Working Capital Management. (Project) Shilpa

Shree Halasidhnath Sahakari Sakhar Karkhana Ltd.
Nipani 1
EXECUTIVE SUMMARY
HSSKL is a co-operative organization are also owned by shareholders and
also borrowing from institutions. HSSKL is` situated at shankaranand nagar nipani.
Taluka chikodi, district Belgaum. This unit is 3km away from nipani.
Sugar industry is largest agro based industry in the rural India. About 45
million sugarcane formers, there dependents and large mass of agricultural laborer are
involved in the sugarcane cultivation harvesting and ancillary activity constituting
7.5% of the population of the 0.5% million skilled worker and semi-skilled workers,
mostly from the rural areas are engaged in the sugar industry, The sugar industry in
India has a focal point for socio-economic development in the rural areas by
mobilizing rural resources, generating employment and higher income, transport and
communication facilities.
This project is carrier out in shree Halasidhnath sahakari sakhar karkhana
limited. For the period of 4 week started from 27/11/2015 to 27/12/2015, This project
is all about “assessment working capital management with special references to
HSSK”.
Today we are know that financial managers role plays an important role in not
even for long term financial planning but also in short term financial planning for
effective utilization of resources (financial) available which make considerable
changes in determining profitability of organization. Working capital utilization tells
about organization short term solvency and creditworthiness. There are different
techniques available in order to utilize short term finance resources effectively and
efficiently which generates considerable profitability to organization.
STATEMENT OF PROBLEM
This project deals with the study of financial performance based on working capital at
shree Halasidhnath sahakari sakhar karkhana ltd Nipani.
Since there is not found any management problem but the study is carried out to know
effecting utilization of working capital in the factory.
Shree Halasidhnath Sahakari Sakhar Karkhana Ltd. Nipani 2
Objectives of study:
The objective of the study of working capital management
 To know the changes in the working capital of the factory.
 To evaluate working capital management H.S.S.K Ltd.
 To study the system and process involved in managing inventory.
 To know maintain current assets & current liabilities.
 To study financial performance of organization.
Benefits of the study

 It helps to know how they handle or manage the working capital finance.
 The training helps in gaining a practical knowledge of the functional department
of organization.
Scope of study:
 The study has been done for 5 years i.e. 2010-2011 to 2014-2015.
 The study helps to knowing various techniques used in the company.
 Training helps the individual to have brief of an organization.
 It helps in knowing the real organizational environment.
Limitation of study
 The study will be restricted only the to shri halasidhnath sahakari sakkar karkhana
Ltd Nipani, therefore the results of the study cannot be generalized.
 Lack of co-operation.
 The study was based on annual report and annual financial statement of the
organization.
 Time period for the study will be restricted only 30 days.
Methodology:
Nature of data:
The nature of data collected for the study of the working capital
management is secondary data form the company. In order to draw meaningful
inferences the collected data are analyzed with the help of financial ratios.
Sources of data collection:

Primary Data:
The data required for the project was collected through the discussion with
finance manager and various executive in the company.
Following are the methods of primary data.
 Observation method.
 Interview method.
 Questionnaire method.
 Discussion method.
Secondary Data:
The major Sources of data for this project was collected form annual report, profit and
loss account, manuals and some more information collected through the internet.
Following are the method of secondary data.
 From management.
 Internet.
 Past records.
 Banks and journals/periodical.
 Books etc.
Plan of analysis:
This study is conducted with the help of statics figures & techniques like
graphs & charts.
INDUSTRY PROFILE
 Introduction
Sugar industry is very important to the Indian National economy, because of its
multiple contribution in the shape of employment and provision of materials to other
industries.
Sugar is made by some plants to store energy that they don’t need straight
away, rather like animals make fat. People like sugar for its sweetness and its energy
so some of these plant are grown commercially to extract the sugar.
Sugar is produced in 121 countries and global production now exceeds 120
million a year. Approximately 70%is produced from sugar cane a very tall gross with
big stems which is largely grown in the tropical countries. The remaining 30%is
produced from sugar beet a root crop resembling a large parsnip grown mostly in the
temperate zones of the north.
If has been rightly pointed out by the late shree. Fakhrudin Ali Ahmed when he
was minister for food and agriculture, at the eleventh annual general meeting of the
national federation of co- operative factories limited. “The co-operative factories in
some parts of the country have become symbol of industrialization in the development
of ancillary industry provides employment to about 35 million cultivations and 3.6
lakh skilled and unskilled workers. Further, it accounts for providing employment to
crores of thousands in the sugar trades, in the transport of sugarcane and sugar etc.. its
by products are used as raw materials in industries such as alcohol, plastics,
synthetics, rubber, and fiber board pharmaceuticals, paper, etc.. the sugar industry in
recent yeas has begun to export sugar, thus earning valuable foreign exchange.
Besides it provides Rs.300/- crores in the form of taxes to the exchange consisting
these many facts of important of the industry, it ranks seconds among the major
consumer industries of this.
The sugar industry is mostly oriented to a single materials, namely sugarcane that
forms 60%of the total cost of production. Therefore, the availability of sugarcane and
facilities of transporting raw material of the sugar mill naturally condition the industry
of sugar proximity to. The raw material is essential because the sucrose content of the
sugarcane begins to decrease soon after the cane is cut obtained as the factories for
generating power use by a product during the producing. Therefore, power is not at all
a dominating factor determining the location of sugar industry in recent time,
techniques feasibility and economics visibility of the sugar project have been given
importance in location of sugar industry. In the word of Dr. M. Mehta. “The location
pattern of the sugar industry is greatly influenced by the character local distribution
depends entirely of physical and geographical factors, nature plays a dominant plays a
dominant role in the sugar industry”.
In india, major sugarcane growing states are uttar Pradesh, Maharashtra, Karnataka,
Gujarat, Tamilnadu, and Andhra Pradesh. These se place contribute more than 85% of
total sugar production in the country; uttar Pradesh and Maharashtra together
contribute more than 57% of total production.
THE HISTORICAL BACKGROUND OF THE INDIAN SUGAR INDUSTRY;

The sugar industry is proud to be an industry, which' spreads the taste of

sweetness to the mankind. The history of origin of this industry is as old as the history
of main himself. Sugar is generally made from 'sugarcane and beet. In India, sugar is
produced mainly from sugarcane. India had introduced sugarcane all over the world
and is a leading country in the making sugar from sugarcane.
‘Saint Vishwamitra’ is known as the research person of the sugarcane

religious literature. We can find the example of sugarcane in Vedic literature also as
well as sugarcane. We can also find the reference of sugar and the sugarcane in
Patanjali’s Mahabashya and the treaty on the grammar of ‘Panini’. Greek traveler
‘Niyarchus’ and Chinese traveler ‘Tai-Sung’ have mentioned in their travelogue that
the people of India used to know the methods of making ‘sugar and juice from
sugarcane the great Emperor Alexander also carried sugarcane with him while
returning to his country.
Thus from different historical references and from some ‘Puranas’ it can he
concluded that method of making sugar from sugarcane was known. To the people of
Bihar. The historical evidences of sugar industry prospering in ancient India concrete
and this has helped to develop and prosper the co-operative sugar movement in India.
NATIONAL SCENARIO OF SUGAR INDUSTY:
“Indian sugar mills have made an investment of 2500 million during the last
two years only which is no longer limited to sugar but also includes the cogenerated
power and ethanol sector as well”
“Indian contributes about 12% of world sugar production and annual sugar
production capacity of 23 million tones with a total investment of 11000 million”.
Sugar industry has a potential to generate about 6000 MW of power.
Already 50 units have an installed capacity co generate around 900 MW surplus
power and a capacity of 1000 MW in the process of being installed by 50 sugar mills.
By 2010- 2011 the total surplus power generate by sugar industry and supplied to the
grid would cross 2250 MW.
As regards ethanol sugar industry has a capacity of producing about1300 million

