Project report on Working Capital Management

A STUDY ON “WORKING CAPITAL MANAGEMENT”IN

SEJAL GLASS LIMITED

PROJECT SUBMITTED IN PARTIAL FULFILMENT OF THE COURSE REQUIREMENT OF POST GRADUATE DIPLOMA IN MANAGEMENT

(AICTE).

INTERNALLY GUIDED EXTERNALLY GUIDEDBY:- BY:-K V. RAMANATHAN A. VENKATRAMANANFACULTY- FINANCE CHIEF FINANCIAL OFFICER

SUBMITTEDBY:-

SHIVALINGA DHANGARReg. No. DSBSPGDMA1325

AUGUST 2014

DAYANANDA SAGAR BUSINESS SCHOOLPOST GRADUATE DIPLOMA IN MANAGEMENT (AICTE)

SHAVIGE MALLESHWARA HILLS, KUMARSWAMY LAYOUTBANGALORE– 5600078.

1

CERTIFICATE

This is to certify that the report titled “A STUDY ON WORKING

CAPITAL MANAGEMENT IN SEJAL GLASS LIMITED ” has been prepared

under my guidance and supervision. The report is submitted in partial fulfillment

of the requirement for the award of Post Graduate Diploma in Management

(Approved by AICTE) by SHIVALINGA DHANGAR, Reg. No.

DSBSPGDMA1325 and this report/study has not formed a basis for the award of

any degree or diploma in any university/institution.

Place:

Date:

Prof. R. K. VIJAYA SARATHY Guide : KV. RAMANATHANDirector Designation : Faculty

2

DECLARATION

I hereby declare that the report/ study titled “WORKING CAPITAL

MANAGEMENT” prepared under the guidance of Prof. KV. RAMANATHAN

submitted in partial fulfillment of the requirement for the award of Post Graduates

Diploma in Management (AICTE) in Dayananda Sagar Business School is my

original work and has not been submitted for the award of any other degree/

diploma in any university/ institution.

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ACKNOWLEDGEMENT

I wish to express my deep sense of gratitude to Prof. RK. VIJAYA SARATHY,

director, Dayananda Sagar Business School, Bangalore for permitting me to do the

project.

I would like to express my hurtful thanks to Prof. KV RAMANATHAN, Faculty in

Finance, Dayananda Sagar Business School, Bangalore for the necessary

cooperation extended to me in doing my project work.

With immense pleasure, I would like to express my sincere thanks and gratitude to

SEJAL GLASS LIMITED, Mumbai, and my co-guide Mr. MAHESH DESAI and

Mr. A VENKATRAMANAN for providing necessary information during my

project period.

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CONTENTS

LESSONS TOPICS PAGE NO.

CHAPTER-1 WORKING CAPITAL 1 – 9

1.11.21.31.41.51.61.7

Introduction Working Capital ManagementOperating CycleConcept Of Working CapitalObjectivesImportanceWorking Capital Analysis

1 2

3 - 4567

8 – 9

CHAPTER-2 RESEARCH METHODOLOGY 10 – 19

2.12.22.32.42.52.62.72.82.9

What is ResearchTypes of ResearchObjectives of the studyLimitations of the studyStatement of ProblemReview of Literature Research DesignSampling DesignData Collection

1011121314

15 - 16171819

CHAPTER-3 COMPANY PROFILE 20 – 31

3.13.23.33.43.53.63.6

IntroductionVision & MissionMilestonesSWOT AnalysisDrivers of Sejal’s Future GrowthProducts of Sejal Glass.Financial Performance of Company

20 – 232425

26 – 2728

29 – 3031

CHAPTER-4 DATA ANALYSIS AND INTERPRETATIONS 32 – 45

CHAPTER-5 FINDINGS AND SUGGESTIONS 46 – 47

CHAPTER-6 CONCLUSION 48

BIBLIOGRAPHY 49

ANNEXURE : Questionnaire 50 – 51

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LIST OF TABLES

TABLE NO. DESCRIPTION PAGE NO.

Table 1 Sample Size Distribution 18

Table 2 Clients of Sejal Glass 22

Table 3 Five years financial performance of Sejal Glass 31

Table 4 Relationship between Receivables and Payables 32

Table 5Relationship between Short term borrowings and Short term loans & advances

33

Table 6 Cash Conversion Cycle 34

Table 7 Comparison of current Assets & Current liabilities 35

Table 8 Relationship between Total sales and Expenditure 36

Table 9 Respondents from different Company 37

Table 10 Company’s Collection Period 38

Table 11 Company’s Payable Period 39

Table 12 Company’s Inventory Cycle 40

Table 13 Credit Risk in Company 41

Table 14 Bad debt level in Company’s Accounts Receivables 42

Table 15 Discount Offer to Customers for Prompt Payment 43

Table 16 Reminding customers by phone to pay the balance amount 44

Table 17 How often does company review its working capital 45

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LIST OF GRAPHS

FIGURE NO. DESCRIPTION PAGE NO.

FIGURE 1 Clients of Sejal Glass 22

FIGURE 2 Relationship between Receivables and Payables 32

FIGURE 3Relationship between Short term borrowings and Short term loans & advances

33

FIGURE 4 Cash Conversion Cycle 34

FIGURE 5 Comparison of current Assets & Current liabilities 35

FIGURE 6 Relationship between Total sales and Expenditure 36

FIGURE 7 Respondents from different Company 37

FIGURE 8 Company’s Collection Period 38

FIGURE 9 Company’s Payable Period 39

FIGURE 10 Company’s Inventory Cycle 40

FIGURE 11 Credit Risk in Company 41

FIGURE 12 Bad debt level in Company’s Accounts Receivables 42

FIGURE 13 Discount Offer to Customers for Prompt Payment 43

FIGURE 14 Reminding customers by phone to pay the balance amount 44

FIGURE 15 How often does company review its working capital 45

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CHAPTER 1

WORKING CAPITAL

INTRODUCTION

Every business whether big, medium or small, needs finance to carry on its operations and to achieve its target. In fact, finance is so indispensable today that its rightly said to be the lifeblood of an enterprise. Without adequate finance, no enterprise can possibly accomplish its objectives. So this chapter deals with studying various aspects of working capital management that is necessary to carry out the day-to-day operations. The term 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 funds invested in current assets keep revolving fast and are being constantly converted in to cash and this cash flows out again in exchange for other current assets. Hence it is known as revolving or circulating capital. On the whole, Working Capital Management performs a key function and is of top priority for every finance manager. All managers must, however, keep in mind that n their pursuit to liquidity, they should not lose sight of there basic goal of profitability. They should be able to attain a judicious mix of liquidity and profitability while managing their working capital.

