SUMMER TRAINING PROJECT REPORT ON WORKING CAPITAL MANAGEMENT OF SHREYANS INDUSTRIES LIMITED (UNIT:SHREYANS PAPERS)

In the partial fulfillment of the requirement for the award of Degree of

Master of Business Administration

(Session 2010-2012)

SUBMITTED TO:GURU NANAK INSTITUTE OF MANAGEMENT & TECHNOLOGY ,MODEL TOWN,LUDHIANA SUBMITTED BY:ANU TAYAL MBA (3 SEM) 104602248658

PREFACE

On the job training in business organisation infuses among students a sense of critical analysis to apply the real managerial situation, to which they are exposed. It gives them an opportunity to apply their conceptual, theoretical and imaginative skills to the real life situation and to evaluate the result thereafter. I was lucky to have got the opportunity to work at SHREYANS INDUSTRY LIMITED. I visited the concern for six weeks and prepared my project on the topic Working Capital Management. I also got practical experience in the field of management. This report is written on the basis of what I have learnt, experience and explored during my summer training.

ACKNOWLEDGEMENT

The most pleasant task of the report writing is to expressing my thanks and gratitude to all those, with whose guidance, cooperation and sincere advice. I have been able to draw and complete my report entitled Working Capital Management with reference to Shreyans Industries Limited. I am especially grateful to Mr. Anil Kumar Jain (Executive Director) and Mr. Arun Goyal (Sr.GM Personnel Deptt.) for providing me an opportunity to complete my summer training in this prestigious organization and for his timely guidance. I would like to express my deep sense of gratitude towards Mr. R.P. Gupta (GM Finance & Accounts) and Mr. Surinder Sharma (Manager of Finance & Accounts) who helped me very much in completing my project with case. Words are insufficient to express my appreciation for the sincerely acknowledge, suggestions, invaluable and continuous motivations provided by them. I am highly thankful to Mr. R.P. Gupta (Pulp Deptt.), Mr. Rakesh Saxena (R & D Deptt.), Mr. D.K. Gautam (GM Raw material), Mr. G.S. Yadav (GM Store Purchase), and Mr. V.C.R. Pillai (DGM Marketing), without the help of these people it would not have been possible to collect the data. Last but not the leas, I express gratitude to my teachers and staff members of Shreyans Industries Ltd., whose contributions are no less in the completion of my project.

CONTENTS
1. Introduction of Paper Industry 2. Introduction of Company Organization Profile Founder Chairman Profile Acquasition of SHREE RISABH Brief Highlights of SIL Future Expansion & Diversification Technology Sharing Paper Manufacturing Process

3. SWOT Analysis of SIL 4. Research Methdology 5. Working Capital Management Concept of Working Capital Kinds of Working Capital Sources of Working Capital Assessment of Working Capital Reqirement 6. Components of Working Capital Cash Management Receivable Management Inventory Management 7. Bibliography

CHAPTER-1 PAPER INDUSTRY IN INDIA

The Paper Industry in India is witnessing significant growth and capacity expansions to meet the growing demand for paper consumption as a result of growth in education sector and increasing literacy rate. Increased economic activity is providing the players an opportunity for growth and expansion. Indian paper industry is poised to grow and touch 11.5 million tonnes from 9.18 million tonnes to 2011-12 from 2009-10 at the rate of 8% per annum, according to The Associated Chambers of Commerce and Industry of India (ASSOCHAM). The ASSOCHAM paper on Growth of Paper Industry in India, indicated that per capita paper consumption increased to 9.18 kg on 2009-10 as compared to 8.3 kg during 2008-09. India has emerged as the fastest growing market when it comes to consumption, posting 10.6% growth in per capita consumption of paper in 200910. The industry offers employment to more than 0.3 million people directly and about 1 million people indirectly. India produces many varieties of papers, namely, printing and writing paper, packaging paper, coated paper and some speciality paper. Varieties under printing and writing paper are creame wove paper, super printing paper, maplitho paper (non-surface and surface size), copier paper, bond paper and coating base paper and others. The varieties under packaging paper are kraft paper, boards, poster paper and others. The other varieties under coated paper are art paper/board, chromo paper/board and others. There are approximately 600 paper mills in India, of which twelve are major players. The paper industry in India could be classified into 3 categories according to the raw materials consumed:

1. Wood based 2. Agro based & 3. Waste paper based

Paper in India is made from 40 per cent of hardwood and bamboo fibre, 30 per cent from agro waste and 30 per cent from recycled fibre. Newsprint and publication paper account for 2 million tonnes, of which 1.2 million tonnes of newsprint paper is manufactured in India and the remaining 0.8 million tonne is imported. Indian paper industry can be more competitive by adding improvements of key ports, roads and railways and communication facilities, revision of forest policy is required for wood based paper industry so that plantation can be raised by industry, cooperatives of farmers, and state government. Degraded forest land should be made available to the industry for raising plantations.Import duty on waste paper should be reduced,Duty free imports of new & second hand machinery/equipment should be allowed for technology up gradation.

CHAPTER-2 SHREYANS INDUSTRIES LIMITED COMPANYS PROFILE

Shreyans is one of the leading industrial groups of North India promoted by the well known OSWAL family of Ludhiana. Shreyans is a multi unit group with interests in Paper and Textiles. Shreyans has an annual turnover of US $ 50 million. Shreyans Group has over 1100 employees.

Shreyans industries limited (SIL) an existing assisted company promoted by Late Mr. D.K Oswal, has facilities of manufacturing of 100 tones per day of writing & printing paper (WPP) at Ahmedgarh, district Sangrur, Punjab (Shreyans Paper) & 64 tpd at Bannah , District Ropar, Punjab(Shree Rishabh paper).

The company also had a spinning unit with complements of 25,344 spindles for manufacturing of cotton & cotton blended yarn at Machhiwara, district Ludhiana, Punjab(Shreyans Spinning Mill) which was sold to Sabina woolen mills ltd in 2000-01 for consideration of Rs 130 million.

