Working capital is the cash needed to pay for the day to day operation of the business. Working capital is a financial metric which represents operating liquidity available to a business, organization or other entity, including governmental entity. Along with fixed assets such as plant and equipment, working capital is considered a part of operating capital. Net working capital is calculated as current assets minus current liabilities. It is a derivation of working capital ,that is commonly used in valuation techniques such as DCFs (Discounted cash flows). If current assets are less than current liabilities, an entity has a working capital deficiency, also called a working capital deficit. A company can be endowed with assets and profitability but short of liquidity if its assets cannot readily be converted into cash. Positive working capital is required to ensure that a firm is able to continue its operations and that it has sufficient funds to satisfy both maturing short-term debt and upcoming operational expenses. The management of working capital involves managing inventories, accounts receivable and payable, and cash. Working capital management is a very important component of corporate finance because it directly affects the liquidity and profitability of the company. It involves the decision of the amount and composition of current assets and the financing of these assets. Efficient working capital management involves planning and controlling current assets and current liabilities in a manner that eliminates the risk of inability to meet due short term obligations on the one hand and avoid excessive investment in these assets on the other hand. “Working capital” means that part of the total assets of the business that change from one form to another form in the ordinary course of business



operations.” Also known as revolving or circulating capital or short-term financial management it is nothing but the difference between current assets and current liabilities. The word “working capital” is made of two words - Working & Capital. The word „working‟ means day to day operation of th e business, whereas the word „capital‟ means monetary value of all assets of the business. Working capital is of major importance to internal and external analysis because of its close relationship with the current day-to- day operations of a business. Every business needs funds for two purposes.  Long term funds are required to create production facilities through purchase of fixed assets such as plants, machineries, lands, building, etc.  Short term funds are required for the purchase of raw materials, payment of wages, and other day-to-day expenses.

The advantages of working capital or adequate working capital may be enumerated as below: Cash Discount:8099883885 If a proper cash balance is maintained, the business can avail the advantage of cash discount by paying cash for the purchase of raw materials and merchandise. It will result in reducing the cost of production. It creates a Feeling of Security and Confidence: The proprietor or officials or management of a concern are quite carefree, if they have proper working capital arrangements because they need not worry for the payment of business expenditure or creditors. Adequate working capital creates a sense of security, confidence and loyalty, not only



throughout the business itself, but also among its customers, creditors and business associates. 3. „Must‟ for Maintaining Solvency and Continuing Production: In order to maintain the solvency of the business, it is but essential that the sufficient amount t of fund is available to make all the payments in time as and when they are due. Without ample working capital, production will suffer, particularly in the era of cut throat competition, and a business can never flourish in the absence of adequate working capital. 4. Sound Goodwill and Debt Capacity: It is common experience of all prudent businessmen that promptness of payment in business creates goodwill and increases the debt of the capacity of the business. A firm can raise funds from the market, purchase goods on credit and borrow short-term funds from bank, etc. If the investor and borrowers are confident that they will get their due interest and payment of principal in time. 5. Easy Loans from the Banks: An adequate working capital i.e. excess of current assets over current liabilities helps the company to borrow unsecured loans from the bank because the excess provides a good security to the unsecured loans, Banks favour in granting seasonal loans, if business has a good credit standing and trade reputation. 6. Distribution of Dividend: If company is short of working capital, it cannot distribute the good dividend to its shareholders in spite of sufficient profits. Profits are to be retained in



High Morale: The provision of adequate working capital improves the morale of the executive because they have an environment of certainty. 8.Increased Production Efficiency: A continuous supply of raw material. financial crisis due to heavy losses. SJCET MBA .WORKING CAPITAL the business to make up the deficiency of working capital. 10. research programme. if company maintains adequate working capital. business oscillations.g.. Exploitation of Good Opportunity: In case of adequacy of capital in a concern. good opportunities can be exploited e. On the other contrary. company may make off-season purchases resulting in substantial savings or it can fetch big supply orders resulting in good profits. It will increase the production efficiency. Meeting Unseen Contingency: Depression shoots the demand of working capital because sock piling of finished goods become necessary. 7.g.. ample dividend can be declared and distributed. innovations and technical development and expansion programmes can successfully be carried out if adequate working capital is maintained in the business. security and confidence. which will. which is a great psychological. It increases the market value of shares. etc. Certain other unseen contingencies e. factor in improving the overall efficiency of the business and of the person who is at the hell of fairs in the company. 9. in turn increases the efficiency and morale of the employees and lower costs and create image among the community. if working capital is sufficient. can easily be overcome.

WORKING CAPITAL NEED FOR THE STUDY In any of the organization working capital place an important role under estimation of working capital effects the profitability and liquidity of company financial position so it is very much needed to analysis the efficiency of working capital management to this industry. SJCET MBA .

4. SJCET MBA . cash and receivable at ULTRA TECH but there are some more and they are 1. To understand the planning and management of working capital at ULTRATECH 3. To suggest ways for better management and control of working capital at the concern.WORKING CAPITAL OBJECTIVE OF THE STUDY The objectives of this project were mainly to study the inventory. The main purpose of our study is to render a better understanding of the concept “Working Capital Management”. To measure the financial soundness of the company by analyzing various ratios. 2.

4. 5. 3. The project would also be an effective tool for credit policies of the companies. The project will be a learning of planning and financing working capital. SJCET MBA . This project will be a learning device for the finance student. 2. 6. These are as follows – 1. This will show different methods of holding inventory and dealing with cash and receivables.WORKING CAPITAL SCOPE OF THE STUDY This project is vital to me in a significant way. This will show the liquidity position of the company and also how do they maintain a particular liquidity position. It does have some importance for the company too. Through this project I would study the various methods of the working capital management.

WORKING CAPITAL RESEARCH METHODOLOGY Data Collection Sources of Data: After going through different methods of data collection it was decided that both primary and secondary data are suitable for this survey. Primary:  The primary data was collected mainly through interaction and discussions with the company‟s executives. SJCET MBA .  Accounting records information given by the management. Secondary: Company financial records. the company annual resource and other necessary information in the internet. Data is collected completely from the resource of the company and to some extent from the financial reports.

 The data collected is based on financial statements which may have certain limitations. SJCET MBA . they are as follows:  The study covers only the working capital management of the company with the help of secondary data collected from the office.WORKING CAPITAL LIMITATIONS OF THE STUDY The following are the limitations of the analyzing the financial statements analyzing data.  Limitations of ratio analysis are also limitations of study.

which can be converted into cash with in a financial year. Net working capital: It refers to the difference between current assets and current liabilities. Current assets are the assets. Gross working capital 2. SJCET MBA . Net working capital is a qualitative concept. The gross working capital points to the need of arranging funds to finance current assets.WORKING CAPITAL WORKING CAPITAL = CURRENT ASSETS-CURRENT LIABILITIES There are two major concepts of working capital: 1. And vice-versa for negative networking capital. A positive net working capital will arise when current assets exceed current liabilities. Net working capital Gross working capital: It refers to firm's investment in current assets. Net working capital can be positive or negative.

Charminar etc. But cement means is most vital and important material for modern constructions. the evidence of lime construction. It is a material which sets and hardness when mixed with water. In ancient times clay bricks and stones have been used for construction works. Qutubminar. The Romans were using a binding or a cementing material that would harden and water. Cement is basically used in construction as a building agent. The construction in lost centuries was with Lime that was the main equipment used for construction work. it is commonly used is any substance applied for soft stocking things. The ancient constructions like Tajmahal. He observed that production obtained by during lime stone was the best cementing material for work under water.WORKING CAPITAL INDUSTRY PROFILE INTRODUCTION OF CEMENT: The basic need of human being is food clothing and shelter love and affection /possession is on never ending process for a human being. The first systematic effort was made by “SMEATON” who undertook the execution of a new light house in 1756. Mysore Palace. Cement the word derived from a latin word „CEMENTTUM‟ means stone chipping such as we used in roman. Cement the word as per oxford. As the time passes on human beings their wants and wishes also changed from ancient times to modern times and among them the living pattern and construction works also have been changed from temporary construction of house to permanent construction and the basic material used in construction is “Cement”. SJCET MBA . Red fort..

