ADVENT INSTITUTE OF MANAGEMENT SCIENCE AND

TECHNOLOGY

________________WORKING CAPITAL MANAGEMENT______________

Post Graduate Diploma in Management

(2009-2011)
Semester III

Submitted to: Submitted By:

PRIYANK PALIWAL Pratik Mundra

Designation

Lecturer in AIMST
 PREFACE

The main motive behind the summer training of the PGDBM Programme is to
provide the practical aspect of the organization’s working environment. This training helps us to
visualize and realize about the congruency between the theoretical learning in the college and the
actual practices of the management. This overall project gives us an insight into actual corporate
world apart from a pure theoretical environment of the classroom. It allows us to face the world
full of ups and downs and to get a glance of the future corporate world in which we are going to
enter.

My summer training project at R.K.Marble Pvt.Ltd is a complete experience in itself

and it has become an inspirable part of my knowledge of management being learned in PGDBM
Programme.

This project is based on to have an overview of management of working capital and

to know about how the companies are managing their funds, cash and day to day transactions.
ACKNOWLEDGEMENT:-

It gives me immense pleasure to present this project report on Working Capital Management
carried out at R.K.Marble Pvt. Ltd. In partial fulfillment of Post-Graduation Diploma in Business
Management.No work can be carried out without the help and guidance of various persons.
I am happy to take this opportunity to express my gratitude to those who have been helpful to me
in completing this project report.

At the outset I would like to thank Mr. Rajendra Mathur (Asst. Chief Accountant of finance
Dept.) for their valuable advice and guidance.

I am also very thankful to Mr. R.B.Mehta (Vice President) who supported me and entertained me
in the company. I also thank to all staff members of account department for helping me to
complete the summer internship program.

I would be failing in my duty if I do not express my deep sense of gratitude to Mr.Priyank

Paliwal without his guidance it wouldn’t have been possible for me to complete this project
work.

Pratik Mundra
Company Profile:-

The Company R. K. Marble Private Limited was established in 1989 by the Patni group of
Kishangarh-District Ajmer to help serve increasing National and international demands for Indian
marble. Since then we have enjoyed exponential growth and export to many markets worldwide
including European Union countries, the Middle East, Japan, other parts of Asia, China and North
America etc.

"The seagull who sees farther, flies higher" living up to the immortal words of Johanthan Swift,
Mr. Ashok Patni established the first processing unit at Rajasthan (with an installed capacity of
one lakh cu. ft. marble slabs Per Annum) and never looked back. The company now has 14
Gangsaw machines. In November 1993 was the time, when state government took a step forward
to allot a virgin marble mine on lease to R. K. Marble at Morwad, Distt. Rajsamand in Rajasthan.

By the touch of sheer hard work, guts, burning inner desire to reach unprecedented heights and
fulfilling their dreams "the trio" converted these marble mines to gold mines. Morwad from which
the stone takes its name is a remote village in the eastern part of Rajasthan, India.

Today the name Morwad Marble from R. K. Marble group has become almost generic for a whole
range of white and semi-white types of marble, which are extracted from these locations.

The popularity of this range of marble continues to grow at an astonishing rate and it is marketed
in large quantities. The white background with light gray veins corresponds with nearly everyone's
perception of the most beautiful marble and architects for many of the India's important buildings
suggest it.

Zoom into the corner stone of Majoli, In Madhya Pradesh , India to scale the magnetic fascination
of an ISO 9001 : 2000 adorned Guinness Record Holder, engaged as the largest producer of
marble in the world. Bedecked with most sought after gadgets, the exotic Majoli mine is the most
coveted breeding ground of world's choicest Wonder Marble that's wondrous and splendid in
myriad hues.

Wonder Marble's colour panorama and innate design makes it the right choice for flamboyant
users. Our fascinating range can be floored to encompass living rooms, drawing arrangements,
dining spaces, hotel lobby's, pool sites, wall claddings, special lounges and many more. Among its
endless usages left for creative imagination, some could be - artifacts and decorative objects
 Products

Dealing in Products like Marble, Flooring Patterns, Marble Stone , Marble Stone Figure, White
marble, Marble Flooring, Marble Tiles.

Wonder Marble

The WONDER MARBLE produced at the R.K. Majoli mines comes to you in heartwarming
shades of deep and dark red, brown to rose patches in creamy base coupled with abrasion resistant
fine grained form, luster and reflective gloss which makes it truly a masterpiece for a lifetime.

