Summer Training Finance Project

SINTECH PRECISION PRODUCTS
LIMITED
C-189 & 190, Site No. 1, B.S. Road, Ind. Area, Ghaziabad
[U.P.] Phone No.: 0120-2866320/21,3290635/37/38 Fax No.
0120-2867715
E-mail: marketing@sintechpumps.com Web Site:
www.sintechpumps.com
CERTIFICATE
This is to certify that the Summer-Training Project of FINANCE Titled
WORKING CAPITAL MANAGEMENT and ITS APPRAISAL is an original
work and that this work has not been submitted anywhere in any form. My
indebtedness to other works/publications has been duly acknowledged at the
st
st
relevant places. The project work was carried from 1 June, 2009 to 31 July
2009 in SINTECH PRECISION PRODUCT LIMITED.
st
Date: 31 July 2009

Signature
(Bulbul Sharma)
PGDM ( 2009-10)
Signature
(Mr. Sanjeev Garg)
Sintech Precision Product Limited
ACKNOWLEDGEMENT
Words are indeed inadequate to convey my deep sense of gratitude to all those
who have helped me in completing this summer project to the best of my ability.
Being a part of this project has certainly been a unique and a very productive
experience on my part.
I am really thankful to Mr. Sanjeev Garg, Finance Manager for making all kinds of
arrangements to carry the project successfully and for guiding and helping me
to solve all kinds of quarries regarding the project work. His systematic way of
working and incomparable guidance has inspired the pace of the project to a great
extent.
I would also like to thank my mentor and project coordinator, Mr.
Parminder Singh, Asstt. Manager, (Finance & Accounts) for assigning me a
project of such a great learning experience and acquainting me with real life project
financing and appraisal.
I am very grateful to CA Neeta Sahu (Training & Placement Officer) AJAY
KUMAR GARG INSTITUTE OF MANAGEMENT, Ghaziabad. Who has given
me the opportunity to do this project in the Sintech Precision Product Ltd. and
very thankful to all lecturers of AKGIM, Ghaziabad for their useful guidance and
advise.
This project would not have been successful without the help of Mr.N.C.
Dhingra
(Chairman) Mr. Sahil Dhingra (Managing Director) of
Sintech.
Last but not least I would like to thank all the employees of Sintech Precision
Product Ltd. who have directly or indirectly helped me with their moral support
for the completion of my project.
(Bulbul Sharma)
TABLE OF CONTENTS
Acknowledgement
Abstract
1. Introduction
The problems Purpose
of study Research
methodology Scope of
the study
Data sources
Limitations
2. Industry Profile
a. Indian Economy
b. Pump industry
c. Global Pump Market Outlook
3. Sintech Precision Product Ltd. An Overview
Companys Profile
Vision, Misson & Quality
Product Range
Sectoral Overview
4. Conceptual Framework
Introduction to Working Capital Management
Significance of working capital management
Liquidity vs Profitability: Risk Return trade off
Classification of working capital
Types of working capital needs
Financing of working capital
Factors determining working capital requirements
Working capital cycle
Sources of working capital
Inventory management
Cash management
Receivables management
Managing payables (Creditors)
5. Working Capital Analysis and its Appraisal
6. Major Findings
7. Conclusion
8. Suggestions and Recommendations
9. Bibliography
10.
Appendices
ABSTRACT
This project is based on the study of working capital management in Sintech
Precision Product Ltd. An insight view of the project will encompass what it
is all about, what it aims to achieve, what is its purpose and scope, the various
methods used for collecting data and their sources, including literature survey
done, further specifying the limitations of our study and in the last, drawing
inferences from the learning so far.
Sintech Precision Products Ltd., founded in 1986, by an enterprising technocrat
Mr. N.C.Dhingra is recognized as one of the largest pumping solutions provider
today in India. Sintech is an advanced pumping solution provider for water
intensive heavy industries. With a very diverse product portfolio, Sintech
provides solutions for multifarious applications like clear water, process, slurry,
liquid with suspended solids, sewage, acids, alkalies, seawater and many more.
Sintech has branch offices and dealership network in throughout the nation as
well as catering the international market.
The working capital management refers to the management of working capital,
or precisely to the management of current assets. A firms working capital
consists of its investments in current assets, which includes short-term assets
cash and bank balance, inventories, receivable and marketable securities.
This project tries to evaluate how the management of working capital is done in
Sintech through inventory ratios, working capital ratios, trends, computation of
cash, inventory and working capital, and short term financing.
INTRODUCTION
The problems Purpose

of study Research
methodology Scope of
the study Data
sources Limitations
INTRODUCTION:
The project undertaken is on WORKING CAPITAL MANAGEMENT
IN SINTECH PRECISION PROUCT LTD.
It describes about how the company manages its working capital and the
various steps that are required in the management of working capital.
Cash is the lifeline of a company. If this lifeline deteriorates, so does the
company's ability to fund operations, reinvest and meet capital requirements
and payments. Understanding a company's cash flow health is essential to
making investment decisions. A good way to judge a company's cash flow
prospects is to
look
at
its
working
capital
management
(WCM).
Working capital refers to the cash a business requires for day-to-day operations
or, more specifically, for financing the conversion of raw materials into
finished goods, which the company sells for payment. Among the most
important items of working capital are levels of inventory, accounts receivable,
and accounts payable. Analysts look at these items for signs of a company's
efficiency
and
financial
strength. The working capital is an important yardstick to measure the

companys operational and financial efficiency. Any company should have a
right amount of cash and lines of credit for its business needs at all times.
This project describes how the management of working capital takes place
at
SINTECH.
The Problems
In the management of working capital, the firm is faced with two key problems:
1. First, given the level of sales and the relevant cost considerations, what are
the optimal amounts of cash, accounts receivable and inventories that a firm
should choose to maintain?
2. Second, given these optimal amounts, what is the most economical way to
finance these working capital investments? To produce the best possible
results, firms should keep no unproductive assets and should finance with
the cheapest available sources of funds. Why? In general, it is quite
advantageous for the firm to invest in short term assets and to finance shortterm liabilities.
PURPOSE OF STUDY
The objectives of this project were mainly to study the inventory, cash and
receivable at SINTECH PRECISION PRODUCT LTD., but there are some
more and they are The main purpose of our study is to render a better understanding of
the concept Working Capital Management.
To understand the planning and management of working capital at
SINTECH.
To measure the financial soundness of the company by analyzing various
ratios.
To suggest ways for better management and control of working capital at
the concern.
RESEARCH METHODOLOGY
This project requires a detailed understanding of the concept
Working Capital Management. Therefore, firstly we need to have a
clear idea of what is working capital, how it is managed in SINTECH,
what are the different ways in which the financing of working capital
is done in the company.
The management of working capital involves managing inventories,
accounts receivable and payable and cash. Therefore one also needs to
have a sound knowledge about cash management, inventory
management and receivables management.
Then comes the financing of working capital requirement, i.e. how the
working capital is financed, what are the various sources through
which it is done.
And, in the end, suggestions and recommendations on ways for better
management and control of working capital are provided.
SCOPE OF THE STUDY

This project is vital to me in a significant way. It does have some
importance for the company too. These are as follows
This project will be a learning device for the finance student.
Through this project I would study the various methods of the working
capital management.
The project will be a learning of planning and financing working capital.
The project would also be an effective tool for credit policies of the
companies.
This will show different methods of holding inventory and dealing with
cash and receivables.
This will show the liquidity position of the company and also how do
they maintain a particular liquidity position.
DATA SOURCES:
The following sources have been sought for the preparation report:
Primary sources such as business magazines, current annual reports,
book on Financial Management by various authors and internet
websites the imp amongst them being : www.sintechpumps.com,
www.indiainfoline.com, www.studyfinance.com .
Secondary sources like previous years annual reports, CMA Data,
reports on working capital for research, analysis and comparison of
the data gathered.
While doing this project, the data relating to working capital, cash
management, receivables management, inventory management and
short term financing was required.
This data was gathered through the companys websites, its corporate
intranet, Sintechs annual reports and CMA Data of the last three
years.
A detailed study on the actual working processes of the company is
also done through direct interaction with the employees and by timely
studying the happenings at the company.
Also, various text books on financial management like Khan & Jain,
Prasanna Chandra and I.M.Pandey were consulted to equip ourselves
with the topic.
LIMITATIONS OF THE STUDY:

We cannot do comparisons with other companies unless and until we
have the data of other companies on the same subject.
Only the printed data about the company will be available and not the
backend details.
Future plans of the company will not be disclosed to the trainees.
Lastly, due to shortage of time it is not possible to cover all the factors
and details regarding the subject of study.
The latest financial data could not be reported as the companys websites
have not been updated.
INDUSTRY PROFILE
Indian Economy
Pump Industry
Global pump market outlook and
growth driver
INTRODUCTION TO THE INDUSTRY

