TABLE OF CONTENTS

CHAPTER CONTENTS PAGE NO

NO

1 INTRODUCTION 1-6

2 REVIEW OF LITERATURE 7-11

INDUSTRY PROFILE AND

COMPANY PROFILE
3 12-41
THEORETICAL FRAME WORK

4 DATA ANALYSIS &

42-72
INTERPRETATION

5 FINDINGS, SUGGESTIONS &

73-75
CONCLUSSION

BIBLIOGRAPHY

APPENDIX
 LIST OF TABLES
TABLE TABLE NAME PAGE

NO NO

4.1 CURRENT RATIO 42

4.2 QUICK RATIO 44

4.3 ABSOLUTE LIQUID RATIO 46

4.4 DEBT EQUITY RATIO 48

4.5 PROPRIETARY RATIO 50

4.6 WORKING CAPITAL TURNOVER RATIO 52

4.7 TOTAL ASSET TURNOVER RATIO 54

4.8 GROSS PROFIT RATIO 56

4.9 NET PROFIT RATIO 58

4.10 RETURN ON SHARE HOLDERS FUND . 60

4.11 COMPARATIVE BALANCE SHEET OF THE

62
YEAR 2014-2015

4.12 COMPARATIVE BALANCE SHEET FOR

63
THE YEAR 2015-2016

4.13 COMPARATIVE BALANCE SHEET OF THE

64
YEAR 2016-2017
4.14 COMPARATIVE BALANCE SHEET OF THE 65

YEAR 2017-2018

4.15 COMPARATIVE BALANCE SHEET OF THE

66
YEAR 2018-2019

4.16 SCHEDULE OF CHANGES IN WORKING

68
CAPITAL 2015-2016

4.17 SCHEDULE OF CHANGES IN WORKING

69
CAPITAL 2016-2017

4.18 SCHEDULE OF CHANGES IN WORKING

70
CAPITAL 2017-2018

4.19 SCHEDULE OF CHANGES IN WORKING

71
CAPITAL 2018-2019
 LIST OF CHARTS

CHART CHART NAME PAGE

NO NO

4.1 CURRENT RATIO 43

4.2 QUICK RATIO 45

4.3 ABSOLUTE LIQUID RATIO 47

4.4 DEBT EQUITY RATIO 49

4.5 PROPRIETARY RATIO 51

4.6 WORKING CAPITAL TURNOVER RATIO 53

4.7 TOTAL ASSET TURNOVER RATIO 55

4.8 GROSS PROFIT RATIO 57

4.9 NET PROFIT RATIO 59

4.10 RETURN ON SHARE HOLDERS FUND . 61

CHAPTER- I
INTRODUCTION
 1.1 INTRODUCTION

The project entitled working Capital Management at Kerala

state financial enterprises, Thrissur it describes about how the
companies manage its working capital and the various steps that
are required in the management of working capital and throws
light on the working capital position of the company

Working Capital Management is the process of planning,

and controlling the level and mix of the current assets of the firm
as well as financing these assets. Working capital is the capital
required for the day-to-day working of an Enterprise's working
Capital Management is concerned with the problems that arise in
attempting to manage the current assets, current liabilities and
Inter relationships that exist between them. The main aim of the
study is to find out whether the companies efficiently manage its
working capital. The main objective of working Capital
Management is to maintain normal daily operational activities for
the firm in order to increase the firm's performance and to reduce
the firm's liquidity risk. Shortage of working capital can cause
problems on the firm daily activities Which will inversely affect
to the firm's profitability while over investment on working
capital can increase opportunity cost, especially when the firm has
to use external funds to increase its working capital.

1
 A project is conducted in "KERALA STATE
FINANCIAL ENTERPRISES LTD" and is based on "A
STUDY ON WORKING CAPITAL MANAGEMENT" gives
an idea about working of the organization and their financial
position.

1.2 STATEMENT OF PROBLEM

This study is conducted to know whether the working

Capital Management of Kerala state financial enterprises,
Thrissur is efficient or not with the help of balance sheet and
profit and loss account for their 2015 -2019 by using various
ratios. The study throws a light on various aspects such as the
firm's working capital efficiency, financial performance, liquidity
and solvency, so, this study entitled working capital analysis of
Kerala State financial enterprises, Thrissur makes an attempt to
analyze the working capital efficiency.

1.3 SIGNIFICANCE OF THE STUDY

Working Capital Management is an integral part of overall

corporate management. In today's world there is a realization of
every society has limited financial resources, so in this highly
competitive environment working Capital Management is the
most important factor, every business needs to view the
performance of working capital for smooth running of the

2
company. Ratio analysis is the best way to analyze the working
capital of the company, it helps to measure the performance
financial performance and profitability of KSFE is reflected in its
financial statement and to provide suggestions to improve its
business. The study helps in understanding of the various concept
of the working capital like current asset and current liabilities.
Comparing the working capital from one period to another helps
in underlying problems in the company's operations.

1.4 OBJECTIVES

 To know the changes in working capital

 To know the profitability of the company
 For making Comparison of KSFE with the other
competitors
 To know the relationship between current asset and current
liability

1.5 SCOPE OF THE STUDY

The study was conducted over its period 21 days and

entitled working capital Management of Kerala state financial
enterprises, Thrissur to know the changes in the working capital
of the KSFE. This study is to evaluate the financial performance
of the firm and to identify the factor that affecting working capital

3
management, study involved the analysis and interpretation of
cash, inventories and receivables and profitability of the concern.

1.6 RESEARCH METHODOLOGY

Research is an original contribution to the existing stock of

knowledge marketing for its advancement, methodology is a way
to solve the research problem systematically. It includes various
steps that arc generally by the researches in studying the search
problem along with the logic behind the research methodology
means the scientific method of conducting a research.

1.6.1 RESEARCH DESIGN

A research design is the arrangement of condition and

analysis of data in a manner that aims to combine relevance to the
research purpose with the economy in procedure is systematic
planning of research usually resolve a particular question, the
collection and recording the evidence the process and analysis of
these data and their interpretation and the publication of result.

1.6.2 SOURCE OF DATA COLLECTION

All type of research requires data. So, the basic problem of

every enquiry is to collect fact and figures relating to a particular

4
phenomenon under study. The collection of the data is the
primary step is statistical, investigation. Collection of data is a
process of enumeration together with the proper collection of
data. The analysis of financial condition and performance of the
enterprise necessitates accurate and reliable data.

PRIMARY DATA

Primary data are those collected by the investigator (or

researcher) himself for the first time and thus they are original in
character. An informal interview has been conducted with the
accounts officer and additional information was obtained through
discussion with staff members of the company.

SECONDARY DATA

Secondary data means data that arc already available that is

they refers to the data which already been collected and analyzed
by someone else. The study conducted by using secondary data.
It consists of reports and publications of various associations
connected with business. Industry and bank records, websites,
magazines and newspapers etc. The data used in this study have
been taken from publishes annual financial reports of the
company

5
TOOLS AND TECHNIQUE

The analysis and interpretation of financial statement is used

to determine the financial position and results of operation as
well. Here in this study following are the tools used for analyzing
the financial position of the company.

ANALYTICAL TOOLS

 Ratio analysis
 Comparative statement
 Statement of changes in working capital

PRESENTATION TOOLS

 Graphs and Diagrams

1.7 LIMITATION OF THE STUDY

 The sources of data were very limited. The study

mainly depends on the secondary data taken from the
annual report.
 The figures taken from the financial statements for
study were historical in nature, lime value of money is
not considered.
 Non-monetary factors like human behavior, their
relationship etc. are not considered.
 The data used for the study was limited, because the
auditors not published the data.

6
 CHAPTER - 2
REVIEW OF LITERATURE
REVIEW OF LITERATURE

The purpose of this chapter is to present a review of relating

to working Capital Management.