A significant development was made in 1930 when all manufacturers mergers together to form the Associated Cement Company Limited. In 1914 as the foundation of stable cement Industry was laid as sun above. India is the fourth largest cement producer after China. Cement Industry is the major Industry it has taken rapid strides for a modest beginning at porbandar in 1914 to the 1980‟s with over understanding out of the 60 units. SJCET MBA . so far annual production and demand has been growing a pace at roughly 68 million tons with an installed capacity of 82 millions tons. Indian endowed with cement grade lime stones (90 Billion tons ) and coal (190 Billion tons ). In 1920. The basic raw material required for cement manufacture and self sufficient in manufacturing cement making machineries. which will make it global.A. The World Bank is examine the feasibility of providing a third line of credit for further upgrading Industry in varying areas. The strength and vitality of cement Industry can be gouged by the intrest shown and support given by World Bank. 14 units are in the public sectors remaining units are in private sector. During nineties it had a particular impressive expansion with a growth rate of 10%. Japan and U. It was Indian Cement Company at Porbandar in Gujarat.S. considering the excellent performance of the industry in utilizing loans and achieving the objectives and targets. the cement marketing corporation was formed to promote the sale and distribution of cement.WORKING CAPITAL THE INDIAN CEMENT INDUSTRY: By staring priduction in 1914 the story of India cement industry is a stage of continuous of growth.

The largely out molded well process technology. Material is partly or completed carried out before the feud enters the rotator kin besides saving power. Presently 93% of the total capacity in the industry is based on modern and environment friendly dry process technology and only 7% of the capacity is based on old wet and semi-dry process technology. 3. TECHNOLOGICAL CHANGES: Continuous technological upgrading and assimilation of latest technology has been going on in the cement industry.000 tons per day plants being setup in the country use this technology. TECHNOLOGY: Cement may be manufactured employing three alternative technologies.WORKING CAPITAL Therefore. The more modern dry process that requires only 19% coal utilization. The induction of advanced technology has helped the industry immensely to conserve energy and fuel and to save materials substantially. Here the calcinatory or raw. the adoption of this technology enable in increase in installed capacity by 30-35%. 2. employing over a 100 thousand people directly and contributing amount of rupees 8 billion to India‟s GDP. There is tremendous scope for waste heat recovery in cement plants and there by reduction in emission level. SJCET MBA . the 30. India today totally installed capacity of over 30 million tons. The latest percallinator technology through which optimum utilization may be achieved. One project for co-generation of power utilizing waste heat in an Insian cement plant is being implemented with Japanese assistance under Green Aid Plan. 1.

The Cement Corporation of India. Portland Puzzling Cement (PPC).WORKING CAPITAL India is also producing different varieties of cement like Ordinary Portland Cement (OPC). Export during April-May. Oil Well Cement. J K Cement and L & T cement. There are 10 large cement plants owned by various state Governments. White Cement etc.35 million tons. The export of cement during 2003-04 and 2005-06 was 5. which is a Central Public Sector Undertaking.28 million tons and more than 300 mini cement plants with an estimated capacity of 11. Portland Blast Furnace Slag Cement (PBFS).92 million tons respectively. The total installed capacity in the country as a whole is 159.35 million tons as against a production of 107. and L & T Ltd.10 million tons per annum. Major exporters were Gujarat Ambuja Cements Ltd.14 million tons and 6. Also. TOTAL PRODUCTION: The cement industry comprises of 125 large cement plants with an installed capacity of 148. production of these varieties of cement conform to the BIS Specifications. the industry is also exporting cement and clinker.84%. Actual cement production in 2004-05 was 116. 2005 was 1. has 10 units. Major players in cement production are Ambuja cement. The SJCET MBA . Apart from meeting the entire domestic demand. registering a growth rate of 8. some cement plants have set up dedicated jetties for promoting bulk transportation and export.90 million tons in 2003-04. Rapid Hardening Portland Cement. The planning commission for the formulation of X Five Year Plan constituted a „Working Group on Cement Industry‟ for the development of cement industry. Sulphate Resisting Portland Cement. Aditya cement.38 million tons.

SJCET MBA .14 million tons and 6. Further push to housing developments programs. registering a growth rate of 8. 2005 was 1. 2. J K Cement and L & T cement. 1. Cement industry has been decontrolled from price and distribution on 1 st march 1989 and de-licensed on 25th July 1991. Apart from meeting the entire domestic demand.84%.35 million tons as against a production of 107.90 million tons in 2003-04. The Working Group has identified following thrust areas for improving demand for cement. the constraints faced by the Actual cement production in 2004-05 was 116. Major players in cement production are Ambuja cement. The export of cement during 2003-04 and 2005-06 was 5.WORKING CAPITAL Working Group has identified following thrust areas for improving demand for cement. the performance of the industry and prices of cement are monitored regularly.92 million tons respectively. However. and L & T Ltd. the industry is also exporting cement and clinker. Aditya cement. and Use of ready-mix concrete in large infrastructure projects.35 million tons. The planning commission for the formulation of X Five Year Plan constituted a „Working Group on Cement Industry‟ for the development of cement industry. Being a key infrastructure industry. Major exporters were Gujarat Ambuja Cements Ltd. Promotion of concrete Highways and roads. 3. Export during April-May.

the performance of the industry and prices of cement are monitored regularly. Further push to housing developments programs. Information Technology Medical Science etc. Use of ready-mix concrete in large infrastructure projects. NEED AND IMPORTANCE: In India we see rapid industrial development in the last few centuries. In India cement industry is growing rationally and SJCET MBA . the constraints faced by the industry are reviewed in the Infrastructure Coordination Committee meetings held in the Cabinet Secretariat under the Chairmanship of Secretary (Coordination). They are steel cement SOF. at present the Industry has to make an agreement towards the levy quota which is to be sold compulsorily to the Government the rest of the output or open market quota may be sold in the open market evolved prices the output lifted by the Government is allocated state wise. Cement industry has been decontrolled from price and distribution on 1 st march 1989 and de-licensed on 25th July 1991. And there are different industrial sectors are playing a vital role for the economy‟s development. The 444 Committee on Infrastructure also reviews its performance. However. Indian industry is growing at considerable ratio which reveals India is a developing country. Being a key infrastructure industry.WORKING CAPITAL 4. Promotion of concrete Highways and roads. One among them was “CEMENT INDUSTRY” which plays a vital role for the country‟s development. DISTRIBUTION SYSTEM: Distribution of cement was entirely under Government control until 1982. and 6. 5.

legal. Orient limited.. India limited. social.WORKING CAPITAL marketing is the king pin of all activities particularly to the business because of this changes in the external environment i. There is increased in the salaries in all most in every market leading to competition is aspects of price. In even Industry now a days there is no special interest for particularly department like production or manufacturing but knows a days total quality management plays a vital for the company‟s success. The manufacturers of Cement like NAGARJUNA cement. SJCET MBA . are providing cement and they are distributing cement through wide network of dealers. Distribution channel which plays a vital role for the company success. which help to increase the standard of living of people. Ultratech etc. technical and international environment and changes in marketing. political.. promotion etc.e. NAGARJUNA cements are doing its business from decades and it is continuously contributing to the national economy. Distribution channels are link between the company and consumer.

