Working Capital Management PROJECT REPORT MBA

WORKING CAPITAL MANAGEMENT OF BAHETY CHEMICALS & MINERALS PVT. LTD., DANDELI.
INDEX TABLE
SL.NO CONTENTS
PAGE NO. 2 TO 6
1 2 "
PART I
EXECUTIVE SUMMARY
PART II
INTRODUCTION TO THE STUDY INDUSTRY PROFILE
TO 1!
PART # III
INTRODUCTION OF COMPANY
1$ TO "$
PART # IV
RESEARCH METHDOLOGY OB%ECTIVES OF THE STUDY
"6 TO "&
6 ( &
PART # V
WORKING CAPITAL MANAGEMENT
!' TO 66
PART # VI
DATA ANALYSIS AND INTERPRETATION
6 TO ($
PART VII
FINDINGS SUGGESTIONS & CONCLUSIONS.
(6 TO (&
ANNEXURE
&' TO &2
FINANCIAL STATEMENT. BIBILOGROPHY.
BABASAB PATIL
-1-
PART # I
EXECUTIVE EXECUTIVESUMMARY SUMMARY
INDUSTRY PROFILE. INDUSTRY PROFILE. COMPANY PROFILE. COMPANY PROFILE. NEED FOR THE STUDY. NEED FOR THE STUDY. OB%ECTIVES OF THE STUDY. OB%ECTIVES OF THE STUDY. SCOPE OF THE STUDY. SCOPE OF THE STUDY. LIMITATIONS OF THE STUDY. LIMITATIONS OF THE STUDY. METHODOLOGY. METHODOLOGY. FINDINGS. FINDINGS. SUGGESTIONS. SUGGESTIONS. CONCLUSION. CONCLUSION.
EXECUTIVE SUMMARY BABASAB PATIL

-2-
T)*+, -. */, 0*1234 5T/, 0*123 -. 6-78)9: ;<=)*<+ ><9<:,>,9*?

As a part of curriculum, every student studying MBA has to undertake a project on a particular subject assigned to him/her Accordingly ! have been assigned the project "ork on the study of "orking capital management in Bahety #hemicals $ Minerals pvt ltd %andeli %ecisions relating to "orking capital &#urrent assets-#urrent liabilities' and short term financing are kno"n as "orking capital management !t involves the relationship bet"een a firm(s short-term assets and its short term liabilities )he goal of "orking capital management is to ensure that the firm is able to continue its operation and that it has sufficient cash flo" to satisfy both maturing short term debt and upcoming operational e*penses +orking capital is used in B#M private ltd , for the follo"ing purpose,-a" material, "ork in progress, finished goods, inventories, sundry debtors, and day to day cash re.uirements )he B#M private ltd , keep certain funds "hich is automatically available to finance the current assets re.uirements )he various information regarding /+orking #apital Management0 such as classification, determinants, sources have been discussed relating to B#M private ltd , -atio Analysis has been #arried out using 1inancial !nformation for last five accounting years i e from 2223 to 2212 -atios like +orking capital )urnover -atio, 4uick -atio, #urrent -atio, !nventory )urnover -atio, %ebtor )urnover -atio, #reditors turnover rario have also been analy5ed analy5ed At B#M private ltd , the "orking capital management has sho"n increase in the period of study )his sho"s "orking capital is managed effectively and all the other departments are "orking in perfect co-ordination to ensure the progress of B#M private ltd , but ! have given some 6uggestions $ #onclusions on the basis of my 7roject 6tudy INDUSTRIAL PROFILE A 6tatement of #hanges in +orking #apital has also been
BABASAB PATIL
-8-
)he chemical industry is one of the oldest domestic industries in !ndia, contributing significantly to both the industrial and economic gro"th of the country since it achieved independence in 19:; )he chemical industry currently produces nearly ;2,222 commercial products, )he industry covers a large spectrum of categories including inorganic and organic chemicals, drugs and pharmaceuticals, plastics and petrochemicals, dyes and pigments, fine and specialty chemicals, pesticides and agrochemicals and fertili5ers COMPANY PROFILE Bahety chemicals and Minerals &7vt' <imited is a small-scale industry )he company purchased and constructed building in the year 1998 !t started production in the year 1993 !ts main product is Aluminium 6ulphate !t is a private company situated in the !ndustrial estate, Ambe"adi =n the outskirts of %andeli city "hich is enjoying all the re.uired facilities like "ater, po"er, transport, labors and good environment and materials NEED FOR THE STUDY )he study has been conducted for gaining practical kno"ledge about +orking #apital Management $ activities of Bahety #hemicals $ Minerals pvt ltd , )he study is undertaken as a part of the MBA curriculum from 21 >une 2212 to 81st >uly 2212 in the form of summer in plant training for the fulfillment of the re.uirement of MBA degree OB%ECTIVES OF THE STUDY )o study the sources and uses of the "orking capital )o study the li.uidity position through various "orking capital related ratios )o study the "orking capital components such as receivables accounts, #ash management, !nventory management )o make suggestions based on the finding of the study SCOPE OF THE STUDY
BABASAB PATIL
-:-
)he scope of the study is identified after and during the study is conducted )he main scope of the study "as to put into practical the theoretical aspect of the study into real life "ork e*perience )he study of "orking capital is based on tools like -atio Analysis,
6tatement of changes in "orking capital 1urther the study is based on last ? years Annual -eports of Bahety #hemicals $ minerals pvt ltd
LIMITATIONS OF THE STUDY )he study duration &summer in plant' is short )he analysis is limited to just five years of data study &from year 2223 to year 2212' for financial analysis <imited interaction "ith the concerned heads due to their busy schedule )he findings of the study are based on the information retrieved by the selected unit
METHDOLOGY !n preparing of this project the information collected from the follo"ing sources P7)><73 2<*<4 )he 7rimary data has been collected from 7ersonal !nteraction "ith 1inance manager i e , Mr Mahesh @adkarni and other staff members S,;-92<73 2<*<4 )he major source of data for this project "as collected through annual reports, profit and loss account of ? year period from 2223-2212 $ some more information collected from internet and te*t sources SAMPLING DESIGN 2 1 2 T--+0 U0,24 M6-A*cel has been used for calculations 6ampling unit 6ampling 6i5e , 1inancial 6tatements , <ast five years financial statements
BABASAB PATIL
-?-
FINDINGS4
+orking capital of the Bahety #hemicals $ Minerals 7vt <td "as increasing and sho"ing positive "orking capital per year )he Bahety #hemicals $ Minerals 7vt <td has higher current and .uick ratios are i e , 2 B; and 2 82 respectively 6o the company(s li.uidity position is good !t sho"s that it is able to meet its current obligations SUGGESTIONS +orking capital of the company has increasing every year 7rofit also increasing every year this is good sign for the company !t has to maintain it further, to run the business long term )he #urrent and .uick ratios are almost up to the standard re.uirement 6o the +orking capital management Bahety #hemicals $ Minerals 7vt <td is satisfactory and it has to maintain it further
CONCLUSION4
)he study on "orking capital management conducted in Bahety #hemicals $ Minerals 7vt <td to analy5e the financial position of the company )he company(s financial position is analy5ed by using the tool of annual reports from 222?-23 to 222912 )he financial status of Bahety #hemicals $ Minerals 7vt <td is good !n the last year the inventory turnover has increased, this is good sign for the company =n the "hole, the company is moving for"ard "ith e*cellent management
BABASAB PATIL
-3-
PART # II
INTRODUCTION INTRODUCTIONTO TOTHE THESTUDY STUDY
INDUSTRY INDUSTRYPROFILE PROFILE
BABASAB PATIL
-;-
INTRODUCTION TO THE STUDY

BACKGROUND OF STUDY C#ash is the lifeblood of businessC is an often repeated ma*im amongst financial managers +orking capital management refers to the management of current or short-term assets and short-term liabilities #omponents of short-term assets include inventories, loans and advances, debtors, investments and cash and bank balances 6hortterm liabilities include creditors, trade advances, borro"ings and provisions )he major emphasis is, ho"ever, on short-term assets, since short-term liabilities arise in the conte*t of short-term assets !t is important that companies minimi5e risk by prudent "orking capital management STATEMENT OF THE PROBLEM )his project deals "ith the study about /+orking #apital Management0 in BAHETY CHEMICALS AND MINERALS PVT. LTD
IMPORTANCE OF THE STUDY )here are numerous aspects of "orking capital management that makes it an important topic for the study )he management of assets in any organi5ation is an essential part of overall management )he enterprise, at the time of formation attaches great importance to fi*ed assets management, as a part of investment decision-making Do"ever, in the overall day-to-day financial management, after the initial investment, the management gives more importance to managing "orking capital !f "e look at any financial statement it "ill be evident that the investment in fi*ed assets remains more or less static but the "orking capital is constantly changing A healthy "orking capital position is the sine.ua-non of a successful business )his is reflected in ade.uate inventories, lo"est level of debtors, minimum utili5ation of bank facilities for "orking capital, etc thus the study of "orking capital management occupies an important place in financial management
BABASAB PATIL
-B-
INDUSTRIAL PROFILE HISTORY

)he chemical industry is one of the oldest domestic industries in !ndia, contributing significantly to both the industrial and economic gro"th of the country since it achieved independence in 19:; )he chemical industry currently produces nearly ;2,222 commercial products, ranging from cosmetics and toiletries, to plastics and pesticides
)he "ide and diverse spectrum of products can be broken do"n into a number of categories, including inorganic and organic &commodity' chemicals, drugs and pharmaceuticals, plastics and petrochemicals, dyes and pigments, fine and specialty chemicals, pesticides and agrochemicals, and fertili5ers )he !ndian pesticide industry has advanced significantly in recent years, producing more than 1,222 tons of pesticides annually !ndia is the 18th largest e*porter of pesticides and disinfectants in the "orld, and in terms of volume, is the 12th largest producer of chemicals )he !ndian agrochemical, petrochemical, and pharmaceutical industries are some of the fastest gro"ing sectors in the economy +ith an estimated "orth of E2B billion, it accounts for 12 ? percent of the countryFs total industrial production and 13 2 percent of the total e*ports from the !ndian manufacturing sector Daving a strong focus on moderni5ation, the !ndian government actively promotes the advancement of the domestic chemical industry 7olicy, planning, development, and regulation of the industry is all coordinated by the %epartment of #hemicals and 7etrochemicals, "hich has been part of the Ministry of #hemicals and 1ertili5ers since 1991 6everal organi5ations in the private sector are "orking to"ards gro"th of the industry and the e*port of !ndian chemicals Among these are the !ndian #hemical Manufacturers Association, the #hemicals and 7etrochemicals Manufacturers Association, and the 7esticides Manufacturers and 1ormulators Association of !ndia
BABASAB PATIL
-9-
INDIAN CHEMICAL INDUSTRY SCENARIO #hemical !ndustry is one of the oldest industries in !ndia, "hich contributes significantly to"ards industrial and economic gro"th of the nation !t is highly science based and provides valuable chemicals for various end products such as te*tiles, paper, paints and varnishes, leather etc , "hich are re.uired in almost all "alks of life )he !ndian #hemical !ndustry forms the backbone of the industrial and agricultural development of !ndia and provides building blocks for do"nstream industries #hemical !ndustry is an important constituent of the !ndian economy !ts si5e is estimated at around G6E 8? billion appro* , "hich is e.uivalent to about 8H of !ndiaFs I%7 )he total investment in !ndian #hemical 6ector is appro* G6E 32 billion and total employment generated is about 1 million )he !ndian #hemical sector accounts for 18-1:H of total e*ports and B-9H of total imports of the country !n terms of volume, it is 12th largest in the "orld and 8rd largest in Asia #urrently, per capita consumption of products of chemical industry in !ndia is about 1/12th of the "orld average =ver the last decade, the !ndian #hemical industry has evolved from being a basic chemical producer to becoming an innovative industry +ith investments in -$%, the industry is registering 6ignificant gro"th in the kno"ledge sector comprising of specialty chemicals, fine #hemicals and pharmaceuticals )he !ndian #hemical Market 6egment "ise is as under, SEGMENT Basic #hemicals 6pecialty #hemicals Digh And / Jno"ledge 6egment TOTAL MARKET VALUE @BILLION US AB 22 9 3 8?
CHEMICAL INDUSTRY STRUCTURE

Dighly fragmented and "idely dispersed +estern !ndia accounts for :?-?2H of total !ndian chemical !ndustry <arge players in bulk chemicals Both large and small players in 1ine and 6pecialty #hemicals 7resence of many multinational companies also
BABASAB PATIL
- 12 -
FOREIGN TRADE
!ndia "as a net importer of chemicals in early 1992s, but has no" become a net e*porter due to reduction in !mports because of implementation of many large scale petrochemical plants like -eliance etc and also because of tremendous gro"th of e*ports in sectors like bulk drugs and pharma, pesticides, dyes and intermediates B<0); C/,>);<+0 EC=-7* 2)2 ,C;,,2)9:+3 6,++...
A*ports by the basic chemical sector in 199?-93 surpassed the target of -s 3,;:2 crore by reaching a figure of -s ;,9;9 82 crores and sho"ing a massive gro"th of 2:H over the preceding yearFs figure of -s 3,:28 92 crores %uring 199:-9? e*ports totaled -s 3,:28 92 crores against the target of -s ?,?2: 32 crores, "hile in the preceding year shipments reached -s :,92: :2 crores against the target of -s :,?B: 22 crore
)he drugs and pharmaceuticals and the organic/inorganic/agro-chemicals contributed as much as 38H of total e*ports )his has been a herculean task, "hich has been achieved by competing "ith big multinational corporations of the "orld )urnover for the year ended 199B-99 is close to -s 1?, 222 crores
)he "ebsite carries detailed information regarding different varieties of chemical and terminology of chemical such as #hemical 7rocessing, #hemical !ndustry, #hemical )echnology, #hemical Association, #hemical Angineering, #hemical @e"s etc 6uch information "ill enable you to properly assess the usage of different chemicals in safe $ secure manner )he voluminous kno"ledge about chemical related issues can be easily and instantly obtained from this "ebsite
BABASAB PATIL
- 11 -
LISTS OF CHEMICAL INDUSTRIES

