CHAPTER II REVIEW OF LITERATUREshodhganga.inflibnet.ac.in/bitstream/10603/51158/8/08...4 Amen‘s., Sugarcane and Sugar in Gorakhpur: An Inquiry into peasant production for capitalist

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CHAPTER – II

REVIEW OF LITERATURE

In this chapter, the researcher collected studies which are related to

financial performance of sugar industries and other related industries both in

India and abroad. The review of literature supports to frame the

methodology and hypotheses of the present study. In this way the researcher

collects all the reviews and has arranged it according to year-wise

chronological order. Different authors have been analyzed for performance

in different perspectives. A review of these analyses is important in order to

develop an approach that can be employed in the context of the study of

sugar industry in Tamilnadu. Therefore, the present chapter reviews the

various approaches to the study of financial performance.

Mahalingam (1980)1 has conducted a study entitled ―Financial

Performance of Indian Sugar Industries‖ and has highlighted the theoretical,

as well as, practical advantages of operation of sugar mills. In this study he

has shown the actual benefits derived from the cooperative sugar mills. He

has pointed out that the benefits included rise in remuneration and the

consequent change in their cropping pattern, additional employment

opportunities and the development of their industries and business activities

in and around cooperative sugar mill.

Asha Jain (1981)2 has carried out a study on ―Price-Cost Margin in

Indian Manufacturing Industries : An econometric analysis‖ and examined

1 Mahalingam, S. ―Financial Performance of Indian sugar Industries‖, The Management

Accountant, Vol.15, No.4, Aprl. 1980, pp. 294. 2 Asha Jain, ―Price cost Margin, Indian manufacturing Industry An Econometric Analysis‖, Ph.D.

thesis, IIT, Kanpur, 1981.

21

the price cost margin over time in the Indian manufacturing industries. The

author has used price cost margin as a measure of profitability. Cost factors

have emerged as major determinants of profitability, while the structural

variables like concentration ratio, capital intensity have shown mixed

pattern. The author has observed different results for different industries.

Latha Arun Reddy (1983)3 has undertook a study entitled

―Profitability and Growth – Indian Manufacturing Industries‖ and has

examined the profitability of the Indian paper industry with reference to the

financial statistics of joint stock companies in India by the RBI. The prime

objective of the study has been to look at the relationship between growth

and profitability, using regression models and compound growth rates. The

author has observed that there has been a strong positive correlation between

growth and profitability in the paper industry.

Amin (1984)4 focuses on the cultivation of sugarcane by small

farmers in GorakhPur region. He has analysed the socio-economic and

cultural conditions, under which these small farmers have become dependent

upon traders, property owners and other intermediaries for marketing

sugarcane for the production of crystal sugar.

Kapadia (1985)5 has made a study to find out the contribution of

taken over units, in the poor financial surpluses earned by public sector

enterprises during 1978-83. He has found that taken over units accounted

for 18 per cent of total investment, 22 per cent of total sales turnover and 45 3 Latha Arun Retty, ―Profitability and Growth Indian Marketing Industries‖, Artha-Vikas, Vol.

XIX, No.1-2, Jan.-Dec. 1983, p.1. 4

Amen‘s., Sugarcane and Sugar in Gorakhpur: An Inquiry into peasant production for capitalist

Enterprises in Colonial India, Delhi, OUP, 1984, pp.xxii, 336. 5 Kapadia, M.S (1985). Public Sector‘s Poor Financial Returns: Place for Taken over Units,

Financial Express, No.7, p.5.

22

per cent of employment of all central government enterprises. He has found

that 48 taken over units are in red during the period of study amounting to

Rs. 936 crores. He has suggested measures for no-more takeovers of sick

industrial units just for the sake of protecting the employment, where it is

mostly non-viable to achieve the commercial results.

Kaveri (1985)6 has carried out a study on ―Financing of Working

Capital in Indian Industry‖. This review of working capital finance is based

on the Reserve Bank of India's studies on Finances of Large Public Limited

Companies, concluding that Indian industry has, by and large, failed to

change its pattern of working capital financing in keeping with the norm

suggested by the Chore Committee.

Rayudu (1985)7 in his article, ―Appraisal of Technical Performance

of sugar Industry A Case Study of Sectoral Analysis‖ has discussed the

crushing capacity, capacity utilization, hours of cane crushed, sugar and

molasses production efficiency, etc. On a comprehensive basis, the

comparison has been made between co-operative, pate and Government

sugar mills in Andhra Pradesh.

Sharma and Reddy (1985)8 has made a study on the liquidity

position of the Nizam Sugar Factories Limited during the years 1972-73 to

1981-82 and to identify the factors influencing the liquidity. The study has

concluded that the major element affecting the liquidity position of the firm

is government policy with respect to the input and output as well.

6 V. S. Kaveri ―Financing of Working Capital in Indian Industry‖ Economic and Political Weekly

Vol. 20, No. 35 (Aug. 31, 1985), PP. M123-M128. 7

C.S.Rayudu, ―Appraisal of Technical Performance of Sugar Industry – A Case study of sectoral

analysis‖, Indian Co-operative Review, New Delhi, Vol.xxxii, No.24, Oct-1985, P.134-137. 8 Sharma, S.N and Reddy, A.V (1985). Corporate Liquidity: A Case Study, The Management

Accountant, pp. 415-419.

23

Ram Vichar Sinha (1986)9 in his book ―Sugar Industry in India‖ has

concentrated on the economics of sugar mills in India. This book covers the

historical aspects of sugarcane, by-product utilization and labour relation in

sugar mills.

Rajendra Patil (1987)10

has studied the position of sugar Co-

operatives at Sri Panchaganga Co-operative Sugar Mill in Koihapur district

of Maharashtra. He concluded that the Panchaganga Co-operative Sugar

Mill acts as the appropriate agent for bringing about rural transformation.

Though there are adequate local resources of mobilization, implementation

of well-planned area development plans and various schemes of small

farmers. It is an apt example of how the gain from Co-operative enterprise

can have widespread benefits.

Thangavelu (1987)11

in his research work ―A study of the working of

paper industry with special reference to Sri. Venkatesa Paper and Boards

Ltd., Udumalpet‖, has analyzed the cost efficiency and financial

performance of Sri Vankatesa paper and board limited, Udumalpet from the

year 1977-78 to 1985-86. The relevant data are collected from the annual

reports of the company and are fitted to a regression model. He has

concluded that the co-efficient of output and raw materials is significant at 1

percent level. The study has also revealed that the cost has increased by 2.67

times, the profit ratio has shown a declining trend and the operating cost has

gone up ranging to 48 percent on sales throughout the period under study.

9

Ram Vichar Sinha; Sugar Industry in India, Deep and Deep Publication, New Delhi, 1986. 10

B.Rajendra Patil, ―Development of co-operative sugar factory and its social commitment,‖ Indian

cooperative review, NCUI, New Delhi, Vol. xxvi, No.1, July-1987, P. 111-119. 11

Thangavelu, ―A study of the working of paper industry with special reference to Sri Venkatesa

papers and Boards Ltd., Udumalpet‖, M.Phil. Dissertation submitted to Bharathiar University,

1987.

24

Khan (1988)12

has conducted a study on ―physical performance of

sugar industry in India since 1950-51 and has showed that a striking feature

of the sugar industry has been the instability in its output. The author has

also disclosed that the industry has faced regional imbalances in capacity

expansion and capacity requirements.

Pandey and Bhat (1988)13

have analyzed the financial ratios of the

Indian manufacturing industries, by taking 612 companies from 1965-66 to

1984-85. They have identified three groups of ratios, which contain the

maximum amount of information on profitability and have applied these

ratios to analyze only manufacturing and processing industries. The three

groups of financial ratios are returned on investment, sales efficiency and

equity intensiveness. There is a declining trend in profitability in relation to

sales, shareholders‘ equity and total investment. The three groups of ratios

show a declining trend across most of the firms.

Kulkarni (1989)14

in his article entitled ―Paper and Paper Board‖ has

noted that the paper industry is able to attain an abnormal rise in the capacity

and production for the last two decades, whereas, the rate of capacity

utilization declined very sharply. In 1971, the capacity and production of

paper and paper board units are 9.54 lakh tones and 7.75 lakh tones

respectively, representing a capacity utilization of 82.3 percent. In 1982, the

respective figures are 18.16 lakh tones and 12.06 lakh tones registering a

capacity utilization of 66.4 percent. For the year 1988, the capacity has

12

Khan. M.Y. ―Physical Performance of Sugar Industry in India Since 1950-51‖, RBI occasional

papers, 1988, pp.57-58. 13

Pandey, I.M and Bhat, R (1988). Financial Ratio Patterns in Indian Manufacturing Companies: A

Multivariate Analysis, Working Paper No. 764, August, Indian Institute of Management,

Ahmedabad 14

Kulkarni, A.V. ―Paper and Paper Board‖, No.1, Economic Times, August 1989, p.9.

25

raised to 28.51 lakh tones and the production is 17.20 lakh tones indicating

overall capacity utilization at 60.4 percent. The paper industry‘s installed

capacity is on the basis of 80 percent capacity utilization against the present

rational average capacity utilization of 65 percent.

―Modernization of Sugar Industry‖ is edited by Getaway J.K

(1990)15

and has been published by Arnold Publisher, New Delhi, is only a

compilation of papers presented by various authors. This book, consisting of

the papers presented by various authors‘, deals mainly with deficiencies of

the sugar industry in India and the modernization techniques to be adopted

to improve it. The author has argued the needs to expand the production

capacity of this industry and to develop the ancillary units to exploit the

wastes of sugar industry. In short, the author emphasizes the need for

diversification of sugar industry.