ready mix concretes under the name of „UltraTech Concrete‟ and new age building products under the name of „UltraTech Building Products Division‟. White Cement. Portland Blast Furnace Slag Cement. Ready Mix Concrete. building products and a host of other building solutions. The in-film branding with „Chak De India‟ and the IPL SJCET MBA . the Aditya Birla Group.33. UltraTech Cement is part of the US $40 billion Aditya Birla Group. India's largest and the world's 10th largest manufacturer of cement. The company has 22 cement plants in India with an installed capacity of 48. These traits have inspired engineers to further use their imagination. Portland Pozzalana Cement. 4 in the world and No. one of India's largest producers of RMC and the nations's largest producer of white cement has been instrumental in India‟s rapid infrastructural growth. is in the league of Fortune 500 companies. UltraTech as a brand is an embodiment of „strength‟ and „reliability‟. Brandscape: The UltraTech brand bears a strong association with popular Indian sports namely cricket and hockey. The retail outlets of UltraTech operate under the name of „UltraTech Building Solutions‟. which has resulted in a more extensive realm of possibilities. belonging to 42 different nationalities across 36 countries. Another survey conducted by Aon -Hewitt. It employs a diverse workforce comprising of 1. Its state-of-the-art manufacturing facilities produce products and services that have aided growth not only in urban areas but also in the rural interiors of the country.WORKING CAPITAL INTRODUCTION UltraTech Cement.000 employees. Fortune magazine and RBL ranked the group as No.75 Million Tonnes Per Annum (MTPA) with an expected increase of 10 MTPA by FY 13.1 in Asia Pacific among the „Top Companies for Leaders‟ (2011). A recent survey conducted by Aon-Hewitt ranked the Aditya Birla Group as one among the „Best Employers‟ in India. The range includes Ordinary Portland Cement. White cement is manufactured under the brand name of „Birla White‟ . UltraTech Cement provides a range of products that cater to all the needs from laying the foundation to delivering the final touches. UltraTech‟s parent company.

WORKING CAPITAL connect with the Rajasthan Royals (Season 2. The infilm branding opportunity was used by UltraTech for the first time ever in the cement industry. engineers.„A Celebration of Architecture‟. while in Season 5. All these affiliations have strengthened Brand UltraTech's association with the fraternity of students. architects. the world's largest producer of movies in as many as 10-12 different languages. builders and the construction community at large. Chak De India. SJCET MBA . provides a great opportunity for advertisers to reach the masses. UltraTech is also associated with the Business India exhibition . 3 & 5) and Deccan Chargers (Season 4) has made UltraTech a youthful brand to reckon with. the association with Rajasthan Royals has been strengthened as the Principal Team Sponsor for IPL 2012. IPL Association In Season 4. Birla White‟s homegrown „Yuvaratna‟ Awards recognise architectural and engineering excellence. UltraTech Cement partnered with the talented team from Hyderabad Deccan Chargers.

Superbrands is a global organisation that recognizes. a Business India Exhibitions' event held in collaboration with the Inside Outside Mega Show.WORKING CAPITAL A Celebration of Architecture: UltraTech Cement is proud to present „A Celebration of Architecture‟. this is certainly an outstanding achievement. showcases and pays tribute to the best brands in each country. In a market comprising of several highly regarded competitors. thereby making it resilient to fluctuating economic conditions. SJCET MBA .„SUPERBRAND‟ for the years 2011 and 2012 by the Superbrands Council. „Maine Kal Ko Dekha Hai‟. For the fourth edition of Consumer Superbrands. This is an important recognition of our efforts and serves our objective of getting closer to the consumer. UltraTech was a part of a very exclusive group of winners selected first by the consumer and then by an independent Superbrands Council comprising of the most eminent professionals from India‟s corporate sector. It is a prestigious award and recognizes the brand custodian„s persevering efforts to build a brand that is strong on consumer perceptions. „Iss Cement Main Jaan Hai‟. Brand Reach: UltraTech has forged an emotional bond with the Indian audience through its campaigns. It has also been bestowed with the title of the customer selected „POWERBRAND‟ for the year 2012 by Powerbrands India. The common message in all the campaigns has been that of a real life hero whose success contributes to nation building. that demonstrates the splendour of Indian architecture across judging categories. Brand Achievements: UltraTech Cement has been honoured with the title of the customer validated award . and the two latest TVCs on „Childhood and EMI‟.

UltraTech and its subsidiaries have a presence in 5 countries through 11 integrated plants. second too has earned time the and distinction is also of „SUPERBRAND‟ for a „POWERBRAND‟. two plants have received ISO 27001 certification and four have received SA 8000 certification. 1 clinkerisation plant. consecutive UltraTech is India's largest exporter of cement clinker spanning export markets in countries across the Indian Ocean. 2 rail and 3 coastal terminals and 101 RMC plants. The company exports over 2. Europe and the Middle East. 15 grinding units. 1 white cement plant.WORKING CAPITAL Birla White. Most of the plants have ISO 9001. a brand of the UltraTech. which is about 30 per cent of the country's total exports. Portland Pozzolana cement and Portland blast-furnace slag cement. The certification process is currently underway for the remaining plants. ISO 14001 and OHSAS 18001 certification.  ULTRATECH CEMENT  ULTRATECH CONCRETE  ULTRATECH BUILDING PRODUCTS  ULTRATECH BUILDING SOLUTIONS  BIRLA WHITE  STAR CEMENT SJCET MBA . In addition. UltraTech's products include Ordinary Portland cement. Africa.5 million tonnes per annum.

a nonmetallic product essentially consisting of silicates and alumino-silicates SJCET MBA . from building products to building solutions and an assortment of ready mix concretes catering to varied needs and applications. general-purpose readymixes and even high strength pre-cast and pre-stressed concrete. These applications cover dry-lean mixes.WORKING CAPITAL About UltraTech Cement: UltraTech Cement is the ultimate 360º building materials destination. PORTLAND BLAST-FUMACE SLAG CEMENT: Portland blast-furnace slag cement contains up to 70 percent of finely ground. granulated blast-furnace slag. providing an array of products ranging from grey cement to white cement. Our Products: ORDINARY PORTLAND CEMENT: Ordinary portland cement is the most commonly used cement for a wide range of applications.

either together or separately. ash from burnt plant material or silicious earths). self-discharging bulk cement carriers. Cement is stored in 4 x 7500 T cement concrete silos. though they do not have cementing properties in themselves. It is then discharged at the port in road bowsers which transport cement 10 km from port to the terminal. CEMENT TO EUROPEAN &LANKAN NORMS: UltraTech's bulk cement terminal in Sri Lanka is located at Colombo. UltraTech Cement. A sophisticated bulk cement terminal UltraTech's success is attributed to its diverse product offerings. Product groups decentralise control and encourage innovation. burnt clays. They also ensure better customer segmentation. Portland clinker is ground with gypsum and pozzolanic materials which.WORKING CAPITAL PORTLAND POZZOLANA CEMENT: Portland pozzolana cement is ordinary portland cement blended with pozzolanic materials (power-station fly ash. Different products are handled by different product groups. which are also known as profiles. Cement is received by specially-engineered. which in turn leads to better customization of product offerings and guarantees cent percent customer satisfaction. SJCET MBA .

Birla White, UltraTech Concrete, UltraTech Building Products and UltraTech Solutions are the different profiles of UltraTech, each catering to varied needs. This versatility has been a key competitive advantage for UltraTech over the years.

ULTRATECH CEMENT: UltraTech Cement is the largest selling single brand cement in India and the largest cement clinker exporter. UltraTech's products include Ordinary Portland Cement, Portland Pozzolana Cement and Portland Blast Furnace Slag cement. UltraTech is the most trusted and preferred brand of Engineers, builders, contractors and individual house builders. Today, UltraTech is used in vital structures like dams, bridges, flyovers, airports, metro railways apart from residential and commercial structures.

