Beruflich Dokumente
Kultur Dokumente
CONTENTS
Sr.No.
1.
Page No.
3
A] Company Profile
13
B] Details of Promoters
22
2.
27
3.
Research Methodology
28
A] Primary Data
41
B] Secondary Data
41
4.
44
5.
Limitation of Study
61
6.
Findings
62
7.
Recommendations / Suggestions
64
8.
Bibliography
65
Page 0
Executive summary
The
topic
of
the
project
undertaken
was
Working
Capital
Management. The idea behind selection of this project was mainly due to its
nature and importance in the overall financial management of organization.
The important of working capital management is reflected in the fact that
financial managers spend a great deal of time in managing current assets
and current liabilities. Arranging short term financial, negotiating favourable
credit term, controlling cash movement managing accounts receivable and
monitoring Investment in inventories consumes a great deal of time of
finance manager.
Page 1
The need of working capital Arise from the cash/operating cycle of the
firm. Efficiency of operations accelerates the pace of cash cycle and
improves the working capital turnover resulting in reduced requirement of
working capital. A firm should have adequate working capital to support its
budgeted level of activity in terms of production/sales. It should have
neither more nor less working capital than required.
The Finance Manager also has to calculate the firms risk taking and
debt serving capacity for compounding the funds. The ratio analysis is done
to know the performance of the organization. The rationale of ratio analysis
lies in the fact that it makes related information comparable. Comparison
with related facts is, therefore, on the basis of ratio analysis. Analysis of
financial statements is of interest to lenders (short-term as well as longterm), investors, security analysts, managers and others. If properly
analyzed and interpreted, financial statements can provide valuable insights
into a firms performance.
Page 2
INTRODUCTION
Working Capital (Meaning and Definition):
Definition:
Page 3
2. Capital
The word working means day to day operation of the business, whereas the
word capital means monetary value of all assets of the business. Working
capital may be regarded as the life blood of business. Working capital is of
major importance to internal and external analysis because of its close
relationship with the current day to-day operations of a business. Every
business needs funds for two purposes.
Businesses
use
capital
for
construction,
renovation,
furniture,
Page 4
Current Asset- Current assets are the assets which can be converted
into cash within an accounting year.
Current Liabilities
Current Assets
Cash in hand / at bank
Bills Payable
Bills Receivable
Sundry Creditors
Sundry Debtors
Outstanding expenses
Accrued expenses
Investors/ stock
Temporary investment
Prepaid expenses
Accrued incomes
Page 5
Page 6
2.
OPERATING CYCLE:
Page 7
working capital funds the firm needs, while shorter operating cycle period
indicates that there is no locking up of funds in current assets.
Cash
Debtors/BR
Raw Material
Sales
Work-in Progress
Finished Goods
Thus the operating cycle of a firm consists of the time required for the
completion of the chronological sequence of the following:
i.
ii.
iii.
iv.
v.
The segments of the operating cycle include raw material storage period,
conversion period, finished goods storage period and average collection
period before getting back cash along with profit. The total duration of all
the segments mentioned above is known as gross operating cycle period.
When the average payment period of the company to its suppliers is
deducted from the gross operating cycle period the resultant period is called
the net operating cycle period or the operating cycle period.
NEED
Page 8
The need and importance of adequate working capital for day to day
operation can hardly be underestimated. Every firm must maintain a sound
working capital position otherwise; its business activities may be adversely
affected. Thus every firm must have adequate working capital.
The excess working capital, when the investment in working capital is more
than the required level, may result in-
On the other hand, inadequate working capital situation is not good for the
firm. Such a situation may have following consequences:
i.
ii.
iii.
Interruptions
in
production
schedule
may
occur
ultimately
v.
Page 9
This type of aggressive policy has many implications. These implications are
as under:
i.
ii.
iii.
Page 10
INDUSTRY PROFILE
Page 11
TTK Prestige:
TTK prestige offers various kitchen appliances for Indian homes. It is
the first kitchenware company in India to receive the ISO 9001 Certification
and the PED/CE Certification by TUV, Germany. The design and durability
are always the first class type in the Prestige cookware models. It deals with
almost all types of cooking products.