Working capital management deals with the most dynamic fields in finance, which needs constant interaction between finance and other functional managers. The finance manager acting alone cannot improve the working capital situation. In recent times a few case studies regarding management of working capital in selected companies have been in order to make in-depth analysis of the several experts of working capital management, The finding of such studies not only throws new lights on the technical loopholes of management activities of the concerned companies, but also helps the scholars and researchers to develop new ideas techniques and methods for effective management of working capital.

Decisions relating to working capital and short term financing are referred to as working capital management. These involve managing the relationship between a firm's short-term assets and its short-term liabilities. The goal of working capital management is to ensure that the firm is able to continue its operations and that it has sufficient cash flow to satisfy both maturing short-term debt and upcoming operational expenses.

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WORKING CAPITAL MANAGEMENT

In simple terms working capital means is that the amount of funds that a company require finance for its day-to-day operations. Working capital states that the period of debtors, receivables etc for a company to raise finance from them at the earliest. Finance manager should develop sound techniques of managing current assets.

Working capital management involves managing the relationship between a firm's short-term assets and its short-term liabilities. The goal of working capital management is to ensure that the firm is able to continue its operations and that it has sufficient cash flow to satisfy both maturing short-term debt and upcoming operational expenses.

The following should be effective in working capital management:

Cash management: Identify the cash balance which allows for the business to meet day to day expenses, but reduces cash holding costs.

Inventory management: Identify the level of inventory which allows for uninterrupted production but reduces the investment in raw materials—and minimizes reordering costs—and hence increases cash flow. Besides this, the lead times in production should be lowered to reduce Work in Process (WIP) and similarly, the Finished Goods should be kept on as low level as possible to avoid over production.

Debtors management: Identify the appropriate credit policy, i.e. credit terms, discounts etc. which will attract customers, such that any impact on cash flows and the cash conversion cycle will be offset by increased revenue and hence Return on Capital. Debtors credit period should be less than 90 days to achieve good working capital ratio and position of the company.

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OPERATING CYCLE

The operating cycle is the average period of time required for a business to make an initial outlay of cash to produce goods, sell the goods, and receive cash from customers in exchange for the goods. If a company is a reseller, then the operating cycle does not include any time for production - it is simply the date from the initial cash outlay to the date of cash receipt from the customer.

The operating cycle is useful for estimating the amount of working capital that a company will need in order to maintain or grow its business. A company with an extremely short operating cycle requires less cash to maintain its operations, and so can still grow while selling at relatively small margins. Conversely, a business may have fat margins and yet still require additional financing to grow at even a modest pace, if its operating cycle is unusually long.

In case of a manufacturing company, the operating cycle is the length of time necessary to complete the following cycle of events –

Conversion of cash into raw materials Conversion of raw materials into work-in-progress Conversion of work-in-progress into finished goods Conversion of finished goods into accounts receivables Conversion of accounts receivable into cash

The above operating cycle is repeated again and again over the period depending upon the nature of the business and type of product etc. the duration of the operating cycle for the purpose of estimating working capital is equal to the sum of duration allowed by the suppliers.

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OPERATING CYCLE OF MANUFACTURING BUSINESS

Realization Sales

Accounts Receivable

Cash Finished Goods

Purchases Production

Production

Raw Materials Work-in-progress

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CONCEPT OF WORKING CAPITAL

The concept of working capital includes current assets and current liabilities both. There are two of working capital they are gross and net working capital.

1. Gross working capital: Gross working capital refers to the firm’s investment in current assets. Current assets are the assets, which can be converted into cash within an accounting year or operating cycle. It includes cash, short term securities debtors (account receivables or book debts), bills receivables and stock (inventory).

2. Net working capital: Net working capital refers to the difference between current assets and liabilities are those claims of outsiders, which are expected to mature for payment within an accounting year. It includes creditor’s or accounts payables bills payable and outstanding expenses. Net working copulate can be positive or negative. A positive working capital will arise when current assets exceed current liabilities and vice versa.

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Concept of Working Capital

Gross Working Capital Net Working Capital

OBJECTIVES

Every company has their own objectives of working capital that is they try to keep company position at upper level through working capital. Company may get good position by giving less credit period to debtors, receivables, etc. and by taking more credit period from creditors, payables etc. Its main objective is to get back cash in short term period and meets companies day to day operations. Effective working capital helps a company to borrow short term funds and long term funds from public, banks, investment banking and financial institutions.

The overall financial management objectives of an organization could be summarized in terms of the following five objectives:

To ensure that the organization always has enough cash to meet its legal obligations and avoid illiquidity- that is, to maintain adequate short-term financial flexibility.

To arrange to obtain whatever funds are required from external sources at the right time, in the right form, and on the best possible terms.

To ensure that the organization’s assets and liabilities – current and long-term, financial and operating are utilized as effectively as possible.

To forecast and plan for the financial requirements of future operations. To make all decisions and recommendations on the basis of one primary criterion:

maximizing the long-term value of the organization. This objective is attained in a publicly owned corporation through maximization of the wealth of the owners (stockholders) by maximizing stock price.

The last point is particularly important; without this requirement, financial executives could find many suboptimal solutions to problems. It would be easy, for example, to satisfy the first requirement by maintaining enormous cash balances or investing very large sums in readily salable short –term securities; but such a policy would normally not be in the best interests of the stockholders of a typical corporation.

IMPORTANCE

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Proper management of working capital is very important for the success of an enterprise. “It aims at protecting the purchasing power of assets and maximizing the return on Investment. The manager of administration of current assets to a very large extent determines the success of the operations of a firm. Constant management is required to maintain appropriate levels in the various working capital accounts. A study of working capital is of major importance to internal and external analysis because of its close relationship to current day-to-day operations of business, Inadequacy or mismanagement of working capital is the leading cause of business failures. Shortage of working capital, so often advanced as the main cause of failure of Industrial concerns, is nothing but the clearest evidence of mismanagement, which is so common. The current assets and current liabilities flow round in a business like an electric current. The working capital plays the same role in the business as the role of the heart in the human body. Just as the heart gets blood and circulated the same in the body, in the same enterprise, adequate amount of working capital is pre-requisite. The adequacy of cash and current assets together with their efficient handing virtually determine the survival or demise of a concern. Inadequate working capital is a business ailment as compared to the availability of excess working capital may lead carelessness.

