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Knowledge is an experience gained in life, it is the choicest possession, which should not be
shelved but should be happily shared with others.
No work in this world can be completed successfully if guidance is not provided in the right
direction. In this regard, I express my gratitude to my esteemed mentor, Mrs. AMITA RANI for
her valuable critiques, assistance and encouragement, which enabled me to carry on the project
successfully. I thank her for giving me a wonderful opportunity to work on this project. Her
time-to-time guidance and incessant support helped me to broaden my outlook on the project I
am highly obliged for their support throughout the preparation of this project. I would also like to
thank Mr. Deepak Puri for providing company details like Annual Statements and some more
valuable information and guidance. Last but not the least I would also like to thank the
respondents who spared their valuable time to fill the questionnaire.
I would like to thank all for giving their valuable inputs and time.
DECLARATION
This is to state that the Project titled WORKING CAPITAL MANAGEMENT OF RIL &
CUSTOMER PREFERENCE TOWARDS RELIANCE COMMUNICATIONS is based
on the original work carried out by me and is being submitted towards partial fulfillment of the
requirement for the MBA program of the Punjab Technical University, Jalandhar. This has not
been submitted for the award of any other degree or diploma.
(SWATI SABHERWAL)
EXECUTIVE SUMMARY
It gives me an immense pleasure in presenting this final project report on WORKING CAPITAL
MANAGEMENT OF RIL & CUSTOMER PREFERENCE TOWARDS RELIANCE
COMMUNICATIONS for the partial fulfillment of the degree of Masters of Business
Administration (2008-10). This report gives the reader an overview of the concept of working
capital in the simplest language as far as possible. It also gives information on the working
capital management of Reliance Industries Limited and customer preference towards Reliance
Communications.
The result is purely based on a complete survey carried out for the project. Both Primary Data
i.e. by exploratory research, information from residents of sector 8 and 9, Chandigarh and people
coming to recharge dealers in sector 8 and Secondary Data i.e. by annual reports, newspapers,
magazines and scheme brochures. To make the report simpler and easier to understand graphs,
pie- charts, tables and Chi-Square Test are used wherever possible and interpretation of the same
has been given.
Special care has been taken to ensure that this report is free of any printing mistakes but I
apologize if any printing error creeps in. At the end, I hope this report fulfills its purpose by
providing an in-depth knowledge of mutual funds.
CHAPTER NUMBER NAME OF THE CHAPTER
CHAPTER 1 INTRODUCTION
CHAPTER 5 FINDINGS
CHAPTER 6 SUGGESTIONS
CHAPTER 7 CONCLUSION
CHAPTER 8 REFERENCES
CHAPTER 9 ANNEXURES
WHAT IS WORKING CAPITAL?
Fixed Capital is that part of which is required for the purchase of fixed assets like Land
and Building , Plant and machinery etc. The fixed capital provides the basic means for the
business to earn its return... But by themselves, these fixed assets would not produce anything. For
instance, to operate the machines, we require men, materials, power, tools, accessories etc. These
factors involve expenses. In addition, we have to maintain certain current assets like stocks, stores,
equipments, etc. All these require enough resources to keep the wheels of the business in motion.
Therefore, in addition to the amount of fixed capital every business whether new or growing
requires Working Capital. Working Capital is that portion of a business concerns total capital,
which is employed in term of operations. Without working capital, fixed capital would be idle and
ineffectual.
A number of definitions have been formulated: perhaps the most widely acceptable would be:
WORKING CAPITAL represents the excess of CURRENT ASSETS over CURRENT
LIABILITIES.
The same may be designated in the following equation:
WORKING CAPITAL= CURRENT ASSETS CURRENT LIABILITIES:
Funds thus invested in current assets keep revolving fast and are being constantly converted in to
cash and this cash flows out again in exchange for other current assets. Thus it is known as
revolving or circulating capital or short term capital.
TABLE A:
Constituents of Current Assets and Current Liabilities
PART A: CURRENT ASSETS
Inventories Raw materials and components, Work in progress,
Finished goods, other.
Trade Debtors.
Loans and Advances.
Investments.
Cash and Bank balance.
Production Policy :
In certain industries the demand is subject to wide fluctuation due to seasonal variation. The
requirement of working capital, in such cases depends upon the production policy. The production
could be kept either steady by accumulating inventories during slack period with a view to meet
high demand during the peak season or the production could be curtailed during the slack season
and increased during peak season. If the policy is to keep production steady by accumulation
inventories it will require higher working capital. A company should have some production policy
i.e. to maintain the production is a considerable range in order to meet the changing demand. A
company like RIL whose productive capacities can be utilized for manufacturing varied products
can have the advantages of diversified activities and solve their working capital problem.
Market Condition :
The degree of competition prevailing in the market places has an important bearing on working
capital needs. When competition keen, a larger inventory of finished goods is required to promptly
serve customer who may not be inclined to wait because other manufacturers are ready to meet
their needs, further, generous credit terms may have to be offered to attract customers in a highly
competitive market. Thus, working capital needs tends to be high because of greater investment in
finished goods inventory and accounts receivable.
If the market is strong and completion weeks a firm can manage with a smaller inventory of
finished goods because customers can be served with some delay. Further in such situation the
firm can insist on cash payment and avoid lock up of funds in accounts receivable, it can even
ask for advance payment, partial or total.
Credit Policy :
The credit policy is concerned in its dealings with debtors and creditors influence considerably the
requirements of the working capital. A concern that purchases its requirements on credit and sells
its products/services on cash requires lesser amount of working capital. On the other hand a
concern buying its requirements for cash and allowing credit to its customers, shall need larger
amount of funds are bound to be tied up in debtors or bills receivables.
Business Cycle :
Business Cycle refers to alternate expansion and contraction in general business activities. In a
period of born i.e. when the business is prosperous there is a need for larger amount of working
capital due to increase in sales, rise in prices, optimistic expansion of business etc. On the country
at the time of depression i.e. when there is a down swing of the cycle, business contracts, sales
decline, difficulties are faced in collections from debtors and firms may have a large amount of
working capital lying ideal
Other Factors :
Certain other factors such as operating efficiency, management ability, irregularities a supply,
import policy, asset structure, importance of labor, banking facilities etc. also influences the
requirement of working capital.
FINANCING OF WORKING CAPITAL
The working capital requirements of a business concern can be classified as:-
a) Permanent or Fixed working capital requirements.
b) Temporary or variable capital requirements.
In concern, a part of working capital investments are as permanent investment in fixed assets. This
is so because there always a minimum level of current assets which are continuously required by
the enterprise to carry out its day-to-day business operations and this minimum cannot be
expected to reduce at any time. This minimum level of current assets gives rise to permanent or
fixed working capital as this part of working capital is permanently blocked in current assets.
Similarly some amount of working capital may be required to meet the seasonal demands and
some special exigencies such as rise in prices, strikes etc. this proportion of working capital gives
rise to temporary or variable working capital which cannot be permanently employed gainfully in
business.
The fixed proportion of working capital should be generally financed from the fixed capital
sources while the temporary or variable working capital requirements of a concern may be met
from the short term sources of capital. The various sources for the financing of working capital
are:-
MANAGEMENT OF INVENTORY
Inventories constitute the most significant part of current assets of a large majority of companies
in India. On an average, inventories are approximately 60 % of current assets in public limited
companies in India.
