ON

Undertaken At

Submitted in the partial fulfillment for the award of Masters Degree in Business Administration (Session 2008 - 10)
SUBMITTED TO: Mrs. Sapna Malik SUBMITTED BY: Pooja Gupta Roll No.: 081041

S. D. COLLEGE OF MANAGEMENT, ISRANA, PANIPAT

KURUKSHETRA UNIVERSITY, KURUKSHETRA

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PREFACE
Learning is an essential part of life .A person learns in everything he does. Each moment, each day of his life teaches him a new thing. Where as the practical knowledge is an important suffix to the theoretical knowledge, both have to be coupled to be fruitful. Class room teaching makes the fundamental concepts clear but they must be correlated with practical training to make the theoretical base stronger. I consider myself lucky to do my summer training at Concepts Creations Panipat. It helped me to apply theoretical knowledge in Concepts Creations Panipat which made my financial concepts more clear. Outmost care has been taken while printing the report but all kinds of suggestions and critical evaluation is welcomed.

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ACKNOWLEDGEMENT
At the outset I would like to thank the Management of CONCEPT CREATIONS PANIPAT for the wholehearted co-operation and guidance extended by them, which made my summer training project possible. I am very grateful to my project guide Mr. Mukesh Garg Manager-Finance Department, for his support and suggestions, which led to the completion of this project.

POOJA GUPTA Date: _______

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STUDENT DECLARATION

I, student of Masters in Business Administration

S.D COLLEGE OF submitted in

MANAGEMENT hereby declare that the dissertation/thesis entitle Study of Cash Flow Management of the CONCEPT CREATIONS PANIPAT for any other degree, fellowship or similar title or prize. fulfillment of the training; is my original work and is not submitted for the award

POOJA GUPTA (MBA)

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CERTIFICATE

This is to certify that POOJA GUPTA has completed the research project entitled Analysis of Working Capital under my supervision. To the best of my knowledge, the report consists of results of empirical study conducted by my student. In my opinion, the work is of the requisite standard expected of a MBA student. Therefore I, recommend the same to be set for evaluation.

Mrs. Sapna Malik (Project guide)

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TABLE OF CONTENTS PARTICULARS Executive Summary Objectives of Training Managerial Usefulness of Study CHAPTER-1 INTRODUCTION TO COMPANY 1.1 Introduction 1.2 Mission 1.3 Quality policy 1.4 Company profile 1.5 Organization chart 1.6 Career 1.7Product line 1.8 Competitive edge 1.9 Process 1.10 Latest creation CHAPTER-2 REVIEW OF LITERATURE CHAPTER-3 RESEARCH METHODOLOGY 3.1 Objectives of study 3.2 Research methodology 3.3 Research design 3.4 Types of research design 3.5 Data collection method PAGE NO. 1 3 4 5-21 5 7 7 8 11 14 15 18 19 20 22 26-28 26 26 27 27 28

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CHAPTER-4 INTRODUCTION TO WORKING CAPITAL 4.1 Meaning of working capital 4.2 Need of working capital 4.3 Importance of working capital 4.4 Working capital Cycle 4.5 Important terms in working capital 4.6 Sources of working capital 4.7 Requirements of working capital 4.8 Types of working capital 4.9 Components of working capital 4.10 Working capital management 4.11 Components of working capital 4.12 Importance of working capital management 4.13 Techniques of working capital management CHAPTER-5 ANALYSIS AND INTERPRETATION 5.1 Financials of company 5.2 Schedule of changes in working capital 5.3 Comparative statement of working capital CHAPTER- 6 CONCLUSION AND SUGGESTIONS 6.1 Recommendations of study 6.2 Limitations of study 6.3 Conclusions SWOT ANALYSIS OF COMPANY BIBLIOGRAPHY

29-56 29 30 31 32 34 35 36 39 41 42 44 52 53 57-77 57 67 72 78-80 78 79 79 81 82

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LIST OF TABLES
Sr.no Table: 1.7 Table: 5.1 Table: 5.2 Table: 5.3 Table: 5.4 Table: 5.5 Table: 5.6 Table: 5.7 Table: 5.8 Table: 5.9 Table: 5.10 Table: 5.11 Table 5.12 Table 5.13 Table 5.14 Table 5.15 Description Product line Comparative Analyses of Sales % Increase/(Decrease) in Sales Comparative Analysis of Gross Profit (Rs in Lacks) % Increase/(Decrease) in Gross Profit Total Net Profit % Increase/(Decrease) in Gross Profit Comparative Analysis of Gross Profit Ratio Comparative Analysis of Net Profit Ratio Comparative Analysis of Current Assets Comparative Analysis of Current Liabilities Comparative Analysis of Working Capital Comparative Analysis of Debtors Collection Period Comparative Analysis of Stock Holding Period Comparative Analysis of Creditors Payment Period Comparative Analysis of Current Ratios Page. No 15 59 60 61 62 63 64 65 66 69 70 71 74 75 76 77

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LIST OF FIGURES
Sr. No Fig: 1.1 Fig: 1.2 Fig: 1.3 Fig: 4.1 Fig: 4.2 Fig: 4.3 Fig: 4.4 Fig: 4.5 Fig 5.1 Fig: 5.2 Fig: 5.3 Fig 5.4 Fig 5.5 Fig5.6 Fig5.7 Fig 5.8 Fig: 5.9 Fig 5.10 Fig: 5.11 Fig 5.12 Description Organizational Chart Companys Share in Textile Industry Process for Manufacturing of Textile Working Capital Cycle Important Terms of Working Capital Types of Working Capital Permanent and Temporary WC of a Stable Firm Permanent and Temporary WC of a Raising Firm Comparative Analysis of Sales % Increase/ (Decrease) In Sales Comparative Analysis of Gross Profit % Increase/(Decrease) In Gross Profit Total Net Profit % Increase/(Decrease) In Net Profit Comparative Analysis of Gross Profit Ratio Comparative Analysis of Net Profit Ratio Comparative Analysis of Current Assets Comparative Analysis of Current Liabilities Comparative Analysis of Working Capital Comparative Analysis of Debtors Collection Period 29 Page. No 12 13 19 33 34 39 40 41 59 60 61 62 63 64 65 66 69 70 71 74

Fig 5.13 Fig5.14 Fig5.15

comparative analysis of stock holding period comparative analysis of creditors payment period comparative analysis of current ratios

75 76 77

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EXECUTIVE SUMMARY Practical training constitutes an integral part of the management studies. Training gives an opportunity to the student to expose themselves to the industrial 29

environment, which is quite different from the class room teachings. The practical knowledge is an important suffix to the theoretical knowledge. One cannot rely upon theoretical knowledge. It has coupled with practical for it to be fruitful. Classroom lectures make the fundamental concept of management clear but their application in actual practice. Positive and correct results of the classroom learning need realities of the practical situations. The training also enables the management students to themselves see the working conditions under which they have to work in future. It thus enables the students to undergo those experiences, which will help later when they joint any organization. It is in this sense that practical training in company has a significant role to play in the subject of financial management for developing managerial and administrative skills in the future finance managers and to enhance their analytical skills. I consider myself lucky to get training in largest manufacturer of carpets CONCEPT CREATIONS. I underwent six weeks training at Panipat branch. It really helped me to get a practical insight in to the actual environment and provide me an opportunity to make my financial management concept clearer. If development capital is what establishes a business, working capital is what keeps it going. One of the most common downfalls of business is unexpectedly high running cost. What is important is not just the size of operating costs, but the cash flows that is when money has to be paid out in relation to the stream of income arriving in. Thus Working Capital Management is of prime importance. This project is a small attempt to study the working capital management in CONCEPT CREATIONS PANIPAT. The project can be divided into two sections. First is the analysis of the working capital position of the company using ratio analysis and second is the study of working capital management techniques. Working Capital Management basically comprises of Receivables Management, payables Management and Inventory Management. These three have been discussed separately along with companys policy on these areas.

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CONCEPT CREATIONS PANIPAT is maintaining the following records which are indicative of its professional approach: Maintaining proper sets of accounting records. Maintaining an accurate cashbook reconciled with the bank statement. Maintaining monthly statement showing profit performance and the working capital position. Making a regular forecast of cash requirements based upon planned sales volume. Ageing of debtors/creditors with comparisons to previous months. At the end, observations/recommendations have been given.

OBJECTIVE OF THE TRAINING

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It is well known fact that we remember 20% of what we hear, we remember 40% of what we see but we remember 75% of what we do. There are two fold of the management of working capital Maintenance of working capital at appropriate level. Availability of ample funds as and when they are needed.

The present study in CONCEPT CREATIONS PANIPAT mainly focuses on the above objectives as well as some other objectives which I have taken into consideration during the project training. To access the requirement of working capital of the company. To assess the changes in working capital needs over the years. How management of working capital affects the financial position of Evaluate current assets and current liabilities to find out liquidity To prepare the statement of working capital of the concern

the company? position of the company.