ABOUT SHREYANS PAPERS

The company was incorporated in 1979, as Shreyans Paper Mills Ltd, the name was subsequently changed to Shreyans Industries Ltd. The Company, has been promoted by well known Oswal family of Ludhiana.

Presently, the company has two paper manufacturing units located at Ahmedgarh (Distt. Sangrur) & at Banah (Distt. Nawanshaher) in the state of Punjab. Over the years number of modernization-cum-expansion schemes were undertaken and the present installed capacity of manufacturing writing & printing paper, from agro-based raw materials, is 37000 Mts per annum. Company had been the winner of Best Productivity Awards for number of years.Company has also set up Chemical Recovery Plant at both the paper units. This has enabled to economizing on consumption of chemicals andsimultaneously achieving the prescribed standards of effluent discharge. In addition, company has total captive cum power cogeneration capacity of about 5.6 MW, at Ahmedgarh unit. However to augment the total power requirement at Banah power plant with a capacity of 5MW is already installed. With a view to improve the quality of pulp and also to save on cooking chemicals, a Continuous Digester has been installed in both the units. The units at Ahmedgarh & Banah have its own E.O. Bleaching plant, for the manufacturing of High Bright, Superior Quality paper. The company is operating with a wide product mix with well accepted quality in the market based on non-conventional raw materials. Major consumers of the companys products includes Major Publishers, Copy Manufacturers, Job Printers, Various states Text Book Boards, Exporters of Notebooks & Diaries, Printing & Stationary Dept., Railways, P&T Dept., Security Press etc.

FOUNDER CHAIRMAN PROFILE

Late Sh. D.K OSWAL Founder chairman & managing Director Mr. D.K. Oswal, the Founder Chairman & Managing Director of Shreyans Group, was born on 17th March, 1940 in the well known OSWAL FAMILY of Ludhiana. Business was in his blood by birth. He became the Chairman of VARDHMAN Group. He remained the chairman of the VARDHMAN Group for more than 20 years.

During his tenure as Chairman Cum Managing Director Company implemented various Expansion and Modernizations plans at its paper units including the setting up of Chemical Recovery plant and Power CoGeneration plant at both the units. During his tenure company had been awarded National Productivity Award for five consecutive years.

In his capacity as Managing Director of the Company Mr. D.K. Oswal continued taking effective steps for the Companys future growth plans and sustained development and lead a strong team of professionals, managerial staff and work force having expertise in their fields.

CAUSTIC RECOVERY

During 1995, the company implemented a scheme for recovery of caustic soda at an estimate cost of Rs 113 million. The scheme was to give two-fold benefit Reduce the cost of caustic Lyle Reduce the pollution level of water being discharged from the unit.

The scheme was completed in 1996. The cost was financed by way of a conditional grant of Rs 21.8 million from ICICI (test division), concessional loan of Rs 38.5million. The caustic recovery of the company has been operating satisfactorily. The company has been utilizing the caustic recovery facilities for production of soda ash as the company do not possess the required equipment for the extraction of caustic soda from black liquid (by product of the paper pulp making process) & also because, on account of current market conditions, the extraction sale of soda ash is more beneficial than the extraction & captive consumption of caustic soda. The company has been recovering approximately 85% of soda ash & selling the same in the open market.

CO- GENERATION
The SIL has its co-generation plant consisting of four boilers, which are used for generating power for captive use, primarily in the caustic recovery plant where uninterrupted power supply is essential. The co-generation plant was to be set up at an estimate cost of Rs 44.4million. The scheme was implemented at the cost of Rs 48 million (over run of Rs 3.6 million) & was financed by rupee term loan of Rs 30million from ICICI & internal accruals of Rs 18 millions. The company is at present generating about 3.0MW of power with the above.

Board of Directors Sh. Rajneesh Oswal Sh. Vishal Oswal Sh. Anil Kumar Sh. Ajay Kumar Chakarborty Sh. Kunal Oswal Sh. Madan Lal Gupta Dr. (Mrs.) Harbhajan Kaur Bal Dr. Nandagiri Jagannatha Rao Sh. Rajneesh Oswal Sh. Raman Marwaha (Chairman & Managing Director) (Vice Chairman & Managing Director) (Executive Director & CEO) (Independent Director) (Whole Time Director) (Independent Director) (Independent Director) (Independent Director)

Sh. Raghubir Chand Singal (Independent Director) (Executive Director) (Independent Director)

Sh. Rajendra Prasad Gupta (Independent Director) Sh. Surinder Kumar Sekhri (Independent Director) Bankers State Bank of Patiala Bank of India State Bank of Mauritius Auditors M/S. Dass Khanna & Company Chartered Accountants B-XX-2815, Gurdev Nagar, Pakhowal Road, Ldh

ACQUASITION OF SHREE RISHABH

During 1994, the company acquired the paper unit of Zenith limited at village Banah, District Ropar, Punjab. Zenith had been referred to BIFR & as per the operating agency (OA) reports prepared by ICICI. ZENITH S paper & steel unit were a drag on the companys operations & were to be hived off. Accordingly, bids were invited for the same & SIL offered to take over the fixed assets of the paper unit for consideration of Rs 147.5 million. This scheme was approved by BIFR vide its order dated July 28, 1994. Sil named the unit Shree Rishabh paper (Rishabh) .The Company had financed the total consideration of Rs 147.5 million for acquisition of the unit by internal accruals of Rs 47.5 million & term loan of Rs 100 million from ICICI. After undertaking balancing scheme SIL, has been able le to improve the operations & the unit has been earning gross profits since 1995.