Indian Economy
In the beginning of the year 2008 the economy was on a higher growth path with the
macro-economic fundamentals inspiring confidence and a general optimism
about the medium to long term prospects of the economy. The economy was
expected to slow down marginally from the three years of 9% plus growth in real
GDP reflecting a cyclical downturn in the global economy and expectations
were that the growth would be around 8.5%. High oil prices and domestic inflation
and worsening of international financial crisis which had surfaced in 2007 have been
definite areas of concern. But the global situation deteriorated massively after midSeptember 2008 following collapse of series of investment banks in the US. This
resulted in choking of credit and global crash in stock markets. Crisis of this
magnitude in industrialized countries has impact around the world especially in the
emerging market countries like India. The Indian economy which started with a
strong economic performance lost the momentum once the ripple effects of the
gloom in the global economy set in. Sensex in January 2008 was all time high at
21206, came down to around 9000 towards the end. The high cost of crude oil
around US$ 150 per barrel in August,
2008 added to the countrys woes in terms of higher import bill. Rupee
weakened
against dollar sliding down from Rs.39 in the beginning of the year to Rs.48 towards
the end.
According to the estimates released by Central Statistical Organisation (CSO)
the real GDP growth was 7.6% in the second quarter of 2008-09 as compared to
9.3% of the corresponding quarter of 2007-08, reflecting deceleration in growth of
industry and services. The agricultural production was below the estimate. The
index of industrial production recorded 3.9% as compared to 9.2% in the
previous year. Indias balance of payments position witnessed widening of trade
deficit. The crisis in global financial markets deepened since mid September, 2008
exerting pressure on financial markets and crashing of equity markets leading to
wide spread volatility. The global turmoil in the financial markets spilled over the
emerging markets. This has finally affected the manufacturing sector. As a
result, authorities in several countries embarked upon an unprecedented way of
policy initiatives to contain systematic risk, arrest the plunge in asset prices and
shore of the confidence in the international banking system. This has brought about
some level of stability. The Indian Government has not lagged behind. It has been
successful in bringing down inflation from 12.9% in August, 2008 to around 6%
towards the end of the year. The challenges of high growth and now global
recession have become more complex especially with increased globalization of
world economy and growing influence of global developments, economic and no
economic. Upgrading infrastructure such as energy, roads, inflation management,
promoting growth of industrial sector, stability in financial market, containing deficit,
both domestic and external, promoting exports amidst global recession are the
major challenges that are faced by Indian economy.
Pumps Industry
Indian pumps, catering to a range of sectors from agriculture to nuclear power
generation, are expected to capture a bigger slice of the world market. With exports
already reaching around 70 countries, the Indian pump industry is poised to
register a faster growth rate than the global average, says an industry study.
The Indian pump industry is set to grow at 6-7 percent over the next three years
(against the 4 percent of the world pump market).
The growth witnessed by the Pumps Industry was in line with the performance of the
Indian economy. The growth in these sectors mainly came from Energy sector. This
was the result of capacity additions in Super Critical plants including Ultra Mega
Plants. On the other hand, increased forays from Chinese contractors into Energy
Sector continued to exert pressure on the demand. Demand for Submersible pumps
is weather dependent and varies with geographical location. Growth in standard
industrial pumps is closely linked to the development in the industrial sector of the
economy. Trends in waste water sewage market are encouraging due to increased
Government spending. The earlier buoyant demand for industrial valves tapered
off in the latter part of the year due to drop in activities in Steel and General Industry.
The industry, now holding euro 500 million worth of global market share, "is
expected to grow at a rate faster than the world pump market growth, capturing a
larger share of the market," states the study released by the Confederation of
Indian Industry (CII). According to industry estimates, India produces around one
million pumps of various kinds. There are around 800 large, medium and small
units producing the pumps for sectors from agriculture to nuclear power generation.
"Indian pump manufacturers are able to meet most of the domestic market
demand," said Sarita Nagpal, head of manufacturing services of CII, which works
closely with the Indian Pump Manufacturers Association.
Exports have registered a 11 percent growth in the last two years after reversing a
negative 11.5 percent trend in 2002-03 to clock 45 percent growth in 2003-04. India
has today become a reliable, technically competent, competitive and enterprising
outsourcing option for many multinational companies in industrial pumps and
systems.
The growth story has emerged through technical collaborations and joint
ventures that Indian companies have had with multinational majors. Technical
know-how of global
standard
has
thus
been
well
absorbed. In addition, various research institutes such as the Small Industries
Testing and Research Centre (Si'Tarc) in Coimbatore, have developed energyefficient designs for pumps to meet the norms of Indian standards.
The Indian pump industry has an outstanding record of indigenous research and
development in all three areas of technological intensities - from mass-produced
pumps for agriculture to gigantic pumps for interlinking rivers, and pumps for critical
services such as nuclear power generation. The Bureau of Indian Standards has
developed
42
specifications
for
indigenous
pumps.
GLOBAL PUMP MARKET OUTLOOK AND GROWTH

DRIVERS
The world pump market is governed by the demand in United States,
European Union and Japan. With these countries burdened by recession, market
forecasts up to 2013 have been revised to a compounded average growth rate of
just 0.3% from
3-4%. The global market for centrifugal pumps in 2009 and 2010 is likely to
contract, while that for positive displacement pumps will post good gains.
Consolidation of
players in the pump industry through mergers and acquisitions, may catch
momentum in 2009 -10 in spite of the present recessionary trends.
Although water and sewage, power, building services, industry, oil and gas are
major drivers of the global pump market, for KBL, water, power and irrigation will
continue to be chief market drivers.
Factors affecting
industry:
growth
of
the
global
pump
Per capita availability of water in Asia is less than other continents; and it will
continue to grow rapidly, thus increasing demand for delivery and treatment
of that water. Rising consumption with decreasing supplies of uncontaminated
water is pushing up the market of desalination plants for treating seawater.
Urbanization of Asia has seen relocation of more than one billion

migrants from villages to cities. This is creating pressure on the existing
infrastructure including delivery of utility water and removal and treatment of
wastewater.
Most governments in Asia and in Africa are likely to increase their spending
on infrastructure projects like irrigation and drinking water schemes.
The world is moving towards energy efficient products and services to be

able to sustain the growth rates achieved in the past few years with
petroleum being the primary energy source.
Sintech Precision Product Ltd. An Overview
Companys Profile
Vision, Misson & Quality
Product Range
Key Players
Sectoral Overview
Introduction to the Company

Company Profile
Sintech Precision Products Ltd., founded in 1986, by an enterprisi ng technocrat
Mr. N.C.Dhingra is recognized as one of the largest pumping solutions provider
today in India. With headquarters located in NCR of India, Ghaziabad, Sintech
Precision Products Ltd has built a strong presence in the domestic market over the
past three decades.
Sintech is an advanced pumping solution provider for water intensive heavy
industries. With a very diverse product portfolio, Sintech provides solutions for
multifarious applications like clear water, process, slurry, liquid with suspended
solids, sewage, acids, alkalies, seawater and many more. Sintech has branch offices
and dealership network in throughout the nation as well as catering the international
market.
With tremendous growth potential in future pumping technology market,
Sintech Precision Products Ltd has acquired certification from Moody International
based in UK, who operates in terms of the UKAS license requirements. Our
system is regularly audited for compliance to these International Standards.
Sintech Precision Products Ltd. an ISO 9001 certified company is now a leading &
respected pump manufacturer in India. Sintech make pumps are manufactured
as per DIN-24256/ISO-2858/IS 5120 /HIS/IS - 1520 standards and tested as per
IS9137, API-610 & ISO 2548 standards. Sintech make pumps constitutes of highly
standardized and is designed with modular structures and offers the best possible
interchangeability. This largely reduces spares inventory. Sintech has a high
production system with two Manufacturing units.
Sintech Precision Products Ltd. has now expanded in all type of pumps suitable for
diverse multifarious applications like clear water, process, slurry, liquid with
suspended solids, sewage, acids, alkalies, sea water and many more application.
Till date SINTECH has supplied thousands of pumps for various critical and
non
critical applications, which are working quietly and efficiently to the entire customer
satisfaction.
Vision
Sintech seeks to be recognised as the Innovator and thought leader of
pumping related products and technologies in domestic and global markets.
Mission
Improve customer returns
Create value through a culture of excellence
Innovate product and service delivery
Imbibe Quality as companys bloodline
Quality
Sintech Precision Products Ltd s Q3 model is a move in that direction.
Principally based on three quality-integrated pillars, the Q3 model reflects the inside
out approach of the organization, that incorporates Q1 Applied engineering expertise
Q2 Superior pumping capabilities
Q3 Exceptional service
QUALITY ASSURANCE PROCEDURES

Our Quality Assurance Department is manned by qualified engineers to ensure
completion of raw materials and final pumps with relevant quality norms. The
activities are divided into raw material inspection, in-process inspection and final
inspection.
Sintech Precision Products Limited has in house facilities and equipments
required for ensuring quality, such as
Hydrostatic machine for hydrostatic test of the casing
Dynamic balancing machine for dynamic balancing of the impeller.
For non-destructive testing such as ultrasonic test magnetic particle test inspection
is carries out through external reputed agencies.A well laid test field for performance
testing having sophisticated flow meter with digital display by which flow of the liquid
can be tested accurately is available at our works.
Product Range
Type
Design
Rating
Capacity : upto 1,000

m3/hr
Head upto 1,100 m
SMS
Multistage Pump
SCS &
SCSD
Horizontal Split
Casing Pump
SWP &
CPS
Water Pump
Process Pump

m3/hr
Head upto 180 m

m3/hr
Head upto 140 m

m3/hr
Head upto 10 m
SAF
Axial Flow Pump
Application/Sector
Boiler Feed
Mine De-watering
Water Supply
Jockey
Condensate Transfer
Descaling Operations
Industrial and
Municipal Water
Supply
Cooling Towers
Injection Water
Spray Pond
Air-conditioning
Water
Treatment Plant
Fire Fighting
Irrigation
Water Supply
Drip Irrigation
Cooling Tower
Condensate handling
Air-conditioning
Fire Fighting
Service Water
Chemical Process
Effluent Treatment
Hydrocarbon
Viscous Liquid
Acids Juice Pump
Distillery
Sea Water
River Water
Canal Water
Sewage

m3/hr
Head upto 60 m
SSHQ
Non Clog Pump

m3/hr
Head upto 45 m
SMF
Mixed Flow Pump
SVT
SVMF
SVAF
Vertical Turbine
Vertical Mixed
Flow
Vertical Axial Flow
SV
Liquid Ring
Vacuum
Pump

m3/hr
Head upto 300 m
Free Air Capacity :

upto 4,975 m3/hr
Vacuum upto 685
mmHg
Capacity : upto 150

m3/hr
Head upto 100 m
SGP
Gear Pump
Sewage
Effluent Treatment
Unscreened Juice
Slurry
Drainage
River water
Sludge
Grain Wash
Syrup
Melt
Mud
Injection Water
Sewage
Effluent Treatment
Drainage
River Water
Water Supply
General Water
Supply
Cooling Tower
Spray and Injection
Water
Irrigation
Hydropower
Chemicals
Pharmaceuticals
Food
Sugar
Plastic
Paper
Pulp
Thick Viscous Liquid
Dyes
Coaltar
Mollasses
Soaps
Paint
ST
Lobe Pump
/ Star Pump
STF
Torque Flow
Pump
EB
&
EBM
Capacity : upto 100

m3/hr
Head upto 50 m

m3/hr
Head upto 100 m
Capacity : upto 100

m3/hr
Head upto 50 m
Thick Mollasses
Highly Viscous Liquid
Abrasive Slurries
Sewage
Industrial Waste
Sugar
Pulp and Paper
Steel
Power
Fibre
Textile
Waste Water
Grain Wash
Solid Handling
Cement Aquaculture
Massecuite
Magma
Rota Pump
SSPL
Self Priming
Pump
Capacity : upto 250

m3/hr
Head upto 50 m
Sump Drainage
Dewatering
Ash Slurry
Wet Scrubber
SECTORAL OVERVIEW
Power
This business group caters to the needs of power industry - conventional and
renewable. Considering the chronic shortage of power, this sector is bound to
emerge as a major market driver for decades to come. The Power group is proud
to have successfully completed the sump model test of cooling water system for
India's first ultra mega power project of 4000 MegaWatt (5 x 800 MW) at
Kirloskarvadi. Orders received include:
Raka Saudia Power & Water
Co. Ltd.
Bhakra Beas Management
Board (P.W.)
Shri Chamundeswari Sugars
SWRO Barge Project
Pong Power Project
Clear Water Limited

