CHAPTER-1INTRODUCTIONBACKGROUND OF STUDY:Whatever may be the organization, working capital plays an important role, as the company needs capital for its day to day expenditure. Thousands of companies fail each year due to poor working capital management practices. Entrepreneurs often don't account for short term disruptions to cash flow and are forced to close their operations. In simple term, working capital is an excess of current assets over the current liabilities. Good working capital management reveals higher returns of current assets than the current liabilities to maintain a steady liquidity position of a company. Otherwise, working capital is a requirement of funds to meet the day to day working expenses. So a proper way of management of working capital is highly essential to ensure a dynamic stability of the financial position of an organization. OPTCL is one of the largest power transmission organizations in the country, which plays the role of transmission of electricity in the entire state of Orissa. Seeing the good opportunity to study financial systems and practices of OPTCL, it is relatively important take up internship assignment on WORKING CAPITAL MANAGEMENT IN OPTCL. During the project work, it is being analyzed the working capital position of this organization. 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 money flow to satisfy both maturing short-term debt and upcoming operational expenses. Working capital management deals with maintaining the levels of working capital to optimum, because if a concern has inadequate opportunities and if the working capital is more than required then the concern will lose money in the form of interest on the blocked funds. Therefore working capital management plays a very important role in the profitability of a company. And also due to heavy competitions among different organizations it is now compulsory to look after working capitalRELEVANCE OF STUDYAt OPTCL a substantial part of the total assets are covered by current assets. Current assets form around 30%- 40% of the total assets. However this could be less profitable on the assumption that current assets generate lesser returns as compared to fixed assets. But in todays competition it becomes mandatory to keep large current assets in form of inventories so as to ensure smooth production an excellent management of these inventories has to be maintained to strike a balance between all the inventories required for the production.So, in order to manage all these inventories and determine the investments in each inventories, the system call for an excellent management of current assets which is really a tough job as the amount of inventories required are large in number.Here comes the need of working capital management or managing the investments in current assets. Thus in big companies like OPTCL it is not easy at all to implement a good working capital management as it demands individual attention on its different components.The study of working capital management is very helpful for the organisation to know its liquidity position. The study is relevant to the organization to know the day to day expenditure. This study is relevant to give an idea to utilise the current assets.This study is also relevant to the student as they can use it as a reference. This report will help in conducting further research. Other researcher can use this project as secondary data PROBLEM STATEMENT:Working capital management or simply the management of capital invested in current assets is the focus of study. So topic is to study working capital management of OPTCL.Working capital is the fund invested by a firm in current assets. Now in a cut throat competitive era where each firm competes with each other to increase their production and sales, holding of sufficient current assets have become mandatory as current assets include inventories and raw materials which are required for smooth production runs. Holding of sufficient current assets will ensure smooth and un interrupted production but at the same time, it will consume a lot of working capital. Here creeps the importance and need of efficient working capital management. Working capital management aims at managing capital assets at optimum level, the level at which it will aid smooth running of production and also it will involve investment of nominal working capital in capital assets.The problem generally explains that, less attention has been paid to the area of short-term finance, in particular that of working capital management. Such neglect might be acceptable were working capital considerations of relatively little importance to the firm, but effective working capital management has a crucial role to play in enhancing the profitability and growth of the firm. Indeed, experience shows that inadequate planning and control of working capital is one of the more common causes of business failure.HYPOTHESIS OF THE STUDY: The following are the hypothesis of the study1) The firm is facing difficulty in paying short-term debt.2) The firm is not properly managing the sundry debtor.3) The current liabilities are increasing than current assets year by year.OBJECTIVE OF THE STUDY: Everything in life holds some kinds of objectives to be fulfilled. This study is not an exception to it. The following are a few straight forward goals which i have tried to fulfil in my project: 1) To study the various components of working capital.2) To analyze the liquidity trend.3) To analyze the working capital trend.4) To appraise the utilization of current asset and current liabilities and find out short-comings if any.5) To suggest measure for effective management of working capital.
LIMITATIONS OF THE STUDY:-Following are the limitations of the study:1) The topic working capital management is itself a very vast topic yet very important also. Due to time restraints it was not possible to study in depth in get knowledge what practices are followed at OPTCL.2) Many facts and data are such that they are not to be disclosed because of the confidential nature of the same.3) Since the financial matters are sensitive in nature the same could not acquired easily.4) The study is restricted to only the Four Year data of OPTCL.
CHAPTERISATION:Following are the chapterisation of the study:Chapter-1 represents the background of the study, relevance of the study, problem statements, hypothesis, objectives as well as limitations of the study.Chapter-2 represents company profile of OPTCL.Chapter-3 represents review of literature.Chapter-4 represents research methodology of the study including sources of data collection, formulas and statistical tools used for data analysis. Chapter -5 represents results and findings.Chapter -6 represents conclusion and suggestion.Chapter -7 represents implication for future research.
CHAPTER-2COMPANY PROFILEORISSAPOWERTRANSMISSIONCORPORATIONLIMITED.(OPTCL)Registered Office: Janpath, Bhubaneswar - 751022 Phone : (0674)- 2541320 / 2542320 ORISSA POWER TRANSMISSION CORPORATION LIMITED (OPTCL), one of the largest Transmission Utility in the country was incorporated in March 2004 under the Companies Act, 1956 as a company wholly owned by the Government of Orissa to undertake the business of transmission and wheeling of electricity in the State. Started commercial operation from 01.04.2005 only as a Transmission Licensee. (a deemed Transmission Licensee under Section 14 of Electricity Act, 2003) Notified as the State Transmission Utility (STU) by the State Govt. and discharges the State Load Dispatch functions. The registered office of the Company is situated at Bhubaneswar, the capital of the State of Orissa. Its projects and field units are spread all over the State. OPTCL became fully operational with effect from 9th June 2005 consequent upon issue of Orissa Electricity Reform (Transfer of Transmission and Related Activities) Scheme, 2005 under the provisions of Electricity Act, 2003 and the Orissa Reforms Act, 1995 by the State Government for transfer and vesting of transmission related activities of GRIDCO with OPTCL. The Company has been designated as the State Transmission Utility in terms of Section 39 of the Electricity Act, 2003. Presently the Company is carrying on intra state transmission and wheeling of electricity under a license issued by the Orissa Electricity Regulatory Commission. The Company is also discharging the functions of State Load Despatch Centre. The Company owns Extra High Voltage Transmission system and operates about 9550.93 ckt kms of transmission lines at 400 kV, 220 kV, 132 kV levels and 81 nos. of substations with transformation capacity of MVA. The day-to-day affairs of the Company are managed by the Managing Director assisted by whole-time Functional Directors as per the advice of the Board of Directors constituted. They are in turn assisted by a team of dedicated and experienced professionals in the various fields.
VISION AND MISSION OF OPTCL:VISION:1)To build up OPTCL as one of the best transmission utility in the country in terms of uninterrupted power supply, minimizing the loss, contributing states industrial growth.2)Development of a well coordinated transmission system in the backdrop of formation of strong National Power Grid as a flagship, endeavour to steer the development of Power System on Planned path leading to cost effective fulfilment of the objective of 'Electricity to All at affordable price.MISSION:Plan & operate the Transmission system so as to ensure that transmission system built, operated and maintained to provide efficient, economical and coordinated system of Transmission and meet the overall performance Standards.
(i) To upgrade the transmission system network so as to handle power to the tune of 3000 MW for 100% availability of power to each family.
