WORKING CAPITAL MANAGEMENT OF JINDAL

A PROJECT REPORT

Submitted in partial fulfillment of the

Requirement for the award of

BACHELOR DEGREE IN COMMERCE

Submitted by

SUBHADARSHINI BEHERA

Exam. roll no.- 18COM-157

Under the Guidance of

PRADEEP KUMAR PATTANAIK

Assistant professor in Commerce

DEPARTMENT OF COMMERCE
GOVERNMENT COLLEGE (AUTONOMOUS), ANGUL, PIN-
759143
SESSION:
2018-2021
 CERTIFICATE

This is to certify that the project report titled “ Working Capital

Management Of Jindal” submitted by Subhadarshini Behera (BC18-098) in
partial fulfillment of the requirements of the Graduate Degree in Commerce for
the academic session 2018-2021 is the original work of the above candidate.

Pradeep Kumar Pattanaik

Guide
 DECLARATION

I , SUBHADARSHINI BEHERA, BC18-098 final year students of B.COM of

GOVERNMENT COLLEGE(AUTONOMOUS), ANGUL would like to declare that the project
entitled” “, is a bonafide work done by the student in partial fulfillment of Bachelors Degree
affiliated to Government college (Autonomous), Angul. The research submitted is my original
work and true to the best of my Knowledge and belief.

Date : 17/07/2021 Pradeep Kumar Pattanaik

Place : Angul

SILAN SINGH

B.COM 6th SEMESTER

Roll No.- 18102A15043

TALCHER
AUTONOMOUS
COLLEGE, TALCHER
 ACKNOWLEDGMENT

I would like to express my special thanks of gratitude to my teacher Pradeep Kumar

Pattanaik who gave me the golden opportunity to do this wonderful project on the topic
Working Capital Management Of Jindal , which also helped me in doing a lot of research
and I came to know about so many new things. I am really thankful to Her.

Secondly I would also like to thank my parents and friends and others who helped me a lot in
finishing this project within the limited time.

I am making this project not only for marks but to also increase my knowledge.

SILAN SINGH

B.COM 6th SEMESTER

Roll No.- 18102A15043

TALCHER
AUTONOMOUS
COLLEGE, TALCHER
 CONTENTS

CHAPTER- I

INTRODUCTION

1.1 Meaning of working capital

1.2 Classification of working capital

1.3 Need/ objective of working capital

1.4 Adequate, excessive and inadequate working capital

1.5 Factors determining working capital requirements

1.6 Objective of the study

1.7 Methodology of the study

1.8 Limitations of the study

CHAPTER- II`

JINDAL HISTORY AND COMPANY PROFILE

2.1 Jindal History

2.2 Company profile

2.3 Location of the organization

2.4 Vision of Nalco

2.5 Mission of Jindal

2.6 Captive power plant

2.11 Employees
CHAPTER-III

DATA COLLECTION AND PRESENTATION

FINANCIAL STATEMENT OF JINDAL

CHAPTER- IV

DATA ANALYSIS AND INTERPRETATION

Ratio Analysis

Statement of changes in working capital

Data Equity Ratios

CHAPTER- V

FINDINGS AND SUGGESTIONS

CHAPTER- VI

BIBLIOGRAPHY
 CHAPTER-I
INTRODUCTION :-

1.1 Meaning of Working Capital

Capital required for a business can be classified as fixed capital and working
capital. Every business needs funds for two purposes i.e for its establishment
and to carry out its day-to-day operations.

Long term funds are required to create production facilities through

purchase of fixed assets such as plant & machinery, land, building, furniture etc.
Investment in these assets represents that part of firm’s capital which is blocked
on a permanent or fixed basis and is called fixed capital.

Funds are also needed for short term purposes for the purchase of
raw materials, payment of wages, and other day-to-day expenses. These funds
are known as working capital.