MANAGERIAL USEFULNESS OF STUDY

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For a fresher like me, in a big organization like CONCEPT CREATIONS PANIPAT . gave me a feel of the real working atmosphere. It enhanced my horizons about how the members of the organization work as a team, cocoordinating with each other, and their interdependence on each other. I became aware of the synergy effect i.e., how different members in different profiles produce greater results with co-ordination. The usefulness of Study: In-depth knowledge of Companys workings. Familiar atmosphere of Company motivates the researcher. Awareness of difference between the bookish knowledge and the practical workings of the company. Knowledge of Companys policies. Motivates to work as a team member. To get aware of Current Position of the Company. The various designations in an organization, the respective work profiles and the interdependence among them. Synergy effect. It helps to understand how to tackle work pressure and meet dead lines. Difference between budgeted and actual performance. Time utilization. Wealth maximization. Data analysis and interpretation helps to increase capability of mind. Knowledge of Companys decisions to solve the problems

1.1 INTRODUCTION TO INDUSTRY

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History, craft and cottage industries come together at this important junction between the Punjab and the Gangetic Plains. About 100 km from Delhi, in the state of Haryana, is the sprawling industrial city of Panipat, a luminary of the handloom industry in India. Long before one enters the main city, billboards proclaim the presence of the weaving units. Further, up, the main road is flanked by a string of showrooms with local handloom products on display. Panipat is famous for panja durrie a kind of a floor covering, which is in great demand in India and abroad. Originally, it was a traditional item made by village women meant to be a part of daughters dowry. But slowly the product came to be recognized beyond Panipat and the growing demand for durries resulted in a burgeoning number of private and state owned weaving units within the city. What happened to make this plebeian looking city such a flourishing business center? During the partition in 1947, a large number of professional weavers from Sind, Jhang and Multan, (now in Pakistan) migrated to India. As chance would have it, they were allotted land around Panipat to settle down. The weavers lost no time in setting up looms and getting down to their ancestral craft. But they were up against stiff competition from mills producing the same type of durries much faster and much cheaper. To counter the challenge, weavers of handloom durries began to experiment with color and design. Zebra stripes made way for floral geometrical patterns. Stock reds and blues moved over to let in rich Indian colors. Slowly the new kind of durrie caught on. From cotton to woolen durries, it was but a natural transition, as Panipat is one of the largest markets of raw wool in northern India. Today the Panipat-Ambala durrie-rug belt is famous all over the country and has various outlets at home and abroad men meant to be a part of daughters dowry. But slowly the product came to be recognized beyond Panipat and the growing demand for durries resulted in a burgeoning number of private and state owned weaving units within the city.

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Indian textile traditions are reputed all over the world and admired for their beauty, texture and durability. India has a diverse and rich textile tradition. The origin of Indian textiles can be traced to the Indus valley civilization. The people of this civilization used homespun cotton for weaving their garments. India had numerous trade links with the outside world and Indian textiles were popular in the ancient world. Indian silk was popular in Rome in the early centuries of the Christian era. Hoards of fragments of cotton material originating from Gujarat have been found in the Egyptian tombs at Fostat, belonging to 5th century A.D. The most ancient of Indian texts and scriptures, like Rigveda, the Ramayana and Mahabharata talk of the finesse of Indian textiles. The ancient sculptures too bear testimony to Indias rich textile traditions. Paintings depict figures in fine, delicate and decorated fabric. Cotton, Muslin, silk and other Indian textiles were some of the most traded products from India. Each Indian region has its own textile characterizing it in terms of designs, weaving patterns and techniques, colors and texture. Read below the details of various Indian textile traditions. The primary contribution of textile industry: Export earning for the country, textile industry occupies16% of the country's export earning. Generating employment, second largest employment generator after agricultural sector Industrial output sums up to 14% of total industrial production and approximately contributes to 30 % of total export products. LEADING PANIPAT TEXTILE COMPANIES Sheena exports Handfab Paliwal exports Om Overseas Ess Kay Enterprise 29

 Shri Krishna Furnishing Shiv Shakti exports

1.2 MISSION
For an Enterprise business mission embodies of its endeavor, which acts as a guiding light for continuous development & growth. MISSION OF CONCEPT CREATIONS PANIPAT: Engineering Changes through core competency for greater synergy reinforcing bonds with customers & establishing powerful symbiotic relationship with international allies, preparing global market. The company wants to make a lasting difference to its shareholders, its customers, business associates, its employee and country as a whole. Company also gives better quality and better technology to customer and treats every customer as special to build respect for, and loyalty to, CONCEPT CREATIONS PANIPAT

1.3 QUALITY POLICYConcept creations steadfast commitment to quality is reflected in ISO 9001-2000 certification and the Rugmark, Kaleen, Care & Fair label on Carpets. The dedicated team of craftsmen in Concept creations brings together years of experience and knowledge in carpet manufacturing. Designs are created using the latest computer aided technology and manufactured to a quality only the finest weavers can produce. To maintain consistency in quality and supply throughout the year, they procure high quality raw wool from the leading wool grading centers in India and New Zealand. The wool is then blended and spun by us in Indias best spinning mills. While manufacturing carpets, they blend soft yarn of New Zealand with resilient and long lasting Indian wool to give the best quality carpets.

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Committed to total quality culture, Concept creations strive to meet and exceed its customer expectations. Continuously endeavor towards achieving higher standards of product and service excellence. Result - maximization of customer trust and satisfaction. Quality control is the hallmark of their products. It helps them at every stage to achieve a very consistent product, which is in tune with customers' expectations. Carpets are manufactured from the finest wool, which ensure that the carpets have: o Long life. o Beautiful look. o Are not harmful to the health of children. o Easy to handle o Soothing to the eyes.

1.4 COMPANY PROFILE

Concept Creations is one of the largest manufacturers & exporters of Home Furnishings, Carpets and Floor Coverings in India. They count among their clientele some of the most reputed stores and catalog companies of the world. Their in-house Design Studio is reputed for its superior quality of designs and innovative products. They are renowned for our exclusive theme-based collections that reflect the moods of various seasons. They are also renowned for creating custom-made products to suit the taste of aesthetics from across countries. Concept Creations is run by highly experienced professionals who have in-depth knowledge in carpet designing, manufacturing and raw materials.

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Concept Creations has built up an international reputation in Carpets and Home Furnishings on the basis of our superior quality products and timely delivery.

YEAR OF ESTABLISHMENT OFFICE OF WORKS Village & P.O., Noorwala Main Barsat Road, Panipat PARTNERS 1. Shri Ashok Sharma

1996

2. Shri Vinod Kathuria 3. Shri Ved Parkash Bharti

ADDRESS: Concept Creations 29

Manufacturers & Exporters of Home Furnishings, Village & P.O.,Noorwala, Main Barsat Road, Panipat WORKS: Noorwala, Main Barsat Road, Panipat 132103 Haryana (India) +91 (180) 2631681, 2638791, 2640906 Fax: +91 (180) 2633086 Delhi Office: +91 (011) 2702 9522 DESIGN STUDIO: 110 Ground Floor, Vaishali Enclave, Pritampura, Delhi-110088(INDIA) Tel: 91-11-2310747, 42455655, Fax: 91-11-27029522. E-MAIL: conceptc@ndf.vsnl.net.in kamal@conceptcreationsgroup.com STATUTARY REGISTRATIONS: Tax Deduction Account No. Permanent Account No. TIN PF Registration No. ESI Registration No. Service Tax No. RTKC01841A AAAFC6948H 06612609453 KL17567 13/25163/14 214/ST/GTA/PNP/2005

AUDITORS OF THE COMPANY Vinod Grover & Associates Charted Accountant 29

Panipat

BANKERS OF THE COMPANY 1. Oriental Bank Of 5. State Bank Of India,

Commerce 2. Oriental Bank Of

Airport Mumbai 6. State Bank Of India,

Commerce 3. IGIA 4. PTG Punjab National Bank, Punjab National Bank,

MT Branch Panipat 7. State Bank Of India,

N.S. Mumbai 8. 9. Union Bank Of India Vijayaya Bank

ASSOCIATIONS

OF

PARTNERS

IN

OTHER

CONCERNS/FIRMS/COMPANIES: Shri Ashok Sharma: Shri Vinod Kathuria Associates. Shri Ved Parkash Bharti Partner in Rivers & Concept India. Director in Le gem Hotel Pvt.Ltd, Radhey Radhey Loomtex Pvt.Ltd, Krishna Krishna Loomtex Pvt.Ltd, Partner in Rivers. Partner in Rivers, Associates in K K

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1.5 ORGANIZATION CHART

Fig: 1.1

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Organizational Chart

COMPANYS SHARE IN RELATED TO INDUSTRY:

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Fig: 1.2 Companys share in textile industry Total export from panipat is approx. 500crore and part of concept creations export is 8.5% of total. CUSTOMERS CHOICES OF PRODUCT: BATHMATS CARPET BEDCOVERS 29 CURTAINS SHAGGY CARPETS TABLE COVER

 NAPKIN

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1.6 CAREER
Concept creations is a leader in the commercial carpet industry. They offer a competitive compensation and benefits package to most of our employees. Their primary customer contacts include commercial interior designers, architects, flooring contractors/carpet dealers, and corporate clients. The work environment is fast-paced, highly competitive but congenial. Team consists of go-getters who have: Positive attitude Ability to inspire others Potential to grow and assume higher responsibilities for contributing to the success of the organization They may have opportunities for you in their sales, design and export department. Desirable Experience In the Interior Furnishings Industry. Proven ability to understand the work. Market knowledge and a clear understanding of home furnishing products.

