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A Summer Training Report

ON

Working Capital Management

CONDUCTED AT
PARLE BISCUITS PRIVATE LIMITED
Bahadurgarh

Submitted in partial fulfillment for the award of degree of

MASTER OF BUSINESS ADMINISTRATION


(SESSION 2005-2007)

SUBMITTED BY:
BHUPENDER SINGH
MBA –2ND YEAR

P.D.M.COLLEGE OF ENGINEERING,
SARAI AURANGABAD, BAHADURGARH
APPROVED BY
MAHARISHI DAYANAND UNIVERSITY, ROHTAK

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DECLARATION

I, Roll No Class of the PDM College of


Engineering here by declared at the project entitled
is an original work and the same has not been submitted to any other
institute for the award of any other degree. The interim was presented to the supervisor on
and the pre submission presentation was made on ____________. The feasible suggestions have
been only incorporated in consultation with the supervisor.

Countersigned

Signature of the Supervisor

Forwarded By Signature of the candidate

Director/Principal of the Institute

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TABLE OF CONTENTS

 ACKNOWLEDGMENT 4
 PREFACE 5
 INTRODUCTION
* HISTORY OF COMPANY 6
* PRODUCT PROFILE 18

 MANAGERIAL USEFULNESS OF STUDY 49


 CONCEPTS USED IN STUDY 50
 FOCUS OF THE PROBLEMS 51
 OBJECTIVES OF THE PROJECT 52
 SCOPE OF THE WORK 54
 RESEARCH METHODOLOGY 55

* RESEARCH DESIGN
* UNIVERSE AND SURVEY POPULATION
* SAMPLE
* SAMPLING METHOD
* COLLECTION OF DATA

 DATA ANALYSIS 60
 FINDINGS 74
 RECOMMENDATION 76
 LIMITATIONS 77
 CONCLUSIONS 78
BIBLIOGRAPHY
79
ANNEXURE
80

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ACKLNOWLEDGEMENT

The satisfaction and euphoria that accompany the successful completion of any task would

be, but incomplete without mentioning the people who made it possible, whose constant guidance

encouraging crowned my effort with success.

I would like to begin with a special note of gratitude and heartfelt thanks to Mr. S. S.

SHIVRAIN, General Manager, who gave me the opportunity to complete my summer project at PARLE

BISCUITS PRIVATE LIMITED Bhadurgarh, Haryana.

I am extremely grateful to the Deputy Manager of Finance Department Mr. JAIDEEP

BHALA for his constant encouragement and valuable suggestions throughout my summer training and

project for his cooperation extended to me.

I am extremely indebted to Mr. PAWAN TYAGI, Mrs. SANTOSH NARWAL, Mr. S.N.

VERMA, Mr. AKHIL RASTOGI, Mr. VINOD, Mr. AJAY SINGAL, Mr. PARMINDER SINGH,

Mr. VIJENDER SINGH, and Mr. MANOJ for sharing their valuable time, comments and encouraging

suggestions which guided and inspired me throughout the preparation of the project.

I express my special thanks to Mr. K.G. CHACKO (OFFICE MANAGER), Mr. RAJIV

SINGH (I.T. MANAGER), Mr. VIJAY KUMAR THAKUR (I.T. ASSTT. MANAGER), Mr. JANAK

SHEKHAWAT (HR &P), Mr. SANJAY GOEL, Mr. VIDYA DHAR KASWAN (PURCHASE

OFFICERS) for giving me their valuable opinions time to time.

At last but not the least, I am very thankful to all the staff members of I.T. department also.

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PREFACE

Practical work experience is the integral part of individual learning. An individual who is

learning managerial concepts has to undergo this practical experience for being a future executive.

Master of Business Administration is a two-year programme that inserts management

knowledge in an individual to make that individual completely professional for which practical experience

is must.

Parle Biscuits Pvt. Ltd. is the market leader in biscuit industry. Bahadurgarh plant

of PBPL offered me a project on Working Capital Management to understand the current position through

dates provided by them.

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HISTORY OF COMPANY

INTRODUCTION

A long time ago, when the British ruled India, a small factory was set up in

the suburbs of MUMBAI city, to manufacture sweets and toffees. The year was 1929 and the market was

dominated by famous international brands that were imported freely. Despite the odds and unequal

competition, this company called

Parle Products, survived and succeeded, by adhering to high quality and improvising from time to time.

A decade later, in 1939, Parle Products began manufacturing biscuits, in addition to sweets

and toffees. Having already established a reputation for quality, the Parle brand name grew in strength with

this diversification. Parle Glucose and Parle Monaco were the first brands of biscuits to be introduced,

which later went on to become leading names for great taste and quality.

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HOW PARLE FOUGHT TO MAKE BISCUITS AFFORDABLE TO ALL

Biscuits were very much a luxury food in INDIA, when Parle began production in 1939.

Apart from Glucose and Monaco biscuits, Parle did offer a wide variety of brands.

However, during the Second World War, all domestic production was diverted to assist the

Indian Soldiers in India and Far East. Apart from this, the shortage of wheat in those days, made Parle

decide to concentrate on the more popular brands, so that people could enjoy the price benefits.

Thankfully today, there’s no dearth of ingredients and the demand for more premium

brands is on the rise. That’s why; we now have a wide range of biscuits mouthwatering confectioneries to

offer.

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THE QUALITY COMMITMENT

Parle Product Private Limited has 3 manufacturing plants –

1) VILE PARLE in Mumbai (Maharashtra)

2) BHUJ (Gujarat)

3) BANGLORE (Karnataka)

Apart these plants Parle Product Pvt. Ltd. maintain 20 contract base manufacturing units in

all over INDIA. These plants and CMU’s produce sweets and confectionary products.

Parle Product Pvt. Ltd. has also a subsidiary company, which is Parle Biscuit Pvt. Ltd. This

subsidiary company produces only biscuits. It also has 2 manufacturing plants –

1) BAHADURGARH in Gurgaon (Haryana)

2) NEEMRANA in Alwar (Rajasthan)

Apart these two plants Parle Biscuit Pvt. Ltd. maintain 11 contract base manufacturing units

on different locations, which produce only biscuits.

All these factories are located at strategic locations, so as to ensure a constant output & easy

distribution. Each factory has state-of-the-art machinery with automatic printing & packaging facilities.

All Parle products are manufactured under the most hygienic conditions. Great care is

exercised in the selection & quality control of raw materials; packaging materials & rigid quality standard

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are ensured at every stage of the manufacturing process. Every batch of biscuits & confectioneries are

thoroughly checked by expert staff, using the most modern equipment.

