CITY COLLEGE OF COMMERCE AND

BUSINESS ADMINISTRATION

Bachelors of Commerce (University of Calcutta)

Project on Working Capital Management – ITC LTD.

SUBJECT: PROJECT WORK

PAPER: CC6.1Ch

B.COM (HONOURS)

SEMESTER VI

TOPIC: A Case Study On The Working Capital Management Of ITC LTD.

PREPARED BY: MANIDIPTYA SAHA

YEAR: 2025

A PROJECT REPORT SUBMITTED FOR PARTIAL FULFILMENT OF THE DEGREE OF B.COM

HONOURS IN ACCOUNTING & FINANCE UNDER THE UNIVERSITY OF CALCUTTA
TOPIC OF THE STUDY

A Case Study On The Working Capital

Management Of
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PROJECT REPORT

Submitted for the Degree of B.Com Honours in

Accounting & Finance under the University of
Calcutta.
“Working Capital Management Of ITC Ltd.”
Submitted by:
Name of Candidate: Manidiptya Saha
C.U. Registration no: 122-1111-0007-22
C.U. Roll no: 221122-21-0006
Name of College: City College of Commerce And Business
Administration.

Supervised by:
Name of the Supervisor: Dr. Dipanjana Bagchi.

Name of the College:

CITY COLLEGE OF COMMERCE AND BUSINESS ADMINISTRATION

Year Of Submission: 2025

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Acknowledgement
It is a matter of great pleasure for me in submitting the project report on “Working Capital
Management of ITC Ltd” for the fulfillment of the degree of B.Com Honours in Accounting &
Finance under the University of Calcutta.

I am thankful to and owe

gratitude to all those who have helped me in preparing this report. Words seem to be inadequate to
express my sincere thanks to our honourable principal __________ , as well as our head of
department honourable __________ and finally my supervisor Dr. Dipanjana Bagchi for her
valuable guidance, constructive criticism, untiring efforts and immense encouragement during the
entire course of the study due to which my efforts have been rewarded.

I want to thank all who have supported me and gave their timely guidance. Last but not the least I
am very grateful to all those who helped me in one-way or the other way at every stage of my
work.

Name of the Student

Manidiptya Saha
6th Semester B.Com(H)

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Student's Declaration
I hereby declare that the project work with the title, “Working Capital Management
of ITC Ltd” submitted by me for the partial fulfillment of the degree of B.Com Honours in
Accounting & Finance under the University of Calcutta is my Original work and has not been
submitted earlier to any other University/institution for the fulfillment of the requirement for any
course of study.

I also declare that no chapter if this manuscript in whole or in part has been incorporated in
this report from any earlier work done by others of by me. However, extracts of any literature
which has been used for this report has been duly acknowledged providing details of such literature
in the references.

Place: Signature:

Date: Name:
Address:
Reg. No:
Roll No:

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Supervisor's Certificate
This is to certify that Mr Manidiptya Saha a student of B.Com Honours in Accounting & Finance
of City College Of Commerce And Business Administration College under the University of
Calcutta has worked under my supervision and guidance for his Project Work and prepared a
Project Report with the title “Working Capital Management of ITC Ltd”.

The Project Report, which he is submitted, is his genuine and original work to the best of my
knowledge.

Place: Signature:

Date: Prof. ____________

(Professor in commerce)
College

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CHAPTER 1: INTRODUCTION

✧Definition & Background of the Study

Working Capital is the money required to Fund the day-to-day operations of a business. It helps a
company in ensuring to pay-off the debts and expenses when they falls due. In this project we have
studied the performance of Working Capital Management of ITC Ltd. We find that the primary
theme of Working Capital Management is the interaction between Current Assets and Current
Liabilities. It is based on two Concepts Gross Working Capital Management and Net Working
Capital Management. The liquidity of a business is measured by the firm’s ability to satisfy short-
term obligations as they become due. We have prepared different ratios and analysed them to
measure how proficiently Working capital has been used in the business.

✧Literature Review
✦Dr.V Bhuvaneswari (2020):

She highlighted the working capital which will determine whether the position of the
company from the working capital point of view is sound and satisfactory. She concluded
that the overall working stability, soundness and overall financial performance have
improved over the years.

✦Tanwar S.K. and Shah C.K.((2012):

They have made an in-depth study of the inventory management of selected companies in India.
In order to project a clear picture of the profitability of the industry as a Whole, the analysis of
profitability of individual firm would be helpful. In conclusion the author is of the opinion tha
the profitability analysis today is of paramount significance in the context of overall performance
of the business concern.