1.7 PRODUCT LINE

Home Carpets Home Furnishings Profile Hand Tufted Curtains Bath Mats Kids Carpets Floor coverings Kids Collection

Latest Creations Handloom Cushions Jute Durries Bed Linen

Shaggy carpets

Throws

Hemp

Cushions

Hand Knotted

Bed Linen

Leather

Curtains

Custom

Table Linen

Cotton Durries

Throws

 Carpets:

They make perfect quality, smell free carpets in Plain, Modern and Oriental Designs in Hand Tufted and Handloom Carpets. They have an exclusive collection of Shaggy / Berber high pile carpets and we also specialize in making customized Designer Carpets, Prayer Rugs, Theme Carpets and Contract Carpets with company logo. Plus they also make plain Boardroom Carpet.

Home Furnishings:

They produce a complete range product right from Bath Mats, Bed Covers, Curtains, Cushions, Durries and Rugs to Placemats, Napkins, Table Covers, apart from a variety of other home furnishings.

 Floor Coverings:

Concept Creations offers an exclusive range of Floor Coverings such as Mats and Durries in a variety of materials. Kids Collection:

They produce a complete range of specially designed kids products including Bed Linen, Cushions. To add that exclusive childlike ambience to your childrens room, choose from our selection of exquisite Kids Carpets, Curtains, Throws and Bath Mats, all Designed in colors, patterns and concepts ideal for children.

1.8 COMPETITIVE EDGE:

Due to our consistency in high quality products and timely delivery, they have built up a formidable reputation in the market. Leading position among their competitors is proven by the fact that many importers are choosing them over their earlier suppliers from India and giving them all their future orders. Another reason for the boom in demand for Indian Hand Tufted Woolen Carpets is due to the long time recession in Hand Knotted Carpets and cut throat competition in the Machine-Made Carpet industry. Hence, a lot of traders, importers and machine-made carpet manufacturers are focusing on Indian Hand Tufted Woolen Carpets. Concept Creations comes in here as a much sought after supplier being the only organized company in India who can take care of all types of customer requirements.

1.9 PROCESS FOR MANUFACTURING OF TEXTILE PRODUCTS

Fig: 1.3 Process for manufacturing of textile

1.10 LATEST CREATIONS

Carpets:

Bright colors

Ethnic patterns in vogue

Exquisite perfect finish

Floor Coverings:

Earthy brown

Rim in black

Smart & elegant

Home Furnishings:

Floral elegance

summer colors

Kids Collection:

Flower n fun

summer colors

The Handloom sector plays a very important role in the countrys economy. It is one of the largest economic activity providing direct employment to over 65 lakes persons engaged in weaving and allied activities. Due to effective government intervention through financial assistance and implementation of various development and welfare schemes, this sector has been able to with stand competition from the power loom and mill sectors. Handloom, once the symbol of self reliance and generating employment for millions of small weavers, is on the verge of collapse following like increase in prices of raw-materials, fall in demand and poor marketing. Handlooms are an important craft product and comprise the largest cottage industry of the country. Millions of looms across the country are engaged in weaving cotton, silk and other natural fibers. There is hardly a village where weavers do not exist, each weaving out the traditional beauty of Indias own precious heritage.

Spread in 1754 square Kilometer area. Panipat is located 90 K.M. away from New Delhi in North having the population more than 8.33501 Lakhs. Panipat is also called the city of weavers. Panipat is one off the developing city of Haryana. The economy of city is based on several industrial agriculture, tourism and handloom etc. Many Central and State Government Industrial units have been established here. These are Panipat Thermal Power Station, National Fertilizers Limited (NFL), Indian Oil Corporation; many private companies also have been set up in this town like as PEPSI in drinks, ANSAL in construction, Tanta Road construction etc. Panipat is famous fro PANJA DURRIE a kind of floor covering, which is in great demand in India and abroad. Originally, it was a traditional item made by village women meant to be a part of daughters dowry. But slowly the product came to be recognized beyond Panipat and growing demand for durries resulted in a burgeoning numbers of private and state owned weaving units with in the city. The Punjab Durries is only one of the floor covering made in Panipat. There are several other kinds of floor covering like large sized handloom durries, chindi or fabric and leather scrap durries, rugs, druggist, and carpets. Also made and marketed locally are blankets, khes and vast variety of furnishing fabrics. Handloom goods are the important cottage and home industries taken up by the people. Among the women folk, handloom cloth weaving is the traditional occupation of the district. Their production of cloths is mainly household clothes for every day use and traditional ceremonial dress etc. They feel proud to wear clothes which they themselves have made. The whole handloom industry survives on heavy subsidies today, as it has always done. Which means that sales depend on the rebates offered during festival times? There are no returns here for government as the weavers. Most

handloom co-operatives are permanently broke, the subsidies do not arrive in time, and the weavers lead a precarious existence. The success stories of a Kanchipuram or Banares are few and isolated to mean much. Take to any of the weavers from weavers from Maduri to Chanderi and they will cavil at having to sit at the loom for days and months. Handloom is extremely a time consuming. The returns for weaving cotton fabrics are insufficient compensation for the labors. In general, no weaver wants his children to break their backs and hearts in this hereditary profession. SCHEME OR DEVELOPMENT OF HANDLOOM INDUSTRY 1. PROJECT PACKAGE SCHEME Under the scheme, the facilities are availability of margin money, supply of looms and accessories, setting up of work shed, training of weavers, setting up of dye house and go down, design input, publicity and advertisement, common facility centre, sale centre, infrastructure development etc. So far, 2407 weavers have been assisted involving an amount of Rs.262.53 lakhs under the scheme. 2. INTEGRATED HANDLOOM VILLAGE DEVELOPMENT PROJECT Under the scheme, assistance are available for construction of work shed, common facility centre, training of weavers, supply of looms, participation in exhibition, provision of margin money and infrastructure development. So for, 1100 weavers have been assisted involving an amount of Rs 181.67 lakhs under the scheme. 3. WORK SHED CUM-HOUSING Handloom weaving is mostly in the cottage scale and there in need for adequate work shed. In view of this, Government of India action for weavers has been assisted under the scheme involving an amount of Rs. 216.00 lakhs.

4.

DEEN DAYAL HATHKARGHA PROTSAHAN YOJONA The Scheme has come into operation with effect from April 2001. It is a comprehensive scheme for Handloom Sector to take care of wide range of activities such as; product development, Infrastructural and institutional and institutional support, training of weavers, supply of equipment and marketing support etc. Both at macro and micro levels in an integrated and coordinate manner for an overall development and benefit of Handloom Weavers. The Government of India has sanctioned a sum of Rs 240.69 lakhs and released a sum of Rs 120.28 lakhs as first installment Central Share for implementation of 64 projects.

5.

HEALTH PACKAGE SCHEME Under the scheme, financial assistance in the form of medical reimbursement is provided to weavers, for medical treatment of diseases like asthma, T.B, inflammation of alimentary system etc. So for, 8315 weavers have been assisted involving Rs. 50.95 Lakhs under the scheme.

6.

MISCELLANEOUS HANDLOOM SCHEMES Over and above these schemes, 1500 weavers have been assisted involving Rs. 1.20 Lakhs under the Group Insurance Scheme, 1425 weavers involving Rs. 2.56 Lakhs under the Thrift Fund Scheme, 4500 weavers involving Rs. 90.00 Lakhs under the scheme of Margin Money for Destitute Handloom Weavers involving Rs. 31.90 Lakhs with the assistance from the government of India.

7.

NEW INTITATIVES In order, to provide financial assistance in an integrated manner too the handloom weavers and strengthen the design segment of the fabrics. Government of India had taken the new initiatives in addition to on going

other schemes and programmes by launching new schemes, namely, Deen Dayal Hath Kargha Protsahan Yojana and set up a National Center for Textile Design (NCTD) recently. 8. NATIONAL CENTRE FOR TEXTILE DESIGN The National centre for Textile design has been set up to provide information on fashion Trends, Colors and Design forecast, for the benefits of weavers, exporters, handlooms agencies and all other persons connected with the textile sector. NCTD aims fro undertake online activities such as trends and forecast both at National and International levels, to set up an extensive database or cyber yellow pages, a design pool the virtual Museum of Heritage Textiles etc. the center aims to benefits the weavers by linking him to the market.

3.1 MAIN OBJECTIVE

To analyze the Working capital in Concept Creations Ltd to study day to day operations of the company. Sub Objectives of the Study 1 To understand and analyze the working capital of the company over the year. 2 To get a feel of corporate life, its functioning & various interaction style. 3 To get the first hand experience in the field of manufacturing unit.

3.2 RESEARCH METHODOLOGY

Research in general refers to the search of knowledge. One can also define research as a scientific & systematic collection of information. In simple words research is the careful investigation or enquiry of markets especially through search for new facts in any branch of knowledge.

Redman & mory defines research systematized effort to gain new knowledge. Analytical Tools Microsoft Excel Bar charts (A bar chart or bar graph is a chart with rectangular bars with lengths proportional to the values that they represent. Bar charts are used for comparing two or more values that were taken over time or on different conditions, usually on small data sets. The bars can be horizontally oriented (also called bar chart) or vertically oriented (also called column chart). Sometimes a stretched graphic is used instead of a solid bar. It is a visual display used to compare the amount or frequency of occurrence of different characteristics of data and it is used to compare groups of data. Justification of study Working capital is very important aspect of finance of every company. It is use in day to day working activities involved in an organization so this topic is chosen so as to known changes in Working capital of Concept Creations. This topic also helps in getting practical knowledge of the finance area.