JAIN P. K. AND YADAV SURENDRA S. (2001) That was

a study of corporate working capital management related to
practicing in india, Singapore and Thailand. Study tried to
understand the relationship of working capital management and
current assets and current liabilities, and their inter-relationship.
Further the authors have shown an aggregative analysis of current
assets and current liabilities in terms of major liquidity ratios. It
also states working capital position in terms of these ratios
pertaining to various industries. From the paper one can infer that
the available data in respect of the sample companies from the
three countries confirm the wide inter-industry variations in
liquidity ratios. Towards the end, the authors suggest that serious
consideration needs to be given by the respective governments as
well as industry groups in these three countries in order to take
corrective measures to take care of and rectify the areas of
concern.

HOWORTH CAROLE AND WESTEAD PAUL (2003)

Have tried to find out the working capital management routines of
a large random sample of small companies in the UK.

7
Considerable variability in the take-up of eleven working capital
management routines was detected. Principal components
analysis and cluster analysis confirmed the identification of four
distinct “types” of companies with regard to the patents of
working capital management. While the first three„ types‟ of
companies focused upon cash management, stock or debtors
routines respectively, the fourth „type‟ was less likely to take -up
any working capital management routines. The objective of the
study is to encourage additional research rather than to provide an
exhaustive overview of all the factors associated with the take-up
of working capital management routines by small companies. The
results suggest that small companies focus only an areas of
working capital management where they expect to improve
marginal returns.

MISRA (2004): Approached working capital as segment of

capital employed rather than a Mere cover for creditors. He
emphasized that working capital is the fund to pay all operating
expenses of running a business, he pointed out that return on
capital employed, aggregate master of efficiency in running a
business, would be adversely affected by excessive working
capital. For knowing the appropriateness of working capital
amount, he applied operating cycle (OC) concept.

8
AGRAWAL (2005): He studied working capital Management
on the basis of sample of 34 large manufacturing and trading
public limited companies in 10 industries in private sector for
the period 2001 -2002 to 2004-2005. Applying the same
technique of ratio analysis, response to questionnaire and
interview, the study concluded the although working capital per
rupee of sales showed a declining trend over the year but still
there appeared a sufficient scope for reduction in investment in
almost till segment of working capital.

SAMLLOGLUF F. AND DEMIRGUNCES K. (2008):

The Objective of the study is to examine the effect of working
capital Management on firm's prosperity the study carried with
manufacturing companies listed in Istanbul stock exchange the
tenure for the study is 1989 to 2007 for the study multi regression
statistical method is used. Observed comes outs of study revealed
that some factors having negative impact and some having
positive impact on profitability of firms, positive factors like
growth of sales on other hand debtor's payment period, stock
conservation period, as well as debt interest negatively affect the
firm's profitability.

RAMACHANDRAN AZHAGAIH AND JANAKI

RAMAN (2000): Examine relationship among working capital
Management proficiency and earnings before interest and tax. For

9
the measurement of working capital Management three indexes
are taken into consideration performance index, utilization index
and efficiency index and EBIT of the selected companies for the
study period are taken at the end of the study be suggested that
there is a need to improve the working capital Management.

AJAIKUMARAGARVAL (2014): Working capital can use as

a tool as control operation, control of operation is elimination of
unwanted activity and having fast movement of inventory. It
reduces the requirement of working capital to minimum and faster
production enables the firm to acquire new business.

GAYATHRI .J (2015): This study getting overall review about

working capital management. This case study depending textile
industry to analyses better understanding of methodology used,
limitations of various available estimation procedures and
database. This review empirical study explores the avenue for
future and present research effort related to the subject matter.
There is various research studies different aspect use for financial
performance of textile industry.

SYEDNOORULSHAJAR, SALEEMAKHTARFUROOQI
(2010): Analysed the Performance of three automobile firms
for 10 years from 2005 to 2014. Return on capital employed was
taken as dependent variable and current ratio, inventory turnover
ratio and debtor turnover ratio were taken as independent
10
variables. They were using correlation coefficient and regression
analysis. They noticed that all the dependent variables are
significantly and positively associated with profitability.

RAMNAKKAUR AND DR. SUNITA SUKHIJA (2019):

Analysed the 5 automotive companies during time period of
fifteen years i.e., 2002-03 to 2016-17. They had taken total
current assets and the differential between current assets and
current liabilities as variables. Tool used by the researcher in the
above study was coefficient of variation. It was noticed that
Mahindra and Bajaj autos has been able to increase the
differential between current assets and current liabilities while its
competitors were not able to replicate the same.

11
INDUSTY AND COMPANY PROFILE

Non-banking financial companies (NBFCs) constitute an

important segment of the financial system in India. NBFCs are
financial intermediaries engaged primarily in the business of
accepting deposits and delivering credit. They play an important
role in channelizing the scare financial resources to capital
formation. NBFCs supplement the role of the banking sector in
meeting the increasing financial needs of the corporate sector,
delivering credit to the unorganized sector and to small local
borrowers. NBFCs have a more flexible structure than banks. As
compared to banks they can take quick decisions, assume greater
risk, tailor make their services and charges according to the needs
of the clients. Their flexible structure helps in broadening the
market by providing the saver and investor a bundle of service on
a competitive basis.

NBFCs provide a range of services such as hire purchase

finance, loans, and investments. Due to the rapid growth of
NBFCs and a wide variety of services provided by them, there has
been a gradual blurring of distinction between banks and NBFCs
except the commercial banks have the exclusive privilege in the
issuance of cheques.

12
3.1.1 NON-BANKING FINANCIAL COMPANY
(NBFCS)

A Non-Banking Financial Company (NBFCs) is a company

registered under the companies act 1956 of India engaged in the
business of loans and advances acquisition of shares, stocks,
bonds hire-purchase insurance business or chit business but does
not include any institution whose principal business includes
agriculture industrial activity or the sales, purchase or
construction of immovable property.

The working and operations of NBFCs are regulated by the

Reserve Bangloor of India (RBI) within the framework of the
[Reserve Bank of India Act 1934] (chapter III-B) and the
directions issued by it. On November 9,2017 Reserve Bank Of
India (RBI) issued a notification outlining norms for outsourcing
of functions services by Non-Bank Finance Institution (NBFCs)
as per the new norms NBFCs cannot outsource core management
functions like internal audit and management of investment
portfolio, strategic and compliance functions for Know Your
Customer (KYC) norms and sanction of loans. Staff of service
providers should have access to customer information only up to
an extent which is required to perform the outsourced function.
Boards of NBFCs should approve a code of conduct for direct
sales and recovery agents. For debt collection, NBFCs and (their

13
outsourced agents should not resort to intimidation or harassment
of any kind. All NBFCs have been directed to set up grievance
redressed machinery which will also deal with the issues relating
to services provided by the outsourced agency.

NBFCs have raised large number of resources through

deposits from public, shareholders, directors and other companies
and borrowings by issue of non-convertible debentures. In the
year 1998 a new concept of public deposits meaning deposits
received from public, including shareholders in the case of public
limited companies and unsecured debentures/ bonds other than
those issued to companies, banks and financial institutions was
introduced for the purpose, of focused supervision of NBFCs
accepting such deposits.

3.1.2 EVOLUTION, GROWTH AND DEVELOPMENT

OF NBFCS IN INDIA

Till recently NBFCs and unincorporated bodies have been

competing and complementing the services of commercial banks
all over the world. While the financial system in a country
generally develops through a process of gradual evolution, it has
been observed that here is a stage in the evolutionary process
where in the growth of NBFCs is more pronounce than other
components of the financial system. Further, they take different
forms and sizes depending upon the needs of their clientele. Thus,

14
in the United State of America, the growth of NBFCs was more
pronounced during the first three decades of this century and two
of the top five commercial lenders are NBFCs and the three of the
four top providers of construction finance are non-bank Firms at
present. In India such marked growth in the non-bank financial
sector was noticed in the last two decades. The NBFCS as a group
have succeeded in broadening the range of financial service
rendered to the public during this period.