Hawkins:
Page 12
Pigeon is a well known kitchen appliance brand that provides top quality
non-stick cookware to Indian customers.
Alda:
Alda produce wide range of kitchen products in India. Alda uses latest
innovation and technological advancement to manufacture the products.
The Alda non-stick cookware uses unique Daikin non-stick coating from
Japan which gives the most resistant non-stick surface for long-lasting
usage.
Usha:
Usha Shriram enterprises was established in the year 1983. At
present, it provides wide range of home appliances and consumer durable
products. The non-stick cooking equipments from this company includes
Tawa, Dosa tawa, Grill pan, Kadai and Frying pan.
Page 13
Crystal:
Crystal fulfills each and every household needs in India since 1971. In
the year 2007, it launched High end 3 coat platinum Teflon coated nonstick cookware. Crystal is also a certified licensee of DuPont USA. Concave
griddle,
Flat griddle,
COMPANY PROFILE
Page 14
The first Nirlep product was launched in Mumbai. It was a fry pan with code
name F.P. 24. It was received suspicious. It was not surprising because
Indian housewife had never seen anything similar to it before.
In the initial stage Nirlep had just one distributer in Mumbai. But today the
company is having a wide distribution network of about 85 distributers
across the country coupled with a strong and dedicated field force to ensure
sales and services at around 9000 retail outlets.
Today, company is pioneer and leader with the market share of 35% in the
non-stick cookware segment in the country. The company exports its
products to countries like Saudi Araobia, Dubai, Maldives & Sri Lanka. The
BBA VI SEM [2014 2015]
Page 15
The company is having six manufacturing plants out of which three are
devoted to the cookware business; namely Nirlep Appliances Ltd., Amulet
Industries Pvt. Ltd., & Bhogale Coatings Pvt. Ltd. The company has also
undertaken several turnkey projects for setting up manufacturing plants for
the non-stick cookware in Middle East & Africa. The other three plants are
located in Waluj Industrial area, Aurangabad namely Marathwada Auto
compo. Pvt. Ltd., Umasons Steelfeb Pvt. Ltd.
One & half year back the company entered into a strategic technology tie up
with Smaltriva, an Italian company which is world leader in industrial bake
ware coatings. The industrial bake ware coating system (called the SBS
coating) denotes the most advanced non-stick coating systems used by the
most important food and bakery industries in the world. The SBS coating
system can be applied only by the most experienced licensed applicators and
Nirlep is proud to be one among them.
The
companys
fully
integrated
manufacturing
setup
for
non-stick
Page 16
very
overheads
Since
expensive
were
PTFE
very
has
the
high.
non-stick
manufacture
Non-Stick
cookware.
In 1964, Mr.Nilkanth Bhogale
moved
from
Aurangabad
Mumbai
and
to
Started
Page 17
manufactured for Rs. 80, whereas the normal pans available then used
to cost Rs. 8. To sell these cook wares, promotions were done by live
demonstrations at social clubs, Women gatherings etc. Soon other big
cities also started souring Non-stick tawa. The key challenges faced by
the
company
were
Logistics,
Raw
Materials,
Labour
Intensive,
from
the
Indian
Government.
In
1974,
1stpress
advertisement was released and now the company would increase its
market network & product capacity. In 1980, new plant was set up at
Jalna.
In 1978, 1st TV commercial was aired, due to which all non-stick tawa
of Nirlep were bought away in no time.
There were a few business enquires that came from Dubai, Ghana & Sri
Lanka. Nirlep had set up non-stick cookware plants for them. Now the
company not only exported products but also exported technology and
this made them the market leaders.
Since 1980, field staffs were employed who acted as Liaison officers
between the customers retailer distributors company. From time
to time the senior team at Aurangabad visited the markets to get 1st
hand information. This year, markets opened and new competitors
Page 18
Page 19
Page 20
Joint venture
The joint venture Nova Italia Food Services Pvt Ltd is essentially a
marketing company that will bring to India Pardini's products, which
are available in the European market, said Mr Bhogale.
