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A

PROJECT REPORT

ON

STUDY OF WORKING CAPITAL AT ASHOK SAHAKARI SAKHAR KARKHANA LTD;ASHOKNAGAR


BY GAURAV PRAKASH PAWAR MBA (FINANCE) ROLL NO. 9213320013

SUBMITTED TO PUNJAB TECHNICAL UNIVERSITY (PTU)

IN PARTIAL FULFILLMENT OF MASTER IN BUSINESS ADMINISTRATION (MBA)

ROYAL COLLEGE OF MANAGEMENT (RCM) PUNE


2009-11

TABLE OF C O N T E N T S Chapter No. Title Declaration from student Certificate from Company/Organization Certificate from Guide Acknowledgement Chapter Scheme List of Graphs List of Tables List of Annexure List of Abbreviations Executive Summary Introduction Background of the study Background of the topic Company profile Need of the study Scope of the study Objectives of the study Concept of the study Factors Influencing Working Capital Growth trend Organization profile Location Page No. I II III IV V VI VII VIII IX X 1-10 1 1-2 2 2-3 3-4 4 5 7 7 8 9

I 1.1
1.2 1.3 1.4 1.5 1.6 1.7 1.8 1.9 1.10 1.11

II 2.1 2.2 2.3 2.4 III IV V VI

Research Methodology Primary data Secondary data Population Limitation of the study Data Processing and Analysis Findings Conclusion Recommendations

11-12 11 11 12 12 13 21 22 23

DECLARATION I, Mr. Gaurav Prakash Pawar hereby declare that this project report is the record of authentic work carried out by me during the period from April to June 2011 and has not been submitted to any other University or Institute for the award of any degree /diploma etc

Gaurav Prakash Pawar Date: - 30thJuly 2011

ACKNOWLEDGEMENT

It is a matter of great satisfaction and pleasure to present this report on summer training in Ashok Co-Operative Sugar Factory Ltd; Ashoknagar. I take this opportunity to my thank to all those involved in my training I express my deepest thanks to my faculty guide, Prof. Manesha Dhaawaray for her untiring energy in always guideline me, also encouraging me for the project. I thank all staff members. I thanks to Mr. Bhanudas Murkute (Director) for given me opportunity to work at A.S.S.K.Ltd. As a Management trainee. I am thankful to Mr. Nivrutti Kulkarni (Finance Manager) for his encouragement and able guidance at every stage of my training work.

IV

Chapter Scheme Chapter No. Title Page No.

I II III IV V VI

Introduction Research Methodology Data Processing and Analysis Findings Conclusions Recommendations

1-10 11-12 13 21 22 23

List of Tables Table No. 1 2 3 4 5 6 7 8 9 Title Cycle of working capital Gross Profit Margin Ration Net Profit Margin ratio Return On Equity Return On Total Cost(ROTA) Liquid Ratio Capital Employed Turnover Ratio Fixed Asset Turnover Ratio Inventory Turnover Ratio Page No 6 13 14 15 16 17 18 19 20

VI

List of Graphs

Graph No.
1

Title Difference between permanent and temporary working capital Gross Profit Margin Ration Net Profit Margin ratio Return On Equity Return On Total Cost (ROTA) Liquid Ratio Capital Employed Turnover Ratio Fixed Asset Turnover Ratio Inventory Turnover Ratio

Page No 6 13 14 15 16 17 18 19 20

2 3 4 5 6 7 8 9

VII

List Of Annexure

Anx No. 1 2 3 4 5 6

Titel Profit And Loss Account For The Year 2007 Profit And Loss Account For The Year 2008 Profit And Loss Account For The Year 2009 Balance Sheet As On 31 MARCH 2007 Balance Sheet As On 31 MARCH 2008 Balance Sheet As On 31 MARCH 2009

Page No. 24 25 26 27 28 29

VIII

List of Abbreviations

Abbreviation A.S.S.K. Ltd GPM NPM DTR CTR ROCE ROE RTA FATR CETR WCTR

Full form Ashok Sahakari Sakhar Karkhana Limited Gross Profit Margin Net Profit Margin Debtors Turnover Ratio Creditors Turnover Ratio Return on Capital Employed Return on Equity Return on Total Asset Fixed Asset Turnover Ratio Capital Employed Turnover Ratio Working Capital Turnover Ratio

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EXECUTIVE SUMMARY

The main objective of this project is to study the financial health of the organization by calculating various ratios and working capital. During the project, they shows various types of ratios and How ratios are important in the view of organization and how management use analysis of ratio and how management use working capital figure for future planning and determination of policies. I have properly studied all financial documents and records and trail balance sheet to calculate the important ratio. Each ratio focused on the financial strength and weakness of the firm. Data for this project is collected through two sources. Primary Sources, This data means the first hand information, which was collected during formal & informal discussions with the General Manager. Secondary data was generated with the help of Annual Report, Induction manual, Reference book, Loan agreement and other sources in observation in Finance Department.

