Prathap working capital

INTRODUCTION

Working capital can be regarded as the circulatory system of any business. The success and

efficiency of business enterprise depends largely on its ability to manage its working capital.

Even a well established business concern, needs careful attention for effective management

of working capital .working capital is the one of the important facts of a firm’s over all

financial management and whatever may be the size of business, working capital is its life

blood. Working capital management is concerned with the problems that arise in attempting

to manage the current assets, current liabilities and the inter relationship that exist between

them. The current assets refer to those assets, which in the ordinary course of business can be

converted in to cash within one year without undergoing a dimension in value, current

liabilities are those liabilities, which are intended at the inception, to be paid in the ordinary

course of business, within a year, out of current assets. The basic objective of working capital

management is to put current assets to optimum use for overall profitability of a business

enterprise. If the firms maintain a satisfactory level of working capital it’s likely to become

insolvent and may even be forced to bankruptcy. The effective management of a working

capital requires both medium term planning and intermediate reaction to change in forecast

and conditions. The current assets should be managed in such a way that it should cover its

current liabilities in order to ensure a reasonable margin safety. Therefore the interaction,

between the current assets and current liabilities is the main theme of the theory of working

capital management.

Definition:

1. “Working capital refers to a firm’s investment in short term assets, such as cash

amounts receivable, investments etc.”

___Weston & Brigham.

2. “The sum of the current assets is the working capital of the business.”

_____J.S.Mill.

Importance of working capital:

Some time, If creditors demands their money from company, at this time company's

high working capital saves company from this situation . You know that selling of current

assets are easy in small period of time but Company can not sell their fixed assets with in

small period of time. So, If Company have sufficient working capital , Company can easily

pay off the creditors and create his reputation in market . But If a company have zero working

capital and then company can not pay creditors in emergency time and either company

becomes bankrupt or takes loan at higher rate of Interest . In both condition , it is very

dangerous and always Company's Account Manager tries to keep some amount of working

capital for creating goodwill in market .

Positive working capital enables also to pay day to day expenses like wages, salaries,

overheads and other operating expenses. Because sufficient working capital can not only pay

maturity liabilities but also outstanding liabilities without any more delay.

One of advantages of positive working capital that Company can do every risky work without

any tension of self security

INDUSTRY PROFILE

The chemical industry comprises the companies that produce industrial chemicals. Central to the modern world economy, it converts raw materials (oil, natural gas, air, water, metals, and minerals) into more than 70,000 different products.

Products

Polymers and plastics, especially polyethylene, polypropylene, polyvinyl chloride, polyethylene terephthalate, polystyrene and polycarbonate comprise about 80% of the industry’s output worldwide.[citation needed] Chemicals are used to make a wide variety of consumer goods, as well as thousands inputs to agriculture, manufacturing, construction, and service industries. The chemical industry itself consumes 26 percent of its own output.[citation needed] Major industrial customers include rubber and plastic products, textiles, apparel, petroleum refining, pulp and paper, and primary metals. Chemicals is nearly a $3 trillion global enterprise, and the EU and U.S. chemical companies are the world's largest producers.[citation needed]

Product category breakdown

Sales of the chemical business can be divided into a few broad categories, including basic chemicals (about 35 to 37 percent of the dollar output), life sciences (30 percent), specialty chemicals (20 to 25 percent) and consumer products (about 10 percent).

]Basic chemicals

Basic chemicals, or "commodity chemicals" are a broad chemical category including polymers, bulk petrochemicals and intermediates, other derivatives and basic industrials, inorganic chemicals, and fertilizers. Typical growth rates for basic chemicals are about 0.5 to 0.7 times GDP. [citation needed] Product prices are generally less than fifty cents per pound.[citation needed]

Polymers, the largest revenue segment at about 33 percent of the basic chemicals dollar value, includes all categories of plastics and man-made fibers.[citation needed] The major markets for plastics are packaging, followed by

home construction, containers, appliances, pipe, transportation, toys, and games.

The largest-volume polymer product, polyethylene (PE), is used mainly in packaging films and other markets such as milk bottles, containers, and pipe.

Polyvinyl chloride  (PVC), another large-volume product, is principally used to make pipe for construction markets as well as siding and, to a much smaller extent, transportation and packaging materials.

Polypropylene  (PP), similar in volume to PVC, is used in markets ranging from packaging, appliances, and containers to clothing and carpeting.

Polystyrene  (PS), another large-volume plastic, is used principally for appliances and packaging as well as toys and recreation.

The leading man-made fibers include polyester, nylon, polypropylene, and acrylics, with applications including apparel, home furnishings, and other industrial and consumer use.

The principal raw materials for polymers are bulk petrochemicals.[citation needed]

Chemicals in the bulk petrochemicals and intermediates are primarily made from liquefied petroleum gas (LPG), natural gas, and crude oil. Their sales volume is close to 30 percent of overall basic chemicals.[citation needed] Typical large-volume products include ethylene, propylene, benzene, toluene,xylenes, methanol, vinyl chloride monomer (VCM), styrene, butadiene, and ethylene oxide. These chemicals are the starting points for most polymers and other organic chemicals as well as much of the specialty chemicals category.

Other derivatives and basic industrials include synthetic rubber, surfactants, dyes and pigments, turpentine, resins, carbon black, explosives, and rubber products and contribute about 20 percent of the basic chemicals' external sales.

Inorganic chemicals (about 12 percent of the revenue output) make up the oldest of the chemical categories. Products include salt, chlorine, caustic soda, soda ash, acids (such as nitric acid,phosphoric acid, and sulfuric acid), titanium dioxide, and hydrogen peroxide.

Fertilizers are the smallest category (about 6 percent) and include phosphates, ammonia, and potash chemicals.

Life sciences

Life sciences (about 30 percent of the dollar output of the chemistry business) include differentiated chemical and biological substances, pharmaceuticals, diagnostics, animal health products, vitamins, and pesticides. While much smaller in volume than other chemical sectors, their products tend to have very high prices—over ten dollars per pound—growth rates of 1.5 to 6 times GDP, and research and development spending at 15 to 25 percent of sales. Life science products are usually produced with very high specifications and are closely scrutinized by government agencies such as the Food and Drug Administration. Pesticides, also called "crop protection chemicals", are about 10 percent of this category and include herbicides, insecticides, and fungicides.[citation needed]

Specialty chemicals

Specialty chemicals are a category of relatively high valued, rapidly growing chemicals with diverse end product markets. Typical growth rates are one to three times GDP with prices over a dollar per pound. They are generally characterized by their innovative aspects. Products are sold for what they can do rather than for what chemicals they contain. Products include electronic chemicals, industrial gases, adhesives and sealants as well as coatings, industrial and institutional cleaning chemicals, and catalysts. Coatings make up about 15 percent of specialty chemicals sales, with other products ranging from 10 to 13 percent.[citation needed] Specialty Chemicals are sometimes referred to as "fine chemicals"

Consumer products

Consumer products include direct product sale of chemicals such as soaps, detergents, and cosmetics. Typical growth rates are 0.8 to 1.0 times GDP.

Every year, the American Chemistry Council tabulates the U.S. production volume of the top 100 basic chemicals. In 2000, the aggregate production volume of the top 100 chemicals totalled 502 million tons, up from 397 million tons in 1990. Inorganic chemicals tend to be the largest volume, though much smaller in dollar revenue terms due to their low prices. The top 11 of the 100 chemicals in 2000 were sulfuric acid (44 million tons), nitrogen (34), ethylene (28), oxygen (27), lime (22), ammonia (17), propylene (16), polyethylene (15), chlorine (13), phosphoric acid (13) and diammonium phosphates(12).

Companies

The largest corporate producers worldwide, each with plants in numerous countries, include BASF, Bayer, Braskem, Celanese/Ticona, Degussa, Dow, DuPont, Eastman Chemical Company,ExxonMobil, INEOS, Mitsubishi, PPG Industries, SABIC and Shell, along with thousands of smaller firms.

In the U.S. there are 170 major chemical companies.[citation needed] They operate internationally with more than 2,800 facilities outside the U.S. and 1,700 foreign subsidiaries or affiliates operating. The U.S. chemical output is $750 billion a year. The U.S. industry records large trade surpluses and employs more than a million people in the United States alone. The chemical industry is also the second largest consumer of energy in manufacturing and spends over $5 billion annually on pollution abatement.

In Europe, especially Germany, the chemical, plastics and rubber sectors are among the largest industrial sectors.[citation needed] Together they generate about 3.2 million jobs in more than 60,000 companies. Since 2000 the chemical sector alone has represented 2/3 of the entire manufacturing trade surplus of the EU. The chemical sector accounts for 12% of the EU manufacturing industry's added value.

The chemical industry has shown rapid growth for more than fifty years.[citation

needed] The fastest-growing areas have involved the manufacture of synthetic organic polymers used as plastics, fibres andelastomers. Historically and presently the chemical industry has been concentrated in three areas of the world, Western Europe, North America and Japan (the Triad). The European Community remains the largest producer area followed by the USA and Japan.

The traditional dominance of chemical production by the Triad countries is being challenged by changes in feedstock availability and price, labour cost, energy cost, differential rates of economic growth and environmental pressures. Instrumental in the changing structure of the global chemical industry has been the growth in China, India, Korea, the Middle East, South East Asia, Nigeria, and Brazil.

Technology

This is a process diagram of a turbine generator. Knowing how to design a sustainable process in which the system can withstand or manipulate process halting conditions such as; heat, fiction, pressure, emissions, contaminants, is essential for engineers working to produce a sustainable process for use in the chemical industry.

As accepted by chemical engineers, the chemical industry involves the use of chemical processes such as chemical reactions and refining methods to produce a wide variety of solid, liquid, and gaseous materials. Most of these products are used in manufacture of other items, although a smaller number are used directly by consumers. Solvents, pesticides, lye, washing soda, and portland cement are a few examples of product used by consumers.

The industry includes manufacturers of inorganic- and organic-industrial chemicals, ceramic products, petrochemicals, agrochemicals, polymers and rubber (elastomers), oleochemicals (oils, fats, and waxes), explosives, fragrances and flavors. Examples of these products are shown in the Table below.

The novel chemical reactor reduces the amount of solvents used from 1000 litres to just 4 litres.

