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Unit: CPM Fort: Songadh
Submitted by :- JIGNESH L GAMIT MBA Submitted to :- Mr.VIJENDRA GUPTA
The project report on JK Paper Ltd. has been prepared as per the topic “Working Capital Management of JK Paper Ltd.” prescribed by Mandvi education society, to me. Understanding of both practical and theoretical knowledge is essential in this competitive world. Training is an important aspect of the study. The basic aim of training in the management field is to know how to apply management theories in practice. Practice makes man perfect; therefore practical study is very important for management students. Practical training helps in comprehending the theory of subject taught in classroom. This is more applicable in case of management education. My training at JK Paper Ltd. has such effect to acquire the practical knowledge of Finance Management and others. Thus, it is our moral and obligatory duty to take part of our studies with great enthusiasm and seriousness and give them due importance. Last but not the least I received all required information and co-operation from the Accounts Department and HR Department. I hope that this report will meet the educational requirement.
Success is not merely a question of luck of genius it depends on hard work, sustained toil and most important of all his guidance. I am greatly thankful to JK Paper Ltd. for giving me an opportunity to work on this project at their company. I wish to express my sincere thanks to Mr.VIJENDRA GUPTA, Lecturer of MANDAVI EDUCATION SOCIETY,MANDAVI who gave me chance to undertake this project report under JK Paper Ltd.
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ACKNOWLEDGEMENT COMPANY PROFILE INTRODUCTION PRODUCT PROFILE ORGANIZATIONAL STRUCTURE RESEARCH METHODOLOGY LITERATURE REVIEW THEORITICAL BACKGROUND (WCM) ANALYSIS OF WORKING CAPITAL MANAGEMENT 8.1) 8.2) 8.3) 8.4) Working Capital Analysis Ratio Analysis Inventory Management Receivable Management
UNIT: CPM .5) Cash Management FINDINGS SUGGESTION CONCLUSION BIBLOGRAPHY 95 98 99 100 JK PAPER LTD.9 10 11 12 8.
INTRODUCTION TO ORGANISATION & MILL • COMPANY PROFILE JK GROUP JK owes its name as an Industrial entity and was conceived by the two great visionaries – Late Lala Juggilal Singhania and his son Late Kamlapat Singhania. They dreamt of an Industrial India and founded the JK Organization as their contribution towards realization of that dream. About JK Organization .
The name „JK Organization‟. JK owes its name as an industrial entity and was conceived by two great visionaries Late Lala Juggilal Singhania & his son Lala Kamlapat Singhania. which today is one of the leading Private Sector Groups in India. was founded over 100 years ago. They dreamt of an Industrial .
Companies that are member of JK organization are: • • • • • • • JK Tyres JK Paper JK Lakshmi Cement JK Seeds JK Sugar Fenner (India) Umang Dairies . multi-product and multi-location business operation. The companies in the Group have a diverse portfolio. For J. Food & Dairy Products.India and founded JK Organi zation. Readymade Apparels. including Automotive Tyres & Tubes. Paper & Pulp. Cement. V-Belts. Oil Seals. Sugar. etc. Organization it's been a century of multi-business. Cosmetics. Power Transmission Systems. Woolen Textiles.K. as their contribution towards realization of that dream. Hybrid Seeds.
.80. “Excellence comes not from mere words or procedures. improve it”.• CliniRx Research With its operations spread in almost every state of India. It is a way of thinking that comes only from a drive within”. JK Organization is one of the India‟s top Industrial houses with diversified interests and assets exceeding US $ 16 Billion. -Hari Shankar Singhainia (President. produces 1.000 people. JK Organisation) JK Group started its paper business way back in year 1938 with a board mill in Bhopal. is India‟s 6th largest paper manufacturer. the Group employs over 30. A mindest that says “when it is good enough. but now JK Paper Ltd. It comes from an urge to strive and deliver the best every time. JK Group constantly strives to achieve excellence and its products and processes and is conscious about the imperative need to maintain competitive age in Business.000 tones of paper and pulp in a year.
uncoated and pulp manufacturing capacity . Both plants are ISO 9001 – 2001. JK Paper has two large integrated paper manufacturing plants – JK Paper Mills in the Eastern part in the state of Orissa with 1..000 TPA coated .JK Paper Ltd.000 TPA packaging Board manufacturing capacity.000 TPA paper and pulp manufacturing capacity and 60. India‟s largest producer of branded papers is a leading player in printing and writing segment.. Both Mills manufacture premium grade writing and printing papers. 25. and Central Pulp Mills in the Western part in Gujarat state with 55. • About JK Paper Mills. JK Paper Ltd. OHSAS .18001 and ISO 14001 certified and operate around 120% capacity utilization. largely branded. Ranks 15th among global paper producers. Rayagada ..
27. productivity. Most modern and largest pulp mill in India. Over the years the production capacity has been enhanced to a level of 1. industrial safety as well as pollution control and environment protection which are indicated by achievements like: • • • First Mill in India to get ISO 9001 and ISO 14001 certification.JK PAPER MILLS.000 TPA with the addition of 4 more paper machines manufacturing diversified product range from 29 GSM to 300 GSM of different grades of paper. JKPM has strived for excellence and consistently set high standards in quality. Adjudged first „Greenest Paper Mill‟ in India in 1999. . Dist. Rayagada (Orrisa) JK Paper Mills is a premier integrated pulp and paper mill located at Jayakapur. conversation of energy and water. Orissa. JKPM was commissioned in the year 1962 with an integrated pulp and paper plant with 15000 TPA installed capacity for manufacturing high quality writing and printing papers.: Rayagada.
JK Bond. Since then JKPM has further consolidated its position in the market and has established itself as a brand leader in different varieties of writing and printing papers like JK Copier. Songadh On the western coast of India. at Fort Songadh in the State of Gujarat is located Central Pulp Mills. And the Journey still continues… Central Pulp Mills. Super Hibrite (SHB) Maplitho and JK Cote premium coated paper and board. It is also an integrated pulp and paper plant with a capacity of 55. Songadh… At a Glance Central Pulp Mills. JK Copier Plus. i.e. During 1992. a surface sized finished paper – JK Maplitho – equivalent to uncoated woodfree printing paper in international parlance. CPM was commissioned in year 1962 and commercial production for . It has two paper machines and manufactures premium grade papers in writing and printing paper segment. JK Excel Bond. but JK Group turned it around. JK acquired CPM which was a sick unit.000 TPA.The company was a pioneer to introduce in market. the other Unit of JK Paper Ltd.
openness.JK Paper was started in year 1993. including intellectual honesty. fairness and trust Commitment to excellence Objectives • Goal . • Core Values • • • Caring for People Integrity. Netherlands and in the year 2006 OHSAS 18001.” • Mission To be a world class company by achieving growth and leadership through. In the Year 2003. • • • • • JK Brand Equity Customer Obsession Technological Innovation Cost Competitiveness Environmental and Social Care while continuously enhancing shareholder Value. Vision. Mission and Core Values of the Company : • Vision ”To be a dynamic benchmark and leader in the Indian Paper Industry. the unit was accredited to ISO 14001 Environment Management Systems and ISO 9001 Quality management Systems by DNV.