Swam B.N (1990)16

has studied cost benefit analysis of India‘s only

sugar beet plant in India. He has made an experiment on the beet sugar pilot

project at Gana Nagar, Rajasthan, and has given a wise idea to break the off-

season in Indian sugar industry.

Agarwal (1991)17

has undertaken a study on ―profitability and growth

in Indian Automobile manufacturing industry‖ and the study considers the

performance of the companies. The key objective of this study is to find out

whether the firms have been making abnormal profits when price controls

have been removed. The study is also aimed at evaluating the impact of

15

J.K.Gehawat (Editor), Modernization of sugar industry, Arnold publication, New Dethi, Bombay,

Bangalore, Calcutta and Madras, 1990 16

B.N.Swami, ―Cost Benefit analysis of India only Beet Sugar Plant‖, Journal of Management

Accountant, Vol. 28 (4), 1990, 134-140. 17

Agarwal R.N. ―Profitability and Growth in Indian Automobile manufacturing Industry‖, Indian

Economic Review, Vol.XXVI, No.1, 1991, pp. 81-97.

26

policy changes since 1981-82 on profitability and growth of firms in the

industry using Tobin‘s square as a measure of profitability and is found to be

primarily associated with vertical integration, diversification, age of the

firms, and industry policy. The study also reveals that the important

determinants of the growth of firms are expansion of capacities,

diversification, industry policy, dummy variables and gross retained profits.

The author has found evidence of abnormal profit, when price controls have

been removed.

Bhavani (1992)18

in her research work on ―performance of sugar

cooperative in Tamilnadu‖ has examined the physical performance, growth

and capacity utilization of sugar cooperatives in Tamilnadu, using ratio

analysis, regression analysis and compound growth rate. It has been

observed that the sugar production and said variables are positively

correlated and sugar recovery is not significantly correlated with sugar

production, number of factories and sugarcane crushed. The author has also

examined the physical performance of sugar factories in Tamilnadu, in terms

of sugarcane crushed, direction of crushing, sugar recovery and sugar

production. The author has observed that most of the cooperative sugar mills

in Tamilnadu are under utilized in some periods. The outcome of the study

has revealed that the efficiency of the selected nine cooperative sugar mills

assessed in terms of four indicators not uniform.

Gopalan M and K.Minfraj (1992)19

in their article on ―Financial

Management of Co-operative Sugar Mills‖ have dealt with certain issues for

18

Bhavani, S. ―Performance of sugar cooperative in Tamilnadu‖, unpublished M.Phil., dissertation,

Bharathiar University, Coimbatore, 1992. 19

M.Gopalan and K.Minfraj, Co-operatives, TCU, Chennai, Vol.78, April-1992, P. 412.

27

improving operational efficiency in financial affairs of Dharnapuri Co-

operative sugar Mill, This study is based on case study method.

Jagdish Lal (1992)20

in his article on ―Sugar and Sugarcane

Production Trends and Policies‖ has studied the production of sugar and its

consumption trend and has examined the impact of sugarcane and sugar

pricing and distribution policies. The study has shown that there is an

increasing trend in the case of production and consumption of sugar during

the period 1950-51 to 1990-91.

Chandra Sekaran (1993)21

has made a study on ―determinants of

profitability in sugar industry‖. The main aim of the study is to draw

inference on the impact of policy measures which has led to change in price

and distribution in the sugar industry. The determinants of profitability are

analyzed using the technique of least squares. In order to find out whether

the profitability function has shifted after the introduction of partial de-

control, dummy variable is introduced for estimating the function and the

test is also done to ascertain the inference. It is concluded from the study

that the profitability of the company is based on the assets structure and

proper utilization of the production capacity.

Venkaiah (1993)22

in his study entitled ―Management of Cooperative

Sugar Factories – A case study of Anakapalle cooperative Sugar Ltd.,

Thummapala‖, has analysed the operational efficiency and the capacity

20

Jagdish Lal, ―Sugar and Sugarcane Production, Trends and Policies‖, Indian Journal of

Agricultural Economics, Vol.47, No.3, 1992, pp.365-366. 21

Chandra Sekaran, N. ―Determinants of profitability in sugar industry‖, Decision, Vol.20, No.4,

Oct.-Dec.1993, pp. 235-244. 22

Venkaiah, V. ―Management of cooperative sugar factors : A case study of the Anakapalle Co-

operative Sugar Ltd., Tummapala‖, Role of Agriculture in Economic development, Deep & Deep

Publication, New Delhi, 1993, pp. 127-146.

28

utilization of the factory. He has observed that the financial performance of

this company has been unsatisfactory.

Thyagarajan (1994)23

in his article on ―Liberalization of Sugar

Industry in India‖ published in ―Kissan world‖ complaint the licensing

policy of the sugar mills and the control affected by the government on the

price fixation and problems faced by it.

An attempt has been made to study the ―Financial Performance of

Private Corporate Business Sector 1994-95‖ and the findings are published

in RBI Bulletin (1995)24

. The study covers 1030 companies in which 925

were non-financial companies and 105 are financial companies. The

consolidated results for the entire sector are analyzed in this study. The

results of the non-financial and financial companies are also analyzed size

wise on the basis of 1994-95 paid up capital of the companies. The study

revealed that the good corporate performance during 1994-95 has been

reflected in key profitability ratio which has shown distinct progress in the

year review as compared to the previous year.

Vijayakumar and Venkatachalam (1995)25

have carried out a study

entitled ―Profitability and Viability Working Capital and Profitability – an

empirical analysis‖ taking 13 firms from sugar industry, covering a period

from 1982-83 to 1991-92. The impact of working capital ratios on

profitability has been determined using correlation and regression analysis.

Major ratios like liquid ratio, receivables turnover ratio are computed to

23

R.V.Thyagarajan ―Liberalization of sugar Industry in India‖, Kisan world, Feb-1994 24

RBI Bulletin, ―Financial Performance Private Corporate Business Sector, 1991-95‖, Finance

India, Vol.IX, No.4, Dec.1995, pp.901-908. 25

Vijayakumar A and Venkatachalam A. ―Profitability and viability : working capital and

profitability – An empirical analysis‖, The management accountant, Vol.30, No.10, Oct.1995, pp.-

748-750.

29

measure their impact on profitability (PBT/TA). The study has shown that

inventory turnover ratio and receivable turnover have positive correlation

with the profitability and liquid ratio, whereas, cash turnover ratio negative

correlation with the profitability.

Boothalingam (1996)26

has studied the diversification and increased

efficiency in sugar production of co-operative sugar mills regarding the

usage of their by-products. Inclusion of value added activities by the co-

operative sugar mills have enabled to provide better return to their members,

he has added.

Manohar Rae (1996)27

in his article on ―Development of Indian

Sugar dustry Historical‖ has studied the origin of sugarcane and its

development. He has covered the area of cane production, utilization of

sugarcane, sugar licensing policy, quality of sugar, various development

schemes and suggestions offered by committees, sugar distribution, buffer

stock, international sugar trade etc.

Ravi (1996)28

has studied certain polices of sugar mills. This study is

based on policy, implication and strategies. The objective of this article is to

find out the major issues of the co-operative sugar mills in the changing

economic environment. He has examined the sugarcane pricing policy such

as statutory minimum price and state advisory price. He has also suggested

that the diversification is a key factor for improving the status of co-

26

M.Boothalingam, ―Diversification and increased Efficiency in sugar co-operatives,‖ Tamil Nadu

Journal of Co-operatives, TCU, Chennai, Vol. 28, No.6, Sep-1996, P. 314-346 27

P.J.Manohar Rao., ―Development of Indian Sugar Industry Historical‖ Indian Co-operative

review, NCUI, New Delhi, Vol. xxxii, No.7, March 1996, P. 152-160 28

D.Ravi, ―Development of co-operative sugar industry in policy implication and strategies,‘ co-

operative perspective, journal of co-operative management (Special journal) Pune, Vol. 30 and 31,

No. 4 and 1, January-March, April-June 1996, P.7-91

30

operative sugar mills, and it is one of the major solutions for overcoming the

present problems of co-operative sugar mills.

Saikumar and Raju (1996)29

in their articles have studied the role of

Co-operative sugar mills in India. They have found out that the average

crushing season and average recovery percentage of Co-operative sugar

mills are comparatively more against public and private sugar sectors and

they have found out the increase in the number of mills, which has resulted

in the increase of installed capacity. They have measured only the

operational efficiency of the co-operative sugar mills.

Pari and Divakar Naik (1997)30

have carried out a study entitled

―Trends in Area, Production and Productivity of Sugarcane in Orissa in

comparison with National and Global Level‖ and have analysed the inter

district trends in area, production and productivity of sugarcane in the state

of Orissa for the period 1973-74 to 1990-91 and have compared the same

with national and global levels. The study has reported a significant use in

area, production and productivity of sugarcane at the global level.

Pari and Vijayakumar (1997)31

have undertook a study entitled

―Productivity and Profitability of the Paper Industry : A case study of

Seshasayee Paper and Board Limited, Tamilnadu‖ and have analyzed the

productivity and profitability of the paper industry. The authors have

analysed the growth in production, sales and profit of Seshasayee paper and

29

G.V.S.Saikumar and S.N.Raju, ―Role of Co-operative Sector in Sugar Industry,‖ Indian co-

operative Review, NCUI, New Delhi, Vol. xxxiv, No.2, October-1996, P. 157-166 30

Pari K.C. and Dibakan Naik, ―Trends in Area, Production and Productivity of Sugarcane in Orissa

in comparison with national and Global Level‖, Agricultural situation in India, Vol.XXXXXII,

No.10, Jan.1997, pp.669-6730 31

Pari. C.A. and Vijayakumar, A. ―Productivity and Profitability of the paper Industry : A case study

of Seshasayee paper and Boards Ltd.,‖ Management and Labour Studies, Vol.22, No.2, Apl.1997,

pp.82-89.