liters and the government intends to increase ethanol doping to 10% from june 2008
thereby increasing annual demand to 1100 million liters.
India has now as many as 453 working sugar factories with an average
capacity of 3500 TCD as against 299 working sugar factories with as average capacity
of 1650 TCD in 1980 plants being installed and capacity expansion being undertaken
now are for much higher capacity ranging between 7500 to 10000 TCD comparable
with the verge capacities of sugar plants in major sugarcane and sugar producing
countries.
INTERNATIONAL SCENARIO OF SUGAR INDUSTRY:
“Brazil and India would shape developments in global sugar trend as
largest producer and producer- consumer respectively”. The first revision of the world
sugar balance by ISO for the current season2011- 2012 puts worlds production at a
record 168.955 million tons raw value of 5.2% from the last season. However the
revised projection represents a considerable 1.420 million tone downward correction
of ISO’s initial assessment in August 2011. World consumption is expected to grow at
a rate still lower than the long term 10 year average (2.03% and 2.59%respectvely).
The lower growth is attributed to record high price in both the worlds market and
more importantly domestic markets. Even so global use of sugar is expected to reach
167.667 million tones. Therefore growth in the global production is sufficient to cover
sugar consumption. Same can be said about export availability projected at 50.687
million tone in 2011-2012 that adequately covers import demand expected not to
exceed 50.155 million tones. A sharp recovery in Indians output and an improvement
of sugar production in china on the one hand and considerable production shortfalls in
western and eastern Europe due to unfavorable weather conditions on the other hand
have become the major supply features of 2011/12 meanwhile Brazil’s production in
2011/12 (October/September) is also expected of decrease as against the previous
year although in terms of nationals crop year (may/April) a further growth is projected
for growth is projected for both 2011/12 ISO’s first revision of the world trade
balance indicates that the global export availability and import demand in 2011/12
(October/ September) look nearly balanced in both the white and raw sugar segments
of the market.
CONTRIBUTION OF SUGAR INDUSTRY TO INDIAN ECONOMY :

Sugar industry contributes about Rs.l650 Crores to the Central Exchequer as
excise duty and other taxes annually. In addition, about Rs.6O0 Crores is realized by
the State Governments annually through purchase tax and cuss on cane. At the
prevailing sugarcane price, the total sugar cane produced in the country value at about
Rs.24000 Crores per year.
SUGAR PRODUCTION:
Most of the sugar in India is manufactured and sold as “White Crystal Sugar”
which is produced by Double Suspiration Process, while the norm in developed and
emerging nations is refined sugar, which is produced by the Phosphoflotation Process.
Most of the mills in India are not equipped to make refined sugar Mills
which are designed to produce refined sugar can manufacture sugar not only from
sugarcane but also from raw sugar which can be imported. Therefore, such mills can
run their production all the year round, as opposed to single state mills, which are
dependent upon the seasonal supply of sugarcane.
CONCLUSION:
India is a largest consumer of sugar in the World and second largest
manufacturer of sugar followed by China, USA, Thailand, Germany, and Pakistan. In
the sugar industry the top position is Brazil as it is a world largest manufacturer of
sugar. As seeing tl1e consumption of sugar the India is having big market for sugar
industry. As it is a large-scale industry it provides large profit for the country and it
can also be helpful for development of industrial infrastructure. India is a world’s
largest consumer and second largest manufacturing of sugar so the sugar must be
cheaper. It can be provide by our sugar industry.
COMPANY PROFILE
Name : Shree Halasidhnath Sahakari Sakhar

Karkhana Ltd;
Status : Co-operative body.
Gram : hala sugar.
Address : Shri HSSK Ltd, Shankaranand Nagar
At : Nipani, Tal : Chikodi
Dist : Belgaum, State : Karnakata
Phone No (08338) 220355, 222090
221351,221828.
FAX-(08338) 221315
Location : 3 KM away from Nipani, toward Kolhapur Road
Situated beside national highway No 4
Date of Reg. : 22nd April 1981
Commencement : 4th Jan, 1987
License Capacity : 2200 MT per day
Present Capacity : 2200 MT per day
Employees : 547
Area of Operation : Chikodi Taluka
E-mail : hala_sugar@rediffmail.com
INTRODUCTION:-
Shree Halasidhanath Sahakar Sakhar company Ltd. established in the year
1981 at shankaranand nagar which is 3 km away from Nipani. It has been established
with co- operation of many social leaders and co-operatives societies under leadership
of founder chairman late shri Baburao Patil Budihalkar. The construction task has
been set up in 1979 and (license in 1981- 82)by laid down the foundation stone by
hand of former prime minister late Rajiv Gandhi of India and actual production task
commenced in 1986 with the plant’s capacity 1250 TCD.
Shree Halasidhanath sahakari sakhar company Ltd,is co-operative
organization. Co-operative companies are owned by shareholders and loan borrowing
from financial institution. It appoints the board of management. The employees of the
organization are appointed by board of management.
LOCATION PLANT:-
Shri Halasidhanath Sahakari Sakhar company Ltd, Nipani has been
constructed in a such a area where there is plentiful resources available in the from
raw material of sugar cane and in other forms can be availed easily and economically
at place entitled as shri shankaranand nagar.
FACTORY PREMISES
Shri Halasidhanath Sahakar Sakhar company Ltd, Nipani has ‘possessed
optimal premises including ware house, factory plant , office building, canteen,
colony, agriculture land, petrol pump, co-operative banks building etc.
NATURE OF ORGANISATION
Nature of business carried Shree Halasidhanath Sahakar Sakhar company Ltd,
Nipani is involved in the activity of` manufacturing white crystal sugar products
which is the main product.
The process of production involves conversion below of:-
1) Raw sugar cane to sugar,
2) Raw sugar to refined sugar
Molasses, Biogases are it’s by products.

Molasses:-
Molasses is mainly used for the manufacture of ethyl alcohol (ethanol), yeast
and cattle feed.
Biogases:
Biogases is usually used as a combustible in the furnaces to produce steam,
which in turn is used to generate power, it is also used as raw materials for production
of paper and as feedstock for cattle.
Operation of HSSK:-
Shree Halasidhnath sahakari sakhar company Ltd, has a wide range of area
of operation for continuous and regular flow of sugarcane form different authorized
area within 10000 acre around the spot of plant includes some region of two states
from Maharashtra and Karnataka. Company directly not dealing with international
market but dealers does all such activities.
VISION & MISSION :

VISION:
The company’s vision is to become the most efficient producers of sugar and
the largest marketer of sugar and ethanol in the country.
 SHRI HALASIDHANATH SAHAKAR SAKHAR KARAKHANA LTD.