CHAPTER NO . 1 INTRODUCTION 1.1 BACKGROUND OF THE STUDY Sugar Industry in India is agro based industry. Occupying a predominate position in the economy of the country. Sugar Industry is the Biggest industry employing nearly three lacks workers and sub staining 2.5 to 3 crores of agriculturists and persons are engage in transportation and harvesting. Total sugar industry in India are 320 out of that 70% are in the co-operative sector. The production of sugar in India is highest in the world. In India Maharashtra stands first in production of sugar. Now in Maharashtra state 78 sugar factories in operating through beginning a few private entrepreneurs started sugar production in 1930. The real inspiration was derived from the leadership of late Dr. PADMASHRI VIKHE PATIL & DR.DHANANJAYRAO GADGIL when they started the First sugar factory on co-operative basis in 1950. So now in Maharashtra out of 78 sugar factories 67 are working on operative basis and remaining 11 are working on joint stock company system Ahmednagar district. We find that out of 18 sugar factories 13 are working on co-operative basis & only 5 are joint stock companies. The present study has been undertaken in the area of Ashok co-operative sugar factory ltd. Ashoknagar, Taluka-Shrirampur, District-Ahmednagar 1.2 BACKGROUND OF THE TOPIC capital is just like a blood in the human body because capital is significant in financial management due to the fact that it plays a vital role in keeping the wheel of the business running. Every business requires capital, without which it cannot be promoted. The capital is required as fixed capital and working capital. Fixed capital required for establishment of a business, where as working capital required for day-to-day operations of a business. Financial statements are prepared for decision-making. They play a dominant role in setting the framework of managerial decision. But the information provided in financial statement is not an end in itself as no meaningful conclusion can be drawn from this statement alone. However, the information provided in financial statement used in decision making through analysis and interpretation of financial statement. 1

Working capital is refers to short-term funds to meet operating expenses. It refers to the funds, which a company must possess to finance its day-to-day operations of the business. It is concerned with the management of the firms current assets and current liabilities. It relates with the problems that arise in attempting to manage the current assets, current liabilities and their inter-relationship that exists between them. If a firm can not maintain a satisfactory level of working capital, it is likely to become insolvent and may even be forced into bankruptcy...

1.3 COMPANY PROFILE History of Ashok Co-operative Sugar Factory Ltd. Before giving into actual establishment of this factory. Directly traced on the success of the idea of Pravaranagar in Bombay state during 1948 to 1954. In local farmers around Belapur road in Ahmednagar District were encouraged to pursue the idea of co-operative sugar factory by the local official held a conference of local farmers at belapur road on 17th Dec, 1945 under the president ship of DR.Gadgil the veteran Economist of Pune. The successful working and tremendous progress of Pravara Co-operative Sugar Factory Ltd. Pravaranagar encouraged the farmers. Around the area of cultivated more sugarcane to meet this problems govt. indicates 12 sits which were considered suitable for the establishment of sugar factories of Maharashtra subsequently in the year 1954 this Ashok Cooperative Sugar Factory Ltd; Ashoknagar is granted industrial license registered no.264 dated 1 Dec 1954. 1.4 NEED OF THE STUDY In every business organization its financial transaction are recorded in the systematic term, which called Financial Statements such as profit and Loss Account and Balance Sheet. Financial statement shows the financial strength and weakness of the firm, hence, the financial statements are prepared for the decision making. Management becomes able to take correct decision on the basis of these financial statements is necessary to be analyzed. The information provided in Financial Statements is of immense use in making decision through analysis of and interpretation of Financial Statements. Financial analysis is the process of identifying financial strength and weakness of the profit and loss A/C and other operative data. 2

There are various methods to techniques used in analyzing Financial Statement, Schedule of changes in Working Capital, Fund Flow Statement and flow analysis, Cost Volume Profit Analysis and Ratio Analysis. Working Capital management is one of the powerful tools used for analyzing Financial Statement. Working Capital interpreted Financial Statement in an effective manner that made enable to understand to management. It is the statement which shows exact how much amount is require to run business or for production. 1.5 SCOPE OF THE STUDY A) Managerial Uses Of Working Capital1)Helps in Decision Making- Financial statement are prepared primarily for decision-making. But the information Provided in financial statements is not analysis helps in making decision from the information provided in these financial statements. 2) Helps In Financial Forecasting And Planning- Working Capital is much help is financial forecasting and planning. Planning is looking ahead and the ratios calculated for a number of years work as guide for the future. 3) Helps In Control- Working Capital even helps in making effective control of the business. Standard ratios can be based upon Proforma Financial statements and variances or deviations, If any , can be found by comparing the actual with the standard so as to take corrective action at the right time. B) Utility Of Employees- The employees are also interested in the financial position of the concern especially profitability. Their was increase and amount of fringe benefits are related to the volume of profits earned by the concern. The employees make use of information available in financial statement. Various profitability ratios relating to gross profit, operating profit, net profit, etc. enables employees to put forward their view point for the increase of wages and other benefits.