31

Board limited for the period 1981-82 to 1993-94 and have found out the

factors that determines the profitability of the company. The regression

analysis has revealed that the debt to total assets ratio, inventory turnover

ratio, current ratio, operating expenditure ratio, capacity integration and

vertical integration are permanent variables in determining the profitability

of Seshasayee paper and board limited.

Sanjeev Kumar Malik (1997)32

in his article entitled ―Growth

analysis of Sugarcane in Haridwar District of Uttar Pradesh‖ has

investigated the growth rate of sugarcane crop in Hardwar District and has

visualized the effects of change in areas of cultivation as well as yield

potential. To study the growth rate, the exponential function is fitted by the

least square method. Haridwar district has made significant and positive

compound growth rate of sugarcane production per unit per year. He has

concluded that the growth rate of sugarcane production has found higher

than the area and yield growth. Moreover the increase in the production of

sugarcane has been mainly caused by the area effect along with the yield

effect.

Kawal Raj Dawar (1998)33

in his study in ―Determinants of

Profitability in Sugar Industry in Punjab and Haryana‖ has measured the

profitability of the individual mills on year-wise basis. The researcher has

employed time series and cross section data to calculate multiple regression.

The author has arrived at the conclusion that improvement in sugarcane

recovery and avoidance of abnormal expansion can go a long way in

improving profitability ratio in the sugar industry.

32

Sanjeev Kumar Malik, ―Growth Analysis of Sugarcane in Hardwar District of Uttar Pradesh‖,

Cooperative Sugar, Vol.28, No.6, Feb. 1997, pp.453-454. 33

Kawal Raj Dawar, ―Determinants of Profitability in the Sugar Industry in Punjab and Haryana : A

Sector wise Analysis‖, Indian Co-operative Review, April, 1998, pp. 325-331.

32

Narayanasamy and Ramachandran (1998)34

have concluded that

the sugar mills have to purchase sugarcane at the price advised by the state

government, which is substantially higher than the minimum price fixed by

central government, and should not have a free hand in the sale of sugar,

since the release of sugar being controlled by the Government. The prices of

input and output of sugar are decisive factors in determining the

development of co-operative sugar mills.

Vijayakumar (1998)35

in his article titled ―Determinants of Corporate

Size Growth and Profitability‖ has examined the determinants of corporate

size, growth and profitability of the Indian companies for the period

covering from 1980-81 to 1995-96. The statistical techniques, like average,

correlation and linear and multiple regression analysis have also been

employed in this study. The inter industry analysis has revealed that except

the textile industry, the growth has been positively and significantly

associated with the size with respect to all other industries. It has also

revealed that the growth has been found to be associated with profitability to

a considerable extent.

Chandrasekaran (1999)36

has carried out a study on ―Financial

Performance of Indian Sugar Industry‖ for the period covering from 1990-91

to 1995-96 in which various ratios, like profitability ratio, coverage ratio,

liquidity ratios and turnover ratios, have been calculated. It has been found

that financial performance of the sugar industry had been moderate to poor,

except during 1993-94. The study has disclosed that the financial

34

N.Narayanasamy and Ramachandran, ―Factors affecting the Growth and Development of

Cooperative sugar factory — A case study, ‗Indian co-operative Review, NCUI, New Delhi, Vol.

xxv, No3, Jan-1998, P. 242-253 35

Vijayakumar, A. ―Determinants of Corporate Size Growth and Profitability: The Indian

Experience‖, The Management Accountant, May, 1998, Vol.33, No.5, pp. 327-329. 36

Chandrasekaran, N. ―Financial Performance of Indian Sugar Industry‖, The Management

Accountant, Vol.34, No.4, April 1999, pp.293-298.

33

performance of sugar industry has been affected mainly by high stocks of

finished goods, average to low coverage ratios, due to high variability of

earnings, high leveraging and difficulty of controlling cost structure. The

author has concluded that tough cycle of low production, high price

realization, followed by higher production and low price realization leading

to delay in payments would affect the companies if there is no significant

improvement in the financials of industry.

Navaneethakannan (1999)37

in his study has analysed the

―Productivity of Sugar Industrial Units in Cuddalore District‖ and has found

that, in general, sugar industry has faced the problems (non availability of

sugarcane, adequate water facilities) from the production department and

(liquidity position) from the financial department and (strike, lock out, lay-

off) from the management. He has suggested, moreover, has planned rational

allocation of resources from various activities pertaining to the functioning

of the sugar industries.

Jain and Surendra S.Yadav (2000)38

have ―Current Assets

Management: A Comparative Study of India, Singapore and Thailand‖

stated that sound current assets management is considered to be the primary

goal of working capital management in a business organization. Each current

asset, such as cash, inventory and receivables, must be managed efficiently,

in order to maintain the liquidity of the firm, while not keeping too high a

level of any one of them.

37

V.Navaneethakannan, 1999 ―A study on Productivity of Sugar industrial Units in Cuddalore

District,‖ Unpublished M.Phil Thesis, Annamalai University. 38

P.K.Jain & Surendra S.Yadav, "Current Assets Management: A Comparative Study of India,

Singapore and Thailand", Vision, the Journal of business perspective, Vol. 4, N0.2, July-

December 2000, PP.5 & 10.

34

Rajeswasi (2000)39

has carried out a study on ―Liquidity Management

of Tamilnadu Sugar Corporation Ltd, Alangular - A Case Study‖. Data has

been collected from the annual reports of TANCEM for a period of five

years from 1993-94 to 1997-98 to analyze the liquidity position of

TANCEM. It has been concluded from the analysis that, the liquidity

position of TANCEM is not stable. It has been observed from the liquidity

ratios, that there has been too much of liquidity in the first two years of the

study period. It has been concluded that the liquidity management of

TANCEM is poor and not satisfactory, since a very high degree of liquidity

is also as bad as an idle asset and affects profitability.

Sarvanan (2001)40

has made ―A study on Working Capital

Management in Ten Selected Non-Banking Financial Companies‖. For this,

he has employed several statistical tools on different ratios to examine the

effective management of working capital. He has concluded that the sample

firms had placed more importance upon the liquidity aspect compared to that

of the profitability.

Shanmugam and Poornima (2001)41

have studied ―Working Capital

is Still Most Crucial‖. 28 medium and large scale spinning mills in

Coimbatore industrial area and have revealed that the effective working

capital is almost crucial in an organization‘s success. The study has revealed

that most of the industries depend on production plans in working capital

planning, leaving all norms aside. The budgetary control has been found to

be the widely applied criterion of working capital control. When the

researchers interviewed the CEOs of the sample companies, it has come out 39

Rajeswari, N. ―Liquidity Management of Tamilnadu Cement Corporation Ltd., Alangulam – A

Case study‖, The Management Accountant, Vol.35, No.5, May 2000, pp. 377-378. 40

Sarvanan, P., "A Study on working Capital Management in Non- banking Finance Companies",

Finance India, Vol. XV, No.3, September, 2001 PP. 987-994. 41

Shanmugam, R and Poornima, S (2001). ―Working Capital is Still Most Crucial‖, Indian

Management, April, pp.62-65.

35

that every CEO has spent majority of time on working capital management,

which in turn highlights the importance of working capital management.

Prasad (2001)42

conducted a research study on the ―Working Capital

Management in Paper Industry‖. His sample consisted of 21 paper mills

from large, medium and small scaled for a period of 10 years. He has

reported that the chief executives have properly recognized the role of

efficient use of working capital in liquidity and profitability, but in practice,

they cannot achieve it. The study has also revealed that 50% of the

executives have followed budgetary method in planning working capital and

working capital management has been efficient due to sub optimum

utilization of working capital.

Sathyamoorthi (2002)43

in his work ―Management of Working

Capital in Selected Co-operatives in Botswana‖ has attempted to ascertain

how the current assets are financed and also has attempted to discover the

relative importance of various current asset components. The study covers

four years data of select cooperative organizations in Botswana. The study

has revealed that the liquidity ratios played a vital role to evaluate the short-

term efficiency of the organization. The study has shown that the

cooperatives had low liquidity resulting in their week position to pay short-

term debts.

Vijayakumar (2002)44

has carried out a study entitled ―Assessment of

Corporate Liquidity – A Discriminate Analysis Approach‖ in which 5

42

R.Prasad (2001) ―Working Capital Management in Paper Industry‖, Finance India Vol.XV No.1,

pp. 185-188 43

Sathyamoorthi, C.R (2002). ―Management of Working Capital in Selected Co-operatives in

Botswana‖, Finance India, September, Vol.16, No. 3, pp.105-125. 44

Vijayakumar, A. ―Assessment of Corporate Liquidity – A discriminant Analysis Approach‖,

Research Studies in Commerce and Management, Classical Publishing Company, New Delhi,

2002, pp.180-191.

36

cooperative sugar mills and 5 private sector companies in Taminadu are

taken into consideration among the 14 cooperative sugar mills of 14 private

sector companies. Only those units which are established before 1984 and

having a crushing capacity of 2000 metric tonnes per day are selected for the

study. The discrimination analysis is employed to determine the combined

effects of the ratios. The author has concluded that the cooperative sector is

classified as poor risk in all the selected years on the basis of current and

liquid ratio. The author has further concluded that the same has become

good risk during the year 1986-87 and 1987-89 on the basis of

discriminating Z score. The study has revealed that the overall liquidity

position of the industry is satisfactory.