Product Type Examples

inorganic industrialammonia, nitrogen, sodium   hydroxide, sulfuric   acid, nitric acid

organic industrial acrylonitrile, phenol, ethylene oxide, urea

ceramic products silica brick, frit

petrochemicals ethylene, propylene, benzene, styrene

agrochemicals fertilizers, insecticides, herbicides

polymers polyethylene, Bakelite, polyester

elastomers polyisoprene, neoprene, polyurethane

oleochemicals lard, soybean oil, stearic acid

explosives nitroglycerin, ammonium nitrate, nitrocellulose

fragrances and flavors

benzyl benzoate, coumarin, vanillin

Although the pharmaceutical industry is often considered[who?] a chemical industry , it has many different characteristics that puts it in a separate category. Other closely related industries include petroleum, glass, paint, ink, sealant, adhesive, and food processing manufacturers.

Chemical processes such as chemical reactions are used in chemical plants to form new substances in various types of reaction vessels. In many cases the reactions are conducted in special corrosion resistant equipment at elevated temperatures and pressures with the use of catalysts. The products of these reactions are separated using a variety of techniques including distillation especially fractional distillation, precipitation, crystallization, adsorption, filtration,sublimation, and drying.

The processes and product or products are usually tested during and after manufacture by dedicated instruments and on-site quality control laboratories to ensure safe operation and to assure that the product will meet required specifications. The products are packaged and delivered by many methods, including pipelines, tank-cars, and tank-trucks (for both solids and liquids), cylinders, drums, bottles, and boxes. Chemical companies often have a research and development laboratory for developing and testing products and processes. These facilities may include pilot plants, and such research facilities may be located at a site separate from the production plant(s).

History

Chandler (2005) argues the relative success or failure of American and European chemical companies is explained with reference to three themes: "barriers to entry," "strategic boundaries," and "limits to growth." He says successful chemical firms followed definite "paths of learning" whereby first movers and close followers created entry barriers to would-be rivals by building "integrated learning bases" (or organizational capabilities) which enabled them to develop, produce, distribute, and sell in local and then worldwide markets. Also they followed a "virtuous strategy" of reinvestment of retained earnings and growth through diversification, particularly to utilize "dynamic" scale and scope economies relating to new learning in launching "next generation" products.

Companies in the 21st century

The chemical industry includes large, medium, and small companies located worldwide. Companies with sales of chemical products greater than $10 billion dollars in fiscal year 2007 appear listed below. For some of these companies the chemical sales might represent only a portion of their total sales; (for example ExxonMobil's chemical sales covered only 8.7 percent of their total sales in 2005).

COMPANY, HEADQUARTERS2007 Chemical Sales, billions[1]

Rank Country

BASF SE, Ludwigshafen, Germany $65.3 1

Dow   Chemical,   Midland,   Michigan,   United States

$53.5 2

INEOS, Lyndhurst, UK $43.6 3

LyondellBasell, Houston, Texas, United States $42.8 4

Formosa Plastics, Taiwan $31.9 5

DuPont, Wilmington, Delaware, United States $28.5 6

Saudi   Basic   Industries   Corporation,   Riyadh, Saudi Arabia

$26.4 7

Bayer, AG, Leverkusen, Germany $24.2 8

Mitsubishi Chemical, Tokyo, Japan $22.2 9

Akzo  Nobel/Imperial   Chemical   Industries(ICI), Amsterdam/London

$19.9 10

Air Liquide, Paris, France $16.3 11

Sumitomo Chemical, Tokyo, Japan $15.2 12

Evonik Industries, AG, Essen, Germany $15.0 13

Mitsui Chemicals, Tokyo, Japan $14.3 14

Asahi Kasei, Tokyo, Japan $13.8 15

Toray Industries, Tokyo, Japan $13.1 16

Chevron   Phillips,   The   Woodlands,   Texas, United States

$12.5 17

DSM NV, Heerlen, Netherlands $12.1 18

PPG   Industries,   Pittsburgh,   Pennsylvania, United States

$11.2 19

Shin-Etsu Chemical Co., Ltd., Tokyo, Japan $11.1 20

Just as companies emerge as the main producers of the chemical industry, we can also look on a more global scale to how industrialized countries rank, with regards to the billions of dollars worth of production a country or region could export. Though the business of chemistry is worldwide in scope, the bulk of the world’s $3.7 trillion chemical output is accounted for by only a handful of industrialized nations. The United States alone produced $689 billion, 18.6 percent of the total world chemical output in 2008.

Global Chemical Shipments by Country/Region (billions of dollars)[2]

1998 1999 2000 2001 2002 2003 2004 2005 2006 2008 2009

United States of America

416.7

420.3

449.2

438.4

462.5

487.7

540.9

610.9

657.7

664.1

689.3

Canada 21.1 21.8 25.0 24.8 25.8 30.5 36.2 40.2 43.7 45.4 47.4

Mexico 19.1 21.0 23.8 24.4 24.3 23.5 25.6 29.2 32.0 33.4 37.8

North America

456.9

463.1

498.0

487.6

512.6

541.7

602.7

680.3

733.4

742.8

774.6

Brazil 46.5 40.0 45.7 41.5 39.6 47.4 60.2 71.1 82.8 96.4 126.7

Other 59.2 58.1 60.8 63.4 58.6 62.9 69.9 77.2 84.6 89.5 102.1

Latin America

105.7

98.1106.5

104.9

98.2110.3

130.0

148.3

167.4

185.9

228.8

France 79.1 78.5 76.5 76.8 80.5 99.6111.1

117.5

121.3

138.4

158.9

Germany124.9

123.2

118.9

116.1

120.1

148.1

168.6

178.6

192.5

229.5

263.2

Italy 63.9 64.6 59.5 58.6 64.5 75.8 86.6 89.8 95.3105.9

122.9

United Kingdom

70.3 70.1 66.8 66.4 69.9 77.3 91.3 95.2107.8

118.2

123.4

Belgium 27.1 27.0 27.5 27.1 28.7 36.1 41.8 43.5 46.9 51.6 62.6

Ireland 16.9 20.1 22.6 22.9 29.1 32.3 33.9 34.9 37.5 46.0 54.8

Netherlands 29.7 29.4 31.3 30.6 32.2 40.1 49.0 52.7 59.2 67.9 81.7

Spain 31.0 30.8 30.8 31.9 33.4 42.0 48.9 52.7 56.7 63.7 74.8

Sweden 11.1 11.4 11.2 11.0 12.5 15.9 18.2 19.3 21.2 21.2 22.6

Switzerland 22.1 22.2 19.4 21.1 25.5 30.3 33.8 35.4 37.8 42.7 53.1

Other 27.1 26.8 25.9 26.4 27.9 33.5 38.6 42.9 46.2 50.3 58.9

Western Europe

503.1

504.0

490.4

488.8

524.4

630.9

721.9

762.7

822.4

935.4

1,076.8

Russia 23.8 24.6 27.4 29.1 30.3 33.4 37.5 40.9 53.1 63.0 77.6

Other 22.3 20.3 21.9 23.4 25.3 31.4 39.6 46.2 55.0 68.4 87.5

Central/Eastern Europe

46.1 44.9 49.3 52.5 55.6 64.8 77.1 87.1 108.0 131.3 165.1

Africa & Middle East

52.7 53.2 59.2 57.4 60.4 73.0 86.4 99.3 109.6 124.2 160.4

Japan 193.8 220.4 239.7 208.3 197.2 218.8 243.6 251.3 248.5 245.4 298.0

Asia-Pacific excluding Japan

215.2 241.9 276.1 271.5 300.5 369.1 463.9 567.5 668.8 795.5 993.2

China 80.9 87.8 103.6 111.0 126.5 159.9 205.0 269.0 331.4 406.4 549.4

India 30.7 35.3 35.3 32.5 33.5 40.8 53.3 63.6 72.5 91.1 98.2

Australia 11.3 12.1 11.2 10.8 11.3 14.9 17.0 18.7 19.1 22.8 27.1

Korea 39.3 45.5 56.3 50.4 54.9 64.4 78.7 91.9 103.4 116.7 133.2

Singapore 6.3 8.5 9.5 9.4 12.5 16.1 20.0 22.0 25.8 28.9 31.6

Taiwan 21.9 23.7 29.2 26.8 28.4 34.3 44.5 49.5 53.8 57.4 62.9

Other Asia/Pacific

24.8 29.1 30.9 30.8 33.3 38.8 45.5 52.9 62.9 72.2 90.8

Asia/Pacific 409.0 462.3 515.7 479.7 497.7 587.8 707.5 818.8 917.31041.0

1291.2

Total world shipments

1573.5

1625.5

1719.0

1670.9

1748.8

2008.5

2325.6

2596.4

2858.1

3160.7

3696.8

 COMPANY PROFILE

                             R.P Agro tech Limited entered the Agrochemical& pharmaceutical 

industry in 1973 founded by Mr. Anand swarup Augural an industrialist with a strong 

vision for future growth now a multiproduct multicoated company which includes a 

leading Hindi  daily  RASHTRIYA SWAROOP.  The company’s  manufacturing   facilities 

and their corporate office at Luck now are manned by highly qualified, adequately 

experienced   professionals   and   scientists   in   addition   to   a   committed   team   of 

employees   which   include   skilled   and   semiskilled   work   force   with   competent 

upcountry   operations   are   manned   by   competent   marketing   professionals   and 

supports staff located in company’s relational/branch offices based at all the regions 

of   India   well   known   products 

CAPTEN,FOLPET,LINDANE,THIRAM,CHLORPYRIPHOS,TOLNAFTATE,RUBBER,

CHEMICALS, DYE, INTERMEDIATES ETC.

                                                     R.P Argotic Ltd enjoys a very healthy management-worker 

relationship   reflecting   high   standards   of   industrial   relations,   through   constant 

implementation of excellent staff welfare programmes.The employees in turn are a 

highly motivated term committed to the goals of organization with special emphasis 

on superior quality and customer satisfaction.

                      R.P.Agrotech Ltd has its own R&D department to the development of 

innovative   chemical   technologies   for   specialty   and   bulk   Agrochemicals   and   Bulk 

Drugs.

