A STUDY ANALYSIS ON

WORKING CAPITAL MANAGEMENT

AT POLSTAR CARGO PVT.LTD.

S
A PROJECT REPORT

Submitted in the partial fulfilment of the requirement the award of Degree of Master
of Business Administration (MBA)
2020-2021

Submitted by: Aarti

University PRN: 2028100013
GUIDED BY:
Dr. Rohtash Kumar

BHARTI VIDYAPEETH DEEMED UNIVERSITY SCHOOL

OF DISTANCE EDUCATION
Academic study centre- BVIMR, New Delhi
An ISO 9001:2008 Certified Institute
NAAC Accredited Grade “A” University

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 Student Undertaking Certificate Originality

I Aarti, a student of MBA 3rd Semester would like to declare that the Project report
entitled “A Study Analysis on Working Capital Management at Pole Star Cargo Pvt.
Ltd. ” submitted to Bharati Vidyapeeth University Pune, school of Distance Education
Pune, Academic study centre BVIMR New Delhi in partial fulfilment of the requirement
for the award of the degree.

It is an original work carried out by me under the guidance of Dr. ROHTAS

KUMAR.

All respected guides, faculty member and other source have been properly Acknowledged
and the report contains no plagiarism.

To the best of my knowledge and belief the matter embodied in this project is a genuine
work done by me and it has been neither submitted for assessment to the University nor to
any other University for the fulfilment of the requirement of the course of study.

Aarti

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 Acknowledgement

I have taken in this project. However, it would not have been possible without the kind
support and help of many individuals and organisation. I would like to extend my sincere
thanks to all of them.

I am highly indebted to Dr. ROHTAS KUMAR for their guidance and constant supervision
as well as for providing necessary information regarding the project & also for their support
in completing the project.

I would like to express my special gratitude and thanks to industry person for giving me such
attention and time.

My thanks and appreciation also goes to everyone who have willingly helped me out with
their abilities.

Aarti

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4
 Table of
CONTENTS

PAGE NO.
CHAPTER-1 : Introduction to the topic 6-8
About the company 8-11
Objective and vision of the company 11-12
Scope of the company 13-25
Porters 5 Forces Model 25-27

CHAPTER-2 : REVIEW OF LITERATURE 28-32

Current issue 32-33

History and development of company and industry 33-34

New development of company and indusy 34-35

CHAPTER-3 : RESEARCH METHODOLOGY 36-38

Research design 38-39
Data collection 39-40
Primary and secondary data 40-40
Methods for data collection 40-41
Limitation of the study 41-42

CHAPTER-4 : DATA ANALYSIS 43-63

Methods and techniques of data analysis
Secondary data analysis

CHAPTER-5 : FINDINGS & CONCLUSIONS 64-65

CHAPTER-6 : SUGGESTIONS 66-66

CHAPTER-7 : REFRENCES 67-67

Appendices 68-68

CHAPTER 1

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 INTRODUCTION

INTRODUCTION

Working capital management is concerned with the problems that arise while managing the
current assets, the current liabilities and the interrelationship that exists between them. Thus,
the working capital management refers to all aspects of a administration of both current assets
and the current liabilities. Every business concern should not have neither ample of ideal
funds now into short of working capital as both the conditions are harmful and unprofitable
for any business. But out of these two, the shortage of working capital is more dangerous for
the well being of the firms. This project will be focused on POLSTAR CARGO fragrance
which is ideal ITES organization for its client however in recent times POLSTAR CARGO
fragrance going through the tough time where many companies goes out from the POLSTAR
CARGO fragrance hand however this project will focus on the following two problem faced
by the POLSTAR CARGO fragrance.
1. First, given the level of sales and the relevant cost considerations, what are the optimal
amounts of cash, accounts receivable and inventories that a firm should choose to maintain?
2. Second, given these optimal amounts, what is the most economical way to finance these
working capital investments? To produce the best possible results, firms should keep no
unproductive assets and should finance with the cheapest available sources of funds. Why? In
general, it is quite advantageous for the firm to invest in short term assets and to finance
short-term liabilities.

WHY THIS PROJECT CHOOSEN (JUSTIFICATION OF TITLE)

Study of working capital is helpful in knowing the company’s position of funds maintenance
and ensures appropriate level of working capital inventory, current ratio, quick ratio, current
amount turnover & web torn turnover levels

2. This project is helpful in expanding the dualism; it ensures project viability & availability
of funds.

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 3. This project is also useful as it compares the present year data with the past data, thereby it
shows the trend or changes. Thus helps in taking corrective measures to improve performance

4. It will give overall view of the organization and it is useful in further expansion decisions
taken by the management.

SCOPE OF THE PROJECT

 This project will be a learning device for the finance student.

 Through this project we would study the various methods of the working capital
management.

 The project will be a learning of planning and financing working capital.

 The project would also be an effective tool for credit policies of the companies.

 This will show different methods of holding inventory and dealing with cash and receivables.

 This will show the liquidity position of the company and also how do they maintain a
particular liquidity position.

OBJECTIVE OF THE STUDY

Study of the working capital management is very important. Unless the working capital is
planned, managed and monitored effectively, company cannot earn profits and increase its
turnover, Also it helps in removing bottlenecks, With this primary objective of the study.
Other main objectives include:
 To examine the effectiveness of working capital management polices with the help of
accounting ratio
 To ascertain the optimal level of Permanent and temporary working capital required for the
company to ensure profitability

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 To study liquidity position of the company by taking various measurements.
 To compare and analyze various components of working capital management such as
Accounts receivables, accounts payables, inventory position, credit management, etc
 To make suggestions for policy makers for effective management of working capital.
 To study the Operating and cash cycle of the company

ABOUT THE COMPANY

POLSTAR CARGO PRIVATE LIMITED is a Private incorporated on 20 January 2014. It is
classified as Non-govt company and is registered at Registrar of Companies, Delhi. Its
authorized share capital is Rs. 6,000,000 and its paid up capital is Rs. 1,500,000. It is inolved
in Supporting and auxiliary transport activities; activities of travel agencies

Pole Star Cargo India Private Limited's Annual General Meeting (AGM) was last held on 30
September 2019 and as per records from Ministry of Corporate Affairs (MCA), its balance
sheet was last filed on 31 March 2019.
Pole Star Cargo India Pvt. Ltd. is a company of mindful, committed, and responsive
individuals with diverse backgrounds, ideologies, areas of expertise. As diverse as we are, we
are unified by the common goal to servicing our customers beyond their greatest expectations
through innovation and creativity.
Throughout its history, the company philosophy has emphasized the importance of personal
customer service with innovation and integrity.

Over the years we have continually strived for excellence and achieved steady growth. Our
success is due to constant emphasis on staff professionalism, coupled with innovative
procedures and technology.

Presently, there are 4 shareholders of the company :

 Ashwani Sharma
 Anuradha Sharma
 Arjun Sharma
 Nikita Joshi Sharma

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We view each business transaction as an equally important link in building long-term
relationships with our customers. As a result, our management for your transportation
logistics is defined by professional, personalized attention every step of the way.

Our company is also involved in trading business of various products (export/import) and
have professional team for sourcing & quality control. Interested parties may contact us for
any query they may have for export/import of any product they are looking for....

Working with Pole Star Cargo India Pvt. Ltd. as a part of your team allows you to
concentrate on the priorities of your day-to-day business, while we take care of the myriad
details involved in global shipping and documentation. Put simply, our goal is to make your
job easier.

Company Details

CIN U63010DL2014PTC263744

Company Name POLE STAR CARGO INDIA PRIVATE

LIMITED

Company Status Active

RoC RoC-Delhi

Registration 263744
Number

Company Company limited by Shares

Category

Company Sub Non-govt company

Category

Class of Company Private

Date of 20 January 2014

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 CIN U63010DL2014PTC263744

Incorporation

Age of Company 7 years, 5 month, 19 days

Activity Supporting and auxiliary transport activities;

activities of travel agencies
Click here to see other companies involved in
same activity.

POLSTAR CARGO has also developed extensive expertise in many industrial verticals such
as Insurance, Consumer Banking & Retail Finance, Commercial Finance, Healthcare and
Manufacturing & Industrial with comprehensive offerings across their value chain, the
following are the functional practices.
1. Finance & Accounting

POLSTAR CARGO Financial and Accounting Services aims at providing customizable,

effective, and accurate financial solutions. At POLSTAR CARGO we engage professionally
qualified and trained resources who have specialized expertise and in-depth experience in all
aspects of finance and accounts. Our focus on Controllership and Six Sigma process
management helps in increasing the shareholder value and profitability of our clients.

Our specialized knowledge and extensive experience enables us to cover a wide spectrum of
financial and accounting solutions.

Procure to pay
 Accounts Payable
 Fixed Assets Accounting

Record to report

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  Audits & Projects
 Closure of Books
 General Accounting Reporting
 Accounts Reconciliation

Planning & performance management

 Group Consolidation
 Planning & Performance
 Base Cost Reporting
 Cash Flow Analysis
 Manufacturing Finance
 Sales Analysis
1. Banking/ finance

Talent Pool

i. We all employees with excellent communication skills and vast Customer Service
experience. They are fluent in the required language of service and have been trained
extensively on Voice and Soft Skills
ii. They also posses immense Contextual knowledge related to the credit card product that they
handle
2. Transportation
POLSTAR CARGO provides a diverse portfolio of high-quality, offshore back-office
services to drive efficiency among the world's leading transportation companies - whether
global airlines, travel agencies, logistics service providers, GDS, car rental firms or cruise
lines.
VISION OF THE COMPANY
"Our vision is to create a pleasant and a memorable experience, both for our customers and
the people associated with POLSTAR CARGO , whilst giving back to nature."

MISSION OF THE COMPANY

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For our employees:- To provide an inclusive & progressive workplace where ownership is
encouraged, performance is rewarded, and future leaders are nurtured.
For our customers:- To make our customers successful by providing them a predictable, cost
effective and a seamless logistics experience backed by technology and operational
excellence.