22 Microns <td AB- =rganics Aimco 7esticides Alkyl Amines #hemicals <td Allied -esins $ #hemicals <td s Alpanil !ndustries #hemplast 6anmar Iala*y 6urfactants Iulshan 7olyols Dindustan !nsecticides <imited !ndo Ierman #arbons >ainco !nks $ #hemicals >yoti #hemical
CHEMICAL INFORMATION )he "ebsite carries detailed information regarding different varieties of chemical and terminology of chemical such as #hemical 7rocessing, #hemical !ndustry, #hemical )echnology, #hemical Association, #hemical Angineering, #hemical @e"s etc 6uch information "ill enable you to properly assess the usage of different chemicals in safe $ secure manner )he voluminous kno"ledge about chemical related issues can be easily and instantly obtained from this "ebsite CHEMICAL COMPOUNDS #hemical compound is formed by combination of t"o or more elements into one substance form !n a chemical compound atoms of its constituent elements are bonded together in molecules Millions of chemical compounds can be made by combining the roughly 122 chemicals )he ratio determining the composition of chemical compound remains fi*ed )he ratio of each element in a chemical compound is generally e*pressed by chemical formula like,
BABASAB PATIL
- 12 -
"ater "hich is represented by chemical formula D2= is a chemical compound consisting of t"o hydrogen #hemical compounds are further divided into subcategories )hose chemical compounds "hich are based on carbon and hydrogen atoms are called organic compounds and other chemical compounds "hich are based on elements other than carbon and hydrogen are called inorganic compounds Another form of chemical compound "hich contain bond bet"een carbon and metal are called organ metallic compound. #hemical compounds in "hich components share electrons are kno"n as covalent compounds "hereas compounds consisting of oppositely charged ions are kno"n as iconic chemical )alking about property of chemical compounds, a chemical compound may have several possible phases At lo" enough temperatures all compounds can e*ist as solids 6ome chemical compounds may also e*ist as li.uids, gases, and even plasmas Avery kno"n chemical compound decompose "hen heat is applied !ndian chemicals industry during 222?-23 "as G6E82 ?9 billion, a gro"th of 12 28Hover the previous year and a #AI- of B 3BH during the last 8 years #hemical industry occupies an important place in the country(s economy %uring 222?-23 contributed about 8H of I%7 and 1; 3H of the manufacturing sector Do"ever, !ndia continued to be a net importer in 222?-23, "ith imports of G6E; 92 billion and e*ports of E9 ? billion the post +)= era, !ndian chemical industry is undergoing a massive e*pansion, brand building and increased global reach )he industry is e*pected to gro" at a#AI- of over 12H for the ne*t 8 years, in line "ith the gro"th of manufacturing industry )he "ide and diverse spectrum of chemical products can be broken do"n into number of categories - inorganic and organic &commodity' chemicals, drugs and pharmaceuticals, plastics an petrochemicals, dyes and pigments, fine and specialty chemicals, pesticides and agrochemicals and fertili5ers )his report covers all the segments e*cept petrochemicals, drugs and pharmaceuticals )he report covers overall industry scenario in the conte*t of global chemicals industry, various segments, gro"th drivers, critical success factors, issues and challenges and future outlook for the industry )he report also profiles the major 1;companies in the !ndian industry &11 !ndian companies and 3 M@#s' )he report is useful for industry analysts, banks and financial institutions, investors, consultants, corporate engaged directly or indirectly in the chemicals industry and international readers "ho "ant to keep abreast of the !ndian manufacturing sectors
BABASAB PATIL
- 18 -
ORGANIC CHEMICALS
=rganic chemicals are compounds that are formed from the t"o basic building blocks of carbon and hydrogen !t is one of the most important sectors of the chemical industry, providing the basic feedstock for a variety of other industrial sectors such as drugs and pharmaceuticals, dyes and dye intermediates, leather chemicals, paints and pesticides As in the case of most of the other chemical sectors, the domestic industry is a late starter, "ith the pioneers in the field being the @ational =rganic #hemical !ndustries <imited &@ocil' and Dindustan =rganic #hemicals <imited &Docl' )he !ndian industry has traditionally used the alcohol route for the manufacture of many organic chemicals, but is no" shifting over to the globally accepted petrochemical route, "ith the alignment of petrochemical feedstock prices "ith the international levels )he industry is valued at around G6E : ? billion &1999-22' )he oil crisis of the 19;2s sa" a shift to process-oriented research in the global economies After a fall in the 19B2s, the last decade of the century has rekindled interest in the industry and has seen the emergence of Asia as a po"er to reckon in the industry )he !ndian industry ho"ever sa" a spurt in gro"th in the 19B2s, "hich "as sustained in the last decade )he industry is today valued at G6E 1 1 billion and has emerged as a key player in the Asia 7acific region A fe" large companies "ith a "ide range of products dominate the industry )he industry is highly fragmented, there being more than 12,222 manufacturing units in total SPECIALITY CHEMICALS 6pecialty chemicals are those that are customi5ed to perform specific functions, applications and operating conditions 6peciality #hemicals are high priced, lo" volume chemicals used for specific applications by various industries Main specialty chemicals are rubber chemicals, "ater treatment chemicals, polymer additives, lubricating additives, specialty pigments etc )hese chemicals are mainly based on organic chemicals Ilobally the contribution of specialty chemicals is up to 2?H of the chemical sector i e it is appro*imately "orth G6E :?8 billion )he average annual gro"th !s e*pected to be ; ?H !n !ndia, the capacity of speciality chemical is ?2;2 )housand M)s and production is appro* 8392 thousand M)s
BABASAB PATIL
- 1: -
PART # III
INTRODUCTION INTRODUCTIONOF OFCOMPANY COMPANY

COMPANY PROFILE. COMPANY PROFILE. VISION AND MISSION. VISION AND MISSION. BOARD OF DIRECORS. BOARD OF DIRECORS. OB%ECTIVES OF BCM.PVT.LTD. OB%ECTIVES OF BCM.PVT.LTD. PRODUCT PROFILE OF BCM.PVT.LTD. PRODUCT PROFILE OF BCM.PVT.LTD. EXPANSION AND DIVERSIFICATION. EXPANSION AND DIVERSIFICATION. SWOT ANALYSIS OF BCM.PVT.LTD SWOT ANALYSIS OF BCM.PVT.LTD ORGANIDATION STRUCTURE. ORGANIDATION STRUCTURE. DEPARTMENTAL STUDIES. DEPARTMENTAL STUDIES.
BABASAB PATIL
- 1? -
INTRODUCTION OF THE COMPANY
COMPANY PROFILE HISTORY OF THE COMPANY

Bahety chemicals and Minerals &7vt' <imited is a small-scale industry )he company purchased and constructed building in the year 1998 !t started production in the year 1993 !t is a private company situated in the !ndustrial estate, Ambe"adi =n the outskirts of %andeli city "hich is enjoying all the re.uired facilities like "ater, po"er, transport, labors and good environment and materials )he company is achieving its sales target "ith some ups and do"ns )he company has been receiving good response from customers and e*pected to achieve better sales in coming years )he #ompany has its nature of business )he company has not accepted any deposits from public as per the provisions of section ?BA of the company Act, 19?3
BABASAB PATIL
- 13 -
PROFILE OF BAHETY CHEMICALS AND MINERALS PVT. LTD
BABASAB PATIL
- 1; -
N<>, -. */, ;->=<93 Y,<7 -. ,0*<E+)0/>,9* C/<)7><9 T3=, -. ;->=<93 A7,< -. -=,7<*)-9
BAHETY CHEMICALS AND MINERALS PVT.LTD, DANDELI $(1"2$. 1998 6hri #handrashekhar > Bahety 7rivate <imited Bahety #hemicals and Minerals &7vt' <td , # K 1, !ndustrial Astate, Ambe"adi, %andeli K ?B182? %ist, Jar"ar & u k ', Jarnataka 6tate )el,-2B2B: - 2828:2
N<*17, -. B10)9,00 EC=-7* =+<;,0
7roduction and 6ale of Alumina 6ulphate &Alum' %andeli, Darihar, Ioa, Dyderbad, Dubli, %har"ad, Banglore, @agpur, Belgaum 3 L6i*M %epartments
N-. -. 2,=<7*>,9*0
N1>E,7 -. ,>=+-3,,0
12;
N1>E,7 -. 6-78)9: 2<30 3 days in a "eek
P7-21;*)-9 ;<=<;)*3 S*-7<:, C<=<;)*3
B22 M) of Aluminium sulphate &Alum' per month as per the 2229-2212 report 1222 Metric )=@
BABASAB PATIL
- 1B -
CAPITAL STRUCTURE OF BCM.CO.LTD
SHARE CAPITAL4# 1 2 Authori5ed capital -s 12,22,222 12,222 e.uity shares of -s 122 each 6ubscribed/ paid-up share capital -s 12,22,222 12,222 e.uity shares of -s 122 each
BORROWED FUND,)he #ompany has taken long term loans from #orporation Bank %andeli !t has also taken unsecured loans from its joint associate 6hri -aghavendra #hemicals )he company has also received government subsidy of 2?H on capital investments
TABLE SHOWING THE LONG TERM LOANS TAKEN BY BCM.CO.LTD L-<9 Y,<7 222? -2223 2223 - 222; 222; - 222B 222B - 2229 2229 - 2212 S,;17,2 L-<9 2219213 22 83?1?99 22 8;:2832 22 228BB:? 22 2?;:3;2 22 U90,;17,2 L-<9 ?39;8: 22 11?222 22 233:222 22 23?1:;1 22 82:9192 22
INVESTMENT IN FIXED ASSETS IS SOWN BELOW

SL.NO
F)C,2 A00,*0
T-*<+ I9F,0*>,9* @R0.B
BABASAB PATIL
- 19 -
1 2 8
<and and Building Machinery Adjacent Building
82,22,222 22 12,22,222 22 1?,22,222 22
VISION AND MISSION OF BCM .CO.LTD

5VISION?
/)o fulfill the gro"ing demand of Alum and increasing the production0
5MISSION? 1 2 8 : ? 3 )o provide employment 4uality product, Ma*imum satisfaction to customers )o ensure enterprise gro"th )o create clean and healthy environment )o develop the establishing the organi5ation in the city
COMPANY OWNERSHIP
SHARE HOLDERS
BABASAB PATIL
- 22 -
6hri #handrashekhar > Bahety 6hri >a"aharlal Bahety 6hri 7ritvipal Bahety 6hri Badal Jumar Bahety 6mt <a*mi Bahety BOARD OF DIRECTORS 6hri #handrashekhar Bahety 6hri >a"aharlal > Bahety MANAGING DIRECTOR 6hri #handrashekhar Bahety STAFF
@AMA6 Mr Mahesh @adkarni Mr N - %eshpande Mr -ajendra Mahalkar Mr @eil Mr 7atil %A6!I@A)!=@ 1inance Manager Administrative Manager 7roduction Manager 7urchase Manager <aboratory !n-charge
N-*,4 Marketing %epartment is handled by M% OB%ECTIVES OF BCM.CO.LTD )o e*pand their market into other states )o moderni5e the organi5ation by using the hi-tech machines in the production process )o increase the productivity )o produce chemical into different area )o kno" the customer attitude to"ards alum #hemical
PRODUCT PROFILE4#
)he B#M #ompany is engaged in the production of Alum &Aluminium sulphate'
BABASAB PATIL
- 21 -
Alum is used in "ater treatment as mordant in dyeing Aluminium sulphate mainly used in paper si5ing and in "ater treatment 7harmaceutically, it is employed in dilute solution as a mild astringent and antiseptic for the skin 6oda alum or aluminium sulphate is used in some baking po"ders Aluminium sulphate is kno"n more as alum !t is a colourless solid, "hich is soluble in "ater but insoluble in alcohol
MA%OR PRODUCTS OF THE COMPANY Ni5 ferric alum Ni5 ferric li.uid alum @on K ferric alum
A+1>)9)1>#S1+=/<*, F,77);#A+1>
USES4 !ndustrial "aste"ater treatment Municipal "aste"ater treatment #larification and phosphorus removal 7otable and process "ater treatment #olor and turbidity removal 7ulp and paper mills, 7aper si5ing, 6oap manufacturers, Manufacture of glycerin from soap lyes 6"imming pools, oil "ell operators
BABASAB PATIL
- 22 -
A+1>)9)1>#S1+=/<*, F,77); # +)G1)2 # A+1>
USE4 %yeing and purification, +ater treatment
A+1>)9)1>#S1+=/<*, N-9#F,77);#A+1>
USES4 Gsed for dyeing and purification Gsed in the pulp $ paper industry Gsed in +ater and +aste "ater )reatment 7lants
BABASAB PATIL
- 28 -
EXPANSION AND DIVERSIFICATION

A*pansion of the company is under progress )he company is planning to produce alum ferric solid through conventional process, Boiler evaporation of "ater from li.uid alum Astimated investment in e*pansion process is -s 2; <acks )he funds re.uired for e*pansion is borro"ed from bank through term loans A*pansion of the company is likely to give 12 K 12 employment opportunities )he company is also planning to diversify !t is planning to manufacture crystal alum for "hich the market is better 6"imming pools are one of the markets for crystal alum ?2H of the diversification process is already developed )he estimated investment re.uired starting up producing crystal alum is -s 8 <acks
INFRASTRUCTURE FACILITIES PROVIDED BY BCM.CO.LTD4

WELFARE FACILITIES4 )he "orkers in Bahety #hemicals and Minerals are given some facilities for their Betterment and comfort 1. WASHING RESTING FACILITIES4 1acility for "ashing, storing, drying materials, resting first aid facilities have been provided inside the factory for the benefits of "orkers on duty 2. DRINKING WATER4 )he company has made provision of clean, drinking "ater providing to the "orkers during the "orking hours )here are drinking taps and coolers placed in every department ". SHELTER AND LUNCHROOM4 After the "orking hours to take rest rooms have been made by the company and to have food in lunchtime !. CANTEEN4 #anteen is also provided to the "orkers !t runs on /no profit and no loss basis0 $. PARKING FACILITIES4 As the ra" materials are brought in <orries, there is a proper facility to park them and unload them
BABASAB PATIL
- 2: -
SWOT ANALYSIS OF BAHETY CHEMICALS & MINERALS PVT.LTD.
STRENTHS 1 2 8 : Availability of manpo"er Digh .uality product <o" price high .uality Availability of ra" materials
WEAKNESS 1 2 Deavy transport charges Major consumption in paper industries but limited paper industries in
Jarnataka
OPPORTUNITIES 1 2 8 : ? )echnological up gradation 1oreign market e*pansion =nline ordering process 7roduct e*pansion Market e*pansion
THREATS 1 2 Antry of competitors 7roduct substitution
BABASAB PATIL
- 2? -
ORGANISATION STRUCTURE
MA@AI!@I %!-A#)=-
7G-#DA6A %A7)
<AB=-A)=-O %A7)
A%M!@!6)-A)!= @ %A7)
1!@A@#A %A7)
MA-JA)!@I %A7)
Manager
<aboratory !n-charge
7-=%G#)!=@ %A7)
Manager
Manager Manager
BABASAB PATIL
- 23 -
DEPARTMENTAL STUDIES OF BCM. CO.LTD