                                           With its focused R&D effort in the recent past, it has been able to  

improve the process condition for existing products resulting in better product and 

has   developed   process   conductions   for   other   Agrochemicals   of   large 

usage.Development   of   technology   for   Mancoze2,   4,   5,   Ttrichloroaniline,   DDV, 

chlorpyriphos, quinalphos, captan, folpet, thiophosgene and Tolnaftate etc.are some 

of The major contribution of the R&D efforts.           

 R.P. Pesticides Ltd has a sprawling complex at the UPSIDC Industrial Area at chinhat, 

at  the outskirts  of  Lucknow City  which  is   ideally  situated  in terms of  operational 

logistics. 

               The state-of-art manufacturing complex in equipped with modern plant and 

machinery with other highly sophisticated facilities to produce high quality technical 

grade products,based on technologies from internationally known institutions as like 

the R.p.Agro chemicals Technology. The product portfolio consists of Monocrotophos 

Technical,  Lindens Technical  and their   formulations,  Dichlorobenzene and 1,  2,  4-

Trichlorobenzene. The complex also has a sophisticated granular formulation plant to 

manufacture savido14.4G (Carbyl+Lindane) a specialist combination products under 

a   special   agreements  with  Bayer  Crop   science  Ltd.   The   complex  also  has  a  well 

equipped quality assurance laboratory with Gas Chromatographs, Ultra violet visible 

spectrophotometer, Karl-Fischer apparatus, Roto Vacuum driers etc. For monitoring 

quality right form raw material to the finished product at every stage.

                                   As far as R.P.Agro tech Ltd concerned, it has a good future because of 

quality   parameters   that   are   ideal   without   incurring   losses   in   the   process   and 

compromising the capacity utilization.

Reaction

Chlorination:-

We have facilities for photo chlorination, normal chlorination etc the turn of about 20 to

30 tones of chlorine consumption for Agro & Parma intermediates

Thiophosgenation:-

Production and use of Thiophosgene

For down stream reactions for Parma Intermediates/APIS etc.

Nitration:-

Using Nitric& Sulphuric Acid

Reduction:-

Using Iron

Aminolysis:-

Infrastructure Facilities

Boiler:-

1st 6Tones per Hr.Capacity

2nd 2Tones per Hr.Capacity

Chilled Water System:-

Cumulative Capacity Available

500TR at 6-7oC

Brine System:-

70TR at-35Oc

Brine System:-

150TR at-10Oc

Nitrogen Plant:-

10m3/hr

Stand by power Generator:-

1000KVA

Hot oil system Dow herm:-

2 Nos., 2, 00,000 Kcal/hr

Workshop:-

For day to day Maintenance

Analyticallab:-

GLC’S: 3 Nos.

HPLC: 1 No.

UV Spectra Photometer: 1 No.

Karl Fischer: Nos.

Other Facility for volumetric and Gravimetric Analysis

In-house R&D

Gram Lab.

Kg Lab.

Semi Commercial  pilot plant Equipped with all  Separate utilities like chilled 

water, Boiler waters, Vaccum system & DG etc.

Fungicides:-

Captan Technical 92% min.             Insecticides:-

Captan 50% WP

Captan 80% WP                               Chlorpyriphos Technical 97% min

Captan 80% WDG                            Chlorpyriphos  20% EC

Folpet Technical 95% min.                DDVP Technical 97% min.

Folpet 50% WP                                  DDVP 76%EC 

Folpet 80% WP

Folpet 80% WDG                               Lindane Technical 99.5% min.                           

Folpet 75% WP                                   Lindane 20%EC, Lindane 6%

5-Nitroisophthalic A(5-NIPA)

Hexa Fluoro Benzene

Thiophosgene

BNTCF (BetaNaphthylThioChloroFormate)

Tetra Methyl Thiram Monosulfide 

N N Di Methyl Carbamoyl Chloride 

Di Methyl Carbamoyl Chloride

Biotech Products

   1.Alien 98:-The broad spectrum Biocide for fungus control

   2. Cucurmin Powder

Rubber chemicals

Tetra Methyl Thiram Disulphide (TMTD)

Zinc Diethyl Dithio Carbamate(ZDEC)

Zinc Dimethyl Dithio Carbamate(ZDMC)

Zinc Dibutyl Dithio Carboamate(ZDBC)

Sodium Dimethyl Ditjio Carbamate(SDMDC)

Hexa Chloro Benzene(HCB)

Dye Intermediates 

Trichiorobenzene(TCB)-Commerical Grade

1, 2, 4 trichlorobenzene 99.5% min.

2, 4, 5 Trichloroaniline 99% min

1, 2, 4 Trichloro-5-nitro benzene

Hexachlorobenzene 99%

Febam technical                                        Lindane 4% + Carbaryl 4% 

Febam 76%WP                                          Monocrotophos Technical 73% min.

Thiram Technical 95%min.                      Monocrotophos 36%SL

Thiram 75% WP

Thiram 80% WP                                       Quinalphos Technical 70% min.

Thiram 70%  WDG                                   Quimalphos 25%EC                                

Ziram Techinal 95% min.                          Phosphamidon Technical 92% min

Ziram 27% CS                                            Phosphamidon 40%SL

Ziram 80% WP

Ziram 90% WP

Ziram 92% WDG

Pharmaceuticals:-

APIS/Bulk Drugs:-

   1.Lindane(Gamma Benzene Hexa Chloride)IP/BP/USP

   2.Tolnaftate:-BP/USP

   3.Captan(Technical)

Pharma Intermediates:-

Phthalide

Phthalimide

Potassium Phthalimide

4-Nitro Phthalimide

4-Amino phthalimide

5-Amino phthalide

5-Bromo phthalide

5-Cyano phthlide

2-Mercapto Benzimidazole

5-Methoxy 2-MBI

NEED FOR THE STUDY

The concept of working capital has gained vital role in the business activity of any

firm. It’s difficult to find a firm without any amount of working capital. However, the

composition of working capital may vary for different firms. It is the base for the

company to earn sufficient sale activity. Working capital management is a significant

fact of financial management. Two major reasons underline the important of scope of

the working capital management which are

A substantial portion of total investment is represented in the investment of current

assets.

Quick changes in sales have to be geared up by investment in current assets and

the level of the current liabilities.

SCOPE OF THE STUDY

An extensive study is done the investment made by R.P.AGRO   TECH   PVT. 

LTD.,Industrial Corporation, on its working capital and the factors determining that

investment. Also the study concentrates on the liquidity positions of the firm, and a

brief study is made on the techniques used by firms for the management of its

current assets and the sources through which the finance for working capital is

availed for the firm.

OBJECTIVES OF THE STUDY

The main aim of the study is to analyse the short term financial performance

of R.P.AGRO TECH PVT. LTD.,. In addition to following are the objectives of

the present study.

To review the growth and working of the company during the last 5

years 2007-2012 is required.

To measure the financial strength of R.P.AGRO TECH PVT. LTD., during

the period of study.

To evaluate the working capital management of R.P.AGRO TECH PVT.

LTD., Finally to suggest the measure for more effective working capital

of the firm if any.

RESEARCH METHODOLOGY

The data obtained for study as to be divided in to two groups.

1. Primary data

2. Secondary data

Primary data: primary data comprises information obtained by the

candidate during the discussion with the head of department and from

the meeting with the officials and the staff.

Secondary data: secondary data comprises of information obtained

from annually reports, balance sheets and other financial statement

files, and some other important document maintained by the

organisation are also helpful.

In the study one fourth of the total information obtained is from primary

data and the rest is from secondary data.

LIMITATION OF THE STUDY

1. Entire study is based on the financial statement of  R.P.AGRO 

TECH PVT. LTD.,. The study is limited to the other 2007-2012.

2. Opinions of the management of the R.P.AGRO TECH  PVT.   LTD., 

were taken in to consideration. Hence there is a chance for

the personal bias.

3. The availability of time is very less

WORKING CAPITAL MANAGEMENT

Introduction:

Working capital is the life blood and nerve centre of a business. Just as circulation of

blood is essential in the human body for maintaining life, working capital is very essential to

maintain the smooth running of a business. No business can run successfully without an

adequate amount of working capital.

Working capital refers to that part of firm’s capital which is required for financing short term

or current assets such as cash, marketable securities, debtors, and inventories. In other words

working capital is the amount of funds necessary to cover the cost of operating the enterprise.

Meaning:

Working capital means the funds (i.e.; capital) available and used for day to day operations

(i.e.; working) of an enterprise. It consists broadly of that portion of assets of a business

which are used in or related to its current operations. It refers to funds which are used during

an accounting period to generate a current income of a type which is consistent with major

purpose of a firm existence.

Importance of working capital:

Some time, If creditors demands their money from company, at this time company's

high working capital saves company from this situation . You know that selling of current

assets are easy in small period of time but Company can not sell their fixed assets with in

small period of time. So, If Company have sufficient working capital , Company can easily

pay off the creditors and create his reputation in market . But If a company have zero working

capital and then company can not pay creditors in emergency time and either company

becomes bankrupt or takes loan at higher rate of Interest . In both condition , it is very

dangerous and always Company's Account Manager tries to keep some amount of working

capital for creating goodwill in market .

Positive working capital enables also to pay day to day expenses like wages, salaries,

overheads and other operating expenses. Because sufficient working capital can not only pay

maturity liabilities but also outstanding liabilities without any more delay.

One of advantages of positive working capital that Company can do every risky work without

any tension of self security.

Objectives of working capital:

Every business needs some amount of working capital. It is needed for following purposes-

1. For the purchase of raw materials, components and spares.

2. To pay wages and salaries.

3. To incur day to day expenses and overhead costs such as fuel, power, and office

expenses etc.

4. To provide credit facilities to customers etc.

Factors that determine working capital:

The working capital requirement of a concern depend upon a large number of factors such as-

Size of business

Nature of character of business.

Seasonal variations working capital cycle.

Operating efficiency.

Profit level.

Sources of working capital:

The working capital requirements should be met both from short term as well

as long term sources of funds.

Financing of working capital through short term sources of funds has the

benefits of lower cost and establishing close relationship with banks.

Financing of working capital through long term sources provides the benefits

of reduces risk and increases liquidity.

Types of working capital:

Working capital an be divided into two categories-

A. Permanent working capital:

It refers to that minimum amount of investment in all current assets which is

required at all times to carry out minimum level of business activities.