About costs and therefore, to inefficiency of operations. Many a times business failure takes place due to lack of working capital. If a concern maintains an adequate amount of working capital, it enjoys a good credit rating and gets discount on payment. It will ensure proper functioning of the business operations and help in the maximization of threat of return. A business house can maximize its rate of return on the capital invested provide in keeps pace with the scientific and technological developments taking place in the field to which it pertains. As soon as some technological and scientific development takes place, a business enterprise in order to accelerate its profitability should immediately introduce the same to its productive process. In reality, however the sufficiency of working capital will determine the course of decision in this regard.

Working capital helps to operate the business smoothly without any financial problem for making the payment of short-term liabilities. Purchase of raw materials and payment of salary, wages and overhead can be made without any delay. Adequate working capital helps in maintaining solvency of the business by providing uninterrupted flow of production. Quick payment of credit purchase of raw materials ensures the regular supply of raw materials from suppliers. Suppliers are satisfied by the payment on time. It ensures regular supply of raw materials and continuous production. A firm having adequate working capital, high solvency and good credit rating can arrange loans from banks and financial institutions in easy and favorable terms.

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WORKING CAPITAL ANALYSIS

CURRENT ASSETS:Current assets are those which can be converted into cash as and when needed, i.e., those

assets which can turn to cash as per the requirement of the business within the accounting period.

SUNDRY DEBTORSDebtors are those to who products are supplied on credit basis. These amounts are

collected within the accounting period. Therefore, they are converted into cash as per requirement, hence they are considered under current assets.

INVENTORIESClosing stocks or inventory includes raw materials, work in progress and finished goods,

which are needed for the smooth running of the organization. Generally inventory is maintained by every organization, which is bound to meet its demand in the market. The amount of inventory maintained by the firm represents its profitability position. The quality must not be in excess or inadequate, it must be according to the requirement. The quality stores must be able to meet the market demand.

CASH AND BANKEvery organization or firm maintains cash reserves in their accounts. This is the major

key on which working of the entire organization is dependent upon. This is required in every aspect of production, marketing, financing etc. In other words, it can be said that it plays a vital role in the functioning of any organization.

LOANS AND ADVANCESAdvances to staff are those advances, which are given to the employees as festival

advances. These advances are treated as current assets as they are given advance to the employees and are collected with in the accounting year. It doesn’t result in any default payment as the amount is deducted from their salaries directly during their payment. Their advances are prepared and are collected in the accounting year. These are the loans and advances amount that are given by the organization in procuring of raw materials. Amount is given in advance to its supplier in supplying the raw materials required and this is adjusted after receiving the raw material. The final settlements take place only after deducting the advances amount from total amount.

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CURRENT LIABILITIES:Current liabilities are those which are payable during an accounting year. These are paid

out of current assets like cash. When current assets availability is present there exist the current liabilities but current assets must always be in excess to current liabilities. This provides the organization to be in a good position.

SUNDRY CREDITORSCreditors are those from whom products are purchased on credit basis. These amounts are

paid within the accounting period. If the creditors number increase the amount payable also increases which further increases the liquidity.

LINE OF CREDIT:Banks to new business do not often give lines of credit. However, if your new business is

well capitalized by equity and you have good collateral, your business might qualify for one. A line of credit allows you to borrow funds for short terms needs when they arise. The funds are repaid once you collect the accounts receivables that resulted from the short-term sales peak. Lines of credit typically are made for one year at a time and are expected to be paid off for 30 to 60 consecutive days sometime during the year to ensure that the funds are used for short-term needs only.

SHORT TERM LOAN:While your new business may not qualify for a line of credit from a bank, you might have

success in obtaining a one-time short-term loan (less than a year) to finance your temporary working capital needs. If you have established a good banking relationship with a banker, he or she might be willing to provide a short-terms note for one order or for a seasonal inventory and/or accounts receivable buildup. In addition to analyzing the average number of days it takes to make a product (inventory days) and collect on an account (account receivable days) Vs. the number of days financed by accounts payable, the operating cycle analysis provides one other important analysis. From the operating cycle, a computation can be made of the dollars required to support one day of accounts receivables and inventory and the dollars provided by a day of accounts payable. Working capital has a different impact on cash flow in a business.

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CHAPTER 2

RESEARCH METHODOLOGY

What is Research…?

Research means search for facts in order to find answers to certain questions or to find solutions to certain problems. It is often referred to as ‘scientific inquiry’ or ‘scientific investigation’ into a specific problem or situation. This is because; the search for facts should be made by scientific method rather than by arbitrary method. The scientific method uses systematic rational approach to search for facts, whereas, the arbitrary method attempts to find answers to questions on the basis of imagination and one’s own beliefs and judgment.

In simple words Research is the systematic process of finding out problems between variables by investigating inside or outside of the company and giving better solutions to it.

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TYPES OF RESEARCH

Types of research are very important to research something in the company or somewhere else. There are many researches which suits for different areas to find out the problems in an organization, for e.g. quantitative research at numerical area. I have been used three types of researches for my project work that is Descriptive Research, Historical Research and Quantitative Research.

Descriptive Research:Descriptive research helped me to find out facts and details of the Sejal Glass ltd. I have

been enquired directly to senior executives and senior employees about what has happened and what is happening in the company.

Historical Research:Through historical research I have been found past details which is affecting current

situation of Sejal Glass. They sold their float glass manufacturing plant to Saint Gobain ltd. Since that day they are spending a lot for raw materials and creditors are more than debtors.

Quantitative Research:This research has undertaken to measure the quantity or amount of the company. I

glanced at company’s balance sheet then I came to know since 3- 4 years they are in loss. Company’s expenses and current liabilities are more than profit and current assets respectively.

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OBJECTIVES OF THE STUDY

To study the various components of working capital.

To analyze the liquidity trend of Sejal Glass Ltd.

To appraise the utilization of current asset and current liabilities and find out short-comings if any.

To suggest measure for effective management of working capital.

To measure and evaluate the liquidity and profitability position of Sejal Glass Ltd.

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LIMITATIONS OF THE STDY

Time factor is the most crucial one. The study was conducted within a short period of two months.

Sejal glass executives were hesitating to provide information.

I had to wait for a long time to make contact with the executives, because they were busy with their work.

Due to busy work schedule, detailed discussions were not possible

It is also found that some of the executives lack interest, enthusiasm, initiative and

involvement, which was de-motivated me.

Competitors of sejal glass have given less information and data.

Lot of time consumed during survey.

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STATEMENT OF PROBLEM

Sejal Glass limited sold their Float Glass manufacturing plant to Saint Gobain because it was continuous production plant so company could not have reduced their production where their sales was less because of more competition. They could not have reduced their fixed cost, so day by day expenditure was increasing, it was not their cup of tea to reduce the cost therefore they sold the plant.