AIMS
 To expand its installed capacity, achieve end -to- end integration for all its
plants to improve margins and reduce business cycle. -`
 Achieve greater raw material security.
 Increases its focus of cooperate and high volume consumers. ,
 To become the most efficient and market driven integrated processor of
sugarcane in India.
 Delivering consistently on returns to all its shareholders.
 Bringing overall productivity and efficiency throughout the organization,

especially by value addition of it’s by products in Sugar effluent waste etc. '
 Producing the best quality sugar to satisfy the domestic and internal norms.
Mission :
 To become a provider of world class sugar products to nation.
 To enhance shareholders wealth by sustained, profitable and financially sound
growth with prudent risk management systems.
 To fulfill national and social obligation as a responsible cooperate citizen.
 To create an environmental, intellectual satisfying & professionally rewarding
to the employee.
Growth of company:-
 The purchasing rates of a halasugar have been increased by 350 per tone.
 Earlier the company was paying 2151 per tone for the purchasing of
sugarcane.
 Now the company is paying 2300 per tone purchasing of sugarcane. In that
govt financial assistance will pay the Rs=150.
 There is also increase in the share rates of the company by 7000 per share.
 In the year 1987 the companies share rate was 1000 per share.
 Than after the 2002 the share rate of company is increased to 3000 per share.
 There is also increase in number of share of a company earlier in 1987 the
number of share of accompanies ware 4500.
PRESENT BOARD OF DIRECTOR’S
SI.NO Name Place Position

01 Shri. Subhash. S. joshi. Nipani Chairman
02 Shri. Anita. R. patil. Akkol Vice-chairman
03 Shri. Appasaheb. S. jolle. Examba Director
04 Shri. Vishwanath. S. kamate. Khadaklat Director
05 Shri. Ganesh. p. hukkeri. Examba Director
06 Shri. Chandrakant. S. kothiwale. Nipani Director
07 Shri. Ramagonda. Y. patil. Rampur Director
08 Shri. Malagonda. P. patil. Jatrat Director
09 Shri. Ramagonda. B. patil. Janwad Director
10 Shri. Avinash. A. patil. Nanganur Director
11 Shri. Samit. B. sasane. Padalihal Director
12 Shri. Jayawant. M. kambale. Mattiwade Director
13 Shri. Vidya. A. ginde. Galataga Director
14 Shri. Mallikarjun. J. patil. Kerur Director
15 Shri. Babasaheb. N. khot. Shamanewadi Govt. Nominee
16 Shri. M. D. Mallur. Belgaum Managing director
PRODUCT PROFILE:-
The main and direct product of sugarcane is sugar. The factory produces like molasses
biogases & press mud.
The following diagram shows the products that are manufactured by the
industry:-
Sugarcane
sugar Byproduct
1. M 30 Molasses
2. SI 30 Bagases
3. SI 30 press mud
Sugar:
Sugar is produced in four different varieties. They are as follow,
1. Medium size (M-30)
2. Small size (S1-30)
3. Very small S2-30)
MEMBERSHIP OF SHARE CAPITAL:-

The membership of Shri Halasidhanath Sahakar Sakhar karakhana Ltd has

been accepted by different individuals and firms categorized into three classes as
under
Number of Share Capital

Type of membership
members ( Rs in lakhs)
A Class : Growers 20785 1007.57

B Class : Co-operative Institutions and
3069 105.26
Non Growers
C Class : Government of Karnataka 01 1558.91
Total 23855 2671.77
INFRASTRUCTURAL FACILITY:-
The various infrastructure facilities provided by Shri Halasidhanath Sugar Ltd
are as fallows.
 The warehousing is built in order to pressure for forthcoming seasonal
changes due to which the material will be loss (capacity- 5000 tones, 2
warehouses).
 Canteen facility is provided within the campus of the company so that workers
will continue with speed in work by saving their time in travelling from
company to their house. (Seating capacity 70 peoples).
 Food is provided at subsidized rates to employees. i.e 50%.
 The company has its own quarters, provided their employees. One guest
house.
AWARDS OR ACHIEVEMENTS:-
1) During l996-97 the factory as received award from SIST (south Indian sugar
technologists association) for best achievement in sugar cane development.
2) During 2010-11 factory has received best technical efficiency award from
SISSTA.
3) During 2013 – 14 factor has received award to commendable performance for
the season.
AIMS & OBJECTIVES QF THE COMPANY

 To acquire lands either by way of purchase or otherwise for cultivation of
Sugar-cane and other cost and for erection of building, godawans staff quarters
etc and for installation of machinery’s.
 To manufacture Sugar, Jaggery and their by products out of Sugar-cane grown
and supplied by members of the society and other and to sale the same to the
best advantage.
 To undertake such other activities as are identical and conductive to the
development of the society etc.
 To acquire and install machinery for the utilization of by products and buy raw
materials and sell finished products is the course of utilizing and marketing the
byproducts.
PRESENT EMPLOYEES STRENGTH:

The following is the information of manpower position in HSSK ltd
SI. No Department No of employees

01 Managing director 01
02 Time office 08
03 General store 20
04 Civil department 06
05 Security 24
06 General administration 24
07 General accounts 09
08 Cane account 10
09 Environment 06
10 Vehicle 11
11 Mechanical department 180
12 Manufacturing department 133
13 Agriculture department 115
Total 547
Most important think about organization is internal environment because

internal environment plays an important role in development of organization. In
halasidhnath unit taking into consideration 25 workers various department.
ORGANIZATION CHART:-
Chairman and MD
Executive Directors
Executive Vice President
Account Engineering Cane

Department Department Department
General Cane Manufacturing

Account Account Department
Computer Store Time Purchase Sales

Section Section Section
Different departments
1) Administration personnel department
2) Production department
3) Marketing department
4) Purchase department
5) Cane Accounts department
Personnel Department :
The personnel department manages the employee’s welfare, problems of
workers, security and salary and this department is important for every Organization.
The personnel department is concerned with recruitment, selection, transfer
and promotion of laborers etc. The main function of this department is to recruit the
workers, train them and place them into the jobs, on the bases 'of right men for the
job. Thus personnel department helps in securing, using and developing appropriate
manpower to achieve the objectives of organization.
Personnel Manager
Deputy Personnel Manager
Labour Welfare Officer
Guest In-charge
Gate Keeper
Another important task of this department is taking care of welfare programs

and training the employees of the organization. A good training and welfare programs
always leads to the better achievement of the goals set by the organization. Welfare
programs include providing security and safety measures helmets, safety boots,
separate uniforms etc. Labour Welfare Officer heads welfare activities.
FUNCTION
1) It gives more importance to salary, job economic rewards, job simplification
and job specialization
2) The HOD and Administration Department holds the responsibility of
arranging, organizing, training and implementing programmes for all the
employees of the organization.
3) Its aim is to improve the working conditions and standard of living of workers.
DUTIES OF LABOUR WELFARE OFFICER
1) LWO acts like advisor, assistance in implementing legislative and non-
Legislative provisions relating to Sanitation, Recreation, welfare Amenities
etc.
2) Helps to maintain good working conditions.
3) Formation of welfare committees.
4) Implementation of welfare acts.
5) He has to supervise the welfare programmes taken up by the organization.
6) He acts as an advisor to the employer in the matter to formulating welfare
policies.
7) He is councilor for workers problems.
8) He is mediator and liaison officer between management and Labors
9) He works with management and workers equally to improve productivity
Production Department
Manufacturing Section
Chief Chemist
Deputy Chemist
Lab Chemist
Supervisor
Worker
In this section, chief chemist plays a vital role. He has to supervise and control
the manufacturing process and the personnel in the shift during the crushing season.
Production department is the most important part of any manufacturing unit.
Whatever plans, policies and purchase. Hala sugar makes all these different aspect are
to be implemented simultaneously in order to achieve the best quality of products.
Manufacturing is a tough task and it needs a sound technical knowledge as well as
experience and training.
SUGARMANUFACTURING PROCESS
In the first step sugarcane is harvested and cleaned sugarcane is loaded in the
vehicle and brought to the factory. The gross weight is taken and cane is unloaded on
the feeder table with electric crane. Cane is fed to cane carrier from the feeder table.
The preparatory devices viz. cutter, furbisher etc. are installed on the carrier to cut
sugarcane. Second carrier where juice is extracted and hot water is supplied for
maximum, extraction of juice before -last mill and mixed Juice is sent for processing
takes' the prepared cane to mills. Water and a juice both are weighed automatic
weighing scales separately. Biogas is used as fuel in the boilers.
Mixed juice is clarified by sulphitation process by heating at 70 degree Celsius