(ii) To impart advanced techno managerial training to the practicing engineers and work force so as to professionalism them with progressive technology and capable commercial organization of the country so as to build up the most techno-commercially viable model of the countryOBJECTIVES OF OPTCL:To effectively operate Transmission lines and Sub-Stations in the State for evacuation of power from the state generating stations feed power to state distribution companies, wheeling of Power to other states, maintenance of the existing lines and sub-stations for power transmission and to undertake power system improvement by renovation, up-gradation and modernization of the transmission network.OPTCL being a State Transmission Utility Public Authority has set the following objectives.Undertake transmission and wheeling of electricity through intra- State Transmission system1) Discharge all functions of planning and coordination relating to Intra State, inter State transmission system with Central Transmission Utility, State Govt. Generating Companies, Regional Power Board, Authority, Licensees or other person notified by State Govt. in this behalf. 2) Ensure development of an efficient and economical system of intra state and inter State transmission lines for smooth flow of electricity from generating station s to the load centres. 3) Provide non-discriminatory open access to its transmission system for use by any licensee or generating company or any consumer as and when such open access is provided by the State Commission on payment of transmission charges/surcharge as may be specified by the State Commission. 4) Exercise supervision and control over the intra-state transmission system, efficient operation and maintenance of transmission lines and substations and operate State Load Despatch Centres to ensure optimum scheduling and despatch of electricity and to ensure integrated operation of power systems in the State. 5)Restore power at the earliest possible time through deployment of emergency Restoration system in the event of any Natural Disasters like super cyclone, flood etc. POWER SECTOR REFORM IN THE STATE:
The Power Sector Reforms in the State of Orissa was started during November 1993 in an organized manner. The main objective of the reform was to unbundle generation, transmission and distribution and to establish an independent and transparent Regulatory Commission in order to promote efficient and accountability in the Power Sector.In order to implement the reform, in the first phase, two corporate entities namely Grid Corporation of Orissa Limited (GRIDCO) and Orissa Hydro Power Corporation Limited (OHPC) were established in April 1995. GRIDCO was incorporated under the Companies Act, 1956 in April 1995 to own and operate the transmission and distribution systems in the State. Similarly OHPC was incorporated to own and operate all the hydro generating stations in the State.The State Government enacted the Orissa Electricity Reform Act, 1995 which came into force with effect from 1.4.1996. In exercise of power under Section 23 and 24 of the Orissa Electricity Reform Act, 1995,the State Govt. notified the Orissa Electricity Reform (Transfer of Undertakings, Assets, Liabilities, proceedings and Personnel ) Scheme Rules 1996. As per the scheme, the transmission ,distribution activities of the erstwhile OSEB along with the related assets, liabilities, personnel and proceedings were vested on GRIDCO . Simultaneously the hydro generation activities of OSEB along with related assets, liabilities, personnel and proceedings were vested on OHPC.In order to privatize the distribution functions of electricity in the State, four Distribution Companies namely Central Electricity Supply Company of Orissa Limited (CESCO), North Eastern Electricity Supply Company of Orissa Limited (NESCO), southern Electricity Supply Company of Orissa limited (SOUTHCO) & Western Electricity Supply Company Orissa Limited (WESCO) were incorporated under the Companies Act, 1956 as separate corporate entities. During November 1998 the State Govt. issued the Orissa Electricity Reform (Transfer of Assets, Liabilities, Proceedings and Personnel of GRIDCO to distribution Companies) Rules 1998 wherein the electricity distribution and retail supply activities along with the related assets, liabilities, personnel and proceedings were transferred from GRIDCO to the four Distribution Companies. Through a process of international Competitive Bidding (ICB), the four Distribution Companies were privatized during 1999. After separation of Distribution business, GRIDCO left with electricity Transmission and Bulk Supply/Trading activities. GRIDCO was also declared as the State Transmission Utility and was discharging the functions of State Load Despatch Centre (SLDC).The Government of India enacted the Electricity Act, 2003 which came into effect from 10th June 2003. Under the provisions of the said Act, trading in electricity has been recognised as a distinct licensed activity, which can only be undertaken by a licensee to be granted by the appropriate commission. The Act specifically prohibits the STU and Transmission Company in the State from engaging in the business of trading. GRIDCO being a State Transmission Utility was not permitted to engage itself in the trading in electricity and was required to segregate its activities in a manner within the transional period allowed under the Act that, the entity which will undertake transmission STU and SLDC function will not undertake the activities of Trading and Bulk Supply of Electricity.Keeping in view the statutory requirement of the Electricity Act for separation of trading and transmission functions into two separate entities, the State Govt incorporated Orissa Power Transmission Corporation Limited (OPTCL) to take over the transmission, STU/SLDC functions of GRIDCO. In exercise of the power conferred under Section 39,131, 133 & 134 of the Electricity Act, 2003, read with Section 23 & 24 of the Orissa Electricity Reform Act , 1995, the State Govt. issued the notification Orissa Electricity Reform (Transfer of Transmission and Related Activities) Scheme 2005 on 9.6.2005. The Scheme was made effective from 1.4.2005.By virtue of the Transfer Scheme, 2005, OPTCL now undertaking the functions of transmission of electricity in the State of Orissa and has been declared as the State Transmission Utility. GRIDCO is also discharging the functions of SLDC.
REFORM ACHIEVEMENT:Milestones of Orissa Power Sector Reform1) First Transfer between OHPC and GRIDCO effected on 1st April, 19962)OER Act, 1995 created Orissa Electricity Regulatory Commission,a Regulatory Body which became functional on 1.8.19963) Unbundling of Transmission and Distribution via Second Transfer Schemeeffective from November 26, 1998 4)9 Tariff Orders after public hearing have been passed by OERC(FY98, FY99, FY00, FY01, FY02, FY03, FY04, FY05, FY06) 5) BSES took over management and operational control of 3 Distribution Companies (WESCO, SOUTHCO and NESCO) from April 1, 1999 6) Privatization of Distribution completed with AES taking over thefourth distribution company, CESCO from September 1, 1999 7) CESCO remained under the management of an Administrator (CEO)appointed by OERC with effect from 27.8.20018)A new public limited company under the name Orissa Power TransmissionCorporation Limited was incorporated on 29.03.2004 to carry on thebusiness of Transmission, STU, and SLDC functions of GRIDCO
9) OPTCL became functional on 1.4.2005. GRIDCO continue to carry onits Bulk Supply and Trading functions
CHAPTER-3: REVIEW OF LITERATURE The purpose of this chapter is to present a review of literature relating to the working capital management. The following are the literature review by different authors and different research scholars.Pass C.L., Pike R.H[footnoteRef:1] (1984), studied that over the past 40 years major theoretical developments have occurred in the areas of longer-term investment and financial decision making. Many of these new concepts and the related techniques are now being employed successfully in industrial practice. By contrast, far less attention has been paid to the area of short-term finance, in particular that of working capital management. Such neglect might be acceptable were working capital considerations of relatively little importance to the firm, but effective working capital management has a crucial role to play in enhancing the profitability and growth of the firm. Indeed, experience shows that inadequate planning and control of working capital is one of the more common causes of business failure. [1: Pass C.L., Pike R.H: An overview of working capital management and corporate financing (1984).]
Herzfeld B[footnoteRef:2] (1990), studied that Cash is king--so say the money managers who share the responsibility of running this country's businesses. And with banks demanding more from their prospective borrowers, greater emphasis has been placed on those accountable for so-called working capital management. Working capital management refers to the management of current or short-term assets and short-term liabilities. In essence, the purpose of that function is to make certain that the company has enough assets to operate its business. Here are things you should know about working capital management. [2: Herzfeld B; How to Understand Working Capital Management (1990).]
Samiloglu F.and Demirgunes K[footnoteRef:3] (2008), studied that the effect of working capital management on firm profitability. In accordance with this aim, to consider statistically significant relationships between firm profitability and the components of cash conversion cycle at length, a sample consisting of Istanbul Stock Exchange (ISE) listed [3: Samiloglu F. and Demirgunes K., The Effect of Working Capital Management on Firm Profitability: Evidence from Turkey (2008)]
Appuhami, Ranjith B[footnoteRef:4] (2008), studied impact of firms' capital expenditure on their working capital management. The author used the data collected from listed companies in the Thailand Stock Exchange. The study used Schulman and Cox's (1985) Net Liquidity Balance and Working Capital Requirement as a proxy for working capital measurement and developed multiple regression models. The empirical research found that firms' capital expenditure has a significant impact on working capital management. The study also found that the firms' operating cash flow, which was recognized as a control variable, has a significant relationship with working capital management. [4: Appuhami, Ranjith B A; The Impact of Firms' Capital Expenditure on Working Capital Management: An Empirical Study across Industries in Thailand, (2008)]
Hardcastle J[footnoteRef:5] (2009)., studied that Working capital, sometimes called gross working capital, simply refers to the firm's total current assets (the short-term ones), cash, marketable securities, accounts receivable, and inventory. While long-term financial analysis primarily concerns strategic planning, working capital management deals with day-to-day operations. By making sure that production lines do not stop due to lack of raw materials, that inventories do not build up because production continues unchanged when sales dip, that customers pay on time and that enough cash is on hand to make payments when they are due. Obviously without good working capital management, no firm can be efficient and profitable. [5: Hardcastle; Working Capital Management,(2009).]
Thachappilly G[footnoteRef:6] (2009)., Working Capital Management Manages Flow of Funds,(2009) describes that Working capital is the cash needed to carry on operations during the cash conversion cycle, i.e. the days from paying for raw materials to collecting cash from customers. Raw materials and operating supplies must be bought and stored to ensure uninterrupted production. Wages, salaries, utility charges and other incidentals must be paid for converting the materials into finished products. Customers must be allowed a credit period that is standard in the business. Only at the end of this cycle does cash flow in again [6: Thachappilly G. Working Capital Management Manages Flow of Funds,(2009)]
Beneda, Nancy; Zhang, Yilei[footnoteRef:7] (2008), studied impact of working capital management on the operating performance and growth of new public companies. The study also sheds light on the relationship of working capital with debt level, firm risk, and industry. Using a sample of initial public offerings (IPO's), the study finds a significant positive association between higher levels of accounts receivable and operating performance. The study further finds that maintaining control (i.e. lower amounts) over levels of cash and securities, inventory, fixed assets, and accounts. [7: Beneda, Nancy; Zhang, Yilei, Working Capital Management, Growth and Performance of New Public Companies, Credit & Financial Management Review, (2008)]
Dubey R[footnoteRef:8] (2008)., studied The working capital in a firm generally arises out of four basic factors like sales volume, technological changes, seasonal, cyclical changes and policies of the firm. The strength of the firm is dependent on the working capital as discussed earlier but this working capital is itself dependent on the level of sales volume of the firm. The firm requires current assets to support and maintain operational or functional activities. By current assets we mean the assets which can be converted readily into cash say within a year such as receivables, inventories and liquid cash. If the level of sales is stable and towards growth the level of cash, receivables and stock will also be on the high. [8: Dubey R, Working Capital Management-an Effective Tool for Organisational Success (2008)]
McClure B[footnoteRef:9] (2007)., Working Capital Works describes that Cash is the lifeline of a company. If this lifeline deteriorates, so does the company's ability to fund operations, reinvest and meet capital requirements and payments. Understanding a company's cash flow health is essential to making investment decisions. A good way to judge a company's cash flow prospects is to look at its working capital management (WCM). Cash is king, especially at a time when fund raising is harder than ever. Letting it slip away is an oversight that investors should not forgive. Analyzing a company's working capital can provide excellent insight into how well a company handles its cash, and whether it is likely to have any on hand to fund growth and contribute to shareholder value. [9: McClure B, Working Capital Works (2007)]
Gass D[footnoteRef:10] (2006)., studied "Cash is the lifeblood of business" is an often repeated maxim amongst financial managers. Working capital management refers to the management of current or short-term assets and short-term liabilities. Components of short-term assets include inventories, loans and advances, debtors, investments and cash and bank balances. Short-term liabilities include creditors, trade advances, borrowings and provisions. The major emphasis is, however, on short-term assets, since short-term liabilities arise in the context of short-term assets. It is important that companies minimize risk by prudent working capital management. [10: Gass D, How To Improve Working Capital Management (2006)]
Maynard E. Refuse[footnoteRef:11] (1996), Argued that attempts to improve working capital by delaying payment to creditors is counter-productive to individuals and to the economy as a whole. Claims that altering debtor and creditor levels for individual tiers within a value system will rarely produce any net benefit. Proposes that stock reduction generates system-wide financial improvements and other important benefits. Urges those organizations seeking concentrated working capital reduction strategies to focus on stock management strategies based on lean supply-chain techniques. [11: Maynard E. Rafuse, Working capital management: an urgent need to refocus Management Decision, (1996)]
Thomas M. Krueger[footnoteRef:12] (2005), studied distinct levels of WCM measures for different industries, which tend to be stable over time. Many factors help to explain this discovery. The improving economy during the period of the study may have resulted in improved turnover in some industries, while slowing turnover may have been a signal of troubles ahead. Our results should be interpreted cautiously. Our study takes places over a short time frame during a generally improving market. In addition, the survey suffers from survivorship bias only the top firms within each industry are ranked each year and the composition of those firms within the industry can change annually. [12: Thomas M. Krueger, An Analysis of Working Capital Management Results Across Industries American Journal of Business, (2005)]
Eljelly[footnoteRef:13] (2002) empirically examined the relationship between profitability and liquidity, as measured by current ratio and cash gap (cash conversion cycle) on a sample of 929 joint stock companies in Saudi Arabia. Using correlation and regression analysis, Eljelly [9]found significant negative relationship between the firm's profitability and its liquidity level, as measured by current ratio. This relationship is more pronounced for firms with high current ratios and long cash conversion cycles. At the industry level, however,he found that the cash conversion cycle or the cash gap is of more importance as a measure of liquidity than current ratio thataffects profitability. The firm size variable was also found to have significant effect on profitability at the industry level. [13: Eljelly; cash conversion cycle year (2002.)]