responsibility and effectiveness to the entire system at JK Paper. The Company has taken a major initiative to deliver world-class service through implementation of an Enterprise Resource Planning (ERP) system. bringing in greater of efficiency. • About Various Policies . 2008 in the paper business of JK Group. This system was implemented from 1st April.To be among top 3 paper manufacturers by achieving breakthrough in PQCDSM. This transformational technology has brought in best practices across all functions of the organization to deliver highest value to all external and internal customers. It has opened a transparent dialogue between the supplier and the customer. This system is of JD Edward Enterprise and the server of the system is in the Delhi at the Corporate Office of JK Paper. ERP system was implemented from 1st July. Customer obsession is at the core of JK Paper‟s mission statement. 2005 in other businesses of JK Organization. This ERP System has tiedup the total supply chain. enabling seamless flow of information in „Real time‟. • ERP System in JK Paper Ltd. (Enterprise Resource Planning) Through ERP System Management of JK Paper is connected through internet. Passion to deliver highest value to all our external and internal customers has led the Company to take major initiatives in the direction of implementing Enterprise Resource Planning (ERP) system in the organization.
involvement and motivation. Unit: Central Pulp Mills Are committed to: • Comply with applicable environmental.through our products and services at competitive cost by continual improvement in processes. • Quality Policy To provide „Customer Delight‟ both internal and external . productivity. • Periodically reviewing the stability.• Environmental. contractors and their workmen through ongoing training. adequacy and effectiveness of our EHS management systems. . Occupational Health and Safety (EHS) Policy We at JK Paper Ltd. occupational health and safety (EHS) legislation and other requirements • Prevent and control population and work place occupational health and safety hazards • Demonstrate continual improvement in our EHS performance We shall strengthen our EHS performance by: • Integration of EHS criteria in all our planning and operational activities • Adoption of cleaner technologies processes and resource conversation • • A forestation through social and form forestry by cloned technology Enhancing skill and competence of our employees. quality and maintenance systems.
healthy and safe work environment • Eight Pillars of TPM • Achievements 2010-11: Greentech Safety Gold Award – 2011 Greentech Environment Gold Award .• Total Productivity Maintenance (TPM) Policy We at Central Pulp Mills. and • Creating lively.2010 Excellence in Consistent TPM Commitment Award – 2009 National Energy Conversation Award – 2009 Greentech Environment Gold Award – 2009 2009-10: . in our continuous pursuit of being globally competitive and achieving „customer delight‟ through world class quality standards are committed to maximize overall equipment effectiveness by: • Aiming for • Zero Accidents • Zero Breakdowns • Zero Defects • Lowest cost of production with everyone‟s participation • Nurturing team work and continuous development of individual skills at all levels. energetic.
2009 Greentech Environment Silver Award . offers range of office documentation papers from Economy to Premium grades.2008 OHSAS 18001:1999 certification from DET NORSKE VERITAS (DNV) JIPM TPM Excellence 1st Category Award Winner of National Award for Excellence in Energy Management Winner of National Safety Award – 2004 Best Paper Mill of the Year Award from Indian Paper Manufacturers Association ISO 14001 Certification from DET NORSKE VERITAS (DNV) ISO 9001:2000 Certification from DET NORSKE VERITAS (DNV) Outstanding Pollution Control Programme from Southern Gujarat Chamber of Commerce and Industry Outstanding achievement in Productivity in Chemical Industry from Southern Gujarat Chamber of Commerce and Industry.Greentech Safety Award – 2009 2008-09: 2007-08: 2006-07: 2006-07: 2004-05: SGCCI Award for Research & Development . Outstanding Export Performance in Chemical Industry from Southern Gujarat Chamber of Commerce and Industry 2003-04: 2002-03: 1999-00: 1998-99: 1996-97: Award for Energy Conservation (Large Mills) from Indian Paper Manufacturers Association. New Delhi. They include Photocopy and Multi Purpose Papers for use in . About the Products : JK Paper Ltd.
Project Reports. Project Reports. Corporate Stationery. • JK Excel Bond Ideal for Letterheads. Inkjet & LaserJet printers. Envelopes. • Sparkle Copier Ideal for photocopying & desktop printing. Papers produced can be classified into following types: • JK Copier Plus Ideal for Quality Photocopying. Presentations. and Exercise Book. Presentation copies or any aesthetic job. Inkjet and Laser Printers. . • SS Maplitho SS Maplitho is ideal for trouble free printing as it has excellent smoothness and dimensional stability. Brochures. Fax Machines. making Diaries. It is used for printing books. Notepads.Desktop. • JK Easy Copier Ideal for Photocopying. Manuscript writing. Certificate. Resumes. Scribble Pad. Pamphlets. Premium Watermarked and Laid marked Business Stationery Papers are also being marketed to satisfy the varied needs of Corporate and Individuals. calendars. Photocopiers and Multifunctional Devices. maps.
Invitation Cards. • JK MICR Cheque Paper MICR (Magnetic Ink Circumstance Register) paper is the high quality papers. Reports. Resumes. Hotel/Airline Menu Cards. Personal Letterheads. Certificates. . Presentations. used for making Cheque books and Demand Drafts.• JK Savannah Suitable for Corporate Stationery.
• List of Departments • Production Department • Bamboo Yard • Chipper House • Pulp Mill • Paper Machine Process • Paper Machine I & II • Stock Paper Machine I & II • Rewinder & Cutter • Finishing House • Works Office • HRD Centre • Personnel Department .
• Accounts Department • Forest Department (Raw Mat. Civil k. Pulp Mill Maintenance n. Laboratory i. Paper Machine Maintenance Personnel Department is the bedrock of any business organization. Plantation m. Electrical l. The . Success and Failure of any organization depends on quality of personnel they have. Instrument j.) • Sales & Stock (Marketing) • Stores • Purchase • Other Departments • Transport • Security & Fire Fighting • Administration • Information Technology • Turbine • Recovery • Works Office h.
placement. . It includes human resource functions like human resource planning. retaining. Management of human resource is a continuous process. at JK Paper Ltd. Human Resource comprise the aggregate of employee attributes including knowledge. performance appraisal. Hence. transfer. which are presently and potentially available to the organization for the achievement of its goal and objectives along with serving best to the society and its stakeholders. training and development. So it is a never ending process. promotion. Personnel management can be defined as the process of accomplishing organizational objective by acquiring.aim of personnel department is to bring people together and develop into an effective organization. Human Resource Department. welfare activities. experience and health. selection. labor relation activities. At JK Paper they recognize the power of knowledge. extensive investments are made towards people and people practices. Fostering the spirit of entrepreneurship among these professionals has enabled JK Paper to establish the role of true leadership guiding the future growth and development of the industry. In short Personnel Management is the task of dealing with human relationship within an organization and maintains healthy and smooth relationship within as well as outside the organization. terminating and properly using the human resource in an organization. is divided into 3 parts. recruitment. skill. success depends very much on quality of their Human Resource. JK Paper believes that the most significant resource is its human resource and JK Paper Ltd. induction and orientation. The talent pool at JK Paper would rank among the very best in the Indian Paper Industry today. wages and salary administration etc. demotion.
• • • Personnel Department Human Resource Development Centre Administration Department Mission and Vision : • To motivate all employees for best performance for getting optimum production • To provide excellent services to our internal and external customers for their satisfaction • To achieve cordial Human Relations with employees including union and association • To create awareness amongst employees about company‟s system and personnel policies Organization Chart : Roles of Personnel Department : .