THE MARKETING STRENGTH

The extensive distribution network built over the years is a major strength for Parle

Products. Parle biscuits and sweets are available to consumer even in the most remote places and in the

smallest of villages with a population of just 500.

Parle Has nearly 1500 wholesalers catering to 4,25,000 retail outlets directly or indirectly.

A two hundred strong dedicated field force services these wholesalers and retailers. Additionally there are

40 depots and C&F agents supplying goods to the wide distribution network.

The Parle marketing philosophy emphasizes catering to the masses.

We constantly endeavor at designing products that provide nutrition & fun to the common man. Most Parle

offerings are in the low & midrange price segments. This is based on our cultivated understanding of the

Indian consumer psyche. The value for money positioning helps generate large sales volumes for the

products.

Parle-G it’s first venture became an instant favorite amongst the masses, leading the

glucose category with a huge market share of 65%. It topped charts worldwide by becoming the

WORLD’S LARGEST BISCUIT SELLING BRAND as revealed by the US-BASED BAKERY

MANUFACTURES ASSOCIATION in 2002.

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The turnover of Parle Product Pvt. Ltd. is 1500 crores and the turnover of Parle Biscuit Pvt.

Ltd. is 750 crores.

THE CUSTOMER CONFIDENCE

The Parle name conjures up fond memories across the length and breadth of the country.

After all, since 1929, the people of India have been growing up on Parle biscuits & sweets.

Today, the Parle brands have found their way into the hearts and homes of the people of all

over India & abroad. Parle Biscuits & Confectioneries, continue to spread happiness & joy among people

of all ages.

The consumer is the focus of all the activities of Parle. Maximizing value to consumers and

forging enduring customer relationships are the core endeavors at Parle.

Our efforts are driven towards maximizing customers’ satisfaction and this is in synergy

with our quality pledge. “Parle Products Limited will strive to provide consistently nutritious & quality

food products to meet consumers’ satisfaction by using quality materials and by adopting appropriate

processes. To facilitate the above we will strive to continuously train our employee and to provide them an

open and participative environment. “

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EMERGING TRENDS OF THE BRAND

Since its inception in the 30’s Pale biscuits have prided itself in offering quality products

that are affordable to the common man. The marketing mix has evolved with the times…

THE PRODUCT

Parle biscuits have a range of variants in its product portfolio. The popular brands Parle-G,

Krackjack, Monaco and its variants (zeera, onion and methi) are available in packets of various

convenient sizes. New products like Hide & Seek are a foray into the premium segment.

THE PRICING STRATEGY

This biscuit major has not bothered to raise the price of its flagship brand “Parle-G” for the

past 6-8 years and has always tried to provide its offerings at nearly 33% discount as compared to other

competitive brands.

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THE PROMOTION POLICY

The consumer is the focus of all activities at Parle. Maximizing value to consumers and

forging enduring customer relationships are the core endeavors at Parle. Parle-G ‘My Dream Comes True

Contest’ was one of its biggest promotional ventures (2.5 crores) which gave contestants a chance to fulfill

their dreams. Discounts, gift offer schemes are other popular promotional offerings.

THE PLACE

A well-entrenched distribution system (the company covers 12-15 lacks outlets across the

country) with 40 depots at strategic points all over the country. From the depots, the biscuits are sold to

wholesalers and further to retailers.

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PARE BISCUTS PRIVATE LIMITED (BAHADURGARH)

Parle Biscuit Pvt. Ltd. is a subsidiary of Parle Product Pvt. Ltd.

The manufacturing at Bahadurgarh unit started in 1982 for Parle-G with a single plant. It is planted in near

about 16 acres of land.

Including General Manager 78 employees of Managerial and Officer

class are working in this plant. Production is going on in this plant 24 hours in three shifts. Number of

permanent workers of thrice shifts is 680 and around 400 workers are there on contract basis.

In 1990’s Krackjack production began followed by Monaco and Nimkin. Average

Production capacity of Bahadurgarh unit per month is-

1) Parle-G 3500 Metric Tonnes

2) Krackjack 1600 Metric Tonnes

3) Monaco 800 Metric Tonnes

The plant works in coordination with the Mumbai office, Neemrana (Rajasthan) Plant of

PBPL, 11-contract base manufacturing units and 40 depots. But the accounts are finalized of Neemrana

plant and 11 CMU’S at Bahadurgarh Plant.

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Location of the 11 CMU’S is as follows-

• 5 at Kanpur

• 1 at Gorakhpur

• 1 at Patna

• 1 at Faizabad

• 1 at Raipur

• 1 at Varanasi

• 1 at Ajmer

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DEPARTMENTS IN PLANT

• FINANCE

• HR & PERSONNEL

• QUALITY ASSURANCE

• PRODUCTION & PRINTING

• EXCISE & DESPATCH

• ENGINEERING

• I.T.

• PURCHASE

• STORE

The organization follows a flat structure with less hierarchal levels. The heads of the

different departments report to the General Manager through direct communication. The working

atmosphere is not stressful with enough work-flexibility given to staff and managers.

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The plant also has auditorium and viewing gallery, which is used during the visit of

school children. A retail shop at the Plant provides Parle Products at M.R.P. rates.

CREDIT POLICY OF PARLE BISCUITS PVT. LTD.

Before coming to the credit policy it’s necessary to be aware with the goods distribution

policy of Parle Biscuits Pvt. Ltd.

For fulfilling the demand of it’s customer’s timely Parle Biscuits Pvt. Ltd. maintains 40

DEPOTS in all over INDIA. Finished goods are transferred from production plants to these depots.

According to their transportation facilities customers of Parle Biscuits Pvt. Ltd. ask their demand of

different products to depots.

Then it’s the responsibility of these depots to fulfill the demand of customers of Parle Biscuits Pvt. Ltd.

Parle Biscuits Pvt. Ltd. doesn’t has credit policy it deals in cash. For the collection of it’s

payment PBPL deals with 5 banks which are as follows:

1) UTI

2) STANDARD CHARTERED

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3) HDFC

4) BANK OF PUNJAB

5) CORPORATION BANK

After collecting the amount of sold goods it is deposited by the depots in any of these bank.

Parle Biscuits Pvt. Ltd. divided its customers in 4 categories-

1) Cheque Parties – Cheque parties are those who send their blank cheques to Depots before

receiving the finished goods. Depots fill the selling amount of the consignment in those cheques and

then these cheques are deposited by the depots in the account of PBPL in any of these 5 banks.

