3er its cost and
pro3ide funds for growth. *rofit is the measure of the efficiency of a business
enterprise. It also ser3es as a protection against uncertain risk. It is
remuneration for inno3ation. The sur3i3al of the firm depends upon it ability
to earn profits. 6ut from the e8perience it is learnt that concept of
ma8imi:ation is a myth.
4ey acti3ities of financial managementF
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@inancial analysis
*lanning and control.
1anagement of firms asset structure.
1anagement of firms financial structure.
@inancial decisionsF
In3estment decisionF
The decisions relates to the determination of the total amount of assets to be
held by the firm/ their composition/ the business risk and the image of the
firms percei3ed by the in3estors.
@inancial decisionsF
#fter taking the in3estment decision/ the firm commits itself to the new
in3estment and hence it must decide upon the best means of financing these
commitments. # proper dept equity mi8 has to be fi8ed so as ma8imi:e the
profit ability of the concern. The cost of raising funds for in3esting is 3ery
crucial in making the financial decisions.
W,rki! &a%ita# -aa!e-et0
IntroductionF
=orking capital management is one of the most important aspects of financial
management. It forms a ma<or function of the manager and account.
1eaning and definitionF
=orking capital management is the management of all aspects of working
capital/ which manage the firms current assets and current liabilities in such a
way that a satisfactory le3el of working capital is maintained.
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#ccording to 1r. -mith Dworking capital management is concerned with the
problem that arise in attempting to current assets/ current assets / current
liabilities and the inter!relationship that e8ists between them.
=orking capital refer to that part of the companys capital/ which is required
for in3estment/ made in short term or current assets for e.g. cash/ debtors /
marketable securities and in3entories. @unds then in3ested in these types of
current assets keep re3ol3ing fast and other current constantly connected into
case and again this cash flow out in e8change for other current assets keep
re3ol3ing fast and being constantly connected into cash and again this cash
flow out in e8change for other current assets. Therefore it is also called as
circulating or short!term capital.
$acto+s affectin. 2o+3in. capita-/
The working capital requirement of a firm is affected by a number of factors.
The 3arious factors/ which affect the working capital requirement of a
concern/ are as follows.
"ature of businessF
The working capital requirements of enterprises are basically related to the
conduct of business. *ublic utilities ha3e certain features which ha3e a bearing
on their working capital needs. They do not maintain big in3entories and ha3e/
therefore/ probably the least requirement of working capital. &n the hand
trading and manufacturing concern required large amount of capital to
maintain a sufficient amount of cash/ in3entories and book debts.
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*roduction cycleF
The term production or manufacturing cycle refers to the time in3ol3ed in the
manufacturing of goods. There is a small time gap before raw materials
become finished goods. Therefore the longer the time span/ the larger will be
the working capital needed and 3ice 3ersa.
6usiness cycleF
The business fluctuations influence the si:e of working capital mainly during
upward phase when boom conditions pre3ail/ the need for working capital is
likely to grow to co3er the lag between increased sales and receipt of cash as
well as in3est in plant and machinery to meet the increased demand.
*roduction policyF
# better alternati3e is a steady production policy independent of shifts in
demand for the finished good. This means a large accumulation of finished
goods during the off H season and their abrupt sales during the peak season.
The progressi3e accumulation of stock naturally required an increasing
amount of working capital which remains tied up for some month.
,redit policyF
The credit policy relating to sales and purchases also affects the working
capital. The credit policy in influences the requirements of working capital in
two ways.
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! ,redit terms granted by the firm to its customer. 6uyers on goods.
,redit terms a3ailable to the firm from its creditors.
! # firm/ which more credit sales and cash/ purchase required high
working capital than a firm ha3ing more credit purchase and cash
sales.
-cale of productionF
# concern carrying on acti3ities on a small scale of needs less working capital.
&n the other hand a concern undertaking acti3ities on a large scale needs large
amount of working capital.
7rowth and e8pansion of businessF
The growth and e8pansion of business also affect the working capital
requirement. =hen there is growth and e8pansion in the business of a working
capital of the firm will also increase.
&perating efficiencyF
The operating efficiency of the management is also important determinants of
the le3el of working capital. # firm en<oying operating efficiency can
eliminate wastage and use its resources efficiently and thereby reduce its
capital needs considerably.
&perating cycleF
&perating cycle refers to the length of time necessary to complete the
following cycles of e3ents.
! ,on3ersion of cash into in3entory.
! ,on3ersion and in3entory into recei3able.
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! ,on3ersion of recei3able into cash.
-ources of working capitalF
#mong the 3arious sources a3ailable for financing capital needs/ finance
manager has to select the best suitable source depending on working capital
need of company.
%ong H term sourcesF
! 6y issue of shares
! 6y issue of debenture
! *ouching back of profit
! %ong H term loan.
-hort Term -ourcesF
They are classified intoF
I"T9'"#%
=ith drawing the depreciation fund ! 6ank
+sing the resourcement for ta8ation ! Trade ,redit
*ostponement of payment accrued e8penses ! 6ills of e8change
*ublic (eposits ! 7o3ernment assistance
$*n,s +e4*i+e, fo+ the $i+m/
93ery company needs two types of funds they areF
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. %ong terms fundsF ! these are required to create production facilities
through purchase of fi8ed assets such as plant and machinery/ land and
building/ furniture etc./ in3estments in these assets are called fi8ed
capital.
2. -hort term fundsF ! these are required for short H term purpose for the
purchase of raw materials/ payments of wages and other day today
e8pensi3e etc./ these funds are known as working capital.
Types of working capitalF
There are two types of working capital. They areF
. 7ross working capital
2. "et working capital
?. 7ross working capitalF
'efer to the firms in3estment in current assets. ,urrent assets are the assets/
which can be concerned into and within an accounting year >or operating
cycle? I include cash/ short!term securities/ debtors >accounts recei3ables or
book debts? bills recei3able and stock >in3entory?. 7ross working capital
points to the arranging of funds to finance current assets.
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2?. "et working capitalF
'efer to the difference between current assets and current liabilities. ,urrent
which are those claims of outsiders/ which are e8pected to nature for payment
within accounting years and include creditors >accounts payable?/ bills
payable and outstanding e8penses. "etworking capital can be positi3e or
negati3e. # positi3e net working capital will arise when current assets e8ceed
current liabilities and a negati3e working capital will arise when current
liabilities are in e8cess of current assets.