Vijayakumar (2002)45

in his work ―Determinants of Profitability – A

Firm Level study of the Sugar Industry of Tamilnadu‖ has made an attempt

to study the various determinants of profitability viz., growth rate of sales,

vertical integration and leverage. The study is concluded by computing

current ratio, operating expenses to sales ratio and inventory turnover ratio.

The author has employed econometric models to test various hypotheses

relating to profitability with other variables. It has been concluded that

efficiency in inventory management and current assets are important to

improve profitability.

Reddy and Sudarsana (2003)46

in their study on ―Financial

Performance of Paper Industry in Andhra Pradesh‖ have studied issues

relating to the financial performance of some selected paper mills in Andhra

Pradesh. Non-financial areas, such as production, marketing, personal and

45

Vijayakumar, A. ―Determinants of Profitability – A Firm level study of the Sugar Industry of

Tamilnadu‖, The Management Accountant, Vol.37, No.6, June 2002, pp.458-465. 46

Reddy and G. Sudarsana. ―Financial performance of paper industry in Andhra Pradesh‖ Finance

India 17. 3 (Sep 2003): PP. 1027-1033.

http://search.proquest.com/docview.lateralsearchlink:lateralsearch/sng/author/Reddy,+G+Sudarsana/$N?site=business&t:ac=224361288/130C59D16D8398ECFA9/96&t:cp=maintain/resultcitationblockshttp://search.proquest.com/docview.lateralsearchlink:lateralsearch/sng/author/Reddy,+G+Sudarsana/$N?site=business&t:ac=224361288/130C59D16D8398ECFA9/96&t:cp=maintain/resultcitationblockshttp://search.proquest.com/docview.lateralsearchlink_1:lateralsearch/sng/pubtitle/Finance+India/$N?site=business&t:ac=224361288/130C59D16D8398ECFA9/96&t:cp=maintain/resultcitationblockshttp://search.proquest.com/docview.lateralsearchlink_1:lateralsearch/sng/pubtitle/Finance+India/$N?site=business&t:ac=224361288/130C59D16D8398ECFA9/96&t:cp=maintain/resultcitationblockshttp://search.proquest.com/docview.lateralsearchlink_1:lateralsearch/sng/pubtitle/Finance+India/$N?site=business&t:ac=224361288/130C59D16D8398ECFA9/96&t:cp=maintain/resultcitationblockshttp://search.proquest.com/docview.lateralsearchlink_1:lateralsearch/sng/pubtitle/Finance+India/$N?site=business&t:ac=224361288/130C59D16D8398ECFA9/96&t:cp=maintain/resultcitationblocks

37

research and development, are excluded. Objectives of the study are to

evaluate the financing methods and practices of sample paper mills, to

analyse the investment pattern and utilisation of fixed assets, to ascertain the

working capital condition, to review the profitability performance, and to

suggest measures to improve profitability. Primary data have been obtained

from respondents and unstructured interview held with the executives of

sample mills. The study concludes that the paper industry in Andhra Pradesh

needs the infusion of additional funds. Also needed are restructuring of

finances, modernisation of technology, use of assets efficiently, creation of

adequate depreciation provision, and optimising inventory investments.

Satyanarayana Chary and Venkateshwarlu (2003)47

have indicated

that ―Working Capital Analysis‖ can be regarded as the circulatory system

of any business. Management of working capital is complicated on account

of two important reasons, namely, fluctuating nature of its amounts, and the

need to maintain a proper balance between current assets and non-current

assets, in order to maximize profit. Shortage of working capital is a chronic

disease with the industrial sector in India. The importance of working capital

in an industry cannot be over-stressed, as it is one of the important causes of

success or failure of an industry. Whatever be the size of a business, working

capital is its life-blood.

Vijayakumar and Kadirvelu (2003)48

have undertaken ―A study on

Profitability and Size of the Firm in Indian Minerals and Metals Industry‖.

The study has focused to give a solution to the two contradictory suggestions

47

T.Satyanarayana Chary & V.Venkateshwarlu, "Working Capital Analysis" The Journal for

Practicing Managers, National Institute of Industrial Engineering, Mombai-400087-India, Vol.27,

No.3, July-Sep 2003, P.38. 48

Vijayakumar A. and Kadirvelu, S. ―Profitability and Size of the firm in Indian Minerals and

Metals Industry‖, The Management Accountant, Vol.38, No.11, Nov. 2003, pp.816-821.

38

viz., the larger firms earn a higher rate of return on its investment than the

smaller firms and the counter argument that size, breeds, inefficiency and

hence profitability may decline with size of firms. Hence, it has become

necessary to study the relationship between size and profitability of the

firms. The study is related that size was found to be significantly associated

with the profitability during the study period.

Chakraborty (2004)49

has argued ―Managing Corporate Liquidity

and Financial Flexibility: Different Approach‖ that the conventional method

of measuring liquidity would not be sufficient to cover the extended view of

liquidity and new framework has to be developed to cover the analysis of

amount and trend of internal cash flow, which has the better proposition to

focus on a firm‘s liquidity position. He has concluded that this was definitely

a better approach to measure liquidity over the conventional method of ratio

analysis.

Reddy and Patkar (2004)50

have studied ―Working Capital and

Liquidity Management in Factoring: A Comparative Study on SBI and

Canbank Factors‖ the size and components of liquidity management in

factoring companies. They have examined the correlation between liquidity

and profitability of factoring companies. They have concluded that the

sundry debtors and amount due to creditors are the major components of

current assets and current liabilities respectively and also these determined

the size of the working capital.

49

Chakraborty, P.K (2004). ―Managing Corporate Liquidity and Financial Flexibility: Different

Approach‖, The Management Accountant, Vol.39, No. 8, pp. 653-655. 50

Reddy, Y.V and Patkar, S.B (2004). ―Working Capital and Liquidity Management in Factoring: A

Comparative Study on SBI and Canbank Factors‖, The Management Accountant, Vol.39, No.5,

pp. 373-378.

39

Balakrishnan (2005)51

in his study ―Financial Performance of Public

Sector Petroleum Industry‖, has analysed the liquidity, solvency,

profitability to predict the financial position of the companies. He has

concluded that the petroleum industry is in a health position.

Namasivayin (2005)52

in his article, ―India Recognized as a Major

Sugar Exporter‖ has suggested that the lenders should come forward to

provide adequate cash credit limit to sugar industries. These measures may

enable them not only to fund buffer stock adequately, but also to minimize

the product loss by utilizing sophisticated information technologies.

Alagumani and Anjugam (2006)53

in their article have focused

―Sugar Policy and Area Allocation and Econometric Analysis‖ and has

revealed that from the beginning, sugar has been put under rigid control.

During mid sixties, it has transformed by imposing 70% levy to partial

control. From eighties, it has liberalized by improving the proportion of free

sale sugar. Increased production of sugar has made the government to

further improve the proportion of free sale sugar to 70% during 1999-2000.

Andy Duff and Venkatramani (2006)54

in their article ―Fortune

Smiles on India‘s Sugar Sector‖ have explored how the sector‘s fortunes had

changed and examined some key factors that would influence its

development and profitability in the years to come. Production in 2005-06

has rebounded powerfully following two seasons of low output. Attractive

51

Balakrishnan .H. ―Financial Performance of Public Sector Petroleum Industry‖, PhD, Thesis,

Bharathiar University. 52

N.Namasivayam. June 2005, ―India Recognized as a Major Sugar Exporter‖, Industrial Herald,

p.34. 53

T.Alagumam and M.Anjugam, Jan.2003 ―Sugar Policy and Area Allocation an Econometric

Analysis‖, Indian Economic Panorama, p.37. 54

Andy Dutt and Venkataraman, S. ―Fortune smiles on India‘s sugar Sector‖, International Sugar

Journal, Vol.108, No.1292, 2006, pp.415-424.

40

margins for sugar products, robust growth in domestic sugar consumption

and promising market developments for ethanol and cogeneration have

combined to generate a wave of investment in the sector. India‘s sugar

sector is clearly on a roll-yet it is not so long ago that the industry was has

been crisis. Among the other issues, consideration has been given to the

impact of some fairly radical ideas regarding sugar prices and marketing

management that has been recently proposed by the government.

Padmanabhan (2006)55

has suggested ―Production of sugar in India -

An Analytical Study‖ that the sugarcane is one of the most important

commercial crops of the country and the sugar industry occupies an

important place in the economy. Sugarcane crop provides raw material to

over 25 industries and sugar industry is one of the largest agro based

processing industries, responsible for socio-economic development of rural

masses and national economy of our country.

Thirunarayanasamy (2006)56

, in his study has analysed ―Co-

operative Sugar Mills in Tamilnadu- An analysis of Sickness and Revival

Measures‖, concluded that the sickness in cooperative sugar mills has been

found to increase year by year. It is reflected in Altman‘s Z Score. The

accumulated losses, Absolute technology, mismanagement in finance and

production factors are the important causes for sickness in the mills. The

deviation from HCL (High Level Commission) norms was due to the above-

mentioned factors, which clearly revealed the weak position of the mills.