ULTRATECH CONCRETE: Ready mix concretes of UltraTech operate under the mother brand of UltraTech Concrete. UltraTech Concrete sub-brands are christened 'Plus', 'Lite', 'Duracon', 'Fibrecon', 'Free Flow', 'Colourcon', 'Stainless', 'Thermocon', 'Hypercon', 'Pervious' and 'Décor', each of which offer a unique value proposition and cater mainly to specific requirements of large infrastructural project




ULTRATECH BUILDING PRODUCTS: UltraTech Building Products manufactures and markets technologically

reengineered products including dry mix mortars and blocks for the construction and infrastructure industry. The sub brands of UltraTech Building Products are 'Seal & Dry', 'Super Stucco', 'Readiplast', 'Fixoblock', 'Xtralite' and 'Powergrout'.

ULTRATECH BUILDING SOLUTIONS: UltraTech Building Solutions (UBS) is a novel concept in the Indian Construction Industry. It is a one stop shop designed on the "plan, build and support" philosophy, which offers home building solutions right from planning to completion. UBS is based on a franchise model that caters to the building and construction needs of individual home builders as well as the entire building and construction fraternity. Collaboration is the key to UBS which houses renowned brands of building materials apart from its own cement, namely paint, construction chemicals, steel, pipes and fittings. A basket of services like Technical Advisory, Vaastu Services, House Layouts and Construction Cost Calculator, also form a significant part of the offerings at UBS.




BIRLA WHITE: The UltraTech brand houses its white cement products under the umbrella of 'Birla White'. Birla White's range comprises of Birla White Cement and other finishing products, widely used for interiors and exteriors including flooring, walls and ceilings. The sub brands of Birla White are 'Wallcare', 'Textura', 'Levelplast' and 'GRC'.

STAR CEMENT: Star Cement is a leading manufacturer of cement in the Middle East. Its operations are spread across UAE, Bahrain and Bangladesh with an installed capacity of 3 million metric tons per annum. Footprints: UltraTech is the 10th largest cement manufacturer in the world making it a significant global player. It has grinding units, jetties, bulk terminals and integrated SJCET MBA

The company has. they inspire us to continuously push the very benchmarks of quality a little higher. catering to export markets in countries across the Indian Ocean. UltraTech uses the latest technology to ensure that all stakeholders can track the delivery status of their orders in real time. Logistics: UltraTech Cement has more than 200 sales offices across the country. To handle the complex nature of operations. Awards: While „Customer Satisfaction‟ is an important indicator used at UltraTech to enhance the company‟s performance. over the years. quality. which handle a combined load of around 14. the logistics operation is being handled at UltraTech through a multi-tiered structure which involves logistics teams at Plant. won numerous awards across categories such as export. Europe and the Middle East. there is a central logistics team who set the overall policy guidelines. Such diverse presence across countries has helped UltraTech leverage economies of scale and enabled it to become a name to reckon with in the international market.000 orders per day. everyday. its pursuit of excellence has been acknowledged across multiple performance criteria by experts and contemporaries. yet more importantly. Region and Zonal levels. Beside this. UltraTech Cement is the country's largest cement clinker exporter.WORKING CAPITAL plants all across the world. SJCET MBA . Vehiclebased GPS technology is also being used to increase the efficiency of the fleet. They do so through their efficient logistics department. Africa. monitor logistics performance and ensure segmental priorities as well as service requirements are met. While these awards are a great source of pride. and safety among others.

The state of the art system includes the cargo conveying and handling system as a part of the cement plant with the present capacity of 5. SJCET MBA . environment friendly mode of transportation. and to utilize sea-route. This captive jetty handles about 4 to 5 million tones of captive cargoes.2 million tones production of clinker and cement annually. UTCL captive Jetty Facility: The captive jetty of Gujarat Cement Works of the Ultra Tech Cement Ltd (Aditya Birla Group of Companies) was established in 1996 for the captive usage to meet the domestic as well as international demands of cement products. the most economical. with more than 80% berth occupancy rate.WORKING CAPITAL Logistics processes are empowered by best in class SCM processes using technology as the enabler with focus on:  Network Optimization  Web Based Order Management system with real time visibility of order status  Customer Service level measurement on real time basis  GPS based Vehicle Tracking System for dedicated fleet Automation at secondary service points like Railheads and Godowns .

The Gujarat Cement Works is one of the largest cement plant at a single location in India and is the largest exporter of cement and clinker in India. India and about 80 kms from the UT/Diu. Gujarat.WORKING CAPITAL It is situated at west coast of India and in the State of Gujarat at a distance of 140 kms of southwest of Bhavnagar. SJCET MBA .

The appropriate mix of short-term and long-term financing used to support this investment in current assets. If short-term financing has to be used. The cost advantage 4. They are the determination of: 1. Like the most corporate financial decisions. Following table will summarize our discussion of short-term versus long-term financing. the net effect on the value of the firm should be used to determine the optimal amount of working capital. but it can have a negative effect on the cash flows.WORKING CAPITAL THEORETICAL FRAMEWORK Another important aspect of a working capital policy is to maintain and provide sufficient liquidity to the firm. Short-term financing may be preferred over long-term financing for two reasons: 3. SJCET MBA .having a large net working capital may reduce the liquidity risk faced by a firm. the decision on how much working capital be maintained involves a trade off. Flexibility But short-term financing is more risky than long-term financing. a firm should decide whether or not it should use short-term financing. The optimal level of investments in current assets. Therefore. 2. Sound working capital involves two fundamental decisions for the firm. the firm must determine its portion in total financing.

WORKING CAPITAL Maintaining a policy of short term financing for short term or temporary assets needs (Box 1) and long. But what one gains by following alternative strategies (like by box 2 or box 4) needs to weighed against what you give up.term financing for long term or permanent assets needs (Box 3) would comprise a set of moderate risk –profitability strategies. SJCET MBA .


greater would be the need for working capital. Temporary working capital Permanent working capital: There is always a minimum level of working capital. the magnitude and quantum of working capital required will not be same all the times. Still others are random reflecting the uncertainty associated with growth in sales due to firm's specific or general economic factors. as is the case with increased inventory required for a particular festival season. Some of these changes reflect permanent changes in the firm as is the case when the inventory and receivables increases as the firm grows and the sales become higher and higher. The operating cycle is a continuous process and therefore. the working capital is needed constantly and regularly. Other changes are seasonal. which is continuously required by a firm in order to maintain its activities. This amount of working capital is SJCET MBA . rather it will fluctuate. Every firm must have a minimum of cash. The lengthier the operating cycle. The need for current assets tends to shift over time. The working capital needs can be bifurcated as: 1. Working capital is required because of existence of operating cycle. this minimum level of current assets. Permanent working capital 2. is known as permanent working capital for that firm. stock and other current assets. However. which must be maintained by any firm all the times.WORKING CAPITAL TYPES OF WORKING CAPITAL NEEDS Another important aspect of working capital management is to analyze the total working capital needs of the firm in order to find out the permanent and temporary working capital.

Temporary working capital: Any amount over and above the permanent level of working capital is temporary. Permanent or Fixed Working Capital requirements 2. So. This is because the demand for permanent current assets might FINANCING OF WORKING CAPITAL There are two types of working capital requirements as discussed above. The position of the required working capital is needed to meet fluctuations in demand consequent upon changes in production and sales as a result of seasonal changes. In the case of an expanding firm. the permanent working capital line may not be horizontal. Temporary or Variable Working Capital requirements Therefore.WORKING CAPITAL constantly and regularly required in the same way as fixed assets are required. it may also be called fixed working capital. SJCET MBA . to finance either of these two working capital requirements. They are: 1. fluctuating or variable working capital. The permanent level is constant while the temporary working capital is fluctuating increasing and decreasing in accordance with seasonal demands as shown in the figure. we have long-term as well as short-term sources.

