107900592009

Gujarat Apollo industries ltd.
A PROJECT REPORT ON
STUDY OF WORKING CAPITAL MANAGEMENT.

AT
GUJARAT APOLLO INDUSTRIES LTD.

SUBMITTED FOR: Partial fulfillment of the requirements Of the two year fulltime Master of Business Administration (M.B.A)
Guided By:
Prof. Anjali Pandya Prof. Nimesh bhojak
SUBMITTED BY: BHALAVAT KAUSHAL K. M.B.A SEM- 2 Roll No: 09 EXAM NO: ______ (2011-12) SUBMITTED TO: GUJARAT TECHNOLOGICAL UNIVERSITY, AHMEDABAD.
DIVABA INSTITUTE OF MANAGEMENT & COMPUTER APPLICATION Affiliated with Gujarat Technological University -MBA programme Vi: ansan, Ta: Dascroi.
DIVABA INSTITUTE OF MANAGEMENT & COMPUTER APPLICATION, ANASAN
I.
PREFACE
Summer training is an integral part of the MBA programme. The main objective of the Summer Training is to work in the Organization and gain the valuable knowledge of management skills that will be useful in the future career building. The purpose is to study how an organization functions and how to apply our theoretical knowledge in the professional life. As a practical point of view for training I have selected GUJARAT APOLLO INDUSTRIES LTD. which is one of the leading construction equipment companies of India. It helps to get better understanding and working of various theories of financial management.
I have prepared the report, which contains following parts: Study of working capital management. Study cash management and inventory management. Comparison of current year and previous year balance sheet.
I learnt a lot from this training about the corporate life, which will be useful for me in future.
II.
ACKNOWLEDGEMENT
I am debited to some great personalities who always inspire me to do this job.
I sincerely wish to thank all those persons who have spent their valuable time for guiding and helping me to complete this summer training.
At very first, I would like to express my sincere gratitude to Mr. ASHUTOSH MEHTA (FINANCE MANAGER) & Mr. CHETAN JANI of GUJARAT APOLLO INDUSTRIES PVT. LTD. for giving me an opportunity to carry out working capital project at his esteemed organization and I am very much thankful to Mr. A. C. RAVAL for providing me necessary information and constant guidance in my project work.
Then I would like to express heartily thanks to Mr. NIMESH BHOJAK & Miss. ANJALI PANDYA for inspiring me. I also express my gratitude to GUJARAT TECHNOLOGICAL UNIVERSITY & my College DIVABA INSTITUTE OF MANAGEMENT & COMPUTER APPLICATION.
Summer training is a hard work. What make it possible is the support I got from those around me especially my families and my friends. While I cheerfully share the credit for the accurate aspect of this summer training. At last we cannot forget the number of people who directly or indirectly helps us to decorate our project.
III.
EXECUTIVE SUMMARY
The MACHINARY INDUSTRIES is a knowledge driven industry. This project gives the overall idea about the basic concept of working capital management to understand the financial position of the company, cash management, comparison of two year balance sheet.
This project gives the idea or knowledge about the inventory management system of the organization. How they are keeping finance, how they are dealing with the system. This project gives the knowledge about working capital management and for that I can use different method like Analysis of liquidity ratio, Analysis of liquidity position, Analysis of operating cycle, Analysis of components of gross working capital, Liquidity ranking.
Finance analysis of the company shows the financial position of the company of the particular year. SWOT analysis of this industry gives the knowledge the strength of the industry, loopholes of the industry, what are the opportunities available to the industry.
This way the project gives the theoretical knowledge about the financial position of the organization and overall condition of the company in the history.
TABLE OF CONTENT CHEP. PARTICULARS PAGE NO.

I. II. III. IV. 1 2 3 PREFACE ACKNOWLEDGEMENT EXECUTIVE SUMMARY PURPOSE OF MAKING THIS PROJECT REPORT THE SITUTION & DEVLOPMENT OF ROADS IN INDIA INDUSTRY INDICATION
2.1 ROAD NETWORK
2 3 4 10 11 12 13 14 14 14 15 16 17 18 19 20 21 21 22 23 24 25
GENARAL INFORMATION
3.1 NAME OF THE FIRM 3.2 ADDRESS 3.3 BANKER NAME & AUDITORS 3.4 BOARD OF DIRECTORS & CO. SECRETARY 3.5 HISTORY DEVLOPMENT 3.6 SIZE OF THE UNIT & FIRM 3.7 LAY OUT CHART 3.8 ORGNISATION CHART 3.9 GOAL OF THE COMPANY
PRODUCTION DEPARTMENT
4.1 TECHNOLOGY 4.2 R&D DEPARTMENT 4.3 PRODUCT PRICE LIST 4.4 PRODUCTS
FINANCE DEAPRTMENT
5.1 FINANCE CHART 5.2 FINANCE PLANNING
5.3 MARKET SHARE PRICE LIST 5.4 SWOT ANALYSIS
Gujarat Apollo industries ltd. 25 26 28 29 30 31 33 35 36 37 38 39 42 43 44 45 46 49 50 68 76 87 88 90 92 93
WORKING CAPITAL MANAGEMENT

6.1 INTRODUCTION 6.2 MEANING 6.3 CONCEPT 6.4 NEED AND OBJECTIVE 6.5 CONSTITUTES OF CURRENT ASSESTS 6.6 CONSTITUTES OF CURRENT LIBILITIES 6.7 CONSTITUTES OF WORKING CAPITAL 6.8 ADVANTAGES OF WORKING CAPITAL 6.9 DISADVANTAGES OF WORKING CAPITAL 6.10 FACTORS & REQUIRMENTS
RESEARCH METHODOLOGY
7.1 INTRODUCTION 7.2 TYPES OF DATA COLLECTION 7.3 OBJRCTIVE OF THE STUDY 7.4 SCOPE & LIMITATION OF THE STUDY
8
8.1 8.2
DATA ANALYSIS & INTERPRITATION

CAPITALIZATION COMPRISES WORKING CAPITAL ANALYASIS
8.2.1 RATIO ANALYSIS 8.2.2 FUND FLOW ANALYSIS 8.2.3 WORKING CAPITAL BUDGET
9 10 11 12 V.
FINDINGS SUGGESTIONS CONCLUSION BIBLIOGRAPHY ANNXURE

A. BALANCE SHEET THREE YEARS B. PROFIT & LOSS ACCOUNT THREE YEARS

C. CASH FLOW STATEMENT
CHART & TBALE INDEX NUM.

I.
PARTICULARS
CHART INDEX
A. LAY OUT CHART B. ORGNISATION CHART C. FINANCE CHART D. BOOK VALUE CHART E. OPERTAING CYCLE CHART F. CURRENT RATIO CHART G. QUICK RATIO CHART H. WORKING CAPITAL TURNOVER RATIO I. DEBTORS TURNOVER RATIO J. CREDITORS TURN OVER RATIO K. EARNING PER SHARE L. INTEREST COVERAGE RATIO M. GROSS PROFIT RATIO N. NET PROFIT RATIO O. TOTAL ASSESTS TURNOVER RATIO P. DEBT EQUITY RATIO Q. CURRENT ASSESTS TURNOVER RATIO
PAGE NO.
18 19 24 47 31 50 52 54 55 56 57 59 61 62 63 64 65
II.
TABLE INDEX
1. ROAD NETWORK TEBLE 2. PRODUCT PRISE TABLE 3. MARKET SHARE PRICE TABLE 4. CURRENT RATIO TABLE 13 22 26 50

5. QUICK RATIO TABLE 6. WORKING CAPITAL TURNOVER RATIO TABLE 7. DEBTORS TURNOVER RATIO TABLE 8. CREDITORS TURNOVER RATIO TABLE 9. EARNING PER SHARE RATIO TABLE 10. INTEREST COVRAGE RATIO TABLE 11. GROSS PROFIT RATIO TABLE 12. NET PROFIT RATIO TABLE 13. TOTAL ASSESTS TURNOVER RATIO TABLE 14. DEBT EQUITY TURNOVER RATIO TABLE 15. CURRENT ASSESTS TURNOVER RATIO TBALE 16. COMMONSIZE STATEMENT TABLE 17. INCOME STATEMENT TABEL 18. WCM PERSENTAGE WISE TABLE 19. CHNGES IN WCM INCREASE/DECREASE TABLE 20. WC BUDGET ON DETAILS TABLE 85 68 73 76 79 55 56 57 59 61 62 63 64 65 52 54
III.
PURPOSE OF MAKING THIS PROJECT REPORT
As explained earlier research of project report is nothing but a first step in the practical field.
No one is learning swimming by just understanding theories of swimming from textbook but one has to get into the water in properly. Similarly project report yields a first chance for learning business administration in the real field. In a process of training a project report are has to pass through the real human affiliation environment & necked truth of industrial problem a practical constrictive of the management etc. therefore, we are enlisting the objectives of project report as below.
To expand the skill of effective communication with management, administrative staff, technical staff like engineers, labors etc.
. By getting concerned in different issues of management. We are analyze, talk about & decision making, altitudes, & theyre by realizing the real role of M.B.A. professional.
It also develops the skill of gathering data from different Sources like library, electronics media, and websites from individuals & classifying the same in dispread manner.
It develops the art .of valuable presentation by effective project writing.
With the above global objectives in the mind, we look & search in the market for an industry, which may have human resources role in the national development. As a result we decided to work ahead all industry named, GUJARAT APOLLO INDUSTRIES LTD.". Its an industry, which is involved in the manufacturing of Road making machineries.
1. THE SITUATION & DEVELOPMENTT OF ROADS IN INDIA

