AMAR Project 1

1
CHAPTER – I
INTRODUCTION
1.1 WORKING CAPITAL ANALYSIS
1.1.1 MEANING AND CONCEPT OF WORKING CAPITAL
Maintaining adequate working capital is not just important in the short-term.

Sufficient liquidity must be maintained in order to ensure the survival of the business in
the long term as well.
Every business needs adequate liquid resources in order to maintain day-to-day

cash flow. It needs enough cash to pay wages and salaries as they fall due and pay
creditors if it is to keep its workforce and ensure its supplies.
Therefore, when businesses make investment decisions they must not only
consider the financial outlay involved with acquiring the new machine or the new
building, etc, but must also take account of the additional current assets that are uaually
involved with any expansion of activity.
The term of 'working capital Analysis' includes both 'Analysis' and

'Interpretation'. A distinction should, therefore, be made between the two terms. While
the term 'Analysis' is used to mean the simplification of financial data by methodical
classification of the data given in the working capital.' Interpretation' means, 'explaining
the meaning and significance of the data so simplified.' However both Analysis and
Interpretation are interlinked and complimentary to each other. Analysis is useless
without interpretation and interpretation without analysis is difficult or even impossible.
Even a profitable business may fail if it does not have adequate cash flow to meet
its liabilities as they fall due.
2
1.2 COMPANY PROFILE
Chettinad Cement Corporation Limited (CCCL) was launched three decades ago
by one of the India’s most illustrious sons Dr.Raja Sir. Muthiah Chettiar. The company
continues to uphold and illustrates today under the dynamic leadership of
Dr.M.A.M.Ramaswamy, Chairman and M.A.M.R.Muthiah, Managing Director.
Chettinad Cement Corporation Limited was started in the year 1967. Initially the
Cement was manufactured in the wet process technology. Due to hike in the fuel prices
the company went for expansion in the year 1989 to produce cement with the latest dry
process technology.
CCCL has acquired most of its critical equipments, from Europe, USA and Japan
and utilized foreign technological expertise to installed and commissioned these
equipments.
The vertical roller mill from Loesche for grinding Lignite, the first of its kind in the
country is commissioned for processing the fuel requirement. The company with the
installation of OK Mill, the world’s most sophisticated and Hi-Tech cement mill ( a
vertical roller mill), the production capacity has quantum leaped and expected to touch a
million mark. CCCL, apart from manufacturing cement, is also into wind energy farms.
This includes harnessing power from 66 windmills setup at Poolavadi with various
capacities. CCCL has taken elaborate measures for pollution control spending almost 10
crores in this field. Many of the electrostatic precipitators and several filters and bag dust
collector in cement mill are installed all over the plant. STP is also working to take care
of water pollution. For Occupational Health & Safety, CCCL has institutionalized a
Safety Committee working group, promoted the use of Personal Protective Equipment
(PPE) in key work areas and subjecting the employees
for regular health check-up.
3
Chettinad Cement Corporation Ltd., Puliyur Cement Factory has won

international Recognition by getting IS/ISO 9001:2000 Quality Management System
Certification And IS/ISO 14001:2004 Environmental Management System Certification.
The company is having its captive mines for limestone about 40kms from factory
(Seethainagar Limestone Mines). It is fully mechanised with latest sequential blasting
technology. The limestone after blasting is handled and transported to crusher by means
of heavy (earth moving equipments like shovel, dumpers, pay loaders. The limestone is
unloaded to the impact crusher through hopper for crushing. This crusher helps in
reducing the size of the limestone to the required size for further processing. The crushed
limestone is transported by belt conveyors to bunker where the loading of the limestone
takes place. The loading is done systematically by pneumatic gates provided below the
bunkers to the wagons. The transportation of limestone is being done by our own wagons
and locomotives. We have our own MG railway line with the intermediate station. The
wagons containing limestone are unloaded by the wagon tippler in the factory and
transported to the stockpile.
The Stacker reclaimed is a linear stock pile which helps to blend the material by
forming layers and while extracting material by reclaimed is right angle to the formation.
This ensures blending of material. The stacker & reclaimer was supplied by Elecon and
having a capacity of 2 x 24,000 M.T. Stacking capacity. The limestone reclaimed from
the stock pile Bauxite and Iron Ore as additives to compensate deficiencies of the
limestone are filled in the hoppers. These materials are weighed and extracted to the
vertical roller mill for grinding.
The Vertical Roller Mill for raw material grinding is a highly energy efficient mill
having the latest process controls. The material is ground to a fine powder and is
collected in an Electrostatic Precipitator and transported to blending silos by means of
bucket elevator. There are two silos for storing the ground raw material (Raw meal)
which are also used for blending. The blended raw meal is extracted from the silo bottom
and after weighment; it is transported to preprocessing section.
4
The blended raw meal is transported by bucket elevators to the top of preheated
where there are sets of five cyclones to transfer the heat or to preheat the raw meal by
means of kiln and precalciner exhaust gases. The preheated raw meal is sent to
precalciner where fuel is fired to calcine the material. The calcined raw meal is sent to
kiln where further fuel is fired to convert the raw meal to clinker. The entire
pyroprocessing is supplied by Fuller - USA.
Coal / Lignite is used as fuel which again is ground to a fine power for handling and easy
burning by means of vertical Roller Mill and stored in the coal bins. These are weighed
and extracted at the bottom by screw conveyors, fired in the precalciner and kiln as
mentioned above The clinker after formation is cooled in a CIS/CFG cooler and the
cooled clinker is stored in the two silos.
The clinker from the silos are extracted by conveyors and are transported to hoppers
along with flyash and gypsum (Retarder) to convert into a final product.
The weighed Quantity of clinker , Flyash, and gypsum are ground by vertical
roller mill (OK mill) supplied by ONODO-KOBE Japan. This is one of the biggest mill
in India with the latest sophistication. The ground cement is transported to the silos as per
the type of cement by bucket elevators. The cement is extracted from the silo bottom and
are packed in automatic packers. There are four automatic packers which helps to pack
the cement in 50kg per bag and are transported to the destination by means of trucks and
wagons. We have latest sophisticated
1.2.1 SITE DESCRIPTION AND SITE PLAN
CCCL is located at Puliyur village in Karur (Dt.) Tamil Nadu,