1923 • Recruitment • Sources Of Recruitment • • • Selection • VRS Scheme • Performance Appraisal Internal Sources External Sources . 1972 • The Workmen Compensation Act. 1965 • The Payment of Wages Act. 1948 • The Payment of Bonus Act. 1936 • The Minimum Wages Act. 1948 • The Contract Labor Act.• • • • • Personnel Roles IR and Legal Roles Welfare Roles Social Responsibilities Legislations • The Factory Act.
performance management and development. Mission and Vision : • Vision :To achieve internal customer delight through planning and implementation of need Human Resource Development and TPM promotion services at Optimum cost. • Mission :To excel in design. evaluation and continuous improvement of Human Resource department and TPM promotion activities by setting stretch taught and achieving them on time.Human Resource Development is the frameworks for helping employees develop their personal and organizational skills. . coaching. key employee identification. succession planning. knowledge. delivery. Human Resource Development includes such opportunities as employee training. tuition assistance. The focus of all aspects of Human Resource Development is on developing the most superior workforce so that the organization and individual employees can accomplish their work goals in service to customers. employee career development. and abilities. and organization development.
DGM (HRD – CSR) Mission and Vision : .Organization Chart (HRD Centre) : Asst. Mgr (HRD) SR. Trainee (CSR) Sr. Exe. Executive (HRD – TPM) Executive (HRD) Vacant Asst Executive (HRD) Jr.
Organization Chart : Roles of Administration Department : • • • • • Transportation Facilities Guest House Facility Medical Assistance Communication Facilities Colony Accommodation and Maintenance . • Proper checking of incoming/outgoing persons • Minimum time utilization for incoming/outgoing vehicles • Enforcement of proper security system • Instant access of firefighting equipments to take timely action to extinguish fire.• Proper checking of outgoing vehicles.
manpower and other factors of production) in to output (semi finished and finished goods and services) with the help of certain process (planning. Manufacturing of goods is highly complex process. The . scheduling and controlling). machinery. information.• • Postage Facility Executive Hostel Production is the process concerned with the conversion of inputs (raw materials.
. so that expectations cost of production and selling cost of resulting goods and services can be reduced. The aggregate annual output is over 180.company makes the best use of man. Over the last decade the constant endeavour of JK Paper has been to upgrade its manufacturing processes at grass-root levels to help create customer value. • First Paper Mill to get ISO 14001 certification . JK Paper Ltd. has always leveraged technology for constant product upgradation and has been a pioneer in many arenas. Some of the landmarks which JK Paper achieved much before the rest of the Indian paper companies are: • First to introduce Surface Sized Wood free Paper • First Paper Mill to get ISO 9001 certification. Production Management is concerned with decision making related to manufacturing process. of the paper industry.000 tons per year of Paper and Pulp. India’s largest producer of Branded papers is a leading player in the Printing and Writing segment. Be it the most modern Pulp Mill or an automatic cut-size line for branded products. materials and machinery for that sole purpose of economical delivery of quality goods to customers. Production Management is concerned with planning. it has been a saga of continuous process development with an eye on the customer. controlling and co-ordination of manufacturing process. Both the plants of JK Paper are ISO 9001–2001 and ISO 14001 certified and operate at around 120% capacity utilization. organizing. using contemporary technology. JK Paper Ltd. It makes the best utilization of raw materials available and does necessary processing on it and converts it into utility.
000 TPA capacity is equipped with the most modern technology sourced from global leaders like Voith of Germany and several other leading names in the paper board machinery sector. Organization Chart (Production Process) .These pioneering moves have given JK Paper pride of place as the change leader. Songadh at a substantial Rs. ushering in a phase of complete makeover in the Indian paper market. This plant of 60. On the pathway of moving focus from commodity to branded and high value categories. Once again. JK Paper has setup state-of-the-art Packaging Board Plant at its Central Pulp Mills Unit. technology is the key driver to revolutionize packaging in India. JK Paper Ltd. has undergone major technical upgradation in the machines and processes for manufacturing paper.235 crore investment.
• Production Process (Flow Chart) : • CHIPPER HOUSE .
• CHIPS SCREENING • CHIPS WASHING • DIGESTER .
• WASHING & BLEACHING OF PULP • STOCK PREPARATION • PAPER MACHINE • REWINDING & CUTTER • FINISHING .
Place.Now-a-days the importance of marketing department in every sector is increasing.” In JK Paper too marketing department is given access importance. and Promotion) for products. And marketing department of the company operates from Delhi which heads four zonal offices. “Marketing is the social process by which individuals and groups obtain what they need and want through creating and freely exchanging goods and services of value with others. . services or ideas to create exchange between individuals and organizations. Chennai (South Zone). Kolkata (East Zone). Every business organization uses marketing to promote their product. JK Paper has only Sales & stock department at their production units. According to Philip Kotler. Delhi (North Zone). Mumbai (West Zone). Marketing is an ongoing process of planning and executing the marketing mix (Product. Price. That‟s why marketing department is at their corporate office in Delhi and not at their production units in Rayagada and Songadh.
Sales & Stock Department looks after availability of stock. keeps information about dealers. etc. it also looks after day to day sales. transporters. customers. transportation. wholesalers. • Marketing Network : • Countries in which JK Paper Exports : Abu Dhabi Bangladesh Ethiopia Kenya Maldives Oman Sri lanka South Africa Brazil Ghana Labuan Mauritius Sharjah Syria Australia Dubai Iran Libya Nepal Singapore Turkeys . loading of goods in trucks etc.
Yemen Jordan South Korea • Austria Malaysia Vganda Egypt Nigeria Organization Chart (Sales & Stock Department) • Mission and Vision : • • • • • • • Proper inventory keeping system Avoid small losses and peace meal material Advance logistics programme Zero complaint from dispatch area To have clean and safe environment Avoid detention of trucks Avoid access documentation • Order Processing System : .
Completes in 15 Days • Distribution Channel Collection of Receivables – Terms & Conditions : • Cash discount of 2% is given if payment mede in 20 days .
5% is given if payment is done in advance No discount is given if payment done within 30 days Interest at 24% P.• • • • • • Cash discount of 2. is taken if payment made after 30 days Value Added Tax : 4% Excise duty : 8% CST : 3% Organization Chart • Functions of Account Department : • • • • Bill Passing Payment approval Payment Advice Payment Release .A.
• • • • Production Data Stock Position Information regarding sales Variable cost for power. chemical. etc. feul. • Organizational Chart (Purchase Dept ) .• Management Information System : The top management is sent a one page report daily which contain.
• Chart 11: Organization Chart (Purchase Department) • Mission and Vision : • Vision To become purchaser of quality products with cost effectiveness to meet the plant requirement. to locate best suppliers in the market and create long term relationship to meet future challenges in dynamic global environment. • Mission To endeavor. • Issue of Purchase Orders : .
Completes in 13-15 Days • Purchase Bills Passing System : • Major Purchase Items • Spares and Tools • Chemicals • Equipments .
• Packaging Materials • Lubricants • Coal and Fuel • Organization Chart (Stores Department) • Objectives and Goals • Minimum retrieval time • Prevention /condition monitoring • Optimum inventory .
