SYNOPSIS

ON

“ASTUDY ON WORKING CAPITAL

MANAGEMENT AT SUNFLAG IRON & STEEL
CO.LTD. BHANDARA”

SUBMITTED TO
R.T.M.Nagpur University ,Nagpur

Submitted by

Mr. ,,,,,,,,,,,,,,,,,,,,,,,,,,
Financial Management

Guide
Dr. Prashant A. Manusmare
J.M.Patel College, Bhandara
(2020-21)
TITLE :A STUDY ON WORKING CAPITAL MANAGEMENT AT
SUNFLAG IRON & STEEL CO.LTD. BHANDARA

INTRODUCTION TO TOPIC

Working Capital is a financial metric which represents operating liquidity available to a

business,organization or other entity,including government entity. Along with Fixed assets
working capital is considered a part of operating capital. Net working capital is calculated as
Current assets minus Current liabilities.If Current assets are less than current liabilities ,an entity
has working capital deficiency,also called working capital deficit.A company can be endowed
with assets and profitability but short of liquidity if 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, account
receivable and payable and cash.

Working Capital Management :

Decisions relating to working capital and short term financing are reffered to as working capital
management. The goal of working capital management is to ensure that the firm is able to
continue its operations and that it has sufficient cash flow to satisfy both maturing short-term
debt and upcoming operational expenses.

Problem Statement

Working capital management or simply management of capital invested in current asset is the
focus of the study.So the topic is to study working capital management of Sunflag Iron & Steel
Co. Ltd, Bhandara.In cut throat competition where each firm competes with each other to
increase their production and sales, holding of sufficient current assets have become mandatory
for smooth production runs. Holding of sufficient current assets will ensure smooth and
uninterrupted production but at the same time it will consume a lot of working capital. Here
creeps the importance and need of efficient working capital management.working capital
management aims at managing capital assets at optimum level, the level at which it will aid
smooth running of production and it will involve investment of nominal working capital in
capital assets.

Company Profile :

Since inception Sunflag has firmly believed that geographical boundaries do not limit the
growth of human progress. In furthering its commitment to narrow the gap between developed
and the developing countries, Sunflag has succeeded in transplanting advanced technologies into
third world nations.
Sunflag's activities range from making artificial leather, synthetic fibres, spinning,
weaving, manufacturing of sophisticated garments to agriculture and agro based industries.
With a pragmatic investment policy, professional management and a commitment to maintain
the highest standards of business ethics, Sunflag looks forward to playing an ever-increasing role
in enriching the industrial environment of the countries with which Sunflag's destiny is so
closely entwined.
Sunflag Iron and Steel Co. Ltd. is a prestigious unit of the SUN FLAG GROUP. It has set
up a state-of-art integrated plant at Bhandara,IndiaThe plant has a capacity to produce 200,000
tonnes per annum of high quality special steel using iron ore and non coking coal as basic inputs.

The plant comprises a 1,50,000tonnes per annum Direct Reduction Plant, to produce sponge
iron for captive consumption in the Steel Melting Shop. This shop comprises a 50/60 tonnesultra
high power Electric Are Furnace with Eccentric bottom arrangement; a Ladle auto mould level
controller and electromagnetic stirrer. The billets produced at the steel melting shop are rolled at
the Mannesmann Demag Designed ultra modern 18 stand Continousmill.This mill has a walking
hearth reheating furnace, quick roll-changing facilities, a 65metres long walk and wait type
modern cooling bed and above all computerised process control linking and controlling the
various stages.
Rationale of Study
At Sunflag Iron & steel Co. Ltd , a substantial part of total assets are covered by current assets.
Current assets around 30% -50% of total assets. However this could be less profitable on the
assumption that current assets generate lesser return than fixed assets.In cut throat competition
where each firm competes with each other to increase their production and sales, holding of
sufficient current assets have become mandatory for smooth production runs. Holding of
sufficient current assets will ensure smooth and uninterrupted production but at the same time it
will consume a lot of working capital.