C)Utility Of Government- Government is interested to know the overall strength of the industry. Various financial statements published by industrial units are used to calculate ratio for determining short term, long term and overall financial position of the concerns. Government may basis its future policies on the basis of industrial information available from various units. D) Tax Audit Requirement- This Finance Act 1984, inserted section 44 AB in the income Tax Act. Under This Section every assesses engaged in any business and having turnover or gross receipts exceeding Rs.40 Lacks. Is Required to get the accounts audited by a charted accountant and submit the tax audit report before the due date for filling the return of income under section 139(1).In case of professional a similar report is required if the gross receipt exceed Rs.10 lacks. Clause 32 of the Income Tax Act requires that the following accounting ratios should be given: (1) Gross Profit/ Turnover (2) Net Profit/ Turnover (3) Stock in trade/ Turnover (4) Material consumed/ Finished Goods Produced 1.6 OBJECTIVES OF THE STUDY In the present era of competition, the companies have huge potentials to grow in the market. Due to the Globalization, a tremendous change takes place in the financial sector. The research aims to study the financial strength and weaknesses of the company with special reference to WORKING CAPITAL MANAGEMENT. 1. To study how the company will manage its current assets to maintain better financial position. 2. To know the reasons of deviations in the working capital position of the company. 3. To study the liquidity management of the company. 4. To study inventory management of the company. 5. To study the receivables management of the company. 6. To study the sales of the company and revenue.

1.7 CONCEPT OF THE STUDY

The concept of working capital has been a matter of great controversy, among the financial wizards and they view it differently. working capital can be classified in to broadly two concepts of working capital commonly found in the existing literature of finance, such as: A) Gross working capital concept:According to the gross working capital concept, the total current assets are termed as the gross working capital or circulating capital or operating the capital as rotate continuously as long as the firm exists. A total current asset includes cash, marketable securities, accounts receivables, inventory, prepaid expenses, advance payments etc. This concept also called as quantitative or broader approach. Gross working capital refers to firms investments in the short-term assets such as cash, short-term securities, accounts receivables and inventory. B) Net working capital concept:As per this net working capital concept, the excess of current assets over current liabilities represents net working capital. Net working capital concept represents the amount of the current assets, which would remain after all the current liabilities were paid. It may be either positive or negative. It will be positive, if current assets exceed the current liabilities and negative, if the current liabilities are in excess of current assets. A net working capital concept indicates or measures the liquidity and also suggests the extent to which working capital needs may be financed by the payment source of funds C) Permanent Working Capital This indicates the amount of minimum Working Capital which is required to be maintained by every business at any point of time, in order to carry on business permanent & uninterrupted basis. It is permanently locked up in current assets. D) Temporary Working Capital This indicates that amount of Working Capital required by the business over & above fixed Working Capital. This need of Working Capital may vary depending upon the fluctuations in demand as a result of changes in production or sale 5

Table.1 Cycle of working capital

Graph 1. Difference between permanent and temporary working capital

Permanent Working Capital. Amount of Working Capital.

Time

1.8 FACTORS INFLUENCING WORKING CAPITAL 1. General nature of the business companies which sell a service and that too for immediate cash, require little working capital. But a manufacturing firm which produce a product and sell on credit basis, working capital required with high. 2. Production cycle if the production process is lengthy working capital needs with high. 3. Speed of operations cycle, if the speed of operational cycle is slow working capital needs high. 4. Credit terms if the company purchases raw-materials on credit basis and sills finished goods on cash base, working capital requirement will be low. 5. Growth and expansion is firms larger growth prospects demand grater working capital. 6. Dividend policy is firms pursuing liberal dividend policy requires more working capital. To analyze the changes in Working capital for the study period of Ashok Sugar Factory Ltd., Ashoknagar. To analyze the Working capital performance of the firm through ratio analysis. To suggest possible solution for better management of Working capital of Ashok Sugar Factory Ltd., Ashoknagar. 1.9 GROWTH TRENDSBefore 1932 there were about ten factories producing above 1.6 lacks tons of sugar in 1951-52 sugar production reached a figure of 15.2 lacks tones. In 1951 the government provided incentives by raising minimum prices of sugarcane and maximum prices of sugar. So these policies have directly effect on the result in lower production. The government again adopted the policy of protection and raised minimum sugarcane prices in 1954 as result sugar output rise to 15 lacks tons in 1954-55 and imports became necessary.During the season 1981-82 the highest production was recorded. Which were 84.37 lacks tones? The area under sugar cane in Maharashtra i.e. in 1972-73 was 11, 91,800 tones & 81.6 tones per hector, but in 1981-82 was 2,87,80,000 tones & 96.9 tones per hector per hector. The change in sugarcane production because the new developed variety gives more crop yield & it depending upon the climatic condition from year to year.

