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MANAGEMENT OF WORKING CAPITAL IN CEMENT INDUSTRY Click to edit Master subtitle style

PRESENTED BY ARPIT GARG


4/27/12

INTRODUCTION
Concept of working capital is very important

in the field of financial management. For growth and profitability of a firm working capital management is vital.

Net Working Capital = Current Asset Current Liabilities working capital is the life blood and controlling nerve center of a business
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CONTINUE
The term net working capital can be defined in two ways:
The most common definition of net working capital

(NWC) is the difference between current asset and current liabilities

Net working capital is NWC is that portion of current assets


which is financed by long term funds

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CONSTITUENTS OF CURRENT ASSETS


Cash in hand and cash at bank Bills receivables Sundry debtors Short term loans and advances. Inventories of stock as: Raw material, Work in

process

Finished goods
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Stores and spares,

Temporary investment of surplus funds.

CONSTITUENTS OF CURRENT LIABILITIES


Accrued or outstanding expenses. Short term loans, advances and deposits. Dividends payable. Bank overdraft. Provision for taxation Bills payable. Sundry creditors.
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ADVANTAGE OF ADEQUATE WORKING CAPITAL


SOLVENCY OF THE BUSINESS Goodwill Easy loans Cash Discounts Regular Supply of Raw Material Regular Payment Of Salaries Exploitation Of Favorable MarketConditions Ability To Face Crises Quick And Regular Return On Investments
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CURRENT RATIO =

LIABILITES

CURRENT ASSETS/CURRENT

QUICK RATIO =

LIABILITES

QUICK ASSETS/CURRENT

(Marketable Securities, Cash in hand and Cash at bank, Debtors)

Absolute liquid ratio =


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liquid assets/CURRENT LIABILITES

Determinants of Working Capital Nature of industry Nature of industry


Demand of creditors

Cash requirements
General nature of business

Time

Volume of sales

Nature of industry Cash requirements

Demand of creditors General nature of business


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Excessive working capital


Excessive working capital means ideal funds

which earn no profit for the firm and business cannot earn the required rate of return on its investments.

Redundant

working capital leads to unnecessary purchasing and accumulation of inventories. debtors and defective credit policy which causes higher incidence of bad debts.

Excessive working capital implies excessive

4/27/12 It may reduce the overall efficiency of the

CEMENT INDUSRTY IN INDIA


India is the second largest producer of cement

on the globe after China.

In total, India manufactures 251.2 Million

Tones of cement per year.


Estimates state that the production in the

sector will touch 262.61 MT in FY12.

Major players alone account for about 70

percent of the total volume of cement produced in India

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Scope and Purpose


The efficiency of the working capital

management and its components

Efficiency and effectiveness of management Importance of taking care of current assets

and current liabilities


Optimize the use of available resources Checking out the risk and profitability Liquidity and Profitability Fluctuation
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Problems of Cement industry


Shortage of capital Power shortage Locational problems Shortage of coal Non-availability of railway wagons Defective method of transport Negligible share in world trade Technological obsolescence
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Future Ahead of Indian Cement Industry


The annual demand for cement in India is

consistently growing at 8-10%.

Demand for cement in the country is

expected to increase to 244.82 million tonnes by 2012


The demand will be at 311.37 million tonnes if

the projections of the road and housing segments are met in reality
Government is also taking certain measure for

avail transport , coal and crude oil availability 4/27/12 to

COMPANIES
Gujarat Ambuja Cement Managalam Cement Limited India Cement Company Ltd.

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Managalam Cement Limited


Company was incorporated as a public limited

company on 27th October 1976


Starting phase : company does not perform

well

Produces 3.25 million tonnes of cement Upgraded their technology in 2011 Analyst advice to buy for the investor for long

term basis

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Gujarat Ambuja Cement


The company was incorporated on 20th

October, 1981 as Ambuja Cements Pvt.Ltd

Public limited company on 19th March 1983 Latest technology adopted by company Collabrations with foreign companies In 2011 it has capacity of producing 25 million

tonnes of cement.

Its stock also performing well in 2011


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analyst(ashwani gujral) recommend to buy

Continue

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India Cement Company Ltd.


It was established in 1946 and the first plant

was set up at Sankarnagar in Tamil Nadu in 1949


It has about seven cement manufacturing

plants spread over Southern India catering to major markets in South India and Maharashtra.
India Cements Ltd. also owns Indian Premier

League's Chennai franchise, Chennai Super Kings.

Its capacity is 15.5 million tonnes in 2011


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Continue.
The Company's plants are well spread with

three in Tamilnadu and four in Andhra Pradesh which cater to all major markets in South India and Maharashtra. market share of 28% in the South. It aims to achieve a 35% market share in the near future. The Company has access to huge limestone resources and plans to expand capacity by de-bottlenecking and optimisation of existing plants as well as by acquisitions.

The Company is the market leader with a

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LIQUIDI TY RATIO
MANGALAM

CEMENT

AMBUJA
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CEMENT

SOURC ES OF FUND
MANGALAM

CEMENT

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WORKI NG CAPITA L

MANGALAM CEMENT

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REFRENCES
8_dp_singh_review_article_june_2011

http://money.rediff.com/companies/india-cements-ltd http://money.rediff.com/companies/mangal am-cement-ltd/11510022

http://money.rediff.com/companies/ambuja-cements

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Thank you

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