Page 21
VISION:
MISSION:
Page 22
PRODUCT/SERVICES PROFILE
The fort line product of Nirlep is the non stick cookware. Besides this Nirlep
also markets other products like Nirlep Enamelware. A whole new range of
stock and serve enamel coated utensils.
The products in these ranges are made from pure aluminium and have
spiral groves carved on their bottom. The spiral groves help in quick and
uniform transfer of heat and thus help in saving fuel.
1.Health- In Nirlep products the food doesnt stick of the utensil and this
helps in lowering the consumption of oil and thus the consumption of fats
and cholesterol.
3.Economy-
property and less fuel due to the spiral grooving on the bootom economy is
achieved by saving on fuel and oil.
BBA VI SEM [2014 2015]
Page 23
NIRLEP PRODUCTS
Nonstick Cookware
Enamel Cookware
Pressure Cooker
Induction Cooktop
Gas Lighter
Nonstick Snackmaker
Induction Compatible
Cookware
Page 24
DETAILS OF PROMOTERS
BOARD OF DIRECTORS
Ramchandra N. Bhogale, Director
Mukund N. Bhogale, Managing Director
Page 25
Production managers
Quality analyzers
Administrative staff
COMPETITORS OF NIRLEP
Page 26
NIRALI
TTK PRESTIGE
HAWKINS
USHA
TVS
PREMIER
CRYSTAL
ALDA
PIGEON
Page 27
INFRASTRUCTURE FACILITIES
Office and Building Premise
FACILITIES
They have maintained their campus very clean with good environment.
Page 28
FINANCIAL CONDITION
Turnover:
YEAR
VALUE
2013-2014
(Rs. In Lacs)
6544.26
2012-2013
5727.22
2011-2012
5333.32
2010-2011
4983.00
Page 29
Interpretaion:
ACHIVEMENT AWARDS
Page 30
Page 31
understand
the
Working
Capital
structure
of
NIRLEP
APPLIANCES. Ltd.
Page 32
RESEARCH METHODOLOGY
Review of Literature:
Working Capital
Page 33
Current Asset- Current assets are the assets which can be converted
into cash within an accounting year.
Current Liabilities
Current Assets
Cash in hand / at bank
Bills Payable
Bills Receivable
Sundry Creditors
Sundry Debtors
Outstanding expenses
Accrued expenses
Investors/ stock
Temporary investment
Prepaid expenses
Accrued incomes
Page 34
Page 35
Whenever the need for working capital funds arises, agreement should be
made quickly. If surplus funds are available they should be invested in short
term securities.
Page 36
the current assets exceed the current liability, the working capital is positive
and vice versa.
On the basis of time
On the basis of time, working capital may be classified as:
1.
2.
Page 37
working capital and special working capital. The capital required to meet the
seasonal need of the enterprise is called seasonal working capital. Special
working capital is that part of working capital which is required to meet
special exigencies such as launching of extensive marketing for conducting
research, etc.
OPERATING CYCLE:
Page 38
Cash
Debtors/BR
Raw Material
Sales
Work-in Progress
Finished Goods
Thus the operating cycle of a firm consists of the time required for the
completion of the chronological sequence of the following:
The segments of the operating cycle include raw material storage period,
conversion period, finished goods storage period and average collection
period before getting back cash along with profit.
Page 39
company to its suppliers is deducted from the gross operating cycle period
the resultant period is called the net operating cycle period or the operating
cycle period.
NEED
Cash Discount- If raw material purchased in bulk at that time will get
cash discount.
Easy loans from banks- Borrow Unsecured loans from banks, Banks
favor in granting seasonal loans.
Page 40
off
Interruptions
in
production
schedule
may
occur
ultimately
resulting
in lowering of the profit of the firm.
Page 41
Page 42
iv.
v.
vi.
2. SIZE OF THE BUSINESS: Greater the size of the business, greater is the
requirement of working capital.
BBA VI SEM [2014 2015]
Page 43
6. WORKING CAPITAL CYCLE: The speed with which the working cycle
completes one cycle determines the requirements of working capital. Longer
the cycle larger is the requirement of working capital.