The official has opinionated that there was little scope for reviving the sick

mills. However, for recovery from sickness, HCL norms in production and

55

T.M.Padmanabhan, ―Production of sugar in India — An analytical study‖, Southern Economist,

New Delhi, Jan-2006, P. 15-16 56

M.Thirunarayanasamy, December 2006, Co-operative Super Mills in Tami Nadu an Analysis of

Sickness and Revival Measures, Unpublished Ph.D Thesis, Annamalai University

41

related aspects have to be followed. The study has been concluded that better

management practices and strict implementation of HCL norms would

produce better results.

Bhagat and Dilip Jain (2007)57

in their study ―Indian Sugar Industry

– An overview‖ have discussed about the structure, size and influence of

Indian sugar industry on world sugar market and presented an overall view

of the sugar industry and its socio-economic impact. The paper highlighted

the Indian sugar industry scenario, technology issues, efficiency

improvement, by-product usage and environmental safeguards addressed by

the Indian sugar mills. The authors have also presented that the engineering

and institutional support is available for its sustainable growth.

Chockalingam and Thirunarayansamy (2007)58

in their article

―The Cooperative Sugar Mills in Tamilnadu‖ - An analysis of Sickness

Revival Measures found that the net worth to total assets and the working

capital to total assets are negative in all the mills, due to purchase tax, cess,

and Co-operative society‘s commission, which has increased the cost of

production and these mills did not work at their full capacity, due to

inadequate supply of sugarcane, lack of electricity and water. They have

asserted that mis-management and internal disputes are the other problems

faced by the co-operative sugar mills in Tamilnadu.

Dheenadhayalan and Devianabrasi (2007)59

have suggested

―Financial health of Co-operative Sugar Mills -A Case Study of NPKRR Co-

operative Sugar Mills Ltd‖ that the ―Z‖- score of the sample units remain 57

Bhagat, J.J. and Dilip Jain, ―Indian Industry – An Overview‖, International Sugar Journal,

Vol.109, No. 1304, Aug.2007, pp.505-509. 58

S.M.Chockalingam and M.Thirunarayanasamy, 2007, ―Co-operative sugar Mills in Tamil Nadu —

An analysis of sickness and revival measures, Indian Co-operative Review, pp.181-187. 59

Dr.V.Dheenadhayalan and Mrs.R.Devianabrasi, ―Financial health of Co-operative Sugar Mills —

A Case Study of NPKRR Co-operative Sugar Mills Ltd‖., New Dethi, January -2007, P. 192-197

42

below the grey area from 1997 to 2007, but in the year 2001-02, they are in

the ―Z‖- score -0.29. After 2001-02, the decrease in the score indicates that

the sample unit is not financially sound and healthy. The sample units need

to put in efforts to increase the score. This will help the sample unit to avoid

any damage to its liquidity and solvency positions, thereby avoiding

financial distress and bankruptcy.

Pandey (2007)60

has recommended ―Indian Sugar Industry - A Strong

Industrial Base for Rural India‖ that the Indian Sugar Industry, second

largest ago-based processing industry after the cotton tiles industry in the

country, have a lion‘s share in accelerating industrialization process and

bringing socio-economic changes in under developed rural areas. Sugar

industry covers around 7.5% of total rural population and provides

employment to five lakh rural people. About 4.5 crore farmers are engaged

in sugarcane cultivation in India. Sugar mills (co-operative, private, and

public) have been instrumental in initiating a number of entrepreneurial

activities in rural India. Indian sugar industry can be a global leader,

provided, that it comes out of the vicious cycle of shortage and surplus of

sugarcane, lower sugarcane yield, and lower sugar recovery, ever- increasing

production costs and mounting losses. It needs quality management at all

levels of activity to enhance productivity and production. Attention is

required on cost minimization and undertaking product by processing

activities.

Kannadhasan (2007)61

in his article entitled ―Measuring Financial

Health of a Public Limited Company Using ‗Z‘ Score Model-A Case Study‖

60

Dr.Pandey, ―Indian Sugar Industry — A Strong Industrial Base for Rural India‖ MPRA,

Dec.2007. 61

M. Kannadhasan ―Measuring Financial Health of a Public Limited Company Using ‗Z‘ Score

Model- A Case Study‖ The Management Accountant, June 2007, Vol.42, No.6, PP.469-473.

43

ascertained the financial health of Wendt (India) Limited company and its

consistency in financial performance for five financial years from 2001-02

to 2004-05. The research findings are that the company is maintaining good

financial performance throughout the study period.

Kannadhasan (2007)62

has made an attempt ―Measuring Financial

Health of a Public Limited Company using ‗Z‘- Score Model- A Case

Study‖ to have an insight into the examination of financial health of a watch

company in India. To evaluate the financial conditions and performance of a

company, the author has used Z- score model, which captures the predictive

viability of a company‘s financial health, by using a combination of

financial ratios that ultimately predicts a score, which can be used to

determine the financial health of a company. The study concludes that the

company‘s overall financial health was good.

Sam Luther (2007)63

has undertaken a study entitled ―Liquidity Risk

and Profitability Analysis : A case study of Madras Sugars Ltd‖ and has

highlighted how the company had achieved adequate liquidity, risk

minimization and profit maximization. The objectives of the study are to

measure and evaluate the liquidity position of MCL, to assess the correlation

between liquidity and profitability and to assess the trade-off between

profitability and risk for a period from 1994-98 to 2004-05. The relationship

between liquidity and profitability are measured by computing spearman‘s

rank correlation co-efficient. The author, by using t-test, has concluded that

there is a liner relationship between liquidity and profitability. It is also

concluded that the high degree of aggressive policy adopted by MCL has

made a negative impact on its profitability. 62

M.Kannadhasan, ―Measuring financial health of a public limited company using ‗Z‘- score model-

a case study‖, The Management Accountant, June-2007, p. 469-479 63

Sam Luther C.T. ―Liquidity Risk and Profitability Analysis – A case study of Madras Cements

Ltd‖, The Management Accountant, Vol.42, No.10, Oct. 2007, pp.784-789.

44

Singh (2007)64

has studied ―Sugar industry in Uttar Pradesh:

Efficiency still Honey the Key‖, the sugar industry is a major agro-based

industry of Uttar Pradesh where cropping pattern is largely subsistence-

oriented and sugarcane is one of the important cash crops. During 2001-02,

the state had 20.35 lath ha area under sugarcane out of the total 4403 lakhs

ha area under sugarcane in the country. The sugar industry has shown

considerable instability in the level of production because of

interdependence and inter-relationship between sugarcane, gur, khansari and

white sugar leading to fluctuations in the production of sugarcane, as well

as, sugar. These fluctuations have emanated from the presence of various

processing sectors and have the different government policies. Such

uncertainty of affairs is neither conducive to sound growth of the industry

nor to the growers. In view of this scenario, it felt necessary to carry out an

investigation, which can reveal the present state of sugar industry, in terms

of its efficiency in operations. The study has revealed that most of the mills

are in the efficiency range of 60-80 percent. Efficiency is higher in the

private sector (81%), followed by the public (73%) and co-operative (66%)

sectors. Though this study has advocated the continuation of partial

decontrol policy, it has urged the policy makers to streamline strategies that

promote stabilization of sugarcane economy and make the state, a credible

supplier of Sugar in the international market, benefiting growers, processors

and, in turn, consumers.

Somannavar (2007)65

in his article, states that ―Indian Sugar Industry

is Competitive‖. He concluded that the strong infrastructure build up, co-

ordination between the centre and state governments, dialogue between the

64

N.P.Singh (2007) ―Sugar industry in Uttar Pradesh: Efficiency still Honey the Key‖, Agricultural

Economic review, Year-2007, Vol. 20, Issue-I. 65

Dr. S.B. Somannavar, Feb.2007. Indian Sugar industry- is it competitive?, Financing Agriculture,

P.8

45

firm and the farm sector, future based R&D, government co-operative

sector, proper utilization of the by-products and able trade policy have been

the essentials to make the Indian sugar industry globally competitive.

Vishanani and Shah (2007)66

have studied the ―Impact of Working

Capital Management Policies on Corporate Performance – An empirical

study‖ of Indian consumer electronic industry by implementing simple

correlation and regression models. They have found that there is no

established relationship between liquidity and profitability for the industry as

a whole; but various companies of the industry depict different types of

relationship between liquidity and profitability. However, majority of the

companies revealed positive association between liquidity and profitability.

Appuhami and Ranjith (2008)67

in their study on ―The Impact of

Firms' Capital Expenditure on Working Capital Management: An. Empirical

Study across Industries in Thailand‖ have investigated the impact of firms'

capital expenditure on their working capital management. The authors have

used the data colleted from listed companies in the Thailand Stock

Exchange. The study has also found that the firms' operating cash flow,

which has been recognized as a control variable, has a significant

relationship with working capital management, which is consistent with

findings of previous similar researches. The findings enhance the knowledge

base of working capital management and will help companies manage

working capital efficiently in growing situations associated with capital

expenditure.

