Beruflich Dokumente
Kultur Dokumente
Gross working capital focuses attention on two aspects of current assets management as
optimum investment in current assets on the other hand net working capital is the difference
between Current Assets & Current Liabilities. In other words net working capital in that portion
of firms current assets which is financed with long term funds rinse assent current liabilities
represents sources of short term funds as long as current assets exceeds must be financed with
long-term source
Sugar Industry :
Sugar industry is one of the largest agro based industry in India. Next to sugar industry
holds the pride of place as an instrument of rural development.The extension of sugar industry
cultivation and setting up new factories since independence have greatly contributed to the socio-
economic development of some rural tracts in the country auth an investment of about 2000
cores the sugar industry provides employment to nearly 4 lakes workers about 80 million farmers
and engaged in sugar cane cultivation in India
In the beginning of sugar industry there was no progress, in the sugar industry. Sugar
industry protection was granted since 1932 efforts were made to establish a modern industry.
Sugar cane is grown nearly in all parts of India.
1
Sugar cane growing area in the country may be broadly divided in two tropical belts. In
the sub tropical and tropical, the sub tropical belt mainly comprises the state of Punjab, Uttar
Pradesh, Bihar, Madhya Pradesh and West Bengal. The tropical belt covers Maharashtra,
Gujarat, A.P., Tamil Nadu and Kerala. The two belts are categorized and by marked difference in
climate and agriculture conditions
The main activity of the organization is manufacturing of sugar and its by products from
the raw material i.e. sugarcane which produced from fields in the surrounding villages.
Through it is the one if oldest industry in India due to bad utilization of resources and odd idea
of working capital management the firm is suffering from losse
2
NEED FOR THE STUDY
To examine and the working capital management of the firm and find out. The effective
utilization of working capital
To study the components of working capital during the seven years period under study
3
OBJECTIVES OF THE STUDY
The present study is intended to analyze the practice in working capital management in
Thandava co-operative sugar industry.
To study the efficiency with which the firm is utilizing its various assets in generating
sales.
4
METHODOLOGY
PRIMARY DATA
SECONDARY DATA
For the proposed project, most of the data will be collected from secondary data. The
secondary data is proposed to collected from annual reports to the Thandava co-operative sugars
limited, and other records maintained by the company
5
LIMITATIONS
Although every effort has been made to study the “working capital management “ in
details, in the Thandava co-operative sugars at Payakaraopeta.
For the accounting year 2004 accounts have not been finalized. Due to this,
information relating to this period is not gathered.
Apart from the above constraints, one serious limitation of the study is, that it is not
possible to reveal of the financial data owing to the policies and procedures laid
down by the Thandava Co-Operative Sugars Ltd. At Payakaraopeta.
Limited time is given to study these aspects.
However the available data is analyzed with great effort to get and insight into
working capital management in Thandava Co-Operative Sugars Ltd. At
Payakaraopeta.
6
INDUSTRY PROFILE
HISTORY
India has been known as the original home of sugar and sugarcane. Indian methodology
supports the above fact as it contains legends showing the origin of sugar cane. India is the
second largest producer of sugar cane next to Brazil. Presently, above 4 million hectares of land
is under sugarcane with an average yield of 70 tons per hectare.
India is the largest single producer of sugar including traditional sugarcane sweeteners,
khan sari and Gur equivalent to 26 million tons raw value followed by Brazil in the second place
at 18.5 million tones. Out of 7 States in last 10 years. India has ranked No.1 position in 7 out of
last 10 years. During 1998-99 India produced 17.0 million tons (155 lakh tones white sugar)
while Brazil had produced 18.5 million tones.
Traditional sweeteners Gur & Khandhasari are consumed mostly by the rural population in
India. In the production of alternate sweeteners, Gur & Khandsari were produced where better
standard of living and higher income groups were there. The sweeteners demand has shifted to
white sugar currently; about 1/3rd sugar cane production is utilized by the Gaur and Khandhasari
sectors.Being in the small-scale sector, these two sectors are completely free from controls and
taxes, which are applicable to the sugar sector.
Sugar industry is mostly situated in the regions where the land is fertile and suitable for
growing in A.P. It is one among such fertile regions of India and has been a sugar cane
cultivating state for a long time. It is one of the major sugar productions of Khandasari and Gur
till recent past although sugar factories existed in India since 1920.It was only in 1950, that A.P.
had a chance of establishing these factories in A.P.