1.10 ORGANIZATION PROFILE

Registered No. Sugar Factory License No. Industrial Growth License No. Ethanol License No. Sen. Vat No. Vat No. Service Tax No. Excise No. Tel No. Fax No. E- Mail Employees

G 264 Date 1/12/1954 1] No. L8-61-55.L 25-53 Date 15/01/1952 1] No. L/25/N209/68 L.C. Date 23/11/1968 A.E.M./206 Date 22/01/2002 27380002261 C Delhi 27380002261 V Mumbai 54/S.T./G.T.A./130103?04-05 AACCA 3452-B Shrirampur Office- [02422] 223340, 223460 Factory Office- [02422] 246491,246492 [02422] 246493 ashokssk_anr@yahoo.co.in 1200-1300

1.11 LOCATION Ashok Sugar Factory Ltd; Ashoknagar is situated at Ashoknagar Tel.Shrirampur Dist. Ahmednagar for history perspective of the history of Factory Nipani Wadgaon the village where this factory is situated on pravara left canal the irrigation of pravara left bank. Has thus played a major part in this change factory is situated near central railway line on daund manmad rute. Railway station Nipani Wadgaon. This Factory is previously named as karegaon bhag Cooperative Sugar Factory Ltd. Is registered undered the Co-operative societies act on 1 dec, 1954 with the registration no. 264 dated 1 Dec, 1954 FUTURE PLAN/GOALS OF THE COMPANY/FACTORY COUNTRY WINE Submitted the project wine to government and its started as early as possible Winning Project To produce directly wine from the cane juice Graine base distillery project To produce the ethanol from the grains like jwar and maze To increase the capacity of the Factory Co Generation project will start.

Picture -1. Ashok Sugar Factory

Picture-2.Ashok Sugar Factory

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CHAPTER NO.2 RESEARCH METHODOLOGY SOURCES OF DATA COLLECTION 2.1 PRIMARY DATA This data generated specifically for the purpose of working out the project. This data mean the first hand info., which is collected various sources schedules and formally informal information. 1) Information relating to the project was collected during formal & informal discussions with the General Manager(Finance) 2) Queries arising in due course of the project brought into the notice of concerned Authority and necessary explanation and solution are adapted. 2.2 SECONDARY DATA 1) Annual ReportMajority of information gathered from data exhibited in the annual reports of the company.200405,2005-06,2006-07,2007-08,2008-09. 2) Induction ManualInformation relating to company history and profile gathered from the induction manual of ASSK Ltd; Ashoknagar. 3) Reference BookTheory relating to the subject matter and various concepts taken from financial reference books. Financial Management (M.Y. Khan, P.K. Jain),Financial Management (S.M.Inamdar),FinancialManagement(P.V.Kulkarni), PTU MBA 4th Semister Working Capital Management Book 4) Loan AgreementInformation relating to various rules and regulation for bank finance taken up from loan agreement between A.S.S.K. and consortium banks. 11

2.3 POPULATION Ashok Sahakari Sakhar Karkhana Working area concluded 40 villages.11,000 Share Holders and 1200 workers in this company. 2.4 LIMITATION OF THE STUDY 1). Generally company does not allow outsider to conduct any study or search work in the organization. Therefore to get the e project done in company it was very difficult. 2) Due to confidentially some important information, which is important for the project, could not collected. 3) All the financial data is A.S.S.K. have taken from the various statements of the companys i.e. Balance Sheet, Profit and Loss Account thus this project report is based on the information provided by the concern authorities. The Figures incorporated are not the exact ones as available.

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CHAPTER NO. 3 DATA PROCESSING

1.Gross Profit Margin ratio Table:2 Gross Profit Margin Ration Particular Gross Profit Net Sales Gross Profit Ratio 2006-07 11,66,69,889 64,51,84,494 18.08% 2007-08 -7,26,51,200 58,41,86,990 -12.4% 2008-09 71,53,462 82,11,99,350 0.87%

Graph:2 Gross Profit Margin Ratio

2006-07 2007-08 2008-09

Interpretation Gross profit margin ratio was 18.08% in the year 2006-07 which shows very good sign . After that Gross Profit Margin Ratio Was -12.4% in the 2007-08 and 0.87% in the year 2008-09. In the financial year 2007-08 Gross Profit Margin Ratio is decreased at huge percentage because company had incurred more on cost of goods sold in this year.

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2.Net Profit Margin ratio Table:3 Net Profit Margin Ratio Particular Net Profit Net Sales Net Profit Ratio 2006-07 8,36,94,336 64,51,84,494 12.9% 2007-08 -16,81,39,245 58,41,86,991 -28.78% 2008-09 19,03,308 82,83,52,813 0.23%

Graph:3 Net Profit Margin Ratio

2006-07 2007-08 2008-09

Interpretation Net Profit Margin Ratio was 12.9% in the year 2006-07. Net Profit Margin ratio for the year 2007-08 was -28.78% and for the year 2008-09 0.23%. This net Profit ratio indicates the overall performance & efficiency of company. In the above calculation in year 2004-05 the Net Profit ratio was 0.81% but after that it seems to fail in the financial year 2005-06,2006-07,2007-08 & raise very marginally in tear 2008-09 to 0.12%.As the higher Net Profit ratio indicates the good performance & efficiency of the company.