Raymond W Goldsmith traces the existence of "chit funds

and 'nidi's' in India before world war 1, that such institutions were
more common in western and southern India. According to
Goldsmith; "whatever the fragmentary material exists points to
the small size of these institutions which seems to have originated
in the mid-nineteen centuries and indicates fairly and clearly a
rapid decline in their size and importance relative to that of
financial institutions of the western type, which developed in
India during the nineteen centuries.

Banking commission (1972) has noticed the rapid progress

made by "Finance Corporation" in states like Gujarat and Mysore
(present Karnataka state). These finance corporations are petty
finance outlets formed under the partnership act of India and their
capital was also less than Rupees 1 lakh. However, literature on
non-banking financial sector reveals that the major NBFCs in

15
India are concentrated in six states like West Bengal,
Maharashtra, Tamil Nadu, Uttar Pradesh, Karnataka and Delhi.

Among the NBFCS hire purchase finance companies have

been same of the oldest and most prominent institution. They
have played an important role in the finance of the road transport
sectors one estimate puts about 25-30 per cent of all civilian
commercial vehicles sales have been financed by hire purchase
companies. Some NBFCS have started out as support companies
for industrial houses. Their purpose was to act as fixed deposit
collection front and at best work out leasing deals for clients of
these industrial houses. The last two decades witnessed a
phenomenal growth in the number of NBFCS.

3.1.3 TYPES OF NBFCs

NBFCs can be classified into different segments depending upon

the

 Equipment leasing company: Any company which is

carrying on as its principal business as the activity of leasing
equipment or the financing of such activity is termed as
equipment leasing company.
 Hire purchase finance company: Any company which is
carrying as its principal business as hire purchase
transactions is known as hire purchase finance company.

16
 Housing finance company: Any company which carrying on
as its principal business the financing as acquisitor or
development of plots and land in connection there which is
called Housing finance-company.
 Investment Company: Any company which is carrying on as
its principal business the acquisitor of securities is termed as
investment company.
 Loan Company: It is a company which is carrying on as its
principal business the providing of finance whether by
making loans of advances otherwise for any activity other
than its own. This category docs not include an equipment
leasing or hire purchase finance company or a housing
finance company.
 Mutual benefits finance company (Nidhi company): It is
those companies which are notified by the central
government as a Nidhi company under section 620-A of the
companies act 1956.
 Mutual Benefits Company (potential nidhi company): A
company which is working on the lines of a nidhi company
but has not yet been declared by the central government as
minimum NOF ( Net Owned Fundes) of Rupees 10 Lakh
has applied to the RBI for Certificate of Registration (COR)
and also to the Department of Companies Affairs (DCA) for

17
 being notified as nidhi company and has not contravened
directions / regulations of RBI/ DCA.
 Non-Banking financial Company: Any hire purchase
finance, housing finance, investment loan, equipment
leasing or mutual benefit financial company but does not
include a finance company or a stock exchange or a stock
broking company.

3.1.4 NBFC AFTER A STELLAR RUN IN INDIA

Non-banking finance companies (NBFCs) have undergone a

significant transformation over the past few years. The sector has
managed to witness robust credit growth in past few years and has
been clear out performance in last three years on the back of the
fading effects of RERA (Realestate Regularity Authority) higher
growth in loan books and improvement in spreads between
borrowing and lending rates.

According to RBI recent financial stability report, aggregate

balance sheet size of the NBFCs sector was Rupees 22.1 lakh
crores as of March 2020, and borrowing grew at. 19.1 per cent
during FY 18-19, loans and advances increased 21.2 percent and
investment increased 13.4 percent Asset quality and capital
adequacy of NBFCs have also improved during FY 19-20.

18
3.2 COMPANY PROFILE

The Kerala State Finance Enterprise Ltd, popularly known

as KSFE. It is a miscellaneous non-banking finance company and
it is fully owned by the government of Kerala. It is one of the
most profit-making public sectors undertaking of the state. KSFE
was formed by the government of Kerala with the objective of
providing alternative to the public from the private chit promoters
in order to bring in social control over the chit fund business, so
as to save the public from the clutches of unscrupulous fly-by
night chit fund operators. KSFE has been registering impressive
profits every year, without fail since its inception. A striking point
is that all the funds mobilized by KSFE through its various
deposits schemes and chitty are advanced wholly to the public in
Kerala itself, whereas other financial institutions and banks
channel their deposits collected in Kerala for advances outside the
slate.

3.2.1 MANAGEMENT OF KSFE

The management of the company is vested in the board of

directors. The government of Kerala may appoint 2 directors
other than the managing director as chairman and vice chairman

19
of the board. The first board was constituted as per government
orders no: GO (RT)4876/69/FM dated 26/11/1979 and they
assume charge is appointed by the governor. The remuneration is
subject to the control and supervision of the board of director's
general body representation the shareholders shall be supreme
governing body of the company.

3.2.2 BEGINNING

 KSFE was created by the government of Kerala on 6th

November 1969
 The paid-up capital then was Rupees 2 lakhs
 Total number of employees at the start was 45.
 The number of branches KSFE began with was 10.
 The head office of KSFE is placed in Thrissur, the hub of
chitty business in Kerala.

3.2.3 CURRENT SCENARIO

 Paid up capital is Rupees 100 crores.

 Total number of employees is 6782.
 The number of branches is 600.
 The number of customers is more than 33 lakhs.
 Our turnover as on Sept. 2018 is 3380/cr.

20
3.2.4 OBJECTIVES OF KSFE

The main objective of the company is listed in its memorandum

of association. The object pursued by the company in its
incorporation is,

 To start, conduct, promote, manage and carry on its

business of chitties in India or elsewhere.
 To promote, undertake, manage and carry on the business
of dealer's agent and traders under hire purchase system.
Now the hire purchase system is replaced with customer
vehicle loan.
 To start and operate business of providing financial
assistance for the construction of new building for repair,
renewals, attraction, addiction and modification of existing
building for self employment.
 To provide financial assistance for the purpose of running
and maintaining the article equipment acquired under
customer vehicle loan system of the company.
 To advance money on the security of the gold or other
valuable.

3.2.5 MISSION OF KSFE

The mission of KSFE ltd is well being of public by its

different products like chitty, loans, deposits etc. for the welfare

21
of the society. The chitty are come under the Kerala Chitty Act
1975, which bought into force with effect from 25th August 1975.
The act is to give adequacy and safety to the funds of The society
and gave good returns to them. It also ensures lesser rate of
interest for loans and advances.

3.2.6 VISION OF KSFE

 Providing a whole range of quality service, and products.

 Adopting technology and benchmark standards in
customer services and performance.
 Spreading our wings beyond the borders of Kerala on a
global level.
 Retaining the pre-eminent role in chitty business.
 Continuing focus on extending resources to the
government of Kerala.
 Sustaining commitment to the weaker sections of society
as the neighborhood institution for support, trust and
security.

DEPOSITS AND LOAN SCHEMES OFFERED BY

KSFE

 Chitty
 Fixed deposits

22
  Sugama deposits
 Deposits in trust scheme
 Safe deposit locker
 New chitty loan
 Gold loan
 FD loan .
 Consumer vehicle loan
 Reliable consumer loans
 Trade loan
 Housing loan
 Tax planning scheme
 Sugama Akshaya OD
 Mangalya loan
 Vidyadhanam loan

FUTURE PLAN OF KSFE

 Centralized chitty registration

 Online chitty auction
 Chitty payments at the door step of subscribers.
 Opening branches outside Kerala
 Spreading weekly chitty to all the KSFE branches.
 E-remittance facilities for all customers.
 Foray into the field of M-commerce

23
  Introducing ATM facilities and any time anywhere
transaction facilities.
 Implementation of core solutions software in the company.
 Going for CRISIL rating to obtain FAAA
 Undertaking trading of Gold.