The planning commission had advised the government to exercise control in declaring new national highways since random declaration has caused a backlog of incomplete highways according to commission, the response to public, Pvt., partnership modes have been Ltd. so far with a total of 48 projects worth RS.89.4 billion being developed through this route. The Tamil Nadu government has allowed RS.3.7 billion for improving roads in the channel Metropolitan Area. The revised estimate of the total investment needed for the structure of rural roads under the Pradhan Mantri Gram SADAK Yojana has shot up to Rs, 1330 billion from the prior RS.600 billion. The National Bank for Agriculture and Rural Development (NABARD) has sanctioned RS.633.5 million for rural roads and bridges and minor preigation in Tamilnadu under the Rural Infrastructure Development Fund (RIDF). NABARD has sanctioned projects with an outlay of RS.713 million. The Group of Ministers (GOM) has rejected the rural transport and highway department's suggestion to change the formula for the distribution of revenue collected during the additional cess of 50 paisa an every liter of petrol and diesel. The finance ministry has spoken concern over the breakdown, of the Notional Highway Authority of India (NHAI) to spend funds for the national highway projects. The Banglore, Mysore Infrastructure Corridor (BMIC) project is involved in a controversy. The Andhra Pradesh chief minister's "Rajiv Palle Bauta" programmes received a sanction of Rs.2 billion from NABARD for development of rural roads. The first installment would cover about 2,500 Km. of roads, including high level bridges and culverts. Four major roads projects have been in the news freshly. Three of these are urban projects while the forth is a rural project being attempted on a public, Pvt., partnership basis. Thiruvanthapuram City Road Development Project. Warana Rural Road Project. Ahmedabad vadodara expressway. Delhi Gurgaon expresses way.
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2. INDUSTRY INDICATION
The world's leading democracy
Government committed to infrastructure growth, special focus on the roads,
Rs75000/- corers (USD 15.5 Billion) to be invested in road construction in the next 5 years
All the projects under Golden Quadrilateral have been firmed up.
The balance NSEW corridor projects shall be awarded in 2003-04.
Availability of skilled manpower
World Bank and ADB funds are flowing in cess an petrol and diesel is generating good funds.
Anticipated market growth of 23-30% per year in Road construction equipment sector
The significance of roads in the economic development of a nation cannot be overemphasized. It is the oldest and the most popular mote of transportation.
Indio has one of the biggest road networks in the world (3.3 million km), comprising national highways (65,569 km), state highways (131,899 km), district roads, and rural roads, urban Roads and special roads designed for military purposes and for' part connectivity.
Indian roads bear about 85 percent of passenger and 70 percent of goods traffic. National highways comparison less than 2 percent of the total road length but away 40 percent of traffic.
The national highways are the duty of the Ministry of Road Transport and Highway (MARTH) and the National Highways Authority of India (NHAI), while states have different bodies to manage their road networks. In most states. Public works departments look otter road development and maintenance. DIVABA INSTITUTE OF MANAGEMENT & COMPUTER APPLICATION, ANASAN
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2.1. Road Network

Category Primary Secondary Component National Highways State Highways Major District Roads Tertiary Total Approx Village and other roads Length (km) 65,569 131,899 467,763 2,650,000 3,315,231 3,300,000
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3. GENERAL INFORMATION
3.1. NAME OF FIRM: GUJARAT APOLLO INDUSTRIES LTD.
3.2. ADDRESS: 3.2.1. REGISTERED OFFICE Ditasan, Post Jagudan, State Highway, Mehsana 382 710 (North Gujarat)
3.2.2.
CORPORATE OFFICE
Apollo house, Near Mithakali six roads, Navrangpura, Ahmedabad 380 009
3.3. BANKER:
1. STATE BANK OF INDIA. AUDITORS: -
ARVIND A.THAKKAR & CO.

Chartered Accountants, Ahmedabad SIZE OF THE FIRM: Large scale unit
13
3.4. BOARD OF DIRECTOR
Mr. ANIL T. PATEL Mr. MANIBHAI V. PATEL Mr. AJITKUMAR T. PATEL Mr. ASIT A. PATEL Mr. ANAND A. PATEL Dr. N.V. VASANI Dr. N.T. PATEL Mr. R.C. GOSAIN
- FOUNDER CHAIRMAN & DIRECTOR - DIRECTOR - DIRECTOR - MANAGING DIRECTOR - EXECUTIVE DIRECTOR - INDEPENDENT DIRECTOR - INDEPENDENT DIRECTOR - INDEPENDENT DIRECTOR
COMPANY SECRETARY:SURESH S. SHAH
14
3.5. HISTORY AND DEVELOPMENT

This company was incorporated on 7" octomber 1986 in the state of gujrat as a public limited company . The certificate of commencement of business business was otained from the registered of companies. Gujarat on 1lth November 1986.G.A.E.L. was promoted by MIS .Apollo earthmovers pvt. Ltd. love to the Apollo group of Gujarat in association with Gujarat industrial investment corporation ltd.(GIIC), a state' level fmancial institution . the Apollo group of companies ,of which Gujarat Apollo equipment limited is the flagship , is Indian No.1 manufacturer of road construction &maintenance equipment. From a
modest beginning in the year 1972, the group today offers almost the entire range of equipment that lends them admirably to the road building industry. Gujarat Apollo is a Bombay stock exchange listed company. The group has four modem manufacturing facilities . The construction division of the company commenced operations in April 1995. Prior to information of this division , the construction activities were carried out through other group companies.
Road construction equipment Road construction filtration system Ship breaking The group started business' operation in1965 by establishing Apollo engineering company for
water welt drilling construct over a period of time. The company integrated backwards into production of drilling rings. It also started manufacturing Trailer & Agriculture Equipments In 1972,appollo industrial products private limited was set-up to manufacture mechanical paver finishers and hot mix plants . the company business grew steadily and its products earns good reputation in the market.
There for, in 1985,appollo earthmovers private limited teamed with Gujarat industrial investment corporation (GIIC) to set up Gujarat Apollo equipment limited(G.A.E.L) the company started manufacturing drum type asphalt plant and hydrostatic sensor paver finisher under a technical coloration arrangement with barber Greene ,USA. In July 1992 GIIC divested its entire 11% holding to Apollo earthmovers private limited at a negotiated price of rs.18.69 per share Gujarat Apollo equipment limited' entered the capital market in February 1994. it is listed on the Bombay and Ahmadabad stock exchanges.appol10 industrial products and Apollo earthmovers retain their privet ltd. status . DIVABA INSTITUTE OF MANAGEMENT & COMPUTER APPLICATION, ANASAN
15
3.6. SIZE OF THE UNIT & FORM OF ORGANISATION Industry can be classify in to three way (a) small scale industry (b) medium scale industry (c) large scale industry
S.S.I.--- according to capital investment , an industry which has not investment more then 75 lacs is called small scale industry .
M.S.1.--- an industrial units said to be medium scale unit in which capital investment in plant and machinery is between 75 lacks to 100 lacks .
L.S.I.---an industrial unit said to be large scale unit which invest capital in plant and machinery more then 1 corer and use power and also employed workers more then small scale industry.
Gujarat Apollo Industry limited is a large scale industry which is obvious . Following are the main forms of organization - Sole proprietor ship firm - Partnership firm - Joint stock company - Co-operative sector in joint stock company, there are various forms contain like statutory company, chartered co., govt. co.pvt.co. and also limited co. etc.
Gujarat Apollo Industry ltd. Ditasan is a company of company form.
16
17
3.7. organisation chart
18
3.8. GOAL OF THE COMPANY
3.8.1.
LONG TERM GOAL FOR FIVE YEARS.
sub stand market leadership in product line maintain market presence among international competitors develop capable manpower for industrial needs.
3.8.2. SHORT TERM GOAL FOR ONE YEAR.
brick turn over of inventory ratio at 8 reduce delivery time bring all a great vender to quality level of excellent grade . earn Iso-certificate launch hat end loader
3.8.3. MISSION
GAEL is committed lo delight customers with quality products and services thought market dedicated on going upgrading of technology supported by trained human resources.
3.8.4.
MAIN OBJECTS
To carry on the business of manufacturing, buying, selling, altering, importing , exporting, improving assembling distributing or dealing in road construction and maintenance machinery , cement mixing and distribution equipment, canal making and lining.
19
4. PRODUCTION DEPARTMEnt
An obsession to provide at most quality products has resulted in our setting up one of the most sophisticated manufacturing plant in DITASAN The manufacturing speed and capacity of this plant is very high. The plant is' equipped with high efficiency purified Air technology with maintains a continuous flow of bacteria kee environment of filtered air through filter inside the providing an absolutely strive environment.
4.1. TECHNOLOGY
Technology is most important factor in production of qualified and better product without good technology; production cannot be manufactured in a good manner . technology used in production of Apollo's product is following.
The company's existing plan is based on the technology adopted from M/S barber. Greene Company, USA. M/s. barber Greene company is an engaged in the manufacturer of road construction and maintenance equipment, it has three manufacturing plan in USA and affiliates in England, Canada, brazil and Netherlands, as per the agreement with GIIC and approved by the govt. of India. The company has developed indigenously the cold miming machine with the internet technical strength and development capability the company shall be developing the proposed product on its own.
4.2. RESEARCH AND DEVELOPMENT

The company is not having an independent research and development unit registered with the government of India however, product development activates continue to get at most priority in the field of process technology, improvement in quality, import substitution etc through the quality assuring department.
4.2.1.
RAW MATERIAL
The main raw material required for the product rang are mild steel sheets, steel bars, steel roil and steel pipes; the requisite steel is available from SAIL'S stock yard of Ahmadabad. At present level of operation about 1160 tones of mild steel was consumed. After the proposed expansions the company of optimum capacity utilization would require 2070 tones mild steel.
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4.3. Product & price of the company

Sr. No. Item Selling price (Rs.) 1 2 3 4 5 6 7 8 Kerb Laying Machine KP-40 Slipformer KP-1200 SF Extra Mould for KP-40 Extra Mould for KP-1200SF Kerb Cutter with 16 HP Petrol Engine Kerb Cutter With Ele. Motor Kerb cutter (Vertical) 7,25,000/22,50,000/65000/91,000/1,405,000/750,000/16,10,000/-
WM-6 std. Paver with kirl. 4R1040 Engine & std. 41,00,000/Screed WM-6 std. Paver with Leyland 6.65 / kirl, 4R1040 (Turbo)/kirl 6R1080 Engine, Tel Screed & Power Steer.
1,00,25,000/-
10
Mobile Cement Concrete Batch Mixing Plant 20 Cu.Mt Road marking Machine RM-100 (Extruder type) Road marking Machine HPWB with Screed Gas Preheated 500 kg Road Surface Cleaner
1,18,85,000/-
11 12 13 14
56,00,000/51,45,000/42,25,000/6,11,000/-
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4.4. PRODUCTS
The company product mix includes paver, finisher, dram mix plant bitumen sprayer and road maker. All these products fall under the category of capital goods involve investing large funds.
4.4.1.
THE MAJOR PRODUCTS OF THE COMPANY ARE AS UNDER
Wet mix macadam plants
Hydrostatic paver finisher
Asphalt batch mix plant
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5. FINANCE & ACCOUNT DEPARTMENT
Organization structure of finance & accounting department is line organization system. All the functions of finance is in the head of chief accountant... There are 6 seniors following is the chart of finance & A/c. Department. .
Chairman & M.D.
Executive Director
Chief Accountant
Accounts
Clerk
Form the above chart; we can find that all the functions are distributed under the chief accountant. Mr. P.V. Patel & Mr. S.K. Mooudra takes all the decisions regarding finance, but last authorities are in the hand of the chairman and executive director. Mr. Asit A. Patel, executive Director is ultimate responsible person for execution of any finance decision, clerk works under the head of accountant of normally accountant works under the head of chief accountant. Due to the better finance policy of company accountant, finance functions are operated smoothly and although problem. DIVABA INSTITUTE OF MANAGEMENT & COMPUTER APPLICATION, ANASAN
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5.1. FINANCE PLANNING