A.P. Govt. announced a proposal for establishment of 5 more sugar units in co-operative
sector in April 1982.178 thousand acres are under sugar cultivation which constructs 7% of the
total acreage in India.
7
During the recent years, this was decreasing and this figure has come down to the thousand
hectors during 1980-91 which was around 5% of the average figure of India. The figure for A.P.
was 76 tons in 1965-66 when it was 43.7 tons per hector for India almost 80% higher. The yield
per hector in A.P. is compared to that of mass-producing state like U.P. where then exit 38.2
tones per hectors in 1978-79 and Bihar where 27-12% per hector in 1978-79 was prese
The total sugarcane produced in the state is just 8% of the total production in India is 1950-
51. The total production is 49.10 thousand tones out of 69.22 thousand tones for 1978-79 this
figure has gone up to 9,482 thousand tones which is 36.2% of the total production. This
production for all India in 1978-79 is 38.2%. The total sugar cane produced in the year 1986-87
season of A.P. was Rs 8,800 thousand tones. So the contribution of A.P. in the total production is
5.52%.
India has been divided into three areas in the sugar recovery attained by factories of Andhra
Pradesh fell into medium recovery for the date during the year 1986-87 was 9.6%.
Andhra Pradesh is the major lead regarding sugar production. The sugar recovery is more
then compared to average sugar crushing season and the average recovery of India crushing
season is low due to more production of average recovery of india.Crushing season if low due to
more production of Gur and Khandasari. The farmers are supplying to that of sugar factories and
transport facilities.
There, the farmers are making for the nearby fields. The cane price also is not favorable that
is price of sugar cane fixed by the factories is low. That is not commercial therefore the seasonal
is short in A.P. so the sugar production in A.P. is unfavorable.
A.P. produced more than 310 lakhs tones out of a total production in the year 1987-88. In
1979-80 the production was 34 thousand tones out of which 1,017 thousands tones of sugar
production which was 5.15% of total production in A.P has increased sugar production in India.
The total sugar consumed by A.P. excluding Khandasari sugar was 292 thousand tones,
where as in India it was 5,105 thousand tons in 1987. A.P always has been a surplus state as far
as sugar is consumed till 1977-78 during which years the total production was 5,405 thousand
tones yearning a surplus production of more than 150 thousand tones.
8
SUGAR FACTORIES IN INDIA
CO-
STATE PUBLIC PRIVATE TOTAL
OPERATIVE
Andhra Pradesh 05 16 14 35
Assam 01 03 02 06
Bihar 15 15 - 30
Gujarat - - 18 18
Haryana - 01 10 11
Kerala - 01 04 05
Madhya Pradesh 01 04 03 08
Maharashtra - 06 10 109
Orissa - 01 04 05
Nagaland 01 - - 01
Pondicherry - 01 01 02
Punjab 03 03 03 09
Rajasthan 01 01 01 03
TamilNadu 03 12 12 27
West Bengal 01 02 02 05
Others 02 02 02 06
1930-1931 148
1940-1951 158
1950-1961 173
1970-1981 314
1989-1990 377
2001-2002 475
2002-2003 370
2003-2004 348
2004-2005 556
10
COMPANY PROFILE
INTRODUCTION
Date of registration of Thandava Co-operative Sugars was done on 9th Feb 1957. Date of
starting the plant from 21st August, 1957. The cost of the land with registration of Rs.57.92. The
plant started production in 1964, with a capacity of 350 tcd (tones crushing per day) later in
1971. It was increased to 1250 tcd. After 10 years the new plant was constructed just by the side
of old plant with a capacity of 1750 tcd. Still now plant is running smoothly with profits with
this plant 649 numbers employees are recruited and around 1500 families are indirectly
benefited.
1) To raise the share capital and to borrow funds either on this security of the property of
the society of otherwise from co-operative societies of Govt. industrial finance
corporation, life insurance, corporation and other sources.
2) To purchase to take on base or otherwise acquire land houses and other buildings or
railway siding that may be necessary or expenditure for the above purpose.
3) To purchase and install the machinery.