ACHIVEMENTS AND AWARDS

KSFE is the number one non-banking financial company in

Kerala. PRAVASI BHARATHI (KERALA) SHREYAS
AWARD for the year 2010. KSFE is selected for the award on the
basis of overall performance of the company.

WORK FLOW MODEL

This is the work flow adopted by KSFE at the time of receiving

deposits or lending loans to their customers.

 Customers: Customers approach the KSFE with the

intentions of depositing the amount and get returns out of it.
The customer also approaching KSFE for getting loans like
vehicle loans, passbook loans, etc. So, the customers will be
looking for business plan which pays highest rate of return
or lowest rate of interest. Different options arc providing by
KSFE to the customers like chitty, sugama deposits, fixed
deposits etc.

24
 Lending money and accepting deposits: As like banks,
KSFE also providing money to the customers by the way of
different loans like chitty loans, gold loans, passbook loans,
trade financing, flexi trade loan etc. the returns are
comparatively higher and because the effective returns are
really higher than the published interest rate because of
monthly payment of interest (in case of all other institutions,
the interest is paid quarterly). KSFE accept deposits from
customers by the way of chitty, sugama deposits, fixed
deposit etc. The customer can have introduced either by any
existing customer or an employee of the KSFE the customer
has to provide necessary documents like ration card or any
license for address, age and income proof.

 Application review and documentation: Once the

customer fills all the necessary documents the manager
reviews the application KSFE tries to verify the authenticity
of the documents finished.
 Decision making: After verifying the documents the
manager takes decision on the customer whether they have
to provide loans or accept deposits.
 Deposit completed or loans sanctioned: The final stage of
the process money deposits will be in he account of
customers. The annual interest rate in case of deposits from

25
the public, is 7% per annum. Interest for chitty price money
deposits is 8% per annum. Due to the monthly payment of
interest the effective rate will be higher than its rate. Senior
citizen will get 7.25% for fresh deposits and 8% for price
money deposits. Normally 75% of fixed deposits amount
can be availed as loan. The facility is called fixed deposits
loan.

KSFE AT THE GLANCE

Type Public sector

Owned by Government of Kerala

Founded 6th November 1969

Head office Thrissur

Number of offices Above 415

Chairman Adv. Peelipose Thomas

Managing director Sri, A purushothaman

Industry Finance

Paid up capital 20 crores covered

Business turnover 15000 crores

Employees 5100 above

26
 ORGANIZATION STRUCTURE OF KSFE (HEAD OFFICE)

Board of Directors

Chairman

Managing Directors
Secretariat PA/SM (RR)

GM Business GM Finance DGM P & HR DGM (M&V)

AGM (ALC) AGM (LEG AL) DGM

(BUSI&OPS) SM/CM AGM AGM AGM(IT)
Record P&HR Recovery
(Tax) SM/CM

SM/CM SM/CM
SM/CM (LEGAL) AGM
SM/CM JMI&V

JM(PIG) JM(BUSI)
SM/CM Secretary
SM/CM SM/CM Board Board Board
of of of
JM Branch

27
GM: General Manager

DGM: Deputy General Manager

DGM (P&HRD): Deputy General Manager (Personal and

human development)

DGM (JI&V): Deputy General Manager (Internal Audit and

Vigilance)

AGM (PLG & BUS): Assistant General Manager (Personal

Human Resource Development)

AGM (IT): Assistant General Manager (IT)

AGM (Region): Assistant General Manager (Region based at

Respective Regional Office)

SM/CM (PLG): Senior/ Chief Manager (planning)

SM/CM.(RR): Senor/Chief Manager (Revenue Recovery)

SM/CM (IT): Senior/Chief Manager (Information Technology)

SM/CM (GAD): Senior/Chief Manager (Chief Administrator)

SM/CM (1A): Senior/Chief Manager (Internal Audit)

JM/BM (l & V): Junior/Branch Manager (Inspection and

Vigilance)

28
 THEORETICAL FRAMEWORK

Working capital

Working capital is the capital required the day to day

working of an enterprise it is required for the purchase of raw
materials and for meeting the day-to-day expenditure on salaries,
wages rent etc. according to Shubin "working capital is the
amount of funds necessary to power the coast of operating the
enterprises", working capital being lifeblood for any Enterprise.
Its management become a crucial exercise for the financial
manager of a firm, proper management of working capital is
essential to a Company's fundamentals in financial health and
operational success as a business.

A business uses working capital in its daily operations,

working capital is the difference between a business current asset
and current liabilities or debts, the working capital ratio which
divides current assets by current liabilities indicates whether a
company has adequate cash flow to cover short term debt and
expenses.

WORKING CAPITAL MANAGEMENT

Working capital Management is concerned with problem

that arise in attempting to manage the current assets, current

29
liabilities and the Inter relationship that exist between them, it
involves both the formulations working capital policy and
carrying out that policy in day-to-day operations, the primary
purpose of working capital Management is to make sure the
company always made in sufficient to meet its short-term
operating cost and short-term debt obligation, managing working
capital means managing inventories cash, accounts, payables, and
cash receivable. There are two concepts used for working capital
these are:

1. Gross working capital

2. Net working capital

GROSS WORKING CAPITAL

According to gross concept working capital refers to the

amount of funds invested in current asset, thus, working capital is
equal to the current assets, the working capital as per gross
concept is called gross working capital. Gross concept is a
quantitative concept.

Gross working capital = total current assets

NET WORKING CAPITAL

According to net concert working capital refers to excess of

current assets over current liabilities. Thus, working capital refers

30
to net current assets. working capital as per net concept working
capital is called net working capital it is a qualitative concept.

Net working capital = current assets- current liabilities

COMPONENTS OE WORKING CAPITAL

 CURRENT ASSETS

Current assets arc those assets which can be converted in to

cash in the normal course of activity of a firm usually one year,
examples of current assets include cash, bank balance, bill
receivable, stock of current assets etc.

 CURRENT LIABILITIES

Current liabilities are those liabilities which are repayable

during short period usually within a year, examples of current
liabilities include sundry creditors, bills payable, short term
borrowing, provisions for taxation etc.

TYPES OF WORKING CAPITAL

Working capital is broadly classified in to two

1. Permanent working capital

2. variable working capital

31
 Permanent working capital

There is always a minimum amount of working capital

which is continuously required by the Enterprise to carry out its
normal business operations. This is usually called as permanent or
fixed working capital.

Variable working capital

Any amount over and above the permanent working capital

is variable or temporary working capital, it is the working capital
Which varies with the volume of business, this is additional
capital needed to meet the seasonal and special needs.

COMPETITORS

Competition means the act of competing a contest and

competitor is one who competes. It refers to rivalry among
various firms operating in a particular market that satisfy the same
customer needs. The industry structure effects long run
profitability. Therefore, the competitors should be understood and
monitored. Their actions can spoil on otherwise attractive
industry their weakness can be target for exploitation and their
response to a firms marketing initiative.

KSFE.com top competitors include,

 Onlinesebi.com

32
  adcb.com
 emicalculator-india.com
 manoramaonline.com
 wikipedia.org
 gokulamchits.com
 rupaiyaexchangr.com
 reliancemoney.co.in
 myinvestmentidea.com
 Charteredclub.com

TOOLS OF THE STUDY

Certain tools arc to be used for the research works that are follows,

1. ANALYTICAL TOOL

A. RATIO ANALYSIS

Ratio analysis is one of the most powerful tools of financial

analysis. It is used as a device to analyze and interpret the
financial health of the enterprise. Ratios are considered as one of
the useful aids available to the management in assessing the
position and drawing conclusion regarding efficiency and
financial status of a business concern.