66

Vishnani, S., and Shah, B. K. ―Impact of Working Capital Management Policies on Corporate

Performance -an Empirical Study‖, Global Business Review, 2007, Vol. 8, No. 2, PP. 267- 281. 67

Appuhami and B A Ranjith ―The Impact of Firms' Capital Expenditure on Working Capital

Management: An. Empirical Study across Industries in Thailand‖ International Management

Review 4. 1 (2008): PP. 8-21.

http://search.proquest.com/docview.lateralsearchlink:lateralsearch/sng/author/Appuhami,+B+A+Ranjith/$N?site=business&t:ac=195578526/130C5ED65432AB70B17/38&t:cp=maintain/resultcitationblockshttp://search.proquest.com/docview.lateralsearchlink:lateralsearch/sng/author/Appuhami,+B+A+Ranjith/$N?site=business&t:ac=195578526/130C5ED65432AB70B17/38&t:cp=maintain/resultcitationblockshttp://search.proquest.com/docview.lateralsearchlink_1:lateralsearch/sng/pubtitle/International+Management+Review/$N?site=business&t:ac=195578526/130C5ED65432AB70B17/38&t:cp=maintain/resultcitationblockshttp://search.proquest.com/docview.lateralsearchlink_1:lateralsearch/sng/pubtitle/International+Management+Review/$N?site=business&t:ac=195578526/130C5ED65432AB70B17/38&t:cp=maintain/resultcitationblockshttp://search.proquest.com/docview.lateralsearchlink_1:lateralsearch/sng/pubtitle/International+Management+Review/$N?site=business&t:ac=195578526/130C5ED65432AB70B17/38&t:cp=maintain/resultcitationblocks

46

Renugadevi and Anurada Rajendran (2008)68

in their article

entitled ―Financial Efficiency of Sugar Industry in Tamilnadu‖, have

analysed the financial position of the selective unit of sugar industry in

Tamilnadu. The study covers a period of six years from 1998-99 to 2003-04.

Ratios are calculated with the help of the data obtained from various

secondary sources. They have concluded that despite all difficulties, the

sugar industry has indeed very bright prospects, as there is abundant supply

of raw materials, labour and huge local market. The Government is bound to

continue on a long term basis partial control and dual pricing system so that

the interest of consumers on the one hand and that of industry on the other

are protected and reconciled.

Ramachandran and Janakiraman (2009)69

have found negative

―The Relationship Between EBIT and the Cash Conversion Cycle (CCC).

The study has revealed that operational EBIT‖ dictates how to manage the

working capital of the firm. Further, it has been as found that lower gross

EBIT was associated with an increase in the accounts payable days. Thus,

the study has concluded that less profitable firms wait longer to pay their

bills, taking advantage of credit period granted by their suppliers. While the

positive relationship between average receivable days and firms EBIT

suggested that less profitable firms will pursue a decrease of their accounts

receivable days in an attempt to reduce their cash gap in the CCC.

Gaur and Jighyasu (2010)70

in their study on ―Financial

Performance Measures of Business Group Companies: A Study of Indian

68

Dr (Mrs) V. Renugadevi and Mrs.Anurada Rajendran ―Financial Efficiency of Sugar Industry In

Tamilnadu‖, Organisational Management Vol.XXIV, No.2.July-Sept.2008, PP. 4 and10. 69

Ramachandran, Azhagaiah and Muralidharan Janakiraman, "The Relationship between Working

Capital Management Efficiency and EBIT" Managing Global Transitions,7(1), PP.61-74, 2009. 70

Gaur and Jighyasu (2010) ―Financial Performance Measures of Business Group Companies: A

Study of Indian Non-Metallic Mineral Products Industries‖ . IUP Journal of Business

Strategy 7. 4 (Dec 2010): PP. 45-53.

http://search.proquest.com/docview.lateralsearchlink:lateralsearch/sng/author/Gaur,+Jighyasu/$N?site=business&t:ac=822454209/130C570458A65B04795/7&t:cp=maintain/resultcitationblockshttp://search.proquest.com/docview.lateralsearchlink:lateralsearch/sng/author/Gaur,+Jighyasu/$N?site=business&t:ac=822454209/130C570458A65B04795/7&t:cp=maintain/resultcitationblockshttp://search.proquest.com/docview.lateralsearchlink_1:lateralsearch/sng/pubtitle/IUP+Journal+of+Business+Strategy/$N?site=business&t:ac=822454209/130C570458A65B04795/7&t:cp=maintain/resultcitationblockshttp://search.proquest.com/docview.lateralsearchlink_1:lateralsearch/sng/pubtitle/IUP+Journal+of+Business+Strategy/$N?site=business&t:ac=822454209/130C570458A65B04795/7&t:cp=maintain/resultcitationblockshttp://search.proquest.com/docview.lateralsearchlink_1:lateralsearch/sng/pubtitle/IUP+Journal+of+Business+Strategy/$N?site=business&t:ac=822454209/130C570458A65B04795/7&t:cp=maintain/resultcitationblockshttp://search.proquest.com/docview.lateralsearchlink_1:lateralsearch/sng/pubtitle/IUP+Journal+of+Business+Strategy/$N?site=business&t:ac=822454209/130C570458A65B04795/7&t:cp=maintain/resultcitationblocks

47

Non-Metallic Mineral Products Industries‖ have focused on the financial

data of 57 business group companies of Indian nonmetallic mineral products

industries (sugar, glass, gems & jewellery, refractories, ceramic tiles,

abrasives and granite) over a time period of 10 years (1999-2008) and have

examined the firm's financial performance, using performance measures-

Operating Profit and Return On Net Worth (RONW), the Size (SIZE),

Leverage (LEV), Working Capital Ratio (WCR) and Age (AGE) of the firm

are included as determinants of firm performance. Non-metallic mineral

product category consists of important industries of the manufacturing sector

(which contributes almost 15% to the GDP) and 3-4% to the GDP. This

study tries to see the performance of business group firms in different

business cycles.

Pankaj, Agarwal and Sinha (2010)71

have conducted a study on

―Financial Performance of Microfinance Institutions of India A Cross-

Sectional Study‖ analyzed the financial performance of various

microfinance institutions operating in India. It assumes significance because,

it is imperative that these institutions be run efficiently, given the fact that

they are users of marginal and scarce capital and the intended beneficiaries

are the marginalized sections of society. MFIs must be able to sustain

themselves financially in order to continue pursuing their lofty objectives,

through good financial performance.

Raheman, Abdul; Qayyum, Abdul; Afza, Talat; Bodla and

Mahmood Ahmed (2010)72

have carried out a study on ―Sector-wise

71

Pankaj K., Agarwal and S.K. Sinha ―Financial Performance of Microfinance Institutions of India

A Cross-Sectional Study‖ Delhi Business Review, July - December 2010, Vol.11, No. 2. Volume

1, N. 1 December – 2010. 72

Raheman, Abdul; Qayyum, Abdul; Afza, Talat; Bodla and Mahmood Ahmed. ―Sector-wise Analysis of

Working capital Management and Firm Performance in Manufacturing Sector of Pakistan‖

Interdisciplinary Journal of Contemporary Research In Business 2.7 (Nov2010):PP.412-437.

http://search.proquest.com/docview.lateralsearchlink:lateralsearch/sng/author/Raheman,+Abdul/$N?site=business&t:ac=848642383/130C5ED65432AB70B17/2&t:cp=maintain/resultcitationblockshttp://search.proquest.com/docview.lateralsearchlink:lateralsearch/sng/author/Qayyum,+Abdul/$N?site=business&t:ac=848642383/130C5ED65432AB70B17/2&t:cp=maintain/resultcitationblockshttp://search.proquest.com/docview.lateralsearchlink:lateralsearch/sng/author/Afza,+Talat/$N?site=business&t:ac=848642383/130C5ED65432AB70B17/2&t:cp=maintain/resultcitationblockshttp://search.proquest.com/docview.lateralsearchlink:lateralsearch/sng/author/Bodla,+Mahmood+Ahmed/$N?site=business&t:ac=848642383/130C5ED65432AB70B17/2&t:cp=maintain/resultcitationblockshttp://search.proquest.com/docview.lateralsearchlink:lateralsearch/sng/author/Bodla,+Mahmood+Ahmed/$N?site=business&t:ac=848642383/130C5ED65432AB70B17/2&t:cp=maintain/resultcitationblockshttp://search.proquest.com/docview.lateralsearchlink:lateralsearch/sng/author/Bodla,+Mahmood+Ahmed/$N?site=business&t:ac=848642383/130C5ED65432AB70B17/2&t:cp=maintain/resultcitationblockshttp://search.proquest.com/docview.lateralsearchlink:lateralsearch/sng/author/Raheman,+Abdul/$N?site=business&t:ac=848642383/130C5ED65432AB70B17/2&t:cp=maintain/resultcitationblockshttp://search.proquest.com/docview.lateralsearchlink:lateralsearch/sng/author/Qayyum,+Abdul/$N?site=business&t:ac=848642383/130C5ED65432AB70B17/2&t:cp=maintain/resultcitationblockshttp://search.proquest.com/docview.lateralsearchlink:lateralsearch/sng/author/Afza,+Talat/$N?site=business&t:ac=848642383/130C5ED65432AB70B17/2&t:cp=maintain/resultcitationblockshttp://search.proquest.com/docview.lateralsearchlink:lateralsearch/sng/author/Bodla,+Mahmood+Ahmed/$N?site=business&t:ac=848642383/130C5ED65432AB70B17/2&t:cp=maintain/resultcitationblockshttp://search.proquest.com/docview.lateralsearchlink_1:lateralsearch/sng/pubtitle/Interdisciplinary+Journal+of+Contemporary+Research+In+Business/$N?site=business&t:ac=848642383/130C5ED65432AB70B17/2&t:cp=maintain/resultcitationblockshttp://search.proquest.com/docview.lateralsearchlink_1:lateralsearch/sng/pubtitle/Interdisciplinary+Journal+of+Contemporary+Research+In+Business/$N?site=business&t:ac=848642383/130C5ED65432AB70B17/2&t:cp=maintain/resultcitationblocks

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Analysis of Working capital Management and Firm Performance in

Manufacturing Sector of Pakistan‖. The present study empirically estimates

and compares sector-wise impact of working capital management on

performance of manufacturing firms in terms of collection policy, inventory

policy, payment policy, Cash Conversion Cycle and Net Trading Cycle,

using financial data for 204 firms listed on Karachi Stock Exchange

classified in 9 sectors during period 1998-2007. The results indicate that

there are variations in sectoral performance in terms of different measures of

working capital management. There is no consistent behavior of any of the

working capital management measure in all of the sectors. In some sectors,

some of the measures play their vital role in predicting the profitability while

not in others.