Clear Water Limited
Co-gen Plant Limited

(Through Avant Garde)
2x250 MW Korba East
2x210 MW Rayalaseema
TPS Stage II, Unit 3 & 4
Water Resource Management

This business group addresses the needs of water supply, water treatment and
waste water treatment segments. Water, like power is a major market driver for the
pump industry and equipment peripheral to water industry. Water stressed regions
in the world are on the rise, thanks to uncurbed urbanization, growing
industrialization, increasing pollution levels and absence of sufficient teeth to the
legislation to deal with water pollution across the world. India is no exception. Such
a scenario demands better and better water management, with latest
technologies,
cheaper methods and sustainable operations.
This business group continues to serve municipal corporations, water and sewerage
boards of India. Delhi Jalboard's Vishwakarma project, Nagpur municipal
corporation's Gorewada and Mahadula projects and Maharashtra Jal
Pradhikaran's Malegaon project went on stream this
year.
We made significant in-roads in waste water treatment segment in India as well as
overseas, based on the Gondwana Engineers Limited's strengths. Orders received
include:
Steel Authority of India Llimted, Bhilai for a 30 million liters per day (MLD)
sewage treatment plant
Vadodara municipal Sewa Sadan for a 8.5 MLD sewage treatment plant
Pune municipal corporation for a 40 MLD sewage treatment plant
Sugar Industry
Some prestigious projects in sugar industry are:
Balrampur Chini Mills Limited

Balrampur Chini Mills Limited
Bajaj Hindusthan Limited
Bajaj Hindusthan Limited
Uttam Sugar Mills Limited
Uttam Sugar Mills Limited
Khumbi Project
Gularia Project
Kinauni Project
Kinauni Expansion
Barkatpur Project
Shermau Project
Paper / Etp / Chemical / Food

Some prestigious projects in Paper / Etp / Chemical / Food are:
Satyam Industries Pvt. Ltd
Clear Water Limited
Clear Water Limited
Ghaziabad Organics Ltd.

Adinath Enterprises
Winsor Sathyam Engineering
Panipat Project
Bhiwadi Project
Kanoria Chemical &
Indus.Ltd.
Ghaziabad Project
FMC Satnam Agro Project
Bombay Rayon Fashion
Limited
Steel
Some prestigious projects in steel industry are:
Maa Chinnamastika Steel &
IST Steel & Power Limited

Shri Mahavir Ferro Alloys P Ltd. -
Steel Project Power

Limited
Bellary Project
Rourkela Project
Mines
Some prestigious projects in mines industry are:
Singareni Colleries Co. Ltd.

15 HP
40 HP
75 HP
125 HP
WORKING CAPITAL MANAGEMENT

CONCEPTUAL FRAMEWORK
Introduction
Significance of working capital management
Liquidity Vs. profitability: Risk Return trade off
Classification of working capital
Types of working capital needs
Factors determining working capital requirements
Working capital cycle
Sources of working capital
Working capital position
Inventory management
Cash management
Receivables management
Managing payables (Creditors)
Financing current assets
Working capital & short-term financing
Financing Current Assets
Introduction to working capital

Working Capital is the Life-Blood and Controlling Nerve Center of a
business
The working capital management precisely refers to management of current assets.
A firms working capital consists of its investment in current assets, which include
short-term assets such as:
Cash and bank balance,
Inventories,
Receivables (including debtors and bills),
Marketable securities.
Working capital is commonly defined as the difference between current assets
and current liabilities.
Working Capital = Current Assets-Current Liabilities
There are two major concepts of working capital:
Gross working capital
Net working capital
Gross working capital:
It refers to firm's investment in current assets. Current assets are the
assets, which can be converted into cash with in a financial year. The gross
working capital points to the need of arranging funds to finance current assets.
Net working capital:
It refers to the difference between current assets and current liabilities. Net
working capital can be positive or negative. A positive net working capital will
arise when current assets exceed current liabilities. And vice-versa for negative
net working capital. Net working capital is a qualitative concept. It indicates
the liquidity position of the firm and suggests the extent to which working
capital needs may be financed by permanent sources of funds. Net working
capital also covers the question of judicious mix of long-term and short-term
funds for financing current assets.
Significance Of Working Capital Management
PAYMENT
TO
SUPPLIERS
EASY LOAN
FROM
BANKS
DIVIDEND
DISTRIBUTION
SIGNIFICAN
--CE OF
WORKING
CAPITAL
INCREASE
EFFECIENY
INCREASE
DEBT
CAPACITY
INCREASE
IN FIX
ASSETS
The management of working capital is important for several reasons:

For one thing, the current assets of a typical manufacturing firm account for
half of its total assets. For a distribution company, they account for even more.
Working capital requires continuous day to day supervision. Working capital has
the effect on company's risk, return and share
prices,
There is an inevitable relationship between sales growth and the level of
current assets. The target sales level can be achieved only if supported by
adequate working capital Inefficient working capital management may lead to
insolvency of the firm if it is not in a position to meet its liabilities and
commitments.
Liquidity Vs Profitability: Risk - Return trade off

Another important aspect of a working capital policy is to maintain and provide
sufficient liquidity to the firm. Like the most corporate financial decisions, the
decision on how much working capital be maintained involves a trade off- having a
large net working capital may reduce the liquidity risk faced by a firm, but it can
have a negative effect on the cash flows. Therefore, the net effect on the value of
the firm should be used to determine the optimal amount of working capital.
Sound working capital involves two fundamental decisions for the firm. They are
the determination of:
The optimal level of investments in current assets.
The appropriate mix of short-term and long-term financing used to support
this investment in current assets, a firm should decide whether or not it
should use short-term financing. If short-term financing has to be used, the
firm must determine its portion in total financing. Short-term financing may
be preferred over long-term financing for two reasons:
The cost advantage
Flexibility
But short-term financing is more risky than long-term financing. Following table will
summarize our discussion of short-term versus long-term financing
Maintaining a policy of short term financing for short term or temporary assets
needs (Box 1) and long- term financing for long term or permanent assets needs
(Box 3) would comprise a set of moderate risk profitability strategies. But what
one gains by following alternative strategies (like by box 2 or box 4) needs to
weighed against what you give up.
CLASSIFICATION OF WORKING CAPITAL

Working capital can be classified as
follows:
On the basis of time
On the basis of concept
Types of Working Capital Needs

Another important aspect of working capital management is to analyze the
total working capital needs of the firm in order to find out the permanent and
temporary working capital. Working capital is required because of existence
of operating cycle. The lengthier the operating cycle, greater would be the
need for working capital. The operating cycle is a continuous process and
therefore, the working capital is needed constantly and regularly. However,
the magnitude and quantum of working capital required wi ll not be same al
l the times, rather it wi l l fluctuate.
The need for current assets tends to shift over time. Some of these changes
reflect permanent changes in the firm as is the case when the inventory and
receivables increases as the firm grows and the sales become higher and
higher. Other changes are seasonal, as is the case with increased inventory
required for a particular festival season. Still others are random reflecting
the uncertainty associated with growth in sales due to firm's specific or
general economic factors.
The working capital needs can be bifurcated
as:
Permanent working capital
Temporary working capital
Permanent working capital:

There is always a minimum level of working capital, which is continuously
required by a firm in order to maintain its activities. Every firm must have a
minimum of cash, stock and other current assets, this minimum level of
current assets, which must be maintained by any firm al l the times, is
known as permanent working capital for that firm. This amount of working
capital is constantly and regularly required in the same way as fixed assets
are required. So, it may also be called fixed working capital.
Temporary
capital:
working
Any amount over and above the permanent level of working capital is
temporary, fluctuating or variable working capital. The position of the
required working capital is needed to meet fluctuations in demand
consequent upon changes in production and sales as a result of seasonal
changes.
The permanent level is constant while the temporary working capital is

fluctuating increasing and decreasing in accordance with seasonal
demands as shown in the figure. In the case of an expanding firm, the
permanent working capital line may not be horizontal. This is because the
demand for permanent current assets might be increasing (or decreasing) to
support a rising level of activity. In that case line would be rising.
FACT ORS DET ERMINING WORKING CAPIT AL REQUIREMENTS

There are many factors that determine working capital needs of
an enterprise. Some of these factors are explained below:
Nature or Character of Business.
The working capital requirement of a firm is closely related to the
nature of its business. A service firm, like an electricity undertaking
or a transport corporation, which has a short operating cycle and
which sells predominantly on cash basis, has a modest working
capital requirement. Oh the other hand, a manufacturing concern
like a machine tools unit, which has a long operating cycle
and which sells largely on credit, has a very substantial working
capital requirement.
Sintech is a manufacturing concern so this requires them to keep
a very sizeable amount in working capital.
Size of Business/Scale of Operations.
Sintech has a good position in its segment and they are also
spending their operations in the domestic market as well as in
foreign market. The scale of operations and the size it holds in the
market makes it a must for them to hold their inventory and current
asset at a huge level.
Rate of Growth of Business.
The rate of growth of sales indicates a need for increase in the
working capital requirements of the firm. As the firm is projected to
increase their sales by 69% from what it was in 2009, it is required
to guard them against the increasing requirements of the net current
asset by way of efficient working capital management. The sales
and
projected
sales
level
inventories and receivables.
determine
the
investment
in
Price Level Changes.