Because of the large size of inventories maintained by firms maintained by firms, a considerable
amount of funds is required to be committed to them. It is, therefore very necessary to manage
inventories efficiently and effectively in order to avoid unnecessary investments. A firm
neglecting a firm the management of inventories will be jeopardizing its long run profitability
and may fail ultimately.
The purpose of inventory management is to ensure availability of materials in sufficient quantity
as and when required and also to minimize investment in inventories at considerable degrees,
without any adverse effect on production and sales, by using simple inventory planning and
control techniques.
MANAGEMENT OF CASH
Cash is the important current asset for the operation of the business. Cash is the basic input needed
to keep the business running in the continuous basis, it is also the ultimate output expected to be
realized by selling or product manufactured by the firm.
The firm should keep sufficient cash neither more nor less. Cash shortage will disrupt the firms
manufacturing operations while excessive cash will simply remain ideal without contributing
anything towards the firms profitability. Thus a major function of the financial manager is to
maintain a sound cash position.
Cash is the money, which a firm can disburse immediately without any restriction. The term cash
includes coins, currency and cheques held by the firm and balances in its bank account.
Sometimes near cash items such as marketing securities or bank term deposits are also included in
cash. Generally when a firm has excess cash, it invests it is marketable securities. This kind of
investment contributes some profit to the firm.
NEEDTO HOLD CASH
The firms need to hold cash may be attributed to the following three motives:-
The Transaction Motive: The transaction motive requires a firm to hold cash to conduct its
business in the ordinary course. The firm needs cash primarily to make payments for purchases,
wages and salaries, other operating expenses, taxes, dividends, etc.
The Precautionary Motive: A firm is required to keep cash for meeting various contingencies.
Though cash inflows and outflows are anticipated but there may be variations in these estimates.
For example a debtor who pays after 7 days may inform of his inability to pay, on the other hand a
supplier who used to give credit for 15 days may not have the stock to supply or he may not be in
opposition to give credit at present.
Speculative Motive: - The speculative motive relates to the holding of cash for investing in profit
making opportunities as and when they arise.
The opportunities to make profit changes. The firm will hold cash, when it is expected that interest
rates will rise and security price will fall.
MANAGEMENT OF RECEIVABLE
A sound managerial control requires proper management of liquid assets and inventory. These
assets are a part of working capital of the business. An efficient use of financial resources is
necessary to avoid financial distress. Receivables result from credit sales. A concern is required to
allow credit sales in order to expand its sales volume. It is not always possible to sell goods on
cash basis only. Sometimes other concern in that line might have established a practice of selling
goods on credit basis. Under these circumstances, it is not possible to avoid credit sales without
adversely affecting sales. The increase in sales is also essential to increases profitability. After a
certain level of sales the increase in sales will not proportionately increase production costs. The
increase in sales will bring in more profits. Thus, receivables constitute a significant portion of
current assets of a firm. But for investment in receivables, a firm has to insure certain costs.
Further, there is a risk of bad debts also. It is therefore, very necessary to have a proper control
and management of receivables.
Operating cycle
Operating cycle refers to the time duration required to convert sales ,after the conversion of
recourses into inventories, into cash .the operating cycle of a manufacturing company like RIL
includes:
1.) Acquisition of resources such as raw materials, labor, power and fuel etc.
2.) Manufacture of the product which includes conversion of materials into work-in-progress into
finished goods.
3.) Sale of the product either for cash or on credit. Credit sales create account receivables for
collection.
COMPONENTS OF WORKING CAPITAL ARE CALCULATED AS FOLLOWS
1) Raw Materials Storage Period=Avarage stock of raw materials/Avarage cost of raw material
consumption per day.
2.) W-I-P Holding period=Average w-i-p in inventory/Average cost of production per day.
3.) Stores and spares conversion period= Average stock of Stores and spares/ Avarage
consumption per day.
4.) Finished goods conversion period= Average stock of finished goods/Avarage cost of of
goods sold per day.
5.) Debtors collection period=Avarage book debts/Avarage credit sales per day.
6.) Credit period availed=Avarage trade creditors/Average credit purchase per day.
World telecom industry is an uprising industry, proceeding towards a goal of achieving two
third of the world's telecom connections. Over the past few years information and
communications technology has changed in a dramatic manner and as a result of that world
telecom industry is going to be a booming industry. Substantial economic growth and mounting
population enable the rapid growth of this industry. The world telecommunications market is
expected to rise at an 11 percent compound annual growth rate at the end of year 2010. The
leading telecom companies like AT&T, Vodafone, Verizon, SBC Communications, Bell South,
Qwest Communications are trying to take the advantage of this growth. These companies are
working on telecommunication fields like broadband technologies, EDGE(Enhanced Data rates
for Global Evolution) technologies, LAN-WAN inter networking, optical networking, voice over
Internet protocol, wireless data service etc.
Present market scenario of world telecom industry: Over the last couple of years, world
telecommunication industry has been consolidating by allowing private organizations the
opportunities to run their businesses with this industry. The Government monopolies are now
being privatized and consequently competition is developing. Among all, the domestic and small
business markets are the hardest.
INDIAN OVERVIEW
Today the Indian telecommunications network with over 375 Million subscribers is second
largest network in the world after China. India is also the fastest growing telecom market in the
world with an addition of 9- 10 million monthly subscribers. The teledensity of the Country has
increased from 18% in 2006 to 33% in December 2008, showing a stupendous annual growth of
about 50%, one of the highest in any sector of the Indian Economy. The Department of
Telecommunications has been able to provide state of the art world-class infrastructure at
globally competitive tariffs and reduce the digital divide by extending connectivity to the
unconnected areas. India has emerged as a major base for the telecom industry worldwide. Thus
Indian telecom sector has come a long way in achieving its dream of providing affordable and
effective communication facilities to Indian citizens. As a result common man today has access
to this most needed facility. The reform measures coupled with the proactive policies of the
Department of Telecommunications have resulted in an unprecedented growth of the telecom
sector.
India's telecom sector has shown massive upsurge in the recent years in all respects of industrial
growth. From the status of state monopoly with very limited growth, it has grown in to the level
of an industry. Telephone, whether fixed landline or mobile, is an essential necessity for the
people of India. This changing phase was possible with the economic development that followed
the process of structuring the economy in the capitalistic pattern. Removal of restrictions on
foreign capital investment and industrial de-licensing resulted in fast growth of this sector. At
present the country's telecom industry has achieved a growth rate of 14 per cent. Till 2000,
though cellular phone companies were present, fixed landlines were popular in most parts of the
country, with government of India setting up the Telecom Regulatory Authority of India, and
measures to allow new players country, the featured products in the segment came in to
prominence. Today the industry offers services such as fixed landlines, WLL, GSM mobiles,
CDMA and IP services to customers. Increasing competition among players allowed the prices
drastically down by making the mobile facility accessible to the urban middle class population,
and to a great extend in the rural areas. Even for small shopkeepers and factory workers a phone
connection is not an unreachable luxury. Major players in the sector are BSNL, MTNL, Bharti
Teleservices, Hutchison Essar, BPL, Tata, Idea, etc. With the growth of telecom services,
telecom equipment and accessories manufacturing has also grown in a big way.