The nee, o+ objectives of 2o+3in. capita-/
The need for working capital to run day ! to ! day business acti3ities cannot be
o3eremphasi:ed. =e will hardly find a business firm/ which doesnt require
any amount of working capital. Indeed/ firms differ in their requirements of
the working capital. =e know that a firm should aim at ma8imi:ing the wealth
of its share holders. In its endea3or to do so/ a firm should earn sufficient
return from its operations. 9arning a study amount of profit required
successful sale acti3ity. The firm has to in3est enough funds in current assets
for cash instinctually. There is always an operation cycle in3ol3ed in the
con3ersation of sales into cash.
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The 3arious need of working capital is as followsF
. To pay wages and salary.
2. It helps to the purchase of raw materials/ components and shares.
5. It helps to incur day H to H day e8pensi3e and o3erhead costs such as
fuel/ power/ office e8penses etc.
C. It also to meet the selling cost as packing ad3ertising etc.
5. It pro3ides credit facilities to the customer.
;. It helps to maintain the in3entories of raw material/ working progress/
stores and spares and finished stock.
P+ob-ems associate, 2ith e0cess 5 ina,e4*ate 2o+3in. capita-/
#?. (angers of e8cess working capitalF
. It results in unnecessary accumulation of in3entories. Thus the changes
of in3entory mishandling/ the losses increase.
2. It is an indication of defecti3e credit policy and stock collection
period.
5. 98cessi3e working capital makes management complacent/ which
degenerates into managerial efficiency.
C. Tendencies of accumulating to make speculati3e profits grow. This
may tend to make di3idend policy liberal and difficult to cope with in
future when the firm is unable to make speculati3e profits.
67 DAN("R# O$ INAD")UAT" 'ORKIN( CAPITAL/
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. It stagnates growth. It becomes more difficult to undertake profitable
pro<ects due to non!a3ailability of working capital funds.
2. It becomes difficult to implement operating plans and achie3e the
firms profit target.
5. &perating inefficiencies creep in when it becomes difficulty e3ent to
meet day!to!day commitments.
C. @i8ed assets are not efficiently utili:es for the working of capital
funds. Thus/ the rate of return on/ in3estment slumps.
5. *aucity of working capital funds renders the firm unable to a3ail of
attracti3e credit opportunities etc.
;. The firm losses it reputation when it is not in a position to turno3er
short!term obligations.
1anagement of working capital
7enerally working capital refers to the e8cess of current assets o3er current
liabilities. 1anagement of working capital therefore is concerned with the
problem that arises in attempting to manage their current assetsM their current
liabilities and he inter relationship that e8ists between them. It refers to mall
aspects of administration of both current assets and current liabilities.
The basic goal of writing capital management is to manage their current assets
and current liabilities of s a firm in such a way that a satisfactory le3el of
working capital is maintained. The policies of working capital management of
a firm ha3e a great on its profitability/ liquidity and structural health of the
organi:ation.
In this conte8t the working capital management is three dimensional in nature.
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. (imension i is concerned with the formulation o0f policies regard to profit
ability/ risk and liquidity.
2. (imension ii is concerned with the decision about the composition and
le3el of current assets.
5. (imension iii is concerned with the decision about composition and le3els
of current liabilities.
*ermanent or fi8ed working capitalF
The need for current assets arises because of the operating cycle. The
operating cycle is a continuous process and therefore/ there need for the
current assets is felt constantly. 6ut the magnitude of current assets needed is
not always the same it increases o3er time. 0owe3er there is always a
minimum le3el of current assets/ which is continuously required by the firm to
carry on its business operations. This minimum le3el of current assets is
referred to as permanent or fi8ed working capital.
$ariable or temporary working capitalF
(epending upon the changes in production and sales/ the need for working
capital o3er and abo3e permanent working capital/ will ha3e to be maintained
to support the peak proceeds of sale and in3estment in recei3e may also
increase during such periods. &n the other hand/ in3estment in raw material/
working capital needed to support the changing production and sales acti3ities
is called fluctuating/ or 3ariable or temporary working capital. The firm to
meet liquidity measurement that wills last only temporarily creates temporary
working capital.
#o*+ces of 2o+3in. capita-/
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The need of working capital is increased by raising prices of end products and
relati3e inputs. &n the other hand/ the go3ernment and monetary authorities
play their own role to curd the malice in periods of inflation. The control
measures often take the firm of dear money policy and restrictions credit.
@inancing of additions working capital in such an amusement becomes a real
problem to finance manager of a concerned unit. ,ommercial banks play the
most significant role in pro3iding working capital finance/ particularly in
Indians conte8t. In 3iew of mounting inflation/ the rabbi has taken up certain
social measures to check the supply un the economy the balancing need has to
be managed either by long H term borrowing or by issuing equity or earning
sufficient profits and retaining the same of copying with the additional
working capital requirements. The first choice before a finance manager/
where backs do not pro3ide a part of additional working/ is to take the long H
term sources of finance.
%ong term financingF
%oans from financial institution the option are normally rules out/ because
financial institutions do not pro3ide finance for working capital requirements.
@urther this facility is not a3ailable to all companies this option is not
practical.
#ccepting public depositsF
The issue of tapping public deposits is directly related to the image of the
company seeking to in3ite public deposits.
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'ising by internal financingF
'aising funds from operations profit poses problems for many companies/
because prices of their end products are controlled and not permit companies
to earn profit sufficient requirements to finance additional working assist/ still
a largely feasible solution lies in increased profit ability through cost control
and cost reduction measures managing the cash operating cycle/ rationali:ing
in3entory stock and so on.
6asic objective of 2o+3in. capita- mana.ement/
The basic ob<ecti3es of working capital mismanagement are to manage the
firms working capital >i.e. current assets and current liabilities? in such a way
that a satisfactory le3el of working capital >i.e. neither e8cessi3e nor
inadequate working capital? is maintained. This is necessary because/ if the
working capital is e8cessi3e or large/ the liquidity position ad3ersely affected/
as funds would remain idle. ,on3ersely if the working capital is too small/ the
profit ability of the firm may impro3e/ but the liquidity position of the firm
would be ad3ersely affectedly
Pr,&e$$ ,r $te%$ i/,#/e" i 1,rki!