7.
between the question of working capital and the velocity or speed with which
the sales are affected. A firm having a high rate of stock turnover wuill needs
lower amt. of working capital as compared to a firm having a low rate of
turnover.
8.
and sales its product / services on cash requires lesser amt. of working
capital and vice-versa.
Page 44
9.
prosperous, there is need for larger amt. of working capital due to rise in
sales, rise in prices, optimistic expansion of business, etc. On the contrary
in time of depression, the business contracts, sales decline, difficulties are
faced in collection from debtor and the firm may have a large amt. of
working capital.
10.
11.
12.
PRICE LEVEL CHANGES: Changes in the price level also affect the
Page 45
Page 46
RATIO ANALYSIS
1. Current ratio.
2. Quick ratio
BBA VI SEM [2014 2015]
Page 47
Primary data: -
Personal interview was the main tool for the collection of primary data and
information. This study has brought in use very little primary data in
relation with the elements of working capital.
Secondary data: -
Since the study is based on the financial aspects of the company so the
Annual report of the organization, Balance Sheet, Profit and Loss accounts
of the company brought in use. Besides the above data, the company profile
and theoretical aspects are taken from the secondary sources.
Page 48
in crore
I]Sources of funds
1.Shareholders funds:
a) Share capital
b)Reserve and surplus
2.Loan Funds:
a)Secured loan
b)Unsecured loan
c)Deferred tax liability
Total
II]Application of Funds
1.Fixed Assets:
a)Gross block
b)Less: Depreciation
BBA VI SEM [2014 2015]
Mar-11
Mar-12
Mar-13
Mar-14
12 mths
12 mths
12 mths
12 mths
1.60
3.25
1.87
4.41
2.64
5.56
3.64
8.25
11.15
2.92
12.51
2.68
16.83
2.76
21.48
27.81
30.47
2.37
0.01
44.76
14.29
7.95
18.65
9.27
37.72
11.30
18.93
11.52
6.90
Page 49
c)Net block
2.Investments
3.Current
Assets,Loan
Advances:
a)Inventories
b)Sundry debtors
c)Cash and bank Balance
d)Other current assets
e)Loans and Advances
4.61
0.31
6.33
0.23
9.37
0.29
26.41
0.34
7.40
12.34
0.29
0.04
3.38
7.97
14.35
0.10
0.04
3.92
8.54
12.06
0.33
8.46
11.34
11.51
0.34
6.89
23.48
26.40
29.42
30.09
9.72
11.49
11.27
12.09
13.75
0.24
18.93
14.91
0.01
21.48
18.14
27.81
18.00
44.76
&
&
deposits
Less:Current
liabilities
&
provision
Net current assets
Miscellaneous Expenditure
Total
in crore
Mar-11
Mar-12
Mar-13
Mar-14
12 mths
12 mths
12 mths
12 mths
A]Income
Sales
Other receipts
Total A
49.83
0.19
50.02
53.29
0.47
53.77
57.27
0.23
57.50
65.44
0.28
65.73
B]Expenditure
Finished goods consumed
Raw material consumed
13.97
19.23
13.53
20.65
15.04
19.80
11.21
28.69
Manufacturing expenses
Manpower expenses
Administration expenses
Advertising & sales promotion
2.61
3.47
2.18
4.96
3.65
4.05
2.37
5.23
3.96
4.60
2.93
6.74
5.47
5.59
3.75
6.55
exp
Interest
1.44
1.57
1.41
2.19
Page 50
0.21
0.21
0.01
0.86
48.96
1.05
52.34
1.42
55.95
2.02
65.50
1.05
0.31
0.05
1.42
0.48
0.06
1.55
0.65
-
0.22
0.03
-
tax
Provision for dividend
Dividend tax paid
Profit after tax
0.08
0.01
0.59
0.09
0.01
0.77
0.02
0.03
0.65
0.02
off
Depreciation
Total B
DATA
ANALYSIS
0.17
AND
INTERPRETATION
1.