Lazaridis and Tryfonidis [footnoteRef:14](2004), conducted a cross sectional study by using a sample of 131 firms listed on the Athens Stock Exchange for the period of 2001 - 2004 and found statistically significant relationship between profitability, measured through gross operating profit, and the cash conversion cycle and its components (accounts receivables, accounts payables, and inventory). Based on the results analysis of annual data by using correlation and regression tests, they suggest that managers can create profits for their companies by correctly handling the cash conversion cycle and by keeping each component of the conversion cycle (accounts receivables, accounts payables, and inventory) at an optimal level. [14: Lazaridis and Tryfonidis, cash conversion cycle year (2004)]
Raheman and Nasr[footnoteRef:15] (2004), studied the effect of different variables of working capital management including average collection period, inventory turnover in days, average payment period, cash conversion cycle, and current ratio on the net operating profitability of Pakistani firms. They selected a sample of 94 Pakistani firms listed on Karachi Stock Exchange for a period of six years from 1999 - 2004 and found a strong negative relationship between variables of working capital management and profitability of the firm. They found that as the cash conversion cycle increases, it leads to decreasing profitability of the firm and managers can create positive value for the shareholders by reducing the cash conversion cycle to a possible minimum level. [15: Raheman and Nasr; variables of working capital management year ( 2004).]
Garcia-Teruel and Martinez-Solano[footnoteRef:16](1996) collected a panel of 8,872 small to medium-sized enterprises (SMEs) from Spain covering the period 1996 - 2002. They tested the effects of working capital management on SME profitability using the panel data methodology. The results, which are robust to the presence of endogeneity, demonstrated that managers could create value by reducing their inventories and the number of days for which their accounts are outstanding. Moreover, shortening the cash conversion cycle also improves the firm's profitability. [16: Garcia-Teruel and Martinez-Solano; working capital management of SMEs year 1996.]
Falope and Ajilore[footnoteRef:17] (2003), used a sample of 50 Nigerian quoted non-financial firms for the period 1996 -2005. Their study utilized panel data econometrics in a pooled regression, where time-series and cross-sectional observations were combined and estimated. They found a significant negative relationship between net operating profitability and the average collection period, inventory turnover in days, average payment period and cash conversion cycle for a sample of fifty Nigerian firms listed on the Nigerian Stock Exchange. Furthermore, they found no significant variations in the effects of working capital management between large and small firms. [17: Falope and Ajilore: utilisation of resources year 2003]
Kouma Guy[footnoteRef:18], (2001) in a study on, Working capital management in healthcare, Working capital is the required to finance the day to day operations of an organization. Working capital may be require to bridge the gap between buying of stocked items to eventual payment for goods sold on account. Working capital also has to fund the gap when products are on hand but being held in stock. Products in stock are at full cost, effectively they are company cash resources which are out of circulation therefore additional working capital is required to meet this gap which can only be reclaimed when the stocks are sold (and only if these stocks are not replaced) and payment for them is received. Working capital requirements have to do with profitability and much more to do with cash flow. [18: ) Kouma Guy, (2001)Working capital management in healthcare [email protected] Volume 5; page No 76-89]
Mehmet SEN, Eda ORUC (2005)[footnoteRef:19] in the study Relationship between the efficiency of working capital management and company size, As it is known, one of the reasons which cause change in working capital from one period to another is the change in management efficiency. The change in management efficiency will affect the change in working capital in a way as increaser or reducer from on period to another. In this study, the effect of change in management efficiency in working capital management in to the change in working capital is compared by company size and sectors. The data of this study covers sixty periods as the total of quarterly financial statement of 55 manufacturing companies which were in operation in Istanbul Stock exchange (ISE) between the years 1993 and 2007. In every period we studied, for inventories short term commercial receivables and short term commercial liabilities, and calculated the effect of change in management efficiency on to the effect of working capital change. In all sectors considered, in the change in working capital, and observed the effect of reducing of efficiency in inventory management. It is also observed that efficiency change in the management of the short term commercial receivables and the short term commercial liabilities by the company sizes and sectors make a positive effect in to the change in working capital [19: Mehmet SEN, Eda ORUC (2005) Relationship between the efficiency of working capital management and company size, [email protected] Volume 2; Pages No 32-42]
Brealey, R., (1997)[footnoteRef:20] in a study on, Working Capital management concepts work sheet university of phoenix. Concept application of concept in the Simulation reference to concept in reading cash conversion cycle cash conversions is the process of managing a companys cash inflows and outflows. In the simulation, the finance manager was responsible for balancing sales with collections or accounts receivables (cash inflows) and purchases with payments or accounts payables (cash outflows). This delicate balance maintains the companys balance sheet keeping the cash and loans in a situation of financial stability and keeping the money from being tied up. Principles of corporate finance. Working capital management. New York: McGraw-Hill. [20: Brealey, R., (1997) Working capital management Working Capital management concepts work sheet university of phoenix. Volume 1; Pages No 123-128]
CHAPTER-4RESEARCH METHODOLOGY Research methodology is a systematic approach in management research to achieve pre-defined objectives. It helps a researcher to guide during the course of research work. Rules and techniques stated in research methodology save time and labour of the researcher as researcher know how to proceed to conduct the study as per the objective.SELECTION OF TOPIC: The selection of topic is a crucial factor in any research study. There should be newness and it should give maximum scope to explore the ideas from different angles.In present day due to increase in competition, working capital is becoming necessary for the organisation. It is that part of capital which is necessary to undertake day to day expenditure of the business organization. Whatever may be the organization, working capital plays an important role, as the company needs capital for its day to day expenditure. Thousands of companies fail each year due to poor working capital management practices. Entrepreneurs often don't account for short term disruptions to cash flow and are forced to close their operations. Working capital is the fund invested by a firm in current assets. Now in a cut throat competitive era where each firm competes with each other to increase their production and sales, holding of sufficient current assets have become mandatory as current assets include inventories and raw materials which are required for smooth production runs. Holding of sufficient current assets will ensure smooth and un interrupted production but at the same time, it will consume a lot of working capital. Here creeps the importance and need of efficient working capital management. After due to consultation with the external guide /internal guide, the topic was finalized and titled as-A STUDY ON WORKING CAPITAL MANAGEMENT IN OPTCL, BBSRSELECTION OF LOCATION FOR THE STUDY: The location for study was selected as the corporate office of OPTCL, Bhubaneswar.RESEARCH DESIGN: A Research design is the arrangement of conditions for collection and analysis of data in a manner that aims to combine relevance to the research purpose with economy in procedure The research design followed to study the working capital management in ORISSA POWER TRANSMISSION CORPORATION LIMITED (OPTCL) is Descriptive and Analytical Research Design.SOURCES OF DATA COLLECTION:1. Secondary data collectionSecondary data collection:The secondary data are those which have already collected and stored. Secondary data easily get those secondary data from records, journals, annual reports of the company etc. It will save the time, money and efforts to collect the data. Secondary data also made available through trade magazines, annual reports, books etc.
This project is based secondary data collected through annual reports of the organization. The data collection was aimed at study of working capital management of the company.
Project is based on
1. Annual report of OPTCL. 2006-20072. Annual report of OPTCL 2007-20083. Annual report of OPTCL. 2008-20094. Annual report of OPTCL. 2009-2010
FORMULAS OF RATIO ANALYSIS & DEFINITIONRATIO:Ratio analysis is the powerful tool of financial statements analysis. A ratio is define as the indicated quotient of two mathematical expressions and as the relationship between two or more things. The absolute figures reported in the financial statement do not provide meaningful understanding of the performance and financial position of the firm. Ratio helps to summaries large quantities of financial data and to make qualitative judgment of the firms financial performance.