&a%ita# -aa!e-et0
=orking capital management in3ol3ed tow possesses/ they are fore casting the
amount of working capital.
(etermining the sources of working capital means estimating the amount of
working capital I estimating the amount of working capital needed by as
firm. There amount of working capital needed by a firm has to be estimated by
taking into consideration se3eral factors/ the nature of business/ scale of
operation/ production policies/ length of manufacturing process rapidity of
turno3er/ seasonal fluctuation/ and period of credit allowed to debtors/ period
of credit a3ailed of from creditors etc.
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(etermining the sources of working capitalF
(etermining the sources of working capital means determining or deicing the
sources from which the working capital requirement off a firm should be met.
The working capital requirement of a firm should be met from both long !
term and a short term sources of fund. It will be appropriate to finance ore
meet the fi8ed or permanent parts of the working capital requirements from
long ! terms sources and the 3ariable or fluctuating Npart of the working
capital requirement from short ! term sources.
The 3arious long H term sources of working capital are shares > equity as well
as preference?/ debentures/ plaguing back of profit/ term loan from industrial
finance corporation and bank / long H term/ depositors from the public etc./
The 3arious short! term sources of working capital are credit/ bank credit/
customer ad3ances and short H term public deposits.
C+ite+ia fo+ j*,.in. the efficiency of 2o+3in. capita- mana.ement/
The efficiency of working capital management 3an is <udged through
accounting ratios. The important accounting ratios that could be used fo.r
<udging the effecti3ely of working capital management areF
,urrent ratio
Kuick ratio
,ash to current assets ratio
&perating ratio
In3entory turno3er ration
Total assets turno3er ratio
=orking capital turno3er ratio
#cid H test ratio
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1easures to be adopted for a sound working capital managementF
@or a sound management of working g capital/ a concern should adopt the
following measuresF
. 6udget its cash flow.
2. ,ontrol debtors.
5. ,ontrol its creditor.
C. ,ontrol its stock
5. #3oid o3er borrowing.
;. #3oid o3er in3estment fi8ed assets.
A. (etermine the financing mi8.
Ope+atin. cyc-e an, cash cyc-e/
In3estment in working capital is influenced by four key e3ents in t5he
production and sales cycles of the firm.
a. *urchase of raw materials
b. *ayment of raw materials
c. -ale of finished goods
d. ,ollection of ,ash for -ales.
The firm beings with the purchase of raw material/ which are paid for after a
delay/ represent the account payable period. The firm con3erts the raw
material into finished goods and then sells the same. The time lag between the
purchase of raw materials and sale of finished goods is the in3entory period.
The period that comes between the date off sales and the date of collection of
recei3able is the accounts payable period >debt periods?. The time that comes
between the purchase of raw materials and there collection of cash for ales is
refers as the operating 3ehicle/ where / the time length between the payment
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of raw martial purchase and the collection of cash for dosed sales us referred
to as the cash cycle.
The operating cycle is the sum of the in3entory period and the account
recei3able period whereas the cash cycles are equal to the operating cycle less
the account payable period. @rom the financial statements of the firm/ we can
estimate the in3entory period/ the account recei3able and the account payable
period.
TOOL# $OR ANAL%#I# O$ 'ORKIN( CAPITAL
The quantum of working capital as well as its financing pattern are sub<ect to
constant monitoring and re3iew by the financial manager. There are different
analytical tools which can help a financial manager/ In monitoring and
3iewing and controlling the working capital. The popularly used tools areF
. 1onitoring the operating cycle
2. =orking capital ratios
MONITORIN( 'ORKIN( CAPITAL/
The total working capital needs depend upon the length of operating
cycle/ the greater would be the working capital need. The operating cycle may
be defined as the time duration starting from he procurement of goods or raw
materials and ending with the sales reali:ation. The length and nature of the
operating cycle may fifer from one firm to another depending upon the si:e
and nature of the firm.
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In a trading concern/ there is a series of acti3ities starting from procurement of
goods and ending with the reali:ation of sales re3enue. -imilarly incase of
manufacturing from this ser3ices starts from procurement of raw materials and
ending with the sales reali:ation of finished goods. In both the cases/ howe3er/
there is time group is called operating cycle. Thus/ the operating cycle of firm
consists of the time required for the completion of chronological sequence of
some or all the following.
. *rocurement of raw materials and ser3ices.
2. ,on3ersion of raw materials into work H in H progress.
5. ,on3ersion of work H in progress into finished goods.
C. -ale of finished goods >,ash or ,redit?.
5. ,on3ersion of recei3able into cash.
&*9'#TI"7 ,),%9 *9'I&(F
The length of time duration of the operating cycle of ma any firm can
be defined as the sum of its in3entory con3ersion period and recei3ables
con3ersion period.
?.I"$9"T&') ,&"$9'I-I&" *9'I&(F
It is the time required for the con3ersion of raw material into finished
goods sales. In a manufacturing firm the I,* is consisting of 'aw material
con3ersion period >',*?O work H in H progress con3ersion period > =,*?
I finished goods con3ersion period >@,*?
2?. '9,9I$#6%9 ,&"$9'I-I&" *9'I&(F
It is the time required to con3ert the credit sales into cash reali:ation. It
refers to the period between the occurrences of credit sales and collection
of debtors. The total of I,* and ',* is also known as total operating cycle
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period >T&,*?. The firm might et some credit facilities from the supplier
of raw materials/ wage earners etc. This period for which the payments to
their parties and differed or delayed is known as payable period or differed
period.
The net operating cycle is arri3ed by deducing (* from the T&,*/ Thus/
"&,PT&,*!(*PI,*Q',*!(*
'ORKIN( CAPITAL RATIO#/
#nother analytical tool that can be used for analyses of working capital
is the accounting ratios particularly the working capital ratios. -ome of the
important working capital ratios are.