2.Temporary working capital:

The amount of such working capital keeps on fluctuating from time to time on

the basis of business activities.

Advantages of working capital:

• It helps the business concern in maintaining the goodwill.

• It can arrange loans from banks and others on easy and favourable terms.

• It enables a concern to face business crisis in emergencies such as depression.

• It creates an environment of security, confidence, and over all efficiency in a

business.

• It helps in maintaining solvency of the business.

Disadvantages of working capital:

Rate of return on investments also fall with the shortage of working capital.

• Excess working capital may result into over all inefficiency in organization.

• Excess working capital means idle funds which earn no profits.

• Inadequate working capital cannot pay its short term liabilities in time.

Working capital may be defined in to two ways;

1. Gross working capital

2. Net working capital

1. Gross working capital:

The term working capital refers to total current assets .The net working capital is

again defined in two ways

Net working capital is the difference between current and current liabilities.

Net working capital is that portion of current assets which is financed with a

long-term funds.

2. Net working capital:

Cash and short-term assets expected to be converted to cash within a year less short-term 

liabilities. Businesses use net working capital to measure cash flow and the ability to service 

debts. A positive net working capital indicates that the firm has money in order to maintain or

expand its operations. Net working capital tends not to add much to the business' assets, but

helps keep it running on a day-to-day basis.

Trace off between profitability and risk:

The firm’s profitability is measured by profits after expenses. The term risk is defined as that

probability that a firms will become technically insolvent so that it will not be able to meet its

obligation when they become due for payment.Net working capital is used for measuring the

risk of becoming technically insolvent. The greater NWC the more liquid is the firms and

therefore, the less likely it is going to become technically insolvent. The inter relationship

between risk, Liquidity and NWC is such that if the NWC or liquidity increases the firms risk

decrease.

Trade off:

To get higher profits the firms has to face higher risk. otherwise the higher the profits, the

higher the risk the firm has to face. The trade-off between these variables is that regardless of

how the firm increases its profitability through the manipulation of working capital, the

consequence is the corresponding increase in risk as measured by the level of NWC.

EFFECT OF LEVEL OF CURRENT ASSESTS AND CURRENT

LIABILITIES ON THE PROFITABILITY-RISK-RETURN TRADE OFF:

The effect of current assets and current liabilities on profitability i.e, risk-return trade off can

be shown using the ratio of assets to total assets and current liabilities. To total assets change

in the ratio will reflect a change in the amount of current assets and current liabilities. It may

either increase or decrease.

PERMANENT AND TEMPORARY WORKING CAPITAL:

Its necessary for a business enterprise to maintain and contain minimum level of working

capital to carry on its business on continuous and uninterrupted working capital.

Any amount over and above the permanent level of working capital needed is to meet

fluctuating or variable working capital. The position of required working capital is needed to

meet fluctuations in demand consequent upon changes in business condition.

CHANGES IN WORKING CAPITAL:

1. Changes in level of sales and operating expenses.

2. Changes in policy.

3. Changes in technology.

1.CHANGES IN LEVEL SALES AND OPERATING EXPENSES:

The first factor causing a change in working capital requirement is a change the sales and

operating expenses. The changes in the factor may be a long run trend of changed. For

instance the price of raw material may be consultancy rising necessitating the holding of large

inventory. Secondly the cyclical changes in the economy leading to ups and downs in

business activity influencing the level of working capital, both permanent and temporary.

Thirdly the source of change is seasonality in sales activity. Seasonal peaks and can be said to

be the main score of variation in the level of temporary working capital. The change in sales

and operating expenses may be either increasing or decreasing an increase in volume of sales

is bound to be accompanied by need for working capital. Similarly a change in operating

expenses in the form of rise or fall has a similar effect on the level of working capital.

2.POLICY CHANGES:

One of the major cause of change in the level of working capital is policy changes initiated

by the management. The firm has avoided choice in the matters of current assets policy. The

current assets-policy is based on the difference between the respect having a very high level

of current assets in relation to sales may deliberately opts for a less conservative policy and

vice-versa. Therefore the managerial decisions on policy changes have an impact on the

working capital.

3.TECHNOLOGICAL CHANGES;

Third main cause that affects the level of working capital is technological change, which is a

result of technological developments, which shortens the operating cycle, thus reducing the

need for working capital.

DETERMINANTS OF WORKING CAPITAL:

NATURE OF BUSINESS:

Working capital requirements of firms are basically influenced by the nature of its

business. Trading and financial firms have a very small investment in fisted assets, but

requires a large sum of money to be invested in working capital.

SALES AND DEMAND CONDITIONSA;`

The working capital needs of the firm are related to its sales. Its difficult to precisely

determine the relationship between volume of sales and working capital needs. In practice

current assets have to be employed before the growth takes place. It is therefore necessary to

makes advances planning of working capital for a growing firm on a continuous basis.

A growing firm may need to invest funds in fixed assets in order to sustain its growing

production and sales. This will in turn increase investment in current assets to support

enlarged scale of operations. It should be realised that a growing firms needs funds

continuously. it uses external sources as well as internal sources to meet increasing need for

funds and such firm face further financial problems when it retains substantial proportions of

its profits towards meeting the working capital needs. It would not retains substantial

proportion of its profits towards meeting the working capital needs. It would not be able to

pay dividends to share holders. Its therefore operative that proper planning to be done by such

companies to finance their increasing needs for working capital.

Sales depend on demand conditions .Most firms experience seasonal and cyclical fluctuations

in demand for their products and services. These business variation affect the working capital

requirements, especially the temporary requirements of the firms.

TECHNOLOGY AND MANUFACTURING POLICY:

The manufacturing cycle comprises of purchase and the use of materials and the production

of finished goods. Longer the manufacturing cycle, larger will be the firm’s working capita

requirements. If there are alternative technology of manufacturing cycle, one best alternatives

may be chosen. Once a manufacturing technology has been selected, it should be ensured that

manufacturing cycle is completed with in the specific period. This needs proper planning and

co-ordination at all levels of activity.

A strategy of constant production may be maintained in order to resolve the working capital

problems arising due to seasonal changes in the demand for the firm’s product. A steady

production policy will cause inventories to accumulate during the off season periods and risks

of maintaining a constant production schedule and the firm may adopt a variable production

policy, varying its production schedules in accordance with changing demand.

AVAILABILITY OF CREDIT:

The working capital requirements of the firm are also affected by credit terms granted by its

creditors. A firm will needs less working capital if liberal terms are available to it. Similarly,

the availability of credit from banks also influences the working capital needs of the firms. A

firm, which can get bank credit easily on favourable conditions, will operate with less

working capital than a firm without such facility.

OPERATING EFFICIENCY:

The operating efficiency of the firm relates to the optimum utilisation of resources at

minimum cost. The firm will be effectively contributing in keeping the working capital

investment at a lower level if it is efficient in controlling operations costs and utilising current

assets. The use of working capital is improved and pace of cash conversion cycle is

accelerated with operating efficiency. Better utilisation of resources improves profitability

and, thus helps in releasing the pressure in working capital. Although it may not be possible

for a firm to control prices of material, wages of labour, it can certainly ensure efficient and

effective use of its material, labour and other resources.

LEVEL OF CURRENT ASSETS:

An important working capita policy decision is concerned with the level of investment in

current assets under a flexible policy. The investment in current assets are high. this means

that the firm maintains a huge balance of cash and marketable securities, carries amount of

inventories, and grants generous term of credit to customers, which leads to high level of

debtors.

After establishing the level of current assets, the firms must determine how these should be

financed. What mix of long-term capital and shorter debts should the firms employ to support

its current assets.

Several strategies are available to a firm for financing its capital requirements. Following are

three strategies namely A,B and C.

Strategy A: Long term financing is used to meet fixed assets requirements as well as peak

working capital ,requirements when the working capital requirements is less than its peak

level the surplus is invested in liquid assets.

Strategy B:

Long term financing is used to meet fixed assets requirements ,permanent working capital

requirements and a portion of fluctuating working capital requirements. During seasonal

downswings surplus is invested in liquid assets.

Strategy C:

Long term financing is used to meet fixed assets requirements and permanent working capital

requirements. Short-term financing is used to meet fluctuating working capital requirements.

SOURCES OF WORKING CAPITAL:

After determining the level of working capital on the basis of various determinants, the next

step is to consider how it will be financed. A large manufacturing concern may procure funds

from various sources to meet its working capital requirements from time to time. For the

convenience of study the sources of working capital may be classified under two heads.

A. Sources of long term or regular working capital.

B. Sources of short term or seasonal working capital.

Sources of long term or regular working capital:

The long term working capital requirements can be met from the following sources.

1. Issue of shares:

It is the safest way of procuring permanent and regular working capital without fixed

charges.

2.Issue of debentures:

Regular and long term working capital may be obtained at lower cost of trade on equity.

3.Retained profits:

Accumulated large profits are also considered to be a good source of financing long term

working capital requirements. It is the best and the cheapest source of finance. It creates no

change in future profits.

4.Sales of fixed assets:

If there are any idle fixed assets in the firms, they can be sold out and the proceed may be

utilized for financing the working capital requirements.

5.Term loans:

Mid term and long term loans for a period above 3 years provide important source of

working capital and such term loans borrowed from the special financials institution such as

IDBI,IFCI,LIC.........Etc.

SOURCES OF SHORT TERM WORKING CAPITAL:

The source of short term working capital may be classified in two heads.

A. Internal sources

B. External sources

A. Internal sources:

Under this category the sources of working capital are tapped from within the internal

sources such as depreciation funds. provision for taxation and accrued expenses.

1.Depreciation fund:

Depreciation funds are out of profits provided they are invested in or represented by assets

2.Provision for taxation:

There remains a time lag between making the provision for and payment of Taxation. A

Company may utilise such provision during the intermittent period temporarily.

3. Accrued expenses:

The company sometimes postpones the payment of certain expenditure due to finalisation

of the accounts. These accrued (due to paid) expenses also constitute an important source

of working capital.

C. External sources:

External sources mean the sources providing financial for company’s working capital

other than those of internal sources. these may be enumerated as giving below.

Normal trade credit:

Creditors provide short-term financial position to the company by selling the goods, inventories

and equipment on the basis of differed payment. It is a very common sources of short term

financial and normally every concern use this sources as a normal trade practice.