Working capital refers to that part of the firm’s capital which is

required for financing short term or current assets such as cash, marketable
securities, debtors and inventories. Funds, thus, invested in current assets keep
revolving fast and are being constantly converted into cash and this cash flows
out again in exchange for other current assets. Hence, it is also known as
revolving or circulating or short-term capital.
 According to Genestenberg,” Circulating capital means current assets
of a company that are changed in the ordinary course of business from one form
to another, i.e, from cash to inventories, inventories to receivables, receivables
to cash.

Working capital generally means the excess of current assets over current
liabilities. The management of current assets, current liabilities and inter-
relationship between them is termed as working capital management. The main
objective of working capital management is to get the balance of current assets
and current liabilities right.

1.2 Classification of working capital

Working capital can be classified on the basis of concept and on the

basis of time.
In the broad sense, the term working capital refers to the Gross
WorkingCapital and represents the total amount of funds invested in current
assets. Thus, the gross working capital is the capital invested in total current
assets of the enterprise. Current assets are those assets which can be converted
into cash within a short period of normally one accounting year.

In a narrow sense, the term working capital refers to the Net Working
Capital.Net working Capital is the excess of current assets over current
liabilities.Net working capital may be positive or negative. Current liabilities are
those liabilities which are intended to be paid in the ordinary course of business
within a short period of normally one accounting year out of the current assets
or the income of the business. In general practice, net working capital is referred
to simply as working capital.

Permanent or fixed working capital is the minimum amount which is required

to ensure effective utilization of fixed facilities and for maintaining the
circulation of current assets. There is always a minimum level of current assets
which is continuously required by the enterprise to carry out its normal business
operations. This minimum level of current assets is called permanent or fixed
working capital as this part of working capital is permanently blocked in current
assets. As the business grows, the requirements of permanent working capital
also increases due to the increase in current assets.

Temporary or variable working capital is the amount of working capital

which is required to meet the seasonal demands and some special exigencies.
Temporary working capital differs from permanent working capital in the sense
that it is required for short period and cannot be permanently employed
gainfully in the business.

1.3 Need or Objective of working capital

The working capital is needed for the following purposes-

➢ For the purchase of raw materials, components and spares.

➢ To pay wages and salaries.
➢ To incur day-to-day expenses and overhead costs such as fuel, power,
office expenses etc.
➢ To meet the selling costs such as packing, advertising etc.
➢ To provide credit facilities to the customers.
➢ To maintain the inventories of raw materials, work-in-progress, stores
and spares and finished stock.

1.4 Adequate, Excessive and Inadequate Working Capital

Working capital is the life blood of a business. It is very much essential to

maintain the smooth running of a business. No business can run successfully
without an adequate amount of working capital. Every business should have
adequate working capital to run its business operations. Both excess as well as
short working capital positions are bad for any business.
Advantages of adequate working capital

➢ Helps in maintaining solvency of the business by providing uninterrupted

flow of production.
➢ Enables a business concern to make prompt payments and hence helps in
creating & maintaining goodwill.
➢ A concern having adequate amount of working capital, high solvency and
good credit standing can arrange loans from banks and others on easy and
favorable terms.
➢ Adequate working capital also enables a concern to avail cash discounts
on the purchase and hence it reduces cost.

Disadvantages of excessive working capital

➢ Excessive working capital means idle funds which earn no profit for the
business and hence the business cannot earn a proper rate of return on its
investments.
➢ Excessive working capital leads to unnecessary purchasing and
accumulation of inventories causing more chances of theft, waste and
losses.
➢ It may result into overall inefficiency in the organization.
➢ Excessive working capital implies excessive debtors and defective credit
policy which may cause higher incidence of bad debts.