ROLE OF RATIO ANALYSIS Ratio analysis helps to appraise the firms in the term of there profitability and efficiency of performance, either individually or in relation to other firms in same industry. Ratio analysis is one of the best possible techniques available to management to impart the basic functions like planning and control. As future is closely related to the immediately past, ratio calculated on the basis historical financial data may be of good assistance to predict the future. E.g. On the basis of inventory turnover ratio or debtors turnover ratio in the past, the level of inventory and debtors can be easily ascertained for any given amount of sales. Similarly, the ratio analysis may be able to locate the point out the various arias which need the management attention in order to improve the situation. E.g. Current ratio which shows a constant decline trend may be indicate the need for further introduction of long term finance in order to increase the liquidity position. As the ratio analysis is concerned with all the aspect of the firms financial analysis liquidity, solvency, activity, profitability and overall performance, it enables the interested persons to know the financial and operational characteristics of an organization and take suitable decisions.LIQUDITY RATIO:Liquidity refers to ability of a concern to meet its current obligations as and when these become due. The short-term obligations are met by realising amounts from current, floating or circulating asset. The current asset either be liquid or near liquidity. These should be convertible into cash for paying obligation of short-term nature. To measure the liquidity of a firm, following ratios can be calculated:A) CURRENT RATIO: Current assets include cash and those assets which can be converted in to cash within a year, such marketable securities, debtors and inventories. All obligations within a year are include in current liabilities. Current liabilities include creditors, bills payable accrued expenses, short term bank loan income tax liabilities and long term debt maturing in the current year. Current ratio indicates the availability of current assets in rupees for every rupee of current liability. CURRENT RATIO=CURRENT ASSET/ CURRENT LIABILITIES
B) QUICK RATIO OR ACID TEST: Quick ratios establish the relationship between quick or liquid assets and liabilities. An asset is liquid if it can be converting 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 include in quick assets are debtors and bills receivable and marketable securities. Inventories are considered as less liquid. Inventory normally required some time for realizing into cash. Their value also be tendency to fluctuate. The quick ratio is found out by dividing quick assets by current liabilities. QUICK RATIO=total liquid asset/ total current liabilitiesC) ABSOLUTE LIQUID ASSET: Even though debtors and bills receivables are considered as more liquid then inventories, it cannot be converted in to cash immediately or in time. Therefore while calculation of absolute liquid ratio only the absolute liquid assets as like cash in hand cash at bank, short term marketable securities are taken in to consideration to measure the ability of the company in meeting short term financial obligation. It calculates by absolute assets dividing by current liabilities. ABSOLUTE LIQUID RATIO=absolute liquid asset/ total current liabilitiesEFFICIENCY RATIO: Funds are invested in various assets in business to make sales and earn profits. The efficiency with which assets are managed directly affects the volume of sale. Activity ratios measure the efficiency and effectiveness with which a firm manages its resources or assets. These ratios are also called turnover ratios.A) DEBTORS TURNOVER RATIO: Receivable turnover ratio provides relationship between credit sales and receivables of a firm. It indicates how quickly receivables are converted into sales. DEBTORS TURNOVER RATIO= SALES/ AVERAGE ACCOUNT RECEIVABLES. AVERAGE A/C RECEIVABLES= opening trade debtor+ Closing trade debtor/2AVERAGE COLLECTION PERIOD= (365/DTR) daysOr RECEIVABLES * 365/ saleB) WORKING CAPITAL TURNOVER RATIO: It signifies that for an amount of sales, a relative amount of working capital is needed. If any increase in sales contemplated working capital should be adequate and thus this ratio helps management to maintain the adequate level of working capital. The ratio measures the efficiency with which the working capital is being used by a firm. It may thus compute net working capital turnover by dividing sales by net working capital.WORKING CAPITALTURNOVER RATIO=cost of sales/ net working capital
CURRENT ASSET TURNOVER RATIO: CURRENT ASSET TURNOVER RATIO= sales / current assetSTATISTICAL TOOLS USED FOR DATA ANAYLSIS:The various statistical tools used for data analysis is as follows:a) Tables:b) Bar-chartc) Graphsd) Correlation
ANALYTICAL TOOLS USED:The analytical tools used for data analysis is as follows:a) Ratio analysisb) Schedule of change in working capitalc) Cash flow statements
CHAPTER-5RESULTS AND FINDINGSThe result and discussion of the study is presented in five different sections. The first sections explain about the various components of working capital, variable of working capital. The second section explains about the liquidity trend of the organization. The third section explains about the working capital trend .The fourth section explains the utilization of current assets and current liabilities. The fifth section explains the measure to effective management of working capital.The first section explains about the various components of working capital and variables of working capital. The components of working capital are presented in Table 5.1. (TABLE 5.1: COMPONENTS OF WORKING CAPITAL)Table 1.12006-2007(rs)2007-2008(Rs)2008-2009(Rs)2009-2010(Rs)
Cash648,276,812490,881,183907,019,750727,106,129
Debtors7981962011,05,24,79,9821,05,50,97,4731,05,56,31,698
Inventories75106469076,68,65,26280,85,19,27896,90,56,460
sundry Creditors61,03,22,49666,51,67,98068,95,26,59772,40,51,456
Provisions83,08,65,8191,30,45,17,7444,81,70,02,6035,69,56,67,475
An insight into the table reveals that:a) Cash and bank balances in 2006-2007 were Rs 648276812. It is decreased to Rs 490,881183. With a-24.27% growth. In 2008-2009 it increased to Rs 907,019,750. And then it suddenly decreased to Rs 727,106,129.b) Debtors increases which was not a good sign. In 2006-2007 debtors were Rs 79,81,96,201 and it increased Rs 105,24,79,982 a total increase in Rs 254283781. In 2008-2009 it was Rs 1,05,50,97,473. And in 2009-2010 it again increased to Rs 1,05,56,31,698.c) Inventories were increased at a good speed. The inventories were Rs 79,81,96,201 in 2006-2007. In 2007-2008 it increased to Rs 76,68,65,262, ultimately increase in Rs 15800572, with the percentage growth 2.10%. In 2008-2009 it increased to Rs 80,85,19,278 with the increase in 7.7% . in 2009-2010 it again increased to 96,90,56,460 with a increase in 29%.d) Sundry creditors also increased a lot. In 2006-2007 it was Rs 61, 03, 22,496. Then it increased by Rs 5,4 8,45,484 which ultimately amounted to Rs 66,51,67,980 with a increase of 8.99%. in the year 2007-2008. In 2008-2009 it increased to Rs 68,95,26,597 with a percentage increase of 12.98%. in 2009-2010 it again increase to Rs 72,40,51,456.e) Provisions also increased throughout this 4years. In 2006-2007 it was Rs83,08,65,819. Then it increased to Rs 1,30,45,17,744 with a percentage increase of 57%. In 2008-2009 it again increased to Rs4,81,70,02,603 with a percentage increase in 479%. In 2009-2010 it again increased to Rs 5,69,56,67,475.(Table 5.2: Variables of Working Capital Management)VARIABLES YEARS
2006-20072007-20082008-20092009-2010
ROTA (Return on Total Assets)0.150.160.220.10
OPM (operating profit margin)61.55%56.40%27.78%34.65%
GEAR (Gearing Ratio i.e. financial debt / total assets)0.64:10.55:10.43:10.33:1
CR (Current Ratio)1.28:10.94:10.86:10.62:1
QAR (Quick Assets Ratio)0.58:10.46:10.27:10.22
CA/TA (Current Assets to Total Assets)0.130.120.210.16
CL/TA (Current Liabilities to Total Assets)0.110.130.240.26
SK/CA (Stocks to Current Assets)0.230.250.130.19
TD/CA (Trade Debtors to Current Assets)0.250.340.170.21
CA_TURN (Current Assets Turnover is Sales/Current Assets)1.101.291.080.60
The various variables of working capital is presented in table 5.2. An analysis of data presented in the table reveals the following findings;A) Return on total asset came 0.15 in 2006-2007, 0.16 in 2007-2008, 0.22 in 2008-2009 and 0.10 in 2009-2010.B) Operating profit margin was 61.55% in 2006-2007 then it reduced to 56.40%, 27.78%, and 34.65% in 2007-2008, 2008-2009, and 2009-2010 respectively. Anything between 65% to 85% is known as a good operating margin. And for OPTCL is a sign of alarm.C) Gearing ratio came 0.64:1 in 2006-2007 and in 2007-2008 it is 0.55:1 and 0.43:1 and 0.33:1 in 2008-2009 and 2009-2010.D) Current ratio generally reduced for the organisation, in 2006-2007 it was 1:28 and it reduced to 0.94:1 in 2007-2008 and then it again reduced to to0.86:1 and 0.62 in 2008-2009 and 2009-2010 respectively.E) Quick asset ratio in 2006-2007 as it was 0.58:1, in 2007-2008 it became 0.46:1 and in 2008-2009 and in 2009-2010 it became 0.27:1 and 0.22:1.F) Current asset to total asset ratio came 0.13, 0.12, 0.21 and 0.16 in the year 2006-2007, 2007-2008, 2008-2009, and 2009-2010.G) Current liability to total asset ratio came 0.11 in 2006-2007, in 2007-2008 it came 0.13, and in 2008-2009 and 2009-2010 it came 0.24:1 and 0.26:1 respectively. H) Stock to current asset is 0.23, 0.25, 0.13, and 0.19 in respective years.I) Trade debtors in 2006-2007 is 0.25, in 2007-2008 is 0.34, in 2008-2009 is 0.17 and in 2009-2010 is 0.21.J) Current asset turnover is 1.10 in 2006-2007, 1.29 in 2007-2008, 1.08 in 2008-2009 and become 0.60 in 2009-2010Table 5.3: Components of Current ratio, quick ratio and Absolute Liquid Ratios2006-20072007-20082008-2009 2009-2010
Current ratio1.28:10.94:1