After selling plant, company facing many problems from suppliers because of low capital they are unable to make payment on time so more than 50% of suppliers are not supplying on credit basis. So that company has to make payment in advance and on delivery.

Customers delaying invoice payment was deemed by survey respondents to have had a high or very high impact on working capital over the past 12 months. Similarly, customers exerting pressure on businesses to extend their credit and payment terms were also placing high or very high pressure on working capital.

The main problem from suppliers i.e. 80% suppliers are from India from that 70% suppliers allowing 30 - 45 days credit and for rest of them company has to make payment in advance. 20% suppliers from rest of the country from that 40% of suppliers allowing 60 - 90 days credit and for rest of them company has to make payment in advance.

Stretching credit period of suppliers is the main source to improve working capital but here it is not there. So this is one of the cause for working capital. Company spending a lot for unnecessary things therefore Company’s expenditure is also more than income since 3 years.

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REVIEW OF LITERATURE

Working capital is very important for every company to meet day to day operation expenses and urgent payments. Effective working capital increase the company profit and vice versa. For effective working capital, collection days should be less and payment days should be more overall cash conversion cycle days should very low or in negative.

Many researchers have studied working capital from different views and in different environments. The following ones were very interesting and useful for our research:

Eljelly (2004) Identified the relation between profitability and liquidity who was examined, as measured by current ratio and cash gap (cash conversion cycle) on a sample of joint stock firms in Saudi Arabia. The study found that the cash conversion cycle was of more importance as a measure of liquidity than the current ratio that affects profitability. The size variable was found to have significant effect on profitability at the industry level. The results were stable and had important implications for liquidity management in various Saudi firms. First, it was clear that there was negative relationship between profitability and liquidity indicators such as current ratio and cash gap in the Saudi sample examined. Second, the study also revealed that there was great variation among industries with respect to the significant measure of liquidity.

Lazaridis and Tryfonidis (2006) have explored the relationship between corporate profitability and WCM in the Athens Stock Exchange. The finding of results shows a negative relationship between profitability and working capital indicators like days of accounts receivable, account payable and cash conversion cycle. They concluded that firms can create profits by effectively handling each component of the cash conversion cycle.

Saswata Chatterjee (2010) Focused on the importance of the fixed and current assets in the successful running of any organization. It poses direct impacts on the profitability liquidity. There have been a phenomenon observed in the business that most of the companies increase the margin for the profits and losses because this act shrinks the size of working capital relative to sales. But if the companies want to increase or improve its liquidity, then it has to increase its working capital. In the response of this policy the organization has to lower down its sales and hence the profitability will be affected due to this action. For this purpose 30 United Kingdom based companies were selected which were listed in the London Stock exchange. The data were taken of three years 2006-2008. It analyzed the impact of the working capital on the profitability. The dimensions of working capital management included in this research which is quick ratios, current ratios C.C.C, average days of payment, Inventory turnover, and A.C.P (average collection period. on the net operating profitability of the UK companies.

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Mohamad and Saad (2010) Used Bloomberg's database of 172 listed companies randomly selected from Bursa Malaysia main board for five year period from 2003 to 2007. Applying correlations and multiple regression analysis, they found that current assets to total asset ratio shows positive significant relationship with Tobin Q, ROA and ROI. Cash conversion cycle, current asset to current liabilities ratio and current liabilities to total assets ratio illustrate negative significant relations with Tobin Q, ROA and ROIC.

All the above studies provide us a solid base and give us idea regarding working capital management and its components. They also give us the results and conclusions of those researches already conducted on the same area for different countries and environment from different aspects. On basis of these researches done in different countries, we have developed our own methodology for research.

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RESEARCH DESIGN

Problem: In Sejal Glass, since 3 years there is negative and equal relationship between current assets and current liabilities. Collection period is more than payment period so cash conversion cycle is more which should be less or negative. This is main pressure on working capital.

Objective: The main objective of research is to appraise the utilization of current asset and current liabilities and find out short-comings if any and to suggest measure for effective management of working capital.

Sampling Design: I have been used judgement method in non random sampling. Because all will not be good respondents to answer my questions. I have selected those who know about working capital, debtors, creditors, stock etc. Sample size is 50 in different glass industry from different departments.

Data Collection: I have been collected data through both primary and secondary. Primary data from Questionnaire, Observation and Personal interview with CFO, executives and senior employees. Secondary data from annual reports and company websites.

Areas of Data Collection: I was visiting different company to collect data. I have done survey other than Sejal Glass in FG Glass Industry, NSD Glass Industry.

Time Frame: I have done this research activity in two months.

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SAMPLING DESIGN

Sampling Method:

I have been used appropriate sample to collect right data from respondents. For research in finance we cannot ask information to everyone regarding finance. We should concern the person who is aware about the company finance. So that I have used non random sampling under this I have used judgement method to collect data. I have gathered data by judgement. I have concerned the one those who aware about company’s working capital i.e. debtors, creditors, receivables, payables, stock cycle etc. I have done survey in different glass industry i.e. FG Glass Industry, NSD Global Trade Pvt Ltd to collect data.

Sample Size:

The study encompassed a representation of a sample of 30 respondents from Sejal Glass, FG Glass Industry and NSD Global Trade Pvt Ltd.

TABLE 1: Sample Size Distribution

Department No of Respondents

Production 5

Marketing and Distribution 15

Finance 20

Total 30

Source: Primary Data

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DATA COLLECTION

Sources of Data:There were mainly two major sources of data namely;

Primary Data:Primary data has been obtained through personal discussions with managers and senior officials of the organisation, observations and questionnaire both open ended and closed ended.

Secondary Data: Secondary data has been obtained from published reports like the annual reports of the company, balance sheets, and profit and loss account, websites, records such as files, reports maintained by the company.

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CHAPTER 3

SEJAL GLASS LIMITED

INTRODUCTION

In 1991, Mr. Amrut Gada, a first generation entrepreneur started with a small glass trading retail outlet, Sejal Glass House. Envisioning the demand for glass in the Indian Market, he expanded to a processing unit in Charkop, Mumbai with Sejal Glass Craft Pvt Ltd. Glass was being increasingly used in construction. Recognizing this trend quickly, SEJAL GLASS LTD was established.

Sejal Glass Limited, was incorporated as a private limited Company in the year 1998, and its was changed to a public limited company on March 08, 1999. Sejal glass is one of the leading glass processors and retailers in India. The Company is also set to venture into float glass manufacturing with the commencement of its float glass project in September 2009 at Bharuch, Gujarat. It will become an integrated player in the field, having presence right from the flat glass production to glass processing to retailing of glass products. With the float glass production capacity operational, Sejal will emerge among the top four float glass manufacturers in the country.