Trichy- Karur Highway 65km away from Trichy and 13 Km before Karur. It is situated at
the elevation of approx 110 m Mean sea level. The Ambient temperature is 42 deg C max
and 25 deg C Min with an average rainfall of 600-800mm in a year. The relative
Humidity is 80-85% max and 50% min. The Maximum wind velocity is 50Km/Hr Max
during the windy seasons.
5
For 6 month wind direction is East- west and for the next 6 months west-
east. Topographically the firm is generally flat. Amaravathi river which is tributory to
river Cauvery, is situated about 2 Km away from the Factory. We have
provided a school for our employees and for our near by society behind our colony. It is
well connected by road in Tamil Nadu and Broad gauge Railway throughout India.
The Chettinad Cement Corporation Limited (CCCL) is one of the most modern
cement plant in the country located at Puliyur in Karur district, Tamil Nadu.
1967 - 4 lac tonnes per annum cement production capacity with wet process
1989 - Dry process kiln of 1700 TPD commissioned with vertical roller mill for
fuel & limestone grinding.
1990 - 2 Nos. of KVA Capacity WARTSILA DG set installed.
1994-96 - 66 Nos. of wind electric Generator of total capacity 17.3 Mw installed
at Poolavadi Udumaplet Taluk.
1995 - ISO – 9001 Certificate received.
1996 - Stacker & Reclaimer for Limestone.
1996-97 - Belt Elevator for Raw mill and Kiln feed installed.
1997 - A) Impact Crusher for lime stone crushing at mines installed.
B) Bag filter for coal mill grinding system.
1998 - Vertical roller mill for cement grinding installed. Additional ESP installed
for Klin / Raw mill to handle excess process gases.
2000 - A) CIS / CFG Cooler installed. Low pressure Cyclone installed. Latest
Technology LV- Tech Classifier installed in Raw mill Kiln capacity increased to
2800 TPD. B) Green field Cement Plant with capacity of 1.1 Million was
commissioned at Karikkali works
2001- Rock breaker ( Terminator ) installed in mines.
2003 - ISO 14001:2004 is implemented
6
2004 - Environment Management Service Certificate option.

2004 - Fly Ash Silo construction work 5,000MT Capacity started
2005 - Fly Ash Silo construction work completed.
2006 - IS:ISO 18001:2000 is implemented
2007 - Bag House installed in Raw Mill/Kiln Circuit
2007- 15 MW Captive Power Plant erection work started
1.2.2 The product offered by CCCL is as given below:
 ORDINARY PORTLAND CEMNT OPC-43, OPC-53

 PORTLAND POZZOLANA CEMENT (PPC)
 SULPHATE RESISTING PORTALND CEMENT
 PORTLAND SLAG CEMENT
1.3 INDUSTRY PROFILE;
Cement industry is one of the major industries in the industrial sector which affects
the activities of industrial and constructional sector to great extent in India and world.
Over this industry is also a part of the economical growth of our country.
In the 18th century a British engineer named “JOHN SEMEATIOR” invited how to
make cement for construction of the time. cement from process of lime and the roman
invented volcanic ashinancient days.
In the early 19 th century the British engineer named “joseph aspdin” developed a
kind of cement “Portland” .the newly developed cement and hence become popular in the
market. In 1916 the Portland association was formal in Chicago.
7
TYPES OF CEMENT;
The various types of cement are produced in India

 Ordinary Portland cement
 Portland POZZOLANA cement
 Portland blast furnace slag cement
 Sulphate resistant Portland cement
 White cement
1. Ordinary Portland cement

it is also know as grey cement .it is manufactured by combining limestone,
bauxite, and ironers and calking in a preheated kiln to produce clinker which is
grounded with gypsum in a given proportion to produce opc .
this cement is combined the proposition of clinker, and gypsum. The ratio is
clinker 95%, and gypsum 5%.
2. Portland pozzolana cement

Using fly ash. whish is got a waste material makes this from thermal
plants with clinker and gypsum in a different ratio. The ratio for clinker is 75% fly
ash is 20%and gypsum5%
3. Portland blast furnace slag cement

This is manufacture by using slag. The standard mix of PBFSC is
47.5% clinker 47.5% slag and gypsum5%.
4. Pulphate resistant Portland cement

This is a special type of cement mainly used in seashore area and sculpture
content soil areas.
8
Chapter-II
2.1 Review of literature
Abdul raheman and Mohamed nasr conducted a study on working capital

management and profitability is a very important component of corporate finance
because it directly affects the liquidity and profitability of the company. It deals with
current assets and liabilities. Working capital management important due to many
reasons. for one thing, the current assets typical manufacturing firm accounts for over
half of its total assets. For a distribution company , they account for even more.
Excessive in a firm’s realizing substandard return on investment. However firms with too
few current assets may incur shortages and difficulties in maintaining smooth operation
(horne and wachowicz,2000).efficient working capital management involves planning
and controlling
Net working capitals commonly defined as the difference between current assets and
current liabilities. Efficient working capitals management requires that firms should
operate with some amount of NWC. The exact amount varying from industry and
depending among others things, on the nature of industry.
The total working capitals requirements of a firm is determined by a variety of factors. It

should be, however noted that these factors affects different enterprises differently. They
also vary from time to time. In general, the following factors are involved in a proper
assessment of the quantum of working capital requirements. An undertaking about the
concepts in working capital was the results of reading from pillai. R.S.N.Bhagavathi,
Management Accounting, and Dr.S.N.Maheswari “Problems & Solutions in management
Accounting & Financial Accounting.
The working capital requirements of an enterprise are basically related to the conduct of
the business. Some business need more working capital and vice versa. For example, the
percentage of current assets was found to be lowest in hotels, restaurants and eating
9
house(10-20%),but in the case of construction and trading groups, it is to be expected a

high working capital(80-90%). The various financial ratios play a significant role in
revealing the financial healthiness of the organization. The ratios and its illustration were
adapted from David Alexander& Anne Britton, “Financial Reporting” and
Dr.Varna&Agar val, “Financial Management”.
Production cycle was the key factor which has a bearing on the quantum of working
capital is the production cycle. The term “PRODUCTION CYCLE” refers to the time
involved the manufactures of goods. It covers the time span between the procurement of
raw materials and the completion of production process. Funds or working capital is
required in these stages.
The working capital requirement are also determined by the nature of the business cycle.
Business fluctuations lead to cyclical and seasonal changes which in turn, cause a shift in
the working capital position, particularly temporary working capital requirement.
The quantum of working capital is also determined by production policy. In the case of
certain lines of business ,the demand for products is seasonal, i.e., it will be purchased
during certain the need of more capital. An undertaking on the production process and
key issues in production was achieved through readings from M.Y.Khan & P.K.Jain,
“Financial Management” and Vinod K.M, “Management Accounting”.
The level of working capital is also determined by credit policy which relates to sales and
purchases. The credit policy influences the requirement of working capital in two ways
a)Through credit terms granted by the firm to its customers.
b)Credit terms available to the firm from its customers.
These two will affect the working capitals need.

10
As a company grows. It is logical to expect that a larger amount of Working capital will
be required. It is , of course, difficult to determine precisely the relationship between the
growth in the volume of business of a company and the increase in its working capital.
The important detail on credit policy and plant for growth and expansion was generated
from company’s internal sources and records.
An approach to research, The design, structure from reading from peasant Chandra,
“Financial Management Theory & Practice” and Harrison Horngren, “Financial
Accounting”.
The data analyses method, tools used and processing of data based on standard statistical
tools suggested in I.M.Pandey, “Financial Management” and R.Narayanaswamy ,
“Financial Management”.
The company profile was gathered from internal publications and internal records of the
company.
11
Chapter-III
RESEARCH METHODOLOGY
3.1 AIM FOR THE STUDY

To improve the working capital management of the company
3.2.2Primary objectives:-
To study the working capital management of chettinad cement corporation ltd
for the period of 2004-2009
3.2.3 Secondary objectives:-
 To study the change in the working capital.
 To study composition of Current Assets and Current liabilities.
 To find out the growth value of working capital .
 To find out how current assets have been financed.
 To find out the variable and fixed component of working capital .