2) Demand Draft Parties – In such cities where anyone of these 5 banks isn’t there customers of

those come in this category.

Before receiving the finished goods customers send the draft of the consignment amount to

production plants directly. Then consignment is sent to those customers by concerned depot.

3) Credit Parties – Those parties to whom maximum 4 days credit facility is provided are called credit

parties. After 4 days these parties send cheque of consignment amount to depot. And then procedure

just like first category is followed by depot.

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4) Credit Demand Draft Parties - These are those parties to whom 4 days credit facility is

provided but they also don’t have facility of any of those 5 banks in their city.

After 4 days just like the second category these parties send the draft of consignment

amount directly to production plant.

Product Profile

Over the years, Parle has grown to become a multi-million US Dollar company. Many of

the Parle products, biscuits or confectionaries, are market leaders in their category and have won acclaim at

the Monde Selection, since 1971.

Today, Parle enjoys a 40% share of the total biscuits market and a 15% share of the total

confectionary market in India.

The Parle biscuits brands are:

1) Hide & Seek

2) Choc Cream

3) Elaichi Cream

4) Orange Cream

5) Pineapple Cream

6) Marie Choice

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7) Cheesling

8) Jeffs

9) Monaco

10) Nimkin

11) Sixer

12) Glucose

13) Krackjack

14) Parle-G

The Parle toffees brands are:

1) Funtoosh

2) Mango Bite

3) Orange Candy

4) Poppins

5) Roll-A-Cola

6) Tangy Candy

7) Boo

8) Pippermint

9) Rose Mint

10) M Choco

11) Melody

12) Dairy Toffee

13) Lux Toffee

14) Mayfair Toffee

15) Kismi

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16) Mahakismi

17) Smoothies

18) Cafechino

19) Chox Bar

Introduction of Topic
WORKING CAPITAL AT A GLANCE

 INTRODUCTION

 TYPES

 FEATURES

 DETERMINANTS

 COMPONENTS

 WORKING CAPITAL CYCLE

INTRODUCTION

A successful sales program is necessary for earning profits by any business enterprise. Sales

don’t convert into cash instantly. There is a time lag between the sale of goods and receipt of cash.

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Therefore, there is a need for working capital in the form of current assets to deal with the

problem arising out of the lack of immediate realization of cash against goods sold. Therefore sufficient

working capital is necessary to sustain sales activity.

FEATURES

1) Working capital is regarded as the excess of current assets over current liabilities.

2) Working capital indicates circular flow of funds in the day-to-day activities of business. That’s why it

is also called circulating capital.

3) Working capital represents the minimum amount of investment in raw materials, work-in progress,

finished goods, stores and spares, accounts receivables and cash balance.

TYPES

Working capital can be classified either on the basis of concept or on the basis of

periodicity of its requirement.

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1) ON THE BASIS OF CONCEPT

On the basis of concept working capital is of 2 types.

A) Gross working capital - Gross working capital is represented by the total Current assets.

Gross working capital = Total current assets

B) Net working capital - Net working capital is the excess of current assets over current liabilities.

Net working capital = Current assets – Current liabilities

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2) ON THE BASIS OF REQUIREMENT

On the basis of requirement working capital is also of 2 types.

A) Permanent working capital - It is that amount of investment which should always be there

in the fixes or minimum current assets like inventory, accounts receivables or cash balance etc. to

carry out business smoothly. Such an amount cant be reduced if the firms wants to carry on

business operations without interruption.

B) Variable working capital - The excess the amount of working capital over permanent
working capital is known as variable working capital. It may also be subdivided into two parts.

b) Seasonal working capital - Such capital is required to meet out the seasonal

demands of busy periods occurring at stated intervals.

c) Special working capital - Such capital is required to meet out the extra-ordinary
needs for contingencies. Events like strike, fire, unexpected competition, rising price

tendencies, or initiating a big advertisement campaign require such capital.

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DETERMINANTS
1) Nature of business – The effect of the general nature of the business on working capital
requirements can’t be exaggerated. Rail, roads and other public utility services have large fixes
investment so they have the lower requirements of current assets. Industrial and manufacturing
enterprises, on the other hand, generally require a large amount of working capital.

2) Production policies – if the production is evenly spread over the entire year, working capital
requirements are greater, because the inventories will be unnecessarily accumulated during of season
period. But if the production schedule favours a varying production plan as per the seasonal
requirements, working capital is required to a greater extent during a specified season only. The
production policies are affected by so many factors availability of raw materials, labour, stocking
facility etc & therefore, whatever the productions policies are, the firm has to arrange its working
capital requirements accordingly.

3) Proportion of the cost of raw materials to total cost - In those industries where cost of
proportion is a large proportion of total cost of the goods produced, requirements of working capital
will be comparatively large.

4) Length of period of manufacturing – The time which elapses between the commencement
and end of the manufacturing process has an important bearing upon the requirements of working
capital. The manufacturing cycle may be shorter for certain concerns & longer for others- it depends
on the type of the product to be manufactured, work to be done through machine labour & hand
labour, degree of rationalization of manufacturing procedures through times, motion & fatigue
studies etc.

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5) Terms of purchase - If suppliers allow continuous credit, payment can be postponed for some

time and can be made out of the sale proceeds of the goods produced. In such a case, the

requirements of working capital will be reduced.

6) Dynamic Attitudes – As a company grows, it is logical to expect the large amount of working

capital will be required.

7) Business cycles – Requirement of working capital also varies with the business. When the price
level is up due to boom conditions, the inflationary conditions create demand for more working

capital. During depression also a heavy amount of working capital is needed due to the inventories

being locked unsold and book debts uncollected.

8) Requirement of cash - The working capital requirements of a company are also influenced by

the amount of cash required by it for various purposes. The greater the requirement of cash, the

higher will be the working capital needs of the company.

9) Dividend policy of concern – If the management follows a conservative dividend policy the
needs of working capital can be met with the retained earnings. The relationship between dividend

policy and working capital is well established and mostly companies declare dividend after a careful

study of their cash requirements.

10) Other Factors - Other factors, which affect the requirement of working capital, are lack of co-

operation in production and distribution policies, transport and communication facilities, the fiscal

and tariff policies of the government etc.

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COMPONENTS

Main components of working capital are as follows:

1) Cash – Cash is the most liquid and important component of working capital. Holding cash involves
cash in the sense that the present worth of cash held for a year is less than the value of cash on today.

During inflationary situations as exist today the cost of holding includes the deterioration in the value

of the cash due to inflation. Cash, therefore, results in enhanced liquidity, but lower profitability.

