From 3rd May 2010 to 30th June 2010.

Submitted By: Manish Pandey (M200936)
APEEJAY INSTITUTE OF TECHNOLOGY GREATER NOIDA (UP) Under The Guidance Of Industrial Guide: Submitted To Academic Guide:

Mr. J.K.Gupta
Head Finance & Accounts Minda Corporation Ltd. Noida (U.P)

Ms. Sonika Gargi
Faculty- Finance

APEEJAY Institute Of Technology Greater Noida (U.P)



I, hereby state that the project report titled ³Working Capital Management´ of Minda Corporation Ltd. is an original work done entirely by me and is based on my own observations. The facts presented here are true to the best of my knowledge.



(Manish Pandey.)

Date: 30- june- 2010


During post graduation in master of business administration program, Students comes direct contact with the real corporate world through the Industrial training. PGDM program provides its students with an in-depth study of various managerial activities that are performed in any organization. It is great privilege for me to place this report before the readers. The report is concerned with ³Working Capital Management Of Minda Corporation Ltd.´ which is an QS 9000, ISO-14001, and TS Certification. This report is proposed in a very simple and understandable language. I would also like to start that although every possible care has been taken to make this report error free. I shall feel highly obliged to all the readers if the same are brought to my notice. I sincerely express my gratefulness to all those who have directly or indirectly helped me in preparing this report. I have spent my 8 weeks, prime time to under and the function of Finance and Accounts Section .

In brief I can say that this project is a summary of all the information and knowledge, I have gathered during my training period.

(Manish Pandey.)


profit and loss account accounting process. J. I would like to thank my project supervisor Mr.K.) 4 . provides details regarding the working capital. Noida Uttar Pradesh.ACKNOWLEDGEMENT This project is an authenticated work on Summer Training project at Minda Corporation Ltd. Minda Corporation Ltd. who extended their immense help to complete my project. Head Finance And Accounts. (Manish Pandey. balance sheet. I would like to take this opportunity to thank all the people. Gupta. Sonika Gargi (Finance) for their useful guidance and advises. and sales & purchase account. This project which is on ³Working Capital Management In Minda Corporation Ltd. who spent his valuable time to discuss about the project and his continuous cooperation to me and for guiding and helping me to solve all kinds of quarries regarding the project work. who have directly or indirectly helped me with their moral support for the completion of my project. Last but not the least I would like to thank all the employees of Minda Corporation Ltd. I would also like to thank to my mentor Ms.

student of PGDM ±II year at Apeejay Institute of Technology. Sonika Gargi) Faculty Supervisor 5 . This is an original work carried out by the said student to the best of my knowledge and I recommend for the submission of this research project. (Ms.SUPERVISOR¶S CERTIFICATE This is to certify that project titled. Greater Noida. ³ Working Capital Management ´ carried out by Manish Pandey. under my supervision. School of Management.

DIRECTOR¶S CERTIFICATE This is to certify that project titled. School of Management. This is an original work carried out by the said student to the best of my knowledge and I recommend for the submission of this research project. AIT. R. Sonika Gargi. Greater Noida. student of PGDM ±II year at Apeejay Institute of Technology. (Prof. ³ Working Capital Management ´ carried out by Manish Pandey . (Faculty Supervisor. Greater Noida). Verma) Executive Director 6 . K. under the supervision of Ms.

8. (c) ±Competitiveness & Commitments. Objective Of The Project. PARTICULARS PAGE NO. 3.N 1. (b) -Determinant. Working Capital Management. 7. Preface. (d) ±Mission And Vision Statement. . Declaration. 6. Methodology Of The Project. 5. (e) ±SWOT Analysis.TABLE OF CONTENTS S. Certificates. Company Profile. (c) ±Need & Objective Of Working Capital . 4. 2. (a) ± Management Team (b) -Group Companies. (f) -Products And Customers. (a) ±Concept Of Working Capital Management. 2 3 4 5-6 10-29 15-16 16-21 21-24 25-26 26-27 28-29 30 31-32 33-68 34-36 36-39 39-41 7 Acknowledgement.

Cash. (d) ± Debtor Turnover Ratio. Working Capital Ratios. 10. (Management Of Inventory. (g) ± Average Collection Period. (a) ± Current Ratio. (e) ±Time & Money Concept Of Working Capital. (f) ±Working Capital Turnover Ratio. Working Capital. (f) ±Types Of Working Capital. (a) ± Gross Working Capital. (g) ±Sources Of Working Capital (h) ±Different Aspect Of Working Capital. (h) ± Average Payment Period. Receivables / Debtors. 42-44 44-45 45-48 48-51 52-68 69-84 69-70 71-72 73-74 74-76 76-78 78-80 80-82 82-84 84-88 84-86 86-88 8 . (c ) ±Inventory Turnover Ratio.(d) ±Operating Cycle. (b) ±Net Working capital. Payable / Creditor 9. (e) ± Creditor Turnover Ratio. (b) ±Quick Ratio.

16. 15. Conclusion. Annexure. 13. Working Capital Limits Findings. Suggestion. 89-90 91-95 96-97 98 99 100-103 9 .11. 12. 14. Bibliography.

Minda in Delhi. (through merger of Sylea Automotiv India 2003 Ltd.L. Indonesia Minda Stoneridge JV Formed Minda SAI Ltd. The group was founded in 1958 by Mr. Established Minda Wirelinks Minda Huf JV MCL. S. Noida Group Foundation 2009 2008 2007 2005 2004 1985 1989 1958 10 . & Minda Wirelnks) Acquired Sylea Automotive India Ltd. Office Minda Furukawa JV Minda Valeo JV Acquired KTSN in Germany Setup PTMA.COMPANY PROFILE HISTORY. Ltd. Today it has emerged as a leading automotive component player in India and Worldwide. 2010 Acquired Tectro in Poland Setup Minda Vietnam Co. Setup Minda Automotive Solutions in Uzbekistan Acquired ALU Automotive in Germany Acquired Schenk Plastic Solutions in Germany Setup Japan Engg.

For over five decades, MINDA has been a major presence in India's automobile industry. These fifty years have been interspersed by a number of technological innovations that have gone on to become industry standards. Today the Group has emerged as one of the leading manufacturer of automobile components with an expected turnover of Rs. 1625 Crores ($ 340 million) for 200910 and employs more than 8000 people India-wide & Overseas. For the technological edge, we have a dedicated R&D facility and collaborations with the pioneers and leaders of the Automobile Industry. For assimilating the latest technologies, Minda has entered into strategic alliances and technical collaborations with leading international companies and acquired businesses across Europe. This has provided Minda with the cutting edge in product design and technology to meet strict international quality standards. The Group companies are accredited with QS 9000, ISO-14001, and TS Certification. Minda Group is the India's leading manufacturers of Security Systems, Wiring Harnesses, Couplers & Terminals and Instrument Clusters, Die Casting, Interiors, Windows Regulators, Keys & Key Duplicating Machines, and Surface Finishing that caters to all major two , three, four wheeler & off ± road vehicles manufacturer in India & Overseas

Export Sales 3000 24 2 2500 198 2000 Rs Million 1496 1500 995 1000 500 0 2002 2003 2004 2005 2006 200 2008 2009 Years 66 44 Export Sales 1 50 2159



Minda Corporation Limited started operation in the year 1985 under the name of Minda Switch Auto Private Limited for manufacture of Ignition Switches for Indian Automotive Industry. In the year 1996, the company joined hands with Huf Hüsbeck Fürst GmbH & Co. KG, Germany and became a Joint Venture Company known as Minda Huf Limited. In its quest for growth and to serve the increasing needs of its customers for more products, the company was re ± christened into its present form in 2007. The company which started by making Ignition Switches for the service market is today one of the market leaders in the manufacture of 2 wheeler, 3 wheeler and off road vehicle security system and supplies to major Indian OEM's (Original Equipment Manufacturer) besides exporting about 20% of its products. Today, the company is not only making its conventional mechanical security but is also manufacturing high technology mechanical & electronic security system like 2 track & 4 track key system, Magnetic Shutter Mechanism, Immobilizers including the RF based & transponder based. The Group manufactures different lines of automobile parts:






To cater to the Indian OEM's expectation of European technology, in the year 2007, the company diversified into the manufacturing of Door System with technical assistance from Castellon SA of Spain for design & manufacturing Window Regulators. In the year 2009, the company started its Plastic Division with the support of its Group Companies in Europe. Keeping in mind the future requirement of its customers, in 2009 the company rolled out its commercial production of Electronic Controllers for Electric Vehicles. Minda Corporation Limited Is a diversified company with a product port folio encompassing from Mechanical & Electronic Security System, Door System, Electronic Controllers for Electric Vehicles, Plastic Interiors and for Auto OEMs across the Globe. It also manufactures Die Casting Parts and high class Surface Finishing parts for auto and consumer durable industry. Minda Corporation Limited is one of the largest manufacturers of 2 wheeler, 3 wheeler and Off Road vehicles, Electronic & Mechanical Security System to Indian OEM's. It exports about 20% of its products to USA, UK, Europe & South East Asia and ASEAN countries. It is the only company in India to have its own patented Magnetic Shutter for 2 wheeler application . To enhance the vehicle security it manufactures key sets with conventional keys, 2 track keys, 4 track keys & Snake Biting keys for 2 wheeler applications. Minda Corporation Limited manufactures Window Regulator in India for renowned Indian OEM's with Technical Assistance from CASTELLON SA, Spain. Minda Corporation Limited is the first company in India to develop a controller for E - Bikes. These controllers are manufactured with technical tie-up with NEC Corporation, Japan. To provide German technology at Indian prices to India Auto OEM's Minda Corporation Limited has set up its Plastic Interiors manufacturing operations with support from its Group companies in Europe. Minda Corporation Limited has a State of the Art Surface Finishing Division which is capable of plating Nickel, Chrome, Copper, Brass, Electrophoresis Lacquering, Powder & Wet painting facility to give any type of finish to its products.


Cellular manufacturing. MANUFACTURING. Poke . It is having Pressure Die Casting as well as Gravity Die Casting Machines. to make it self sufficient to test & validate the vide range of the products manufactured by it. The best practices like Kaizen. Ashok Minda Group manufactures different lines of automobile parts that broadly fall under the following categories:  Electronic & Mechanical Security Systems. VSM. Minda Corporation Limited was the first company in the Minda Group to establish and develop the strong Minda Manufacturing Systems which have been imbibed across the manufacturing plants of the Minda Group of companies. ISO (International Organization for Standardization) 14000 certified. The Division also has excellent facilities for Machining & Powder coating the components. 14 .  Connective Systems. which develops Aluminum & Zinc Die Cast parts not only for Captive consumption but also for other Tier 1 & OEM customers in India and abroad. The State of the Art testing & validation equipment is installed at Minda Corporation Limited.Yokes. Most of the plants are of Minda Corporation Limited are ISO/TS 16949.  Window Regulators & Door Checkers. The company also has its own Standards Laboratory for calibrating its equipment from time to time. The Pant Nagar plant and Its Surface Finishing Division are also OHSAS (Occupational Health & Safety Advisory Services) certified.  Die Casting. OEM's in India respect Minda Corporation Limited for its quality levels across all products.Minda Corporation Limited has its own Die Casting Division. Piece Flow etc are Implemented throughout its plants. Quality & Standardization is given the importance at Minda Corporation Limited. TPM activities are in place at its Pune & Pant Nagar plants.

Singh ± Mr.  Instrument Clusters & Sensors. Managing Director. Minda Schenk Plastic Solutions Group. Joint Precedent. paul Domink Czarnecki ± Managing Director. Minda Corporation Ltd. Jeevan Mahaldar Mr. Minda SAI Ltd. Managing Director. Ashok Minda. Sanjay Thapar Managing Director. Minda Furukawa Electric Pvt. Mr. Chairman & Group CEO. 15 . Minda KTSN Plastic Solution GmbH. Minda Valco Security System Pvt. Minda Silica engineering Ltd.  Keys & Key Duplicating Machines.  Surface Finishing MANAGEMENT TEAM. Mr. Pramod Parasramka ± Mr. Mr.K. Mr. K. Interiors. Praveen Gupta ± Managing Director. Mukesh Malhotra ± Managing Director. Minda Stoneridge Instruments Ltd. Mr. N. Ltd. Mr. Ltd.Modi Managing Director. Business Heads.D.