Disadvantages of Inadequate working capital

➢ A concern which has inadequate working capital cannot pay its short term
liabilities in time. Thus, it will lose its reputation and shall not be able to
get good credit facilities.
➢ It cannot buy its requirements in bulk and cannot avail discounts etc.
 ➢ It becomes difficult for the firm to exploit favourable market conditions
and undertake profitable projects due to lack of working capital.
➢ It cannot pay day-to-day expenses of its operations and it creates
inefficiencies, increases costs and reduces profits of the business.

1.5 Factors determining the working capital requirements

* Nature of business- The working capital requirement of a firm basically

depends upon the nature of its business. Public utility undertakings require
small amount of working capital, trading and financial firms require very large
amount, whereas manufacturing undertakings require sizable working capital
between these two extremes.

* Size of the business- The working capital requirements of a concern are

directly influenced by its size of the business which may be measured in terms
of scale of operations. Greater the size of a business unit, generally larger will
be the working capital requirements. However, in some cases even smaller
concern may need more working capital due to high overhead charges,
inefficient use of available resources and economic disadvantages of small size.

* Manufacturing process- In manufacturing business, the requirements of

working capital increases in direct proportion to the length of manufacturing
process. Longer the process period of manufacture, larger is the amount of
working capital required. Therefore, if there are alternative process of
production, the process with the shortest period of production should be chosen.

* Seasonal Variation- In certain industries raw material is not available

throughout the year. They have to buy raw materials in bulk during the season
to ensure an uninterrupted flow and process them during the entire year. A huge
amount is blocked in the form of material inventories during such season, which
gives rise to more working capital requirements.
* Working capital cycle- In a manufacturing concern, the working capital
cycle starts with the purchase of raw materials and ends with the realization of
cash from the sale of finished goods.

This cycle involves purchase of raw

materials and stores, its conversion
into finished products through work-
in-progress with the progressive
increment of labour and service costs,
conversion of finished stock into
sales, debtors and receivables
andultimately realization of cash and
this cycle continues again from cash
to purchaseof raw materials andso on.

* Business cycles- Business cycles refer to alternate expansion and contraction

in general business activity. In the period of boom i.e when the business is
prosperous, there is a need of larger amount of working capital due to increase
in sales, rise in price, etc. In the times of depression, i.e when there is a down
swing of the cycle, the business contracts, sales decline, difficulties are faced in
collection from debtors and firms may have large amount of working capital
lying idle.

* Rate of growth of business- The working capital requirements of a concern

increase with the growth and expansion of its business activities.

* Price level changes- Changes in the price level also affect the working capital
requirements. Generally, the rising prices will require the firm to maintain larger
amount of working capital as more funds will be required to maintain the same
current assets.
* Other Factors- Certain other factors such as operating efficiency,
management ability, irregularities of supply, import policy, banking facilities
etc also influence the requirements of working capital.

1.6 OBJECTIVE OF THE STUDY-

➢ To study the history of Jindal, company profile and locations of the

organizations.
➢ To understand the concept of working capital and analyze the working
capital management of Jindal.
➢ To compute various ratios of Jindal and to interpret the financial position
of Jindal through ratio analysis.

1.7 METHODOLOGY OF THE STUDY-

The following methodology has been followed to obtain information about the
study-

➢ Primary data was collected through personal discussions with the officials
of Jindal.
➢ Other information relating to the study was collected through secondary
source such as books and websites.

1.8 LIMITATIONS OF THE STUDY-

➢ Time is the major constraint of this study.

➢ The study is limited to three year’s data and thus, the company’s true
financial position may not be established.
➢ Individual perspective may be different.
 CHAPTER-II