Indian Telecom sector, like any other industrial sector in the country, has gone through many
phases of growth and diversification. Starting from telegraphic and telephonic systems in the
19th century, the field of telephonic communication has now expanded to make use of advanced
technologies like GSM, CDMA, and WLL to the great 3G Technology in mobile phones. Day by
day, both the Public Players and the Private Players are putting in their resources and efforts to
improve the telecommunication technology so as to give the maximum to their customers.
ABOUT RELIANCE INDUSTRIES LIMITED
(Enhancing Lives. Energizing India. The Reliance Way)
HISTORY OF IPCL
The government of India handled over management control to Reliance group on June 4, 2002,
since then the company is being managed by reliance. The new management team has re-
endorsed the companys mission to create value for all stakeholders. All over efforts are being
made to enhance productivity and control cost for superior value addition.
The physical and cultural integration began from the word go, both IPCL and Reliance started
adopting Best Practices from each other. This led to optimal utilization of available resources
for enhancing productivity. The profit for the first financial year(2002-03) under the reliance
management stood at INR 2.04 billion, 90% jump over the previous years profit of INR 1.07
billion.
Commenting on the results for 2002-2003, Mr. Mukesh Ambani, Chairman, said we are
delighted with the complete turnaround in IPCLs performance in the very first year of
acquisition by reliance. The successful absorption of Reliances best practice by IPCL in all
areas of operations, and positive impact of measures introduced for cost reduction and
productivity and efficiency gains. We have great confidence in the capabilities of IPCL and its
people, and are confident of further improvement in the companys performance in the future.
OUR MISSION
Be a globally preferred Business associate with responsible Concern for ecology, society, And
stakeholders value.
VALUES & QUALITY POLICY
OUR VALUES
Integrity, Respect for People, Unity of Purpose, Outside-in Focus, Agility and Innovation.
QUALITY POLICY
HIGHLIGHTS(2008-09)
COMPANY LOGOS
This decision of the government, Every thing under one roof inspired
the second logo of IPCL. IPCL took up the challenge of setting up the entire integrated complex
at Vadodara.
The government of India handled over management control to Reliance group on June 4, 2002,
since then the company is being managed by reliance.
RIL MILESTONE
YEAR EVENTS
1969 IPCL was incorporated under company act.
1970 Construction of our first Petrochemicals complex commenced at Vadodara, Gujarat.
1973 Commenced commercial operation at Vadodara.
1992 Initial public offering and listing on the Vadodara stock exchange
1992 Second Petrochemical Complex commenced at Nagothane, Maharashtra
1996 Third Petrochemical Complex commenced at Gandhar
1999 Gandhar complex commissioned.
2000 Completion of the second phase of the Gandhar complex
2002 Reliance took over IPCL.
2004 Amendment agreement between the government and the strategic partner, Reliance
petroleum limited, a Reliance group company.
2005 Government of India withdrew its nominee directors from the board of directors of
India petrochemicals co. ltd.
2006 Amalgamation of six polyester companies i.e. Apollo fibres ltd, Central India
ploysters ltd, India polyfibres ltd, Orissa polyfibres ltd, Recron synthetics ltd and
Silvassa industries Pvt ltd with IPCL.
2007 RIL complete a landmark acquisition of IPCL.
2008 RIL signed MOU with GAIL(INDIA) Ltd. to explore opportunities of setting of
petrochemical plants.
2009 RPL merged with RIL Ltd : value creation through scale & synergies.
Life at Reliance is challenging, fulfilling and exciting! Reliance offers access to world-class
resources for personal and professional growth. At Reliance, you'll have the chance to take on
challenging responsibilities, working with top-notch, world-class professionals from around the
globe. You will be part of a culture of excellence. People are central to Reliance's growth
strategy. A large in-house pool of intellectual capital is the driving force behind Reliance's rapid
growth, and is one of its competitive advantages. Reliance is a young company, with an average
age of 39 years. Talent is drawn from diverse academic and professional backgrounds.
Reliance targets the world market for talent, provides global perspectives and has a large number
of expatriates on its rolls. Reliance endeavours to create a workplace where every person can
reach his or her full potential.
Reliance's occupational health centres carry out pre-employment and periodic medical checkups
as well as other routine preventive services. Specialised tests like biological monitoring, health
risk assessment studies and audits for exposure to various materials are also performed. Health
education and awareness form an integral part of the health care programme at Reliance.
We believe that the safety of each employee is the responsibility of the individual as well as of
the whole community of employees.
Reliance builds with care a workplace that proactively fosters professional as well as personal
growth. There is freedom to explore and learn; and there are opportunities that inspire initiative
and intrinsic motivation. We believe that people must dream to achieve, that these dreams will
drive the company's excellence in all its businesses. Reliance thinks, behaves, lives and thrives
with a global mindset, encouraging every employee to reach his / her full potential by availing
opportunities that arise across the group.
As corporate citizens, we invest in social infrastructure, believing strongly that our business
strength fuels our social contributions. To this end, Reliance encourages, funds and develops
numerous education, health, human capital and infrastructure initiatives. These initiatives are
undertaken through partnerships with non-governmental organizations, corporate and trusts.
For those who study innovative organizations Reliance Industries will be a shining example of
how innovation is practised in almost everything that they do. Here are few things that set them
apart:
"Sense of urgency" - Reliance speed is legendary now. Reliance has mastered project
management skills and has made it virtually into a fine art. It is this sense of speed that
restored operations in record time in Jamnagar, Patalganga and Hazira after being
affected by cyclones and floods.
"Dreams and Vision are the most potent fuels in the world." - This is an unmistakable
Reliance hallmark espoused both by the founder Chairman Sh. Dhirubhai Ambani and
the current Chairman Sh. Mukesh Ambani. To a question on what would be his next big
ambition Sh. Mukesh Ambani answered
"Rural transformation. - Creating direct employment for half a million people in rural
India. Creating a supply chain that the world will envy."
It is evident that Reliance Industries is where it is today because of Innovation in thinking and
execution. Given its ambition for India and its own organization Reliance leadership has now
taken on a major initiative in the innovation domain.
The leadership of RIL recognizes that its biggest competitive advantage and differentiator in the
future would be innovation. Innovation has to become the language, the behaviour definer, the
culture and the soul of Reliance, even more explicitly than ever before.
ABOUT RELIANCE COMMUNICATIONS
The Late Dhirubhai Ambani dreamt of a digital India an India where the common man would
have access to affordable means of information and communication. Dhirubhai, who single-
handedly built Indias largest private sector company virtually from scratch, had stated as early
as 1999: Make the tools of information and communication available to people at an affordable
cost. They will overcome the handicaps of illiteracy and lack of mobility.
It was with this belief in mind that Reliance Communications (formerly Reliance Infocomm)
started laying 60,000 route kilometers of a pan-India fiber optic backbone. This backbone was
commissioned on 28 December 2002, the auspicious occasion of Dhirubhais 70th birthday,
though sadly after his unexpected demise on 6 July 2002.
Reliance Communications has a reliable, high-capacity, integrated (both wireless and wireline)
and convergent (voice, data and video) digital network. It is capable of delivering a range of
services spanning the entire infocomm (information and communication) value chain, including
infrastructure and services for enterprises as well as individuals, applications, and consulting.
Today, Reliance Communications is revolutionizing the way India communicates and networks,
truly bringing about a new way of life.