For our partners:- To augment the capability of our partners with modern processes &
technology and be a consistent contributor to their business growth.

For our shareholders:- To maximize shareholder value creation by pursuing sustainable

growth opportunities, practising the highest levels of corporate governance while contributing
positively to a cleaner planet.

WORKING CAPITAL CYCLE

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 The upper portion of the diagram above shows in a simplified form the chain of events in a
manufacturing firm. Each of the boxes in the upper part of the diagram can be seen as a tank
through which funds flow. These tanks, which are concerned with day-to-day activities, have
funds constantly flowing into and out of them.

 The chain starts with the firm buying raw materials on credit.
 In due course this stock will be used in production, work will be carried out on the stock, and
it will become part of the firm’s work-in-progress.
 Work will continue on the WIP until it eventually emerges as the finished product.
 As production progresses, labor costs and overheads need have to be met.
 Of course at some stage trade creditors will need to be paid.
 When the finished goods are sold on credit, debtors are increased.
 They will eventually pay, so that cash will be injected into the firm.

Each of the areas- Stock (raw materials, WIP, and finished goods), trade debtors, cash
(positive or negative) and trade creditors – can be viewed as tanks into and from which funds
flow.
Working capital is clearly not the only aspect of a business that affects the amount of
cash.
 The business will have to make payments to government for taxation.
 Fixed assets will be purchased and sold
 Lessors of fixed assets will be paid their rent
 Shareholders (existing or new) may provide new funds in the form of cash
 Some shares may be redeemed for cash
 Dividends may be paid
 Long-term loan creditors (existing or new) may provide loan finance, loans will need to be
repaid from time-to-time, and
 Interest obligations will have to be met by the business
Unlike, movements in the working capital items, most of these ‘non-working capital’ cash
transactions are not every day events. Some of them are annual events (e.g. tax payments,
lease payments, dividends, interest and, possibly, fixed asset purchases and sales). Others

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 (e.g. new equity and loan finance and redemption of old equity and loan finance) would
typically be rarer events.

SOURCES OF WORKING CAPITAL

POLSTAR CARGO has the following sources available for the fulfillment of its working
capital requirements in order to carry on its operations smoothly:
 Banks:
These include the following banks –
 Canara bank
 Standard chartered bank
 Commercial Papers:
Commercial Papers have become an important tool for financing working capital
requirements of a company.
Commercial Paper is an unsecured promissory note issued by the company to raise short-term
funds. The buyers of the commercial paper include banks, insurance companies, unit trusts,
and companies with surplus funds to invest for a short period with minimum risk.

INVENTORY MANAGEMENT

Inventories
Inventories constitute the most important part of the current assets of large majority of
companies. On an average the inventories are approximately 60% of the current assets in
public limited companies in India. Because of the large size of inventories maintained by the
firms, a considerable amount of funds is committed to them. It is therefore, imperative to
manage the inventories efficiently and effectively in order to avoid unnecessary investment.

Nature of Inventories
Inventories are stock of the product of the company is manufacturing for sale and
components make up of the product. The various forms of the inventories in the
manufacturing companies are:

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 Raw Material: It is the basic input that is converted into the finished product through the
manufacturing process. Raw materials are those units which have been purchased and stored
for future production.
 Work-in-progress: Inventories are semi-manufactured products. They represent product that
need more work they become finished products for sale.
 Finished Goods: Inventories are those completely manufactured products which are ready
for sale. Stocks of raw materials and work-in-progress facilitate production, while stock of
finished goods is required for smooth marketing operations. Thus, inventories serve as a link
between the production and consumption of goods.

Inventory Management Techniques

In managing inventories, the firm’s objective should be to be in consonance with the
shareholder wealth maximization principle. To achieve this, the firm should determine the
optimum level of inventory. Efficiently controlled inventories make the firm flexible.
Inefficient inventory control results in unbalanced inventory and inflexibility-the firm may
sometimes run out of stock and sometimes pile up unnecessary stocks.
 Economic Order Quantity (EOQ): The major problem to be resolved is how much the
inventory should be added when inventory is replenished. If the firm is buying raw materials,
it has to decide lots in which it has to purchase on replenishment. If the firm is planning a
production run, the issue is how much production to schedule. These problems are called
order quantity problems, and the task of the firm is to determine the optimum or economic lot
size. Determine an optimum level involves two types of costs:-
 Ordering Costs: This term is used in case of raw material and includes all the cost of
acquiring raw material. They include the costs incurred in the following activities:
 Requisition
 Purchase Ordering
 Transporting
 Receiving
 Inspecting
 Storing

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 Ordering cost increase with the number of orders placed; thus the more frequently inventory
is acquired, the higher the firm’s ordering costs. On the other hand, if the firm maintains large
inventory’s level, there will be few orders placed and ordering costs will be relatively small.
Thus, ordering costs decrease with the increasing size of inventory.

 Carrying Costs: Costs are incurred for maintaining a given level of inventory are called
carrying costs. These include the following activities:
 Warehousing Cost
 Handling
 Administrative cost
 Insurance
 Deterioration and obsolescence
Carrying costs are varying with inventory size. This behavior is contrary to that of ordering
costs which decline with increase in inventory size. The economic size of inventory would
thus depend on trade-off between carrying costs and ordering cost.
The company in order to meet its raw materials requirements could have gone for frequent
purchases, which would have resulted in lesser cash flows for the firm rather than the high
expenditure involved when procuring in at bulk. The reason why the firm has gone for these
bulk purchases because of the lower margins and the discounts it availed because of
procuring in bulk quantities.
A negative growth in WIP could be because:
a) The time taken to convert raw materials to finished goods is very minimal
b) This is also due to capacity being not utilized at the optimum.

ABC System: ABC system of inventory keeping is followed in the factories. Various items
are categorized into three different levels in the order of their importance. For e.g. items such
as memory, high capacity processors and royalty are placed in the ‘A’ category. Large
number of firms has to maintain several types of inventories. It is not desirable the same
degree of control all the items. The firm should pay maximum attention to those items whose
value is highest. The firm should therefore, classify inventories to identify which items
should receive the most effort in controlling. The firm should be selective in approach to

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control investment in various types of inventories. This analytical approach is called “ABC
Analysis”. The high-value items are classified as “A items” and would be under tightest
control. “C items” represent relatively least value and would require simple control. “B
items” fall in between the two categories and require reasonable attention of management.
The relevance of JIT in POLSTAR CARGO Info system can be questioned. This is because
they procure materials on the basis of projections made at least two or three months before.
Even at the time of procurement they ensure that they procure much more than what actually
is required by the firm that is they hold significant amount of inventory as safety stock. This
is done to counter the threat involved in default and accidental breakdowns. The levels of
safety stock usually vary according to the usage.

Work-in-progress

The work-in-progress holding time is important for a firm in the sense that it determines the
rate of time at which the production process will be complete or the finished goods will be
ready for disposal by the firm. The firm as it is in the
process of assembling should take the least possible time in conversion to finished goods
unlike a hard core manufacturing firm, as any firm would like to have its inventory in the
work-in-progress at the minimum. There would also be less of stock out costs as due to better
conversion rates the firm is able to meet the rise in demand situations. More the time it
spends lesser its efficiency would be in the market. Here the firm has been able to bring down
its WIP conversion periods.

Finished Goods
The time taken for the firm to realize its finished goods as sales has increased as compared to
last year. This growth in sales could be traced back to the growing domestic IT market for the
commercial as consumer segment in India. POLSTAR CARGO has around 15% of the
market in desktop and it is the market leader in this segment. So it is only natural that they are
able to better their conversion rate of finished goods to sales.

Operating Cycle

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 The operating cycle of the firm reveals the days within which the inventory procured gets
converted to sales or revenue for the firm. This time period is of importance to the firm as a
lag here could significantly affect the profitability, liquidity, credit terms, and the policies of
the firm. All the firms would like to reduce it to such extend that their cash inflows are timely
enough to meet their obligations and support the operations. That the firm has been able to
reduce the ratio is in itself an achievement as they were having huge stocks of inventory. But
the reduction in the cycle could also be attributed to the boom in the market and the growth it
is expected to reach. This boom automatically ensures the demand for the finished goods and
thus helping in it to garner sales for the firm.

CASH MANAGEMENT
Sources of Cash:
Sources of additional working capital include the following:
 Existing cash reserves
 Profits (when you secure it as cash!)
 Payables (credit from suppliers)
 New equity or loans from shareholders
 Bank overdrafts or lines of credit.
 Long-term loans
If you have insufficient working capital and try to increase sales, you can easily over-stretch
the financial resources of the business. This is called overtrading.
Early warning signs include:
 Pressure on existing cash
 Exceptional cash generating activities e.g. offering high discounts for early cash payment
 Bank overdraft exceeds authorized limit.
 Seeking greater overdrafts or lines of credit
 Part-paying suppliers or other creditors
 Paying bills in cash to secure additional supplies
 Management pre-occupation with surviving rather than managing
 Frequent short-term emergency requests to the bank (to help pay wages, pending receipt of a
cheque).