This requires them to keep a very sizeable amount in working capital. A service firm. Some of these factors are explained below:  Nature or Character of Business. which has a short operating cycle and which sells predominantly on cash basis. which has a long operating cycle and which sells largely on credit. has a modest working capital requirement. a manufacturing concern like a machine tools unit. like an electricity undertaking or a transport corporation. ULTRA TECH STEEL carry on activities related to computer systems. The rate of growth of sales indicates a need for increase in the working capital requirements of the firm. has a very substantial working capital requirement.WORKING CAPITAL FACTORS DETERMINING WORKING CAPITAL REQUIREMENTS There are many factors that determine working capital needs of an enterprise. it is required to guard them against SJCET MBA . They have increased their share in the consumer segment notably in the last four years. Oh the other hand. ULTRA TECH is the leader in its segment in both consumer as well as commercial market share. Though they are primarily an assembling firm they also have manufacturing facilities in Chennai and Pondicherry.  Size of Business/Scale of Operations. The scale of operations and the size it  Rate of Growth of Business. As the firm is projected to increase their sales by 80% from what it was in 2006. This they have achieved through retail expansion. The working capital requirement of a firm is closely related to the nature of its business.

 Price Level Changes.WORKING CAPITAL the increasing requirements of the net current asset by way of efficient working capital management. They will eventually pay. and it will become part of the firm‟s work-in-progress. which would have meant that more funds are required to maintain the same current assets. which are concerned with day-to-day activities. Work will continue on the WIP until it eventually emerges as the finished product. 5. They might have gone for this large-scale procurement for availing discounts and anticipating a rise in prices. These tanks. labor costs and overheads need have to be met. debtors are increased. 3. When the finished goods are sold on credit. 1. The upper portion of the diagram above shows in a simplified form the chain of events in a manufacturing firm. Of course at some stage trade creditors will need to be paid. 7. 2. Changes in the price level also affect the working capital requirements. It was the reduced margins in the price of the raw materials that had prompted them to go for bulk purchases thus making on additions to their net current assets. 6. The sales and projected sales level determine the investment in inventories and receivables. have funds constantly flowing into and out of them. 4. Each of the boxes in the upper part of the diagram can be seen as a tank through which funds flow. so that cash will be injected into the firm. As production progresses. SJCET MBA . In due course this stock will be used in production. The chain starts with the firm buying raw materials on credit. work will be carried out on the stock.

WIP. Shareholders (existing or new) may provide new funds in the form of cash 5. Working capital is clearly not the only aspect of a business that affects the amount of cash. Long-term loan creditors (existing or new) may provide loan finance. Dividends may be paid 7. Lessors of fixed assets will be paid their rent 4. Fixed assets will be purchased and sold 3. 1. cash (positive or negative) and trade creditors – can be viewed as tanks into and from which funds flow. loans will need to be repaid from time-to-time. trade debtors. The business will have to make payments to government for taxation. and finished goods). 2.WORKING CAPITAL Each of the areas. and SJCET MBA . Some shares may be redeemed for cash 6.Stock (raw materials.

99 1236.42 5160.76 TOTAL OF CURRENT LIABILITIES(B) 5160.37 PROVISIONS 4275.65 2901.23 115.91 3923.WORKING CAPITAL STATEMENT OF CHANGES IN NET WORKING CAPITAL 2007-2008 PARTICULARS A)CURRENT ASSETS 2310.24 28.42 WORKING CAPITAL(A-B) SJCET MBA .43 ----------1893.70 SUNDRY DEBTORS 1034.07 10181.84 88.43 1236.71 LOANS AND ADVANCES 9436.28 ---2007 2008 INCREASE(+) DECREASE(-) INVENTORIES 3580.89 3609.18 TOTAL OF CURRENT ASSETS(A) B)CURRENT LIABILITIES 4248.36 ----276.10 757.84 2913.42 2258.31 CURRENT LIABILITIES 27.40 --402.43 2258.68 6257.43 DECREASE IN WORKING CAPITAL 5160.90 591.12 CASH AND BANK 2510.39 6142.

19 14191.90 TOTAL OF CURRENT ASSETS(A) B)CURRENT LIBILATIES 6142.79 5158.79 ----1234.97 4130.68 PROVISIONS 6257.80 ------2622.89 5269.80 INCREASE IN WORKING CAPITAL 5158.74 -----------120.WORKING CAPITAL STATEMENT OF CHANGES IN NET WORKING CAPITAL 2008-2009 2008 PARTICULARS A)CURRENT ASSETS 2901.84 CASH AND BANK 2913.13 1307.07 LOANS AND ADVANCES 10181.79 4130.23 8765.97 SJCET MBA .20 1214.10 456.41 CURRENT LIBILATIES 115.88 2009 INCREASE(+) DECREASE(-) INVENTORIES 3609.10 SUNDRY DEBTORS 757.09 9033.11 268.58 2792.91 TOTAL OF CURRENT LIABILITIES(B) 3923.02 4916.99 2367.99 WORKING CAPITAL(A-B) 1234.20 5158.88 152.

70 DECREASE IN WORKING CAPITAL 5158.20 SUNDRY DEBTORS 1214.06 2970.11 11955.42 15292.20 TOTAL OF CURRENT LIABILITIES(B) 5158.99 TOTAL OF CURRENT ASSETS(A) B)CURRENT LIABILITIES 8765.58 CASH AND BANK 2792.14 17480.66 84.54 1442.35 379.07 2983.79 5158.77 497.77 353.26 2188.42 CURRENT LIABILITIES 268.WORKING CAPITAL STATEMENT OF CHANGES IN NET WORKING CAPITAL 2009-2010 2009 PARTICULARS A)CURRENT ASSETS 5269.02 5648.19 LOANS AND ADVANCES 14191.09 PROVISIONS ---- TAX LIABILITIES 9033.79 6259.09 2970.06 6259.74 2656.10 968.70 ----------------3190.98 2983.79 WORKING CAPITAL(A-B) SJCET MBA .68 3716.79 5413.95 --------------2010 INCREASE(+) DECREASE(-) INVENTORIES 4916.

07 1528.09 2188.09 WORKING CAPITAL(A-B) SJCET MBA .38 ------------587.50 620.74 17995.52 ------750.32 CURRENT LIABILITIES 353.87 3453.07 PROVISIONS 2983.36 802.87 1385.52 7.WORKING CAPITAL STATEMENT OF CHANGES IN NET WORKING CAPITAL 2010-2011 2010 PARTICULARS A)CURRENT ASSETS 5648.38 DECREASE IN WORKING CAPITAL 2188.35 TOTAL OF CURRENT ASSETS(A) B)CURRENT LIABILITIES 11955.68 CASH AND BANK 3761.74 SUNDRY DEBTORS 2656.31 5421.77 ---2011 INCREASE(+) DECREASE(-) INVENTORIES 5413.09 3453.79 7177.26 TOTAL OF CURRENT LIABILITIES(B) 2188.77 12543.66 18798.12 4831.05 1848.91 4293.19 1905.73 267.42 TAX LIABILITIES 15292.71 1385.45 ---532.14 LOANS AND ADVANCES 17480.

76 2277.70 1622.04 507.05 3912.07 TOTAL OF CURRENT ASSETS(A) B)CURRENT LIABILITIES 12543.17 CURRENT LIABILITIES 620.31 4899.54 ---1039.34 INCREASE IN WORKING CAPITAL 824.91 19213.66 LOANS AND ADVANCES 18798.90 ---262.85 824.74 TAX LIABILITIES 17995.07 ---2012 INCREASE(+) DECREASE(-) INVENTORIES 5421.05 ---21.22 ---291.19 SUNDRY DEBTORS 1905.49 SJCET MBA .37 ---283.90 5870.05 824.42 20037.12 PROVISIONS 4831.71 WORKING CAPITAL(A-B) 21.94 5683.91 CASH AND BANK 4293.84 7831.WORKING CAPITAL STATEMENT OF CHANGES IN NET WORKING CAPITAL 2011-2012 2011 PARTICULARS A)CURRENT ASSETS 7177.34 ---112.51 ---3537.36 TOTAL OF CURRENT LIABILITIES(B) 802.50 12835.49 3912.