MEANING

A ratio is a simple arithmetic expression of the relationship

of one number lo another. Ratio is relationships expressed in
33
mathematical terms between figures which are connected with
each other in some manner.

OBJECTIVES

 To study the short-term solvency of a firm.

 To study the long-term solvency of a firm.
 To determine the profitability of a firm.
 To measure the performance of a firm.
 To facilitate the process of financial forecasting.
 To facilitate comparison.
 To communicate the strength and weakness of a firm.
 To enable managerial decision making.

USES OF RATIO ANALYSIS

 Utility to management.
 Utility to shareholders and investors
 Utility to creditors.
 Utility lo employees.
 Utility to government

SIGNIFICANCE OF RATTIO ANALYSIS

The significance of the financial statements analysis for

different parties as follow.

34
SIGNIFICANCE TO MANAGEMENT

The management can measure the effectiveness of the own

policies and decisions, determine the advisability of adopting new
policies, procedure and document to owners, the result of their
managerial efforts.

SIGNIFICANCE TO INVESTORS

With the help of financial analysis investors and share

holders of the business can know about the earning capacity and
the safety to their investment in the business.

SIGNIFICANCE FOR CREDITORS

Financial analysis tells them whether companies have

sufficient assets and funds to pay off its creditors.

SIGNIFICANCE FOR GOVERNMENT

Government can judge, the basis of analysis of financial

statements, which industry is progressing on the desired lines and
which industry need for the financial help.

SIGNIFICANCE TO FINANCIAL INSTITUTION

With the help of financial statements analysis financial

institution can know the profit earning capacity of the business
and its long-term solvency.

35
SIGNIFICANCE TO EMPLOYEES

Analysis of financial statements helps the employees in

determining the true profit of the business enterprise,

ADVANTAGES OF RATIO ANALYSIS

 To work out the profitability.

 To work out the solvency.
 Helpful in analysis of financial statement.
 Helpful in comparative analysis of the performance.
 To simplify the accounting information,
 To work out the operating efficiency.
 To work out short term financial position.
 Helpful for forecasting purpose.

DISADVANTAGES

 Limited comparability.
 Fake ratios.
 Effect of price level changes.
 Qualitative factors are ignored,
 Effect of window dressing.
 Costly technique.
 Misleading results.
 Absence of standard university accepted terminology.

36
TYPES OF RATIOS

Ratios are grouped into various classes according to the

financial activity or function they evaluate. There are four
important categories they are.

1. LIQUIDITY RATIO
2. SOLVENCY RATIO
3. ACT1VITY RATIO
4. PROFITABILITY RATIO

1. LIQUIDITY RATIO

Liquidity ratios arc the ratios that measure the ability of a

company to meet its short-term obligations. The liquidity short
term borrowings and current liabilities. If the value is greater than
1, it means the short-term obligations are fully covered. Most
common examples of liquidity ratios include,

 Current ratios
 Quick ratios
 Cash ratio
 Working capital ratio etc.

37
2. SOLVENCY RATIO

The term solvency refers to the ability of a concern to meet its

long-term obligations, the long-term liability of a firm is towards
debenture holders financial institutions providing medium and
long-term loans and other creditors selling goods on credit. These
ratios indicate firm’s ability to meet the fixed interest and its cost
and repayment schedules associated with its long-term
borrowings. The solvency ratio “measures the size of a company's
after-tax income excluding non-cash depreciation expenses as
compared to the firm's total debt obligation”. Examples of
solvency ratios are,

 Proprietary ratio
 Debt equity ratio
 Fixed asset to net worth

3. ACTIVITY RATIO

Activity ratio are considered with measuring the efficiency in

asset management. These ratios are also called Efficiency ratio or
Asset utilization ratios. An activity ratio may he defined as a test
of the relationship between sales and various assets a firm.

 Inventory turnover ratio

 Fixed asset turnover ratio
 Working capital turnover ratio
38
4. PROFITABILITY RATIO

The main aim of an enterprise is to earn profit which is

necessary for the survival and growth of the business enterprise. It
is earned with the help of amount invested in business. It is
necessary to know how much profit has been earned with the help
of the amount invested in the business. This is possible through
profitability ratio. This ratio examines the current operating
performance and efficiency of the business concern. Profitability
ratios are:

 Gross profit margin

 Net profit ratio
 Return on equity ratio etc…

B. COMPARATIVE STATEMENTS.

Comparative statements deal with the comparison of

different items of 'the profit and loss account and balance sheet of
two or more periods. Separative comparative statements are
prepared for profit and loss account as comparative income
statements and for balance sheet. As a rule, any financial
statements can be presented in the form of comparative statement
such as comparative balance sheet and comparative profit and
loss account.

39
COMPARATIVE INCOME STATEMENTS

Three important information are obtained from the

comparative income statements. They are gross profit, operating
profit and net profit. The changes or the improvement in the
profitability of the business concern is find out over a period of
time. If the changes or improvement is not satisfactory, the
management can find out the reason for it and some corrective
action can be taken.

COMPARATIVE BALANCESHEET

The financial condition of the business concern can be

finding out by preparing comparative balance sheet. The various
items of balance sheet for two diferent periods are used. The
assets are classified as current assets and fixed assets for
comparison. Likewise, the liabilities are classified as current
liabilities, long term liabilities and shareholder's net worth. The
term shareholders net worth includes equity share capital,
preference share capital, reserve and surplus and the like.

2. PRESENTATION TOOL

• GRAPHS AND DIAGRAMS

A graph can be defined as a pictorial representation or a

diagram that represents data or values in an organized manner.

40
The points on the graph often represent the relationship between
two or more things. There are many different types of graphs such
as connected and disconnected graphs, weighted graphs, directed
and undirected graphs, and simple graphs etc....

A diagram is a visual form for presenting statistical data for

highlighting the basic facts and relationship which arc inherent in
data. The diagrammatic presentation is more understandable and
it is appreciated by everyone. It attracts the attention and it is a
quicker way of grasping the results saving the time it is very
much required, particularly in presenting qualitative data. There
are different types of diagrams used in statistics are line diagram,
bar diagram and pie chat etc.

41
4.1 CURRENT RATIO

Current ratio is defined as the ratio of current assets to current

liabilities it shows the relationship between total assets and total
current liabilities. Current ratio is also called Working capital
ratio

Current ratio = current assets / current liabilities

The table 4.1 showing current ratio for the year 2014-2019

Year Current assets Current Ratio

liabilities
2014-2015 157098989596 153551645912 1.023

2015-2016 184914497064 180140481638 1.026

2016-2017 208326567464 203013427246 1.026

2017-2018 236069946548 229623736000 1.028
2018-2019 275183935802 267198825506 1.029
(Source: collected from secondary source)

42
Chart 4.1 showing the CURRENT RATIO for the year 2014-
2019

Series 1

1.03
1.028 1.028 1.029
1.026
1.026 1.026
1.023
1.024
1.022
1.02
2014-2015
2015-2016
2016-2017
2017-2018
2018-2019

Series 1

INTERPRETATION

As a conventional rule a current ratio of 2.1 is considered to be

best. The analysis of current ratio indicates the company does not
maintained optimum level of current ratio in the five years.
Company is not at all liquid and only have enough liquidity to just
pay off the current liabilities

43
4.2 QUICK RATIO

Liquid ratio or Quick ratio is the ratio of quick assets or liquid

assets to current liabilities. It is the measure of the instant debt
paying ability of the business enterprises. It is also called acid test
ratio or near money ratio.

