A

DISSERTATION REPORT
ON
WORKING CAPITAL MANAGEMENT OF UFLEX
LIMITED

For the fulfillment of the requirement of

MASTER OF BUSINESS ADMINISTRATION
JAMIA HAMDARD, HAMDARD NAGAR, NEW DELHI
(2013-2015)

Submitted to:
Submitted by:
Mrs. Sana Beg
Singh Chauhan
Assistant professor [FMIT]
2013-2015

Rahul
MBA (Gen)

CERTIFICATE

This is to certify that the dissertation report titled, A STUDY ON WORKING CAPITAL
MANAGEMENT OF UFLEX LIMITED is a study undertaken by Mr. Rahul Sing
Chauhan, MBA (Gen) (2013-2015).
The dissertation report is the result of his own work as declared by the student in Declaration
from Student of Authentic Work which is attached in this dissertation report.

(Mrs. Sana Beg)

Supervisor

DECLARATION
I hereby declare that the project work entitled A STUDY ON WORKING
CAPITAL MANAGEMENT OF UFLEX LIMITED submitted to Department of
Management, JAMIA HAMDARD, is a record of an original work done by me
under the guidance of Mrs. Sana Beg, FMIT. This project work is submitted
in the fulfillment of degree of Master of Business Administration. The results
embodied in this report have not been submitted to any other university or
institute for the award of any degree or diploma.

Rahul Singh Chauhan

MBA (GEN)

ACKNOWLDEGMENT
As the Research has been concluded, the Researcher would like to sincerely thank a number of
people for their guidance and support.
In addition to this, the Researcher would like to show gratitude to Mrs. Sana Beg, Assistant
professor (FMIT) who undertook the role of a supervisor and mentor in the Researchers
journey of preparation of this paper and without whose guidance this paper would not have
materialized.
I would like to express my sincere thanks to my friends and whole faculty of JAMIA
HAMDARD University for their valuable guidance in completion of this report

Rahul Singh Chauhan

MBA (GEN)

EXECUTIVE SUMMARY
Packaging serves by helping preservation of the quality and lengthening the shelf life of
innumerable products - ranging from milk and biscuits, to drugs and medicines, processed and
semi-processed foods, fruits and vegetables, edible oils etc.
UFLEX Ltd, is the India-based Flexible Packaging giant. UFLEX Packaging Division- Exports
provides flexible packaging solutions through a wide range of products to satisfy diverse needs
of the customers all over the world. The Exports Sales in the financial year 2012-13 have
increased by 20.38% in comparison with the previous financial year. The operating profit has
increased by 18.30% as per the provisional figures provided by the Accounts Department
(Exports Division).
The objective of the project is to understand Working Capital Management. Working capital
refers to the cash a business requires for day to day operations or more specifically, for financing
the conversion of raw material into finished goods. The project aimed to gain in-depth
knowledge about the processes and operations of the various department of the Exports Division.
The project helped in gaining complete practical knowledge about working of the Marketing
Department. It included identifying the potential customers for flexible packaging in Europe in
the product categories of personal care, detergents, pet-food, snacks food etc. through Secondary
Research using internet.
The project further includes calculations related to the assessment of Working Capital and
preparation of Comparative Statement of Current Assets and Current Liabilities for calculating
the operating cycle. The operating cycle for the year 2013 is 91.66 days and for the projected
year 2014 it is 101.08 days which is slightly on the higher side and efforts should be made to

reduce it. Maximum Permissible Bank Finance for Working Capital for the projected year has
come out to be Rs. 4432 lacs.

TABLE OF CONTENTS

CHAPTERS

Page No.

1) Introduction
2) Objectives of the study
3) Review of literature
4) Company profile

Research methodology
6) Data, analysis and interpretations
7) Findings..
8) Conclusion.
9) Limitations of the study
10) Recommendation..
11) Bibliography
5)

CHAPTER 1 - INTRODUCTION
WORKING CAPITAL
The Working Capital can be categorized, as funds needed for carrying out day-today operations
of the business smoothly. Cash is the lifeline of a company. If this lifeline deteriorates, so does
the companys ability to fund operations, reinvest and meet capital requirements and payments.
Understanding a companys cash flow health is essential to making investment decisions. A good
way to judge a companys cash flow prospects is to look at its Working Capital Management
(WCM).
Working Capital management is about the commercial and financial aspects of Inventory, credit,
purchasing, marketing, and royalty and investment policy. Every running business needs working
capital. Even a business which is fully equipped with all types of fixed assets required is bound
to collapse without working capital.

Adequate supply of raw materials for processing

Cash to pay for wages, power and other costs
Creating a stock of finished goods to feed the market demand
The ability to grant credit to its customers.

All these require working capital.