4) To purchase sugar cane and other raw material from members or non members and also
to undertake cultivation of sugarcane.
11
Growth & Development
Thandava co-operative sugar plant is take more care to growth and development of the
organization the capacity of the plant is 1750 tcd. In that 12% of power will be used for plant
auxiliary consumption. So around 1800 units consumed per day for auxiliary total export of A.P.
Transco will pay tone per unit. But since 4 months they are paying 2.84 poise per unit as per
regulation commission rules.
12
SHARE CAPITAL POSITION
The authorized share capital of the society under by law no. 6 of the bylaws
of the society has paid up share capital of Rs. 179.19. The Govt. of Andhra
Pradesh has contributed on amount if 1159.14 lakhs towards their share in the
capital structure of the society.
MEMBERSHIP
Including Govt. of Andhra Pradesh as on date there are 11,581 share
holders in the society out of the above share holders 500(approx.) are female
members. As the factory situated in the backward area of Visakhapatnam and East
Godavari District most of the members are small and marginal farmers belonging
to the backward community out of 11,581 members excluding govt. About 7000
cane grower members are growing cane and supply to the factory only from 1990-
13
91 season. The cane plantation agreements and supply have been increased
considerably on account of various cane development activities taken up by the
management in the factory zone. Which includes issue of the free fertilizers
pesticides etc?
For the year 2003-04 the Govt. of India has fixed minimum cane price or
Rs. 815.00 per million tones. Linked to 9.241 recoveries. Accordingly the cane
price for the years payable for the year works out of Rs. 875(including Tax). The
company has paid the cane price initially @550 per million tones. On all the cane
supplied during the year 2001-02. Thus the company has to pay the balance cane
price Rs. 153.90 per million tone for which action is being taken to start the
payment with in a period of 10 days.
The society borrowed funds amounting to Rs. 3334.17 lakhs from the
central financial institutions.
14
State co-op. Bank Ltd, Hyderabad. 500.00
VisakhaCo-operativeBank 295.00
___________
3334.47
Purchase Tax
The Govt has increased purchase tax Rs.32% to Rs. 60% per million tone
as from 1997 to 2004 company has paid Rs.
2001-02 1,36,64,988
2002-03 1,13,00,955
2003-04 1,72,57,471
1) Entrance Fee
2) Issue of share
3) Deposits
15
4) Loans & over drafts
5) Debentures
6) Donation & grants
Export The difference in crushing period in India and other major producers
exporters like Brazil and Australia can be utilized to top the export market in a
big way for the purpose of comparison the crushing season for different. Sugar
cane producing countries like India
Mexico Nov.-July
USA Oct.-June
Brazil June-May
Africa April-Nov.
China Jan-Dec.
Pakistan Nov-May
India Oct.-June
16
Imports:
The govt. Controls import of sugar through import policy and custom duties
based on a demand-supply mismatch in the country..
EXPORTS
The substantial increase in the volume of free international trade in sugar
present on excellent opportunity to the Indian sugar industry to embark on regular
plan for sugar exports.
AUDITING
Thandava Co-operative Sugars Ltd. has been auditing by Sri Brahmayya &
co, charted accountant, Vizag
He shall organize overall meetings of the board and general body. He shall
be responsible for bringing all policy matter before the board and general body and
shall see the effective implementation of the resolution posses by the set of bodies
in his absence vice-chairman will preside over the board and general body.
Managing Director
Departments
1) Administrative
2) Accounts Department
3) Agriculture Department
4) Engineering
5) Manufacturing
ADMINISTRATIVE DEPARTMENT
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The administrative department officer and chief personal office are the
heads of these departments. He is the next to managing director. He shall be
exercise such powers and performs such duties as may be entrusted to him from
time to time by the M.D. under the administrative officer. There are 7
departments, which are directly responsible to him.
ACCOUNTS
General Accounts
Store Accounts
Cane Account
ENGINEERING DEPARTMENT
The chief engineer heads this department. The plant and machinery of the
factory are under control of chief engineer. He formulates the techniques of
current and economic crushing of sugar cane shutting to the machinery and
equipment responsible for keeping in day today check on milling boiler and power
house performance and stem steam and power consumption at various section of
the factory.