3.3 RESEARCH DESIGN
A research design is the arrangement of conditions for collection analysis of

data is a manner that aims to complain relevance to the research purpose with economy in
procedure. Research methodology of the study is only depends up on the following table.
 Nature of working statements
 Period of the study

12
3.3.1Nature working statement;

The term recorded facts refers to the data taken out from accounting
records.facts that have not been recrded in the financial books are not depicted in the
financial statement
3.3.2Period of the study :
The study analyzing the working capital management of CHETTINADU
CEMENT CORPORATION Ltd covers the financial year’s from 2004-05 to 2008-2009
3.4 DATA COLLECTION

3.4.1Secondary data:
Secondary data has been collected from the annual reports of the company .The collected
data has been processed and interpreted with financial tools and graphs . The tools used
for the purpose of analysis the ratio analysis and schedule of changes in working capital
3.5 RESEARCH TOOLS :

 Ratios
 Common size statement
 Schedule of changes in working capital management
 Operating cycle
3.5.1RATIOS;
Ratio analysis is a techniques of analysis and interpretation of financial
statement. It is a process of establishing and interpretation of various ratio for helping in
making certain decisions.
However, ratio analysis is not an end itself. It is only a means of better understanding
of financial strengths and weaknesses of a firm.
 CURRENT RATIO
 QUICK RATIO
 DEBTOR TURN OVER RATIO
 NET PROFIT RATIO
13
3.5.2COMMON SIZE STATEMENTS

Under this method the changes in the figures of two years is calculated and
percentage change is calculated by converting all the figures in terms of total liabilities or
total assets.In other words the base to calculate the percentage change is kept the
same;either Total Liabilities or Total Assets
 RATIO ANALYSIS
Ratios represent the relationship between two or more variables.It is a technique of
analyzingand interpreting the financial statements.It helps to find out the liquidity
position and the solvency position of the firm.It indicates short-term as well as long-
term solvency position of the firm it is the process of determination of various ratios
for the purpose of decision-making.
3.5.3WORKING CAPITAL MANAGEMENT
Capital required for purchase of raw material, and for meeting the day-to-
day expenditure on salaries,wages ,rents advertising ect.,is called working capital. In
other words, working capital refers to that part of a firm’s capital which is employed for
short-term operations.
THE length of the operating cycle of a manufacturing firm is the sum of
1. inventory conversion period, and
2. book debts conversion period
the inventory conversion period is the total time needed for producing
and selling the product. Typically it includes,
a) raw materials conversion period
b) work-in-progress
c) finished goods conversation period
the book debts conversation period is the required to collect outstanding
amount from customers. The total of inventories conversion period and book debts
conversion period is sometimes referred to as gross operating cycle.
14
FINANCIAL CURRENT ASSETS
Three of financial may be distinguished
1. Long term
2. Short-term financing
3. Spontaneous financing
The important source of long term financing are share, debentures, preference
shares, retained earnings and long term debt from financial institutional short-tem
financing refers to those sources of short term credit than the firms must average in
advance. These sources include short term bank loans, commercial papers, factoring
receivable and public deposit Spontaneous financing refers to the automatic sources of
short term funds arising in the normal course of a business.
3.5.4 OPERATING CYCLE
Operating cycle is the time duration required to convert sales after the
conversation of resources into inventories, into cash. The Operating cycle of a
manufacturing company involve five phase:
15
OPERATING CYCLE A MAUNFACTURING FIRM
Debtors Sales
Finished Goods
Cash
Raw material
Work in progress
Sales of the product either for cash or on credit. Credit sale creates book debts for
collection.
16
1. CURRENT RATIO
Current Ratio is the relationship between current Asset and Current Liability. A
current ration of 2:1 is considered ideal. The current ratio of a firm measures its short
term solvency. It indicates the availability of current asset in rupees for every one rupee
of current liability.
Current Assets
Current Ratio = --------------------------
Current Liabilities.
2.QUICK RATIO
Quick Ratio is also called as acid-test ratio or liquid ratio because; it is the acid
test concerns financial soundness. It is the relationship between quick assets and quick
liabilities. Quick assets are those assets which are readily converted into cash. The
include cash and bank balance, bills receivable, debtors, short term investments. Quick
liabilities include creditors, bills payable, outstanding expanses.
Quick assets
Quick ratio = --------------------
Quick liabilities.
17
CONTROL OF WORKING CAPITAL
Working capital turnover ratio indicates the velocity of the utilization of net working.
This ratio indicated the number of times the working capital is turned over in the course
of a year. This ratio measures the efficiency with the working capital is being used by a
firm.
Net sales
1. working capital turnover ratio = --------------------------
Net working capital
Gross working capital

2. Gross working capital to fixed assets = ---------------------------
Fixed assets
Gross working capital

3. Gross working capital to sales = ---------------------
Sales
Net working capital

4. Net working capital to net worth = -----------------------------
Net worth
18
CONTROL OF RECEIVABLE MANEGMENT
A concern may sell goods on cash as well as on credit. Credit is one of the important
element of sales promotion. The volume of sales can be increased by following a liberal
credit policy. But the effect of liberal credit policy may result in typing up substantial
funds of a firm in the forms of receivables.
Annual credit sales

1. Receivables turnover ratio =---------------------------------
Average receivable
Receivables at the end

2. Receivable to sales = -------------------------------* 100
Sales
Receivables
3. Receivable as a % of current assets =---------------------------* 100
Current assets
DEBTORS TURNOVER RATIO;
Debtor’s turnover ratio measures the number of times the receivables are rotated
in a year in terms of sales. This ratio also indicates the efficiency of credit collection and
efficiency of credit policy. This ratio is helpful in determining the operational efficiency
of a business concern and the effectiveness of its credit policy. Debtor’s turnover ration
can be calculated as follows:
=Net Credit Sales / Average Receivables

=Average Debtor =Opening Balance of Debtors + closing Balance of Debtors
19
CONTROL OF CASH MANAGEMENT
sales
1. cash turnover ratio =--------------------
Cash balance
Cash balances
2. cash as a % of current assets =----------------------*100
current assets
NET PROFIT RATIO;
This ratio measures the relationship between net profit and net sales. It indicates the
efficiency of the overall operations of the firm. It shows what percentage of sales is left
to the ratio year after is an indication of improving working conditions and vice versa.
Net profit
1. Net profit ratio =------------------------*100
Sales
Net profit(after interest& tax)