Despite in the cost involved it is pertinent to hold cash because it facilitates the attainment of some

important motives.

2) Marketable Securities – Though marketable securities provides a such lower yield that the
firm’s operation assets. They serve two useful functions. Firstly, they act as a substitute for cash, and

secondly, are used as temporary investment. Where these securities are held in lieu of the cash

balance, they act as a substitute for transactional or precautionary balances. Normally, these aren’t

used as speculative balances, but only as a guard against the possible shortage of bank credit.

Marketable securities (as temporary investment) may be held for one of the following reasons:

• Seasonal or cyclical operations

• To meet known financial requirements. Construction of an additional plant.

• Immediately after the sale of long-term securities.

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3) Account Receivable - Though accounts receivable are a vital investment of any business
organization, little analytical work as been done to determine credit policies. Maintaining account

receivable has its cost implications in that the firm’s monetary resources are tied up. This is of greater

significance in the inflationary economy, because of the depreciation in the value of money.

Basically, this is a two-step account. When goods are shipped, inventories are reduced and accounts

receivable is created. When payment is made, this account is reduced and the cash level increases.

Accounts receivables are, therefore a function of the volume of credit sales and the average length of

time between sales and collections.

4) Inventory – Inventories represent a substantial amount of a firm’s current assets. Management of


inventories should be efficiently carried out so that this investment doesn’t become too large, as it

would result in blocked capital which could put to productive use elsewhere. On the other hand,

having too small an inventory could result in loss of sale or loss of customer goodwill. An optimum

level of inventory should therefore be maintained.

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WORKING CAPITAL CYCLE

Working capital cycle indicates the length of time between a firm’s paying for materials

entering into stock and receiving the cash from sale of finished goods. In a manufacturing firm, the duration

of time required to complete the sequence of events is called operating cycle.

In case of a manufacturing company, the operating cycle is the length of time necessary to

complete the following cycle of events: -

1) Conversion of cash into raw materials

2) Conversion of raw materials into work-in-progress

3) Conversion of work-in-progress into finished goods

4) Conversion of finished goods into accounts receivable

5) Conversion of accounts receivable into cash

The above operating cycle is repeated again & again over the period depending upon the nature of the

business & type of product etc. the duration of the operating cycle for the purpose of estimating working

capital is equal to the sum of duration allowed by the suppliers.

Working capital cycle can be expressed as:

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R+W+F+D-C

Where R=Raw Material Storage Period = Avg. Stock of Raw Material

Avg. Cost of Production per day

W=Work in Progress Holding Period = Avg. Work in Progress Inventory

Avg. Cost of Production per day

F=Finished Goods Storage Period = Avg. Stock of Finished Goods

Avg. Cost of Goods Sold per day

D=Debtors Collection Period = Avg. Book Debts

Avg. Credit Sales per day

C=Credit Period Availed = Avg. Trade Creditors

Avg. Credit Purchases per day

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OPERATING CYCLE OF MANUFACTURING BUSINESS

REALIZATION Accounts SALES

Receivables

Cash Finished Goods

PURCHASES PRODUCTION

PRODUCTION PROCESS

Raw Materials Work-in-Process


PROCESS

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METHOD OF ASSESMENT OF WORKING CAPITAL

Operating cycle No. of days

Raw material = 916.53 = 7.9

114.84

Stock in Process = 10.12 = .088

114.84

Finished goods = 1054.1 = 9.13

115.36

Debt collection period = 4.22

(Calculating in ratios)

_______________

Total length of Operating Cycle = 21.34 Days

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SALES per month 67829.07 = 5652.422 Rs.

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Total EXPENSES 60450.77 = 5037.66 Rs.

Per month 12

WORKING CAPITAL REQUIRED = Total Length of X Monthly Expenses

Operating Cycle

__________________________________

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= 21.34 X 5037.66

30

= 3583.45Rs.

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Working Notes:

1. Raw Material – (Mentioned in P&L Account)

Opening Stock + Purchases – Closing Stock

2003-04:

Annual Consumption = 36047.27Rs

1 Month’s Consumption = 36047.27/12 = 3003.94Rs

2004-05:

Annual Consumption = 38058.07Rs

1 Month’s Consumption = 38058.07/12 = 3171.50 Rs.

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2. Stock In Process --

Raw Material + Power + Labour + Repairs

+ Other Manufacturing Expenses + Depreciation

+ Opening Stock – Closing Stock

2003-04:

Cost of Production = 40125.5 Rs.

1Month’s Stock In Process = 40125.5/12 = 3343.81Rs.

2004-05

Cost of Production = 41315.08 Rs.

1Month’S Stock In Process = 41315.08/12 = 3442.92 Rs.

3. Finished Goods --

Cost of Production + Opening Stock - Closing Stock

2003-04:

Cost of Goods Sold = 40275.31Rs.

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1 Month’s Finished Goods = 40275.31/12 = 3356.27Rs.

2004-05:

Cost of Goods Sold = 41529.54Rs.

1 Month’s Finished Goods = 41529.54/12 = 3460.85Rs.

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THEORTICAL ASPECTS OF WORKING CAPITAL

MANAGEMANT

WORKING CAPITAL MANAGEMENT

NATURE OF WORKING CAPITAL MANAGEMENT

Working capital management is three dimensional in nature-

1) It is concerned with the formulation of policies with regard to profitability, liquidity and risk.

2) It is concerned with the decisions about the composition and level of current assets.

3) It is concerned with the decisions about the composition and level of current liabilities.

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Policies regarding to Profitability
Liquidity and Risk

Composition of Level
of Current Assets Composition of Level
of Current Liabilities

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DIMENSIONS OF WORKING CAPITAL

GOAL OF WORKING CAPITAL MANAGEMENT

Working capital management is concerned with the problems that arise in

attempting to manage the current assets, the current liabilities and the interrelationship that exists

between them.

The term current assets refer to those assets which is the ordinary course of business

can be converted into cash within one year. Major current assets are cash, marketable securities,

accounts receivable and inventory.

Current liabilities are those liabilities, which are intended, at their inception, to be

paid in the ordinary course of business within a year, out of the current assets or earnings of the

concern. Current liabilities are accounts payable, bills payable, bank overdraft, and outstanding

expenses.

Working capital is that portion of firm’s assets which is financed by long-term

funds.

Interaction between current assets and current liabilities is the main theme

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of the theory of working capital management.

Goal of working capital management is to manage the firm’s current assets and

liabilities in such a way so that a satisfactory level of working capital is maintained.