The finance planning is playing a very important role in company. The process of estimating the funds requirements of the firm and determining the sources of funds is called finance planning for every company, finance planning is must. The head of account and finance department spars there most of the time in making planning of finance. It they are not successful in making planning of finance. It they are not successful in making effective financial planning, they never success in business.
All companies have their own different plan about financing. So financial planning covers specially What would be fund requirement? Maximum utilization of funds.
GUJARAT APOLLO INDUSTRIES PVT. LTD. has it s own plan for fixing financial requirements and maximum utilization of fund. In The APOLLO . the chairman decides the requirements of funds in board meeting of company. For helping accurate figure of requirements of funds, they make 6 monthly or sometime yearly forecasts of funds. Each and every department maintained its requirements. After' deciding requirements of funds, company tries to collect money and for this they arrange meeting with its banker such as State Bank of, India and Dena Bank at a ratio 6:4. Again management plans for proper maximum utilization of amount. They have adapted enough controlling measure have that can ensure no idle funds. They have set target for such job in terms of money period required, time consumed, quality assured etc.
By doing financial planning in good manner, APOLLO makes effective use of fund and there is no shortage or any idleness of funds. In company so from that view paint financial planning has greater significance.
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5.2. Market share price data on the year 2008-09 and 200910: Period
April 2008 May 2008 June 2008 July 2008 August 2008 September 2008 October 2008 November 2008 December 2008 January 2009 February 2009 March 2009 April 2009 May 2009 June 2009 July 2009 August 2009 September 2009 October 2009 November 2009 December 2009 January 2010 February 2010 March 2010
Highest price
280.00 285.10 229.95 189.00 206.95 190.00 155.95 116.80 96.00 64.70 62.40 58.50 84.50 121.00 144.70 136.65 149.80 175.00 166.50 180.00 197.00 223.70 208.00 214.80
Lowest price
173.65 214.10 175.10 150.00 170.00 139.00 88.50 87.00 54.10 51.65 53.75 49.00 55.50 66.00 110.00 106.80 116.00 140.00 146.25 140.40 170.50 181.25 170.80 190.00
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5.3. SWOT ANALYSIS
26
Strengths:
Apollo is producing whole range of road construction equipment. Apollo is having technologically superior equipment and huge developed infrastructure to cater the road construction equipment market. Apollo is having good marketing set-up through the branch offices located at the important places. Apollo has created goodwill by selling huge population equipment.
Weaknesses:
Zyxler Machinery eq. pvt ltd.is manufacturing the sensor paver of 9 mts. Width. Higher delivery time as compared to other player in plant and paver. Apollo is not providing free cost of services for one year which may other companies are providing.
Opportunities:
Road marking and milling machine are best prospects for future. Apollo can take service contract from the customer. Very few players intended to supply equipment to government. Afghanistan is having the good prospects in infrastructure development.
Threats:
Unipave already manufacturing batch mix plant Maruti is willing to cater the market of SAARC countries like Nepal and Bangladesh. Capious, Siddharth, D.M., Kuldevi, Himalaya are willing to manufacture sensor paver.
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6. Working Capital Management

6.1. INTRODUCTION
Working Capital management is a significant fact of financial management due to the fact that it plays a pivotal role in keeping the wheels of a business enterprise running. Working Capital management is concern with short term financial decisions have been relatively neglected in the literature of finance. Shortage of funds for working capital has caused many businesses to fail and in many cases, has recorded their growth, Lack of efficient and effective utilization of working capital leads to earn low rate of return on capital employees or even compels to sustain losses An Executive function of Finance for taking Liquidity decisions. Signifies money required for day-to-day operations of an organization. Business cannot run without adequate working capital (WC). Requirements of WC may differ from organization to organization.
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6.2. MEANING
Working Capital management is the administration of the firms current assets and the financing needed to support the current assets. Current assets are those assets, which will be converted into cash within the current accounting period or within the next year as a result of the ordinary operation of the business. They are cash or nearly converted cash resources. These include Cash and Bank Balances, Receivables, Inventory, Prepaid expenses, Short Term advances, Temporary Investments. The value represented by these assets circulates among several items. Cash is used to buy raw materials, to pay wages and to meet other manufacturing expenses. Finished goods are produced further held as inventories and when inventories are sold account receivables are created. Then the collection of account receivables brings cash into the firm and the cycle starts again.
Cash Cash Inventories Cash Receivables Cash Circulation of Current Assets
Current Liabilities are the debts of the firm that have to be paid during the current accounting period or within a year. This includes creditors for goods purchased, outstanding expenses, short-term borrowing, advances received against sales, taxes and dividends payable, and other liabilities maturing within a year. Working Capital is also known as circulation capital, fluctuating capital and revolving capital.
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6.3. CONCEPT
Gross Working Capital: It refers to the firms investments in current assets. There is two characteristics of current assets like: Short life span and swift transformation into other assets forms.
Net Working Capital: It refers to the excess of the current assets over current liabilities. Net Working can be positive or negative. A negative working capital will arise in case when current liabilities are more than current assets and positive working capital will occur when current assets are more than current liabilities. Current credit soundness is indicated by positive NWC position, which is of major concern to investors and bankers. It is measured by the current ratio obtained by dividing the rupee value of current assets by rupee value of current liabilities. Larger the ratio the more solvent the firm, i.e. in the event of bankruptcy, falling prices of inflated values, the book value of current assets could shrink considerably and the firms creditors would still be assured of payments. However from managements point of view a high ratio may indicate poor planning since excessive amounts are tied up in on productive current assets, which tend to produce a lower income. The above concepts are called Balance Sheet Approach of Working Capital
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6.4. Need for working capital

The need for Working Capital to run day-to-day business activities cannot be overemphasized. It is difficult to find any organization, which does not required any amount of Working Capital. Indeed, firms differ in their requirements of the working capital we know that a firm should enhance the wealth of its shareholders. In its endeavor to do so a firm should earn a sufficient return from its operations. For generating sales current assets are needed because sales do not convert into cash immediately. OBJECTIVES OF WORKING CAPITAL MANAGMENT By optimizing the investment in current assets and by reducing the level of current liabilities, the company can reduce the locking up of funds in working capital thereby; it can improve the return on capital employed in the business. But maintaining excess funds in working capital means locking up of funds without return. The firm should manage its current assets in such a way that the marginal return on investment in these assets is not less than the cost of capital employed to finance the current asset Operating Cycle Sales of the products either for cash or on credit. Credit sales create book debts for collection.
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The operating cycle of working capital is shown in the following figure.
(Source: I M Pandey, Financial Management, Vikas Publication, Ninth Edition)
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6.5. CONSTITUENTS OF CURRENT ASSETS
Current assets Loans & advances

Currents assets Inventories stock in trade work in progress raw materials stores and spare parts Total Inventories Debtors Cash & Bank balances (subtracting FCCB issue unutilized money as it amounts to long term liability) loans and advances
FY 07-08
FY 08-09
FY 09-10
5,48,82,932 5,33,18,355 15,11,94,650 54,04,089 26,48,00,026 25,10,34,086 18,29,13,709
6,93,62,040 10,31,43,500 12,51,24,189 52,42,969 30,28,72,698 21,25,71,863 6,45,86,370
5,87,81,304 9,99,76,461 20,68,16,784 46,73,999 37,08,51,361 38,51,21,468 8,69,87,236
21,35,67,983
46,16,23,030
48,87,54,654
Net current assets

1) 2) 3) 4) 5)
(A)
91,25,58,012 1,04,17,93,650 1,33,17,14,719
Cash in hand and cash at bank Bills receivables Sundry debtors Short term loans and advances. Inventories of stock as: a. b. c. d. Raw material Work in process Stores and spares Finished goods
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6. Temporary investment of surplus funds. In a narrow sense, the term working capital refers to the net working. Net working capital is the excess of current assets over current liability, or, say: NET WORKING CAPITAL = CURRENT ASSETS CURRENT LIABILITIES.
Current assets Loans & advances Net current assets (A)
FY 07-08
FY 08-09
FY 09-10
91,25,58,012 1,04,17,93,650 1,33,17,14,719 20,57,03,090 70,68,54,922 20,86,20,582 22,74,62,406
Net current liabilities (B) Working capital (A-B)
83,31,73,068 1,10,42,52,313
Net working capital can be positive or negative. When the current assets exceeds the current liabilities are more than the current assets. Current liabilities are those liabilities, which are intended to be paid in the ordinary course of business within a short period of normally one accounting year out of the current assts or the income business.
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6.6. CONSTITUENTS OF CURRENT LIABILITIES

1. 2. 3. 4. 5. 6. 7. Accrued or outstanding expenses. Short term loans, advances and deposits. Dividends payable. Bank overdraft. Provision for taxation , if it does not amt. to app. Of profit. Bills payable. Sundry creditors. FY 07-08 FY08-09 FY 09-10
Current Liabilities
Sundry Creditors unclaimed dividend sundry deposits advances from customers
9,27,51,738 30,11,995 Nil 6,54,96,123
9,69,21,215 33,33,002 nil 7,18,62,940
13,99,86,154 24,00,670 Nil 3,65,95,779
Provisions
For income tax net off advances tax & TDS For fringe benefit tax For dividend and dividend tax Net current liabilities (B) 73,39,809 2,50,000 3,68,53,425 20,57,03,090 Nil 4,50,000 3,68,53,425 20,86,20,582 Nil Nil 4,84,79,803 22,74,62,406
It is qualitative concept, which indicates the firms ability to meet to its operating expenses and short-term liabilities. IT indicates the margin of protection available to the short term creditors. It is an indicator of the financial soundness of enterprises. It suggests the need of financing a part of working capital requirement out of the permanent sources of funds
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6.7. CLASSIFICATION OF WORKING CAPITAL: On the basis of concept working

capital can be classified as gross working capital and net working capital. On the basis of time, working capital may be classified as: Permanent or fixed working capital. Temporary or variable working capital
6.7.1.
TEMPORARY OR VARIABLE WORKING CAPITAL
Temporary or variable working capital is the amount of working capital which is required to meet the seasonal demands and some special exigencies. Variable working capital can further be classified as seasonal working capital and special working capital. The capital required to meet the seasonal need of the enterprise is called seasonal working capital. Special working capital is that part of working capital which is required to meet special exigencies such as launching of extensive marketing for conducting research, etc. Temporary working capital differs from permanent working capital in the sense that is required for short periods and cannot be permanently employed gainfully in the business.
Position of deployment fund and variable working capital