Chief Chemist heads this department side of the factory from juice to final
bagging of sugar. The department is to see the good quality of the sugar
production. He has to co-ordinate the work of manufacturing department with that
of the engineering and department.
AGRICULTURE DEPARTMENT
Chief agriculture officer heads this department- The duties of the chief
agriculture officer can be divided in two distinct spheres.
20
Cane Development
Cane Procurement
There are 5 agriculture officers. The duties and responsibilities of the field
officers and agriculture officers. The duties and responsibilities of the and
agriculture officer to develop sugar cane plants registered and also to meet the cane
growers and issue proper instruction to them.
INTRODUCTION
Funds are required for two basic reasons in any organization. First, funds are
needed for the creation of productive, Capacities, and Purchases fixed assets,
secondary, to finance a post for the day to day running of business which in other
words is the working capital.
Working capital management takes care of the problem that arises during the
management of current assets, current liabilities and inter relationship that exit
between them, thus it is also known as current asset management and current
liabilities from an integral from an integral part in the balance sheet of the firm
21
Working capital is an integral of overall corporate management the finance
manager has to carry out the finance function is the face of risk cannot be
predicated with certainty.
Definitions
In the broad sense the term working capital is used to denote the total
current assets. The following are some definition of this group.
Any acquisition of funds which increase the current assets increase working
capital also for they are one and - (Bonneville)
In the narrow sense working capital is regarded as the excess of current assets
over current liabilities. This is the definition used by the most financial experts
and authors emphasizing the accounting phase of finance
Gross concept
Net concept
“Net working cap ital is the difference between the total current asset and
total current liabilities” but generally, Net working capital is referred as
22
working capital. Net working capital can be defined as current assets, which
are finance with LONG-TERM funds
COMPONENTS
Current assets
Current liabilities
CURRENT ASSETS
Current have short life span one are subject to swift transformation into
other assets forms.
Stock (raw material , stores & spaces , work in progress and finished
goods)
Sundry debtors (less provision for bad and doubtful debts)
Loans and advances.
Cash and bank balance
CURRENT LIBILITIES
Sundry creditors
23
Short term barrowing
Bank and overdrafts and loans
Advances and deposits.
2 what should be the ration of short term financing to long term financing
There are number of factors influencing the working capital needs of the firm.
It represents the assets required on continuing basis over the inter year.
Tendon committee has reserved to this type of working capital as core current
assets
CHARACTERSTICS
POLICY
EXCESS
CASH
DEFICIE
NCY
Credit management
Minimize cost
POLICY
EXCESS
27
DEFICIENCY
The amount of working capital over permanent working capital. It may again
be submitted into seasonal and special working.
28
Sources of working capital:
Internal External
29
Funds Credit Papers
Sale of debentures
Factoring
There are several tools of analyzing the working capital of concern. The
important they are as follows.
30
a) Static Tools
b) Dynamic Tools
A)Static Tools
B)Dynamic Tools
Funds flow analysis of working capital: Funds flow analysis is also an effective
management tool to study funds how have been procured for business and how
they have been employed.
31
Working capital budget
1. Inventory Report
2. Cash Report
32
It reflects the net liquid position of the concern. Usually cash reporting is
done on daily basis. Cash reports show the summary of daily cash receipts and
cash distribushment x the cash balance.
Net working capital is the excess of current assets over current liabilities.
1. CASH
2. Marketable Securities
33
They are the temporary or short term investments in shares, debentures,
bonds and other securities. These are readily marketable and can be converted in
to cash within the accounting period. A firm usually invests in them when it has
temporary surplus cash.
STOCK OR INVENTORY
They are the expenses of future period paid in advance. Example of these
is prepaid insurance prepaid rent or taxes paid advances.
The closing stock figure is divided by the working capital, which depicts the
proportion of working capital represented by the inventories.
34
It measures the operating efficiency of the enterprise. It shows the number
of times the goods are turned over during a particular period. It may be expressed
in reference to cost or selling price.
The ratio is calculated with reference to average monthly net sales. It shows the
time that will be taken to pay the short-term obligations from the business
operation.
1. Current Assets
2. Cash ratio:
35
It is the ratio of cash x cash equivalents assets to current liabilities.
There does not seen to be any standard ratio for measuring cash position.