,+''9"T '#TII&
%IK+I( '#TI&
I"$9"T&') T+'"&$9' '#TI&
=&'4I"7 ,#*IT#% T& T&T#% -#%9-
,#-0 T& "9T =&'4I"7 ,#*IT#%
(96T&'- T+'"&$9' '#TI&
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R"C"IVA6L"# MANA("M"NT/
@inished goods sold on credit get con3erted > from the point of 3iew of
the selling firm? into recei3ables > book debts? which when reali:ed generate
cash. The a3erage balance the recei3able account would appro8imately be
a3erage daily credit sales multiplied by a3erage collection period.
&629,TI$9- &@ '9,9I$#6%9- 1#"#7919"TF
The main ob<ecti3es of recei3ables management #reF
. To obtain the optimum 3alue of sales.
2. To control the cost of credit and keep it at minimum.
5. To reduce the a3erage collection period.
A#P"CT# O$ R"C"IVA6L" MANA("M"NT/
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. (9T9'1I"I"7 ,'9(IT *&%I,)F
The first decision area of recei3able management is determining credit
policy. In de3eloping an optimum credit policy/ the financial manager
should compare the benefits of credit e8tension with the cost of credit. The
ma<or considerations in costs are liquidity and opportunity cost. The credit
policy of a firm pro3ides the framework to determine.
=hether or not e8tent credit to a customer
0ow much credit to e8tend
2. I"$9"T&') 1#"#7919"TM
In3entory management in3ol3es the control of assets being produced for
the purpose of sale in the normal course of companys operation.
In3entories include raw material in3entory/ work!in!progress in3entory
and finished f goods in3entory. The goal of effecti3e in3entory
management is to minimi:e the total costs!direct and indirect that is
associated with holding in3entories. 0owe3er the importance of in3entory
depends on the e8tent of in3estment in3entory.
'&%9 I" =&4I"7 ,#*TI#%F
In3entories are a component of the firms working capital/ as such/
represents a current asset. -ome characteristics are important in the broad
conte8t of working capital management including.
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? ,urrent #ssetF It is assumed that in3entories will be con3erted to cash
in the current accounting cycle/ which is normally/ one year.
2? %e3el of liquidityF In3entories are 3iewed as a source of near cash. #t
the same time/ most firms hold some slow mo3ing items that may not
be sold for a long time. In this case/ the liquidity aspects of in3entories
become highly important to the manager of working capital. #t a
minimum/ the analyst must recogni:e that in3entories are least liquid
of current assets. @or firms with highly uncertain operating
en3ironments/ the analyst must discount the liquidity 3alue of
in3entories significantly.
5? %iquidity %agsF In3entories are tied to the firms pool of working
capital in a process that in3ol3es three specific lags namelyF
,reation lag
-torage lag
-ale lag
,irculating lag
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,#-0 1#"#7919"TF
,ash is the most important factor in financial management. It is also
the most important of all the current assets/ for the operations of the business.
It is the basic input needed to keep the business running on a continuous basis/
it is also the ultimate output e8pected to be reali:ed by selling the ser3ice or
product manufactured by the firm.
,ash is of 3ital importance to the daily operations business firms. Its
effecti3e management is the key determinant of efficient current assets
management requirements of the business. Its shortage stops the business
operation and may degenerate a firm into a state of technical insol3ency.
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"99( @&' #" &629,TI$9 &@ ,#-0 1#"#7919"TF
%arger cash and bank balances indicate high liquidity position of a
,ompany which will result in lower profitability as idle cash fetched no
return/ while the same when in3ested in the assets of the company will result
in profits. The need for holding cash arises from a 3ariety of reasons such asF
. T'#"-,#TI&" 1&TI$9F # company is always is always
entering into transactions with other entities/ which may cause
immediate cash inflows and outflows. -o firms always keep a
certain amount as cash to deal with routine transactions where
immediate ash payment is required.
2. *'9,#+TI&"#') 1&TI$9F # company has to be prepared to
meet such contingencies like a sudden fire may break out/
accidents/ employees strike etc. to minimi:e its losses. @or this
purpose company generally maintain some amount in the form of
cash.
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5. -*9,+%#TI&" 1&TI$9F @irms also maintain cash balance in
order to like ad3antages of opportunities that do not take place in
the course of routine business acti3ities.
C. Lac3 of P+ope+ #ynch+oni1ation bet2een Cash Inf-o2s 5 Cash
O*tf-o2s./In case of reasonably well managed profitable companies/
that total amount of cash inflows for the year is usually higher than
the total amount of cash outflows. R0owe3er/ the company can ha3e
spells of cash deficits and surpluses mainly due to lack of
synchroni:ation between cash inflows and outflows.
89:; OP"RATIONAL D"$INATION O$ CONC"PT#/
*rofit I %oss #ccountF It is a report of business acti3ities for a gi3en period and
is prepared to ascertain profit and loss of a company in a particular year. 6alance
-heetF 6alance sheet is a statement of assets and liabilities indicating the
financial position of the company of the certain date.
C*++ent Assets/ ,urrent assets refer to all those assets/ which change their form and
substance/ and which ultimately is con3erted into! cash during the normal operating
cycle of the business/ which is normally one year. ,urrent assets of a company
include sundry debtors/ cash/ bank balance and loans and ad3ances/ outstanding and
accrued e8penses/ prepaid e8penses and stock etc.
Tota- Assets/ It represents net fi8ed assets/ in3estments/ current assets/ loans
and
#d3ances/ outstanding and miscellaneous e8penditure. Total assets refer to all
'eali:able assets i.e./ both tangible and intangible assets.
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#ha+eho-,e+s< "4*ity/ It is the profit earned before charging interest/ depreciation
and ta8.
(+oss P+ofit/ It is the profit earned before charging interest/ depreciation and ta8.
"et P+ofit/ It is the profit earned after charging interest/ depreciation but
including other incomes.
Rese+ves I #*+p-*s/ The profits of the corporation that are ploughed back into
the business are referred to as reser3es and surplus.
$inancia- Ratios/ The relationship between accounting figures
e8pressed mathematically is known as financial ratios.
O6&"CTIV"# O$ T!" #TUD%
. To understand the concepts of =orking ,apital 1anagement at "(*.
2. To compare the last four years financial performance with special reference to
working capital.
5. To calculate the operating cycle of working capital and find out its impact on
working capital.
C. To analy:es the reasons for increaseG decrease in the working capital
requirements of the company.