in juice heater. By burning sulphur, Phosphoric acids, milk of lime and S02 gas are
produced. And they are used as clariticants. Then the sulphited juice is heated to 105
degree Celsius in another juice heater. The sugar is produced from further
concentration of this syrup and sugar melt by evaporation in vacuum pan. Syrup is
boiled at about 60 degree Celsius. This gives ‘A’ massecuite and it is discharged to
crystallizers. Then the sugar crystals are separated from the mother liquor in
centrifugal machine. The liquor is called as ‘A’ Heavy Molasses. Sugar is washed and
dried with super heated _water and dropped on the hopper from centrifugal machine.
The sugar is graded according to the size and then it is bagged in ‘A’ twill bags
l00Kgs. Net.
‘A’ heavy molasses is subjected to 2“d boiling to get B-sugar and B-heavy
molasses. B-sugar is melted and used. B-heavy molasses is subjected to 3'd boiling to
get C-sugar and final molasses. C-sugar is melted and used. Final molasses is weighed
and sold as byproduct for distillery units.
SUGAR MARKETING DEPT
Sales Manager
Asst. Sales Manager
Officer Boy
Sugar is marketed through Traders. The sugar is marketed in 2 quotas i.e. free
sugar and levy sugar. For free sugar, rate is fixed by company based on current
market position and it is sold to the dealers or directly in the market. For levy sugar,
rate is fixed by the govt. and it is sold to the govt. and there is cash and carry system
for the payment of price of sugar. Transportation charges must be paid by the parties.
The sugar is sold in India and also exported to other countries.
SUGAR SUPPLIED IN TWO QUOTAS.

 Levy Sugar: For this sugar, rate is fixed by the government and it is sold to the
government.
 Free sugar: For this sugar, rate is fixed by the factory based on current market
position and it is sold directly to the market i.e. in free market.
The sugar industry contributes socially and economically, socially it provides
employment to thousands of people. Economically by earning the foreign exchange.
Along with these things it generates its own power that saves conventional sources of
energy.
India is one of the largest sugar production countries in the world, contributing
about 8% of the world’s production of vacuum pan centrifugal sugar.
PURCHASE DEPARTMENT
Purchase Officer
Asst. Purchase Officer
Office Boy
Purchasing plays an important and significant role in processing industry.

Purchasing is a tough task, which is to be performed very carefully. It functions on the
principle of “Money saved in purchase is money gained in sales”. Profit can also be
earned in purchasing process by the purchase manager by his knowledge about the
entire market.
Purchase dept. is subdivided into 3 parts.
a) Stores purchase department
b) Mechanical department
c) Cane purchase department
Purchasing department is centralized. This department purchases items like
steel, cement, hardware items, rubber and chemicals like phosphoric acid, sulphur,
sulphuric acid etc. -
Cane Account Office

Accountant
Asst. Accountant
Clerk
Peon
Cane purchase department is a department where cane is purchased directly

from farmers. factory purchases sugarcane from villages like of Athani, 7 villages of
Raibag and 1 village of Chikkodi, which is the area, reserved by the govt. Cane
department is the major department of any sugar mill. This department is purchasing
sugarcane from growers.
FUNCTIONS:
Cane department is working under Manager Cane, who is a very experienced
person. And has a much more knowledge about sugarcane quality. The main function
of this department is the purchasing of sugarcane. The main goal of this department is
to supply high quality sugarcane. Main input of hala sugar Limited is the raw fresh
sugarcane. To control the different activities of purchase of sugarcane, cane
department play very important role. This department has purchased sugarcane from
different villages of the district. Cane field officers are surveying regularly and
motivate growers.
CONCEPTUAL BACKGROUND
WORKING CAPITAL
Working capital meaning:-
working capital is defined as the excess of current assets over current liabilities.
Current assets are those assets which will be converted into cash within the current
account period or within the next near as a result of the ordinary operation of the
business. They are cash or near cash resources. These include.
 Cash and Bank balance
 Receivables
 Inventory
- Row material stores and
- Work - in progress
- finished goods
 Prepaid expenses
 Short- term advances
 Temporary investments
The value represented by these assets circulates among several items. Cash is
used to buy row materials, to pay wages and to meet other manufacturing
expenses. Finished goods are produced. These held as inventories when these
are sold, accounts receivables are created. The collection of accounts
receivables brings cash into the firm. The cycle starts again.
Current liabilities are the debts of the firm that have to be paid during the
current accounting period or within a year. These include:
 Creditors for goods purchased
 Outstanding expenses i.e. ., expenses due but not paid
 Short term borrowings
 Advances received against sales
 Taxes and dividends payable
 Other liabilities maturing within a year.
Need for working capital

The basic objective of financial management is to maximize shareholders
wealth. This is possible only when the company earns sufficient profit largely
depends upon the magnitude of sales. However, sales do not convert into cash
instantaneously. There is always time gap between the sale of goods and receipts of
cash.
Working capital is required for this period in order to sustain the sales activity
e.g.-cost of inventories, for paying wages and salaries, for meeting the overhead
expenses such as rent taxes, advertisement etc.
Objective of working capital:

The basic objectives of working capital management are as follows:
 By optimizing the investment in current assets and by reducing the level of current
liabilities, the company can reduced the locking up funds in working capital there by;
it can improve the return on capital employed in the business.
 The second important objective of working capital management is that the company
should always be in a position to meet its current obligations, with the firm. But
maintaining excess funds in working capital means locking of funds without return.
 The firm should manage its current assets in such a way that the marginal return on
investment in these assets is not less than the cost of capital employed to finance the
current assets.
Classification of working capital
A. On the basis of concept
Gross and net working capital:
Generally the working capital has its significance in two perspectives – gross
working capital and net working capital the term Gross working capital refers to the
firm’s investment in current assets. The term Net working capital refers to the excess
of current assent over current liabilities. These gross working capital and net working
capital are called balance sheet of working capital.
B. On the basis of time

Permanent and temporary working capital
Considering time as the basis of classification, there are two of types of
working capital viz. ‘permanent’ and ‘temporary’ permanent working capital
represents the assets required continuing bases over the entire year. Where as
temporary working capital represent additional assets required at different items
during the year. A firm will finance its seasonal and current fluctuations in business
operations through short term deft financing.
For example, in speak seasons, more raw materials to be purchased, more
manufacturing expenses to be incurred, more fund will be locked in debtors balance
etc. in such times excess requirement of working capital would be financed from short
term financing sources.
Sources of working capital

1. Trade credit
2. Bank credit
1) Trade credit
Trade credit refers to credit extended to the supplier of the goods and service in the
normal course of transaction/ business/ sales of the firm. According to the trade
practices the cash is not paid immediately for purchases but after an agreed period of
time, thus, deferral of payment (trade credit) represents a source of finance for credit
purchase.
2) Bank Credit:
The firm gets working capital finance from bank by five years.
1) Cash credit
2) Loans
3) Purchases/Discount bills
4) Letter of credit
5) Working capital term loans.
Disadvantages of Inadequate working capital:

 Concern which has inadequate working cannot pay its short term liabilities in time.
Thus It will loss its reputation and shall not be able to get good credit facilities.
 It may become difficult for the firm to undertake profitability project due to non-
availability of founds.
 Operating inefficiency may arise because of difficulties in meeting day today
expenses.
 Fixed assets may not be efficiently utilized due to lack of working fund and it lowers
the rate of return on investments in the process.
On the other hand excessive working capital pose the following dangerous.
 Excess of working capital may result in any necessary accumulation of inventories,
increasing the chances of inventory, mishandling, waste and theft.
 Excessive working capital may make management complacent leading gradually
managerial inefficiency.
 It gives risk to speculative transaction.
 Excessive working capital implies excessive debtors and defective credit policy which
may cause high incidence of bad debt.
Advantages of adequate working capital

