Documenti di Didattica
Documenti di Professioni
Documenti di Cultura
INDUSTRY PROFILE
5-8
ORGANIZATION PROFILE
9-31
32-44
45
46-65
FINDINGS
66
SUGGESTIONS
67
10
CONCLUSION
68
11
BIBLIOGRAPHY
69
registered under Karnataka co-operative societies Act in 1969. The Plant is located at Sankonattii Village of Athani in Belgaum district. The registration number of the company is DSK/REG/01/80-81 dated 10-03-1981. The industrial license number of the factory is L.I.667 (1988) dated 02/11/1988. The founder of this organization was Late Sri. A.B.Jakanur Ex Min.of Karnataka. At present it has an attractive campus with magnificent buildings over it. There are totally 18,103 shareholders of TKCSFL and it has paid up share capital of Rs.18.39 Crores. During the year 2007-08, it has earned a net profit of Rs.18.34 lakh. During the same year it has produced 7.00 lakh Quintals of sugar and it has crushed 5.60 lakh Tonnes of cane. There are 610 workers in TKCSFL. It is paying salary of Rs. 1500,000 per month to its workers. Total Turnover of sugar is Rs.60.03 crores.
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INTRODUCTION TO STUDY
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INDUSTRY PROFILE
INTRODUCTION TO SUGAR INDUSTRY: Babasabpatilfreepptmba.com Page 5
PROFILE OF THE SUGAR INDUSTRY: Sugar mills with cane crushing capacity and sugar production per unit in various countries Babasabpatilfreepptmba.com Page 6
The advent of modern sugar industry began in 1930 with grant of tariff protection to the Indian sugar industry. The number of sugar mills increased from 30 in the year 1930-31 to 135 in the year 1935 and the production during the same period increased from 1.20 lakh tones to 9.34 lakh tones under dynamic leadership of the private sector. The era of planning for industrial development began in 1950-51 and government laid down targets of sugar production and consumption licensed and installed capacity, sugarcane production during each of the five year plan periods. Total sugar industries in India are 506 out of which 67 are public sector companies, 157 are private sector companies and 282 are co-operative societies. Total sugar industries in Karnataka are 40 out of which two are public sector companies, 18 are private sector companies, 19 are co-operative societies and one is joint venture.
Government enacted the Sugar Development Fund Act & Rules, which provides for levy of per quintal of sugar known as Sugar Development Fund (SDF). The SDF is utilized for granting term loans to sugar mills modernization and grants for research projects in the sugar besides creation of buffer stocks as and when required to ensuring price stability. Government delicensed sugar sector in August 1998. It is now open to entrepreneurs to set up mills without license but at distance of 15 kms away from the existing factory. Sugar units free to expand Babasabpatilfreepptmba.com Page 7
INDIAN SUGAR INDUSTRY AT GLANCE: No of sugar factories established Total capital employed Total annual turnover Total payment to cane growers Contribution to central & state exchequers Direct employment : rural educated Farmers/families involved in sugar cane (7.5% Babasabpatilfreepptmba.com 574 Rs. 50,000 crores Rs. 25,000 crores Rs. 18,000 crores Rs. 1700 crores+800 crores Rs. 5.00 Lakhs Rs. 45 million Page 8
In global economy, the Indian sugar industry has achieved a number of milestones Largest Sugar Producer in 7 out of 10 years Second Largest Area under Cane/Cane production Amongst the cost effective industries with its field cost (Sugar cane) being the second lowest, despite small land-holding and low productivity Fourth efficient processor of sugar despite low capacity of its sugar plants as compared very large-size plants in other parts of the world GOVERNMENT POLICY: The present policy of decontrol 10% of production by each unit is supplied for public distribution system I as levy sugar at Govt. notified prices admittedly bellow 20% of the actual cost of production. The levy sugar is I to the public irrespective of their economic status. The balance 90% is sold in the free market against monthly/ issued by the Government. This policy has been continuing since 1967-68 except for brief periods of de-control during the years of surplus production and accumulated sugar stocks. Government announces the Statutory Minimum price (SMP) for sugarcane every year based on recommendations of the Commission for Agricultural Cost & Prices (CACP).