2. Return on shareholders investment =----------------------------
Shareholder’s funds
20
CONTROL OF INVENTORY MANAGEMENT
Every firm has to maintain a certain level of inventory of finished goods so as to

be able to meet the requirement of the business. But the level of inventory should neither
be too high nor too low. It is harmful to hold more inventories. On the other hand, too
low inventory may loss business opportunities. It is very essential to keep sufficient stock
in business.
Inventory Turnover Ratio indicates the number of time the stock has been turned
over during the period and evaluated the efficiency with which a firm is able to manage
its inventory. Inventory turnover ratio measures the velocity of conversion of stock into
sales.
Total inventory
Ratio of inventory to sales =-------------------------
Sales
Net sales
Inventory turnover ratio =---------------------------
Inventory
Inventory
Inventory of current assets =--------------------------
Current assets
Sundry creditors
Sundry creditors to inventory =-------------------------------
Inventory
Inventory
Inventory to net working capital =---------------------------
21
Net Working capital
OPERATING CYCLE
Average of RM
Raw materials =------------------------------------ *360
Cost of materials
Average of W.I.P
Work in progress =----------------------------- *360
Cost of production
Average stock of FG
Finished goods = -------------------------------- *360
Cost of good sold
Average debtors
Debt collection period = ------------------------------- *360
Credit sales
Creditors
Credit deferred period = ------------------------------ *360
Credit purchase
22
3.6 SCOPE OF THE STUDY:
1. The annual reports of 2004-05,2005-06,2006-07,2007-08 and 2008-09 were

analyzed.
2. Standered financial ratio was used to analyze the financial healthiness of

the company.
3. The contributors from experts and professional were used in the study to
arrive inferences and suggestions.
3.7 LIMITATION OF THE STUDY:
1. Annual reports might be window dressed.
2. Cross verification and inner breakup of the data were not gathering for
analyses.
3. Day to day working capital management would be a better indicator for

estimating efficiency of working capital management. But the study was not able
to perform the study on these directions.
23
CHAPTER IV
TABLE SHOWING CURRENT RATIO
TABLE 4.1 (Rs. In lakhs)

YEAR CURRENT ASSETS CURRENTLIABILITIES RATIO
2004-05 11396 6934 1.64
2005-06 16435 7928 2.07
2006-07 17986 10768 1.67
2007-08 21789 17296 1.26
2008-09 40469 35837 1.13
Sources: Annual report
Inference;
From the above table, it is found that in the year 2005-2006 there was a
satisfactory ratio after that there was an unsatisfactory ratio in 2004-2005 to 2008-2009.
CHART SHOWING CURRENT RATIO

CHART 4.1
current ratio
2.5
2.07
2
1.64 1.67
1.5
1.26
ratio 1.13
1 RATIO
0.5
0
2004-05 2005-06 2006-07 2007-08 2008-09
year
24
TABLE SHOWING QUICK RATIO

YEAR QUICK ASSETS QUICK LIABILITIES RATIO
2004-05 5392 6934 0.78
2005-06 6538 7928 0.82
2006-07 7939 10768 0.74
2007-08 13962 17296 0.81
2008-09 23852 35837 0.67
Inference;
The quick ratio of the company shows less than one similarly it was below
the standard level from the year of 2004-2009 because the standard ratio is
1:1
CHART SHOWING QUICK RATIO

CHART 4.2
12
10 0.67
0.81
8
5
0.74
6 4
0.82 3
4
2
0.78 5
2 4
1 3
2
1
0
2004-05 2005-06 2006-07 2007-08 2008-09
RATIO
TABLE SHOWING WORKING CAPITAL

25

Period Net Sales Net Working Capital Ratio
2004-05 40258 4462 9.02
2005-06 47853 8507 5.63
2006-07 58417 7218 8.09
2007-08 84647 4493 18.84
2008-09 110720 4632 23.90
Inference;
The above table reveals that the working capital turnover ratio during the period
2004-05 to 2008-2009. the position increasing 9.02%in the first year and then it has bean
decreasing to5.63%in the year 2005-06 which has been increasing in the year 2007-
07to2008-2009.
The above table we can understand that the maximum position of the working capital is
23.90% in the year 2008 – 09
CHART SHOWING WORKING CAPITAL

CHART 4.3
working capital turnover
Ratio
23.90
25.00
20.00 18.84
15.00
ratio
9.02 8.09
10.00
5.63
5.00
0.00
2004-05 2005-06 2006-07 2007-08 2008-09
year
TABLE SHOWING GROSS WORKING CAPITAL TO FIXED ASSETS

Period Gross Working Fixed Assets Ratio
26
Capital
2004-05 11396 42208 0.27
2005-06 16435 44511 0.37
2006-07 17986 48228 0.37
2007-08 21789 52344 0.42
2008-09 40469 84608 0.48
Inference;
From the above table it reveals that the net working capital during the period of
2004-05to2008-09 it shows a constant increased to 0.27%,0.37%,0.37%0.42%,0.48%
during these periods it increased respectively
The above table we can understand that the maximum position of the gross working
capital is 0.48% in the year 2008-09.
CHART SHOWING GROSS WORKING CAPITAL TO FIXED ASSETS
CHART 4.4
Gross working capital to fixed assets
0.50
0.45
0.40
0.35
0.30
Ratio 0.25 0.48
0.42
0.20 0.37 0.37 Ratio
0.15 0.27
0.10
0.05
0.00
2004-05 2005-06 2006-07 2007-08 2008-09
year
TABLE SHOWING NET WORKING CAPITAL TO NET WORTH

Net Working
Period Capital Net worth Ratio
2004-05 4462 13295 9.02
27
2005-06 8507 14746 5.63

2006-07 7218 17442 8.09
2007-08 4493 26324 18.84
2008-09 4632 39249 23.9
Source; Annual report
Inference;
The above table reveals that the net working capital to net worth during
the period 2004-05 to 2008-09. In the year 2004-05 it has been 9.02% it has been
decreased to 5.63% during the year 2006-07 it has been increased to 8.09% and
finally it increased to 23.9% the above table we can understand that the maximum
position of the net working capital to net worth is 23.9% in the year 2008-09.
CHART SHOWING NET WORKING CAPITAL TO NET WORTH

CHART 4..5
30
25 23.9
20 18.84
15
10 9.02
8.09
5.63
5
0
2004-05 2005-06 2006-07 2007-08 2008-09
TABLE SHOWING GROSS WORKING CAPITAL TO SALES

Gross Working
Period Capital Sales Ratio
2004-05 11396 40258 0.28
2005-06 16435 47853 0.34
2006-07 17986 58417 0.31
2007-08 21789 84647 0.26
2008-09 40469 110720 0.37
28
Inference;
The above table reveals that the gross working capital to sales during the period
2004-2005 to 2008-2009. this position increasing up to 0.28% and 0.34% d in the last two
years and then it has been decreasing from 2006 to 07 it had been decreasing 0.31%and
0.26%then it has been increasing last year 0.37
The above table we can understand that the maximum position of the working
capital is0.37% in the year 2008-09
CHART SHOWING GROSS WORKING CAPITAL TO SALES

CHART 4.6
Gross working cabital to sales
0.40 0.37
0.34
0.35
0.31
0.30 0.28
0.26
0.25
Ratio 0.20
0.15 Ratio
0.10
0.05
0.00
2004-05 2005-06 2006-07 2007-08 2008-09
year
TABLE SHOWING DEBTORS TURNOVER RATIO

Average
Period Credit sales receivables Ratio
2004-05 40258 1505 26.75
2005-06 47853 1907 25.09
2006-07 58417 1744 33.50
2007-08 84647 1699 49.82
2008-09 110720 1487 74.46
29
Inference;
The above table reveals that the Debtor turnover ratio during the period 2004-05
to 2008-09. Debtor turnover ratio of the firm it has been increased trend till the period
2004-09 it has been increased up to 74.46% in the year 2008-2009 respectively
The above table we can understand that the maximum position of the Debtors
turnover ratio is 74.46%in the year 2008-09.Hence the credit collection is efficient.
CHART SHOWING DEBTORS TURN OVER RATIO
CHART 4.7
80.00 74.46
70.00
60.00
49.82
50.00
Ratio 40.00 33.50