BRIEF HIGHLIGHTS OF SHREYANS

PAPERS,AHMEDGARH
An agro based paper plant using rice straw, wheat straw and sugarcane residue Annual production capacity of 66000 M.t. Installed Asia first soda recovery plant with US AID TEST SCHEME One of the large Agro based paper mill in north India Excellent technology inputs and parameters in the industry Operating at a high capacity of over 100% utilization Leading supplier to Indian Railways, Postal Department, Universities and Education Boards throughout India. National productivity awards won by the company for the years 1986 to 1991(5 consecutive years) R & D lab equipped with Lab Digester, lab Valley Beater brightness,

Opacity and gloss Testing Machine, Burst Strength Tester, Double Folding Endurance tester, Gurley Porosity, Smoothness Tester, and Cobb tester. Future Plans to increase capacity by 100% A continuous digester plant developed in house, has been set up to improve the quality of pulp and also to reduce the consumption of various chemicals Company products have also been exported to south Asian & Middle East Countries. State of the art automation system to keep strict control on ash content,grammage variation,moisture percentage to produce quality paper.

PRODUCT PROFILE

In the range of 40 GSM to 150 GSM High Brightness Paper Cream Wove Coloured Paper Duplicating Paper Surface Sized Printing Paper Azure Laid Paper Maplitho Paper Stamp Paper Inland Letter Paper Postal Envelope Paper Offset Paper Cover Paper Super Calendared Paper Rail Ticket Paper Super Printing Paper

Quality Policy

Companys quality policy is Manufacture Eco-friendly paper products as per quality requirements and continual improvement in paper quality to satisfy customers Companys objectives are: 1. Paper quality as per customer need. 2. Compliance of standards 3. Improvement in quality through R&D and Plant modification 4. Continual efforts to reduce complaints 5. Improvement in productivity through high intention, sincere efforts, appropriate decision and timely execution

Quality Control

The mill maintains a quality control laboratory. Testing is done at all the stages. Raw Material Dust, Moisture, Quality Chemicals Purity, Concentration Pulp Brightness, Strength Strength Properties Bursting strength, Tensile strength, tearing strength, double strength, and Cobb value. Paper GSM, Brightness, Opacity, Smoothness Finishing House finishing size

FUTURE EXPANSION & DIVERSIFICATION

Shreyans Group has plans in the near future for capacity Enhancement at both its paper plants. Horizontal expansion by setting up facility for office stationery

manufacturing. Converting plant for maplitho & copier paper. To diversify into information technology sector by going into call centers, medical transcriptions, software export etc.

TECHNOLOGY SHARING

Shreyans Group is looking for technology up gradation and technology sharing in the following area on global basis. Improvement in quality of pulp (Agro Based) Improvement in quality of paper (Agro Based) Water Management system (In Agro Based paper unit)

BUSINESS ALLIANCE
Looking for business alliance both in domestic and international market for export of paper from 50 GSM to 170 GSM in Africa, Middle East and South America.

ORGANIZATIONAL CHART OF SIL

PAPER MANUFACTURING PROCESS

Paper mill Section

Wheat Straw (Raw material) (Raw Material) Washing

Cooking

Washing

Bleaching

Chlorination

Alkali Extraction O2 H2O2 Hypo I

Hypo II

Pulp (Bleached) Stock Preparation section Section Paper machine

Finishing House

1.Wheat

Straw Shreyans is an Agro based paper mill. So, here raw material used for making is agricultural waste. Various types of raw materials can be used in these kinds of industries like Wheat straw, Baggase, Sarkanda, Kahi grass, Sabai grass etc. In Shreyans, 95% of raw material is obtained from wheat straw and the rest 5% from imported wood pulp or imported waste paper to increase the strength of the paper. Raw material is stored for 15 days.

2.Washing The raw material i.e. wheat straw is washed with water to remove the dust and impurities which are present in the raw material. 10cm of water is consumed for washing per tonne of raw material. The wheat straw wash liquor is used for producing Biogas.

BIOGAS PLANT

Wheat Straw Wash Liquor

Decker- to remove waste particles

Clarifier

Buffer Tank to maintain the pH

Digestor gas generation

Gas Holder

The gas produced here goes to Boiler House to generate power. 3.Cooking The raw material is cooked in Continuous Digestor. This process is fully automatic. In Continuous Digestor raw material and water are cooked in Caustic Soda and Steam under required pressure. The pulp here made is called cooked pulp or unbleached pulp. 4.Washing This cooked pulp is allowed for washing. Caustic Soda is removed in the form of Black Liquor by the process of washing. This black liquor is subjected for recovery in Recovery Plant where caustic soda is recovered in the form of soda ash passing through evaporators, venture & scrubber and fluidized Bed Reactor System.

5.Bleaching The unbleached washed pulp remaining behind after separation of black liquor is processed in bleaching plant having sequence of chlorination stage, caustic extraction stage and two Hypo stages. The pulp made is called bleached pulp. 6.Stock Preparation The various pulps mainly Straw pulp, long fibre pulp and wood pulp/waste paper pulps are pumped into mixing chests in the required proportion. Here various chemicals like Alkyne ketodimer, Poly TC, Ranipal are added to reach at the required strength and brightness of the paper. This pulp is then fed into the paper machine for making the paper. 7.Paper Machine The pulp while passing over a paper machine wire forms a layer of paper as a long running of the wire and at Sunction roll, water content to a large extent are drained out. The paper layer so formed is then forwarded to presspart and the dryers where the paper is dried up with the help of steam which heats up the dryers. The paper so formed is then reeled at the pop reel in the form of rolls.

8.Finishing House The percent rolls of paper are either cut into reels at rewinder or into sheets at sheet cutter as per the requirements. The paper is then stored, counted and packed into bundles and transferred to sales department. 9.Sales and Excise - This department is headed by MR. V. C. RAVINDRAN. The paper department produces various types of writing and printing paper. All these varieties of paper are sold through dealers in major cities. Besides this the company has its own branch offices at Mumbai, Delhi, Chandigarh, and Ahmedgarh which fulfill the needs of dealers in their respective areas. The major centers where the company dealers are located are Delhi, Agra, Ahmadabad, "Mumbai, Kanpur, Jalandhar, Chandigarh, Patna, Pune, and Jaipur. The company has been selling its products mainly to Government/ Semi government departments like Indira Gandhi National Open University, Text Book Corporation like N.C.E.R.T., banks and universities. Besides the company has also been selling to local markets of states like Punjab, U.P., Rajasthan, Gujarat, Madhya Pradesh, Maharashtra and J&K through wide network. The marketing department keeps record of excise duty and fixes price of various varieties of paper. The marketing department also makes proper arrangement for transporting paper to various destinations

Effluent Treatment Plant

From the point of view of pollution a paper industry is labeled as the most water pollution causing industry and due to this, to reduce water pollution Effluent Treatment Plant have to set up for treatment of water before discharging it outside the factory.