PURCHASE DEPARTMENT. LABORATORY DEPARTMENT. ADMINISTRATION DEPARTMENT. PRODUCTION DEPARTMENT. FINANCE DEPARTMENT. MARKETING DEPARTMENT.
PURCHASE DEPARTMENT4 )he purchase officers and assistance head the purchase department )he clearly take the re.uisition from various departments and for"ard to the purchase offices and then the purchase officer arranges to the purchase re.uired materials from the best seller available in the market )he purchase department plays a very important role in the company "here the dealing made bet"een the purchase officers and sellers is convenient then it can be help in reduction of the price of the materials and their by "hich "ill also result in increase of profit
FUNCTIONS 7urchase the good .uality materials Dave a better dealing at present and future "ith the supplier 7urchase only and re.uired materials
BABASAB PATIL
- 2; -
THE IMPORTANT SUPPLIERS OF BAHETY CHEMICALS & MINERALS PVT.LTD. TABLE SHOWING SUPPLIERS RAW MATERIALS. SL.NO 1 2 " ! $ 6
SUPPLIERS ABD!)A> !@%G6)-!A6 D!@%A<#= !@%G6)-!A6 A#!% 7<G6 A%NA@#A 6G-1A#)A@#A !@%!A <!M!)A% AG-A=<A #DAM!#A< BA<A>! !@%G6)-!A6 BA<IAGM M!@A-A<6
LOCATION J=<DA7GBA<IAGM BA@IA<=-A BA@IA<=-A MA@IA<=-A J=<DA7GBA<IAGM 6A)A-A IG>-A) 6A@I<! %DA-+A% !#DA<JA-A@>! J=<DA7G-
( & 1' 11 12 1"
BA-A) #DAM!#A< #A-B=-A@%AM G@!NA-6A< <)% #DAMA#D #=-7=-A)!=@ %AA7AJ @!)-A)A AP#A< )-A%A-6 1A-MA- B-=)DA-6
LABORATORY DEPARTMENT4 <aboratory is also one of the important department here because this department is used for testing the ra" materials and the finished goods for their .uality )here is a lab incharge that looks after all the functions of the laboratory <ab incharge has certain other "orkers under him "ho help him in e*ecuting his functions
BABASAB PATIL
- 2B -
PRODUCTION DEPARTMENT4
)he 7roduction department is one of the important department in the company !t is the department that produces the product on "hich the company is established 6pecial care is taken in this department on production <ist of critical ra" materials presently in the production of Alum RAW MATERIALS USED4
A<GM!@A =- A<GM!@A DO%-A)A A<GM!@A 6<G%IA BAGP!)A 6G<7DG-!# A#!% 67A@) 6G<7DG-!# A#!% +A)A-
PRODUCTS PRODUCED4 )he company is engaged in the production of three types of Alum they are 1 Ni5 ferric alum 2 Ni5 li.uid ferric alum 8 @on K ferric alum
PRODUCTION PROCESS OF FERRIC ALUM

6pent 6ulphuric Acid is led into -eactor through service tank Measured .uantity of Alumina sludge and "ater is slo"ly added into the reactor +hen the complete ra"
BABASAB PATIL
- 29 -
materials are together, e*othermic reaction takes place &<ot of steam and heat is evolved in the process' After about an hour time viscous 1erric Alum !s ready in the reactor )he viscous 1erric Alum is discharged through the outlet of the reactor through hose pipe into M6 moulds and it is left for 1 to 2 hour(s time for solidification 1erric Alum is either sold in blocks form or broken into pieces and bagged as per re.uirement of the customers WORKFLOW MODEL4#
SPENT SULPHURIC ACID STORAGE TANK.
ALUMINA SLUDGE
WATER SERVICE TANK.
REACTOR.
A*othermic reaction
Avolvement of heat and 6team
FERRIC ALUM
PRODUCTION PROCESS OF LIHUID FERRIC ALUM

6pent 6ulphuric Acid is led into -eactor through service tank Measured .uantity of
Bo*ite and "ater is slo"ly added into the reactor +hen the complete ra" materials are
BABASAB PATIL
- 82 -
together, e*othermic reaction takes place &<ot of steam and heat is evolved in the process' After about an hour time viscous <i.uid 1erric Alum !s ready in the reactor )he viscous <i.uid 1erric Alum is discharged through the outlet of the reactor through hose pipe into tank <i.uid 1erric Alum is sold in tank form to the customers WORKFLOW MODEL4#
SPENT SUPHURIC ACID STORAGE TANK. BAUXITE
WATER SERVICE TANK.
REACTOR.
A*othermic reaction
LIHUID FERRIC ALUM
PRODUCTION PROCESS OF NON#FERRIC ALUM

6ulphuric Acid is led into -eactor through service tank Measured .uantity of Alumina hydrate and "ater is slo"ly added into the reactor +hen the complete ra"
BABASAB PATIL
- 81 -
materials are together, e*othermic reaction takes place &<ot of steam and heat is evolved in the process' After about an hour time viscous @on-ferric Alum !s ready in the reactor )he viscous @on-ferric Alum is discharged through the outlet of the reactor through hose pipe into Aluminium moulds and it is left for 1 to 2 hour(s time for solidification @on-ferric Alum is either sold in blocks form or broken into pieces and bagged as per re.uirement of the customers WORKFLOW MODEL4#
SULPHURIC ACID STORAGE TANK.
ALUMINA HYDRATE
WATER SERVICE TANK.
REACTOR.
A*othermic reaction
NON#FERRIC ALUM
ADMINISTRATION DEPARTMENT4 Administration %epartment takes care of the "hole activities happening in and
around the company )he personal manager heads the department and personal managers
BABASAB PATIL
- 82 -
is responsible for the man po"er in the "hole factory 7ersonal Manager is concerned "ith the most efficient use of people to achieve organi5ation and individual goals !t is the "ay of managing people at "ork so that they give the best to the organi5ation Administration department also takes care of the planning, organi5ing, directing, controlling, procuring and developing and integrating of the company and human resources to the end !t also looks after the financial matters of the company FUNCTIONS4 Maintenance of files, records etc , #ollecting and presenting the data in the form of useful information from the records Maintenance of time management in the company !nsuring smooth running of the office files by interacting "ith e*ternal agendas as re.uired Iood relation bet"een the employer and employee Maintaining the financial matters of the company Iood relations "ith supplier and customers Maintenance of salary, "ages records Jeeping all the records of all the departments FINANCE DEPARTMENT4 1inance is an essential component of the business to maintain its operations effectively )his dept is concerned "ith day-to-day activities like purchases, sales salary etc and proper management and maintenance of accounts of concerned year 6ince B#M is the small scale industry it maintains very good accounting system, )he "hole financial matter is mainly dealt by the separate dept called finance dept )he Major sources of finance are, 1 2 6hares & A.uity 6hares' <oan from corporation banks
FUNCTIONS4
BABASAB PATIL
- 88 -
-ecording day to day transactions in a systematic manner Maintaining proper accounts of purchases and sales Maintaining profit $ loss A/c and 7reparing the Balance sheet of B#M systematically 7aying the interest on loans at right time Maintain $ paying the ta*(s $ insurance Make use of available finance resources properly Maintain li.uidity of assets properly to earn the ma*imum profit
MARKETING DEPARTMENT4 Marketing %epartment is also a one of the important department in the company )his department is important because it gives a clear picture of ho" much to produceQ +hich "ill also help in the investment to he made and to purchase department to purchase ra" materials )he marketing department has a procedure, by "hich it is done i e , fit receives the order from the buyers and for"ards the order to the production department and as per the order production department produces the re.uired production and it makes the packing of materials and sends it to the buyers as per the order Marketing department also take care of the time given to it by the buyer to produce the product !f there is any default in the order such as product not as per order or not at time or minimum product supplied the party "ill send back the sample to the organi5ation and the organi5ation gives certain percentage of discount for the default but no replacement is made
BABASAB PATIL
- 8: -
THE SOME OF THE IMPORTANT CUSTOMERS OF THE BAHETY CHEMICALS AND MINERALS PVT. LTD., ARE4# TABLE SHOWING CUSROMERS
SL.NO
1 2 " ! $ 6
CUSTOMERS
+A6) #=A6) 7A7A- M!<<6 <!M!)A% I-A6!M !@%G6)-!A6 <)% RGA-! !@%G6)-!A6 <)% BA<J-!6D@A DA-!J-!6D@A JA-+A JA-ANAA-A BA%D-A )-A%A-6 J!) <AB MADA@%-A #DAM!#A<6
LOCATION
%A@%A<! DA-!DAI=A DO%A-BA% DGB<! %DA-+A% BA@I<=-A JA!IA BA@I<=-A %A@%A<! @AI7GBA<IAGM
( & 1' 11 12
@G#<AA- 7=+A- #=-7=-A)!=@ 6AMA- #DAM!#A<6 6D-AOA6 7A7A- M!<<6 N!##= <AB=-A)=-!A6 6D-! <APM! !@%G6)-!A6
BABASAB PATIL PART # IV - 8? -
RESEARCH RESEARCHMETHDOLOGY. METHDOLOGY.

SCOPE OF THE STUDY. SCOPE OF THE STUDY. OB%ECTIVES OF THE STUDY. OB%ECTIVES OF THE STUDY. METHDOLOGY. METHDOLOGY.
SCOPE OF THE STUDY

)he scope of the study is identified after and during the study is conducted )he main scope of the study "as to put into practical the theoretical aspect of the study into real life "ork e*perience )he study of "orking capital is based on tools like -atio Analysis,
6tatement of changes in "orking capital 1urther the study is based on last ? years Annual -eports of Bahety #hemicals $ minerals pvt ltd
BABASAB PATIL
- 83 -
OB%ECTIVES OF THE STUDY
)o study the sources and uses of the "orking capital
)o study the li.uidity position through various "orking capital related ratios
)o study the "orking capital components such as receivables accounts, #ash management, !nventory management
)o make suggestions based on the finding of the study
RESEARCH METHDOLOGY
INTRODUCTION4 -esearch methodology is a "ay to systematically solve the research problem !t May be understood as a science of studying no" research is done systematically !n that various steps, those are generally adopted by a researcher in studying his problem along "ith the logic behind them
BABASAB PATIL
- 8; -
/)he procedures by "hich researcher go about their "ork of describing, e*plaining and predicting phenomenon are called methodology0 TYPE OF RESEARCH4 )his project 5A S*123 -9 W-78)9: C<=)*<+ M<9<:,>,9* -. B</,*3 ;/,>);<+0 & >)9,7<+0 P7)F<*, L*2? is considered as an analytical research Analytical -esearch is defined as the research in "hich, researcher has to use facts or information already available, and analy5e these to make a critical evaluation of the facts, figures, data or material
SOURCE OF RESEARCH DATA4 )here are mainly t"o through "hich the data re.uired for the research is collected PRIMARY DATA4 )he primary data is that data "hich is collected fresh or first hand, and for first time "hich is original in nature !n this study the 7rimary data has been collected from 7ersonal !nteraction "ith 1inance manager i e , Mr Mahesh @adkarni and other staff members
SECONDARY DATA4
BABASAB PATIL
- 8B -
)he secondary data are those "hich have already collected and stored 6econdary data easily get those secondary data from records, annual reports of the company etc !t "ill save the time, money and efforts to collect the data )he major source of data for this project "as collected through annual reports, profit and loss account of ? year period from 2223-2212 $ some more information collected from internet and te*t sources SAMPLING DESIGN 6ampling unit 6ampling 6i5e , 1inancial 6tatements , <ast five years financial statements
)ool Gsed for calculations, - M6-A*cel TOOLS USED FOR ANALYSIS OF DATA )he data "ere analy5ed using the follo"ing financial tools )hey are -atio analysis 6tatement of changes in "orking capital
LIMITATIONS OF THE STUDY

)he study duration &summer in plant' is short )he analysis is limited to just five years of data study &from year 2223 to year 2212' for financial analysis <imited interaction "ith the concerned heads due to their busy schedule )he findings of the study are based on the information retrieved by the selected unit
BABASAB PATIL
- 89 -
PART PART ## V V
WORKING WORKINGCAPITAL CAPITALMANAGEMENT. MANAGEMENT.

