Definition of Working Capital:: VCR Institute of Management Studies

INTRODUCTION
DEFINITION OF WORKING CAPITAL:

According to M.Y. Khan & P.K. Jain “Working capital refers to manage the firm current
assets & current liabilities in such a way that a satisfactory level of working capital is
maintained.
According to the cubing working capital is an amount of fund is necessary to cover the
cost of operating the enterprise.
Working capital management is concerned with the problem is that arise in attempting to
manage the current assets and the current liabilities and their inter relationship their arise
between them.
Current assets refers to those assets which to the ordinary course of business can be or
will be turned into cash within one year without undergoing a diminution in value and without
disrupting the operations of the firm.
The major current assets are cash marketable securities accounts receivable and their inception to
be paid in the ordinary course of business within
a year out of current assets (or) earnings of the concern. The basic current liabilities are Bills
payables. Bank overdrafts and outstanding expenses.
The goal of working capital management is to manage the firm current assets and current
liabilities in such a way that a satisfactory level of working capital is maintained.
Thus the current assets should be large enough to cover its current liabilities in order to
ensure a reasonable margin of safety. Each of the current assets must be efficiently in order to
maintain the liquidity of the short term be managed efficiently in order to maintain the liquidity
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VCR INSTITUTE OF MANAGEMENT STUDIES
of the short term sources of financing must be continuously managed to ensure that they are
obtained and used in a best possible way.
Therefore interaction between current assets and current liabilities in the main theme of
working capital management.
Profits are earned with to help of assets. Which are partly fixed and partly current
working capitals some times referred to as “CIRCULATING CAPITAL”.
“WORKING CAPITAL” is also called as “CIRCULATING CAPITAL”
CONCEPTS:
GROSS WORKING CAPITAL:
The Gross working capital is the firm investment in current assets. The current Assets are
Assets which can be converted into cash with in an accounting year and include cash within an
accounting year and include cash. Short term securities like debtors. Bills Receivables and
investor.
Gross working capital constituted current Assets i.e.
1. Inventory: which are further classified into
a. Raw materials
b. Working in progress
c. Finished goods
2. Accounts Receivables:
a. Cash and bank balance.
Any" business firm needs to provide it with enough of these current Assets. So that it an
carry on its business operation smoothly.
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These Assets are essential circulating in nature. That is to say that the business buys raw
materials with cash Receivable as a result or cash sales.
NET WORKING CAPITAL:
Net working capital refers to the difference between current assets and current liabilities
are those claims outsiders which are expected to mature are payment within an accounting year
and include creditors Bills payables and outside expenses.
Net working helps the management to look after the permanent sources for its financing
working capital under this approach does not increase with increase in short term borrowing.
Profits are earned with the help of assets which are partly fixed and partly working
capital some times referred to as "CIRCULATING CAPITAL" or "WORKING CAPITAL".
NEED FOR WORKING CAPITALS:
Business firms aim at maximizing the wealth of shareholders. In its endeavor to
maximize shareholder's wealth a firm should earn sufficient return from its operation earning a
steady amount of profits required successfully sales activity. The firm has to invest enough funds
in current assets for the success of sales activity current assets are needed because sales doesn't
convert into cash instantaneously there is always an operating cycle involved in the conversion
of sales into cash.
Level of working capital is necessary on a continuous and uninterrupted basis. This
requirement is referred to as permanent level of working capital is temporary. Fluctuating or
variable working capital. This is portion of the required working capital is needed to meet
fluctuating in demand consequent upon changes in production and sales as a result of seasonal
changes.The above shows permanent level is fairly constant. While temporary working capital is
fluctuating some times increasing and some times decreasing in accordance with seasonal
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demand. In the case an expanding firm the permanent working capital may not be a horizontal.
This is because the demand for permanent current assets might be increasing or decreasing
supports a rising level of activity. In that the line should be a rising one.
PERMANENT AND TEMPORARY WORKING CAPITAL:
Both kinds of working capital are necessary to facilitate the sale process through the
operating cycle. Temporary working capital is created to meet liquidity requirements that are
purely transient in nature.
ROLE OF FINANCIAL MANAGER IN WORKING CAPITAL
MANAGEMENT
1. Working capital management requires must of the finance manager time as it represent a
large position of investment is assets.
2. Working capital management requires much of the finance management time as it
represent larger position of investment in assets.
3. Action should be taken to curtail unnecessary investment in current assets.
4. All precaution should be taken for the effective and efficient management of working
capital.
5. I agree have to manage their current assets and current liabilities very carefully and
should see that the work should be done properly in order to achieve predetermined
organizational goals.
6. The financial manager should pay special attention to the management of current assets
on continuing basis.
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INDUSTRY PROFILE
Industry Overview:
The total Indian storage battery market is approximately estimated at US$ 500 Million
with the automotive battery segment contributing 60 to 65 percent of the overall market value. In
terms of volumes, the overall consumption of automotive batteries could be around 6.3 million
units with the OE segment comprising around 1.2 to 1.3 million units per annum, according to an
interview with the Executive Vice President of ARBL that was published on the website
chennaibest.com. The late 1990s also saw a surge in the sales of the passenger car segment for
around 2 years due to certain factors like the software boom, lowering of interest rates, etc. -
which increased the overall sales of batteries. The automotive sector did not see any significant
growth during the early part of the new millennium and is slowly showing signs of growth
during this financial year. This factor also adds to the demand in the aftermarket as more number
of cars was sold around 2 to 3 years back which is generally the life of a lead acid battery. The
replacement automotive battery market is expected to grow at a healthy rate in the coming years.
Role of Technology
With the advent of newer more advanced technologies, the consumer is getting the best
of both worlds; a superior product at an affordable price. ARBL sells its automotive battery
under the brand name Amaron which is the country's first Zero Maintenance Free Automotive
battery while the competitors had only maintenance free batteries that needed topping up of
distilled water. Today, all the leading manufacturers are also offering a similar product with
focus shifting towards offering a technologically superior product. Amaron was also the first to
talk about what goes into making a great product. It spoke of having silver inside which is used
as an alloy mix that actually increases the battery life and this was the first attempt by any battery
manufacturer to educate the consumers.
Fuddy Duddy Category to Creative Advertisement of the Year
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The interest level shown by any car owner to a battery revolves around only when the car
fails to start. Amaron therefore realized the need to make the consumer think about automotive
batteries, because thinking before a purchase will definitely lead to a comparison among the
brands available in the market.
Amaron thus went ahead with its "Chicken Leg" media campaign that created a storm in
the advertising industry and made people look to this relatively new player in the battery
industry. Over the years, the creative bent of all its campaigns starting from the media blitz, to
below-the-line campaigns have been towards educating the consumer about a battery.
The lead shown by ARBL was quickly followed by the others, with Exide Industries
sponsoring a cricket series in India for the first time with the campaign "India moves on Exide"
becoming a major success.
All this action in the automotive battery industry did not go unnoticed. An automotive
battery manufacturer (Amaron) for the first time was in the same league as mega ad spenders like
Coca Cola, Times of India, and others and won the Creative Advertiser of the Year, which was a
shot in the arm for the entire automotive battery industry.
Distribution
For the success of any aftermarket product, availability of the same is as important as the
product quality and competitive pricing which go a long way in increasing the visibility and
creating a network across markets. Here again, the leading automotive battery manufacturers
became aggressive in extending their reach to the nooks and corners of the country and also
moved away from the traditional distribution network and instead appointed dealers and
distributors who were the first timers to the battery business like service outlets of some of the
automobile majors like Maruti, Hyundai, Telco, Ashok Leyland, Hindustan Motors etc, roadside
mechanics and lube shops etc., which went a long way in increasing the reach and visibility.
There has been certain uniqueness that has been brought into the business by establishing
exclusive outlets with some flashy names like "Pitstops" and "Terminals" which was never seen
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earlier in this industry. All this, resulted in taking the smaller / regional manufacturers head on
and helped in building better brand recall and awareness among the end users.
Global scenario:
Global Opportunities for Advanced Battery Technologies in Automotive Applications,

1998 to 2008 is a multi client report designed specifically to provide subscribes with an accurate
and independent assessment of emerging opportunities in the automotive battery industry. In
addition to providing invaluable information and insights into developments in starting, lighting,
and ignition (SLI) technology, the report focuses specifically on opportunities emerging from
electric vehicles and hybrid electric vehicles.
The report provides material suppliers, advanced battery companies, automotive original
equipment manufacturers, investors, and others with an excellent resource to build soil, strategic
plans and respond to competitive forces, emerging technologies, and evolving market needs.
Specifically, the report assists subscribers in growing their business by providing the following:
Features:
Identification of the issues and timing for large scale commercial implementation of
advanced battery technology in the global automotive industry.
 Unbiased global scenario forecasts of commercial systems to 2003 and 2008.