 Solvency of business:
Adequate working capital helps in maintaining solvency of the business by providing
uninterrupted flow of production.
 Good will:
Sufficient working capital enables a business concern to make prompt payment and it
helps in creating and maintaining good will.
 Easy loan:
An adequate working capital, high solvency and good credit standing helps to arrange
loans from banks and others
 Cash discount:
Adequate working capitals also enable a concern to avail cash discount on purchase
and it in turn reduces cost.
Inventories
Inventories refer to the stock of raw materials held for use in manufacturing
process and finished goods held for sale. Thus the term inventory refers to the stock of
raw material, Work-in-progress, finished goods and supplies.
Kinds of Inventories
Inventories can be classified into three categories.
 Raw materials
 Work-in-progress
 Finished goods
 Benefits of holding inventories
1. Raw Materials:
Raw materials form a major part of input into organization. They are
required to carry out production activities uninterruptedly. The quantity of raw
materials required will be determined by the rate of consumptions and the time
required for replenishing the supplies. The factors like the availability of the materials
and the government regulation, etc affect the stock of raw materials.
These includes those materials, which have been committed to production in a
manufacturing firm. They may consist of basic raw materials or finished components.
2. Work-In-Progress:
The work in progress is that stage of stocks, which are between the raw
materials and finished goods. The raw materials enter the process of manufacture and
they are not converted into finished goods.
This includes those materials, which have been committed to production
process but have not yet been completed.
3. Finished goods:
The goods ready for sale or distribution will come under this category. The
stock of finished goods provides a buffer between production and market. The
purpose is to maintaining a proper supply of goods to consumer at a proper time
In some concern the production is undertaken on order basis, in these concerns
they will not need finished goods, the need for finished goods inventory will be more
when production is undertaken in general without waiting for specific orders.
These are completed products awaiting sale. They are the final output process
of the production process in a manufacturing firm. In case of wholesalers and
retailers, they are generally to referred to as merchandise inventory. The level of the
above three kinds of inventories differ depending upon the nature of the business.
4. Benefits of holding inventories:

These are completed products awaiting sale. They are the final output of the
production process in a manufacturing firm in case of wholesalers and retailers, they
are generally referred to as merchandise inventory.
Benefits of holding inventories

Holding of inventories helps in firm in separating the process of purchasing,
producing and selling. In case a firm does not hold sufficient stock of raw materials,
finished goods etc. the purchasing would take place only when the receives the order
form a customer. It may result in delay in executing the order because of difficulties
in obtaining procuring raw materials, finished goods etc. thus inventories provide
cushion so that the purchasing, production and sales functions can proceed of
optimum speed.
The specific benefits of holding inventories can be put as follows:

i. Avoiding losses of sales
If a firm maintains adequate inventories it can avoid losses on account of losing the
customers for non supply of good in time.
ii. Reducing ordering cost

The variable cost associated with individual orders, e.g., typing checking, approving
and mailing the order, etc. can be reduced if a firm places a few large orders than
numerous small orders.
iii. Achieving efficient production runs

Maintenance of large inventories helps a firm in reducing the set up cost associated
with each production run.
Risks and coast associated with inventories:

Holding of inventories exposes the firm to a number of risks and coast. Risk of
Holding inventories can put as follows:
i) Price decline
This may be due to increase in the market supply of the product, introduction of a new
competitive product, price cutting by the competitors etc.
ii) Product deterioration
This may due to holding a product for too long a period or improper storage
condition.
How to reduce operating cycle?

This aim of every management should be to reduce the length or operating cycle or
the number of operating cycle in years.
Only then the need for working capital decreases. The followings a few remedies
may become handy in contrasting the length of operation cycle period.
Purchase Management:
The purchase manager owns a responsibility in insuring availability of right
type of materials in quality of right quantity at right price on right time and at right
place. These six R:s contribute generally in the improvement of length of operating
cycle. Further, streamlining of credit from supplier and inventory polity also help the
management.
Production management:
The production manager affects the length of operating cycle by managing and
controlling manufacturing cycle, which is a part of operating cycle and influences
directly. Longer the manufacturing cycle, longer will be the operating cycle and
higher will be the firm’s working capital requirements.
The following measures may be taken:

 Proper maintenance of plant, machinery and other infrastructure facilities.
 Proper planning and coordination at all levels of activity.
 Up- graduation of manufacturing system, technology.
 Selection of the shortest manufacturing cycle out of various alternative etc.
Marketing management:
The sale and production policies should be synchronized as far as possible.
Lack of matching increases the operating cycle period. Production of qualitative
products of lower costs enhance sales of the firm and reduces finished goods storage
period. Effective advertisement, sales promotion activities, efficient salesman ship,
used of appropriate distribution channel etc. reduces the storage period of the finished
products.
Sound credit and collection policies:

Sound credit and collection policies enable the finance manager in minimizing
investment in working capital in the form of book debt. The firm should be
discretionary in granting credit terms to its customers. In order to see that the
receivable conversion period is not increased, the firm should follow a rationalized
credit policy based on the credit standing of customers and other relevant facts. The
firm should be prompt in making collections. Slack collection policies will tie up
funds for long period, increasing length of operating cycle.
Proper monitoring of external environment:

The length of operating cycle is equally by external environment. Abrupt
changes I basic conditions would affect the length of operating cycle. Fluctuations is
demand, competitors, production and sales policies, govt. fiscal and monetary
policies, changes on impact front, price fluctuations, etc., should be evaluated
carefully by the management to minimize their impact their adverse impact on the
length of operating cycle.
Other suggestions:
The personnel manager by framing sound recruitment, selection, training
placement, promotion, transfer, wages incentives and appraisal policies can contrast
the length of operating cycle. Use of human resource development technique in
organization, Enhance the morale and zeal of employees thereby reduces the length of
the operating cycle. Proper maintenance of plant, machinery infrastructural facilities,
timely replacement, renewals, overhauling etc. will contribute towards the control of
operating cycle.
These measures, if adhered properly, would go a long way in minimizing not
only the length of operating cycle period but also the firm’s working capital
requirements.
Factors determining working capital requirement

These is no set universally applicable rules to ascertain working capital needs
of business organization. The factors which influence the need level are discussed
below:
1. Nature of business:
If we look at the balance sheet of any trading organization, we find major parts
of the resources are developed on current assets, particularly stock-in-trade. Whereas
in case of a transport organization major part of funds would be locked up fixed assets
like motor vehicles, spares and work shed etc. and the working capital component
would be negligible. The service organizations public utilities need lesser working
capital than trading and financial organization. therefore, the requirement of working
capital depends upon the nature of business carried by the organization.
2. Manufacturing cycle:
Time span required for conversion of raw materials into finished goods is a
block period. The period in reality extends a title before and after the working in
progress. This cycle determines the need of working capital.
3. Business cycle fluctuations:

This is another factor which determines the need level. Barring exceptional
cases, there are the variations in the demand for good/ services handling by any
organization. Economic boom or recession etc., have their influence on the
transactions and consequently on the quantum of working capital required.
4. Sale of operation:
Operational level determines working capital demand during a given period.
Higher the scale, higher will be the need for working capital. However, pace of sales
turnover (quick or slow) is another factor. Quick turnover calls for lesser investment
in inventory while low turnover rate necessities larger investment.
5. Credit policy:
Credit policy of the organization includes to whom and to what extent credit
may be allowed. Amount of money locked up in account receivable has its impact on
working capital. in good money cases, account receivables are sterile and sticky and
thereby they have forfeited the right to be classified as current assets. In view of such
situation in ascertaining quick ratio instead of deducting stock-in-trade we find it
worthwhile to deduct sundry debtors.
The other component is credit policy of the suppliers, their terms and
conditions of credit has its historical presence in the trading would. Availability of
normal credit supplies as well as trade credit facility working capital supply and
reduce the need for bank finance.
6. Accessibility to credit:
Credit worthiness is the precondition for assured accessibility to credit.
Accessibility in banks depends on the flow of credit i.e. the level of working capital.
7. Growth and diversifications of business:

Growth and diversifications of business call for larger volume of working
capital. the need for increased working capital does not follow the growth of business
operations but precedes it. Working capital need is in fact assessed in advance in
reference to the business plan.
8. Supply situation:
In easy stable supply situation, no contingency plan is necessary and
precautionary steps in inventory investment can be avoided. But in case of supply
uncertainties, lead-time may be longer necessitating larger basic inventory, higher
carrying cost and working capital need for the purpose. No aggressive can gain
foothold in such situation.
9. Environment factors:
Political stability in its wake brings money market and trading world. Things mostly
go smooth. Risk ventures are possible with enhanced need for working capital
finance, similarly, availability of local infrastructural facilities, road, transport, storage
and market etc., influence business and working capital need as well.
Ratio analysis
Meaning:
The term ‘ratio’ refers to ‘one number expressed in term of another’. Ratio is
a mathematical expression of the relationship between two or more related number.
‘The ration’ used to describe significant relationship between two or more
related items of financial statements are called as accounting ratio’
The ratio may be expressed either in/form of:
1) Co-efficient
2) Percentage
3) Proportion
Thus ratio analysis is defined and interpretation of financial statements through ration.
1) Current Ratio:
Current ratio means the ratio of current assets to current liabilities. It indicates
relationship between assets and current liabilities. It is also collect as working capital
ratio it is calculated as follows:
Current assets
Current ratio’s =
Current liability
Current Ratio of 2:1 are considered to be ideal.

A very high current ratio is not desired as it indicates less efficient use of funds.
IMPORANCE:
i) It shows firms ability to pay its current liability.
ii) It segues as an index of firm s financial stability.
iii) It indicates financial and operational.
Quick / acid test ratio:

This ratio also called as “Liquid Ratio”. The Liquid ratio is the ratio between
“liquid assets” to “Liquid Liabilities” or some authors explains ratio is the ratio
between “Liquid Assets” to Current. The following formula is used:
Liquid Assets
Liquid ratio =
Current liability
Liquid Assets: All Current Assets Except “Stock and prepaid expensed” are treated
as liquid Assets.
Liquid Liabilities: All Current Liabilities expect “Bank over draft and Cash credit
facilities” are considered as liquid Liabilities.
IMPORTANCE:
i) It plugs the loopholes of current ratio.
ii) It shows accurate liquidity position of a firm.
2) Working capital turnover ratio:

This ratio shows whether working capital has been efficiency used in making sales.
High ratio indicates higher operating efficiency of a firm and vice-versa. It is
calculated as follows.
Net sales
Working capital turnover ratio =
Working capital
Here sales = sales – returns

Net sales = fixed assets – current liabilities
Working capital turnover ratio may take different forms for different purpose. Some
of them are being explained below.
1. GROSS PROPIT RATIO:

It is ratio of gross profit to net sales expressed as percentage. It is calculated as
follows.
Gross profit
Gross profit = x100
Net sales
IMPORTANCE:
i) It states the extent to which to selling price per unit may be reduced without incurring
loss.
ii) It helps to ascertain the average gross margin to be maintained on sales.
iii) There is no standard gross profit ratio for evaluation. Higher the ratio, greater will be
the profitability and vive versa.
2. NET PROFIT RATIO:
This is the ratio of net profit to net sales expressed as a percentage. It is calculated as
follow.
Net profit
Net profit ratio= x 100
Net sales
Net profit is the balance of profit and loss A/c which is calculated after charging all
operating and non operating expenses and incomes.
IMPORTANCE:
i) It measures overall profitability if a firm
ii) It helps in assessing the overall efficiency of a firm.
ADVANTAGES AND DISADVANGES OF RATIO ANALYSIS:
 Simplifies Financial Statements
 Facilities inter firm comparison
 Help in planning
 Liquidity position with
 Long term Solvency
ADVANTAGES:
If companies ignore the impact of inflation or price level changes in the financial
statement or if financial statement are based in historical costs. Then it becomes
limitation of ratio analysis. Another problem is it depends on quality of financial
statements. For example:
If there is no transparency / disclosure of real thing in the statements it
becomes problems to analyst. But now days it doesn’t hold well because, every,
company has to disclose its information according to accounting to standards, in the
annual reports.
ANALYSIS AND INTERPRETATION OF DATA

 Meaning of working capital

Working capital is that amount of funds which is required to carry out day to day
operating of an enterprise. It is that part of total capital which is employed in its short
term operations.
 Current assets:
Current assets are those assets, which in the normal course of business
convertible into cash within a short period of time that is, an according year (or
operating cycle).
 Components of current assets:
 Stock of materials in trade and in transit
 Sundry debtors
 Bills exchange
 Loans and advances
 Deposits
 Cash and bank balance
 Prepaid expenses
 Outstanding income
 Current liabilities:
Current liabilities include all the obligations of the concern that are maturing
within an accounting year.
 Components of current liabilities:
 Sundry creditors
 Loans from bank and others
 Provisions for taxation, dividend
 Liabilities towards gratuity
 Outstanding expenses
 Incomes received in advances
ANALYSIS
STATEMENT SHOWING CHANGES IN WORKING CAPITAL

For the year ending 2010 -11 and 2011-2012
Particular 2010-2011 2011-2012 Increase Decrease
A)current
Assets
Cash in hand 343933 401685 57752
Cash at bank 36617042 10036198 26580844
stock 566703527 912235683 345532156
Total current
assets 603664504 922673566
B)current
Liabilities
Deposit 6817514 10820823 4003309
Sundries 127536246 8970025 118566222
Other sundries 84315143 98391260 14076116
Other payables 204224141 263530162 59306021
Total current
Liabilities 422893044 381712270
Net working 180771460 540961300
Capital (A-B)
360189840 360189840
Increase in NWC
540961300 540961300 464156130 464156130
STATEMENT SHOWING CHANGE IN WORKING CAPITAL

For the year ending 2011-2012 and 2012-13
Particular 2011-2012 2012-2013 Increase Decrease
A)current
Assets
Cash in hand 401685 989702 588017
Cash at bank 10036198 8980872 1055326
Stock 912235683 912788988 553305
Total current
Assets 922673566 922759562
B)current
Liabilities
Deposit 10820823 652371184 641550361
Sundries 8970024 447714 8522310
Other sundries 98391259 169902190 71510931
Other payables 263530162 24465949 239064213
Total current
Liabilities 381712268 847187037
Net working 540961298 75572525
Capital (A-B)
Decrease in NWC 465388773 465388773
540961298 540961298 714116618 714116618

Particulars 2012-2013 2013-2014 Increase Decrease

A)current
Assets
Cash in hand 989702 430836 558866
Cash at bank 8980872 4402783 4578089
Stock 912788988 760260077 152528911
Total current
Assets 92275962 765093696
B)current
Liabilities
Deposit 652371184 374051780 278319404
Sundries 447714 985807 538093
Other sundries 169902190 161835602 8066588
Other payables 24465949 41108838 16642889
Total current
Liabilities 847187037 577982027
Net working 75572525 187111669
Capital (A-B)
111539144 111539144
Increase in NWC
187111669 187111669 286385992 286385992

Particulars 2013-2014 2014-2015 Increase Decrease
A)current
Assets
Cash in hand 430836 653044 222208

Cash at bank 4402783 27922305 23519522
Stock 760260077 538148037 222112040
Total current
Assets 765093696 566723386
B)current
Liabilities
Deposit 374051780 25774329 348277451
Sundries 985807 3223290 2237483
Other sundries 161835602 217019229 55183627
Other payables 41108838 42230211 1121373
Total current
Liabilities 577982027 288247059
Net working
Capital (A-B) 187111669 278476326
Increase in NWC 91364657 91364657
278476326 278476326 372019181 372019181
STATEMENT SHOWING IN WORKING CAPITAL

For the year 2010-2015
Particular 2010-2011 2011-2012 2012-2013 2013-2014 2014-2015
A)Current
Assets
Cash in hand 343933 401685 989702 430836 653044
Cash in hand 36617042 10036198 8980872 4402783 27922305
Stock 566703527 912235683 912788988 760260077 53818037
Total current
Assets 603664504 922673566 922759562 765093696 566723386