Changes in the price level also affect the working capital
requirements. It was the reduced margins in the price of the raw
materials that had prompted them to go for bulk purchases thus
making on additions to their net current assets. They might
have gone for this large-scale procurement for availing discounts and
anticipating a rise in prices, which would have meant that more
funds are required to maintain the same current assets.
SOURCES OF WORKING CAPITAL

Sintech has the following banks available for the fulfillment of its
working capital requirements in order to carry on its operations smoothly:
Banks:
These include the following banks
o Indian Bank
o Syndicate Bank
NAME OF THE BANK

INDIAN BANK
SYNDICATE BANK
TOTAL
FUND BASED
300
200
500
NON-FUND BASED
250
100
350
WORKING CAPITAL CYCLE

The upper portion of the diagram below shows in a simplified form the
chain of events in a manufacturing firm. Each of the boxes in the upper part
of the diagram can be seen as a tank through which funds flow. These
tanks,
which are concerned with day-to-day activities, have funds constantly
flowing
into and out of them.
CASH
DEBTORS &
BILLS
RECEIVABLES
RAW
MATERIAL
OPERATING CYCLE
SALES
WORK IN
PROGRESS
FINISH
GOODS
The chain starts with the firm buying raw materials on credit.
In due course this stock will be used in production, work will be carried out
on the stock, and it will become part of the firms work-in-progress.
Work will continue on the WIP until it eventually emerges as the
finished product.
As production progresses, labor costs and overheads need have to
be met.
Of course at some stage trade creditors will need to be paid.
When the finished goods are sold on credit, debtors are
increased. They will eventually pay, so that cash will be injected
into the firm.
Each of the areas- Stock (raw materials, WIP, and finished goods), trade
debtors, cash (positive or negative) and trade creditors can be viewed
as tanks into and from which funds flow.
Working capital is clearly not the only aspect of a business that affects
the amount of cash.
The business will have to make payments to government for
taxation. Fixed assets will be purchased and sold
Lessors of fixed assets will be paid their rent
Shareholders (existing or new) may provide new funds in the form of cash
Some shares may be redeemed for cash
Dividends may be paid
Long-term loan creditors (existing or new) may provide loan finance,
loans will need to be repaid from time-to-time, and
Interest obligations will have to be met by the business
Unlike, movements in the working capital items, most of these non-working
capital cash transactions are not every day events. Some of them are annual
events (e.g. tax payments, lease payments, dividends, interest and, possibly,
fixed asset purchases and sales). Others (e.g. new equity and loan finance
and redemption of old equity and loan finance) would typically be rarer
events.
INVENTORY MANAGEMENT
Inventories
Inventories constitute the most important part of the current assets of large
majority of companies. On an average the inventories are approximately 60%
of the current assets in public limited companies in India. Because of the
large size of inventories maintained by the firms, a considerable amount of
funds is committed to them. It is therefore, imperative to manage the
inventories efficiently and effectively in order to avoid unnecessary
investment.
Nature of Inventories
Inventories are stock of the product of the company is manufacturing for sale
and components make up of the product. The various forms of the inventories
in the manufacturing companies are:
Raw Material: It is the basic input that is converted into the finished
product through the manufacturing process. Raw materials are those
units which have been purchased and stored for future production.
Work-in-progress: Inventories are semi-manufactured products.

They represent product that need more work they become
finished products for sale.
Finished Goods: Inventories are those completely manufactured

products which are ready for sale. Stocks of raw materials and workin-progress facilitate production, while stock of finished goods is
required for smooth marketing operations. Thus, inventories serve
as a link between the production and consumption of goods.
Inventory Management Techniques

In managing inventories, the firms objective should be to be in
consonance with the shareholder wealth maximization principle. To achieve
this, the firm should determine the optimum level of inventory. Efficiently
controlled inventories make the firm flexible. Inefficient inventory control
results in unbalanced inventory and inflexibility-the firm may sometimes run
out of stock and sometimes pile up unnecessary stocks.
Economic Order Quantity (EOQ): The major problem to be

resolved is how much the inventory should be added when inventory is
replenished. If the firm is buying raw materials, it has to decide lots in
which it has to purchase on replenishment. If the firm is planning a
production run, the issue is how much production to schedule. These
problems are called order quantity problems, and the task of the firm
is to determine the optimum or economic lot size. Determine an
optimum
level involves two types of costs:-
Ordering Costs : This term is used in case of raw material

and includes all the cost of acquiring raw material. They
include the costs incurred in the following activities:
Requisition
Purchase Ordering
Transporting
Receiving
Inspecting
Storing
Ordering cost increase with the number of orders placed; thus
the more frequently inventory is acquired, the higher the firms
ordering costs. On the other hand, if the firm maintains large
inventorys level, there will be few orders placed and ordering
costs will be relatively small. Thus, ordering costs decrease with
the increasing size of inventory.
Carrying Costs: Costs are incurred for maintaining a given

level of inventory are called carrying costs. These include the
following activities:
Warehousing Cost
Handling
Administrative cost
Insurance
Deterioration and obsolescence
Carrying costs are varying with inventory size. This behavior is

contrary to that of ordering costs which decline with increase in
inventory size. The economic size of inventory would thus
depend on trade-off between carrying costs and ordering cost.
ABC System:
ABC system of inventory keeping is followed in the factories. Various
items are categorized into three different levels in the order of their
importance. For e.g. items such as memory, high capacity processors
and royalty are placed in the A category. Large number of firms
has to maintain several types of inventories. It is not desirable the
same degree of control all the items. The firm should pay maximum
attention to those items whose value is highest. The firm should
therefore, classify inventories to identify which items should receive
the most effort in controlling. The firm should be selective in approach
to control investment in various types of inventories. This analytical
approach is called ABC Analysis. The high-value items are classified
as A items and would be under tightest control. C items represent
relatively least value and would require simple control. B items fall
in between the two categories and require reasonable attention of
management.
CASH MANAGEMENT
Sources of Cash:
Sources of
following:
additional
working
capital
include the
Existing cash reserves

Profits (when you secure it as cash!)
Payables (credit from suppliers)
New equity or loans from shareholders
Bank overdrafts or lines of credit.
Long-term loans
If you have insufficient working capital and try to increase sales, you can
easily over-stretch the financial resources of the business. This is called
overtrading.
Early warning signs include:
Pressure on existing cash
Exceptional cash generating activities e.g. offering high
discounts for early cash payment
Bank overdraft exceeds authorized li mi t.
Seeking greater overdrafts or lines of credit
Part-paying suppliers or other creditors
Paying bills in cash to secure additional supplies
Management pre-occupation with surviving rather than managing
Frequent short-term emergency requests to the bank (to help pay
wages, pending receipt of a cheque).
CASH MANAGEMENT IN SINTECH PRECISION PRODUCT

LTD.
The cash management system followed by the SINTECH is mainly
lock
box system.
Cash Management System involves the following
steps:
1. The branch offices of the company at various locations hold the
collection of cheques of the customers.
2. Those cheques are either handed over to the CMS agencies or bank
of the particular location take charge of whole collection.
3. These CMS agencies or bank send those cheques to the clearing
house to make them realized. These cheques can be local or
outstation.
4. The CMS agencies or bank send information to the central hub of the
company regarding realization/cheque bounced.
5. The central hub passes on the realized funds to the company as per
the agreed agreements.
6. The CMS agencies or concerned bank provides the necessary MIS to
the company as per requirement.
In cash management the collect float taken for the cheques to be realized into
cash is irrelevant and non-interfering because banks such as Standard
Chartered, HDFC and CitiBank who give credit on the basis of these cheques
after charging a very small amount. These credits are given to immediately
and the maximum time taken might be just a day. The amount they charge is
very low and this might cover the threat of the cheque sent in by two or three
customers bouncing. Even otherwise the time taken for the cheques to be
processed is instantaneous. Their Cash Management System is quite
efficient.
RECEIVABLES MANAGEMENT
Cash flow can be significantly enhanced if the amounts owing to a business
are collected faster. Every business needs to know.... who owes them
money.... how much is owed.... how long it is owing.... for what it is owed.
Late payments erode profits and can lead to bad debts.
Slow payment has a crippling effect on business; in particular on small
businesses whom can least afford it. If you don't manage debtors, they will
begin to manage your business as you wi l l gradually lose control due
to reduced cash flow and,
of
course, you
could experience an
increased incidence of bad debt.

The following
debtors:
measures
will
help
manage
1. Have the right mental attitude to the control of credit and make sure
that it gets the priority it deserves.
2. Establish clear credit practices as a matter of company
policy.
3. Make sure that these practices are clearly understood by staff, suppliers
and customers.
4. Be
professional
especially
when
accepting
new
accounts,
and
largerones.
5. Check out each customer thoroughly before you offer credit. Use
credit agencies, bank references, industry sources etc.
6. Establish credit limits for each customer and stick to
them.
7. Continuously review these limits when you suspect tough times are
coming or if operating in a volatile sector.
8. Keep very close to your larger customers.
9. Invoice promptly and clearly.
10.Consider
accounts.
charging
penalties
on
overdue
11.Consider accepting credit /debit cards as a payment

option.
12.Monitor your debtor balances and aging schedules, and don't let
any debts get too old.
Debtors due over 90 days (unless within agreed credit terms) should
generally demand immediate attention. Look for the warning signs of a
future bad debt. For example..
1. Longer credit terms taken with approval, particularly for smaller
orders.
2. Use of post-dated checks by debtors who normally settle within
agreed terms.
3. Evidence of customers switching to additional suppliers for the
same
goods.
4.
New customers who are reluctant to give credit
references.
5. Receiving part payments from debtors.
Here are few ways in collecting money from debtors:
Develop appropriate procedures for handling late
payments.
Track and pursue late payers
Get external help if you own efforts fail.