 Forecast of material requirements for advanced batteries.
 Profiles of companies those are active in this field.
Benefits:
Identification of emerging business opportunities for advanced batteries
 New SLI technologies

 HEVs
 EVs
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 Competitive intelligence for use in bench marking
 A resource for screening potential merger and acquisition candidates
The business:
Revenues for the global battery market reached an estimated $30 billion in 1998.SLI and related
secondary battery applications represent approximately one-half of the overall revenues and are
mostly utilized in automotive applications. High-performance secondary batteries used in such
applications as portable electronics represent approximately 15% of the overall battery market.
These high-performance secondary batteries have the fastest growth rates, at over 10% a year.
Primary batteries represent the remaining one-third of battery industry revenues.
A battery is an electro chemical device in which the free energy of chemical reaction is
converted in to the electrical energy. The chemical energy contained in the active materials is
converted electrical by means of electrochemical oxidation reduction reactions.
HOW BATTERY WORKS:
When you place the key in your car’s ignition and turn the ignition switch “ON” a
signal sent to the battery. Upon receiving the signal, the battery takes energy that it has been
strong in chemicals form and releases it as electricity power is used to crank the engine. The
battery also release energy to power the car’s light and others accessories. It is the only device,
which can store electrical energy in the form of chemical energy, and science it is called as a
storage battery.
SEALED MAINTENANCE FREE (SMF) BATTERY:
Sealed maintenance free (SMF) batteries technologies are leading the battery industry in
the recent years in automobile and industry battery sector around the globe.
SMF batteries come under the rechargeable battery category so it can be used a number
of times the life of a battery. SMF batteries are more economical than cadmium batteries. These
batteries are more compact then the wet type batteries. It can be at any position, these batteries
are very popular for portable power requirements and space constraint applications. The
replacement market, on the other hand, is much longer. The replacement market is characterized
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by the presence of large unorganized sector, which constitutes around 55-60% of the total
replacement market.
INDUSTRIAL BATTERIES:
Industrial batteries can be basically classified into two main categories:
 AUTOMOTIVE BATTERIES
 STATIONARY BATTERIES
The automotive batteries are used in electric vehicles and forklifts. The stationary
batteries used in Telecom, Railway and power industries have Registered a growth in excess of
20% and this trend in likely to be continuing in the next 5 years.
The industrial segment is highly technology is an important factor land is vital for
brand reference. The total demand for the industrial battery segment is met by indigenous
production with a small saves of about 10% of by imports. The demand for industrial has grown
slowly and steadily.
RECYCLING OF BATTERIES:
Battery acid is recycled neutralizing it into water of converting it to sodium soleplate for
laundry manufacturing. Cleaning the battery cases, melting the plastics and reforming it into
pellets recycle plastic. Lead, which makes up 50% of every battery, is melted, poured into slabs
and purified.
PROSPECTUS OF SMF\ VRLA BATTERIESD IN INDIA:
The following factors are influencing demand of VRLA technology batteries.
 Entry of multinationals in telecom industry.
 DOT’S policy decision to upgrade the overall technology base.
 Constraints in the use of conventional battery in radio
TELECOM:
The government policy to increase the capacity from 10 million lines by 2000 increased
the demand for storage batteries considerably. The value added services like radio paging and
cellular will increase the demand for storage batteries in future considerably.
RAILWAY:
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In railways, the demand estimate is based on the annual post production which
comes to 2500 numbers by railways itself and 1000 numbers more by various other segments,
plus replacements demand and annual requirements for railway electrification.
POWER SECTOR:
In power sector the estimated 90 private power projects which are expected to produce
40000 MV with approximate capital outlay of Rs. 1, 40,000 crores would keep the industry
figured brighter in the coming years. The demand for VRLA batteries is increased due to its
performance over the conventional batteries. So it is more acceptable to the consumers.
VALUE REGULATED LEAD ACID BATTERIES:

In the recent years in automobiles and industry battery sector around the globe VRLA
batteries have become the preferred choice in various applications such as uninterrupted power
supply, emergency lights, security systems and weighting scales. VRLA batteries are leak- proof,
explosion resistant and having life duration of 15-20 years. These batteries withstand the
environment conditions due to high technology, in built in the batteries. Each cell is housed in a
power coated steel tray making them convenient to transport and installation. So transit damages
are minimized in case of batteries.
COMPANY’S PROFILE
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INTRODUCTION TO THE COMPANY
Amara Raja Batteries Ltd is the largest manufacturer of Standby Valve Regulated Lead Acid
(VRLA) batteries in the Indian Ocean Rim comprising the area ranging from Africa and the
Middle East to South East Asia. They are in the business of Industrial Battery, Automobile
Battery and Power System. The manufacturing facility is located at Tirupati in Andhra Pradesh.
The company is the largest supplier of stand-by power systems, atering to Indian utilities such as,
Departments of Telecommunication, Indian Railways, Power Generation Stations, MTNL,
VSNL, ITI and HTL. They are also having prestigious Automotive clients including Ford, GM,
Daimler Chrysler, Ashok Leyland, TELCO, and Mahindra & Mahindra. Amara Raja Batteries
Ltd was incorporated in February 1985 as a private limited company.
The company was converted into public in the year 1990. In May
1992, they designed and implemented the most advanced battery manufacturing facility in India.
In December 1997, they signed a joint venture agreement with the Johnson Controls Inc, USA
for the import of technology for the manufacture of Automotive (SLI) batteries. In the year 2000,
the company launched Amaron automotive batteries. In the year 2002, they launched Quanta
UPS, Amkaron Hiway and Harvest batteries. In the year 2004, they launched Amaron PRO, GO,
and FRESH automotive batteries.
The company has increased the production capacity of
VRLA Storage Batteries during the financial year 2003-04 by 150000 Nos and with this
expansion,the total capacity has increased to 1275000 Nos. The company further increased the
production capacity by 500000 Nos during the year 2004-05, by 825000 Nos during the year
2005-06. During the year 2006-07, the Company has successfully completed the expansion of
their 2V VRLA annual capacity from 240 million AH to 350 million AH.
The Company also has enhanced their automotive (monobloc)
battery capacity from 2.4 million units per annum to 3.60 million units per annum. Also, the
company has announced aggressive capex plan contemplating an investment of Rs 2016 million.
During the year 2007-08, the company increased the capacity of automotive battery plany from
3.6 million units to 4.9 million units which includes additional capacity created in monobloc
VRLA batteries. The company is investing an amount of Rs 650 million to expand the large
VRLA battery capacity from 450 million Ah to 900 million Ah and this new facility is expected
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to commence their operation during the second half of the financial year 2008-09. In May 2007,
the company has launched a new retail store format 'Powerzone' to cater the growin or better
technology and better service at affordable price in the rural markets. They are offering a platter
of products of global quality at local prices, right from automotive batteries, tractor batteries and
home UPS, from the House of Amara Raja. In May 2008, the company entered the two wheeler
battery segment with the launch of Amaron Pro Bike Rider 2-wheeler batteries powered by
VRLA technology with 60 months warranty. The company has also approved an investment of
Rs 520 million to enhance the capacity of Industrial battery division.
Brief about the Promoters
Dr. Ramachandra N. Galla, a Non-Resident Indian now settled in