ORGANISATIONAL PROFILE
The Krishna Co-Operative Sugar Factory Limited, Athani (Krishna Sahakari Sakkare Karkhane Niyamit, Athani.) is a co-operative society registered under Karnataka co-operative societies Act in 1969. The industrial license number of the factory is L.I.667 (1988) dated 02/11/1988. The Krishna Co-Operative Sugar Factory Limited, Athani is a co-operative unit. It is situated near Sankonatti village, at a distance of about 6 Km from Athani town. The factory at present has an attractive campus with magnificent buildings over it.
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The Krishna Sahakari Sakkare Karkhane Name of the Company Date of Incorporation/Registration Nature of Constitution Niyamit Athani No. DSK/REG/01/80-81 Date : 10-03-1981 Co-operative Sector
40501
12/6/2002
Crushing capacity
2500 TCD
Project Cost
Working period
Type unit
Areas of operations
22 villages
STAFF: The employees are responsible for the success or failure of company. There are totally 530 workers in the company. No. of Workers 1) Permanent worker 2) Seasonal workers 320 290 610 Company is paying salary of Rs. 21, 00, 000 per month in season and 15,00,000 per month in off Season to its workers. WORKERS SHIFT SYSTEM: Babasabpatilfreepptmba.com Page 13
GENERAL AND ADMINISTRATION 8:00 am to 12:00 pm 1:00 pm to 5:00 pm CENTRAL OFFICE 10:00 am to 2:00 pm 02:30 pm to 5:30 pm 30 min 60 min
Departments
Enhancement
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Engineering Department Production Department Cane development Department Administration Department Civil Department Time Office Stores Department Vehicle Department Total
121
60
57
09
247
88 32 11 0 2 14 06 274
37 0 20 0 2 29 03 151
31 15 16 0 0 0 0 119
09 08 12 28 00 0 0 66
165 55 59 28 04 43 09 610
COMPETITORS:
Ugar sugars Hira sugars Renuka sugars Datt sugars (Maharashtra) Panchaganga sugars (Maharashtra) Athani farmers sugar factory Dkssk chikkodi
INFRASTRUCTURE FACILITIES:
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ACHIEVEMENTS/AWARDS:
STAI, SISSTA & DSTA in their recent 10th annual convention at Chennai held on 11-08-2007 have honored this sugar factory with the most prestigious award as the THE BEST EFFICIENCY & PERFORMANCE SUGAR FACTORY in the country for the year 200607. Honble Union Minister gave the award for agricultural, food & Civil Supplies, in presence of Honble Chief Minister of Tamilnadu. The TKCSFL Athani has also bagged First place for Best Cane Development Award, SISSTA-2007. The companies have the Honor of achieving the Highest Sugar Recovery @ 11.68% in Southern part of India for the year 2008-09. 2.7 VISION & MISSION OF THE ORGANIZATION: To continue to remain the best performer among sugar manufacturing companies in India & to provide more value to the shareholders by means of efficient capacity utilization of its sugar, power and distillery based facilities. VISION: The vision statement of The Krishna Co-operative Sugar Factory Limited is We are dedicated to deliver overall value to our customers by delivering high quality products, exceptional financial performance to our share holders & complete satisfaction to cane growers, employees & stakeholders.
MISSION:
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SUGAR:
The factory initially started crushing at the rate of 2500 Tonnes crushing per day (TCD). It is needless to emphasis here that this factory has its own credibility and enjoys its own sanctity in the sugar industry. The TKCSFL Athani produces the sugar which can be classified as shown in the table below. The sugar is divided in to three types based on the crystal size; they are large, medium, and small. The production of these is dependent on the crushing capacity of the factory. To produce large sized crystals it takes more time, which in turn affects the crushing. As the size increases the impurity increases and colour of the crystals decreases.
DISTILLATION: The unit uses molasses, which is waste in the production of sugar, as raw material for distillation. This molasses has about 40% to 45% of sugar in it. The yeast strain used in fermentation process is Sacchromyces Uvarum.
BAGASSES:
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ORGANISATION STRUCTURE:
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BOARD OF DIRECTORS
MANAGING DIRECTOR
CIVIL
ENG.
STORE KEEPER
MEDICA L OFFICER
CHIEF C.D.O
OFFICE SPDT
LWO
WATCH WARD
CHIEF ENG.