5. To calculate liquidity ratios and thereby analy:ing the liquidity position of the
company.
;. To study the performance of the company with help of ratios
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A. To understand the credit policy followed by the company.
M"T!ODOLO(%/
(ata ,ollectionF
There are two types of dataF
P+ima+y ,ata/
*rimary data are the dataRs collected for the first time and are not a3ailable in
the secondary source. The necessary rele3ant information has been collected
through discussions with the concerned department people.
#econ,a+y ,ata
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-econdary data are the dataRs that are de3eloped for the same purpose other
than helping to sol3e the problem at hand. The data collection method in this
pro<ect is of by using the secondary sources of data such as companyRs annual
reports/ profit and loss accounts and balance sheet.
ANAL%#I# AND INT"RPR"TATION#
OP"RATIN( C%CL"
: !o-,in. Pe+io, of #toc3 =!P#7 F
This represents the number of days for which raw materials and stores remain
in3entory before they are issued for production. It may be calculated as follows.
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0*- P #3erage In3entory
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! S 5;5
,ost of 7oods -old
)ear 200;!0A 200A!08 2008!0.
#3g In3entor>'s?y 52/.C/02C A0/85/0.; AC/;A/.50
,ost of 7oods -old >'s? 50/.8/8A/0. 5C/50/08/8A2 5A/0A/;5/A..
0olding *eriod of -tock >(ays? ;.25 A.5 A.55
0olding *eriod of -tock >(ays?
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0;!0A 0A!08 08!0.
0*- is normal. It is between ; to A.5 days/ it was decreased to ;.2 days in the year
200;!0A which is good as the raw materials are con3erted to finished goods 3ery
soon. #nd again it as increased to A.5days in 200A!08/ and in ne8t year also same.
This is due to the high in flow of raw materials and sales. #nd e3en the sales ha3e
grown almost double as compared to 200;!0A.
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8 D"6TOR# COLL"CTION P"RIOD =DCP7
(ebtors are created because goods are sold on credit for marketing and
competiti3e reasons. (ebtors collection period is the time required to collect the
outstanding amount from the customers.
DCP P Debto+s > ;?@
#a-es
)9#' 200;!0A 200A!08 2008!0.
(96T&'- >'s? 2A/5./02C 2./5/.2C 52/C5/.A5
-#%9- >'s? 5/0C/0;/02. 5C/50/.C/A02 5A//50/;5
(ebtors ,ollection
*eriod >(ays?
5.2C 5 5..
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(ebtors ,ollection *eriod >(ays?
20
0;
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0A
INT"RPR"TATION/
(ebtors ,ollection *eriod is high in the first year. In the second it is decreasing and in 3ery
ne8t year it is showing little up. If (,* is decreasing/ which is a good sign of a companyRs
point of 3iew. It means that the company is able to collect its debt in time.The ,ompanyRs
sales are 00B on credit basis. The purchases are also on 00B credit basis.
; OP"RATIN( C%CL"
The length of the operating cycle of the firm is the sum of holding period of stock and debtors
collection period.
T&perating cycle is the time duration required to con3ert sales/ after the con3ersion of
resources into in3entories/ into cash.T
&perating cycle is the duration of period consumed in completing manufacturing cycle.
=hen the in3estment into different stages of manufacturing is compared with working days in a
year operating cycle in dayRs term can be deri3ed. It includes days taken for raw materials
holding into production period. (ays taken for materials in process days taken for collection of
dues from customers/ and collection of dues days taken for clearance of bills taken for creditors.
The total number of days including creditorRs payment period is regarded as &perating cycle
and when from such operating cycle if the creditorRs payment period is e8cluded is known as
cash cycle.
The operating cycle of a manufacturing company in3ol3es three phasesF
. #cquisition of resources such as raw material/ labor/ power and fuel etc.
2. 1anufacture of the product which includes con3ersion of raw material into
finished goods.
5. -ale of the product either for cash or on credit.
OP"RATIN( C%CL" P !OLDIN( O$ #TOCK A D"6TOR# COLL"CTION P"RIOD
)9#' 200;!0A 200A!08 2008!0.
0*- >(#)-? ;.25 (ays A.5 A.5
(,* >(#)-? 5.2C 5 5..
&*9'#,TI"7
,),%9 >(ays?
..CA 0.5 0.C.
&*9'#TI"7 ,),%9 >(ays?
U &*9'#,TI"7 ,),%9
>(ays?200;!0A 200A!08
2008!0.
Inte+p+etation/ The duration of
operating cycle ..CA days in the year
200;!0A/ 0.5/ I 0.C. days in the
year 200A!08/ it is showing constant
trend/ in the year 2008!0.. .0ence/
working capital is not in control.
B CR"DITOR# PA%M"NT P"RIOD =CPP7 /
,reditors payment period is the length of the time of the firm is able to defer
the payments on 3arious resources purchases.
,** P ,reditors S 5;5
,ost of 7oods -old
)9#' 200;!0A 200A!08 2008!0.
,'9(IT&'- >'s? 22/20/05 22/5/22; 2/.C/.52
,&-T &@ 7&&(- -&%(>'s? 50/.8/8A/0. 5C/50/08/8A2 5A/0A/;5/A..
,** >(ays? 2.C 2.5C 2.;
,reditors *ayment *eriod >(ays?
20
0;
!
0A
2
0
0
A!
0
8

2
0
0
8!
0
.
I
,redit
ors
*aym
ent
*erio
d
>(ays
?
INT"RPR"TATION/
In terms of days the company has to pay credit purchases for about 2.5 days taking 5;5
days working of the company. This may be interpreted as yearend target purchase and production
schedule which is commonly found in manufacturing sector. This shows that the company pays its
credits within a3g period of 2 to 5 days.
(+oss 'o+3in. Capita-/
'efer to the firmRs in3estment in current assets. ,urrent assets are the assets/ which can be
concerned into and within an accounting year >or operating cycle? I include cash/ short!term
securities/ debtors >#ccounts recei3ables or book debts? bills recei3able and stock >In3entory?.
7ross working capital points to the arranging of funds to finance current assets.

(+oss 'o+3in. Capita- C Tota- C*++ent Assets
)ear 200; 200A 2008 200.