Rao, Chinta Venkateswara, Azhagaiah, Ramachandran; Rao and

Chandrasekhara, (2010)73

have conducted a study on ―Financial

Management Focus on Working Capital Utilization in the Indian Cotton

Textile Industry : Methodological Analysis‖ and have analyzed the trends

and patterns of efficiency of WC (WC) utilization in respect of size of firms

of cotton textile sector in India on the application of three indices viz.,

Performance Index (PI), Utilization Index (UI), and Efficiency Index (EI).

For the purpose of analysis, the selected firms are classified into three size

categories viz "Small", "Medium" and "Large", based on average assets size

over the study period. The study reveals that Linear Growth Rate (LGR) of

PI, UI and EI in respect of WC efficiency for small size firms is significant,

while that of for medium size firms, the trend of UI alone is significant. The

trend of PI, UI and EI for large size firms is insignificant. On the whole,

73

Rao, Chinta Venkateswara; Azhagaiah, Ramachandran; Rao and K.Chandrasekhara, ―Financial

Management Focus on Working Capital Utilization in the Indian Cotton Textile Industry:

Methodological Analysis‖ Journal of Financial Management & Analysis 23.2 (Jul-Dec 2010): PP.63-

84.

http://search.proquest.com/docview.lateralsearchlink:lateralsearch/sng/author/Rao,+Chinta+Venkateswara,+PhD/$N?site=business&t:ac=861735009/130C5ED65432AB70B17/43&t:cp=maintain/resultcitationblockshttp://search.proquest.com/docview.lateralsearchlink:lateralsearch/sng/author/Rao,+Chinta+Venkateswara,+PhD/$N?site=business&t:ac=861735009/130C5ED65432AB70B17/43&t:cp=maintain/resultcitationblockshttp://search.proquest.com/docview.lateralsearchlink:lateralsearch/sng/author/Rao,+K+Chandrasekhara,+PhD/$N?site=business&t:ac=861735009/130C5ED65432AB70B17/43&t:cp=maintain/resultcitationblockshttp://search.proquest.com/docview.lateralsearchlink:lateralsearch/sng/author/Rao,+K+Chandrasekhara,+PhD/$N?site=business&t:ac=861735009/130C5ED65432AB70B17/43&t:cp=maintain/resultcitationblockshttp://search.proquest.com/docview.lateralsearchlink:lateralsearch/sng/author/Rao,+K+Chandrasekhara,+PhD/$N?site=business&t:ac=861735009/130C5ED65432AB70B17/43&t:cp=maintain/resultcitationblockshttp://search.proquest.com/docview.lateralsearchlink:lateralsearch/sng/author/Rao,+Chinta+Venkateswara,+PhD/$N?site=business&t:ac=861735009/130C5ED65432AB70B17/43&t:cp=maintain/resultcitationblockshttp://search.proquest.com/docview.lateralsearchlink:lateralsearch/sng/author/Azhagaiah,+Ramachandran/$N?site=business&t:ac=861735009/130C5ED65432AB70B17/43&t:cp=maintain/resultcitationblockshttp://search.proquest.com/docview.lateralsearchlink:lateralsearch/sng/author/Rao,+K+Chandrasekhara,+PhD/$N?site=business&t:ac=861735009/130C5ED65432AB70B17/43&t:cp=maintain/resultcitationblockshttp://search.proquest.com/docview.lateralsearchlink_1:lateralsearch/sng/pubtitle/Journal+of+Financial+Management+$26+Analysis/$N?site=business&t:ac=861735009/130C5ED65432AB70B17/43&t:cp=maintain/resultcitationblockshttp://search.proquest.com/docview.lateralsearchlink_1:lateralsearch/sng/pubtitle/Journal+of+Financial+Management+$26+Analysis/$N?site=business&t:ac=861735009/130C5ED65432AB70B17/43&t:cp=maintain/resultcitationblockshttp://search.proquest.com/docview.lateralsearchlink_1:lateralsearch/sng/pubtitle/Journal+of+Financial+Management+$26+Analysis/$N?site=business&t:ac=861735009/130C5ED65432AB70B17/43&t:cp=maintain/resultcitationblocks

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despite the positive growth in PI, the WCM efficiency of overall firms is

found to be not encouraging, because the constant factors are declining,

which shows that the fixed components of WC are more than the varying

components of the WC.

Singh, Fulbag; Mogla and Monika (2010)74

have conducted a study

on ―Profitability Analysis of Acquiring Companies‖ and have examined the

profitability of acquiring firms in the pre- and post-merger periods. The

sample consists of 153 listed merged companies. Five alternative measures

of profitability are employed to study the impact of mergers on the

profitability of acquiring firms. The results reveal that profitability declined

in 55% of companies, and only 29% of companies could improve their

profitability. DuPont analysis reveals that profitability declined due to poor

asset utilization. It suggests that managers should give due attention to

proper utilization of newly acquired assets. Acquisition of neither healthy

nor loss-incurring units contributed to the profitability of acquirers.

Ahmad, Hafiz Khalil; Raza, Ali; Amjad, Waqas; Akram, and

Muhammad (2011)75

have conducted a study on ―Financial Performance of

Non Banking Finance Companies in Pakistan‖ and have analyzed the

financial performance of those non-bank finance companies (NBFCs) which

are providing the services of investment advisory (IAS), asset management

(AMS), leasing and investment finance (IF) for last two years. Ratio analysis

method has been used to analyze the financial performance of non-bank

financial institutions. The study concludes that the financial performance of

NBFCs has been better in 2008 as compared to the overall decline in 2009 74

Singh, Fulbag; Mogla and Monika. ―Profitability Analysis of Acquiring Companies‖ IUP Journal

of Applied Finance 16. 5 (Jul 2010): PP. 72-83. 75

Ahmad, Hafiz Khalil; Raza, Ali; Amjad, Waqas; Akram, and Muhammad. ―Financial

Performance of Non Banking Finance Companies in Pakistan‖ Interdisciplinary Journal of

Contemporary Research In Business 2. 12 (Apr 2011): 732-744.

http://search.proquest.com/docview.lateralsearchlink:lateralsearch/sng/author/Singh,+Fulbag/$N?site=business&t:ac=742380929/130C5E558DB78523478/44&t:cp=maintain/resultcitationblockshttp://search.proquest.com/docview.lateralsearchlink:lateralsearch/sng/author/Mogla,+Monika/$N?site=business&t:ac=742380929/130C5E558DB78523478/44&t:cp=maintain/resultcitationblockshttp://search.proquest.com/docview.lateralsearchlink:lateralsearch/sng/author/Ahmad,+Hafiz+Khalil/$N?site=business&t:ac=876050665/130C570458A65B04795/6&t:cp=maintain/resultcitationblockshttp://search.proquest.com/docview.lateralsearchlink:lateralsearch/sng/author/Raza,+Ali/$N?site=business&t:ac=876050665/130C570458A65B04795/6&t:cp=maintain/resultcitationblockshttp://search.proquest.com/docview.lateralsearchlink:lateralsearch/sng/author/Amjad,+Waqas/$N?site=business&t:ac=876050665/130C570458A65B04795/6&t:cp=maintain/resultcitationblockshttp://search.proquest.com/docview.lateralsearchlink:lateralsearch/sng/author/Akram,+Muhammad/$N?site=business&t:ac=876050665/130C570458A65B04795/6&t:cp=maintain/resultcitationblockshttp://search.proquest.com/docview.lateralsearchlink:lateralsearch/sng/author/Akram,+Muhammad/$N?site=business&t:ac=876050665/130C570458A65B04795/6&t:cp=maintain/resultcitationblockshttp://search.proquest.com/docview.lateralsearchlink:lateralsearch/sng/author/Akram,+Muhammad/$N?site=business&t:ac=876050665/130C570458A65B04795/6&t:cp=maintain/resultcitationblockshttp://search.proquest.com/docview.lateralsearchlink:lateralsearch/sng/author/Singh,+Fulbag/$N?site=business&t:ac=742380929/130C5E558DB78523478/44&t:cp=maintain/resultcitationblockshttp://search.proquest.com/docview.lateralsearchlink:lateralsearch/sng/author/Mogla,+Monika/$N?site=business&t:ac=742380929/130C5E558DB78523478/44&t:cp=maintain/resultcitationblockshttp://search.proquest.com/docview.lateralsearchlink_1:lateralsearch/sng/pubtitle/IUP+Journal+of+Applied+Finance/$N?site=business&t:ac=742380929/130C5E558DB78523478/44&t:cp=maintain/resultcitationblockshttp://search.proquest.com/docview.lateralsearchlink_1:lateralsearch/sng/pubtitle/IUP+Journal+of+Applied+Finance/$N?site=business&t:ac=742380929/130C5E558DB78523478/44&t:cp=maintain/resultcitationblockshttp://search.proquest.com/docview.lateralsearchlink_1:lateralsearch/sng/pubtitle/IUP+Journal+of+Applied+Finance/$N?site=business&t:ac=742380929/130C5E558DB78523478/44&t:cp=maintain/resultcitationblockshttp://search.proquest.com/docview.lateralsearchlink:lateralsearch/sng/author/Ahmad,+Hafiz+Khalil/$N?site=business&t:ac=876050665/130C570458A65B04795/6&t:cp=maintain/resultcitationblockshttp://search.proquest.com/docview.lateralsearchlink:lateralsearch/sng/author/Raza,+Ali/$N?site=business&t:ac=876050665/130C570458A65B04795/6&t:cp=maintain/resultcitationblockshttp://search.proquest.com/docview.lateralsearchlink:lateralsearch/sng/author/Amjad,+Waqas/$N?site=business&t:ac=876050665/130C570458A65B04795/6&t:cp=maintain/resultcitationblockshttp://search.proquest.com/docview.lateralsearchlink:lateralsearch/sng/author/Akram,+Muhammad/$N?site=business&t:ac=876050665/130C570458A65B04795/6&t:cp=maintain/resultcitationblockshttp://search.proquest.com/docview.lateralsearchlink_1:lateralsearch/sng/pubtitle/Interdisciplinary+Journal+of+Contemporary+Research+In+Business/$N?site=business&t:ac=876050665/130C570458A65B04795/6&t:cp=maintain/resultcitationblockshttp://search.proquest.com/docview.lateralsearchlink_1:lateralsearch/sng/pubtitle/Interdisciplinary+Journal+of+Contemporary+Research+In+Business/$N?site=business&t:ac=876050665/130C570458A65B04795/6&t:cp=maintain/resultcitationblockshttp://search.proquest.com/docview.lateralsearchlink_1:lateralsearch/sng/pubtitle/Interdisciplinary+Journal+of+Contemporary+Research+In+Business/$N?site=business&t:ac=876050665/130C570458A65B04795/6&t:cp=maintain/resultcitationblockshttp://search.proquest.com/docview.lateralsearchlink_1:lateralsearch/sng/pubtitle/Interdisciplinary+Journal+of+Contemporary+Research+In+Business/$N?site=business&t:ac=876050665/130C570458A65B04795/6&t:cp=maintain/resultcitationblocks