Minda SAI limited is one of the leading manufacturer of broad range of Wiring Harnesses.CORPORATE FUNCTIONAL HEAD. Head ± Group Corporate Marketing And Corporate. 16 . N. D.K. Based at Noida. Minda Silca Engineering was incepted in 2002 by A. Mukesh Malhotra ± Mr. Connectors. Medical Equipments. Industrial & Domestic Boilers and Off ± Road Vehicles. Wiring Sets.K. Head Global Interiors. Providing solutions to each vertical of Automotive world. Taneja ± Group CEO.C. of Italy a member of world renowned Kaba group to be called as Minda Silca Engineering Ltd. Minda SAI also gives connective systems for White goods.MINDA SILCA ENGINEERING. (2)- MINDA SAI LTD. Minda Group with the name of Tuff Engineering Pvt. Industrial & Domestic Freezers. this company of A. Shrma ± Mr. Head ± Group Corporate HR. Kalyan Datt ± Mr. Head ± Group Corporate TQM.K. GROUP COMPANIES. Ltd. P. Head ± Group Corporate IT. Mr. From supplying keys to OEMs of the parent company Tuff joined hands with Silca Inc. Vikas Rai Bhatnagar ± Mr. (1). Elangovan ± Mr. Minda group initiated with humble beginning by Partnering in providing key solutions to Original Key Manufacturers. Terminals & Wires.

a complete solution from modular design to sequenced delivery with an expertise In process & product management.end plastic components. Minda Asean Automotive. The product range comprises of switches and locks for two wheelers and is going to start manufacturing of other groups product lines. began its production in Indonesia in October 2005. Minda Asean Automotive boasts of a state of the art manufacturing facility in Indonesia.is Esslingen and in Liberec.As a connective system provider Minda SAI gives its customers. In short span. Vietnam. Germany and has two plants. The Minda group has setup green field manufacturing facility in Indonesia through a company named PT. It is one of the key player in Europe and has several prestigious clients including global giants like Daimler. The skin form technology allows the development of plastic components in a manner that provides for a highly scratch ± resistance and leather surfaces in plastics. (3). The project that was conceptualized in October 2004. Minda Schenk is rapidly expanding its presence around the world and plants to strategically mark its presence in Indian market as well. Recognizing the importance of the ASEAN market. the ASEAN venture started to acquire renowned ASEAN OEM customer and is today exporting to Malaysia. (4). The company is headquarter is Esslingen. Today PT. Philippines and Thailand.MINDA SCHENK PLASTIC SOLUIONS.MINDA ASEAN AUTOMOTIVE. Czech Republic. 17 . Minda Schenk Plastic Solutions specializes in manufacturing automotives interiors for cars. The company has a patent on skin form technologically that was developed by the company through rigorous research and has come to be recognized as a revolutionary application that promises to develop high .

18 .MINDA AUTOCARE LTD. and the excellent sales and service facilities provided by the Minda Autocare Ltd. MACL has a three ± tier distribution network. is working towards establishing MINDA as a renowned and preferred Global Auto Component solution provider. which covers over 15. MACL is also in the process of spreading its wings outside India to address the vast and growing global replacement market for its range of products. field force and distribution network.MINDA INTERNATIONAL LTD. was setup in 2007 in order to interact and work closely with its Esteem Japanese customers. This will support products such as Electronic Security Systems and Automotive Batteries. The company was established in 1985 and was then known as Switch Masters Limited. Minda International Ltd. Minda International Ltd. Co-ordination and Collaboration with OEMs in Japan regarding Design and Development of Auto Components across the Globe. B and C category cities covering the 2 wheeler as well as 4 wheeler business segments. acknowledged to be amongst the best in the industry. participating at Global Supplier Level in the Auto Component Sector. Development of a parallel distribution network largely through vehicle accessory dealers is also in the offing. The company supplies and services the entire range of Minda Group products across the length and breadth of the country. (6). The goodwill and acceptance that Minda products have in the market is a direct result of the Group's emphasis on quality. Simultaneously.000 retailers and garages/ mechanics/ electricians throughout the country. its wide acceptance amongst almost all customers in the country. The Japan Office started its operation in Japan in Jan-07 with an objective to make effective Communication.(5). Minda Autocare Limited (MACL) is the Group's specialist auto component distribution and servicing Company with a countrywide distribution network of about 300 dealers spread across 91 A.

MINDA KTSN PLASTIC SOLUTION. (8). It has established a plant in Binh Xuyen Industrial Zone in the northern province of Vinh Phuc. France. Vietnam Co. Kunststofftechnik Sachsen GmbH & Co. Minda Vietnam is the first Indian automotive component manufacturer in Vietnam. LTD. MKPS has more then 50 years experience in development and production of technically plastic parts -and assemblies. KG (MKPS) is a Group Company of the Ashok Minda Group. constructive solutions and their realization assure us and our customers the necessary head start. was established in June 2008 for the purpose of addressing the growing auto market in Vietnam and exporting to the ASEAN countries.MINDA VALEO SECURITY SYSTEM PVT. Innovative. Ltd. international company which secured oneself a good market position as automotive supplier. We are a mediumsized.How regarding the realization of their products. Minda Valeo Security Systems Pvt. The business activities include the complete processes chain: Starting with the first design draft up to the realization of the production run. KG is a subsidiary of the Indian Minda Group with more then 3500 employees worldwide. is 50:50 joint venture between A K Minda Group and Valeo Security Systems. (9). enjoys market leadership in security systems for the automotive industry. 19 . Ltd. Located at Pirna.(7). Customers in Europe and all over the world have confidence in our Know . Headquartered at Pune. Ltd. The Minda Valeo Security Systems Pvt. Minda KTSN Plastic Solutions GmbH & Co.MINDA VIETNAM COMPANY LTD. near Dresden.

Laos. giving us proximity to most of the automotive OEM's in India. Sri Lanka. Since the year 2000. Our plant has all the state of the art machinery. Singapore. Thailand. relay box. a leading manufacturer of Electronics instruments. Pune. Minda Furukawa Electric Pvt. With this development. India and Furukawa of Japan. As a part of this agreement the $752 million Stoneridge Inc. Prior to this supply of various parts such as Instrument clusters. Minda Stoneridge Instruments Limited (MSIL). Bangladesh. The Joint Venture is a 51: 49 partnership with Ashok Minda Group holding 49% and Furukawa holding 51%. couplers. Burma. (MFE) is a Joint Venture between the Ashok Minda Group.MINDA AUTOMOTIVE SOLUTIONS. and components related to wiring harness e. Security systems. Philippines. MSIL has exclusive manufacturing and marketing rights for India and 17 Asian countries. Ltd. Mauritius. USA (NYSE: SRI) has 49% stake in MSIL. Pakistan. junction box. were being exported from India. Minda Automotive Solutions (MAS) was incorporated in March 2009 with a view to support the only automotive customer General Motors ± Uzbekistan being a localized source. Cambodia. (11). Brunei. LTD.(10). terminals. and Steering Roll Connectors used for the airbag systems etc. (12). Vietnam.g. Our plant is located at Chakan. Nepal. The company develops and produces the entire range of wiring harness for four wheelers for its customers. a group company of the Ashok Minda Group entered into a joint venture with Stoneridge Inc.MINDA STONERIDGE INSTRUMENTS LTD. namely Malaysia. sensors etc.MINDA FURUKAWA ELECTRIC PVT. 20 . Maldives. testing and support facilities required for making all types of instruments as per our customer's requirement. Indonesia.

Fresh engineers are rigorously trained to be able to meet the demands of the industry and our customers.ENGINEERING. our benchmarked Group Company in Plastic Interiors. Philippines. Window regulators. Minda Group has grown with technology over the years. The engineering force is led by a team of seasoned professionals with several years of experience in the industry.resistant and leather ± like hepatic surfaces in plastics. This R&D department not only works for its Indian operations but also develops products for its manufacturing companies in Indonesia & Vietnam. owns the patent to the world ± class Skinform Technology. With an ever-expanding portfolio of automotive products there is a renewed emphasis on Research and Development in the Group. Vietnam.RESEARCH AND DEVELOPMENT. Today our R&D activities span many countries and many products. the Group's oldest Company. This technology allows the development of plastic components in a manner that provides highly scratch . 21 . All Group Companies have their own special cells that undertake Research and Development activities from time to time.. Research in Skin form was begun in MSPS in March 2003 and by June 2003 it went for trials and was eventually introduced in October 2004. The engineers in this department are globally . COMPETITIVENESS. Electronic Controllers & Plastic Interiors. Minda Schenk Plastic Solutions (MSPS). (a). Indonesia. Engineering capabilities are acclaimed far and wide. Minda Corporation Limited has filed 8 patents on Magnetic Shutter technology in India. a dedicated Research Department undertakes research on developing futuristic Mechanical & Electronic Security Systems. In Minda Corporation Ltd. Most of our engineering resources are hand ± picked from the best institutes in the country. The Minda Group today has the capability to transform any idea that the customers may have on innovative products for their future vehicles.trained and they also frequently coordinate with the Indian Institutes of Technology (IITs) and the various design teams in Minda Group companies that are stationed in Germany & Japan. Thailand and Japan.

that are implemented throughout its plants. depending on specific products and also the needs of specific markets. Vietnam. Cellular manufacturing. disclosure and accountability are central to the working of the Company and its Board of Directors. Poke ± Yokes. Following are the highlights of our manufacturing capabilities:  Use of best practices like kaizen. Beginning with its first manufacturing plant in India in 1958. COMMITMENTS. India. It is our manufacturing excellence that most of our customers respect us for our benchmarked quality levels across all products.(b)- MANUFACTURING. Poland. It shares a long term perspective and firmly believes that good Corporate Governance practices underscore its drive towards competitive strength and sustained performance. Thus. basic Corporate Governance norms have been 22 . Our Group is open. Corporate Governance practices requires from a Company that it functions as a unit which is able to meet its obligations. Japan.  Most of our plants are ISO/TS 16949. ISO 14000 certified and OHSAS certified. Customers Employees. which leads to increasing Employee and Customer satisfaction and delivering Shareholder value by ensuring timely and transparent. Piece Flow etc. financial as well as managerial disclosures.  Standards Laboratory for calibrating equipment from time to time. and Uzbekistan. VSM. optimize shareholders' value and be accountable towards the Community. accessible and consistent with communication. it is also about creating an outperforming organization.  State of the testing & validation equipment to test & validate wide range of the products manufactured by us. the Group today is a global player operating from 16 plants in India and about 10 plants and offices in Germany. fairness. Czech Republic. Government and other segments of the society. Indonesia. The Company believes that the Corporate Governance is not only about creating checks and balances. Transparency. Manufacturing facilities are spread all across the world. (a)CORPORATE GOVERNANCE.

(c). water and soil pollution. It has made a modest beginning with limited resources. moral and spiritual capacities for a meaningful life. waste generation and natural resources consumption.SOCIAL RESPONSIBILITY. in fact they are our future. It is also the laboratory for adulthood.  Generate environmental awareness among all employees. For instance. love and protection to the parentless children.ENVIROMENT & SAFETY. Yet much remains to be done at the ground level. malnutrition. The Minda Group has always been committed to developing products and manufacturing processes that combine technological innovation with respect for the environment. They also constitute to be the foundation of any organized society. Minda Bal Gram was started to fulfill this aim.  Reducing air. It tries to provide enabling environment to children to develop intellectual. deaths due preventable diseases. and lack of basic needs. revisit the statistics on infant mortality. child illiteracy. (b). 23 . All Group companies are concerned about environmental impacts of its activities and products and are therefore committed to:  Ensuring continual improvement in its environmental performance. Childhood is a priceless possession and cannot be redeemed. After watched the Gujarat earthquake in 2001 The Minda Corporation promote an institution that could provide natural care.institutionalized as an enabling and facilitating business process at the Board. These reflect that more is required from each one of us to promote and protect our future.  Ensuring compliance with all applicable environmental Laws and regulations. Management and at all operational levels. Children are the most valuable yet the most vulnerable resource of our society.

water conservation and pollution control Activities Under ISO 14001 have been implemented. This much of the treated water was used from ETP output. Gurhal)  For Pollution of dust. A series of Energy Conservation.  For Noise Abatement ( Cassia nodosa.  For Air Pollution (Bel. the company has saved 600 KL of ground water from Jan'03 to June'03. In the step towards abating various type of pollutions. Water Conservation. In a step towards Energy Conservation. energy efficient tube lights (E+) have been introduced in Assembly area. These tube lights are guaranteed for a period of 2 years . which is as par with the norms of Environmental Protection Rules 1986 / schedule VI. temperature.free replacement. Ticoma stans). 24 . Ashok) For plants that restored garbage dumps to pleasant green landscape ( Arjun. This has resulted in the saving of 22 Mw per existing lights (4 feet) and 32 Mw per 2 existing tube lights (2 feet). some specific plantation were done in the company. Energy Conservation. Under Water Conservation program. Gulmohar. Mango Teak). Pollution Control. chemical emission (Amaltas.

25 . Profitable. Minda Group want to emerge in the Global arena as a leading automotive player and realize profitability in business so as to sustain and enhance its efforts towards emerging as a leader in the industry. Minda Group also are committed to change management as a way of life to enable us to meet the emerging challenges of the Industry.´ Minda Mission is to be globally recognized as world class system supplier to Minda¶s valued customers by doing 360 degree innovation. The actions of all Group Companies are and will be geared towards meeting stringent benchmarks and norms that are required and will be required.MISSION AND VISION STATEMENT. In spreading globally Minda Group will not focus on any specific country or region but take decisions based on its core interests in the automotive sector. organizational structure. Minda Group intend to increase its focus on innovation in products and technologies. Global. As a group Minda have been at the forefront of innovation. As a player the Group is sensitive to the rapidly changing business environment. utilizing cutting edge technologies and delivering maximum customer satisfaction. Innovative. in its own domain. ³To be a Dynamic. and optimizing efficiencies. making excellence a habit. And Profitable Global Automotive Organization For Emerging As The Preferred Supplier and Employer. Dynamic. To Create Value For All Stakeholders. Minda Group are already Global and will continue to expand to meet the global requirements of OEMs and be a significant player globally. PHILOSOPHY OF THE VISION STATEMENT.