The company’s glass Processing unit is located in Silvassa, Gujarat . The plant has state of the art machines and equipment, imported from European manufacturers and the company’s processing facility is also certified by European Glass Manufacturers. The biggest advantage of the unit is its proximity to the A-grade cities of Gujarat and Maharashtra, enabling it to tap the demand and ensure faster response to major centres of real estate development through its products. The company is having processing facilities for insulating, toughened, laminated glasses and for decorative glass as well.

27

The Company has also operates its trading division from its premises named ‘Sejal Encasa', which is located at Kandiva li, Mumbai. It offers a comprehensive range of glass wares, decoration items, artworks, light fittings, chandeliers, mirrors, doors, luminaries, and other brands from renowned manufacturers. The strategy is to offer one-stop solutions in glass projects used outside or in the house or offices. Company is having strong distribution network around 300 dealers all over India.

On May 2011 the Company has transferred the entire business of manufacturing and selling of float glass, to Saint-Gobain Glass India Limited a 100% subsidiary of the France-based Compagnie de Saint Gobain, a world leader in Building Materials, by way of Slump Sale as defined under Section 2(42C) of the Income Tax Act, 1961 on a going concern basis w.e.f. May 31, 2011 for a total value of Rs.686 Crores. After this event, the Company is in the process of expanding the existing Value Addition of Glass business as well as developing new business.

Sejal alslo forayed into real-estate segment as a non-core activity during 2012-13. Being a supplier to all major real estate developers since the past decade, company has gained tremendous understanding of the operations, economies and key factors governing profitability in the segment. With the in-house professional team, they had already proved their project execution capability in the construction of the state of art float glass manufacturing facility in Bharuch, in the state of Gujarat as well as in the construction of the corporate office building in Mumbai.

Being non core business, they have decided to unlock value from these investments through joint-venture route as well as forming subsidiaries. They have entered into joint venture model with leading and respected real estate developers in Mumbai and Surat for society redevelopment projects, township projects.

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CLIENTS OF SEJAL GLASS

TABLE 2:

BUILDERS CORPORATES HOTELS ARCHITECTS

K Raheja Corp Emirates AirlinesITC Maratha Hotel

MumbaiVivek Bhole &

Associaes

Lodha BuildersStandard Chartered

BankITC Grand Central

Hotel MumbaiTalati & Panthaky

Kalpataru Builders J P Morgan Stanley Pride Hotel MumbaiNiteen Parulekar

Architects Pvt Ltd

HDIL Godrej & Boyce Park Hyatt Pune Ar. Reza Kabul

Keystone Realtors Pvt Ltd

Nimit Steel Cosmos Resort Goa

Wadhwa DevelopersAlok Infrastructure

LtdGranville Hotel Pvt

Ltd Mumbai

Ekta World Indian Broiler Group

Mayfair Housing Pvt Ltd

The Phoenix Mills Ltd

Vinayak Developers

Source: Secondary Data

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FIGURE 1:

30

Builders37%

Corporates 26%

Hotels22%

Architects15%

CLIENTS OF SEJAL GLASS

VISION & MISSION

Vision:

It is this vision of the Sezal Group to create a brand image for Sezal that evokes a sense of awe, blind faith and inspiration and to achieve for itself the position of industry leader in the field of value addition business of processed glass, by investing into integrated operations and deliver world-class products.

Processes, operating systems and procedures shall be adopted with the objective

of surpassing the exacting international standards for product and systems.

Creating and multiplying wealth of the company with continuous expansion for a better future of all stakeholders.

Mission:

To bring to our customers the benefits of industry leading technology from concepts to ralisation.

To provide to our customers the best of glass solutions.

To set standards in service to customers.

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MILESTONES

1998: Sejal Arhitectural Glass Limited, was incorporated as a private limited company in December 1998.

2000: Silvassa unit started its commercial operations by setting up a processing facility for insulating glass.

2001: Started another process for toughened glass in the year 2001.

2007: Added an automated lamination line &Started ‘Sejal Encassa’ the company’s retail showroom at Kandivali, Mumbai.

2008: Initiated backward integration by commencement of float glass project at Bharuch, Gujarat.Raised IPO funds of Rs. 105.73 cr.

2009: Completed the construction of our float glass plant.

2011: Float glass manufacturing plant sold to Saint-Gobain Glass India Limited in May due to low sales.

32

SWOT ANALYSIS

Strengths:

First generation entrepreneur Qualified and expert team of professional and management World-class technology and equipment Continuous innovation and quality control Strong branding Favorable demand & supply situation will keep the margins intact The Company is moving into production of float glass, which is a high growth segment.

Weakness:

No established reputation in float glass segment Competition from established players with global backing

33

Strengths Weakness

Opportunities Threats

Opportunities:

Strong entry barrier due to the capital-intensive nature of the industry Float glass production is going to put the company into a diverse trajectory

Threats:

Competition in processing from established international players Operational teething problems in the new plant

34

DRIVERS OF SEJAL FUTURE GROWTH

At Sejal, we feel the following factors will ensure our growth in the coming years: MEN: Our people collectively make our organization. We have always believed in recruiting quality people having the zeal to outperform and a passion to excel. In 2008-09, we focused on creating a strong management team, as a result recruited senior professionals with in depth experience in the glass industry. This initiative would enable us harness our intellectual capital to efficiently outperform the challenges in the industry.

METHOD: During the year, we focused on controlling costs and improving quality. We initiated steps to control inventory, reduce process costs and machine downtimes and ensuring efficient utilization of energy during the year. In doing this, our ERP system played a vital role in identifying addressable segments within the processes. The cost and quality consciousness at Sejal would sustain our efforts in creating a formidable brand in glass products.

MATERIAL: With the commencement of our float glass plant, we will command presence across the value chain of glass products. To ensure better results, we initiated a seeding activity with the dealers and distributors of float glass. Currently, we import float glass, which form the raw material for our processing division. With the commencement of the float glass plant, our dependence on imported products will decrease, resulting in higher margins and superior quality of the products. In addition, our ability to produce a range of quality products in decorative and façade glass, and specialty glass segments, would enable us reach deeper into the demand centres across India.

MACHINERY: As a conscious decision to create world-class quality products, we installed the best of machines and technology in our plants. With the difference in cost being substantial as compared to the Chinese machines, our plant would be able to ensure superior product quality, leading to higher realizations.