Wonder Marble is available in 4 exotic colours:

 Milky Opal: Creamy base: Shades of beige & mauve

 Pink Pearl: Ecstatic pink & brown tones
 Garnet Rush: Reddish
 Jasper Jazz: Chocolate, red & brown
White Marble

Famous from antiquity, for the high quality the incomparable clearness and resistance, the
Morwad Marble from R. K. Marble Private Limited have constituted the base of many big
monuments and works of art in India. R.K. Milky Coral is a captivating splendor with generous
splashes of green and grey on milky white marble.
Marble Patterns & Fixing

R K Marble Private Limited offers decorative flooring patterns, stone inlaid borders and marble
inlaid items. The most popular choice with architects and interior designers for flooring and wall
cladding.

Mines
 World famous Morwad Mines of R.K.Marble Private Limited are situated 15km from Rajnagar
on Udaipur – Rajnagar - Ajmer National Highway No.8. Connected by well-maintained by
metalled road from Rajnagar. The nearest Airport at Dabok which is 68 Kms. from mines and 19
Kms from udaipur. Nearest Railway station at Kankroli, is 20 Kms. from mines. Electrical power
line of 11KV from State Viduyat Nigam is extended up to mines. Captive Power generation to the
tune of 2500 KVA is stand by.

Four Captive Diesel Dispensing pumps with 120 KL storage capacity and Explosive magazine
with 500 kg storage capacity are maintained at mines.

An over head tank of 1.5 lac liters capacity along with a filter plant is maintained for meeting the
requirement of drinking water and domestic use. The quality of water is potable.

Requirement of water for industrial use is met with the help of water tanks filled from tube wells
from the nearby areas.

The Safety Management is given utmost importance pit Safety Committee meetings are
organized regularly for tacking stock of safety preparation, accident analysis, and suggestions for
remedial measures for achieving ZERO accident status. The personal protective equipment and
safety gadgets are provided to employees and all out efforts are made to inculcate the habit of their
regular use.
Mines

Facilities of Modern store and well equipped workshops for repair and maintenance of HEMM
and other field machinery are available at mines.

Technology, the core aspect at R. K. Marble Private Limited can be seen at mining campus where
all means of communication are available which hooks this remote site to the rest of the world and
make them feel a part of larger community of R. K. Group. Eight telephone connections, with a
fax connection and two hot line between Mines to Udaipur and Kishangarh office are available at
mines site. Base mobile and walky-talky sets are well maintained for smooth communications
amongst the staff/workers/officers.

A four-bed hospital with Para medical staff and Doctor along with an ambulance is available at a
well-equipped Group Vocational Training Center is established at site to provide initial training to
new entrants and refresher and special training to existing employees OEMS and other service
agencies, training programmes were conducted periodically.

Factory
Our factory is located about 26 KM from the
holy city of Ajmer and about 107 KM from
Jaipur, the state capital of Rajasthan, along the
famous Makarana road. We have exclusively
used our own marble in combination with
other stone to give a fascinating look at our
factory site. Our managing director Mr. Suresh
Patni looks after the factory and is known for
his motto, "Customer Satisfaction".

The RK Marble Processing Centre houses 14 Gangsaw machines. Two Resin treatment plants, an
edge-cutting unit and 18 head-polishing unit from Breton. It has the most modern layout with
completely automatic plant to recycle water for marble cutting.

Latest gadgets like wireless, hotlines, modems, computerized MIS and costing systems are being
used in order to accelerate quality control and production, hence contributing to cost affectivity.
Quality Assurance

People

R. K. Marble Group has always stood for

quality without compromise. It believes in long-term business relations and works hand to hand
with the customers to ensure that it gets the best value of money. Stringent in-house quality
control measures are in place and yet it is always willing for third party quality checks. The
Company has adopted quality policy to standardize its systems, procedures and processes with
adequate documentation. R. K. Marble Private Limited is an ISO 9001: 2000 certification for its
various activities at mines and factory and ISO 14001 certification for Environment Management
System
Highly motivated team of professionals is dedicated to work. The team created the records of
completing large projects before given time frame.

Needless to say, the growth of R. K. Marble Group has been spurred by the spirit of the
individuals who work at various levels to keep ahead of the rest and constantly rise to the
challenges that beckon them at the frontiers of technology.

Strengths

The endeavor of the company is to provide quality products by imbibing the latest international
mining technology. This can be gauged from the fact that the entire mine operations are carried
out with the help of latest equipment for marble extraction. Sophisticated software developed
internally on RDBMS platform tracks and evaluates all possible functions, cost areas and
productivity of the mining operations. It is also the first marble mining company, which has very
high level of mechanization with highly skilled and trained workmen.