However, some authorities favor that the cash ordinarily should not be less than
10% to 15% of current liabilities. We can calculate cash velocity. High velocity
of suggests effective utilization of cash reserves.
Net Sales
Cash Velocity = ------------------
Cash
Net Sales
Working capital turnover ratio’s= ----------------------------
Net Working Capital
It gives over all position of the liquidity. Solvency position of the
firm. It is not measurement to working capital position.
36
5. Current assets turnover
This ratio gives the sales revenue to total current assets measures how
effective management is in controlling the liquid assets.
Higher the value of this ratio better is the position. It shows over under
trading position in relation to the quantum or working capital Sales revenue
6. Current Ratio:
7. Quick ratio
They are current assets because their benefits will be received with in firms
has earned but not yet received. They include accrued dividends accrued interest
37
They include dues from employees or associates advances, advance
for current supplies and advances against acquisition of capital assets. Except for
the advances payment for current supplies it is not proper to include loans and
advances in current assets.
CURRENT LIABILITIES
They are debts payable with in an accounting period current assets are
converted to cash to pay current liabilities sometimes new current liabilities.
Sometimes new current liabilities may be incurred to liquidate the existing ones.
1. Sundry creditors
They represent the current liabilities towards suppliers whom the firm has
purchased raw material on credit.
2. Bills payable
They are the promises made in writing by the firm to make payment of a
specified sum to creditors over the firm to become bills payable ones the firm
accepts them. They have a life of less than a year.
3. Bank borrowings
38
4. Provisions
5. Outstanding expenses
The firm may owe payments to its employees and others at the end
of the accounting period for the services received in the current year. These are
payable within a year short period. Examples are wages payable, rent payable.
These are raised by a firm for financing its current assets. These are
raised for duration of one year through three years
Nature of Business
39
Seasonality of operations
Production policy
Market conditions
Condition of supply
Nature of Business
For instance retail sources must carry large stock of a variety of goods
to satisfy various and continuous demand of their customers. On working capital
needs working capital needs tend to be high balance of greater investment in
finished goods inventory and accounts receivable.
Conditions of supply
Seasonality of operations
Production policy
Market conditions
The firm’s policies for managing its working capital should be designed to
achieve three goals.
Adequate liquidity
If a firm lakhs sufficient cash to pay its bill when due;it will experience continuing
problems. The most important goal is to achieve adequate liquidity for the conduct
of day-to-day operations.
41
Cash inventories
Receivable
Minimization of risk
In selecting its source of financing. Payables and other short-term liabilities
may involve relatively low cost. The firm must ensure that near-term obligations
do not become excessive compared to the current assets on hand to pay them.
The firm holds working capital for the same purpose as it holds any other
assets that are to maximize the present value of common stock and value of the
firm. It should not hold idle assets current assets more than it should have idle the
investment of excess cash, minimizing of inventories speedy collection of
receivables and elimination of unnecessary and costly short-term financing an
contribute to maximize the value of the firm.
components etc. are usually made on a credit basis , thereby giving rise to the
spontaneous current liability namely, accounts payable. When the average payment
period of the company to its suppliers is deducted from the gross operating cycle
period the resultant period is called net operating cycle period or simply
43
DATA ANALYSIS & INTERPRETATION
This chapter deals with the calculation statement of changes in working
capital and the ratios related to working capital management
Ratio analysis
44
Statements of changes in working capital
Working capital means the excess of current assets over current liabilities.
45
COMPARITIVE BALANCE SHEET OF THANDAVA CO- OPERATIVE
SUGERS, FOR THE YEAR 2006-2007.