India is the main promoter. He is a post graduate engineer with over 16 years experience in
power systems as an electrical engineer in Nuclear and conventional source power generating
stations across the USA. Mr. Galla went to USA after obtaining degrees from S.V. University,
Tirupati & Roorkee University. He holds an M.S. Degree in system science from Michigan state
university. After his return to India, he promoted along with Andhra Pradesh Electronics
Development Corporation (APEDC). A Rs. 2 crores unit – Amara Raja Power Systems Ltd. –
for the manufacture of uninterrupted power supply systems (UPS), Battery Chargers, D.C. power
supplies & static inverters. For the year ending 31 st March, 1990 this unit achieved a sales
turnover of Rs. 192 lakhs and earned cash profit of Rs. 14 lakhs.
AMARA RAJA GROUP OF COMPANIES:
 AMARA RAJA BATTERIES LIMITED (ARBL), karakambadi, Tirupathi.
 AMARA RAJA POWER SYSTEMS PVT.LTD (ARPSPL), Karakambadi, Tirupathi.
 MANGAL PRECISION PRODUCTS PVT LTD (MPPL), karakambadi, Tirupathi.
 MANGAL PRECISION PRODUCTS PVT LTD (MPPL), petamitta, chittoor.
 AMARA RAJA ELECTRONICS PVT. LTD (AREPL), Dighavamagham, Chittoor.
 GALLA FOODS LTD
2.1 BACKGROUND AND INCEPTION OF THE COMPANY
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Amara Raja Batteries Limited (ARBL) Company incorporated under the company’s act,
1956 in 13th February 1985 and converted into public limited company on 6th September 1990.
ARBL, an amara raja-Johnson controls company is the India’s leading automotive and
industrial battery manufacturer. The company is the technology leader and is one of the largest
manufactures of lead acid batteries for both industrial and automotive applications in the Indian
storage industry with brands like amoron and power zone in its kitty
ARBL is the first company in India to manufacture VRLA (value regulated lead acid)
Batteries. The main objective of the company is manufacturing of good quality of SEALED
MAINTENANCE FREE lead acid batteries (SMF). The company was set up with Rs.1920 lakhs
in 18 acres area near Karakambadi village, Renigunta Mandal. The project site is notified Under
“B” category.
The company has the clear-cut policy of direct selling without any intermediate. So they
have set up six branches and are operated by corporate operations office located in Chennai. The
company has virtual monopoly in higher A.H (Amp Hour) rating market its product VRLA. It is
also having the facility for Industrial and Automotive Batteries.
Mr. Galla Rmachandra Naidu, chairman who is an NRI having engineering background
promoted AMARA RAJA BATTERIES LTD. in 1985 at Karakambadi Village near Tirupathi.
He also seeded MANGAL PRECISION PRODUCTS Ltd. in 1990 at Karakambadi Village near
Chittoor and AMARA RAJA ELECTRONICS Ltd. in 2000 at Diguvamagham village near
Chittoor. Before embarking on this venture he worked as senior project engineer with M/S
Sergeant& Lundy, USA (power consultants) for about 20 years. Prior to this, he worked as an
Electrical Engineer for US Steel Corporation for about 3 years.
In 1989, ARBL has entered into Industrial Battery market with Technical alliance with
GNB Batteries, USA to promote advanced Maintenance Free Valve Regulated Lead Acid (MF-
VRLA) batteries prior to setting its own facilities ARBL Imported the product in semi-Knocked
down condition. In September 1990, it was converted into a public limited company and it’s IPO
(Initial Public Offer) in January 1991 aggregating Rs.59.5Million. It was formed to manufacture
Maintenance-free, sealed lead acid batteries in which commercial production commenced from
May 1992. Despite its initial technical support from GNB Batteries, during the financial year
1998 ARBL ceded a 23.7% stake to Johnson Controls Inc. USA, at a premium of Rs.75 per share
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to cement a financial and technical tie-up to foray into Automotive Batteries. Besides having
overall control of the company as the chairman Mr.R.N.Galla. His son, Mr. Jayadev Galla, who
is acting as a managing director of the company, has worked earlier with GNB Battery
Technologies, USA as an International Sales Executive.
2.2 NATURE OF BUSINESS CARRIED

ARBL comprises of two major divisions viz,
1.Industrial Batteries Division (IBD)
2.Automotive Batteries Division (ABD)
3.Small Batteries Division (SBD)
Industrial battery division (IBD)
Amara raja has become the benchmark in the manufacture of industrial batteries. India is
one of the largest and fastest growing markets for industrial batteries in the world and Amara raja
is leading the front with an 80% Market share for stand by VRLA batteries. It is having the
facility for producing plastic components required for industrial batteries.
Incorporation:
ARBL is the first company in India to manufacture VRLA batteries. The company has
setup of Rs. 1920 lakhs. Plants in 18 acres in karakambadi village, near Tirupati.
ARBL was established in the year 1985 as private limited and then it has been changed
into public limited company with the advent of GNB industrial batteries USA, for manufacturing
sealed value regulated.
Capacity
The actual installed capacity of IBD is over 4, 00,000 cells per annum and utilization
capacity is reached over 3, 50,000 cells per annum.
Automotive Battery Division (ABD)
ARBL inaugurated its new automotive plant at karakambadi near Tirupati. On September
2001 this plant part of the most completely integrated battery manufacturing facility in India with
all critical components including plastics sourced in house from existing facilities on site. This
gives Amara raja is having complete control own inventory and product quality in this project,
Amara raja strategic alliance partners Johnson Controls USA have closely worked with their
Indian counterparts to put together the latest advances in manufacturing technology and plant
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engineering. It is also having the capacity for producing plastic components required for
automotive batteries.
Capacity:
Amara Raja has a replacement Battery Brand Amaron hi-life. ARBL has a capacity for
manufacture of around 1,000,000 units at its facility at Tirupati with an investment of US $ 10.00
million. A Greenfield project is planned at the same site with an additional investment of US $6
million to augment capacity to 2 million batteries. The Amaron hi-life battery is a product of the
collaborative efforts of engineers at Johnson Controls Inc. and Amara Raja. This Zero
maintenance product incorporates the latest technological advances in the field and is on par with
batteries manufactured and marketed in developed countries. A fully charged, factory-activated
battery provides extra high starting performance and power at any temperature.
2.3 VISION, MISSION AND QUALITY POLICY
Group Vision;
By 2025, We will be a Top 500 global group redefining businesses to deliver
High Social Impact , by anticipating future trends, building preferred brands and leveraging
talent & technology.
Group mission;
Mission, mantra, way of thinking, philosophy, what we live for… call it what you want,
you’ll find it below
“To transform our spheres of influence and to enrich the quality of life by building Institutions
that provide better access to better opportunities, goods and services to more people all time…”
Introduce latest generation technologies:
 Adapt these technologies to suit the operating environment

 Develop and manufacture globally competitive, customer-focused products of world-
class quality.
 Responsibly introduce these products into relevant markets.
 Provide world-class customer support.
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Group Quality policy;
Our aim is to achieve total customer satisfaction through the collective

commitment of our employees in design manufacture, integrate and market reliable power
supplies, batteries, allied products and services.
To accomplish above, we will focus on;
1. Establishing superior specifications for our products and processes,
2. Employing state of the art technologies and robust design principles.
3. Striving for continual improvements and in process and quality.
4. Implementing methods and technology to monitor quality levels.
5. .provide prompt sales services
We believe that the commitment of employees is primary for our quality goals. We
train motivate and involve employees at every level to achieve our aim.
PRODUCTS / SERVICES PROFILE
Automotive battery products:
Four-wheelers:
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1. Amaron hi-way
Amaron hi-way truck batteries-lasts long, really long.
Amaron hi-way truck batteries, brought to you by Amara Raja Batteries Limited (ARBL), the
largest manufacturer of Stand by VRLA Industrial Batteries in the Indian.
2.Amaron pro hi-life
Amaron PRO hi-life batteries design features and benefits
Longest life – thanks to the reformulated Advanta paste recipe.
Zero maintenance – high heat technology, premium silver alloys for a low-corrosion and no top-
ups experience.
Highest cranking power – largest intercell welds, 19mm lugs.
3. Amaron shield
Amaron shield – power Infinite
The new Amaron shield, with an unheard of 24 months warranty. A product of Amara Raja
Batteries Limited, Amaron shield is a result of a partnership between the Amara Raja Group and
Johnson Control Inc, USA, the global leader in interior experience, building efficiency and
power solutions.
Amaron shield design features and benefits Long life – the robust plate
design and a ribbed container provide extra strength and improved resistance to corrosion.Ultra
low maintenance – the special hybrid alloy system minimizes water loss, making the battery ultra
low maintenance and ensuring longer life.Ready to install – factory charged, wet shipped and
equipped with T3 terminals.Charge acceptance – the unique paste formulation provides for quick
charging between power failures.
4. Amaron go:
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Amaron go batteries design features and benefits;
Long life – thanks to the reformulated advanta paste recipe.
Maintenance free – High heat technology, premium silver alloys for a low-corrosion and no top-
ups experience.
Factory fresh – wet shipped and ready to fit.
5. Amaron fresh
6.Amaron optima
Optima yellow top: deep cycle batteries for extreme applications