1.Credit papers:

Bills payable or promissory note, which may be discounted from bankers for meeting short

term capital by the drawer.

2.Bank credit:

The greater part of the working capital is supplied by commercial banks to their customers

through direct advances in the shape of loans, cash credit or over draft and through

discounting the credit, papers, e.g bills payable and promissory notes etc.

3.Customer credit:

Advance may also be obtained from customers against the contracts entered into by the

enterprise such advances are generally asked for the completing the process of manufacturing

large plants and machinery involving long time in completing the process of manufacturing

e.g, ship building industries. The amount can be used for purchasing raw materials, paying

wages and so on.

4. Public deposits:

Most of the companies in recent years depends on this sources to meet their working capital

requirements. Under the companies’ act 1956 a company is authorizes to funds to 25% of

equal and free by this source.

5. Government assistance:

Central and state governments of the country provide short term finance to industries or

business by allowing tax concessions, sanctioning direct loans or grant to industries or a

class of industries to asset their production program etc.

WORKING CAPITAL POLICY:

Working capital management policies have a great effect on firms profitability, liquidity

and its structural health a finance manager should therefore, chalk out appropriate

working capital policies in respect of each component of working capital so as to

ensure high profitability proper liquidity and sound structural health of the

organisation.

In order to achieve this financial manager has to perform basically following two functions

1. Estimating the amount of working capital.

2. Searching for course from which these funds have to be raised.

OBJECTIVE OF WORKING CAPITAL MANAGEMENT:

1. Maintenance of working capital.

2. Ability of ample funds at time of needs.

The basic goal of working capital management is to manage each of the funds current

assets and current liabilities in such a way that an acceptable level of net working

capital is always maintained in the business.

WORKING CAPITAL FORECAST:

There are number of methods to determine the working capital needs.

1.BY DETERMINING THE AMOUNT OF CURRENT ASSETS AND CURRENT

LIABILITIES:

The assessment of working capital requirement can be made on the basis of the

current assets required for the business and the credit facilities available for the

acquisition of such current assets in the form of current liabilities.

2.CASH FORECASTING METHOD:

In this method the position of cash at the end of the period is shown after consideration

the receipts and payments to be made during the periods. Its from assumes more or less

a summary of cash book. this shows the deficiency or surplus of cash as the definite

point of time.

3.THE BALANCE SHEET METHOD:

The balance sheet method of forecasting is made up of the various assets and liabilities

of the business. After wards, the difference between the two is taken which will

indicate either cash surplus on cash or deficiency.

4.PROFIT AND LOSS ADJUSTMENT METHOD:

Under this method the forecasted profits are adjusted after adding the cash flows and

deducting the cash out flows. The basic idea under this method is to adjust the

estimated profit on cash basis.

5.WORKING CAPITAL AS A PERCENTAGE OF SALES:

Under this method the working capital is to be related to sales and calculated percentage

of sales.

6.WORKING CAPITAL AS A PERCENTAGE OF FIXED ASSESTS:

In this method working capital is related to fixed capital investment. therefore it is

projected as a percentage of fixed capital investment.

WORKING CAPITAL TURNOVER RATIO:

It measures the efficiency of the employee of the working capital. Generally higher the

turnover, greater is the efficiency and larger the scale of profits. working capital

turnover ratio can be calculated with the help of the following formula.

salesWorking capital turnover ratio= Net working capital

Working capital cycle (or)Operating cycle:

OPERATING CYCLE:

Thus, sum total of these times is called on “operating cycle“ and it consists on the

following six steps.

Raw materials

working-in-

Progress

Finished goods

cash/ Credit sales

Cash

1. Conversion of cash into raw materials.

2. Conversion of raw materials into works-in-process.

3. Conversion of works-in-process into finished products.

4. Time for sale of finished goods—cash sales and credit sales.

5. Time for realisation from debtors and bills receivables into cash.

6. Credit period allowed creditors for credit purchase of raw materials, inventory and

creditors for wages and overheads.

The firm begins with the purchase of raw material, which are paid for after a delay, which

represents the accounts payable period. The firm converts the raw materials in to finished

goods and then sells the same. The time lag between the purchase of raw material and sale of

finished goods is the inventories period. Customers pay their bills some time after the sales.

The period that elapses between the dates of sales and collection of receivables is the

accounts receivable period.

The time that elapses between the purchases of raw material and the

collection of cash for sales is referred to as the operating cycle. Where as the time

length between the payment of raw materials purchases and the collection of cash

for sales is referred to as the cash cycle. The operating cycle is the sum of the

inventory period and the accounts receivable period, where as the cash is equal to

operating cycle less the account payable period. From the financial statement of the

firm ,we can estimate the inventory period ,the account receivable period, and the

account payable period.

INVENTORY MANAGEMENT:

The term inventory management refers to the stockpile of the products affirm is

offering for sale and the components that make up the products. In other words

inventory is composed of assets that will be sold in future in the normal course of

business operations the assets. which forms store as inventory in anticipation of need

are raw material ,B. work in process (semi finished goods) and (c)finished goods.

The material inventory contains items that purchase by the firm form others and are

converted in to finished goods through the manufacturing process. They form an

important ingredient of the final product.

The work in process .Inventory consists of items currently be used in the

production process. They are normally semi-finished goods which are at various

stages of product in multi stage production process. Finished goods represent final or

completed product, which are available for sale. The inventory of such goods

consists of items that have been produced yet to be sold.

INVENTORY MANAGEMENT IN INDIA:

Inventory level in India is appearing to be high. The reasons commonly cited

for this are as follows:

Purchase executives are severely penalized for stock outs, but they are not

questioned for high inventories.

Lengthy and cumbersome import procedures in the past forced companies to carry

huge amount of inventories for imported items.

Its pays to keep inventories high because of price rise due to inflation.

Most of the vendors are not reliable in terms of delivery schedules and quality

materials supplied. Hence companies carry large safety stocks.

Due to lack of standardization’s there is a large variety of stores.

The most commonly used tools of inventory management in India are ABC analysis, FSN

analysis, and inventory turnover analysis.

ABC Analysis: Thought ABC analysis is widely used, one often finds that the ABC

classification is not reviewed and revised periodically.

FSN Analysis: For the purpose of control companies classify items into fast

moving(F),slow moving(S),and non-moving(N) categories; unfortunately companies do

not dispose off non-moving items swiftly.

CASH MANAGEMENT

In working capital management, cash management is one of the key factors. Cash is the most

liquid current assets and it is the common denominator to which all current assets can be

reduced. More over receivable and inventory get eventually converted in to cash.

MOTIVES OF THE HOLIDING:

With reference to cash management, the term cash is used in two senses, they are narrow

sense and broad sense. In narrow sense used to broadly cover currency and the generally

accepted equivalents of cash such as cheques, drafts, and the bundies in banks’ he broad view

of cash also included cash assets such as marketable securities and time deposits in banks.

There are four primary motives for maintaining cash balances. They are

1.Transaction motive

2.Precautionary motive

3.Speculative motive

4.compensation motive

1.TRANSACTION MOTIVE:

The refers to holding of cash to meet routine cash requirements to finance the transaction,

which a firm carries on in the ordinary course of business. To ensure that the firm can meet

its obligations when payments are due in a situation in which disbursement are in excess of

current cash receipts ,it must have adequate cash balances. The requirement of cash balances

to meet routine cash anticipated obligations whose timings is not perfectly synchronized with

cash receipts.

2.PRECAUTIONARY MOTIVE:

In addition to the non-synchronized of anticipated cash inflows and out flows in the ordinary

course of business, a firm may have to pay cash for purpose, which cannot be predicted or

anticipated, The unexpected cash needs may be the result of following

Floods, strikes and failure of important customers;

Bills may be presented for settlement earlier than expected;

Unexpected slow down in collection of accounts receivable;

Cancellation of some order for goods as the customer is not satisfied;

Sharp increase in cost of raw material.

3.SPECULATIVE MOTIVE:

It refers to the desire to take advantage of opportunities ,which present themselves at

unexpected moments and which are typically outside the normal course of business. while the

precautionary motive is defensive in nature in that firms must make provision to tide over

unexpected contingency, the speculative motive represents appositive and aggressive

approach. Firms aim to exploit profitable opportunities and keep cash in reserve to do so the

speculative motive helps to make advantage of;

An opportunity to purchase raw material at a reduced price on payment of immediate

cash.

A chance to speculate on interest rate movements by buying securities when interest

rates are expected to decline.

Delayed purchase of raw material on the anticipation of decline in price and

Make purchase at favourable prices.

4. COMPENSATION MOTIVE:

Yet another motive to hold cash balance is to compensate banks for providing certain services

and loans. Banks provide a variety of services to business firms such as clearance of cheque

supply of credit information transfer of funds, and so on, while for some these services banks

charge a commission or fee ,for other they seek indirect compensation. Usually it is required

to maintain a minimum balance of cash at the bank. Since the firm for transaction purpose

cannot utilize this balance, the bank can use the amount to earn a return. Such balances are

compensating balances.

Cash management involves managing the money of the firm in order to maximize cash

availability and interest income on any idle funds. At one end, the function starts when a

customer writes a cheque to pay the firm on its accounts receivable, the function ends from

the supplier. An employee, or the government realizes collects funds from the suppliers. An

employee or the government realizes collected funds from the firm on an account payable or

actual. All activities’ between these two points fall within accounts receivable management.

On the other hand the firm’s decision about when to pay its bills involves accounts payable

and accrual management. he various collection and disbursement methods by which a firm

can improve its cash management efficiency constitute two sides of the same coin. The

exercise joint impact on the overall efficiency of cash management. The idea is to collect

accounts receivables as soon possible, but pay accounts payable as late as consistent with

maintaining the firm’s credit standing with the suppliers.

COLLECTION PROCESS:

A number or methods are designed to speed up this collection process by once or all of the

following;

Speed time of payment from the customer to firm.

Reduce the during which payment receive by the firm remain uncollected funds.

Speed the movement of funds to disbursement banks.

OBJECTIVES OF CASH MANAGEMENT:

The basic objectives of cash management are to fold to meet the cash disbursement needs

{payment schedule} and to minimize funds committed to cash balances. These are conflicting

and mutually contradictory and the task of cash management are to reconcile them.