The waste water releasing from the different sections of process is treated in waste water treatment plant where biological treatment system is being performed and the treated water is partially utilizing in plantation and the rest being discharged.

ETP Plant Process

Waste Water

Equalization Tank

Settling Tank or Clarifier

Aeration Tank

Settling Tank

Aeration Tank

Settling Tank

The water released from settling tank is discharged.

CHAPTER-3 SWOT ANALYSIS

Strengths Excellent operating parameters. Highly qualified, motivated and professionally competent workforce. Easy accessibility and proximity to raw material sources. Both units fully compliant to environmental laws. Adequate marketing network and large presence in institutional and international market. Good acceptability in market place.

Weaknesses Paper industry highly cyclic in nature. Limited product range in lower end of paper market. Prices and availability of basic raw materials, highly dependent on vagaries of nature. Lower level of technology vis--vis competition in nearby regions.

Opportunities Increase in demand of paper on account of increase in per capita consumption due to increase in GDP and literacy levels. Price competitiveness, which can cater to growing educational sector requirements.

Opportunities in export market in nearby countries on account of price advantage vis--vis distant suppliers. Production of better quality paper will bring in newer segments of market under the fold of the Company.

Threats Adverse changes in Government Policies. Continuous fall in import tariff creating tough competition from international suppliers. Build-up of State of Art technology in nearby regions, which will lower the pricing of imports into the country. Continuing strengthening of Indian currency to make imports cheaper and limited scope of export of paper.

CHAPTER-4 Research Methodology

Research in common parlance refers to a search for knowledge. One can also define research as a scientific and systematic search for pertinent information on a specific topic. In fact, research is an art of scientific investigation. This inquisitiveness is the mother of all knowledge and the method, which man employs for obtaining the knowledge of whatever the unknown, can be termed as research.

Objectives of Research
The purpose of research is to discover answers to questions through the application of scientific procedures. The main aim of research is to find out the truth which is hidden and which has not been discovered as yet. To gain familiarity with a phenomenon or to achieve new insights into it. The portray accurately the characteristics of an particular individual, situation or a group To determine the frequency with which something occurs or with which it is associated with something else. To test a hypothesis of a casual relationship between variables.

Types of research The basic types of research are as follows:Descriptive: - Descriptive research includes surveys and fact finding enquires of different kinds. The major purpose of descriptive research is description at the state of affairs as it exists at present. Analytical:- In this research has to use facts or information already available analyze these to make a critical evaluation of the material.

Applied: - Research can either be applied or fundamental research. Applied research aimed at finding a solution for immediate problems facing a society or industries or business organization. Fundamental Research:- This research is mainly concerned withgeneralizations and with the formation of a theory. Research concerning some natural phenomenon or relating to pure mathematics are examples of fundamental research. Empirical Research: - Empirical research relies on experience or observation alone, often without due regard for system and theory. Empirical research is appropriate when proof is sought that certain variables affect other variables in some way. Qualitative Research: - Qualitative research is especially important in the behavioral science where the aim is to discover the underlying motives of human behavior which make people like or dislike a particular thing.

SIGNIFICANCE OF RESEARCH
The increasingly complex nature of business and government has focused attention on the use of research in solving operation problem. Significance of research is as follows: Research has its special significance in solving various operational and planning problems of business and industry. Research provides the basis for nearly all government policies in our economic system. Research is equally important for social scientists in studying social relations answer to various social problems. Research may mean the generalizations of new theories.

RESEARCH DESIGN
Decisions regarding what, where, how, much, by what mean concerning an enquiry or a research study constitute a research design. A research design is the arrangement of conditions for collection and analysis of data in a manner that aims to combine relevance to the research purpose with economys procedure.

LIMITATIONS

Limitations of the study are all those limitations which a student has to face while completing such project. However following are the main limitations: Limitations of time and resources may have shadow the study. Time for training period was too small to study the organization in detail. It is the policy of all the companies that they cannot tell the trainees the accurate figures of the company. So the project made by the student does not show the accurate position of the company as they have to rely upon the information provided to them by the company. Inspite of my best efforts this report may be suffering from some personal errors.

CHAPTER-5 MEANING OF WORKING CAPITAL

Capital required for a business can be classified under two main categories via, 1) 2) Fixed Capital Working Capital

Every business needs funds for two purposes for its establishment and to carry out its day- to-day operations. Long terms funds are required to create production facilities through purchase of fixed assets such as p & m, land, building, furniture, etc. Investments in these assets represent that part of firms capital which is blocked on permanent or fixed basis and is called fixed capital.

Funds are also needed for short-term purposes for the purchase of raw material, payment of wages and other day to- day expenses etc.These funds are known as working capital.

In simple words, working capital refers to that part of the firms capital which is required for financing short- term or current assets such as cash, marketable securities, debtors & inventories. Funds, thus, invested in current assts keep revolving fast and are being constantly converted in to cash and this cash flows out again in exchange for other current assets. Hence, it is also known as revolving or circulating capital or short term capital.

CONCEPT OF WORKING CAPITAL

There are two concepts of working capital: 1.) Balance sheet concept 2. )Operating cycle

1.) There are 2 interpretatiom of working capital under balance sheet concept:a) Gross working capital b) Net working capital The gross working capital is the capital invested in the total current assets of the enterprises .Current assets are those Assets which can convert in to cash within a short period normally one accounting year.