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 CASH MANAGEMENT IN POLSTAR CARGO :
The cash management system followed by the Genpact is mainly lock box system.
Cash Management System involves the following steps:
1. The branch offices of the company at various locations hold the collection of cheques of the
customers.
2. Those cheques are either handed over to the CMS agencies or bank of the particular location
take charge of whole collection.
3. These CMS agencies or bank send those cheques to the clearing house to make them realized.
These cheques can be local or outstation.
4. The CMS agencies or bank send information to the central hub of the company regarding
realization/cheque bounced.
5. The central hub passes on the realized funds to the company as per the agreed agreements.
6. The CMS agencies or concerned bank provides the necessary MIS to the company as per
requirement.
In cash management the collect float taken for the cheques to be realized into cash is
irrelevant and non-interfering because banks such as Standard Chartered, and Canara Bank
who give credit on the basis of these cheques after charging a very small amount. These
credits are given to immediately and the maximum time taken might be just a day. The
amount they charge is very low and this might cover the threat of the cheque sent in by two
or three customers bouncing. Even otherwise the time taken for the cheques to be processed
is instantaneous. Their Cash Management System is quite efficient.
Cash vs. Marketable Securities
The investment in marketable securities rather than having large cash balances in something
that has been given thought for by the firm. This is because while a firm gets revenue in the
form of interests by investments, it actually has to pays certain amount money to the banks
for maintaining current accounts and fixed deposits usually have a longer maturity period.
That is, the problem with high investments is that the opportunity to earn is lost, thus a firm
has to maintain an optimal cash balance. But the investment in mutual funds or other
marketable securities might create a problem of investment, as they might not be readily
realizable as say liquid cash or the amount deposited in the current account. The investments

19
 in say fixed assets say may earn a fixed rate of interest but they have a maturity period
attached to them.
In POLSTAR CARGO , Standard Chartered is the concentration bank in which all the
inflows from the deposit banks are concentrated and passed on to the disbursement banks for
further disbursement.

Liquid Cash Balance

The liquid cash maintained in the business is only that much as is required to satisfy the daily
requirements of the firm and not more. The rest of the cash is invested into mutual funds and
also held in fixed deposits and current accounts.
Instruments Used
The instrument used here are primarily cheques comprising of around 97% of what is used in.
The rest 2-3% comprise of the letters of credit.
Thus working capital is the lifeline for every business. The main advantages of sufficient
working capital are:
 It helps in prompt payment
 Ensures high solvency in the company and good credit standing.
 Regular supply of material and continuous production.
 Ensures regular payment of salaries and wages and day to day commitments.

RECEIVABLES MANAGEMENT

Cash flow can be significantly enhanced if the amounts owing to a business are collected
faster. Every business needs to know.... who owes them money.... how much is owed.... how
long it is owing.... for what it is owed.

Late payments erode profits and can lead to bad debts.

Slow payment has a crippling effect on business; in particular on small businesses whom can
least afford it. If you don't manage debtors, they will begin to manage your business as you
will gradually lose control due to reduced cash flow and, of course, you could experience an
increased incidence of bad debt.

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 The following measures will help manage your debtors:
1. Have the right mental attitude to the control of credit and make sure that it gets the priority it
deserves.
2. Establish clear credit practices as a matter of company policy.
3. Make sure that these practices are clearly understood by staff, suppliers and customers.
4. Be professional when accepting new accounts, and especially larger ones.

5. Check out each customer thoroughly before you offer credit. Use credit agencies, bank
references, industry sources etc.
6. Establish credit limits for each customer and stick to them.
7. Continuously review these limits when you suspect tough times are coming or if operating in
a volatile sector.
8. Keep very close to your larger customers.
9. Invoice promptly and clearly.
10.Consider charging penalties on overdue accounts.
11.Consider accepting credit /debit cards as a payment option.
12.Monitor your debtor balances and aging schedules, and don't let any debts get too old.

Recognize that the longer someone owes you, the greater the chance you will never get paid.
If the average age of your debtors is getting longer, or is already very long, you may need to
look for the following possible defects.
 Poor collection procedures.
 Lax enforcement of credit terms.
 Slow issue of invoices or statements.
 Errors in invoices or statements.
 Customer dissatisfaction.
 Weak credit judgement

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 Debtors due over 90 days (unless within agreed credit terms) should generally demand
immediate attention. Look for the warning signs of a future bad debt. For example…..
1. Longer credit terms taken with approval, particularly for smaller orders.
2. Use of post-dated checks by debtors who normally settle within agreed terms.
3. Evidence of customers switching to additional suppliers for the same goods.
4. New customers who are reluctant to give credit references.
5. Receiving part payments from debtors.

Profits only come from paid sales.

The act of collecting money is one, which most people dislike for many reasons and therefore
put on the long finger because they convince themselves that there is something more urgent
or important that demand their attention now. There is nothing more important than getting
paid for your product or service. A customer who does not pay is not a customer.

Here are few ways in collecting money from debtors: -

 Develop appropriate procedures for handling late payments.
 Track and pursue late payers
 Get external help if you own efforts fail.
 Don’t feel guilty asking for money. It’s yours and you are entitled to it.

 Make that call now. And keep asking until you get some satisfaction.
 In difficult circumstances, take what you can now and agree terms for the remainder, it
lessens the problem.
 When asking for your money, be hard on the issue – but soft on the person. Don’t give the
debtor any excuses for not paying.
 Make that your objective is to get the money, not to score points or get even.

COLLECTION POLICIES:
It refers to the collection procedures such as letters, phone calls and other follow up
mechanism to recover the amount due from the customers. It is obvious that costs are
incurred towards the collection efforts, but bad debts as well as average collection period

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 would decrease. Further, a strict collection policy of the firm is expensive for the firm
because of the high cost is required to be incurred by the firm and it may also result in loss of
goodwill. But at the same time it minimizes the loss on account of bad debts. Therefore, a
firm has to strike a balance between the cost and benefits associated with collection policies.
The steps usually followed in collection efforts are:
 Sending repeated letters and reminders to the customers
 Personal visits
 Using agencies involved in collection process
 Making telephonic reminders
 Initiating legal actions
 Real Time Gross Settlement (RTGS)
Real Time Gross Settlement as such is a concept new in nature and though the firm uses the
system with all the members of the consortium, it is still in its primal stage and will take time
before all of the clients of the firm are willing to accept it. The firm has made a proposal to
the consortium of the banks during appraisal for faster implementation of internet based
banking facility by all the banks and adoption of RTGS payment system through net.
The debtor’s turnover ratio is completely dependent upon the credit policy followed by the
firm. The credit policy followed by the firm should be such that the threat of bad debts and
the default rate involved should be terminated.

Financing Current Assets

The firm has to decide about the sources of funds, which can be availed to make investment
in current assets.
Long term financing:
It includes ordinary share capital, preference share capital, debentures, long term borrowings
from financial institutions and reserves and surplus.
Short term financing:
It is for a period less than one year and includes working capital funds from banks, public
deposits, commercial paper etc.
Spontaneous financing:
It refers to automatic sources of short-term funds arising in normal course of business. There
is no explicit cost associated with it. For example, Trade Credit and Outstanding Expenses
etc.

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Depending on the mix of short and long term financing, the company can follow any of
the following approaches.

Matching Approach
In this, the firm follows a financial plan, which matches the expected life of assets with the
expected life of source of funds raised to finance assets. When the firm follows this approach,
long term financing will be used to finance fixed assets and permanent current assets and
short term financing to finance temporary or variable current assets.
Conservative Approach
In this, the firm finances its permanent assets and also a part of temporary current assets with
long term financing. In the periods when the firm has no need for temporary current assets,
the long-term funds can be invested in tradable securities to conserve liquidity. In this the
firm has less risk of facing the problem of shortage of funds.
Aggressive Approach
In this, the firm uses more short term financing than warranted by the matching plan. Under
an aggressive plan, the firm finances a part of its current assets with short term financing.
Relatively more use of short term financing makes the firm more risky.

SHORT TERM FINANCING

Other than the investment in current assets, the firm also has to be concerned with short-term
to long-term debt as this plays a very important role in determining the amount of risk
undertaken by the firm. That is, the firm not only has to be concerned about current assets but
also the sources through which they are financed. A firm before financing in either of the two
has to take into consideration various aspects. While short term might seem the ideal way to
finance your assets than the long term due to shorter maturity period and also less of costs are
involved, there is an inherent risk in short term financing due to fluctuating interest rates ansd
due to the reason that the firm might be unable to repay the amount in a short span of time.
Under secured loan cash credit, along with non fund based facilities, foreign currency term
loan from banks are secured by way of hypothecation of stock-in-trade, book debts as first
charge and by way of second chanrge on all the immovable and movable assets of the parent
company. Term loan in Indian rupees from a bank is subject to a prior charge in favour of
company’s bankers on book debts and stock in trade for working capital facilities.

24
 Here POLSTAR CARGO has a major portion of their financing done through short term
financing than long term financing. The preference of short term financing to long term as
such is not the part of any policy employed by the firm but it was due to the reason that the
interest rates in short term were more investor friendly and the cost involved in them were
also low. At present, we can see that the firm is moving more towards long term financing as
the interest terms in the long term has reduced compared to the short term.

Analysis of–Porter’s 5 Forces Model 

Porter developed these (5) forces to be a framework in where a business strategic manager
can gain that competitive edge over its rival firms. Even though it may be viewed as
simplistic, it is a powerful tool in understanding where power lies in any given business
situation. With such understanding, you can see where your strengths and weakness are and
how you can avoid taking the wrong steps. 

Porters 5 Forces Model

1. Threat of New Entrants. 

2. Bargaining power of suppliers 

3. Bargaining Power of Customers 

25
4. Competitive Rivalry between existing players  

5. Threat of Substitutes. 

1) Threat of new entrants: The easier it is for new companies to enter the industry, the more
cut-throat competition there will be. Factors that can limit the threat of new entrants are
known as barriers to entry. Some examples include:
 Existing loyalty to major brands 

 Incentives for using a particular buyer (such as frequent shopper programs)

 High fixed costs 

 Scarcity of resources 

2) Power of Suppliers: This is how much pressure suppliers can place on a business. If
one supplier has a large enough impact to affect a company’s margins and volumes, then they
hold substantial power. Here are a few reasons that suppliers might have power: 
 There are very few suppliers of a particular product 

 There are no substitutes 

 The product is extremely important to the buyer, they cannot do without it 

 The supplying industry has a higher profitability than the buying industry 

 Supplier switching costs relative to firm switching costs 

3) Power of Buyers/ Customers: This is how much pressure customers can place on a
business.  If one customer has a large enough impact to affect a company’s margins and
volumes, then they hold substantial power. Here are a few reasons that customers might have
power ∙ Small number of buyers 
 Purchases of large volumes 

 Switching to another (competitive) product is simple 

 The product is not extremely important to the buyer, they can do without it for a period of
time. 