REVEIEW OF LITERATURE FOR WORKING CAPITAL
1) Target levels for each category of current operating assets and liabilities, and
2) How current assets will be financed. Generally good working capital policy (i.e. under
conditions of certainty) is considered to be one in which holdings of cash, securities, inventories,
fixed assets, and accounts payables are minimized.
The level of accounts receivables should be used as a means of stimulating sales and other
income. Previous literature on working capital management has found a negative association,
overall, between level of working capital and operating performance as measured by operating
returns and operating margins (Peterson and Rajan, 1997). Under conditions of certainty (i.e.
sales, costs, lead times, payment periods, and so on, are known), firms have little reason to hold
more working capital than a minimum level. Larger amounts would increase the level of
operating assets, increase the need for external funding, resulting in lower return on assets and a
lower return on equity, without any increase in profit.
However the picture changes when uncertainty (i.e. uncertain growth) is introduced (Brigham
and Houston, 2000). Larger amounts of cash, securities, accounts receivables, marketable
securities, inventories, and fixed assets will be needed to support increased sales Required levels
will be based on expected sales levels and expected order lead times. Additional holdings may be
needed to enable the firm to deal with departures from the expected values. Further, firms will
also attempt to increase their accounts payable balances as a means of financing increased levels
of current operating assets. Firms which are in high growth stages will face the challenge of
maintaining the necessary level of operating assets to support subsequent growth, while at the
same time attempting to maintain adequate performance indicators.
From the above reviews it can be concluded that many researches have been
conducted before relating to the concept of working capital but no researches
have been conducted to study the working capital management of Reliance
Industries Limited. This gap has been fulfilled by this research report which
gives an practical insight into the concept of working capital management.
Cygnus Business Consulting & Research Pvt. Ltd. (2008), in its Performance Analysis of
Companies (April-June 2008) has analyzed the Indian telecom industry in the awake of recent
global recession and its overall impact on the Indian economy. With almost 5-6million
subscribers are being added every month, and the country is witnessing wild momentum in the
telecom industry, the Indian telecom industry is expected to maintain the same growth trajectory.
Internet service providers in India, Rao (2000), provide a broad view of the role of an
Internet service provider (ISP) in a nascent market of India. Building local content,
foreknowledge of new Internet technologies, connecting issues, competitiveness, etc. would
help in their sustainability.
The role of technology in the emergence of the information society in India, Singh
(2005), describes the role that information and communication technologies are playing for
Indian society to educate them formally or informally which is ultimately helping India to
emerge as an information society.
GROWTH IN SEGMENTS
According to a Frost & Sullivan industry analyst, by 2012, fixed line revenues are expected to
touch US$ 12.2 billion while mobile revenues will reach US$ 39.8 billion in India. Fixed line
capex is projected to be US$ 3.2 billion, and mobile capex is likely to touch US$ 9.4 billion.
Further, according to a report by Gartner Inc., India is likely to remain the world's second largest
wireless market after China in terms of mobile connections. According to recent data released by
the COAI, Indian telecom operators added a total of 10.66 million wireless subscribers in
December 2008. Further, the total wireless subscriber base stood at 346.89 million at the end of
December 2008.
The overall cellular services revenue in India is projected to grow at a CAGR of 18 per cent from
2008-2012 to exceed US$ 37 billion. Cellular market penetration will rise to 60.7 per cent from
19.8 per cent in 2007.
The Indian telecommunications industry is on a growth trajectory with the GSM operators
adding a record 9.3 million new subscribers in January 2009, taking the total user base to 267.5
million, according to the data released by COAI. However, this figure does not include the
number of subscribers added by Reliance Telecom.
In WiMax, India is slated to become the largest WiMAX market in the Asia-Pacific by 2013. A
recent study sees India's WiMAX subscriber base hitting 14 million by 2013 and growing
annually at nearly 130 per cent. And investments in WiMAX ventures are slated to top US$ 500
million in India, according to a report by US-based research and consulting firm, Strategy
Analytics.
A report by market research firm IMRB stated that the mobile value-added services (MVAS)
industry was valued at US$ 1.15 billion in June 2008, and is expected to grow rapidly at 70 per
cent to touch US$ 1.96 billion by June 2009.
Currently, MVAS in India accounts for 10 per cent of the operator's revenue, which is expected
to reach 18 per cent by 2010. According to a study by Stanford University and consulting firm
BDA, the Indian MVAS is poised to touch US$ 2.74 billion by 2010.
Mobile advertising, which is an important VAS segment, offers great potential to become an
important revenue source. Marketers are increasingly using MVAS as a step ahead of SMS-
based marketing to sell soaps and shampoos, banking, insurance products and also entertainment
services, and rural markets are proving to be very receptive for such marketing.
Further, Venture Capitalists like Canaan Partners, Draper Fisher Juvertson, Helion, and Nexus
India are also innovating with services like mobile payment options, advertising, voice-based
SMS and satellite video streaming.
According to Venture Intelligence, there were nine deals worth US$ 41 million in 2007 in the
mobile VAS space, and till August 2008, seven deals worth US$ 91 million had already been
finalized. Presently, mobile VAS has a US$ 700 million market with a 20 per cent y-o-y growth,
which is likely to touch US$ 3 billion by 2012.
From the above reviews it can be concluded that many researches have been
conducted before but no researches have been conducted to study the
performance of leading players. This topic had been chosen keeping in mind
the increasing competition in telecom industry and to study the position of
Reliance communications as compared to 4 other top players. This gap has
been fulfilled by this research report which gives a practical insight into the
concept of working capital management.
RESEARCH METHODOLOGY
For every comprehensive research a proper research methodology is indispensable & it has to be
properly conceived. The methodology adopted by me is as follows:-
CHAPTER: 3(a)
RESEARCH PROBLEM
To know the working capital management of RIL with the help of ratio analysis.
To analyze the market strength of reliance communications.
CHAPTER: 3(b)
HYPOTHESIS OF THE STUDY
A research hypothesis is the statement created by a researcher when they speculate upon the
outcome of a research or experiment.
For the study of customer preference towards Reliance Communications the following
hypothesis was set up.
H0: There is no significant relationship between factors and satisfaction level.
H1: There is significant relationship between factors and satisfaction level.
CHAPTER 3(c)
OBJECTIVES OF STUDY
Find out Ratios related to working capital management of RIL and compare with last 5
years.
Find deviation of calculated from standard or Norms.
To study the customer preference towards reliance communications as compared to its
competitors namely Airtel, Vodafone, Idea, Tata Docomo.
To suggest measures to improve its market share and positioning.
CHAPTER 3(d)
SCOPE OF STUDY
The scope of this study is to provide an insight into concept of working capital management and
illustrate it by actually working capital management of RIL. This study also provides insight of
the customer preference of Reliance Communications and its market share as compared to Airtel,
Vodafone, Idea, Tata Docomo.
CHAPTER 3(e)
RESEARCH DESIGN
According to Clifford Woody, research comprises defining and redefining problems,
formulating hypothesis or suggested solutions; collecting, organizing and evaluating data;
making deductions and reaching conclusions; and at last carefully testing the conclusions to
determine whether they fit the formulating hypothesis.