INCREASE DECREASE
CURRENT ASSETS:
closing stock 29,91,92,835 33,48,92,289 6,39,51,821
Postage 1,768 1,990 41
saving bank a/c 1,91,725 1,23,305 9,423
current account with bank 15,50,936 1,15,08,645 47,98,494
cash in hand 21,29,237 21,62,083 16,95,015
members loan 74,41,664 58,18,093 30,43,890
interest due 26,523 4,89,467 48,97,936
adjusted due 7,40,37,241 6,98,58,091 21,73,860
total current asset 38,45,71,929 42,48,53,963
CURRENT LIABILITIES
cash credit from CCB 24,13,65,169 25,83,53,430
sundry creditors 52,69,025 52,69,025
Establishment contingent
charges 6,43,57,512 7,00,36,979 23,29,509
Interest due and payable 92,35,782 96,09,183 5,71,627
reserve of interest 18,17,78,871 19,19,09,196 29,52,300
other liabilities 14,32,97,957 11,41,74,869 7,05,97,728
total current liabilities 64,53,04,316 64,93,52,682
NET WORKING
CAPITAL:(A-B) -26,07,32,387 -22,44,98,719
46
12,23,82,29
GRAND TOTAL 12,23,82,296 6
INTERPRETATION
From the above table it is clear that the working capital of the Thandava Co-
operative Sugars ltd year 2006 current liabilities more than current assets net
working capital position was not satisfactory during the year 2007
47
COMPARITIVE BALANCE SHEET OF THANDAVA CO- OPERATIVE
SUGERS .FOR THE YEARS 2007-2008
INCREASE DECREASE
CURRENT ASSETS:
closing stock 31,14,74,675 32,43,72,061 1,28,97,386
Postage 2,452 6,27 1,825
saving bank a/c 1,26,079 1,31,815 5,736
current account with bank 4,26,04,048 2,05,88,656 2,20,15,392
cash in hand 42,67,809 23,81,722 18,86,087
members loan 84,43,740 1,27,43,145 42,99,405
interest due 11,56,658 17,74,331 6,17,673
adjusted due 6,53,29,111 6,70,11,384 16,82,273
total current asset 43,34,04,572 42,90,03,741
CURRENT LIABILITIES
Sugar pledged A/c APCOB 0 20,13,45,825 20,13,45,825
cash credit from CCB 26,98,99,729 -64,57,391
sundry creditors 52,69,025 52,69,025
Establishment contingent
charges 6,98,75,739 7,24,43,626 25,67,887
Interest due and payable 99,83,594 1,03,58,065 3,74,471
reserve of interest 19,98,73,349 20,42,38,163 43,64,814
other liabilities 8,36,94,202 7,65,85,574 71,08,628
TOTAL CURRENT
LIABILITIES 63,85,95,638 56,37,82,887
NET WORKING
CAPITAL:(A-B) -20,51,91,066 -13,47,79,146
For the year 2007 current liabilities are more than current Assets. There is
change in Current Assets and current liabilities. Net working capital has shown the
table. In the year 2007 net working capital is 20,59,45,200 Net working capital
position was not satisfactory during the year 2007
49
COMPARITIVE BALANCE SHEET OF THANDAVA CO- OPERATIVE
INCREASE DECREASE
CURRENT ASSETS:
closing stock 32,43,72,061 24,86,24,696 7,57,47,365
Postage 627 537 90
saving bank a/c 1,31,815 2,860 1,28,955
current account with bank 2,05,88,656 28,28,135 1,77,60,521
cash in hand 23,81,722 14,24,473 9,57,249
Members loan 1,27,43,145 1,40,38,468 12,95,323
interest due 17,74,331 19,56,460 1,82,129
adjusted due 6,70,11,384 8,25,12,511 1,55,01,127
total current asset 42,90,03,741 35,13,88,140
CURRENT LIABILITIES:
Sugar pledged A/c APCOB 20,13,45,825 15,61,27,804 4,52,18,021
cash credit from CCB -64,57,391 -1,36,588
sundry creditors 52,69,025 52,69,025
For the year 2008 current liabilities are more than current Assets. There is
change in Current Assets and current liabilities. In the year 2008 net working
capital is 6, 25, 29,477 Net working capital position was not satisfactory during the
year 2009.