INTRODUCTION. INTRODUCTION. MEANIG OF CAPITAL. MEANIG OF CAPITAL. MEANING OF WORKING CAPITAL. MEANING OF WORKING CAPITAL. NEED OF WORKING CAPITAL. NEED OF WORKING CAPITAL. CLASSIFICATION OF WORKING CAPITAL. CLASSIFICATION OF WORKING CAPITAL. ESTIMATION OF 5WC? REHIUREMENTS ESTIMATION OF 5WC? REHIUREMENTS OPERATING CYCLE OF WORKING CAPITAL. OPERATING CYCLE OF WORKING CAPITAL. FINANCING OF WORKING CAPITAL. FINANCING OF WORKING CAPITAL. DETERMINANTS OF 5WC? REHUIREMENTS. DETERMINANTS OF 5WC? REHUIREMENTS. #=M7=@A@)6 =1 /+ # M?. #=M7=@A@)6 =1 /+ # M?.
BABASAB PATIL
- :2 -
CAPITAL I9*7-21;*)-94
#apital is the keynote of economic development !n this modern age, the level of economic development is determined by the proportion of capital available
M,<9)9: -. C<=)*<+4
!n the ordinary sense of the "ord #apital means initial investment invested by businessman or o"ner at the time of commencing the business #apital &economics', a factor of production that is not "anted for itself but for its ability to help in producing other goods
D,.)9)*)-94
Capital is a factor of production "ith a specific, changeable value attached to it that could, potentially, provide its o"ner "ith more "ealth !t is an abstract economic concept, and, as such, has many different definitions and classifications, but the unifying feature of capital is that it has a certain value, so it in itself is a type of "ealth, and it has the potential of generating more "ealth
F,<*17,0 -. C<=)*<+4
#apital has the follo"ing features 1 2 8 : ? 3 ; #apital is a man made #apital is a perishable #apital is a human control possible #apital is a mobile #apital is a human sacrifice #apital is a scarce #apital is a passive factor
BABASAB PATIL
- :1 -
INTRODUCTION OF WORKING CAPITAL4

+orking capital is the life blood and nerve centre of a business >ust as circulation of blood is essential in the human body for maintaining life, "orking capital is very essential to maintain the smooth running of a business @o business can run successfully "ithout an ade.uate amount of "orking capital
)here is operative aspects of "orking capital i e current assets "hich is kno"n as funds also employed to the business process from the gross "orking capital #urrent asset comprises cash receivables, inventories, marketable securities held as short term investment and other items nearer to cash or e.uivalent to cash +orking capital comes into business operation "hen actual operation takes place generally the re.uirement of .uantum of "orking capital is determined by the level of production "hich depends upon the management attitude to"ards risk and the factors "hich influence the amount of cash, inventories, receivables and other current assets re.uired to support given volume of production +orking capital management as usually concerned "ith administration of the current assets as "ell as current liabilities )he area includes the re.uirement of funds from various resources and to utili5e them in all result oriented manner !t can be stated "ithout e*aggeration that effective "orking capital management is the short re.uirement of long term success )he importance of "orking capital management is indisputableS Business liability relies on its ability to effective management of receivables, inventory, and payables By minimi5ing the amount of funds tied up in current assets 1irms are able to reduce financing costs or increase the funds available for e*pansion Many managerial efforts are put into bringing non-optimal level of current assets and liabilities back to"ards their optimal levels
BABASAB PATIL
- :2 -
MEANING OF WORKING CAPITAL

+orking capital means the funds &i e S capital' available and used for day to day operations &i e S "orking' of an enterprise !t consists broadly of that portion of assets of a business "hich are used in or related to its current operations !t refers to funds "hich are used during an accounting period to generate a current income of a type "hich is consistent "ith major purpose of a firm e*istence
!n Accounting,
DEFINITIONS4 Many scholars( gives many definitions regarding term "orking capital some of these are given belo"
According to Weston & Brigham /+orking capital refers to a firm(s investment in short-term assets cash, short term securities, accounts receivables and inventories
Mead Mallott & Field /+orking capital means current assets0
Bonnerille /Any ac.uisition of funds "hich increases the current assets increases "orking capital for they are one and the same0
BABASAB PATIL
- :8 -
7ositive "orking capital means that the company is able to pay off its short-term liabilities companies that have a lot of "orking capital "ill be more successful since they can e*pand and improve their operations
@egative "orking capital means that a company currently is unable to meet its short-term liabilities "ith its current assets funds necessary for gro"th #ompanies "ith negative "orking capital may lack the
OB%ECTIVES OF WORKING CAPITAL MANAGEMENT

Affective management of "orking capital is means of accomplishing the firm(s goal of ade.uate li.uidity !t is concerned "ith the administration of current assets and current liabilities !t has the main follo"ing objectives-
1 2 8 : ? 3 ; B
)o ma*imi5e profit of the firm )o help in timely payment of bills )o maintain sufficient current assets )o ensure ade.uate li.uidity of the firms !t protects the solvency of the firm )o discharge current liabilities )o increase the value of the firm )o minimi5e the risk of business
THE NEED FOR THE WORKING CAPITAL
BABASAB PATIL
- :: -
)he need for "orking capital arises due to the time gap bet"een production and reali5ation of cash from sales +orking capital is must for every business for purchasing ra"-materials, semi finished goods, stores $ spares etc and the follo"ing purposes
1. T- =17;/<0, 7<6 ><*,7)<+0, 0=<7, =<7*0 <92 -*/,7 ;->=-9,9*. A manufacturing firm needs ra"-materials and other components parts for the purpose of converting them in to final products, for this purpose it re.uires "orking capital )rading concern re.uires less "orking capital
2. T- >,,* -F,7 /,<2 ,C=,90,0. +orking capital is re.uired to meet recurring over head e*penses such as cost of fuel, po"er, office e*penses and other manufacturing e*penses ". T- /-+2 .)9)0/,2 <92 0=<7, =<7*0 ,*;. 6tock represents current asset A firm that can afford to maintain stock of re.uired finished goods, "ork in progress $ spares in re.uired .uantities can operate successfully 6o for that ade.uate .uantity of "orking capital is re.uired
!. T- =<3 0,++)9: & 2)0*7)E1*)-9 ,C=,90,0. +orking capital is re.uired to pay selling $ distribution e*penses !t includes cost of packing, commission etc
$. +orking capital is re.uired for repairs $ maintenance both machinery as "ell as factory buildings 6. +orking capital is re.uired to pay "ages, salaries and other charges . !t is helpful in maintain uncertainties involved in business field
WORKING CAPITAL MANAGEMENT BABASAB PATIL

- :? -
+orking #apital Management refers to management of current assets and current <iabilities )he major thrust of course is on the management of current assets )his !s understandable because current liabilities arise in the conte*t of current assets +orking #apital Management is a significant fact of financial management !ts !mportance stems from t"o reasons, !nvestment in current assets represents a substantial portion of total investment !nvestment in current assets and the level of current liabilities have to be geared
.uickly to change in sales )o be sure, fi*ed asset investment and long term financing are responsive to variation in sales Do"ever, this relationship is not as close and direct as it is in the case of "orking capital components
CLASSIFICATION OF WORKING CAPITAL

WORKING CAPITAL
=n )he Basis of #oncepts
=n )he Basis of )ime
Iross +orking #apital
@et +orking #apital
7ermanent / 1i*ed +orking #apital
)emporary / 1luctuating +orking #apital
!nitial +orking #apital
-egular +orking #apital
6easonal +orking #apital
6pecial +orking #apital
I. On The Basis of Concepts

1B G7-00 W-78)9: C<=)*<+
BABASAB PATIL
- :3 -
Iross "orking capital is the amount of funds invested in various components of current assets #urrent assets are those assets "hich are easily / immediately converted into cash "ithin a short period of time say, an accounting year #urrent assets includes #ash in hand and cash at bank, !nventories, Bills receivables, 6undry debtors, short term loans and advances )his concept has the follo"ing advantages,i ii 1inancial managers are profoundly concerned "ith the current assets Iross "orking capital provides the correct amount of "orking capital at the right time
iii iv v !t enables a firm to reali5e the greatest return on its investment !t helps in the fi*ation of various areas of financial responsibility !t enables a firm to plan and control funds and to ma*imi5e the return on investment
1or these advantages, gross "orking capital has become a more acceptable concept in financial management
2B N,* W-78)9: C<=)*<+ )his is the difference bet"een current assets and current liabilities #urrent liabilities are those that are e*pected to mature "ithin an accounting year and include creditors, bills payable and outstanding e*penses +orking #apital Management is no doubt significant for all firms, but its significance is enhanced in cases of small firms A small firm has more investment in current assets than fi*ed assets and therefore current assets should be efficiently managed )he "orking capital needs increase as the firm gro"s As sales gro", the firm needs to invest more in debtors and inventories )he finance manager should be a"are of such needs and finance them .uickly
II. O9 T/, B<0)0 -. C-9;,=*0
BABASAB PATIL
- :; -
1B P,7><9,9* I F)C,2 W-78)9: C<=)*<+ 7ermanent or fi*ed "orking capital is minimum amount "hich is re.uired to ensure effective utili5ation of fi*ed facilities and for maintaining the circulation of current assets Avery firm has to maintain a minimum level of ra" material, "ork- in-process, finished goods and cash balance )his minimum level of current assts is called permanent or fi*ed "orking capital as this part of "orking is permanently blocked in current assets As the business gro" the re.uirements of "orking capital also increases due to increase in current assets <B I9)*)<+ 6-78)9: ;<=)*<+ At its inception and during the formative period of its operations a company must have enough cash fund to meet its obligations )he need for initial "orking capital is for every company to consolidate its position EB R,:1+<7 6-78)9: ;<=)*<+ -egular "orking capital refers to the minimum amount of li.uid capital re.uired to keep up the circulation of the capital from the cash inventories to accounts receivable and from account receivables to back again cash !t consists of ade.uate cash balance on hand and at bank, ade.uate stock of ra" materials and finished goods and amount of receivables 2B T,>=-7<73 I F+1;*1<*)9: W-78)9: C<=)*<+ )emporary / 1luctuating "orking capital is the "orking capital needed to meet seasonal as "ell as unforeseen re.uirements !t may be divided into t"o types <B S,<0-9<+ W-78)9: C<=)*<+ )here are many lines of business "here the volume of operations are different and hence the amount of "orking capital vary "ith the seasons )he capital re.uired to meet the seasonal needs of the enterprise is kno"n as seasonal +orking capital EB S=,;)<+ W-78)9: C<=)*<+ )he #apital re.uired to meet any special operations such as e*periments "ith ne" products or ne" techni.ues of production and making interior advertising campaign etc, are also kno"n as special +orking #apital IMPORTANCE OF WORKING CAPITAL
BABASAB PATIL
- :B -
S-+F,9;3 -. */, E10)9,004 Ade.uate "orking capital helps in maintaining the solvency of the business by providing uninterrupted of production
G--26)++ 4 6ufficient amount of "orking capital enables a firm to make prompt payments and makes and maintain the good"ill
E<03 +-<904 Ade.uate "orking capital leads to high solvency and credit standing can arrange loans from banks and other on easy and favorable terms
C<0/ 2)0;-19*04 Ade.uate "orking capital also enables a concern to avail cash discounts on the purchases and hence reduces cost
R,:1+<7 S1==+3 -. R<6 M<*,7)<+4 6ufficient "orking capital ensures regular supply of ra" material and continuous production
R,:1+<7 =<3>,9* -. 0<+<7),0, 6<:,0 <92 -*/,7 2<3 *- 2<3 ;->>)*>,9*0 4 !t leads to the satisfaction of the employees and raises the morale of its employees, increases their efficiency, reduces "astage and costs and enhances production and profits
EC=+-)*<*)-9 -. .<F-7<E+, ><78,* ;-92)*)-904 !f a firm is having ade.uate "orking capital then it can e*ploit the favorable market conditions such as purchasing its re.uirements in bulk "hen the prices are lo"er and holdings its inventories for higher prices
B 9
AE)+)*3 *- F<;, C7)0,0, A concern can face the situation during the depression H1);8 <92 7,:1+<7 7,*179 -9 )9F,0*>,9*04 6ufficient "orking capital enables a concern to pay .uick and regular of dividends to its investors and gains confidence of the investors and can raise more funds in future
12 H):/ >-7<+,4 Ade.uate "orking capital brings an environment of securities, confidence, high morale "hich results in overall efficiency in a business ADEHUACY OF WORKING CAPITAL4
BABASAB PATIL
- :9 -
+orking capital should be ade.uate so as to protect a business from the adverse effects of shrinkage in the values of current assets !t ensures to a greater e*tent the maintenance of a company(s credit standing and provides for such emergencies as strikes, floods, fire etc !t permits the carrying of inventories at a level that "ould enable a business to serve satisfactorily the needs of its customers !t enables a company to operate its business more efficiently because there is no delay in obtaining materials etcS because of credit difficulties INADEHUATE OF WORKING CAPITAL4
+hen "orking capital is inade.uate, a company faces many problems !t stagnates the gro"th and it becomes difficult for the firm to undertake profitable projects for nonavailability of "orking capital funds %ifficulty in implementing operating plans and achieving the firm(s profit targets =perating inefficiencies creep in "hen it becomes difficult even to meet day-to-day commitments 1i*ed assets are not utili5ed efficiently thus the firm(s profitability "ould deteriorate 7aucity of "orking capital funds renders the firm unable to avail attractive credit opportunities )he firm loses its reputation "hen it is not in a position to honor it short-term obligations thereby leading to tight credit terms
DANGERS OF EXCESSIVE WORKING CAPITAL4

)oo much "orking capital is as dangerous as too little of it A*cessive "orking capital raises problems 1 !t results in unnecessary accumulation of inventories )hus chances of inventory mishandling, "aste, theft and losses increase 2 !ndication of defective credit policy and slack collection period #onse.uently, it results in higher incidence of bad debts, adversely affecting profits, 8 : Makes the management complacent "hich degenerates in to managerial inefficiency )he tendencies of accumulating inventories to make a speculative profit, "hich tends to liberali5e the dividend policy, make it difficult for the concern to cope in the future "hen it is not able to make speculative profits
BABASAB PATIL
- ?2 -
ESTIMATION OF WORKING CAPITAL REHIUREMENTS

Managing the "orking capital is a matter of balance )he firms must have sufficient funds on hand to meet its immediate needs )he Bahety chemicals $ minerals &pvt' <imited is manufacturing oriented organi5ation
)he follo"ing aspects have to be taken into consideration "hile estimating the "orking capital re.uirements )hey are, 1 2 )otal costs incurred on material, "ages and overheads )he length of time for "hich ra" material are to remain in stores before they are issued for production 8 )he length of the production cycle or "ork-in-process, i e , the time taken for conversion of ra" material into finished goods : )he length of sales cycle during "hich finished goods to be kept "aiting for sales ? 3 ; B 9 )he average period of credit allo"ed to customers )he amount of cash re.uired paying day-today e*penses of the business )he average amount of cash re.uired to make advance payments )he average credit period e*pected to be allo"ed by suppliers )ime lag in the payment of "ages and other e*penses
BABASAB PATIL
- ?1 -
OPERATING CYCLE OF WORKING CAPITAL4

)he "orking capital cycle reserves to the length of time bet"een the firm paying cash for materials etc , this "orking capital also kno"n as operating cycle +orking capital cycle or operating cycle indicates the length or time bet"een companies paying for materials entering into stock and receiving the cash from sales of finished goods )he operating cycle &+orking #apital' consists of the follo"ing events +hich continues throughout the life of businessQ
CASH
DEBTORS
RAW MATERIALS
FINISHED STOCK
WORK#IN#PROGRESS
#onversion of cash into ra" materials #onversion of ra" materials into "ork in progress #onversion of "ork in progress into finished stock #onversion of finished stock into accounts receivables&%ebtors'through sale and #onversion of account receivables into cash
BABASAB PATIL
- ?2 -
FINANCING OF WORKING CAPITAL