26.75 Ratio
30.00 25.09
20.00
10.00
0.00
2004-05 2005-06 2006-07 2007-08 2008-09
YEAR
TABLE SHOWING DEBTORS TO SALES

PERIOD DEBTOR SALES RATIO
2004-05 1395 40258 3.47
2005-06 1709 47853 3.57
2006-07 2149 58417 3.68
2007-08 2825 84647 3.34
2008-09 2585 110720 2.33
Inference;
The above table reveals that the debtor to sales during the period 2004-05 to 2008-09.
In the year 2006-2007 it has been increasing up to 3.68% and for the following
30
subsequent years it follows a decrease trend which comes down up to 2.33% in the year
2008-09 respectively
The above table we can understand that the maximum position of the
Debtors to sales is 3.68 % in the year 2006-2007.
CHART SHOWING DEBTORS TO SALES
CHART 4.8
14
12 2.33
10 3.34
3.68 5
8
3.57 4
6
3
3.47
4 2
5
4
2 1 3
2
1
0
2004-05 2005-06 2006-07 2007-08 2008-09
RATIO
TABLE SHOWING THE DEBTORS OF CURRENT ASSETS

TABLE 4.9 Rs.In.Lakhs
PERIOD DEBTOR CURRENT RATIO
ASSETS
2004-2005 1395 11396 12.24
2005-2006 1709 16435 10.40
2006-2007 2149 17986 11.95
2007-2008 2825 21789 12.97
2008-2009 2585 40469 6.35
Inference;
The above table reveals that the debtor as a percentage of assets during the period 2003-
04 to 2007-08. In the year 2003-04 it has been 12.24% and for the following subsequent
years it follows a decrease trend which comes down up to 6.39% in the year 2007-08
respectively
31
Debtors as a % of assets is 12.24% in the year 2003-04.
CHART SHOWING THE DEBTORS OF CURRENT ASSETS
CHHART 4.9
debtors as a % of current assets
14.00 12.97
12.24 11.95
12.00
10.40
10.00
8.00
Ratio 6.39
6.00 RATIO
4.00
2.00
0.00
2004-05 2005-06 2006-07 2007-08 2008-09
year
TABLE SHOWING CASH TURNOVER RATIO

Period Sales cash balances Ratio
2004-05 40258 1395 28.86
2005-06 47853 1709 28.00
2006-07 58417 2149 27.18
2007-08 84647 2825 29.96
2008-09 110720 2585 42.83
Sources: Annual reports
Inference;
The above table reveals that the cash turnover ratio during period 2004-05 to
2008-09.In the year 2004-05 it was 28.86it has bean decreased in the year 2005-07 as
28 and 27.18 thereafter in the year 2007-08 which is increased 29.96 and 42.83 in the
year 2008-09.
The above table we can understand that the maximum position of the cash
turnover ratio is 42.83% in the year 2008-09
32
CHART SHOWING CASH TURNOVER RATIO

CHART 4.10
cash tunover ratio
45.00 42.83
40.00
35.00
28.86 29.96
30.00 28.00 27.18
25.00
Ratio
20.00
Ratio
15.00
10.00
5.00
0.00
2004-05 2005-06 2006-07 2007-08 2008-09
year
TABLE SHOWING CASH AS APERCENTAGE OF CURRENT ASSETS

current
Period cash balances assets Ratio
2004-05 1395 11396 12.24
2005-06 1709 16435 10.40
2006-07 2149 17986 11.95
2007-08 2825 21789 12.97
2008-09 2585 40469 6.39
Inference;
The above table reveals that the cash as a % current assets of firm has been
fluctuating trend during period 2004-05 to 2008-09.when the current assets increased
and profit also increased .In the year 2004-05 the ratio was 12.24 and the next year
which has been decreased as 10.40. Thereafter the ratio has been increasing tread.
The above table we can understand that the maximum position of cash as a
percentage of current is 12.97% in the year 2007-08
CHART SHOWING CASH AS APERCENTAGE OF CURRENT ASSETS

33
CHAART 4..11
25
20
15 12.97
6.39
11.95
10
10.4
12.24 5
4
5 3
2 5
1 3 4
1 2
0
2004-05 2005-06 2006-07 2007-08 2008-09
Ratio
TABLE SHOWING POSITION OF INVENTIRIES

Gross working
Period Inventories capital Ratio %
2004-05 6004 11396 53
2005-06 9897 16435 60
2006-07 10017 17986 56
2007-08 7827 21789 36
2008-09 16617 40469 41
Inference;
The table reveals that the position of inventory in Gross working capital from
the year 2004-05 to 2008-09 . In the year 2005-06, the percentage of inventory in Gross
working capital has increased and thereafter the same has been decreased respectively in
the year 2007 – 2008 to 2008-2009 it has increased
inventory is 60% in the year 2005 – 06
CHART SHOWING POSITION OF INVETORIES

CHARRT 4.12
34
Invetories
60
50
40
Ratio 30 60 56
53
41 Ratio %
20 36
10
0
2004-05 2005-06 2006-07 2007-08 2008-09
Year
TABLE SHOWING POSITION OF SUNDRY DEBTORS

sundry Gross working Ratio
Period debtors capital %
2004-05 1505 11396 13
2005-06 1907 16435 12
2006-07 1744 17986 10
2007-08 1699 21789 8
2008-09 1487 40469 4
Inference;
The table showing the position of Sundry Debtors in Gross working capital
from the year 2004-05 to 2008-2009 . In the year 2004-2005 it is 13% and thereafter in
the year 2008-09 it decreased to 4% respectively
The above table we can understand that the maximum position of the Sundry
Debtors is 13% in the year 2004 – 2005.
CHART SHOWING POSITION OF SUNDRY DEBTORS

CHARRT 4.13
35
Sundry Debtors
14
12
10
8
Ratio 13
6 12
10 Ratio %
4 8
2 4
0
2004-05 2005-06 2006-07 2007-08 2008-09
Year
36
TABLE SHOWING POSITION OF CASH&BANK

Gross
Cash& Bank working Ratio
Period Balances capital %
2004-05 1395 11396 12
2005-06 1709 16435 10
2006-07 2149 17986 12
2007-08 2825 21789 13
2008-09 2585 40469 6
Inference;
The above table analysis we can see the contribution of cash on the firm current
asset. The cash position was decreasing in the year 2008 – 2009 and then same has been
finally it has been increased to 13percentage and finally it has been decreased to 6
percentage in the year 2008 – 2009 respectively
The above table we can understand that the maximum position of the Cash is 13
percentage in the year 2007 – 08.
CHART SHOWING POSITION OF CASH&BANK

CHART 4.14
cash&Bank
balance
14
12
10
8
Ratio 13
6 12 12
10 Ratio %
4 6
2
0
2004-05 2005-06 2006-07 2007-08 2008-09
year
TABLE SHOWING CASH AS A NET PROFIT RATIO