CONCEPTS OF WORKING CAPITAL
Gross Working Capital: The gross working capital refers to the firms investment in all the
current assets taken together. The total investment in all the individual current assets is the gross
working capital.
Net Working Capital: The term net working capital is defined as the excess of total current
assets over total current liabilities. It may be noted that the current liabilities refer to those
liabilities which are payable within the period of one year.
LIQUIDITY V/S PROFITABILITY
An aggressive approach results in greater profitability but lower liquidity while a conservative
approach results in lower profitability but higher liquidity. This can be resolved to a certain

extent by the management by following a moderate policy which is neither highly aggressive nor
highly conservative.
FACTORS AFFECTING WORKING CAPITAL

Nature of business
Seasonality of operations
Production policy
Market condition
Condition of supply
Business cycle fluctuation
Credit policy
Operating cycle

COMPONENTS OF WORKING CAPITAL: A large amount of the working capital remains

tied up in various capital components. These are:

Raw material
Work- in- Process
Finished Goods
Receivables

WORKING CAPITAL MANAGEMENT AT UFLEX LIMITED

UFLEX Ltd. Packaging Division- Exports provides Flexible Packaging solutions through a wide
range of products to satisfy diverse needs of the customers all over the world, who consistently
turn to the company for complete flexible packaging solutions year after year, time and again.
The global perspective gives the important advantage of developing knowledge of foreign
markets, analyzing the options for the company and offering world class services to the growing
customer base in over 80 countries around the globe.
To understand the Working Capital Management it is very important to understand the operations
of various departments associated with it. Understanding the whole cycle from the procuring of
raw material to the delivery of goods to the customer is very essential. The cycle involves the use

of Working Capital at various stages. For smooth flow of the operations it is very important to
have adequate working capital. An effort has been made through this project to have a firsthand
experience of the working of various departments and to study and gain in-depth knowledge
about the processes and operations of the Exports Division. The motive was to gain
comprehensive knowledge about different departments which are involved in the completion of a
particular order acquired by the Exports Division. The project focuses on the following
departments

Marketing Department

Stores Department

Commercial Department

Finance Department

M A R K E T IN
G
D E PA RT M E
NT

F IN A N C E
D E PA RT M
ENT

STO RES
D E PA RT
M ENT

C O M M E RC I
AL
D E PA RT M E
NT

Chapter 2-OBJECTIVE OF THE STUDY

The objective of the project is to understand WORKING CAPITAL

MANAGEMENT AT UFLEX LTD (Packaging Division-Exports).

The project also includes understanding the processes and operations of various
departments of the Exports Division.

CHAPTER 3- LITERATURE REVIEW

Working capital management and corporate performance:
Case of Malaysia
-M. A. Zariyawati, M. N. Annuar, H. Taufiq, A.S. Abdul Rahim

Abstract
Working capital always being disregard in financial decision making since it involve investment
and financing in short term period. However, it is an important component in firm financial
management decision.
An optimal working capital management is expected to contribute positively to the creation of
firm value. To each optimal working capital management firm manager should control the trade
off between profitability and liquidity accurately. The intention of this study is to examine the
relationship between working capital management and firm profitability. Cash conversion cycle
is used as measure of working capital management.
This study is used panel data of 1628 firm-year for the period of 1996-2006 that consist of six
different economic ectors which are listed in Bursa Malaysia. The coefficient results of Pooled
OLS regression analysis provide a strong negative significant relationship between cash
conversion cycle and firm profitability. This reveals that educing cash conversion period results

to profitability increase. Thus, in purpose to create shareholder value, firm manager should
concern on shorten of cash conversion cycle till optimal level is achieved.
Key words: working capital management; cash conversion cycle; profitability.
In intention to discover the relationship between efficient working capital management and
firms profitability, Shin and Soenen (1998) used net-trade cycle (NTC) as a measure of working
capital management.
NTC is basically equal to the CCC whereby all three components are expressed as a percentage
of sales. The reason by using NTC because it can be an easy device to estimate for additional
financing needs with regard to working capital expressed as a function of the projected sales
growth. This relationship is examined using correlation and regression analysis, by industry and
working capital intensity. Using a compustat sample of 58,985 firm years covering the period
1975-1994, in all cases, they found, a strong negative relation between the length of the firm's
net-trade cycle and its profitability. In addition, shorter NTC are associated with higher riskadjusted stock returns. In other words, Shin and Soenen (1998) suggest that one possible way the
firm to create shareholder.

Working Capital a Tool to Judge your Companys Efficiency

The most repeated maxim amongst financial managers is "Cash is the lifeblood of business". A
business owner always look that his cash flow to business is smooth and use it for generating
profit. When a business is running smoothly and taking in profit, then it will undoubtedly have
cash surpluses. If your business does not have cash surplus, expect to go out of the business.
Actually, cash earnings are worth more than inventory to many businesses and their financial
managers try to maximize it whenever and wherever it is possible. Here are a few ways you can
improve your business through gaining working capital:
1. Cash Flow forecasting is what working capital management is all about. Your forecast should
include factors like fluctuating market cycles, unforeseen events, loss of customers and your
competitor's strategy. Also, unforeseen demands and its effect on your business all need to be
factored in.

2. There is nothing wrong with putting together a contingency plans just in case of unexpected
events. It's true that market leaders manage uncertainty much better than in years past, but you
really should have risk management procedures for your company as insurance. Base it on both
an objective and realistic view of how working capital is used in your business.
3. Try to address your working capital on a corporate-wide basis. The cash you generate at one
business is often better used at another provided one is more profitable than another. However,
for this type of internal business exchange to work you must have certain practices already in
place. Your business should have efficient banking channels and an open line of communication
between production and billing as well as an internal system to move cash to and from the
locations.
4. You need proper procedures in place to deal with dispute management. You want your
customers to basically go away during disputes and free up that locked up cash. Not only that but
it can also improve your overall customer service by using that energy towards sales, order entry,
and cash collection. You'll be pleasantly surprised how much of an increase you'll see in your
business's

efficiency

on

top

of

reduction

in

operating

costs.