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3.Return On Equity Table:4 Return On Equity Particular Net Profit Equity Shareholder Fund Return On Equity Graph:4 Return On Equity 2006-07 2007-08 2008-09 8,36,94,336 -16,81,39,245 19,03,308 27,90,25,501 29,55,76,552 31,28,21,350 30% -56.88.% 0.60%

2006-07 2007-08 2008-09

Interpretation In year 2006-07 Ratio on Equity is 30% And year 2007-08 was -56.88% and 2008-09 in the Financial year Ratio On Equity is 0.60% ratio increased in 2008-09. Return on Equity means the ratio in which the return is on only owned funds, equity funds. The higher ratio is the good indicator where as low ratio is poor indicator.

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4.Return On Total Cost(ROTA) Table:5 Return On Total Cost(ROTA) Particular Net Profit (after tax) Total Assets Return on Total Asset 2006-07 2007-08 2008-09 8,36,94,336 -16,81,39,245 19,03,308 1,16,67,63,954 1,06,29,72,213 1,20,50,99,557 7.17% -15.81% 0.157%

Graph:5 Return On Total Cost(ROTA)

2006-07 2007-08 2008-09

Interpretation The ROTA means the ratio of Net Profit after tax to total asset. The higher the ratio good for the company. The ROTA Figure gives investors an idea of how effectively the company is converting the money it has to invest into net income.

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5.Liquid Ratio Table:6 Liquid Ratio Particular Liquid Assets Liquid liabilities Liquid Ratio 2006-07 18,75,60,886 19,78,10,469 0.94% 2007-08 15,10,54,419 22,00,97,393 0.68% 2008-09 21,43,48,678 22,53,07,838 0.95%

Graph:6 Liquid Ratio

2006-07 2007-08 2008-09

Interpretation The Quick ratio measures your ability to access cash quickly to support immediate demands., the quickly to support immediate demands, the quick ratio divides current assets excluding inventory by current liabilities. In the case A.S.S.K. liquidity of firm is very good because liquidity ratio from year 2006-07 to year 2008-09.

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6.Capital Employed Turnover Ratio Table:7 Capital Employed Turnover Ratio Particular Net Sales Capital Employed CETO Ratio 2006-07 64,51,84,494 627,90,25,501 2.31 2007-08 58,41,86,991 29,55,76,553 1.97 2008-09 82,83,52,813 31,28,21,351 2.64

Graph:7 Capital Employed Turnover Ratio

2006-07 2007-08 2008-09

Interpretation The capital employed turnover ratio tells us the state of the relationship between the share holders investment in the business & the sales that the management of the business has been able to generate from it. The capital employed turnover ratio shows that in financial year 2006-07 is 2.31, 2007-08 is 1.97 & 2008-09 is 2.64

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7.Fixed Asset Turnover Ratio Table:8 Fixed Asset Turnover Ratio Particular Net sales Fixed Assets FATO Ratio 2006-07 64,51,84,494 32,32,77,954 1.99 2007-08 58,41,86,990 37,14,82,213 1.57 2008-09 82,83,52,813 39,75,87,557 2.08

Graph:8 Fixed Asset Turnover Ratio

2006-07 2007-08 2008-09

Interpretation FATR indicates how efficiently the fixed assets have been utilized. The ratio for the last 3 year is 1.99,1.57, & 2.08 for manufacturing concerns, this ratio is very important. The reason is that like current assets , fixed assets are contributing quite substantially in making sales while low ratio indicates that fixed assets are not being used efficiently.

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8.Net Working Capital Table:9 Net Working Capital Particular Cost Of Goods Sold Avg. Inventory Inventory Turnover Ratio 2006-07 52,85,14,605 61,56,75,898 1.32 2007-08 51,15,35,791 52,21,27,000 0.97 2008-09 82,83,52,813 50,00,94,000 1.64

Graph:9 Inventory Turnover Ratio

2006-07 2007-08 2008-09

Interpretation The Working capital turnover ratio is ratio in which the number of times working capital is turned around in particular period. The high ratio shows the better utilization of the working capital. In the above example the ratio is getting increase & hence Good indication of better utilization of working capital.