Total assets
31-03-2009
31-03-2010
1,55,04,33,514
1,84,69,75,990
Application of fund
Net fixed assets Current Investments Current assets Total liabilities 36,20,09,499 14,66,30,365 1,04,17,93,650 1,55,04,33,514 58,87,24,543 15,39,99,134 1,33,17,14,719 1,84,69,75,990
Sources of fund
Paid up capital Reserve and surplus Secured loan Unsecured loan Tax liability Current liabilities 15,75,00,000 95,81,48,937 10,28,37,907 91,79,63,30, 2,16,29,758 22,74,62,406 16,57,50,000 1,26,97,60,340 20,38,11,307 17,55,79,257 3,20,75,086 20,86,20,582
Variable working capital
83,31,73,068
1,10,42,52,313
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6.8. ADVANTAGE OF ADEQUATE WORKING CAPITAL

These are advantages of working capital management in Gujarat Apollo industries ltd. SOLVENCY OF THE BUSINESS: Adequate working capital helps in maintaining the solvency of the business by providing uninterrupted of production. Goodwill: Sufficient amount of working capital enables a firm to make prompt payments and makes and maintain the goodwill. Easy loans: Adequate working capital leads to high solvency and credit standing can arrange loans from banks and other on easy and favorable terms. Regular Payment Of Salaries, Wages And Other Day TO Day
Commitments: It leads to the satisfaction of the employees and raises the morale of its employees, increases their efficiency, reduces wastage and costs and enhances production and profits. High Morale: Adequate working capital brings an environment of securities, confidence, high morale which results in overall efficiency in a business. These are other advantages of working capital management Cash Discounts: Regular Supply of Raw Material
Exploitation Of Favorable Market Conditions: Ability To Face Crises: Quick And Regular Return On Investments
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6.9. DISADVANTAGES OF INADEQUATE WORKING CAPITAL

Every business concern should have adequate amount of working capital to run its business operations. The need for working capital arises due to the time gap between production and realization of cash from sales. There is an operating cycle involved in sales and realization of cash. There are time gaps in purchase of raw material and production; production and sales; and realization of cash. Thus working capital is needed for the following purposes in Gujarat Apollo industries ltd. For the purpose of raw material, components and spares. To pay wages and salaries To incur day-to-day expenses and overload costs such as office expenses. To meet the selling costs as packing, advertising, etc. To provide credit facilities to the customer. To maintain the inventories of the raw material, work-in-progress, stores and spares and finished stock. For studying the need of working capital in a business, one has to study the business under varying circumstances such as a new concern requires a lot of funds to meet its initial requirements such as promotion and formation etc.
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6.10.
FACTORS THE WORKING CAPITAL REQUIREMENTS
1. NATURE OF BUSINESS: The requirements of working is very limited in public utility undertakings such as electricity, water supply and railways because they offer cash sale only and supply services not products, and no funds are tied up in inventories and receivables. On the other hand the trading and financial firms requires less investment in fixed assets but have to invest large amt. of working capital along with fixed investments. 2. SIZE OF THE BUSINESS: Greater the size of the business, greater is the requirement of working capital. 3. PRODUCTION POLICY: If the policy is to keep production steady by accumulating inventories it will require higher working capital. 4. LENTH OF PRDUCTION CYCLE: The longer the manufacturing time the raw material and other supplies have to be carried for a longer in the process with progressive increment of labor and service costs before the final product is obtained. So working capital is directly proportional to the length of the manufacturing process. 5. SEASONALS VARIATIONS: Generally, during the busy season, a firm requires larger working capital than in slack season. 6. WORKING CAPITAL CYCLE: The speed with which the working cycle completes one cycle determines the requirements of working capital. Longer the cycle larger is the requirement of working capital. DEBTORS CASH FINISHED GOODS
RAW MATERIAL
WORK IN PROGRESS
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7. RATE OF STOCK TURNOVER: There is an inverse co-relationship between the question of working capital and the velocity or speed with which the sales are affected. A firm having a high rate of stock turnover wuill needs lower amt. of working capital as compared to a firm having a low rate of turnover. 8. CREDIT POLICY: A concern that purchases its requirements on credit and sales its product / services on cash requires lesser amt. of working capital and vice-versa. 9. BUSINESS CYCLE: In period of boom, when the business is prosperous, there is need for larger amt. of working capital due to rise in sales, rise in prices, optimistic expansion of business, etc. On the contrary in time of depression, the business contracts, sales decline, difficulties are faced in collection from debtor and the firm may have a large amt. of working capital. 10. RATE OF GROWTH OF BUSINESS: In faster growing concern, we shall require large amt. of working capital.
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6.11.
MANAGEMENT OF WORKING CAPITAL
Management of working capital is concerned with the problem that arises in attempting to manage the current assets, current liabilities. The basic goal of working capital management is to manage the current assets and current liabilities of a firm in such a way that a satisfactory level of working capital is maintained, i.e. it is neither adequate nor excessive as both the situations are bad for any firm. There should be no shortage of funds and also no working capital should be ideal. WORKING CAPITAL MANAGEMENT POLICES of a firm has a great on its probability, liquidity and structural health of the organization. So working capital management is three dimensional in nature as 1. 2. 3. It concerned with the formulation of policies with regard to profitability, liquidity and risk. It is concerned with the decision about the composition and level of current assets. It is concerned with the decision about the composition and level of current liabilities.
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7. Research Methodology
7.1. Introduction
o Research methodology is a way to systematically solve the research problem. It may be understood as a science of studying now research is done systematically. In that various steps, those are generally adopted by a researcher in studying his problem along with the logic behind them. It is important for research to know not only the research method but also know methodology. o The procedures by which researcher go about their work of Describing, explaining and predicting phenomenon are called methodology. Methods comprise the procedures used for generating, collecting and evaluating data. All this means that it is necessary for the researcher to design his methodology for his problem as the same may differ from problem to problem. o Data collection is important step in any project and success of any project will be largely depend upon now much accurate you will be able to collect and how much time, money and effort will be required to collect that necessary data, this is also important step. Data collection plays an important role in research work. Without proper data available for analysis you cannot do the research work accurately.
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7.2. Types of data collection

There are two types of data collection methods available.
1. Primary data collection 2. Secondary data collection
1) Primary data The primary data is that data which is collected fresh or first hand, and for first time which is original in nature. Primary data can collect through personal interview, questionnaire etc. to support the secondary data.
2) Secondary data collection method The secondary data are those which have already collected and stored. Secondary data easily get those secondary data from records, journals, annual reports of the company etc. It will save the time, money and efforts to collect the data. Secondary data also made available through trade magazines, balance sheets, books etc. This project is based on primary data collected through personal interview of head of account department, and other concerned staff member of finance department. But primary data collection had limitations such as matter confidential information thus project is based on secondary information collected through five years annual report of the company, supported by various books and internet sides. The data collection was aimed at study of working capital management of the company
I choose the secondary data for Gujarat Apollo industries ltd.
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7.3. OBJECTIVES OF THE STUDY

Study of the working capital management is important because unless the Working capital is managed effectively, monitored efficiently planed properly and reviewed periodically at regular intervals to remove bottlenecks if any the Company cannot earn profits and increase its turnover. With this primary Objective of the study, the following further objectives are framed for a depth Analysis. 1. To study the working capital management 2. To study the optimum level of current assets and current liabilities of the Company. 3. To study the liquidity position through various working capital related ratios. 4. To study the working capital components such as receivables accounts, cash management, Inventory position
5. To study the way and means of working capital finance 6. To estimate the working capital requirement 7. To study the operating and cash cycle of the company.
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7.4. SCOPE & LIMITATIONS OF THE STUDY
Scope of the study The study of working capital is based on tools like trend Analysis, Ratio Analysis, working capital leverage, operating cycle etc. Further the study is based on last 3 years Annual Reports Gujarat Apollo industries Ltd. And even factors like competitors analysis, industry analysis were not considered while preparing this project. Limitations of the study Following are the limitations of the study being conducting: 1) Limited data:This project has to be done on the basis of the annual reports; it just constitutes one part of data collection i.e. secondary. There are limitations for primary data collection because of confidentiality. 2) Limited period:This project is based on five year annual reports. Conclusions and recommendations are based on such limited data. The trend of last five year may or may not reflect the real working capital position of the company 3) Limited area:Also it is difficult to collect the data regarding the competitors and their financial information. Industry figures were also difficult to.
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8. Data analysis and interpretation

8.1. Capitalization Comprises
Ownership capital and surplus in whatever form it may appear. Borrowed capital, which consist of bands of long term debt.
There may be of shareholders as on 31st march 2009 and 2010. Category No. of share No. of share % march 2010
Promotions and persons concert Mutual fund Banks FIIs Foreign nationals Bodies corporate Trust and foundations Public 81,51,114 13,54,201 187 2,39,498 2,35,851 13,74,990 5,000 52,17,159
total %
total
march 2009
73,89,952, 10,94,696 187 1,49,547 2,49,654 16,12,651 5,000 52,48,313
share 2010 share 2009

49.18 8.17 ----1.44 1.40 8.30 0.03 31.48 46.92 6.95 ---0.95 1.59 10.24 0.03 33.32
Total
1,65,75,000
1,57,50,000
100
100
Company is said to be owner capitalization if its earnings are less in relation to its capital investments. In other words, when book value of the company's share is greater than its real value owner capitalization can adversely affect the company's prestige; it lowers the profit so interest of shareholder is also affected. It sometime leads to high price or interior quality product. Company is said to be under capitalized when real value of its shares is greater than book value. Under capitalization results in higher profit, increase the prestige and good return to share holder however, expectation from an under capitalized company increased. So always we should go for fair capitalization in
Book Value = Net Assets No. Of Shares
Book value for the year 2007-08 = 1,18,16,44,1444 DIVABA INSTITUTE OF MANAGEMENT & COMPUTER APPLICATION, ANASAN
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1,05,00,000
1125.37 Rs
Book value for the year 2008-09
1,40,38,03,31,409 1,57,50,000
891.30 Rs
Book value for the year 2009-10
10,92,04,39,262 1,66,75,000
658.8 Rs
1200
1125.37 891.3
1000
800 600 400 200 0 2009-10 658.8
2008-09
2007-08
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8.2. WORKING CAPITAL ANALYSIS