CONSTITUENTS OF CURRENT ASSETS

1) 2) 3) 4) 5) Cash in hand and cash at bank Bills receivables Sundry debtors Short term loans and advances. Inventories of stock as: a. b. c. Raw material Work in process Stores and spares

d.

Finished goods

6. Temporary investment of surplus funds. 7. Prepaid expenses 8. Accrued incomes. 9. Marketable securities.

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.

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.

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.

The gross concept is sometimes preferred to the concept of working capital for the following reasons:

1.

It enables the enterprise to provide correct amount of working capital at

correct time. 2. Every management is more interested in total current assets with which it has

to operate then the source from where it is made available. 3. It take into consideration of the fact every increase in the funds of the

enterprise would increase its working capital. 4. This concept is also useful in determining the rate of return on investments in

working capital.

The net working capital concept, however, is also important for following reasons: 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.

2.)Operating Cycle As discussed earlier,working capital refers to that part of firms capital which is required for financing short-term or current assets such as cash,debtors,inventories.Funds,thus,invested in current assets keep revolving fast

and are being constantly converted into cash and this cash flows out again exchange for other current assets

Debtor s

Cash

Sales WorkinProgres s

Raw Materia ls Finishe d Goods

Hence it is also known as revolving or circulating capital.The circular flow concept of working capital is based upon working capital cycle of a firm. The cycle starts with the purchase of raw material and other resources & end with the realization of cash from the sale of finished goods.The time required to complete one cycle determines the requirement of working capital,longer the period of cycle ,larger is the requirement of working capital. The gross operating cycle of a firm is equal to the length of the inventories and receivables conversion period.

GROSS OPERATING CYCLE=RMCP+WIPCP+FGCP+RCP

Where, RMCP = Raw material conversion period WIPCR=Work-in-process conversion period FGCP=Finished goods conversion period RCP=Receivable conversion period

PDP=Payable deferral period

NET OPERATING CYCLE PERIOD=GROSS OPERATING CYCLE PERIOD PAYABLE DEFERAL PERIOD

Following formulas can be used to determine the conversion periods

1. RMCP =

Avg stock of raw material Raw material consumption per day

2.WIPCP =

Avg stock of work in process Total cost of production per day

3.FGCP =

Avg stock of finished goods Total cost of sales per day

4.RCP =

Avg accounts receivable Net credit purchases per day

5.PDP =

Avg payables Net credit purchases per day

KINDS OF WORKING CAPITAL

KINDS OF WORKING CAPITAL

On The Basis Of CONCEPT

On The Basis Of TIME

GROSS Working Capital

NET Working Capital

FIXED Working Capital

VARIABLE Working Capital

REGULAR Working Capital

SEASONAL Working Capital

RESERVE Working Capital

SPECIAL Working Capital

1. PERMANENT OR FIXED WORKING CAPITAL

Permanent or fixed working capital is minimum amount which is required to ensure effective utilization of fixed facilities and for maintaining the circulation of current assets. Every firm has to maintain a minimum level of raw material, work- inprocess, finished goods and cash balance. This minimum level of current assets is called permanent or fixed working capital. As the business grow the requirements of working capital also increases due to increase in current assets.

Fig. 1
In fig.1 permanent working capital is stable or fixed over time while the temporary or variable working capital fluctuates.

2. 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.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.

Fig.2
In fig.2 permanent working capital is also increasing with the passage of time due to expansion of business .

ADVANTAGE OF ADEQUATE WORKING CAPITAL

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. Cash Discounts: Adequate working capital also enables a concern to avail cash discounts on the purchases and hence reduces cost. Regular Supply of Raw Material: Sufficient working capital ensures regular supply of raw material and continuous production. 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. Exploitation Of Favorable Market Conditions: If a firm is having adequate working capital then it can exploit the favorable market conditions such as purchasing its requirements in bulk when the prices are lower and holdings its inventories for higher prices. Ability to Face Crises: A concern can face the situation during the depression.

DISADVANTAGES OF REDUNDANT OR EXCESSIVE WORKING CAPITAL

Excessive working capital means ideal funds which earn no profit for the firm and business cannot earn the required rate of return on its investments. Redundant working capital leads to unnecessary purchasing and accumulation of inventories. Excessive working capital implies excessive debtors and defective credit policy which causes higher incidence of bad debts.

It may reduce the overall efficiency of the business. If a firm is having excessive working capital then the relations with banks and other financial institution may not be maintained.

Due to lower rate of return n investments, the values of shares may also fall. The redundant working capital gives rise to speculative transactions

DISADVANTAGES OF INADEQUATE WORKING CAPITAL

Every business needs some amounts of working capital. 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: 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.

FACTORS DETERMINING 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.

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 will 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. 11. EARNING CAPACITY AND DIVIDEND POLICY: Some firms have more earning capacity than other due to quality of their products, monopoly conditions,

etc. Such firms may generate cash profits from operations and contribute to their working capital. The dividend policy also affects the requirement of working capital. A firm maintaining a steady high rate of cash dividend irrespective of its profits needs working capital than the firm that retains larger part of its profits and does not pay so high rate of cash dividend. 12. PRICE LEVEL CHANGES: Changes in the price level also affect the working capital requirements. Generally rise in prices leads to increase in working capital. Others FACTORS: These are: Operating efficiency.

Management ability. Irregularities of supply. Import policy. Asset structure. Importance of labor. Banking facilities, etc.

FORECAST OF WORKING CAPITAL REQUIREMENT

Factors to be considered

Total costs incurred on materials, wages and overheads The length of time for which raw materials remain in stores before they are
issued to production.

The length of the production cycle or WIP, i.e., the time taken for conversion
of RM into FG.

The length of the Sales Cycle during which FG are to be kept waiting for
sales.