2.1 Jindal history -

❖ Jindal Steel and Power Limited (JSPL) is one of the leading power in
steel industry with interest spanning across the spectrum from mining
iron ore to manufacturing value added steel product.
❖ The Founder of JSPL was LATE O.P JINDAL-BABUJI (The man of
Destiny) (1930-2005) . The life journey of Mr. Jindal from a farmer’s son
to be successful industrialist, a philanthropist, a politician and a leader
would sense, as a great source of inspiration for generation to come. He
was the First industrialist of India to be elected as a member of
parliament .
❖ JSPL ,formed in 1998 with the transfer of the Raipur and Raigarh unit of
Jindal Strip Limited (JSL) ,is the largest coal based steel producer with a
production of 0.62 mn tpa. Under the scheme of transfer, equity capital of
JSL was split between JSL and JSPL in the ratio 60:40.
❖ The Raigarh Division (Consisting of sponge iron, mild steel slabs and
captive power consumption units), iron ore mines at Tensa (Orissa) .
❖ In 1969, O.P Jindal (1930-2005) started pipe Unit Jindal Limited at Hisar
,India. After Jindal’s death in 2005, much of his assets were transferred to
his wife, Savitri Jindal. Jindal Group’s management was then split among
his four sons with Naveen Jindal as the Chairman of Jindal Steel and
Power Limited.
2.2 Company profile
✓ JSPL is an industrial powerhouse with a dominant presence in
steel, power, mining and infrastructure sectors. Part of the US $ 18
billion OP Jindal Group this young, agile and responsive company
is constantly expanding its capabilities to fuel its fairy tale journey
that has seen it grow to a US $ 3.3 billion business conglomerate.
✓ Led by Mr Naveen Jindal, the youngest son of the legendary Shri
O.P. Jindal, the company produces economical and efficient steel
and power through backward and forward integration.
✓ JSPL operates the largest coal-based sponge iron plant in the
world and has an installed capacity of 3 MTPA (million tonnes per
annum) of steel at Raigarh in Chhattisgarh. Also, it has set up a
0.6 MTPA wire rod mill and a 1 MTPA capacity bar mill at Patratu,
Jharkhand, a medium and light structural mill at Raigarh,
Chhattisgarh and a 2.5 MTPA steel melting shop and a plate mill to
produce up to 5.00-meter-wide plates at Angul, Odisha.
✓ JSPL has been rated as the second highest value creator in the
world by the Boston Consulting Group, the 11th fastest growing
company in India by Business World and has figured in the Forbes
Asia list of Fab 50 companies. It has also been named among the
Best Blue Chip companies and rated as the Highest Wealth
Creator by the Dalal Street Journal. Dun & Bradstreet has ranked it
4th in its list of companies that generated the highest total income
in the iron and steel sector.
2.3 Locations of the organizations –

Registered office of JSPL is situated at O.P Jindal Marg, Hissar Haryana

,Corporate Office is at New Delhi, There are many branches of JSPL are also in
Odisha such as it’s Branch office is at Bhubaneswar and also in other places of
in Odisha is located such as Sundergarh , Keonjhar ,Angul and Barbil .

2.4 Vision

To be reputed global Company in the Steel and Power Sectors.

2.5 Mission

✓ To achieve sustainable growth in business through diversification,

innovation and global competitive edge.

✓ To satisfy the customers and shareholders, employees and all other

stake holders.

✓ To continuously develop human resources, create safe working

conditions, improve productivity and quality and reduce cost and
waste.

✓ To be a good corporate citizen, protecting and enhancing the

environment as well as discharging social responsibility in order to
ensure sustainable growth.

✓ To intensify R&D for technology development.

✓
2.9 Captive Power Plant
* JSPL is a highly integrated steel producer. It has captive iron ore and
coalmines. It also has a captive source of power. Its low input costs make it one
of the lowest cost producers of sponge iron in the world. Its high value
added products like rails and structural help it to 1earn higher margins.

* On the back of the upturn in the steel cycle, JSPL has shown impressive profit
growth during the last three years. Due to the sharp growth in volumes
and r e al i z at i o ns , The Co mpa ny has a c hi e ve d re ve nue C A GR at
62 . 4 %. We estimate EBITDA and net profit CAGR at 60.9% and 67.9%,
respectively.