Optima blue top: for twice the life of traditional marine and RV batteries
Optima red top: the battery that withstands the most vibrations
Industrial battery division:
Powerstack;
Amara Raja’s Power Stack is a high performance battery designed to meet the demands
of a wide range of industrial applications. The power stack range is modular in structure and is
capable of accommodating a wide spectrum of capacities depending on the application. Major
application areas include telecommunications, power utilities, railways, defence, and other heavy
industries.
The advantages of powerstack at a glance:
 The advantages of power stack at a glance
 Design floats life of 20 years
 Proven performance in harsh tropical conditions
 Deep discharge capabilities
 Unbeatable track record in applications across heavy industries
 QS 9000 – accredited across all functional areas and business ranging from
manufacturing to services.
 World class ISO 14100 accredited facility
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Quanta;
Quanta is not just another UPS battery, it is a UPS battery with a back-up for a back-
up.UPS battery is further backed by the world renowed technology that others cannot provide
you with. Put simply, Quanta is the product of fail-safe, fool-proof battery technology, produced
and tested in our premier manufacturing facility and provides several firsts for a battery of its
kind.
The advantages of Quanta at a glance
 Unique heavy-duty, corrosion-resistant alloy for positive grids, to increase cyclic life in a
tropical environment.
 Lower internal resistance for superior high-discharge performance.
 Interchange, a patented paste recipe for excellent charge acceptance.
 Aesthetically designed with a rugged Flappon terminal protector that prevents shorts
 Compact, lightweight, factory-charged, explosion-resistant and environment friendly
clean and sleek looks.
 Apart from the technology itself, helping us meet our stringent quality norms is our QS
9000 accredited manufacturing plant. All of which makes Quanta the unrivalled choice
for the smart UPS equipment buyer.
Power Control:
 They provide back-up critical installations in power generating units and provide back-up
power for transmission and distribution sub-stations like:
 North Chennai thermal power station
 ARBL is an approved vendor for NTPC/NHPC and power Grid Corporation.
Oil & gas:
1. ARBL provides integrated solutions for renewable energy back-up power for ONGC’s
offshore platforms.
2. The island of Lakshadweep is powered through Amara Raja Power Systems.
3. They also provide back-up power for low power transmitters for Doordarshan.
Motive Power:
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1. ARBL is the country’s first manufacturer of maintenance-free traction batteries used in
Forklifts and Pallet trucks.
Defence:
ARBL introduced new technologies for back-up power in defence, police and
paramilitary communication systems.
UPS & EPABX:
ARBL is the preferred suppliers for all leading UPS back-up manufacturers like APC,
Numeric, DB power, AP Lab, Electronics & Controls etc. our UPS batteries are the fastest
growing battery brand since its launch in July 2002 with a nation-wide footprint of sales and
service points and over 3,00,000 batteries in use at over 10,000 customer sites.
Railways:
 ARBL pioneered the use of maintenance-free batteries in the Indian Railways.
 Over 50% of Indian Railways’ two and three tier self-generation Air-conditioned coaches
are powered by ARBL.
 Over 40% of Railway’s Signalling and Telecom power supply solutions are provided by
ARBL.
Area of Operation:
Regional:
Leading battery manufacturer Amara Raja Batteries Limited launched
Amaron pit shop in Kakinada and Rajamundry today. With these the total number of pit shops in
Andhra Pradesh will grow to 14. The complete range of Amaron automotive batteries, the most
popular product from ARBL, will be available at the pit shop. Amaron pit shop is an innovative
concept pioneered by Amara Raja in the automotive battery industry.
National:
The Company currently has a pan-India sales and service network with 152
franchisees, 120 pit shops and over 15000 active retailers.
Ownership pattern:
Shareholding of promoter and promoter group
20
Promoters - 52.1
Mutual Funds /UTI / Banks - 13.9
Foreign Institutional Investors - 4.2
Bodies Corporate -5.7
Individuals -17.4
Other -6.8
Competitor’s information:
EXIDE:
The Company was incorporated as Associated Battery Makers (Eastern) Ltd., on 31st
January, 1947 under the Companies Act, 1913 to purchase all or any of the assets of the business
of manufacturers, buyers and sellers of and dealers in and repairers of electrical and chemical
appliances and goods carried on by the Chloride Electric Storage Company (India) Ltd, in India ,
since 1916 with a view thereto to enter into and carry into effect (either with or without
modification) an agreement which had already been prepared and was expressed to be made
between the Chloride Electric Storage Co (India) Ltd on the one part and the Company of the
other part. The Company manufactures the widest range of storage batteries in the world from
2.5 Ah to 20,400 Ah capacities, covering the broadest spectrum of applications.
The Company has six factories strategically located across the country – two in
Maharashtra, one in West Bengal, two in TamilNadu and one in Haryana. The Company’s
predecessor carried on their operations as import house from 1916 under the name Chloride
Electrical Storage Company. Thereafter, the Company started manufacturing storage batteries in
the country and have grown to become one of the largest manufacturer and exporter of batteries
in the sub-continent today. Exide separated from its UK-based parent, Chloride Group Plc., in
1989, after the latter divested its ownership in favour of a group of Indian shareholders. The
Company has grown steadily, modernized its manufacturing processes and taken initiatives on
the service front. Constant innovations have helped the Company to produce the world’s largest
21
range of industrial batteries extending from 2.5 Ah to 15000 Ah and covering various technology
configurations.
BOSCH:
Founded in 1951,bosch limited is indias largest auto component manufacturer and
also one of the largest indo-German company in India. The company generated net sales of
Rs.32365 crores in 2010. The bosch group holds close to 70% stake in bosch limited.
Bosch limited has a strong nationwide service net work which spans across 1000
towns and cities with over 4000 authorized representatives to ensure wide spread availability of
both products and services. The company headquartered in Bangalore with manufacturing
facilities at Bangalore, nagantapura (near Bangalore),Nasik, jaipur and goa.
Infrastructural Facilities
  World-class integrated facility
 Oxide manufacture to finished battery dispatch in one complex

 Automation at every possible process and in all critical areas
 Fully furnished in-house plastic injection molding
 Ultra modern Sheet metal fabrication facility with CNC machines robotic welding
equipment
 Test facilities to check the raw material to Parts Per Billion Level
 Fully fledged calibration & chemical labs to correct instruments & check material
purity
BOARD OF DIRECTORS:
Chairman : Ramachandra N Galla

Managing Directior : Jayadev Galla
Shuqing yang
Director : P.Lakshmana Rao
Nagarjun Valluripalli
Company Secretary : N.Ramanathan
Director : N Sri Vishnu Raju
22
Independent Director : T.R.Narayana Swamy
Additional : George A Gonzalez
Alternate : Director:Rohit Kochhar
Awards and Achievements Received by Amara Raja Group
 Best Industry all round Performance award in 1998 by FAPCCI