26
 4) Availability of Substitutes 

What is the likelihood that someone will switch to a competitive product or service? If the
cost of switching is low, then this poses to be a serious threat. Here are a few factors that can
affect the threat of substitutes: 
 Buyer propensity to substitute 

 Relative price performance of substitutes 

 Buyer switching costs

5) Competitive Rivalry 

And last but not least, this describes the intensity of competition between existing firms in an
industry.  Highly competitive industries generally earn low returns because the cost of
competition is high. A highly competitive market might result from: 
 Many players of about the same size, no dominant firm. 

 Little differentiation between competitors’ products and services. 

 A mature industry with very little growth. 

 Companies can only grow by stealing customers away from competitors

27
 CHAPTER-2
Review of literature

1- The research done by Pass C.L., Pike R.H., “An overview of working capital management
and corporate financing”,(1984) describes that over the past 40 years major theoretical
developments have occurred in the areas of longer-term investment and financial decision
making. Many of these new concepts and the related techniques are now being employed
successfully in industrial practice. By contrast, far less attention has been paid to the area of
short-term finance, in particular that of working capital management. Such neglect might be
acceptable were working capital considerations of relatively little importance to the firm, but
effective working capital management has a crucial role to play in enhancing the profitability
and growth of the firm. Indeed, experience shows that inadequate planning and control of
working capital is one of the more common causes of business failure.

2- The research done by Herrfeldt B., “How to Understand Working Capital Management”
describes that“Cash is king”--so say the money managers who share the responsibility of
running this country's businesses. And with banks demanding more from their prospective
borrowers, greater emphasis has been placed on those accountable for so-called working
capital management. Working capital management refers to the management of current or
short-term assets and short-term liabilities. In essence, the purpose of that function is to make
certain that the company has enough assets to operate its business. Here are things you should
know about working capital management.

3- The research done by, SamilogluF. and Demirgunes K., “The Effect of Working Capital
Management on Firm Profitability: Evidence from Turkey” (2008) describes that the effect of
working capital management on firm profitability. In accordance with this aim, to consider
statistically significant relationships between firm profitability and the components of cash
conversion cycle at length, a sample consisting of Istanbul Stock Exchange (ISE) listed
manufacturing firms for the period of 1998-2007 has been analysed under a multiple
regression model. Empirical findings of the study show that accounts receivables period,
inventory period and leverage affect firm profitability negatively; while growth (in sales)
affects firm profitability positively.

28
4- The research done by, Appuhami, Ranjith B A, “The Impact of Firms' Capital Expenditure on
Working Capital Management: An Empirical Study across Industries in Thailand” ,
International Management Review,(2008), The purpose of this research is to investigate the
impact of firms' capital expenditure on their working capital management. The author used
the data colleted from listed companies in the Thailand Stock Exchange. The study used
Shulman and Cox's (1985) Net Liquidity Balance and Working Capital Requirement as a
proxy for working capital measurement and developed multiple regression models. The
empirical research found that firms' capital expenditure has a significant impact on working
capital management. The study also found that the firms' operating cash flow, which was
recognized as a control variable, has a significant relationship with working capital
management.

5- The research done by, Hardcastle J., “Working Capital Management”,(2007) describes that
Working capital, sometimes called gross working capital, simply refers to the firm's total
current assets (the short-term ones), cash, marketable securities, accounts receivable, and
inventory. While long-term financial analysis primarily concerns strategic planning, working
capital management deals with day-to-day operations. By making sure that production lines
do not stop due to lack of raw materials, that inventories do not build up because production
continues unchanged when sales dip, that customers pay on time and that enough cash is on
hand to make payments when they are due. Obviously without good working capital
management, no firm can be efficient and profitable.

6- The research done by, Thachappilly G., “Working Capital Management Manages Flow of
Funds”,(2009) describes that Working capital is the cash needed to carry on operations
during the cash conversion cycle, i.e. the days from paying for raw materials to collecting
cash from customers. Raw materials and operating supplies must be bought and stored to
ensure uninterrupted production. Wages, salaries, utility charges and other incidentals must
be paid for converting the materials into finished products. Customers must be allowed a
credit period that is standard in the business. Only at the end of this cycle does cash flow in
again. The research done by, Beneda, Nancy; Zhang, Yilei, “Working Capital Management,
Growth and Performance of New Public Companies”.

29
7- The research done by, Dubey R. “Working Capital Management-an Effective Tool for
Organisational Success” (2008) describes that The working capital in a firm generally arises
out of four basic factors like sales volume, technological changes, seasonal , cyclical changes
and policies of the firm. The strenghth of the firm is dependent on the working capital as
discussed earlier but this working capital is inteslf dependent on the level of sales volume of
the firm.The firm requires current assets to support and maintain operational or functional
activities.By current assets we mean the assets which can be converted readily into cash say
within a year such as receivables, inventories and liquid cash.If the level of sales is stable and
towards growth the level of cash, receivables and stock will also be on the high.

8- The research done by, McClure B., “Working Capital Works” describes that Cash is the
lifeline of a company. If this lifeline deteriorates, so does the company's ability to fund
operations, reinvest and meet capital requirements and payments. Understanding a company's
cash flow health is essential to making investment decisions. A good way to judge a
company's cash flow prospects is to look at its working capital management (WCM). Cash is
king, especially at a time when fund raising is harder than ever. Letting it slip away is an
oversight that investors should not forgive. Analyzing a company's working capital can
provide excellent insight into how well a company handles its cash, and whether it is likely to
have any on hand to fund growth and contribute to shareholder value.

9- The research done by, Gass D., “How To Improve Working Capital Management” (2006)
"Cash is the lifeblood of business" is an often repeated maxim amongst financial managers.
Working capital management refers to the management of current or short-term assets and
short-term liabilities. Components of short-term assets include inventories, loans and
advances, debtors, investments and cash and bank balances. Short-term liabilities include
creditors, trade advances, borrowings and provisions. The major emphasis is, however, on
short-term assets, since short-term liabilities arise in the context of short-term assets. It is
important that companies minimize risk by prudent working capital management.

10- The research done by, Maynard E. Rafuse, “ Working capital management: an urgent need to
refocus” Management Decision, (1996) Argues that attempts to improve working capital by
delaying payment to creditors is counter-productive to individuals and to the economy as a

30
 whole. Claims that altering debtor and creditor levels for individual tiers within a value
system will rarely produce any net benefit .Proposes that stock reduction generates system-
wide financial improvements and other important benefits .Urges those organizations seeking
concentrated working capital reduction strategies to focus on stock management strategies
based on “lean supply-chain” techniques.

11- Impact of Working Capital Management Policies on Corporate Performance—An

Empirical Study Sushma Vishnani, Bhupesh Kr. Shah (2007)

It is felt that there is the need to study the role of working capital management policies on
profitability of a company. Conventionally, it has been seen that if a company desires to
take a greater risk for bigger profits and losses, it reduces the size of its working capital in
relation to its sales. If it is interested in improving its liquidity, it increases the level of its

working capital.

However, this policy is likely to result in a reduction of the sales volume, therefore of
profitability. Hence, a company should strike a balance between liquidity and profitability. In
this paper an effort has been made to make an empirical study of Indian Consumer
Electronics Industry for assessing the impact of working capital policies & practices on
profitability during the period 1994–95 to 2004–05. The impact of working capital policies
on profitability has been examined by computing coefficient of correlation and regression
analysis between profitability ratio and some key working capital policy indicator ratios.

12- Working Capital and Financial Management Practices in the Small Firm Sector

Michael J. Peel, Nicholas Wilson (2008)

MICHAEL J. PEEL IS A LECTURER IN accountancy and finance at Cardiff Business

School, University of Wales and Nicholas Wilson is Professor of Credit Management at the
University of Bradford, England. Very little research has been conducted on the capital
budgeting and working capital practices of small firms. The purpose of this paper is to
present the results of a preliminary study on the working capital and financial management
practices of a sample of small firms located in the north of England. In general, the results of
the survey indicated that a relatively high proportion of small firms in the sample claimed to
use quantitative capital budgeting and working capital techniques and to review various

31
 aspects of their companies' working capital. In addition, the firms which claimed to use the
more sophisticated discounted cash flow capital budgeting techniques, or which had been
active in terms of reducing stock levels or the debtors' credit period, on average tended to be
more active in respect of working capital management practices. It hoped that the issues
raised would stimulate further theoretical and empirical contributions on this neglected and
important area of small business research.

13- The research done by Pass C.L., Pike R.H., “An overview of working capital management
and corporate financing”,(1984) describes that over the past 40 years major theoretical
developments have occurred in the areas of longer-term investment and financial decision
making. Many of these new concepts and the related techniques are now being employed
successfully in industrial practice. By contrast, far less attention has been paid to the area of
short-term finance, in particular that of working capital management. Such neglect might be
acceptable were working capital considerations of relatively little importance to the firm, but
effective working capital management has a crucial role to play in enhancing the profitability
and growth of the firm. Indeed, experience shows that inadequate planning and control of
working capital is one of the more common causes of business failure.

14- The research done by Herrfeldt B., “How to Understand Working Capital Management”
describes that“Cash is king”--so say the money managers who share the responsibility of
running this country's businesses. And with banks demanding more from their prospective
borrowers, greater emphasis has been placed on those accountable for so-called working
capital management. Working capital management refers to the management of current or
short-term assets and short-term liabilities. In essence, the purpose of that function is to make
certain that the company has enough assets to operate its business. Here are things you should
know about working capital management.