2.11 Employees –
Out of 7,320 employees (including Trainees) on the Company's roll, there were
1,194(16.31%) SCs, 1,324(18.09%) STs, 789 (10.78%) OBCs and 84 (1.15%)
PWDs. The total number of lady employees in the organization stands at 355.
 CHAPTER-III

FINANCIAL STATEMENT OF JINDAL

3.1 Concept of financial statement

3.2 Features of financial statement
3.3 Objectives of financial statement
3.4 Importance of financial statement
3.5 Sources of data collection

3.1 Concept of Financial statement –

Financial statement is a formal record of the financial activities and position of
the business, person or other entity.

Relevant financial information is presented in a structured manner and in a form

easy to understand. They typically include basic financial statements,
accompanied by a management discussion and analysis.

The major four types of financial statements are as follows-

 A. Balance sheet- a Balance sheet, also referred to as a statement of
financial position, reports on a company’s assets, liabilities, and owners
equity at a given point in time.

B. Income statement- an income statement, also known as a statement of

comprehensive income, statement of revenue & expenses, P&L or profit
and loss report, reports on a company’s income, expenses, and profits
over a period of time. A profit and loss statement provides information on
the operation of the enterprise. These include sales and the various
expenses incurred during the stated period.

C. A statement of change in equity, also known as equity statement or

statement of retained earnings, reports on the changes in equity of the
company during the stated period.

D. A cash flow statement reports on a company’s cash flow activities,

particularly its operating, investing and financing activities.

3.2 Features of financial statements –

➢ Financial statements are those statements which present historical data,

which implies that financial statements reveal what has already happened
and theydonot tell anything about the future.
➢ Financial statements are expressed in monetary terms, so profit and loss
statements show profitability of the business, balance sheet reveal the
financial position of the company and cash flow statements reveal the cash
position or liquidity which is there with the company.
 ➢ Financial statements donot reveal the employees satisfaction levels, or
efforts put by the owner of the company and all other such qualitative
factors are excluded from financial statements.

3.3 Objectives of financial statements –

➢ To know about the business activities whether running at profit or loss.

➢ To ascertain the financial position of the business.
➢ To provide meaningful information about the financial activities of a
business to different parties or persons.
➢ To provide information about the capacity of the business for paying
loans and interest theron.
➢ To provide information about economic resources and obligations and
their changing pattern.

3.4 Importance of financial statements –

➢ The management can get a lot of information from the financial statement
which is very important for different decision making.
➢ The information relating to profitability and operation cost are also
provided by the financial statement.
➢ The financial position of a business is shown by its financial statements.
➢ With the help of financial statement, a financial institution can get
important information at the time of taking decision regarding
sanctioning of loans.
3.5 Sources of data collection –

The data are collected through primary and secondary sources. Primary data is
collected through personal discussions with the officials of Jindal, Such as profit
& Loss A/c, Balance Sheet ,Annual Report etc. Secondary sources of data are
collected from books and internet.
 3.6 RATIO ANALYSIS

Ratios of JSPL for last three years

Ratio

Liquidity Ratios
Current 1.7:1 1.5:1 2.03:1
Quick 1:1 1:1 1.4:1
Leverage Ratios
Debt-Equity .67:1 .71:1 1.02:1
Interest Coverage* 9.3:1 7.2:1 8.2:1
Capital Employed to Net worth 2.5:1 2.4:1 2.03:1
Profitability Ratios
Gross Profit Margin 52.42% 52.38% 53.56%
Operating Profit Margin 39.96% 40.63% 39.93%
Net Profit Ratio 22.86% 19.9% 22.10%
Return on Investment 9.93% 9.25% 12.70%
Equity Related Ratios
Return on Equity 31.17% 28.39% 33.23%
Earning Per Share Rs.186.07 Rs.45.66/186.07 Rs.80.34
Dividend Per Share Rs.10 Rs.12 Rs.2.50
Dividend Payout 5.37% 6.44% 3.11%
Activity Ratios
Inventory Turn Over 6.27 5.81 6.66
Net Asset Turn Over 53.18% 54.8% 66.6%
Total Asset Turnover Ratio 44.9% 46.31% 55.57%
Working Capital Turnover 4.37 Times 5.66 Times 3.22 Times