• Functions of Stores Department : • Proper Storage • Inventory Control • Raising of Purchase requisition • Receipt of material • Arranging inspection of inward materials • Issue of materials • Material Handling contract • Stores Accounting (Quantity) • Disposal of scrap and surplus equipment through tender public auction • Classification of Stores Items : • Raw materials (Bamboo. wood.) • Coal and Fuel • Spares and stores • Chemicals • Machine clothing • Packaging materials • Lubricants . etc.
• Stores Issue System : • Issue voucher raised by the department • It is duly signed by authorised person • Material is drawn from stores • Custodians of stores are checked • Inventory Management System : • Minimum / maximum stock level is fixed time to time based on consumption level • Review of high value stock items on day to day basis for regulating the suppliers as per the available stock • Review of purchase requisition by department before planning the orders • Providing details of materials received and lying in stock against department purchase requisition and non lifted by them .
Madhya Pradesh. Till date. Side by side. Bamboo is procured from nearby forests in Gujarat.000 Ha of land has been planted with high yielding pulpwood species by the farmers in the adjoining areas of mill locations with the assistance of the Company. The Company sources nearly 60% of its raw material requirement from man-made plantations. Maharastra. etc. Uttar Pradesh. Madhya Pradesh. Andhra Pradesh. Uttar Pradesh. Transportation of raw materials is done by railways from Assam and by road form other states. Karnataka. Wood is procured from Gujarat. etc. Haryana.Forest Department looks after the procurement of Bamboo and hardwood form the forest as well as form the market. Assam. it also promotes social/farm forestry within a radius of 200 KMs from its plants. in excess of 48. Every year it adds another 4500/5000 Ha by distributing 30 million . Maharastra. from the open market of Gujarat.
By providing farmers high quality plant species through the Company‟s plantation research centre. have covered more than 45.saplings to the farmers. which gives 2-3 times higher yield to the farmer. the Company has been able to develop 6 JK Super clones for Eucalyptus. Company has its own nurseries in Surat. Dhulia. Andhra Pradesh. The Company‟s plantations. Navsari. Nandubar. • Organization Chart (Forest Department) : • Roles of Forest Department • To observe affective office TPM • To conduct meetings with field managers and staff by GM to review the achievement of target for bamboo procurement from forest. Narmada. Very large number of farmers in the states of Orissa. Chhattisgarh. Gujarat and Maharashtra are benefitting from this programme. West Bengal. . Baroda and Panchmahal districts. Tapi.000 hectares of land over the years. The plantation with its superior quality plants contribute towards a strong base for high quality raw materials. it is helping the farmers to improve their economic well being. Through its dedicated R&D wing. Bharuch. driven by in-house research programme.
• To ensure procurement of quality raw materials at lower cost. • To satisfy the internal customers(stores) with regard to arrangement of required raw material at the right time and right manner • To satisfy the external information regarding quantity and quality of the raw materials supplied by them and arrange timely payment to suppliers and transporters.
Organization Chart :
Total Security Guards – 51 Contract Security Guards from RDSL 2 JK Paper Employees Fire Jeep – 1 Fire Tanker - 2 (5000 Ltrs Capacity Each) Fire Trailor pump - 1 Fire Exhausters – 300
Roles of Fire fighting and Security Department • Proper checking of incoming / outgoing vehicles • Proper checking of incoming / outgoing persons • Checking of Workers • Weight checking of incoming truck • Ensure that incoming vehicle is ok or not • Checking for liesence of Driver • Protecting Raw material from fire • Protection of company premises • Safety precautions • • Enfrocement of proper security equipments Instant access to fire fighting equipments to take timely action to extinguish fire.
The term research refers to the systematic method consisting of enunciating the problem, formulating the hypothesis collecting data, analyzing the facts and reaching the certain conclusions either in the form of solution towards the concern problem or in certain generalization for some theoretical formulation. Research methodology is a way to solve systematically the research problem. It may be understood as a science of studying how research is done scientifically. • Time period of the study :
The present study was undertaken during six weeks from 1st June - 15th July. • Research Design :
Descriptive research procedure is used for describing the recent situations in the organization and analytical research to analyze the result by using research tools.
which includes : • Balance Sheet of company . Secondary data : Secondary data are those which have already been collected by someone else and which have already been passed through the statistical process. accurate and systematic. Information pertaining to receivables. cash. Here I have done the analysis on the basis of secondary data. Secondary data consist of not only published records and reports but also unpublished records. Although the data description is factual. descriptive research can be said to have a low requirement for internal validity. The Secondary data consist of reality available compendices already complied statistical statements. describes data and characteristics about the population and phenomenon being studied. the research cannot describe what caused a situation. • Data Source & Collection Method : • • Primary data Secondary data Primary data : To collect the primary data I have collected the information by informal discussion held with various department heads. Therefore descriptive research cannot be used to create a casual relationship. where one variable affects another. and creditors were collected from the respective departments in the units.• Descriptive Research : Descriptive research. inventory. In other words. also known as statistical research.
• Purpose : The purpose of this paper is to properly analysis of the working capital management of JK Paper Ltd. • To get proper understanding of concepts. Songadh” for 6 weeks duration. .. Songadh over the period 2007-2010 • OBJECTIVE OF THE STUDY : The management of Working Capital is very important.• Profit / Loss of JK Paper Ltd. Therefore. To render recommendations for the effective management of working capital. cash accounts. I have done the study of balance sheet. The motive behind the study to develop the understanding about working capital management in the running business organization and to help the company in developing the efficient working capital management. • • • • To analyze the working capital management. To determine the gross operating and net operating cycle of the unit. profit/ loss A/c‟s. it helps in future planning and control decision.. To know the future need of working capital in the running organization. • • SCOPE OF THE STUDY : The study is conducted at “JK Paper Ltd. The study of working capital management is purely based on secondary data and all the information is available within the company itself in the form of records. It involves the study of day – to – day affairs of the company.
Analysis through schedule change in working capital. • The time span of the project was very short 6 weeks.• • • I have also conducted the interview with employees of accounts department. The study is supposed to be related to the period of last four years. Due to the busy schedule. • • • Receivable Management Inventory Management Cash Management • • Limitation of Study : Generally the company does not allow the finance project to have any study or research work. . So scope of the study limited up to the availability of official records and information provided by the employees. • • The organizations do not disclose all the data which is an obstacle for the detail study. some of the staff members were not in a position to spare time for guiding the topic or giving any information. which was a major constraint. so study and analysis on this topic within limited period was not sufficient. • • • • Analysis through working capital ratios. Analysis through various components of working capital. Therefore getting a project work in the company itself was very difficult. Analysis through gross operating cycle and net operating cycle.
greater emphasis has been placed on those accountable for so-called working capital management. inventory period and leverage affect firms . Empirical findings the study show that accounts receivable period. • The research done by. • Maximum secondary data is used. “How to understand Working Capital Management” describe that “Cash is king” so say the money managers who share the responsibility of running this country‟s businesses. In accordance with this aim. Samiloglu F. Working capital management refers to the management of current or short – term assets and short – term liabilities. Hence the result also reveals approximate values. to consider statistical significance relationship between firm profitability and the component of cash conversion cycle at length a sample consisting of Istanbul Stock Exchange (ISE) listed manufacture firms for the period of 1998-2007 has been analyzed under multiple regression models.• As the organization policies were very strict regarding using actual figures due to which approximately values were used for analysis. and Demirgunes K. the purpose of that function is to make certain that the company has enough assets to operate its business.. In essence.. • The research done by Herrfeldt B. And with banks demanding more from there prospective borrowers. “Effect of Working Capital Management on firm Profitability : Evidence of Turkey” (2008) describe that the effect of working capital management on firm profitability.