5. Collaborating with your customers instead of being focused only on own operations will also
yield good results. If feasible, helping them to plan their inventory requirements efficiently to
match your production with their consumption will help reduce inventory levels. This can be
done with suppliers also.
The most critical short-term commercial financing techniques typically include short-term
merchant cash advance and credit card processing programs and commercial real estate loan
programs. Both working capital funding approaches are frequently a source of confusion for
business owners.
An underutilized commercial financing strategy for businesses is possibly the best commercial
loan strategy to secure cash for their business: a business cash advance using credit card
processing. Credit card financing is an effective business financing tool that is usually

overlooked by any business accepting credit cards as a customer payment method.

Service businesses, restaurants and retail stores are the most likely candidates to benefit from this
working capital cash management strategy. This funding strategy uses an under-utilized business
asset (credit card receivables) to obtain business cash advances based upon sales volume. This
working capital cash strategy is also known as credit card factoring. Some business owners have
used receivables financing or factoring which allows them to sell future receivables on a
discounted basis.
Not all service and retail businesses can document business receivables to obtain a commercial
loan. Businesses such as bars and restaurants do not typically have receivables to use for
business financing. What these businesses do have in many cases is documented sales activity. It
is this documented level of credit card sales activity that becomes a financial asset to the business
and its working capital management strategies. Business cash advances from $5,000 to $300,000
can usually be obtained based on a merchant's sales volume and future sales.
There will usually be only a few business financing sources that are regularly successful at
executing the credit card financing and processing. There are key difficulties to avoid with a
working capital advance, and selecting an effective funding source is essential to an appropriate
business cash advance program.

However there will be many commercial mortgage loan situations in which longer-term
commercial financing is not appropriate for the business owner. In such circumstances it is
important for a business owner to realize that there are viable short-term working capital
strategies. It is prudent to explore short-term commercial loan choices for business owners who
want to refinance or sell the property within a short time frame. Appropriate short-term
commercial mortgages will have more reasonable lockout fees and prepayment penalties than
typically required with long-term commercial real estate financing.
While we will not attempt to describe the technical aspects of commercial loan prepayment fees

and lockout fees in this article, we will note that the absence of such fees in most short-term
commercial mortgage loan programs is a very positive aspect of these short-term working capital
management options. The lack of such penalty fees could easily translate to a savings of 10% to
30% or more if a business owner needs to sell their commercial property during the time period
which would have triggered prepayment fees and lockout fees in traditional longer-term
commercial real estate loans.
Although prepayment and lockout fees will typically be avoided with short-term commercial
mortgage loans, there are some trade-offs to be made if a business owner selects shorter-term
working capital loans. When short-term commercial mortgages are available, they will usually
not be readily available for special purpose commercial properties, the interest rate will
frequently be in the range of 11% to 13% and the loan-to-value will typically be under 70%.
Multi-family, warehouse, mixed-use, office and retail commercial properties are the best
candidates for short-term business finance options. For a typical short-term commercial loan,
business owners should be comfortable with a time period of less than three years.
Few commercial lenders are capable of successfully executing short-term business financing.
There are also numerous problems to avoid with short-term commercial mortgage programs, so
selecting a lender is critical to business owners wanting a short-term business loan involving
commercial property.
It is sufficiently important to repeat that a vital key to successful short-term commercial loans
and business cash advances is selection of an appropriate lender. Despite the potential benefits of
shorter-term business financing, the choice of a lending source cannot be overlooked.
Retrieved

from

"http://www.articlesbase.com/finance-articles/working-capital-financing-and-

shortterm-commercial-loans-479938.html
Working Capital Management-an Effective Tool for Organizational Success
The working capital in a firm generally arises out of four basic factors like sales volume,
technological changes, seasonal , cyclical changes and policies of the firm. The strengths of the
firm is dependent on the working capital as discussed earlier but this working capital is itself
dependent on the level of sales volume of the firm. The firm requires current assets to support

and maintain operational or functional activities. By current assets we mean the assets which can
be converted readily into cash say within a year such as receivables inventories and liquid cash
.If the level of sales is stable and towards growth the level of cash, receivables and stock will
also be on the high. However, with the increase in the working capital as a result of high sales
volume this pattern is referred to as working capital management because in order to produce or
manufacture additionally or increase the overall sales target, more amount of working capital is
required by the firm which is possible only when the management of working capital is prudent
and effective whereas in case of declining sales reduction in the allocation of working capital
will be prudent way to manage every business operation. Technological changes too has an
impact on the management of working capital because as the production process changes or the
line of business changes ,all this an an effect on the working capital requirements which in turn
gets affected. Apart from this the policies of the firm too affects the pattern of working capital
management. Seasonal and cyclical fluctuations, recession too adversely affects the sales pattern
or functionalibilty of the firm.