The study of working capital management is very helpful for the organization to know its
liquidity position. The study is relevant to the organization to know the day to day
expenditure.This study is relevant to give an idea to utilize the current assets.This study is also
relevant to the further researcher in conducting research.

Scope of the Study :

The study of working capital management is mostly based on secondary data and all the
information is available within the company itself from the records. To get proper understanding
of this concept, I have done the study of Balance Sheets, Profit & Loss Acccounts, trail balance
and cost sheets. So, scope of the study is limited upto the availability of official records and
information provided by the employees. This study is supposed to be related to the period of last
three years.
OBJECTIVES OF THE STUDY
Everything in life holds some kinds of objectives to be fulfilled. The following are few straight
forward goals which tried to be fulfilled in my project.

1. To Study various concepts of working capital

2. To analyse the liquidity trend

3. To analyse the working capital trend.

4. To appraise the utilization of current assets and current liabilities and find out short

comings if any

5. To suggest measure for effective management of working capital.

Hypothesis of the Study :

The following are the hypothesis of the study

1. The firm isfacing difficulty in paying short-term debt

2. The firm is not properly managing the sundry debtors

3. The current liabilities are increasing than current assets year by year
RESEARCH METHODOLOGY
Research methodology in a way is a written game plan for conducting research. Research
methodology has many dimensions. It includes not only the research methods but also considers
the logic behind the methods used in the context of the study and complains why only a
particular method of technique has been used. The basic task of research is to generate accurate
information for use in decision making. Research can be defined as the systematic and objective
process of gathering, recording and analyzing data for aid in making business decisions.As the
project involves analyzing of financial structure, the research is exploratory in nature, covering
financial parameters and come of the important ratios to carry out research.

Time Period of the Study :

The study will undertaken for Six Months.

Data Source and Collection Method :

There are two types of data

1. Primary Data
2. Secondary Data

Secondary Data Collection :

The secondary data are those which have already collected and stored. Secondary data easily
get from records, journals ,annual reports of the company.It saves time.money and
efforts.The project mostly based on secondary data collected through annual reports of the
company.The data collection is aimed at study of working capital management of the
company.
 Project will based on

1. Annual Report of Sunflag Iron & Steel Co.Ltd., Bhandara -2015-16

2. Annual Report of Sunflag Iron & Steel Co.Ltd., Bhandara -2016-17
3. Annual Report of Sunflag Iron & Steel Co.Ltd., Bhandara -2017-18
Selection of Location for the study : The location for study is selected as the corporate
office of Sunflag Iron & Steel Co. Ltd.

Research Design :

Descriptive research also known as statistical research describes data and characteristics about
the population or phenomenon being studied. Descriptive research answers the questions who,
what when and how…

Statistical tools for Analysis :

The various Statistical tools for Analysis is as follows-

a) Tables
b) Barcharts
c) Graphs

Analytical Tools :

a) Ratio Analysis
b) Schedule of changes in working capital
c) Cash flow statements
Limitations

 The topic working capital management itself a very vast topic yet very important also.
Time will be the biggest constraint but all effort will be made to get all the relevant
information required for this study.
 Many facts and data are such that they are not to be disclosed because of confidential
nature.
 The study is restricted to only the three year data of Sunflag Iron & Steel Co. Ltd.

CHAPTERISATION:

Following are the Chapterisation of the study

Chapter 1 :INTRODUCTION

Chpter2 : Company profile

Chpter3 :Obectives of Study , Hypothesis & Limitation

Chapter 4 : Literature Review

Chapter 5 : Research Methodology

Chapter 6 : Data Collection & Analysis

Chapter 7 : Findings & Conclusion

Chapter 8 : Suggestions & Recommendations

RELEVENT BIBLOIGRAPHY/REFERENCES

Name of Book Author Publication

Financial Management I. M. Pandey HPH Pub.

Research Methodology Devendra Thakur Deep & deep

Financial Management Rastugi HPH Pub.

 www.google.com

o Magzines

o Articles

o Annual Reports
Mr. ---------------------------- Dr. Prashant A. Manusmare
Researcher Supervisor/Guide

J.M.Patel College, Bhandara