As we know working capital is the life blood and the centre of a business. Adequate amount of working capital is very much essential for the smooth running of the business. And the most important part is the efficient management of working capital in right time. The liquidity position of the firm is totally effected by the management of working capital. So, a study of changes in the uses and sources of working capital is necessary to evaluate the efficiency with which the working capital is employed in a business. This involves the need of working capital analysis. The analysis of working capital can be conducted through a number of devices, such as: 1. 2. 3.
Ratio analysis. Fund flow analysis. Budgeting.
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8.2.1. Ratio Analysis

Ratio Analysis is a widely used tool of Financial Analysis. It is defined as the systematic Use of Ratio to interpret the financial statement so that the strength and weakness of a firm as well as its historical performance and current financial condition can be determined. The Ratio refers to the numerical or quantitative relationship between two variables\items. Ratio analysis presents the financial statement into various functional areas which highlight various aspects of the business like inequality, Profitability, assets turn over, financial structure etc., all these ratios are important to both categories of the suppliers of funds owners, and outsiders. Whose interest is reflected in various valuations rations?
1. Current ratio 2. Quick ratio 3. Working capital turnover ratio 4. Debtors turnover ratio 5. Creditors turnover ratio 6. Earning par share 7. Interest coverage ratio 8. Gross profit ratio 9. Net profit ratio 10. Total assets turnover ratio 11. Debt equity ratio 12. Current assets turnover ratio 13. Inventories turnover ratio
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Gujarat Apollo industries ltd. 8.2.1.1. Current Ratio:

Current ratio is the indication of the firm commitment to meet its short-term liabilities. It is widely used indicator of a companys ability to pay its debts in short-term. The Current Ratio is the ratio of total current assets to total current liabilities. It can be calculated, by dividing current assets by current liabilities.
Current Ratio = Total Current Assets Total Current Liabilities Where,

The current assets of the firm represent those assets which can be in the ordinary course of business, converted in to cash within a short period of time, normally not exceeding one year. The current liabilities defined as liabilities which are short maturing obligation.
Current Assets = Inventories + Debtors + Bill Receivables + Marketable Securities + Bank & Cash Balance + Prepaid Expenses. Current liability = Creditors + Bill payables + Unpaid expenses + Provision for tax + dividend Payable + Bank over Draft Table 1: Current Ratio
Particulars 2009-10 Total Current Assets Total Current Liabilities Current Ratio
Year 2008-09 2007-08
91,25,58,012 1,04,17,93,650 1,33,17,44,719 16,12,59,856 17,13,17,157 5.65 6.08 17,89,82,603 7.44
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Gujarat Apollo industries ltd. Chart E. Current Ratio
8 7 6 5 4 3 2 1 0
7.44 5.65 6.08
2009-10
2008-09 Cuurent Ratio
2007-08
Analysis:
1) Companys Current ratio will good Even if there is decrease in the current ratio.
During the Current year:
2) From this Current Ratio the Company has better liquidity \short term Solvency. 3) It is very good that they would decrease their current ratio because high ratio indicates of a Slack Management Practices, as it might signal excessive inventories for the current Requirements. As the same time the firm may not be use of current borrowings.
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Gujarat Apollo industries ltd. 8.2.1.2. Quick Ratio
All Current Assets are not equally liquid. While cash is readily available to make payments to suppliers .Debtors can be quickly converted into cash, Inventories are two steps away from conversion into cash (sales and collection). The quick ratio or acid test ratio is computed as a supplement to current ratio. The ratio relates highly liquid current assets usually current assets less inventories, to current liability.
Quick Ratio =
Quick Assets Liquid Liabilities
Where, Quick Assets = Current Assets Inventories Current Liabilities = Current Liabilities
Table 2 : Quick Ratio PARTICULARS QUICK ASSESTS CURRENT LIBLITIES RATIO 2009-10 960893358 178982603 5.368 2008-09 738781263 171317157 4.312 2007-08 647515778 161259856 4.015
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Gujarat Apollo industries ltd. Chart F Quick Ratio

5.368 4.312 4.015
6 5 4 3 2 1 0 2009-10 2008-09 2007-08 QUICK RATIO QUICK RATIO
Analysis:
1) The quick assets of the company are decreasing but it will also it is a good condition. 2) The company has an enough cash source to meet its short term obligation. And The reason for decrease in its ratio is that the company is increase its inventory And the company also pays money to its secured and unsecured loan.
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8.2.1.3.
Gujarat Apollo industries ltd. Net Working Capital turnover ratio:

Net Working Capital (NWC) represents the excess of current assets over current liabilities.
Net Working Capital = Total Current Assets Total Current Liability Ratio =SALES \ WORKING CAPITAL Table 3 Net Working Capital turnover Ratio Particulars 2009-10 Total Current Assets Total Current Liabilities Working Capital SALES RATIO 1,33,17,44,719 17,89,82,603 1,15,27,62,116 2,05,00,49,518 1.778 Year 2008-09 2007-08
1,04,17,93,650 91,25,58,012 17,13,17,157 87,04,76,493 16,12,59,856 75,12,98,156
1,69,90,71,163 1,90,90,81,043 1.95 2.54
Chart G Net Working Capital
3 2.5 2 1.5 1 1.778 1.95
2.54
working capital turnover ratio
0.5
0 2009-10 2008-09 2007-08
Analysis:
The ratio represents that part of the long term funds represented by the net worth and long term debt which is presently blocked asset. Here, as per the graph, since last two consecutive years the ratio is being increased regularly. But current it is decrease.
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Gujarat Apollo industries ltd. 8.2.1.4. Debtors Turn Over Ratio: -
Meaning: - The Debtors Turn Over Ratio shows whether the amount of resources tied up in debtors is reasonable and whether the company has been efficient in converting debtors in to cash. Debtors Turn Over Ratio = Credit sales/ Average debtors
PARTICULAR credit sales AVG. Debtors Debtors Turn Over Ratio
2009-10 2136196447 576381058 3.70
2008-09 1790679505 435238247 4.11
2007-08 1817124589 375649078 4.83
TABLE 4: debtors turnover ratio

6 5 4 ratio 3 2 1 0 2009-10 2008-09 year 2007-08 3.7 4.83 4.11
ANALYSIS: The company has high debtor turnover ratio which indicates that the finance management is collecting companys dues from the debtors immediately 4.83 times in the year of year of 2008, this ratio decreasing to 4.11 times in the year of 2009 and decreases to 3.70 times in the year of 2010.
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Gujarat Apollo industries ltd. 8.2.1.5. creditors ratio: = credit purchase / average creditors
Table 5: Creditors ratio: Particulars Credit purchase Average creditors Ratio Chart I: 2009-10 2008-09 2007-08
1,22,62,82,814 99,17,02,180 93,34,31,485 6,99,93,077 17.52 4,84,51,013 20.46 4,63,75,869 20.15
21 20 19 18 17 16 17.52
20.46
20.15
2009- 2008- 200710 09 08 creditors turnover ratio
Analysis:
This ratio indicate credit available to company they provide company time given to pay cash to creditors. As show the 2007-08 the ratio is 20.15 they are continually decrease in the both years so the ratio 2009-10 is 17.52 so this situation is not for the good company
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Gujarat Apollo industries ltd. 8.2.1.6. Earning Per Share:
If the company has issued preference share capital then net profit for equity share = Net Profit Preference Dividend. In absence of the preference share capital net profit is taken in the numerator of the below formula.
Earning
Per
Share
profitafte rrtax prf .dividend *100 numberofequityshare
Table 6: Earning Per Share
Particulars
Years (Rs in Cr.)
2009-10 Net Profit after tax 26,99,41,206 Pro. Dividend 4,14,37,500
2008-09 21,62,16,284 3,15,00,000 1,57,50,000 13.73
2007-08 37,36,70,909 3,15,00,000 1,05,00,000 35.59
No. of Equity Share 1,66,75,000 Earning/Share 16.25
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Chart J: Earning Per Share
earing per share
35.59
16.25
13.73
2009-10
2008-09
2007-08
Analysis: This provides companys future prices. It is increases gradually and picks in year 2007-08 at value 35.59 Then it is decrease in the year 2008-09 and reaches at the 13.73 this is because of the net profit is decrease to the previous year value and because 2007-08 year profit margin so earning per share high than after year decrease because that time is recession time so not get the high profit so earning per share decrease it is main reason of differences in two year share earning.
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8.2.1.7.
Interest Coverage Ratios:
This Ratio indicates the use of interest becoming debt funds in generating higher operating profits or EBIT. Higher is the Ratio better is the utilization of the debt funds. Higher interest coverage ratio enhances the equity earning (i.e. EBIT interest) is passed over to the equity finance of the capitalization. It can be concluded as follow:
Interest Coverage Ratio
EBIT Interest
Table7: Interest Coverage Ratios
Particulars 2009-10 EBIT Interest Interest Coverage Ratio 41,42,86,534 1,26,85,280 32.65
years 2008-09 2007-08
32,36,13,359 52,67,55,472 1,46,79,203 22.04 2,31,41,216 22.76
Chart K: Interest Coverage Ratio
interest coverage ratio
29%
42%
2009-10
2008-09 2007-08
29%
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Analysis: A high ratio implies adequate safety for payment of interest. It is increase slightly in the first four year, but in the year 2008-09 the ratio is DECREASING very high 2009-10. It is clearly indicates by the above calculation that interest expenses decreases and also PBIT increase and so it implies that the debt of the company decreases. Thus in general we can conclude that the growth of the company is very good
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Gujarat Apollo industries ltd. 8.2.1.8. Gross Profit Ratio:-
It is a ratio expressing relationship between gross profit earned to net sales. It is an useful indication of the profitability of business.
Gross Profit Ratio = Gross Profit / Sales x 100
TABLE 8: GROSS PROFIT RATIO PARTICULAR Gross Profit Sales Gross Profit Ratio 2009-10 41,42,86,534 2008-09 32,36,13,359 2007-08 52,67,55,472
2,05,00,49,518 1,69,90,71,163 1,90,90,81,043 20% 19% 27%
Chart L: Gross profit Ratio:

30% 25% GP ratio(in%)
27% 20%
20%
15% 10% 5% 0%
19%
2009-10
2008-09
year
2007-08
Analysis : In the year 2007-08 27% gross profit ratio was 0.27, which decreases in the year 2008-09 19% and once again it will increase in the year 2009-10 21%. In the year 2003-04 sales is high but gross profit is low thats why gross profit ratio is less. Because before year balance is carry forward
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Gujarat Apollo industries ltd. 8.2.1.9. Net Profit Ratio:-
This ratio is valuable for the purpose of ascertaining the overall profitability of the business and shows the efficiency of the business. It is the reserve of the operating ratio. Net Profit Ratio = Net Profit /Sales x 100
Table 9: net profit ratio PARTICULAR Net Profit Sales Net Profit Ratio(%) Chart M :Net profit ratio :2009-10 26,93,41,206 2,05,00,49,518 13% 2008-09 21,62,16,284 1,69,90,71,163 12% 2007-08 37,36,70,909 1,90,90,81,043 19%
20% 18% 16% 14% 12% 10% 8% 6% 4% 2% 0%
19% 13%
NP ratio(in%)
12%
2009-10
2008-09 year
2007-08
Analysis -
From the above net profit ratio, it is clear that company is making satisfactory profit. Net profit ratio is 19% in the year 2008 and in 2009 it decreases to 12 % and in the year of 2010 it is increase to 13%. This ratio shows a better profitability of the firm as compared to the whole industry. This suggests as satisfactory position of the firm.
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8.2.1.10.
Gujarat Apollo industries ltd. Total Assets Turn Over Ratio: -
- The amount invested in business is invested in all assets jointly and sales are affected through them to earn profit. So in order to find out relation between total assets to sales.
Total Assets Turn Over Ratio = Sales / Total Assets
Table 10 : total assets turnover PARTICULAR Sales Avg. Total Assets Ratio 2009-10 2,05,00,49,518 96,02,19,631 2.13:1 2008-09 1,69,90,71,163 7,0190,15,745 0.242:1 2007-08 1,90,90,81,043 5,90,82,20,722 0.32:1
Chart N: Total assets turnover ratio:

9 8 total ass ratio 7 8.46 7.13 6.36
6
5 4 3 2 1 0 2003-04 2004-05 year 2005-06
Analysis:
Total assets turn over ratio is 0.32 times in the year of 2008 and this ratio decreasing to 0.242 times in the year of 2009 and this ratio again increase to 2.13 times in the year of 2010. because total assets is high and again sale will more. The higher this ratio, it shows that with less amount of investment in total assets the business has a capacity to sell more.
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Gujarat Apollo industries ltd. 8.2.1.11. Debt equity ratio
When debt funds are used to generate ROI greater than interest cost on debt, the equity earning is enhanced, but if the interest cost is higher than the ROI, adversely affect the earning owners. This ratio is popularly described as Debt-Equity Ratio. Higher debt equity ratio is (1) good if ROI is greater than interest on debt. Thus, use of debt (or leverage) is considered as a Double Aged weapon.
Debt
Table 11 : Debt Equity Ratios
Equity
ratio
total debt Net capitalize d
Particulars 2009-10 Total debt Total capitalization Ratio Chart O: Debt Equity Ratio
Years (Rs in Cr.) 2008-09 21,25,71,863 1,11,56,48,937 19% 2007-08 25,10,34,086 93,62,86,078 26.8%
38,51,21,468 1,43,55,10,340 27%
27.00% 30.00% 25.00% 20.00% 15.00% 10.00% 5.00% 0.00% debt funded ratio 2009-10 27.00% 2008-09 19.00% 19.00%
26.80%
2007-08 26.80%
Analysis: Debt Equity Ratio is debt to Equity. Debt means long term fund having maturity of five years or more including interest thereon. Equity is paid up share capital plus free reserves. The higher the debt fund used in capital structure, the greater is the financial risk. This is also known as leverage ratio. Here as per the graph, we can see that the value is decreasing regularly.
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8.2.1.12.
Gujarat Apollo industries ltd. Net Fixed Assets Turnover Ratio:

=
net sales net fixed assets
Net Fixed Assets Turnover Ratio is shows Turnover of the company is how much percentage of Net Fixed Assets. It is calculated as below
Table 12 : Net Fixed Assets Turnover Ratio
YEAR Total Net Sales Net Fixed Assets Net Fixed Assets Turnover Ratio in times
2009-10 2,05,00,49,518 51,08,88,400
2008-09 1,69,90,71,163 27,51,34,319
2007-08 1,90,90,81,043 21,19,01,201
4.01:1
6.17:1
9:1
Chart P: Net Fixed Assets Turnover Ratio

10 9 8 7 6 5 4 3 2 1 0 2009-10 2008-09 2007-08
9 6.17
4.01
Analysis: Net fixed assets turnover is indicates that the companys total fixed assets over the sales. The net fixed asset is high at 107.14% in the year 2008-09. From the chart we can see that in the year 2008-09 is increases and than after it is decreases in the year 2009-10 DIVABA INSTITUTE OF MANAGEMENT & COMPUTER APPLICATION, ANASAN
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8.2.2. FUND FLOW ANALYSIS

Fund flow analysis is a technical device designated to the study the source from which additional funds were derived and the use to which these sources were put. The fund flow analysis consists of.It is an effective management tool to study the changes in financial position (working capital) business enterprise between beginning and ending of the financial dates.
1. Income statement analysis 2. Common size statement analysis
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Gujarat Apollo industries ltd. 8.2.2.1. COMMONSIZE ANALYSIS
Balance sheet:
PARTICULAR 2009 2010 RS % 2008 2009 RS % 2007- 2008 RS %
Source of fund 1 share holders fund Share capital Reserve and capital 16,57,50,000 8.97 15,75,00,000 95,81,48,937 11.73 71.40 10,50,00,000 83,12,86,078 8.25 65.32
1,26,97,60,340 68.74
2 loan fund Secured loan Unsecured loan 20,38,11,307 17,55,79,257 11.03 9.50 10,28,37,907 9,17,96,330 7.66 6.84 19,46,74,617 11,04,41,410 15.29 8.68
total
1,84,69,75,086 100
1,34,18,12,932 100
1,27,25,34,788 100
Application of fund
3 fixed assets Gross block -depreciation Net block + cap work in progress 62,96,50,767, 11,87,62,367 51,08,88,400 7,78,36,143 34.09 6.43 27.66 4.21 37,43,74,862 9,92,40,544, 27,51,34,318 8,68,75,181 27.90 7.39 20.50 6.47 29,33,40,318 8,14,39,117 21,19,01,201 5,17,82,231 23.05 6.40 16.66 4.07
4 investment Current assets, loan
67

And advances Inventories Sundry debtors Cash and bank Loan & advances 37,08,51,361 38,51,21,468 8,69,87,236 48,87,54,654 20.07 20.85 4.70 26.46 30,30,12,387 21,25,71,863 6,45,86,370 46,16,23,030 22.58 15.84 4.81 34.40 26,50,42,234 25,10,34,086 18,29,13,709, 21,35,67,983 20.83 19.73 14.37 16.78
-current liability & provision Current liability Provision 17,89,82,603 4,84,79,803 9.69 2.63 17,13,17,157 3,73,03,425 12.76 2.78 16,12,59,856 4,44,43,234 12.67 3.49
Net current asset
22,74,62,406
12.32
20,86,20,582
15.55
20,57,03,090,
16.16
Differed tax liability
3,20,75,086
1.74
2,16,29,758
1.61
2,12,32,683
1.67
Total
1,84,69,75,990 100
1,34,18,12,932 100
1,27,25,34,788 100
Analysis Sources of Funds:

In the year 2007-08 share capital of the company was 8.25% it is increase in the year 2008-09 and 2009-10 it was 11.97% and 8.97%. Reserve and surplus of the company was 65.32% in the year of 2007 -08 it was increase 71.40% in the year of 2008-09 and it was decrease also in the year of 2009 -10 to 68.74%. Secured loan of the company was 15.29% in the year of 2007-08, it was decrease in both last year 2008-09 & 2009-10 7.66% & 11.03%. Unsecured loan of the company was 12.17% in the year of 2009 -10.
68
Gujarat Apollo industries ltd. Application of Funds:

Fixed assets of the company was decrease It increase in the year 2008 -09 & 2009-10 compare to 2007-08. Fixed assets increase due to change in investment of the company. Deprecation in the year 2007-08 is 6.40 % and previous two years both are slidely equal such as 7.40 % and 6.43 % in the year 2008 -09 and 2009-10. Capital work in progressing the year 2007-08 is 4.07 % and next two years, it is increase to 6.47 % and also increase to 4.21 % in the year 2009 -10 respectively. Investment of the company in 2007-08 was 20.83%. It is increase in 2008-09 is 22.58% and it is increase in the year 2009-10 to 21.07%. Investment of company increases because company spent its more amount in investment. Sundry debtors are high 19.73 % in the year 2007 -08 and next year 2008-09 is decreasing 15.82 % and they are increasing 20.85 % in the year 20 09-2010. In 2007-08 inventories of the company was 20.83% It was increase is 22.58%in the year of 2008-09 and it was decreasing 20.07% in the year of 2009 -10.Inventories of the company shows fluctuation position. This fluctuation due to changes in licenses goods, because an inventory is increase in the year of 2008-09. Cash and bank balance of the company was 14.37% in the year of 2007-08, it was decreasing 4.81% & 4.70% in the year 2008-09 and 2009-10. Loan and advances of company in 2007-08 it was 16.78 and it will increase in 2008-09 and 2009-10 is 34.40% and 26.46%.
69
8.2.2.2.
Gujarat Apollo industries ltd. Purpose of the Income Statement