The second important segment of working capital management is deciding the

optimum level of investment in various current assets. There are three important current assets

cash, accounts receivables and inventory

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INVENTORY MANMAGEMENT IN PARLE BISCUITS PVT. LTD.

For inventory management in Bahadurgarh plant of PBPL certain things are considered

which are completely practical-

• As market generally fluctuates so if there is any perception of the increment in the price level of any

commodity in future then that particular commodity is stored.

• All the materials of the mixture, which is used in making biscuits, can be stored maximum only for 3

days. Because store of plant is designed like this that more than 3 days storage can’t be maintained in

it.

• Minimum levels of inventories are maintained in plant in wake of lead-time, govt. policies, and one-

day safety stock for transportation problem.

• Re-order levels of inventories are maintained in the plant in wake of per day consumption level of

inventories and lead-time in days.

The position of inventory at the end of last two years is as follows-

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NAME OF THE COMMODITY YEAR AMOUNT (In Rs/-)

Stores and spares 2003-04 82, 91,000

2004-05 57, 29,000

Raw Materials 2003-04 10, 21,52,000

2004-05 8,11,54,000

Packing Material 2003-04 5,82,08,000

2004-05 7,08,06,000

Finished Goods 2003-04 11,61,33,000

2004.5 9,46,87,000

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CASH MANAGEMENT IN PARLE BISCUITS PVT. LTD.

Cash management in Parle Biscuits Pvt. Ltd. is as follows-

Average daily collection of the Parle Biscuits Pvt. Ltd. is 2 crores.

• Salaries and Wages are distributed in Parle Biscuits Pvt. Ltd on monthly basis. 50,00,000-

75,00,000 salaries and wages are distributed in one month. Like this all other daily transactions are

completed by daily collection.

• In case of strike or any contingency supply of demand is completed by another plant of Parle Biscuits

Pvt. Ltd. and by 11 CMU’S. Supply doesn’t disturb.

• Authority for getting the benefit of any opportunity is given to Mumbai office of Parle Biscuits Pvt.

Ltd. That decides the policy regarding to any market opportunity.

• Parle Biscuits Pvt. Ltd. doesn’t have any credit policy. It deals in cash. That’s why it doesn’t has any

cash problem.

• Distribution channel of Parle Biscuits Pvt. Ltd. is very short only depots are there as a middleman

between plant & open market. That’s why there isn’t any necessity of more cash.

• Biscuits come in FMCG product. So circulation of cash is smooth & fast.

43
• Production cycle is short. That’s why Parle Biscuits Pvt. Ltd has less demand of cash.

FUND FLOW ANALYSIS

The statement of change in financial position, prepared to determine only the sources and

uses of working capital between dates of the two Balance Sheets is known as the Fund Flow Statement.

Working Capital is defined as the difference between Current Assets and Current Liabilities. Working

determines the liquidity of the firm.

The Working Capital flow or fund arises when the net effect of transaction is to increase or

decrease the amount of Working Capital. Normally, a firm will have some transactions that will change Net

Working Capital and some that ill cause no change in Net Working Capital. The transaction will cause Net

Change of Working Capital only when one of the accounts affected is a current account (Current Liability)

and account is non-current account (Long-term Assets or Long term Liability).

The concepts of Working Capital may be summarized as follows:

• The Net Working Capital increases or decreases when a transaction involves a current account and

a non-current asset account.

• The Net Working Capital remains unaffected when a transaction involves only Current accounts.

• The Net Working Capital remains unaffected when a transaction involves only non current

accounts.

• Now let us examine the Working Capital flow of Parle Biscuits Pvt. Ltd. through the statement of

change in Working Capital.

44
FINANCING OF WORKING CAPITAL

INTRODUCTION

A firm has to decide how it is to be financed. The need for financing arises mainly because

the investment in Working Capital/Current Assets that is raw materials, work/stock-in-progress, finished

goods and receivables typically fluctuates during the year.

The main sources of Working Capital financing are Trade Credit, Bank Credit, RBI

framework/regulation of bank credit/finance/advances, Factoring, Commercial Papers and Internal Sources.

TRADE CREDIT

Trade Credit refers to the credit extended by the supplier of goods and services in the

normal course of transaction/business/sale of the firm. According to trade practices, cash is not paid

immediately for purchases but after an agreed period of time. Thus, deferral of payment (trade credit)

represents a source of finance for credit purchases.

45
BANK CREDIT

Bank Credit is the primary institutional source of Working Capital finance in India.

In fact, it represents the most important source for financing of Current Assets.

Working Capital finance is provided by banks in five ways:

1) Cash Credits/Overdrafts

2) Loans

3) Purchase/Discount Bills

4) Letter of Credit

5) Working Capital term loans

46
RESERVE BANK OF INDIA FRAMEWORK FOR /REGULATION OF BANK

CREDIT

In order to secure alignment of Bank Credit with planning priorities and measures to

direct Bank Credit to priority sectors and enforce a measure of financial discipline among industrial

borrowers.

However, the basic character of Bank financing of Industry, namely over borrowing and

domination of cash credit system did not materially alter.

COMMERCIAL PAPERS

Commercial Paper is a short-term unsecured negotiable instrument, consisting of usance

promissory notes with a fixed maturity. It is issued on a discount on face value basis but it can also be

issued in interest bearing form. A Commercial Paper when issued by a company directly to the investor is

called a Direct Paper. The companies announce current rates of Commercial Papers of various maturities,

and investors can select those maturities, which closely approximate their holding period. When

Commercial Papers are issued by security dealers/dealers on behalf of their corporate customers, they are

called Dealer Paper. They buy at a price less than the commission and sell at the highest possible level.

47
FACTORING

Factoring provides resources to finance receivables as well as facilitates the collection of

receivables. Although such services constitute a critical segment of the financial services scenario in the

developed countries, they appeared in the Indian financial scene only in the early nineties as a result of RBI

initiatives. There are two bank-sponsored organizations, which provide such services:

1) SBI Factors and Commercial Services Ltd.

2) Canarabank Factors Ltd.

The first private sector factoring company, Foremost Factors Ltd, started operations since

the beginning of 1997.

48
INTERNAL SOURCES

This is also another major source for financing of Working Capital. Internal Sources include

profits, reserves etc.

FINANCING OF WORKING CAPITAL IN PARLE BISCUITS PVT. LTD.

In Parle Biscuits Pvt. Ltd financing of Working Capital is done through only

internal sources. Profits and reserves of Parle Biscuits Pvt. Ltd. are enough to fulfill the demand of it’s

Working Capital.