7ross
=orking
,apital >'s?
2/28/5;/20 2/.0/2/AA 5/0/;5/25 2/;2/;A/A50
In year of 2008 7=, is high. In 200. 7=, falls.
87 Net 'o+3in. Capita-/
'efer to the difference between current assets and current liabilities. ,urrent liabilities are those
claims of outsiders/ which are e8pected to mature for payment within accounting years and
include creditors >accounts payable?/ billRs payable and outstanding e8penses. "etworking capital
can be positi3e or negati3e. # positi3e net working capital will arise when current assets e8ceed
current liabilities and a negati3e working capital will arise when current liabilities are in e8cess of
current assets.
Net 'o+3in. Capita- C C*++ent Assets D C*++ent
Liabi-ities
INT"RPR"TATION
The "et =orking ,apital required is between crore to .5 crore in the year "=, is .C5 crore
and it is slowly getting increasing in the year 200Aas the In3entries/ sales and the cash in hand
and bank ha3e raised.
The net working capital has been increased in 2008 when compared to the pre3ious year. The
current assets of the company is good in the year 2008 as compared to the pre3ious yearRs and again
it is decreased in the year 200. as the In3entories and cash at bank and cash in hand ha3e decreased
and debtors are increased.
#TAT"M"NT #!O'IN( N"T 'ORKIN( CAPITAL
*#'TI,+%#'- >'s? 200; 200A 2008 200.
,urrent #ssetsF
a? In3entories 55/2/.A5 A2/A5/0A; ;8/.5/; 80/C0/A85
-undry (ebtors 2A/C;/52. 2A/A/5. 50/5;/52. 5C/5/;8
,ashI 6ank 6alances 2;/A2/8C 50/52/CA0 A/;5/0A. 5/./2;5
8A/5/;8; /50/../0;5 /0A/C/52C /2A/./;;8
b? %oans and #d3ances /C/2C/C5C /5./5/2 /.C/50/;0 /5C/A;/082
T&T#% 2/28/5;/20 2/.0/2/AA 5/0/;5/25 2/;2/;A/A50
%9--F ,urrent %iabilities
,urrent%iabilities/I*ro3isions .8/;5/2C2 /2C/00/00A /28/C0/5.8 /28/2;/0.
,reditors ./../5;0 20/C0/580 25/8./8A2 ./../..5
T&T#% /8/;2/;02 /CC/C0/58A /52/50/CA0 /C8/2;/02
"9T =&'4I"7 ,#*IT#% /0./.5/58 /C5/A/58. /C./5C/;55 /C/C/A58
#TAT"M"NT #!O'IN( PRO$ITA6ILIT%
*#'TI,+%#'-
. I",&19F
200; 200A 2008 200.
-ale of milk I its *roducts 25/.0/8./.0; 2A/A0/.C/0;A 2./82/;A/AAC 55/2;/0;/C.5
-ale of (iesel I %ubricants 0 5/A/A5/25; C/58/80/;C 5/;2/.C/205
&ther Incomes 8/55/C;; 5/58/A0; ./C;/5C 22/2./C;C
T&T#% >#? 2;/0./25/5A2 5/0C/0;/02. 5C/50/.C/A02 5A//50/;5
2. 9V*9"(IT+'9F
,ost of milk I -1*
20/0C/C5.C82 2/CA/.C/.;C 25/0.58/A82 25/5;/8/5AC
,ost of (iesel/ *etrol I
%ubricants -old
0 5/2/A/0AC C/5/C./258 5/5;/52/A5C
Transport 98penses 2/A/CC/585 2/0./2A/.2; 2/20/0A/55 5//20/;0
*rocessing 98penses /;/58/5A. /5/C/85. /CA/80/5.5 /;C/;5/C88
*acking 98penses .8/5./A;; /0/5./;;8 /0A/.C/855 /0./C0.555
#dministrate 98penses 85/C5/5;C ./8/22C ./C0/CC /00/;5/58;
lnterest & 6ank charges 5./C/05; C5/55/5.5 ;5/5;/;5 ;0/2C/08
(epreciation written off C0/20/;0C CA/C5/C.. 5C/C8/C55 ;C/0C/C5;
T&T#% >6? 25/../.5/C; 50/.5/;5/80A 5C/2;/.;/52; 5A/02/A/5..
5.*rofit for the )ear before
Ta8ation >#!6?
./5/.5; 0/C2/22 5/.8/A; 8/58/A;C
%essF *ro3ision for ta8ation
,urrent Ta8 2/2/55C 2/55/52 2/0C/;2 ;/55/00A
(eferred Ta8 >5/2A/05;? >../8;? >82/.C5? >5/AC/C0?
@ringe 6enefit Ta8 /A;/;2A /88/5.C /.0/;A. 2/5/555
*'&@IT #@T9' T#V#TI&" A/A0/05 5/8/.20 85/850 5/;C/5;C
I"T9'*'9T#TI&"F In the year of 200; profit is increasing. 6ut for the ne8t year little decrease in
the profit/ in 2008 profitability is fully decreasing. "ow for the year 200. it is showing little
increasing in the profit.
#TAT"M"NT #!O'IN( INCR"A#"ED"CR"A#" IN T!" 'ORKIN(
CAPITAL =Rs7
*#'TI,+%#'- 200; 200A 2008 200.
:Inc+ease in C*++ent
Assets
a? In3entories !!!!!!!!!!!! 5./;2/05 !!!!!!! /C5/;;.
-undry (ebtors !!!!!!!!!!!!!!! 2C/..0 2F8C/80 5/A5/28.
,ash I 6ank 6alances
b? %oans and #d3ances
!!!!!!!!!!!!!!!!! 5/80/28; 5.5;/8;
A/88/;A8 55/5A/C8.
8Dec+ease In C*++ent
Liabi-ities
,urrent %iabililies/*ro3isions
I ,reditors
!!!!!!!!!! !!!!!!!!!!!! !!!!!!!!!!! C/0C/C5;
Dec+ease in 'o+3in.
Capita-
!!!!!! !!!!!!!!!!!!!!! !!!!!!!!!!! 5C/.2/.A
Total ;/5;/05A 58/22/22. 5./AC/5A
-Dec+ease in c*++ent
Assets
a? In3entories !!!!!!!!! !!!!!!!!!!!!! !!!!!!!!!!! 5/A./.;0
-undry (ebtors !!!!!!!! !!!!!!!!!!!!! !!!!!! !!!!!!!!