MEETING PAYMENT SCHEDULE:

In the normal course of business, the firms have to make payment of cash on a continuous

and regular basis to suppliers, employees and so on .AT the same time there is a constant

inflow of cash through collection from debtors. cash is therefore, aptly described as the oil to

lubricate the ever turning wheels of business without it the process grids to a stop a basics

objectives of cash management is to meet the payment schedule that is to have sufficient cash

to meet the payment schedule can hardly be over emphasized.

The advantage of adequate cash are

1. It prevent insolvency or bankruptcy arising out of inability of affirm to meet its

obligations.

2. The relationship with the bank is not strained.

3. It helps in forecasting good relation with trade creditors and suppliers of raw

materials, as prompt payment is made within the due date.

4. A cash discount can be availed of if payment is made within the due date.

5. It leads to a strong credit rating which enables the firm to purchase the goods on

favourable terms and to maintain its line of credit with bank and sources of credit.

MINIMIZING FUNDS COMMITTED TO CASH BALANCE:

The second objective of cash management is to minimize cash balance. In minimizing the

cash balances two conflicting aspects have to be reconciled. A high level of cash balances

will ensure prompt payment along with all the advantages. But it also implies that large funds

will remain idle, as cash is non earning asset and the firm will have to forgot profit. Allow

level of cash balances on the other hand may mean failure to meet the payment schedule. The

aim of cash management therefore should be to have an optimal of cash balance.

RECEIVABLES MANAGEMENT :

The receivable management is represent an important component of current assets of a firm.

The term receivable is defined as “Debt owned to the firm by customer arising from sales of

goods or services in the ordinary course of business”. When a firm makes an ordinary sales of

goods of services and does not reserved payment, the firm grant trade credit and this creates

account receivables which could be collected in future. Receivables management is also

called trade credit customers allowing them a reasonable period of time in which to pay for

the goods received.

The main object of receivables management is to promote sales and profits until that

point is reached where the return on investment in further funding receivable is less than the

cost of funds raised to finance that additional credit.

The main aim of accounts receivables management is to maintain a trade of between

profits (benefits) and risk (cost) that is to say, the decision to commit funds to receivable will

be based on a comparison and a cost involved while determining the optimum level of

receivables. The cost and benefits to be comparative are marginal cost and benefits the firm

should only consider the incremental(additional) marginal cost and benefits. The firm should

only considered the incremental or additional benefits and cost that result from a change in

the receivables or trade credit policy.

PAYABLE MANAGEMENT:

Management of accounts payable is as much important as management of account receivable

of course, their is a basic difference between the approach to be adopted by the finance

manager in two cases. where as the underlying objective in case of accounts receivable is to

maximize the acceleration of collection process, the objective in case of accounts payable is

to show down the payments of accounts payable may result in saving of some interest costs

but it can prove very costly to the firm in the form of loss credit in the market. The finance

manager has ensure that payments to the credit are made at the stipulated time period after

obtaining the best credit terms possible.

CONTROL OF ACCOUNTS PAYABLE:

Computing average age of payable can do this. This may be calculated by any of the

following methods.

Months or days in the period/Accounts payable turnover.

Account payable turnover = credit purchase in the period / Average accounts

payable.

RATIO ANAYSIS:

It is essential for a firm to be meet its obligations as they becomes due. Liquidity ratios

measure the ability of the meet its current obligations. Infect, analysis of liquidity needs the

preparation of cash budgets and cash and funds flows statements, but liquidity ratios by

established a relationship between cash and other current obligation, provide a quick measure

of liquidity. A firm should ensure that it does not suffer from lack of liquidity, and also that it

does not have excess liquidity, the failure of a company to meet this obligation due to lack of

sufficient liquidity, will result in a poor credit worthiness, loss of creditor’s confidence or

even in legal tangles resulting in the closure of the company. A very high degree of liquidity

is also bad ,idle assets earn nothing. The firm’s funds will be unnecessarily tie up in current

assets. Therefore it is necessary to strike a proper balance between high liquidity and lack of

liquidity. The most common ratios which indicate the extent of liquidity or lack of it are

1.current ratio and2. Quick other ratios interval measure and networking capital turnover

ratio.

CURRENT RATIO :

The current ratio is calculated by dividing assets by current liabilities.

Current ratio = current assets

Current liabilities

Current assets include cash and those assets which can be converted in to cash within a year,

such as marketable securities, debtors and inventories. Prepaid expenses are also include in

current assets as they represent the payments that will not be made by the firm in the future.

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

creditors, bills payables short term bank loans, income-tax liability and long-term debt

maturing in the current year.

QUICK RATIO:

Quick ratio establishes a relationship between quick or liquid assets and current liabilities.

An assets is liquid if it can converted in to cash immediately or reasonably soon without a

loss of value. Cash is the most liquid asset. Other assets which are consider to be relatively

liquid and included in quick assets as debtors and bills receivables and marketable securities

temporary quoted investment. Inventories are considered tube less liquid. Inventories

normally requires some time for realizing into cash. Their value also has a tendency to

fluctuate. The ratio is found out by dividing quick assets by current liabilities.

Quick ratio = current assets – inventories

Current liabilities

CASH RATIO:

Since cash is the most liquid assets, a financial analyst may examine cash ratios and its

equivalent to current liabilities. Trade investment or marketable securities are equivalent of

cash. Therefore they may be include in the computation of cash ratio.

Cash ratio = Cash in hand or bank

Current liabilities

ACTIVITY RATIO:

Funds of creditors and owners and are invested in various assets to generate sales and profits.

The better the management of assets are the amount of sales. Activity ratios are employed to

evaluate the efficiency with which the firm manages and utilize its assets. These ratios are

also called turnover ratio because they indicate the speed with which assets are being

converted or turned over into sales. Activity ratios, thus involves a relationship between sales

and assets .A proper balance sales and assets generally reflect that assets are managed well.

Several activity ratio can be calculated to judge the effectiveness of asset utilization.

INVENTORY TURNOVER RATIO:

Inventory turnover ratio indicates the efficiency of the firm in producing and selling its

product. It is calculated by dividing the total sales by the average inventory.

Inventory turnover ratio = Total sales

Average inventory

RECEIVABLE TURNOVER RATIO:

It is also known as debtor’s turnover ratio. It establishes relationships between credit sales

and average receivables. This ratio is calculated on the basis of the following formula

Receivable turnover ratio = Sales

Average inventory

In case of receivable turnover ratio debtors and bills receivables are added together to

determine the receivables.

In case of newly start business debtors in the beginning will not be available. So debtor at the

will be supposed to average debtors.

TABLE: 1

ParticularsAs on

31-3-2007Amounts

As on

31-3-2008Amounts

Effect on Changes in working capital

RS/- Rs/- Increase DecreaseCurrent assets :Inventories 8,00,38,989 5,36,54,395 ……… 2,63,84,594

Sundry debtors 139,14,87,559 141,52,79,192 2,37,91,633 ……….

Cash &bankBalance

2,04,79,270 97,91,407 ........... 1,06,87,863

Loans, Advances& deposits

531,44,66,731 620,20,95,437 88,76,28,706 ..........

Total Currentassets(A)

680,64,72,549 768,08,20,431 ……… ……….

Current liabilities:current liabilities

175,03,76,281 220,07,98,208 ……… 45,04,21,927

Total Current liabilities (B) 175,03,76,281 220,07,98,208

……… ….......

Net working in capital(A-B) 505,60,96,268

548,00,22,223 ……… ….......

Increasing in working 42,39,25,955 ……… ……… 42,39,25,955

capital

Total: 548,00,22,223 548,00,22,223 91,14,20,339 91,14,20,339

STATEMENT OF CHANGES IN WORKING CAPITAL FROM 2007-2008

INTERPRETATION:

When comparing 2007 to 2008 there was an increase in working capital by

42,39,25,955 due to increase in Sundry debtors, loans, advance, and current

liabilities. The Networking capital positive.

TABLE:2

STATEMENT OF CHANGES IN WORKING CAPITAL FROM 2008-2009

  As on As on Effect on Changes in working capitalParticulars 31-3-2008 31-3-2009

  Amounts Amounts  RS/- Rs/- Increase Decrease

Current assets :        Inventories 5,36,54,395 8,31,49,191 2,94,94,796 ………Sundry debtors 1,41,52,79,192 203,86,81,691 62,34,02,499 ………

Cash &bank 97,91,407 1,46,35,496 48,44,089 ………BalanceLoans, Advances 620,20,95,437 555,87,32,120 ……… 64,33,63,317& depositsTotal Current 768,08,20,431 769,51,98,498    assets(A)Current liabilities:        current liabilities 220,07,98,208 186,55,17,674 33,52,80,534 ……… 

Total current 220,07,98,208 186,55,17,674    liabilities(B)  

 Net working in capital(A-B)

548,00,22,223 582,96,80,824 ……… ………

Increasing in working capital

34,96,58,601 ……… ……… 34,96,58,601

TOTAL: 582,96,80,824 548,00,22,223 99,30,21,918 99,30,21,918

INTERPRETATONS:

When comparing 2008 to 2009 there was an increase in working capital by

34, 96, 58,601 due to increase in Sundry debtors, Inventories , and decrease in

loans, advance, deposits , current liabilities. The Networking capital positive.

TABLE:3

STATEMENT OF CHANGES IN WORKING CAPITAL FROM 2009-2010

  As on As on Effect on Changes in working capital

Particulars 31-3-2009 31-3-2010  Amounts Amounts  RS/- Rs/- Increase DecreaseCurrent assets        Inventories 8,31,49,191 12,66,45,600 4,34,96,409 …………… Sundry debtors 203,86,81,691 203,96,81,691 10,00,000  ……………

Cash &bank1,46,35,496 2,46,35,496 1,00,00,000

 ……………Balance

Loans, Advances 555,87,32,120 555,92,09,543 477423

 ……………

& depositsTotal Current

769,51,98,498 

……………  ……………assets(A) 775,01,72,330

Current liabilities:

current liabilities 186,55,17,674

 142,77,33,058

…………… 43,77,84,616

Total current liabilities(B) 186,55,17,674 43,77,84,616 

…………… …………… 

Net working in capital(A-B) 582,96,80,824 731,23,87,714

 …………… …………… 

Increasing in 148,27,06,890   …………… ……………  148,27,06,890

working capital

TOTAL 731,23,87,714 731,23,87,714 148,27,06,890 148,27,06,890

INTERPRETATONS:

When comparing 2009 to 2010 there was an increase in working capital

by 148,27,06,890 due to increase in Sundry debtors, Inventories , and in loans,

advance, deposits , current liabilities. The Networking capital positive. All current

current assets.