51
COMPARITIVE BALANCE SHEET OF THANDAVA CO- OPERATIVE
INCREASE DECREASE
CURRENT ASSETS:
closing stock 24,86,24,676 31,61,58,077 6,75,33,381
Postage 537 621 84
saving bank a/c 2,860 2,926 66
current account with bank 28,28,135 17,94,585 10,33,550
cash in hand 14,24,473 9,33,910 4,90,563
members loan 1,40,38,468 1,09,85,987 30,52,481
interest due 19,56,460 17,44,346 2,12,114
adjusted due 8,25,12,511 7,44,12,654 80,99,857
total current asset 35,13,88,140 40,60,33,106
CURRENT LIABILITIES:
Sugar pledged A/c APCOB 15,61,27,804 21,14,09,651 5,52,81,847
cash credit from CCB -1,36,588 -1,36,588
sundry creditors 52,69,025 52,69,025
For the year 2009current liabilities are more than current Assets. There is
change in Current Assets and current liabilities In the year 2009 net working
capital is 80, 46, 275, Net working capital position was not satisfactory during the
year 2010
53
COMPARITIVE BALANCE SHEET OF THANDAVA CO- OPERATIVE
SUGERS .FOR THE YEARS 2010-2011
INCREASE DECREASE
CURRENT ASSETS:
closing stock 31,61,58,077 25,22,06,256 6,39,51,821
Postage 621 662 41
saving bank a/c 2,926 12,349 9,423
current account with bank 17,94,585 65,93,079 47,98,494
cash in hand 9,33,910 26,28,925 16,95,015
members loan 1,09,85,987 79,42,097 30,43,890
interest due 17,44,346 66,42,282 48,97,936
adjusted due 7,44,12,654 7,22,38,794 21,73,860
total current asset 40,60,33,106 34,82,64,444
CURRENT LIABILITIES
Sugar pledged A/c APCOB 21,14,09,651 17,10,25,992 4,03,83,659
cash credit from CCB -1,36,588 -1,36,588
sundry creditors 52,69,025 52,69,025
55
RATIO ANALYIS
The finance manager always tries to maintain an adequate working capital at every
time. So as to carry on the operation successfully and maximize the return of
investment.
These ratios are much help to the firm. To know the working capital position
of the firm.
The most important rations for determining the trend in the business over a period
of year are as follows.
56
WORKING CAPITAL TURNOVER RATIO
This is computed by the net sales dividing by networking capital. The term
net working capital represents the excess of current assets over current liabilities.
This ratio shows the number of times working capital is turned over in a state
period.
WORKING
NETWORKING CAPITAL
YEAR NET SALES
CAPITAL(INCRORES) TURNOVER
RATIO
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WORKING CAPITAL TURNOVER RATIO
Ratio
2007 2008 2009 2010 2011
6.46
5.25
-0.89
-1.72
-7.88
INTERPRETATION
The working capital turnover ratio of the Thandava co-operative sugar Ltd.,
was satisfactory compare to the past years. it indicates the efficient utilization of
working capital by the management of the company. In the year 2011 the company
has recorded a high ratio which is good for the firm. As it may lead to financial
position. But overall working capital turnover ratio of the company has been
satisfactory
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STOCK TURNOVER RATIO
This ratio also knows a inventory turnover ratio establishes relationship between
cost of goods during a given period and the average amount f inventory held
during that period. This ratio reveals that number of times of finished stock is
turned over during a given accounting period. Higher the better it is because it
shows that finished stock is rapidly turned over.
On the other hand a low stock turnover ratio is not desirable because it reveals that
accumulation of obsolete stock or the carrying of too much stock.
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STOCK TURNOVER RATIO:
Ratio
2007 2008 2009 2010 2011
1.42
0.86
0.8 0.8
0.56
INTERPRETATION
The above table shows that in the year 2007 inventory turnover ratio is
higher i.e. 0.56, comparing to the other years but in the year 2008 the company has
recorded ratio I 1.42, but in the year 2011 indicates its turnover is decreases to
0.80. The inventory turnover ratio indicates the no. of tires during the year the cost
of goods sold with the stock in the track this ratio indicates the efficiency in
inventory management.
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CURRENT RATIO
The ratio measures the solvency of the co. in the short term. Current assets are
those assets, which can reconverted in to cash within a year current liabilities and
provisions are those liabilities that are payable with a year. A current ratio 2:1
indicated a highly solvency positions
It is the ratio of current asset to current liabilities. it shows the firm’s ability to
cover its current liabilities with its current assets.