Dont feel guilty asking for money .. its yours and you are entitled to
it.
Make that call now. And keep asking until you get some
satisfaction.
In difficult circumstances, take what you can now and agree terms for the
remainder, it lessens the problem.
When asking for your money, be hard on the issue but soft on the
person. Dont give the debtor any excuses for not paying.
Make that your objective is to get the money, not to score points or get
even.
MANAGING PAYABLES (Creditors)

Creditors are a vital part of effective cash management and should
be managed carefully to enhance the cash position.
Purchasing initiates cash outflows and an over-zealous purchasing function
can create liquidity problems.
Consider the following: Who authorizes purchasing in your company - is it tightly managed
or spread among a number of (junior) people?
Are purchase quantities geared to demand forecasts?
Do you use order quantities, which take account of stock holding
and purchasing costs?
Do you know the cost to the company of carrying stock?
How many of your suppliers have a return policy?
Are you in a position to pass on cost increases quickly through price
increases to your customers?
If a supplier of goods or services lets you down can you charge back
the cost of the delay?
There is an old adage in business that "if you can buy well then you can
sell well". Management of your creditors and suppliers is just as
important as the management of your debtors. It is important to look after
your creditors- slow payment by you may create ill feeling and can
signal that your company is inefficient (or in trouble!).
Remember that a good supplier is someone who will work with you
to enhance the future viability and profitability of your company.
Financing Current Assets

The firm has to decide about the sources of funds, which can be availed
to make investment in current assets.
Long
financing:
term
It includes ordinary share capital, preference share capital, debentures,

long term borrowings from financial institutions and reserves and surplus.
Short term financing:
It is for a period less than one year and includes working capital funds
from banks, public deposits, commercial paper etc.
Depending on the mix of short and long term financing, the
company can follow any of the following approaches.
Matching Approach
In this, the firm follows a financial plan, which matches the expected life of
assets with the expected life of source of funds raised to finance assets.
When the firm follows this approach, long term financing will be used to
finance fixed assets and permanent current assets and short term financing
to finance temporary or variable current assets.
Conservative Approach
In this, the firm finances its permanent assets and also a part of temporary
current assets with long term financing. In the periods when the firm has no
need for temporary current assets, the long-term funds can be invested in
tradable securities to conserve liquidity. In this the firm has less risk of facing
the problem of shortage of funds.
Aggressive Approach
In this, the firm uses more short term financing than warranted by the
matching plan. Under an aggressive plan, the firm finances a part of its
current assets with short term financing.
WORKING CAPITAL POSITION ANALYSIS IN SINTECH PRECISION

PRODUCT LIMITED
Net working Capital ( CURRENT ASSETS CURRENT LIABILITIES)
(Rs.in lacks)
YEAR
31.03.07
31.03.08
31.03.09
CURRENT ASSETS
INVENTORIES
SUNDRY DEBTORS
CASH AND BANK
OTHER CURRENT ASSETS
LOANS & ADVANCES
TOTAL CURRENT ASSESTS
180.26
114.33
10.81
6.67
291.13
390.84
34.30
28.08
653.95
219.79
28.22
21.99
21.44
-------------333.51
--------------
78.74
-------------823.09
--------------
83.92
--------------1008.67
---------------
336.70
256.33
18.16
59.05
21.11
29.36
315.76
305.99
59.88
64.05
72.00
LESS:CURRENT LIABILIT IES AND PROVISIONS

Short term borrowing
Sundry creditors
Advanced received
Provisions
Instalments of term loan
Other current liabilities
70.34
--TOTAL CURRENT LIABILITIES
94.54
159.49
25.30
21.56
14.66
16.82
--------------
--------------
-----------
332.37
----------------
720.71
----------------
888.02
------------
--NET WORKING CAPITAL
1.14
102.38
120.65
48
AMOUNT(IN LACKS)
NET WORKING CAPITAL
140
120
100
80
60
40
20
0
102.38
120.65
1.14
2007
2008
YEAR
2009
Data Interpretation
If we analysis the three years working capital position of the company, we find out that
company has sufficient working capital to meets its short term liability, it is good indicator for
the company but in 2008, working capital is increased by 101.24 lacs which shows that a
sufficient amount has been blocked in working capital which could be used for some other
more beneficial purpose.
49
INVENTORY ANALYSIS
Inventory means stock of three things :1. Raw materials
2. Semi finished goods.
3. Finished goods.
Position of inventory in Sintech Precision Product Ltd.
(Rs.in lacks)
YEAR
31.03.07
Stores, Spare Parts etc.

Stock In tradeFinished Goods
Raw Materials
Material under process
10.10
37.04
78.74
54.38
--------------180.26
-------------------
31.03.08
.87
26.93
184.53
78.80
---------------291.13
----------------
31.03.09
25.57
41.76
340.08
246.54
--------------653.95
-------------
Analysis through chart:
700
600
500
AM OUNT (IN 400
LACKS)
300
200
100
0
2007
2008
2009
YEAR
INT ERPRET AT ION:

By analyzing the 3 years data, We are looking increasing pattern in inventories. We can see
that inventories are increased from 180.26 lacs to 291 lacs in the year 2008 and in the year
2009 it is increased from 291 lacs to 653 lacs. By seeing this pattern we can say that the
company is managing the inventory according to the sale. Company have a great demand
for the pump in the year 2010 that is biggest reason for increase in inventories. From other
point of view we can say that the liquidity of firm is blocked in inventories but to stock is very
good due to uncertainty of availability of raw material in time.
50
SUNDRY DEBTORS ANALYSIS

Debtors or an account receivable is an important component of working capital and fall
under current assets. Debtors will arise only when credit sales are made.
Position of Sintech Precision Product Ltd.
(Rs.in lacks)
YEAR
31.03.07
Sundry Debtors
114.33
------------114.33
---------------
31.03.08
31.03.09
390.84
219.79
------------390.84
----------------
-------219.79
----------
400
300
AMOUNT ( IN
200
LACKS)
100
0
2007
2008
2009
YEAR
INT ERPRET AT ION

In the table and figure we see that there is rise in the debtors in the year 2008 and decrease in
the year 2009. A simple logic is that debtors increase only when sales increase and decrease
if sales decrease. In the year 2008, sales is increased by 72.30% and decreased by 19.24%
in the year 2009.
We can say that it is a good sign as well as negative also. Company policy of debtors is
very
good but a risk of bad debts is always present in high debtors. when sales is increasing with a
great speed the profit also increases. If company decreases the Debtors they can use
the money in many investment plans.
51
CASH AND BANK BALANCE ANALYSIS

Cash is called the most liquid asset an vital current assets, it is an important component of
working capital. In a narrow sense, cash includes notes, bank draft, cheque etc while in a
broader sense it includes near cash assets such as marketable securities and time
deposits with bank.
Position of Cash and Bank Balance in Sintech Precision Product
Limited
YEAR
Cash Balance in hand
Bank BalanceWith Scheduled Banks
31.03.07
31.03.08
1.45
27.30
9.36
------------10.81
-------------
7.00
------------34.30
-------------
(Rs.in lacks)
31.03.09
2.90
26.12
-----------29.02
------------
35
30
25
AMOUNT ( IN 20
LACKS )
15
10
5
0
2007
2008
2009
YEAR
INT ERPRET AT ION

If we analyze the above table and chart we find that it follows a uneven pattern. In the
year
2007 it had maintained a low amount of cash and bank balance. But in the year 2008, cash
and
the bank balances has increased from 10.81 lacs to 34.30 lacs which is not a good sign for the
company because it shows that company is not using its cash for beneficial activities.
Although, in the year 2009, cash has reduced from 34.30 lacs to 29.02 lacs but this is very
good sign for company because they are not holding the cash in hand but using the cash for
better project s, but still it is not conducive. From the other point of view, company will not face
the problem of liquidity as company is maintaining the cash balance.
52
LOANS AND ADVANCES ANALYSIS

Loans and Advances here refers to any to amount given to different parties,
company, employees for a specific period of time and in return they will be liable to
make timely repayment of that amount in addition to interest on that loan.
Position of Other Loans & Advances in Sintech Precision Product
Limited
YEAR
Advances to suppliers
Advances
Deposits
(Rs.in lacks)
31.03.07
31.03.08
31.03.09
10.91
10.53
6.67
--------------28.11
--------------
39.69
39.05
28.08
--------------106.82
----------------
44.62
39.30
21.99
-----------105.91
-----------
INT ERPRET AT ION

If we analyze the table and the chart we can see that it follows an increasing trend which is a
good sign for the company. We can see that from the year 2007 to 2008 it increased more than
triple. We can see that the increase of 275% and 6.08% in 07-08 and 08-09 respectively from
previous year.
The increasing pattern shows that company is giving advances for the expansion of plants
and machinery which is good sign for better production of pumps and other goods. Although
companys cash is blocked but this is good that company is doing modernization of plants In
time to compete with other competitors in market.
53
CURRENT LIABILITIES ANALYSIS

Current liabilities are any liabilities that are incurred by the firm on a short term basis or
current liabilities that has to be paid by the firm with in one year.
Position of Other Current Liabilities in Sintech Precision Product Limited
(Rs.in lacks)
YEAR
Current Liabilities
Sundry Creditors
Bank Loan
Advance Received
Provisions for taxes
Other Liabilities
31.03.09
31.03.07
31.03.08
159.49
94.54
25.30
21.56
16.82
-----------------
256.33
336.70
18.16
59.05
29.36
-----------------
305.99
315.76
59.88
64.05
70.34
----------------
332.37
-----------------
720.71
-----------------
888.02
----------------
1000
800
AMOUNT
( IN
LACKS )
600
400
200
0
2007
2008
2009
YEAR
INT ERPRET AT ION