This research is divided in two parts:
(i) Working Capital Management through secondary data based on certain parameters;
(ii) an exploratory research based on a survey of the concerning literature. A sample
survey was conducting with the help of Scheduling Method of collecting data i.e.
personally the enumerator visited and got the questionnaires filled from the
respondents. The enumerator in this method helps the respondents in recording their
answers to various questions in the said schedules.
CHAPTER 3(f)
SOURCES OF DATA
There are two types of data viz. primary and secondary. The primary data are those which are
collected afresh and for the first time, and thus happen to be original in character.
The secondary data, on the other hand, are those which have already been collected by someone
else and which have already been passed through the statistical process.
For this research report, primary data was collected through questionnaires from customers and
recharge dealers of sector 8 and 9 and there was no bias on the part of the enumerator while
selecting the sample for the analysis concerning Reliance Competitors.
Secondary data was used for the working capital management of RIL that is company annual
reports, profit and loss account and balance sheet for the years 2004-05, 2005-06, 2006-07, 2007-
08, 2008-09, brochures from recharge dealers, magazines and newspapers.
CHAPTER 3(g)
SAMPLE SIZE
For this research, in part one, a sample size of annual reports for 5 years 2004-05, 2005-06,
2006-07, 2007-08, 2008-09 were taken.
For the second part, a sample size of 100 respondents was taken out of the total customers using
mobile phones.
CHAPTER 3(h)
SAMPLE AREA
The sample area was Chandigarh and involved respondents coming to recharge dealers in sector
8 and 9 and the residents of sector 8.
CHAPTER 3(i)
STATISTICAL TOOLS USED
The various statistical tool used were data distribution tables, graphs and pie charts. Ratio
analysis was used for determining the working capital management of RIL. Hypothesis testing
through Chi Square test was used in Customer Preference Towards Reliance Communications.
CHAPTER 3(j)
LIMITATIONS OF THE STUDY
Following were the limitations of the study:
Time was limited.
The sample size of 100 is very small and more than that could not be possible.
The study was only based on the survey of respondents in CHANDIGARH and no other
area could be undertaken for the survey due to lack of transport and time.
This of working capital management is based solely upon the annual reports of the
company in hard copy and through company website.
Only 5 companies could be compared for the market analysis in order to avoid
complexity of data.
(WORKING CAPITAL MANAGEMENT OF RIL)
CURRENT RATIO
ACID-TEST RATIO
CURRENT RATIO
It is also known as working capital ratio .It is a measures of short-term financial strength of the
business and shows whether the business will be able to meet it s current liabilities as when
they mature.
Current Assets including assets which can be converted in to cash easily and itself like market
securities debtors, inventory, prepaid expenses etc.
Current Liabilities included creditors, bills payable, accrual expenses, short term bank loan,
income tax liabilities and long term debt maturity in current year. In short it can be said as all
obligation within a year are included in current liabilities.
Current ratio is a measure of the firms short term solvency. It indicate the availability of
current assets in rupee of current liabilities. As a conventional rule, a current ratio should be or
slightly more. It focuses the strong of weak position of the company.
2008-09 1.61:1
2007-08 2.19:1
2006-07 1.77:1
2005-06 1.96:1
2004-05 2.14:1
IO
INTERPRETATION:
2.5
It is generally believed that 2:1 ratio shows a comfortable working capital position. The tendon
committee appointed by RBI had wide recommended a current ratio of 2:1.
Company has maintained this ration and increased it year by year. A current ratio is 1.61 in the
current year. But in the other year the ratio is nearer to 1:2 so we can say that the company
having comfortable working capital position.
ACID-TEST RATIO
The measure of absolute liquidity may be obtained only cash and bank balance as well as only
ready marketable security with liquid liabilities. This is every existing standard of liquidity and it
is satisfaction if the ratio is 1.50:1.
ACID-TEST RATIO
1.8
1.6
ACID-TEST RATIO
1.4
1.2
1
ACID-TEST
0.8 RATIO
0.6
0.4
0.2
0
2008-09 2007-08 2006-07 2005-06 2004-05
YEARS
INTERPRETATION:
Acid-test ratio is near to one in current year that is 1.08 as compare to 1.38 in the previous year.
Over all the acid-test ratio of last five year is very satisfactory so we can conclude that the
absolute liquidity of the Reliance Industries Limited is in favour.
2008-09 31.21:1
2007-08 22.60:1
2006-07 29.92:1
2005-06 19.50:1
2004-05 16.82:1
35
DEBTORS TURNOVER
30
25
RATIO
20 DEBTORS TURNOVER
15 RATIO
10
5
0
2008-09 2007-08 2006-07 2005-06 2004-05
YEARS
INTERPRETATION:
We know that the higher Debtors turnover ratio is not good for the firm. In the year 2008-09 it is
31.21:1 but in the previous year it was 22.60:1. So some improvement is needed.
CREDITORS TURNOVER RATIO :
Creditors turnover ratio shows the proportion of purchase to account payable number of days
within which we make payment to our creditors for credit purchases estimated the creditors ratio
if this ratio is higher it means company has to check whether company is making payment within
credit period available. If it is making payment before the due date means the company is not
taking full advantage of it credit period and if company making the payment the period that
indicates that the company is not taking the benefit of discount allowed.
2008-09 3.33:1
2007-08 4.62:1
2006-07 5.47:1
2005-06 5.49:1
2004-05 3.96:1
5.47 5.49
6
4.62
5 3.96
4 3.33
3
2 CREDITORS
TURNOVER
1
RATIO
0
2008- 2007- 2006- 2005- 2004-
09 08 07 06 05
YEARS
INTERPRETATION:
Higher Ratio of creditor turnover forces the company to check that payment is made with in
credit period properly or not. The creditors turnover ratio is 3.33 in 2008-09 as compare to
2007-08 the ratio is 4.62 which is higher than the other years.
INVENTORYTURNOVERRATIO
10
9.2
8 8
RATIO
7.51 7.17
6
0
2008-09 2007-08 2006-07 2005-06
YEARS
INVENTORYTURNOVER RATIO
INTERPRETATION:
Higher the ratio more profitability the business would be. The ratio is joining the ability of
management with which it can move the stock. Inventory turnover ratio is highest in the year
2006-07 is 9.20 as compare to the other year but in current year it is 7.51 which is little lower
than previous year but it is obvious that in heavy industries like Reliance Industries Limited have
lower ration as compare to FMCG.
NET WORKING CAPITAL TURNOVER RATIO
Net working capital turnover ratio is obtained by net working capital joining to sales. The excess
of current assets over current liabilities is called working capital. It is found for measuring firm
liquidity. It also measures the firm potential reserve of funds.
Rs. 19874.06
WOR
KIN
GCAPIT
A LT
U R
NOVERR
ATIO
2
004
-05 5.83
YEARS
2
005
-06 10
WOR KIN
G
2
006
-07 CAPIT
A L
9.85
T
U R
N O VER
RAT
IO
2
007
-08 5.57
2
008
-09 7.6
WOR
KIN
GC APITAL
TURNOVERR
A TIO
INTERPETATION:
As per the balance sheet data of the creditor the working capital turnover ratio is different for the
different years. The ratio is 7.60 in 2008-09 and 5.57 in 2007-08 but the best favorable ratio is in
2005-06 which is 10 times. So it means that higher the ratio better the working capital condition
of the company.