over a specific period of time.
o The primary purpose of the income statement is to report a company's earnings to investors
o Years ago, the income statement was referred to as the Profit and Loss (or P&L) statement, and has since evolved into the most well-known and widely used financial report on Wall Street. o Many times, investors make decisions based entirely on the reported earnings from the income statement without consulting the balance sheet or cash flow statements (which, while a mistake, is a testament to how influential it is). o The income statement is a basic record for reporting a company's earnings. Since earnings are a fundamental component in a firm's worth, it is essential for investors to know how to analyze different elements of this important document. o This tutorial is designed to teach you some basic methods for analyzing the income statement. Analyzing income statements is an important tool to help investors appraise their investment options. By analyzing an income statement properly, investors can begin to evaluate the effectiveness of the management of operations in the companies in which they are interested in investing. o Proper income sheet analysis can help identify good investment opportunities. It can also reduce the risk involved with choosing a poor investment choice.
70
8.2.2.3.
Gujarat Apollo industries ltd. Beginning our Analysis of the Income Statement
As we progress through this series of investing lessons, you must remember John Burr Williams basic truth that a business is only worth the profit that it will generate for its owners from now until doomsday, discounted back to the present, adjusted for inflation.
The income statement is the report card of those earnings, which ultimately determine the price you should be willing to pay for a business.
An Income Statement is a standard financial document that summarizes a company's revenue and expenses for a specific period of time, usually one quarter of a fiscal year and the entire fiscal year.
It is important that both investors and company managers be able to read and understand this document in order to understand the company's financial condition.
71
8.2.2.4.
Gujarat Apollo industries ltd. Table 13: INCOME STATEMENT
PARTICULAR
GROSS SALES
2009-2010
2,14,16,32,586
2008-2009
1,81,24,24,023
2007-2008
1,86,38,40,978
(-) EXCISE DUTY NET SALES
12,47,50,038 2,01,68,82,548
14,14,07,071 1,67,10,16,952
14,00,24,242 1,72,38,16,736
CONSUMPTION OF RAW MATERIAL
1,15,78,74,870
95,35,70,908
91,25,01,216
PROVISION FOR EMPLOYEE MANUFACTURING , ADMINISTRATIVE AND SELLING EXPENSES (+) OTHER INCOME (OPERATING) OTHER INCOME INCREASE/DECREASE IN STOCK PROFIT BEFORE DEPRECIATION, INTEREST AND TAX (PBDIT) (-) DEPRECIATION INTEREST & CHARGES PROFIT BEFORE TAX (-) PROVISION FOR TAXATION NET PROFIT / PAT CURRENT TAX FRINGE BENEFIT TAX DEFERRED TAX
7,13,41,790 31,77,49,021
5,43,26,640 28,57,83,348
4,14,95,048 34,43,45,416
3,31,66,970 1,32,84,651 44,84,11,023 2,14,39,209 1,26,85,280 41,42,86,534 13,45,00,000 Nil 24,50,000 1,04,45,328 26,93,41,206
2,80,54,211 -6,42,01,734 35,65,70,441 1,82,77,879 1,46,79,203 32,36,13,359 10,50,00,000 0000000000 22,50,000 3,97,075 21,62,16,284
18,52,64,307 41,33,867 56,29,94,234 1,30,97,546 2,31,41,216 52,67,55,472 15,10,00,000 73,39,809 20,00,000 1,64,437 37,36,70,909
72
Analysis:
The multi step income statement clearly states the gross profit amount 41,42,86,534 year 2009-10, 32,36,13,359 year 2008-09, 52,67,55,472 year 2007-08 The multi step income statement presents the sub total other income. That indicates the profit earned 3,31,66,970Rs in year 2009-10, 2,80,54,211rs in year 2008-09 from the companys activities of buying and selling. Each time a company prepares its financial statements, it records a depreciation expense to allocate the loss in value of the machines, equipment or cars it has purchased. However, unlike other expenses, depreciation expense is a "non-cash" charge. This simply means that no money is actually paid at the time in which the expense is incurred. primary
73
8.2.3. WORKING CAPITAL BUDGET

A budget is a financial and / or quantitative expression of business plans and polices to be pursued in the future period time. Working capital budget as a part of the total budge ting process of a business is prepared estimating future long term and short term working capital needs and sources to finance them, and then comparing the budgeted figures with actual performance for calculating the variances, if any, so that corrective actions may be taken in future. He objective working capital budget is to ensure availability of funds as and needed, and to ensure effective utilization of these resources. The successful implementation of working capital budget involves the preparing of separate budget for each element of working capital, such as, cash, inventories and receivables etc.
1. Statement for working capital management on percentage wise analysis 2. Statement changes in working capital management on increase/ decrease for two year comparison 3. Analysis for working capital budget with operating cycle
74
8.2.3.1.
Statement
for
working
capital
management
on
percentage wise analysis

Table 14: STATEMENTS OF INDUSTRIES LIMITED FOR THE YEAR 2009-10
PARTICULARS CURRENT ASSETS, LOANS

AND ADVANCES
2009-10
PERCENTAGE
Inventory Sundry Debtors Cash & Bank Balance Other current assets Loans and advances Gross working capital (A) CURRENT LIABILITIES &PROVISION Current liabilities Provision Total current liabilities and provisions(B) Net working capital(A-B)
37,08,51,361 35,51,21,468 8,69,87,236
27.84 26.67 7.53
48,87,54,654 1,33,17,14,719
36.70 100.00
17,89,82,603 4,84,79,803 22,74,62,406 1,10,42,52,213
78.69 21.31 100.00
75


AND ADVANCE
2008-09
PERCENTAGE
Inventory Sundry Debtors Cash & Bank Balance Other current assets Loans and advances
30,30,12,387 21,25,71,863 6,45,86,370 nil 46,16,23,030
29.08 20.41 6.20 nil 44.32
Gross working capital (A) CURRENT LIABILITIES &PROVISION Current liabilities Provision Total current liabilities and provisions(B) Net working capital(A-B)
1,04,17,93,650
100.00
17,13,17,157 3,73,03,425 20,86,20,582
82.12 17.88 100.00
83,31,73,068
76


AND ADVANCE
2007-08
PERCENTAGE
Inventory Sundry Debtors Cash & Bank Balance Other current assets Loans and advances
26,50,42,234 25,10,34,086 18,29,13,709 nil 21,35,67,983
29.04 27.51 20.04 nil 23.40
Gross working capital (A)
91,25,58,012
100.00
CURRENT LIABILITIES &PROVISION Current liabilities Provision Total current liabilities and provisions(B) Net working capital(A-B) 16,12,59,856 4,44,43,234 20,57,03,090 78.40 21.60 100.00
70,68,54,922
77
8.2.3.2.
Gujarat Apollo industries ltd. Statement changes in wcm on increase/ decrease for two year comparison
Table 17: STATEMENT OF CHANGES IN WORKING CAPITAL FOR THE YEAR 2008-2009 PARTICULERS BALANCE CHANGES IN WORKING CAPITAL 2009 INCREASE DECREASE
2008 CURRENT ASSETS 26,50,42,234 25,10,34,086 Sundry Debtors 18,29,13,709 Cash & Bank Balance nil 21,35,67,983
Inventories
30,30,12,387 21,25,71,863 6,45,86,370 nil 46,16,23,030
3,79,70,153
-3,84,62,223 11,83,27,339 --
Other current assets Loans and advances
--
24,80,55,047
TOTAL (A) CURRENT LIABILITIES Current liabilities provision TOTAL (B)
91,25,58,012
1,04,17,93,650
16,12,59,856 4,44,43,234 20,57,03,090
17,13,17,157 3,73,03,425
1,00,57,301 71,39,809 --
-20,86,20,582
78

Working capital (A-B) 70,68,54,922 12,45,18,146 83,31,73,068 --12,45,18,146
Increasing in working capital TOTAL
83,31,73,086
83,31,73,086
28,84,47,517
28,84,47,517
79

Table 18: STATEMENT OF CHANGES IN WORKING CAPITAL FOR THE YEAR 2009-2010
PARTICULERS
BALANCE
CHANGES IN WORKING CAPITAL 2010 INCREASE DECREASE
2009 CURRENT ASSETS 30,30,12,387 21,25,71,863 Sundry Debtors 6,45,86,370
Inventories
6,78,38,974 37,08,51,361 17,25,49,605
------
38,51,21,468 Cash & Bank Balance nil 46,16,23,030 8,69,87,236
2,24,00,866
Other current assets
--
2,17,31,624 Loans and advances nil
48,87,54,654
TOTAL (A) CURRENT LIABILITIES Current liabilities provision TOTAL (B)
1,04,17,93,650
1,33,17,14,719
17,13,17,157 3,73,03,425 20,86,20,582
17,89,82,603 4,84,79,803 22,74,62,406
76,65,446 1,11,76,378 -----
80

Working capital (A-B) 83,31,73,068 27,10,79,245 1,10,42,52,313 --27,10,79,245
Increasing in working capital TOTAL
1,10,42,52,313
1,10,42,52,313
26,56,79,245
27,10,79,245
ANALYSIS:
INVENTORIES In the context of United Engineering Services the major increase in the present three financial years has been of the The pile up of inventory that is used in trial run, before hand to be used in the checking the machinery & the newly installed production capacity. The increased inventory to produce more goods so as to utilize the new plant set up
CASH AND BANK BALANCES Cash and bank balance as per the balance sheet it is seen to be increasing but from the above statement it is seen to be decreasing. This discrepancy can be attributed to the fact that balance sheet figures carry additional cash balance of unutilized FCCB issue proceeds which amount to long term liability as well. Thus the actual figures are distorted because the money from FCCB issue has to be returned and it is a kind of long term loan which the company has sought for expansion purpose. As a result to find the actual outlay of cash the unutilized money has been subtracted. Also we should take note of the fact that the FCCB money can only be used for expansion purpose and not as money for usual application of working capital.
81