CHIEF CHEMIST
DIST. CHEMIST
CO-GEN
CANE YARD
AGRL DEV
COMPUTER
GAD SECTION
EST SECTION
MEETING SECTION
SHARE SECTION
TYPING SECTION
GUEST HOUSE
LEGAL SECTION
PURCHASE SECTION
FUNCTIONAL DEPARTMENTS
Functional heads
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FUNCTIONS: They look after the overall financial requirements of the company. Babasabpatilfreepptmba.com Page 22
An Accounts Officer is the head of this department. Accountant, sales manager, and head cashier assist him. AS FUNCTIONING OF EACH SECTION IS SUMMARIZED FOLLOWS: GENERAL ACCOUNTS SECTION: General Accounts are looking after the passing of bills and profit and loss account is attended by general accounts section. payments. Management is also
done by General account section and preparation of financial statements i.e., Balance sheet,
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PURCHASE
Purchase officer heads Purchase Department. He is responsible for purchasing the spare parts required for the industry. The storekeeper is responsible for stacking; maintaining and issuing required materials to the concerned section.
The important functions of this department are: Purchasing materials Calling quotations Preparing C.S.Q (comparative statement quotation) Placing before meeting for decision Placing orders for supply of materials. Passing bills to Accounts section for payment.
GODOWN
SUPERVISORS
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1. Determination of purchase budget In the beginning of the year the purchase manager, with the help of production planning department, prepares a purchase budget. This budget guides him in knowing what and when he has to buy and also quantity. 2. Determination of quantity The stock availability in each location is determined and compared with the actual requirements. After receiving the sales order, raw materials needed are scheduled according to these order level. 3. Purchase order: After satisfy with the quality of materials and reputation of the supplier, purchase
order is sent to the supplier. Purchase order includes the date of order, description of materials to be supplied. The copies of this order are sent to the Administrative office, Accounts departments and to the Storekeeper. 4. Receiving and issuing raw materials: The department heads and the storekeeper check the quality and quantity of raw materials received respectively. The storekeeper enters the details of purchased materials in the store receipt book. Then the general manager passes the amount for payment. PRODUCTION DEPARTMENT Production management refers to the application of management principles to the production function in a factory. In other words production management involves application of planning, organizing, directing and controlling the production process. A well-organized production function can offer competitive advantage to a firm in the following areas. Higher quality More inventory turns Shorter new product lead time Page 26
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Structure:
CHIEF CHEMIST MANUFACTURING CHEMIST DEPUTY CHEMIST LAB IN CHARGE
LAB BOY
PRODUCTION PROCESS: The main Raw material in the production of sugar is SUGAR CANE The raw materials has to go through following stages before it become finished product. The process in each stage is as under: STAGE:1 SUGAR CANE SUPPLY: Page 27
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The juice from all the mills is pumped to juice weighting scale. It is heated to about 70-77o c in the juice heaters. It is taken to continuous juice sulphitor in which milk of lime and sulphur di-oxide gas are adjusted to maintain ph 7.0. It is again heated in juice heaters to about 100 to 105oc and sent to continuous clarifier. Clear juice is taken to multiple effect evaporators to concentrate up to 60oc Brix. The settled mud from the bottom of the clarifier is taken to mud mixer to mix with beguile and taken to continuous vacuum filer. The filtrate is transferred to raw juice receiving tank for treatment. The adhered mud on the screens is scraped and sent out as filter cake, which will be used for composting the manure. STAGE:-4 SUGAR MANUFACTURE AND CRYSTALLIZATION PURING:
The concentrated syrup from evaporator is taken to syrup sulpthitor to adjust Ph 4.8 to 5.2. This is stored in the supply tanks and fed to A masscult boiling by taking B-seed as a footing. It is concentrated to 92o Brix and dropped to the crystallizer. This masscult is purged in the centrifugal machines. The adhered crystals are scraped to hopper and treated with hot air and cold air blower. It is sent to grader the size for gradation. This graded sugar is stored in SILOS. Weighed and bagged sugar bags are transferred to respective godowns for stacking. STAGE 5:- FURTHER PROCESS:
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STORES DEPARTMENT