CHAPTER 4- COMPANY PROFILE

Uflex is a Multi Million Group headquartered at Noida, on the periphery of New Delhi, India and
having manufacturing facilities in India and Dubai. UAE, Offices in Europe and North America
and market presence in 80 countries around the world. Uflex facility enjoys ISO 9001 and ISO
14001 certifications and has FDA and BGA approvals. For their products, Uflex is part of the
D&B Global Database and winner of various prestigious national and international awards like
the top exporter of BOPET and BOPP films, and the world star award for packaging excellence.
FPA, AIMCAL and the DuPont awards in 2004-05 are the latest in this series. Uflex Group came
into existence in 1983 and has grown into one of the biggest multi integrated packaging groups
in the world. The Group is a multi faceted organization which has backward integrated its
operations from manufacturing of polyester chips, films(BOPET, BOPP and CPP- both in plain
and metalized form), coated film, laminates, pouches, holographic films, gravure cylinders, Inks
and adhesives to all types of packaging and printing machines, offering total flexible packaging
solutions to the entire world.

Uflex has always been dedicated to the industry giving technical know-how and being the trendsetter in the flexible packaging industry. Uflex has always been on the edge of innovation and
endeavors to be the first to come up with innovative products that cater to the changing demands
of the packaging industry. Experience and expertise in all spheres of packaging gives Uflex the
insights of the latest developments and innovations that are takin place around the world and
helps to be in the sync with our customer requirements and quality concerns.
As part of the Uflex group. We have over over twenty years of experience in polymer
technology, a record of success and innovation and are a publicly traded company in the DSE
1989, manufacturing and supplying products and delivering services that are world class,
worldwide. The financial data of the company shows that the operating profit for the company
increased by 29.33% from the financial year 2006-07 to 2007-08 bringing it to Rs. 129.24 Cr.
The earning per share is Rs. 9.53 for the year and Dividend per share is Rs. 4. Debt to Equity
ratio for the year being 2.13 and the current ratio 1.95.

Vision
At Uflex we believe that, to eventually emerge as a World leader in providing total Flexible
Packaging solutions, we need a customer focused approach.
The way to being a world class player is paved with state-of-art facilities blended with world
class practices. And it shall be our endeavour to be placed amongst the top ten international
players by the year 2005.

Mission
We believe in using our creativity and aesthetic potential in providing flexible packaging
solutions which make packaging easier, faster, more efficient and user friendly. In this way we
too have share in contributing to the conservation of resources by enhancing the shelf life of the
perishable products.

INTEGRATED SOLUTIONS BY UFLEX

Uflex Ltd provides integrated packaging solutions, right from design to delivery. Catering to the
specific need for Laminates and pouches of each customer by constantly redefining cost effective
packaging options, is the only tradition of service known to Uflex . With almost 2 decades of
experience in flexible packaging and significant investments, we have perfected our processes
and technology to produce high quality flexible packaging materials on time and within budgets.
To ensure superior quality and timely delivery we have achieved full backward integration. Our
in-company divisions and group companies located nearby produce all critical inputs, like the
BOPET and BOPP films, Inks, Adhesives and substrates, Holographic films, Metallization
facility, Blown film and other such raw materials.
Through our innovations in packaging, we have even helped our customers resolve a variety of
problems. A few such cases are quoted below:

An auto major had serious problem in combating spurious spares. We designed very

special laminates with holographic designs incorporating the companys logo. This eliminated
the problem almost immediately raising the sales to three times within a year.

A bed mattress manufacturer had no brand recognition inspite of giving the best quality,

because of duplication. When all methods failed to contain this piracy, Uflex Engineering
Division created a Gravure printed pouch measuring 36x96. The problem was nipped and the
brand established its leadership in the market.

A leading snack food manufacturer sold a popular snack in 400 gms packing. The

quantity was too much for a person to finish in one go. But the snack needed to be sold in the
400 gms packs. Uflex Zipouch division designed a enclosable pouch with zipper. The buyer
could eat as much as desired and then seal the pack for reuse later.

GROUP COMPANIES
UFLEX ENGINEERING LIMITED
As one of the leading engineering companies in India, FEL manufactures a wide range of
packaging and converting machines. It also undertakes tailor made fabrication jobs for various
industries

with

primary

focus

on

the

oil,

gas

and

construction

industry.

The latest addition is the division that manufactures electronic sensor controlled automobile
dippers to be used in vehicles.

UFLEX CHEMICALS LIMITED

With a US$ 6.5 million manufacturing facility at noida, near Delhi, producing Inks and adhesives
and a 72000 TPA polyester chips manufacturing plant at Malanpur, near Delhi.

UFLEX FOODS LIMITED

A 100% export oriented state-of-art freeze dried mushroom manufacturing plant is set in the city
of Dehradun in the foothills of the Himalayas

UFLEX CONVERTING LIMITED

This company is divided into the Film Division and Converting Division. The film division is
one of the largest manufacturer and supplier of Biaxially Oriented Polyethylene Teraphthalate
films, Biaxially Oriented Polypropylene films and metalized films in the world.
With a 25000TPA strong converting capacity the Converting division of Uflex group is a leading
converter in India producing laminates in a roll form, performed pouches as well as rotogravure
cylinders.