I9*7-21;*)-94 After determining the level of "orking capital, a firm has to decide ho" it is to be financed !n that B#M, it "as financing the "orking capital from the follo"ing four common sources )hey are, 1. SHARES4 )he B#M has issued the e.uity shares for raising the funds )he A.uity shares do not have any fi*ed commitment charges and the dividend on these shares is to be paid subject to the availability of sufficient funds )hese funds have been injected from the company(s o"n personal resources and from the members
2. TRADE CREDIT4 )he trade credit refer to the credit e*tended by the suppliers of goods in the normal course of business )he firm has a good relationship "ith the trade creditors 6o that suppliers send the goods to the firm for the payment to be received in future as per the agreement or sales invoice !n this "ay, the firm generates the short-term finances from the trade creditors !t is an easy and convenient method to finance and it is informal and spontaneous source of finance for the firm
". BANK CREDIT4 #ommercial banks play an important role in financing the trade $ industry Bank provides short-term, medium term $ long term finance to an industrialist or a business man
BABASAB PATIL
- ?8 -
1. L-<904 )he B#M &7N)' <)% , has taken loan from the commercial bank for "orking capital re.uirement for a certain period at certain interest rate
2. C<0/ C7,2)* I OF,727<.*04 Gnder cash credit/overdraft from/arrangement of bank finance, the bank specifies a determined borro"ings/credit limit )he borro"er can dra"/borro" up to the stipulated credit/overdraft limit +ithin the specified limit/ line of credit, any number of dra"als/dra"ings are possible to the e*tent of his re.uirement periodically )his form of financing of "orking capital is highly attractive to the borro"ers because, firstly, it is fle*ible in that although borro"ed funds are repayable on demand, banks usually do not recall cash advances/roll them over and, secondly, the borro"er has the freedom to dra" the amount actually outstanding Do"ever, cash credit/overdraft is inconvenient to the banks and hampers credit planning
!. CUSTOMER ADVANCES4 )he B#M &pvt' <imited follo" the practice of collecting advance money from the customers as soon as orders are placed and before the actual delivery of the goods 6uch an advance received from the customers constitutes one of the short-term sources of finance
#ertain H of the price of the goods to be sold to the customers is collected in the of an advance 6eller can utili5e the advance money so collected for meeting these urgent financial obligations
BABASAB PATIL
- ?: -
DETERMINANTS OF WORKING CAPITAL REHUIREMENTS

!n order to determine the amount of "orking capital needed by the firm a number of factors have to be considered by finance manager )hese factors are e*plained belo"
1. N<*17, -. B10)9,004 )he @ature of the business effects the "orking capital re.uirements to a great e*tent 1or instance public utilities like rail"ays, electric very little "orking capital because they need companies, etc need
not hold large inventories and
their operations are mostly on cash basis, but in case of manufacturing firms and trading firms, the re.uirement of "orking capital is sufficiently large as they
have to invest substantially in inventories and accounts receivables B#M is a production firm, there for "orking capital re.uired is more in period of production as compared to other period 2. P7-21;*)-9 P-+);),04 )he production policies also determine the +orking capital re.uirement )hrough the production schedule i e the plan for production, production process etc )he B#M has small production process ". C7,2)* P-+);34 )he credit policy relating to sales and affects the "orking capital )he credit policy influence the re.uirement of "orking capital in t"o "ays, 1 2 )hrough credit terms granted by the firm to its customers/buyers #redit terms available to the firm from its creditors
)he credit terms granted to customers have a bearing on the Magnitude of +orking capital by determining the level of book debts )he credit sales results is higher book debts &re available' higher book debt means more +orking capital
BABASAB PATIL
- ?? -
=n the other hand, if liberal credit terms are available from the suppliers of goods L)rade creditorsM, the need for "orking capital is less )he "orking capital re.uirements of
business are, thus, affected by the terms of purchase and sale, and the role given to credit by a company in its dealings "ith #reditors and %ebtors !n B#M company ra" materials are purchased "ith a credit or cash and finished goods are sold on cash basis and also credit basis !. C/<9:,0 )9 T,;/9-+-:34 )echnology used in manufacturing process is mainly determined need of "orking capital Moderni5e technology needs lo" "orking capital, "here as old and traditional technology needs greater "orking capital $. S)J, -. */, B10)9,00 U9)*4 )he si5e of the business unit is also important factor in influencing the "orking capital needs of a firm <arge 6cale !ndustries re.uires huge amount of "orking capital compared to 6mall scale !ndustries 6. G7-6*/ <92 EC=<90)-94 )he gro"th in volume and gro"th in "orking capital go hand in hand, ho"ever, the change may not be proportionate and the increased need for "orking capital is felt right from the initial stages of gro"th
. D)F)2,92 P-+);34 Another appropriation of profits "hich has a bearing on "orking capital is dividend payment 7ayment of dividend utili5es cash "hile retaining profits acts as a source as "orking capital )hus "orking capital gets affected by dividend policies )he B#M follo"s liberal dividend policy "ill re.uire more "orking capital than company that follo"s a strict dividend policy
BABASAB PATIL
- ?3 -
(. S1==+3 C-92)*)-904 !f supply of ra" material and spares is timely and ade.uate, the firm can get by "ith a comparatively lo" inventory level !f supply is scarce and unpredictable or available during particular seasons, the firm "ill have to obtain ra" material "hen it is available !t is essential to keep larger stocks increasing "orking capital re.uirements &. M<78,* C-92)*)-904 )he level of competition e*isting in the market also influences "orking capital re.uirement +hen competition is high, the company should have enough inventories of finished goods to meet a certain level of demand =ther"ise, customers are highly likely to s"itch over to competitor(s products !t thus has greater "orking capital needs +hen competition is lo", but demand for the product is high, the firm can afford to have a smaller inventory and "ould conse.uently re.uire lesser "orking capital But this factor has not applied in these technological and competitive days 1'. B10)9,00 C3;+,4 )he "orking capital re.uirements are also determined by the nature of the business cycle Business fluctuations lead to cyclical and seasonal changes "hich, in turn, cause a shift in the "orking capital position, particularly for temporary "orking capital the variations in the business conditions may be in t"o directions, 1 2 Gp"ard phase "hen boom condition prevail, %o"ns"ing phase "hen economic activity is marked by a decline
11. P7-.)* L,F,+4 7rofit level also affects the "orking capital re.uirements as a concern higher profit margin results in higher generation of internal funds and more contributing to "orking capital
BABASAB PATIL
- ?; -
ESTIMATION OF CURRENT ASSETS

1. R<6 M<*,7)<+ I9F,9*-73, )he !nvestment in -a" Material can be computed "ith the help of the follo"ing formula,Budgeted 7roduction & !n units ' #ost of -a" Average !nventory
Material&s' per unit
Dolding 7eriod &months/days'
12 months / ?2 "eeks / 83?days 2. W-78#)9#=7-:7,00 @WIPB I9F,9*-73, )he relevant cost of determine "ork in process inventory are the proportionate share of cost of ra" material and conversion costs & labors and Manufacturing over Dead cost e*cluding depreciation' !n case, full until of ra" material is re.uired in the beginning the unit cost of "ork is process "ould be higher, i e , cost of full unit T ?2H of conversion cost compared to the ra" material re.uirement )hroughout the production #ycle, "orking process is normally e.uivalent to ?2H of total cost of production 6ymbolically, Budgeted 7roduction & !n units ' Astimated "orkAverage )ime 6pan
in-progress cost per unit
of "ork-in-progress inventory &months/days'
12 months / ?2 "eeks / 83?days ". F)9)0/,2 G--20 I9F,9*-734 +orking capital re.uired to finance the finished goods inventory is given by factors summed up as follo"s,Budgeted 7roduction & in units ' #ost of Ioods 7roduced 1inished Ioods
per unit &e*cluding depreciation'
Dolding 7eriod &months/days'
12 months / ?2 "eeks / 83?days
BABASAB PATIL
- ?B -
!. D,E*-704 )he "orking capital tied up in debtor should be estimated in relation to total cost price & e*cluding depreciation ' symbolically, Budgeted 7roduction & !n units ' #ost of 6ales per Average %ebt
unit e*cluding depreciation
#ollection 7eriod &months/days'
12 months / ?2 "eeks / 83?days $. C<0/ <92 B<98 B<+<9;,04 Apart from +orking #apital needs for 1inancing !nventories and %ebtors, 1irms also find it useful to have such minimum cash Balances "ith them !t is difficult to lay do"n the e*act procedure of determining such an amount )his "ould primarily be based on the motives of holding cash balances of the business firm, attitude of management to"ards risk, the access to the borro"ing sources in times of need and past e*perience
ESTIMATION OF CURRENT LIABILITIES

)he +orking #apital needs of business firms are lo"er to the e*tent that such needs are met through the #urrent <iabilities&other than Bank #redit' arising in the ordinary course of business )he !mportant #urrent <iabilities in this conte*t are )rade#reditors, +ages and =verheads,1. T7<2, C7,2)*-704 )he 1unding of +orking #apital from )rade #reditors can be computed "ith the help of the follo"ing formula,Budgeted Oearly 7roduction & !n units ' -a" Material #redit 7eriod
#ost per unit
Allo"ed by creditors &months/days'
12 months / ?2 "eeks / 83?days N-*,4# 7roportional adjustment should be made to cash purchases of -a" Materials
BABASAB PATIL
- ?9 -
2. D)7,;* W<:,04 )he 1unding of +orking #apital from %irect +ages can be computed "ith the help of the follo"ing formula,-
Budgeted Oearly 7roduction & !n units '
%irect <abor
Average )ime-lag in
#ost per unit
7ayment of "ages &months/days'
12 months / ?2 "eeks / 83?dayss
N-*,4# )he average #redit 7eriod for the payment of "ages appro*imates to half-a-month in the case of monthly "age payment )he first days monthly "ages are paid on the 82 th of the month, e*tending credit for 29 days, the second day(s "ages are, again , paid on the 82th day, e*tending credit for 2B days, and so on Average credit period appro*imates to half-a-month
". OF,7/,<20 @-*/,7 */<9 D,=7,;)<*)-9 <92 A>-7*)J<*)-9B4 )he 1unding of +orking #apital from =verheads can be computed "ith the help of the follo"ing formula,-
Budgeted Oearly 7roduction & !n units '
=verhead
Average )ime-lag in
#ost per unit
7ayment of overheads &months/days'
12 months / ?2 "eeks / 83?days N-*,4# )he amount of =verheads may be separately calculated for different types of =verheads !n the case of 6elling =verheads, the relevant item "ould be sales volume instead of 7roduction Nolume
BABASAB PATIL
- 32 -
FORMAT FOR DETERMINATION OF WORKING CAPITAL4
SL.NO
PARTICULARS A6)!MA)!=@ =1 CURRENT ASSETS 1B Minimum desired cash and Bank balances 2B !nventories -a" material +ork-in-progress 1inished stock "B %ebtors )otal #urrent Assets *** *** *** *** ***
AMOUNT
XXX
A6)!MA)!=@ =1 CURRENT LIABILITIES 1B #reditors 2B +ages "B =verheads )otal current liabilities NET WORKING CAPITAL &)otal #urrent assets K )otal #urrent liabilities' Add , Margin for contingency net +orking capital re.uirement *** *** ***
XXX XXX XX XXXX
COMPONENTS OF WORKING CAPITAL BABASAB PATIL