0.86:10.62:1
Quick ratio0.58:10.46:10.27:10.22
Absolute liquid ratio0.25:10.15:10.12:10.08:1
SK/CA0.230.250.130.19
TD/CA0.250.340.170.21
CA/TA0.130.120.210.16
CL/TA0.110.130.240.26
CCC( cash conversion cycle)
Inventory days77 days70 days43 days115days
Debtor turnover days125days85days57days126days
Creditors turnover days63 days61days37 days86days
Table-5.3 revels the components of current ratio, quick ratio and absolute quick ratio. From the table following things can be derived:
a) In 2006-2007 it is found that the current ratio is 1.28:1 which is just below the standard of 2:1. In 2007-2008, it is found that the current ratio of OPTCL is 10.94:1. It is below the standard of 2:1 and it is due to a decrease in total current assets from previous year and an increase in current liability this year. The cash and bank balance is found to be decreased this year in comparison to that of previous year where as the current liabilities and provisions both have increased this year. In 2008-2009, it is found that the current ratio of OPTCL is 0.86:1. . It is a not good indication according to the rule of thumb. Because the firm has more current liabilities than current assets. The firm may not be able to meet its short term obligations in time. In 2009-2010, it is found that the current ratio of OPTCL was 0.62:1 it was not a good indication according to rule of thumb.b) Quick ratio in 2006-2007 it was 0.58:1 and 0.46:1, 0.27:1 and 0.22:1 in 2007-2008, 2008-2009, and 2009-2010 respectively.c) In the year 2006-2007 the Absolute Liquid Ratio is found to be 0.25:1. In the year 2007-2008 the Absolute Liquid Ratio of OPTCL is found to be 0.15:1. The Absolute Liquid Ratio of the firm for the financial year 2008-2009 is found to be 0.12:1 which is below the normal standard of 1:2 or 0.5:1. This is due to less cash and bank balances of the organization in comparison to the Current Liabilities. In the year 2009-2010, the absolute liquid ratio found to be 0.08:1.d) Stock to current asset is 0.23, 0.25, 0.13, and 0.19 in respective years.e) Trade debtor to current asset ratio come 0.25, 0.34, 0.17 and 0.21 respectively.f) Current asset to total asset ratio came 0.13, 0.12, 0.21 and 0.16 in the year 2006-2007, 2007-2008, 2008-2009, and 2009-2010.Current liabilities to total asset came 0.11 in 2006-2007 and in 2007-2008 it came 0.13 , in 2008-2009 it came 0.24:1 and in 2009-2010 it came 0.26:1.
h) Cash conversion ratio for inventory came 77days, 70 days, 43 days and 115 days.Cash conversion for debtor comes 125 days in 2006-2007, and it reduced to 85 and 57 days in 2007-2008, 2008-2009 respectively. But in 2009-2010 it increases to 126 days. Cash conversion ratio came 63days, 61days, 37days and 86days respectively.
THE SECOND SECTION EXPLAINS ABOUT THE LIQUIDITY TREND OF THE ORGANIZATION.LIQUIDITY RATIOCURRENT RATIOTable5.4CURRENT RATIO- (CURRENT ASSETS/CURRENT LIABILITY)
YEAR
CURRENT ASSET(IN RUPEES)CURRENT LIABILITY(IN RUPEES)RATIO
2006-20073,21,50,26,4292,50,80,12,5161.28:1
2007-20083,10,61,19,3033,35,96,86,5080.94:1
2008-20096,30,63,13,3197,29,34,88,6490.86:1
2009-20105,07,93,75,3788,21,36,64,2740.62:1
From the table 5.4 and diagram of Current Ratios of different financial years of OPTCL, various results can be made.A) 2006-2007 it was found that the current ratio was 1.28:1 which is below the standard of 2:1. It is due to a decrease of total current assets from the previous year to current year. Still it is manageable and also the condition was under the control.B) In 2007-2008, it was found that the current ratio of OPTCL was 0.94:1. It was below the standard of 2:1 and it is decrease in total current assets from previous year and an increase in current liability this year. The cash and bank balance is found to be decreased this year in comparison to that of previous year where as the current liabilities and provisions both have increased this year.C) In 2008-2009, it was found that the current ratio of OPTCL was 0.86:1. . It is a not good indication according to the rule of thumb. Because the firm has more current assets than current liabilities. The firm may be able to meet its short term obligations in time.D) In 2009-2010, it was found that the current ratio of OPTCL was 0.62:1. It was not a good indication according to rule of thumb. Because the firm has more current assets than current liabilities. The firm was not able to meet its short term obligation in time.E) Because of increase in administrative overhead expenses, super annuity benefits and payment of past loan etc. are the major factor for increasing of current liabilities.F) Situation can be controlled. So more emphasis can be given on these areas to reduce current liabilities and to increase current assets so that the actual standard of 2:1 can be achieved.In addition to, company should make clear cut strategic planning to sell electricity to major industries at industrial rate to achieve higher revenueTABLE5.5Quick Ratio- (Liquid Asset/ Current Liability)YEARLIQUID ASSETCURRENT LIABILITYRATIO
2006-20071,44,64,73,0132,50,80,12,5160.58:1
2007-20081,54,33,61,1653,35,96,86,5080.46:1
2008-20091,96,21,17,2237,29,34,88,6490.27:1
2009-20101,78,27,37,8278,21,36,64,2740.22:1
FROM THE TABLE 2.2 FOLLOWING THINGS ARE DERIVED:A) The Quick Ratio or the Acid Test Ratio of OPTCL for the financial year 2006-2007 was found to be 0.58:1 and the normal standard for is 1:1. So it is a manageable situation. B) In the year 2007-2008 it was found that the Quick Ratio of OPTCL was 0.46:1 which was below the normal standard. It was due to a little bit increase in current liabilities in comparison to that of previous year. Still it was also in a manageable position and by giving a small effort the normal standard of 1:1 can be achieved.C) In the year 2008-2009 it Is found that the QUICK ratio of OPTCL IS 0.27:1, which is just normal standard. It is due to a little bit increase in current liabilities.D) In the year 2009-2010 it is found that the Quick ratio was 0.22:1. Which is below standard of 1:1? Management should have an eye on to that.
TABLE 5.6ABSOLUTE LIQUID RATIO- (ABSOLUTE LIQUID ASSET/CURRENT LIABILITY):
YEARAbsolute Liquid AssetCurrent LiabilityRatio
2006-200764,82,76,8122,50,80,12,5160.25:1
2007-200849,08,81,1833,35,96,86,5080.15:1
2008-200990,70,19,7507,29,34,88,6490.12:1
2009-201072,71,06,1298,21,36,64,2740.08:1
By going through the table 5.6 & diagram of Absolute Liquid Ratio, balance sheet of OPTCL the following results can be drawn.A) In the year 2006-2007 the Absolute Liquid Ratio was found to be 0.25:1. Though it is below the normal standard still it is in a manageable condition. B) In the year 2007-2008 the Absolute Liquid Ratio of OPTCL was found to be 0.15:1 which is below from the previous year. It is due to a decrease in cash and bank balances and also a slightly increase in Current Liabilities. C) The Absolute Liquid Ratio of the firm for the financial year 2008-2009 is found to be 0.12:1 which is below the normal standard of 1:2 or 0.5:1. This is due to less cash and bank balances of the organization in comparison to the Current Liabilities.D) In the year 2009-2010, the absolute liquid ratio found to be 0.08:1. This is due to less cash and bank balances of the organization in comparison to the Current liabilities.(Table 5.7)CASH FLOW STATEMENTS (2009-2010) (2008-2009) (2007-2008)
amount in (Rs) amount in (Rs) amount in (Rs)
profit/loss before tax & extraordinary items-71,37,17,644-18,30,29,883-3,64,99,383
adjustment for:
appropriation to reserves and surpluses1,18,36,39,0446,33,87,38311,15,56,818
interest and finance charges54,16,01,19897,24,54,6171,10,65,54,318
Depreciation1,08,22,03,5921,09,74,37,8791,09,90,58,990
preliminary expenses W/O30,26,42330,26,42330,26,423
excess provision written back-1,04,00,87,510-47,574-209
interest income-4,55,13,310-6,90,09,008-5,03,60,383
provisions for wealth tax27,84646,31846,305
provision/write off against theft materials15,22,60329,50,31228,65,292
provisions for obsolete stock-store etc1,11,96,801
bad and doubtful debt4,47,68,65211,63,52592,89,278
provisions for fringe benefit tax---------------------23,96,915-21,13,256
OPERATING PROFIT BEFORE WORKING CAPITAL CHANGE (A)1,05,74,70,893
1,88,59,83,0782,25,46,20,994
WORKING CAPITAL CHANGE
stores and spares-16,20,59,785-4,46,04,328-2,98,62,664
sundry debtors-4,53,02,877-37,81,016-26,35,73,059
other current assets-59,43,581-1,43,98,325-2,44,71,317
loan and advances1,20,34,71,087-2,72,53,85,61824,60,67,167
current liabilities4,93,59,03742,88,03,92842,01,27,401
Provisions1,91,87,52,3823,52,31,00,65647,36,52,134
NET WORKING CAPITAL CHANGES (B)2,95,82,76,2631,16,37,35,29682,19,39,662
CASH GENERATED FROM THE OPERATION (A)+(B)4,01,57,47,1563,04,97,18,3743,07,65,60,656
CASH FLOW FROM INVESTING ACTIVITIES:
capital expenditure (CAPEX)-93,41,57,641-91,68,37,432-1,03,91,08,694
Interest received revenue4,55,13,3106,90,09,0085,03,60,383
CASH GENERATED FROM INVESTING ACTIVITIES ( C )-88,86,44,331-84,78,28,424-98,87,48,311
CASH FLOW FROM FINANCING ACTIVITIES:
proceeds from secured loan-1,06,41,24,474-1,05,96,33,683-1,02,66,95,328
proceeds from unsecured loan32,39,10,165-6,95,82,948-36,86,01,393
interest paid-2,61,68,02,137-88,70,89,752-83,19,11,252
proceed from share capital5,00,00,00023,05,55,000-----------------
CASH FLOW FROM FINANCING ACTIVITIES (D)-3,30,70,16,446-1,78,57,51,383-2,24,52,07,973
NET CASH GENERATED FROM ALL ACIVITIES (A+B+C+D)-17,99,13,62141,61,38,567-15,73,95,628
Cash and cash equivalent at the beginning of the year90,70,19,75049,08,81,18364,82,76,812
cash equivalent at the end of the period72,71,06,12990,70,19,75049,08,81,184
Table 5.7 defines the following:a) Cash generated from investing activities, Rs-88,86,44,331 , Rs-84,78,28,424 andRs-98, 87, 48,311 in the year 2009-2010, 2008-2009 and 2007-2008 respectively.b)Hence, there is a generation of Rs.4,01,57,47,156 cash flow from its operating activities for the year 2009-2010, where as in 2008-2009, it was Rs.3,04,97,18,374. And in 2007-2008 it was 3,07,65,60,656.