BRANDS PACKAGED BY UFLEX (DOMESTIC)

Maggie

Clinic Plus

Taj Mahal

Top Ramen

All Clear

Lipton

Sleepwell

Mr. White

Munch

Close up

Pillsburry

Alpenlibe

Gillette

Nature Fresh

Coffitos

Sundrop

Bonkers

Kohinoor

Tata Chakra

Everyday

Lifebuoy

Lehar

Ceat

Santoor Lays

Apollo

Lux

Horlicks

Pantene

Head &shoulders

Margo

Polyester chips
BOPET
BOPP
CPP films
Packaging machines
Converting Equipments
Inks
Adhesives
Flexible Laminates

Henko

sagar

Red Label

Pan Parag

Vanish

Bagpiper

PRODUCTS OF THE COMPANY

Uflex manufactures in-house :

Uncle Chips

Chik

Pouches
Woven poly propylene

CHAPTER 5 RESEARCH METHODOLOGY

Methodology used in UFLEX for market development and the process:
In UFLEX Limited the task of market development progresses in various stages. It starts
with the process of exploratory research through shop audits then proceeds towards
constructive research about potential buyers and then contacting them and then the process
of customer development is undertaken.
RESEARCH TYPE

For this project report descriptive research is done by the help of various tools and
techniques.
SOURCES OF DATA
Secondary data - from Finance Department of UFLEX itself from the files and documents
maintained by the company. Collection of secondary data on Working Capital is done
through Journals, Web pages and Financial Management books.
TOOLS AND TECHNIQUES USED
To understand the working capital management of Uflex limited various tools and techniques
have been applied to do the analysis or the projections for the year 2014, the project work
includes analyzing the previous years entries of Profit & Loss account and balance sheet and
projecting the same for the next year. The estimations are done keeping in view the previous
trends.
Analysis is done by the help of balance sheet, operating statement, operating cycle; comparison
of current assets and current liabilities is done to know the working capital requirements of the
company. Computation of maximum permissible bank finance for working capital has been
calculated by using various formulas.

CHAPTER 6 DATA ANALYSIS

MAXIMUM PERMISSIBLE BANK FINANCE (MPBF)
As per RBI guidelines, working capital loans are granted on the basis of certain calculations/
analysis submitted by companies to banks/ financial institutions. The formats in which these
reports are given are as per - CMA format, and the financing methodology is known as
Maximum Permissible Bank Finance (MPBF).

First Method of Lending: Banks can work out the working capital gap, i.e. total current assets
less current liabilities other than bank borrowings (called Maximum Permissible Bank Finance or
MPBF) and finance a maximum of 75 per cent of the gap; the balance to come out of long-term
funds, i.e., owned funds and term borrowings. This approach was considered suitable only for
very small borrowers i.e. where the requirements of credit were less than Rs.10 lacs.
Second Method of Lending: Under this method, it was thought that the borrower should
provide for a minimum of 25% of total current assets out of long-term funds i.e., owned funds
plus term borrowings. A certain level of credit for purchases and other current liabilities will be
available to fund the buildup of current assets and the bank will provide the balance (MPBF).
Consequently, total current liabilities inclusive of bank borrowings could not exceed 75% of
current assets.
Method I: .75 (CA CL)
Method II: 0.75 CA CL
Here CA stands for CURRENT ASSETS corresponding to the suggested norms or past levels if
lower, CL represents CURRENT LIABILITIES excluding bank lending.
After doing the required calculations for the assessment of working capital the Exports Division
sends the CMA to the Corporate Finance Department of the Company which is responsible for
handing of the financial requirements of all the divisions and company as a whole. The
Corporate Finance Department then issues the required amount to the Exports Division after
verifying the calculations

UFLEX LTD - EXPORTS DIVISION

ASSESMENT OF WORKING CAPITAL REQUIREMENTS

PART A- OPERATING STATEMENT

S No.

1.

PARTICULARS

Gross Sales

(Amount -RUPEES IN LACS)

AS ON
31.03.12

AS ON
31.03.13
PROVISIONAL

AS ON
31.03.14
PROJECTIONS

(i) Domestic Sales

(ii) Export Sales
Add other revenue income
Total

0.00
15949.05
904.09
16853.14

0.00
19200.00
800.00
20000.00

0.00
24000.00
1000.00
25000.00

0.00

0.00

0.00

16853.14

20000.00

25000.00

18.67

25.00

used in the process of manufacture)

a) Imported
b) Indigenous
Other Spares
a) Imported
b) Indigenous
Power and Fuel
Direct Labour
(Factory wages & salary)
Other manufacturing Expenses
Depreciation
Sub-Total
Add : Opening Stock-in-Process
Deduct : Closing Stock-in-Process

12054.94
0.00
12054.94
0.00
0.00
0.00
89.73
299.04

14400.00
0.00
14400.00
0.00
0.00
0.00
102.00
360.00

17856.00
0.00
17856.00
0.00
0.00
0.00
127.50
450.00

1794.59
2.92
14241.22
345.11
551.07

2040.00
3.00
16905.00
551.07
482.61

2550.00
3.14
20986.64
482.61
550.00

Cost of Production
Add : Opening stock of finished goods
Deduct: Closing Stock of finished goods
Total Cost of Sales

14035.26
252.75
124.76
14163.25

16973.46
124.76
260.00
16838.22

20919.25
260.00
370.00
20809.25

2.

Less: Excise Duty

Deduct other items

3.

Net Sales (item 1 minus item 2)

%age rise or fall in net sales as compared to

4.

previous year

5.