- 31 -
)he components of "orking capital are,

CASH MANAGEMENT RECEIVABLES MANAGEMENT INVENTORY MANAGEMENT CASH MANAGEMENT4 #ash is the important current asset for the operation of the business #ash is the Basic input needed to keep the business running in the continuous basis, it is also the ultimate output e*pected to be reali5ed by selling or product manufactured by the firm )he firm should keep sufficient cash neither more nor less #ash shortage "ill disrupt the firm(s manufacturing operations "hile e*cessive cash "ill simply remain ideal "ithout contributing anything to"ards the firm(s profitability )hus a major function of the financial manager is to maintain a sound cash position #ash is the money, "hich a firm can disburse immediately "ithout any restriction )he term cash includes coins, currency and che.ues held by the firm and balances in its bank account NEED FOR HOLDING CASH )he need for holding #ash arises from a variety of reasons "hich are, 1. T7<90<;*)-9 M-*)F,4 A company is al"ays entering into transactions "ith other entities +hile some of these transactions may not result in an immediate inflo"/outflo" of cash &A g #redit purchases and 6ales', other transactions cause immediate inflo"s and outflo"s 6o firms keep a certain amount of cash so as to deal "ith routine transactions "here immediate cash payment is re.uired 2. P7,;<1*)-9<73 M-*)F,, #ontingencies have a habit of cropping up "hen least e*pected A sudden fire may break out, accidents may happen, employees may go on a strike, creditors may present bills earlier than e*pected or the debtors may make payments earlier than "arranted )he company has to be prepared to meet these contingencies to minimi5e the losses 1or this purpose companies generally maintain some amount in the form of #ash ". S=,;1+<*)F, M-*)F,4
BABASAB PATIL
- 32 -
1irms also maintain cash balances in order to take advantage of opportunities that do not take place in the course of routine business activities 1or e*ample, there may be a sudden decrease in the price of -a" Materials "hich is not e*pected to last long or the firm may "ant to invest in securities of other companies "hen the price is just right )hese transactions are purely of speculative nature for "hich the firms need cash OB%ECTIVES OF CASH MANAGEMENT 7rimary object of the cash management is to maintain a proper balance bet"een li.uidity and profitability !n order to protect the solvency of the firm and also to ma*imi5e the profitability 1ollo"ing are some of the objectives of cash management 1 2 8 : ? 3 )o meet day to day cash re.uirements )o provide for une*pected payments )o ma*imi5e profits on available investment opportunities )o protect the solvency of the firm and build up image )o minimi5e operational cost of cash management )o ensure effective utili5ation of available cash resources
CASH BUDGETING #ash budgeting is an important tool for controlling the cash !t is prepared for future period to kno" the estimated amount of cash that may be re.uired #ash budget is a statement of estimated cash inflo"s and outflo"s relating to a future period !t gives information about the amount of cash e*pected to be received and the amount of cash e*pected to be paid out by a firm for a given period #ash budgeting indicates probably cash receipts and cash payments for an under consideration !t is a statement of budgeted cash receipts and cash payment resulting in either positive or negative cash or for a "eek or for a year and so on
RECEIVABLES MANAGEMENT4
BABASAB PATIL
- 38 -
-eceivables or debtors are the one of the most important parts of the current Assets "hich is created if the company sells the finished goods to the customer but not receive the cash for the same immediately )rade credit arises "hen a company sales its products or services on credit and does not receive cash immediately !t is an essential marketing tool, acting as a bridge for the moment of goods through production and distribution stages to customers )he receivables include three characteristics 1' !t involve element of risk "hich should be carefully analysis 2' !t is based on economic value )o the buyer, the economic value in goods or services passes immediately at the time of sale, "hile seller e*pects an e.uivalent value to be received later on 8' !t implies futurity )he cash payment for goods or serves received by the buyer "ill be made by him in a future period A company gives trade credit to protect its sales from the competitors and to attract the potential customers to buy its products at favorable terms )rade credit creates receivables or book debts that the company is accepted to collect in the near future )he customers from "ho receivables have to be collected are called as /)rade %ebtors0 receivables constitute a substantial position of current assets Iranting credit and crediting debtors, amounts to the blocking of the company(s funds )he interval bet"een the date of sale and the date of payment has to be financed out of "orking capital as substantial amounts are tied up in trade debtors !t needs careful analysis and proper management
!n B#M ltd , they are selling the goods on cash basis and also on credit basis
INVENTORY MANAGEMENT4
BABASAB PATIL
- 3: -
!nventories are goods held for eventual sale by a firm !nventories are thus one of the major elements, "hich help the firm in obtaining the desired level of sales !nventories includes ra" materials, semi finished goods, finished products
!n company there should be an optimum level of investment for any asset, "hether it is plant, cash or inventories Again inade.uate disrupts production and causes losses in sales Afficient management of inventory should ultimately result in "ealth ma*imi5ation of o"ner(s "ealth !t implies that "hile the management should try to pursue financial objective of turning inventory as .uickly as possible, it should at the same time ensure sufficient inventories to satisfy production and sales demand )he main objectives of inventory management are operational and financial )he operational mean that means that the materials and spares should be available in sufficient .uantity so that "ork is not disrupted for "ant of inventory )he financial objective means that investments in inventories should not remain ideal and minimum "orking capital should be locked in it )he follo"ing are the objectives of inventory management, )o ensure continuous supply of materials, spares and finished goods )o avoid both over and under stocking of inventory )o maintain investments in inventories at the optimum level as re.uired by the operational and sale activities )o keep material cost under control so that they contribute in reducing cost of production and overall purchases )o minimi5e losses through deterioration, pilferage, "astages and damages )o design proper organi5ation for inventory control so that management #lear cut account ability should be fi*ed at various levels of the organi5ation )o ensure perpetual inventory control so that materials sho"n in stock ledgers should be actually lying in the stores )o ensure right .uality of goods at reasonable prices
BABASAB PATIL
- 3? -
BENEFITS OF HOLDING INVENORIES4 Dolding of large and ade.uate inventories is very beneficial to every firm )he benefits or advantages of holding inventories area as follo"s 1 2 8 : ? -educing orders cost #ontinuous production )o avoid loss Availing .uantity discount !t enables the firm to avoid scarcity of goods meant for either production o
sale COST OF HOLDING INVENTORIES4 Dolding of inventory e*poses the firm to a number of risks and costs -isks of holding inventories can be put as follo"s 1 2 8 : ? 3 Material cost =rder cost 6torage cost !nsurance =bsolescence 6poilage
!n the B#M, each of the above mentioned costs have to be controlled through efficient inventory management techni.ue )hat is, E;-9->); O72,7 H1<9*)*3 @EOHB4 )his refers to the optimal ordering .uantity that "ill incur the minimum total cost &order cost and carrying cost' for an item of inventory +ith the increase in the order si5e, the ordering cost decreases but the carrying cost increases and the optimal order, .uantity is determined "here these t"o costs are e.ual )he company is al"ays tried to keep an eye on the level of safety stock and the lead-time associated "ith the orders made A=4U
K 2A=
#
Dere, AU Annual consumption =U =rdering cost per order #U #arrying cost per unit
BABASAB PATIL
- 33 -
PART # VI
DATA DATAANANLYSIS ANANLYSISAND ANDINTERPRETATION. INTERPRETATION.
BABASAB PATIL
- 3; -
AL NET WORKING CAPITAL

An analysis of the net "orking capital "ill be very help full for kno"ing the operational efficiency of the company )he follo"ing table provides the data relating to the net "orking capital of B#M NET WORKING CAPITAL M CURRENT ASSETS#CURRENT LIABILITIS Oears 222?-23 2223-2; 222;-2B 222B-29 2229-12 #urrent Asset :?38299 22 9?993:3 22 92;;31; 22 11228:2B 22 119:3333 22 #urrent <iabilities 22:1?:8 22 8BB;;3? 22 2B292;9 22 8BB9B99 22 :13?3?9 22 @+# 2?21??3 22 ?;11BB1 22 32:B?8B 22 ;118?29 22 ;;B122; 22
C/<7* 0/-6)9: NWC

&'''''' ('''''' '''''' 6''''''
NWC
$'''''' !'''''' "'''''' 2'''''' 1'''''' ' 2''$#'6 2''6#' 2'' #'( 2''(#'& 2''&#1'
NWC
Y,<7
INTERPRETATION4# )he above chart sho"s that during the year 222?-23 the company has 2?21??3 22 @ + # !n the year 2223-2; huge increase in the @ + # is ?;11BB1 22 and in the year 222;-2B the company has 32:B?8B 22 @ + # in the year 222B-29 the company has ;118?29 22 @ + # the @ + # of the company is increasing compared to the previous years, in the year 2229-12 the company has ;;B122; 22 @ + # this means the company in a positive position $ @ + # has improved vary fast as compared to the previous years "hich sho" li.uidity 7osition of the Bahety chemicals $ minerals 7vt <td has al"ays more $ sufficient "orking capital available to pay off its current liabilities
BL RATIO ANALYSIS BABASAB PATIL

- 3B -
INTRODUCTION4 -atio Analysis is a po"erful tool of financial analysis Ale*ander Dall first presented it in 1991 in 1ederal -eserve Bulletin -atio Analysis is a process of comparison of one figure against other, "hich makes a ratio and the appraisal of the ratios of the ratios to make proper analysis about the strengths and "eakness of the firm(s operations )he term ratio refers to the numerical or .uantitative relationship bet"een t"o accounting figures -atio analysis of financial statements stands for the process of determining and presenting the relationship of items and group of items in the statements N-*,, ! have used the ratio analysis in this project in order to substantiate the managing of "orking capital 1or this, ! used some of the ratios to get the re.uired output V<7)-10 6-78)9: ;<=)*<+ 7<*)-0 10,2 E3 >, <7, <0 .-++-604 1. LIHUIDITY RATIOS4 <i.uidity refers to the ability of a firm to meet its current obligations as and "hen these become due )he short-term obligations are met by reali5ing amounts from current, floating or circulating assets 1ollo"ing are the ratios "hich can help to assess the ability of a firm to meet its current liabilities 1. 2. ". #urrent ratio Acid )est -atio / 4uick -atio / <i.uidity -atio Absolute li.uid ratio
2. TURNOVERIACTIVITY RATIOS4 )hese are the ratios "hich indicate the speed "ith "hich assets are converted or turned over into sales 1. 2. ". !. !nventory )urnover -atio %ebtors/ Accounts receivables )urnover -atio #reditors/Accounts 7ayables )urnover -atio +orking #apital )urnover -atio
1. CURRENT RATIO4#
BABASAB PATIL
- 39 -
!t is a ratio, "hich e*press the relationship bet"een the total current Assets and current liabilities !t measures the firm(s ability to meet its current liabilities !t indicates the availability of current assets in rupees for every one rupee of current liabilities A ratio of greater than one means that the firm has more current assets than current liabilities claims against them A standard ratio bet"een them is 2,1 C177,9* R<*)-4 C177,9* A00,*0 C177,9* L)<E)+)*),0 Oear 222?-23 2223-2; 222;-2B 222B-29 2229-12 #urrent Assets :?38299 22 9?993:3 22 92;;31; 22 11228:2B 22 119:3333 22 #urrent <iabilities 22:1?:8 22 8BB;;3? 22 2B292;9 22 8BB9B99 22 :13?3?9 22 #urrent -atio 2 28 2 :; 8 21 2 B8 2 B;
C/<7* 0/-6)9: C177,9* R<*)".$ "

C177,99* R<*)-
2.$ 2 1.$ 1 '.$ '

2''$#'6 2''6#' 2'' #'( 2''(#'& 2''&#1'
C177,9* R<*)-
Y,<7
INTERPRETATION4# !t is seen from the above chart that during the year 222?-23 the current ratio "as 2 28, during the year 2223-2; it "as 2 :; and in the year 222;-2B it "as 8 21 )his sho"s the current ratio increases every year but in the year 222B-29 the current ratio "as dropped to 2 B8 due to increase in current liabilities !n the year 2229-12 the current ratio has increases 2 B; )he current ratio is above the standard ratio i e , 2,1 Dence it can be said that there is enough current assets in Bahety chemicals $ minerals 7vt <td to meet its current liabilities 2. ACID TEST RATIO I HUICK RATIO I LIHUIDITY RATIO4# )his ratio establishes a relationship bet"een .uickIli.uid assets and current liabilities !t measures the firms( capacity to pay off current obligations immediately An
BABASAB PATIL
- ;2 -
asset is li.uid if it can be converted in to cash immediately "ithout a loss of valueS !nventories are considered to be less li.uid Because inventories normally re.uire some time for reali5ing into cash )his ratio is also kno"n as acid-test ratio )he standard .uick ratio is 1,1 !s considered satisfactory H1);8 R<*)- M H1);8 A00,*0 @;177,9* <00,*0 # I9F,9*-73B C177,9* L)<E)+)*),0 Oear 222?-23 2223-2; 222;-2B 222B-29 2229-12 #urrent Assets :?38299 22 9?993:3 22 92;;31; 22 11228:2B 22 119:3333 22 !nventories 1?82:?? 22 21312;1 22 8883:82 22 2322921 22 2832311 22 4uick Assets 82823:: 22 ;:8B?;? 22 ?;:11B; 22 B8B2?2; 22 9?B32?? 22 #urrent <iabilities 4uick -atio 22:1?:8 22 1 :B 8BB;;3? 22 1 91 2B292;9 22 2 28 8BB9B99 22 2 1? :13?3?9 22 2 82
C/<7* 0/-6)9: H1);8 R<*)2.$
2 H1);8 R<*)-
1.$
H1);8 R<*)-
'.$
'
2''$#'6
2''6#'
2'' #'(
Y, <7
2''(#'&
2''&#1'
INTERPRETATION4# %uring the year 222?-23 the .uick ratio "as 1 :B, in the year 2223-2; it increases to 1 91 )his sho"s the company maintains satisfactory .uick ratio, in the year 222;-2B the .uick ratio increases to 2 28, in the year 222B-29 it increases 2 1?, in the year 2229-12 it increases 2 82, due to increase in .uick assets )he .uick ratio is above the standard ratio i e , 1,1 Dence it sho"s that the li.uidity position of the company is ade.uate ". ABSOLUTE LIHUID RATIO4# Absolute li.uid ratio may be defined as the relationship bet"een Absolute li.uid assets and current liabilities Absolute li.uid assets include cash in hand and cash at bank )he standard ratio is 2 ?, 1
BABASAB PATIL
- ;1 -
AE0-+1*, L)G1)2)*3 R<*)- M
C<0/ & B<98 B<+<9;, C177,9* L)<E)+)*),0
Oears 222?-23 2223-2; 222;-2B 222B-29 2229-12
#ash $ Bank Balance #urrent <iabilities :98;:2 22 22:1?:8 22 122?332 22 8BB;;3? 22 12881?2 22 2B292;9 22 1;22B1? 22 8BB9B99 22 19;B98B 22 :13?3?9 22
Absolute <i.uidity -atio 2 2: 2 81 2 83 2 :: 2 :;
C/<7* 0/-6)9: AE0-+1*, L)G1)2)*3 R<*)'.$ '.!$
AE0-+1*, L)G1)2)*3 R<*)-
'.! '."$ '." '.2$ '.2 '.1$ '.1 '.'$ ' 2''$#'6 2''6#' 2'' #'( 2''(#'& 2''&#1'
AE0-+1*, L)G1)2)*3 R<*)-
Y,<7
INTERPRETATION4 %uring the year 222?-23 the Absolute li.uidity ratio "as 2 2:, during the year 2223-2; it "as 2 81 and in the year 222;-2B it "as 2 83, in the year 222B-29 it "as 2 :: )his sho"s the Absolute li.uidity ratio increases every year but it is belo" the standard ratio !n the year 2229-12 the Absolute li.uidity ratio has increases 2 :; Dence it sho"s that the li.uidity position of the company is satisfactory 1. INVENTORY TURNOVER RATIO4# !nventory turnover ratio is the ratio, "hich indicates the number of times the stock is turned over i e , sold during the year )his measures the efficiency of the sales and stock levels of a company A high ratio means high sales, fast stock turnover and a lo" stock level A lo" stock turnover ratio means the business is slo"ing do"n or "ith a high stock level I9F,9*-73 T179-F,7 R<*)- M N,* S<+,0
BABASAB PATIL
- ;2 -
C+-0)9: I9F,9*-73 Oear 222?-23 2223-2; 222;-2B 222B-29 2229-12 @et 6ales 19?:22B1 22 81821229 22 2;B9:2B? 22 8B:932:3 22 :28:?3?1 22 #losing inventory 1?82:?? 22 21312;1 22 8883:82 22 2322921 22 2832311 22 !nventory )urnover ratio 12 ;? )imes 1: :9 )imes B 83 )imes 1: 3B )imes 1; 9: )imes
C/<7* 0/-6)9: I9F,9*-73 T179-F,7 R<*)2' 1( 16 1!
ITR
12 1' ( 6 ! 2 ' 2''$#'6INTERPRETATION4 2''6#' 2'' #'( 2''(#'& 2''&#1'
I9F, 9*-73 T179-F,7 R<*)-
!t is seen from the above chart that %uring the year 222?-23 the !nventory t/o ratio is 12 ;? times, in the year 2223-2; it increased to 1: :9 times, But in the year 222;-2B it decreased to B 83 times )here "as a subse.uent increase in the year 222B-29 and 222912 to 1: 3B times and 1; 9: times respectively )his sho"s the company has more sales 2. INVENTORY HOLDING PERIOD 4# )his period measures the average time taken for clearing the stocks !t indicates that ho" many days( inventories take to convert from ra" material to finished goods I9F,9*-73 H-+2)9: P,7)-2 M D<30 )9 < 3,<7 I9F,9*-73 *179 -F,7 7<*)-
Y, <7
BABASAB PATIL
- ;8 -
Oear 222?-23 2223-2; 222;-2B 222B-29 2229-12
%ays in a Oear 83? 83? 83? 83? 83?
!nventory )urnover -atio 12 ;? )imes 1: :9 )imes B 83 )imes 1: 3B )imes 1; 9: )imes
!nventory Dolding 7eriod 2B 38 %ays 2? 19 %ays :8 33 %ays 2: B3 %ays 22 8: %ays
C/<7* 0/-6)9: I9F,9*-73 H-+2)9: P,7)-2