Liquid ratio = Liquid assets/ Current Liabilities

Liquid assets= Current Assets- [stock + prepaid expenses]

The table 4.2 showing liquid ratio for the year 2014-2019

Year Liquid Assets Current Ratio

Liabilities
2014-2015 157083650182 153551645192 1.023

2015-2016 184899408000 180140481638 1.026

2016-2017 208307176797 203013427247 1.026

2017-2018 236050953223 229623736000 1.027
2018-2019 275164666074 267198825506 1.029
(source Collected from secondary source)

44
Chart 4,2 showing liquid ratio for the year 2014-2019

Series 1

1.03
1.028 1.029
1.026 1.027
1.026 1.026
1.023
1.024
1.022
1.02
2014-2015
2015-2016
2016-2017
2017-2018
2018-2019

Series 1

INTERPRETATION

A liquid ratio of 1:1 is considered as satisfactory. In the five

years, the quick ratio is maintained in the level of 1:1. So the
financial position of the KSFE ltd is said to be sound. The firm
able to pay off its current liabilities when they become due.

45
4,3 ABSOLUTE LIQUID RATIO

This ratio establishes the relationship between quick assets and

current liabilities. Quick assets include cash in hand, cash at bank
and marketable securities. The absolute liquid ratio also called
super quick ratio or cash ratio

Absolute liquidity ratio = Quick assets/Current liabilities

The table 4.3 showing Absolute liquid ratio for the year 2014-
2019

Year Quick Assets Current Liabilities Ratio

2014-2015 25444695913 155659231763 0.163

2015-2016 30974133596 180140481638 0.172

2016-2017 35726779619 203013427247 0.176

2017-2018 41507011097 229623736000 0.181
2018-2019 588334762579 267198825506 0.220
(Source: Collected from secondary source)

46
Chart 4.3 showing the Absolute liquid ratio for the year 2014-
2019

Series 1
0.25
0.22
0.172
0.2 0.176
0.163 0.181

0.15

0.1 Series 1

0.05

0
2014-2015
2015-2016
2016-2017
2017-2018
2018-2019

INTERPRETATION

The standard norms' of liquid ratio are 0.5:1, in other words if the
amount of cash and cash equivalent are at least 50% of liquid
liabilities, the liquid position is not considered as good.

47
4.4 DEBT EQUITY RATIO

The ratio indicates the relative proportion debt and equity in

financing the assets of the firm. It expresses the relationship
between debt and equity. It is also called external-internal equity
ratio or security ratio

Debt Equity Ratio= Debt/Equity

Table no:4.4 showing Debt Equity Ratio for the year 2014-
2019

Year Debt Equity Ratio

2014-2015 61532221052 3796265710 16.21

2015-2016 75188650720 4449527617 16.89

2016-2017 89247836803 4903662585 18.20

2017-2018 106752198858 5756408597 18.54
2018-2019 133085703347 7201871849 18.48
(Source: Collected from secondary source)

48
Chart 4.4 showing the Debt Equity Ratio for the year 2014-
2019

19
18.5 18.54
18.2 18.48
18
17.5
17 16.89
16.21
16.5
16
15.5
15
2014-2015
2015-2016 Series 1
2016-2017
2017-2018
2018-2019

INTERPRETATION

This ratio shows the relative contributions of creditors and owners

of bank in its financing. An ideal ratio is 1:1. That means the
funds provided by outsiders and shareholders must be equal. In
the year 2014-2015, the ratio was 16.21 The calculated ratios are
higher than standard. It indicates that there is high proportion of
debt content in the capital structure.

49
4.5 PROPRIETARY RATIO

Proprietary ratio establishes the relationship between

shareholders proprietors fund and total asset. The ratio is also
known as equity ratio or net worth ratio.

Proprietary Ratio= Share Holders Fund/ Total Asset

Table no 4.5 showing proprietary ratio for the year 2014-2019

Year Share Total Asset Proprietary

Holders Fund Ratio
2014-2015 3796265710 157384592960 2.41

2015-2016 4449527617 185164055407 2.40

2016-2017 4903662585 208574601831 2.35

2017-2018 5756408597 236287407040 2.44
2018-2019 7201871849 275376969134 2.61
(Source: Collected from secondary source)

50
Chart 4.5 showing the Proprietary Ratio for the year 2014-
2019

2.65
2.6 2.61
2.55
2.5
2.45 2.41
2.4 2.44
2.4
2.35 2.35
2.3
2.25
2.2
2014-2015
2015-2016 Series 1
2016-2017
2017-2018
2018-2019

INTERPRETATION

The ratio is computed for the purpose of knowing how much fund
have been provided by shareholders to total asset. An ideal ratio is
0.5:1. Owner's contribution is high in the year 2015-2019. It
indicates safety to creditors and the bank less dependent on
creditors.

51
4.6 WORKING CAPITAL TURNOVER RATIO

The relation between sales and working capital is called working

capital turnover ratio. This ratio measures the efficiency in
working capital management.

Working capital turnover ratio = Net Sales / Working Capital

Table 4.6 showing Working Capital Turnover Ratio for the

year 2014-2019

Year Net Sales Net Ratio

Working
Capital
2014-2015 12160293890 3547344404 3.427

2015-2016 14365035324 4774015426 3.009

2016-2017 15820644957 5313140218 2.979

2017-2018 17451693193 6446210548 2.707
2018-2019 19236376391 7985110296 2.409
(Source: Collected from secondary source)

52
Chart 4.6 showing Working Capital Turnover Ratio for the
year 2014-2019

3.427
3.5
3.009
3 2.979
2.707
2.5
2.409
2
1.5
1
0.5
0
2014-2015
2015-2016 Series 1
2016-2017
2017-2018
2018-2019

INTERPRETATION
This analysis measure how well a company is utilizing its
working capital to support a given level of sales. Here shows
fluctuating trend in maintain companies working capital. In the
year 2014-2015 indicates high turnover ratio, So the management
was efficient in using a firm’s Short-term assets and liabilities to
support sales.

53
4.7 TOTAL ASSET TURNOVER RATIO
The Total asset turnover ratio is an efficiency ratio that measures
a company's ability to generate sales from its assets. This ratio
establishes the relationship between total assets and sales.
Total Asset Turnover Ratio = Sales/ Total Assets

Table No 4.7 showing Total Asset turnover ratio for the year
2014-2019
Year Sales Total Assets Ratio
2014-2015 12160293890 157384592960 7.726

2015-2016 14365035324 185164055407 7.758

2016-2017 15820644957 208574601831 7.585

2017-2018 17451693193 236287407040 7.385
2018-2019 19236376391 275376969134 6.985
(Source: Collected from secondary source)

54
Chart 4.7 showing the Total Assets Turnover Ratio for the
year 2014-2018

7.726 7.758
7.8
7.6 7.585
7.4 7.385
7.2
7
6.8 6.985

6.6
6.4
2014-2015
2015-2016 Series 1
2016-2017
2017-2018
2018-2019

INTERPRETATION

A high ratio indicates better efficiency of management in the

utilization of total assets. In the year 2014-2015 the ratio was
7.72. Then it decreased to 6.98. In the year 2018 - 2019 a low
ratio signifies inefficiency in the utilization of resource of
management.

55
4.8 GROSS PROFIT RATIO

This is the ratio of gross profit to sales expressed as a percentage.

It is also known as gross margin. It indicates the efficiency of
production or trading operations.

Gross Profit Ratio = Gross profit \ Net sales

Table No 4.8 showing Gross Profit Ratio for the year 2014-
2019

Year Gross Profit Net Sales Ratio (%)

2014-2015 1709915948 12160293890 14.06

2015-2016 2028747913 14365035324 14.12

2016-2017 1539554223 15820664957 9.73

2017-2018 1506556993 17451693193 8.63
2018-2019 2560931383 19236376391 13.31
(Source: Collected from secondary source)

56
Chart 4.8 showing the Gross Profit Ratio for the year 2014-
2019

Series 1
16 14.06 14.12
14
13.31
12
9.73
10
8.63
8
6 Series 1
4
2
0
2014-2015
2015-2016
2016-2017
2017-2018
2018-2019

INTERPRETATION

The analysis of degree profit ratio shows smaller changes till in

the year 2016-2017. In the year 2017-2018 the gross margin is
decreased to lower level from the range of 15% to 8.63% and
increased gross margin in the year 2018-2019 the range of
13.31%. Here indicates the efficiency of trading operations.