“Working Capital Management manages Flow of Fund”. account receivables and inventory.e. Raw material and operating supplies must be brought and stores to ensure uninterrupted production. simply refers to the firm‟s total current assets (the short term ones). utility charges and other incidents must be paid for converting the material into finished goods. very little research has been conducted on the capital budgeting and working capital practices of small firms. marketable securities. • The research done by Thachappilly G. Obviously good working capital management. While long term finance analysis primarily concern strategic planning. “Working Capital Management”. or which had been active in terms of reducing stock level • The research done by Hardcastle J. the firms which claim to use quantitative capital budgeting and working capital technique and to review various aspects of their companies‟ working capital. no firm can be efficient and profitable. . The result of survey indicates that a relatively high proportion of small firm in the sample claimed to use quantitative capital budgeting and working capital technique and to review various aspect of the companies‟ working capital. working capital management deal with day-to-day operations. Wages. the firms which claim to use more sophisticated discounted cash flows capital budgeting techniques. • Michael J Peel. salaries. (2007) describe that the working capital sometimes called gross working capital. that inventories do not build up because production continue unchanged when sales dip that customer pay on time and that have enough cash is on hand to make payments when they are due.. while growth (in sales) affects on firm profitability positively. In addition. i. the days for paying for raw material to collecting cash from customers. (2009) describe that the Working Capital is the cash needed to carry on operation during the cash conversion cycle. cash. By making sure that the production line do not stop due to lack of raw material. Nicholas Wilson (2008).profitability negatively.. In addition.
Gass D. however.. Only at the end of cycle does cash flow in again. borrowing and provisions. on short-term assets. “How to improve Working Capital Management” (2006) “ Cash is the lifeblood of the business” is an often repeated maxim amongst financial manager. investment and cash & bank balances. . debtors. Working capital management refers to the management of current or short-term assets and short-term liabilities.Customers must be allowed a credit period that is standard in the business. The major emphasis is. loans and advance. Component of short-term assets include inventories. It is important that companies minimize risk by prudent working capital management. trade advances. since short-term liabilities arise in the context of short-term assets. • The research done by. Short-term liabilities include creditors.
Subsequently. This is so because both inadequate as well as excessive working capital position is bad for business. it is neither inadequate nor excessive. Working capital cycle involves conversions and rotation of various component of the working capital.Meaning And Nature of Working Capital Management : The management of working capital is concerned with two problems that arising in attempting to manage the current assets.e. A business which is fully equipped with all types of fixed assets required is bound to collapse without (i) Adequate supply of raw material processing. All these require working capital. with the usage of fixed assets resulting in value addition. Working capital is thus like the lifeblood of business. (iii) Creating a stock of finished goods to feed the market demand regularly and (iv) The ability to grant credit to its customers. The basic goal is working capital management is to manage current assets and current liabilities of the firm in such way that a satisfactory of optimum level of working capital is maintained i. Initial cash is converted into raw material. current liabilities and the inter relationship that asserts between them. the raw material get converted into working in progress and then into finished . power and other costs. (ii) Cash to pay for wages.
goods. When sold on credit. Thus the „cash‟ assume its original CREDITORS CASH Value Addition Value Addition FINISHED GOODS WORK IN PROCESS . the finished goods assume the form of debtor who give the business cash on due date.
Thus the working capital cycle involves rotation of various constitute of working capital. • • On the basis of concept On the basis of time • On the basis of concept working capital can be classified • Gross Working Capital . • Sources of Additional Working Capital : Source of additional working capital include the following… • • • • • • Existing cash reserves Profits ( When you secure it as cash ) Payables ( Credit from Supplier ) New equity or loans from shareholders Bank overdrafts or lines of credit Long – term loans • Classification of Working Capital : Working capital can be classified in two ways…. As a result they rotate and business operation continues. This is how various components of current assets keep on changing their forms due to value addition.form again at the end of one such working capital cycle but in the course it passes through various other forms of current assets too.
which are continuously required. it is financed by the long-term sources. • Permanent Working Capital • Temporary Working Capital • Permanent Working Capital:- The need for current assets arises because of operating cycle. But the magnitude of current assets needed is not always the same. The operating cycle is continuous process and therefore the need for current assets is felt constantly. by firm to carry or its business operations is called permanent or fixed working capital. However there is always a minimum level of current assets. This minimum level of working capital is necessary on the regular basis even if the management of working capital is done efficiently in the organization. .• • Net working capital. As this type of working capital is minimum necessary for the business at all points of time. It increases and decreases over time. On the basis of time working capital may be classified • • Permanent or fixed working capital Temporary or variable working capital • Types of Working Capital : There are mainly two types of working capital.
debtors. Both concepts are depicted in the following figure: - A M O U N T O F W. fluctuating or variable working capital. The additional requirement may be during more active season when the volume of production and sales more goes up necessitating extra blockage of funds temporarily in current assets like Bank Balance. inventory.• Temporary Working Capital :- The amount over and above the permanent level of working capital is temporary. Whose volume is different at different points of time and hence it is financed by short-term sources. etc. . The need for such type of working arises because of fluctuations in production and sales. The temporary working capital is the additional funds required.
. The working capital graph will be rising one as given in figure below: A M O U N T O F W.C. C. the level of permanent working capital also grows. Temporary Working Capital Permanent working Capital Time However when the business is growing.
Temporary Working Capital Permanent Working Capital Time Working Capital Assembly : Particular 2009-10 YEAR 2007-08 2006-07 .
41 107.65 207.70 408.22 162. higher the working capital requirement.74 41. The basic reasons for calculating operating cycle is to find out the means for reducing the duration of operating cycle because if duration of operating cycle will be less than the working capital requirement will be less. WIP conversion period.31 184.24 -420.95 152. This is also known as working capital cycle.09 171.92 152.15 34. It comprises raw material conversion period.50 131.83 176.8 0 -385. Operating cycle is therefore expressed in terms of months or weeks or days.72 120. The highest the operating cycle period.2008-09 Current Assets • • • • • Inventories Sundry Debtors Cash & Bank Balances Loans & Advances Others Current Assets TOTAL CURRENT ASSETS (A) Less : Current Liabilities Current liabilities & Provisions TOTAL CURRENT LIABILITIES (B) NET WORKING CAPITAL (A-B) 126.34 110. So it is total time gap between raw material purchases to total debtors‟ collection.23 117. FG conversion period and debtors‟ conversion period and creditors period.49 7.98 -400.24 4.87 3.87 160.09 237.31 215.06 177.63 • Operating Cycle Analysis Operating cycle refers to the time period which starts from raw material purchases and ends with realization of receivable.89 104.95 267.11 107.15 96. OC = R + W + F + D – C .65 177.77 171.28 • 184.