 ‘Entrepreneur of the Year' awarded to Mr. R. N. Galla, Chairman & Managing
Director in 1998 by HMA
 'Business Excellence Award' in 1999 by Industrial Economist
 'Udhyog Rattan Award' in 1999 by the Institute of Economic Studies
 'Most Significant Automotive Product of the Year 'in December 2000 by Overdrive
(India's leading auto magazine). This honour is in recognition of Amaron's
technological superiority and innovative product features, which have created a new
standard for automotive batteries in India.
23
 'Excellence in Environmental Management' in June 2002 by Andhra Pradesh
Pollution Control Board
 Amara Raja received 5 Awards at the Mumbai Advertising Club Awards 2003 for the
Amaron Hi-Life advertising campaign including Campaign of the Year
 Amara Raja received Best 5S Practices Implementation award from CII, Southern
Region
 MPPL Received award in recognition of excellence in Cleaner Production
Technologies and adoption of climate change mitigation measures from AP Pollution
control Board.
 Award for Best Employer 2009”
 “Award for best HR Strategy in line with Business" and
 "Award for continuous innovation in HR Strategy at Work".
Workflow model
FIGURE1.6.1: AMARA RAJA WORK FLOW MODEL:
Oxide plant Grid casting
Plate Preparation
24
Assembly
Formation
Finishing
Dispatching
2. RESEARCH METHODOLOGY
NEED FOR THE STUDY
 Working capital management plays a vital role in any organization and one
should have a thorough knowledge about the working capital position.
 In view of this context, I have undertaken this study and it would be a great
advantage to the company also, to know it's working capital position.
 Analysis of financial statements of any enterprise is indispensable. This
25
analysis is greatly facilitated by accounting ratios. Accounting ratios eases in
ascertaining the financial strength and weakness of enterprise.
 In the study ratios are used as tools to evaluate the relationship between the
components of working capital.
SCOPE OF THE STUDY
The scope of the study is confined to the analysis of solvency & profitability position
of the company. The data collected from both primary and secondary data.
Primary data
Primary data has been collected through personal interviews with finance department
and the executive
Secondary data
Secondary data collected from the records like B/S, income statement and necessary
records. The information is also collected from the annual reports of the company, Internet
26
data and books and brochures.
 Disclosed fully. This is set back while drawing the conclusion.
 The study is based on 5 annual financial reports only.
 The information from annual reports is insufficient to calculate few ratios.
 Limited time does not allowed to do more analysis.
PERIOD OF THE STUDY:-
The period of the study was two months from May to July 2010; during the period all
the required data was collected through secondary sources and analyzed with the help of
financial tools of analysis. It includes data collection analysis of data and interpretation.
TOOLS APPLIED IN THE STUDY:-
 Working capital ratios
 Operating cycle
 Analysis of current assets and current liabilities.
STATEMENT OF OBJECTIVES:
1. To study the working capital management of Amara Raja Batteries Ltd.
2. To find out liquidity position of the company threw working capital ratios.
3. To study the profitability of the company through the net and gross working capital of the
organization.
4. To estimate the working capital requirement of the company by using operating cycle
approach.
27
5. To analysis the past and present financial performance of the company.
Primary objective
To find out working capital position of the company for the last 5 financial years.
Secondary objective
2. To know the liquidity position of the firm
3. To know the company's sources and application of funds.
4. To identify the performance in terms of efficiency in cash receivable and inventory
management.
5. To study the financial performance of the company.
6. To analyze the operating cycle of the company
7. Analysis of the current assets and current liabilities.
METHODOLOGY:
The objective of the study is to analyze the working capital position of the company
for the past five years from 2005-10 from and to achieve those objective the following
methodology was adopted.
o Firstly to find out liquidity and solvency position of the company through
working capital ratios.
o Secondly, to estimate the working capital requirement of the company by
using Operating cycle.
28
o Finally Analysis of current assets and current liabilities.
TOOLS ARE USED
1. CURRENT RATIO
The current ration establishes the relationship between current assets and current
liabilities. The objective of computing this ration is to measure the ability of the firm to meet
its short term financial strength / solvency of a firm. If a firm having high degree of liquidity
funds is unnecessarily toed up in current assets. The satisfactory current ratio is 2:1. In other
words, the objective is to measure the safely margin available for short term indicators.
2. QUICK RATIO
Quick Ratio also known as acid test ratio or liquid ratio is more rigorous test of liquidity
than the current ratio. The term liquidity refers to the ability of a firm to pay its short term
obligations as and when they become due. Generally a quick ratio is because it is a
29
measurement of a firm’s ability to convert its current assets quickly into cash in order to meet
its current liabilities.
A company with a high value of quick ratio can suffer from the shortage of funds it is has
slow-paying, doubtful and log-duration out standing book debts. On the other hand a
company with a low value of quick ratio may really be prospering and paying its current
obligation in time if it has been turning over its inventories efficiently.
3. ABSOLUTE LIQUID/CASH RATIO

It is suggested that it would be useful, for the management if the liquidity measure also
takes into account reserve borrowing power, as te firm’s real debt paying ability depends not
only on cash resources available with it but also on its capacity borrow from the market at
short notice. Absolute liquid assets include cash in hand and at bank and marketable
securities or temporary investments.
4. NET WORKING CAPITAL RATIO

The difference between Current Assets and Current Liabilities excluding short term bank
borrowings is called Net Working Capital. It is sometimes used as a measure of a firm’s
liquidity. It is considered that, between two firms, the one having the larger Net Working
Capital has the greater ability to meet its current obligations. This is no necessary so; the
measure of liquidity is a relationship, rather than the difference between Current Assets and
Current Liabilities.
5. CURRENT ASSETS TO FIXED ASSETS RATIO :

This ratio will differ from industry to industry. Therefore no standard can be laid
down. A decrease in the ratio may mean that trading is slack or more mechanization has
been through. An increasing in the ratio may reveal that inventories and debtors have unduly
increased or fixed assets have been intensively used.
SOLVENCY RATIO OR LEVERAGE RATIO:
30
1.DEBT RATIO
Debt ratio may be used to analyze the long-term solvency of firm. The firm may be
interested in knowing the proportion of the interest bearing debt (also called funded debt) in
the capital structure. It may, therefore, compute debt ratio by dividing total debt by Capital
Employed (CE) or the Net Assets (NA).
2. FIXED ASSETS TURNOVER RATIO
Fixed assets are used in the business for producing goods to be sold. The effective
utilization of fixed assets will result in increased production and reduced cost. It also ensures
whether investment. In the assets have been judicious (or) not:
3.CASH TO CURRENT ASSETS RATIO

Cash is an important and sensitive current asset: it is viewed as the most liquid asset . when
the proportion of cash in current assets in more than it is said that he company had more
liquid. High proportion of cash in current assets also indicates the good stock in receivables
turn over of the company. This kind of analysis is helpful to the management to understand
the turn over capacity of the concern. This ratio indicates the cash proportion in current
assets.
III PROFITABILITY RATIOS
Apart from the creditors, both short term and long term, also interested in the financial
soundness of a firm are the firm is the owners and management or the company itself. The
management of the firm is natural eager to measure its operating efficiency. Similarly, the
owners invest their funds in the expectation of reasonable returns. The operation efficiency of
a firm and its ability to ensure adequate returns to its shareholders depends ultimately on the
profits earned by it. The profitability of a firm can be measured by its profitability ratios.
1. GROSS PROFIT MARGIN

Gross Profit Ratio established a relationship between Gross profit and Sales and
indicates the efficiency of the management in manufacturing, selling, administrative and
31
other activities of the firm. This ratio is the overall measure of the firm’s profitability and is
calculated as:
2. NET PROFIT MARGIN
Net profit is obtained when operating expenses, interest and taxes are subtracted from
the gross profit. The net profit margin ratio is measured by dividing profit after tax by sales.
LIMITATIONS OF THE STUDY
1. The analysis was confined to a period of five years during 200-10.
2. Financial statement of prepare on the basis of certain accounting concepts in conventions
any change in methods are procedures of accounting will limit the utility of financial
statements. So, the reliability of results depends on the accuracy of the published
information.
3. Time of two months is one of the limiting factors.
4. The analysis and interpretation is restricted of collected data is restricted to necessary
information.
32
Method of Data Collection:
The data have been collected from the both primary and secondary
sources. The primary data was collected by the technique of interview method with the
officials of the organization.
However, the entire study was based on the secondary that which are collected from the
33
books, records, reports, journals and profile of the organization.
STATEMENT SHOWING THE CHANGES OF WORKING CAPITAL

DURING THE YEAR 2006-2007
34
Particulars 31-3-2006 31-3-2007 Increase Decrease
1. Current Assets
Inventories 571,962,221 921,713,415 349,751,194 -
Sundry Debtors 856,520,556 1,459,544,977 603,024,421 -
Cash & Bank Balances 205,212,363 256,000,280 50,787,917 -
Loans, Advances & 634,750,549 859,824,054 224,850,457 -
Deposits
Other Current Assets 12,035,439 3,110,568 - 8,924,871
Total Current Assets 2,280,481,128 3,500,193,294 -
(A) (Gross Working
Capital)
2. Less: Current -
Liabilities &
Provisions
Liabilities 673,895,907 735,304,583 - 61,408,676
Provisions 480,148,548 576,968,027 - 96,819,479
Total Current 1,154,044,455 1,312,272,610 -
Liabilities(B)
Net Working Capital 1,126,436,673 2,187,920,684
(A-B)
Working Capital 1,061,484,011 1,061,484,011
Increase
Total 2,187,920,684 2,187,920,684 1,228,637,037 1,228,637,037
INTERPRETATION:
The net working capital requirements of the company during the year 2007 has been
increased by Rs1,061,484,011. This is due to increase in current assets of the company.
STATEMENT SHOWING THE CHANGES OF WORKING CAPITAL

DURING THE YEAR 2007-2008
35
1. Current Assets
Inventories 921,713,415 1,943,335,704 1,021,622,289 -
Sundry Debtors 1,459,544,977 2,264,682,019 805,137,042 -
Loans, Advances & 859,824,054 1,248,478,477 388,654,423 -
Deposits
Other Current Assets 3,110,568 8,011,086 4,900,518 -
Total Current Assets (A) 3,500,193,294 5,975,961,025 -
(Gross Working Capital)
2. Less: Current -
Liabilities & Provisions
Liabilities 735,304,583 1,027,373,819 292,069,236
Provisions 576,968,027 933,371,133 4,164,031,06
Total Current 1,312,272,610 2,020,744,952 -
Liabilities(B)
(A-B)
Working Capital 1,767,295,389 1,767,295,389
Increase
Total 3,955,216,073 3,955,216,073 2,475,767,731 2,475,767,731