17 1063.WORKING CAPITAL FINANCIAL RATIOS: WORKING CAPITAL TURNOVER RATIO It is a ratio that reflects the amount of working capital needed to maintain a given level of sales.71 4.68 18.03 2009-2010 -702. FORMULA = PARTICULARS NET SALES NET WORKING CAPITAL WORKING CAPITAL TUNRNOVER RATIO 30000 24315.5 2008-2009 2010-2011 2011-2012 1022.98 1375.09 15000 10000 5000 0 2007-2008 -5000 NET SALES NET WORKING CAPITAL WORKING CAPITAL TUNRNOVER RATIO -28.09 1022.17 29396.19 20112012 29396.19 7080.77 25000 20000 17551.43 22.35 25021.87 1375.43 22.28 NET SALES NET WORKING CAPITAL 20082009 19693.98 SJCET MBA .29 17.15 2007-2008 17551.03 20092010 24315.77 1063.87 20102011 25021.5) -28.28 (702.71 4.15 19693.35 7080. A high ratio indicates the firm is in a good liquidity position and vice-versa.29 17.68 18.

the ratio this year has fallen down to 4.19. There has been an increase in the sales and the production capacity this year.64%.WORKING CAPITAL INTERPRETATION: The net working capital of Ultratech Ltd. where the working capital was negative was mainly because of a decrease in current assets. cash & bank balances and loans and advances that has increased tremendously this year. SJCET MBA . The reason for decrease can be accredited to the increase in the current assets such as inventory.15. A sharp decrease in the working capital in the year 2007-2008. As compared to the year 2009-2010 where the working capital ratio was 18. has been fluctuating over the years. The raw materials consumption has also increased by 13.

64 18076.78 0.9 8974.95 6066. The reason for increase might be continuous investments in the current assets over the years.28 10037.48 10375.15 10995.81 1. SJCET MBA . The current ratio has been increasing steadily over the years.61 1. As compared to the previous year in 2009-2010 the ratio has increased to 1.52 10995.15 2007200920102008 2008-2009 2010 2011 2011-2012 6475.78 6066.66 1.64 CURRENT ASSETS CURRENT LIABILITIES CURRENT RATIO INTERPRETATION: The ideal current ratio is considered to be 2:1.9 10037.66 1.29 18076. FORMULA = CURRENT ASSETS CURRENT LIABILITIES PARTICULARS CURRENT ASSETS CURRENT LIABILITIES CURRENT RATIO 20000 15000 10000 5000 0 2007-2008 2008-2009 2009-2010 2010-2011 2011-2012 6475.95 5453.48 8974.28 0.61 1.05 1.64 in the year 2011-2012.29 8999.05 1.19 6768.52 5453. It tells us whether a company is in a position to meet its obligations.WORKING CAPITAL CURRENT RATIO The current ratio is used to evaluate a company‟s overall short – term liquidity position.12 10375.12 8999.19 6768.81 1.

78 0.52 1827. It is the relationship between liquid assets and liabilities.41 5453.28 10037.8 7921. An asset is said to be liquid if it can be converted into cash within a short period without loss of value.95 6066.99 3237.58 4648.59 7169.05 0.54 2047.85 4018.48 10375.66 0. FORMULA = CURRENT ASSETS – INVENTORY CURRENT LIABILITIES 201020112007-2008 2008-2009 2009-2010 2011 2012 6475.3 14838.34 PARTICULARS CURRENT ASSETS INVENTORY CURRENT ASSETSINVENTORY CURRENT LIABILTY QUICK RATIO SJCET MBA .97 6768.29 18076.WORKING CAPITAL QUICK RATIO Quick ratio / Liquid ratio is an indicator of a company‟s short – term solvency or liquidity position.81 0.94 8999.28 2453.61 10995.88 1.31 2868.2 8957.

SJCET MBA .94 10995.95 5453.85 0.88 3237.41 6000 4018.WORKING CAPITAL 20000 18000 16000 14000 12000 10000 6768.52 14838.58 1.28 0. we can see that after a steep fall in the quick ratio from the year 2007-2008 to 2008-2009 there has been a steady increase in the quick ratio and for the year 2011-2012 the ratio is 1.31 1827. As shown in the graph above.28 4648.54 2000 0 2007-2008 CURRENT ASSETS 2008-2009 INVENTORY 2009-2010 2010-2011 0.97 4000 2047. The idea behind this is that for every rupee of current liabilities. Quick ratio is thus a rigorous test of liquidity and gives a better picture of short term financial position of the firm.29 8999.66 6066.3 8957.61 7921.34 which signifies that the liquidity position of the firm has improved and this is because of increase in the cash that is lying with the firm. there should be at least one rupee of liquid asset.34 2011-2012 QUICK RATIO CURRENT ASSETS.48 10375.2 18076.05 7169. And if it is more it is considered to be better.78 8000 6475.99 0.59 10037.INVENTORY CURRENT LIABILTY INTERPRETATION: The ideal standard in case of quick ratio is 1:1.8 2453.81 2868.

4 25021.515 29.52 589.73 24315.77 25000 19693.73 431.35 68.77 41.28 20000 15000 10000 5000 0 2007-2008 2008-2009 2009-2010 NET SALES 2010-2011 2011-2012 17551.4 46.55 33. FORMULA = AVERAGE DEBTORS NET SALES AVERAGE DEBTORS= (OPENING DEBTORS + CLOSING DEBTORS) / 2 PARTICULARS AVERAGE DEBTORS NET SALES DEBTORS TURNOVER RATIO 2007-2008 585.09 29.23 2010-2011 2011-2012 535.13 29396.23 535.28 33.43 68.73 41.98 587.43 29396.98 585.98 2008-2009 2009-2010 587.73 431.55 19693.13 AVERAGE DEBTORS DEBTORS TURNOVER RATIO SJCET MBA .515 17551.09 25021.35 30000 24315.98 46.52 589.WORKING CAPITAL DEBTORS TURNOVER RATIO Debtors Turnover Ratio or Receivables Turnover Ratio indicates the relationship between net sales and average debtors. It shows the rate at which cash is generated by the turnover of debtors.

The higher the ratio the better it is.98 to 68. since it indicates the amount from the debtors is being collected more quickly. it may be assessed whether the sales policy of the management is efficient or not. By comparing the debtors‟ turnover ratio of the current year with the previous year. The more quickly the debtors pay. SJCET MBA .13 which shows that the sales management of the firm is quite efficient. there has been an increase in the ratio from 2007-2008 to 2011-2012from 29. the less risk from bad debts.WORKING CAPITAL INTERPRETATION: Debtors‟ turnover ratio indicates the speed with which the amount is being collected from the debtors. and so lower is the expenses of collection and increase in the liquidity of the firm. As shown in the graph above.

WORKING CAPITAL DEBT COLLECTION PERIOD Days Sales Outstanding is a short – term (operating) Activity ratio which tells us about the debtors holding time.23 11 2009-2010 NO. The cash is not being collected on time which is not a good sign for the company. OF DAYS DEBT COLLECTION PERIOD 2007-2008 2008-2009 29. A high debt collection period indicates that the company is taking time to collect cash from its debtors. OF DAYS 9 46.23 365 9 46. FORMULA = 365/ DEBTORS TURNOVER RATIO PARTICULARS DEBTORS TURNOVER RATIO NO.98 365 12 33.98 365 365 365 365 365 12 33. The more the holding period the more risky it becomes for the company.13 5 2011-2012 2007-2008 2008-2009 DEBTORS TURNOVER RATIO DEBT COLLECTION PERIOD SJCET MBA .52 41.73 365 8 20112012 68.52 365 11 2009-2010 2010-2011 41.13 365 5 400 350 300 250 200 150 100 50 0 29.73 8 2010-2011 68. it is a red flag.