3.3 RESEARCH DESIGN

Research Designs the way in which the research is carried out. It works as a blue print. Research Design is the arrangement of the conditions for the collections and analysis of data in a manner that to combine relevance to the research purpose with economy in procedure.

3.4 TYPES OF RESEARCH DESIGN

Exploratory Research Design Descriptive & Diagnostic Research Design Experimental Research Design

Exploratory Research Design In it, a problem is formulated for precise investigation and working and hypothesis are developed. Descriptive & Diagnostic Research Design In descriptive research design: those studies are taken which are concerned with describing the characteristics of a particular individual or a group. Experimental Research Design In it casual relationships between the variables are tested. It is also known as Hypothesis Testing Research Design

3.5 Data Collection Method:

Data collection is the basic step and of importance on which authenticity of study depends. Before going for the study the researcher have to collect the appropriate data required for the study. Source of allocation of data are two types. 1. Primary Data: primary data are to be collected by the researcher, they are not present in reports or journals etc. and can be collected through a number of method which can be classified as follow Personal interview of sample. Telephonic interview. E- Mails. Observations.

Questionnaires. Interviews. The Primary data is not used in this project report. 2. Secondary Data: Secondary data are the data collected for some purpose other than the research situations; such data are available from the sources such as books, company reports, journals, rating organization, census department etc.. The secondary data are readily available and therefore they are less costly and less time consuming. Sources of secondary data are Internets. Book and journals. Company reports. Census department. Research work of others.

This project report is based on secondary data. Following statements are used for analysis and to derive the results required. Annual Report Files maintained by the department

4.1 MEANING OF WORKING CAPITAL

Working capital refers to the cash a business requires for day-to-day operations, or, more specifically, for financing the conversion of raw materials into finished goods, which the company sells for payment. Among the most important items of working capital are levels of inventory, accounts receivable, and accounts payable. Analysts look at these items for signs of a company's efficiency and financial strength.

Positive working capital means that the company is able to pay off its short-term liabilities. Negative working capital means that a company currently is unable to meet its short-term liabilities with its current assets (cash, accounts receivable and inventory). Also known as "net working capital", or the "working capital ratio". Accounts receivable (current asset) Inventory (current assets), and Accounts payable (current liability) Concept of Working Capital:There are two concepts of working capital 1. Gross working capital 2. Net working capital Gross Working Capital:Gross working capital refers to the firms investment in current assets. Current assets are assets, which can be converted into cash within an accounting year. The main components of current assets are cash, debtors, marketable securities and stock. The gross working capital concept focuses attention on two aspects of current asset management. Net Working Capital:Net working capital refers to the difference between current assets and current liabilities. Current liabilities are those claims of outsiders, which are expected to mature for payment within an accounting year. Current liabilities include creditors, bills payable and outstanding expense. Net working capital can be positive or negative.

Net working capital is a qualitative concept. It indicate the liquidity position of the firm and suggests the extent to which working capital needs may be financed by permanent source of funds such as shares, debentures, long term debts etc. It covers the question of judicial mix of long and short-term funds for financing current assets. In order to protect their interest, short-term creditors like a company to maintain a positive NWC. Conventionally the ratio of CA and CL is 2:1. A negative NWC means a negative liquidity, which may prove to be harmful to company, reputation. It poses a threat on the companys solvency and makes it unsafe and unsound. A. Optimum investment in current assets. B. Financing of current assets.

4.2 NEED FOR WORKING CAPITAL:The basic objective of financial management is to maximize shareholders wealth. For this it is Necessary to generate sufficient profits. The extent to it, which the profit can be, earn, largely depend on the magnitude of sales. However sales do not convert into cash instantly. There is invariable the time gap between the sale of goods and receipt of cash. There is, therefore, a need for working capital in the form of CA to deal with the problem arising. Out of the lack of immediate realization of cash again goods sold. Therefore, sufficient WC is necessary to sustain sales activity. The operating cycle can be said to be at the heart of the need for WC. The continuing flow from cash to suppliers, to inventory, to account receivables and back into cash is known as operating cycle. The operating cycle of a manufacturing Company involves three phases: Acquisition of resources such as raw materials, labor, power and fuel etc. Manufacturing of product Which includes conversion of raw material into WIP into finished goods?

 Sale of the product either on cash or on credit. Credit sales create account receivable for collection.

4.3 IMPORTANCE
The better a company manages its working capital, the less the company needs to borrow. Without adequate working capital there can be no progress. A business must expand and assert itself in a competitive world. If expansion takes place without the firm being able to cover its commitments, then over trading will be the result. Available working capital is stretched a capacity until, finally, bankruptcy or liquidation is forced upon the business. Even companies with cash surpluses need to manage working capital to ensure that those surpluses are invested in ways that will generate suitable returns for investors. The lengths of production and sales cycle pay an important part in the over trading process. If short, and the period of credit is not excessive, then money from sales will help to replenish working capital. However the longer the total period from the buying of the raw material to the receipt of the cash from sales, the more likely is overtrading. Working capital management can be subject to compromise and best practice is often hard to identify, pursue or benchmark. From a funding optimization perspective, however, generating extra cash from internal sources has the advantage over bank and public debt of greater opportunity and access, typically at lower cost. In terms of the impact felt across the company in the business units and customer- facing staff, it is not the financial but the operational benefits that are most keenly felt following a reappraisal of working capital practices. The greater efficiencies in dealing with customers and suppliers greater control of and information on the processes related to ordering/ paying and delivering / getting paid- can ultimately feed into improve delivery of goods and services at lower cost.

Improve working capital leads to increase shareholder value because it enables firms to generate more profit with less capital.

4.4 WORKING CAPITAL CYCLE:

Cash flows in a cycle into, around and out of a business. It is the business's life blood and every Managers primary task is to help keep it flowing and to use the cash flow to generate profits. If a business is operating profitably, then it should, in theory, generate cash surpluses. If it doesn't generate surpluses, the business will eventually run out of cash and expire. The faster a business expands, the more cash it will need for working capital and investment. The cheapest and best sources of cash exist as working capital right within business. Good management of working capital will generate cash will help improve profits and reduce risks. Bear in mind that the cost of providing credit to customers and holding stocks can represent a substantial proportion of a firm's total profits. There are two elements in the business cycle that absorb cash - Inventory (stocks and work-in-progress) and Receivables (debtors owing you money). The main sources of cash are Payables (your creditors) and Equity and Loans.

Fig: 4.1 Working Capital Cycle

OPERATING CYCLE=

R+W+F+DC

R = Raw material shortage period. W = Work in progress holding period. F = Finished goods shortage period. D = Debtors collection period. C = Credit period availed.

Raw material shortage period =

Avg. Stock of raw material

Avg. Cost of raw material consumption per day 2 WIP holding Period = Avg. WIP Inventory Avg. Cost of production per day

Finished Goods storage period =

Avg. Stock of finished Goods Avg. Cost of goods sold per day

Debtors collection period =

Avg. book debts Avg. credit sales per day

Credit period availed =

Avg. trade creditors Avg. credit purchases per day

4.5 IMPORTANT TERMS OF WORKING CAPITAL

Fig: 4.2 Important terms of working capital OVER CAPITALISATION: Over capitalization implies that a company has too large funds for its requirements, resulting in a low rate of return a situation which implies a less than optimal use of resources. A firm has, therefore, to be very careful in estimating working capital requirements. OPTIMUM WORKINGCAPITAL: If a companys current assets do not exceed its current liabilities, then it may run into trouble with creditors that want their money quickly. The working capital ratio which measures the ability to pay back can be calculated current assets divided by current liability.

It is understood that current ratio of 2:1 for a manufacturing company implies that firm has an optimum capital structure. UNDER CAPITAISATION: In the firm has inadequate working capital, it is said to be under-capitalized. Such a firms runs the risks of insolvency. This is because; paucity of working capital may lead to a situation where the firm may not able to meet its liability.

4.6 SOURCES OF ADDITIONAL WORKING CAPITAL

Sources of additional working capital include the following: Existing cash reserves Profits (when you secure it as cash. Payables (credit from suppliers) New equity or loans from shareholders Bank overdrafts or lines of credit Long-term loans If you have insufficient working capital and try to increase sales, you can easily over-stretch the financial resources of the business. This is called overtrading. Early warning signs include: Pressure on existing cash Exceptional cash generating activities e.g. offering high discounts for early cash payment Bank overdraft exceeds authorized limit Seeking greater overdrafts or lines of credit Part-paying suppliers or other creditors

 Paying bills in cash to secure additional supplies Management pre-occupation with surviving rather than managing Frequent short-term emergency requests to the bank (to help pay wages, pending receipt of a cheque).