1. Current Assets
Inventories 1,943,335,704 1,608,268,673 - 335,067,031
Sundry Debtors 2,264,682,019 2,078,493,040 - 186,188,979
Loans, Advances & 1,248,478,477 870,287,297 - 378,191,180
Deposits
Total Current Assets 5,975,961,025 5,259,900,816 - -
(A) (Gross Working
Capital)
2. Less: Current
Liabilities &
Provisions
Liabilities 1,027,373,819 1,137,968,083 - 110,594,264
Provisions 766,756,092 705,123,629 288,247,504 -
Total Current 2020744952 1,843,091,712
Liabilities(B)
(A-B) 36
VCR INSTITUTE
Working Capital OF MANAGEMENT STUDIES
538,406,969 538,406,969
Decrease
Total 3,955,216,073 3,955,216,073 1,018,052,540 1,018,052,540
RATIO FINDINGS:
I. LIQUIDITY RATIO:
5. CURRENT RATIO
The current ration establishes the relationship between current assets and current liabilities.
The objective of computing this ration is to measure the ability of the firm to meet its short term
financial strength / solvency of a firm. If a firm having high degree of liquidity funds is
unnecessarily toed up in current assets. The satisfactory current ratio is 2:1. In other words, the
objective is to measure the safely margin available for short term indicators. This ratio is
expressed as under.
Current Assets
Current Ratio = ---------------------------------
Current Liabilities
Year Current assets Current liabilities Current ratio

2005 1,162,642,497 638,958,266 1.82
2006 2,280,704,176 1,181,003,846 1.93
2007 3,500,193,294 1,312,272,610 2.66
2008 5,749,345,984 2,020,744,952 3.33
2009 5,259,900,816 1,843,091,712 2.85
2010 6,310,628,185 3,190,856,472 1.97
37
Graph showing the current ratio of the firm
3.5
2.5
1.5
0.5
0
2005 2006 2007 2008 2009 2010
INFERENCE:
The current ratio normal standard is 2:1.In the above diagram in all the year
current ratio is satisfactory except
years above the standards. It is in2005,2006,2010. . In the year of 2008 the current ratio is 3.33
and 2009 is 2.85.
6. QUICK RATIO
Quick Ratio also known as acid test ratio or liquid ratio is more rigorous test of liquidity than
the current ratio. The term liquidity refers to the ability of a firm to pay its short term obligations
as and when they become due. Generally a quick ratio is because it is a measurement of a firm’s
ability to convert its current assets quickly into cash in order to meet its current liabilities.
A company with a high value of quick ratio can suffer from the shortage of funds it is has
slow-paying, doubtful and log-duration out standing book debts. On the other hand a company
with a low value of quick ratio may really be prospering and paying its current obligation in time
if it has been turning over its inventories efficiently. This ratio may express as under..
Current Assets - Inventory

Quick Ratio = ---------------------------------
Current Liabilities
38
Year Current assets Inventory Current Quick ratio
liabilities
2005 1,162,642,497 440,958,913 638,958,266 1.12
2006 2,280,704,176 571,962,221 1,181,003,846 1.44
2007 3,500,193,294 921,713,415 1,312,272,610 1.96
2008 5,749,345,984 1,943,335,704 2,020,744,952 1.88
2009 5,259,900,816 1,608,268,673 1,843,091,712 1.98
2010 6,310,628,185 2,175,723,575 3,190,856,472 1.29
Graph showing the quick ratio of the firm
2
1.8
1.6
1.4
1.2
1
0.8
0.6
0.4
0.2
0
2005 2006 2007 2008 2009 2010
INFERENCE:
The standard norm of the ratio is 1:1. A clear position of liquidity can be
known from Quick ratio. From the above table & graph. Company can able to pay the
Current liabilities with the help of Quick Assets.
7. ABSOLUTE LIQUID/CASH RATIO

It is suggested that it would be useful, for the management if the liquidity measure also takes
into account reserve borrowing power, as te firm’s real debt paying ability depends not only on
39
cash resources available with it but also on its capacity borrow from the market at short notice.
Absolute liquid assets include cash in hand and at bank and marketable securities or temporary
investments. This ratio may be expressed as under:
Absolute Liquid Assets

Cash Ratio = ---------------------------------
Current Liabilities
Year Cash and bank Current liabilities Cash ratio

balance
2005 169,121,827 638,958,266 0.26
2006 205,212,363 1,181,003,846 0.17
2007 256,000,280 1,312,272,610 0.19
2008 511,453,739 2,020,744,952 0.25
2009 702,851,806 1,843,091,712 0.38
2010 624,672,429 3,190,856,472 0.19
40
Graph showing the cash ratio of the firm
0.4
0.35
0.3
0.25
0.2
0.15
0.1
0.05
0
2005 2006 2007 2008 2009 2010
INFERENCE:
The standard of absolute Quick Ratio is 0.5:1. In the year 2009 the cash
ratio is 0.38 there are no sufficient absolute quick assets to pay –off the current
liabilities and in the year 2010 the cash ratio is 0.19.
8. NET WORKING CAPITAL RATIO

The difference between Current Assets and Current Liabilities excluding short term bank
borrowings is called Net Working Capital. It is sometimes used as a measure of a firm’s
41
liquidity. It is considered that, between two firms, the one having the larger Net Working Capital
has the greater ability to meet its current obligations. This is no necessary so; the measure of
liquidity is a relationship, rather than the difference between Current Assets and Current
Liabilities.
Net Working Capital

Net Working Capital Ratio = ---------------------------------
Net Assets
Year Net working capital Net assets Net working capital

ratio
2005 973,684,231 3,284,940,551 0.29
2006 1,099,700,330 4,187,820,244 0.26
2007 2,187,920,684 6,077,979,367 0.35
2008 3,955,216,073 8,855,189,092 0.44
2009 3,416,809,104 9,530,836,786 0.35
2010 3,119,771,713 11,221,695,451 0.27
42
Graph showing the Networking capital ratio
0.45
0.4
0.35
0.3
0.25
0.2
0.15
0.1
0.05
0
2005 2006 2007 2008 2009 2010
INFERENCE:
In the above graph the net working capital ratio has been changed from
year to year. In the year of 2008 was incased to 0.44 and 2010 was 0.27.
5. Net working capital turnover ratio:

The net working capital turn over ratio tells that how many numbers of times working
capital funds are utilized in generation of sales. A higher working capital turn over ratio indicates
the efficient turn of the company
Net sales
Net working capital turnover ratio = ------------------- X 100
Net working capital
Net working capital = current assets- current liabilities
43
year Net sales Net working capital Net working capital
turn over ratio
2005 2,363,765,256 973,684,231 2.43
2006 3,636,709,293 1,099,700,330 3.30
2007 5,958,016,404 2,187,920,684 2.72
2008 10,833,256,904 3,955,216,073 2.73
2009 13,131,788,116 3,416,809,104 3.85
2010 14,652,096,705 3,119,771,713 4.69
Graph showing the net working capital turn over ratio
3.5
2.5
1.5
0.5
0
2005 2006 2007 2008 2009 2010
INFERENCE:
In the above graph the net working capital turnover ratio is fluctuating year by
year . from 2007 to 2010 the turnover ratio is gradually increased. The year 2010 was 4.69.
6 .CURRENT ASSETS TO FIXED ASSETS RATIO :

This ratio will differ from industry to industry. Therefore no standard can be laid down.
A decrease in the ratio may mean that trading is slack or more mechanization has been through.
44
An increasing in the ratio may reveal that inventories and debtors have unduly increased or fixed
assets have been intensively used. This ratio worked out as
Current assets
Current assets to fixed assets ratio = -------------------
Fixed assets
Year Current assets Fixed assets Ratio

2005 1,612,642,497 948,631,374 1.69
2006 2,280,704,176 1,043,547,559 2.18
2007 3,500,193,294 1,568,304,581 2.23
2008 5,975,961,025 1,888,508,475 3.16
2009 5,259,900,816 2,813,242,340 1.86
2010 6,310,628,185 3,057,255,262 2.06
45
Graph showing the current asset to fixed asset ratio
3.5
2.5
1.5
0.5
0
2005 2006 2007 2008 2009 2010
INFERENCE:
It is inferred from the above graph the ratios was changed from year by
year. In 2008 was 3.16 the highest ratio compare to the remaining years and 2010 was 2.06.
II. SOLVENCY RATIO OR LEVERAGE RATIO:
1.DEBT RATIO
Debt ratio may be used to analyze the long-term solvency of firm. The firm may be
interested in knowing the proportion of the interest bearing debt (also called funded debt) in the
capital structure. It may, therefore, compute debt ratio by dividing total debt by Capital
Employed (CE) or the Net Assets (NA).
Total Debts
Debt Ratio = ---------------------------------
Net Assets
Year Total debts Net assets Debt ratio