37
YEAR NET PROFIT SALES RATIO

2004-05 1396 40258 3.47
2005-06 2796 47853 5.84
2006-07 4006 58417 6.86
2007-08 11471 84647 13.55
2008-09 16377 110720 14.79
Inference;
It indicates the efficiency of the overall operations of the firm. From the
above graph it was clear that the net profit has constant growth in the prescribed years so
we conclude that an increase in net profit ratio year after year is an indication of
improving working conditions and vice versa.
CHART SHOWING NET PROFIT RATIO

CHART 4.15
Net profit ratio
16
14
12
10
at
io
R
8 14.79
13.55
6
4 6.86
5.84
23.47
0
2004-05 2005-06 2006-07 2007-08 2008-09
year
RATIO
TABLE SHOWING POSITION OF LOANS AND ADVANCES

38
PERIOD LOAN&ADVANCE GROSS WORKING

S CAPITAL RATIO %
2004-05 2462 11396 22
2005-06 2904 16435 18
2006-07 4072 17986 22
2007-08 9434 21789 43
2008-09 19780 40669 49
Inference;
The above table analysis we can see the contribution of Loans and Advances on
the firm current asset. The Loans And Advances position has increased as 22% . In the
first years and then the same has been decreased to 18% and in the subsequent year it has
been increased up to22%&43%&49%in the year 2006-07 to 2008-09 respectively
Loans and Advances is 49% in the year 2008 – 2009.
CHART SHOWING POSITION OF LOANS AND ADVANCES

CHART 4.16
loans&advance
50
49
40 43
30
22
20 18 22
Ratio %
10
0
2004-05 Ratio %
2005-06 2006-07
2007-08
2008-09
year
TABLE SHOWING COMPOSITION OF CURRENT ASSETS FOR THE YEAR

(2004-05 TO 2008-09) TABLE NO4.17
39
2004 2005 2006- 2007- 2008-

articular -05 -06 07 08 09
Inventories 53 60 56 36 41
Sundry debtors 13 12 10 8 4
Cash& bank
balances 12 10 12 13 6
Loans&
advances 22 18 22 43 49
Total 100 100 100 100 100

Inference;
The above table it is found that the Debtors has been at the maximum of 13%
during the year 2004 – 05 , stock maximum contribution is 60% in the year 2005-06 ,
cash and bank balance maximum contribution is 13% in the year 2007-08 and Loans and
Advances maximum contribution is 49.% in the year 2008-09
The above table we can clearly understand maximum contribution of 60%
inventories in current assets.
CHART SHOWING COMPOSITION OF CURRENT ASSETS FOR THE YEAR

2004-05 TO 2008-09
CHART 4.17
40
composition of current assets
2008-09 41 46 49
2007-08 36 8 13 43
Inventories
ye
ar
2006-07 56 10 12 22
Sundry debtors
2005-06 60 12 10 18 Cash& bank balances
Loans& advances
2004-05 53 13 12 22
0 20 40 60 80 100
Ratio
TABLE SHOWING POSITION OF SUNDRY CREDITORS

TABLE NO4.18 (Rs. In lakhs)
Period sundry creditors Total liabilities Ratio %
2004-05 3657 6934 52.74
41
2005-06 3433 7928 43.30

2006-07 4608 10768 42.79
2007-08 4197 17296 24.27
2008-09 11282 35837 31.48
Inference;
The above table reveals that the position of sundry current liabilities from the
period 2004-05 to 2008-09. In the year 2004-09, the percentage of sundry creditors in
total current liabilities has been decreased to 43% it has bean increased 44%
respectively in the year 2008-2009
Liabilities is 52.74% in the year 2004-05
CHART SHOWING POSITION OF SUNDRY CREDITORS

CHART 4.18
CREDITORS
60
50
40
Ratio 30 60 56
53
41 Ratio %
20 36
10
0
2004-05 2005-06 2006-07 2007-08 2008-09
Year
TABLE SHOWING POSITION OF OTHER LIABILITIES

TABLE NO4.19 (Rs. In lakhs)
Period other liabilities Total liabilities Ratio %
2004-05 2166 6934 31.24
2005-06 2401 7928 30.29
2006-07 3151 10768 29.26
2007-08 3260 17296 18.85
42
2008-09 4358 35837 12.16

Inference;
The above table reveals that the position of other liabilities from the period 2004-
05 to 2008-09. In the year 2004-09, the percentage of creditors in total current liabilities
has been decreased to 12.16% it has bean respectively in the year 2008-2009
The above table we can understand that the maximum position of the Liabilities is
31.24% in the year 2004-05.
CHART SHOWING POSITION OF OTHER LIABILITIES

CHART 4.19
60.00
52.74
50.00 43.30 42.79
40.00
31.48
Ratio 30.00 24.27
20.00
10.00
0.00
2004-05 2005-06 2006-07 2007-08 2008-09
year
Ratio %
TABLE SHOWING POSITION OF PROVISION

Total
Period Provision Liabilities Ratio %
2004-05 851 6934 12
2005-06 1872 7928 24
2006-07 3009 10768 28
2007-08 9839 17296 57
43
2008-09 20197 35837 56

Inference;
The table shows the position in total current liabilities from the period 2004-2005
to 2008-2009 . in the year 2004 –05 it is12% and subsequent year the same has bean
increased to 24%,28%,57%,and finally decreased 56%in the year2008-09 respectively .
The above table we can understand that the maximum position of the provision is
57% in the year 2007-08.
CHART SHOWING POSITION OF PROVISION
CHART 4.20
provision
12
24
56 2004-05
2005-05
2006-07
28
2007-08
2008-09
57
TABLE SHOWING COMPOSITION OF CURRENT LIABILITES FOR THE

YEAR 2004-05 TO 2008-09 TABLE 4.21
Particular 2004-05 2005-06 2006-07 2007-08 2008-09
sundry
creditors 52.74 43.3 42.79 24.27 31.48
other
liabilities 35.26 30.29 29.21 18.73 12.16
Provision 12 26.41 28 57 56.36
Total 100 100 100 100 100
Inference;
44
The above table it is found that the sundry creditors has been at the maximum of
88% during the year 2004-05 , provisions maximum contribution is 57% during the year
2007-08.
The above table we can clearly understand maximum contribution of 88% sundry
creditors in current liabilities
CHART SHOWING COMPOSITION OF CURRENT LIABILITES FOR THE
YEAR 2004-05 TO 2008-09
CHART 4.21
2008-09 31.48 12.16 56.36
2007-08 24.27 18.73 57

ye
ar
2006-07 42.79 29.21 28 sundary creditors

other liabilities
2005-06 43.3 30.29 26.41 Provision
2004-05 52.74 35.26 12
0 20 40 60 80 100
ratio
TABLE SHOWING GROWTH VALUE OF WORKING CAPITAL

Period Net working capital Growth value
2004-05 4462 0
2005-06 8507 1.91
2006-07 7218 0.85
2007-08 4493 0.62
2008-09 4632 1.03
Inference;
45
The above table reveals that the growth value of the working capital during the
period 2004-05 to 2008-09. In the year 2005-06 it was 1.91% and it shows a decreasing
trend up to 0.62% and it has increasing 1.03%in 2008-09 respectively.
The above table we can understand that the growth value of the
working capital is 1.91% in the year 2005-2006
CHART SHOWING GROWTH VALUE OF WORKING CAPITAL