88 111 Days Particular Raw Material Stock 2009-2010 5334.95 Consumed during the year 67 Days RMCP Interpretation :The raw material conversion period is the average time period taken to convert material in to work .× 360 Raw Material Consumed during the year Rs. • Work in Process Conversion Period (WIPCP) . so it is not good for the company. we can see that year 2009-10 the raw material conversion period is 67 days which is high as compare to previous year.143.485.1 Million) 2008-2009 2007-2008 3174.in – process.Where. Smaller the raw material conversion period higher the efficiency of production. Here.20 28.87 2006-2007 3. In Lac (0.053.678.50 66 Days Raw Material 28. R = Raw material conversion period F = Finished goods conversion period C = Creditors payment period W = Work in process period D = Debtors collection period • Raw Material Conversion Period (RMCP) = Raw Material Stock -------------------------------------------------.37 41 Days 4660.08 15. It is high because both the level of consumption and inventory level has been increase.07 17.322.
Work – in – process conversion period is low even though the cost of production is too high compare to others. It‟s also contain the production cost holding by it. we can say that for the year 2009-10 due to low work – in – process inventory.× 360 Cost of Production Particular Stock In Process Cost of Production WIPCP 2009-2010 8.13 938.45 4 Days 2007-2008 14.88 11 Days 2006-2007 8.45 3 Days 2008-2009 11.01 620. • Finished Goods Conversion Period = Finished Goods Inventory ----------------------------------.73 504.× 360 Cost of Goods Sold .35 988.98 4 Days 4 11 4 3 Interpretation :It indicate the work – in – process inventory (can say semi – finished good) converted into finished goods.= Stock in Process -----------------------. Here.
the efficiency of company is higher.15 505.63 10 Days 2008-2009 32. it indicates good efficiency of the company.54 620.71 927.Particular Finished Goods Inventory Cost of Goods Sold FGCP 2009-2010 26.× 360 Credit Sales . It‟s also containing the production cost holding by it.88 13 Days 2007-2008 22. If finished goods conversion period is lower. In case of this company for the year 2009-10 finished goods conversion period is 10 days which is lower than the previous year 2008-09. • = Debtors Conversion Period Debtors -----------------.54 994.63 13 Days 13 16 13 10 Interpretation :It indicates the finished goods inventory converted in to sold or distributed to the end user.27 16 Days 2006-2007 22.
Rs. Here.47 48 days 100.31 53 Days 2006-2007 107. a longer collection period implies too liberal and inefficient credit collection performance. It is difficult to provide a standard collection period of debtors.24 932. we can say that for the year 2009-10.49 1299.55 41 Days 41 53 Interpretation :This conversion period measures the quality of debtors.87 749.57 29 Days 2008-2009 107.26 614. • Creditors Conversion Period Creditors -----------------------× 360 Particular 2009-2010 2008-2009 = 2007-2008 114.71 874.78 480. It reduces the chances of bad debts. So companies‟ management is efficient in collection on cash and they have not more provision for bad debts.95 86 days 2006-2007 109. Similarly. In Crore (10 Million) Particular Debtors Credit Sales DCP 2009-2010 104.15 1268.18 64 days Creditors Purchase CCP 115.68 38 days . debtors‟ conversion period is low as compare to previous years. A short collection period implies without delay in payment by debtors.34 30 Days 2007-2008 110.13 941.
the higher the number the better. Creditor conversion period is high as compare to previous year.Purchase 64 86 38 48 Interpretation :Creditors‟ conversion period an indication of a company‟s credit worth in the eyes of its supplies and creditors. A company that is especially slow to pay its bills may be a company having trouble generating cash or one trying to finance its operations with its suppliers‟ funds. Within reason. Company‟s credit worth is increase so company can able to manage cash for the payment of their suppliers. Here. YEAR RMCP WIPCP 2009-2010 67 3 2008-2009 41 4 2007-2008 111 11 2006-2007 66 4 • Gross Operating Cycle FGCP 10 13 16 13 DCP 29 30 53 41 GOC 109 days 88 days 191 days 125 days . because all companies want to converse cash. since it shows how long they are willing to wait for payment. we can say that for the year 2009-10.
As we can see in the year 2009-10 gross operating cycle periods is 109 days which is high in the above data because gross operating cycle as well as payable deferral period is high in year 2009-10.Interpretation :Gross operating cycle is total inventory conversion period and debtors‟ conversion period. • Net Operating YEAR 2009-2010 2008-2009 2007-2008 2006-2007 Cycle GOC 109 88 191 125 CCP 48 38 86 64 NOC 61 days 50 days 105 days 61 days .
In this technique. The firm has to negotiate working capital from sources such as commercial banks. Analysis through Working Capital Ratios : A study of the causes of changes in uses and sources of Working Capital is necessary to observe that whether working capital is serving the purpose for which it has been created or not. so which gives bad indication.Interpretation :Net operating cycle also represents the cash conversion cycle. for each aspect of analysis certain ratios are computed and then results are compared with standard ratio or industry average. should be obtained in order to carry out the firms operations. As we can see in the year 2009-10 Net Operating Cycle period is 61 days which is highest in the above taken data because gross operating cycle as well as payable deferral period is high in 2009-10 compare to previous year. If net operating cycle of a firm increase. called working capital. initially net operating cycle of a firm increase as compare to previous year. Here. It also represents the time interval over which additional funds. it means further need for negotiable working capital. It is net time interval product and cash payment for resources acquired by the firm. .
current assets double the current liabilities is considered to be satisfactory.171 2. In Crore (10 Million) YEAR CURRENT ASSETS CURRENT LIABILITY 184. The following are the important ratios to measure the efficiency of working capital: • Current Ratio: It is most common measure for measuring liquidity.e.65 CURRENT RATIOS 2.385 2.28 .09 177.15 385. It is also called “Working Capital Ratio.169 2009-10 2008-09 2007-08 2006-07 400. A ratios equal or near to the rule of thumb of 2:1 i. High current ratio indicates firm is liquid and has the ability to pay its current obligation in time and when they become due.” It expresses relationship between current assets & current liabilities.751 2.95 171.23 420. Current Assets Current Ratio = ---------------------Current Liabilities Rs.31 152.72 408.The ratio analysis provides guides and clues especially in sporting trends towards better or poorer performance and in finding out significant deviation for any average or relatively applicable standards.
2.171 2.751 2.169 2.385
Interpretation:Higher the current ratio, the larger is the amount of rupees available per rupee of current liabilities, the more is the firm‟s ability to meet current obligation and greater is safety of fund of short term creditors. From the above calculation we can say that current ratio of 2009-10 is 2.171 : 1 which is comparatively lower than the previous year. It indicates the company is quite not satisfactory with their current affair as compare to previous years.
Net Working Capital Ratio Net Working Capital is difference between current assets and current liabilities. This ration measure firm‟s potential reservoir funds relate to net assets.
Net Working Capital Ratio = Net Working Capital ----------------------------
Net Assets Year 2009-10 2008-09 2007-08 2006-07 Net W.C. 215.92 267.77 237.06 207.63 Net Assets 142.37 150.20 168.34 172.08 Ratio (in times) 1.52 1.78 1.41 1.21
1.21 1.41 1.78 1.52
Interpretation :The difference current assets and current liabilities excluding short – term bank borrowing is called net working capital or net current assets. Net current assets are sometimes used as a measure of a firm‟s liquidity. It is considered that the firm having the large networking capital has the greatest ability to meet its current obligation. As shown in the calculation net working capital of 2009-10 is low as compares to previous year because firm had used its cash & bank balance to meet its current obligation. Here we can say that as compare to previous net working capital is low which is good for the company.