50

caused by many factors. This study can be helpful for investors for sake of

knowledge and to take long term investment decisions.

Alam, Hassan Mobeen; Raza, Ali; Akram and Muhammad

(2011)76

have undertaken a study on ―Financial Performance of Leasing

Sector. The Case of Pakistan‖ has examined financial performance of

leasing companies since 2008 to 2010. Ratio analysis technique has been

used to evaluate financial performance of leasing companies. This study

concludes that, in 2010, the financial ratios are showing the positive change,

but there is a decline in financial performance of leasing companies in 2009

as compared to 2008.

Amalendu Bhunia, Sri Somnath Mukhuti and Sri Gautam Roy

Amalendu Bhunia (2011)77

have conducted a study on ―Financial

Performance Analysis-A Case Study‖ and have identified the financial

strengths and weaknesses of the Indian public sector pharmaceutical

enterprises, by properly establishing relationships between the items of the

balance sheet and profit and loss account. The study covers two public sector

drug and pharmaceutical enterprises listed on BSE. The study has been

undertaken for the period of twelve years from 1997-98 to 2008-09 and the

necessary data have been obtained from CMIE database. The liquidity

position is strong in case of both the selected companies, thereby reflecting

the ability of the companies to pay short-term obligations on due dates and

they relied more on external funds in terms of long-term borrowings, thereby

providing a lower degree of protection to the creditors. Financial stability of

76

Alam, Hassan Mobeen; Raza, Ali; Akram and Muhammad. ―Financial Performance of Leasing

Sector. The Case of Pakistan‖ Interdisciplinary Journal of Contemporary Research In

Business 2. 12 (Apr 2011): PP. 39-345. 77

Amalendu Bhunia, Sri Somnath Mukhuti and Sri Gautam Roy Amalendu Bhunia, ―Financial

Performance Analysis-A Case Study‖ Current Research Journal of Social Sciences 3(3): 269-275,

2011.

http://search.proquest.com/docview.lateralsearchlink:lateralsearch/sng/author/Alam,+Hassan+Mobeen/$N?site=business&t:ac=876011083/130C570458A65B04795/9&t:cp=maintain/resultcitationblockshttp://search.proquest.com/docview.lateralsearchlink:lateralsearch/sng/author/Raza,+Ali/$N?site=business&t:ac=876011083/130C570458A65B04795/9&t:cp=maintain/resultcitationblockshttp://search.proquest.com/docview.lateralsearchlink:lateralsearch/sng/author/Akram,+Muhammad/$N?site=business&t:ac=876011083/130C570458A65B04795/9&t:cp=maintain/resultcitationblockshttp://search.proquest.com/docview.lateralsearchlink:lateralsearch/sng/author/Alam,+Hassan+Mobeen/$N?site=business&t:ac=876011083/130C570458A65B04795/9&t:cp=maintain/resultcitationblockshttp://search.proquest.com/docview.lateralsearchlink:lateralsearch/sng/author/Raza,+Ali/$N?site=business&t:ac=876011083/130C570458A65B04795/9&t:cp=maintain/resultcitationblockshttp://search.proquest.com/docview.lateralsearchlink:lateralsearch/sng/author/Akram,+Muhammad/$N?site=business&t:ac=876011083/130C570458A65B04795/9&t:cp=maintain/resultcitationblockshttp://search.proquest.com/docview.lateralsearchlink_1:lateralsearch/sng/pubtitle/Interdisciplinary+Journal+of+Contemporary+Research+In+Business/$N?site=business&t:ac=876011083/130C570458A65B04795/9&t:cp=maintain/resultcitationblockshttp://search.proquest.com/docview.lateralsearchlink_1:lateralsearch/sng/pubtitle/Interdisciplinary+Journal+of+Contemporary+Research+In+Business/$N?site=business&t:ac=876011083/130C570458A65B04795/9&t:cp=maintain/resultcitationblockshttp://search.proquest.com/docview.lateralsearchlink_1:lateralsearch/sng/pubtitle/Interdisciplinary+Journal+of+Contemporary+Research+In+Business/$N?site=business&t:ac=876011083/130C570458A65B04795/9&t:cp=maintain/resultcitationblockshttp://search.proquest.com/docview.lateralsearchlink_1:lateralsearch/sng/pubtitle/Interdisciplinary+Journal+of+Contemporary+Research+In+Business/$N?site=business&t:ac=876011083/130C570458A65B04795/9&t:cp=maintain/resultcitationblocks

51

both the selected companies has showed a downward trend and consequently

the financial stability of selected pharmaceutical companies has been

decreasing at an intense rate. The study exclusively depends on the public

sectors published financial data and it does not compare with private sector

pharmaceutical enterprises. The study helps the investors to identify the

nature of Indian pharmaceutical industry and also help to take decision

regarding investment.

Gupta Anand (2011)78

in his study on ―Financial Performance of

Public Enterprises in India: A Case Study of Rashtriya Chemicals &

Fertilizers Limited‖ has looked at the financial performance of the largest

public enterprise in the fertilizer sector – Rashtriya Chemicals and Fertilizers

Limited (RCFL) – with a view to understand what ails it. The paper stresses

that RCFL has done poorly: its reported pre-tax profits as a percentage of

average networth have ranged between 2.5 and 10.2 since its incorporation

in 1978, which is substantially lower than the profitability norms set up by

Government of India‘s Fertilizer Industry Coordination Committee. The

paper asserts that a major factor responsible for this is RCFL‘s inefficiency

in the use of various inputs (e.g., feedstock, power).

Sharma and Satish Kumar (2011)79

in their article entitled ―Effect

of Working Capital Management on Firm Profitability Empirical Evidence

from India‖ have examined the effect of working capital on profitability of

Indian firms. They have collected data about a sample of 263 non-financial

78

Gupta Anand P. ―Financial Performance of Public Enterprises in India: A Case Study of

Rashtriya Chemicals & Fertilizers Limited‖ Paper provided by Indian Institute of Management

Ahmedabad, Research and Publication Department in its series IIMA Working Papers with

number WP1988-11-01_00846. 2011. 79

A.K. Sharma and Satish Kumar ―Effect of Working Capital Management on Firm Profitability

Empirical Evidence from India‖ Global Business Review February 2011 Vol. 12 No. 1,

PP. 159-173.

http://ideas.repec.org/s/iim/iimawp.html

52

BSE 500 firms listed on the Bombay Stock (BSE) from 2000 to 2008 and

have evaluated the data using OLS multiple regression. The findings of their

study significantly depart from the various international studies conducted in

different markets. The results reveal that working capital management and

profitability is positively correlated in Indian companies. The study further

reveals that inventory of number of days and number of days accounts

payable are negatively correlated with a firm‘s profitability, whereas number

of days accounts receivables and cash conversion period exhibit a positive

relationship with corporate profitability. The present study contributes to the

existing literature by examining the effect of working capital management

on profitability in the context of an emerging capital market, such as India.

Srivastava and Anubha (2011)80

have carried out ―A Study of

Working Capital Management of Hisar Project: Reliance Infrastructure

Limited, India‖ and have focused on various facets of working capital

management at RIL at its Engineering, Procurement and Construction (EPC)

division, which mainly deals in power projects. Financial analysis of the

company has also been carried out to know its creditworthiness. Working

capital management involves not only managing the different components of

the current assets, but also managing the current liabilities, or to be more

precise, financing the current assets. There are three main areas in working

capital management and the study focuses on receivables management, cash

management, and inventory management. RIL manages its receivable

accounts through ageing analysis and manages its cash through management

information system. Inventory management is made easier through the

process of high sea sales and sale in transit. An analysis with respect to the