B)Current
Liabilities
Deposit 6817514 10820823 652371184 374051780 25774329
Sundries 127536246 8970025 447714 985807 3223290
Other sundries 84315143 98391260 169902190 161835602 217019229
Other payables 204224141 263530162 24465949 41108838 42230211
Total current
Liabilities 422893044 381712270 847187037 577982027 288247059
Net working
Capital(A-B) 180771460 540961300 75572525 187111669 278476326
Current ratio:- current ratio means the ratio of current assets to current liabilities. In
indicates relationship between assets and current liabilities it is also collect as working
capital ratio it is calculated as.
CURRENT ASSETS
1) CURRENT RATIO =
CURRENT LIABILITIES
Year 2010-2011 2011-12 2012-2013 2013-2014 2014-2015

CURRENT
ASSETS 603664504 922673566 1005903002 838911480 566723386
CURRENT
LIABILITIE 42893044 381712270 864497056 597317246 288247059
S
CURRENT
RATIO 14.07 2.42 1.16 1.40 1.97
16
14 current ratio
12
10
8
6
4
2
0
2010-2011 2o11-2012 2012-2013 2013-2014 2014-2015
INTERPRETATION
The higher is the ratio, greater is the margin of safety the higher the ratio, the better is
a company current position & at the same time a higher current ratio mean that the
company may have an excessive investment in current asset which lie idle as in the
year 2010-11 it was 14.07, in 2011-12 was 2.42, in 2012-13was 1.16, in 2013-14 it
was 1.40, & 2014-15 it was 1.97. the firm current ratio is more satisfactory in the year
2010-11. The current ratio of the company is found high which is good for the
company.
2) QUICK ASSETS
QUICK ASSETS
QUICK RATIO =
QUICK LIABILITIES
QUICK ASSETS = CURRENT ASSETS – INVENTORIES
QUICK LIABILITIES = CURRENT LIABILITIES – BANK OVER DRAFT
YEAR 2010-2011 2011-2012 2012-2013 2013-2014 2014-2015
QUICK
ASSETS 36960977 10437853 93114014 78651403 128118371
QUICK
LIABILITIE 42893044 381712270 864497056 597317246 28540432
S
QUICK
RATIO 1.17 0.13 0.11 0.13 4.49
5 Quick ratio
4.5
4
3.5
3
2.5
2
1.5
1
0.5
0
2010-11 2010-12 2012-13 2013-14 2014-15
INTERPRETATION
The standard quick ratio is 4.49 the company has not sufficient quick current assets to
cover quick liabilities and the quick ratio is below the standard that in 2010-11 was
1.17, in the year 2011-12 was 0.13, in 2012-13 was 0.11, in 2013-14 was 0.13,and
2014-15 was 4.49 which reveals that the co. is unable to meet its current claims. The
high ratio indicates that all debtors may not be quick and cash may be immediately
needed to pay operating expenses. It should be noted that inventories are not
absolutely Non liquid to a measurable extent inventories are available to meet current
obligations. So the company can suffer from shortage of funds.
3) WORKING CAPITAL TURNOVER RATIO
This ratio shows whether working capital has been efficient used in making sales.
High ratio indicates higher operating efficient of a firm and vice-versa\. It is
calculated as follow.
NET SALES
WORKING CAPITAL TURNOVER RATIO =
NET WORKING CAPITAL
YEAR 2010-2011 2011-2012 2012-2013 2013-2014 2014-2015

Net annual
sales 585584620 704086638 1133913017 1037921284 1012911235
net working
capital 180771460 540961300 75572525 187111669 278476326
WCTO
Ratio 3.26 1.30 15.00 5.55 3.64
16 working capital turnover ratio

14
12
10
8
6
4
2
0
2010-11 2011-12 2012-13 2013-14 2014-15
INTERPRETATION
The above chart shows the working capital turnover ratio of that 5years. The ratio in
the year 2 in 2012-13 i.e. 15, in 2012-13 i.e. 5.55, increased and in 2014-15 i.e. 3.64,
2010-11 i.e. 3.26, and 2011-12 i.e. 1.30, the ratio is decreased so we can found there
is no uniformity in working capital turnover ratio.
CURRENT ASSETS TURNOVER RATIO

The current assets turnover ratio in addition it, instead the net current assets,
this ratio shows the firm’s ability in generating sale from all the financial resource
committed to total assets.
NET SALES
CURRENT ASSETS TURNOVER RATIO =
CURRENT ASSETS
YEAR 2010-2011 2011-2012 2012-2013 2013-2014 2014-2015

Net
sales 585584620 704086638 1133913017 1037921284 1012911235
Current
Assets 603664504 922673566 1005903002 838911480 566723386
CATO
Ratio
current0.76assets turnover
1.00 1.13
ratio
1.24 1.79
2
1.8
1.6
1.4
1.2
1
0.8
0.6
0.4
0.2
0
2010-11 2011-12 2012-13 2013-14 2014-15
INTEPRETATION
The above chart shows the current assets turnover ratio of last 5years. The ratio in the
year 2010-11 ie 1.00 in 2011-12 ie 0.76 in 2012-13 i.e 1.13 in 2013-14 i.e, 1.24 and
2014-15 ie 1.79 the current ratio is below the standard because their decrease in net
sales. The ideal norm is 2:1 time but the ratio of the company not reach the ideal norm
position as their ratio is decreasing. This ratio shows the firm’s ability in generating
sales from all financial resources.
INVENTORY TURNOVER RATIO

It indicates the efficient of the firm in producing the selling its product. The
ratio indicates how fast inventory is sold. A high ratio is good from viewpoint of
liquidity and vice versa. A low ratio would signify that inventory does not sell and
stay on the shelf or in warehouse for a long time.
NET SALE
INVENTORY TURNOVER RATIO =
INVENTORY
YEAR 2010-2011 2011-2012 2012-2013 2013-2014 2014-2015
net sales 585584620 704086638 1133913017 1037921284 1012911235
Inventory 566703527 912235683 912788988 760260077 538148037
ITOR 1.03 1.18 1.24 1.37 1.88

ratio
2 inventory turnover ratio

1.8
1.6
1.4
1.2
1
0.8
0.6
0.4
0.2
0
2010-11 2011-12 2012-13 2013-14 2014-15
INTERPRETATION
In the SHSSKL the inventory turnover ratio that the year period the ratio.
There has been increased in the ratio in the year 2014-15, when compare with 2013-
14 and 2012-13. It indicates high ratio, it means, Inventory turnover ratio implies
good inventory management and very high ratio calls for a careful analysis. It may
indicate under investment in inventory. But 2010-11 and 2011-12 there is decreased
in ratio which implies not good inventory management.
GROSS PROFIT RATIO
Gross profit margin ratio is the result of relationship between price, sales, volume and
cost. a change in gross profit margin can be due to changes in any of these factors. It
represents the limit of beyond which fall in sales price are outside and tolerance limit.
GROSS PROFIT
GROSS PROFIT RATIO = X 100
NET SALES
YEAR 2010-2011 2011-2012 2012-2013 2013-2014 2014-2015
GROSS
PROFIT 591161631 167193109 117002287 133747058 -129372523
NET
SALES 585584620 704086638 1133913017 1037921284 1012911235
RATIO 100.95% 24.46% 10.32% 12.88% -12.77%
120 Gross profit ratio