TABLE: IV.4

STATEMENT OF CHANGES IN WORKING CAPITAL FROM: 2010-11

  Effect on changes in working capitalParticulars AS ON

31/3/2010AS ON

31/3/2011     

  RS/- RS/- Increases DecreasesCurrent assets :        

Inventories 12,66,45,600 27,15,51,706 14,49,06,106 ……… 

Sundry debtors 203,96,81,691 297,74,90,285 93,78,08,594  Cash & bank balances 246,35,496 544,35,408 297,99,912

………

Loans & advances, Deposit

555,92,09,543 522,63,39,617 ……… 33,28,69,926

Other current assets   169,55,602 169,55,602 ………

TOTAL CURRENT ASSETS(A)

775,01,72,330 854,67,72,618    

CUURENT LIABILITIES:  

Current liabilities 43,77,84,616 1,05,78,723 42,72,05,893 ……… 

Provisions ……… 96,88,459 ………  96,88,459

TOTAL CURRENT LIABILITIES(B)

43,77,84,616 2,02,67,182  

Net working capital 731,23,87,714 852,65,05,436 ……… ……… (A- B)Increasing in working capital

121,41,17,722 ………  ……… 121,41,17,722

TOTAL: 852,65,05,436 852,65,05,436 155,66,76,107 155,66,76,107

INTERPRETATONS:

When comparing 2010 to 2011 there was an increase in working capital by

121,41,17,722 due to increase in Sundry debtors, Inventories, current liabilities , and

decrease in loans, advance, deposits . The Networking capital positive.

TABLE: 5

STATEMENT OF CHANGES IN WORKING CAPITAL FROM 2011-2012.

  As  on As on Effect on changes in working capital.Particulars 31/3/2011. 31/3/2012

  Amounts AmountsCurrent assets: RS/- RS/- Increase Decrease

Inventories 27,15,51,706 28,97,95,767 1,82,44,061 ……… Sundry debtors 297,74,90,285 336,93,40,046 39,18,49,761 ………cash & bank Balances

5,44,35,408 4,44,35,408 ……… 1,00,00,000

Loans ,advances & Deposits

522,63,39,617 513,06,86,883 ……… 9,56,52,734

Other 1,69,55,602 12,14,98,881 10,45,43,279  ……… current assets Total current assets(A)

854,67,72,618 895,57,56,985

 Current liabilities:        current liabilities 1,05,78,723 2,05,78,723 ……… 1,00,00,000Provisions 96,88,459 84,12,811 12,75,648  ………

Total current 2,02,67,182 2,89,91,534    

liabilities(B)Net working capital

(A-B) 852,65,05,436 892,67,65,451………  ………

Increasing in working capital

40,02,60,015  ……… ……… 40,02,60,015

TOTAL: 892,67,65,451 892,67,65,451 51,59,12,749 51,59,12,749

INTERPRETATONS:

When comparing 2011 to 2012 there was an increase in working capital by

40,02,60,015 due to increase in Sundry debtors, Inventories, current liabilities , and

decrease in loans, advance, deposits, cash and bank . The Networking capital

positive.

CURRENT RATIO:

Current assets include cash and those assets which can be converted in to cash within a year,

such as marketable securities, debtors and inventories. Prepaid expenses are also include in

current assets as they represent the payments that will not be made by the firm in the future.

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

creditors, bills payables short term bank loans, income-tax liability and long-term debt

maturing in the current year.

CURRENT RATIO: CURRENT ASSETS

CURRENT LIABILITIES

TABLE:1

GRAPH-1

THE BELOW GRAPH SHOWN THE CURRENT RATIO

2007-08 2008-09 2009-10 2010-11 2011-120

0.5

1

1.5

2

2.5

3

CURRENT RATIO

Series1CURRENT  RATIO

INTERPRETATION:

YEAR CURRENT ASSESTS(In lakhs)

CURRENT LAIBILITIES

(In lakhs)CURRENT RATIO

2007-08 76808.20 22007.98 2.49

2008-09 76951.98 18655.17 2.12

2009-10 77501.72 43778.46 2.77

2010-11 85467.72 20267.18 2.21

2011-12 89557.56 28991.53 2.59

Current ratio of the company is above the standard ratio 2:1.

In the year 2007-2008 the current ratio is 2.49

In the year 2008-2009 the current ratio has been decreased to 2.12 when compared to

2007-2008.

2009-2010 the current ratio is increased to 2.77 when compared to previous years.

In the year 2010-2011 the current ratio is decreased 2.21 when compared to 2009-

2010.

In the year 2011-2012 this is current ratio 2.59 when compared to all ratios.

QUICK RATIO:

Quick ratio establishes a relationship between quick or liquid assets and current liabilities.

An assets is liquid if it can converted in to cash immediately or reasonably soon without a

loss of value. Cash is the most liquid asset. Other assets which are consider to be relatively

liquid and included in quick assets are debtors and bills receivables and marketable securities

temporary quoted investment. Inventories are considered tube less liquid. Inventories

normally requires some time for realizing into cash. Their value also has a tendency to

fluctuate. The ratio is found out by dividing quick assets by current liabilities

Quick ratio = quick assets

Current liabilities

Quick assets = current assets – stock

TABLE:2

YEAR QUICK ASSESTS

CURRENT LIABILITIES

RATIO

2007-08 76271.66 52007.98 1.47

2008-09 76120.49 68655.17 1.10

2009-10 27554.12 14377.84 1.91

2010-11 42522.09 22026.71 1.93

2011-12 5359.61 2899.15 1.84

GRAPHICAL REPRESENTATION:

QUICK RATIO

0

1

2

3

4

5

6

7

8

RATIO

RATIO

2007-08 2008 -09 2009-10 2010-11 2011-12

y

INTERPRETATION:

Quick ratio is the standard ratio . 1:1.

In ratio 2007-08 is 1.47 starting.In 2008-2009 the quick asset ratio is decreased 1.10. ratio than compared to previous year.In the year 2009-2010the quick asset ratio is increased 1.91 .In the year 2010-11 the quick assets ratio is decreased 1.93.2011-2012 the quick assets ratio is decreased than the previous year 1.84.

WORKING CAPITAL TURNOVER RATIO:

Working capital of a concern is directly related to sales, the current assets like debtors, bills

receivables, cash, and stock etc. change with the increase or decrease in sales.

The working capital taken as

Working capital = current assets – current liabilities

Working capital turnover ratio indicates velocity of the utilization of net working capital

this ratio indicates number of times the working capital is turned over in the course of year.

This ratio measures the efficiency with which the working capital is being used by a firm.

WORKING CAPITAL TURNOVER RATIO = SALES

-------------------

NET WORKING CAPITAL

TABE-3

YEAR SALES NET WORKING CAPITAL

RATIO

2007-08 356572676 5480022223 0.065

2008-09 401518095 5829680824 0.055

2009-10 443662199 7312387714 0.061

2010-11 729128449 1214117722 0.601

2011-12 536297256 8926765451 0.060

GRAPH-3

WORKING CAPITAL TURNOVER RATIO

0

1

2

3

4

5

6

7

RATIORATIO 

INTERPRETATION:

In the year 2007-08 the working capital turnover ratio is increased to

0.065 this is the biggest ratio than compared to all the years.

In the year 2008-2009 the ratios is decreasing and fall by 0.055.

In the year 2009-2010, 2010-2011 the ratio is 0.061 & 0.601 is decreased

because lack of sales.

2011-2012 this is the decreased to 0.060.

CURRENT ASSESTS TURNOVER RATIO :

CURRENT ASSESTS TURNOVER RATIO = SALES

CURRENT ASSESTS

TABE:4

YEAR SALES CURRENT ASSESTS

RATIOS

2007-08 356572676 7680820431 0.046

2008-09 401518095 7695198498 0.052

2009-10 443662199 7750172330 0.057

2010-11 729128449 8546772618 0.085

2011-12 536297256 8955756985 0.060

GRAPH:4

CURRENT ASSESTS TURNOVER RATIO

0

1

2

3

4

5

6

7

RATIOSRATIOS 

INTERPRETATION:

In the year 2007-2008 the current assets turnover ratio is very least 0.046.

Because lack of sales.

In the year 2008-2009 the current assets turnover ratio increased to 0.12

when compared to previous year because they increase sales.

In 2009-2010 the current assets turnover ratio is 0.057.

In the year 2010-2011 the ratio is increased to 0.85.

In the year 2011-2012 is decreased to 0.060 because lack of sales.

DEBTORS TURNOVER RATIO:

This ratio indicates debtors constitute an important constituent of current assets and

therefore the liquidity of debtors to a great extent determines a firm’s liquidity. Two ratios are

used by financial analysis to judge the liquidity of the firm. They are

1. debtors turnover ratio

2. debtors collection period

Debtor’s turnover indicates the number of times turnover each year. It indicates the

efficiency of the staff entrusted with collection of book debts. The higher the ratio.

The better it is, since it would indicate that debts are being collected more promptly.

Credit sales

Debtors turnover ratio= --------------------------------Average debtors

Opening balance + closing debtors

Average debtors = --------------------------------------------------

2

Table-5

Year Credit sales Avg. debtors Ratio

2007-08 9475.92 3031.27 3.12

2008-09 9085.59 2935.43 3.09

2009-10 9333.96 2315.83 4.03

2010-11 23858.36 3055.17 7.80

2011-12 31587.33 5648.28 5.59

DEBTORS TURNOVER RATIO

0

2

4

6

8

10

12

14

Ratio 

Ratio 

Interpretation:

The debtors turnover ratio in the year 2007-08 is 3.12 and it will be decrease 3.09 in

the year 2008-09 and increased to 4.03& 7.8 In the two years 2009-10 &2010-11 and again

decreased to 5.59 in the year2011-12.