This department is headed by storekeeper. To keep the stores and required materials for the factory section wise in a proper way and to maintain their registers and big cards of indents (order goods) Functions: 1) To make the materials requisition for the purpose of knowing the quantity materials. 2) To make purchase order or in simple terms the tenders. 3) To make approval memo for verification of materials. 4) The main function of store department is to prepare a Bin Card. 5) The store Department issues material with reference with store requisitions. 6) To make classification & codification of materials. 7) Receipts of materials. 8) Inspect it with ordered quantity, quality and if any other specifications. 9) Some of the materials like chemicals are to be sent to laboratory for inspection and testing. 10) Getting indents from departmental head and issuing it. 11) To make purchase returns if the materials are rejected. 12) To maintain minimum level of materials. 13) Informing purchase department when materials require. In stores there are two sections
transport, purchase order reference, bill no, the name of the supplier etc. the store keeper has given proper conditions to the materials to identify the materials. MARKETING AND SALES DEPARTMENT The American Marketing Association offers the following formal definition: Marketing is an organizational function and a set of processes for creating, communicating, and delivering value to customers and for managing customer relationships in the ways that benefit the organization and its stake holders. It can be viewed Marketing Management as, an art and science of choosing target markets and getting, keeping, and growing customers through creating, delivering, and communicating superior customer value. Channel of distribution Most producers do not sell their goods directly to the final users. Between them stands set of intermediaries performing a variety of function Those intermediaries constitute a marketing channel. Marketing channels are sets of interdependent organizations involved in the process of making a product or service available for use or consumption. Marketing channel decisions are among the most critical decisions facing management. The channel chosen intimately affects all the other marketing decision. The companys pricing depends on whether it uses mass merchandisers or high quality boutiques. The firms sales force and advertising decisions depends upon how much training and motivation dealers need. In addition, the company's channel decisions involve relatively long term commitments to other firms. Role of marketing manager 1) To collect information for sale forecasting. Babasabpatilfreepptmba.com Page 30
1.
Sugar
Domestic Sale of Sugar The sugar is sold in the domestic market through tender system. Sugar tenders will be called periodically from the various sugar traders. The traders are intimated well in advance about the grade and quality being offered in tender over telephone. The sugar tender is some times conducted at Karnataka Sugar Institute, Belgaum and also at factory site. The officer of KSI will be present at the time of tenders. The rates will be collected over telephone from the various parties along with grade and quantity of sugar required by them. The parties who have offered higher price will be allotted the sugar and they will be instructed to take the sugar Babasabpatilfreepptmba.com Page 31
2. Export of Power to the KPTCL Grid In addition to the above company is also receiving its revenue from its power plant. Company is having a power plant of 6.0 MW capacities. It is using about 4.0MW for its own/captive consumption; the excess power of about 2.0MW is being exported to the KPTCL. WORKING CAPITAL MANAGEMENT: The aim of the present study is to examine the Small Scale Industry practices in Working Capital management and to evaluate management performance for the same purpose. Since the efficiency of the Working Capital management is determined by the efficient administration of its various components- cash, accounts receivable and inventory, the study attempts to determine the management of each component. Working Capital in a business enterprise may be compared to the blood in a human body: Blood gives life and strength to the human body. Similarly Working Capital injects life and strength- profits and solvency - to the business organization. Working Capital refers to short term funds required for the purpose of business operations. The funds used for meeting day to Babasabpatilfreepptmba.com Page 32
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FACTORS AFFECTING WORKING CAPITAL NEEDS: The Working Capital requirements of a form depend on many factors. It is a common proposition that the size of Working Capital is a function of sales. Sales alone do not determine the size of Working Capital. But it is constantly affected by the crisis- crossing economic currents flowing in a business. The nature of the firms activities, the industrial health of the country, the availability of materials, the ease or tightness of the money market are all parts of these shifting forces. Realizing the complication involved in Working Capital estimates, Gerstenberg observes, Although no definite rule can be established for determining Working Capital requirements, we can arrive at some general principles. Certain influences, some inherent in the nature of the Babasabpatilfreepptmba.com Page 34