Minda Group will not deviate from his core sector but will expand to include different components and systems that align and have synergy with its products and technologies. and the Society within which Minda operate. through training and development. Minda Group plan to undertake several initiatives such as closely monitoring every aspect of our move to offer world ± class products to his ever . addressing the holistic Needs and Concerns of its Employees and their Families. Minda Group will stick to being a significant player in the automotive domain and emerge as a systems supplier. SWOT ANALYSIS OF MINDA CORPORATION LTD. we intend to continue with its people ± sensitive initiatives so as to realize a rich and vibrant work ± culture and also.become a preferred supplier to global OEMs and also emerge as the preferred employer in its Industry. its Employees and their Families.Automotive. our Suppliers.  Strong Financial returns. 26 . Minda Group core focus is on developing confidence. undertaking Corporate Social Responsibility for wider interests of the society and the needs of its Suppliers. Minda consider that its employees are equal owners and stakeholders and this Group belongs to them all.  Growing International presence. continue to nurture employees towards greater efficiency. generating Greater Returns and Trust for its Investors. As an Organization Minda Group is sensitive towards all stakeholders including its esteemed Clients. Minda Group will continue to offer participation in the Growth of its Group. Create Value For All Stakeholders. Strengths:  Strong brand recognition. For this. Minda Group will be focused towards meeting the two essential areas of endeavor . On the employee front. to all its employees.increasing clientele. generating greater thrust towards undertaking active role in building Customer Trust and Confidence. as well as. Emerge Preferred Supplier and Employer. As a Group.

 The modernization. Threats:  Entry of Global players. Weakness:  Complexity of operation.  Explore the new market in the rest of the World.  The impact of Foreign currency fluctuation and Interest Rates. Opportunity:  Rapid integration with Global Economy.  Organization can change direction quickly if the approach isn't working. Strong sense of culture in the working environment.  Continuous increase in labor cost. productivity improvement and cost control measures will improve the performance of the division in times to come.  Customer Loyalty.  Appreciation of rupees against foreign currency.  Political Threats.  Lengthy processing chain.  Good Corporate image.  The numbers of players are increasing which further increases the competition.  It is hard to find the skillful labor for the company. 27 .

Door System.PRODUCTS. Die Casting. Side Door Latches. Remote Key Less Antenna. Surface Finishing. Connectivity system. 28 . 2 & 3 Wheelers. Outside Door Handles.

CUSTOMERS.Security System. 29 .

 To suggest.  To know about the Net Working Capital position of Minda Corporation Ltd.  To look at possible remedial measures if any on the basis of which tied ± up funds in Working Capital could be used effectively and efficiently.OBJECTIVE OF THE PROJECT. 30 .  To know about the Current assets and Current liabilities position of Minda Corporation Ltd.  To determine the Ratios relating to the Working Capital. if possible on the basis of conclusion some modification to meet the situation.

g. Analysis: For the comparative analysis ratios were used along with graphs. 31 . & 2008 ± 09 and other necessary information collected itself like for inventory. period of 2005-06.METHODOLOGY OF THE PROJECT. Balance Sheet. Internet data¶s. Type Of The Project: The project is descriptive and analytical in nature. interpretation & recommendation were made on the basis of figures and diagrams .e. and Working Capital Provider Banks and their limits etc. at that time the preparation of this annual report of the Company was going on. The data collected are Primary Data . Charts. Direct expenses. Statistical tools like Tables. Besides for Explanation of several issues. different articles. Interpretation & Recommendation: After completion of the entire analysis.  Conclusion & Recommendation. were collected from the Annual Reports of Minda Corporation Ltd. The current year i.  Type of the project. 2006 .08.07. Books etc were consulted. 2007 . charts. Bar graphs used for representation of data.. and necessary diagrams. Collection of Data: Data required for the project e. statement of Profit & Loss Account etc.  Analysis of Data. 2009-10 has not been taken into calculation because. The Methodology followed in this project involved the following Phases:  Collection of Data.

   32 .LIMITATIONS OF THE PROJECT. Inadequacy of data is another problem. The study depends on Financial data collected from Annual Report Of the company.  Time is definitely the main Constraint. The data collected from above the source are not of detailed nature. There are controversies related to correctness of Current Assets and Current Liabilities that enters in to the domain of Working Capital Management. Time was not sufficient enough to asses all the processes and policies of an organization of the structure o Minda Corporation LTD.

. availability of raw material. Optimum and appropriate movement of blood through the body is extremely necessary to continue life. While. An enterprise should maintain optimum amount of Working Capital so as to carry on the productive and distributive activities smoothly. 33 . Thus efficient management of Working Capital is an important indicator of sound health of an organization which requires reduction of unnecessary blocking of capital in order to bring down the cost of financing. INTRODUCTION. Efficient management of working capital is one of the pre ± conditions for the success of an enterprise. Holding of excess Working Capital results in the reduction of the profitability. which in turn are influenced by a trade off between profitability and liquidity. Thus the amount of Working Capital in every enterprise.´ ³More business fails for lack of cash than for want of profit´.WORKING CAPITAL MANAGEMENT. should be neither more or less than what is actually required. etc. Like human blood. the businesses can hardly prosper and service. the enterprise would suffer reduction in earnings due to productive capacity remain unutilized. is a difficult task for the management because the amount of Working Capital varies across firms over the periods depending upon the nature of business. But the proper estimation of Working Capital actually required. Working Capital in business is just live blood in human body. goal of Working Capital Management is to manage the firm¶s Current Assets and liabilities in such a way that satisfactory level of Working Capital minted. whether manufacturing or non ± manufacturing. If the circulation of Working Capital becomes weak. While inadequate amount of Working Capital impairs the firm¶s liquidity. Thus. the proper circulation of funds (Working / Circulating Capital) is utmost necessary to continue business. the determination of optimum level of Working Capital involves fundamental decisions to an organization¶s liquidity. Management of Working Capital Management is an extremely important area of Financial Management as Current Assets represent more than half of total assets of a business. For shortage of Working Capital. While excess Working Capital leads to extra cost for want of productive capacity. credit policy. ³Working capital means the part of the total assets of the business that change from one form to another form in the ordinary course of business operations. production cycle. Efficient management of Working Capital means management of various components of Working Capital in such a way that an adequate amount of Working Capital is maintained for smooth running of a firm and for fulfillment of twin objectives of liquidity and profitability.

whereas the word capital means monetary value of all assets of the business. which the company sells for payment.day cash requirements of its operations. The word working capital is made of two words : 1. These funds are known as Working Capital. lands. 34 . and MEANING OF WORKING CAPITAL. Funds are also needed for short ± term purposes for the purpose of raw materials. Gross Working Capital and Net Working Capital. Gross Working Capital refers to organizations investment in total Current Assets. Working Capital is the amount of capital that a business has available to meet the day . Working Capital is a valuation metric that is calculated as Current Assets over Current Liabilities. convert into cash within an accounting year and include Cash.to . machineries. Capital The word working means day to day operation of the business. In simple words.e. Working Capital refers to that part of the firm¶s capital. marketable securities. which can be. Working Capital is also known as Operating Capital.  Short term funds are required for the purchase of raw materials. Marketable Securities. CONCEPT OF WORKING CAPITAL. etc. intently etc. and other day ± to ± day expenses. it is also known as Circulating Capital. Working Capital can be defined broadly in two different ways i. debtors and inventories. or more specially. for financing the conversion of raw material into finished goods. & buildings etc.term or Current Assets such as cash. Current Assets are the assets. payment of wages. which is required for financing short .Working 2. payment of wages and other day ± to ± day expenses.Every Business needs funds for two purpose: Long term funds are required to create production facilities through purchase of fixed assets such as plants.

Symbolically: NWC = CA ± CL. Current Assets are assets. Where. which can financed by long ± term funds.  Finished goods. which are accepted to mature for payment within an accounting year and include Creditors.  Inventories of stocks. Net Working Capital can also be defined as the portion of firm¶s Current Assets.  Stores and spares. 35 . which can be converted into cash within an accounting year. This is any cash or assets that can be quickly turned into cash.  Raw material. NWC = Net Working Capital. Constituents of Current Assets:  Cash in hand and bank balance. CURRENTS ASSETS.  Sundry debtors (provision for bad debts).  Short tern loans and advances.  Work in progress. Bills Payable and outstanding expenses. CA = Current Assets.Net Working Capital refers to the difference between Current Assets and Current Liabilities are those claims of outsiders. CL = Current Liabilities.  Bills receivables.

 Short term borrowings.  Reserve for D/D (Discount For Debtors).  Tax in arrear. each of which should be considered carefully for determining the proper amount of Working Capital. It may be however be added that these factors affect differently to the different units and these keeps varying from time to time. Etc. CURRENT LIABILITIES: Current liabilities are those claims of outsiders.  Dividend in arrear.  Bank overdraft.  Sundry creditors or account payable.  Accrual incomes. which are expected to mature for payment within an accounting year.  Outstanding expenses.  Dividend payable. Constituents of current Liabilities:  Bills payable. In general. Prepaid expenses. the determinants of Working Capital which re common to all Organization¶s can be summarized as under: 36 .  Provisions. DETERMINANTS OF WORKING CAPITAL: Working Capital requirements of a concern depends on a number of factors.

public utilities like railways. Some industries which produces round the year but sale mainly done in some special seasons are also need to keep more Working Capital. need much less inventories and cash. (d).Production Policies: Production policies of the organization effects Working Capital requirements very highly. (f). the tendency of Management is to increase the up inventories of 37 . (b). During boom period. ills receivables. Seasonal industries..Business Fluctuation: Changes in the Economy also influencing the Working Capital. liquid cash etc. which needs to invest a lot in stocks. Longer the Operating Cycle. Efficiency of debt collecting machinery is also relevant in this matter. electricity. Manufacturing concerns stands in between these two extends. the firm in. ete. technologies. (e). Working Capital requirement for manufacturing concerns depends on various factors like the products.(a). which produces only in specific season requires more Working Capital. the higher will be the Working Capital requirement of the organization.Size Of Business: Size of business is another factor to determines the need for Working Capital.Credit Policy: Companies. Credit availability form suppliers also effects the company¶s Working Capital requirements. follows liberal credit policy needs to keep more Working Capital with them. there are trading firms. (c).Nature Of Business: Need for Working Capital is highly depends on what type of business. A company doesn¶t enjoy a liberal credit from its suppliers will have to keep more Working Capital. marketing policies.Length Of Operating Cycle: Operating Cycle of the firm also influence the Working Capital.

(h). Similarly companies using bulky materials also maintain large reserves¶ of raw material inventories. EXCESS OR ADEQUATE WORKING CAPITAL. It should not have either redundant / excess Working Capital or inadequate/ shortage of Working Capital.Current Asset Policies: The quantum of Working Capital of a company is significantly determined by its Current Assets policies. A company with conservative assets policy may operate with relatively high level of Working Capital than its sales volume. Constantly reduce the industrial and trading activities show a downward termed.Other Factors: Effective co ± ordination between production and distribution can reduce the need for Working Capital. However.raw materials and finished goods to avail the advantage of rising prove. 38 . Some companies manufacture and sell goods only during certain seasons. Similarly during depression when the prices and demand for manufactured goods.Fluctuations Of Supply And Seasonal Variations: Some Companies need to keep large amount of Working Capital due to their irregular sales and intermittent supply. This creates demand for more Capital. (i). (g). out of the two. Every business concern should have adequate Working Capital to run its business operations. Transportation and communication means. This increase the need of Working Capital. Working Capital requirements of such industries will be higher during certain season of such industries period. Both excess as well as shortage of Working Capital situations are bad for any business. If developed helps to reduce the Working Capital requirement. A company pursuing an aggressive amount assets policy operates with a relatively lower level of Working Capital. Hence the demand for Working Capital is low. inadequacy or shortage of Working Capital is more dangerous from the point of view of the firm.

The extent to it. a need for Working Capital in the form of Current Assets to deal with the problem arising. therefore. largely depends on the magnitude of sales. sufficient Working Capital is necessary to sustain sales activity. Working Capital is needed for the following purpose:39 . There is. which the profit can be earned. Credit worthiness suffers. non ± profitable for business. There is invariable the time gap between the sales of goods and receipts of cash. For this it is necessary to generate sufficient profits.  Economies of scale are not possible. Therefore.  Day ± to ± day liquidity worsens. Out of the lack of immediate realization of cash again goods sold. NEED FOR WORKING CAPITAL.  Lower rate of return leads to lower dividend available to share holder that causes companies Goodwill decreases.Disadvantages Of Redundant Or Excess Working Capital:  Idle funds. The basic objective of Financial Management is to maximize shareholder¶s wealth. poor ROI. Disadvantages Or Dangers Of Inadequate Or Short Working Capital:  Can not pay off its short ± term liabilities in time.  Difficult for the firm to exploit favorable market situations.  Due to low rate of return on investments.  Unnecessary purchasing & accumulation of inventories over required leve.  Improper utilization the fixed assets and ROA/ROI falls sharply. However sales do not convert into cash instantly. the market value of shares may fall.  Overall inefficiency in the organization.  When there is excessive Working Capital.