SJCET MBA . In other words. An increase in the ratio indicates excessive blockage of funds with the debtors which increases the chances of bad debts. In this case as we can see that there is a decrease in the average collection period which indicates prompt payment by debtors which reduces the chances of bad debts. As we can see here. credit sales are locked up in debtors for the number of days.WORKING CAPITAL INTERPRETATION: Debt collection period means the average number of days that the debtors take to get converted to cash. the debt collection period has come down from 12 days to 5 days which means that the debtors get converted to cash in 5 days.

91 2011-2012 17471.97 1779. A higher ratio indicates that inventory does not remain in warehouses or on the shelves but rather turns over rapidly from the time of acquisition to sales.83 2845.78 6.43 5.WORKING CAPITAL STOCK TURNOVER RATIO The Inventory Turnover Ratio measures the efficiency of the firm‟s inventory management.07 20102011 15730.8 6. over investment in inventory or unsalable goods.76 200920010 14928.5 1937.13 SJCET MBA .67 2661.72 20082009 11155. Formula = cost of goods sold Average stock Average stock= (opening stock+closing stock)/ PARTICULARS 2007-2008 COST OF GOODS SOLD AVERAGE STOCK STOCK TURNOVER RATIO 10174.82 5. A lower inventory turnover ratio means accumulation of inventories.14 5.65 2457.

72 1937. The ratio indicates whether the stock has been efficiently used or not.14 5. It shows the speed with which the stock is turned into sales during the year. The graph above shows that after an increase in the ratio from the year 2007-2008 to 2009-2010 (5.97 11155.67 17471.76 2457.83 14928.WORKING CAPITAL 20000 15000 10000 5000 0 2007-2008 2008-2009 2009-2010 2010-2011 2011-2012 1779.8 6.65 COST OF GOODS SOLD AVERAGE STOCK STOCK TURNOVER RATIO INTERPRETATION: This ratio indicates the relationship between the cost of goods sold during the year and average stock kept during that year. A high ratio is indicative that the stock is selling quickly.07 2661.91) after which again a rise in the ratio in the year 2011-2012(6. SJCET MBA .07) there in the year 2010-2011(5.13).5 15730.82 5.91 2845.78 6.72-6.13 10174.43 5.

79 0.1 6241.73 1.7 3543.86 PARTICULARS NET CREDIT PURCHASE AVERAGE CREDITORS PAYABLES TURNOVER RATIO 1.42 3964.WORKING CAPITAL PAYABLES TURNOVER RATIO FORMULA.56 3194.76 1.42 6853. SJCET MBA .31 1.61 5215.72 4383.8 3543.01 3194.73 1.01 2000 1000 0 2007-2008 2008-2009 2009-2010 2010-2011 2011-2012 0.NET CREDIT PURCHASE AVERAGE CREDITORS AVERAGE CREDITORS= (OPENING CREDITORS+CLOSING CREDITORS)/2 2008.76 1.79 0.01 3000 2263.72 4383.56 NET CREDIT PURCHASE PAYABLES TURNOVER RATIO AVERAGE CREDITORS INTERPRETATION: The ratio indicates the speed with which the amount is being paid to the creditors.61 5215.01 2353.86 0.31 6853.95 2840.1 3964.7 2353. A higher ratio is better since it would indicate that the creditors are being paid more quickly and this increases the credit worthiness of the firm.20092007-2008 2009 2010 2010-2011 2011-2012 2263.95 7000 6000 5000 4000 2840.8 6241.

has to take into consideration various aspects. Other than the investment in current assets. While short term might seem the ideal way to finance your assets than the long term due to shorter maturity period and also less of costs are involved. we can see that the firm is SJCET MBA .Under secured loan cash credit. along with non fund based facilities. the graph above shows a steep fall in the ratio from the year 2009-2010(1.76) to 2010-2011(1. The preference of short term financing to long term as such is not the part of any policy employed by the firm but it was due to the reason that the interest rates in short term were more investor friendly and the cost involved in them were also low. there is an inherent risk in short term financing due to fluctuating interest rates and due to the reason that the firm might be unable to ready the amount in a shorter span of time. That is . Here ULTRA TECH has a major portion of their financing done through short term financing than long term financing. At present. Term loan in Indian rupees from a bank is subject to a prior charge in favour of company‟s bankers on book debts and stock in trade for working capital facilities. The reason for the fall can be attributed to a decrease in the net credit purchases in the year 2009-2010. A firm before financing in either of the two. the firm not only has to be concerned about current assets but also the sources through which they are financed. the firm also has to be concerned with short-term to long-term debt as this plays a very important role in determining the amount of risk undertaken by the firm. foreign currency term loan from banks are secured by way of hypothecation of stock-in-trade.31) and then again a rise to the year 2011-2012(1.WORKING CAPITAL Here. book debts as first charge and by way of second chanrge on all the immovable and movable assets of the parent company.56).

FINDINGS 1. but it got reduced as compared to 39. 4. The working capital position of the company is sound and the various sources through which it is funded are optimal.01% return in 2012 5. The firm has not compromised on profitability despite the high liquidity is commendable. The returns have been affected by a marked growth in working capital and though a 29.WORKING CAPITAL moving more towards long term financing as the interest terms in the long term has reduced compared to the short term. The company has used its dividend policy. The debts doubtful have been doubled over the years but their percentage on the debts has almost become half.75% in 2006 return on investment is good. 7. Ultra tech has reached a position where the default costs are as low as negligible and where they can readily factor their accounts receivables for availing finance is noteworthy. SJCET MBA . This implies a sales and collection policy that get along with the receivables management of the firm. 3. 2. 6. purchasing. The various ratios calculated are an indicator as to the fact that the profitability of the firm and sales are on a rise and also the deletion of the inefficiencies in the working capital management. financing and investment decisions to good effect can be seen from the inferences made earlier in the project.

Following are few recommendations given to the company in achieving its desired objectives: 1. as it is very profitable for the company. but still there is some scope for improvement in its management. receivables and inventory. 2. things should go with a proper understanding for managing cash. 3. The investment of cash in marketable securities should be increased.WORKING CAPITAL SUGGESTIONS The management of working capital plays a vital role in running of a successful business. The over purchasing function should be avoided as it could lead to liquidity problems. SJCET MBA . The business runs successfully with adequate amount of the working capital but the company should see to it that the cash should not be tied up in excessive amount of working capital. Though the present collection system is near perfect. ULTRATECH is managing its working capital in a good manner. This can help the company in raising its profit level by making less investment in accounts receivables and stocks etc. the company as due to the increasing sales should adopt more effective measures so as to counter the threat of bad debts. 4. So. This will ultimately improve the efficiency of its operations.

Holding of excessive and insufficient stock must be avoided as it creates a burden on the cash resources of a business and results in lost sales.WORKING CAPITAL 5. SJCET MBA . etc respectively. delays for customers.

Ratio analysis is also a very important part of a business. Working capital management is a very crucial part of any organization.WORKING CAPITAL CONCLUSION Ultra tech Steel has been analyzed in terms of financial aspects especially working capital and financial ratios. SJCET MBA . It is a platform to judge a company based on liquidity. A comparison has been made with JSW and SAIL to see the position of Ultratech Ltd. It is very crucial for banks. It has also maintained a good level of EPS. The inventory turnover has been maintained efficiently which we can see from the high inventory turnover ratio. It needs to maintain its working capital efficiently for its day to day operations to take place. Ultra tech Steel has been able to maintain a good liquidity position throughout. in the industry. investors. It also makes comparisons easier. It has been able to pay back its liabilities on time and also has been able to give dividends on time to its shareholders. creditors etc. An organization needs proper liquidity to meet its obligations on time. profitability etc.