Liquid Ratios This ratio is also known as quick ratios or acid test ratios. It is more rigorous test of liquidity than the current ratios. It is based on those current assets which are highly liquid. Inventory and prepaid expenses are excluded because they are deemed to be least liquid component of current assets. A high quick ratios indicate that the firm is liquid and has the ability to meet its current assets in time and on the other hand low ratios represent liquidity position is not good.
Quick Ratio = Quick or Liquid Ratio _____________________ Current Liabilities LIQUID ASSETS CURRENT LIABILITIES 273.34 184.31 303.61 152.95 287.81 171.09 288.87 177.65
YEAR 2009-10 2008-09 2007-08 2006-07
LIQUID RATIOS 1.483 1.985 1.682 1.626
1.626 1.682 1.985 1.483
626 in 2006-07 and increased to 1.55 NET WORKING CAPITAL 215. • Working Capital Turnover Ratios Working capital turnover ratios indicates the velocity of the utilization of the net working capital.63 WCTR 6.31 932.06 207.92 267.161 4.Interpretation :Usually high liquid ratios an indication that the firm is liquid and has the ability to meet its current or liquid liabilities in time and on the other hand a low liquidity ratio represents that the firm's liquidity position is not good. The liquid ratios present an uneven change over the past four year.77 237.483 in 200910 is more than the rule of thumb but the ratios of four year is quite more than the rule of thumb. According to rule of thumb. It was 1.57 1268.34 749. Working Capital Turnover Ratios = COGS or Sales ____________________ Net Working Capital YEAR 2009-10 2008-09 2007-08 2006-07 SALES 1299. This ratio measures the efficiency with which the working capital is being used by the firm. The decrement in ratios is not satisfactory. it should be 1:1.483 in 2009-10. however the ratios 1.985 in 2008-09 and then to 1.737 3.491 .019 4.
how many times on an average.00 STOCK TURNOVER RATIO 10.491 3.e. So we can say that in 2009-10 working capital efficiency is more than the previous year 2008-09. Stock Turnover Ratios This ratios tell the story by which stock is converted into sales.161 4.019 Interpretation :Working capital turnover ratio measures the firm‟s efficiency that how a firm manages and utilize its working capital as we can see from the above calculation of year 2009-10 has a higher working capital turnover ratio which is higher than the previous year 2008-09. Stock or Inventory Turnover Ratio = COGS or Sales _____________________ Average Stock YEAR SALES AVERAGE INVENTORY 122.737 6. The ratio of the company is satisfactory.4.. A high stock turnover ratios reveals the liquidity of the inventory i.57 .65 2009-10 1299. inventory is turned over or sold during the year.
77 6.90 156. As we can see from the graph that in the year 2009-10 ratio is 10. • Debtors Turnover Ratios .78 6.2008-09 2007-08 2006-07 1268.65 : 1 which is higher than all previous years.77 10.09 4.58 137. It is a test of efficient inventory management.34 749.31 932. so we can say that inventory is converted into finished goods highest in this year which indicate the highest efficient use of the inventory.81 7.65 7.55 178. higher ratio shows efficient use of inventory.78 Interpretation :Stock turnover ratio measures how quickly inventory is sold.09 4. To judge whether the ratio of a firm is satisfactory or not.
60 5.60 DEBTOR TURNOVER RATIO 8.52 652.40 162.68 170.79 .82 164.84 524.40 3.23 3.70 887.83 2009-10 2008-09 2007-08 2006-07 909.Debtors Turnover Ratio = Credit Sales ______________ Average Debtor YEAR SALES AVERAGE DEBTORS 105.
A higher ratio is indicator of shorter time lag between credit sales and cash sales.3. work-in-process and finished goods. . Companies in India . Inventory constitute major portion of current asset of public Ltd.231 5.60 Interpretation :The analysis of the debtor‟s turnover ratio supplements the information regarding the liquidity of one item of current asset of the firm. As we can see in the year 2009-10 debtors‟ turnover ratio is highest that is 8. So this ratio is good for the converting credit sales into cash sales for the company.The manufacturing companies hold inventories in the form of Raw material. So we can say that company has not faced problem in collecting the money in this year of 2009-10.83 3.40 8. The ratio measure how rapidly debts are collected.60 : 1 which is higher than 2008-09.
The firm should therefore consider (a) Costs (b) Return (c) Risk • evaluation of inventory management performance: - Ratio analysis has been used for making evaluation of Inventory management performance. (Speculative Motive) Inventories represent investment of a firms funds and that is why management of inventory is necessary for the maximization of the value of the firm. The various figures are given in the table. proper planning and handling is required for the purpose of achieving the right quality of output. INVENTORY MANAGEMENT Rs. The ratios for last four years have been worked out and compared.• There are at least three motives for holding inventories : • • • To facilitate smooth production and sales operation (Transaction motive) To guard against the risk of unpredictable changes in usage rate and delivery time (Precautionary Motive) To take advantage of price fluctuations. As the raw material used in the company is pig iron. In Crore (10 Million) ITEM 2009-10 2008-09 2007-08 2006-07 .
23 178.63 Ratio (%) a) Inventory to Gross Working Capital (1/2) b) Inventory Turnover (3/1) c) Inventory Conversion Period (365/b) days 45 Days 70 Days 113 Days 81 Days 8.38 0.28 994.50 0.36 Interpretation :Inventory conversion period means.15 5.(1) Average Inventory (2) Total Current Assets (3) Cost of Goods Sold 122.23 4.63 927.43 0.00 400.18 3.58 408.15 137.27 620.88 505. It indicates how effectively and efficiently an . time taken to convert raw material into finished goods to goods sold.90 420.30 0.72 156.81 385.
• It is based on economic value. Debtor Collection Period` = (Average Debtors / Credit Sales) * 365 ( = No. 25 days. white the seller expects an equivalent value to be received later on. In other words. It is an essential marketing tool in modern business trade. However when a firm sells goods or services on credit. • Debtors Collection Period : - Indicates the average time taken to collect debts. which the firm is expected to collect in near future. A firm grants credit to its customers so that its sales are its customers so that its sales are not lost to competitors. To the buyer. As we can see from the graph for the year 2008-09 inventory conversion period is 70 days which is highest among the collected data. Here we can see that for the year 2009-10 inventory conversion period is 45 days which is less than the rest of year. which should be carefully analyzed. • It implies futurity. So we can say that they are able to substantially reduce the inventory holding period from 70 to 45 days i. a reducing period of time is an indicator of increasing efficiency. The receivables arising out of credit has three characteristics. Credit creates receivables. Lesser the inventory conversion period more efficient and effective use of inventory. the economic value goods or services pass immediately at the time of sale. It may happen because the average inventory holding period has been decrease and also the cost of goods sold increase. The customers from whom receivables have to collected in future are called debtors and represents the firm‟s claim or asset.inventory is controlled. of days) . When firm sell goods for cash. • It involves an element of risk.e. payments are received immediately and therefore no receivables are created. Account receivable constitutes a significant portion of the total current assets of the business after inventories. payments are received only at a future date and receivables are created.