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CHAPTER NO. 4 FINDING

This study has been taken up with main intention of analyzing the profitability and financial soundness of A.S.S.K. The finding is result of analyzing the data of three years with respect to the financial position operational efficiency and profitability of the company. The brief description of the finding of the study is given below1. Gross Profit margin Ratio was very good sign. the comparison of last 3 yers this ratio are changing. that ratio are not constant 2. The company is failed to maintain the margin of covering the administrative, selling and distribution expenses. 3. This Net Profit indicates the overall performance & efficiency of company. From the above calculation it seen that the efficiency & performance of the company is getting dampen. 4. If the Company wants to increase the efficiency & improve their performance then the companies want to maintain its higher Net Profit rate. 5. ROE ratio indicates the higher ratio is the good indicator where as low ratio is poor indicator. In the above figure the ratio continually failing down hence shows the poor performance. 6. ROTA ratio indicates the higher the ratio good for the company. In the above figure the ratio is getting reduce i.e. return on total asset is getting reduced and hence weakening the position of the company. 7. Capital employed turnover ratio has shown good result from last 3 years, increasing. ROCE can be increased by one of the following way- increase profit margin, decrease in capital employed. ROI can be improved by boosting sales, reducing invested capital or reducing cost.

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CHAPTER NO. 5 CONCLUSION

Working capital plays a key role in a business enterprise just as the role of heart in human body. Working capital is acts as grease to run the wheel of fixed assets. Working capital effective provision can ensure the success of a business while its inefficient management can lead not only to loss but also to the ultimate downfall of business funds. Working capital relates in other words,efficiency of business enterprise depends largely & its ability to manage Working capital. Working capital management is concerned with the problem that arises in attempting to manage the current assets, the current liabilities and the inter-relationship that exists between them. The term current assets refers to those assets which in the ordinary course of business can be converted into cash with in one year without undergoing a diminution in value and without disrupting the operations of the firm. Current liabilities are those liabilities which are intended, at their inception, to be paid in the ordinary course of business, with in a year, out of the assets or earnings of the concern. 1) Companys solvency position is not good it shows that company has sufficient liquid assets. 2) Companys turnover increased tremendously but company has concentrated on its cost of goods sold because it affect on gross profit of the company. 3) High ratio shows that better utilization of the company its indicates Working Capital. 4) ROE is low, Ratio in Financial Year 2007-08,2008-09, it shows that poor performance of the company. 5) The companys liquidity position in terms current ratio & quick ratio has not been maintained at a comfortable position. The current ratio in the period of 3 years is well below the normally acceptable ratio 2:1. 6) The analysis of financial data reveals that the company has very sound position regarding liquidity & solvency as shown by the current and quick ratio. The cash to current assets shows decreasing trend shows the efficiency in operation 22

CHAPTER NO. 6 RECOMMENDATION

This Project is useful to understand the Working Capital of Financial Statement undertaken for A.S.S.K.LTD. And others companies. This is useful in understanding all theoretical concept, how they are practically implemented, also I studied the various types of ratios which are used by the A.S.S.K. for analyzing its financial statements. Besides this I also find out the working capital company. 1).So this project provided details of Ratio Analysis of financial statements, this project gives me the practical knowledge of the concept. It gives me the information regarding the working of the companies. This project is also useful for A.S.S.K. for the effectively implementation of the working capital. 2).To recommend measures to improve performance and interpret Balance Sheet And Profit & Loss Account of A.S.S.K. Ashoknagar for the year2008-09,2007-08,2006-07 3).Highlight the utility of financial ratios in determining the financial capability of the Firm.
4) This project is easy to understand and helpful to rectify or useful to make certain changes in

companies working capital 5) This Project analysis is useful to ASSK Ltd. for the decision making. 6) It can be seen from the study of this project that Ashok Sahakari Sakhar Karkhana Ltd; must try to increase there inventory. 7) The growth in the liquidity ratio is not much than the previous years so management must look to increase or try to increase their liquidity position

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Ashok Co-operative Sugar Factory Ltd, Ashoknagar Tal-Shrirampur, Dist- Ahmednagar PROFIT AND LOSS ACCOUNT FOR THE YEAR 2007 ANNEXURE:1
EXPENSES 1.CANE PURCHASED & RELATED EXP. A) Sugar cane purchase B) Cane development Exps. 2.CANE PURCHASE TAX 333239121 7089128.39 9146856 2.VALUE OF BY PRODUCT SALES (Exclusive Excise Duty) Sch. No. 31/03/2007 INCOME 1.VALUE OF SUGAR PRODUCTION (Exclusive Excise Duty) Sch. No. 5 31/03/2007 622523964

3.CANE HARVESTING &TRANSPORT EXPENSES 4.CANE SUPPLY & RELATED EXPS. 5.SALARY & WAGES 6.STORES REPAIRS A) Machinery Repairs B) Process & Chemical Exps. C) Packing Exps. D) Other Stores(Chemical) 7.MANUFACTURING &S ELLING EXPX. 8) ADMINISTRATIVE EXPS. 9) INTREST A) On Long Term Loans B) On Working Capital Loans C) On Deposits 10. DEPRECIATION 11. RECOUPMENT ACCUMULATED LOSSES TOTAL