CURRENT RATIO
CURRENT ASSETS
2)
CURRENT LIABILITES
Page 51
2011
23.48
2012
26.40
2013
29.42
2014
30.09
Assets
Current
9.73
11.49
11.27
12.09
2.41:1
2.29:1
2.61:1
2.48:1
Liabilities
Current Ratio
Page 52
Interpretation:
As we know that ideal current ratio for any firm is 2:1. If we see the
current ratio of the company for last four years it has standard ratio from
2011 to 2014. This shows that companys liquidity position is sound. Its
current assets are more than its current liabilities.
2. QUICK RATIO
Quick ratio is a more rigorous test of liquidity than current ratio.
Quick ratio may be defined as the relationship between quick/liquid assets
and current or liquid liabilities. An asset is said to be liquid if it can be
BBA VI SEM [2014 2015]
Page 53
converted into cash with a short period without loss of value. It measures
the firms capacity to pay off current obligations immediately.
QUICK RATIO = QUICK ASSETS
CURRENT LIABILITES
Where Quick Assets are:
1)
Marketable Securities
2)
3)
Debtors.
A high ratio is an indication that the firm is liquid and has the ability
to meet its current liabilities in time and on the other hand a low quick ratio
represents that the firms liquidity position is not good.
As a rule of thumb ratio of 1:1 is considered satisfactory. It is
generally thought that if quick assets are equal to the current liabilities then
the concern may be able to meet its short-term obligations. However, a firm
having high quick ratio may not have a satisfactory liquidity position if it has
slow paying debtors. On the other hand, a firm having a low liquidity
position if it has fast moving inventories.
Page 54
(Rupees in Crore)
Year
2011
2012
2013
2014
Quick Assets
14.68
12.94
12.7
12.2
9.73
11.49
11.27
12.09
1.5 : 1
1.1 : 1
1.1 : 1
1:1
Current Liabilities
Quick Ratio
Interpretation :
A quick ratio is an indication that the firm is liquid and has the ability
to meet its current liabilities in time. The quick ratio is 1:1 and it is ideal as
compare with standard.
Page 55
2011
2012
2013
2014
0.60
0.33
0.62
0.68
Current Liabilities
9.73
11.49
11.27
12.09
0.06 : 1
0.02 : 1
0.05 : 1
0.05 : 1
Interpretation :
The companys absolute ratio is low as compare to standard ratio 0.5:1. If
absolute acid test ratio is 0.05 which is less than rule standard ratio and
current and liquid ratio are much more than rule of thumb, at that time, we
have to improve cash liquidity by changing the policy of credit sales and
Page 56
advance payments.
B) CURRENT ASSETS MOVEMENT RATIOS
Funds are invested in various assets in business to make sales and
earn profits. The efficiency with which assets are managed directly affects
the volume of sales. The better the management of assets, large is the
amount of sales and profits. Current assets movement ratios measure the
efficiency with which a firm manages its resources. These ratios are called
turnover ratios because they indicate the speed with which assets are
converted or turned over into sales. Depending upon the purpose, a number
of turnover ratios can be calculated. These are :
1.
2.
3.
4.
The current ratio and quick ratio give misleading results if current
assets include high amount of debtors due to slow credit collections and
moreover if the assets include high amount of slow moving inventories. As
both the ratios ignore the movement of current assets, it is important to
calculate the turnover ratio.
Page 57
Inventory turnover ratio measures the speed with which the stock is
converted into sales. Usually a high inventory ratio indicates an efficient
management of inventory because more frequently the stocks are sold ; the
lesser amount of money is required to finance the inventory. Where as low
inventory turnover ratio indicates the inefficient management of inventory. A
low inventory turnover implies over investment in inventories, dull business,
poor quality of goods, stock accumulations and slow moving goods and low
profits as compared to total investment.
AVERAGE STOCK =
Page 58
(Rupees in Crore)
Year
Cost of Goods sold
Average Stock
Inventory Turnover
2011
48.77
7.76
6.28 times
Ratio
Page 59
2012
51.86
7.69
6.74 times
2013
55.72
8.26
6.74 times
2014
63.19
9.94
6.35 times
Interpretation :
These ratio shows how rapidly the inventory is turning into receivable
through sales. In 2012 and 2013 the company has high inventory turnover
ratio but in 2014 it has reduced to 6.35 times. This shows that the
companys inventory management technique is less efficient as compare to
last year.