Cost of Sales
Raw Materials (including stores and other items

6.

Gross Profit (item 3 minus item 5)

Gross Profit as % to net sales

2689.89
15.96

3161.78
15.81

4190.75
16.76

7.

Selling, General and Administrative Expenses

1116.43

1350.00

1701.00

8.

Operating Profit before interest (6-7)

1573.45

1811.78

2489.75

9.

Interest

528.00

575.00

674.00

10.

Operating Profit after interest (8-9)

Operating Profit as % to net sales

1045.45
6.20

1236.78
6.18

1815.75
7.26

11.

Add other non operating income

a) License Fee
b) Provision for doubtful debts
Sub Total (income)

0.00
0.00
0.00

0.00
0.00
0.00

0.00
0.00
0.00

Deduct other non operating expenses

preliminary exp.
Sub Total (expenses)

0.00
0.00

0.00
0.00

0.00
0.00

Net of other non-operative income/expenses

12.

Profit before tax/loss(-)(item 10 plus item 11)

13.

Provision for Taxes

14.

Net Profit/Loss (-) (item 12 minus item 13)

15.

Dividend

16.

Retained Profit (14-15)

17.

Retained Profit / Net Profit ( % age )

0.00

0.00

0.00

1045.45

1236.78

1815.75

0.00

0.00

0.00

1045.45

1236.78

1815.75

0.00

0.00

0.00

1045.45

1236.78

1815.75

100.00

100.00

100.00

ANALYSIS OF BALANCE SHEET

S No.

1.

PARTICULARS

(Amount: RUPEES IN LACS)

AS ON
AS ON
31.03.13
31.03.14
PROVISIONAL
PROJECTIONS

AS ON
31.03.12

LIABILITIES
CURRENT LIABILITIES :Short-term borrowings from banks
(incld. bills purchased, discounted & excess
borrowing placed on repayment basis)
(i) From applicant bank
(ii) From other banks
Sub-total (A)

4387.15
0.00
4387.15

4650.00
0.00
4650.00

4432
0.00
4432.00

0.00
2793.35

0.00
1091.38

0.00
930.57

2.
3.

Short term borrowings from others

Sundry creditors (Trade)
Advance payments from customers/deposits

4.
5.
6.
7.

from dealers
Provision for taxation
Dividend payable
Other statutory liabilities (due within one year)
Deposits/Installments of term loans/ Debentures

0.00
0.00

0.00
0.00

0.00
0.00

0.00

0.00

0.00

8.

etc.(due within one year)

Other current liabilities & provisions (due within

0.00

0.00

0.00

9.

one year)
Sub-total (B)

35.17
2828.52

0.00
1091.38

0.00
930.57

10.

TOTAL CURRENT LIABILITIES

(total of 1 to 9)
TERM LIABILITIES
Debentures (not maturing within one year)

7215.67

5741.38

5362.57

0.00

0.00

0.00

11.

12.

Preference shares (redeemable after one year)

Term loans (excld installments payable within

0.00

0.00

0.00

13.

one year)
Deferred Payment Credits (excluding

0.00

0.00

0.00

14.

installments due within

one year)
Term deposits (repayable after one

0.00

0.00

0.00

15.
16.

year)/Unsecured Loans
Other term liabilities

0.00
0.00

0.00
0.00

0.00
0.00

17.

TOTAL TERM LIABILITIES

0.00

0.00

0.00

18.

TOTAL OUTSIDE LIABILITIES

7215.67

5741.38

5362.57

19.
20.
21.
23.

NET WORTH
Ordinary share capital
General reserve
Revaluation Reserve
Surplus (+) or deficit (-) in Profit & Loss account

0.00
0.00
0.00
27.25

0.00
0.00
0.00
1264.03

0.00
0.00
0.00
3079.78

24

NET WORTH

27.25

1264.03

3079.78

25.

TOTAL LIABILITIES

7242.92

7005.39

8442.35

ANALYSIS OF BALANCE SHEET (CONTINUED)

S No.

PARTICULARS

(Amount: RUPEES IN LACS)

AS ON
AS ON
31.03.13
31.03.14
PROVISIONAL
PROJECTIONS

AS ON
31.03.12

ASSETS
26.

Cash and bank balances

27.

Investments (other than long term investments)

(i) Government and other Trustee securities
(ii)Fixed deposits with banks
Deposit with Govt & other agencies
(i) Receivables other than deferred & exports
(incld bills purchased and discounted by banks)

28.

(ii) Export receivables (incld bills purchased

and discounted by banks)

2.84

1.00

2.20

0.00
0.00
0.00

0.00
0.00
0.00

0.00
0.00
0.00

0.00

0.00

0.00

5124.00

4740.00

5920.00

0.00

0.00

0.00

29.

Installments of deferred receivables

(due within one year)

30.

Inventory :

900.23

1242.61

1595.00

(i)

224.40

500.00

675.00

0.00

0.00

0.00

Raw materials (including stores & other

items used in the process of manufacture)
a) Imported

b) Indigenous
(ii) Stock-in-process
(iii) Finished goods
(iv) Other consumable spares
a)Imported
b) Indigenous

224.40
551.07
124.76

500.00
482.61
260.00

675.00
550.00
370.00

0.00

0.00

0.00

31.