4.7 WORKING CAPITAL REQUIREMENTS

Working capital needs of a firm are influenced by numerous factors. Important ones are: a) Nature and size of business: Working capital requirements of a firm are basically influenced by the nature of its business. Manufacturing firms require less working capital as compare to trading and financial firms. However, certain manufacturing firms also require a heavy investment in working capital. Public utility concerns require less capital. b) Manufacturing Cycle: The production process consumes time right from the purchase and use of raw materials to the completion of finished goods. The longer the duration, the greater the requirement of working capital for the firm. Thus, if there are alternative ways of manufacturing a product, the process with shortest manufacturing cycle should be chosen. c) Production policy: If the production is evenly spread over the entire year, working capital requirements are greater, because the inventories will be unnecessary accumulated during off- season period, but if the production schedule favors a varying production plan as per the seasonal requirements, working capital is required to a greater extent during a specified season only.

d) Business Fluctuations: Most firms experience seasonal and cyclical fluctuations in demand for their products and services. On account of market boom, sales increases and, as a consequence, the requirement of inventories and debtors increase. Slack seasons reduce the requirements of investment in working capital. e) Firm Credit Policy: The credit policy of a firm affects the working capital by influencing the level of book debts. Liberal credit policy requires more working capital, as there will be more investment in debtors because the collections would also be slower then. In the same way, an org. , which has a very efficient debt collection system and offer strict credit terms will require lesser working capital as compare to organization where debt collection system is not so efficient. f) Ability of credit: The working capital requirements of a firm are also affected by credit terms granted by its creditors. If the credit period allowed to the company is more, the requirements of working capital would be less for the company. If the company does not enjoy liberal credit facilities from its suppliers, it will have to arrange for greater funds for investment in current assets. g) Efficiency of operations: The operating efficiency of a firm relates to optimum utilization of resources at minimum costs. If the operation of the company is efficiently managed, the operating costs would be low and the resources would be utilized in the best possible manner resulting in speeding up of the working capital cycle and thus, reducing the working capital requirements. h) Dynamic attitudes: If the management of the firm is dynamic, thinking in terms of expanding the business or diversifying it, greater funds are required by the business. The main reason why more funds are required

early is that advance planning is essential if the firm is to expand and grow. i) Inventory policies: This has an impact on the working capital requirements since large amount of funds is normally locked up in inventories. An efficient firm may stock raw material for smaller period and may require lower working capital. j) Price Fluctuations: Price- level changes, particularly inflation, have a great effect on the requirements of working capital. In periods of rising prices, more funds are required to be invested in working capital. Same level of operations can be conducted only with greater funds of money falls. k) Supply Fluctuations: Regular supply of raw materials and labor would cause lesser working capital requirements. If large quantities of raw material are required to be stored because of non-availability at a later date or on account of increased prices, more funds are needed for working capital. l) Abnormal Factors: Factors such as strikes and lockouts require additional working capital. Recessionary conditions require more fund for working capital to maintain same amount of current assets.

4.8 TYPES OF WORKING CAPITAL: (from point of view of time)

Fig: 4.3 Types of working capital Permanent Working Capital: Permanent working capital refers to hard core Working Capital. It is used that minimum level of investment in the current assets that is carried by the business at all to carry out minimum level of activities. The following are the characteristics of permanent working capital:a) Amount of permanent working capital remains in the business is one form or the other. The suppliers of such WC should not accept its return during the lifetime of the firm. b) It grows with the size of the firm. Permanent WC is permanently needed for the business and therefore, it should be financed out of long term funds. Temporary Working Capital: Temporary working capital is that part of working capital, which is required by a business above Permanent working capital. It is also called variable working capital. Since the volume of temporary working capital keep on fluctuating time by time according to the business activities it may be financed by short term sources.

Temporary WC
Amount Of WC

Permanente WC

Time Fig: 4.4 Permanent and Temporary Working Capital of a Stable Firm It is shown in the above diagram that permanent WC is stable while temporary WC is fluctuating and increasing and decreasing in accordance with seasonal demands. In the case of an expanding firm the permanent WC line may not be horizontal. This is because the demand for permanent CA might be increasing (or decreasing) to support a rising level of activities. In that case line should be raising one as follows Both kind of WC are necessary to facilitate the sales process through the operating cycle. Temporary WC is created to meet liquidity requirement that are of purely transient nature.

Temporary WC Amount Of WC Permanent WC

Time Fig: 4.5 Permanent and Temporary WC of a Raising Firm

4.9 COMPONENTS OF WORKING CAPITAL:There are two basic components of Working Capital (a) Current assets. (b) Current liabilities. Effective management of working capital calls for effective management of these components. Current assets management includes management of cash, inventories, account receivables etc. And current liabilities management includes creditors management etc.

4.10 INTRODUCTION TO WORKING CAPITAL MANAGEMENT

Working Capital management is a significant face of financial management. Working Capital is referred to as the LifeBlood of any business firm. In a manufacturing concern, Management of working capital requires a great deal of time of managers over its different issues: Framing working capital policies. Assessing the needed level of working capital. Arranging short-term financing. Controlling the movement of cash. Administering accounts receivables and Monitoring investment in inventories. Working capital in simple terms is the amount of funds which a company must have, to finance its day to day operations. It can also be regarded as the proportion of companys total capital which is employed in short term operation. Besides these issues, management of working capital Has been the point of discussion because of ever growing demand for short term finance, its increasing scarcity of finance. It is discipline that seeks proper policies for managing current assets and current liabilities for maximizing the benefits. An effective management of working capital enables a firm to maximize the profitability and also to maintain adequate liquidity in the business as maintaining optimum level of working capital is the ultimate objective with which finance manager is seriously concerned. So, to carry on the production and distribute activities smoothly and to ensure Higher Profitability and to maintain proper Liquidity, an adequate and optimum level of working capital is required. Considering the above issues, study has been carried out in particular to assess the requirement of working capital in Concept creations. Various options to finance the short term requirement and ways and means of control of utilization of available resources because today industries find it difficult to procure adequate credit. Therefore the basic concern is to optimize the use of available resources through the effective and efficient management of working capital.

In financial literature, there exits two concepts namely Gross Concept & Net Concept of working capital. Gross working capital concept refers to current assets viz. Cash, Marketable Securities, Inventories of Raw Material, Work in Progress, Finished Goods and Receivables. Net working capital concept refers to the difference between Current Assets and Current Liabilities. Working Capital can be classified into Fixed or Permanent and Variable or Fluctuating parts. The minimum level of investment in current assets regularly employed in extra working capital needed to support the changing nature of the activity is called Variable / Fluctuating Working Capital. Working Capital Management is thus concerned with all aspects of managing Current Assets and Current liabilities etc. 1. Level of investment in each aspect of current assets. 2. Financing or working capital, mix of various sources of financing, managing bills payable, short term bank loans, deposits. 3. Inter relatedness of various aspects of business. For example inventory level keeps changing acc. To changing levels of sales. During higher sales, inventory decreases, cash balances or receivables increases. Thus all the current assets decisions are inter related and studies of Working Capital Management constitute all the inter related areas as shown:

4.11 COMPONENTS OF WORKING CAPITAL MANAGEMENT

Components of working capital management Inventory control: The objective of inventory management is to minimize the costs associated with holding inventories without impairing operational efficiency. The problem in Inventory Management is to determine the optimum level of inventories and to maintain the same. The optimum level Should ensure that the firm does not suffer on account of production and sales requirements, keeping in view the minimum possible costs in order to maximize profitability. Inventories are stock of the product, a company is manufacturing for sale. Inventories can exist in the form of raw material, work-in-progress, finished goods, components and supplies, whereas motive for holding inventories can be transaction motive, precautionary motive and speculative motive. Inventories constitute the most significant part of Current assets. Because of the large size of inventories maintained by firms, a considerable amount of funds is required to be committed to them. It is therefore, absolutely imperative to manage inventory efficiently and effectively in order to avoid unnecessary investment. Managing inventory is a juggling act. Excessive stock can place a heavy burden on the cash resources of a business whereas insufficient stocks can result in lost sales, delays for customers etc. The less time a company holds inventory, the lower its working capital investment will be. There is a magic threshold, beyond which the length of time the seller needs to acquire materials and make and ship a product

is less than the length of time between order placements and when the customer expects to receive the product. If a business can cross that line, it can completely eliminate inventory and acquire exactly the right materials after each sale has been made. Inventory Management Techniques Inventory Management techniques include the followings: I. II. III. IV. V. VI. VII. VIII. IX. X. XI. Effective and efficient purchasing, storage and issuing procedures. Setting of various levels like max., min., reorder level. Fixation of Economic Order Quantity. Establishment of inventory budgets. Min-Max plan. Two-Bin system. ABC analysis. VED analysis. XYZ analysis. Use of inventory rations. Aging Schedule of inventories

For Inventory Management Concept creations has taken the following steps: Business Process Re-Engineering All the manufacturing facilities are being modernized in accordance with global norms, towards this substantial investment in R&D. Total Quality Management Concept creations Limited are following TQM. It aims at zero defect production, which has far reaching implications on inventory level. Just in Time Approach Concept creations Limited, like many large manufactures operate on a just in time (JIT) basis whereby all the components to be assembled on a particular day, arrive at the factory on same day. This help to minimize manufacturing costs as JIT stocks as discussed above take

Up little space, minimize stock for a very short time; they are able to conserve substantial cash, which is otherwise blocked up in inventories. Vendor Reduction The company today is following the policy of reducing the number of vendors. It is trying to shrink the vendor base radically and then trying to use its clout to negotiate longer terms with the vendor. Payable Management Creditors are a vital part of effective cash management and should be managed carefully to enhance the cash position. Purchasing initiates cash outflows and an over-zealous purchasing function can create liquidity problems. Ironically, some companies looking to take working capital off the balance sheet nurture slow, inefficient or even obstructive A/P process. Its one case where negligence can improve financial performance. But squeezing the vendors is a shortsighted policy. A better strategy is to shrink the vendor base radically, then use ones clout to negotiable longer terms with the vendors. Purchase quantities should be geared to demand forecasts. Order quantities should be used which takes account of stock holding and purchasing costs. The cost to the company of carrying stock should be clearly defined. A Company should have alternative sources of supply. It should get quotes from Major suppliers and shop around for the best discounts, credit terms and reduce dependence on a single supplier. Maximum Level It is the largest quantity of a particular material, which should be kept in the store at any one time. The fixation of maximum level is necessary to avoid unnecessary blocking up of capital in inventories.