CHART 4.22
Growth value
2.5
2 1.91
wt
va
ro
lu
G
1.5
1 1.03
0.85
0.62
0.5
0 0
2004-05 2005-06 2006-07 2007-08 2008-09
year
Growth value
TABLE SHOWING OPTIMUM LEVEL OF CURRENT ASSETS

Period short-term financing long term financing
2004-05 6934 46670
2005-06 7928 53018
2006-07 10768 53807
2007-08 17296 56895
2008-09 35837 89298
Inference;
The above table shows the optimum level of current assets and liabilities for the
year 2003-04 to 2007-08 .the short term financing starts with Rs 6934 and it shows a
uptrend throughout the year and similarly it happened same for short term financing
46
CHART SHOWING OPTIMUM LEVEL OF CURRENT ASSETS

CHART 4.23
140000
120000
100000
80000
ss
et
A
60000
40000
20000
0
2004-05 2005-06 2006-07 2007-08 2008-09
year
short-term financing long term

financing
TABLE SHOWING VARIABLE COST

TABLE 4.24
Period Variable w/c Total w/c Fixed w/c

2004-05 14012 11396 2616
2005-06 45720 16435 29285
2006-07 15651 17986 2335
2007-08 42105 21789 20316
2008-09 225494 40469 185025
CHART SHOWING VARIABLE COST

CHART 4.24
47
250000
200000
150000
st
o
c
100000
50000
0
2004-05 2005-06 2006-07 2007-08 2008-09
year
total w/c fixed w/c
Variable cost for the year 2004-05
11396-9663
Variable cost =--------------------
127-113
1733
=-----------
14
=124*113
48
Variable cost =14012/-
Total cost =11396/-
Fixed cost = variable cost – total cost
= 14012-11396
= 2616/-
16435-11396
Variable cost =--------------------
127-113
5039
=-----------
14
=360*127
49
Total cost =16435/-
= 45720-16435
= 29285/-
17986-16435
Variable cost =--------------------
141-127
1551
=-----------
14
=111*141
50
Total cost =17986
= 15651-17986
= 2335
21789-17986
Variable cost =--------------------
155-141
3803
=-----------
14
=271
51
Total cost =21789
= 42105-21789
= 20316
40469-21789
Variable cost =--------------------
169-155
18680
=-----------
14
=1334*169
52
Total cost =40469/-
= 225494-40469
= 185025/-
Changes of working capital for the year 2004-05 to 2005-06

(Rs. In lakhs)
Current assets 2004-05 2005-06 Increase Decrease
Inventories 6004 9897 3893

Sundry debtors 1505 1907 402
Other current assets 30 18 12

Cash& bank balances 1395 1709 314
Loans &advances 2462 2904 442
Total current assets 11396 16435
Current liabilities
53
Liabilities 6083 6056 27

Provision 851 1872 1021
Total Current 6934 7928
liabilities
Net working capital 4462 8507 4095

Total 8507 8507 5078 5078

Inference:
The above table it is clear that the working capital has increased Rs.4045, in the year of
2005-06.
The analysis of the table it is clearly understood that the current liabilities have been
decreased by Rs.1021 in the year 2005-06.
The analyzed table we can clearly understand that working capital has been
Increased by Rs. 4,045 in the year 2005-2006
54

(Rs. In lakhs)

Other current assets 18 4 14
Current liabilities

Provision 1872 3009 1137
liabilities

Total 85087 8507 3017 3017

Inference:
The above table, it is clear that the working capital has decreased to Rs.1289 in
the year of 2006-07 because the sundry debtors and other current assets Rs. 163 and 14
have been decreased. In the mean while the current liabilities have bean decreased by Rs.
2,840.
The above table shows the changes of working capital as decreased by Rs. 1289 in the
year 2006-07.
55
(Rs. In lakhs)

Other current assets 4 4

Current liabilities

Provision 3009 9839 6830

liabilities

Total 7218 7218 9065 9065

Inference:
The above table, it is clear that the working capital has decreased to Rs.2,725 in
the year of 2007-08 because the inventories and sundry debtors Rs. 2,190 and 45 have
been decreased. In the mean while the current liabilities have bean decreased by Rs.
6,830.
The above table shows the changes of working capital as decreased by Rs. 2,725 in the
year 2007-08.
56
(Rs. In lakhs)
Other current assets 4 4

Current liabilities
Provision 9839 20197 10358
Total Current liabilities 17296 35837

Total 4632 4632 19136 19136

Inference
The above table it is clear that the working capital has increased Rs.139, in the
year of 2008-09.
The analysis of the table it is clearly understood that the current liabilities, provision
have been decreased by Rs.8183,10358 in the year 2008-09.
The analyzed table we can clearly understand that working capital has been
Increased by Rs. 139 in the year 2008-2009
57
OPERATING CYCLE (2004-05 )
Average of RM
Raw materials =------------------------------------ *360
Cost of materials
802
= ________ *360
4667
= 62 days
Average of W.I.P
Work in progress =----------------------------- *360
Cost of production
880
= --------------------------- *360
32043
= 10 days
58
Average stock of FG
Finished goods = -------------------------------- *360
Cost of good sold
229*360
= ----------------------------
40258
=2 days
Average debtors
Credit sales
2476 *360
=---------------------
20258
=44 days
Creditors
Credit deferred per = ------------------------------ *360
Credit purchase
913 *360
=---------------------
8997
=37
59
OPERATING CYCLE ( 2005-06 )
Average of RM
Raw materials =------------------------------------ *360
Cost of materials
641
=________ *360
6522
=35 days
Average of W.I.P
Work in progress =----------------------------- *360
Cost of production
942
=----------------------------- *360
38432
= 9 days
Average stock of FG
Finished goods = -------------------------------- *360
Cost of good sold
60
288
= ---------------------------- * 360
47853
=2 days
Average debtors
Credit sales
1907 *360
=---------------------
23926
= 29 days
Creditors
Credit purchase
1165 *360
=---------------------
11477
=37 days
61
Average of RM
Raw materials =------------------------------------ *360
Cost of materials
1296
=________ *360
8379
=55 days
Average of W.I.P
Work in progress =----------------------------- *360
Cost of production
280
=------------------------- *360
46516
= 2 days
Average stock of FG
Finished goods = -------------------------------- *360
Cost of good sold
62
3437
= ---------------------------- * 360
58417
=21 days
Average debtors
Credit sales
1744 *360
=---------------------
58417
= 21 days
Creditors
Credit purchase
4020 *360
=---------------------
15539
= 93 days
63
Average of RM
Raw materials =------------------------------------ *360
Cost of materials
2114
=________ *360
11026
=69 days
Average of W.I.P
Work in progress =----------------------------- *360
Cost of production
3847
=-------------------------- *360
60714
=23 days
Average stock of FG
Finished goods = -------------------------------- *360
Cost of good sold
1971
= ---------------------------- * 360
84647
= 8 days
64
Average debtors
Credit sales
1699*360
=---------------------
42323
= 14 days
Creditors
Credit purchase
4402 *360
=---------------------
21376
= 74 days