2011
2012
2013
2014
Days
365
365
365
365
6.28
6.74
6.74
6.35
58 days
54 days
54 days
57 days
Conversion
Period
Page 60
Interpretation :
Inventory conversion period shows that how many days inventories
takes to convert from raw material to finished goods. In the company
inventory conversion period is increasing as compare to last 2 years. This
shows the efficiency of management to convert the inventory into cash.
b)
Page 61
Debtors velocity indicates the number of times the debtors are turned
over during a year. Generally higher the value of debtors turnover ratio the
more efficient is the management of debtors/sales or more liquid are the
debtors. Whereas a low debtors turnover ratio indicates poor management of
debtors/sales and less liquid debtors. This ratio should be compared with
ratios of other firms doing the same business and a trend may be found to
make a better interpretation of the ratio.
AVERAGE DEBTORS= OPENING DEBTOR+CLOSING DEBTOR
2
(Rupees in Crore)
Year
2011
2012
2013
2014
Sales
49.83
53.29
57.27
65.44
Average Debtors
11.32
13.34
13.21
11.79
4.4 times
4 times
4.3 times
5.5 times
Debtor
Turnover
Ratio
Page 62
Interpretation :
This ratio indicates the speed with which debtors are being converted
or turnover into sales. The higher the values of debtors turnover, the more
efficient is the management of credit. But in the company the debtor
turnover ratio is decreasing in 2012 compare to 2011 and in 2013 and 2014
it will increase.
Page 63
(Rupees in Crore)
BBA VI SEM [2014 2015]
Page 64
Year
2011
2012
2013
2014
Days
365
365
365
365
Debtor
4.4
4.3
5.5
83 days
91 days
85 days
66 days
Turnover
Ratio
Average
Collection
Period
Interpretation :
In the firm average collection period increasing in 2012 but it will
decrease in 2013 and 2014. It shows that shorter the average collection
period the better is the quality of debtors.
Page 65
Sales
Networking Capital
Page 66
(Rupees in Crore)
Year
2011
2012
2013
2014
Sales
49.83
53.29
57.27
65.44
Networking Capital
13.75
14.91
18.15
18
3.6
3.6
3.1
3.6
Working
Capital
Turnover
Interpretation :
This ratio measures the efficiency with which the working capital is
used by the firm. A higher ratio indicates efficient utilization of working
BBA VI SEM [2014 2015]
Page 67
capital and a low ratio indicates otherwise so in 2011, 2012 and 2013 it
constant but in 2013 it will decrease by 0.5.
Formula:
Page 68
Operating cycle
2011
2012
2013
2014
a)RMCP
B)WIPCP
C)FGCP
(in days)
145
110
57
(in days)
134
98
53
(in days)
150
105
53
(in days)
125
90
57
Page 69
Interpretation :
From the above chart companys RMCP,WIPCP,FGCP period is less as
compare to last year, so company is in profitable condition because less
operating cycle period i.e converting raw material into sales of the product.
2) Information regarding new plans and policies also can not be known
to me.
Page 70
Summary of Findings:
1. Current Ratio: As we know that ideal current ratio for any firm
is 2:1. If we see the current ratio of the company for last four
years it has standard ratio from 2011 to 2014. This shows that
companys liquidity position is sound. Its current assets are
more than its current liabilities.
Page 71
to
last
years.
This
shows
the
efficiency
of
Page 72
SUGGESTIONS:a. Nirlep is very small company and its head office is only in
Aurangabad but according to its goodwill and brand name in
the market, it is necessary to expand the business throught in
India.
Page 73
c. Absolute acid test ratio is 0.05 which is less than standard ratio
and current and liquid ratio are much more than standard, at
that time, to improve cash liquidity by changing the policy of
credit sales and advance payments.
Page 74
BIBLIOGRAPHY
1) www.nirleponline.com
2) www.google.com
Page 75