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Shares do not have any fixed commitment charges and the dividend on these shares is to be paid subject to the availability of sufficient funds. These funds have been injected from the companys own personal resources, from the members and from the third party investors. 2. TRADE CREDITORS: The trade creditors refer to the credit extended by the suppliers of milk in the normal course of business. The firm has a good relationship with the trade creditors. So that suppliers send the milk to the firm for the payment to be received in future as per the agreement or sales invoice. In this way, the firm generates the short-term finances from the trade creditors. It is an easy and convenient method to finance and it is informal and spontaneous source of finance for the firm. 3. FACTORING OR ACCOUNTS RECIEVABLE CREDIT: Another method of raising
short-term finance in The Krishna Co-Operative Sugar Factory Limited, Athani, is through accounts receivables credit offered by the commercial banks. A commercial bank has provided finance by discounting the bills or invoices of its customers. Thus, a firm gets immediate payment for sales made on credit. The factor is also a financial institution, which offers services relating to management and financing of debts arising out of credit sales. Factors render services varying from bill discounting facilities provide commercial banks to the total take over of administration of credit sales including maintenance of sales ledger, collection of accounts receivables, credit control, and protection from bad debts, provision of finance and rendering of advisory services to the firms clients. 4. LINE-OF-CREDIT: The business is well capitalized by equity and is has a very good
collateral, the business (the firm) might quality fore one. A line-of-credit allows firm to borrow funds for short-term needs when they arise. The funds are rapid once the collections of accounts receivables that result from the short-term sales peak. Lines-of-credit typically are made for one year at a time and expected to be paid it for 30 to 60 consecutive days some times during the year to ensure funds are used for short-term needs only. 5. SHORT-TERM LOAN: The firm has borrowed the funds from the commercial banks to finance for the working capital needs. The short-term loans duration is less than one year. They provide a wide verity of loans to meet the specific requirements of a concern. The different forms in which the banks normally provide loan and advances are
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which are an integral part of business operations. Speculative Motive: To tap profits from opportunities arising from fluctuations in commodity prices, security prices, interest rates etc. The company with surplus cash is in a better position to exploit such situations. Cash Flows: The flow of cash into and out of the business over a period refers to cash flow. Cash inflow can be in the form of cash received from customers, lenders and investors. Cash outflow can arise because of payments made to employees (salaries), suppliers and creditors.
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ADEQUACY OF WORKING CAPITAL: A business enterprise should have enough Working Capital. Without adequate Working Capital it cannot be run effectively a manufacturing concern is sure to collapse if it is run for longer period without or with meager amount of Working Capital. Therefore, the enterprise has to maintain adequate Working Capital can avail following advantages: It enables the enterprise to enjoy uninterrupted flow of production by obtaining the raw material well in time.
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These propositions are also known as the principles dealing with risk factors and serve as the basis of Working Capital theory. Principle-1 The first principle is concerned with the relationship between the levels of Working Capital and sales. Briefly, it may be stated as follows: if Working Capital is varied relative to sales, the amount of risk that a form assumes is also varied and the chances of gain or loss are increased This principle implies that a definite relation wrists between the degree of risk and the rate of return. That is the more the risk that a firm assumes, the greater is the possibility of gain or loss. The opportunity for gain is enhanced by choosing an appropriate asset and liability
structure. The firms return on investment will be comparatively large when there are a low proportion of current assets to total assets and a high proportion of current liabilities to total liabilities. This strategy, no doubt, will result in a low level of Working Capital and relatively great profitability but the firm assumes a risk of technical insolvency, i.e., the inability to meet its cash obligations. Therefore, the risk involved with various levels of current assets and current liabilities must be evaluated in relation to the profitability associated with those levels.