If we analyze the above table then we can see that it follow an uneven trend. The important
component of current liabilities is sundry creditors and other liabilities. In 07-08 it
decreased from 359.41 lacs to 256.33 lacs and in 08-09 it increased from 256.33 lacs to
305.99 lacs. This is liability for company so this should be less. when company have minimum
liabilities it creates a better goodwill in market. High current liabilities indicate that company is
using credit facilities by creditors.
54
SUNDRY CREDITORS ANALYSIS

Creditors or an account payable is an important component of working capital and fall
under current liability. Creditors will arise only when credit purchases are made.
Position of Sundry Creditors in Sintech Precision Product Limited
(Rs.in lacks)
YEAR
Sundry Creditors
31.03.07
31.03.08
31.03.09
159.49
------------159.49
256.33
------------256.33
305.99
--------305.99
---------------
----------------
----------
350
300
250
AMOUNT ( IN 200
150
LACKS)
100
50
0
2007
2008
2009
YEAR
INT ERPRET AT ION

In the table and figure we see that there is continuous rise in the creditors in the
company in the successive years. A simple logic is that creditors increase only when
purchases increase and if purchase increases on credit it is not good sign for growth. This is
liability for company so this should be less. when company have minimum liabilities it creates a
better goodwill in market. High current liabilities indicate that company is using credit facilities
by creditors.
55
BANK LOANS AND ADVANCES ANALYSIS

Position of Bank Loans & Advances in Birla Corporation
Limited
lacks)
YEAR
31.03.09
Bank Loan
Advances from the customers
(Rs.in
31.03.07
31.03.08
94.54
25.30
--------------122.84
--------------
336.70
18.16
--------------354.86
----------------
315.76
59.88
-----------375.64
-----------
400
350
300
250
AMOUNT ( IN
200
LACKS )
150
100
50
0
2007
2008
2009
YEAR
INT ERPRET AT ION

If we analyze the table and the chart we can see that it follows an increasing trend which is
not a good sign for the company. We can see that from the year 2007 to 2008 it increased
more than double. The increasing pattern shows that company is taking loan for the expansion
of plants and machinerecy which is not a good sign because company depends on the external
source. On the other hand, company has reduced the bank loan in 2009 and increase in
advances received from the customer, this is good sign for company.
56
PROVISIONS ANALYSIS
Position of Other Provisions in Sintech Precision Product Limited
(Rs.in lacks)
YEAR
31.03.07
31.03.08
Provision for Taxes
21.56
--------------21.56
---------------
59.05
--------------59.05
----------------
31.03.09
64.05
------------64.05
------------
70
60
50
AMOUNT ( IN 40
LACKS )
30
20
10
0
2007
2008
2009
YEAR
INT ERPRET AT ION

From the above table we can see that provision shows an increasing trend and the huge
amount is being kept in these provisions. Though the profits of the company are increased
income tax is also increased which is good that company is creating goodwill in market by
paying income tax in time. Although company is paying more income tax but also they are
earning more. Other provisions are also for the benefit of employees and public. This is good
sign for Company growth.
57
58
Position of WORKING CAPIT AL RAT IO in Sintech Precision Product Limited

FORMULA
INVENTORY + RECIVEABLE - PAYABLE
WORKING CAPITAL RATIO=
------------------------------------------------------------(AS % OF SALES)
SALES
YEAR
31.03.07
WORKING CAPITAL RATIO
18
31.03.08
31.03.09
32
53
60
AS %
50
40
30
20
10
0
2007
2008
2009
YEAR
INT ERPRET AT ION

This ratio indicates whether the investments in current assets or net current assets ( i.e.,
working capital ) have been properly utilized. In order words it shows the relationship between
sales and working capital. Higher the ratio lower is the investment in working capital and hi
gher is the profitability. But too high ratio indicates over trading.
This ratio is an important indicator about the working capital position. Now if we analyze the
three years data, we find that it follows an increasing trend which means that its invest ment
in working capital is lower and the company is utilizing more of its profit. But we find that ratio is
increasing at a very fast rate which is not a good sign for the company and the company is
required to look into these matters closely.
59
Position of CURRENT RAT IO in Sintech Precision Product Limited

FORMULA
TOTAL CURRENT ASSETS
CURRENT RATIO= -------------------------------------------TOTAL CURRENT LIABILITIES
YEAR
31.03.07
CURRENT RATIO
31.03.08
1.00
1.14
31.03.09
1.14
1.2
1.15
1.1
1.05
1
0.95
0.9
2007
2008
2009
YAER
INT ERPRET AT ION

This ratio reflects the financial stability of the enterprise. The standard of the normal ratio is
2:1 but in most of companies standard is taken according to Tandon Committee which is
taken as
1.33:1.
Now if we analyze the three years data it can be predicted that it holds a stable position
all through out period but it is seen that it holds a low position than the standard one and
the
company is required to improve its position.
60
Position of QUICK RAT IO in Sintech Precision Product Limited

FORMULA
TOTAL CURRENT ASSETS - INVENTORIES
QUICK RATIO=
----------------------------------------------------------------TOTAL CURRENT LIABILITIES
YEAR
31.03.07
QUICK RATIO
31.03.08
0.46
0.74
31.03.09
0.40
0.8
0.7
0.6
0.5
0.4
0.3
0.2
0.1
0
2007
2008
2009
YEAR
INT ERPRET AT ION

It is the ratio between quick liquid assets and quick liabilities. The normal value for such ratio
is taken to be 1:1. It is used as an assessment tool for testing the liquidity position of the firm. It
indicates the relationship between strictly liquid assets whose realizable value is almost certain
on one hand and strictly liquid liabilities on the other hand. Liquid assets comprise all current
assets minus stock.
By analyzing the three years data it can be said that its position was weak in the year 2007
but it improved significantly in the next year and again it is declined during the 2009. It is to be
said that it does not meet with the standard but in the year 2008 it was very close to the
standard and it can be said that its liquidity position is not good & stable.
61
Position of CURRENT ASSET S T O FIXED ASSET S RAT IO in Sintech Precision Product

Limited
FORMULA
CURRENT ASSETS
CA TO FA RATIO = ----------------------------FIXED ASSETS
YEAR
CATO FA RATIO
31.03.07
31.03.08
1.65
2.93
31. 03. 09
3.21
DAYS
3.5
3
2.5
2
1.5
1
0.5
0
2007
2008
2009
YEAR
INT ERPRET AT ION

Assuming a constant level of fixed assets, a higher CA/FA ratio indicates a conservative
current assets policy and a lower CA/FA ratio means an aggressive current assets policy
assuming other factors to be constant. A conservative policy i.e. higher CA/FA ratio
implies greater liquidity and lower risk; while an aggressive policy i.e. lower CA/FA ratio
indicates higher risk and poor liquidity.
Now if we analyze the three year data we find the CA TO FA Ration in increasing pattern, so
we can say that company is following the conservative policy to finance its short term capital
requirement.
62
Position of INVENTORY T URNOVER RAT IO in Sintech Precision Product Limited
FORMULA
AVERAGE STOCK
STOCK TURN OVER RATIO ( IN DAYS )= --------------------------------------- * 365
COST OF GOODS SOLD
YEAR
31.03.07
INVENTORY TURNOVER RATIO

( in Days)
104
31.03.08
79
31.03.09
227
250
DAYS
200
150
100
50
0
2007
2008
2009
YEAR
INT ERPRET AT ION

This ratio tells the story by which stock is converted into sales. A high stock turnover ratio
reveals the liquidity of the inventory i.e., how many times on an average, inventory is
turned over or sold during the year. If a firm maintains a minimum stock level in order to
maximize sales by quick rotation of inventory and the holding cost of inventory will be
minimum. A low stock turn over ratio reveals undesirable accumulation of obsolete stock.
By analyzing the three year data it seen that it follows an uneven trend. We see that it
is reduced to 79 from the 104 days in 2008 and in 2009 it is increased by 148 days, Which is
not a good indicator for the company. Company should have to reduce the inventory
conversion period in order to reduce the cost.
63
Position of RECEIVABLE RAT IO in Sintech Precision Product Limited

FORMULA
DEBTORS
RECEIVABLE RATIO = ---------------- * 365
SALES
YEAR
31.03.07
RECEIVABLE RATIO (IN DAYS)
31.03.08
54
70
31.03.09
104
120
DAYS
100
80
60
40
20
0
2007
2008
2009
YEAR
INT ERPRET AT ION

Generally a low debtors turnover ratio implies that it considered congenial for the business as it
implies better cash flow. The ratio indicates the time at which the debts are collected on an
average during the year. Needless to say that a high Debtors Turnover Ratio implies a shorter
collection period which indicates prompt payment made by the customer.
Now if we analyze the three year data we can say that it holds a good position while receiving
its money from its debtors. The ratios are in an decreasing ternd, which implies that recovery
position is not good company and Company have to reduce the receivable period.
64
Position of PAYABLE RAT IO in Sintech Precision Product Limited

FORMULA
CREDITORS
PAYABLE RATIO= ----------------------------- * 365
COST OF SALES
YEAR
31.03.07
PAYABLE RATIO (IN DAYS)
31.03.08
92
69
31.03.09
135
DAYS
160
140
120
100
80
60
40
20
0
2007
2008
2009
YAER
INT ERPRET AT ION

Actually this ratio reveals the ability of the firm to avail the credit facility from the suppliers
throughout the year. Generally a low creditors turnover ratio implies favorable since the firm
enjoys lengthy credit period
Now if we analyze the three years data we find that in the year 2008 the ratio
was very high which means that its position of creditors that year was not good, but in the
2009 it is seen that it has followed a decreasing trend which is very good sign for the
compan y. So we can say it enjoys a very good credit facility from the from the suppliers.
65
Position of Operating Cycle in Sintech Precision Product Limited