INTERPRETATION:
The collection period is highest in 2004-05 is 20.71 days as compare to very low in 2008-09 is
only 11 days. This shows the improvement in collection policy of the Reliance Industries
Limited. So it is very important for any company to collect the debs which this company do very
well.
35
30
25
VALUES
20
15
10
5
0
Current
Debtors
Acid-test
turnover
turnover
Inventory
working
turnover
collection
Creditors
capital
turnover
ratio
Net-
ratio
period
ratio
ratio
Debt
ratio
R AT IO S
2 0 0 8 -0 9 2 0 0 7 -0 8 2 0 0 6 -0 7 2 0 0 5 -0 6 2 0 0 4 -0 5
TABLE 1
CONSUMER PREFERENCE TOWARDS CELL PHONE SERVICE PROVIDERS
S.NO NAME OF THE SERVICE NUMBER OF
PROVIDER RESPONDENTS
1 Reliance Communications 49
2 Airtel 54
3 Vodafone 61
4 Idea 23
5 Tata Docomo 39
INTERPRETATION:
Most of the Respondents prefer Vodafone followed by Airtel, Reliance Communications,
Tata Docomo and Idea respectively.
The number of respondents are more than 100 because of multiple responses by the
respondents.
TABLE 2
SERVICE PREFERENCE OF RESPONDENTS ON THE BASIS OF AGE WISE
CLASSIFICATION
1 16.67 2 28.57 32 32
2 33.33 4 57.14 34 34
3 50 1 14.29 31 31
0 0 0 0 2 2
0 0 0 0 1
TABLE 3
COMPOSITION OF RESPONDENTS ON THE BASIS OF MARITAL STATUS
1. MARRIED 33 33
2 UNMARRIED 67 67
TABLE 4
COMPOSITION OF RESPONDENTS ON THE BASIS OF EDUCATION
QUALIFICATION
1. UPTO HIGHER 32 32
SENIOR
SECONDARY
2 GRADUATES 61 61
3 PROFESSIONALS 7 7
4 OTHERS 0 0
TABLE 5
1. BUISNESS 12 12
2 PROFESSIONAL 2 2
3 EMPLYOEE 33 33
4 HOME MAKER 8 8
5 STUDENT 44 44
6 OTHERS 1 1
TABLE 6
COMPOSITION OF RESPONDENTS ON THE BASIS OF FAMILY INCOME
(PER MONTH)
45% of respondents are get monthly income of Rs.5,000 Rs.10,000, and 31% of respondents
are get monthly income as less than Rs.5,000. On the other hand, 13% of the respondents get a
monthly income of Rs. 10,000 Rs. 15,000 and 11% get Rs. 10,000 and above.
TABLE 7
TABLE SHOWING SOURCE OF INFORMATION TO SELECT SERVICE
PROVIDERS
S.NO. OCCUPATION NUMBER OF % OF RESPONDENTS
RESPONDENTS
1. Family Members 40 40
2 Neighbours 2 2
3 Relations 5 5
4 Friends 37 37
5 Advertisement 4 4
6 Dealers 6 6
7 Others 6 6
INFERENCE:
The most influencing factor for choosing the service provider according to the respondents is
Family Members (40%) followed by Friends (37%), Dealers and Others (6% both), Relations
(5%), Advertisement (4%) and Neighbours (2%).
TABLE NO: 8
COMPOSITION OF RESPONDENTS ON THE BASIS OF PURPOSE OF PURCHASE
OF THE CELL PHONES
1. For Business 42 42
2 For Personal 58 58
INFERENCE:
42% of respondents are using cell phones for their business, and 58% of respondents are using
cell phones for their personal usage.
TABLE 9
1 Reliance 21 28 49
Communnications
2 Airtel 51 3 54
3 Vodafone 52 9 61
4 Idea 37 1 38
5 Tata Docomo 24 2 24
INFERENCE:
Majority of people prefer prepaid connections with Vodafonel at top followed by Airtel, Idea and
Tata Docomo. People prefer postpaid connection of Reliance but substantial but less people
prefer prepais connection for Reliance.
TABLE 10
TABLE NO: 11
INFLUENCING FACTORS TO SELECT THE SERVICE PROVIDER
S.NO. FACTORS NUMBER OF % OF RESPONDENTS
RESPONDENTS
1. Deposit Amount 13 13
2 Brand Image 45 45
3 Availability 10 10
INFERENCE:
45% of respondents are purchasing a particular service provider by its Brand Image, 17% of
respondents are choosing the particular service provider by their customer care service, 13% by
Deposit Amount, 10% by Availability, 8% by Credit Facility for Connection and 7% by Service
Charges.
TABLE NO: 12
CONSUMERS SATISFACTION LEVEL ON THE BASIS OF PRICE OF THE CELL
PHONE PROVIDERS
INFERENCE:
38% of the respondents are highly satisfied for the price of Vodafone followed by Airtel, reliance
Communications, Tata Docomo and Idea respectively. People using Idea service are not satisfied
in majority out of the total number of respondents using Idea service.
TABLE NO: 13
CONSUMERS SATISFACTION LEVEL ON THE BASIS OF AFTER SALES SERVICE
OF THE SERVICE PROVIDER
S.N SERVICE HIGHLY SATISFACTOR NON TOTA
O PROVIDER SATISFACTOR Y SATISFACTOR L
Y Y
1 Reliance 31 12 6 49
Comunication
s
2 Airtel 45 5 4 54
3 Vodafone 39 12 10 61
4 Idea 9 5 14 38
5 Tata Docomo 15 6 3 24
INFERENCE:
Majority of the respondents (45) are highly satisfied about after sales service by Airtel, followed
by Vodafone, Reliance, Tata Docomo and Idea respectively.
12 (Reliance users) and 5 (Airtel users) are satisfied (average) by the after sales service.
14 respondents of total Idea users are dissatisfied by the after sales service whereas only 6 and 4
users of Reliance and Airtel are dissatisfied.
TABLE NO: 14
CONSUMERS SATISFACTION LEVEL THE BASIS OF PERIODICAL OFFERS
PROVIDED BY THE SERVICE PROVIDERS
S.N SERVICE HIGHLY SATISFACTOR NON TOTA
O PROVIDER SATISFACTOR Y SATISFACTOR L
Y Y
1 Reliance 33 12 4 49
Comunication
s
2 Airtel 25 12 1 54
3 Vodafone 42 5 14 61
4 Idea 9 5 14 38
5 Tata Docomo 14 7 3 24
INFERENCE:
On the basis of periodical offers 42 of Vodafone respondents followed by 33 of Reliance are
highly satisfied, and only 9 respondents for Idea.
12 respondents are satisfied (average) of Airtels and Reliances periodical offers.
14 respondents of Vodafone and Idea are dissatisfied whereas 4 and 1 respondents are
dissatisfied for Reliance and Airtel respectively.
TABLE NO 15
CONSUMERS ATTITUDE TOWARDS THE IMPORTANCE OF CELL PHONES
CALCULATION OF SATISFACTORY SCORES
S.NO. NATURE NUMBER OF %age OF
RESPONDENTS RESPONDENTS
1 Necessity 64 64
2 Status 25 25
3 Luxury 11 11
TOTAL 100 100
INFERENCE:
64% of the respondents state that cell phones are necessity, 25% state cell phones as a status
symbol and 11% of respondents are only states that cell phones are luxury.