✦Madhavi K. (2014):

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She has done research based on empirical study of co relation among liquidity position an
profitability of the paper mills in Andhra Pradesh. That has been evaluated ineffective working
capital negatively effect on profitability of the paper mills.

✧Objectives of Study
✦To study the Working Capital Management of ITC LTD.

✦To analyse the liquidity position of the company.

✦To study the present performance of working capital management of the company.

✦To analyse the inventory management and financial health of the Company.

✧Research Methodology
✦Nature of the study- It is an empirical study.

✦ Sample Size- We have used ITC Company for this analysis and used last 5 years data
(i.e. from March 2019 to March 2024).
✦ Data source- It is secondary data based analysis.

✦ Tools used- The different tools used for analysis are Statistical Tools(graphs, diagrams
charts) and Ratio analysis.

✧Limitations of Study
Following limitations were faced while preparing the project :

✦Limited Data- This project is Completely based on Secondary Data as Primary Data
collection is time consuming and trivial here.
✦Limited Time Period- This project is based on past five years annual data. Conclusions
are drawn on such basis.
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✦Limited Variables - Since, the Project is based on Secondary data Limited variables are
used and Simple techniques have been used for analysis

✧Chapter Planning

This project report has been divided in four logical parts-

✦ Chapter 1: Introduction

This chapter includes Definition & Background of Study, Literature review, Objectives of
Study, Research Methodology, Limitations of Study, Chapter Planning.

✦ Chapter 2: Conceptual Framework

This chapter includes Concept, Company Profile, Industry Profile, National Scenario,
International Scenario.

✦Chapter 3: Presentation & Analysis of Data

This chapter shows the analysis of financial data using the Gross Working Capital, Net
Working Capital, and the following Ratios

Current Ratio, Quick/Liquid/ Ratio, Inventory Turnover Ratio, Cash Ratio, Working Capital
Turnover Ratio.

✦Chapter 4: Findings & Conclusion

This chapter is divided into two parts. The first part focuses on the Findings of the study
& the second part focuses on the Concluding portion of the study.

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CHAPTER 2: CONCEPTUAL FRAMEWORK

✧ Concept
✦ Working Capital :

✦ Working capital, also known as net working capital (NWC), is the funds
available for day-to-day operations of the business concern. NWC is a measure
of a company’s liquidity and refers to the difference between operating current
assets and operating current liabilities. Working Capital is the life line and centre
of business which is essential for smooth operation of a business.

✦ Formula => Working Capital= Current Assets – Current Liabilities

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✧Working Capital Management :

✦ Working Capital Management is the process of efficiently managing a company’s short-term

assets and liabilities to ensure sufficient liquidity for day-to-day operations and meeting short-term
financial obligations. It is a business tool that helps companies effectively make use of current
assets, helping companies to maintain sufficient cash flow to meet short term goals and obligations.

✧Key Aspects of Working Capital Management :

❖ Cash Management: Effectively managing cash inflows and outflows to ensure
sufficient liquidity.
❖ Inventory Management: Optimising inventory levels to minimize holding costs and
ensure timely availability of goods.
❖ Accounts Receivable Management: Efficiently collecting payments from
customers to improve cash flow.
❖ Accounts Payable Management: Strategically managing payments to suppliers to
optimize cash flow and maintaining good relationships.
❖ Short term financing: Securing necessary short-term financing to cover temporary
cash flow needs.

✧Significance of Working Capital Management :

❖ Solvency Of Business: Adequate working helps in maintaining solvency of the
business by providing uninterrupted flow of production.

❖ Financial Health: It reflects a company’s ability to manage its day-to-day operations

and maintain a healthy financing position.

❖ Liquidity: Efficient working capital management ensure a company has enough

liquid assets to meet its short-term obligations and operational needs.

❖ Profitability: By minimising unnecessary costs and maximizing cash flow, working

capital management can contribute to increased profitability.
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❖ Growth and Investment: Adequate working capital allows businesses to invest in

growth opportunities and handle unexpected expenses.