CURRENT ASSETS includes cash & those assets which can be easily converted into cash within a short period generally one year such as marketable securities , bills receivables, sundry debtors, inventories, work in progress, prepaid expenses etc .The total current assets are the sum of below contingency
CURRENT LAIBILITIES These are those obligations which are payable within a short period of generally one year and includes outstanding expenses, bills payable, sundry creditors, accrued expenses, bank overdraft, short term advances, income tax payable. The trend of Current Liabilities of United Engineering Services throughout the period from 2008 to 2010 are shown in the table. It is evident from the table that it shows increasing trends in the year 2008 to 2010. It shows that the United Engineering Services has stability in trends of Current Liabilities.
82
8.2.3.3.
working capital budget with details
Current assets Loans & advances Currents assets Inventories stock in trade work in progress raw materials stores and spare parts Total Inventories Debtors Cash & Bank balances (subtracting FCCB issue unutilized money as it amounts to long term liability) loans and advances Net current assets Current Liabilities (A)
FY 07-08
FY 08-09
FY 09-10
5,48,82,932 5,33,18,355 15,11,94,650 54,04,089 26,48,00,026 25,10,34,086 18,29,13,709
6,93,62,040 10,31,43,500 12,51,24,189 52,42,969 30,28,72,698 21,25,71,863 6,45,86,370
5,87,81,304 9,99,76,461 20,68,16,784 46,73,999 37,08,51,361 38,51,21,468 8,69,87,236
21,35,67,983
46,16,23,030
48,87,54,654
91,25,58,012 1,04,17,93,650 1,33,17,14,719 FY 07-08 FY08-09 FY 09-10
Sundry Creditors unclaimed dividend sundry deposits advances from customers
9,27,51,738 30,11,995 Nil 6,54,96,123
9,69,21,215 33,33,002 nil 7,18,62,940
13,99,86,154 24,00,670 Nil 3,65,95,779
Provisions
For income tax net off advances tax & TDS For fringe benefit tax For dividend and dividend tax Net current liabilities (B) 73,39,809 2,50,000 3,68,53,425 20,57,03,090 Nil 4,50,000 3,68,53,425 20,86,20,582 Nil Nil 4,84,79,803 22,74,62,406
Working capital (A-B)
70,68,54,922
83,31,73,068 1,10,42,52,313
83
9. Findings:
With reference to the working capital study of GUJARAT APOLLO INDUSTRIES LTD. quantity of working capital is contributed by short source of finance Making available just adequate quantum of working capital. Some of the existing machinery is new with absolute equipments requiring modernization and rebuilding. The company should administrate their credit on the basis of certain well recognized and established principle of credit administration. The company should maintain an optimum level of cash in the business in order to maintain a proper liquidity in the business. In this gross working capital of the firm, a major part is occupied by inventory and sundry debtors. The current ratio is maintained by the company is 5.65:1 the company exceed minimum current ratio at all the years statement. The quick asset ratio minimally maintained by the company are 5.368:1, the company was satisfy this position up to 2010. The absolute liquid ratio is not satisfied position fluctuations are take place it is high and some at the years 2007 to 2008. Inventory turn ratio is well in satisfied position it is high at 2007-08. It is very poor at the current year of the study that is 1.64. In the debtor turnover ratio is also at well satisfied position it is highly obtain at the year of 200809. The current position is less than that of previous year that is 3.70:1. Average collection period high is at the 2008 and is poor at 2009 and repeat on high next year 2010. In order to achieve to the goals of the organization as whole and achievement of performance appraisal technique is very useful. The company has been maintaining sufficient amount of working capital in all the years
84
10.
SUGGESTIONS
suggested the company should follow the present working capital. The company spends reasonable amount in year 2009-10 Rs. 37.08carore and 2008-09 Rs.30.30carore on inventory so that it should be followed. The current ratio is 2009-10 7.44:1, 2008-09 6.08:1 and 2007-08 5.65:1 maintained at a satisfied level. So that company peruses this much of current assets to meet the objective of the firm. Company is maintaining high quick assets 2009-10 96.08carore and 2008-09 73.87 and 2007-08 64.75carore to overcome current liabilities year 2009-10 17.89carore, 2008-09 17.13carore and 2007-08 16.12carore for better results. For better results company has to maintain cash inflows to overcome current liabilities of the firm. To gain good profits of year 2009-10 26.93carore, 2008-09 21.62carore and 37.36carore company has to improve the sales through inventory management. The company should be try to reduce external liabilities like as unsecured loan in year 2007-08 11.04carore 2008-09 9.17carore and 2009-10 17.55carore, having pay high EPS in year 2009-10 Rs 16.25, 2008-09 Rs 13.73 and 2007-08 35.59Rs. The company should make arrangement of receivables and cash. I would like to give some suggestion. The sale of company is very good. But the company should try to reduce the cost of production and administration by efficient use of resources. This way company can improve its profitability ratio. Companys quick ratio 2009-10 5.36, 2008-09 4.312 and 2007-08 4.015 is increasing and current ratio 2009-10 5.65, 2008-09 6.08 and 2007-08 7.44 is decreasing so it need to maintain both the ratio. After observation over all position of the company we can say that over all position of company is very sound and company would progress very fast in future.
From the creditors and debtors turnover ratio, it is seen that debtor turnover ratio is less then
creditors turnover ratio. It is beneficial to the company. Here we recommend you to keep more creditors turnover ratio then debtors so it will require less working capital.
Here we can see that change in credit period policy, increase expected return, which is good for the
company in the future.
85
11.
Conclusion
It was great experience during the training practically knowledge and mode the project report of training at the GUJRAT APOLLO INDUSTRIES LTD. during the project report and to take the information about organization. It was an exciting moment for me. I also get some experience about the organization work. It is very useful in our future. I learn many things from practical knowledge. At the engaged unit, I would like to express my view favorer of GUJRAT APOLLO INDUSTRIES LTD regarding to its management of marketing, production, finance and product quality, product image of the, product in market. This kind of industrial visit definitely may help us to develop strong practical skills and knowledge.
The mean percentage of current assets to total assets which is 50% which is decreases in last tow year but it is still higher which shows higher investment in current assets. Age of inventory increases, which is not good for liquidity point of view. The element wise analysis of working capital revels that inventory constitutes 60.19% to 44.55% of gross working capital, debtors constitutes 18.87% to 36.58% of gross working capital, cash and bank constitute 0.13% to 1.61% of gross working capital and other assets including loan and advances constitutes 20.18% to 7.15% of the gross working capital contribution of inventory and debtors are highest throughout the period of study. From GP ratio in year 2009-10 20%, 2008-09 19% and 2007-08 27% we can conclude that the
gross profit of the company is increasing as compared to last year. So we recommends the company to cut off the operating expenses more to increase the GP proportionately. Working capital management is an important aspect of any business. Every business concern should have adequate working capital to run its business operation. Every concern should have neither redundant of excess working capital nor inadequate or shortage of working capital. Both excess as well as short working capital positions are bad for any business. The three elements of working capital management are cash management receivable management and inventory management. Every concern should adopt some new tread management strategies that will help in greater productivity, inventory optimization and also better working capital management. DIVABA INSTITUTE OF MANAGEMENT & COMPUTER APPLICATION, ANASAN
86

So, it is noted that working capital is a means to run business smoothly and profitability. Thus, the concept of working capital has its own important in a going concern. Good management of working capital is part of good finance management effective use of working capital will contribute to the operational efficiency of a department; optimum use will help to generate maximum return. United Engineering Services is also using SAP 6.0 versions which is very advanced to do every transaction of any organization. SAP 6.0 also applicable for e-transaction.
87
12.
Bibliography
OTHER BOOKS:
1. Pandey I M, Financial Management, Vikas Publication, Ninth Edition, Pages 577 to 586, 640 to 650. 2. Khan M Y and Jain P K, Financial Management, McGraw-Hill Publication, Third Edition, Pages 15.3 to 15.9. 3. Patel D R, Accounting and Financial Management, Atul Prakashan Publication, First Edition, Pages 210 to 214. 4. Jain N K, Working Capital Management, Aph Publishing Corporation, Pages 77 to 109. 5. Rao P M and Pramanik A k, Working Capital Management, Deep & Deep Publication, Third Edition. 6. Kumar Banerjee Subir, Financial Management, Second Edition, S.chand & Co, New Delhi, 1999.
JOURNALS AND MAGAZINES:

1. The Management Accountant, January 2008, Pages 60 to 67. 2. The Management Accountant, May 2004, Pages 373 to 378. 3. Bhatt, v.v., Working Capital Finance: Criteria of Appraisal economic and Political Weekly Volume VII/1972 Issue 17. Auditors report of the company of the year 2009-10 Annual report of the company of the year 2007-08,2008-09 and 2009-10.
WEB-LINKS:
1. . http://en.wikipedia.org/wiki/denim 2. 3. 4. http://www.apollo.com http://www.economywatch.com http://www.stockpriceinfo.com
88

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Gujarat Apollo industries ltd.

STUDY OF WORKING CAPITAL MANAGEMENT.

GUJARAT APOLLO INDUSTRIES LTD.

DIVABA INSTITUTE OF MANAGEMENT & COMPUTER APPLICATION, ANASAN

Gujarat Apollo industries ltd.

DIVABA INSTITUTE OF MANAGEMENT & COMPUTER APPLICATION, ANASAN

Gujarat Apollo industries ltd.

I am debited to some great personalities who always inspire me to do this job.

DIVABA INSTITUTE OF MANAGEMENT & COMPUTER APPLICATION, ANASAN

Gujarat Apollo industries ltd.

DIVABA INSTITUTE OF MANAGEMENT & COMPUTER APPLICATION, ANASAN

Gujarat Apollo industries ltd.

TABLE OF CONTENT CHEP. PARTICULARS PAGE NO.

DIVABA INSTITUTE OF MANAGEMENT & COMPUTER APPLICATION, ANASAN

5.3 MARKET SHARE PRICE LIST 5.4 SWOT ANALYSIS

Gujarat Apollo industries ltd. 25 26 28 29 30 31 33 35 36 37 38 39 42 43 44 45 46 49 50 68 76 87 88 90 92 93

WORKING CAPITAL MANAGEMENT

DATA ANALYSIS & INTERPRITATION

FINDINGS SUGGESTIONS CONCLUSION BIBLIOGRAPHY ANNXURE

DIVABA INSTITUTE OF MANAGEMENT & COMPUTER APPLICATION, ANASAN

Gujarat Apollo industries ltd.

CHART & TBALE INDEX NUM.

DIVABA INSTITUTE OF MANAGEMENT & COMPUTER APPLICATION, ANASAN

Gujarat Apollo industries ltd.

DIVABA INSTITUTE OF MANAGEMENT & COMPUTER APPLICATION, ANASAN

Gujarat Apollo industries ltd.

PURPOSE OF MAKING THIS PROJECT REPORT

It develops the art .of valuable presentation by effective project writing.

DIVABA INSTITUTE OF MANAGEMENT & COMPUTER APPLICATION, ANASAN

Gujarat Apollo industries ltd.

1. THE SITUATION & DEVELOPMENTT OF ROADS IN INDIA

DIVABA INSTITUTE OF MANAGEMENT & COMPUTER APPLICATION, ANASAN

Gujarat Apollo industries ltd.

Government committed to infrastructure growth, special focus on the roads,

The balance NSEW corridor projects shall be awarded in 2003-04.

Availability of skilled manpower

Gujarat Apollo industries ltd.

2.1. Road Network

DIVABA INSTITUTE OF MANAGEMENT & COMPUTER APPLICATION, ANASAN

Gujarat Apollo industries ltd.

ARVIND A.THAKKAR & CO.

DIVABA INSTITUTE OF MANAGEMENT & COMPUTER APPLICATION, ANASAN

Gujarat Apollo industries ltd.

3.4. BOARD OF DIRECTOR

COMPANY SECRETARY:SURESH S. SHAH

DIVABA INSTITUTE OF MANAGEMENT & COMPUTER APPLICATION, ANASAN

Gujarat Apollo industries ltd.

3.5. HISTORY AND DEVELOPMENT

Gujarat Apollo industries ltd.

Gujarat Apollo Industry ltd. Ditasan is a company of company form.

DIVABA INSTITUTE OF MANAGEMENT & COMPUTER APPLICATION, ANASAN

Gujarat Apollo industries ltd.

DIVABA INSTITUTE OF MANAGEMENT & COMPUTER APPLICATION, ANASAN

Gujarat Apollo industries ltd.

3.7. organisation chart

DIVABA INSTITUTE OF MANAGEMENT & COMPUTER APPLICATION, ANASAN

Gujarat Apollo industries ltd.

3.8. GOAL OF THE COMPANY

LONG TERM GOAL FOR FIVE YEARS.

3.8.2. SHORT TERM GOAL FOR ONE YEAR.

DIVABA INSTITUTE OF MANAGEMENT & COMPUTER APPLICATION, ANASAN

Gujarat Apollo industries ltd.

4.2. RESEARCH AND DEVELOPMENT