Parle Biscuits Pvt. Ltd. doesn’t use any other source apart internal for financing it’s

Working Capital

49
MANAGERIAL USEFULNESS OF STUDY

Today in the business line every man. want to know about his company financial condition. A

working capital is a part of finance. The working capital are calculated by the current assets and

current liabilities which are related to annual report of the company. With the help of working

capital management we can calculated the liquidity position of the company. If the current assets

are more than the current liabilities thus we can say that the liquidity position of the company is

satisfactory, the usefulness of study is included the signification of the working capital. Working

capital management is manage the operating process in the organization & company.

All the businessmen want to know how much they have gained or lost
during the year; how much capital is invested in the business at the end (if the year; how much
amount, they are liable to pay and to whom they owe it; how much is owed to them and by whom
etc. In order to attain such information, it is essential to keep a complete and systematic record of
each and every business transaction entered into during the year.
By keeping a complete and systematic record of every business dealing the businessman can know

how much the amount of purchases is; how much is the amount of sales; what are his total

expenses and what is the amount of profit earned or loss incurred during the year. Furthermore, he

can ascertain the financial position of his business, such as, how much capital it has at the end for

the year and how that capital stands invested in various assets; how much amount he has to take

and from whom and how much amount he is liable to pay and to whom. Besides, the properly

maintained accounts are helpful in the assessment of Income-tax and Sales

50
CONCEPT USED IN STUDY

In this project I used working the ratio which are used for calculating for the financial

conditions of Parle Biscuit Pvt. Ltd. I have used the ratio which are networking capital

ratio, current ratio, average collection ratio and quick ratio. These ratio are very useful to

understand the topic because we can calculate the working capital by the help of these ratio.

I have used these ratio by the declaration of financial manager of Parle Biscuit Pvt. Ltd.

These ratio are shows the liquidity position in the financial competition. Ratio help to

summaries the large quantities of financial data and to make qualitative judgment about the

firm’s financial performance. The project is developed keeping in mind the security of

working capital of the company. That is possible with the help of ratio analysis.

51
Focus of the Problem

The main purpose of study the account process is to find the main reason or decision

which can improve the business of the company. The main purpose or focus of the problem

is to know that which product should be used in the company and why and how can it be

effective for the company?

The main focus of the problem is to find out output of the economical business.

Since a special reference has been made towards Parle Biscuits Pvt. Ltd. business has also

become equally important and unless we know the methodology adopted by Parle Biscuits

Pvt. Ltd. our study will not give the true picture. In nutshell, the focus of our study is find

the amount consolidation of the entire group.

Our study is focused on to know about the amount consolidation of the entire group

and the international financial market.

The study is also focused on satisfaction of the customer, job satisfaction level of

the employees and the effectives handling of accounts with computer & related

software.

52
OBJECTIVE OF PROJECT

Right from the beginning and also in present scenario, Confectionary has carved for itself a

strong place in the international market with around half of the global primary demand of confectionary

products. This scenario likely to continue into the 21st century. Now-a-days confectionary products are also

a means to economic power. Most of the nations including developing countries like INDIA have placed

adequate emphasis on self-reliance technology in confectionary industry.

There has been a rapid and manifold increase in the activities of Parle Biscuits Pvt. Ltd.

since past. These have been directed towards achieving of self-sufficiency in biscuit industry. In order to

meet out the rising demand of biscuits in the country co-coordinated and consolidated efforts are required

in the direction of exploration.

It is precisely in such a background, that the role of analysis of working

capital and its various components, so as to manage them effectively, gets pronounced. The problems in

managing Working Capital particularly in the context of the risk-return trade off associated to very little

scientific and rational analysis. It is against this backdrop that the present study seeks to make an attempt to

critically analyze the effectiveness of Working Capital Management of Parle Biscuits Pvt. Ltd. and offer

suggestions for improvement wherever necessary.

1. Primary : To find out the operating and day to day financial functions
which reflects how the company operates its operating cycle and manage

financial flow in day to day business activity.

53
2. Secondary :

1. To know the functioning of the finance deppt. Of Parle Biscuits Pvt. Ltd.

2. To analyze the liquidity position of the organization

3. To examine profitability position of the management

4. To find out the weaknesses and to suggest various suggestions

5. To study the performance of the Parle Biscuits Pvt. Ltd.

6. To know about certain innovations made in organization as compared to

past.

7. To prepare report on study thus conducted.

54
Scope of the Work

Company has opportunities of tapping new markets by their products. Company is

trying to expand its network in many countries. Societal effects, company has a good scope

in the field of home loans and insurance sector. On one side it will be good for the society

and on the other side it will be beneficial for the company , as the loans have good profits

margins.

55
RESEARCH METHODOLOGY

After knowing the job profile of every employee of finance department in Bahadurgarh

plant of PBPL. I choose the project of Working Capital Management. I discussed the project with my

instructor and coordinator Mr. JAIDEEP BHALA Deputy Manager of Finance Department.

He approved the project. After that a simple course of action has been followed for working

on this project. All the data are gathered from the respective annual report of Parle Biscuits Pvt. Ltd. All the

figures are taken from their balance sheet, profit & loss account of the respective years and other internal

documents.

My instructor Mr. JAIDEEP BHALA in understanding the facts and figures provided a

great help. Mr. BHALA made it possible for me to ask my queries from that person who can answer these

best rather than anybody else in the company. Although is has been a difficult task but the availability of

proper data and timely guidance given by Mr. BHALA made it a little simpler to complete this project.

In a lucid way I can summarize the steps of Research Methodology as-

1) Collection

2) Organization

3) Presentation

4) Interpretation

56
Research Design

The research design involves taking the decision on type of data sources from which the data is to collected

and the contact methods. The research design selected by me was descriptive cum analytical as this the best

suited to analyze the fact which already exist and choose the best one for welfare of the employees.

Survey Population

In Survey population we have to check all the employees working with us. According to that data we can

take a decision toward them and can make a choice regarding them. By this survey we also came to know

how they are surviving in real.

Sample

It is the process by which a part of population is selected to serve as reprentative of the population on

which research is carried out. This the necessary b’use sometimes the size of population makes it difficult

to study each member of population. The sample is part of population which is selected by using sampling

procedures. The sample represents the population.

57
METHODS OF DATA COLLECTION

To deal with real life problems it is often found that data at hand are inadequate and hence it becomes

necessary to collect data appropriate.

As the project is on working capital information include was collected from the finance dept. for this

purpose data collection was done through the primary as well as secondary data.