c) The net cash flow of Rs-3,307,016,446 from financing activities in 2009-10. where it was -1,78,57,51,383 and -2,24,52,07,973 in 2008-2009 and 2008-2007 respectively.
d)That, the net cash flow from its operating, investing and financing activities for the year 2009-2010 is a negative figure of Rs.-17,99,13,621. It became positive in the year 2008-2009, which was Rs 41, 61, 38,567. And in 2007-2008 it becameRs-1573, 95,628.The third section explains about the working capital trend
(Amount. In Rs.)Table-5.8Size of Working Capital:
CURRENT ASSETS(CA)2007(rupees)2008(rupees)2009(rupees)2010(rupees)
Stores and spares75106469076,68,65,26280,85,19,27896,90,56,460
Sundry debtors7981962011,05,24,79,9821,05,50,97,4731,05,56,31,698
Cash and bank balances64827681249,08,81,18390,70,19,75072,71,06,129
Other current assets62808198765,25,53,30466,69,51,62974,48,94,758
Loan and advances38940673914,33,39,5722,86,87,25,1891,58,26,86,333
Total3,21,50,26,4293,10,61,19,3036,30,63,13,3195,07,93,75,378
Less: CURRENT LIABILITIES(CL)2007(rupees)2008(rupees)2009(rupees)2010(rupees)
Sundry creditors61,03,22,49666,51,67,98068,95,26,59772,40,51,456
Deposits and retention from suppliers/contractors12,50,63,35013,71,54,49714,91,29,26912,89,91,075
Interest accrued but not due on loans6,27,33,7892,05,82,1491,30,49,18551,73,055
Liabilities for wealth tax37,29947,24047,25328,781
Electricity duty payable2,12,90349,0921,82,2691,56,113
Liabilities for fringe benefit tax23,41,53444,54,79068,51,70568,51,705
Other liabilities87,64,35,3261,22,77,13,0161,61,76,99,7681,65,27,44,614
Total1,67,71,46,6972,05,51,68,7642,47,64,86,0462,51,79,96,799
Provisions83,08,65,8191,30,45,17,7444,81,70,02,6035,69,56,67,475
Total2,50,80,12,5163,35,96,86,5087,29,34,88,6498,21,36,64,274
working capital( CA-CL)70,70,13,913-25,35,67,205-98,71,75,330-3,13,42,88,896
From the table -5.8 following things are derived:In 2006-2007, working capital was Rs70,70,13,913 because current asset was more than current liabilities. In 2007-2008 working was became negative due to the fact that current liabilities exceeds current assets. In 2008-2009 it became Rs -98,71,75,330 due to excessive of provisions. In that year current liabilities exceeds current assets. In 2009-2010, working capital again became negative.WORKING CAPITAL TREND ANALYSIS: In working capital analysis the direction at changes over a period of time is of crucial importance. Working capital is one of the important fields of management. It is therefore very essential for an analyst to make a study about the trend and direction of working capital over a period of time. Such analysis enables as to study the upward and downward trend in current assets and current liabilities and its effect on the working capital position. The term trend is very commonly used in day-today conversion trend, also called secular or long term need is the basic tendency of population, sales, income, current assets, and current liabilities to grow or decline over a period of time The trend is defined as smooth irreversible movement in the series. It can be increasing or decreasing. Emphasizing the importance of working capital trends, analysis of working capital trends provide as base to judge whether the practice and privilege policy of the management with regard to working capital is good enough or an important is to be made in managing the working capital funds.
(Amount. In Rs.)TABLE-5.9Working Capital Size trendYears2006-20072007-20082008-092009-10
Net W.C (A-B)70,70,13,91325,35,67,205-98,71,75,330 -3,13,42,88,896
W.C. Indices10035.86-139.62-443.31
From the table 5.9 followings things are derived: It is observed that in 2006-2007, working capital indices was very high due to current assets exceeded current liabilities. In 2007-2008indices was also high because current asset were more than current liabilities. In 2007-2008 the company was able to manage their working capital efficiently. But in 2008-2009 and 2009-2010 it became negative. Here in the year 2008-2009 and 2009-2010 current liabilities exceeded current assets.
TABLE-5.10WORKING CAPITAL TURN OVER RATIO- (SALES/NET WORKING CAPITAL)Working capital turnover ratio
YEARCost of SalesNet working capitalRatio
200735534944017070139135.03times
20083997558798-25,35,67,205-15.7times
20096789295427-98,71,75,330-6.88times
20103051627568-3,13,42,88,896-0.97 times
From the table 5.10 following things derived:A) In the year 2006-2007, there was an increased in working capital turnover ratio to 5.03.B) However, in the year 2007-2008, it was -15.7 which indicates there was a decrease in net current assets due to increase in current liabilities.C) In the year 2008-2009, it was -6.88 which is better than the previous year.D) But in 2009-2010, working capital turnover was -0.97, which indicates there was decrease in net current assets due to increase in current liabilities.TABLE 5.11STATEMENT SHOWING CHANGES IN WORKING CAPITAL(2007 and 2008)
(2006-2007)(Rs)(20072008)(Rs)Increase in working capital(Rs)Decrease in working capital(Rs)
Current assets
Stores and spares75106469076686526215800572-
Sundry debtors7981962011052479982254283781-
Cash & bank balances648276812490881183-157395629
Other current assets62808198765255330424471317-
Loans & advances389406739143339572-246067167
Total32150264293106119303
Current liabilities
Current liabilities16771466972055168764-378022067
Provisions8308658191304517744-473651925
Total25080125163359686508
960581118
Working capital(currentassets-current liabilities)707013913-253567205
Net decrease in working capital
-960581118
-253567205-25356720512551367881255136788
From the table 5.11 following things are derived: By going through the statement showing changes in working capital the following results can be made.A) that, the total current asset of the year 2007-2008 is decreased to Rs. 3,10,61,19,303 from a previous years figure of Rs. 3215026429. B) The total value of stores and spare is increased from the previous years figure and the value of sundry debtors is also increased from the previous years figure.C) The cash and bank balances of the organization have a decrease of Rs. 157395629 from the previous years figure. Similarly the figure for loans and advances is also decreased to Rs. 143339572 from the previous years figure of Rs. 389406739.D) The other current assets like prepaid expenses and sundry receivables have also increased from the previous years figure.E) The total current liabilities of the year 2007-2008 are increased to Rs.3359686508 from a previous years figure of Rs.2508012516.F)That, the increase for current liabilities is due to increase in the figure of sundry creditors, deposits and retention from suppliers/contractors, liabilities for wealth tax, liabilities for fringe benefit tax and other liabilities from the previous years figure.G) Due to increase in the value of stores and spares, sundry debtors, and other current assets, there is a sign of increase in working capital. However, due to a decrease in the figure of cash, bank balances, loan and advances etc, there is a clear sign of decrease in the working capital.H) Due to increase in current liabilities and provisions for pension and gratuity and retrospective revision of pay, there is a sign of decrease in working capital.I)As per the analysis, it is observed that, the ratio of increase of working capital is drastically reduced than the previous years and the decrease sign of working capital is Rs.960581118(2007-2008), which has impacted the steady increase of current working capital & negatively affected the profitability of the organization.J) It is found that the current assets figure is decreased from the previous years figure & the current liabilities figure is increased from the previous year. As a result of which, there is a net decrease (negative figure) in working capital this financial year (2007-2008).K) That, some more emphasis can be given on current assets to increase its figure and to decrease current liabilities figure as a result of which the figure for working capital can be increased.TABLE-5.12STATEMENT SHOWING CHANGES IN WORKING CAPITAL(2009 TO 2010)(2008-2009)(Rs)(2009-2010)(Rs)Increase in working capital(Rs)Decrease in working capital(Rs)
Current assets
Stores and spares808,519,27896,90,56,460160537182-
Sundry debtors1,055,097,4731,05,56,31,698534225-
Cash & bank balances907,019,75072,71,06,129179913621
Other current assets66,69,51,62974,48,94,75877943129-
Loans & advances2,86,87,25,1891,58,26,86,333-1,28,60,38,856
Total6,30,63,13,3195,07,93,75,378
Current liabilities
Current liabilities2,47,64,86,0462,51,79,96,799-4,15,10,753
Provisions4,81,70,02,6035,69,56,67,475-87,86,64,872
Total7,29,34,88,6498,21,36,64,274
2147113566
Working capital(current assets-current liabilities)-98,71,75,330-3,13,42,88,896
Net decrease in working capital
-2147113566
-3,13,42,88,896-3,13,42,88,89623861281022386128102
By going through the table5.12 showing changes in working capital the following results can be made:a) That, the total current asset of the year 2009-2010 is decreased to Rs. 5,07,93,75,378 From a previous years figure of Rs. 6,30,63,13,319 .b) The total value of stores and spare is increased from the previous years figure and the value of sundry debtors is also increased from the previous years figure.c) The cash and bank balances of the organization have a decrease of Rs.17,99,13,621from the previous years figure. Similarly the figure for loans and advances is also decreased to Rs.1,58,26,86,333 from the previous years figure of Rs. 2,86,87,25,189.d) The other current assets like prepaid expenses and sundry receivables have also increased from the previous years figure. e) The total current liabilities of the year 2009-2010 are increased to Rs8, 21,36,64,274 From a previous years figure of Rs. 7,29,34,88,649.