The company has made an extensive use of wireless communication to synergies all activities
from drilling to loading of the end product. The optimum utilization of the country's natural
resources can be seen here. Due to the latest technologies used, the recovery ratio of marble blocks
is amongst the highest.
The records of "The Director of Mines & Geology, Udaipur” reveals that the yield from
company's mines is the highest per hectare amongst all marble mines.

Company has achieved so many awards. These awards are very important for a company because
it increases goodwill and image of the company. We can build strong position in the market. And
company can easily get loans and other financial help from the bank and from other financial
institution. These awards show how much company is worried about environment, employees,
customers, and most important stakeholders of the company. It also include external and internal
environment of the company.
AWARD NAME AWARDED BY YEAR

Guinness World Records Guinness World Records 1998, 2000, 2001

Appeared in Guinness World Record

Guinness World Records 2003
Books
ISO 9001 : 2000 BVQI, USA 2003
ISO 14001 BVQI, USA 2003
Entry in Limca Books of World
Limca Books of World Records 1998, 1999
Records
Federation of Indian Mineral
Model Marble Quarry award - Best
Industry (FIMI) & All India Granite 2003
Mechanized Quarry- First Prize
& Stone Association (AIGSA)
The Best Stall for Stone & Stone Centre for Development of Stones
2003
Products (Outdoor) (CDOS)
Institute of trade and Industrial
Udyog Patra Award 2001
Development, New Delhi
State Level Bhamashah Award Education Deptt., Bikaner 2001
Highest Income tax payer Award
(Individually to Syt. Ashok Patni, Syt. Income Tax Deptt., Ajmer 2000
Suresh Patni, Syt.Vimal Patni)
Best Annual Report Award for Institute of Chartered Accountants
2001
Rajasthan Based Companies of India, Jaipur
Indira Priyadarshini Award National Publication, New Delhi 2001
Samman Patra Income Tax Deptt., Udaipur 1998
Shree Digamber Jain Atishaya
Padm Divakar 1999
Kshetra, Padampura, Jaipur
Social Welfare & Development Lions Club, Udaipur 2001
All India Digamber Jain Samaj,
Jain Gaurav 1998
Sikar
Rajasthan Chamber of Commerce &
Corporate Governance Award 2004
Industry
Introduction of Working capital management:-
Working capital management is concerned with the problems arise in
attempting to manage the current assets, the current liabilities and the inter
relationship that exist between them. The term current assets refers to those
assets which in ordinary course of business can be, or, will be, turned in to cash
within one year without undergoing a diminution in value and without
disrupting the operation of the firm. The major current assets are cash,
marketable securities, account receivable and inventory. Current liabilities ware
those liabilities which intended at there inception to be paid in ordinary course
of business, within a year, out of the current assets or earnings of the concern.
The basic current liabilities are account payable, bill payable, bank over-draft,
and outstanding expenses.
The goal of working capital management is to manage the firm’s current assets
and current liabilities in such way that the satisfactory level of working capital
is mentioned. The current should be large enough to cover its current liabilities
in order to ensure a reasonable margin of the safety

Definition:-

1. According to Guttmann & Dougall-

“Excess of current assets over current liabilities”.

2. According to Park & Gladson-

“The excess of current assets of a business (i.e. cash, accounts
receivables, inventories) over current items owned to employees and others
(Such as salaries & wages payable, accounts payable, taxes owned to
government)”.

Need of working capital management:-

The need for working capital gross or current assets cannot be over emphasized.
As already observed, the objective of financial decision making is to maximize
the shareholders wealth. To achieve this, it is necessary to generate sufficient
profits can be earned will naturally depend upon the magnitude of the sales
among other things but sales can not convert into cash. There is a need for
working capital in the form of current assets to deal with the problem arising
out of lack of immediate realization of cash against goods sold. Therefore
sufficient working capital is necessary to sustain sales activity. Technically this
is refers to operating or cash cycle. If the company has certain amount of cash,
it will be required for purchasing the raw material may be available on credit
basis. Then the company has to spend some amount for labour and factory
overhead to convert the raw material in work in progress, and ultimately
finished goods. These finished goods convert in to sales on credit basis in the
form of sundry debtors. Sundry debtors are converting into cash after expiry of
credit period. Thus some amount of cash is blocked in raw materials, WIP,
finished goods, and sundry debtors and day to day cash requirements. However
some part of current assets may be financed by the current liabilities also. The
amount required to be invested in this current assets is always higher than the
funds available from current liabilities. This is the precise reason why the needs for working
capital arise.