All the above relevant information are analyzed and interpreted in the next
chapter.
 CHAPTER- IV
DATA ANALYSIS AND INTERPRETATION

➢ RATIO ANALYSIS

➢ STATEMENT SHOWING CHANGES IN WORKING

CAPITAL

RATIO ANALYSIS –

Ratio analysis is a technique of analysis and interpretation of financial

statements. It is the process of establishing and interpreting various ratios for
helping in making certain decisions. It is the means of better understanding of
financial strengths and weaknesses of a firm. There are a number of ratios
which can be calculated from the information given in the financial statements,
but as we are analyzing the working capital management of Nalco, we need to
calculate liquidity and activity ratios only.

LIQUIDITY RATIOS –

Liquidity refers to the ability of a concern to meet its current obligations as and
when these become due. The short term obligations are met by realizing amount
from current and circulating assets. The current assets should be convertible into
cash for paying obligations of short term nature. The sufficiency or
insufficiency of current assets should be assessed by comparing them with
current liabilities. If current assets can pay off current liabilities, then the
liquidity position of the firm is satisfactory and vice-versa. To measure the
liquidity of the company, following ratios can be calculated-

A. Current ratio
B. Quick/ acid test ratio
C. Absolute liquid ratio

CURRENT RATIO –

Current ratio is also known as working capital ratio. It may be defined as the
measure of general liquidity and is most widely used to make the analysis of a
short-term financial position of the firm. It is calculated by dividing the total of
current assets by the total of current liabilities.

Current ratio= current assets / current liabilities

Current assets are those which can be converted into cash within a short period
of time, normally within one accounting year. Current liabilities are those
obligations which are payable within a short period of generally one accounting
year. The components of current assets and current liabilities are –

Current assets Current liabilities

Cash in hand Bills payable
Cash at bank Sundry creditors
Short term Marketable securities Short term advances
Short term investments Income tax payables
Bills receivables Dividends payable
Sundry debtors Outstanding expenses
Inventories Bank overdraft
Prepaid expenses
 The current ratios Jindal year 2011-12 to 2015-16 are as follows-

2013-14 (in 2014-15 (in 2015-16 (in

cr.) cr.) cr.)
(a)Current 3299.57 1801.66 1490.45
assets
(b)Current 1620.81 1180.35 898.11
liabilities
Current ratio 2.03:1 1.53:1 1.7:1
(a/b)

INTERPRETATION-
In the year 2013-14, the current ratio is 3299.57 which is slightly dropped down
to 1801.66 in the next year. There is decrease in the current ratio in 2013-14 as
it is 1620.81 in this year, which indicates that the liquidity position of the
company has not improved from the previous year. The company has the
highest current ratio i.e-2.03:1 in 2013-14 among all the three years. Again in
the year 2014-15, the current ratio comes down to 1.53:1.

QUICK RATIO OR ACID TEST RATIO-

Its is a rigorous measure of firm’s ability to serve short term liability.
conventionally it is found that acid test /quick ratio is 1:1 is considered the best
ratio .In JSPL in 2007 it was 1:1 and it increased to 1.4:1 in 2008. It show that
its working capital is less blocked in inventories and the better ability to meet its
current liability
.
As per the information there are less debtor and good cash balance. Company is
able to meet its operating expense without any current obligation
Quick liabilities= current liabilities – bank overdraft
 COMPONENTS OF QUICK ASSETS AND QUICK LIABILITIES-

Quick assets Quick liabilities

Cash in hand Bills payable
Cash at bank Sundry creditors
Short term Marketable securities Short term advances
Short term investments Income tax payables
Bills receivables Dividends payable
Sundry debtors Outstanding expenses
Bank overdraft