15- Working Capital and Financial Management Practices in the Small Firm Sector

Michael J. Peel, Nicholas Wilson (2008)

MICHAEL J. PEEL IS A LECTURER IN accountancy and finance at Cardiff Business

School, University of Wales and Nicholas Wilson is Professor of Credit Management at the
University of Bradford, England. Very little research has been conducted on the capital

32
 budgeting and working capital practices of small firms. The purpose of this paper is to
present the results of a preliminary study on the working capital and financial management
practices of a sample of small firms located in the north of England. In general, the results of
the survey indicated that a relatively high proportion of small firms in the sample claimed to
use quantitative capital budgeting and working capital techniques and to review various
aspects of their companies' working capital. In addition, the firms which claimed to use the
more sophisticated discounted cash flow capital budgeting techniques, or which had been
active in terms of reducing stock levels or the debtors' credit period, on average tended to be
more active in respect of working capital management practices. It hoped that the issues
raised would stimulate further theoretical and empirical contributions on this neglected and
important area of small business research.

History and development of company

Pole Star Cargo India Private Limited is a Private incorporated on 20 January 2014. It is
classified as Non-govt company and is registered at Registrar of Companies, Delhi. Its
authorized share capital is Rs. 6,000,000 and its paid up capital is Rs. 1,500,000. It is inolved
in Supporting and auxiliary transport activities; activities of travel agencies

Pole Star Cargo India Private Limited's Annual General Meeting (AGM) was last held on 30
September 2019 and as per records from Ministry of Corporate Affairs (MCA), its balance
sheet was last filed on 31 March 2019.

Directors of Pole Star Cargo India Private Limited are

 Ashwani Sharma,

 Nikita Joshi Sharma

 Anuradha Sharma

Pole Star Cargo India Private Limited's Corporate Identification Number is (CIN)
U63010DL2014PTC263744 and its registration number is 263744.Its Email address is
murari@polestarcargoindia.com and its registered address is KHASRA NO. 10/1 (4-6),
OLD HIGHWAY DELHI GURGAO RO OLD HIGHWAY DELHI GURGAON ROAD,
SAMALKHA NEW DELHI South Delhi DL 110037 IN , - , .

33
 Current status of Pole Star Cargo India Private Limited is - Active

New development of company and Industry

Ocean Freight

This is by far the most popular and cost-effective way to initiate freight movement. The
freight charge is cheaper than on a direct Master Air Waybill and it also means that flight
details can be provided quickly. We facilitate our customers by making cargo consolidation
by Air/Sea which includes the transportation of cargo to the stuffing point, stuffing the cargo
into the container, processing shipping documents with customs, use of premium
Air/Shipping lines and make sure that the cargo will reach the respective destination well
before the stipulated time given by the reputed customer. We carefully follow all the
important shipping instructions given and take care of your cargo by warehousing it until the
shipment is physically affected.

Project Handling

We provide project shipping and global forwarding services through a network of

national/international agents. We make a point of simplifying our project solutions,
finding the direct way, and making things as easy as possible for the customer. The project
handling department of Pole Star Cargo India Pvt. Ltd. is equipped with highly qualified
and experienced specialists within all aspects of project transportation in all parts of the
world.

We have dedicated and trustworthy partners in all parts of the world ensuring our customers
a first-class service all the way from place of production to place of final delivery.

 Handling of Bulk Inventory

 Stuffing & De Stuffing

 Pick and Pack Services

34
35
 CHAPTER 3
RESEARCH METHODOLOGY

Research methodology is a systematic and logical study of an issue or problem through

scientific method. It’s the process of systematically obtaining accurate answers to significant
pertinent questions by the use of scientific method gathering and interpreting information.

Data such as Current assets, liabilities, debtors, creditors, cash balance, inventories etc are
collected in the form of “samples” which is the first step in the scientific research. Further,
data is analyzed through various statistical tools to effectively solve the problems in the area
of working capital management

Statement of problem 

The study will be conduct to find out the overall impact of working capital management of a
firm is important for the following two reasons. An optimum part of the investment is
interested in firm’s current assets.

 Level of current assets will change quickly with the variation in sales and

 The working capital management of a firm will have a greater impact on the firms
profitability

Hence, this study has been conducted to know effect of the size and rising of working capital
and whether such an investment has grown or reduced over a period of time. After calculating
the requirement of current assets, the important task of the financial manager has to choose
appropriate source of finance in order to fund firm’s various current assets which helps in
maximization of profits.

OBJECTIVES &SCOPE OF THE STUDY

OBJECTIVES

36
1. Optimization of Working Capital Operating Cycle:

In simple terms, working capital cycle starts from the day raw materials are acquired and
completes when the finished products are sold. One of the major objectives of working
capital management is to ensure that there is no hindrance during the above mentioned
process. It includes collecting and processing raw materials and other initial investment in
time, placing all the essentials for production beforehand, selling finished products as soon as
possible, collecting account receivables on time and clearing all the account payable’s in
time.

2. Balance Working Capital:

The good net working capital is required to stay in a stable equilibrium. The ratio of current
assets and current liabilities should be optimized. Because the lower value of this ratio
implies that company is not financially stable to clear its current debts, higher value is also
not an indication of prosperity, it suggests that company has too many inventories and they
are not investing in excess cash.

3. Minimize Cost of Capital:

Working capital management focuses on minimizing cost of capital, rate of interest in some
special cases. It is only when the cost of capital will be lesser than revenue, one can earn
profit. Utilization of long-term funds (in proper mix) is one way of minimizing capital cost.
The fundamental principle of financial management should be followed sincerely while
deciding the finance mix, always. The principle states that long term sources should finance
fixed assets and permanent assets. Also, the short-term or temporary assets should be
financed by short-term sources of finance

37
4. Assists the Business to Avoid Over-borrowing:

Over-borrowing is among the quickest techniques towards business growth as well as

business failure. The objectives of working capital management out of over-borrowing leads
to mismanagement of finance as well as assets. Their business goes far beyond their financial
goals which leads towards financial failure for a business. A proper working capital
management will definitely give you a warning sign where you can put your control towards
business expansion.

5. Optimal Return on Current Asset Investment:

The return on the investment infused on short term assets must exceed the average cost of
capital to ensure wealth maximization. In other words, the rate of return earned from the
investment in short term assets should exceed the rate of interest or cost of capital. Objectives
of working capital management aims to extract maximum from an investment in current
assets to ensure higher profitability.

SCOPE OF WORKING CAPITAL

Scope of Working capital management is as given below:–

1. Ensures business continuity: Working capital management enables business in continuing

their activities uninterrupted. Proper management of working capital will lead to availability
of sufficient funds at all times. Business will receive regular supply of raw materials from
supplier by paying them on time which will help in continuing production activities
regularly. 

2. Improves business solvency: Business managing their working capital efficiently are able to
maintain proper liquidity. It will improve their cash management and will reduce their
dependency on external financing as large amount of funds is tied up in working capital.
Management of working capital will enable them in paying all short-term debts and operating
expenses on time. 

38
3. Ability to face crisis: Efficient management of working capital enables business in facing
emergency situations such as depression. It ensures proper availability of funds at all times so
that business can easily face time of crisis or peak demand where they need to boost up their
production.

4. Increase creditworthiness: Improving the business value and position in market is another

important advantage of working capital management. Businesses having sound working
capital position enjoy better liquidity and credit rating. It helps them in raising funds from
various external sources easily at favorable terms.

5. Better relations with supplier and creditors: Management of working capital leads to

better relations with supplier and all creditors. It enables business in paying all dues to
suppliers or trade creditors on time through always maintaining sufficient amount of funds.
This will result in gaining confidence of creditors towards business.

6. Helps in expansion: Every business wants to expand its activities over the time for which it
needs additional capital. Proper management of cash will provide business with necessary
funds timely and make expansion programs successful.

7. Competitive advantage: Business through management of funds is able to reduce their cost

and avoid wastages of resources. They can earn sufficient profits by offering their products
even at low prices to customers. It will help in gaining competitive advantage in market and
generating large revenue.

MANAGERIAL USEFULNESS OF THE STUDY

Efficient working capital management helps maintain smooth operations and can also help to
improve the company's earnings and profitability. Management of working capital includes
inventory management and management of accounts receivables and accounts payables. The
main objectives of working capital management include maintaining the working capital
operating cycle and ensuring its ordered operation, minimizing the cost of capital spent on the
working capital, and maximizing the return on current asset investments.  

Working capital is an easily understandable concept, as it is linked to an individual’s cost of

living and, therefore can be understood in a more personal way. Individuals need to collect
the money that they are owed and maintain a certain amount on a daily basis to cover day-to-
day expenses, bills, and other regular expenditures.

39
 Working capital is a prevalent metric for the efficiency, liquidity and overall health of a
company. It is a reflection of the results of various company activities, including revenue
collection, debt management, inventory management and payments to suppliers. This is
because it includes inventory, accounts payable and receivable, cash, portions of debt due
within the period of a year and other short-term accounts.

Research design

The examination configuration utilized in this task is Analytical/intelligent in nature the

technique utilizing, which analyst needs to utilize certainties, data officially accessible, and
investigate these to make a basic assessment of the execution.

Data collection

 Primary data is collected by interviewing the HOD’s of various departments and concerned
staffs of the finance department, also through observation

 Secondary data is collected from various reports / annual reports, documents charts,
management information systems, published articles etc. Mainly the secondary data is
collected from the 5 years annual report of the company supported by the reports of the
competitors to enable comparison

 The analysis of the information gathered has been made on the basis of the clarifications
sought during the personal discussions with the concerned people and observations during the
personal visits to the important areas o services.

Data collection method

 Primary data – primary data is collected directly from the original sources. It includes
collecting data through observation, interviews, mailing, experimentation, simulation and
projection methods

 Secondary data: secondary data are not originally collected but rather obtained from
published or unpublished sources such as journals, magazines, news papers, internet etc

6.4 Sampling technique

40
 Sampling technique used in this study is “PROBABILITY SAMPLING” or ‘’RAMDOM
SAMPLING’’ wherein the selection of sample items is independent of the person making the
study. i.e., it’s an objective approach of selecting the sample

6.5 statistical tools and techniques

 Various tools and techniques used in the study include:

 Time series analysis (it yields the trend of the past on the basis of which forecasting and
planning for future may be made)

 Graphical and diagrammatic representation (enables easy comparison and interpretation of

the study)

 Correlation coefficient (helps identifying the relationship between two or more variables)

Working Methodology

1. The working methodology is limited to operations of POLSTAR CARGO, The period

considered is 2 months.