Advances to suppliers of raw materials &

stores/spares, consumables

258.15
0.00

0.00
0.00

0.00
0.00

32.

Advance payment of taxes

0.00

0.00

0.00

33.

Other Current assets( specify major item)

937.06

1000.00

900.00

34.

Total current assets (total of 26 to 33)

7222.28

6983.61

8417.20

28.06

30.00

33.45

7.42

8.22

8.30

20.64

21.78

25.15

0.00

0.00

0.00

0.00
0.00

0.00
0.00

0.00
0.00

0.00

0.00

0.00

0.00

0.00

0.00

36.

FIXED ASSETS
Gross Block (land & building machinery,
work-in-progress)
Depreciation to date

37.

NET BLOCK (35-36)

35.

38.

OTHER NON-CURRENT ASSETS

Investments/book debts/advances/deposits
which are not Current Assets
i) a) Investments in subsidiary
companies/affiliates
b) Others (in Govt. Bonds, Bank Bond, FI
Bonds)
ii) advances to suppliers of capital goods &
contractors
iii) Deferred receivables (machinery
exceeding one year)
iv) Others ( Margin with Bank)

39.

Non-consumables stores & spares

Other non-current assets including dues from

40.

directors

0.00

0.00

0.00

41.

TOTAL OTHER NON-CURR. ASSETS

0.00

0.00

0.00

42.

Intangible assets

0.00

0.00

0.00

43.

TOTAL ASSETS (34 + 37 + 41 + 42)

7242.92

7005.39

8442.35

44.

TANGIBLE NET WORTH

27.25

1264.03

3079.78

45.

NET WORKING CAPITAL

[(17+24)-(37+41+42)]

6.61

1242.25

3054.63

46.

Current Ratio

1.00

1.22

1.57

47.

Total Outside Liabilities/Tangible Net Worth

264.80

4.54

1.74

48.

Total Term Liabilities/Tangible Net Worth

0.00

0.00

0.00

COMPARATIVE STATEMENT OF CURRENT ASSETS & CURRENT LIABILITIES

S No.

PARTICULARS

(Amount: RUPEES IN LACS)

AS ON
AS ON
31.03.13
31.03.14

AS ON
31.03.12

PROVISIONAL

1.

2.

3.

4.

5.

6.

7.

I. CURRENT ASSETS
Raw materials (including stores & other items
used in the process of manufacturing)
a) Imported :
Amount
Consumption ( In Days)
b) Indigenous :
Amount
Consumption ( In Days)
Other consumable spares, excldg. those
included in
1 above.
a) Imported :
Amount
Consumption ( In Days)
b) Indigenous :
Amount
Consumption ( In Days)
Stock-in-process :
Amount
Cost of production ( In Days)
Finished goods :
Amount
Cost of sales (In Days)
Receivables other than export & deferred
receivables (including bills purchased &
discounted by banks)
Amount
Sales (In Days)
Export receivables (incld. bills purchased
& disc.)
Amount
Export sales ( In Days)
Advances to suppliers of materials & stores/
spares, consumables
Other current assets including cash & bank

PROJECTIONS

0.00
0.00

0.00
0.00

0.00
0.00

224.40
6.79

500.00
12.67

675.00
13.80

0.00
0.00

0.00
0.00

0.00
0.00

0.00
0.00

0.00
0.00

0.00
0.00

551.07
14.33

482.61
10.38

550.00
9.60

124.76
3.22

260.00
5.64

370.00
6.49

0.00
0.00

0.00
0.00

0.00
0.00

5124.00
117.26
0.00

4740.00
90.11
0.00

5920.00
90.03
0.00

939.90
2.84
0.00
0.00

1001.00
1.00
0.00
0.00

902.20
2.20
0.00
0.00

balance & deferred receivables (due within one

8.

year)
Cash & bank balances
Investments except long-term
Installments of deferred receivables

9.

10.

11.
12.
13.

14.

Others
TOTAL CURRENT ASSETS
II. CURRENT LIABILITIES
(Other than bank borrowings for working
capital)
Creditors for purchase of raw materials,
stores and consumable spares
Amount
Purchase (In Days)
Advance from customers
Statutory liabilities
Other current liabilities
a) S.T. borrowings-others
b) Dividend payable
c) Installments of TL,DPG and public deposits
d) Other current liabilities and provisions
TOTAL CURRENT LIABILITIES

937.06
6964.13

1000.00
6983.61

900.00
8417.20

2793.35
0.00
0.00
35.17

1091.38
27.14
0.00
0.00
0.00

930.57
18.84
0.00
0.00
0.00

0.00
0.00
35.17
2828.52

0.00
0.00
0.00
1091.38

0.00
0.00
0.00
930.57

COMPUTATION OF MAXIMUM PERMISSIBLE BANK FINANCE FOR WORKING CAPITAL

S No.

1.
2.

3.
4.
5.
6.
7.
8.
9.