35

PRODUCTS OF SEJAL GLASS

36

37

FIVE YEARS FINANCIAL PERFORMANCE OF SEJAL GLASS

TABLE 3: (Rs in crores)

Financial Performance 2012-13 2011-12 2010-11 2009-10 2008-09

Profit & Loss Account

Gross Sales 62.67 44.86 279.62 44.89 37.11

Total Income 74.27 53.45 294.19 51.17 51.59

Depreciation 2.44 2.34 40.09 2.65 2.50

Interest 8.10 1.73 66.73 3.80 3.76

Profit Before Taxation -8.97 -0.57 -96.21 1.31 3.17

Profit After Taxation -16.00 -52.64 -63.90 2.52 2.12

Earning Per Share - - - 0.07 0.08

Balance Sheet

Fixed Assets 91.65 153.02 840.34 668.16 389.56

Investments 4.31 3.72 0.08 0.06 0.06

Net Current Assets -4.89 39.14 37.09 11.01 30.97

Net Deferred Tax Asset 22.42 29.35 31.22

Loan Funds 23.84 32.36 623.61 517.55 276.17

Provisions 0.35 0.31 - 1.09 2.47

Profit & Loss A/c 0 0 54.98

Net Worth 0 0 340.11 160.59 141.94

Share Capital 33.55 33.55 33.55 28.80 28.00

Share Warrant / Share Application Money

- - 1.45 4.20 -

Reserved and Surplus 138.06 197.53 305.11 127.59 113.94

Net Worth 171.61 231.08 340.11 160.59 141.94

Source: Secondary data

38

CHAPTER 4

DATA ANALYSIS AND INTERPRETATIONS

TABLE 4: Relationship between Receivables and Payables. (Rs. in crore)

Year Receivables Payables

2013-14 66 55

2012-13 35 30

2011-12 24 18

2010-11 32 121

2009-10 22 73

Total 179 297 Source: Secondary data

FIGURE 2:

2013-14 2012-13 2011-12 2010-11 2009-100

20

40

60

80

100

120

140

66

3524

3222

55

3018

121

73

ReceivalesPaybles

Years

Rs. i

n cr

ores

INTERPRETATION: There is not better relationship between receivables and payables.

Always receivables should be much more than payables. For effective working capital company should always count back debtor days and count forward creditor days. Company should always pull creditor days up to 90 days and customers days should not be extended above 60 days. Therefore company can maintain liquidity position. Here receivables are more so company should convert it into cash as soon as possible.

39

TABLE 5: Relationship between Short term borrowings and Short term loans & advances(Rs. In

crore)

Year Short term borrowings Short term loans & advances

2013-14 33 10.5

2012-13 32 26

2011-12 14 40

2010-11 96 67

2009-10 75 50

Total 250 193.5Source: Secondary Data

FIGURE 3:

2013-14 2012-13 2011-12 2010-11 2009-100

20

40

60

80

100

120

Short term borrowingsShort term loans & advances

Years

Rs. i

n cr

ores

INTERPRETAION:The relationship between short term borrowings and loans & advances is

not good. On average 50cr is borrowing and 38.5cr is loans & advances. For positive working capital, company should decrease borrowings and increase loans. Company should take care of borrowings, if they are borrowing they should clear suppliers payment.

40

TABLE 6: Cash Conversion Cycle

Year Days

2013-14 53

2012-13 135

2011-12 -357

2010-11 40

2009-10 47

Source: Secondary Data

FIGURE 4:

2013-14 2012-13 2011-12 2010-11 2009-10

-400

-300

-200

-100

0

100

200

CCC

Days

Years

No.

of

days

INTERPRETAION:Cash Conversion Cycle should be very effective to meet working capital

needs where it is absence over here. During 2011-12 CCC was very good i.e. payable period was more than receivables. CCC can be effective when it comes in negative. It meant payable days are more than receivables and inventory days.

41

TABLE 7: Relationship between Current Assets and Current Liabilities. (Rs. in Crore)

Years Current Assets Current Liabilities

2013-14 109 134

2012-13 91 96

2011-12 104 64

2010-11 161 123

2009-10 68 102

Total 532 520

Source: Secondary Data

FIGURE 5:

INTERPRETATION:On an average company’s working capital ratio is good. The relationship

between current assets and current liabilities is good. Average current assets is 532cr and current liabilities is 520cr so current assets is more than current liabilities. Average current ratio is 1.023 which should not be less than 1. This much ratio is enough to release fund from bank to meet day to day operations.

TABLE 8: Relationship between Total sales and Expenditure (Rs. In Crore)

42

2013-14 2012-13 2011-12 2010-11 2009-100

20

40

60

80

100

120

140

160

180

Current AssetsCurrent Liabilities

Years

Rs. I

n Cr

ores

Source: Secondary Data

FIGURE 6:

INTERPRETATION:Expenditure is the main cause for the company to getting into loss. There

is big gap between expenditure and total sales. On an average 112cr is the total sales and 118cr is the expenditure. In the year 2010-11 there was more sales still company is in loss because of more expenditure than sales. So company should take care of unnecessary expenses.

COMPARISON WITH COMPETITORS

43

2013-14 2012-13 2011-12 2010-11 2009-100.00

50.00

100.00

150.00

200.00

250.00

300.00

FIVE YEARS SALES PERFORMANCE

SalesExpense

YEARS

AM

OU

NT

Years Sales Expenses

2013-14 126.37 135.45

2012-13 62.67 73.73

2011-12 44.86 53.36

2010-11 279.62 283.58

2009-10 44.89 42.39

Total 558 589

Average 112 118

TABLE 9: Respondents from different Company

Respondents No. of Respondents

Sejal Glass Ltd. 20

NSD Glass Pvt. Ltd 5

FG Glass Pvt. Ltd. 5

Total 30

FIGURE 7:

67%

17%

17%

Percentage of Respondents

Sejal Glass Ltd.NSD Glass Pvt. LtdFG Glass Pvt. Ltd.

INTERPRETATION:From the above graph, more number of respondents from Sejal glass

that is 67%. 17% from FG glass and 16% from NSD glass. All employees were matured and well educated. Most of the employees have more than 3years experience. Respondents have cooperated well during the survey.