AVERAGE COLLECTION PERIOD:

Debtors

Average collection period =------------------------- X 360

Sales

TABLE-5

Year Avg. debtors Sales Days

2007-08 3031.27 9475.92 115

2008-09 2935.43 9085.59 116

2009-10 2315.83 9333.96 89

2010-11 3055.17 23858.36 46

2011-12 5648.28 3157.33 64

AVERAGE COLLECTION PERIOD

2007-08 2008-09 2009-10 2010-11 2011-120%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Days    

INTERPRETATION:

The debtor’s collection period is fluctuating trend during the period from 2007-08-

2011-12 .i.e. 115 days,116 days, 89 days,46 days,64 days.

FIXED ASSESTS TURNOVER RATIO:

FIXED ASSESTS TURNOVER RATIO = SALES

------------------------

NET FIXED ASSESTS

FIXED ASSESTS TURNOVER RATIO

YEAR SALES NET FIXED ASSESTS

RATIOS

2007-08 356572676 114170482 3.12

2008-09 401518095 101156552 3.96

2009-10 443662199 87887763 5.04

2010-11 729128449 89027211 8.18

2011-12 536297256 80475301 6.66

THE FIXED ASSESTS TURNOVER RATIO

2007-08 2008-09 2009-10 2010-11 2011-120%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

FIXED ASSESTS TURNOVER RATIO

RATIOS 

INTERPRETATION:

During the period 2007-08 to 2011-12 the fixed turnover ratio is increasing trend i.e.

from In the year 2007-2008 is 3.12, 2008-09 is 3.96, 2009-10 is 5.04 , 2010-11 is

8.18 and 2011-12 is 6.66.

NET WORKING CAPITAL TURNOVER RATIO:

NET WORKING CAPITAL RATIO = NET WORKING CAPITAL

NET ASSESTS

TABE:7

YEAR NET WORKING CAPITAL

NET ASSESTS

RATIO

2007-08 5480022223 3864904460 1.41

2008-09 5829680824 3322793288 1.75

2009-10 7312387714 185867549 4.34

2010-11 1214117722 392090424 3.09

2011-12 8926765451 596591353 4.96

GRAPH:7

2007-08 2008-09 2009-10 2010-11 2011-120

1

2

3

4

5

6

NET WORKING CAPITAL RATIO

RATIO

INTERPRETATION:

In the year 2007-2008 the working capital ratio is 1.41, 2008-2009 the net working

capital is 1.75. these two are the lowest ratio than compare to all years.

2011-2012 is the highest ratio 4.96 than compared to all the years.

CASH RATIO:

Since cash is the most liquid asset, a financial analyst may examine cash ratios and its

equivalent to current liabilities. Trade investment or marketable securities are equivalent of

cash. Therefore they may be include in the computation of cash ratio.

CASH RATIO = CASH AND BANK BALANCE * 100

CURRENT LIABILITIES

TABLE:8

YEAR CASH&BANK BALANCE

CURRENT LIABILITIES

RATIO

2007-08 3128147 973586165 0.32

2008-09 7309810 810456785 0.50

2009-10 2662718 1965956729 0.63

2010-11 4435408 358991534 0.52

2011-12 4404475 508675825 0.86

GRAPHICAL REPRESENTATION:

GRAPH-8

2007-08 2008-09 2009-10 2010-11 2011-120

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

0.9

1

CASH RATIO

RATIO

INTERPRETATION:

The Cash ratio is fluctuating trend during the period form 2007-08

to 2011-12 due to fluctuating current liabilities i.e. In the year 2007-2008

ratio is 0.32 , 2008-2009 0.50, 2009-10- 0.63,2010-11-0.52 and in the year 20111-

12 it is 0.86.

GROSS PROFIT RATIO:

GROSS PROFIT RATIO = GROSS PROFIT X 100

SALES

TABE:9

YEARS GROSS PROFIT

SALES RATIO

2007-08 62915121 356572676 17.64

2008-09 72417129 401518095 18.04

2009-10 91539437 443662199 20.63

2010-11 80125136 729128449 10.99

2011-12 99256482 536297256 18.51

GRAPH:9

2007-08 2008-09 2009-10 2010-11 2011-120

5

10

15

20

25

GROSS PROFIT RATIO

RATIO

INTERPRETATION:

In the year 2007-2008 the gross profit ratio is 17.64.

After the year 2008-2009 the gross profit is increase 18.04.

In 2009-2010 the gross profit ratio is increase 20.63 this is the biggest than compare

to all years.

In the years 2010-2011 and 2011-2012 the company gross profit 10.99

&.18.51.respectively.

FINDINGS

On the overall evaluation of the working capital management at each and every aspect, the

following findings are found.

1. The net working capital of the company is increasing trend due to increase in

current asset. So the company maintain adequate working capital.

2. The current ratio has been fluctuating over the years, and in the year 2011-

2012 it is stood at 2.59 which is equal to the ideal ratio of 2:1.

3. The quick ratio has been ups and downs through the years and in the year

2011-12 it is at 1.84 due to fluctuation in current liabilities. Which is more

than ideal ratio of 1:1.

4. Working capital turnover ratio fluctuating trend i.e. from 0.065 to 0.060 due to

fluctuations in sales. This ratio indicates that sales is nor increased due to

spending working capital.

5. Debt collection period is less than the ideal time. So the company collect book

debt from debtor within the ideal period in the current year.

6. Net Working capital is fluctuating trend. i.e. from 1.41 to 4.96. Even though it

is fluctuating he company utilising its fixed asset, This is the good sign of the

company.

7. Cash ratio is also fluctuating trend. But in the current year cash ratio is reaches

to 0.86.

SUGGESTIONS

The following are the suggestions are

1. The cash holding of the company should be kept at satisfactory to meet

its commitments promptly.

2. The company must maintain its current ratio at industry standard level i.e

2:1 to meet short term solvency.

3. The company is suggested to maintain the debtors turnover ratio to be

increased, by that the management of credit will be more efficient and

effective.

4. The working capital must be increased in order to increase the day to day

profit of the companies operations. By that the company position will run

smoothly.

5. If the company must concentrate on the sales. So increasing the or get the

good profits.

6. It is suggested that company should follow a different strategy to with

stand in the market.

CONCLUSION

Working capital management decide the composition of current assets and current Liabilities the relative position of liquid assets of less than the running out of cash .The profitability of the firm also will be increased the current assets and financing structure the firm has to resolve the trade and profitability. Therefore in the working capital management it is very much crucial to consider the assets and financing mixes.

Through my study I fund that the overall working capital of the company is good. Even though the firm’s solvency position is satisfactory. The firms liquidity position is current assets ability is standard above and profitability position is weak. Compared the previous years.

So it is advised to the company to adopt better management practices, techniques, methods, etc.Then the company can improve its liquidity position. Can utilize its assets effectively and can earn good profits.

PARTICULARS 2007-08 2008-2009 2009-2010 2010-2011 2011-2012

SOURCE OF FUNDS:

Share holders’ funds

Share capital 927821050 927821050 927821050 827821050 827821050

Reserve & surplus 29575314 16333575314 1633575314 3166781820 3166781820

Deffered tax 21653227 19246437 16324230 13224156 11582473

Loans funds          

Secured loans 4471944175 4531402996 2965934123 872742555 872742555

Unsecured loans 868494453 833277315 863216754 1968805747 1981508152

PROFIT carry forward to(P&L).

120313747 412860752 553546865 892199934 962512372

Total 6439801966 23058183864 6960418336 7741575262 7822948422

Application of funds:

Fixed assests          

Gross block 801919865 80103379 805815883 346980730 352337161

Less: depreciation 687749383 701946827 717928120 257953519 271861860

Net block 114170482 101156552 87887763 89027211 80475301

investments 390000 390000 390000 390000 390000

Current assests, loans and advances:

7680820431 7695198498 7750172330 8546772618 8955756985

TOTAL 7795380913 7796745050 7838450093 8636189829 9036622286

Less: current liabilities and

provisions

2200798208 1865517674 437784616 20267182 28991534

NET CURRENT ASSESTS:

5594582705 5931227376 7400665477 8615922647 9007630752

miss…. assets 8452192 1712695 2835356 1075000 7070560

TOTAL 6439801966 23058183864 6960418336 7741575262 7822948422

BALANCE SHEETS OF R.P.AGRO TECH PVT. LTD.,AS ON

2007-2011

PROFIT AND LOSS ACCOUNT OF R.P.AGRO TECH PVT. LTD.,D,FOR THE YEARS ENDED 2007-2011

PARTICULARS 2007-08 2008-2009 2009-2010 2010-2011 2011-2012

INCOME: 356572676 401518095 443662199 729128449 536297256

Less: excise duty     58690968 78137930 38200791

Value added tax     17852996 27844947 20493001

Net turnover     367118235 678835466 477603464

Other income 204292 53435097 144130715 363788 293055

Variance in stock 4947873 4294997 14658030 6942721 9801213

TOTAL INCOMES          361724841 459248189 525906980 686141975 487697732

EXPENDITURE          

Materials/ stock written off 83247937 29100966 52122762 100160867 143847084

Excise duty 48396990 32742713 48690968 48137930 38200791

Personnal 2974314 3090063 3658841 4562742 4692036

Over head 51249580 48272879 25059641 15377705 8682339

Finance charges 42539045 40452446 35882531 7671596 3158762

Depreciation 21759260 14547219 10165193 17629399 13908341

TOTAL 250167126 168206286 175579936 193540239 212489353

Profit before tax   291041903 350327044 436911842 275208379

Provision for taxation          

Deffere tax -4797550 -2408790 -2925207 -3100073 -1641683

Frindge benifits tax 120853 55401 55541 79806 Nil

Profit after tax 106639312 288577712 347346 436835 476858

Prior period adjustments/ income tax

    5468591 380372671 331017757

Surplus/ deficit from previous yr

13674435 124283040 547730928 511390428 631017757

PROFIT carry forward to

120313747 412860752 553546865 892199934 962512372

BIBLIOGRAPHY

1. PRASANNA CHANDRA; financial management 7th edition

2. I.M PANDEY ; financial management 10th edition

Reports:

Annual reports of balji industrial steel corporation ltd (2005-2010)

Website: www. google.co.in

Manuuals:

5 years Annual reports & Broaches