The methodology of the study is limited to the collection of financial data published in the
annual reports of the company with reference to the objectives stated above, based on which
analysis and interpretation is done with the view to suggest favourable solution to various
problems related to financial performance of POLSTAR CARGO . Also, published data of
the competitors are analyzed to enable comparison.

LIMITATION OF THE STUDY

During my training period although the management and plant personnel were very co-
operative & extended their full support, yet there were following limitations associates with
my study which I would like to mention:

Limited data:

This project has completed with annual reports; it just constitutes of one part of data
collection because of confidentiality.

Limited period:

41
This project is based on five year annual reports. Conclusions and recommendations are
based on such limited data. The trend of last five years may or may not reflect the real
working capital of the company.

Limited area:

Also it was difficult to collect the data regarding the competitors and their financial
information. Industry figures were also difficult to get.

42
 CHAPTER 4
DATA ANALYSIS
SECONDARY DATA ANALYSIS
WORKING CAPITAL ANALYSIS

1. OPERATING CYCLE ANALYSIS

Operating cycle refers to the time period which starts from the raw material purchases and
ends with realization of receivable. So it is total time gap between raw material purchases to
total debtors’ collection. This is also known as working capital cycle. Operating cycle is
therefore expressed in terms of months or weeks or days. The higher the operating cycle
period, higher the working capital requirement. It comprises of raw material conversion
period, WIP conversion period, FG conversion period and debtors’ conversion period and
creditors period. The basic reason for calculating operating cycle is to find out the means for
reducing the duration of operating cycle because if duration of operating cycle will be less
than working capital requirement will be less.
OC = R + W + F + D – C
Where,
R = raw material conversion period W = work in process period
F = finished goods conversion period D = debtor collection period
C = creditors payment period

43
(1) Raw Material Conversion Period (RMCP)
= Average Raw Material Stock
Average Raw Materials consumed during the year
PARTICULARS 2018-19 2017-18 2016-17 2015-16 2014-15
Average raw 33065118 33352213.5 20819151 13076062.5 9471720.12
material stock
Raw material 314166.03 213093.45 107464.04 218371.65 121729.46
consumed
during the year
RMCP 105.25 156.52 193.73 59.88 77.80

250

200 193.73

156.52
150
105.25 RMCP
100 77.8
59.88
50

0
2019 2018 2017 2016 2015

(2) Work in Progress Conversion Period (WIPCP)

= Average stock in progress
Average Cost of Production

PARTICULARS 2019 2018 2017 2016 2015

Average stock in 7834151.50 8313099.5 5586013 4818821.5 3634639.5
progress
Avg. Cost of 190952.86 211273.02 194248.64 180015.22 136824.55
production
WICP 41.03 37.93 28.75 26.77 26.56

44
 45 41.03
40 37.93
35
30 28.75
26.77 26.56
25
20 WICP
15
10
5
0
2019 2018 2017 2016 2015

(3) Finished Goods Conversion Period (FGCP)

= Average finished goods inventory
X
X 360
360
Average Cost of goods sold

PARTICULARS 2019 2018 2017 2016 2015

Average 14911159 13149905.5 5004497 6396225 5858384.5
finished goods
inventory
Cost of goods 1955523.98 1648540.72 1398222.17 1260173 989215.18
sold
FGCP 7.63 7.98 3.58 5.08 5.92

9
7.98
8 7.63
7
5.92
6
5.08
5
4 3.58 FGCP
3
2
1
0
2019 2018 2017 2016 2005

(4) Debtors’ Conversion Period (DCP)

= Days in year company operating
Debtors’ turnover

45
PARTICULARS 2019 2018 2017 2016 2015
Days in year 360 360 360 360 360
company
operating
Debtors’ turnover 21.66 22.89 18.41 15.82 18.38
DCP 16.62 15.72 19.55 22.76 19.59

25 22.76
19.55 19.59
20
16.62 15.72
15

DCP
10

0
2019 2018 2017 2016 2015

(5) Credit Conversion Period (CCP)

= Days in year company operating
Obj100

Creditors’ turnover X
PARTICULARS 2019 2018 2017 2016 2015
Days in year 360 360 360 360 360
company
operating
Creditors’ 27.15 26.02 39.50 22.77 23.30
turnover
Avg. consumption 13.26 13.84 9.11 15.81 16.14
period OR CCP

46
 18
15.81 16.14
16
13.26 13.84
14
12
10 9.11
8 CCP
6
4
2
0
2019 2018 2017 2016 2015

GROSS OPERATING CYCLE FOR POLSTAR CARGO :

YEAR RMCP WICP FGCP DCP GOC
2019 105.25 41.03 7.63 16.62 170.53
2018 156.52 37.93 7.98 15.72 217.84
2017 193.73 28.75 3.58 19.55 245.61
2016 59.88 26.77 5.08 22.76 114.49
2015 77.80 26.56 5.92 19.59 129.87

300
245.61
250
217.84
200
170.53
150 129.87
114.49 GOC
100

50

0
2019 2018 2017 2016 2015

NET OPERATING CYCLE: -

YEAR GOC CCP OR APP NOC
2019 170.53 13.26 157.27
2018 217.84 13.84 204.31
2017 245.61 9.11 236.5
2016 114.49 15.81 98.68
2015 129.87 16.14 113.73

47
 250 236.5
204.31
200
157.27
150
113.73
98.68 NOC
100

50

0
2019 2018 2017 2016 2015

ANALYSIS
It claimed that gross operating cycle of POLSTAR CARGO is increasing in year 2014-15
and in the year 2015-16 it decreasing up to certain extent. In year 2014-15, it is 129.87 days
then it decreased to 114.49 days in year 2005-06 due to contraction in raw material. In 2016-
17, it is on the highest point of 245.61 days. The main reason of increasing gross operating
cycle in 2016-17 is due to more availability of raw material in the stores. In year 2016-17 the
company purchased a bulk of raw material due to market variations the GOC is increased.
However, when we came to year 2017-18 the GOC for S.S has shown a significant decrement
of 204.31 days from the year 2016-17 to 245.61. When in next year 2018-19, it came out to
be 170.53 days. The GOP for satisfactory as it Varies as the market requirements and changes
in form of meet the customer’s requirements largely.
But when we came to the NOC of POLSTAR CARGO it we can see that Creditor’s payment
period OR Average payment period of S.S is on average of 15 days in each (5) five years so
does not make more effect on GOC. Therefore, it is somehow near of the GOC.
That is why the company’s NOC 113.73, 98.68, 236.5, 204.31, and 157.27 in the years 2015,
2016, 2017, 2018 and 2019. Therefore, we can say that there is a significant change in the
NOC of the POLSTAR CARGO .

1. 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 decisions. It only
means of better understanding of financial strengths and weaknesses of a firm. The main
emphasis has been on calculating the ratios related to a working capital management.

48
LIQUIDITY RATIOS: -These are the ratios which measures the short term solvency or
financial position of a firm. In other words, it refers to the ability of a concern to meet its
current obligations as and when these become due. To measure the liquidity of a firm, the
following ratios can be calculated.
CURRENT RATIO: – It may be defined as the relationship between current assets and
current liabilities. This ratio is also known as working capital ratio and measures the ability of
the firm to meet current liabilities. High current ratio indicates firm is liquid and has the
ability to pay its current obligations in time as and when they become due.
A ratio equal or near to the rule of thumb of 2:1 i.e. current assets double the current
liabilities is considered to be satisfactory.
Current Ratio = Current Assets
Obj101

Current Liabilities

YEAR CURRENT CURRENT CURRENT

ASSETS LIABILITIES RATIO
2019 115612673.56 18528617.22 6.24
2018 141934492.00 35172584.20 4.04
2017 97761075.20 12343214.74 7.92

49
 9
7.92
8
7
6.24
6
5
4.04
4 CR
3
2
1
0
2019 2018 2017

ANALYSIS
The current ratio of the POLSTAR CARGO is above the standard and it guarantees the
payment of dues in time. The current ratio of the company has been considerably high
because they had made over investment in inventories, which is the main reason for the high
ratio of current assets. Inventories are high because of seasonal availability of raw material.
The overall position of current ratio for POLSTAR CARGO is satisfactory.

LIQUID RATIO –This ratio is also known as quick ratio or acid test ratio. It is a more
rigorous test of liquidity than the current ratio. It is based on those current assets which are
highly liquid. Inventory and prepaid expenses are excluded because they are deemed to be
least liquid component of current assets. A high quick ratio is the indication that the firm is
liquid and has the ability to meet its current liabilities in time and on the other hand low ratio
represents liquidity position is not good.
Quick Ratio = Quick or Liquid Assets
Obj102

Current Liabilities
Quick Assets = Current Assets – Inventory – Prepaid Expenses

YEAR LIQUID ASSETS CURRENT LIQUID RATIO

LIABILITIES
2019 71845029.56 18528617.22 3.88
2018 74081279.00 35172584.20 2.11
2017 56583851.20 12343124.74 4.58

50
 5 4.58
4.5
4 3.88
3.5
3
2.5 2.11 LR
2
1.5
1
0.5
0
2019 2018 2017

Analysis
According to rule of thumb, it should be 1:, the liquid ratio present a uneven change over the
past four years. It was 2.09 in 2014-15 and increased to 4.58 in 2016-17 and then to 2.11 in
2017-18. The decrement in the ratio is not satisfactory, however the ratio 2.11 in 2017-18 is
more than the rule of thumb but it should be quite more than the rule of thumb.
.
WORKING CAPITAL TURNOVER RATIO – Working capital turnover ratio indicates
the velocity of the utilization of net working capital. This ratio measures the efficiency with
which the working capital is being used by a firm.
Working Capital Turnover Ratio = COGS OR Sales
Obj103

Net Working Capital

YEAR SALES NET WORKING WCTR
CAPITAL
2019 703988634.61 97084056.34 7.25
2018 593474659.66 106761907.80 5.56
2017 503359979.46 85417950.46 5.89
2016 453662278.70 453662278.70 7.74
2015 356117465.20 50495305.37 7.05

51
 9
8 7.74
7.25 7.05
7
5.89
6 5.56
5
4 WCTR
3
2
1
0
2019 2018 2017 2016 2015

ANALYSIS
This ratio indicates the number of times the working capital is turned over in the course of a
year. A high working capital ratio indicates the effective utilization of working capital and
less working capital ratio indicates less utilization. For POLSTAR CARGO , the ratio is quite
same for the past five years. It is 7.05 in 2014-15, 7.74 in years 2015-16 and in2016-17 there
was a slight change came over here and the ratio decreased to 5.89. And in the next year in
2017-18 the ratio stand at 5.56 For POLSTAR CARGO , the ratio is increasing once more in
the very next year in 2018-19, It shows increment to 7.24. The ratio of the company is
satisfactory.