Minimum level

The minimum level is the lowest quantitative balance of material in hand, which must be maintained at all, times so that the assembly line may not be stopped on account of non availability of materials. Re-Ordering Level It is the point at which if the material in store reaches, further supplies must be ordered. The re-ordering level is fixed somewhere between maximum and minimum level each such a way that the quantity of material represented by the difference between the re-ordering level and minimum level will be sufficient to meet the demands of production till the order materializes and supplies are received. Economic order quantity It refers to the size of order, which gives maximum economy in purchasing any materials. It is also referred to as optimum or standard ordering quantity. It is fixed after taking into consideration ordering cost, stock out cost and inventory carrying cost the EOQ is determined by formula method, tabular method or graphic method. Ordering cost It is the cost of placing an order and securing the supplies. The more frequently orders are placed and fewer the quantities purchased on each order, the greater will be the ordering cost and vice versa. Stock out Cost In includes the cost of expediting purchases, obtaining rush deliveries, keeping track of back orders etc. Inventories Carrying Cost It is the cost of keeping item in stock. It includes interest on investment, obsolescence loses, storekeeping cost, insurance premium etc

Perpetual Inventory System

It is also known as automatic inventory system. It is a method of recording store balances after every receipt and issue, to facilitate regular checking and to obviate closing down for stocktaking. Min- Max Plan This is one of the oldest techniques of inventory control. According to this technique for each item of inventory the maximum and minimum levels are fixed. The maximum level lays down the limit above which an inventory item will not be kept in the stores. Two bin system In case of this technique, for each item of inventory two bins are maintained. The first bin contains such quantity of inventory, which is sufficient to meet the consumption requirement till the next order is placed and the second contains the safety stock. Order Cycling System In case of this technique the stock of each item of inventory is reviewed periodically, e.g., monthly, BI-monthly or quarterly. In case the review discloses that stock level of a particular item of inventory will not be sufficient till the next schedule that of review on the basis of probable rate of consumption, an order is placed to replenish its supply ABC Analysis ABC analysis is the technique of exercising selective control over inventory item the technique is based on assumption that a firm should not exercise some degree of control on all items of inventory. It should rather keep greater control over those items, which are more costly, compared to those items, which are less costly. According to this approach, the inventory items are divided into three categories: A, B and C.

VED Analysis

VED Analysis is of the nature of ABC analysis though it is generally used in case of spare parts. The parts are classified into three categories vital, Essential and desirable the firm keeps spare parts in stock only for lead-time, as these are those items, which are readily available in the market. XYZ Analysis XYZ analysis is based on value of inventory in stock. It is different from ABC analysis, which is based on value of materials consumed and VED analysis, which is base on relative importance of inventory in stock. Aging Schedule of Inventory Under this inventories are classified according to age. It helps in identifying inventories, which are moving slowly into production or sales. Receivable control: The third importance of current assets is the accounts receivable. The credit and collection policies are to be properly laid down and effectively implemented to manage the account receivable efficiently. The credit policies should be such which balance the risk on the one hand and the profitability on the other. The investment in receivables should be at an optimum level - which can be determined by a trade off between the costs of receivables (including the bad debt losses) and the profit on sales. Collection policies should ensure timely collection of dues so As to minimize the risk of bad debt-losses. The efficiency of firms collection policy is measured by the rate at which credit sales are converted into cash. The term receivable is defined as debt owed to the firm by customers arising from sales of goods in the ordinary course of business. The sale of goods on credit is an essential part of modern day business. The credit sales are generally made on open account in the sense that there are no formal obligations through a financial instrument. However extension of credit involves risks and cost. Management should weigh the benefits as well as the cost to determine the goal of receivable management.

The benefits from receivables are the increased sales and profits anticipated because of more liberal policy. When firm extend trade credit, i.e. invest in receivables, they intend on increase the sales level. The motive of liberal credit policy can be either growth oriented or sales retention. The extension of credit has a major impact on sales, costs and profitability. Other things being equal, a relatively liberal policy and therefore higher investments in receivables will produce larger sales. However the cost will be higher with liberal policies then with more stringent measures. Therefore account receivable management should aim at a trade- of between profit and risk. The costs associated with the extension of credit and account receivables are collection cost, capital cost, delinquency cost and default cost. Collection costs are administrative costs incurred in collecting the receivables from the customers to whom credit sale has been made. Decision areas There are three crucial decision areas in receivable management:

Credit Policies Credit terms Collection Policies

Credit Policies The credit policy of a firm provides the framework to determine whether or not to extend credit to a customer and also how much credit to extend. It has two broad dimensions, the first is credit standard and second is the credit analysis. Credit standards represent the basic criteria for the extension of credit to customers. The trade- off with reference to credit standards covers collection costs, average collection period, level of bad debts losses and level of sales. With a relaxed credit standard the collection costs, bad debts expenses and sales goes up and in reverse case vice-versa happens. The second aspect of credit policy is credit analysis. It begins with obtaining credit information of the customers and ends up

with the analysis of the obtained credit information. Information can be collected either internally or externally. Internal source of credit information is derived from the records of the firm. The analysis of credit information should cover both qualitative as well as quantitative aspects. The quantitative aspect is based on the available financial statements whereas qualitative aspects cover the quality of management. Credit terms The second decision area in accounts receivable management is the credit terms. After the credit standard has been establish and the credit worthiness of the customers is assessed, the management of a firm must determine the terms and conditions on which trade credit will be made available. Credit terms have three components: credit period, cash discount and cash discount period. Credit period is the duration of time for which trade credit is extended whereas cash discount is the amount by which the over the due amount will be reduced thus benefiting the customer. The credit terms like the credit standard affect the profitability as well as the cost of the firm therefore a firm should determine the credit terms on the basis of costbenefit trade-off. Collection policies The collection policies refer to the procedures followed to collect account receivable when after expiry of the credit period they become due. This policy covers two aspects: first is the degree of effort to collect the over due and second is the type of collection efforts.

 Cash control: Cash is the most important component of working capital. It is most liquid asset of an enterprise. In fact cash is the central point around which all business activities operate and move. It is both the beginning and end of working capital cycle. A business enterprise always strive to maintain sufficient cash balance, neither in excess nor in less, as the surplus of cash will render it idle whereas shortage of cash funds may threaten the firms liquidity and solvency, resulting into danger to its survival too. So, to minimize these run-out costs and to maintain liquidity along with profitability; proper and efficient cash management is of paramount importance in a business organization.

4.12 IMPORTANCE OF WORKING CAPITAL MANAGEMENT

The study of Working Capital Management is of major importance to internal and external analysis. It is being increasingly realized that inadequacy or mismanagement of working capital leads to failure of business. Following points emphasize the importance of working capital management:
1. Time involved: Financial manager has to devote the largest portion of his

time in day to day internal operation of the firm and hence the importance of working capital management.
2. Relationships with sales growth: The need to finance current assets in

closely and directly related to growth of sales. If sales increase, more amounts are required to be invested in accounts receivable. Moreover, in anticipation, greater stocks are to be kept for the increased sales.
3. Quantum of investment: in most of the concerns, which are not

manufacturing, current assets may be even more than half of the total assets of a business. Large investment requires careful attention of current assets of the business. Large investment requires careful attention of the finance management particularly since the investments tend to be relatively volatile.

4. Importance for small firms: Small firm cannot avoid investment in current

assets and therefore, for it the management of current assets assumes special significance. It is so because of the difficulty in arranging long- term loan also the effect being increased current Liabilities on account of short-term-loans.

4.13 TECHNIQUES FOR CONTROL OF WORKING CAPITAL:

Cash forecasting technique can be used of control of funds flowing in and out of business to check surpluses and shortages. Daily, weekly, monthly cash flow statements are used to regulate flow of funds and arrange for fund shortage and invest surplus cash. Fund Flow Statement Ratio Analysis

1. Fund Flow Statement -Fund flow statements are used to find changes in assets over a period of time showing uses of funds and sources of funds. Fund flow represents movement of all assets particularly of current assets because movement in fixed assets is expected to be small except at times of expansion or diversification. 2. Ratio Analysis -Ratio analysis is mainly used for working capital control. Following ratios are commonly used. Working Capital Management Performance using Ratio Analysis A ratio is defined as the indicated quotient of two mathematical expressions and as the relationship between two or more things. In financial analysis, a ratio is used as a benchmark for evaluating the financial position and performance of a firm.

Ratio analysis involves comparison for a useful interpretation of the financial statements. Single ratio in itself does not indicate favorable or unfavorable condition.