86725796 5451160.85

60346437

3.OTHER INCOME

25047892.58

20561586.83 32204.5 15156274.32 8196619.06 3 4 6707995.53 5.NET LOSS 4.PROFIT FROM BY PRODUCT UNIT 22110277.06

605969 20454586 9763559 9213751 83694336.31 692342663.5

TRANSFER TO BALANCE SHEET

168139245.4

TOTAL

692342663.5

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Ashok Co-operative Sugar Factory Ltd, Ashoknagar Tal-Shrirampur, Dist- Ahmednagar PROFIT AND LOSS ACCOUNT FOR THE YEAR 2008 ANNEXURE:2
EXPENSES 1.CANE PURCHASED & RELATED EXP. A) Sugar cane purchase B) Cane development Exps. 2.CANE PURCHASE TAX 3737288259 43661607.2 10240290 2.VALUE OF BY PRODUCT SALES (Exclusive Excise Duty) 26003544.3 Sch. No. 31/03/2008 INCOME 1.VALUE OF SUGAR PRODUCTION (Exclusive Excise Duty) Sch. No. 5 31/03/2008 558183446.7

3.CANE HARVESTING &TRANSPORT EXPENSES 4.CANE SUPPLY & RELATED EXPS. 5.SALARY & WAGES 6.STORES REPAIRS A) Machinery Repairs B) Process & Chemical Exps. C) Packing Exps. D) Other Stores(Chemical) 7.MANUFACTURING &S ELLING EXPX. 8) ADMINISTRATIVE EXPS. 9) INTREST A) On Long Term Loans B) On Working Capital Loans C) On Deposits 10. DEPRECIATION 11. RECOUPMENT ACCUMULATED LOSSES TOTAL

100876843 6141956.84

94695772.58

3.OTHER INCOME

38438136.09

26217520.46 7852154.38 20827128.77 546830.11 3 4 9928137.93 26638758.77 5.NET LOSS 4.PROFIT FROM BY PRODUCT UNIT 30141976.77

21861357 54976613.9 9591268 13121851

TRANSFER TO BALANCE SHEET

168139245.4

820906349.3

TOTAL

820906349.3

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Ashok Co-operative Sugar Factory Ltd, Ashoknagar Tal-Shrirampur, Dist- Ahmednagar PROFIT AND LOSS ACCOUNT FOR THE YEAR 2009 ANNEXURE:3
EXPENSES 1.CANE PURCHASED & RELATED EXP. A) Sugar cane purchase B) Cane development Exps. 2.CANE PURCHASE TAX 460389111.8 13919931.94 9549626 2.VALUE OF BY PRODUCT SALES (Exclusive Excise Duty) 41938668.6 Sch. No. 31/o3/2009 INCOME 1.VALUE OF SUGAR PRODUCTION (Exclusive Excise Duty) Sch. No. 5 31/03/2009 786414144.3

3.CANE HARVESTING &TRANSPORT EXPENSES 4.CANE SUPPLY & RELATED EXPS. 5.SALARY & WAGES 6.STORES REPAIRS A) Machinery Repairs B) Process & Chemical Exps. C) Packing Exps. D) Other Stores(Chemical) 7.MANUFACTURING &SELLING RELATED EXPENSES 8) ADMINISTRATIVE EXPS. 9) INTREST A) On Long Term Loans B) On Working Capital Loans C) On Deposits 10. DEPRECIATION 11. RECOUPMENT ACCUMULATED LOSSES TOTAL

139766019 6594453.1 126347240.6 3.OTHER INCOME 138312611.3

33011200.55 27430.63 26209991.46 13918154.53 3 4 42005087.14 23888604.18 5.NET LOSS 4.PROFIT FROM BY PRODUCT UNIT 25243689.03

939237 61306134.24 9122359 14558090.83 1903308 99190113.2

TRANSFER TO BALANCE SHEET

TOTAL

991909113.2

26

Ashok Co-operative Sugar Factory Ltd, Ashoknagar Tal-Shrirampur, Dist- Ahmednagar BALANCE SHEET AS ON 31 MARCH 2007 ANNEXURE:4
CAPITAL & LIABILITIES Authorised Capital Paid up capital Reserve & Surplus Secured Loans Capital Terms Loan Working Capital Loans Unsecured Loans By Product Division Deposits Current Liabilities & Provision Govt. Liabilities Recovery from cane bills & others Other liabilities Sugar division By product division Current dues Against bills payables Provision Provision For Excise Duty Sales Tax Sugar Molasses Spirit & Ethanol Sales Tax Provision for Interest Payable Total 4504869.5 860688 9946386.68 1219845483 Total 1219845483 9 29862232.53 1183993.29 28463221.73 5 4 29760854.08 94716276.5 2 3 138328586 414539891.6 Sch. No. 1 As on 31/o3/2007 102500000 49887783 229137718.9 ASSETS & PROPERTIES Cash & Bank Balance Cash in hand Cash at bank Investment Advances & Other Receivable Advances Security deposits Other receivable Sugar division By product division 6 7 12164540 16701480.71 Current Assets Store stock Sugar & by product stock 8 137898222.3 Fixed Assets Preliminary Capital & Other Exps. Ashok Bhandare Wage board difference Profit & Loss Account Accumulated tax 21888737.53 Add-Current year loss Less-Current year profit 83694336.3 1 70709622.3 3 154403958. 6 15 16 17 32164106.2 3 593761375. 3 323277954. 6 14 123019758. 1 29862232.5 3 12 13 357203.83 7976833.09 10 11 101212.5 11943460 14300185 Sch. No. As on 31/03/2007