2005 187,540,914 3,284,940,551 0.05
46
2006 276,139,847 4,187,820,244 0.06
2007 1,188,749,049 6,077,979,367 0.19
2008 2.380.420.502 8,855,189,092 0.26
2009 2,249,135,363 9,530,836,786 0.23
2010 443,759,270 11,221,695,451 0.03
Graph showing the debt ratio
0.3
0.25
0.2
0.15
0.1
0.05
0
2005 2006 2007 2008 2009 2010
INFERENCE:
In the above graph the debt ratio is fluctuating year by year. But it is increased in
2008. It shows debt claims is less. As company policy company not needing any debt .It will
good to take debt at low rate of interest. In previous year the debt ratio is 0.03.
2. TOTAL ASSETS TURNOVER RATIO
Net Assets Turnover can be computer simply by dividing sales by total assets:
Sales
Total Assets 47
Total Assets Turnover Ratio = --------------------------
Year Sales Total assets Total assets turnover ratio

2005 2,685,436,096 2,170,834,866 1.23
2006 4,458,295,779 2,538,274,005 1.75
2007 7,451,032,998 3,979,834,518 1.87
2008 13,499,867,499 6,663,141,085 2.02
2009 15,839,540,521 7,097,082,601 2.23
2010 16,910,837,433 6,564,674,528 2.57
Graph showing the total assets turnover ratio
2.5
1.5
0.5
0
2005 2006 2007 2008 2009 2010
INFERENCE:
It is inferred from the above graph the total assets turnover ratio from 2005 was
1.23 and it was gradually increasing to 2.52 in the year 2010 .
3. FIXED ASSETS TURNOVER RATIO
48
Fixed assets are used in the business for producing goods to be sold. The effective
utilization of fixed assets will result in increased production and reduced cost. It also ensures
whether investment. In the assets have been judicious (or) not:
Sales
Fixed Assets Turnover Ratio = --------------------------
Fixed Assets
Year Sales Fixed assets Fixed assets turnover

ratio
2005 2,685,436,096 1,672,298,054 1.60
2006 4,458,295,779 1,907,116,068 2.33
2007 7,451,032,998 2,577,786,073 2.89
2008 13,499,867,499 3,105,843,108 4.34
2009 15,839,540,521 4,270,935,970 3.70
2010 16,910,837,433 4,911,067,266 3.44
49
Graph showing the fixed assets turnover ratio
4.5
4
3.5
3
2.5
2
1.5
1
0.5
0
2005 2006 2007 2008 2009 2010
INFERENCE:
It is inferred from the above table the ratio is fluctuating year by year .because
company sales to fixed assets gradually increased from 2005 to 2008 and suddenly decrease. In
the year 2008 is the highest 4.34 is the highest fixed asset turnover ratio compare to the
remaining years..
4. NET ASSETS TURNOVER RATIO

A firm may also like to relate net assets to sales.
Sales
Net Assets Turnover Ratio = --------------------------
Net Assets
50
Year Sales Net assets Net assets turnover
ratio
2005 2,685,436,096 3,284,940,551 0.81
2006 4,458,295,779 4,187,820,244 1.06
2007 7,451,032,998 6,077,979,367 1.22
2008 13,499,867,499 8,855,189,092 1.52
2009 15,839,540,521 9,530,836,786 1.66
2010 16,910,837,433 11,221,695,451 1.50
Graph showing the net assets turnover ratio
1.8
1.6
1.4
1.2
1
0.8
0.6
0.4
0.2
0
2005 2006 2007 2008 2009 2010
INFERENCE:
It is inferred from the above table that the net assets turnover ratio is gradually
increased up to year of 2009.But year of 2010 is decreased to 1.50, which is not good for
company and it should maintain net asset turnover ratio.
5.CASH TO CURRENT ASSETS RATIO
51
Cash is an important and sensitive current asset: it is viewed as the most liquid asset . when the
proportion of cash in current assets in more than it is said that he company had more liquid. High
proportion of cash in current assets also indicates the good stock in receivables turn over of the
company. This kind of analysis is helpful to the management to understand the turn over capacity
of the concern. This ratio indicates the cash proportion in current assets.
Cash and bank balance

Cash to current assets ratio = ------------------------- X 100
Current assets
Year Cash and bank Current assets Cash to current

balances assets ratio
2005 169,121,827 1,612,642,497 10.45%
2006 205,212,363 2,280,704,176 8.9%
2007 256,000,280 3,500,193,294 7.3%
2008 511,453,739 5,975,961,025 8.5%
2009 702,851,806 5,259,900,816 13.36%
2010 624,672,429 6,310,628,185 9.89%
52
Graph showing the cash to current asset ratio
14
12
10
8
6
4
2
0
2005 2006 2007 2008 2009 2010
INFERENCE:
It is inferred from the above table the cash to current asset ratio is decreasing
year by year. But it increased in 2009.after is decreased 2010, it is not good to the company.It is
maintain the cash to current asset.
III PROFITABILITY RATIOS
Apart from the creditors, both short term and long term, also interested in the financial
soundness of a firm are the firm is the owners and management or the company itself. The
management of the firm is natural eager to measure its operating efficiency. Similarly, the
owners invest their funds in the expectation of reasonable returns. The operation efficiency of a
firm and its ability to ensure adequate returns to its shareholders depends ultimately on the
profits earned by it. The profitability of a firm can be measured by its profitability ratios.
53
2. GROSS PROFIT MARGIN
Gross Profit Ratio established a relationship between Gross profit and Sales and indicates
the efficiency of the management in manufacturing, selling, administrative and other activities of
the firm. This ratio is the overall measure of the firm’s profitability and is calculated as:
Gross Profit
Gross Profit Margin = ---------------------- x 100
Net Sales
Year Gross profit Net sales Gross profit margin

2005 135,811,156 2,368,057,275 5.73
2006 373,464,223 3,636,709,293 10.26
2007 711,984,448 5,958,016,404 11.95
2008 1,459,381,425 10,833,256,904 13.47
2009 1,226,586,080 13,131,788,116 9.34
2010 2,546,348,749 14,652,096,705 17.37
Graph showing the gross profit margin
18
16
14
12
10
8
6
4
2
0
2005 2006 2007 2008 2009 2010
INFERENCE:
54
It is inferred from the above table that the gross profit ratio in the year 2005 is
5.73% it was increase to 10.26% at present it is 17.37% which is good for company and it
should maintain future also.
2. NET PROFIT MARGIN
Net profit is obtained when operating expenses, interest and taxes are subtracted from the
gross profit. The net profit margin ratio is measured by dividing profit after tax by sales.
Net Profit
Net Profit Ratio = ------------------------- X 100
Sales
Where, Net Profit = PBIDT
Year Net profit Sales Net profit ratio

2005 135,811,156 2,685,436,096 5.05
2006 373,464,223 4,458,295,779 8.37
2007 711,984,448 7,451,032,998 9.55
2008 1,459,381,425 13,499,867,499 10.81
2009 1,226,586,080 15,839,540,521 7.74
2010 2,546,348,749 16,910,837,433 15.05
55
Graph showing the net profit ratio
16
14
12
10
0
2005 2006 2007 2008 2009 2010
INFERENCE:
It is inferred from the above table that the net profit ratio in the year 2005
is 5.05% it was increase to 8.37% at present it is 15.05% which is good for company and it
should maintain future also.
FINDINGS
56
 The company maintenance reserves and surplus in an increasing trend.
 A current asset position has increased over the four year period current ration has also
increased stability.
 Quick ratio in the all years is more than the standard norms i.e 1:1. But in the year 2010 it
was less than the standard.
 Resources were allocated mainly to increase the fixed assets over the 5 years period and
inventory was also raised.
 Working Capital position has strengthened over the years
 Employee salary & Benefits are in an increasing trend.
SUGGESTIONS
57
As per the above analysis, interpretation and findings following suggestions are made.
So, these suggestions are may not be effective but these may help for a narrow scope of
improvements regarding working capital of ARBL.
 The current ratio in the year of 2007,2008,2009 are more than the standards. So the
current asset is kept idle, its not should healthy to the organization.
 The quick ratio is more than the standards in all years, that is the quick ratio is kept idle
 As company changed from fob work to sale, it should concentrate on reducing costs.
 It is advisable that raw material conversion period should be reduced, as it is high. It can
be achievement by following good production plan and utilizing men and machinery
effectively.
 Inventory maintenance cost has to be reduced by following the maintain good inventory
principles.
 The company has to spend little bit more on public awareness to get orders from outside
also. " ' '
 As company is going for expansion it should concentrate on recruiting skillful manpower,
which in turn increase productivity.
CONCLUSION
58
The working capital position of the company (Amara raja Batteries Ltd) is satisfactory. It
should focus on sales and marketing. The company is maintaining the normal levels of current
assets and current liabilities. So it is not finding any difficulties to discharge its obligations.
The company can utilize the reserves and surplus by either capitalizing or invest the money some
were as investment to get benefit. They should see that the debtors should be collected within a
specified time by the company. So that they can discharge some of its creditors or current
liabilities and avoid payment of interest.
Statement showing the changes in

working capital for the ending 31-3-2005
59
Particulars 31-3-2004 31-3-2005 Effect of working capital
Increase(RS) Decrease(RS)
CURRENT ASSETS:
Inventories 307,245,534 440,958,913 133,713,379 ----