TABLE 16
REASONS FOR FACING DIFFICULTY IN CELL PHONE CONNECTION
Coverage 42
Service 32
Clarity 45
Network Busy 56
INFERENCE:
Majority of respondents face difficulty in their cell phone connection due to Network problem
followed by Coverage problem, clarity and Service.
CHI-SQUARE TEST
Chi-square test is one of the simplest and most widely used nonparametric tests in statistical
work. This test was first used by Karl Pearson in the year 1900. The quantity describes the
magnitude of the discrepancy between theory and observation. It is a method to test the
relationship between the theoretical (hypothesis) & the observed value.
Chi square test (2) = (O E)2 / E
Degrees Of Freedom = V = (R 1) (C -1)
Were,
O = Observed Frequency
E = Expected Frequency (Emn = total of column m * total of row n)
Total number of frequencies
R = Number of Rows
C = Number of Columns
For all the chi-square test the table value has taken @ 5% level of significance.
Q11 has been used for the chi-square test.
Since some expected values are less than 5 we are clubbing 1 st,3rd,4th, 7th, 8th, 9th, 11th and 12th
frequencies:
O E (O-E) (O-E)2 (O-E)2/E
15 11.16 3.84 14.7 1.32
16 21.5 - 5.5 30.25 1.341
22 16.50 5.5 30.25 1.83
34 40.92 - 6.82 46.5 1.14
13 9.92 3.08 9.5 0.96
TOTAL 6.591
2 = (O-E)2 / E = 6.591
Number of degree of freedom: ndf = (row-1) (column 1) = (3) (2)= 6
Table value of 2 at 5% level of significance = 12.59
Conclusion:
H0 is accepted since the calculated value of 2 (6.591) less than the table value of 2 (12.59)
hence there is no significant relationship between level of satisfaction and age.
2 = (O-E)2 / E = 15.43
Number of degree of freedom: ndf = (row-1) (column 1) = (1) (2) = 2
Table value of 2 at 5% level of significant = 5.99
Conclusion:
H1 is accepted since the calculated value of 2 (15.43) more than the table value of 2 (5.99)
hence there is significant relationship between level of satisfaction and marital status.
GRADUATE 34 23 4 61
PROFESSIONAL 2 3 2 7
OTHERS 0 0 0 0
TOTAL 48 45 7 100
H0: There is no significant relationship between educational qualification and level of
satisfaction.
H1: There is significant relationship between educational qualification and level of satisfaction
O E
12 15.36
34 20.74
2 3.36
0 0
19 14.40
23 27.45
3 3.15
0 0
1 2.24
4 4.27
2 0.49
0 0
MERGING:
O E (O-E) (O-E)2 (O-E)2/E
12 15.36 - 3.36 11.29 0.74
34 20.74 13.26 175.8 8.48
19 14.40 4.60 21.16 1.47
23 27.45 - 4.45 19.80 0.72
12 13.51 - 1.51 2.28 0.17
TOTAL 11.58
2 = (O-E)2 / E = 11.58
Number of degree of freedom: ndf = (row-1) (column 1) = (3) (2) = 6
Table value of 2 at 5% level of significant = 12.59
Conclusion:
H0 is accepted since the calculated value of 2 (11.58) less than the table value of 2 (12.59)
hence there is significant relationship between level of satisfaction and educational qualification.
PROFESSIONAL 1 1 0 2
EMPLYOEE 15 15 3 33
HOME MAKER 3 4 1 8
STUDENT 35 5 4 44
OTHERS 1 0 0 1
TOTAL 61 30 9 100
O E
6 7.32
1 1.32
15 20.13
3 4.88
35 26.84
1 0.61
5 3.60
1 0.60
15 9.90
4 2.40
4 13.20
0 0.30
1 1.08
0 0.18
3 2.97
1 0.72
4 3.96
0 0.09
MERGING:
O E (O-E) (O-E)2 (O-E)2/E
24 22.63 1.37 1.88 0.08
6 7.32 - 1.32 1.74 0.24
15 20.13 - 5.13 26.32 1.31
35 26.84 - 13.84 191.55 7.14
15 9.90 5.10 26.01 2.63
TOTAL 11.40
2= (O-E)2 / E = 11.40
Number of degree of freedom: ndf = (row-1) (column 1) = (5) (2) = 10
Table value of 2 at 5% level of significant = 18.30
Conclusion:
H0 is accepted since the calculated value of 2 (11.40) less than the table value of x2 (18.30)
hence there is no significant relationship between level of satisfaction and occupation.
H0: There is no significant relationship between monthly income and level of satisfaction.
H1: There is significant relationship between monthly income and level of satisfaction.
O E
16 13.33
22 19.35
3 5.59
2 4.73
13 13.64
20 19.80
5 5.72
6 4.84
2 4.03
3 5.85
5 1.69
3 1.43
MERGING:
O E (O-E) (O-E)2 (O-E)2/E
18 16.72 1.28 1.64 0.10
16 13.33 2.67 7.13 0.53
22 19.35 2.65 7.02 0.36
3 5.59 - 2.59 6.71 1.20
13 13.64 - 0.64 0.41 0.03
20 19.80 0.2 0.04 0.002
5 5.72 - 0.72 0.52 0.09
3 5.85 - 2.85 8.12 1.39
TOTAL 3.702
2= (O-E)2 / E = 3.702
Number of degree of freedom: ndf = (row-1) (column 1) = (3) (2) = 6
Table value of 2 at 5% level of significant = 12.59
Conclusion:
H0 is accepted since the calculated value of 2 (3.702) less than the table value of 2 (12.59)
hence there is no significant relationship between level of satisfaction and monthly income.
TABLE NO. 5.6
CHI-SQUARE ANALYSIS ON THE RELATIONSHIP BETWEEN SERVICE
PROVIDERS AND SATISFACTION
NAME OF THE LEVEL OF SATISFACTION TOTAL
HIGH MODERATE LOW
SERVICE
PROVIDER
Reliance 38 8 3 49
Communications
Airtel 49 4 1 54
Vodafone 23 35 3 61
Idea 13 7 3 23
Tata Docomo 12 18 9 39
TOTAL 135 72 19 226
(The total number of respondents here is more than 100 because of multiple responses by
respondents.)
H0: There is no significant relationship between service providers and level of satisfaction.
H1: There is significant relationship between service providers and level of satisfaction.
O E
38 29.27
49 32.26
23 36.44
13 13,74
12 23.30
8 15.61
4 17.20 MERGING:
35 O 19.43 E (O-E) (O-E)2 (O-E)2/E
716 7.33
13.87 2.13 4.53 0.33
18
38 12.42
29.27 8.73 76.2 2.60
349 4.12
32.26 16.74 280.23 8.69
123 4.54
36.44 - 13.44 180.63 4.9
313 5.13
13.74 - 0.74 0.55 0.04
312 1.93
23.30 - 11.3 127.69 5.48
98 3.28
15.61 - 7.61 57.91 3.71
4 17.20 - 13.20 174.24 10.13
35 19.43 15.57 242.42 12.48
7 7.33 - 0.33 0.11 0.02
18 12.42 5.58 31.14 2.51
3 4.12 - 1.12 1.25 0.30
1 4.54 - 3.54 12.53 2.76
3 5.13 - 2.13 4.54 0.88
3 1.93 1.07 1.14 0.59
9 3.28 5.72 32.72 9.98
TOTAL 65.40
2= (O-E)2 / E = 21.06
Number of degree of freedom: ndf = (row-1) (column 1) = (6) (2) = 12
Table value of 2 at 5% level of significant = 21.06
Conclusion:
H1 is accepted since the calculated value of 2 (65.40) is more than the table value of 2 (21.06)
hence there is significant relationship between level of satisfaction and service provider.