57
4.9 NET PROFIT RATIO

Net profit ratio establishes a relationship between net profit (after

tax) and sales. It indicates the efficiency of management in
manufacturing, administering and selling the product. It is a true
indicator of operating efficiency.

Net Profit Ratio = Net Profit \ Net Sales

Table 4.9 showing Net Profit Ratio for the year 2014-2019

Ye Net Profit Net Sales Ratio

ar
2014-2015 598890360 12160293890 4.92

2015-2016 707222035 14365035324 4.92

2016-2017 358742848 15820644957 2.26

2017-2018 852746012 17451693193 4.88
2018-2019 1444124945 19236376391 7.50
(Source: Collected from secondary source)

58
Chart 4.9 showing Net Profit Ratio for the year 2014-2019

8
7 7.5
6 4.92
4.92
5 4.88
4
3
2 2.26
1
0
2014-2015
2015-2016 Series 1
2016-2017
2017-2018
2018-2019

INTERPRETATION

A good margin will vary considerably by industry, but a 10% net

profit is considered average, a 20% margin is considered high and
5% margin is low. In 2014-2018 there is low net profit ratio. In
2018-2019 there is an increase in net profit (7.50)

59
4.10 RETURN ON SHARE HOLDERS FUND .

This is the ratio of net profit to shareholders fund or net worth. It.
measures the profitability from the shareholders point of view.

Return on Shareholders Fund = Net profit after interest and tax /

Shareholder's fund

Table No 4.10 shows the Return on shareholder's fund for the

year 2014-2019

Year Net Profit Shareholder' Ratio

s fund
2014-2015 598890360 3796265710 15.77

2015-2016 707222035 4449527617 15.89

2016-2017 358742848 4903662585 7.31

2017-2018 852746012 5756408597 14.81
2018-2019 1444124945 7201871849 20.05
(source: Collected from secondary source)

60
Chart 4.10 showing the Return on shareholder fund for the
year 2014-2019

25

20
15.77 15.89 20.05
15 14.81
10
7.31
5

0
2014-2015
2015-2016 Series 1
2016-2017
2017-2018
2018-2019

INTERPRETATION

In the year 2016-2017 the return on shareholder fund is decreased

to the lower level from the range of 16% to 7.3% and increased in
the year 2018-2019 the range of 20%. The higher the percentage,
the more money is being returned to investors.

61
4.11 Comparative Balance sheet of the year 2014-2015
Particulars 2014 2015 Increase / %
Decrease

EQUITY &
LIABILITY
1.Shareholder's fund

(a)Share capital 200000000 200000000 - -

(b)Reserve & surplus 3044173350 3596265710 552092360 18.13
2.Non-current liabilities
(a)long term provisions 34418295 36682058 2263763 6.57
3.Current liabilities;
(a)Short-term 47773617162 61532221052 13758603890 28.79
borrowings
(b)other current 76013214824 91244733353 15231518529 20.03
liabilities
(c)Short term provisions 1079065750 774690787 (304374963) (28.20)
TOTAL 12814448938 15738459296 29240103579 22.81
1 0

ASSETS
1 .Non-Current assets
(a)Tangible assets 310044818 285603364 (24441454) (7.88)
(b)Intangible assets - - -
(c)work in progress 41135 - (41135) (100)
2.Current assets
(a)inventories - - - -
(b)cash & cash 20767855138 25444695913 4676840775 22.51
equivalent
(c)Short term loans & 10566393031 12980962065 24145690349 22.85
advances 0 9
(d) other current assets 1402617980 1844673024 442055044 31.51
TOTAL 12814448938 15738459296 29240103579 22.81
1 0

62
4.12 Comparative balance sheet for the year 2015-2016
Particulars 2015 2016 Increase / %
Decrease
EQUILY&
LIABILITY
1.Shareholder's fund

(a)Share capital 200000000 200000000 - -

(b)Reserve & surplus 3596265710 4249527617 653261907 18.16
2.Non-current liabilities
(a)long term provisions 523145487 574046152 50900665 9.72
3.Current liabilities;
(a)Short-term 61532221052 75188650720 13656429668 22.19
borrowings
(b)other current 91244733353 104591828842 13347095489 14.62
liabilities
(c)Short term provisions 288227358 360002076 71774718 24.90
TOTAL 157384592960 185164055407 27779462447 17.65

ASSETS
1 .Non-Current assets
(a)Tangible assets 281889393 246474850 (35414543) (12.56)
(b)Intangible assets 3713971 3083493 (630478) (16.97)
(c)work in progress - - - -
2.Current assets
(a)inventories 15339414 15089064 (250350) (1.63)
(b)cash & cash 25444695913 30974133596 5529437683 21.73
equivalent
(c)Short term loans & 129809620659 151269564866 21459944207 16.53
advances
(d) other current assets 1829333610 2655709538 826375928 45.17
TOTAL 157384592960 185164055407 27779462447 17.65

63
4.13 comparative balance sheet of the year 2016-2017

Particulars 2016 2017 lncrease \ %

Decrease
EQUITY &
LIABILITY
1.Shareholder's fund
(a)Share capital 200000000 500000000 300000000 1.5
(b)Reserve & surplus 4249527617 4403662585 154134968 3.62
2.Non-current
liabilities
(a)Long-term 574046152 657512000 83465848 14.53
provisions
3.Current liabilities
(a)short term 75188650720 89247836803 14059186083 18.69
borrowings
(b)Other current 104591828842 113378202884 8786374052 8.40
liabilities
(c)Short term 36002076 387358549 27385473 7.60
provisions
TOTAL 185164055407 208574601831 23410546424 12.64

ASSETS
1 .Non-current assets
(a) Tangible assets 246474850 243655217 (2819633) (1.14)
(b)Intangible assets 3083493 4295038 1211545 39.29
(c)Work in progress - 84112 84112 -
2.Current assets
(a) Inventories 15089064 19390668 43016045 28.50
(b) Cash &cash 30974133596 35726779618 4752646022 15.34
equivalent
(c) short term loans 151269564866 168586499139 17316934273 11.44
& advances
(d) Other current 2655709538 3994898039 1339188501 50.42
assets
TOTAL 185164055407 208574601831 23410546424 12.64

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4.14 comparative balance sheet of the year 2017-2018

Particulars 2017 2018 lncrease\ Decr %

ease
EQUITY &
LIABILITY
1.Shareholder's fund
(a)Share capital 500000000 1000000000 500000000 50
(b)Reserve & surplus 4403662585 4756408597 352746012 8.01
2.Non-current
liabilities
(a)Long-term 65751200 907262444 249750444 37.98
provisions
3.Current liabilities
(a)short term 89247836803 106452198858 17504362055 19.61
borrowings
(b)Other current 113378202895 122535016640 9156813745 8.07
liabilities
(c)Short term 387387549 336520502 (50867047) (13.13)
provisions
TOTAL 208574601831 236287407041 27712805210 13.28

ASSETS
1. Non-current assets
(a) Tangible assets 243655217 215658965 (27996252) (11.49)
(b)Intangible assets 4295038 1717415 (2577623) (60.01)
(c)Work in progress 84112 84112 - -
2.Current assets
(a) Inventories 19390668 18993325 (397343) (2.04)
(b) Cash &cash 35726779619 41507011097 5780231478 16.17
equivalent
(c) short term loans 168585499138 18856612678 19980627240 11.85
& advances
(d) Other current 3994898040 5977815748 1982917708 49.63
assets
TOTAL 208574601831 236287407041 27712805210 13.28