f)That, the increase for current liabilities is due to increase in the figure of sundry creditors, deposits and retention from suppliers/contractors, liabilities for wealth tax, liabilities for fringe benefit tax and other liabilities from the previous years figure.g)Due to increase in the value of stores and spares, sundry debtors, and other current assets, there is a sign of increase in working capital. However, due to a decrease in the figure of cash, bank balances, loan and advances etc, there is a clear sign of decrease in the working capital.h)Due to increase in current liabilities and provisions for pension and gratuity of pay, there is a sign of decrease in working capital.i)As per the analysis, it is observed that, the ratio of increase of working capital is drastically reduced than the previous years and the decrease sign of working capital is Rs. -2147113566 (2009-2010), which has impacted the steady increase of current working capital & negatively affected the profitability of the organization.j)It is found that the current assets figure is decreased from the previous years figure & the current liabilities figure is increased from the previous year. As a result of which, there is a net decrease (negative figure) in working capital this financial year (2009-2010).k)That, some more emphasis can be given on current assets to increase its figure and to decrease current liabilities figure as a result of which the figure for working capital can be increased.
SECTION-4 EXPLAINS ABOUT CURRENT ASSETS AND CURRENT LIABILITIESCURRENT ASSETSTotal assets are basically classified in two parts as fixed assets and current assets. Fixed assets are in the nature of long term or life time for the organization. Current assets convert in the cash in the period of one year. It means that current assets are liquid assets or assets which can convert in to cash within a year.
(Amnt. In Rs.)TABLE 5.13CURRENT ASSETS SIZE
Current assets(CA)2007(rupees)2008(rupees)2009(rupees)2010(rupees)
Stores and spares75106469076,68,65,26280,85,19,27896,90,56,460
Sundry debtors7981962011,05,24,79,9821,05,50,97,4731,05,56,31,698
Cash and bank balances64827681249,08,81,18390,70,19,75072,71,06,129
Other current assets62808198765,25,53,30466,69,51,62974,48,94,758
Loan and advances38940673914,33,39,5722,86,87,25,1891,58,26,86,333
Total of CA3,21,50,26,4293,10,61,19,3036,30,63,13,3195,07,93,75,378
CA indices10099.61196.15157.99
From the table-5.13 followings things are derived: The current asset indices show growth in the year 2006-2007. In 2007-2008 it declines marginally and in 2008-2009 it again increase and in 2009-2010 it declines.TABLE-5.14
CURRENT ASSET TURNOVER RATIO- (sales/current Assets)
YEARSALESCURRENT ASSETSRATIO
20073,55,34,94,4013,21,50,26,4291.10
20083,99,75,58,7983,10,61,19,303 1.29
20096,78,92,95,4276,30,63,13,3191.08
20103,05,16,27,5685,07,93,75,3780.60
From the table 5.14 following things are derived: In the year 2006-2007, the current asset turnover was 1.10 which became 1.29, 1.08, and 0.60 in the year 2007-2008, 2008-2009 respectively. But in the year 2009-2010, the current asset turnover was 0.60 due to sale was less than the current assets.
COMPONENTS OF CURRENT ASSETSAnalysis of current assets components enable one to examine in which components the working capital fund has locked. A large tie up of funds in inventories affects the profitability of the business or the major portion of current assets is made up cash alone, the profitability will be decreased because cash is non earning assets. TABLE 5.15 (No. in %)Current assets(CA)2007200820092010
Stores and spares23.3724.69 12.82 19.08
Sundry debtors24.8233.8916.73 20.78
Cash and bank balances20.1615.80 14.38 14.31
Other current assets19.5421.01 10.58 14.67
Loan and advances12.114.61 45.49 31.16
Total of CA100100 100100
2007(rupees)2008(rupees)2009(rupees)2010(rupees)
Sundry creditors61,03,22,49666,51,67,98068,95,26,59772,40,51,456
Deposits and retention from suppliers/contractors12,50,63,35013,71,54,49714,91,29,26912,89,91,075
Interest accrued but not due on loans6,27,33,7892,05,82,1491,30,49,18551,73,055
Liabilities for wealth tax37,29947,24047,25328,781
Electricity duty payable2,12,90349,0921,82,2691,56,113
Liabilities for fringe benefit tax23,41,53444,54,79068,51,70568,51,705
Other liabilities87,64,35,3261,22,77,13,0161,61,76,99,7681,65,27,44,614
Total1,67,71,46,6972,05,51,68,7642,47,64,86,0462,51,79,96,799
Provisions83,08,65,8191,30,45,17,7444,81,70,02,6035,69,56,67,475
Total2,50,80,12,5163,35,96,86,5087,29,34,88,6498,21,36,64,274
Current liabilities indices100133.96290.81327.50
CURRENT LIABILITIES:-TABLE 5.16
TABLE 5.17CURRENT LIABILITIES SIZE
From the table 5.17 following things are derived: The current liabilities graph shows a rapid growth. In 2006-2007 ,the current asset indices is 100 and thereafter it increases to 133.96, 290.81, 327.5 in 2007-2008, 2008-2009, 2009-2010 respectively. The current liabilities increased at a speed.(TABLE 5.18)DEBTOR TURN OVER RATIO- (NET SALES/AVERAGE DEBTORS)YEARNet SalesAverage DebtorsRatioAverage CollectionPeriod (365/DTR)days
20073,55,34,94,40112168454102.92125
20083,99,75,58,798925338091.54.3285
20096,78,92,95,4271,05,37,88,7286.4457
20103,05,16,27,5681,05,53,64,5862.89126
Debtor Turn Over Ratio- By going through our calculation table and diagrams of Debtor Turn over Ratio, profit and loss accounts and balance sheets of OPTCL the following results can be drawn.A) In the year 2006-2007 the debtor turnover ratio is 2.92 times and the average collection period is found to be 125 days. This year, there is a higher value of debtor turn over and a shorter average collection period in comparison to that of previous year. This is a good indication.B) In the year 2007-2008 the debtors turnover ratio is 4.32 times and the average collection period is 85 days. This year, the value of debtors turnover is higher than the previous year due to decrease in average debtors and an increase in net sales. And the average collection period is also shorter than the previous years figure.C) In the year 2008-2009 the debtor turnover ratio is 6.44 times and the average collection period is 57 days. This year, the value of debtor turnover is higher than the previous year due to decrease in average debtor.D) In the year 2009-2010 the debtor turnover is 2.89 times and the average collection period is found to be 126 days. This year, there is higher value of debtor turn over.E) OPTCL used to collect pending dues directly from consumers for which, substantial delay in getting payment was . However, the present average period of collection is decreased due to involvement of NESCO, SOUTHCO, CESCO, WESCO etc. for collection of revenue on behalf of OPTCL and the same has been made through banks.The shorter the average collection period, the better the quality of debtors, since a short collection period implies the prompt payments by debtors. So this is a good indication for the organization.Section five generally defines Measures to Improve Working Capital Management at OPTCL: The essence of effective working capital management is proper cash flow forecasting. This should take into account the impact of unforeseen events, market cycles, loss of a prime customer and actions by competitors. So the effect of unforeseen demands of working capital should be factored by company. This was one of its reasons for the variation of its revised working capital projection from the earlier projection.a) It pays to have contingency plans to tide over unexpected events. While market-leaders can manage uncertainty better, even other companies must have risk-management procedures. These must be based on objective and realistic view of the role of working capital. b) Addressing the issue of working capital on a corporate-wide basis has certain advantages. Cash generated at one location can well be utilized at another. c) An innovative approach, combining operational and financial skills and an all-encompassing view of the companys operations will help in identifying and implementing strategies that generate short-term cash. This can be achieved by having the right set of executives who are responsible for setting targets and performance levels. They could be then held accountable for delivering, encouraged to be enterprising and to act as change agents.d) Working capital management is an important yardstick to measure a company operational and financial efficiency. This aspect must form part of the strategic and operational thinking. Efforts should constantly be made to improve the working capital position. This will yield greater efficiencies and improve customer satisfaction.e) Cash should be managed properly.f) Effort should be made to reduce the current liabilities and to increase the current asset.g) Placing the responsibility for collecting the debt upon the centre that made the sale
HYPOTHESIS TESTING: generally hypothesis means a mere assumption or some supposition to be proved or disproved. Hypothesis is usually considered as the principle instrument in research. Its main function is to suggest new experiments and observations.