PARTICULARS

FIRST METHOD OF LENDING

Total current assets
Other current liabilities
(Other than bank borrowings & instl. due in one
Year)
Working capital gap
Min. stipulated Net working capital
(25% of WCG excluding export receivables)
Actual/projected net working capital
Item 3 minus item 4
Item 3 minus item 5
Maximum permissible bank finance (lower of 6 &
7)
Excess borrowings representing shortfall in

AS ON
31.03.12

(Amount: RUPEES IN LACS)

AS ON
AS ON
31.03.13
31.03.14
PROVISIONAL
PROJECTIONS

7222.28
2828.52

6983.61
1091.38

8417.20
930.57

4393.76
-182.56

5892.23
288.06

7486.63
391.66

6.61
4576.32
4387.15

1242.25
5604.17
4650.00

3054.63
7094.97
4432.00

4387.15
0.00

4650.00
0.00

4432.00
0.00

NWC

1.
2.
3.
4.
5.
6.
7.

SECOND METHOD OF LENDING

Total current assets
Other current liabilities
(Other than bank borrowings)
Working capital gap
Minimum stipulated NWC (25% of total current
assets excluding export receivables)
Actual/projected net working capital
Item 3 minus item 4f
Item 3 minus item 5
Maximum permissible bank finance (lower of 6

8.

or 7)
Excess borrowings representing shortfall in

9.

NWC

7222.28
2828.52

6983.61
1091.38

8417.20
930.57

4393.76
524.57

5892.23
560.90

7486.63
624.30

6.61
3869.19
4387.15

1242.25
5331.33
4650.00

3054.63
6862.33
4432.02

3869.19

4650.00

4432.02

517.96

0.00

0.00

CHAPTER 7 FINDINGS
The Inventory conversion period, receivables period and payables deferral period obtained from
the calculations are as follows:

(Period In Days)
Raw Material Conversion Period (RMCP)
Work-In-Progress Conversion Period (WIPCP)
Finished Goods Conversion Period (FGCP)
Inventory conversion period
Receivables Conversion Period (RCP)
Gross Operating Cycle
Payables Deferral Period (PDP)
Net Operating Cycle

2012

2013

2014

6.79
14.33
3.22
24.34
117.26
141.6
-

Provisional
12.67
10.38
5.64
28.69
90.11
118.8
27.14
91.66

Projection
13.8
9.6
6.49
29.89
90.03
119.92
18.84
101.08

It can be seen from the above table that the Raw Material Conversion Period is showing an
increasing trend but is still within 15 days limit. The Work-in-progress conversion period is
showing a decreasing trend which is beneficial for the overall productivity of the Exports
Division and thus the organization on the whole. As major part of sales are basically credit sales,
there is a high Receivables conversion period but is maintained within the 90 days limit. In the
year 2012 the RCP is greater than 90 days because in that year percentage of Export Receivables
with respect to the Export Sales was very high. The Net Operating Cycle is on a higher side
because of the high value of the RCP and Finished Goods Conversion Period. The overall net
operating cycle is satisfactory but should not increase much because the shorter the net operating
cycle, the good for the organization. The organization should try and make less credit sales if
possible in order to reduce the high average collection period.
The Maximum Permissible Bank Finance for Working Capital for the projected year 2014 is Rs.
4432 lacs as calculated by both the methods of lending. The MPBF for the projected year is less
than the previous year because of the inrease in Net Working Capital of the year.

CHAPTER 8 CONCLUSION
The project work undertaken has been a great enriching experience. The study has helped to gain
in-depth knowledge about the different departments of the organization. The departments work
in close co-ordination with each other which brings in high level of efficiency. Customer
satisfaction is given utmost importance by each department and all the specifications given by
the customer regarding the Flexible Packaging material and its dispatch are given due
consideration.
The first hand experience of the working of every department has helped in gaining practical
exposure and in gaining knowledge about the various integrities of business.
By the end of the project the importance of working capital was doubtless. It is now well
understood that cash is the life line of the company. The need and importance of adequate
working capital can hardly be underestimated. Every firm must maintain a sound working capital
position otherwise its business activities are adversely affected. Thus every firm must have
adequate working capital. Therefore estimating the working capital requirements for the coming
year holds great importance.

CHAPTER 9 - LIMITATIONS
In spite of my continued effort to make the project as accurate and wide in scope as possible,
certain limitations become evident while implementing the project. These limitations cannot be
removed and have to be accepted as permanent constraints in implementing the project.
Some of the limitations identified are:

UFLEX Ltd cannot be compared to any of its competitors because it is the only

integrated packaging firm in India.

Generalizations have to be made in some areas while analyzing the financial

statements.

All the financial information was not supplied by the organization as the project

was confined to the Exports Division.

There is uncertainty in forecasts.

Some factors influencing the working capital need cannot be quantified.

CHAPTER 10 RECOMMENDATIONS

After the study carried out, the following recommendations can be made:- The firm should try to reduce its Operating Cycle.
- The firm should try to reduce its Receivables Conversion Period which is slightly high. By this
the funds are blocked with the customers, and hence they become idle, which otherwise can be
used for some profitable purposes.
- The Finished Goods Conversion period is also on the higher side and efforts should be made to
bring it to a lower level by maintaining low levels of Finished Goods Inventory.

CHAPTER 11 BIBLIOGRAPHY

Books:
1.

PRANNA CHANDRA, FINANCIAL MANAGEMENT

Journal:

2.

Corporate Profile- UFLEX LIMITED

Websites:
3.

www.indiainfo.com

4.

www.flexindustries.com

5.

www.flexfilm.com

6.

www.uflex.org