 Deciding Optimum Level of Investment in various Working Capital Assets. If you do.Cash And Equivalents: . Is the inventory level reasonable compared with sales and the nature of your business? What's the 40 . OBJECTIVE OF WORKING CAPITAL MANAGEMENT.  To provide credit facilities to the customers. stores and spare and finished goods. etc.  To incur day to day expenses and overhead costs such as fuel.Accounts Receivable: .  Decide Optimal Mix of Short Term and Long Term Capital. For the purchase of raw material. advertisement etc.  To maintain the inventories of raw material. components and spares. so naturally it requires continual scrutiny. power and office expenses.Inventory: .  To meet selling costs as packing.  To pay wages and salaries. A good cash budgeting and forecasting system provides answers to key questions such as: Is the cash level adequate to meet Current expenses as they come due? What is the timing relationship between cash inflow and outflow? When will peak cash needs occur? When and how much bank borrowing will be needed to meet any cash shortfalls? When will repayment be expected and will the cash flow cover it? (b). work in progress. (a).  Decide Appropriate means of Short Term Financing WORKING CAPITAL IN TURMS OF FIVE COMPONENTS. is the amount of Accounts Receivable reasonable relative to sales? How rapidly are receivables being collected? Which customers are slow to pay and what should be done about them? (c).This most liquid form of Working Capital requires constant supervision.Inventory is often as much as 50 percent of a firm's Current Assets.Many businesses extend credit to their customers.

it is one of the major sources of funds for entrepreneurs.  The amount of cash required to pay day to day expenses of the business.These are obligations of your company at any given time and represent a future outflow of cash.  The length of the sales cycle during which finished goods are to be kept waiting for sales.  The amount of cash required for advance payments if any. The length of time for which raw materials remain in stores before they are issued to production. wages and overheads.Financing by suppliers is common in small business.  Time ± lag in the payment of wages and other overheads.  The average period of credit allowed to customers.Accrued Expenses And Taxes Payable: . Is the amount of money owed suppliers reasonable relative to what you purchase? What is your firm's payment policy doing to enhance or detract from your credit rating? (e). 41 .  The average period of credit to be allowed by suppliers.e. the time taken for conversion of raw material into finished goods.rate of inventory turnover compared with other companies in your type of business? (d)-Accounts Payable:. Factors to be considered:  Total costs incurred on materials..  The length of the production cycle or WIP. FORCASTING / ESTIMATION OF WORKING CAPITAL MANAGEMENT REQUIREMENT. i.

Risk & Liquidity Working Capital Management Composition & Level Of CA Composition & Level Of CL WORKING CAPITAL (OPERATING) CYCLE.NATURE OF WORKING CAPITAL MANAGEMENT. Profitablity. In a trading concern. The Working Capital requirement of a firm depends. 42 . The operating cycle may be defined as the time duration starting from the procurement of goods or raw material and ending with the sales of realization. to a great extent upon the Operating Cycle of the firm. there is a series of activities starting from procurement of goods (saleable goods) and ending with the realization of sales revenue (at the time of sale itself in the case of cash sales and at the time of debtors realization in case of credit sales). The length and nature of the Operating Cycle may differ from one firm to another depending upon the size and nature of the firm. Similarly in case of manufacturing concern.

C= Creditors payment period 43 . Thus. R= Raw Material storage period. In both the cases. O= Length of Operating Cycle. however. Symbolically: O = R + W + F + D . the Operating Cycle of a firm consists of the time required for the completion of the chronological sequences of some or all of the following: Procurement of raw material and services.  Conversion of raw material into work ± in ± progress. D= Debtors collection period.C. F= Finished stock storage period. This time gap is called the Operating Cycle. there is a time gap between the happening of the first event and the happening of the last event.  sale of finished good(cash or credit)  Conversion of receivable into cash.this series starts from the procurement of raw materials and ending with the sales realization of finished goods. Where. W= work in progress period.  Conversion of work ± in ± progress into finished goods.

collect money due from debtors more quickly) or reduce the amount of money tied up (e. Similarly.g. the business will generate more cash or it will need to borrow less money to fund Working Capital.g.g. if we can negotiate improved terms with suppliers e. 44 . we effectively create free finance to help future sales. Time is Money: If we can get money to move faster around the cycle (e. we can reduce the cost of bank interest or will have additional free money available to support additional sales growth or investment.( The Working Capital Cycle (Operating cycle) TIME AND MONEY CONCEPT IN WORKING CAPITAL CYCLE. receivables and payables) has two dimensions . get longer credit or an increased credit limit. when it comes to managing working capital. As a consequence. Each component of working capital (namely inventory. TIME and MONEY. reduce inventory levels relative to sales).

TYPES OF WORKING CAPITAL. Move inventory (stocks) slower. Then We release cash from cycle. We consume more cash.If We Collect receivables (debtors) faster. Shift inventory (stocks) faster. 45 . Collect receivables (debtors) faster. We increase our cash resources. We free up cash. Our receivables soak up cash. Get better credit (in terms of duration or amount from suppliers).

000 + Rs. This will help avoiding :  The unnecessary stoppage of work or chance of liquidation due to insufficient Working Capital.  Effect on profitability (over flowing Working Capital implies cost). Current Liabilities refer to those liabilities which are payable within a period of 1 year. The Net Working Capital may either be positive or negative.00. then the difference is known as Positive Net Working Capital. The Net Working Capital measures the firm¶s liquidity. On the other hand. then the Gross Working Capital of the firm is Rs. If the Total Current Assets are more than Total Current Liabilities.70.70.e. otherwise the difference is known as Negative Net Working Capital.000).1.1. the better will be the liquidity of the firm. regularly in Current Assets.000 (i. Rs 50. The total of investment in all the individual Current Assets is the Gross Working Capital.00.  Net Working Capital: The term Net Working Capital may be defined as the excess of Total Current Assets over Total Current Liabilities. Net Working Capital = Total Current Assets ± Total Current Liabilities.  Gross Working Capital: The Gross Working Capital refers to the firm¶s Investment in all the assets taken together. The Gross Working Capital denotes the Total Working Capital or the total investment in Current Assets. 46 .2. Net Working Capital refers to the amount of funds that must be invested by firm. 50. debtors of Rs. more or less. For example: if a firm has a cash balance of Rs.000. The Gross Working Capital also gives an idea of total funds required for maintaining Current Assets.000.ON THE BASIS OF CONCEPT. The greater the margin.000 + Rs.000 and inventory of raw material and finished goods has been assessed at Rs . The Net Working Capital also denotes the net liquidity being maintained by the firm. A financial manager must consider both (Gross and Net Working Capital) because they provide different interpretation.20.

The amount of Temporary Working Capital keeps on fluctuating on time to time on the basis of business activity. which is required by a firm to carry on its business operations. work ± in ± progress. For example ± extra inventory of finished goods will have to be maintained to support the peak periods of sale. Every firm has to maintain a minimum level of raw materials. Permanent Working Capital. while Temporary Working Capital is fluctuating ± some times increasing and sometimes decreasing. 47 . Temporary Working Capital. finished goods and cash balances. The amount over and above Permanent Working Capital is temporarily variable or fluctuating.  Fluctuating / Variable Working Capital: It is the extra Working Capital needed to support the changing production and sales activities of the firm. it should be financed out of long term funds.ON THE BASIS OF TIME. Amount Of Working Capital. Both kind of Working Capital ± Permanent and Fluctuating (Temporary) are necessary to facilitate production and sales through the Operating Cycle. Permanent Working Capital is permanently needed for the business and therefore. Time. it is shown that Permanent Working Capital is stable over the time. PERMANENT AND VARIABLE WORKING CAPITAL OF A STABLE FIRM. In the above figure.  Permanent / Fixed Working Capital: Permanent Working Capital may be defined as the minimum level of Current Assets.

Time. Retained Earning.PERAMANENT AND TEMPORARY WORKING CAPITAL OF A RISING FIRM. The Working Capital graph will be rising one as given in figure below: Temporary Working Capital. However when the business is Growing.Long Term Sources Of Working Capital. The company can choose to finance its Current Assets by:  Long term sources. Permanent Working Capital. (1). Include Equity and Preference Shares. Debentures and other Long Term Debts from public deposits and Financial Institution. The Long Term Working Capital needs should meet through long term means of financing. 48 .  Short term sources. Amount Of Working Capital.  A combination of them. SOURCES OF WORKING CAPITAL. the level of Permanent Working Capital also grows.

(b). Securities received from employees and customers are examples of other sources of finance.Issue Of Debentures: It crates a fixed charge on future earnings of the company.Retained Earnings: Retain Earning accumulated profits are a permanent sources of regular Working Capital.Financing through long term means provides stability.Other Sources: sale of idle Fixed Assets. Issuing equity shares as it does not create and burden on the income of the concern. (2). (d). debts from financial Institutions like banks. (c). low cost and establishes closer relationships with banker. And increases liquidity of the business concern. Company is obliged to pay interest. (e). the cost is higher than the other financial tools. It is regular and cheapest. Nor the concern is obliged to refund capital should preferably raise Permanent Working Capital.Long Term Debt: Company can raise fund from accepting public deposits. Various types of long term sources of Working Capital are summarized as follow: (a).Issue of Shares: It is the primary and most important sources of regular or Permanent Working Capital. reduces risk or payment. corporations etc. Temporary Working Capital is required to meet the day to day business expenditures. It creates not charge on future profits of the enterprises.Short Turm Sources Of Working capital. The Variable Working Capital would finance from short term sources of funds and only the period needed. It has the benefits of. Some sources of Temporary Working Capital are given below: 49 . Management should make wise choice in procuring funds by issue of Debentures.

cash credit. advances from customers. (c). Credit from suppliers. This will be in the form of short term loans.  Long term loans.Public Deposits: Most of the companies in recent years depend on this source to meet their short term Working Capital requirements ranging from six month to three years. (3). Provision for tax and other provisions kept with the company can be used as Temporary Working Capital.Commercial Bank: A commercial bank constitutes significant sources for short term or Temporary Working Capital. (b). bills of exchanges.Various Credits: Trade credit. whereas the Variables Working Capital should be financed from short term sources. 50 .  New equity or loans from shareholder.(a). business credit papers and customer credit are other sources of short term Working Capital. and the funds are available on time and for the period they are really required.  Payables (credit from suppliers).Sources Of Additional Working Capital. The company should meet its Working Capital needs through both long term and short term funds. Sources of additional Working Capital include the following Existing cash reserves. etc helps to raise Temporary Working Capital (d).  Profits (when you secure it as cash).  Bank overdrafts line of credit. The Working Capital financing mix should be designed in such a way that the overall cost of Working Capital is the lowest. It will be appropriate to meet at least 2/3 of the Permanent Working Capital equipments form long term sources.Reserves and other funds: Various funds of the company like depreciation fund. and overdraft and though discounting the bills of exchanges.

INCREASE EFFECIENC Y. PAYMENT TO SUPPLIERS.If we have insufficient Working Capital and try to increase sales.  Seeking greater overdrafts or lines of credit.  Management pre occupation with surviving rather than managing. INCREASE DEBT CAPICITY. DIVIDENT DESTRIBUTI ON. offering high discounts for clear cash Payment. we can easily over stretch the financial resources of the business. EASY LOANS FROM BANKS. SIGNIFICANCE OF WORKING CAPITAL. 51 .  Part paying suppliers or there creditor.  Exceptional cash generating activities . This is called overtrading. Early warning signs include: Pressure on existing cash.  Bank overdraft exceeds authorized limit. SIGNIFICANC E OF WORKING CAPITAL. INCREASE IN FIXED ASSETS.

 Management of Payables / Creditors. There are three general motives for holding inventories: 52 . NATURE OF INVENTORY. The inventory means and includes the goods and services being sold by the firm and the raw material or other components being used in the manufacturing of such goods and services. On an average. MANAGEMENT OF INVENTORY. Because of large size. Raw materials inventories are those units which have been purchased and stored for future productions.  Raw Material: It is basic inputs that are converted into finished products Through the manufacturing process.  Management of Cash. work ± in ± progress. Maintaining inventories involves trying up of the company¶s funds and incurrence of storage and holding costs. NEED TO HOLD INVENTORY. They represent products that need more work before they become finished products for sale. finished goods.  Management of Inventory.  Work ± in ± Pogress: Work ± in ± progress is semi ± manufactured products. The common type of inventories for most of the business firms may be classified as raw ± materiall.  Finished Goods: These are completely manufactured products which are ready for sale. inventories are approximately 60% of Current Assets. it requires a considerable amount of fund.  Management of Receivables / Debtors.DIFFERENT ASPECTS OF WORKING CAPITAL MANAGEMENT. Inventories constitute the most significant part of Current Assets of a large majority of companies.

Speculative Motive: It influences the decision to increase or reduce inventory levels to take advantage of price fluctuations.(a).  There is potentially greater risk of theft.  Money is held up in stock when it could be put to better use. If too much inventory is held.Precautionary Motive: It necessitates holding of inventories to guard against the risk of unpredictable changes in demand and supply forces and other factors. (b). EFFECT OF EXCESS OR INADEQUATE INVENTORY. 53 .  To Minimize the carrying cost and time. The aim of Inventory Management should be to avoid excessive and inadequate levels of inventories and to maintain sufficient inventory for smooth production and sales operations.  There are superfluous warehousing and storage costs.  To maintain sufficient stocks of raw materials in the periods of short supply and anticipate price changes. the organization wastes money through a variety of factors. An effective Inventory Management should: To ensue a continuous supply of raw material to facilitate uninterrupted production. OBJECTIVE OF INVENTORY MANAGEMENT.Transactions Motive: IT emphasizes the need to maintain inventories to facilitate smooth production and sales operation.  Inventory may deteriorate. and efficient customers service.  To Control investment in inventories and keep it at an optimum level. (c).  To maintain sufficient finished goods inventory for smooth sales operation.

time leg in procuring that item and unforeseen circumstances. To manage inventories efficiently. Economic Order Quantity (EOQ).On the other hand. the firm¶s objective should be in consonance with the shareholder wealth maximization principle. INVENTORY MANAGEMENT TECHNIQUE. How much should be ordered? 2. In managing inventories. the following two questions should be kept in mind:1. Inefficient inventory control results in unbalanced inventory and inflexibility ± the firm may sometimes run out of stock and sometimes may pile up unnecessary stocks. too little inventory can lead to stock ± out which can:  activity. When should be ordered? To answer the above two questions.  Cause discomfort or distress to Clint. 54 .  Lose income. if any. This increases the level of investment and makes the firm unprofitable. the firm should determine the optimum level of inventory. Completely Stopped. For this. It assumes that total inventory cost = total carry cost + total ordering cost. we must calculate Economic Order Quantity and Re ± Order Point. The Economic Order Quantity model attempts to determine the order size that will minimize the total inventory cost. The EOQ model as a technique of Inventory Management defines three parameters for any inventory: Minimum level of inventory of that item depending upon the usage rate of that item. Efficiently controlled inventories make the firm flexible.