The average period of credit allowed to customers. The amount of cash required to pay day-to-day expenses of the business. The amount of cash required for advance payments if any. The average period of credit to be allowed by suppliers.
Time lag in the payment of wages and other overheads

PROFORMA FOR ESTIMATION OF WORKING CAPTIAL REQUIREMENT 1. TRADING CONCERN

2. MANUFACTURING CONCERN

SOURCES OF WORKING CAPITAL

Working capital is an essential requirement for any business activity. Working capital management does not include mere planning and control of total assets and its composition. The broader view encompasses the financing aspects also. In other words, the finance executives have to see answers to the questions What should be the composition of working capital? and What is the best financing mix to employ? An answer to the question leads to the decision making with regard to financing mix of working capital.

Sources of Working Capital

Permanent or Fixed

Temporary or Variable

Shares Bankers Debentures Public Deposits Retained Earnings Loan from financial Institution

Indigenous Trade Creditors Installment Credit Advances Accrued Expenses Deferred Incomes Commercial Paper CommercialBankers

BALANCE SHEET AS AT 31ST MARCH 2011

PARTICULARS

31.3.2011 Rs.in lacs

31.3.2010 Rs.in lacs

I SORCES OF FUNDS 1)SHAREHOLDERS a)Capital b)reserve & surplus FUND 1382.47 5227.82 6610.29 2)loan funds a)secured loans b)unsecured loans 3070.26 466.34 3536.60 3)Deferred tax liability 1989.38 4129.16 454.59 4583.75 2167.82 1382.47 4755.78 6138.25

12136.27

12889.82

II APPLICATIONOF FUNDS 1)Fixed assets

a)Gross block b)Less depreciation c)Net block d)Capital work in progress

18211.52 8346.66 9864.86 267.56 10132.42

17527.97 7485.13 10042.84 437.74 10480.58 12.02

2)INVESTMENTS 3)CURRENT ASSETS,LOANS, & ADVANCES a)Inventories b)sundry debtors c)cash & bank balance d)loans & advances (A) LESS: CURRENT LIABILITIES PROVISIONS a)Liabilities b)Provisions (B) AND

21.86

2409.86 2125.65 243.49 2288.25 7067.25

2001.63 1731.93 414.84 2193.81 6342.21

4266.23 819.03 5085.26

3272.49 672.50 3944.99 2397.22 12889.82

Net current assets(A-B)

1981.99 12136.27

STATEMENT OF CHANGE IN WORKING CAPITAL

PARTICULARS CURRENT ASSETS INVENTORIES SUNDRY DEBTORS CASH AND BANK BALANCE LOANS AND ADVANCES GROSS WORKING CAPITAL LESS: CURRENT LIABILITIES NET WORKING CAPITAL

2010-11

2009-10

2008-09

2409.86 2125.65 243.49 2288.25 7067.25

2001.63 1731.93 414.84 2193.81 6342.21

1827.09 2813.55 520.89 1047.1 6208.63

5085.26 1981.99

3944.99 2397.22

4558.02 1650.61

NET WORKING CAPITAL 3000 2500 2000 1500 1000 500 0 2010-11 2009-10 2008-09 NET WORKING CAPITAL

Interpretation
Working capital management policies of a firm have a great effect on its profitability and liquidity.A sound working capital management policy is one that ensures higher profitability,proper liquidity and sound health structure of organitation. As shown in the above figure the Net Working Capital of SIL is fluctuating in last years.In 2008-09 it as on 1650.51 and in 2009-10 it increased to 2397.22 and again in 2010-11 in decrease to 1981.99. Little decrease in wc will not effect the working of organization.As there are some advantages and disadvantages of inadequate and excessive working capital.

CHAPTER-6 COMPONENTS OF WORKING CAPITAL

There are three main components of Working Capital Management. The study of these components is very necessary because without these components the study of Working Capital Management remains half. So following are the components of the Working Capital Management:1) Cash Management 2) Receivables Management 3) Inventories Management

CASH MANAGEMENT
Cash is one of the current assets of a business. It is needed at all times to keep the business going. A business concern should always keep sufficient cash for meeting the obligations. Any shortage of cash will hamper the operations of the concern and any excess of it will be unprotected. It is in this context the Cash Management has assumed much importance. Cash Management is one of the key areas of Working Capital Management. Apart from the fact it is the most liquid current asset, it is the ultimate output expected to be realized by selling the services as product manufactured by a company.

Cash shortage will disrupt the firms manufacturing operations while excess cash will simply remain idle. Thus the major function of Financial So Cash Management is concerned with the managing of:

1. Cash flows into and out of the firm Inflows and Outflows 2. Cash flows within firm 3. Cash balances held by the firm at a point of time by financing deficit or investing surplus cash. Manager is to maintain a sound cash position.

The reason for holding cash here traditionally being divided into four categories as postulated by Keynes: The Transaction Motive The Precautionary Motive The Speculative Motive The Compensatory Motive

The Transaction Motive is to meet the routine cash requirements to finance the transactions which are found carry on in the ordinary course of business. The Precautionary Motive for holding cash relates to the need for creating readily available to meet the unexpected circumstances. The Speculative Motive refers to the desires of a firm to take advantages of opportunities which presents themselves at unexpected movements and which are typically outside the normal course of the business. The Compensatory Motive refers to hold cash balances is to compensate banks for providing certain services and loans to be compensated for their services indirectly in this form, they required the clients to always keep a bank balance sufficient to earn a return equal to the cost of services. Such balances are called Compensative balances.

OBJECTIVES OF CASH MANAGEMENT

1. To meet the cash disbursement needs 2. To minimize funds committed to cash balances

EVALUATION OF CASH MANAGEMENT

The following ratios have been calculated to check the liquidity position of the company.

1)CURRENT RATIO Current Ratio = Current Assets Current Liabilities

PARTICULARS CURRENT ASSETS CURRENT LIABILITIES CURRENT RATIO

2010-11 7067.25 5085.26

2009-10 6342.21 3944.99

2008-09 6208.63 4558.02

1.389752 1.607662 1.362133

CURRENT RATIO 1.65 1.6 1.55 1.5 1.45 1.4 1.35 1.3 1.25 1.2 2010-11 2009-10 2008-09 CURRENT RATIO

Interpretation: The current ratio of the company showing an fluctuation as per the chart given above. In 2008-09 it goes down to 1.36% and in year 2009-10 it is 1.60 % and now in 2010-11 it goes down to 1.38%. As per rule of thumb the current ratio should be 1.33:1 and companys current ratio is more as compared to the rule of thumb hence, the company is having a good current position in all the three years.