STOCK TURNOVER RATIO

This ratio tells the story by which stock is converted into sales. A high stock turnover ratio
reveals the liquidity of the inventory i.e., how many times on an average, inventory is turned
over or sold during the year.

STOCK OR INVENTORY TURNOVER RATIO = COGS OR SALES

Obj104

AVERAGE STOCK
YEAR SALES AVERAGE STR or ITR
STOCK
2019 703988634.61 55810428.5 12.61
2018 593474659.66 23981268.5 24.75
2017 503359979.46 31409661 16.03

52
2016 453662278.70 24291109 18.68
2015 356117465.20 18964744.11 18.78

30
24.75
25

20 18.68 18.78
16.03
15 12.61 STR
10

0
2019 2018 2017 2016 2015

ANALYSIS: -
By analyzing the five-year data it seen, that it follows an uneven trend. We see that from the
year2015 to 2016 & 2016 to 2017, it moves on a slow pace means, the ratio is increased in
very nominal figures i.e. (.10) times and (2) times, which has been rectified in the year 2018.
In 2018 there is a huge increase in inventory due to this ratio the company maintains is very
high in 2018 and the company is required to take measures to lower down this ratio as it
affects the working capital cycle of company and the flow of cash in the company. In 2019,
we saw company take measure to lower down its ratio which is good for company because a
low stock turnover ratio reveals undesirable accumulation of obsolete stock.

DEBTORS’ TURNOVER RATIO: -

DEBTORS’ TURNOVER RATIO = CREDIT SALES
Obj105

AVERAGE DEBTORS’
YEAR CREDIT SALES AVERAGE DTR
DEBTORS’
2019 703988634.61 32503373 21.66
2018 593474659.66 25923481.52 22.89
2017 503359979.46 27348823.87 18.41
2016 453662278.70 28677098.13 15.82
2015 356117465.20 19374123.96 18.38

53
 25 22.89
21.66
20 18.41 18.38
15.82
15

DTR
10

0
2019 2018 2017 2016 2015

ANALYSIS
Generally a low debtor’s turnover ratio implies that it considered congenial for the business
as it implies better cash flow. The ratio indicates the time at which the debts are collected on
an average during the year. Needless to say that a high Debtors Turnover Ratio implies a
shorter collection period which indicates prompt payment made by the customer.
Now if we analyze the five year data we can say that it holds a good position while receiving
its money from its debtors. The ratios are in variation trend, which implies that recovery
position is good and company should maintain these positions.
CREDITORS’ TURNOVER RATIO: -
Actually this ratio reveals the ability of the firm to avail the credit facility from the suppliers
throughout the year. Generally a low creditor’s turnover ratio implies favorable since the firm
enjoys lengthy credit period.
CREDITORS’ TURNOVER RATIO = NET CREDIT PURCHASE
Obj106

AVERAGE CREDITORS’
YEAR CR
PU

45
2019 567
39.5 2018 505
40
35 2017 421
30 27.15 2016 358
26.02
25 22.77 23.3
2015 300
20 CTR
15
10
5 54

0
2019 2018 2017 2016 2015
ANALYSIS
Actually, this ratio reveals the ability of the firm to avail the credit facility from the suppliers
throughout the year. Generally, a low creditor’s turnover ratio implies favorable since the
firm enjoys lengthy credit period.
Now if we analyze the three years data we find that in the year 2017 the ratio was very high
which means that its position of creditors that year was not good only in the year 2017, when
we turn ahead the other years creditor’s turnover ratio is in pretty good position. In the all
four years it has followed, a decreasing trend, which is very good, sign for the company.
Therefore, we can say it enjoys a very good credit facility from the suppliers.

PARTICULARS 2005-06 2006-07 INCREASE DECREASE

CURRENT
ASSETS:
Inventories 21642098.00 41177224.00 19535126

S. debtors 30359548.69 22158429.16 8201119.53

Cash & Bank 3407307.32 2297697.88 1109609.44

Balances
Loans & 16926496.21 32127724.16 15201227.95
Advances
Total current 72335450.22 97761075.20
assets (A)
CURRENT
LIABILITIES:

55
S. creditors 11585162.05 9759461.84 1825700.21

Provisions 2072970.04 2483662.90 410692.86

Security deposits 100000 100000 ----- ------

& Retention
money
Total current 13758132.09 12343124.74
liabilities (B)
Working capital 58577318.13 85417950.46 36562054.16 9721421.83
(A-B)
Net increase in 26840632.33 26840632.33
working capital
85417950.46 85417950.46 36562054.16 36562054.16
ANALYSIS ON THE BASIS OF SCHEDULE OF CHANGES IN WORKING

56
Advance from 2439050 722054 1716996
customers
Provisions 3539356.00 4971315.00 1431959
Security deposits 100000.00 100000 ----- -----
& Retention
money
Total current 35172584.20 18528617.22
liabilities (B)
Working capital 106761907.8 97084056.34 31290989.67 40968841.13
(A-B)
Net Decrease in 9677851.46 9677851.46
working capital
106761907.8 106761907.8 40968841.13 40968841.13

PARTICULARS 2007-08 2008-09 INCREASE DECREASE

CURRENT
ASSETS:
Inventories 67853213 43767644 24085569
S. debtors 27508864 37497882 9989018
Cash & Bank 3665403.60 6891449.29 3226045.69
Balances
Loans & 42907011.40 27455698.27 15451313.13
Advances
Total current 141934492.00 115612673.56
assets (A)
CURRENT

57
 LIABILITIES:
S. creditors 29094178.20 12735248.22 16358929.98

FOR YEARS 2016 AND 2017:

As we have a look on the schedule of changes in working capital for the POLSTAR CARGO
over the years 2015-16 and 2016-17, we find that, among current assets, inventories, loans
and advances have shown increment from year 2015-16 to year 2016-17. The sundry debtors
and cash & bank balances have decreased in the same years. Among the current liabilities,
the sundry creditors and other liabilities have decreased and provisions were increased.
Therefore, the overall net working capital has increased.
FOR YEARS 2017-18 AND 2018-19:
Among the current assets, debtors and cash & bank balances have increased and inventories
and loans & advances have shown decrement. The total current assets have increased. Among
the current liabilities, sundry creditors and other liabilities have decreased which made a
positive effect on networking capital and it increases, on the other hand, the provision
increased which not directly but overall made a good effect on company. Therefore, the net
working capital has also increased.

ANALYSIS OF VARIOUS COMPONENTS OF WORKING CAPITAL

INVENTORY ANALYSIS

Inventory is total amount of goods and materials. Inventory means stock of three:-
1. Raw materials
2. Semi finished goods.
3. Finished goods.
Position of inventory in POLSTAR CARGO : -
PARTICULARS 2019 2018 2017 2016 2015
Raw material 28833211 37297025 29407402 12230900 13921225
W.I.P 5912280 9756023 6270176 4901850 4735793

58
Finished goods 9022153 20800165 5499646 4509348 8283102
TOTAL 43767644 67853213 41177224 21642098 26940120

80000000
70000000
60000000
50000000
40000000
STOCK
30000000
20000000
10000000
0
2019 2018 2017 2016 2015

INTERPRETATION:
By analyzing the 5 years data we see that the inventories are increased/decreased year by
year. We can look increasing pattern in inventories. We can see that inventories are grown in
16-17 and 17-18 respectively from previous year in figures it increases up to19535126
in2017 and inyear2018 it increases to 26675989 in comparison of 2017. By this growth we
can say that the company is growing. A company uses inventory when they have demand in
market and POLSTAR CARGO is having a demand in industry market. That is biggest
reason for increase in Inventories. From other point of view we can say that the liquidity of
firm is blocked in inventories but to stock is very good due to uncertainty of availability of
raw material in time.
SUNDRY DEBTORS ANALYSIS
Debtors or an account receivable is an important component of working capital and fall under
Current assets. Debtors will arise only when credit sales made.
Position of Sundry Debtors in POLSTAR CARGO
PARTICULARS 2019 2018 2017 2016 2015
DEBTS O/S 0.00 203547.00 118028.00 85124.00 262290.00
FOR A PERIOD
OF SIX
MONTHS
OTHER 37497882.00 27305317.00 22040401.16 30274424.69 26732357.57
DEBTS
TOTAL 37497882.00 27508864.00 22158429.16 30359548.69 26994647.57

59
 40000000
35000000
30000000
25000000
20000000
DEBTORS
15000000
10000000
5000000
0
2019 2018 2017 2016 2015

INTERPRETATION
In the table and figure, we see that there are continuous variations in the debtors of in five (5)
successive years. A simple logic is that debtors increase only when sales increase and if sales
increases it is good sign for growth. We can see that in the year 2016-17 the Debtors are at
minimum level. Moreover, in next two years in 2018 & 2019 the debtors are continuously
increasing.
We can say that it is a good sign as well as negative also. Company policy of debtors is very
good but a risk of bad debts is always present in high debtors. When sales are increasing with
a great speed the profit also increases. If company decreases the Debtors, they can use the
money in many investment plans. So, this variation is good from the firm prospect
CASH AND BANK BALANCE ANALYSIS
Cash called the liquid asset and vital current assets; it is an important component of
Working capital. In a narrow sense, cash includes notes, bank draft, cheque etc.