Current liabilities
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CURRENT RATIO
Ratio
2007 2008 2009 2010 2011
1.18
1.08
0.88
0.68
0.65
INTERPRETATION
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LIQUIDITY RATIO
This is the ratio of liquid asset to liquid liabilities. it shows firm’s liability
To meet current liabilities with its most liquid assets 1:1 ratio is considered ideal
ratio for a concern because it is wise to keep the liquid assets at least equal to the
liquid liabilities at all times. liquid assets are those assets which are readily
converted into cash and will include cash balance, receivables sundry debtors and
not includes in liquid assets because the emphasis is on the ready availability of
cash in case of liquid assets. Liquid liabilities include all items of current liabilities
except bank over draft. This ratio also called the acid-test of a concern’s financial
soundness.
Liquid liabilities
Ratio
2007 2008 2009 2010 2011
0.29
0.26 0.26
0.19
0.14
ratio
INTERPRETATION
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QUICK RATIO
It is very important ratio with the comparing of other ratios. Quick ratio is also
called acid test ratio or Liquid ratio this ratio is calculated by considering quick
assets (current assets-inventories) the numerator and current liabilities in the
denominator
Quick Assets
= -------------------
Current Liabilities
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QUICK RATIO
Ratio
2007 2008 2009 2010 2011
0.29
0.26 0.26
0.19
0.14
ratio
INTERPRETATION
Above table shows the Quick Ratio of The Thandava Co-operative Sugars Limited
Ltd. The quick ratio of The Thandava Co-operative Sugars Limited ltd is
fluctuating from the year 2007-2011. But in all years the company maintained ideal
quick ratio 1:1
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DEBTORS TURNOVER RATIO
Debtor’s ratio or accounts receivable turnover ratio indicates the velocity of debt
collection of a firm. In simple words turnover it indicates the number of times
average debtors (receivable) are turned over during a year
Or
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DEBTORS TURNOVER RATIO
Ratio
25000000
20000000
15000000 2007-2008
2008-2009
10000000
2009-2010
5000000 2010-2011
0
Sales Opening Closing Average Ratio
INTERPRETATION
The table shows the debtors turnover ratio position for the years 2007-
2011 of The Thandava Co-operative Sugars Limited Ltd the debtor’s turnover
ratio of The Thandava Co-operative Sugars Limited Ltd is fluctuating from the
year 2007-2011 but over ally the debtor turnover ratio of The Thandava Co-
operative Sugars Limited Ltd decreased from the year 2007-2011
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STOCK CONVERSION PERIOD
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STOCK CONVERSION PERIOD
Chart Title
2007 2008 2009 2010 2011
651.8
456.3 456.3
424.4
257.4
INTERPRETATION
The above graph shows the stock conversion period of The Thandava Co-
operative Sugars Limited Ltd the stock conversion period of The Thandava Co-
operative Sugars Limited Ltd in increasing trend from the year 2007-2011 the ratio
is decreasing 2 times in the year 2011 when compared to the year 2006-2007
because of increasing stock turnover ratio
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SUMMARY
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In our country there are 213 co-operative sugar factories and in our state 18
co-operative factories are running. Among them there are only four factories
running with profits and remaining 14 running in losses.
Thandava Co-operative Sugars Limited agro based seasonal factory has been
providing employment to the surrounding village’s people to the factory. The
factory has been supplying different loans to the member’s sugar cane growers at
the rate of subsidies less interest to by measures factors modern appliance an
denying bore wells for increase sugar cane production
In these way sugar cane growers raising this living standards. The looks after
each and every that is going on in the factory. His co-ordinate all the five
department’s activities.
The administrative department is the back bone of this factory. Under this
department many things in the factory security office, time office, stores, sugar god
owns, marketing etc.
The administrative office also looks after the welfare of the employees.
Chief account officer has to attend all works relating to the many transaction of the
factory.
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FINDINGS
2010-11
One important general finding is the company did not follow nay
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SUGGESTIONS
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CONCLUSION
The company is able to reduce its working capital from, 1647722 lacks
to 3208281 lacks in a span of five years without affecting the sales of
the company which means that company is sincerely utilizing its funds
and has reduced the locking of funds.
The current liabilities of the company have increased which means that
company has adopted a good realization policy.
The current ratio of the company in last five years has increased from
2.6 to 2.78 which reveal that company is moving from conservative
working capital strategy to aggressive working capital strategy.
The quick ratio of the company has inclined from 1.66 to 2.10 in the
span of five years.
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BIBLIOGRAPHY
WEB SITES
www.nse.com
www.google.com
www.mba.blogspot,com
www.citefinance.com
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