Ordering Cost. A = Total annual requirement for the item. the more frequently inventory is acquired. and these are the cost of ordering and the cost of carrying the inventory. C = Carrying cost per unit per annum. if 55 . EOQ may be presented as follows:- 2AP C Where. P = Ordering cost per order of that Item. transporting. Thus. Ordering Cost increase in proportion to the number of order placed. receiving. purchase ordering. The re ± order level of that item . Assumptions: The EOQ model is based on the following assumptions: The total usage of a particular item for a given period ( usually 1 year) is known with certainty and that the usage rate is even through out the period. EOQ = Economic Order Quantity.  That there are only two costs associated with the inventory.  That there is no time gap between placing an order and getting its supply. inspecting and storing.  The re ± order quantity for which each order must be placed. The term Ordering Costs is used in case of raw materials (or supplies) and includes the entire costs of acquiring raw material. On the other hand. at which next order for that item must be placed to avoid any chance of a stock ± out . It includes requisitioning.  The cost per order of an item is constant and the cost of carrying inventory is also fixed and is given as % of average value of inventory. the higher the firm¶s Ordering Cost.

AP C . It is shown that the total Ordering Cost for any particular item is decreasing as the size per order is increasing. O EOQ.the firm maintains large inventory level. Carrying costs very with inventory size Total Cost. insurance. The Total Annual Carrying Cost is increasing with the increase in order size. there will be few orders placed and Ordering Costs will be relatively small. It includes storage. Costs incurred for maintaining a given level of inventory are called carrying cost. Ordering Cost. Total ordering Cost = (Annual Requirement Per Order Cost) Order Size TOC = Carrying cost. Taxes. This will happen because the firm would be keeping more and more items in stores. It is just because of the increase in the size of the order. the total numbers of orders for a particular item will decrease resulting in decrease in the Total Order Cost. Cost. deterioration and obsolescence. The 56 . Carrying Cost.

The Receivables (including the debtors and the bills) constitute a significant portion of the Working Capital. Average usage. Is the time normally taken between the placement of an order and receiving the supply. Receivable is type of loan extended by the seller to the buyer to facilitate the purchase process. A promise is made by the customer to pay cash within a specified period. The trade ± off of these two costs is attained at the level at which the Total Annual Cost is the least.Total Cost of inventory initially reduces with the increase in the size of order but then increases with the increase in the size of order. Nature. Average Usage. Reorder point = Lead time × Average usage MANAGEMENT OF RECEIVABLES / DEBTORS. Is the rate at which the inventory is being used up. The Re ± Order point depends on Lead Time. The term Credit Policy is used to refer to the combination of three decision variables:57 . The Receivables emerge whenever goods are sold on credit and payments are deferred by customers. The Receivable Management consist of matching the cost of increasing sales (particularly credit sales) with the benefits arising out of increased sales with the objective of maximizing the return on investment of the firm. Economic Order Quantity. The Re ± Order level is the level of inventory at which the fresh order for the item must be placed to procure fresh supply. The Re ± Order Point. Lead Time. Thus. Receivable Management may be defined as collection of steps and procedure required to properly weight the costs and benefits attached with the credit policy. The customers from whom receivable or book debts have to be collected in the future are called trade debtors and represents the firm¶s claim or Assets.

(b). there is always an opportunity cost of the fund tied up in the receivable due to delay in payment. It specifies duration of credit and terms of payment by customers.Delinquency Costs: The firm may have to incur additional cost as delinquency costs. There are various costs and benefits attached with a Credit Policy. The lower the collection period.(a). It includes reminders. This results blocking of funds and the company has to arrange funds to meets its obligation. (a). It becomes cost to the firm. If a firm has more slow ± paying customers. It determine the actual collection period. COSTS. The firm will also be exposed to higher risk of default.Credit Terms. the lower the investment in accounts receivable and vice versa. partly or wholly. This is known as the Cost of Financing the receivables. its investment in accounts receivable will increase. COSTS AND BENEFITS OF CREDIT POLICY. Cost Of Financing. legal notice etc. It is the criteria to decide the type of customers to whom goods could be sold on credit. The credit sales delays the time of sales realization and therefore the item gap between incurring the cost and the sales realization is extended.Collection efforts. (b). These funds are to be procured at some explicit or implicit cost. Administration Cost: A firm will have to incur various costs in order to maintain the record of credit customers both before and after the credit sales. More over. if there is delay in payment by a customer. it will termed as bad debts. postage . Investment in accounts receivable will be high if customers are allowed extended time period for making payments. phone calls. (c).Credit Standards. 58 .Cost Of Default By Customers: If any default is made by the customers in payment.

the firm may offer such terms. Profitability. It brings an opportunity for the firms to make extra profits.Increase In Sales: The sales can be increased by credit sales. the firm make the credit sales at a price which is higher than the usual cash selling price.BENEFITS. More liberal credit terms may be expected to generate higher sales revenue and higher profit. If the net benefit expected from liberalizing the credit terms is positive. Optimum. On the other hand. But they increase the potential cost also in the form of bad debts and a decrease in liquidity of the firm. Stringent policy Credit Policy Liberal policy Credit Policy. (b). there is a positive relation between the sales volume and the profit. otherwise not. 59 . (a). The trade ± off on receivables can be applied to find out whether to liberalize the credit terms or not. a stringent Credit Policy reduces the profitability but may increase the liquidity of the firm. Profitability and Liquidity of a Firm. This will attract more customers to the firm resulting in higher sales and growth of the firm.Increase In Profit: Increase in sales will help the firm to easily recover the fixed expenses and attaining break ± even level and increase the operating profit of the firm. TRADE ± OFF ON RECIVABLES. In a normal situation. Cost And Benefit. (c). Liquidity.Extra Profit: Sometimes.

It is clear from the above figure that as the firm takes its Credit Policy towards more and more liberal.Credit Agency Report: There are certain credit rating agencies which provide independent information on the credit worthiness of different parties. On the other hand.Bank Reference: The bank may be asked to comment on the financial position of a particular customer. 60 . The following are sources of information which can provide sufficient data or information about the credit worthiness of a customer:(a). CREDIT EVALUATION. if the firm makes its Credit Policy more and more stringent.  Analysis of information. Thus. its liquidity decreases whereas the profitability increases. (c). the firm may collect information from various on the prospective credit customers. (b). In order to make better decisions. liquidity and debt service capacity of a customer. These credit agencies gather information on the credit history and see it to the firm which want to extend credit.Published Information: The published financial statements of the customers for few preceding years may also be taken as a source of information. the liquidity may increase but profitability will go down. Evaluation of Credit worthiness of a customer is a two fold steps procedure: Collection of information. The customer may also be required to ask his Bank to provide necessary information in this respect. Credit Evaluation involves determination of the type of customers who are going to qualify for the trade credit. Collection Of Information. Various ratios calculated on the basis of these financial statements may throw light on the profitability. a firm should try to frame its Credit Policy in such a way as to attain the best possible combination of profitability and liquidity.

Once all the available credit information about a potential customer has been gathered. The Average Collection Period may be as follows: Debtors × 365 Credit Sales 61 . CONTROL OF RECEIVABLES. In such situation. the customer may become slower in payments. Once the credit has been extended to a customer as per the credit policy. If it is evident at any stage that the customer has satisfactory credit worthiness. The finance manager should keep a watch on the credit worthiness of all the individual customers and the total Credit Policy of the firm. A firm should go for further information and analysis only if required. the next important step in the management of receivables is the control of these receivables. (b). For this .The Collection Procedure: Once a firm decides to extend credit and defines the terms of credit sales. the firm should apply regular checks and there should be a continuous monitoring system.number of measures are available as follows:1. A strict collection policy can affect the goodwill and damage the growth prospect of sales. In this reference. In case of those customers who are marginally creditworthy. Thus. Average Collection Period: A common method to monitor the receivables is the collection period or number of day¶s outstanding receivables. the objective of collection procedure and policies should be to speed up the slow paying customers and reduce the incidence of bad debts.Monitoring Of Receivables: In order to control the level of receivables. the efforts may be required in the two directions as follow:(a). it must be analyzed to reach at some conclusion regarding the credit worthiness of a customer. it must develop a policy for dealing with delinquent or slow paying customers. The overall collection procedure of the firm should neither be too lenient nor too strict. then there is no need to go for costly exercise of further analysis . If a firm has a lenient Credit Policy. the financial manager must attempt to balance the potential profitability against the potential loss from the default.Analysis Of Information.

Cash Management is concerned with the managing of  Cash flows into and out of the firm.  It is susceptible to sales variations and the period over which sales and receivables have been aggregated. Cash is the important Current Asset for the operations of the business. There are 2 limitations to this method: It provides an average picture of collection experience and it is based on aggregate data. Cash is the basic input needed to keep the business running on a continuous basis. The lines of credit must be reviewed periodically for all the customers. currency. Different lines of credit may be allowed to different customers. Factors Of Cash Management. MANAGEMENT OF CASH. and cheque held by the firm and balance in the bank accounts. Cash Management refers to management of cash balance and the bank balance and also includes the short terms deposits. Two accounting ratios may be calculated to find out the changing pattern of receivables.The collection period so calculated is compared with the firm¶s stated credit period to judge the collection efficiency. 2. Lines Of Credit: Another control measures for Receivables Management is the line of credit which refers to the maximum amount of a particular customer may have as due to the firm at any time. 62 . Accounting Ratios: Accounting information may be useful in order to control the receivables. The term cash includes coins. 3.  Receivables Turnover Ratio.  Average Collection Period. It is also the ultimate output expected to be realized by selling the service or product manufactured by the firm.

Business Operation. Cash Budget should be prepared for this purpose. The surplus cash has to be invested while deficit has to borrow. Invest. Borrow. Surplus. Information And Control.Cash Planning: Cash inflows and outflows should be planned to project cash surplus or deficit for each period of the planning period. Deficit. Cash Management seeks to accomplish this cycle at a minimum cost and it also seeks to achieve liquidity and control. The firm should develop appropriate strategies regarding the following four aspects of Cash Management:(a). ASPECT OF CASH MANAGEMENT. Cash flows within the firm.  Cash balance held by the firm at a point of time by financing deficit or investing surplus cash. Cash Collection. In order to resolve the uncertainty about cash flow prediction and lack of synchronization between cash receipts and payments . 63 . Cash Payment. (CASH MANAGEMENT CYCLE.) Sales generate cash which has to be disbursed out.

MOTIVES OF HOLDING CASH. (b). The Cash Flow should be accelerated while the cash outflows should be decelerated. (c). This is the first basic objective of cash management.Precautionary Motive: This implies the needs to hold cash to meet unpredictable contingencies such as strike. If a firm can borrow at short notice to pay them unforeseen contingency. or inter ± corporate lending.Optimum Cash Level: The firm should decide about the appropriate level of cash balances. according to which the firm should have sufficient cash to meet the various requirement of the firm at different time period. Cash has been described as ³Oil to lubricate the ever turning wheels if business. OBJECTIVE OF CASH MANAGEMENT. (c).Speculative Motives: It refers to the desire of the firm to take advantage of opportunities which present themselves at unexpected movements and which are typically outside the normal course of business. Even though firm hold cash for following motives:(a). marketable securities.Managing The Cash Flows: The flow of cash should be properly managed. usually require client to keep minimum cash balance with them to earn interest and thus compensate them for the free service so provided.´ 64 .Compensatory Motive: Bank provides certain services to their client free of cost. sharp increase in raw materials prices.(b). The cost of excess cash and danger of cash deficiency should be matched to determine the optimum level of cash balances. it will need to maintain relatively small balances and vice ± versa. The firm should decide about the division of such cash balance between alternative short ± term investment opportunities such as bank deposits. without it the process grinds to a stop. A distinguishing feature of cash as an asset is that it does not earn any substantial return for the business.Meeting cash disbursement. They therefore. There are two basic objectives of Cash Management:(a).Investing Surplus Cash: The surplus cash balances should be properly invested to earn profits. (d).

Cash Planning protects the financial conditions of the firm by developing a projected cash statement from a forecast of expected cash inflows and outflows for a given project. This information helps the financial manager to determine the future cash needs of the firm. and the banks might have started dishonoring cheques. If an organization runs out of cash resources it will have to stop operating immediately . (b). Cash Planning may be done on daily. which could entail personal liability or even imprisonment.Managing your cash balances is one of the most important parts of Working Capital Management. It gives information on the timing and magnitude of expected cash flows and cash balances over the projected period. the trustees or directors could stand charged with wrongful or fraudulent trading.  Identification of cash surplus position and duration for which surplus would be available so that alternative investment of this excess liquidity may be considered in advance.Cash Planning. It helps to anticipate the future cash flows and needs of the firm and reduces the possibility of idle cash balances and cash deficits. Cash plans are very crucial in developing the overall operating plans of the firm. plan for the financing of these needs and exercise control over the cash and liquidity of the firm. Cash Budget is an effective tool of cash management and it may help the management in the following ways: Identification of the period of cash shortage so that the Financial Manager may plan well in advance about arranging the funds at an appropriate time. There may not even be the money to pay the salaries at the end of the month. IMPORATANCE AND SIGNIFICANCE OF CASH BUDGET. A Cash Budget is a summery statement of the firm¶s expected cash inflows and outflows over a projected time period. Cash forecasting and Budgeting: Cash Budget is the most significant device to plan for and control cash receipts and payments. The period and frequency of Cash Planning generally depends upon the size of the firm and philosophy of management. weekly or monthly basis.  Better coordination of the timing of cash inflows and outflows in order to avoid chances of shortages or surplus of cash. Cash Planning is a technique to plan and control the use of cash. Furthermore. 65 .