Quick ratio = Quick assets / Quick liabilities

The quick ratio of Jindal from FY 2013-14 to 2015-16 are as follows-

Particular 2013-14 2014-15 2015-16

(a) Current assets 3299.57 1801.66 1490.45
(b) Current liabilities 1620.81 1180.35 898.11

Acid test ratio (a/b) 1.4:1 1:1 1:1

INTERPRETATION-

If we see in the year 2013-14, the quick ratio is 1.4:1 and it comes down directly
to 1:1 in the year 2014-15. The quick ratio is same in the next year.The Current
assests is highest in the year 2013-14 and gradually it deceases to 1801.66 and
1490.45 in the year 2014-15 and 2015-16 respectively .
Leaverage Ratio/Capital Structure Ratio-
The long term creditors are interested in knowing the soundness of the firmon
the basis of long term strength measured in the terms of its ability to paythe
interest regularly as well as repay the installment of the their principal ondue
date or in lump-sum at the time of maturity. It can be examined byleverage
ratio. There are different types of leverage ratio.

• Debt-Equity Ratio
• Interest Coverage Ratio
• Capital employed to Net Worth

Debt-Equity Ratio-
It shows the relationship between borrowed fund and owner’s equity in
measuring long term financial solvency of the firm. It reflect the relative claim
of the creditors and shareholder against the asset of the firm .Alternatively, it
also indicates the relative proportion of the debt and equity financing the asset
of the firm .It has been found that JSPl has increased its debt in debt/equity in
financing the asset of the firm. Due to its good earning capacity JSPL is able to
raise its debt compare to equity. Its increased D/E ratio 43.6% from 2007.

D/E Ratio = Debt / Equity

Particular 2013 (in cr.) 2014 (in cr.) 2015 (in cr.)
Debt 3863.35 2496.73 1844.71
Equity 3756.38 3507.72 2745.37
D/E Ratio 1.02:1 0.71:1 0.67:1
WORKING CAPITAL TURNOVER RATIO –

Working capital of a concern is directly related to sales. The current assets

change with the increase or decrease in sales. Working capital turnover ratio
indicates the velocity of the utilization of net working capital. This ratio
indicates the number of times the working capital is turned over during a year.
This ratio measures the efficiency with which the working capital is being used
by the firm. A higher ratio indicates efficient utilization of working capital and
vice-versa. But a very high working capital turnover ratio is not a good situation
for any firm and hence care must be taken while interpreting the ratio.

Working capital turnover ratio = net sales / net working capital

The working capital turnover ratio of Jindal from FY 2013-14 to

FY 2015-16 are as follows-

Particular 2013-14 (in 2014-15 (in 2015-16 (in

cr.) cr.) cr.)
(a) net sales 5410.75 3519.81 2590.25

(b) net working

capital 1678.76 621.31 592.34
Working capital
turnover ratio(a/b) 3.22:1 5.66:1 4.37:1

INTERPRETATION –

In 2013-14, the working capital turnover ratio (WTR) is 3.22. There is a

increase in WTR in 2014-15 as it arrives at 5.66. This ratio indicates the number
of times the working capital is turned over in a year. The working capital
turnover ratio is down in 2015-16 as it is 4.37.
4.2 A TABLE SHOWING STATEMENT OF CHANGES IN
WORKING CAPITAL FROM FY 2013-14 TO FY 2015-16

(Rs in crore)

Particulars 2013-14 2014-15

CURRENT ASSETS Increase Decrease
Inventories 642.44 980.56 338.12 -
Sundry Debtors 320.31 287.38 - 32.93
Cash & Bank Balances 52.97 577.91 524.94 -
Short-term loans and 785.94 1453.72 667.78 -
advances
(a) Total 1801.66 3299.57 _ _

