working capital of sandhar group

PRESENTATION ON WORKING CAPITAL

By sourabh

COMPANY PROFILE SANDHAR:

Started its journey in 1985 with 12 employees.

Acquired Adeep Group in 1995,with this acquisition it added steel wheel rims & assemblies, handle bars, clutch panels etc.

Continue….Next was Tecfisa in 2007, a niche auto

component supplier based in Barcelona, Spain.

Today, this wholly owned subsidiary enjoys over 25% global market share of Aluminium die cast components for vehicle restraint systems and wiper systems

Number of Employees- 101-500 PeopleBusiness owner- Mr .D . N Davar

SANDHAR MAJOR PLAYERS:

SANDHAR MAJOR PRODUCTS:HANDLE BARS: LOCKING

SYSTEM:

VISION SYSTEM: HANDLES:

Meaning of Working Capital:Working Capital is the amount of funds necessary

to cover the cost of operating the enterprise.Working Capital – It include those assets and

Liabilities which can be converted into cash within one year.

e.g. cash, short term debt, investments, inventory, debtors (receivables), payables (creditors) etc

Net Working Capital is the difference between Current Assets and Current Liabilities.

Need Of Working Capital:Used to pay short term obligations such as

account payable & buying inventory.

If working capital dips too low, risk running out of cash.

Even very profitable business can run into trouble if they lose ability to meet their short term obligations.

Objectives of study: To know the movement of working capital as

an operating cycle by evaluating working capital turnover ratio.

To calculate an analyses the ratio between current asset and current liabilities and their combination in Sandhar components.

To find out the role of quick asset and the amount contributed by it by evaluating quick ratio

Concept Of Working Capital:

Gross Working Capital: Refers to firms investment in current assets.

Net Working Capital: Refers to difference between current assets and current liabilities.

Permanent Working Capital: Level of current assets which is always continuously required by the firm to carry on its business operations.

Working capital is permanent to the extent that it supports constant or minimum level of sales

Temporary Working Capital: Extra working capital, needed to support the changing production and sales activities.

Temporary working capital supports seasonal peaks in business

RESEARCH METHEDOLOGY:Systematic process of collecting and

analyzing information to increase our understanding of the phenomenon under study.

Primary purposes of basic research and documentation, discovery, interpretation, or the research and development of methods and systems for the advancements of human knowledge.

RESEARCH DESIGN:My research is depend on following criteria’s:

Financial analysis through secondary data based on certain parameters.

Research is an analytical research.

Working Capital Cycle

Source of Cash Profits (when you secure it as cash!) Receivables New equity or loans from shareholders Bank overdrafts or lines of credit Long-term loans

CALCULATIONS AND

INTERPRETATION OF DATA

CURRENT RATIO:Current Ratio- Current Assets/ Current Liabilities.

INTERPRETATION:The current ratio is 1.096:1 in 2010-2011. It means that for one rupee of current liabilities, the current assets are 1.096 rupee is available to them. In 2008-09 is bit higher than the previous year, which is making the company sounder then the previous year.

Year 2007-08 2008-09 2009-10 2010-11

Current Assets

688,462 746,105 660,757 653,526

Curr. Liabilities

598,663 624,016 611,718 595,787

Current Ratios

1.150 1.162 1.080 1.096

LIQUID RATIO:Liquid Ratio- Quick Assets/ Quick Liabilities.

Interpretation: liquid ratio of the SANDHAR COMPONENTS has decreased from 0.549 to 0.401 in 2010-2011. Liquid ratio of Company is unfavourable because the quick assets of the company are less than the quick liabilities. The liquid ratio shows the company’s ability to meet its immediate obligations promptly.

Year 2007-08 2008-09 2009-10 2010-11

Quick Assets 225,875 329,147 335,996 239,249

Quick Liabilities

598,663 642,016 611,718 595,787

Liquid Ratio 0.377 0.512 0.549 0.401

WORKING CAPITAL TURNOVER RATIO:Working Capital Turnover Ratio: Cost Of

Sales/Net Working CapitalYear 2007-08 2008-09 2009-10 2010-11

Cost Of Sales

3,546,670 3,941,346 4,521,500 5,908,431

Net Working Capital

89,799 104,089 49,039 57,739

Working Capital Turnover Ratio

39.495 37.865 92.202 102.324

CONCLUSION:Working Capital of a company is quite

satisfactory.Liquidity position of company is quite

satisfactory during the whole period.Quick ratio through out the year is quite

similar.Current ratios makes the company in sounder

position.