Cash forecasts are needed to prepare Cash Budgets. This requires controlling and reviewing of the whole exercise on a regular basis. They are not as detailed as the Short ± Term Forecasts.  It helps to evaluate proposed capital projects. forecasts covering periods of one year or less are considered short term. Long ± term Cash Forecasting: Long ± Term cash forecasts are prepared to give an idea of the company¶s financial requirements in the distant future.  It helps to improve corporate planning. Those extending beyond one year are considered long ± term. the Financial Manager should also ensure that there are no significant difference between the expected Cash Flows and the Actual Cash Flows. The major uses of the Long ± Term Cash Forecast are: It indicates as company¶s future financial needs. Control Aspects: After preparation of Cash Budget. Long ± Term Cash Forecasts compel each division to plan for future and to formulate projects carefully. Short ± Term Cash Forecast: It is comparatively easy to make Short ± Term Cash Forecasts. Long ± Term Cash Forecast may be made for two. The important functions of carefully developed Short ± Term Cash Forecasts are: To determine operating cash requirements. 66 .  To manage investment of surplus cash. It pinpoints the cash required to finance these projects as well as the cash to be generated by the company to support them. especially for its Working Capital requirement.  To anticipate short ± term financing. The short ± term forecast helps in determining the cash requirements for predetermined period to run a business. expansion or acquisitions. It also indicates problems arising from these developments. three or five years. Long ±Term Cash Forecasting reflects the impact of growth. Cash forecasting may be done on short or long ± term basis. Generally. One of the significant roles of the Short ± Term Forecasts is to pinpoint when the money will be needed and when it can be repaid.

67 . It is mostly an informal arrangement and is granted on an open account basis. Purchasing initiates Cash Outflows and an over ± zealous purchasing function can create liquidity problems. Trade Credit refers to that credit that a customer gets from suppliers of goods in the normal course of business. Creditors are a important part of effective Cash Management and should be managed carefully to enhance the cash position. This deferral of payments is a short ± term financing called Trade Credit. Consider the following: Who authorizes purchasing in our company ± is it tightly managed or spread among a number of people?  Are purchase quantities geared to demand forecasts?  Do we use order quantities which take account of stock ± holding and purchasing costs?  Do we know the cost to the company of Carrying Stock?  Do we have alternative source of supply?  How many of our suppliers have a returns policy?  Are we in a position to pass on cost increases quickly through price increase?  If a supplier of good or service lets you down can you charge back the cost of delay?  Can we arrange delivery of supplies staggered or on a just ± in ± time basis? TRADE CREDIT. Open account Trade Credit appears as Sundry Creditors on the buyer¶s balance sheet. It is a major source of financing for firms.MANAGEMENT OF PAYABLES / CREDITORS.

(b). Trade Credit also expands.Easy Availability: Unlike other sources of finance. (c). 68 . he benefits in terms of less cash outflow. Credit Terms sometimes include cash discount if the payment is made within a specified period. Due date is the date by which the supplier expects payments. The expansions in the firm¶s sales cause its purchase of goods and services to increase which is automatically financed by Trade Credit. it does not have the restrictions which are usually parts of negotiated sources of finance. These conditions include the due date and the cash discount given for prompt payments.CREDIT TURMS. The major advantages of Trade Credits are as follows:(a). In case of stretching accounts payable the firm has to forgo the cash discount and may also be required to pay penalty interest charges.Informality: It does not require any negotiations and formal agreement. Trade Credit involves implicit cost. Trade Credit is relatively easy to obtain. Most of the time the supplier passes on all or part of costs to the buyer implicitly in the form of higher purchase price of goods and services supplied. The buyer should take a decision whether or not to avail it. Trade Credit is normally available to a firm. BENEFITS AND COSTS OF TRADE CREDIT. The user of Trade Credit should be aware of the costs of Trade Credit to make use of it intelligently.Flexibility: Trade Credit grows with the growth in firm¶s sales. it is almost automatic and does not require any negotiations. As the volume of the firm¶s purchase increases. Except in the case of financially very unsound firms. Credit Terms refer to the conditions under which the supplier sells on credit to the buyer and the buyer is required to repay the credit. The cost of credit may be transferred to the buyer via the increased price of goods supplied to him. but then he foregoes the credit granted by the supplier beyond the discount period. Cash discount is the concession offered to the buyer by the supplier to encourage him to make prompt payments. If the buyer takes discount.

358 1.193. The Current Ratio of a firm measures its short ± term solvency.523.070 (Rs.33:1 is also accepted.805 283.572.290 2006 283.738.370 2009 Current Assets Current Liability 2008 2007 2006 Current Ratio = 432.16 408.937 481. However.CURRENT RATIO.481.08 401.937 (Rs.481.44 69 .805 CURRENT LIABILITIES 2009 2008 TOTAL 397.109 350.WORKING CAPITAL RATIOS OF MINDA CORPORATION AND ITS INTERPRITATION LTD.193.139.523. sometimes a lower ratio of 1. It is most common measure for measuring liquidity.788 2008 401.) 2007 558.788 397.14 1. (A).290 1.370 1. It indicates the money amount of Current Assets available for each money unit of liabilities.819. A Current Ratio of 2:1 is usually considered satisfactory (thumb rule). that is.070 558. It expresses relationship between Current Assets & Current Liabilities.) 2007 481.358 350.572. its ability to meet short ± term obligations.376.738.376. CURRENT ASSETS 2009 TOTAL 432.109 2006 408.819.139.

 So it can say that the liquidity position of the company in 2005-06 was good but after that continuous decreasement in the liquidity position of the company. 70 . taken as Current Ratio 1.08. Banks however.44 which is best ratio in these four years and after that ratio is continuously decreasing. It holds a low position in 2008-09 which is 1.  Normally the Current Ratio of 2:1 considered very good.  Now if we analyze the four years data it can be predicted that it holds a stable position all throughout period but it is seen that in 2005-06 the Current Ratio was 1. It was highest in 2005-06 and lowest in 2008-09.  After analyzing the four years Current Ratio it can be predicted that the companies liquidity position decreasing day by day because we saw that the Current Ratio of the company is decreasing every year.33:1 as reasonable.OBSERVATION.

376.884 350.87 71 .00 Quick Ratio = 347.572.937 0.580.427 432.481.824.372 284.378 283.LIQUID/ ACID TEST RATIO.186 347.270 323.358 0.805 -123. A quick Assets means Current Assets excluding Stock and Prepaid Expenses.738.372 481.795. It is a relation between Quick Assets and Current Liabilities.788 401. These include Cash and Bank balances.314.77 2006 284.270 397.070 -85.378 Quick Ratio = Quick Assets Current Liability 2009 2008 323.103.139. Inventory Less. It is more useful in knowing the Liquidity of a firm than Current Ratio.370 1.92 2007 371.910. An ideal Acid Test Ratio is generally taken as 1:1. The term Quick Assets refers to Current Assets which can be converted into cash immediately or at a short notice without diminution of value. Prepaid Expenses TOTAL ASSETS 2008 (Rs.819.(B).314.737 2006 408.290 0.) 2007 558.884 371.420. The Acid Test Ratio is a rigorous measure of the firm¶s ability to service short ± term liabilities.523.193.109 -186. Short ±Term Marketable Securities and Debtors/ Receivables.103.580.910.283.518 -77. It is also known as Acid Test Ratio. LIQUID 2009 Current Assets Less.

0. It is used as an assessment tool for testing the liquidity position of the firm.  Now if we analyze the four years data it can be predicted that the Quick Ratio in 2005-06 is best which was 1.  The Liquid Ratio of 1:1 is suppose to be standard but here ratio is less than 1:1 in recent 2-3 years. 0. It means the company has less Liquid Assets that actually it is suppose to have.01. 2007-08. 72 .  In the Financial year 2005-06 the Quick Ratio was 1. 0.e.87 which is not satisfactory. so can satisfactory and in the Financial year 2006-07.  Quick Ratio indicates the company has sufficient liquid balance for the payment of Current Liabilities. which is not a good sign for the enterprise.OBSERVATION.01 and after that it fluctuate and move up and down and in 2008-09 it is 0.92. The normal value for such ratio is taken to be 1:1.87.77. 2008-09 was i. It may not be able to meet its Current liabilities on time.

73 .630.567. Rs.827.619.186 2.986.827.852 264.365 1.924 155.315.987.56 Times In times.567.165.(C).082 26.054.365 1.315.159.607.159.127 1.186 2.925 2009 Inventory Turnover = Ratio Net Sales Avg.127 81.INVENTORY TURNOVER RATIO.47 times 7.987. Inventory 2008 2007 2. 2009 Net Sales 2008 2007 2006 2. Inventory Turnover Ratio = Net Sales / Average Inventory The ratio indicates how fast inventory is sold. It is the ratio between the Net Sales and the average inventory.165.51 times 16.

499 261.567.  This ratio tells the story by which stock is converted into sales.010. So we can say that enterprise have a very good Inventory Turnover Ratio.  Now if we analyze the three years data it can be predicted that the ratio has been increasing.  For every organization point of view the High Inventory Turnover Ratio is desirable .986. 2009 Net Sales Sundry Debtor 2008 2007 2006 2.315. Debtors Turnover Ratio = Net Sales / Sundry Debtors The ratio measures how rapidly receivables are collected. A high Stock Turnover Ratio reveals the liquidity of the inventory i. Rs.925 239.186 2.OBSERVATIONS.159. It is the Ratio between the Net Sales and Sundry Debtors Outstanding during the year.630.51 times and in the 2008-09 it again increases and it is 26.  A high Inventory Turnover Ratio indicates the efficient management of inventory because more frequently the stocks are sold.56 times but in 2007-08 Inventory Turnover Ratio decreases and it was 7.827.999 202.987.365 1.617.e. So we can say that the company is able to turned its inventory in sales. inventory is turned over or sold during the year..020 74 .107.DEBTOR TURNOVER RATIO.165. but high Inventory Turnover Ratio may not indicates the profitable situation always.127 1. In 2006 ± 07 the Inventory Turnover Ratio was 16. how many times on an average.47 times which is good for the company.557.328 228. (D).

159.127 1. which shows that the number of times the Debtors are turned over cash during a year.020 9.328 228.69 times 9.827.925 239.987.186 2.03 Times Times 8.165. 75 .010.617.986.499 261.999 202.557.80 OBSERVATIONS.2009 Debtor Turnover = Ratio 2008 007 2006 2.365 1.84 Times 9. The Debtor of the company is increasing which shows that the company is able to properly managing its Debtors.107.567.  The Debtors Turnover Ratio.315.630.

223.84 times which shows the good sign for the company.888 215.880.569 1.598.03 times.307. Now if we analyze the four years data it can be predicted that the Debtor Turnover Ratio decrease in 2008-09 in comparison to 2005-06 and it fluctuates. in 2007-08 Debtor Turnover Ratio decreases and it was 8.  In 2005-06 the Debtor Turnover Ratio was 9.  Higher the value of Inventory Turnover Ratio the more efficient is the management of Debtors or more Liquid the Debtors are.416. (E).589 399.738.265. Similarly. Rs.387.944 1. 2009 Net Purchase Sundry Creditor 2008 2007 2006 1.953 332.69 times which was not good for the company and comparatively to previous year it increases in 2008-09 and it is 9.228. low Debtors Turnover Ratio implies inefficient management of Debtors or less Liquid Debtors. It is the ratio between net purchases and the Sundry creditors outstanding during the year.662.141 76 .796 277. So excluding 2007-08 we can say the Debtor Turnover Ratio is good.CREDITOR TURNOVER RATIO. Creditors Turnover Ratio = Net Purchases / Sundry Creditors The ratio indicates how rapidly payables are paid.116.808.871 1.80 times which was good and ratio increases in the year 2006-07 and it was 9.  Low Debtor Turnover Ratio in 2007-08 indicates slowing down process of collection system or an extend line of credit that is being allowed by the customer to the company.

2009 Creditor Turnover= Ratio 1,387,416,871 332,880,796 4.17 times.

2008 1,307,116,569 277,738,589 4.71 times

2007 1,662,808,944 399,598,888 4.16 times.

2006 1,223,265,953 215,228,141 5.68 times.

In times.

The creditor Turnover Ratio indicates how rapidly payables are paid to the supplier.

 Now if we analyze the four years data it can be predicted that the Creditor Turnover Ratio decrease in 2008-09 in comparison to 2005-06 and it fluctuates.  A high Creditors Turnover Ratio or a lower Credit Period ratio signifies that the Creditors are being paid promptly. This situation enhances the credit worthiness of the company. However a very favorable ratio to this effect also shows that the business is not taking the full advantage of credit facilities allowed by the Creditors.  In 2005-06 the Creditor Turnover Ratio was 5.68 times and ratio decreases in the year 2006-07 it was 4.16 times which shows the bad sign for the company, in 2007-08 Creditor Turnover Ratio increases and reached to 4.70 times and comparatively to previous year it decreases in 2008-09 and it is 4.17 times.  In 2005-06 the Creditor Turnover Ratio 5.68 times was best and in 200809 it decreases and reached to 4.17 times. It is a bad for the company because if the higher Creditor Turnover Ratio it means we pay money in time then we get credit easily but other side if the Creditor Turnover Ratio is low it means we are not able to pay the money on time then it is difficult for the company to get credit from the supplier. Higher Creditor Turnover Ratio is very important for the company. So it means company has low Creditor Turnover Ratio so company work for increase the Creditor Turnover Ratio.