TABLE 10: Company’s Collection Period

44

RespondentsSejal Glass

(Frequency)%

NSD Glass(Frequency)

%FG Glass

(Frequency)%

0-30 days 9 50% 1 20% 0 0%

30-60 days 7 39% 4 80% 1 20%

60-90 days 0 0% 0 0% 2 40%

Above 90 days 2 11% 0 0% 2 40%

Source: Primary data

FIGURE 8:

0-30 days 30-60 days 60-90 days Above 90 days

0

1

2

3

4

5

6

7

8

9

10

Sejal GlassNSD GlassFG Glass

No. of Days

No.

of

Res

pon

den

ts

INTERPRETATION:From the above table 50% respondents of Sejal glass is saying collectin

money 0-30 days. It is excellent compare to others like NSD & FG Glass. 39% respondents said 30-60 days it is also good but 11% respondents said above 90 days. So company always should give less period to debtors where NSD Glass is doing better than Sejal Glass. NSD respondets said upto 60 days they have been given to debtors. So company should always count backward debtors days as far as possible to run company effectively.

TABLE 11: Company’s Payable Period

45

RespondentsSejal Glass

(Frequency)%

NSD Glass(Frequency)

%FG Glass

(Frequency)%

0-30 days 4 24% 1 20% 0 0%

30-60 days 8 47% 4 80% 2 40%

60-90 days 2 11% 0 0% 3 60%

Above 90 days 3 18% 0 0% 0 0%

Source: Primary data

FIGURE 9:

0-30 days 30-60 days 60-90 days Above 90 days

0

1

2

3

4

5

6

7

8

9

Sejal GlassNSD GlassFG Glass

Days

No.

of

Res

pon

den

ts

INTERPRETATION:From the above table 47% respondents of Sejal glass 80 % of NSD glass

they used to take 30-60 days. Sejal Glass is pulling credit days above 90 days whereas other competitors are not doing. Even though FG glass also extending upto 90 days. So company should always count forward creditors days as far as possible to run company effectively.

TABLE 12: Company’s Inventory Cycle

46

RespondentsSejal Glass

(Frequency)%

NSD Glass(Frequency)

%FG Glass

(Frequency)%

Less than 30 days

7 39% 1 20% 3 60%

30-60 days 8 44% 4 80% 2 40%

More than 60 days

3 17% 0 0% 0 0%

Source: Primary data

FIGURE 10:

Less than 30 days 30-60 days More than 60 days0

1

2

3

4

5

6

7

8

9

Inventory Cycle

Sejal GlassNSD GlassFG Glass

Days

No.

of

Res

pon

den

ts

INTERPRETATION:From the above table 39% of respondents of sejal, 20% of NSD and 60%

of FG glass taking less than 30 days its pretty good. 44% of sejal , 80% of NSD, and 60% said 30-60 days. Here Sejal is much better than others but it should not take more than 60 days where competitors are absence so it may opportunity for them. So company reduce inventory cycle by adopting advance technology or more employees.

TABLE 13: Credit Risk in Company

47

RespondentsSejal Glass

(Frequency)%

NSD Glass(Frequency)

%FG Glass

(Frequency)%

Bellow 5% 4 22% 5 100% 2 40%

5-10% 8 45% 0 0% 2 40%

Over 10% 6 33% 0 0% 1 20%

Source: Primary data

FIGURE 11:

Bellow 5% 5-10% Over 10%0

1

2

3

4

5

6

7

8

9

Sejal GlassNSD GlassFG Glass

Percentage

No.

of

Res

pon

den

ts

INTERPRETATION:From the above table more credit risk is in Sejal that is 33% respondents

said over 10% whereas NSD’s risk is bellow 5% . Even FG’s risk is also less compare to Sejal. If there are more credit risk then company should take advance receipts from customers or dealers so that these things may not be happened.

TABLE 14: Bad debt level in Company’s Accounts Receivables

48

RespondentsSejal Glass

(Frequency)%

NSD Glass(Frequency)

%FG Glass

(Frequency)%

Bellow 1% 1 6% 0 0% 1 20%

1%-5% 8 44% 5 100% 3 60%

6%-10% 5 28% 0 0% 1 20%

Over 10% 4 22% 0 0% 0 0%

Source: Primary data

FIGURE 12:

Bellow 1% 1%-5% 6%-10% Over 10%0

1

2

3

4

5

6

7

8

9

Sejal GlassNSD GlassFG Glass

Percentage

No.

of

Res

pon

den

tse

INTERPRETATION:From the above table the bad debt level of sejal glass is more compare to

others i.e. 1% to 10%. Whereas NSD bad debt level is upto 5%. This is also one the reason for Sejal glass to getting into loss. If there is more bad debts then company should take advance receipts from customers or dealers so that these things may not be happened.

49

TABLE 15: Discount Offer to Customers for Prompt Payment

RespondentsSejal Glass

(Frequency)%

NSD Glass(Frequency)

%FG Glass

(Frequency)%

Yes 15 83% 4 80% 2 40%

No 3 17% 1 20% 3 60%

Source: Primary data

FIGURE 13:

Yes No0

2

4

6

8

10

12

14

16

Sejal GlassNSD GlassFG Glass

No.

of

Res

pon

den

ts

INTERPRETATION: From the above table more than 80% of the respondents from Sejal and

NSD, they are providing discount offer for prompt payment is being made by customers. This one of the things attract customers to pay promptly. Company should provide offers like discounts, gifts, vouchers, coupons etc. So that company can maintain good liquidity position.

50

TABLE 16: Reminding customers by phone to pay the balance amount

RespondentsSejal Glass

(Frequency)%

NSD Glass(Frequency)

%FG Glass

(Frequency)%

Weekly 10 56% 4 80% 2 40%

Monthly 4 22% 1 20% 3 60%

Quarterly 4 22% 0 0% 0 0%

Annually 0 0% 0 0% 0 0%

Source: Primary data

FIGURE 14:

Yes No0

2

4

6

8

10

12

14

16

Sejal GlassNSD GlassFG Glass

No.

of

Res

pon

den

ts

INTERPRETATION:From the above table NSD’s 80% respondents , 56% of Sejal and 40% of

FG said weekly. Monthly is also good to remind customers but quarterly bad where 22% of Sejal respondents said quarterly. Company should call every week or month to inform customers about discount offers for early payment.

51

TABLE 17: How often does company review its working capital

RespondentsSejal Glass

(Frequency)%

NSD Glass(Frequency)

%FG Glass

(Frequency)%

Weekly 2 11% 5 100% 1 10%

Monthly 5 28% 0 0% 2 40%

Quarterly 6 33% 0 0% 2 40%

Whenever Necessary

5 28% 0 0% 0 0%

Source: Primary data

FIGURE 15:

Weekly Monthly Quarterly Whenever Necessary

0

1

2

3

4

5

6

7

Sejal GlassNSD GlassFG Glass

No.

of

Res

pon

den

ts

INTERPRETATION:From the above table 100% respondents of NSD said they are doing

weekly working capital review so that they can arrange fund from other sources whereas maximum respondents of Sejal said quareterly and whenever necessary. Company should review about working capital once in a week or 15days so that company can understand where fund is tied up.