12371539.0 2

27

Ashok Co-operative Sugar Factory Ltd, Ashoknagar Tal-Shrirampur, Dist- Ahmednagar BALANCE SHEET AS ON 31 MARCH 2008 ANNEXURE:5
CAPITAL & LIABILITIES Authorised Capital Paid up capital Reserve & Surplus Secured Loans Capital Terms Loan Working Capital Loans Unsecured Loans By Product Division Deposits Current Liabilities & Provision Govt. Liabilities Recovery from cane bills & others Other liabilities Sugar division By product division Current dues Against bills payables Provision Provision For Excise Duty Sales Tax Sugar Molasses Spirit & Ethanol Sales Tax Provision for Interest Payable Total 1079411.18 296532.4 9998172.92 1324192918 Total 1324192918 9 19368222.36 4521466.78 18943627.82 6 7 9410191 24890350.06 5 4 29760854.08 96094182.5 2 3 152527678 4478231459. 7 Sch. No. 1 As on 31/o3/2007 102500000 49887798 245608754.6 ASSETS & PROPERTIES Cash & Bank Balance Cash in hand Cash at bank Investment Advances & Other Receivable Advances Security deposits Other receivable Sugar division By product division Current Assets Store stock Sugar & by product stock 8 161907162.5 Fixed Assets Preliminary Capital & Other Exps. Ashok Bhandare Wage board difference Profit & Loss Account Accumulated tax 21587053 Add-Current year loss Less-Current year profit 238848867.8 70709622.33 168139245.4 15 16 17 38928693.6 511507185 371482213.2 14 100705112 19368222.36 12 13 300615.2 11204241.59 10 11 604346.76 4557696.12 14314185 Sch. No. As on 31/03/2007

12371539.02

28

Ashok Co-operative Sugar Factory Ltd, Ashoknagar Tal-Shrirampur, Dist- Ahmednagar BALANCE SHEET AS ON 31 MARCH 2009 ANNEXURE:6
CAPITAL & LIABILITIES Authorised Capital Paid up capital Reserve & Surplus Secured Loans Capital Terms Loan Working Capital Loans Unsecured Loans By Product Division Deposits Current Liabilities & Provision Govt. Liabilities Recovery from cane bills & others Other liabilities Sugar division By product division Current dues Against bills payables Provision Provision For Excise Duty Sales Tax Sugar Molasses Spirit & Ethanol Sales Tax Provision for Interest Payable Total 823811.75 197993 9237212.68 1454416235 Total 1454416235 9 14339589.7 505660.39 39317370.12 6 7 9172138.01 31888328.55 5 4 31742928.08 93171458.5 2 3 233644068 475158601.2 Sch. No. 1 As on 31/o3/2007 102500000 49072972 263748378.9 ASSETS & PROPERTIES Cash & Bank Balance Cash in hand Cash at bank Investment Advances & Other Receivable Advances Security deposits Other receivable Sugar division By product division Current Assets Store stock Sugar & by product stock 8 169402121 Fixed Assets Preliminary Capital & Other Exps. Ashok Bhandare Wage board difference Profit & Loss Account Accumulated tax 33193603 Add-Current year loss Less-Current year profit 236945559.4 238848867.8 1903308.38 15 16 17 38552547.5 538343352.9 5 14 144409220.9 14339589.7 12 13 202884.89 6237406.04 10 11 73726.53 34221099.55 Sch. No. As on 31/03/2007

12371539.02 16267000

29

BIBLIOGRAPHY Financial Management: - M. Y. Khan. , P. K. Jain. Financial Management: - S. M. Inamdar Financial Management: - I. M. Pandey. Financial Management: - P. V. Kulkarni PTU MBA 4th Semister Working Capital Management Book FORMULA Gross Profit= Gross Profit/Sales*100

Net Profit= Net Profit/Sale*100

Return On Equity= Net Profit(After Tax & Dividend)/Equity Shareholders Fund*100

Return On Asset= Net profit (After taxes)/Total Asset*100

Current Asset= Current Liabilities/Current Assets

Inventory Turnover Ratio= Cost Of Goods Sold/ Average Inventory

Creditors Turnover Ratio= Net Credit Purchase/ Average creditors

Debt Equity Ratio= Total debt/ Shareholders Equity

Debt to Total Capital Ratio=Long Term Debt/Permanent capital

Working Capital=Current Assets-Current Liabilities 30