✧Components of Working Capital Management:

❖ Current Assets: Cash, Accounts Receivable, inventory, and short-term investments.
❖ Current Liabilities: Accounts Payable, short-term loans, and accrued liabilities.
❖ Cash and Cash Equivalents: This represents the readily available funds a company
has to cover its short-term obligations and operational expenses.
❖ Inventory: Raw materials, work-in-progress, and finished goods that a company
holds for sale.
❖ Advances: This represents amount paid for which the goods and services have not
yet been rendered, including advances given to suppliers and employees.

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✧ Company Profile

ITC Limited is an Indian conglomerate, headquartered in Kolkata. It has a presence across six
business segments, namely FMCG, agribusiness, information technology, paper products,
and packaging. It generates a plurality of its revenue from tobacco products. In terms of market
capitalization, ITC is the second-largest FMCG company in India and the third-largest tobacco
company in the world. It employs 36,500 people at more than 60 locations across India. Its
products are available in 6 million retail outlets in India and exported to 90 countries.

✧History
“ITC Limited” was originally named “Imperial Tobacco Company of India Limited”, succeeding
Imperial Brands and W.D. & H.O. Wills on 24 August 1910 as a British-owned company registered
in Kolkata. Since the company was primarily based on agricultural resources, it ventured into
partnerships in 1911 with farmers from the southern part of India to source leaf tobacco. Under
the company’s umbrella, the “Indian Leaf Tobacco Development Company Limited” was formed
in Guntur district of Andhra Pradesh in 1912.The first cigarette factory of the company was set up
in 1913 in Bangalore.

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In 1928, construction began for the company’s headquarters, the ‘Virginia House’ at Calcutta. ITC
acquired Carreras Tobacco Company’s factory at Kidderpore in 1935 to further strengthen its
presence. ITC helped set up an indigenous cigarette tissue-paper-making plant in 1946 to reduce
import costs significantly. Then, a factory for printing and packaging was set up in Madras in
1949.The company acquired the manufacturing business of Tobacco Manufacturers (India)
Limited and the complementary lithographic printing business of Printers (India) Limited in 1953.

✧Products
The key products segments include packaged Food Item, Agricultural Products, Paper & Paper
Boards, Tobacco Unmanufactured, Hotel, Printed Materials. The main products & services are
cigarettes & cigars, foods, personal care, stationery, safety matches, agarbattis, hotels, paper
products, agri commodities, etc.

✧Industry Profile
ITC is one of India’s foremost private sector companies and a diversified conglomerate with
businesses spanning Fast Moving Consumer Goods, Paperboards and Packaging, Agri Business
and Information Technology. The Company is acknowledged as one of India’s most valuable
business corporations with a Gross Revenue of ₹ 69,446 crores and Net Profit of ₹ 20,422 crores
(as on 31.03.2024). ITC was ranked as India’s most admired company, according to a survey
conducted by Fortune India, in association with Hay Group.

✦Import Shipment Overview

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ITC LTD is a Indian importer or Buyer of Cigar making machinery and deals in majorly cigar
making machinery, tobacco machinery parts, machinery for preparing tobacco, cigarette making
machinery, making machinery for chewing tobacco, etc.

✦Major Suppliers

Major Trading partners of ITC LTD Are CHINA, UNITED ARAB EMIRATES, GERMANY,
ITALY, UNITED KINGDOM.

✦Export Shipment Overview

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ITC LTD is a premier company that exports and imports goods from countries including
Australia ,Netherlands and host of other countries. It is a leading exporter of PRAWNS
FROZEN, PRAWNS FROZEN, PRAWNS FROZEN, etc. The company primarily exports
products to Australia and ships its consignments mainly to Sydney.

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✦Revenue Analysis

ITC Limited, a multinational conglomerate headquartered in Kolkata, India, reported a revenue of

over 700 billion Indian rupees in fiscal year 2024. Apart from its FMCG range, ITC also owns
hotels, agriculture, information technology, packaging, and paperboard businesses. With a wide
range of brands, ITC is a market leader for cigarettes industry. Within the conglomerate, this sector
accounted for about 46 percent of its total revenue. Most of the gross revenue for ITC came from
its cigarette sector in fiscal year 2022.Even though much of the profit comes from cigarettes, ITC
retained its title as India’s leading marketer in FMCG businesses. Since foraying into the food
business in 2001, it has established over 25 brands, each gaining a significant market standing
among Indian consumers. The other prominent product “Classmate” is India’s largest notebook
brand. Apart from agri-business, IT, personal care products, the company supports the small and
cottage industries through incense stick manufacturing. ITC is one of India’s foremost private
sector companies and a diversified conglomerate with businesses spanning Fast Moving Consumer
Goods, Paperboards and Packaging, Agri Business and Information Technology. The Company is
acknowledged as one of India’s most valuable business corporations with a Gross Revenue of ₹
69,446 crores and Net Profit of ₹ 20,422 crores (as on 31.03.2024). ITC was ranked as India’s most

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admired company, according to a survey conducted by Fortune India, in association with Hay
Group.