,ash I 6ank!6alances !!!!!!! !!!!!!! 22/8./5. !!!!!!!!!
b? %oans and #d3ances !!!!!!!! !!!!!!!!! !!!!!!!!!!! 5./AC/5.
8 Inc+ease in C*++ent
Liabi-ities
,urrent liabilities I !!!!!!!! 25/AA/.85 A/8./805 !!!!!!!!!
Inc+ease in 'o+3in.
Capita-
!!!!!!!!!! 55/A8/0A 5/;5/0;; !!!!!!!!!
Tota- !!!!!!!!! ;/5;/05; 5C/C2/2;0 ;5/5C/CA.
The working capital requirements of the company in 200A!08 ha3e been increased. The
reasons for the increase areF
? The increase in current assets is due to
high stock of raw materials and
finished goods/ ll is temporary in nature
and the same is liquidated within
a period of one month.
2? (ue to Increase in (ebtorRs.
5? Increase in loans/ ad3ances and
deposits are due to ad3ances
reco3erable
in cash or in kind or 3alue to be recei3ed
or pending ad<ustments.
C? 'atio #nalysisF
'atio analysis is a powerful tool of financial analysis. # ratio is defined as TThe
indicated quotient of two mathematical e8pressionsT and as TThe relationship between two or
more thingsT. The relationship between two accounting figures/ e8pressed mathematically/ is
known as financial ratio >or simply as a ratio?. The absolute accounting figures reported in the
financial statements do not pro3ide a meaningful understanding of the performance and
financial position of a firm. #n accounting figure con3eys meaning when it is related to some
other rele3ant information. 'atioRs help to summari:e large quantities of financial data and to
make qualitati3e <udgment about the firmRs financial performance.
# single ratio in itself does not indicate fa3orable or unfa3orable condition. It
should he compared with some standard. -tandards of comparison may consist ofF The
following four important categoriesF
? %iquidity ratios
2? %e3erage ratios
5? #cti3ity ratios
C? *rofitability ratios
%iquidity ratio is directly related to the aspect of working capital. %iquidity ratios
measure the ability of the firm to meet its current obligations. %iquidity ratios establish a
relationship between cash and other current assets to current obligations and pro3ide
quick measure of liquidity. -ome of the liquidity ratios areF
. ,urrent 'atio
2. Kuick 'atio
5. ,ash 'atio
C. (ebtors Turno3er 'atio
5. ,reditors Turno3er 'atio
;. "et =orking ,apital 'atio
A. ,urrent #ssets Turno3er 'atio
8. =orking ,apital Turno3er 'atio
: C*++ent Ratio/
The current ratio is calculated by di3iding current assets
by current liabilitiesF ,urrent
ratio P ,urrent #ssets
,urrent %iabilities
The current ratio is a measure of the firmsS short!term
sol3ency. It indicates the a3ailability of current assets in
rupees for e3ery one rupee of current liability.
*articulars>'s? 200; 200A 2008 200.
,urrent #ssets 2/28/5;.20 2/.0/2/AA 5/0/;5/25 2/;2/;A/A50
,urrent %iabilities /8/;2/;02 /CC/C0/58A /52/50/CA0 /C8/2;/02
,urrent 'atio >B? ..2 2 ..8 .AA
InterpretationF
The current assets are more than current liabilities. The current ratio is getting decrease
compare to 200A/ which is good sign/ ft is due to increase in current liabilities. ,ompany can
rise the current ratio by rise the current assets.
8 Debto+ T*+nove+ Ratio/
The difference
between the sales
and the debtors is
considered as the
debtorRs turno3er
ratio.
(ebtors Turno3er 'atio P
-ales

(ebtors
*articularsG)ears 200; 200A 2008 200.
-ales >'s? 2;/0./25/5A2 5/0C.0;/02. 5C/50/.C/A02 5A/.50/;5
(ebtorRs >'s? 2A/C;/52. 2A/A/5. 50/5;.52. 5C.5/;8
(ebtors T*+nove+
'atio >B?
.5 . 2.2 08.
(ebtors Turno3er 'atio
Inte+p+etation/ (ebtors turno3er ratio in the
year 200; was .5 and it is increased to 2 in
the year 2008 but at present it has again
decreased to 0
; C*++ent Assets T*+nove+ Ratio/
The firm may wish to know its efficiency of utili:ing current assets.
C*++ent assets t*+nove+ C #a-es
C*++ent assets
*articularsG)ear 200; 200A 2008 200.
-ales >'s? 2;/0./25/5A2 5/0C/0;/02. 5C/50/.C/A02 5A//50/;5
,urrent #ssets
>'s?
2/28/5;.20 2/.0/2.AA 5/0/;5/25 2.;2/;A/A50
C.2
,urrent #ssets
Turno3er 'atio
>B?
.C 0.;. .5A
Inte+p+etation/
The ,urrent asset Turno3er ratio is increasing as compared to the pre3ious years as it
has grown to C5B up which is a good sign. It shows as the assets are increasing the sales are
also getting increased.
B7 'o+3in. Capita- T*+nove+ Ratios/
# firm may like to relate net current assets >or net working capital gap? to sales.
'o+3in. Capita-
T*+nove+ Ratio C
#a
-es
Net C*++ent Assets
*articulars >'s? 200; 200A 2008 200.
-ales 2;/0./25/5A2 5/0C/0;/02. 5C/50/.C.A02 5A/50/;5
"et ,urrent #ssets /0./.5/58 /C5/A/58. /C./5C/;55 /C/C.A58
=orking ,apital
Turn o3er 'atio >B?
25.A5 2.5 22.. 52.C5
Inte+p+etation/ The ,urrent asset Turno3er ratio is increasing as compared
to the pre3ious years. It is a good sign. It shows as the assets are increasing
the sales are also getting increased.

FINDINGS0
The findings from statements changes in working capital and ratios are
summari:ed belowF
. The working capital requirement is increased in the year 2008 due to increase
in debtors/ loans/ and decrease in the liabilities.