69 0 156.2 62.55 11.85 1.000.75 0 0.30 1.57 13.207.56 Mar '09 Mar '08 207.43 3.124.7 39.60 17.55 50.32 3.41 0 3.27 0 0. Cr.83 281.990.19 0 4.99 0.96 1.22 0 4.2 0. ------------------Mar '12 Sources Of Funds Total Share Capital Equity Share Capital Share Application Money Preference Share Capital Reserves Revaluation Reserves Net worth Secured Loans Unsecured Loans Total Debt Total Liabilities 62.370.538.14 0 3.533.00 Rs.211.21 0 13.04 1.00 4.332.054.73 0 156.36 62.54 71.69 0 4.00 10.00 6.19 6.999.98 0 0 3.84 55.84 18.56 9.82 76.41 3.61 0 7.062.20 3.38 52.29 1.35 37.35 31.26 Mar '11 Mar '10 Mar '09 Mar '08 SJCET MBA .613.523.07 Mar '10 207.26 9.992.308.465.408.19 Mar '11 61.945.002.17 38.512.55 15.56 2.31 43.03 20.152.56 3.87 2.27 16.897.996.87 3.87 2.27 0 4.43 295.93 0 20.88 39.65 70.089.27 36.87 11.540.36 0 0 4.87 22.486.991.373.297.81 310.1 1.91 67.30 13.15 Mar '12 Application Of Funds Gross Block Less: Accum.909.797.415.513.41 9.577.86 62.56 62.41 2.57 7.886.588.16 14.338.59 50.333.740.08 1.39 2.144.98 61.31 1.WORKING CAPITAL ANALYSIS OF THE STUDY Balance Sheet of ULTRATECH CMENTS ------------------.63 7.559.093.62 16.31 3. Depreciation Net Block Capital Work in Progress Investments Inventories Sundry Debtors Cash and Bank Balance Total Current Assets Loans and Advances 76.

Loans & Advances Deffered Credit Current Liabilities Provisions Total CL & Provisions Net Current Assets Miscellaneous Expenses Total Assets Contingent Liabilities Book Value (Rs) 975.6 437.463.1 130.32 0 398.WORKING CAPITAL Fixed Deposits Total CA.585.088.180.46 388.19 18.34 422.221.20 4.44 0 700.25 543.97 0 783.24 13.5 754.73 0 13.957.92 0 9.26 3.59 0 11.50 0 208.6 120.740.78 14.577.2 988.58 8.24 214.15 305.797.29 0 20.61 137.49 928.046.659.534.83 2.03 17.56 584.35 22.991.84 1.85 9.08 0.09 15.856.162.21 133.01 0 17.93 8.83 589.34 11.10 0 6.237.635.34 115.06 414.88 SJCET MBA .39 1.531.

37 6.62 115.81 3.19 1.55 5.5 8.78 18.33 2 8.1 24.35 75.67 10.2 2.13 130.45 11.1 29.73 2 5 29.03 65.99 29.6 29.78 24.56 18.76 64.83 13 67.99 7.06 17.02 3.25 2 13 79.18 18.67 12.17 72.57 84 24.WORKING CAPITAL KEY FINANCIAL RATIOS OF ULTRATECH CEMENTS Mar '12 Investment Valuation Ratios Face Value Dividend Per Share Operating Profit Per Share (Rs) Net Operating Profit Per Share (Rs) Free Reserves Per Share (Rs) Bonus in Equity Capital Profitability Ratios Operating Profit Margin (%) Profit Before Interest And Tax Margin(%) Gross Profit Margin (%) Cash Profit Margin (%) Adjusted Cash Margin (%) Net Profit Margin(%) Adjusted Net Profit Margin (%) Return On Capital Employed (%) Return On Net Worth (%) Adjusted Return on Net Worth(%) Return on Assets Excluding Revaluations Return on Assets Including Revaluations Return on Long Term Funds(%) Liquidity And Solvency Ratios Current Ratio Quick Ratio Debt Equity Ratio Long Term Debt Equity Ratio 1.95 115.81 28.06 137.36 84.87 67.45 10.93 16.46 SJCET MBA .69 12.82 2 2 47.27 83.03 30.58 18.11 29.81 6.88 115.78 24.26 18.11 28.69 52.58 13.58 8.59 71.49 11.5 37.3 64.13 3.17 1.51 133.78 12.91 30.32 6.31 14.38 4 3.83 130.88 13.14 1.95 120.66 70.16 2.56 18.75 2.47 24.88 137.22 110.22 118.66 74.94 45.17 93.7 28.1 28.66 13.26 120.71 65.85 121.46 67.16 74.97 10.71 0.5 133.73 12.05 71.72 5.07 20.31 108.78 24.91 16.11 1.58 24.12 3.76 1.67 Mar '11 Mar '10 Mar '09 Mar '08 2 10 49.

059.85 28.25 ---0.523.08 31.71 1.41 --1.83 28.26 68.5 18.93 26.01 26.74 1.79 35.13 --2.3 2.27 1.702.57 133.65 ---0.10 -196.84 67.15 --3.02 -274.42 58.53 Mar '12 Earnings Per Share Book Value 23.21 2.61 1.78 30.32 34.06 59.27 130.88 ---0.14 1.71 115.69 ---0.56 ---0.35 -274.79 --0.53 36.51 1.21 137.WORKING CAPITAL Debt Coverage Ratios Interest Cover Total Debt to Owners Fund Financial Charges Coverage Ratio Financial Charges Coverage Ratio Post Tax Management Efficiency Ratios Inventory Turnover Ratio Debtors Turnover Ratio Investments Turnover Ratio Fixed Assets Turnover Ratio Total Assets Turnover Ratio Asset Turnover Ratio Average Raw Material Holding Average Finished Goods Held Number of Days In Working Capital Profit & Loss Account Ratios Material Cost Composition Imported Composition of Raw Materials Consumed Selling Distribution Cost Composition Expenses as Composition of Total Sales Cash Flow Indicator Ratios Dividend Payout Ratio Net Profit Dividend Payout Ratio Cash Profit Earning Retention Ratio Cash Earning Retention Ratio AdjustedCash Flow Times 65.48 2.83 35.52 35.32 Mar '10 8.76 2.23 Mar '09 6.87 ---0.11 29.8 1.65 3.650.88 120.15 --3.58 29.37 1.61 3.867.2 65.41 ---0.96 -446.08 Mar '11 19.76 1.54 34.36 ---0.14 --1.47 2 4 1.88 67.5 71 69.01 SJCET MBA .21 ---0.73 31.24 Mar '08 14.16 1.97 -178.03 64.97 1.


com/stock/news/49743/steel-industry-outlook-%96-march2011  Research and Markets: Analyzing the Indian Steel Industry – 2012 Edition is Completed with An Analysis of the Major Players in the Indian Steel Sector | Japan Metal Bulletin  Top Indian Steel Companies Performance | News From SURESH VADDE$FILE/Global%20Steel%20Report%2020102011%20FULL%20REPORT. EDITION . The Analysis And Use Of Financial Statements Gerald I.WORKING CAPITAL BIBLIOGRAPHY BOOK NAME Management Accounting AUTHOR NAME M Y Khan & P K Jain (2010).asp  http://www.zacks.ultratech.pdfs  zenithresearch. REFFERANCES (WEBSITES)  http://www.THIRD EDITION. Share Market Real Estate SJCET MBA . Sondhi & Dov Fried (2011).Fifth Edition.pdf  http://www. Ashwinpaul C. Financial management PRASANNA CHANDRA 5TH EDITION .

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