Average of RM
Raw materials =------------------------------------ *360
Cost of materials
140092
=________ *360
3964069
=13 days
Average of W.I.P
Work in progress =----------------------------- *360
Cost of production
65
3536
=-------------------------- *360
76027
=17 days
Average stock of FG
Finished goods = -------------------------------- *360
Cost of good sold
3646
= ---------------------------- * 360
110720
= 54 days
Average debtors
Credit sales
1487*360
=---------------------
110720
= 10 days
Creditors
Credit purchase
7739 *360
=---------------------
30438
= 92 days
66
Table showing Summary of operating cycle for the year
2004 – 05 to 2008– 09
Particular 2005 2006 2007 2008 2009
operating cycle
ICP
RMCP 62 35 55 69 13
WIPCP 10 9 2 23 17
FGCP 2 74 2 46 21 78 8 100 54 84
Add;
Debtors covered period 44 29 21 14 10

Lees ;
Credit deferred period 37 37 93 74 92
Net operating 81 38 6 40 2
Inference;
67
The above table shows that the inventory conversion period (icp), debtors
collection period and creditors deferred period
If we compare the inventory conversion period in 2008 inventory conversion

period (84days) and the debtors collection period has 10 days to collect the debt as it was
low when compare to other years ,the creditors deferred period has been increased to 92
days
5.1 FINDINGS:
68
 The analyzed data we can inferred that the working capital has increased finally to
rs 139 lakhs this shows the best utilization of cash
 The analyzed table we can clearly understand that working capital has been
Increased by Rs. 4,045 in the year 2005-2006
 The analyzed table shows the changes of working capital as decreased by Rs.
1289 in the year 2006-07.
 The analyzed table shows the changes of working capital as decreased by Rs.
2,725 in the year 2007-08.
 The analyzed table we can clearly understand that working capital has been
Increased by Rs. 139 in the year 2008-2009.
 The analyzed table we can understand that the maximum position of the inventory
is 60% in the year 2005 – 06
 The analyzed table we can understand that the maximum position of the Sundry
Debtors is 13% in the year 2004 – 2005
 The analyzed table we can understand that the maximum position of the Cash is
13% in the year 2007 – 08.
 The analyzed table we can understand that the maximum position of the Loans
and Advances is 49% in the year 2008 – 2009.
 The analyzed table we can clearly understand maximum contribution of 60%

inventories in current assets.
69
 The analyzed table we can understand that the maximum position of the
 Liabilities is 88% in the year 2004-05
 The analyzed table we can understand that the maximum position of the provision
is 57% in the year 2007-08.
 The analyzed table we can clearly understand maximum contribution of 88%

sundry creditors in current liabilities.
 The analyzed table we can understand that the growth value of the working
capital is 1.91% in the year 2004-2005.
 The overall Net operating cycle concludes that the creditors deferred period is
better than debt collection period.
5.2 SUGGESTIONS:
70
 To have a good return the company should reduce the manufacturing expenses.
 The company can increase its Net Profit level which has been increased indicating
a better performance by the company
 The company has invested more in Fixed Assets rather they can diversify their
investment which will bring more profit to the Company.
 The company should maintain the current ratio in a consistence manner because
the ratio reflected the ability of the company to meet its current ability.
5.3 CONCLUSION
According to this study, the working capital management of

71
Chettinad Cement Corporation limited has a better position. The variables
chosen for the study helped in determining the position of the concern
consequently for the past five years. The company’s position in terms of
finance is satisfactory.
BIBLIOGRAPHY
1.GUPTA S.P “Management Accounting”, sathya bhawan, agra,1987.

72
2.MAHESWARI S.N “Management Accounting and financial Accounting

analysis”,Sultan Chand &Sons,educational publishers, newdelhi,2001.
3.V.K.BHALLA “Working capital management (text and cases)”anmol

publications pvt.tld newdelhi-110 002(India).
4.R.S.N PILLAI and BAGAVATHI, “Management Accounting” ,S.Chand

&company ltd ram nagar newdelhi-110 055.
5.R.K.SHARMA and SHASHI K.GUPTA “Management Accounting” kalyani

publishers 1/1,rajinder nagar,Ludhiana 141 008.
6.PANDY I.M Financial Management.
7.Visual basic 6-GARY CRONELL,TATA MC GRAW HILL Publishing

company ltd.

AMAR Project 1

Uploaded by

Copyright:

Available Formats

AMAR Project 1

Uploaded by

Document Information

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

AMAR Project 1

Uploaded by

Copyright:

Available Formats

1

1.1 WORKING CAPITAL ANALYSIS

1.1.1 MEANING AND CONCEPT OF WORKING CAPITAL

Maintaining adequate working capital is not just important in the short-term.

Every business needs adequate liquid resources in order to maintain day-to-day

The term of 'working capital Analysis' includes both 'Analysis' and

1.2 COMPANY PROFILE

Chettinad Cement Corporation Ltd., Puliyur Cement Factory has won

1.2.1 SITE DESCRIPTION AND SITE PLAN

CCCL is located at Puliyur village in Karur (Dt.) Tamil Nadu,

2004 - Environment Management Service Certificate option.

1.2.2 The product offered by CCCL is as given below:

 ORDINARY PORTLAND CEMNT OPC-43, OPC-53

1.3 INDUSTRY PROFILE;

The various types of cement are produced in India

1. Ordinary Portland cement

2. Portland pozzolana cement

3. Portland blast furnace slag cement

4. Pulphate resistant Portland cement

Abdul raheman and Mohamed nasr conducted a study on working capital

The total working capitals requirements of a firm is determined by a variety of factors. It

house(10-20%),but in the case of construction and trading groups, it is to be expected a

a)Through credit terms granted by the firm to its customers.

b)Credit terms available to the firm from its customers.

These two will affect the working capitals need.

3.1 AIM FOR THE STUDY

 To study composition of Current Assets and Current liabilities.

 To find out the growth value of working capital .

 To find out how current assets have been financed.

 To find out the variable and fixed component of working capital .

A research design is the arrangement of conditions for collection analysis of

 Nature of working statements

 Period of the study

3.3.1Nature working statement;

3.4 DATA COLLECTION

3.5 RESEARCH TOOLS :

3.5.2COMMON SIZE STATEMENTS

3.5.3WORKING CAPITAL MANAGEMENT

FINANCIAL CURRENT ASSETS

Three of financial may be distinguished

3.5.4 OPERATING CYCLE

OPERATING CYCLE A MAUNFACTURING FIRM

CONTROL OF WORKING CAPITAL

Gross working capital

Gross working capital

Net working capital

CONTROL OF RECEIVABLE MANEGMENT

Annual credit sales

Receivables at the end

DEBTORS TURNOVER RATIO;

=Net Credit Sales / Average Receivables

CONTROL OF CASH MANAGEMENT

NET PROFIT RATIO;

Net profit(after interest& tax)

CONTROL OF INVENTORY MANAGEMENT

Every firm has to maintain a certain level of inventory of finished goods so as to

Net Working capital

3.6 SCOPE OF THE STUDY:

1. The annual reports of 2004-05,2005-06,2006-07,2007-08 and 2008-09 were

2. Standered financial ratio was used to analyze the financial healthiness of