This ratio indicates whether the investments in Current Assets or Net Current Assets ( i.e., Working capital ) have been properly utilized. Higher the ratio lower is the investment in Working Capital and higher is the profitability. But too high ratio indicates over trading. Working Capital Ratio = Net Sales / Working Capital.


Current Assets Less. Current Liabilities Net Working Capital 432,523,788 -397,572,358 34,951,430

401,376,070 -350,738,937 50,637,133

2007 558,139,109 -481,819,290 76,319,819 2006 408,193,805 -283,481,370 124,712,435

2009 W.C Turnover Ratio = Net Sales Working Capital




2,159,827,365 1,987,165,186 2,567,315,127 1,986,630,925

61.80 times.

39.24 times.

76,319,819 33.64 times.

124,712,435 15.93 times.

In times.


 In the financial year 2005-06 the Working Capital Turnover Ratio was 15. In order words it shows the relationship between Sales and Working Capital. 2007-08.OBSERVATION. In the Financial year 2008-09 the Working Capital Turnover Ratio was highest compared to Financial year 2005-06.8 times which is good sign for the company. Average Collection Period = 365 / Debtor Turnover Ratio.e. Now if we analyze the four years data we find that Ratio follows increasing trend which means that companies investment in Working Capital is minimum and the company utilizing more of its profit.e. 2007-08 was i.64. 39. on average. The Average Collection Period is the number of days.93 times but after that it continuously increasing.AVERAGE COLLECTION PERIOD. Working Capital ) have been properly utilized. It means company achieved maximum sales in the year 2008-09. Working Capital Turnover Ratio in the financial year 2006-07. Higher the ratio lower is the investment in Working Capital and higher is the profitability. 33.24 times and in the year 2008-09 the ratio is 61. that it takes a company to collection its credit accounts or its accounts receivables.  The Working Capital Turnover Ratio graph shows the capability of Minda Corporation and the organization achieve maximum sales with the minimum investment in Working Capital.  Working Capital Turnover Ratio is an important indicator about the Working Capital position. 80 . 2006-07.  Working Capital Turnover Ratio indicates whether the investments in Current Assets or Net Current Assets ( i. Average Collection Period shows in how many days we collect the money. the Average Collection Period of accounts receivable is the average number of days required to convert receivables into cash.. (G). In other words.

 Average Collection Period is the relationship between no.11 days. days.23 In days. OBSERVATION.804857089 41.40 days. 37.2009 Avg.032878177 40. Of days in a year and Debtor Turnover Ratio.98 days.836041917 9. Collection = Period 2008 2007 2006 365 9. 81 . 37.69437754 9. 365 365 365 8.

82 .  Now if we analyze the four years data we can say that it holds a good position while receiving its money from its debtors. So we can say this is a good sign for the enterprise. but Working Capital remains same. If the Average Payment Period is increase.23 days. Most Companies try to decrease the Average Payment Period to keep their larger suppliers happy and possibly take advantage of Trade Discount. It the Financial year 2007-08 the Average Collection Period was 42 days and in the Financial Year 2008-09 Average Collection Period is 40 days. Here in the Financial Year 2005-06 and 2006-07 the Average Collection Period was i. As a general rule the Average Collection Period is not more then 3 to 4 months. The ratio indicates the time at which the debts are collected on an average during the year.e. Cash should increase as well. 37. So after analyzing the four years data we can say that the Average Collection Period of the company is good.AVERAGE PAYMENT PERIOD. Average Payment Period shows that how many days firm makes payment to the Creditors. (H). Average Payment Period = 365 / Creditor Turnover Ratio. So we can say that a high Debtors Turnover Ratio implies a shorter collection period which indicates prompt payment made by the customer.11 days which was approximately same and then the Average Collection Period increasing. The Average Payment Period is defined as the number of days a Company take to pay off Credit Purchase.  If the Average Collection Period is high then the Bad Debts can increase and the company may face losses. 37.

57 days.72 In days. 83 .22 days.2009 Avg.68357812 64.  Average Payment Period reveals the ability of the firm to avail the credit facility from the suppliers throughout the year.161195123 87. 87. 77. 4. Generally a low Creditor¶s Turnover Ratio implies favorable and it is good for the company. days.56 days.167909016 4. OBSERVATION. Payment = Period 2008 2007 2006 365 365 365 365 5.706283609 4.

824.684.788 77.795.536.737 261.468. So it is increasing which is not good for the company.107.553. Gross Working Capital = Total Current Assets.340.328 8.843.756 401.420.772.017 74.  If the Ratio was very high which means that its position of creditors that year was not good.109 2006 123. So we can say that they not enjoys a very good credit facility from the suppliers. Bank Balances Other Current Assets Loans.502.193.139. Most of the companies wants to decrease the Average Payment Period.  It is clear that the Average Payment Period is less in the Financial Year 2005-06 as compared to other Financial Years.283.518 239.070 (Rs.020 11.376.427 202.264. In the Financial Year 2008-09 the Average Payment Period is 88 days.557.454 57. It shows that the company has not sufficient liquidity for the payment. CURRENT ASSETS 2009 2008 Inventories Sundry Debtors Cash.) 2007 186.612 5.044 408. 88 days and 78 days which is not a good sign for the company.035 6.869 79.588.805 84 . Advances TOTAL 85. Now if we analyze the four years data we find that in the Financial Year 2005-06 the Average Payment period was best which is 64 days and then Average Payment Period was increases and in the Financial Year 2006-07 and 2007-08 the Average Payment Period was i.e.010.023 17. It is continuously increasing except the Financial Year 2007-08. WORKING CAPITAL OF MINDA CORPORATION.340 92.364. Gross Working Capital denotes the Total Working Capital or total investment in Current Assets.523.186 228.617.499 14.481 558.697.567 432.GROSS WORKING CAPITAL. (A).860 13.999 13.

85 . OBSERVATION.  After analyzing the four years data we can say the Gross Working Capital increased heavily in the Financial Year 2006-07 in compared to all the years.In lacs.  The various components of Current Assets are also called Gross Working Capital. It denotes the Total Working Capital or Total Investment in Current Assets.  The Gross Working Capital increase in 2006-07 then the Gross working Capital decreases in the Financial Year 2007-08 and then again the gross Working Capital increases in the Financial Year 2008-09 which is good sign for the company.

500 7.397.328.310 118.469.000 6.940 700. CURRENT 2009 Acceptance Sundry Creditors Due To Minda Sons-On Account Of Purchase Consideration.259.NET WORKING CAPITAL.937 481.554 (Rs.486. The Working Capital can be calculated subtracting a Companies¶ Total Current Liabilities from its Total Current Assets.315.606 399.819.195.370 86 .731.738.582 11.589 12.353 63.738.805 3.500 7. Security Deposit Investors Education & Protection Fund Other Liabilities Provisions Differed Premium on Forward cover Interest Accrued But Not Due On Term Loan From Bank Differed Payment Credit TOTAL 397.086.119 30.152 1.) 2007 2006 1.290 283.312.702 43.719 39.014.047 277.502.880. (B). Net Working Capital = Current Assets ± Current Liabilities.598 22.400.312 350.598.312 4.098 15.711. The Gross Working Capital of the company increases in the Financial year 2008-09.688.572.779 4.358 332.481.796 LIABILITIES 2008 4.228.598 21. The company can also get an idea about the required funds for maintaining Current Assets.141 20.849 1.628 28.888 215.212. Sufficient Working Capital helps the company to avoid stoppage of work and effects on profitability.643. So we can say the position of Gross Working Capital of the company is good.277.000 548 20.930 1. Net Working Capital ( which also known as ³Working Capital´ or the initials ³NWC´) is a measurement of the operating liquidity available for a Company to use in developing and growing its business.227.

070 -350.712.358 34. Company has favorable or positive Net Working Capital over the four year which shows the good liquid position of the company.951.819.370 124.523.819 2006 408.788 -397.738.481.572.937 50.435 In lacs.193.WORKING 2009 Current Assets Less.133 (Rs.805 -283.430 CAPITAL 2008 401. Current Liabilities Net Working Capital 432.  Net Working Capital is Current Assets over Current Liabilities. 87 .376.139.290 76.) 2007 558.637.319. OBSERVATION.109 -481.

So we can say the position of the company is satisfactory but company have to do work for increase the Net Working Capital.  The Net Working Capital measures the liquidity of the firm. So organization can work for maintain the Net Working Capital. The greater the margin. the better will be the liquidity of the firm. The best Working Capital figure in the Financial Year 2005-06 which was Rs.5 lacs.  In the Financial Year 2008-09 has lowest Net Working Capital as compare to earlier years. After analyzing the four years data we can say that the situation of Net Working Capital is fluctuating from very high to very low. Which is problem for the company. 1. 349.247 lacs and then huge decreasement in the Financial Year 2008-09 which is Rs. 88 .

No Name Of The Banks Fund Based : 1 Indian Overseas Bank. BG LC 3 Karnataka Bank.900 2.225 35 89 . Working Capital Limits & Utilization as of 31. State Bank of India. BG LC 2 Standard Chartered Bank. Sl. CC WCFC 660 480 1. Standard Chartered Bank.598 500 500 457 394 560 1.200 149 480 629 442 677 Facility Limit Rs/ lacs Outstanding Non Fund Based Limits : 1 Indian Overseas Bank. Fund Based WCDL (Tooling) Plastic Project Total 3.2009.140 2 3 AXIS Bank. LC/ LG 100 450 100 450 125 8 27 - 1.Minda Corporation Ltd. Cash Credit CC PC/ PCFC 4 5 Karnataka Bank.12.

while Axis Bank limit of Working Capital loans is 560 lacs @ 11. Working Capital loans in foreign currency as company has too many exports involved in the business. The company avail the limits of Working Capital in order to avail the benefits of shipment credit. banks can only charge the London Inter-bank Offered Rate (Libor) plus one percentage points as interest for their dollar loans. Indian Overseas Bank¶s limit is of Rs. (interest @ 12%). PCFC loans are vital for exports as they use these funds to procure raw material.5%. took Working Capital loan to fulfill the requirement of Working Capital. Minda also uses non fund based facility. Ex. but its not cost free source of Working Capital loan because it involves implicit cost.25%. This is called packing credit in foreign currency (PCFC). and took the loans on bank guarantee and also uses letter of credit and letter of guarantee.5%. they demanding service charge are pretty much on the higher side. According to existing norms set by RBI. exporters save on cost and thus remain competitive. If the bank are willing to give dollar loans. Minda Corporation Ltd. Minda Corporation also uses Cash Credit Account.OBSERVATION Minda Corporation Ltd. Thus.prime crises and Indian Banks are not able to procure Foreign currency at competitive rates. 11. Should consider the opportunity cost of one method of credit to other sources of credit while taking it¶s financial decisions 90 . Different banks have different limits for Working Capital Loans. The PCFC loan rate is 3. from consortium of banks. The liquidity condition have became very tight after the sub . Banks are not lending in dollars and asking the borrowers to take loan in rupees. Minda also uses WCFC (Working Capital Loan In Foreign Currency) the rate of interest applied is labor charges +5%. which means the credit limit provided by the bank to the exporters till the packing of the finished material because these loans are cheap. packing credit.40 lacs @ 11.

in % 2009 Inventories Sundry debtors Cash. Debtor Turnover Ratio (in times).23 64. Bank Balances Other Current Assets Loans.93 37. Average Payment Period (in days).8 40.5 9 4.11 87.98 77.16 33. Creditor Turnover Ratio (in times). 1.14 0.09 0.7 15.92 7.7 4.8 5.87 26.5 8.83 4.6 RATIOS. Advances Net Sales Net Purchase Liquid Assets Sundry Creditor Security Deposit Other Liabilities Provisions Total Current Assets Total Current Liability Working Capital Average Inventory 20 55 2 2 21 25 25 26 27 1 31 68 24 26 12 16 2008 19 57 4 1 19 23 23 24 23 3 27 70 22 23 18 53 2007 34 47 2 3 14 29 30 28 33 6 40 54 31 32 27 31 2006 30 50 3 3 14 23 22 22 17 8 40 52 23 19 43 WORKING CAPITAL 2009 Current Ratio.64 37. Average Collection period (in days). Inventory Turnover Ratio (in times).16 0.43 1 91 . WC Turnover Ratio (in times).41 87.24 41.22 2008 1.6 2006 1.77 16.6 9.FINDINGS.17 61. 2007 1.72 9. Quick Ratio.7 39.

 The idle Current Ratio is 2:1 but the 1.  Sundry Debtor position increasing companies policy is good.  The best Liquid Assets position in the year 2006-07 and then 2007-08 it decreases and then company work for that and it increases in the Financial Year 2008-09. In the above calculation we found that the best Current Ratio is in the Financial year 2005-06 after that It continuously decrease which is not a good sign for the company. Then in the Financial Year 200708 and 2008-09 it increase which is good sign for the company due to increase in Quick Assets.33:1 is also accepted. QUICK RATIO.  Sundry Creditor fluctuating in every year and in the Financial Year 200607 Sundry Creditors position Is high. in every financial year it means  Cash and bank balance was decrease in the Financial Year 2008-09.  Security Deposit and other liabilities decreasing In the Financial Year 2008-09 in comparison to other Financial Year.  The idle Quick /Acid test Ratio is 1:1.CURRENT RATIO. In the Financial Year 2005-06 company achieve the Idle ratio position.  Provisions are increasing year by year this may be due to taxes and Propose Dividend. 92 . Comparing to Financial year 2005-06 and 2006-07 inventory decreased in the Financial year 2007-08 and 2008-09.  In the Current Assets inventory was fluctuating it moves ups and down. The best cash position in the Financial Year 2007-08 and the best position of loans and advances in the Financial Year 2008-09 it means company is able to collect the short term loans.