Formula = Inventory Conversion Period + Receivable Conversion Period Deferral
Period
Calculation of Operating Cycle at Sintech:Particulars
ICP
RCP
Gross Operating
Cycle
DP
Net OP
( All Figures in Days)
2007-08
104
54
158
2008-09
79
70
149
2009-10
227
104
431
92
66
69
80
135
296
350
Days
300
250
200
150
100
50
0
2007-08
2008-09
2009-10
YEAR
Interpretation
When a company has lower d/e ratio, it means that company is utilizing its own funds and
reserves rather than taking loans from outsiders. Company have a uneven trend in d/e ratio. In
the year 2007 it was 1.02 but in the year 2009 it is declined to .55 so we can say that now
company is using more its fund as compare to previous year, but still the ratio is high. Company
have to reduce the ratio.
MAJOR FINDINGS
Statement Showing Difference from Previous Year
(amt. in lacks)
Particulars
Working Capital
07-08
08-09
102
by 5000%
121
by
19%
-1069
by
19.10%
1009
by
23%
Sales
1323
by 72%
Current Assets
Sundry Debtors
823
by 146%
Inventories
Cash & Bank
Bank Loan and
Advances
Current Liabilities
391
by 243%
220
by 44%
291
by 62%
654
by 125%
34
by 209%
-29
by 15%
107
by 269%
106
by .93
721
by 117%
Sundry Creditors
256
by 42%
306
by 19.53%
Bank Loan and

Advances
355
by 196%
376
by 6%
Provisions &
Deposits
80.16
by121.31%
136
by70%
Other Liabilities
29.36
by 74.55%
70.34
by 139.5%
888
by
23%
1. Working Capital is increased by 19% only in 2008-09 as compare to 5000% increase in

2007-08 and if we analysis the working capital with sales, the sales is decreased by 19%
in 2008-09, thats why working capital is increased by 19% only.
2. Current assets and Current liabilities are increased by 23% in 2008-09 as compare to
previous year but current assets are increased by 146% in 2007-08 as compare to 117%
increase in current liabilities, so we can say that working capital is increased because of
increase in current assets.
1. Inventory is increased by 125% in 2008-09 as compare to 2007-08, so
we can say that current assets are increased due to the increase in the
inventory.
2. Cash and the bank balances are decreased by 15% which shows company
might face the liquidity problem.
3. Debtors are decreased by 44% in 2008-09 whereas creditors are increased
by 19.37% in 2008-09, which shows that company enjoys the good payable
period and goodwill among the creditors.
4. Bank loan and Advances are increased by 6% only as compare to 196%
increase in 2007-08, which shows that company using more of its debt to
fund the short term requirements.
3. Operating cycle of the company is increasing which shows the poor receivable
collection policy
CONCLUDING ANAYSIS
The working capital position of the company is sound and the various
sources through which it is funded are optimal.
The company has used its purchasing, financing and investment decisions
to good effect can be seen from the inferences made earlier in the project.
The debts doubtful have been doubled over the years but their percentage on
the debts has almost become half. This implies a sales and collection policy
that get along with the receivables management of the firm.
The various ratios calculated are an indicator as to the fact that the profitability
of the firm and sales are on a rise and also the deletion of the inefficiencies in
the working capital management.
The firm has not compromised on profitability despite the high liquidity
is commendable.
Sintech Precision Product Ltd. has reached a position where the default costs
are as low as negligible and where they can readily factor their accounts
receivables
for availing finance is noteworthy.
69
SUGGESTIONS AND RECOMMENDATIONS

The management of working capital plays a vital role in running of a successful
business. So, things should go with a proper understanding for managing cash,
receivables and inventory.
Sintech Precision Product Ltd. is managing its working capital in a good manner, but
still there is some scope for improvement in its management. This can help the
company in raising its profit level by making less investment in accounts receivables
and stocks etc. This w i l l ultimately improve the efficiency of its operations.
Following are few recommendations given to the company in achieving its desired
objectives:
The business runs successfully with adequate amount of the working capital but
the company should see to it that the cash should not be tied up in excessive
amount of working capital.
Though the present collection system is near perfect, the company as due to the
increasing sales should adopt more effective measures so as to counter the threat
of bad debts.
The over purchasing function should be avoided as it could lead to liquidity
problems.
The investment of cash in marketable securities should be increased, as it is very
profitable for the company.
Holding of excessive and insufficient stock must be avoided as it creates a burde n
on the cash resources of a business and results in lost sales, delays for customers,
etc respectively.
70
BIBLIOGRAPHY
Following sources have been sought for the preparation of this

report:
Corporate Intranet
Financial Statements (Annual Reports)

CMA Data
Direct interaction with the employees of the company
Internet ---o www.sintechpumps.co.in
o www.scribd.com
o www.indianpumpsindustry.com
Textbooks on financial management I.M.Pandey
Khan and Jain
71
72
CRITICAL M ANAGEMENT ANALYSIS DATA (CMA)

BAL ANCE SHEET
LIABILITIES
ST AT EMENT
Sheet 1
Sintech Precision Products
Limited
CURRENT LIABILITIES
AS PER BALANCE SHEET AS AT 31st MARCH

Lacs
2007
2008
Aud
Aud
I
II
Short-term borrowings from

banks(including bills purchased,
discounted & excess borrowing
placed on repayment basis)
(i.) From applicant banks
2009
Est.
III
2010
Proj
IV
0.00
336.70
400.00
400.00
94.54
0.00
0.00
0.00
94.54
336.70
400.00
400.00
159.49
256.33
90.77
133.33
Advance payments from customers/deposits from dealers
25.30
18.16
20.00
50.00
Provision for taxes
21.56
59.05
8.05
30.68
Deposits/instalments of term
loans/DPGs/Debentures,etc.
(due within one year)
Other current liabilities &
provisions(due within 1 Yr)
14.66
58.55
43.76
24.53
(specify major items)

Liabilities for Expenses
16.82
16.82
29.36
29.36
25.00
25.00
30.00
30.00
237.83
421.45
187.58
268.54
332.37
758.15
587.58
668.54
(ii.) From other banks

(iii) Of which BP & BD
SUB TOTAL
Short term borrowings from others
Sundry Creditors (Trade)
Dividend payable
Other statutory liabilities
(due within one year)
SUB-TOTAL (B)
TOTAL CURRENT LIABILITIES
73
TERM
LIABILITIES
----------------------------------Sintech Precision Products

Form III : Sheet 2
Aud
Rs. In
Lacs
2007
Aud
2008
Aud
2009
Est.
2010
Proj
Debentures (not maturing

within one year)
Preference shares
(redeemable after one year)
Term loans(excluding instalment)
payable within one year)
5.84
0.00
0.00
0.00
Deferred Payment Credits(car Loans)

(excluding instalments due
within one year)
16.20
95.93
27.97
3.44
Term deposits (repayable

after one year)
68.51
60.25
180.25
180.25
0.00
0.00
0.00
0.00
90.55
156.18
208.22
183.69
422.92
914.33
795.80
852.23
24.91
24.91
44.91
44.91
73.56
85.50
112.45
204.50
15.13
0.70
0.00
23.32
0.00
0.00
23.32
0.00
80.00
23.32
0.00
80.00
NET WORTH
114.30
133.73
260.68
352.73
TOTAL LIABILITIES
Closing Balance Of TL(Check)
537.22
20.50
1048.06
58.55
1056.48
43.76
1204.96
24.53
Other term liabilities

TOTAL TERM LIABILITIES
TOTAL OUTSIDE LIABILITIES
NET WORTH
------------------------Ordinary share capital
General reserve
Revaluation reserve
Other reserve (excluding
provisions)
Surplus (+) or deficit (-) in
Profit & Loss Account
Others (specify)
Deferred Tax Liability
Share Application Money
Share Premium
74
75
Rs. in
Lacs
2007
2008
2009
2010
Form III : Sheet 4
Aud
Aud
Est.
Proj
Gross Block(Land & Building
228.40
255.94
285.94
285.94
29.41
47.86
66.46
85.06
198.99
208.08
219.48
200.88
2.72
13.50
70.00
10.00
0.89
3.20
3.20
3.20
1.11
0.00
0.00
0.00
TOTAL OTHER NON-CURR. ASSETS
4.72
16.70
73.20
13.20
Intangible assets (patents,
0.00
0.00
0.00
0.00
537.22
1047.87
1056.29
1204.77
FIXED ASSETS
machinery, work-in-process)
Depreciation to date
NET BLOCK
deposits which are not current

assets
(i) a) Investment in subsidiary
Co./affiliates
b) Other Investments
capital goods & contractors
(iii)Deferred receivables (maturity
exceeding one year)
(iv)Others (a) Debtors> 6 months
(b) Security Deposits
(c) Others
Non-consumables stores &
spares
Other non-current assets including dues from Directors
goodwill, prelim.expenses, bad/

doubtful exp.not provided for etc)
TOTAL ASSETS(34+37+41+42)
76
ASSESSMENT OF WORKING CAPIT AL REQUIREMENT

FORM II : OPERATING STATEMENT
---------------------------------------------------Sheet 1
Amount
in
Branch
Lacs
INDIAN BANK, GHAZIABAD

As per profit and loss account actuals/
estimates for the year ending 31st March
2007
2008
2009
2010
Limited
Aud
Aud
Est.
Proj
II
III
IV
871.45
1458.04
1529.71
2206.00
GROSS SALES
1
i.
Domestic sales
ii.
Export sales
Add other revenue income
Job Work
Total
0.00
0.00
0.00
0.00
3.73
875.18
3.14
1461.18
5.00
1534.71
8.50
2214.50
Less excise duty
107.19
137.86
129.71
206.00
Deduct other items

Net sales ( item 1 - item 2 )
767.99
1323.32
1405.00
2008.50
75.59
72.31
6.17
42.95
Raw materials (including

stores and other items used
in the process of manufacture)
(a) imported
476.99
682.05
874.00
1210.00
(b) Indigenous
476.99
682.05
874.00
1210.00
72.87
111.85
139.00
193.00
(b) Indigenous
72.87
111.85
139.00
193.00
iii)
Power and fuel
12.53
17.34
21.85
31.25
iv)
Direct labour
(Factory wages & salary)
8.34
61.24
74.25
78.75
v)
Other mfg. Expenses
64.42
99.52
124.00
172.00
vi)
Depreciation
9.56
18.45
18.60
18.60
vii)
SUB TOTAL (I TO VI)
644.71
990.45
1251.70
1703.60
viii)
ADD: Opening stocks-in-Process)