58
1. Primary Data

Primary data is the data collected specially for the specific purpose, it can be collected through experiment

or through survey. In a case of survey data can be collected by one or more of the following ways.

1) COMMUNICATION METHOD

2) OBSERVATION METHOD

All the data has been collected from the primary sources.

1. Communication

In Communication data we uses the mode of communication which we uses oftenly. By collecting the data

from this method is the direct interaction. We can collect this data for further use also. Because this data

can be used during comparison from last ones.

2. Observation

During the Data Collection first of all we have to see all the aspect related to data. From where we can get

the input according to our project. As the data collection will be taken initially then we can get the best

output.

59
2. Secondary Data

Secondary data consists of information that already exists somewhere and was collected for another

purpose which may not be the same.

Secondary Data used here

- Various files

- Magazine and Books

- Performa’s and Websites

I have used secondary data in the completion of this summer training report.

60
Data Analysis

ANALYSIS OF WORKING CAPITAL MANAGEMENT

In this chapter an analysis over the Working Capital of Parle Biscuits Pvt. Ltd. has been

done. But before going further let us have a look on the current position of Working Capital.

The Working Capital of the last two years is as follows –

(Amount in Lacs Rs/-)

YEAR SALES INVESTMENTS WORKING % OF % OF

CAPITAL WORKING WORKING

CAPITAL CAPITAL TO

TO SALES INVETSMENTS
2003-04 68000 33540.19 6596.16 9.70 19.67
2004-05 70000 27390.76 5294.01 7.56 19.32

In year 2002-03 Working Capital of Parle Biscuits Pvt. Ltd. was 2500 lacs Rs/- while in the

same period the sales was noticed 65,000 lacs Rs/- then % of Working Capital to sale was 3.84 but in the

next year 2003-04 sales was 50,000 lacs Rs/- and Working Capital was 3,000 lacs Rs/-. So in year 2003-04

% of Working Capital to sales was 6.

61
In year 2002-03 Investments were 20,000 lacs Rs/- so % of Working Capital to

Investments was 12.5 and in year 2003-04 Investments were 15,000 lacs Rs/- so % of Working Capital to

Investments was 20.

62
CALCULATION OF WORKING CAPITAL

80000
SALE
70000
70000 68000

60000

50000
Amount

INVESTMENT 2003-04
40000
33540.19 2004-05
30000 27390.76

Working
20000 Capital
6596.16
10000 5294.01

0
1 2 3
Years

Amount in Lacks

% OF WORKING CAPITAL TO SALES & INVESTMENTS

63
25 % of Working
Capital to
Investment
19.67 19.32
20

15
% of Working 2003-04
Capital to Sales
9.7 2004-05
10
7.56

0
1 2

Amount in Lacs

RATIO ANALYSIS

64
It is a powerful tool of financial analysis. A ratio is defined as “the indicated quotient of

two mathematical expressions” and as “the relationship between two or more things”. Ratio helps to

summaries the large quantities of financial data and to make qualitative judgment about the firm’s financial

performance. The point to note is that a ratio indicates a quantitative relationship, which can be turn, used

to make a qualitative judgment.

Here are some of the calculated ratios of the financial year of Parle Biscuits Pvt. Ltd.

All the ratios are calculated in Lacs Rs/- figures.

Net Working Capital Ratio

65
Net Working Capital

Capital Employed

2003-04 2004-05

Net Working Capital 6596.16 5294.01

Net Assets or Capital employed 29340.48 35093.56

Ratio .22: 1 .15: 1

The difference between Current Assets and Current Liabilities excluding short-term

borrowings is called Net Working Capital or Net Current Assets. The position of Net Working Capital in

the year 2003-04 is better as compared with the year 2002-03. The important thing to say is that this

organization has healthy Current Assets.

66
Net Working Capital Ratio

0.25 0.22
0.2
0.15
0.15

0.1

0.05

0
Net Working Capital Ration
2003-04 0.22
2004-05 0.15
2003-04 2004-05

67
Current Ratio

Current Assets

Current Liabilities

2003.4 2004-05

Current Assets 26686.68 28602.82

Current Liabilities 20090.52 23308.81

Ratio 1.33: 1 1.23: 1

Current Assets include cash and those assets, which can be converted into cash within a

year. All obligations maturing within a year are included in current liabilities.

As a conventional rule a current ratio 2: 1 or more is considered satisfactory. The current

ratio doesn’t represent margin of safety i.e. a “cushion” of protection for creditors.

68
1.34
1.32
1.3
1.28
1.26
1.24
1.22
1.2
1.18
Current Ratio
2003-04 1.33
2004-05 1.23
2003-04 2004-05

69
Average Collection Ratio

Debtors*360

Sales

2003-04 2004-05

Debtors*360 1217.16*360 821.90*360

Sales 68000 70,000

Days 6.45 4.22

The average collection period shows the efficiency of debtors. It tells that Parle Biscuits

Pvt. Ltd doesn’t has credit policy and if is given then in rare cases.

70
7
6
5
4 2003-04
3 2004-05
2
1
0
Average collection ratio
2003-04 6.45
2004-05 4.22

71
Quick Ratio or Acid Test

Current Assets - Inventories

Current Liabilities

2003.4 2004-05

Current Assets – Inventories 26686.68-2869.33= 28602.82 -2524.98=

23817.35 26077.84

Current Liabilities 20090.52 23308.81

Ratio 1.18: 1 1.12: 1

Generally a quick ratio of 1:1 is considered to represent a satisfactory position. But it can’t

be said tat a company having quick ratio of less than 1:1 isn’t financially sound, Because it depends upon

the nature of debtors. If the debtors are slow paying the quick ratio of more than 1:1 can become harmful.

But if debtors are liquid like in this organization than even less than 1:1 can work out to be satisfactory.

As debtors of this organization aren’t slow paying so that quick ratio is satisfactory.

The above made calculation of various ratios has told us about the various aspects of

Working Capital of Parle Biscuits Pvt. Ltd. The system is well under control an effective but still in some

areas a little more concentration to be needed.

72
1.19
1.18
1.17
1.16
1.15
2003-04
1.14
2004-05
1.13
1.12
1.11
1.1
1.09
Quick Ratio
2003-04 1.18
2004-05 1.12
SCHEDULE OF CHANGE IN WORKING CAPITAL

73
Particulars 2003-04 2004-05 Effect on Working capital
Increase Decrease
Current

Assets
Inventories 270934 289272 18338
Debtors 172716 188725 16009
Cash 153228 168070 14842
Accured Income 816122 868345 52223
Total 1413000 1514412
Current Liabilities
C/L (Cr.) 297238 357239 60001
Provisions 1111814 1151815 40001
Total 1409052 1509054
W.C (A-B) 3948 5358 101412 100002
Pos. Inc. in W.C 1410

74
The project is developed keeping in mind the security of Working Capital of the company.

Means that no one can enter in the confidential data of the company and without permission the senior

officer one can’t enter in the main programme whether he is Manager, Employee or the Guest.