Therefore in this report it is compared with: Past ratios, i.e. ratios calculated from the past financial statements of Since liquidity ratios and activity ratios helps to measure the firm ability to meet current obligations and firms efficiency in utilizing its assets respectively. Those two have been used. Limitations of Ratio Analysis It is difficult to decide on the proper basis of comparison. Price level changes make the interpretation of ratio invalid. The differences in the definition of items in the balance sheet and The results are based on highly summarized information.

the same company.

profit & loss account make the interpretation of ratios difficult. Consequently situations, which require control, might not be apparent or situations, which do not warrant Significant effort might be unnecessarily highlighted.

LIQUIDITY RATIOS Liquidity ratio measures the ability of the firm to meet its current obligations. It is necessary to strike a proper balance between high liquidity and lack of liquidity. A high degree of liquidity means that a firms fund will be unnecessarily tied up in current assets. Whereas lack of liquidity, implies failure of a company to meet its obligations due to lack of sufficient liquidity.

The ratios, which are used for the analysis of Concept creations liquidity position in this report, are: Current Ratio Quick Ratio Activity Ratio

CURRENT RATIO Current ratio is calculated by dividing current assets by current liabilities Current ratio

QUICK RATIO Quick ratio establishes a relationship between quick or liquid assets and current liabilities. An asset is liquid if it can be converted into cash immediately or reasonably soon without a loss of value. Inventories are considered to be less liquid therefore calculating quick ratio they are deducted from current assets.

Acid-test ratio (Quick ratio)

ACTIVITY RATIOS

Activity Ratios are used to evaluate the efficiency with which the firm manages and utilizes its assets. The ratios are called Turnover Ratios as they indicate the speed with which the firm manages and utilizes its assets..Activity ratios, which are used to analyze Concept creations effectiveness in Asset utilization, are: Inventory Turnover Ratio Fixed Assets Turnover Ratio Creditors Turnover Ratio

INVENTORY TURNOVER RATIO It indicates the efficiency of the firm in producing and selling its product. It is calculated by dividing sales by avg. inventory. In a manufacturing company inventory of finished goods is used to calculate inventory turnover. Inventory turnover ratio

CREDITOR TURNOVER RATIO Receivables Turnover Ratio

Though the days are very high and apparently appears to substitute right collection, this extended credit has its own drawback like: High interest inbuilt in cost system. Sub-quality creditors may be accepted. Quality of material may be accepted

FIXED ASSETS TURNOVER RATIO

A firms ability to produce a large volume of sales for a given amount of net assets is the most important aspect of its operating performance. Unutilized or underutilized assets increase the firms need for costly financing as well as expenses for maintenance and upkeep. Fixed assets turnover is calculated by dividing net sale by net fixed assets Asset turnover

5.1 OBJECTIVES OF ANALYSIS AND INTERPRETATION

ANALYSIS & INTERPRETATION: (1) FINANCIALS OF THE COMPANY Financials of the Company (For the year 01.04.2008 to 31.03.2009) Particulars 2004-05 (Amount Rs.) Sales 19,20,10,938. 59 2005-06 2006-07 2007-08 in (Amount Rs.) 17,61,76,614 2008-09 in (Amount in Rs.) 12,84,95,906 .94

in (Amount in (Amount Rs.) Rs.)

16,54,97,291 16,46,54,975

% Increase /Decrease in Sales Gross Profit 3,36,71,730.5 9 1,99,00,000 22,964,102.3 4 22,990,990.7 8 15,432,683.4 4 (13.81%) (0.51%) 6.99% (27.06%)

% Increase/De crease in Gross Profit Net Profit % Increase/De crease Net Profit (7.2%) Gross Profit 17.54% Ratio Net Ratio Profit 3.97% 2.05% 1.88% 2.20% 2.80% 12.02% 13.95% 13.04% 12.01% in 55.44% (8.8%) 25.18% 76,29,845.77 34,00,000 31,00,167.07 38,80,943.10 36,02,053.20 40.90% 15.40% 0.12% (32.8%)

1. Comparative Analysis of Sales (Rs in Lacks):

2500 2000 1500 1000 500 0

1920.11 1654.97 1646.55 1761.76 1284.96

2004-05

2005-06

2006-07

2007-08

2008-09

Fig 5.1 Comparative Analysis of Sales 2004-05 2005-06 2006-07 2007-08 2008-09 Total sales are 1920.11 Total sales are 1654.97 Total sales are 1646.55 Total sales are 1761.76 Total sales are 1284.96 Table: 5.1

Comparative Analysis of Sales Interpretation: According to the analysis sales have decreased from last three years but in 2007-08 it increased but in 2008-09 it decreased again at very high level due to recession.

2. % Increase/(Decrease) in Sales over Immediate preceding year:

30 20 10 0 2004-05 -10 -13.81 -20 2005-06 2006-07 -0.51 2007-08 6.99

27.06

2008-09

Fig: 5.2 % Increase/ (Decrease) in Sales over Immediate preceding year

2005-06 2006-07 2007-08 2008-09

% Decrease in Sales over Immediate preceding year is -13.81 % Increase in Sales over Immediate preceding year is -0.51 % Increase in Sales over Immediate preceding year is 6.99 % Increase in Sales over Immediate preceding year is 27.06

Table: 5.2 % Increase in Sales over Immediate preceding year Interpretation: According to the analysis % increase of sales over preceding year as shown in fig: 5.2.

3. Comparative Analysis of Gross Profit (Rs in Lacks):

400 300

336.72 199 229.64 229.91 154.33

200 100 0

2004-05

2005-06

2006-07

2007-08

2008-09

Fig: 5.3 Comparative Analysis of Gross Profit (Rs in Lacks) 2004-05 2005-06 Total Gross Profit is 336.72 Total Gross Profit is 199

2006-07 2007-08 2008-09

Total Gross Profit is 229.64 Total Gross Profit is 229.91 Total Gross Profit is 154.33 Table: 5.3 Total Gross Profit

Interpretation: According to the analysis total gross profit have decreased in 2005-06 but increase in the year 2006-07 & 2007-08 but decreased in 20082009.

4. % Increase/(Decrease) in
year:

Gross Profit over Immediate preceding

50 40 30 20 10

40.9 32.8

15.4

0.12 0 2004-05 2005-06 2006-07 2007-08 2008-09

Fig: 5.4 % Increase/ (Decrease) in Gross Profit over Immediate preceding year 2005-06 2006-07 2007-08 2008-09 % Increase in Gross Profit over Immediate preceding year is 40.09 % Decrease in Gross Profit over Immediate preceding year is 15.40 % Decrease in Gross Profit over Immediate preceding year is 0.12 % Increase in Gross Profit over Immediate preceding year is 32.8 Table: 5.4 % Increase/ (Decrease) in Gross Profit Interpretation: According to the analysis the gross profit of company have decreased in 2006-07 &2007-08 but increase in 2008-09 by 32.8%.

5. Comparative Analysis of Net Profit (Rs in Lacks):

100 80 60 40 20 0 2004-05 2005-06 2006-07 2007-08 2008-09 34 31.01 76.3

38.81

36.02

Fig: 5.5 Comparative Analysis of Net Profit (Rs in Lacks) 2004-05 2005-06 2006-07 2007-08 2008-09 Total Net Profit is 76.30 Total Net Profit is 34 Total Net Profit is 31.01 Total Net Profit is 38.81 Total Net Profit is 36.02 Table: 5.5 Total Net Profit Interpretation: According to the analysis the net profit of company have decreased in 2005-06 & 2006-07 but increased in 2007-08 but due to recession N.P have decreased in 2008-09 by 36.02%.

6. % Increase/(Decrease) in Net Profit over Immediate preceding year:

5 2.05 1.88

2.2

0 2004-05 2005-06 2006-07 2007-08 2008-09

-5 -7.2 -10

Fig: 5.6 % Increase/ (Decrease) in Net Profit over Immediate preceding year 2005-06 2006-07 2007-08 2008-09 % Increase in Net Profit over Immediate preceding year is 2.05 % Decrease in Net Profit over Immediate preceding year is 1.88 % Increase in Net Profit over Immediate preceding year is 2.2 % Decrease in Net Profit over Immediate preceding year is -7.2 Table: 5.6 % Increase/ (Decrease) in Net Profit Interpretation: According to the analysis there is % increase in net profit in the year 2005-06 & 2007-08 but decrease in 2006-07 & 2008-09.

7. Comparative Analysis of Gross Profit Ratio:

18 16 14 12 10 8 6 4 2 0

17.54 13.95 12.02 13.04

12.01

2004-05

2005-06

2006-07

2007-08

2008-09

Fig: 5.7 Comparative Analysis of Gross Profit Ratio 2004-05 2005-06 2006-07 2007-08 2008-09 Total Gross Profit Ratio is 17.53 Total Gross Profit Ratio is 12.02 Total Gross Profit Ratio is 13.95 Total Gross Profit Ratio is 13.04 Total Gross Profit Ratio is 12.01 Table: 5.7 Total Gross Profit Ratio Interpretation: According to the analysis comparative gross profit ratio is shown in fig: 5.7 its decreased in 2008-09 as compared to last five years.

8. Comparative Analysis of Net Profit Ratio:

5 3.97 4 3 2 1 0 2004-05 2005-06 2006-07 2007-08 2008-09 2.8 2.05 1.88 2.2

Fig: 5.8 Comparative Analysis of Net Profit Ratio

2004-05 2005-06 2006-07 2007-08 2008-09

Total Net Profit Ratio is 3.97 Total Net Profit Ratio is 2.05 Total Net Profit Ratio is 1.88 Total Net Profit Ratio is 2.2 Total Net Profit Ratio is 2.8 Table: 5.8 Total Net Profit Ratio

Interpretation: According to the analysis comparative Net profit ratio is shown in fig: 5.8 its increased in 2008-09 as compared to last years.