Gross working capital and Net working capital’:-

There are two concepts of working capital management
~Gross working capital
Gross working capital refers to the firm’s investment I current assets. Current
assets are the assets which can be convert in to cash within year includes cash,
short term securities, debtors, bills receivable and inventory.
~Net working capital
Net working capital refers to the difference between current assets and current
liabilities. Current liabilities are those claims of outsiders which are expected to mature for
payment within an accounting year and include creditors, bills
payable and outstanding expenses. Net working capital can be positive or
negative Efficient working capital management requires that firms should operate with some
amount of net working capital, the exact amount varying from firm to firm and depending, among
other things; on the nature of industries.Net working capital is necessary because the cash
outflows and inflows do not coincide.
The cash outflows resulting from payment of current liabilities are relatively
predictable. The cash inflow are however difficult to predict. The more
predictable the cash inflows are, the less net working capital will be required.
The concept of working capital was, first evolved by Karl Marx. Marx used
the term ‘variable capital’ means outlays for payrolls advanced to workers
before the completion of work. He compared this with ‘constant capital’ which
according to him is nothing but ‘dead labour’. This ‘variable capital’ is nothing wage fund which
remains blocked in terms of financial management, in working-process along with other operating
expenses until it is released through sale of finished goods. Although Marx did not mentioned that
workers also gave credit to the firm by accepting periodical payment of wages which funded a
portioned of W.I.P, the concept of working capital, as we understand today was embedded in his
‘variable capital’.
Type of working capital:-
The operating cycle creates the need for current assets (working capital).
However the need does not come to an end after the cycle is completed to
explain this continuing need of current assets a destination should be drawn
between permanent and temporary working capital.
Permanent working capital
The need for current assets arises, as already observed, because of the cash
cycle. To carry on business certain minimum level of working capital is
necessary on continues and uninterrupted basis. For all practical purpose, this
requirement will have to be met permanent as with other fixed assets. This
requirement refers to as permanent or fixed working capital

Temporary working capital

Any amount over and above the permanent level of working capital is
temporary, fluctuating or variable, working capital. This portion of the required working capital is
needed to meet fluctuation in demand consequent upon changes in production and sales as result
of seasonal changes.
Determinants of working capital:-
The amount of working capital is depends upon a following factors
Nature of business
Some businesses are such, due to their very nature, that their requirement of
fixed capital is more rather than working capital. These businesses sell services
and not the commodities and that too on cash basis. As such, no founds are
blocked in piling inventories and also no funds are blocked in receivables. E.g.
public utility services like railways, infrastructure oriented project etc. there
requirement of working capital is less. On the other hand, there are some
businesses like trading activity, where requirement of fixed capital is less but
more money is blocked in inventories and debtors.
Length of production cycle
In some business like machine tools industry, the time gap between the
acquisition of raw material till the end of final production of finished products
itself is quit high. As such amount may be blocked either in raw material or
work in progress or finished goods or even in debtors. Naturally there need of
working capital is high.
Size and growth of business
In very small company the working capital requirement is quit high due to high
overhead, higher buying and selling cost etc. as such medium size business
positively has edge over the small companies. But if the business start growing
after certain limit, the working capital requirements may adversely affect by the increasing size.
Business/ Trade cycle
If the company is the operating in the time of boom, the working capital
requirement may be more as the company may like to buy more raw material,
may increase the production and sales to take the benefit of favorable market,
due to increase in the sales, there may more and more amount of funds blocked
in stock and debtors etc. similarly in the case of depressions also, working
capital may be high as the sales terms of value and quantity may be reducing,
there may be unnecessary piling up of stack without getting sold, the receivable may not be
recovered in time etc.
Terms of purchase and sales
Some time due to competition or custom, it may be necessary for the company
to extend more and more credit to customers, as result which more and more
amount is locked up in debtors or bills receivables which increase the working
capital requirement. On the other hand, in the case of purchase, if the credit is
offered by suppliers of goods and services, a part of working capital
requirement may be financed by them, but it is necessary to purchase on cash
basis, the working capital requirement will be higher.
Profitability
The profitability of the business may be vary in each and every individual case,
which is in turn its depend on numerous factors, but high profitability will
positively reduce the strain on working capital requirement of the company,
because the profits to the extend that they earned in cash may be used to meet
the working capital requirement of the company.
Operating efficiency

If the business is carried on more efficiently, it can operate in profits which

may reduce the strain on working capital; it may ensure proper utilization of

existing resources by eliminating the waste and improved coordination etc

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