TABLE NO. 5.7
H0: There is no significant relationship between use of cell phone and level of satisfaction.
H1: There is significant relationship between use of cell phone and level of satisfaction.
O E (O-E) (O-E)2 (O-E)2/E
16 11.76 4.24 17.98 1.11
12 16.24 - 4.24 17.98 1.11
24 19.32 4.68 21.90 0.82
22 26.68 - 4.68 21.90 0.82
2 10.92 - 8.92 79.57 5.28
24 15.08 8.92 79.57 5.28
TOTAL 14.42
2= (O-E)2 / E = 14.42
Number of degree of freedom: ndf = (row-1) (column 1) = (1) (2) = 2
Table value of 2 at 5% level of significant = 5.99
Conclusion:
H1 is accepted since the calculated value of 2 (14.42) is more than the table value of 2 (5.99)
hence there is significant relationship between level of satisfaction and use of cell phone.
This chapter is allocated to express the findings of this study. Statistical tools are applied to
analyze the data. It includes the result of each and every tables, charts and tests.
FINDINGS FOR RELIANCE INDUSTRIES LIMITED
The company having comfortable working capital position.
The absolute liquidity of the Reliance Industries Limited is in favour.
The collection policy of the company is very good.
The creditors turnover ratio is 3.33 in 2008-09 as compare to 2007-08 the ratio is 4.62
which is higher than the other years.
Inventory turnover ratio is highest in the year 2006-07 is 9.20 as compare to the other
year but in current year it is 7.51 which is little bit lower than previous year but it is
obvious that in heavy industries like Reliance Industries Limited have lower ratio as
compared to FMCG.
The working capital ratio is 7.60 in 2008-09 and 5.57 in 2007-08 but the best favorable
ratio is in 2005-06 which is 10 times. So it indicates better working capital condition of
the company.
On the basis of consumers attitude, majority of the people are states that cell phones
are necessity to all.
Reasons for facing difficulty in cell phone connection are Network problem followed by
Coverage problem, clarity and Service.
OVERALL CONCLUSION:
Since majority of the factors have significant relationship with the satisfaction level we can
conclude that there is significant relationship between the factors and the satisfaction and hence
we accept the alternative hypothesis of the project i.e. H1.
SUGGESTIONS
The recommendation & suggestion for effective management of working capital at RIL are given
bellow:
1) For inventory, in order to improve the position, RIL can reduce the level of stocks by resorting
to phased production i.e. producing according to requirement and disposing off or recycling the
unserviceable inventories.
However, the low turnover of stock may also be due to problems with generation of sales.
Inventory management is a great concern for RIL especially stores and spares. The purchase
manager should take proper steps for procurement of inventories.
2.) The company must take certain steps to decrease the working capital cycle. One way can be
better management of inventories.
4.) Short term credit period availed must be reduced and sundry creditors should be paid faster.
5.) It should maintain inventory at an optimum level rather than a very optimistic level.
6.) The procurement for materials requisition processing should be reduced so as to minimize the
lead time.
7.) Freedom should be there in deciding the credit policies, cash discount or credit ratings.
8). RIL can also consider negotiating its creditors for relaxing the debt repayment period and
repaying only on or just before the expiry of the credit period.
The recommendation & suggestion for effective management of working capital at RIL are given
bellow:
Reliance Comm. should expand their customer base. But it also has an advantage over
Tata Docomo and Idea.
Reliance Comm. should try to attract old people also.
It should concentrate on good advertisements for their service because, advertisements
take little part for influencing the consumers.
It should try to increase post paid users.
More awareness of their services should be spread to the customers.
Reliance should attract the customers by reducing their price.
Reliance should try to increase their after sales services and decrease their dissatisfied
customers by providing good after sales services.
Reliance should give more periodical offers to its customers.
It should come up with more reasonable and attractive plans for business use.
It needs to focus on providing good clarity of signals as customers prefer Airtel in terms
of signal clarity.
The study involves practical and conceptual over view of decisions concerning current assets
like cash and bank balance ,inventories( like raw materials ,w-i-p,finished goods ),sundry
debtors, loans and advances, other current assets and current liabilities like sundry creditors,
securities and other deposits, other current liabilities and provisions of RIL. Was with the
objective of maximizing the overall net profit of the bank. And complete synchronization and co
ordination among the working capital components which shall contribute to optimum level of
operations. Mismanagement of each or any of these components shall be detrimental to the
objectives of efficient operation, profitability and maximization of overall value of the bank.
The working capital limits would be considered only after the project nearing completion and
after ensuring control over the inventory. The inventory is a great concern for RIL and it need
proper procurement and management.
Eligible working capital limits would be assessed by cash Budget method And Projected
production method depending the market condition, scale of operation, nature of
activity/enterprise and duration/length of operating cycle etc.
This study also attempts to find out the satisfaction of consumer regarding cell phone service
providers. This is an information era significance of information cannot be over emphasized.
This decade, most of the peoples using cell phones. So, service providers are increasing in more
level increasing the level of competition. This leads to adding new features, schemes, periodical
offers to their service and the consumers get maximum benefit from their service provider.
Now-a-days, cell phones are very necessity to all. Because, it is give safety to the men and
women also. They have also become a status symbol for young geeration.
But one should also not forget the disadvantages of cell phones and should try avoiding it
especiaaly for children as it hampers their development mentally and can endager their health.
Crimes are also increasing relating to cell phones and people should be careful.
www.ril.com
http://www.ril.com/html/investor/financials.html
http://www.studyfinance.com/lessons/workcap/
http://en.wikipedia.org/wiki/Working_capital
www.rcom.co.in
www.trai.gov.in
http://www.ibef.org/industry/telecommunications.aspx
Name :
Sex :
Male Female
Age :
Upto 20 yrs 21-30 yrs 31-40 yrs
Marital Status :
Married Unmarried
Educational Qualification
Upto HSC Graduation Professional
Others _____________________________________ (Please Specify)
Occupation :
Business Professional Employee
Q2.) Who influenced you to by the particular cell phone service provider ?
Family Member Neighbours Relations
Others
Q5) If you have postpaid / prepaid connection mention scheme Name & Monthly rental
charges ?
______________________________________________________
Q6) Are you aware of the following details relating in your connection? (Pre / Postpaid
connection)
SCHEME AWARE UNAWARE
Scheme of Initial Purchase
Periodical Offers
Call Waiting and Call Diverting Option
Modes of Payment
Q7) What factor influenced you to decide your Cell Phones service ?
Deposit amount
Brand Image
Availability
Service charges
Q8.) Are you satisfied with your cell phone service provider ?
HIGHLY SATISFACTORY NOT
SATISFACTORY SATISFACTORY
Price
After Sales Service
Periodical Offers
Q10.) What are the reasons of difficulty you face in you cell phone connection (if any)?
Network Busy
Q11.) Rate the service connection you are using on the basis of some factors as follows:
THANKYOU