It helps in reducing accumulation of Inventory.INVENTORY TURNOVER RATIO. In the Financial Year 2006-07 company purchase Material in high quantity. And company sales its Assets that¶s why companies sales increase but in the Financial Year 2008-09 company achieve satisfactory position. Which is good for the company because it means we are not holding Inventory in so many days. Creditor position is very high in the Financial Year 2006-07 but in the Financial Year the Financial year 200809 it decreases.  Debtor Turnover Ratio is fluctuating every year and in the Financial Year 2007-08 it decreases but in the Financial Year 2008-09 it increases company is able to collect the money quickly. It means company is able to sold its Inventory.  In the analysis we found that Inventory Turnover Ratio is Fluctuating but in the Financial Year 2008-09 the ratio increases. DEBTOR TURNOVER RATIO.  Net Sales best position in the Financial Year 2007-08 because that time company sales its Fixed Assets after that it decrease but another in the Financial Year 2008-09 it increases which is good for the company.  Average Inventory is decrease in the Financial Year 2008-09 in comparison to other Financial Years. It means company is able to maintain the Creditor Turnover Ratio. Creditors are fluctuating in every year. In the analysis we found that Creditor Turnover Ratio was good in the Financial Year 2006-07 after that it fluctuates but not so much. which is good for the company.    93 . CREDITOR TURNOVER RATIO.  Debtor are high in the Financial Year 2007-08 that¶s why Debtor Turnover decreases and Debtors are decreases in the in the Financial Year 200809 that¶s why Debtor Turnover increases which is good for the company.

WORKING CAPITAL TURNOVER RATIO. High Ratio means high profitability but too high Ratio indicates over trading. The highest Average Collection Period in the Financial Year 2006-07 after that Average Payment Period increase and in the Financial Year 2008-09 it is good and it is acceptable and company is able to collect its debts in 40 days. Working Capital continuously decreasing. Average Collection Period is the time period required by company to collect its debts. Working Capital Turnover is continuously increasing.    AVERAGE COLLECTION PERIOD. because less Average Payment period means company has sufficient liquidity to pay its debts. The highest Working Capital Turnover in the Financial Year 2008-09 in comparison to other years. Company achieve High Working Capital turnover in the Financial Year 2008-09. The Average Payment Period is best in the Financial Year 2005-06 which is less. Every company want to decrease it. The lowest Working Capital in the Financial Year 2008-09 in comparison to other years. Average Payment period is the time in which the company pay its debts to supplier.   94 . Average Payment Period fluctuating every year some time it increased and some time it decreased.   AVERAGE PAYMENT PERIOD. It is huge difference in Average Payment Period between the Financial Year 2005-06 and 2008-09.

After analyzing the data we found that in the Financial Year 2006-07 inventory increased and in the Financial Year 2007-08 it decreases and then in the Financial Year 2008-09 it increases because of purchase. After analyzing the data it can be said that company forecast its sales in the Financial Year 2008-09 which helped company to block less amount Inventories and also achieved its overall sales. Company block Inventory highly in the Financial Year 2006-07 and also sale its Assets. Debtors are increasing and in the Financial Year 2008-09 Debtors are 55% of its Current Assets it means company has sound credit policy. In the Financial Year 2006-07 there was high blockage in inventory so Creditor are going high in comparison to other years. company¶s Working Capital is favorable which infect protect company against inadequacy of funds required for operations.          95 . So sales increase highly in the Financial Year 2006-07 in comparison to other years. so it means company utilize its cash reserve to pay the Current liability. many times it happened. Thus. Companies sales is high in the Financial Year 2006-07 and 2008-09 in comparing to other years that¶s why Current Assets and Current Liability also increase. Provisions are increasing year by year because the increase in taxes and propose dividend.NET WORKING CAPITAL. Cash is decrease in the Financial Year 2008-09.

If the Average Collection Period is high cause of that. The Inventory Turnover Ratio shows how rapidly the inventory is turning into receivables through sales. It varies between 39 to 61 times. Thus Minda has a very good Inventory Management. So we can say that enterprise has a very good inventory Turnover Ratio. Working Capital Turnover Ratio indicates the efficiency of the firm I utilizing the Working Capital in the business. This ratio has been increase in the Financial Year 2008-09 in compared to other years. So Working Capital Turnover Ratio is good in the Financial year 2008-09. More the number of times Debtors' Turnover. In the Financial Year 2007-08 and 2008-09 the Average Collection Period increase in comparison to other years. But in the Financial year 2008-09 it is high. Debtors Turnover Ratio Fluctuating but in the Financial Year 2008-09 it increase. A high Inventory Turnover indicates the efficient management of inventory because more frequently the stock are sold. Of days in a year and Debtor Turnover Ratio.CONCLUSION. In the Financial Year 2008-09 the Working Capital decreased because of increase in manufacturing expenses and increase in price of raw material because of high inflation and recession also affected the price of various other commodities. better the liquidity position of the firm. Which is excellent for the Management of the firm. This is not a good sign for the enterprise because every company want to decrease Average Collection Period. It means the company is investing in Current Assets and expending its business. Sundry Debtors were the major part in Current Assets which shows efficient Average Collection period. which signifies increase in Current Liabilities. Average Payment period faces ups and down. The Current Assets and Liabilities are increasing year by year. Average Collection Period is the relationship between no. High ratio means high profitability. But in the Financial Year 2005-06 and 2006-07 it is 96       .   Current Ratio has been decreased in the Financial Year 2008-09. The combined effect of better management of inventory and debtors. the bad debts are increase.

 Period means company has sufficient Gross Working Capital has increased in the Financial Year 2008-09 in comparison to 2007. there is very big difference because that time company sale its Assets.  97 .good. Less Average Payment liquidity for the payment. If we compare the Gross Working Capital of the Financial Years 2006-07 and 2007-08. Net Working Capital is fluctuating from very high to very low. The Net Working Capital measures the liquidity of the firm. Gross Working Capital denotes the total Working Capital or total investment in Current Assets. In the Financial Year 2008-09 has lowest Net Working Capital as compared to the other Financial Years.

equity. The greater the margin. term loans/ unsecured loans from promoters to improve it¶s Current Ratio as per the norms. 98 . The company must increase its Net Working Capital. The company should maintain a proper level of inventory so that¶s why the unnecessary blockage of funds can be avoided. Company should raise funds through short term sources for short term requirement of funds.SUGGESATIONS. Which shows the liquidity position of the company. The company must have adequate cash and bank balance to face any situation. Company has to induct long term funds by ways of share capital.         The company has highest seller market of security system. The company has low cash and bank balance in the Financial Year 2008-09. The lowest Net Working Capital in the Financial Year 2008-09 as compared to other years. So the company should try to increase productivity and produce products at lower rate. Company should take control of Average Payment period it is very high in the Financial Year 2008-09. The Gross Working Capital is fluctuating and it increase in the Financial Year 2008-09 but the major proportion of Current Assets comprise of inventories in each year.  Creditors increasing year by year so the company should maintain the low level of creditors because the company can pay them easily whenever required. The company should try to reduce investment in inventory. the better will be the liquidity of the enterprise.

1995. ³Management Accounting.  Annual Report of Financial Year 2005-06.co. ´Financial Management. ´7th edition.  Rustagi R.  http://www. New Delhi: Galgotia Publishing Company.wikipedia. 2007..com 99 . 2002. ´3rd edition.workingcapital. P. and 2008-09 of Minda Corporation Ltd.P. Ltd. Books.. Agra: Sahitya Bhawan Publication.´ Fundamentals of Financial Management.minda.M.BIBLOGRAPHY. ´12th edition.. Internet Sources. 2006-07. 2007-08. New Delhi: Vikas Publishing House Pvt.  Payday I. Annual Report.in  http://www.com  http://www.  Gupta S.

554 350.037 650.543.478.748 37.301 85.731.480 440.483.263.070 Less: Current Liabilities.106.000 1.567 432. 1st AS AT 31-03-2009 AS AT 31-03-2008 SOURCES OF FUND Shareholders Funds Share Capital Reserve and Surplus Loan Funds Secured Loans Unsecured loans Deferred Tax Liability TOTAL APPLICATION OF FUNDS Fixed Assets Gross Block Less: depreciation Net Block Capital Work In Progress Capital Advances Investments Currents Assets Inventories Sundry Debtors Cash & Bank Balances Other Currents Assets Loans And Advances 86.841.409.268.660 33.612 5.420.194 86.430 1.657.163.701 361.186 600.553.035 6.838 41.738.195.900 353.456.788 838.937 50.768.012.766 64.529.628.854 552.359.833.340 92.502.033.000 1.029 35.020 317.900 282.133 1.193.358 34. BALANCE SHEET OF MINDA CORPORATION LTD.017 74.673 109.084.557.756 401.572.429.003.684. Provisions Current liabilities Provisions Net Current Assets TOTAL 353.796.581 501.380 511.483.383 39.012.591.444.518 239.156.929.681 368.194 311.697.463 421.182 521.111.328 8.312 397.795.620 358.359.046 43.468.772.637.409.388.376.568.555 100 .301 33.ANNEXURE.499 14.555 910.785 119.

885.020 11.765.BALANCE SHEET OF MINDA CORPORATION LTD.264.986.723.588.538 634.802 159.000 726.782 3.139.250 284.543 646.805 254.331.140.626.999 13.270 333.580 123.723.669 634.282.097.466 101 .869.370 124.020 271.211 376.138.300.539 46.023 18.674.244.319.504 138.884 3.986.781 30.674.947 78.193.543.952.427 202.617.860 13.454 57.581 44.481.466 932.721 4.473 309.247.234.504 24.186.511 30.655.212.999 449.502.881.658 30.737 261.075.864.794.044 408.819 878.197 482.364.723 386.490 501.109 451.824.580 ` 186.606.290 76.340.221 726. Provisions Current liabilities Provisions Net Current Assets Miscellaneous Expenditure Technical fee TOTAL 24.480 505.819.218 28.779 481.979.712.152 283. 2nd AS AT 31-03-2007 AS AT 31-03-2006 SOURCES OF FUND Shareholders Funds Share Capital Reserve and Surplus Loan Funds Secured Loans Deferred Tax Liability TOTAL APPLICATION OF FUNDS Fixed Assets Gross Block Less: depreciation Net Block Capital Work In Progress Capital Advances Investments Currents Assets Inventories Sundry Debtors Cash & Bank Balances Other Currents Assets Loans And Advances Less: Current Liabilities.403 558.655.250 246.302.

230 134.832.565.969 96.116.702.916 EXPENDITURE Cost Of Materials Manufacturing Expenses Employees Remuneration & Benefits Administrative & Other Expenses Selling & Distribution Expenses Interest & Finance charges Deprecation/Amortization/Impairment 1.041 72.718.316 1.211 1st YEAR ENDED YEAR ENDED 31-03-2009 31-03-2008 INCOME Sales Less: Excise duty Other Income Accretion/(Depletion) in Stock 2.769.888 1.550.185.108.211 PROFIT BEFORE TAXATION (Income .505 1.952 185.000 2.569 32.201.PROFIT & LOSS ACCOUNT OF MINDA CORPRATION LTD.270.416.298 71.500.076 116.989.824.000 2.199.365 -155.979.788 30.804 2.705 108.775.187 69.307.862.000 2.324 2.274 55.837.871 40.459 1.294.152 1.186 -217.552.919.934 -16.987.361.201 69.533.926.681.416 58.499.000 79.715.827.963.729 181.719.387.927.426.631 29.383 2.646.152 19.Expenditure) Provision For Income Tax Provision For Fringe Benefit Tax Deferred Tax Liability NET PROFIT - 102 .079.165.464.000 2.500.000 91.800.228 1.831.539.

186 53.785.465 EXPENDITURE Cost Of Materials Manufacturing Expenses Employees Remuneration & Benefits Administrative & Other Expenses Selling & Distribution Expenses Interest & Finance charges Deprecation/Amortization/Impairment 1.270.982 1.680.223.197 52.009 79.901.980.944.815. 2nd YEAR ENDED YEAR ENDED 31-03-2007 31-03-2006 INCOME Sales Less: Excise duty Other Income Accretion/(Depletion) in Stock 2.444 25.203.808.049 1.874.140.071 44.071 102.750.490.315.650.953 70.567.791 -10.625 5.416.970.858 67.115 1.229.043 112.292.944 52.885.506.016.000 3.265.PROFIT & LOSS ACCOUNT OF MINDA CORPRATION LTD.268 24.725 28.462 44.401 155.732.129 PROFIT BEFORE TAXATION (Income .941 2.581.000 -4.839 71.630.552.365 2.768.622.984 2.662.344.000 723.530.Expenditure) Provision For Income Tax Provision For Fringe Benefit Tax Deferred Tax Liability NET PROFIT - 103 .065 156.925 -236.858.031.425 56.778.653 33.453.000 3.993 1.861 29.710.186.000.442.256.986.127 -380.156.549 73.200 1.999.205.

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