Position of Cash and Bank Balance in POLSTAR CARGO : -

PARTICULARS 2019 2018 2017 2016 2015
Cash & Bank 6891449.29 3665403.60 2297697.88 3407307.32 6617777.19
TOTAL 6891449.29 3665403.60 2297697.88 3407307.32 6617777.19

60
 8000000
7000000
6000000
5000000
4000000
CASH & BANK
3000000
2000000
1000000
0
2019 2018 2017 2016 2015

INTERPRETATION
If we analyze the above table and chart we find that it follows an increasing trend. In the year
2015, it had maintained a huge amount of cash and bank balance which has decreases in the
year 2016, 2017 and 2018. Although company’s cash position in the year2016, 2017 & 2018
was not sound so, this is not a very good sign for company. The analysis shows that the fix
deposits of company are rapidly fallen in the year as 42.3% in 16- 17 respectively from year
2015 that is why company is have minimum balance in 2017 in comparison of all. Through
analysis, we got that company is utilizing the fixed cash for exploding the Projects that is
good for growth.

LOANS AND ADVANCES ANALYSIS

Loans and Advances here refers to any to amount given to different parties, company,
employees For a specific period of time and in return they will be liable to make timely
repayment of that Amount in addition to interest on that loan.
PARTICULARS 2019 2018 2017 2016 2015
LOANS& 27455698.27 42907011.40 32127724.16 16926496.21 11619189.30
ADVANCES
TOTAL 27455698.27 42907011.40 32127724.16 16926496.21 11619189.30

61
 50000000
45000000
40000000
35000000
30000000
25000000 LOANS & AD...
20000000
15000000
10000000
5000000
0
2019 2018 2017 2016 2015

INTERPRETATION
If we analyze the table and the chart we can see that it follows an increasing trend which is a
Good sign for the company. We can see that the increase of loans and advances are increases
year by year except the year 2019. In the year 2018 there is more than Rs.4 crore given as
loan, due to this a lot of amount was blocked. But it used for expansion of business. The
increasing pattern shows that company is giving advances for the expansion of plants and
Machinery which is good sign for better production. Although company’s cash is blocked but
this is good that company is doing modernization of plan competitors in market.

CURRENT LIABILITIES ANALYSIS

Current liabilities are any liabilities that are incurred by the firm on a short term basis or
current Liabilities that has to be paid by the firm within one year.

CREDITORS: -

PARTICULARS 2019 2018 2017 2016 2015

SUNDRY 12735248.22 29094178.20 9759461.84 11585162.05 19863619.97
CREDITORS
TOTAL 12735248.22 29094178.20 9759461.84 11585162.05 19863619.97

62
 30000000
25000000
20000000
15000000 CREDITORS
10000000
5000000
0
2019 2018 2017 2016 2015

INTERPRETATION
If we analyze the above table then we can see that it follow an uneven trend in the sundry
creditors and other liabilities. In 2016 it decreased by 75% and in 2017 it further decreased by
more then100%. In 17-18 it was increased because of growth in other liabilities. This is done
because in the year2018 company purchased a bulk of raw material due to market variations.
When company has minimum liabilities it creates a better goodwill in market. High current
liabilities indicate that company is using credit facilities by creditors.

CHAPTER 5

63
 FINDINGS & CONCLUSIONS
FINDINGS:
I will try to provide these finding after completion of project i.e. Working capital refers to
the cash a business requires for day-to-day operations or, more specifically, for financing the
conversion of raw materials into finished goods, which the company sells for payment.
Among the most important items of working capital are levels of inventory, accounts
receivable, and accounts payable. Analysts look at these items for signs of a company's
efficiency and financial strength
 By conducting the study about working capital management, I found out that working
capital management of POLSTAR CARGO is good. POLSTAR CARGO has
sufficient funds to meet its current obligation every time, which is due to sufficient
profits and efficient management of POLSTAR CARGO .
 Raw material for all the units of POLSTAR CARGO purchased by corporate office in
bulk, which is a major problem for the company as it increases the inventory cost.
 Company is cash rich but as there are expansion and diversification plans under the
pipeline, company is not utilizing these funds. For meeting the working capital needs
and capacity expansion needs, it has borrowed from banks.
 Lack of advertisement can be considered to be a weak point for the POLSTAR
CARGO .
 The amount of stock is increasing per year, which is a good sign, as it would help
them in the tough competition coming ahead.
 Firm profitability can be increase by shortening accounts receivables and inventory
periods.

CONCLUSION
 The essence of effective working capital management is proper cash flow forecasting.
This should take into account the impact of unforeseen events, market cycles, loss of a
prime customer and actions by competitors. So, the effect of unforeseen demands of
working capital should be factored by company. This was one of its reasons for the
variation of its revised working capital projection from the earlier projection.

 It pays to have contingency plans to tide over unexpected events. While market-
leaders can manage uncertainty better, even other companies must have risk-

64
 management procedures. These must be based on objective and realistic view of the
role of working capital.

 Addressing the issue of working capital on a corporate-wide basis has certain

advantages. Cash generated at one location can well be utilized at another. For this to
happen, information access, efficient banking channels, good linkages between
production and billing, internal systems to move cash and good treasury practices
should be in place.

 An innovative approach, combining operational and financial skills and an all-

encompassing view of the company’s operations will help in identifying and
implementing strategies that generate short-term cash. This can be achieved by having
the right set of executives who are responsible for setting targets and performance
levels. They could be then held accountable for delivering, encouraged to be
enterprising and to act as change agents.

 Effective dispute management procedures in relation to customers will go along way

in freeing up cash otherwise locked in due to disputes. It will also improve customer
service and free up time for legitimate activities like sales, order entry and cash
collection. Overall, efficiency will increase due to reduced operating costs.

 Working capital management is an important yardstick to measure a company

operational and financial efficiency. This aspect must form part of the strategic and
operational thinking. Efforts should constantly be made to improve the working
capital position. This will yield greater efficiencies and improve customer satisfaction.

65
 CHAPTER 6
RECOMMENDATIONS & SUGGESTIONS

RECOMMENDATION
 Management should make the proper use of inventory control techniques like
fixation of minimum, maximum and ordering levels for all the items for less
blockage of money.
 The company should also adopt proper inventory control like ABC analysis
etc. This inventory system can make the inventory management more result
oriented. The EOQ should also follow in stores.
 The company should train its work force properly, which would enable the
company to utilize its resources properly and in the interim help in minimizing
wastage, and hence result in the expansion of its market share.
 Due to competition, prices are market driven and for earning more margin
company should give the more concentration on cost reduction by improving
its efficiency.
 The investments of surplus funds made by the corporate office and the units
are not generally involved while taking decisions with regard to structure of
investment of surplus funds. The corporate office should involve the units to
better ascertain the future requirements of funds and accordingly the
investments made in different securities.
 The company is losing its overseas customers due to decrease in exports so;
the sufficient amount of exports should the maintained.
 Company’s Average debtor collection period of company is 19 days.
Therefore, it would be the one of the positive point for company and company
should maintain it for future.

66
 CHAPTER-7
REFRENCES

WEBSITES:-

 Lazaridis, Ioannis and Tryfonidis, Dimitrios, Relationship between Working Capital

Management and Profitability of Listed Companies in the Athens Stock Exchange.
Journal of Financial Management and Analysis, Vol. 19, No. 1, January-June 2006.
Available at SSRN:
http://ssrn.com/abstract=931591
 https://www.polestarcargoindia.com/contact-us.html

 http://papers.ssrn.com/sol3/papers.cfm?
abstract_id=931591&rec=1&srcabs=966188

 http://www.emeraldinsight.com/Insight/ViewContentServlet?
contentType=Article&S.Sename=/published/emeraldfulltextarticle/pdf/
2910030202.pdf

BOOKS AND JOURNALS

 Anand, M. 2001. “Working Capital performance of corporate India: An empirical

survey”, Management & Accounting Research, Vol. 4(4), pp. 35-65

 Berryman, J. 1983. “Small Business Failure and Bankruptcy: A survey of the

Literature”, European Small Business Journal, 1(4), pp47-59

 Bhattacharya, H. 2001. Working Capital Management: Strategies and Techniques,

Prentice Hall, New Delhi.

 Grablowsky, B. J. 1976. “Mismanagement of Accounts Receivable by Small

Business”, Journal of Small Business, 14, pp.23-28

67
 Grablowsky, B. J. 1984. “Financial Management of Inventory”, Journal of Small
Business Management, July, pp. 59-65

 Shields, Patricia and Hassan Tajalli. 2006. Intermediate Theory: The Successful
Student Scholarship. Journal of Public Affairs Education. Vol. 12, No. 3. Pp. 313-334.

APPENDICES

Questionnaire

A. Objectives of the Training Course

1. Do you think the objectives of the course were achieved?

B. Planning of the Training Course

2. I feel that training program was properly planned and the

course took into account what participants considered
important to learn.
3. The management is taking initiatives in providing training
programs to the employees.
4. The training program was properly organized

C. Training Methods

5. I found the different training methods listed below to be

relevant and of good quality:
Lectures
Whole group discussion/brainstorming
Small group discussion
Role-play
Review and revision
6. The language used in the training sessions was easy to
understand.

D. The Training Atmosphere

7. The general atmosphere during the course enhanced the

1.
learning Process.

68
69