Sundry debtors 471,673,642 649,706,121 178,032,479 ----
Cash & bank balance 152,292,556 169,121,827 16,829,271 ----
Loans advance & deposits 251,402,682 342,929,588 91,526,906 ---
Other current assets 7,622,683 9,926,048 2,303,365 ---
Total current assets 1,190,237,097 1,162,642,497
CURRENT LIABILITIES:
Liabilities 162,283,498 345,042,817 ---- 182,759,321

Provisions 198,416,622 293,915,449 ----- 95,498,827
Total current liabilities 360,700,120 638,958,266
829,536,977 973,684,231
Working capital
Net increase in working 144,147,254

144,147,254
capital
Total
973,684,231 973,684,321
422,405,400 422,405,400

60
CURRENT ASSETS:
Inventories 440,958,913 571,962,221 131,003,308 ----

Sundry debtors 649,706,121 856,520,556 603,024,421 ----
Loans advance & deposits 342,929,588 634,973,597 224,850,457 ----
Other current assets 9,926,048 12,035,439 ----- 8,924,871
Liabilities 345,042,817 700,855,298 ---- 34,448,285

Provisions 293,915,449 480,148,548 ---- 96,819,479
Total current liabilities 638,958,266 1,181,003,846
Working capital 973,684,231 2,187,920,684
Net increase in working 1,088,220,354 1,088,220,354

capital
Total 2,187,920,684 2,187,920,684 1,228,412,989 1,228,412,989

61
CURRENT ASSETS:
Inventories 571,962,221 9,21,713,415 131,003,308 ----

Sundry debtors 856,520,556 1,459,544,977 603,024,421 ----
Loans advance & deposits 634,973,597 859,824,054 224,850,457 ------
Other current assets 12,035,439 3,110,568 ----- 8,924,871
Liabilities 700,856,298 735,304,583 ---- 34,448,285

Provisions 480,148,458 576,968,027 ----- 96,819,479
Total current liabilities 1,181,003,846 1,312,272,610
Working capital 1,099,700,330 2,187,920,684

capital
Total 2,187,920,684 2,187,920,684 1,228,412,989 1,228,412,989

62
CURRENT ASSETS:
Inventories 921,713,415 194,3335,704 1,021,622,289 ---

Sundry debtors 1,459,544,977 2,264,682,019 805,137,042 ---
Cash & bank balance 256,000,280 511,453,739 255,453,459 ---
Loans advance & deposits 859,824,054 1,248,478,477 388,654,423 ---
Other current assets 3,110,568 8,011,086 4,900,518 ---
Liabilities 735,304,583 1,027,373,819 292,069,236 ---

Provisions 576,968,027 99,3371,133 --- 416,403,106
Working capital 2,187,920,684 3,955,216,073

capital
Total 3,955,216,073 3,955,216,073 2,183,698,495 2,183,698,495

63
CURRENT ASSETS:
Inventories 1,943,335,704 1,608,268,673 ---- 335,067,031

Sundry debtors 2,264,682,019 2,078,493,040 ---- 186,188,979
Loans advance & deposits 1,029,874,522 870,287,297 ---- 159,587,225
Total current assets 5,749,345,984 525,9900,816
Liabilities 1,027,373,819 1,113,7968,083 --- 110,594,266

Provisions 766,756,092 705,123,629 61,632,463 ----
Total current liabilities 1,794,129,911 1843091712
Working capital 3,955,216,075 3,416,809,104
Net decrease in working 538,406,971 538,406,971

capital
Total 3,955,216,075 3,955,216,075 791,437,501 791,437,501

64
CURRENT ASSETS:
Inventories 1,608,268,673 2,175,723,575 567,454,902 ----

Sundry debtors 2,078,493,040 2,422,954,714 344,461,674 ----
Cash & bank balance 702,851,806 624,672,429 ---- 78,179,377
Loans advance & deposits 870,287,297 1,087,277,467 216,990,170 ----
Liabilities 1,137,968,083 1,656,390,120 --- 518,422,037

Provisions 705,123,629 1,534,466,352 --- 829,342,723
Working capital 3,416,809,104 3,119,771,713
Net decrease in working 297,037,391 297,037,391

capital
Total 3,416,809,104 3,146,809,104 1,145,944,137 1,425,944,137
BIBLIOGRAPHY
65
BOOKS
FINANCE MANAGEMENT I.M. PANDEY
Vikas Publishing House
New Delhi.
FINANCE MANAGEMENT M.Y KHAN & P.K. JAIN Vikas Publishing House
New Delhi.
FINANCE MANAGEMENT
THEORY & PRACTICES PRASANNA CHANDRA Tata McGraw Hill
Publishing Company Ltd. New Delhi.
WEB-SITES
 www.arbl.com
 www.amararaia.co.in
66

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INTRODUCTION

DEFINITION OF WORKING CAPITAL:

cost of operating the enterprise.

disrupting the operations of the firm.

be paid in the ordinary course of business within

payables. Bank overdrafts and outstanding expenses.

liabilities in such a way that a satisfactory level of working capital is maintained.

obtained and used in a best possible way.

working capital management.

working capitals some times referred to as “CIRCULATING CAPITAL”.

“WORKING CAPITAL” is also called as “CIRCULATING CAPITAL”

GROSS WORKING CAPITAL:

Gross working capital constituted current Assets i.e.

1. Inventory: which are further classified into

a. Cash and bank balance.

carry on its business operation smoothly.

materials with cash Receivable as a result or cash sales.

NET WORKING CAPITAL:

and include creditors Bills payables and outside expenses.

capital some times referred to as "CIRCULATING CAPITAL" or "WORKING CAPITAL".

NEED FOR WORKING CAPITALS:

Business firms aim at maximizing the wealth of shareholders. In its endeavor to

of sales into cash.

Level of working capital is necessary on a continuous and uninterrupted basis. This

requirement is referred to as permanent level of working capital is temporary. Fluctuating or

PERMANENT AND TEMPORARY WORKING CAPITAL:

purely transient in nature.

ROLE OF FINANCIAL MANAGER IN WORKING CAPITAL

large position of investment is assets.

2. Working capital management requires much of the finance management time as it

represent larger position of investment in assets.

3. Action should be taken to curtail unnecessary investment in current assets.

Fuddy Duddy Category to Creative Advertisement of the Year

Global Opportunities for Advanced Battery Technologies in Automotive Applications,

 Unbiased global scenario forecasts of commercial systems to 2003 and 2008.

Identification of emerging business opportunities for advanced batteries

 New SLI technologies

VALUE REGULATED LEAD ACID BATTERIES:

Dr. Ramachandra N. Galla, a Non-Resident Indian now settled in

2.1 BACKGROUND AND INCEPTION OF THE COMPANY

2.2 NATURE OF BUSINESS CARRIED

Introduce latest generation technologies:

 Adapt these technologies to suit the operating environment

Our aim is to achieve total customer satisfaction through the collective

To accomplish above, we will focus on;

1. Establishing superior specifications for our products and processes,

2. Employing state of the art technologies and robust design principles.

3. Striving for continual improvements and in process and quality.

4. Implementing methods and technology to monitor quality levels.

5. .provide prompt sales services

PRODUCTS / SERVICES PROFILE

Automotive battery products:

Amaron hi-way truck batteries-lasts long, really long.

2.Amaron pro hi-life

Amaron PRO hi-life batteries design features and benefits

Longest life – thanks to the reformulated Advanta paste recipe.

Highest cranking power – largest intercell welds, 19mm lugs.

Amaron shield – power Infinite

Long life – thanks to the reformulated advanta paste recipe.

Factory fresh – wet shipped and ready to fit.

Optima yellow top: deep cycle batteries for extreme applications

Mutual Funds /UTI / Banks - 13.9

Foreign Institutional Investors - 4.2