Sub-total
72.46
717.17
54.38
1044.83
78.80
1330.50
148.25
1851.85
% age rise (+) or fall (-) in net

sales compared to previous
year (annualized)
Cost of Sales
5
i.)
ii)
Other spares
(a) Imported
77
Form II : Sheet 2
ix)
x)
xi)

Deduct : Closing stocks-inProcess
Cost of Production
Add : Opening stock of
finished goods
SUB-TOTAL
xii)
xiii)
6
Deduct closing stock of

finished goods
SUB-TOTAL (Total cost of Sales)
Selling general and administrative
Expenses
SUB-TOTAL (5+6)
2007
Aud
2008
Aud
2009
Est.
2010
Proj
54.38
78.80
148.25
205.75
662.79
966.03
1182.25
1646.10
3.19
37.04
26.93
71.35
665.98
1003.07
1209.18
1717.45
37.04
26.93
71.35
100.88
628.94
976.14
1137.83
1616.57
82.59
143.09
158.00
190.00
711.53
1119.23
1295.83
1806.57
Operating profit before interest

( 3-7 )
56.46
204.09
109.17
201.93
Interest
12.31
60.23
76.17
81.20
10
11
Operating profit after interest (8-9)

Add other non-operating income
44.15
143.86
33.00
120.73
0.15
1.43
2.00
2.00
0.15
1.43
2.00
2.00
0.09
0.00
0.00
0.00
0.09
0.00
0.00
0.00
(i)
(a)
(b)
(c)
(d)
Bank Interest on FDRs
Sub-total ( income )
(ii)
Deduct other non-operating expenses
(a)
P&P expense inncluding

all book entries written off
(b)
(iii)
Sub-total ( expenses )
0.06
1.43
2.00
2.00
12
Net of other non-operating

income/expenses
Profit before tax/loss[10+11(iii)]
44.21
145.29
35.00
122.73
13
14
Provision for taxes

Prior Years Adjustment(if any)#
17.13
0.00
12.62
0.00
8.05
0.00
30.68
0.00
15
Net profit/loss for the year ( 12-13 )
27.08
132.67
26.95
92.05
16
(a) Equity dividend paid-amt

(Already paid+ B.S. provision)
(b) Dividend Rate
17
Retained profit ( 14-15 )
27.08
132.67
26.95
92.05
18
Retained profit/Net profit (% age)

100.00
# (-)ve for expense/provisions and (+) ve for gains
100.00
100.00
100.00
FUND FLOW STATEMENT

FUND FLOW (DETAILED)
Limited
SOURCES
2007
Aud
Lacs
2008
Aud
2009
Est.
2010
Proj
a.
Net Profit (After Tax)
27.08
132.67
26.95
92.05
b.
Depreciation
9.55
18.45
18.60
18.60
Increase in Capital (incl. Share Premium)
0.00
0.00
100.00
0.00
d.
Increase In TL. Incl.public deposits
46.75
65.63
52.04
0.00
e.
Decrease in
i.) Fixed Assets
0.00
0.00
0.00
0.00
ii.) Other Non Current Assets
3.94
0.00
0.00
60.00
Others
2.20
7.41
0.00
0.00
g.
Total
89.52
224.16
197.59
170.65
USES
a.
Net Loss
0.00
0.00
0.00
0.00
b.
Dec.in Term Liab. incl. Pub.Dep.
0.00
0.00
0.00
24.53
c.
Increase in
86.19
27.54
30.00
0.00
ii) Other Non current assets
0.00
11.98
56.50
0.00
d.
Dividend Payment
0.00
0.00
0.00
0.00
Others
0.00
0.00
0.00
0.00
Total
86.19
39.52
86.50
24.53
2006
Aud
3.33
Lacs
2008
Aud
184.64
2009
Est.
111.09
2010
Proj
146.12
119.17
489.58
227.08
86.63
32.54
-29.21
183.62
305.96
121.32
-59.48
233.87
174.39
-63.30
0.00
29.21
242.16
63.30
0.00
i) Fixed Assets
FUNDS FLOW ST ATEMENT

(Summary)
Particulars
Long Term Surplus/Deficit
ii
Increase/decrease in Curr. Assts.
5
6
iii
iv
Inc./Dec. in CL other than BB

Inc./Dec. in WC Gap
Net Surplus (+) Deficit (-)
vi
Inc./Dec. in Bank Borrowings
80.96
146.12
FUNDS FLOW ST ATEMENT
2007
Lacs
2008
2009
2010
Particulars
Aud
Aud
Est.
Proj
Long Term Sources

Long Term Uses
Surplus/Deficit
89.52
86.19
3.33
224.16
39.52
184.64
197.59
86.50
111.09
170.65
24.53
146.12
2007
Lacs
2008
2009
2010
Particulars
Aud
Aud
Est.
Proj
Opening balance
Add.
i Profit/(-)Loss after Tax
ii Increase in Capital
iii Dec./(-) Inc.in Intangible Assets
iv Inc../(-) \ Dec.in Reserves
v. Adjust prior year expenses
Less
Div Paid(Incl.Div.Tax)/ Withdrawals
84.93
108.61
248.69
375.64
27.08
0.00
0.09
2.20
-0.07
132.67
0.00
0.00
7.41
0.00
26.95
100.00
0.00
0.00
0.00
92.05
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
114.30
248.69
375.64
467.69
Movement of TNW (Corporate)
TNW
FUND FLOW (DETAILED)

Limited
SOURCES
Aud
2007
Aud
Lacs
2008
Aud
2009
Est.
2010
Proj
a.
Net Profit (After Tax)
0.00
132.67
26.95
92.05
b.
Depreciation
9.55
18.45
18.60
18.60
Increase in Capital (incl. Share Premium)
0.00
0.00
100.00
0.00
d.
Increase In TL. Incl.public deposits
0.00
65.63
52.04
0.00
e.
Decrease in
i.) Fixed Assets
0.00
0.00
0.00
0.00
ii.) Other Non Current Assets
0.00
0.00
0.00
60.00
Others
0.00
7.41
0.00
0.00
g.
Total
9.55
224.16
197.59
170.65
USES
a.
Net Loss
5.69
0.00
0.00
0.00
b.
Dec.in Term Liab. incl. Pub.Dep.
0.00
0.00
0.00
24.53
c.
Increase in
i) Fixed Assets
0.00
27.54
30.00
0.00
ii) Other Non current assets
0.00
11.98
56.50
0.00
d.
Dividend Payment
0.00
0.00
0.00
0.00
Others
0.00
0.00
0.00
0.00
Total
5.69
39.52
86.50
24.53
2007
Lacs
2008
2009
2010
Est.
111.0
9
Proj
146.1
2
227.0
8
FUNDS FLOW ST AT EMENT

(Summary)
Particulars
Au
d
Aud
Long Term Surplus/Deficit
3.86
ii
Increase/decrease in Curr. Assts.
0.00
iii
i
v
Inc./Dec. in CL other than BB
0.00
Inc./Dec. in WC Gap
0.00
Net Surplus (+) Deficit (-)
3.86
Inc./Dec. in Bank Borrowings
0.00
6
7
8
v
v
i
Aud
184.6
4
489.5
8
183.6
2
305.9
6
121.3
2
242.1
6
-59.48
233.8
7
174.3
9
80.96
146.1
2
-63.30
0.00
63.30
0.00
FUNDS FLOW ST AT EMENT
Particulars
Au
d
2007
Lacs
2008
2009
2010
Aud
Aud
Est.
Proj
224.1
6
39.52
184.6
4
197.5
9
86.50
111.0
9
170.6
5
24.53
146.1
2
Long Term Sources

Long Term Uses
9.55
5.69
Surplus/Deficit
3.86

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SINTECH PRECISION PRODUCTS

Date: 31 July 2009

The problems Purpose

strength. The working capital is an important yardstick to measure the

SCOPE OF THE STUDY

LIMITATIONS OF THE STUDY:

INTRODUCTION TO THE INDUSTRY

GLOBAL PUMP MARKET OUTLOOK AND GROWTH

Urbanization of Asia has seen relocation of more than one billion

The world is moving towards energy efficient products and services to be

Sintech Precision Product Ltd. An Overview

Introduction to the Company

QUALITY ASSURANCE PROCEDURES

Capacity : upto 1,000

Capacity : upto 10,000

Capacity : upto 1,000

Capacity : upto 20,000

Capacity : upto 2,000

Capacity : upto 7,000

Capacity : upto 20,000

Free Air Capacity :

Capacity : upto 150

Capacity : upto 100

Capacity : upto 1,500

Capacity : upto 100

Capacity : upto 250

SWRO Barge Project

Pong Power Project

Clear Water Limited

Co-gen Plant Limited

Water Resource Management

Balrampur Chini Mills Limited

Paper / Etp / Chemical / Food

Ghaziabad Organics Ltd.

IST Steel & Power Limited

Steel Project Power

Singareni Colleries Co. Ltd.

WORKING CAPITAL MANAGEMENT

Introduction to working capital

Significance Of Working Capital Management

The management of working capital is important for several reasons:

Liquidity Vs Profitability: Risk - Return trade off

CLASSIFICATION OF WORKING CAPITAL

On the basis of time

On the basis of concept

Types of Working Capital Needs

Permanent working capital:

The permanent level is constant while the temporary working capital is

FACT ORS DET ERMINING WORKING CAPIT AL REQUIREMENTS

inventories and receivables.

Price Level Changes.

SOURCES OF WORKING CAPITAL

NAME OF THE BANK

WORKING CAPITAL CYCLE

Work-in-progress: Inventories are semi-manufactured products.

Finished Goods: Inventories are those completely manufactured

Inventory Management Techniques

Economic Order Quantity (EOQ): The major problem to be

Ordering Costs : This term is used in case of raw material

Carrying Costs: Costs are incurred for maintaining a given

Carrying costs are varying with inventory size. This behavior is

Existing cash reserves

CASH MANAGEMENT IN SINTECH PRECISION PRODUCT

increased incidence of bad debt.