Hypothesis: 1- The firm is facing difficulty in paying short-term debt.The following table contains the details about the average collection period from debtors and average payment period to creditors from the period 2006-2007 to 2009-2010.
YearsAverage collection period (x)Average payment period(y) XYX2
y2
2006-2007125637875156253969
2007-20088561518572253721
2008-20095737210932491369
2009-20101268610836158767396
x= 393 Y=247XY=26005 x2 =41975 y2 =16455
KARL PEARSONSS COFFICIENT OF CORRELETION:
By putting the values in the formula the r came =0.86From the calculation value of r come =0.86 which is a positive one. As the correlation came a positive one which ensures that the firm is facing difficulty in paying short-term debt. It is the case where current liabilities are increased throughout the financial years from, 2006-2007, 2007-2008, 2008-2009 and 2009-2010.
HYPOTHESIS:2 THE FIRM IS NOT PROPERLY MANAGING THE SUNDRY DEBTOR.
The following table contains average collection period from debtors and sundry debtors (in crore) from the period 2006-2007 to 2009-2010.
yearsAverage collection period (x)sundry debtors(in crore)
XyX2
y2
2006-20071258010000156256400
2007-2008851058925722511025
2008-2009571066042324911236
2009-2010126106133561587611236
x= 393Y=394XY=38323 x2 =41975
y2 =39897
KARL PERSONS COFFICIENT OF CORRELETION:
The correlation came negative to the second hypothesis.
After putting the data r is found= -0.52. So the hypothesis is rejected. As the firm is able to manage the sundry debtor.
HYPOTHESIS: 3- THE CURRENT LIABILITIES ARE INCREASING THAN CURRENT ASSETS YEAR BY YEAR.
The following table contains the amount of current liabilities(in crore) and current assets (in crore) from the period 2006-2007 to 2009-2010.
yearsCURRENT LIABILITIES(in crore)CURRENT ASSETS(in crore)
XYX2
y2
2006-2007 251 322 80822 63001 103684
2007-2008336321 107856 112896 103041
2008-2009729631 459999 531441 398161
2009-2010821508 417068 674041 258064
x=2137Y=1782 XY= 1065745 x2 = 1381379 y2 = 862950
KARL PERSONS COFFICIENT OF CORRELETION:
=0.88
As the hypothesis is positive which ensures that the current liabilities of firm is increased at a speed than current assets. So the firm should have an eye to this one.
FINDINGS OF THE STUDY
Following are the findings of the study:a) Working capital of three years i.e., (2007-2008, 2008-2009, 2009-2010) is in negative figure. The reason is that the companys current liabilities exceeds current assets from 2006-2007 to 2009-2010. The company created more provisions throughout this 3 years. Sundry creditors increased at a speed in these 3 years. It is an alarm sign for the company. Besides these sundry creditors, other current liabilities also increased like deposits and retention from supplies, liability for wealth tax, electricity duty payable. b) The standard current ratio is 2:1. And for OPTCL it is not satisfactory. The reason behind such result is that the current liabilities exceed current assets. The standard current ratio for 2006-2007 is satisfactory but in the year 2007-2008, 2008-2009, 2009-2010 situations becomes worst. The reason behind the increase in current liabilities and provisions. It is not a good sign for the company.
c) The standard quick ratio is 1:1. And for OPTCL it is not satisfactory. The reason behind OPTCL did not achieve the rule of thumb. The current liabilities exceed the liquid assets. There is an increase in current liabilities like sundry creditor, interest accrued but not due on loans, liability for wealth tax and liabilities for fringe benefit tax than of liquid assets. d) Absolute liquid test ratio is below 1:2, which are worries for OPTCL. The reason is that liquid assets fall very short than current liabilities. The current liabilities again exceed the absolute liquid assets. There is not significant increase in absolute current assets like cash and bank balances from 2006-2007 to 2009-2010. But there is a rapid increase in case of current liabilities like sundry creditors, deposits and retention from suppliers, liabilities for fringe benefit tax and provisions.e) Debtors of the company were high; they were increasing year by year, so more funds were blocked in debtor. As the company is selling electricity to the sundry debtors and the cash is not immediately received so some amount of cash is blocked in that matter.f) The current asset trend increased from 2007 to 2009, but in 2010 it declines. The current assets like stores and spare increased in 2006-2007 to 2007-2008 but in 2008-2009 it declined and then it is increased in 2009-2010. Sundry debtors increased from 2006-2007 to 2007-2008 but it declined in 2008-2009 but again it is increased in 2009-2010.g) The current liabilities trend increasing at a speed which is worried thing for company.Current liabilities like sundry creditors, deposits and retention from suppliers, interest accured but not due on loans, liabilities for wealth tax, electricity duty payable, liabilities for fringe benefit tax increased from 2006-2007 to 2009-2010.h) Debtors turnover ratio improved from 2007 to 2009 and so number of collection period decreases. But in 2010 debtors turnover ratio decreases and collection period increases. In 2006-2007 it was 126 days. Then it is reduced to 85 and 57 days in 2007-2008 and 2008-2009 respectively. But in 2009-2010 it again increased to 125 days.j) Current asset ratio decrease throughout the year. It was 1.10 in 2006-2007 then it increased to 1.29 then a fall down occurred as it was 1.08 in 2008-2009 and 0.60 in 2009-2010. k) Working capital turnover ratio was positive in 2006-2007; it became negative in 2007-2008, 2008-2009 and 2009- 2010. It was 5.03 times in 2006-2007 then is sloped downward and it was -15.7, -6.88, -0.97 in 2007-2008, 2008-2009, 2009-2010 respectively.
CHAPTER -6CONCLUSION AND RECOMMENDATION: CONCLUSION:On the basis of data analysis on working capital management in OPTCL, the following conclusions arrived.a) The company has gross profit for the past four years (2006-07, 2007-08, 2008-09, and 2009-10) in negatives and the current liabilities are increasing, in comparison to current assets position. Hence, it is an alarming sign for the smooth working capital management.b) The OPTCL didnt manage the liquidity position of the company. The liquidity position was in a good condition and in 2006-07, it was also satisfactory. But, in the year 2007-08, 2008-2009, 2009-10 the situation of liquidity position was alarming due to increase in total current liabilities and decrease in total current assets which led to the decrease in the net working capital of the company.c) During the year 2006-07, 2007-08, 2008-2009 and 2009-2010 the companys liquid assets were not satisfactory. d) The average collection period of the company during the year 2006--2007 is 125 days, it is reduced to 85 days in 2007-2008 and again it reduced to 57days in 2008-2009, but the average collection period again increases to 126 days in 2009-2010. e) There is also satisfactory net cash flow from the operating, investing and financing activities of the organization.f)Though the net working capital of the company is decreased, still the company is in a better manageable position and the companys present status of maintaining current assets and current liabilities are satisfactory. g) They are unable to manage their cash, funds and debts.By adapting better management practices, the company may attain a sound financial position in future and able to manage its working capital efficiently
RECOMMENDATIONOPTCL is the soul of Orissas power transmission and is playing a pivotal role in making surplus power consumption state through efficiently administering the system of transmission. For improvement of organizations profitability, much emphasis is needed to improve the better working capital management by decreasing the current liabilities through reducing of unplanned over head expenses. In such process, current assets position will be improved through collection of revenue from power transmission as well as recovery of past dues from consumers, Govt. and other agencies etc. The company should give more attention on increasing its collection of revenue from wheeling of power and should give more emphasis to curtail unplanned expenses to decreases the loss. Further, the management should focus on shortening its average collection period by changing its credit terms and conditions. By taking the above remedial measures, the organization can be an EVA+ company with due emphasis on proper way of managing the working capital. .
CHAPTER -7IMPLICATION FOR FUTURE RESEARCH:
This study is the foundation stone for carrying out further research in the field of working capital management. Further research can be also be carried out the study of working capital management. This one of such preliminary research work and further review of this research work can open up many dimensions for researchers. Although the objective taken in research study is diverse, yet a trend can be observed from the findings for future research work.One of the major drawbacks of the study is the lack of time. Working capital management is a very vast topic and hence in a limited time it is impossible to know every aspects of working capital management. And also it was study that depended on 4years of data. There is future scope for studying these things.
DISCLAIMERThe present study of working capital management in OPTCL is purely academic in nature. The analysis of the data and interpretation of the matters in the project report are purely academic purpose and nobody should take it as a fact finding conclusion for lodging any claim or submission of above facts for their personal benefits for which the undersigned will not be held responsible. The views suggestions, conclusions etc. are the bonfied work of mine and nobody should claim or copy it for their benefit without permission.
...
BIBLIOGRAPHYTEXT BOOKS:
1. Maheswari Dr S.n Financial management, Ninth edition, 2006 sultan chand & sons, New Delhi 2. Pandey I.M., Financial Management, Vikas Publishing House Pvt.Ltd. 8th Edition 1999.3. Prasanna Chandra, Financial management, Fourth edition 1999, Tata Mc.graw hill publishing company ltd, New Delhi. 4. Gupta, sashi., financial management, 4th edition,2007, kalyani publisher, new delhi5. Kothari C.R. Research Methodology, Wishva prakashan, New Delhi, 2001.
ARTICLES:An overview of working capital management and corporate financing.Working capital management.Working Capital Management Manages Flow of Funds (Year 2009)Working Capital Management-an Effective Tool for Organisational Success Year (2008)Website:www. Optcl.co.inwww. Google.comwww. Investopedia.comwww.moneycon