Principle - 3 The third principle is concerned with the risk resulting from the type of capital used to finance Working Capital directly affects the amount of risk that a firm assumes as well as the possibility of gain or loss, and cost of capital
Principle - 4 As stated above, the extent of the of debt depends upon the level of risk a management wishes to undertake. It should be noted that the risk is not only associated with the amount of debt used relative to equity but also related to the nature of the contacts negotiated by the borrower. The dates of maturity and restrictive clauses of the contracts are the most important characteristics of debt contracts that directly affect the firms operations. The greater the disparity between the maturities of a firms short -term debt instruments and its flow of internally generated funds, the greater the risk and vice versa. Incidentally, management is not compensated for assuming the risk referred to in this concept; therefore, under no circumstances should the risk be assumed. On the whole, a management has to determine the liquidity of the firm on the basis of information about risk and opportunity. Costs of holding liquidity. The degree of liquidity, desirable is a function of profitability of insolvency of various levels of liquidity, the opportunity cost of maintaining those levels and the cost of bankruptcy. Therefore, the behavior Babasabpatilfreepptmba.com Page 43
manufacturing firm, has a longer operating cycle for manufacturing the products, and investing more funds in its current assets. Therefore, it requires much more working capital. Market conditions The level of competition existing in the market also influences working capital requirement. When competition is high, the company should have enough inventories of finished goods to meet a certain level of demand. Otherwise, customers are highly likely to switch over to competitors products. It thus has greater working capital needs. When competition is low, but demand for the product is high, the firm can afford to have a smaller inventory and would consequently require lesser working capital. But this factor has not applied in these technological and competitive days. ESTIMATION OF WORKING CAPITAL REQIUREMENTS Managing the working capital is a matter of balance. The firms must have sufficient funds on hand to meet its immediate needs. The Krishna Co-Operative Sugar Factory Limited, Athani, is manufacturing oriented organization; the following aspects have to be taken into consideration while estimating the working capital requirements. They are: Total costs incurred on material, wages and overheads. Page 44
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conversion of raw material into finished goods. The length of sales cycle during which finished goods to be kept waiting for sales. The average period of credit allowed to customers. The amount of cash required paying day-today expenses of the business. The average amount of cash required to make advance payments The average credit period expected to be allowed by suppliers. Time lag in the payment of wages and other expenses.
OBJECTIVES OF STUDY
To study the sources and application of fund of TKCSFL To examine how the working capital requirements is estimated A study on the interpretation of working capital on the basis of calculations and estimations Babasabpatilfreepptmba.com Page 45
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1154259862.23
607333867.73
48500689
The Net Working Capital has been increased in 2006 2007, when compared to other years. This is due to huge rise in inventories .
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Particulars Particulars Increase in Current Assets Decrease in Current Assets Inventories Inventories Sundry debtors Sundry debtors Cash Cash Bank Bank Other assets Loans & advances Receivables from govt. Receivables from govt.
92316657.5 4063303.11
Increase in Current Liabilities Decrease in Current Liabilities Sundry creditors Sundry creditors Term loans Term loans DCC bank DCC bank Others Others Statutory payable Statutory payable Excise duty Increase in working capital Excise duty Decrease in working capital Total Total
6224409 2986176
66804156 -
- 62534882.96 546925994.5 -
990615903.72
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Working Capital 450000000 400000000 350000000 300000000 250000000 200000000 150000000 100000000 50000000 0 399232157 415106145
Working Capital
130504127
Working Capital
2005-06
2006-07 Year
2007-08
Interpretation: It was in positive in the following 3years i.e., from 2005-06 to 2006-07 and in 2007-08 it has been in comparatively high positive terms i.e., amount of Rs. 41,51,06,145. It indicates that, in the 2007-08, the working capital has met its current obligations...
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Interpretation: The Current Ratio for the year 2005-06 is below standard ratio. It is increased to 2.01 to 2.23 for 2006-07, which is above standard ratio. For the year 2007-08 it is decreased to 2.23 to 2.04, which below standard ratio. It indicates that, the firm is able to meet its current obligations.
Interpretation: The ideal ratio is 1:1. The Quick ratio of current assets & liabilities are below the standard ratio. It indicates that the firms liquidity position is good.
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Ratio 4 3.5 3 2.5 Ratio 2 1.5 1 0.5 0 2005-06 2006-07 Year 2007-08 Ratio
Interpretation: The above table exhibits how the current assets were efficiently utilized in generating sales. In the above table the ratio shows that, the firm has utilized the currents assets properly.
Interpretation: The ratio is fluctuating. That was high in 2006-07, 1.30.and it was negative in 2005-06 i.e. 0.81 and 2007-08 i.e.0.56 it indicates that the working capital has been utilized effectively in 2006-07.
-----------------------------2 365
Inventory turnover ratio TABLE 8: COMPUTATION OF INVENTORY TURNOVER RATIO: Babasabpatilfreepptmba.com Page 54
ratio
1 .5 1 0 .5 0 2 0 0 5 -0 6 2 0 0 6 -0 7 2 0 0 7 -0 8
R a t io
yea r
Interpretation: A higher rate of inventory turnover ratio reduces investment in inventory and thus reduces the requirement of working capital. Hence efforts should be made to magnify the ratio to get the benefits, reduction in investment on stock and reduction in requirement of working capital. The above table reveals that, the turnover of inventory in 20005-06 was 2.61 were as in 200607 there was a increase of 1.03 come up to, in 2007-08 there was a decrease of 1.15, this shows of finished goods inventory is more in 2006-07which reflects more sales in 2006-07.