CURRENT LIABILITIES
Liabilities 794.87 1038.87 _ 244
Provisions 385.48 581.94 _ 196.46
Working Cap. 213.59 44.25 169.34 _
Borrowing From Bank
(b) Total 1393.94 1665.06 _ _

Increase in working 271.12 - 271.12

capital
Net working capital 407.72 1634.51
(a-b)

INTERPRETATION –

➢ If we look at inventories, there is increase in inventories in 2014-15 from

the previous year 2013-14.
➢ Talking about debtors, debtors are increasing continuously over the two
years which indicates that the debtors are less liquid and also indicates the
inefficient collection performance of the company.
➢ Coming to cash and bank balances, there is inccrease in cash and bank
balances in 2014-15 from the previous year 2013-14, But at the same
time,high cash and bank balance shows that the company is not utilizing
the investment opportunities properly.
➢ If we analyze short term loans and advances, it has increased in 2014-15
from the previous year. These fluctuations are may be because of
fluctuations in loans to employees, advances to vendors etc.
➢ On looking at other current assets, there is a increase in other current
assets in 2014-15 from the previous year 2013-14. Interest accrued and
insurance claims can be the major cause of these fluctuations.
➢ Now, if we compare the current liabilities, then first comes trade payables
or creditors. The creditors has increased in 2014-15 from the previous
year indicating that the company has cleared the amount due to the
creditors.
➢ If we look at short term provisions, there is a increase in it in 2014-15
from previous year. Short term provisions include gratuity, leave
encashment and provisions for dividend etc.
➢ If we compare the overall changes in working capital, there is increase in
net working capital in 2014-15.
 CHAPTER- V

SUMMARY OF FINDINGS
(SUGGESTIONS AND CONCLUSION)
FINDINGS –
❖ Jindal Steel And Power Limited (JSPL) is a steel and power producer
company . It was established on 8th June, 1969.
❖ JINDAL has its several locations such as Angul, Raipur,Keonjhar,
Bhubaneswar and Raipur.
❖ JINDAL has 600,00,00,000 numbers of authorized equity share capital
of 5/- each and 257,72,38,512 numbers of issued, subscribed and fully
paid up equity share capital of 5/- each.
❖ Working capital generally refers to the excess of current assets over
current liabilities.
❖ JINDAL has sound liquidity position which means it has the ability to
pay its current obligations as and when required.
❖ Increase in sundry debtors indicates that debt collection is not
satisfactory.
❖ Increase in inventory indicates that the stock is moving slowly.
❖ From ratio analysis, we have come to this conclusion that there is a
low utilization of overall assets by the company as the total assets
turnover ratio is less than 1 in all the years.
❖ The company doesnot have any loan from any financial institution
indicating company’s healthy financial position.
❖ 2013-14 was a great year for the company as in this year the company
has highest domestic sales resulting in highest net sale among 3
years(2013-14 to 2015-16). The company also has the highest PAT
crore in this year. The financial statement shows the highest EPS.
RECOMMENDATIONS -

❖ JINDAL is a cash rich firm, it needs to utilize it in proper direction

for expansion and diversification.
❖ JINDAL needs to have full utilization of fixed assets to improve
the total assets turnover and return on total assets leading to
improvement in the performance of JINDAL.
❖ The management of JINDAL should have flexible credit policy
with a strategy to remove weakness of credit policy.
❖ It should not keep its current assets idle which makes the current
ratio too high.
❖ The company should increase its investment opportunities.

CONCLUSION-

I would like to conclude that with the growing demand of steel all over the
world, the Indian steel industry is also growing at an enviable pace. In fact, the
production of steel in India is currently outpacing the demand.
 CHAPTER-VI

BIBLIOGRAPHY
BOOKS REFERRED –

1. Working Capita Management - Hrishikes BhattaCharya

2. Essentials of Working Capital management – James S. Sagner

WEBSITES-

www.jspl.com

www.google.com