FINDINGS

It is very difficult to make the project or the analysis in such a way that can solve all the problems

according to the requirements. In this project it is being tried to give more and more facilities but in a short

period of training time, as much as possible has been done.

75
1.In the year 2002-03 working capital of Parle Biscuit Pvt. Ltd. Was 2500 Lacks

Rs/. While in the same period the sales was noticed 65,000 Lacks Rs/. Then %

of working capital to sale was 3.84 but in the next year 2003-04 sales was

50,000 Lacks Rs/. And working capital was 3,000 Lacks Rs/. So in year 2003-

04 % of working capital to sales was 6.

2.In the year 2002-03 investment were 20,000 Lacks Rs/. So % of working

capital to investments was 12.5 and in year 2003-04 investment were 15,000

Lacks Rs/. So % of working capital to investments was 20.

3. The Position of Net Working Capital in the year 2003-04 is better as

compared with the year 2002-03. The important thing to say is that this

organization has healthy current assets.

4. As a Conventional rule a current ratio 2:1 or more is considered satisfactory

the current ratio don’t represent margin of safety i.e. a “cushion” of

protection for creditors.

5. The average Collection period shows the efficiency of the debtors, it tells

that Parle Biscuit Pvt. Ltd doesn’t has credit policy and if is given then in

rare cases.

6. It can not be said that a Company having a quick ratio of less than 1:1 isn’t

financially sound because it depends upon the nature of debtors. If the

debtors are slow paying the quick ratio of more than 1:1 can become

harmful. But if debtors are liquid like in this organization than even less

than 1:1 can work out to be satisfactory.

76
77
Recommendation

• Total Current assets need to be increased.

• Total Liabilities of outsiders should be deceased.

• Net Profit need to be improved.

• Overall Management should be improved.

• Expenditure should be decreased.

• Organization has healthy current assets but it is need to more improved

current assets and liquidity power.

• The organization is well under controlled and effective but still in some

areas a little more concentration to be needed.

78
Limitations of the Study

The major limitations of my study are as under.

• Limited Time : Although the staff of Parle Company Pvt. Ltd. was very

efficient and highly co-operative and devoted enough of their valuable

time to us. But because of time constant. We were not able to devote as

much time with their employees.

• Secrecy: Some of the information was kept confidential and was not

disclosed to any person who so ever.

• Lack of Comparative Data : Due to non availability of other industries

in the same line we were not able to compare the data of one organization

with other one. Inspire of these difficulties we still put our best efforts to

try to do the full justice subject matter and in completion of the report.

79
Conclusions

“Success is achieved by those who try where there is nothing to loose by trying a great deal

to gain if successful, by all means try.”

W.Clement Stone

The study has its own importance in its own way. With the help of this study one can know about

the struggle and success of Parle Biscuits Pvt. Ltd. Efforts, which is due to its efficient management.

The study will definitely increase the morale of each employee and by studying this managers come

to know that what effective measures can be taken to maintain the effective use of working capital in the

organization and thus to achieve goals of the organizations.

80
BIBLIOGRAPHY

Text Books

D.C.Sharma & K.G.Gupta Management Accounting

M.Y.Khan & P.K.Jain Financial Management

Annual Reports

1) Parle Biscuits Pvt. Ltd. annual report 2001-02

2) Parle Biscuits Pvt. Ltd. annual report 2002-03

3) Parle Biscuits Pvt. Ltd. annual report 2003-04

ANNEXURE

Profit and Loss Account

81
Particulars 2003-04 2004-05
Sales 5282907 5505061
Less: Cost of Goods Sold
Opening Stock 137107 136933
Add: Raw Material Consumed 3067148 3268256
Packing Material Consumed 723740 666587
Payment to an Provisions for employees 171429 126067
Store and Spare Parts Consumed 43975 40306
Power and Fuel 120505 142037
Conversion Charges 257928 305061
Rates and Taxes 68721 78051
Less: Closing Stocks 136933 105061
Gross Profit 829287 846824
Less : Operating Expenses
Selling and Distribution expenses
Repair and Maintenance 44499 40507
Advertisement and Sales/ Marketing Expenses 187875 250507
Communication Expenses 2103 2209
Cash Discount 20440 25061
Traveling and Convince Expenses 6312 7051
General and Administrative Expenses
Rent 4636 2051
Printing and Stationary 2276 2051

Insurance 3531 3033


Legal and Professional 3642 4050
Financial Expenses
Depreciation 103900 95061
Miscellaneous 5488 6057
Operating Profit 327846 396336

82
Add : Not Operating Income

Income from Investment 87622 146251

Other Incomes 10606 21872

Less : Non Operating Expenses

Net income before Tax 426074 564459

Less : Tax@38.5% 164038 217317

Net Income 262036 347142

83
Common Size Statement
Profit and loss Account

Particulars 2003-04 2004-05

Sales 100 100

Less Cost of Good Sold 84.3 84.62

Gross Profit 15.7 15.38


Less : Operating Expenses
Selling and Distribution Expenses 7.15 6.14
General and Administration Expenses .27 .20
Financial Expenses 1.97 1.72
Misc. Expenses .10 .11
Total Operating Expenses 9.5 8.18
Operating Profit 6.21 7.2
Total Income 1.86 3.05
Less : Other Expenses
Income Before Tax 8.07 10.25
Less : Provision for Tax 3.11 3.95
Income after Tax 4.96 6.3

84
Balance Sheet

Particulars 2003-04 2004-05


Liabilities
Share Capital 4950 4950
Reserves and Surplus 1494788 1759852
Secured Loans
Unsecured Loans
Current Liabilities and

Provisions
a) Current Liabilities(Creditors) 297238 357239
b) Provisions 1111814 1151815
Contingent Liabilities
Total 2908790 3273856

Particulars 2003-04 2004-05

Assets
Fixed Assets 556596 583761
Investment 939194 1175683
Current Assets, Loans and

Advances
a) Current assets
Stock 270934 289272
Debtors 172716 188725
Cash 153228 1680707
b) Loans and Advances 816122 868345
Misc. Expenditure
Profit and Loss A/c(Dr. Balance)

85
Total 2908790 3273856

86