100
80
60
40
20
0
2010-11 2011-12 2012-13 2013-14 2014-15
-20
INTERPRETATION
There has been increased in the year 2010-11 as compared to 2011-12, 2013-14,
2011-12 and 2014-15. The high ratio indicates that the company should earn a
sufficient profit on each rupee of sales. While low ratio indicate that in the year 2014-
15 a that the company will be meeting the operations expenses and no returns will be
available to the owners.
NET PROFIT RATIO:
NET PROFIT
NET PROFIT RATIO = X 100
NET SALES
YEAR 2010-2011 2011-2012 2012-2013 2013-2014 2014-2015
NET 1633792.30 56617222 489249 9172963 -207986201

PROFIT
NET 585584620 704086638 1133913017 1037921284 1012911235
SALE
RATIO 1.28 8.04 1.43 1.37 -20.53
Net profit ratio

10
0
201 201 201 201 201
-5
-10
-15
-20
-25
1NTERPRETATION
The above graph shows that the company has increasing in net profit ratio in the year
2011-12 and 2012-13 it is 8.04 and 1.43. it is cover loss of last years. The high ratio
indicates that the company earning a sufficient profit.
Collection of all the ratio’s related to the working capital from the above
analysis.
Particular 2010-11 2011-12 2012-13 2013-14 2014-2015

Current
ratio 14.07 2.42 1.16 1.40 1.97
Quick
ratio 1.17 0.13 0.11 013 4.49
WCTO
ratio 3.24 1.30 15.00 5.55 3.64
CATO
ratio 1.00 0.76 1.13 1.24 1.79
ITO
ratio 1.03 1.18 1.24 1.37 1.88

Gross
ratio 100.95 24.46 10.32 12.88 -12.77
Net profit
Ratio 1.28 8.04 0.43 1,37 -20.33
FINDINGS & SUGGESTIONS
Finding
1) Current ratio of the company increasing. It shows that management is investing more
in current assets. Then required so in order to have more profitably they should
reduced investment in current assets.
2) Quick ratio of the company was in a increasing trend which is good for company.
Company has sufficient quick current assets to cover quick liabilities.
3) The working capital turnover ratio was high from the year 2012-13 to 2013-14 that
shows better utilization of working capital.
4) The current assets turnover ratio of the financial year 2010-11, 2011-12, 2012-13,
2013-14, 2014-15, is 1.00, 0.76, 1.13, 1.24, 1.79 respectively. the current assets
turnover ratio is about 5 time which means that sales were effected at 5 time of the
current assets.
5) The unit has the mixed trend in the gross profit ratio in the year 2014-15 the loss is
-12.77% it is because increase in raw material cost i.e. sugar can.
Suggestion:
1) The extent of current liabilities needs to be reduced and the extent of current assets
should increased so as increase the amount of net working capital.
2) Current assets should be utilized in a better manner so that they generate more sales.
3) SHSSKL should control its operating expenses.
4) SHSSKL prepare a plan and budget to manage the working capital effectively it
should be prepared by the levels of the management on short term as well as long
term basis.
5) The company improving its performance of working capital management.
6) The company has to decrease its fied liabilities for better performance.
7) The company has to make better utilization of working capital and reduce the credit
sales to recover day-to-day obligations.
Conclusion:
The SHSSKL is a well managed company earning profits the overall study
shows that the company is trying to increase its efficiency in managing the funds
which automatically results in good working capital system of the company while
doing this project on impact of current assets and working capital management. I
came to know that by analyzing different types of ratios like working capital turnover
ratio, inventory turnover ratio, current ratio, current turnover ratio etc. which are good
and improving compared with other years, so the impact of current assets and working
capital management of the fund effective.
BIBLIOGRAPHY
 Hala sugar@rediffmail.com
 Old project
 Personal interview
LEARNING FROM PROJECT
It is said that you learn something when you get experience only and in this
connection researcher got experience and opportunity to learn the ratio analysis and
its significance as part and partial of our study in BBA 5 th semester as a project doing
and researcher got opportunity to do project in Nipani and this project was entirely
helpful for career development and its enhanced my knowledge in respect of working
capital it was only theoretically I had experience but when I entered into organization
I came to know how exactly the ratio are calculated how the company uses the assets
for the benefit or profit of a company and I came to know that how important it is to
maintain liquidity in the organization and productivity and solving on the basis only
company can be successfully and by doing this project I got immense knowledge
regarding how to maintain asset and improve productivity as well as learn the
different aspect of the company so finally I can say that the whole project was worth
to get knowledge and carrier development.
ANNEXURES
BALANCE SHEET AS ON 31.3.2015
LIABILITIES AMOUNT ASSETS AMOUNT

RS. RS.
ISSUED & SHARE CAPITAL 267177199 FIXED ASSETS 893273872
‘A’ CLASS SHARE = 100756743 INVESTMENT & 6354000
‘B’ CLASS SHARE = 10529000 SHARES 666266408
‘C’ CLASS SHARE = 155891456 CURRENT ASSETS
RESERVES & OTHER 753708726 (LOANS & ADVANCES) 447303110
TERM LOANS 107000000 PROFIT & LOSS A/C
PLEDGE LOANS 268630219
UNSECURED LOANS 328454187
CURRENT LIABILITIES 288227059
TOTAL 2013197390 2013197390

Working Capital Management. (Project) Shilpa

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Working Capital Management. (Project) Shilpa

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Shree Halasidhnath Sahakari Sakhar Karkhana Ltd.

Benefits of the study

Sources of data collection:

THE HISTORICAL BACKGROUND OF THE INDIAN SUGAR INDUSTRY;

The sugar industry is proud to be an industry, which' spreads the taste of

‘Saint Vishwamitra’ is known as the research person of the sugarcane

As regards ethanol sugar industry has a capacity of producing about1300 million

CONTRIBUTION OF SUGAR INDUSTRY TO INDIAN ECONOMY :

Name : Shree Halasidhnath Sahakari Sakhar

Molasses, Biogases are it’s by products.

VISION & MISSION :

 SHRI HALASIDHANATH SAHAKAR SAKHAR KARAKHANA LTD.

 Bringing overall productivity and efficiency throughout the organization,

PRESENT BOARD OF DIRECTOR’S

SI.NO Name Place Position

10 Shri. Avinash. A. patil. Nanganur Director

11 Shri. Samit. B. sasane. Padalihal Director

12 Shri. Jayawant. M. kambale. Mattiwade Director

13 Shri. Vidya. A. ginde. Galataga Director

14 Shri. Mallikarjun. J. patil. Kerur Director

15 Shri. Babasaheb. N. khot. Shamanewadi Govt. Nominee

16 Shri. M. D. Mallur. Belgaum Managing director

MEMBERSHIP OF SHARE CAPITAL:-

The membership of Shri Halasidhanath Sahakar Sakhar karakhana Ltd has

Number of Share Capital

A Class : Growers 20785 1007.57

AIMS & OBJECTIVES QF THE COMPANY

PRESENT EMPLOYEES STRENGTH:

The following is the information of manpower position in HSSK ltd

SI. No Department No of employees

11 Mechanical department 180

12 Manufacturing department 133

13 Agriculture department 115

Most important think about organization is internal environment because

Executive Vice President

Account Engineering Cane

General Cane Manufacturing

Computer Store Time Purchase Sales

Deputy Personnel Manager

Labour Welfare Officer

Another important task of this department is taking care of welfare programs

Mixed juice is clarified by sulphitation process by heating at 70 degree Celsius

SUGAR MARKETING DEPT

Asst. Sales Manager

SUGAR SUPPLIED IN TWO QUOTAS.

Asst. Purchase Officer

Purchasing plays an important and significant role in processing industry.

Cane Account Office

Cane purchase department is a department where cane is purchased directly

Need for working capital

Objective of working capital:

B. On the basis of time

Sources of working capital

Disadvantages of Inadequate working capital:

Advantages of adequate working capital

4. Benefits of holding inventories:

Benefits of holding inventories

The specific benefits of holding inventories can be put as follows:

ii. Reducing ordering cost

iii. Achieving efficient production runs

Risks and coast associated with inventories:

How to reduce operating cycle?