5.2 SCHEDULE IN CHANGES IN WORKING CAPITAL (in Lacks)

Particulars

2007

2008

Working Capital Increas Decrease e

Current Assets: Debtors Loans & Advances Closing 450.93 77.71 426.56 107.28 243.55 37.31 29.57 4.65 24.37 4.57

Stock 238.90 41.88

(Stock in Trade) Cash Balance & Bank

Total (A) 809.42 Current Liabilities: Sundry Creditors Expenses Payable Bank (O.B.C) Overdraft 10.88 27.13 12.50 67.03 1.62 39.9 472.96 417.39 55.58 814.70 34.22 28.94

Total (B)

510.97

496.91

55.58

41.52

(A)-(B) Net Increase In

298.45

317.79 19.35

Working Capital

1. Comparative Analysis of Current Assets (Rs in Lacks):

1000 800 600 400 200 0

809.42

814.7

2007

2008

Fig: 5.9 Comparative Analysis of Current Assets (Rs in Lacks)

2007 2008

Current Assets (Rs in Lacks) is 809.42 Current Assets (Rs in Lacks) is 814.70 Table: 5.9 Comparative Analysis of Current Assets

Interpretation: According to the analysis the current assets have increased in 2008 as compared to 2007. As shown in fig: 5.9.

2. Comparative Analysis of Current Liabilities (Rs in Lacks):

700 600 500 400 300 200 100 0 2007 2008 510.97 496.91

Fig: 5.10 Comparative Analysis of Current Liabilities (Rs in Lacks)

2007 2008

Current Liabilities is 510.97. Current Liabilities is 496.91 Table: 5.10

Comparative Analysis of Current Liabilities

Interpretation: According to the analysis the liabilities of the company have decreased in 2008 as compare to 2007. Its 496.91 in 2008.

3. Comparative Analysis of Working Capital (Rs in Lacks):

500 400 300 200 100 0 2007 2008 298.45 317.79

Fig: 5.11 Comparative Analysis of Working Capital (Rs in Lacks)

2007 2008

Working Capital is 298.45 Working Capital is 317.79 Table: 5.11

Comparative Analysis of Working Capital (Rs in Lacks)

Interpretation: According to the analysis working capital have increased in 2008 as compare to 2007 shown in fig: 5.11.

5.3 COMPARATIVE STATEMENT OF WORKING CAPITAL (in Lacks):

Particulars

2007

2008

Debtors Collection Period: Sales Debtors 1,761.77 450.93 1,284.96 426.56

Debtors Collection Period = 12m

Debtors / Sales *

3.98m 3.07 m

Stock Holding Period Cost of Production Closing Stock 1505.38 238.90 1,130.63 243.55 2.58m

Stock Holding Period = Closing Stock / COP * 1.90m 12m

Creditors Payment Period 1505.38 COP Creditors 3.77 4.43 472.96 1130.63 417.38

Creditors Payment Period = Creditors / COP

Current Ratio 809.42 Current Assets Current Liabilities 1.58 1.64 510.97 814.70 496.91

Current Ratio = CA / CL

1. Comparative Analysis of Debtors Collection Period: (in months)

5 4 3 2 1 0 2007 2008 0

Fig: 5.12 Comparative Analysis of Debtors Collection Period: (in months)

2007 2008

Debtors Collection Period 4.3 month. Debtors Collection Period 2.5 month. Table: 5.12

Comparative Analysis of Debtors Collection Period: (in months) Interpretation: According to the analysis data collection period is 2.5 in the year 2008 as compare to 2007 it was 4.3 month.

2.

Comparative Analysis of Stock Holding Period: (in months)

5 4 2.58 3 2 1 0 2007 2008 1.9

Fig: 5.13 Comparative Analysis of Stock Holding Period: (in months)

2007 2008

Stock holding period is 1.9. Stock holding period is 2.58. Table: 5.13

Comparative Analysis of Stock Holding Period: (in months) Interpretation: According to the analysis stock holding period have increased to 2.58 as compared to 2007 it was 1.9.

3. Comparative Analysis of Creditors Payment Period: (in months)

5 3.77 4 3 2 1 0 2007

4.43

2008

Fig: 5.14 Comparative Analysis of Creditors Payment Period: (in months)

2007

Total of Creditors Payment Period is 3.77

2008

Total of Creditors Payment Period is 4.43

Table: 5.14 Comparative Analysis of Creditors Payment Period: (in months) Interpretation: According to the analysis creditors payment period in 2008 is 4.43 as compare to 2007 shown in fig: 5.14.

4.

Comparative Analysis of Current Ratio: (in lacks)

3 1.64

1.58

0 2007 2008

Fig: 5.15 Comparative Analysis of Current Ratio: (in lacks)

2007 2008

Current ratio is 1.58 Current ratio is 1.64 Table: 5.15

Comparative Analysis of Current Ratio: (in lacks) Interpretation: According to the analysis current ratio have increased in 2008 as compare to 2007 that is 1.64.

 After conducting the survey & analyzing the whole report. It is concluded that Concept creations exports more than 8.5% of the total export from Panipat city because of best quality products. Most of the material used is imported which increases the cost, rather than exploiting the local resources of Panipat. More emphasis is on floor coverings while other products like curtains, bed coverings, and also seems attractive. Demand of carpet is so high that capacity enhancement proves to be glamour.

6.1 RECOMMENDATIONS
Concept creations should utilized Panipat vicinity resources so as to increase employment opportunities as it has maximum export from Panipat. Concept creations should concentrate on others products like curtains, bed coverings etc to increase market share. As according to its carpet demand it should increase its capacity so as to meet the required demand in the market. Concept creations should adopt certain tools to cope up with recession such as cost cutting. It should diversify itself to other than Panipat area also and should not mainly concentrate on export & import. Short term liability such as salary, wages should not be immediately paid. Time duration of 10-15 days should be kept for the payment of these liabilities this will increase the cost balance within the organization.

Limitations of the study

However, I tried my best to have desired information from the respondents and to make the report fruitful but some limitations are bound to incur which may affect the results or findings. 6.2 Limitations of the study are: Lack of experience: I was new on the topic which was assigned to me. So lack of experience in getting information from respondents came in to the way of collecting the relevant data. Time Constraints: Time was a bit short to fathom into the depth of the study. But still all efforts to the best possible extent have been made to collect the data. Data collection Constraints: Since most of the data used is secondary in nature, this poses the constraints on the validity and reliability of the data. Busy Employees: Employees are not available as are busy in their work Appointments: There was a problem in taking appointments from the managers. Sources: Sources were confounded some time to give proper information. Area: The office area was very congested. 6.3 Conclusion The Working capital analysis is the one of the important tools of financial statement analysis because with working capital analysis the day to day operations of company can be analyzed and Concept creations do not have a satisfactory financial health according to analysis.

Concept creations have a good location area in the vicinity of Panipat but its not able to explore Panipat resources in an efficient manner. So its concluded that the management has the finance available but its not able to invest in a right direction. Therefore it should take in concentration the financial analysis of concern statement to take appropriate decisions.

Textile industry in India has vast scope to grow as Panipat & Umbel is the hub of textile industries and there are many options available to manufacture textile products. Such as weaving and designing. Concept creations are basically in weaving section. Its recommended to more into designing also which will increase the financial health. Last but not the least this research work aims to gather the knowledge of financials loop-pools of the company and in this research work I have contributed best of my experience in Concept creations.

SWOT ANALYSIS OF COMPANY

(A) STRENGTHS Good Brand Equity Good Sales Distribution System Have it own Department (R & D) High Production Capacity High Quality Standard Good Technological Base (B) WEAKNESSES After sale service Promotional Activities Unable to finance needed changes in strategy (C) OPPORTUNITIES Industry can improve its market by selling products to southern and western part of country. Strict payment terms are strength at times as well as weakness at time. If a moderate change as per present market conditions is adopted, then it can increase its market share. (D) THREATS EGR (Excessive Govt. Regulations) CTC (Cut Throat Competitions)

Survey period:
15th June- 31st July 2009

Bibliography:
BOOKS Tulsain P.C, 2007, Financial statement, Financial Accounting, 2nd Edition, Page 9.1-9.15 Maheshwari S.N, 2007, Financial Analysis, Financial Management, 13th Edition, Page Financial Management- S.K Gupta Management Accountancy-D k Gole Cost and Management Accountancy, S.N.Maheshwari Financial Management And Policy, James C.Van Horne JOURNALS 1. Natarajan. R, June 2009, Focus on Weaving, The Textile Magazine, Vol. 50, No. 8, Page 39-41. 2. Mayer Karl, June 2009, Stitch bonding Machines, Asian Textile, ISSN 09713425, Page 41-44 3. Dr. Mathur Manisha, June 2009, Technical Textile, Manmade Textile in India, Vol. LII, No.6, Page 207-209, 52th Edition 4. Chakrabarti Malay, 24 June 2009, Export Prospects & Markets, Textile Trends, Vol. LII, No.3, Page 33-38, 52th Edition. WEBSITES 1. http://en.wikipedia.org 2. www.advfn.com 3. www.investorwords.com/