2)QUICK RATIO Quick Ratio = Quick Assets Current Liabilities

Quick Assets = Current Assets Inventories Prepaid Expenses

PARTICULARS QUICK ASSETS CURRENT LIABILITIES QUICK RATIO

2010-11 4657.39 5085.26 0.915861

2009-10 4340.58 3944.99 1.100277

2008-09 4381.54 4558.02 0.961281

QUICK RATIO 1.2 1 0.8 0.6 0.4 0.2 0 2010-11 2009-10 2008-09 QUICK RATIO

Interpretation: In the year 2008-09 the liquid position of the SIL is 0.96% & it increased up to 1.10% in 2009-10 and it further decreased to 0.91 in 2010-11.The liquid position of the company is showing an downward trend. The rule of thumb for the liquidity ratio is 1:1 and the company is showing a ratio nearer to rule of thumb in 2010-11 that means the companys liquidity position is good in last 2 years.

3)ABSOLUTE LIQUID RATIO OR CASH RATIO Absolute Liquid Ratio = Absolute Liquid Assets Current Liabilities Absolute Liquid Assets = Cash + Marketable Securities

PARTICULARS

2010-11

2009-10

2008-09

ABSOLUTE LIQUID ASSET CURRENT LIABILITIES ABSOLUTE LIQUID RATIO

243.49 5085.26 0.047882

414.84 3944.99 0.105156

520.89 4558.02 0.11428

ABSOLUTE LIQUID RATIO 0.12 0.1 0.08 0.06 0.04 0.02 0 2010-11 2009-10 2008-09 ABSOLUTE LIQUID RATIO

Interpretation: The absolute liquidity ratio is showing an upward trend in last two years. In 200809 it was 0.11% and decreased to 0.04%The ratio of the firm for all the years is not satisfactory. It means that the company is not in a position to meet its short term obligation. But according to the nature and type of business the ratio is sufficient this is because the company has unutilised working capital limit which can be used to pay current liabilities as and when demand arises

RECEIVABLES MANAGEMENT
Receivables constitute a substantial portion of current assets of several firms. For example in India, Trade Debtors and Inventories are the major component of current assets. They form about one-third of current assets in India. Granting credit and creating debtors amount to the blocking of the firms funds. The interval between the date of sale and the date of payment has to be financed out of working capital. This necessitates the firms to get funds from banks or other sources. Thus, Trade Debtors represent investment. As substantial amounts are tiedup in trade debtors, it needs careful analysis and proper arrangement. Trade credit creates receivables or book debt that the firm is expected to collect in the near future. The term receivable is defined as debt owed to firm by customers arising from sales of goods or services in ordinary course of business. Receivables Management is also called Trade Credit Management.

DIMENSIONS OF RECEIVABLES MANGEMENT

Receivables Management involves the careful consideration of the following aspects: 1) Forming of Credit Policy 2) Executing the Credit Policy 3) Formulating and Executing Collection Policy

EALUATION OF RECEIVABLES MANAGEMENT

1)

DEBTOR TURNOVER RATIO

Debtor Turnover Ratio = Credit Sales Average Debtors

Average debtors = opening debtors + closing debtors 2 ( no provision of doubtful debts)

PARTICULARS CREDIT SALES AVERAGE DEBTORS DEBTORS TURNOVER RATIO

2010-11

2009-10

2008-09

25580.86 23879.46 21857.72 2991.61 4521.34 3126.63

8.550867 5.281501 6.990824

DEBTORS TURNOVER RATIO 9 8 7 6 5 4 3 2 1 0 2010-11 2009-10 2008-09 DEBTORS TURNOVER RATIO

Interpretation The companys debtors decreased from 6.9 to 5.2 in 2009-10 and further it showed an increasing trend and was highest in 2010-11. Debtor velocity indicate the number of times the debtors are turned over during a year. Generally, the higher the value of debtors turnover the more efficient is the management of debtors/sales or more liquid are the debtors.

2) AVERAGE COLLECTION PERIOD Average collection period = 365(days) Debtor turnover ratio

PARTICULARS AVERAGE COLLECTION PERIOD

2010-11 42.68573

2009-10 69.10915

2008-09 52.2113

AVERAGE COLLECTION PERIOD 80 70 60 50 40 30 20 10 0 2010-11 2009-10 2008-09 AVERAGE COLLECTION PERIOD

Interpretation The average collection period increased in 2009-10 from 52.2 to 69.10 and decreased in 2010-11 from 69.10 to 42.68.

3)Debtors or receivables turnover ratio: Receivable turnover = Net credit annual sales Average trade debtors Trade debtors = sundry debtors + bills receivable and account receivables Average debtors = opening trade debtors + closing trade debtors 2 PARTICULARS NET CREDIT SALES AVERAGE DEBTORS DEBTOR TURNOVER RATIO 2010-11 48429.5 7083.3 6.83 2009-10 47397.8 8050.8 5.88 2008-09 41423.7 7247 5.71

DEBTOR TURNOVER RATIO 7 6.8 6.6 6.4 6.2 6 5.8 5.6 5.4 5.2 5 2010-11 2009-10 2008-09

DEBTOR TURNOVER RATIO

Interpretation The companys debtors increase from 5.71 to 5.88 in 2009-10 and further it showed an increasing trend and was highest in 2010-11. Debtor velocity indicate the number of times the debtors are turned over during a year. Generally, the higher the value of debtors turnover the more efficient is the management of debtors/sales or more liquid are the debtors.