52

CHAPTER 5

FINDINGS AND SUGGESTIONS

FINDINGS:

Sejal Glass limited sold their Float Glass manufacturing plant to Saint Gobain because it was continuous production plant so company could not have reduced their production where their sales was less because of more competition. They could not have reduced their fixed cost, so day by day expenditure was increasing, it was not their cup of tea to reduce the cost therefore they sold the plant.

After selling plant, company facing many problems from suppliers because of low capital they are unable to make payment on time so more than 50% of suppliers are not supplying on credit basis. So that company has to make payment in advance and on delivery.

Customers delaying invoice payment was deemed by survey respondents to have had a high or very high impact on working capital over the past 12 months. Similarly, customers exerting pressure on businesses to extend their credit and payment terms were also placing high or very high pressure on working capital.

The main problem from suppliers i.e. 80% suppliers are from India from that 70% suppliers allowing 30 - 45 days credit and for rest of them company has to make payment in advance. 20% suppliers from rest of the country from that 40% of suppliers allowing 60 - 90 days credit and for rest of them company has to make payment in advance.

Stretching credit period of suppliers is the main source to improve working capital but here it is not there. So this is one of the cause for working capital. Company spending a lot for unnecessary things therefore Company’s expenditure is also more than income since 3 years.

Since three years Receivables is more than Payables and borrowings is also more than advances & loans.

53

SUGGESTIONS:

Debtors & Receivables: Company should keep reminding customers about outstanding amount on a weekly basis. Company should call and inform customers about cash discount offered for early

payment. Company should try to convince customer for acceptance of bill so you can release cash

from bank with discount. Company should count back debtor days as far as possible.

Creditors & Payables: Because of long outstanding amount suppliers are not ready to supply on credit so

company should try to clear outstanding amount of suppliers so that they can ask more credit days as far as possible.

Company should maintain good relationship with suppliers, for that they have to make payment on due date.

Company should make payment on due date so they can escape from interest.

Inventory: Company should try to reduce inventory cycle. Company should ensure that on time delivery.

Liquidity: Company should maintain liquidity in bank so they can meet urgent needs.

Cash Conversion Cycle: Since 3 years inventory days and receivables days are more than payables days which

should be less. So they should work on it.

54

CHAPTER 6

CONCLUSION

Liquidity is an attribute that signifies the capacity to meet financial obligations of the company when required. The importance of liquidity to meet the day to day operations and urgent payment to suppliers. A firm should maintain adequate level of working capital to meet the day to day operations and maintain business operations. The effective management of working capital requires both medium-term planning and immediate reactions to the fast changes taking in the present business environment. The effectiveness of working capital depends on all current assets and current liabilities.

Sejal Glass Limited should not have sold their manufacturing plant to Saint Gobbain. They could have made joint-venture with them. After selling plant they are not able to pay to suppliers for materials on time. They are spending more for unnecessary things even though they are in loss. For effective working capital company needs to be taken care of current assets and current liabilities i.e. Receivables, Payables, Inventory, liquidity etc.

Sejal Glass should count back credit days of customers and they should keep reminding them about outstanding amount and they should give discount offers for early payment. Company should settle outstanding amount of suppliers and maintain good relationship then they should pull suppliers credit days as far as possible.

Raw materials used to be in factory for high period to convert into finished goods. Receivables days also more so more days tied up with inventory and receivables. Therefore Sejal Glass should be taken care of operating cycle and cash conversion cycle.

55

BIBLIOGRAPHY

Books:

Research Methodology- R.C. Kothari.

Research Methods In Business- Dhruv Shah, Rupal Jain.

Research Methodology- Michal Vaz, Madhu Nair.

Financial Management – Prasanna Chandra.

Journals:

CAMS Journal of Business Studies and Research ISSN : 0975-7953 July-September

Asian Journal of Management Research Volume 4 Issue 2, 2014

International Journal of Economics and Financial Issues, Vol. 2, No. 4, 2012, pp.488-495

Proceedings of the 3rd International Conference on Management and Economics (ICME

2014)

Annual Reports:

Sejal Glass limited Annual Report from 2009 to 2013

Websites:

www.google.com

www.wikipedia.com

www.fm-magazine.com

www.accountingtools.com

56

ANNEXURE

Questionnaire

Name: Date: …………Designation:

(Tick as Appropriate)Section-A: Personal Data

1. Your Age1) Bellow 25 yrs 2)25-29 yrs 3) 30-34 yrs 4) 35 yrs & Above

2. Gender1) Male 2) Female

3. What is Your Qualification?1) Undergraduate 2) Graduate 3) Post-Graduate

4. How long have you been working in this company? 1) Less than 3 yrs 2)3-5 yrs 3) Above 5 yrs

Section-B: Working Capital

5. How would you rate the level of importance by which working capital is placed in the organization?1) High 2) Average 3) Low 4) Not at all

6. How many days credit do you give to Customers/ Debtors?1) 0-30 days 2) 30-60 days 3)60-90 days 4) Above 90 days

7. Is there Bill of Exchange facility in your company? If yes, why don’t you release cash from bank against bill._______________________________________________________________________________________________________________________________________________

57

8. Do you charge interest if customers/ debtors will pay you after due date?1) Yes 2) No(If no why?) _____________________________________________________________

9. How many days credit do you take from Suppliers/ Creditors?1) 0-30 days 2) 30-60 days 3)60-90 days 4) Above 90 days

10. How often does your company remind customers to pay the balance amount?1) Weekly 2) Monthly 3) Quarterly 4) Annually

11. Do you give discount offer to customers/ Debtors for early payment?1) Yes 2) No If No why? ______________________________________________________________

12. What is stock cycle in your company?1) Less than 30 days 2) 31 days – 60 days 3) more than 60 days

13. Rate the percentage of credit risk in your company1) Less than 5% 2) 5-10% 3) Over 10%

14. What is the bad debt level in your accounts receivable? 1) Less than 1% 2) 1% - 5% 3) 6% - 10% 4) Over 10%

15. How many days do you take to convert into finished goods from the date of purchase of raw materials?1) Less than 10 days 2) 10 days - 20 days 3) more than 20 days

16. Do you use banking source to finance your working capital?1) Yes 2) NoIf No why?______________________________________________________________

17. How often does your company review its working capital policy?

1) Weekly 2) Monthly 3) Quarterly 4) Whenever necessary

58