$' !$ !' "$ "' 2$ 2' 1$ 1' $ ' 2''$#'6 2''6#' 2'' #'(
Y,<7
N1>E,7 -. 2<30
I9F,9*-73 H-+2)9: P,7)-2
2''(#'&
2''&#1'
INTERPRETATION4 !nventory holding period fluctuating over the years !t "as 2B 38 days in the year 222?-23 !t decreased to 2? 19 days in the year 2223-2;, it increased to :8 33 days in the year 222;-2B, there "as a subse.uent decrease in the year 222B-29 and 2229-12 to 2: B3 days and 22 8: days respectively )his sho"s the company is minimi5ing these inventory-holding days thereby to increase the sales ". DEBTORS I ACCOUNTS RECEIVABLES TURNOVER RATIO4# %ebtor(s turnover ratio indicates the speed of debt collection of the firm )his ratio computes the number of times debtors &receivables' has been turned over during the particular period D,E*-70 T179-F,7 R<*)- M N,* S<+,0 AF,7<:, D,E*-70 N-*,4 in B#M, "e have taken the total net sales instead of the credit sales, because the credit sales information has not available for the calculation of %)-
BABASAB PATIL
- ;: -
Oear 222?-23 2223-2; 222;-2B 222B-29 2229-12
@et 6ales 19?:22B1 22 81821229 22 2;B9:2B? 22 8B:932:3 22 :28:?3?1 22
Average %ebtors 22218B1 22 :9?B?2; 22 1B2?9:B 22 8;B;2;: 22 :8??83? 22
%ebtors )urnover -atio B BB )imes 3 82 )imes 1? :: )imes 12 13 )imes 9 ;2 )imes
C/<7* 0/-6)9: D,E*-70 T179-F,7 R<*)1( 16 1! 12 D, E*-70 T179-F, 7 R<*)-
DTR
1' ( 6 ! 2 ' 2''$#'6 2''6#' 2'' #'( Y, <7 2''(#'& 2''&#1'
INTERPRETATION4 !t is clear that debtor turnover ratio fluctuating over the years !t "as B BB times in the year 222?-23 !t decreased to 3 82 times in the year 2223-2;, !t again increased to 1? :: times in the year 222;-2B but it decreased to 12 13 times and 9 ;2 )imes in the year 222B-29 and 2229-12 respectively )his sho"s the company is not collecting debt rapidly !. DEBTORS COLLECTION PERIOD 4# %ebtors collection period measures the .uality of debtors since it measures the rapidity or the slo"ness "ith "hich money is collected from them a shorter collection period implies prompt payment by debtors !t reduces the chances of bad debts A longer collection period implies too liberal and inefficient credit collection performance AF,7<:, C-++,;*)-9 P,7)-2 M D<30 )9 < Y,<7 D,E*-70 T179-F,7 R<*)-
BABASAB PATIL
- ;? -
Oear 222?-23 2223-2; 222;-2B 222B-29 2229-12
%ays in a Oear 83? 83? 83? 83? 83?
%ebtors )urnover -atio B BB )imes 3 82 )imes 1? :: )imes 12 13 )imes 9 ;2 )imes
%ebtors #ollection 7eriod :1 12 %ays ?; ;? %ays 28 3: %ays 8? 92 %ays 8; ?? %ays
C/<7* 0/-6)9: D,E*-70 C-++,;*)-9 P,7)-2

' 6'
N1>E,7 -. 2<30
$' !' "' 2' 1' ' 2''$#'6 2''6#' 2'' #'( Y,<7 2''(#'& 2''&#1' D,E*-70 C-++,;*)-9 P,7)-2
INTERPRETATION4 %ebt collection period changing over the years !t "as :1 12 days in the year 222?-23 !t increased to ?; ;? days in the year 2223-2;, but in the year 222;-2B it decreased to 28 3: days )here "as a subse.uent increase in the year 222B-29 and 222912 to 8? 92 days and 8; ?? days respectively )his sho"s the inefficient credit collection performance of the company $. CREDITORSIACCOUNTS PAYABLES TURNOVER RATIO4# #reditor(s turnover ratio is the ratio, "hich indicates the number of times the debts are paid in the year )his ratio is calculated as follo"s C7,2)*-70 T179-F,7 R<*)- M N,* P17;/<0,0 AF,7<:, C7,2)*-70 N-*,4 !n the B#M, "e have taken the total 7urchases instead of the credit purchases, because the credit purchases information has not available for the calculations of #)Oear 222?-23 @et 7urchases 11391292 22 Average #reditors 13;8?1? 22 #reditors )urnover -atio 3 9B )imes
BABASAB PATIL
- ;3 -
2223-2; 222;-2B 222B-29 2229-12
1;;;B3;? 22 1BB93B2B 22 2832?;;8 22 2;1:3389 22
8:9212; 22 23:9;B1 22 23?B999 22 82?;B:9 22
? 29 )imes ; 18 )imes B BB )imes B BB )imes
C/<7* 0/-6)9: C7,2)*-70 T179-F,7 R<*)1' & ( 6 $ ! " 2 1 ' 2''$#'6 2''6#' 2'' #'( Y,<7 2''(#'& 2''&#1'
C7,2)*-70 T179-F,7 R<*)-
INTERPRETATION4 !t is clear that creditor turnover ratio changing over the years !t "as 3 9B times in the year 222?-23 !t decreased to ? 29 times in the year 2223-2;, there "as a subse.uent increase in the year 222;-2B and 222B-29 to ; 18 times and B BB times respectively !n the year 2229-12 it is same as compared to 222B-29 !t sho"s that company has making prompt payment to the creditors 6. CREDITORS PAYMENT PERIOD4# )he #reditors 7ayment 7eriod represents the average number of days taken by the firm to pay the creditors and other bills payables AF,7<:, P<3>,9* P,7)-2 M D<30 )9 < Y,<7 C/<7* 0/-6)9: C7,2)*-70 P<3>,9* P,7)-2 C7,2)*-70 T179-F,7 R<*)(' '
Oear 222?-23 2223-2; 222;-2B 222B-29 2229-12
CTR
%ays in a Oear 83? 83? 83? 83? 83?
N1>E,7 -. 2<30
#reditors 6'
$' !' "' 2' 1'
)urnover -atio 3 9B )imes ? 29 )imes ; 18 )imes B BB )imes B BB )imes - ;; -
Average 7ayment 7eriod ?2 29 %ays ;1 ;1 %ays ?1 19 %ays :1 12 %ays :1 12 %ays
C7,2)*-70 P<3>,9* P,7)-2
BABASAB PATIL
' 2''$#'6 2''6#' 2'' #'(
Y,<7
2''(#'&
2''&#1'
INTERPRETATION4 Average payment period changing over the years !t "as ?2 29 days in the year 222?-23 !t increased to ;1 ;1 days in the year 2223-2;, But in the year 222;-2B and 222B-29 it decreased to ?1 19 days and :1 12 days respectively !n the year 2229-12 it is same as compared to 222B-29 !t indicates that the company has taken the steps to prompt payment to the creditors . WORKING CAPITAL TURNOVER RATIO4# )his ratio indicates the number of times the "orking capital is turned over in the course of the year )his ratio measures the efficiency "ith "hich the "orking capital is used by the firm A higher ratio indicates efficient utili5ation of "orking capital and a lo" ratio indicates other"ise But a very high "orking capital turnover is not a good situation for any firm W-78)9: C<=)*<+ T179-F,7 R<*)- M N,* S<+,0 N,* W-78)9: C<=)*<+
C/<7* 0/-6)9: W<78)9: C<=)*<+ T179-F,7 R<*)-
WCTR
Oear ( 222?-23 2223-2; 6 222;-2B 222B-29 $ 2229-12 !

" 2 1 '
&
@et 6ales 19?:22B1 22 81821229 22 2;B9:2B? 22 8B:932:3 22 :28:?3?1 22
@et +orking #apital 2?21??3 22 ?;11BB1 22 32:B?8B 22 ;118?29 22 ;;B122; 22
+#); ;? )imes ? :B )imes : :3 )imes ? :1 )imes WCTR ? :: )imes
BABASAB PATIL
2''$#'6 2''6#' 2'' #'( - ;B
2''(#'&
2''&#1'
Y,<7
INTERPRETATION4 )he "orking capital t/o ratio is fluctuating year to year that "as high in the year 222?-23, ; ;? timesS there "as a subse.uent decrease in the year 2223-2; and 222;-2B to ? :B times and : :3 times But it increases in the year 222B-29 and 2229-12 to ? :1 and ? :: times respectively )his sho"s the company is utili5ing "orking capital effectively
CL FUND FLOW STATEMENTS

7rinciples of "orking capital for calculation purpose
CURRENT ASSETS
2 1 !f the current assets increase as a result of this, "orking capital also increases !f the current assets decreases as a result of this "orking capital decreases
CURRENT LIABILITIES
!f the current liabilities increases as a result of this "orking capital decreases !f the current liabilities decreases as a result of this "orking capital !ncrease
BABASAB PATIL
- ;9 -
S*<*,>,9* -. C/<9:,0 )9 W-78)9: C<=)*<+4

)he purpose of preparing this statement is for finding out the increase or decrease in "orking capital and to make a comparison bet"een t"o financial years
T<E+, 14 S*<*,>,9* -. C/<9:,0 )9 W-78)9: C<=)*<+ .-7 */, Y,<7 2''$#2''6 P<7*);1+<70
CURRENT ASSETS !nventories 6undry debtors #ash $ Bank balance =ther current assets <oans and Advances @ABT-*<+ C177,9* A00,*0 CURRENT LIABILITIES 6undry creditors 7rovisions @BBT-*<+ C177,9* L)<E)+)*),0 @AB#@BB N,* W-78)9: C<=)*<+ I9;7,<0, )9 W-78)9: C<=)*<+
A0 -9 "1#"# 2''$
222182? 22 1:8BB12 22 ?2833; 22 18:83: 22 1982B1 22
A0 -9 "1#"# 2''6
1?82:?? 22 22218B1 22 :98;:2 22 1:BB22 22 1B3399 22
E..,;* -9 6-78)9: ;<=)*<+
I9;7,<0,
VV ;32?;1 22 VV 1::?B 22 VV
D,;7,<0,
:3BB?2 22 VV 992? 22 VV 38B2 22
!2 122 .''
132319? 22 ?11?31 22
!$6"'&&.''
13;8?1? 22 83B22B 22 VV 1:8?88 22 3;822 22 VV
211 $6.'' 21$"! 1.'' "6('($.''N 2$21$$6.''

- B2 -
2'!1$!".'' 2$21$$6.'' VV 2$21$$6.'' VV &2'$62.'' "6('($.''N &"'!( .''
TOTAL
BABASAB PATIL
INTERPRETATION4 !n the above table, it is seen that during the year 222:-2? and 222?-23 there "as a net increase in "orking capital of -s 83B2B? 22 !t indicates an ade.uate "orking capital in Bahety chemicals $ minerals pvt ltd , )his is because of 1 !ncrease current assets such as 6undry debtors by -s ;32?;1 22, other current assets by -s 1::?B 22 And decrease in !nventories by -s :3BB?2 22, #ash $ Bank balance by -s 992? 22, <oans and Advances by -s 38B2 22 2 !ncrease in current liabilities such as in 6undry creditors by -s 3;822 22 and
decrease in 7rovisions by -s 1:8?88 22
T<E+, 24 S*<*,>,9* -. C/<9:,0 )9 W-78)9: C<=)*<+ .-7 */, Y,<7 2''6#2'' P<7*);1+<70
A0 -9 "1#"# 2''6
1?82:?? 22 22218B1 22 :98;:2 22 1:BB22 22 1B3399 22
A0 -9 "1#"# 2''
21312;1 22 :9?B?2; 22 122?332 22 ;B232 22 119312B 22
E..,;* -9 6-78)9: ;<=)*<+
I9;7,<0,
32B313 22 2;?;1:3 22 ;1191B 22 VV 1229:29 22
D,;7,<0,
VV VV VV ;2?32 22 VV
!$6"'&&.''
13;8?1? 22 83B22B 22
&$&&6!6.''
8:9212; 22 89?38B 22 VV VV 1B1B312 22 2;312 22
2'!1$!".'' 2$21$$6.'' "1&'"2$.''N $ 11((1.''
"(( 6$.'' $ 11((1.'' VV $ 11((1.'' VV $1' 1'&.'' "1&'"2$.''N $1' 1'&.''
TOTAL
INTERPRETATION4
BABASAB PATIL
- B1 -
!n the above table, it is seen that during the year 222?-23 and 2223-2; there "as huge net increase in "orking capital by -s 819282? 22 As #ompare to 222:-2? and 222?-23 )his is because 1 )here is !ncrease in current assets such as !nventories by -s 32B313 22, 6undry debtors by -s 2;?;1:3 22, #ash $ Bank balance by -s ;1191B 22, <oans and Advances by -s 1229:29 22 And decrease in other current assets by -s ;2?32 22 2 )here is !ncrease in current liabilities such as 6undry creditors by -s 1B1B312 22,
7rovisions by -s 2;312 22
T<E+, "4 S*<*,>,9* -. C/<9:,0 )9 W-78)9: C<=)*<+ .-7 */, Y,<7 2'' #2''( P<7*);1+<70
A0 -9 "1#"# 2''
21312;1 22 :9?B?2; 22 122?332 22 ;B232 22 119312B 22
A0 -9 "1#"# 2''(
8883:82 22 1B2?9:B 22 12881?2 22 1B93B8 22 2;12:2: 22
E..,;* -9 6-78)9: ;<=)*<+
I9;7,<0,
11;?8?9 22 VV VV 111:28 22 1?132;3 22
D,;7,<0,
VV 81?2?;9 22 1;2?2B 22 VV VV
&$&&6!6.''
8:9212; 22 89?38B 22
&'
61 .''
B:28:3 22 2138:2 22
23:9;B1 22 1;929B 22
VV VV
"(( 6$.'' $ 11((1.'' $"66$ .''N 62!($"(.''
2(2&' &.'' 62!($"(.'' VV 62!($"(.''
VV "(61 !!.''
$"66$ .''N "(61 !!.''
TOTAL
INTERPRETATION4
!n the above table, it is seen that during the year 2223-2; and 222;-2B there "as also net increase in "orking capital by -s ?833?; 22 As compare to 222?-23 and 2223-2; )his is because 1 )here is !ncrease in current assets such as !nventories by -s 11;?8?9 22, other current assets by -s 111:28 22, <oans and Advances by -s 1?132;3 22 and decrease in 6undry debtors by -s 81?2?;9 22, #ash $ Bank balance by -s 11831B 22
BABASAB PATIL
- B2 -
)here is %ecrease in current liabilities such as 6undry creditors by -s B:28:3 22,
7rovisions by -s 2138:2 22
T<E+, !4 S*<*,>,9* -. C/<9:,0 )9 W-78)9: C<=)*<+ .-7 */, Y,<7 2''(#2''& P<7*);1+<70
CURRENT ASSETS !nventories 6undry debtors #ash $ Bank balance =ther current assets <oans and Advances @ABT-*<+ C177,9* A00,*0
A0 -9 "1#"# 2''(
8883:82 22 1B2?9:B 22 12881?2 22 1B93B8 22 2;12:2: 22
A0 -9 "1#"# 2''&
2322921 22 8;B;2;: 22 1;22B1? 22 223223 22 2333282 22
E..,;* -9 6-78)9: ;<=)*<+
I9;7,<0,
VV 19B1823 22 3B;338 22 13?28 22 VV
D,;7,<0,
;18?29 22 VV VV VV :31;2 22
&'
61 .''
11''"!2(.' '
CURRENT LIABILITIES 6undry creditors 7rovisions @BBT-*<+ C177,9* L)<E)+)*),0
23:9;B1 22 1;929B 22
23?B999 22 1282922 22
VV VV
921B 22 12?1322 22
2(2&' &.'' @AB#@BB N,* W-78)9: C<=)*<+ 62!($"(.''