It is used to measure liquidity of the receivables or to find out period over.57 1268.55 104. A firm sells goods on credit and cash basis.24 29 days 30 days 53 days 41 days Receivable Management . When firm extends credit to its customers. which receivables remain uncollected. Receivable Collection Period = Debtors ---------------------.x 360 Credit sales (assume) Year Sales Debtors Collection Period 2009-10 2008-09 2007-08 2006-07 1299.15 110. book debts are created in firms A/c debtors expected to convert in to cash over short period and thus included in current assets.49 107.87 107.34 749.Credit Sales are all sales made on credit (i. excluding cash sales) .e.31 932.
a longer collection period implies too liberal and inefficient credit collection performance.60 Interpretation :The collection period represents the average number of days for which a firm has to wait before its debtors are converted into cash. It is difficult to provide a standard collection period of debtors. Here we can say that for the year 2009-10 the debtors‟ collection period is quite low as compare to previous years.14 8.41 53 30 29 4. It reduces the chances of bad debts. than this indicates some insufficiency in the procedures for collection debts. So companies‟ management is efficient in collection on cash within their decided well specified period and company has sufficient control over receivable management. . A short collection period implies without delay in payment by debtors. If it is longer than those terms.81 8. Similarly.
without contributing anything towards firm‟s profitability.Cash in the important current assets for the operations of the business. Cash is the basic input needed to keep the business running on continues basis. Thus. The firm should keep sufficient cash. Cash shortage will disrupt the firm‟s manufacturing operation while excessive cash will simply remain idle. neither more or less. Cash management involves following four factors: - . it is also the ultimate output expected to be realized by selling the service or product manufactured by the firm. a major function of the financial managers is to maintain a sound financial position.
37 2008-09 3422.98 8. • • evaluation of cash management performance: The following ratios have been used to evaluate different aspects of cash management.72 145.95 408.53 385. Cash turnover Ratio. In Lac (0. Cash is required to meet a firm‟s transactions and precautionary needs.13 0.15 181.86 1.28 199.67 a) Cash to Current Asset Ratio (1/2) 1. • • Cash to Current Assets Ratio.1 Million) ITEM (1) Cash & Bank Balance (2) Total Current Assets (3) Cash balance ratio 2009-10 793. CASH MANAGEMENT Rs.5 2007-08 349.23 313. It keeps additional funds to meet any emergency situation. A firm needs cash to make payment for acquisition of resources and services for the normal conduct of business. • Controlling cash in flows • Controlling cash outflows • Optimum utilization of surplus cash.25 .58 2006-07 482.81 400.Ascertainment of the minimum cash balance and controlling the levels of cash.17 420. Some firms maintain cash for taking advantages of speculative changes in price of input and output.
It is significant because it is used to pay the firms‟ obligation. • • From the study I come to know there is net decrease in working capital. • WORKING CAPITAL OPERATING CYCLE :- YEAR 2009-10 Raw material conversion period 67 days Work in progress conversion Period Finished goods conversion period Gross Operating cycle 10 days 13 days 16 days 13 days 3 days 4 days 11 days 4 days 2008-09 41 days 2007-08 111 days 2006-07 66 days 109 days 88 days 191 days 125 days . It was observed that sources and application are managed in J K Paper Ltd.b) Cash Turnover in (365/3) days 46 days 65 days 60 days 112 days Interpretation :In current assets cash is the most significant and the least productive asset that a firm holds. Here we can see that the year 2009-10 cash turnover is 46 days which is low as compare to previous year. The company has to extend its creditors credit policy period so they can able to payable the bills.
6 : 1 8.49 : 1 6.68 : 1 3.23 : 1 2006-07 2.Net Operating Cycle 61 days 50 days 105 days 61 days • RATIO ANALYSIS :YEAR 2009-10 Current ratio Net working capital ratio Liquidity ratio Working capital turnover ratio Stock turnover ratio Debtors turnover ratio 2.74 : 1 7.50 : 1 • INVENTORY MANAGEMENT :- YEAR 200910 Inventory Conversion Period 45 days 2008-09 70 days 2007-08 113 days 200607 81 days • RECEIVABLE MANAGEMENT :- YEAR 2009-10 2008-09 2007-08 2006-07 .99 : 1 4.09 : 1 5.78 : 1 1.60 : 1 2008-09 2.52 : 1 1.78 : 1 3.17 : 1 1.48 : 1 6.40 : 1 2007-08 2.17 : 1 1.77 : 1 4.16 : 1 4.21 : 1 1.39 : 1 1.02 : 1 10.41 : 1 1.75 : 1 1.63 : 1 4.
Debtors collection period 29 days 30 days 53 days 41 days • CASH MANAGEMENT :YEAR 2009-10 Cash collection period 46 days 2008-09 65 days 2007-08 60 days 2006-07 112 days From the working capital management.. strongly follows the credit policy and so that they are able to recover their receivable which is good sign. . it can be said that if the ratio is 2 : 1 then the company‟s liquidity position is sound. • From the data available we can see that there is very big fluctuation in net working capital and for that JK Paper Ltd. I have found that it is very difficult task to manage working capital in such big organization. • JK Paper Ltd. • Liquidity position of a company can be ensured by current ratio. have to improve the method of maintaining working capital.. • Inventory conversion period shows a downward trend for year 2009-10 because the average inventory holding period has been decrease and also the cost of goods increase.
while analysis of data from last four financial years. while debtors conversion period and finished goods conversion period is maintain properly. • So that they can increase working capital and get in smooth running of the business. So here company not properly maintaining of raw material conversion period. • After the analysis I have come to the conclusion that the current assets should be managed efficiently.• In case of JK Paper Ltd.. . • Net operating cycle period is increased in the financial year 2009-10. my suggestion are as below :• In case of JK Paper Ltd. it arrived that the company have more than double current assets compare to current liabilities.. After understanding and applying the Working Capital Management theory. they need to change their credit policy because in this case we can see that the average creditors‟ credit period (Bills Payable) is 48 days which they need to negotiate with over creditors‟ to increase the credit period.
. they can shorten collection period. • The Gross working capital is increasing over the years 2009-10 but the major proportion of current assets comprise of inventories. • Here. raw material conversion is increase which should be decreased.. is the company who is producing Board Paper and also has second biggest paper plant in over India. • We can say they have the Monopoly in Board Paper and also they are the market leader in case of paper plant. The company should try to reduce investment in inventory. • So either they can increase the period of creditors‟ credit period or decrease the debtors‟ credit period.• It is possible because JK Paper Ltd.
I can also develop good interpersonal skills and managerial skills.• Where finished goods conversion is decrease which is good sign. • From the above data we can say that there is decrease in net working capital which company has to improve. With the help of this training I can get good exposure of real life situation. • After completing six weeks training I am able to understand and learn different finance strategy. • Here. accounting practices and procedures. • Name of Book Author Publisher . company should increase its credit period by this they can able to pay the bills to their creditors properly.
• Financial Management I.com http://www. M.jkpaper. Pandy Vikash Publication Tata McGrawhill S.google.com . Chand & Publication • Financial Management Khan & Jain • Management Accounting Pillai & Baghavathi • • • Annual Reports of Company http://www.
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