2. The operating cycle of working capital is fluctuating.
5. The sales are increasing year by year.
C. The (ebtors collection period is decreased when compared to 2005 and
increased when compared to 200A.
5. #s the debtors collection period is increasing .
;. ,reditors collection period is also declining.
;. *rofit is increased in 200; I 200A. 6ut decrease in the year 2008 its
reco3ering in the ne8t year.
S(!!e$ti,$0
? The company should take precautionary measures for in3esting and
controlling the funds from recei3ables.
2? The company is following old e8perience methods/ company should
follow some new techniques or some statistical tools to estimate and
manage the working capital through regression analysis and time
series.
5? The firm has sufficient working capital and has belter liquidity position.
6y efficient utili:ing this short!term capital/ then it should increase the
turno3er.
C? ,ontrol the 3ariable misc e8penses.
5? There is intensi3e need of cost analysis and cost control to impro3e
profitability by reducing the cost.
;? The company has to try to impro3e the cash balances.
C,&#($i,
6ased on the account information pro3ided by the company/ it is not enough to
<udge the company performance. 0owe3er based on financial details pro3ided by
the company the conclusions are made.
This pro<ect on =orking ,apital 1anagement in the manufacturing concern is not
merely a work of the pro<ect. 6ut a brief knowledge and e8perience of that how to
utili:e the capital in the firm. The research undertaken has brought into the light the
following conclusionsF
. %ooking at the current ratio it is considerably good/ indicating that the
funds locked up in the current assets and are more than the current liabilities.
2. The cash in hand is getting reduced as it is blocked in the in3entories.
5. The amount collection from debtors has decreased in 200; and 200A but
again rose in 2008/ which is not a sign for the company.
C. The firm has in3ested and blocked up the more funds in the short!term
capital. =hich is affecting on the sales and as well as re3enue of the firm.
The operating cycle of working capital has been increased year by
year. It shows that/ the firm has in3ested more amounts in the working
capital in production process. @rom the analysis/ I can conclude that (' has
a good working capital management
6I6LIO(RAP!%
'9@9''9( 6&&4-
@inancial 1anagement *rasanna ,handra
@inancial 1anagement I1. *andey
@inancial 1anagement 4han and 2ain
@inancial 1anagement *rof #.(.6hat
,ompany 6rochures I ,ompany 1anuals.
6a-ance sheet as on ;:
st
ma+ch 8FFG
32.03.03 Rs
32.03.O4 Rs
2. SOURCES OF FUNDS5
2.O6$ F/$&s5
Ca0!)a* 77,38,000
Rese"-es + S/"0*/s 2,98,:0,334 2,98,;3,47
2,:0,08,334 2,:0,07,47
9. L%a$ F/$&s
Se(/"e& L%a$s 7,03,9:,03: 3,43,;;,43
U$se(/"e& L%a$s 93,3;,487 9;,20,;22
7,33,93,382 7,03,::,773
3. De'e""e& Ta< L!a=!*!)> 9:,39,834 32,0;,;:4
GRAND TOTAL ;,30,;9,74: ;,20,44,3:9
9. APPLICATION OF FUNDS5
7. F!<e& Asse)s5
4,08,73,4;2
G"%ss B*%(.? 3,20,42,499
Less5 A((/#/*a)e&
&e0"e(!a)!%$ )!** &a)e
7,48,;;.;93 7,37,79,;37
NET BLOCK 7,98,28,233 3,:2,02,2;:
8. I$-es)#e$)s5 32,08,880 30,83,280
;. C/""e$) Asse)s,
C/""e$) Asse)s5
a@ I$-e$)%"!es 40,70,:48 ;4,38,22;
S/$&"> De=)%"s 37,32,;24 30,8;,393
Cas + Ba$. Ba*a$(es 23,23,9;8 :,;3,0:3
2,9:,32,;;4 2,0:,27,897
=@ L%a$s a$& A&-a$(es 2,37,:;,049 2,37,80,;02
9,;9,;:,:80 3,02,;8,298
LessA C/""e$) L!a=!*!)!es +
P"%-!s!%$
2,74,9;,029 2,89,30,7:0
NET CURRENT ASSFTS 2,27,72,:34 2,73,37,;88
GRAND TOTAL ;,30,;9,74: ;,20,44,3:9
6a-ance sheet as on ;:
st
ma+ch 8FFH
SOURCES OF FUNDS5 32.03.04 Rs 32.03.0: Rs
. 2. O6$ F/$&s5
Ca0!)a* 77,38,000 77,38,000
Rese"-es & S/"0*/s 2,98,;3,478 2,97,47,028
2,:0,07,478 2,;3,23,028
9. L%a$ F/$&s
Se(/"e& L%a$s 3,43,;;,434 3,:;,:4,;:7
U$se(/"e& L%a$s 9;,20,;22 97,;7,302
7,03,::,773 7,02,73,8:8
3. De'e""e& Ta< L!a=!*!)> 32,0;,;:4 32,43,;93
GRAND TOTAL ;,20,44,3:9 ;,09,89,923
9. APPLICATION OF FUNDS5
7. F!<e& Asse)s5
G"%ss B*%(. 4,08,73,4;2 :,40,78,;27
Less5 A((/#/*a)e& &e0"e(!a)!%$
)!** &a)e
7,37,79,;37
3,48,49,;70
3,:2,02,2;: 3,37,;9,3:7
8. I$-es)#e$)s5 30,83,280 ;9,2:,;80
;. C/""e$) Asse)s,
L%a$s+A&-a$(es5
C/""e$) Asse)s5
a@ I$-e$)%"!es ;4.38,22; :9,:8,0:;
S/$&"> De=)%"s 30,8;,393 9:,:2,823
Cas + Ba$. Ba*a$(es :,;3,0:3 30,89,7:0
2,0:,27,897 2,30,33,0;8
=@ L%a$s a$& A&-a$(es 2,37,80,;02 2,83,23,229
3,02,;8,298
9,30,29,2::
Less5 C/""e$) L!a=!*!)!es +
P"%-!s!%$s
2,89.30,7:0 2,77,70,84:
NET CURRENT ASSETS 2,73,37,;88 2,78,:2,843
GRAND TOTAL ;,20,44,3:9 ;,09,89,923

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