I9;7,<0, )9 W-78)9: C<=)*<+
(6!&&1.''N 11"$2&.''
"((&(&&.'' 11"$2&.'' VV 11"$2&.''
VV 266 $12.''
(6!&&1.''N 266 $12.''
TOTAL
INTERPRETATION4 !n the above table, it is seen that during the year 222;-2B and 222B-29 there "as also net increase in "orking capital by -s B3:991 22 As compare to 2223-2; and 222;-2B )his is because 1 )here is !ncrease in current assets such as 6undry debtors by -s 19B1823 22, #ash $ Bank balance by -s 3B;338 22, =ther current assets by -s 13?28 22 and decrease in !nventories by -s ;18?29 22, <oans and Advances by -s :31;2 22 2 )here is !ncrease in current liabilities such as 6undry creditors by -s 921B 22,
7rovisions by -s 12?1322 22
BABASAB PATIL
- B8 -
T<E+, $4 S*<*,>,9* -. C/<9:,0 )9 W-78)9: C<=)*<+ .-7 */, Y,<7 2''&#2'1' P<7*);1+<70
CURRENT ASSETS !nventories 6undry debtors #ash $ Bank balance =ther current assets <oans and Advances @ABT-*<+ C177,9* A00,*0
A0 -9 "1#"# 2''&
2322921 22 8;B;2;: 22 1;22B1? 22 223223 22 2333282 22
A0 -9 "1#"# 2'1'
2832311 22 :8??83? 22 19;B98B 22 1B??B? 22 823313; 22
E..,;* -9 6-78)9: ;<=)*<+
I9;7,<0,
VV ?3B291 22 2?B128 22 VV 89998? 22
D,;7,<0,
232292 22 VV VV 22321 22 VV
11''"!2(.' '
11&!6666.' '
82?;B:9 22 112;B12 22 VV 128292 22 89BB?2 22 VV
CURRENT LIABILITIES 6undry creditors 7rovisions @BBT-*<+ C177,9* L)<E)+)*),0 @AB#@BB N,* W-78)9: C<=)*<+ I9;7,<0, )9 W-78)9: C<=)*<+
23?B999 22 1282922 22
"((&(&&.'' 11"$2&.'' 66 ! (.''N (2 '&(1.''
!16$6$&.'' (1'' .'' VV (2 '&(1.'' VV 1"!&2"&.'' 66 ! (.''N 1"!&2"&.''
TOTAL
INTERPRETATION4 !n the above table, it is seen that during the year 222B-29 and 2229-12 there "as also net increase in "orking capital by -s 11?;:?2 22 As compare to 222;-2B and 222B-29 )his is because 1 )here is !ncrease in current assets such as 6undry debtors by -s ?3B291 22, #ash $ Bank balance by -s 2?B128 22 <oans and Advances by -s 89998? 22 and decrease in !nventories by -s 232292 22, other current assets by -s 22321 22 2 )here is !ncrease in current liabilities such as 6undry creditors by -s 89BB?2 22 and
decrease in 7rovisions by -s128292 22
BABASAB PATIL
- B: -
PART # VII
FINDINGS. FINDINGS.
SUGGESTIONS SUGGESTIONS& & CONCLUSIONS. CONCLUSIONS.
FINDINGS.
BABASAB PATIL
- B? -
+orking capital of the Bahety #hemicals $ Minerals 7vt <td "as increasing and sho"ing positive "orking capital per year )he Bahety #hemicals $ Minerals 7vt <td has higher current and .uick ratios are i e , 2 B; and 2 82 respectively !nventory turnover ratio is very lo" in the year 222;-2B !n the year 222B-29 it has
increased by 3 82 times as compared to 222;-2B and in the last year 2229-12 it has again increased by 8 23 times as compared to 222B-29 %ebtor(s turnover ratio is very high in the year 222;-2B !n the year 222B-29 it has decreased by ? 2B times as compared to 222;-2B and in the last year 2229-12 it has again decreased by 2 :: times as compared to 222B-29 #reditor(s turnover ratio has increased in the years of 222;-2B and 222B-29 !t is same in the last year 2229-12 as compared to 222B-29 +orking capital turnover ratio is very lo" in the year 222;-2B !n the year 222B-29 it has increased by 2 9? times as compared to 222;-2B and in the last year 2229-2212 it has again increased by 2 28 times
SUGGESTIONS.
BABASAB PATIL
- B3 -
+orking capital of the company has increasing every year 7rofit also increasing
every year this is good sign for the company !t has to maintain it further, to run the business long term )he #urrent and .uick ratios are almost up to the standard re.uirement 6o the +orking capital management Bahety #hemicals $ Minerals 7vt <td is satisfactory and it has to maintain it further )he company has sufficient "orking capital and has better li.uidity position By efficient utili5ing this short-term capital, then it should increase the turnover )he company should take precautionary measures for investing and collecting funds from receivables and to reduce the bad debts )he company has sufficient "orking capital and has better li.uidity position By efficient utili5ing this short-term capital, then it should increase the turnover #reditor(s turnover ratio has increasing from 222;-2B to 222B-29 and in the last year 2229-2212 it is same as compared to 222B-29 #ompany is making prompt payment to its creditors )his is good sign for the company =n-time payment to suppliers "ill increase the credibility of the firm !t has maintain it further to survive in the market )he company is utili5ing "orking capital effectively this is good for the company !t has to maintain it further
BABASAB PATIL
- B; -
CONCLUSIONS.
)he study on "orking capital management conducted in Bahety #hemicals $ Minerals 7vt <td to analy5e the financial position of the company )he company(s financial position is analy5ed by using the tool of annual reports from 222?-23 to 222912 )he financial status of Bahety #hemicals $ Minerals 7vt <td is good !n the last year the inventory turnover has increased, this is good sign for the company )he company(s li.uidity position is very good +ith regard to the investments in current assets there are ade.uate funds invested in it #are should be taken by the company not to make further investments in current assets, as it "ould block the funds, "hich could other"ise be effectively utili5ed for some productive purpose =n the "hole, the company is
moving for"ard "ith e*cellent management
BABASAB PATIL
- BB -
FINANCIAL STATEMENT. BIBILOGROPHY.
FINANCIAL STATEMENT 2''&#2'1'
BABASAB PATIL
- B9 -
PROVISIONAL BALANCE SHEET AS AT "10* MARCH, 2'1'

LIABILITY SOURCES OF FUNDS 6hare capital -eserves and surplus LOAN FUNDS 6ecured <oans Gnsecured <oans %eferred ta* liability CURRENT LIABILITIES 6undry creditors 7rovisions 82?;B:9 22 112;B12 22 2?;:3;2 22 82:9192 22 B2129B 22 1222222 22 9B2;212 22 AMOUNT ASSETS FIXED ASSETS Iross block <ess, %epreciation @et Block #apital +!7 CURRENT ASSETS !nventories 6undry debtors #ash $ bank balance =ther current assets <oans and Advances TOTAL 21!1 ("1.'' 2832311 22 :8??83? 22 19;B98B 22 1B??B? 22 823313; 22 21!1 ("1.'' 12918832 22 ?18?9?9 22 ?;;;:21 22 8398;3: 22 AMOUNT
BIBLIOGRAPHY
TEXT BOOKS
M.Y.K/<9 I P.K %<)9, F)9<9;)<+ M<9<:,>,9* T,C*, P7-E+,>O0 C<0,0, $TH E2)*)-9,T<*< M;G7<6 H)++ P1E+)0/)9: C->=<93 L)>)*,2, N,6 D,+/), 2'' .
BABASAB PATIL
- 92 -
P7<0<99< C/<927<, F)9<9;)<+ M<9<:,>,9* T/,-73 <92 P7<;*);,, $TH E2)*)-9, T<*< M;G7<6 H)++ P1E+)0/)9: C->=<93 L)>)*,2, N,6 D,+/), 2''1. A991<+ R,=-7* -. B</,*3 C/,>);<+0 & M)9,7<+0 P7)F<*, L)>)*,2.
WEB SITE VISITED
666.:--:+,.;-> 666.6)8)=,2)<.-7: 666.*7<90*1*-70.;->
BABASAB PATIL
- 91 -

Working Capital Management PROJECT REPORT MBA

Uploaded by

Document Information

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Working Capital Management PROJECT REPORT MBA

Uploaded by

Copyright:

Available Formats

WORKING CAPITAL MANAGEMENT OF BAHETY CHEMICALS & MINERALS PVT. LTD., DANDELI.

FINANCIAL STATEMENT. BIBILOGROPHY.

EXECUTIVE SUMMARY BABASAB PATIL

T)*+, -. */, 0*1234 5T/, 0*123 -. 6-78)9: ;<=)*<+ ><9<:,>,9*?

INTRODUCTION INTRODUCTIONTO TOTHE THESTUDY STUDY

INDUSTRY INDUSTRYPROFILE PROFILE

INTRODUCTION TO THE STUDY

INDUSTRIAL PROFILE HISTORY

CHEMICAL INDUSTRY STRUCTURE

LISTS OF CHEMICAL INDUSTRIES

INTRODUCTION INTRODUCTIONOF OFCOMPANY COMPANY

INTRODUCTION OF THE COMPANY

COMPANY PROFILE HISTORY OF THE COMPANY

PROFILE OF BAHETY CHEMICALS AND MINERALS PVT. LTD

N<*17, -. B10)9,00 EC=-7* =+<;,0

N1>E,7 -. 6-78)9: 2<30 3 days in a "eek

P7-21;*)-9 ;<=<;)*3 S*-7<:, C<=<;)*3

CAPITAL STRUCTURE OF BCM.CO.LTD

INVESTMENT IN FIXED ASSETS IS SOWN BELOW

T-*<+ I9F,0*>,9* @R0.B

<and and Building Machinery Adjacent Building

82,22,222 22 12,22,222 22 1?,22,222 22

VISION AND MISSION OF BCM .CO.LTD

A+1>)9)1>#S1+=/<*, F,77); # +)G1)2 # A+1>

USE4 %yeing and purification, +ater treatment

EXPANSION AND DIVERSIFICATION

INFRASTRUCTURE FACILITIES PROVIDED BY BCM.CO.LTD4

SWOT ANALYSIS OF BAHETY CHEMICALS & MINERALS PVT.LTD.

THREATS 1 2 Antry of competitors 7roduct substitution

DEPARTMENTAL STUDIES OF BCM. CO.LTD

( & 1' 11 12 1"

PRODUCTION PROCESS OF FERRIC ALUM

SPENT SULPHURIC ACID STORAGE TANK.

WATER SERVICE TANK.

Avolvement of heat and 6team

PRODUCTION PROCESS OF LIHUID FERRIC ALUM

SPENT SUPHURIC ACID STORAGE TANK. BAUXITE

WATER SERVICE TANK.

Avolvement of heat and 6team

LIHUID FERRIC ALUM

PRODUCTION PROCESS OF NON#FERRIC ALUM

SULPHURIC ACID STORAGE TANK.

WATER SERVICE TANK.

Avolvement of heat and 6team

BABASAB PATIL PART # IV - 8? -

RESEARCH RESEARCHMETHDOLOGY. METHDOLOGY.

SCOPE OF THE STUDY

OB%ECTIVES OF THE STUDY

)o study the sources and uses of the "orking capital

)o make suggestions based on the finding of the study

LIMITATIONS OF THE STUDY

WORKING WORKINGCAPITAL CAPITALMANAGEMENT. MANAGEMENT.

INTRODUCTION OF WORKING CAPITAL4

MEANING OF WORKING CAPITAL

Mead Mallott & Field /+orking capital means current assets0

OB%ECTIVES OF WORKING CAPITAL MANAGEMENT

THE NEED FOR THE WORKING CAPITAL

WORKING CAPITAL MANAGEMENT BABASAB PATIL

CLASSIFICATION OF WORKING CAPITAL

=n )he Basis of #oncepts

=n )he Basis of )ime

Iross +orking #apital

@et +orking #apital

7ermanent / 1i*ed +orking #apital

T)+, -. /, 01234 5T/, 0123 -. 6-78)9: ;<=)<+ ><9<:,>,9?

N<17, -. B10)9,00 EC=-7 =+<;,0

P7-21;)-9 ;<=<;)3 S-7<:, C<=<;)3

T-<+ I9F,0>,9* @R0.B

AE0-+1, L)G1)2)3 R<*)- M

C/<7* 0/-6)9: AE0-+1, L)G1)2)3 R<*)'.$ '.!$

AE0-+1, L)G1)2)3 R<*)-

AE0-+1, L)G1)2)3 R<*)-

C/<7* 0/-6)9: I9F,9-73 T179-F,7 R<)2' 1( 16 1!

I9F, 9-73 T179-F,7 R<)-

C/<7* 0/-6)9: D,E-70 T179-F,7 R<)1( 16 1! 12 D, E-70 T179-F, 7 R<)-