2.4 National Scenario

ITC’s ‘Nation First: Sab Saath Badhein’ philosophy underlines its core belief in building a
globally competitive and profitable Indian enterprise that makes an exemplary contribution to
creating larger societal value. As a company deeply rooted in Indian soil, ITC is inspired by the
opportunity to serve larger national priorities. A global exemplar in Sustainability, ITC is the only
enterprise in the world of comparable dimensions to be carbon-positive, water-positive and solid
waste recycling positive for over a decade now. ITC has created over 6 million sustainable
livelihoods. Nearly 50% of the total energy consumed in ITC is from renewable sources. ITC’s
premium luxury hotels have the unique distinction of being LEED® Platinum certified.
Together with farmers and local communities, ITC has implemented large scale interventions in
climate-smart and sustainable agriculture that make a meaningful contribution to the Hon’ble
Prime Minister’s vision of doubling farmer incomes. Towards this, ITC has launched an integrated
programme titled ‘Baareh Mahine Hariyali’ (maximising farm utilisation over 12 months of the
year) to give a new dimension to the complex task of multiplying farmer incomes. ITC is
collaborating with NITI Aayog to progressively build capacity of 2 million farmers in 27
Aspirational Districts to help enhance rural incomes.
ITC is investing in India’s future by building world-class consumer goods factories and iconic
hospitality assets that will contribute to the country’s competitive capacity. These investment
projects underpin the Company’s support to the Government’s “Make in India” vision.

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Sales were up 16% YoY, driven by strong growth across segments. EBITDA was at Rs 5224 crore,
up 16.8% YoY, with margins at 31.8%.Consequent PAT was at Rs 4191 crore (up 11.8% YoY).
ITC’s share price has underperformed the FMCG index with negative 6.8% return (from Rs 286
in May 2017 to 267 in May 2022).
Revenue witnessed growth of 16% to Rs 16426 crore on the back of 10% growth in cigarettes,
31.8% growth in paperboard, 29.6% growth in agri & 12.3% growth in FMCG businesses. Hotels
business also saw strong recovery with 35.4% growth. However, it still remains lower than pre-
Covid revenues. There was some impact of Covid-19 third wave on hotel business during the
quarter

2.5 International Scenario

ITC’s International Business Division (ITC-IBD) launched Project Symphony three years ago to
transform itself from a speculation and price-based commodity trading outfit into a knowledge-based
and customer-focused enterprise.
The aim was to become a Rs 1,000-crore entity in three years. Last year, the division achieved a
turnover of Rs 800 crore against around Rs 300 crore three years ago. Its agro-exports grew by over
48 per cent during 2001-02. The harnessing of information technology across the value chain from
farm to the foreign customer is stated to have enabled ITC-IBD to substantially increase its export
earnings.

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In India, we have very good quality, average quality and also very bad quality agricultural produce.
Similarly, we have very good exporters, average exporters and fly-by-night operators. Generally, India
has got labelled as an inferior quality producer and unreliable exporter having inconsistent quality and
processing facilities. As a result, there is a lower price that is normally offered to Indian products.
Barring a few special products, general Indian commodities are typically bought at a discount in the
international market. Consequently, the Indian exporter is not interested in enhancing the quality.
Because the quality enhancement efforts are not happening, the price discount is getting standardised
in the international market. Even if the general market has a discount, even if the general market is

bogged down by unreliability problems, the customers are willing to pay the right price.

CHAPTER 3:PRESENTATION& ANALYSIS OF DATA

✧Gross Working Capital:

✦ Gross working capital represents a company’s total current assets, essentially the sum of all
assets it can quickly convert into cash within a year. It’s a measure of a company’s liquidity and
ability to meet short-term financial obligations.
✦Formula => Gross Working Capital = Sum of all Current Assets

Sum of all Current Assets = (Current Investments + Inventories + Trade Receivables + Cash &
Cash Equivalent + Short Term Loans And Advances + Other Current Assets)

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