INVENTORY MANAGEMENT
Inventory is the most important segment of working capital. Inventory Management is a part of Production Management. Inventory Management helps to the financial manager in planning and budgeting inventory. It is a technique of controlling the purchase, use and transformation of material in optimal manner. The phrase optimal signifies minimal waste and cost of holding inventory. The management of inventory requires stocking of raw materials, components, consumables, packing material, work-in-progress and finished goods, so that production and marketing line are fed regularly. While on the other hand, he has to reduce the idle capital tied up in an inventory.

NATURE OF INVENTORIES Inventories are the stock of the product a company is manufacturing for sale and components that make up the product. The various forms in which inventories exist in a manufacturing company are: raw material, work-in-progress and finished goods.

Raw materials are those basic inputs that are converted into finished product through the manufacturing process. Raw materials inventories are those units which have been purchased and stored for future productions. Work-in-progress inventories are semi-manufactured products. They represent products that need more work before they become finished products for sale. Finished goods inventories are those completely manufactured which are ready for sale. Stocks of raw material and work-in-progress facilitate production, while a stock of finished goods is required for marketing operations. Thus, inventories serve as a link between the production and consumption of goods.

The level of three kinds of inventories for a firm depends on the nature of its business. A manufacturing firm will have substantially high levels of all three kinds of inventories, while a resale or wholesale firm will have a very high level of finished goods inventories as compared to raw materials and work-in-progress inventories. Within manufacturing firms, there will be differences. Large heavy engineering companies produce long production cycle products; therefore, they carry large inventories. On the other hand, inventories of a consumer product company will not be large because of short production cycle and fast turnover.

NEED TO HOLD INVENTORIES

There are three general motives for holding inventories:

Transactions motive: Transactions motive emphasizes the need to maintain inventories to facilitate smooth production and sales operations. Precautionary motive: Precautionary motive necessitates holding of inventories to guard against the risk of unpredictable changes in demand and supply forces and other factors. Speculative motive: Speculative motive influences the decision to increase or reduce inventory levels to take advantage of price fluctuations.

A company should remain adequate stock of materials for a continuous supply to the factory for an uninterrupted production. It is not possible for a company to procure raw materials whenever it is needed. A time lag exists between demand for materials and its supply. Therefore, the firm should maintain sufficient stock of raw materials at a given time to streamline production. Other factors which may necessitate purchasing and holding of raw material inventories are quantity discounts and anticipated price increase. The firm may purchase large quantities of raw materials that are needed for the desired production and sales levels, to obtain quantity discounts of bulk purchasing. At times, the firm would like to accumulate raw materials in anticipation of price rise. Work-in-progress inventory builds up because of the production cycle. Production cycle is the time span between introduction of raw material into production and emergence of finished product at the completion of production cycle. Stock of finished goods has to be held because production and sales are not instantaneous. A firm cannot produce immediately when goods are demanded by customers. Therefore, to supply finished goods on a regular basis, their stock has to be maintained. Stock of finished goods has also to be maintained for sudden demands from customers.

OBJECTIVE OF INVENTORY MANAGEMENT

In the context of inventory management, the firm is faced with the problem of meeting two conflicting needs: To maintain a large size of inventory for efficient and smooth production and sales operations.

 To maintain a minimum investment in inventories to maximize profitability. Both excessive and inadequate inventories are not desirable. These are two danger points within which the firm should operate. The optimum level of inventory will lie between the two danger points of excessive and inadequate inventories. The firm should always avoid a situation of over-investment or under-investment in inventories. The major dangers of over investment are: a) Unnecessary tie-up of the firms funds and loss of profits. b) Excessive carrying cost c) Risk of liquidity. The excessive level of inventories consumed funds of the firm, which cannot be used for any other purpose, and thus, it involves an opportunity cost. An effective inventory management should a) Ensure a continuous supply of raw materials to facilitate uninterrupted production. b) Maintain sufficient finished goods inventory for smooth sales operation, and efficient customer service. c) Maintain sufficient stocks of raw materials in periods of short supply and anticipate price changes. d) Minimize the carrying cost and time.

EVALUATION OF INVENTORY MANAGEMENT

1) INVENTORY TURNOVER RATIO Inventory Turnover Ratio = Cost of Goods Sold Average Inventory PARTICULARS INVENTORY TURNOVER RATIO 2010-11 2009-10 2008-09 11.14 9.39 10.93

INVENTORY TURNOVER RATIO

11.5 11 10.5 10 9.5 9 8.5 2010-11 2009-10 2008-09 INVENTORY TURNOVER RATIO

Interpretation: The inventory turnover ratio of the company is fluctuating. In 2008-09 it was 10.93 times and it decreased up to 9.39 times in 2009-10 and increased to 11.14 times in 2010-11. Standard for this ratio is 8 times, the company,s ratio is more than the standard hence position is satisfactory. A high inventory turnover/stock velocity indicates efficient management of inventory because more frequently the stock are sold, the lesser amount of money is required to finance the inventory. A low inventory turnover ratio indicates

an inefficient management of inventory. A low inventory turnover implies overinvestment in inventories, dull business, poor quality of goods, stock accumulation, accumulation of obsolete and slow moving goods and low profit as compared to total investment.

2)INVENTORY CONVERSION PERIOD Inventory Conversion period = Days in a year

Inventory Turnover Ratio

PARTICULARS INVENTORY CONVERSION PERIOD

2010-11 32.764

2009-10 38.871

2008-09 33.394

INVENTORY CONVERSION PERIOD

40 38 36 34 32 30 28 2010-11 2009-10 2008-09 INVENTORY CONVERSION PERIOD

Interpretation The Inventory conversion period is showing a fluctuating trend.It was increasing in 2009-10 the ratio came down then again in 2010-11 it has gone up and came down in 2010-11 with little change.

BIBLIOGRAPHY BOOKS Shashi K. Gupta & R.K. Sharma, Financial Management, Kalyani Publications I.M. Pandey, Financial Management, Vishal Publicating House Pvt. Ltd. M.Y. Khan, Financial Management, Tata Mc Graw Hill publications Co. Ltd. Annual reports of SIL Internal files related to Working Capital Management Websites: www.google.com www.wikipedia.com www.shreyansgroup.com