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P ercentage
0.9
0.85
0.8
P ercenta ge
0.75
0.7
Interpretation: The above table exhibits how the current assets were efficiently utilized in generating sales. In the above table the ratio was found near to1. It shows that, the firm has utilized the currents assets properly.
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R atio
2 .5
1.5 R atio 1
0 .5
Interpretation: The table shows the proportion of current assets and fixed assets undertaken by the unit. The above table clears that proportion of investment in fixed assets is more than proportion of investment in current assets. The ratio ranges between 0.56:1 to 0.65
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Ind ic es ( 0 4 - 0 5=10 0 )
350 300 250 200 150 100 50 0 2004 -05 2 005-06 2 006-07 Ye ar
Interpretation: The above table throws light on investment in total inventory and the progressive base year percentage growth in total inventory. The growth rate in inventory was on a downward trend in 2005-06 as compared to 2004-05 by 81.90% respectively. In 2006-07 the trend was on a upward by 262.7% as compared to 2005-06. In 2007-08 the trend was on a upward by 301.5% as compared to 2006-07. However, the size of inventory had that leads to the increase in output and sales has a positive impact on its growth in unit. RECEIVABLE MANAGEMENT:
Ind ic es ( 0 4 0 5=10 0 )
200708
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365 = ---------30.48
11.81 days
TABLE 12: COMPUTATION OF RECEIVABLE TURNOVER RATIO: Year Sales Closing debtors RTR Average collection Babasabpatilfreepptmba.com Page 60
R TR
Interpretation: In the above chart, the Debtor turnover ratio is low in all years i.e. it was 36.96 in 2005-06. As a result of that, the payment period will increase. But a very low is dangerous. Lower the DTR it affects increases in working capital.
TABLE 13: COMPUTATION OF PROPORTION OF RECEIVABLES TOCURRENT ASSETS: Year Total Receivables Current Assets Percentage Page 61
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Values
Interpretation: Total receivables Percentage of total = Receivables to total current assets Total current assets Total receivable includes the sundry debtors, loan and advances. The above table indicates that 14.4% of the total current assets were kept in receivables in 2005-06. This share decreased up to 9.61% during the period of 2006-07. Further the trend was towards declined to 7.06% during the period of 2007-08. TABLE 14: COMPUTATION OF SIZE OF TOTAL RECEIVABLES: Year 2004-05 Total Receivables 2,77,12,355 Indices(04-05=100) 100 x100
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In dic e s ( 0 4 -0 5 =1 00 )
Interpretation: The table throws light on the position of total receivables. It is evident from the table that, there was an increased in the size of receivables up to 134.6% during 2005-06. In the year 2006-07 the trend was again increased i.e. 251%. Further decreased to 207 for the year 2007-08
CASH MANAGEMENT: Cash is another significant element of working capital it includes cash in hand and bank balances. Without cash no business unit can survive at any time during its life cycle. Cash occupies an important place in the structure of working capital in order to maintain good trade and credit, cash is needed for repayments that must be made on scheduled Babasabpatilfreepptmba.com Page 63
P ercentage
12
10
P ercentage
Interpretation: From the table it can be derived the fact that the average cash to current assets ratio is the lowest at 10.51 in 2005-06. However, the ratio has decreased of 5.04% in 2005 06. But there was increased by 1.85 % in the year 2007-08. The proportion of total assets to cash there was high in the year of 2005-06. In the total, the average cash balance to total current assets is very low. It shows inadequate cash balance or situation is undesirable from the point of profitability and liquidity of the unit.
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Interpretation: From the table it can be derived the fact that the average cash to
current liabilities ratio is the lowest at 0.212 in 2005-06. However, the ratio has decreased of 0.112% in 2006 07. But there was decreased by 0.038 % in the year 2007-08.
FINDINGS:
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SUGGESTIONS:
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CONCLUSION:
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BIBLIOGRAPHY:
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N. K. Agarwal
Website
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