65
4.15 Comparative balance sheet of the year 2018-2019

Particulars 2018 2019 lncrease\ Decr %

ease
EQUITY &
LIABILITY
1.Shareholder's fund
(a)Share capital 1000000000 1000000000 - -
(b)Reserve & surplus 4756408597 6201871849 1445463252 30.38
2.Non-current
liabilities
(a)Long-term 907262444 976271779 69009335 7.60
provisions
3.Current liabilities
(a)short term 106752198858 133085703347 26333504489 24.66
borrowings
(b)Other current 122527940757 133798440455 11270499698 9.19
liabilities
(c)Short term 343596384 314681704 (28914680) (8.41)
provisions
TOTAL 236287407040 275376969134 39089562094 16.54

ASSETS
1. Non-current assets
(a) Tangible assets 215658965 189766178 (25892787) (12.00)
(b)Intangible assets 1717415 3267154 1549739 90.23
(c)Work in progress 84112 - (84112) -
2.Current assets
(a) Inventories 18993325 19269728 276403 1.455
(b) Cash &cash 41507011097 58834762579 17327751482 41.74
equivalent
(c) short term loans 188566126378 209777264679 21211138301 11.24
& advances
(d) Other current 5977815748 6552638816 574823068 9.61
assets
TOTAL 236287407040 275376969134 39089562094 16.54

66
INTERPRETATION

Comparative statement is the important indicator of financial

analysis and control. It helps to determine how funds are
financed. In 2015-2019 the cash and cash equivalents are high. In
the year 2015-19 fixed assets are reduced.

67
4.16 Schedule of changes in working capital 2015-2016

Particulars Previous year Current year Increase in Decrease in

2015 2016 working working
capital capital
CURRENT
ASSETS:-
Inventories 15339414 15089064 - 250350
Cash and cash 25444695913 30974133596 55294376 -
equivalents
Short term loans 129809620659 151269564866 388915351 -
and advances
Other current 1844673024 2655709538 871036914 -
assets
Total current 157114329010 184914497064 - -
asset (A)
CURRENT
LIABILITIES:-
Short term 61532221052 75188650720 198564296 -
borrowing
Other current 91244733353 104591828842 195470984 -
liabilities
Short term 774690787 360002076 - 497699963
previous
Total current 153551645192 180140481638 - -
liabilities (B)
Net working 3562683818 4774015426 - -
capital (A-B)
Increase in 1211331608 - - 1211331608
working capital
4774015426 4774015426 1709281921 1709281921

68
4.17 Schedule of changes in working capital 2016-2017

Particulars Previous year Current year Increase in Decrease in

2016 2017 working working
capital capital
CURRENT
ASSETS:-
Inventories 15089064 19390668 4301604 -
Cash and cash 35726779168 30974133596 - 5852634588
equivalents
Short term loans 151269564866 168585499139 17315934273 -
and advances
Other current 3994898039 2655709538 - 2439177068
assets
Total current 184914497064 208326567464 - -
asset (A)
CUURENT
LIABILITIES:-
Short term 89247836803 75188650720 - 14509186083
borrowing
Other current 104591828842 113378202494 6047272127 -
liabilities
Short term 387387549 360002076 - 27385473
previous
Total current 1801404816388 203013427246 - -
liabilities (B)
Net working 4774015426 5313140218 - -
capital (A-B)
Increase in 539124792 - - 539124792
working capital
6446210548 6446210548 23367508004 23367508004

69
4.18 Schedule of changes in working capital 2017-2018

Particulars Previous year Current year Increase in Decrease in

2017 2018 working working
capital capital
CURRENT
ASSETS:-
Inventories 19390668 18993325 - 397343
Cash and cash 41507011097 35726779618 - 5908872817
equivalents
Short term loans 188566126378 168585499139 - 189224933857
and advances
Other current 3994898039 5977815748 1982917709 -
assets
Total current 208326567464 236069946548 - -
asset (A)
CUURENT
LIABILITIES:-
Short term 89247836803 106752198858 16191385997 -
borrowing
Other current 113378202894 122535016640 7843837688 -
liabilities
Short term 3873875469 336520502 - 50867047
previous
Total current 203013427246 229623736000 - -
liabilities (B)
Net working 531340218 6446210548 - -
capital (A-B)
Increase in 1133070330 - - 1133070330
working capital
TOTAL 6446210548 6446210548 26018141394 26018141394

70
4.19 Schedule of changes in working capital 2018-2019

Particulars Previous year Current year Increase in Decrease in

2018 2019 working working
capital capital
CURRENT
ASSETS:-
Inventories 18993325 19269728 276403 -
Cash and cash 41507011097 58834762579 17327751482 -
equivalents
Short term loans 188566126378 209777264679 21211138301 -
and advances
Other current 5977815748 6552638816 596661866 -
assets
Total current 236069946548 275183935802 - -
asset (A)
CUURENT
LIABILITIES:-
Short term 133085703347 106752198858 - 26311665691
borrowing
Other current 133798440455 122535016640 - 11269423815
liabilities
Short term 336520502 314681704 - 21838798
previous
Total current 229623736000 267198825506 - -
liabilities (B)
Net working 6446210548 7985110296 - -
capital (A-B)
Increase in 1538899748 - - 1538899748
working capital
TOTAL 7985110296 7985110296 39135828052 39135828052

71
INTERPRETATION

The statement shows positive working capital the current assets

and current liabilities are increasing trend. In 2015-2019, the
operating expenses are high. It leads to fund loss in operation.
Hence the recent increase in working capital during 2015-2019.
The company still maintained sufficient working capital for the
day- to- day operation.

72
5.1 FINDINGS

 In the five years analysis of current ratio show that the

current asset is note twice as large as current liabilities. The
company does not have enough liquid assets to cover its
short term liabilities.
 Quick ratio is satisfactory. Because quick ratio of one
indicates that quick assets almost equal to current assets.
The company can pay its current liabilities when they are
due with only assets.
 In the year 2014-2015 indicate high turnover ratio, so the
management was efficient in using short term asset &
liabilities to support sales. But amount has been blocked
more in working capital. Gradually the company decreased
the working capital turn over level into minimum level.
 Debt equity ratio is higher than standard. It indicates that
there is high proportion of debt content in the capital
structure.
 Owner's contribution is high in the year 2015-19. That
means the bank less dependent on creditors.
 In the year 2018-19 a low total asset turnover ratio, it
signifies inefficiency in the utilization of resource of
management.

73
 During the year 2018-19, there are greater the use of return
on shareholders fund, the higher the percentage the more
money is being returned to investors.
 From 2014-18 there is low net profit ratio.
 The analysis of degree gross profit ratio shows smaller
changes till in the year 2016-17

74
5.2 SUGGESTIONS

 Liquidity position of KSFE has not improved over the five

years. It suggests that the firm could maintain proper liquid
fun like cash and bank balance which is essential for better
liquidity position.
 The company can increase the level of working capital to
give more support to sales.
 Company can focus more on primary operations to increase
the profitability the company.
 KSFE can add more technology-based services to attract
high income people.
 Investment in marketable securities can be increased,
because it is very profitable for the company.
 Security requirements and formalities should be simplified.

75
5.3 CONCLUSION

Working capital is the lifeline of every industry irrespective

of whether it is a manufacturing industry, service industry.
Working capital is the prime and most important requirements for
carrying out the day-to-day operations of the business. Working
capital finance reduces the overall fund requirement, required to
build up the current asset, which in turn help to improve turnover
ratio.

The study details with the analysis of working capital

management with special reference of KSFE Ltd. As far as the
company is concerned working capital is important. It is useful
for knowing the efficiency liquidity position of the company. The
analysis of 5 years reveals that the company is in a position to pay
off its current obligations. The company should effectively utilize
its asset, the company should try to improve its debit
management. The maintaining of working capital and overall
performance of the company is satisfactory.

76