ABSTARCT

The present project is on working capital in Kesoram Cements.

The position of the company was studied data was collected he
regarding growth in assets and liabilities. Sales working capital ratio
debtors on turnout ratio, current ratio and other ratios was calculated
composition current of pass five year was collected sources and funds
statement for five years was collected. Interpreted it was fund that
working capital was increasing the begging and latter on it was the
declaiming it was suggested to utilize the companies founds properly.

1
 CHAPTER –I

INTRODUCTION

2
 INTRODUCTION

Working capital is one of the most important requirements of any business

concern. Working capital can be compared with the blood of human beings. As
human cannot survive without blood, in the same way no business concern can
survive without working capital.

Working capital management deals with maintaining the levels of working

capital to optimum, because if a concern has inadequate opportunities and if the
working capital is more than required then the concern will lose money in the form
of interest on the blocked funds. Therefore working capital management plays a
very important role in the profitability of a company.

To go deeper into the topic first of all the meaning of working capital should
be made clear. The term working capital stands for that part of the capital, which is
required for financing the current needs of the company.

It is usually invested in raw material stock (both finished and semi finished).
Accounts receivable, saleable securities and in cash. Capital in all these forms is
constantly being converted into cash and this cash flow out again in exchange for
other forms of working constantly turned over management of working capital
usually involves planning and controlling these current assets.

The basic objective of financial management is to maximize the shareholders

wealth. This is possible only when the company earns sufficient profits. The amount
of such profits largely depends upon the magnitude of sales. However do not convert
into cash instantaneously. These are always a time gap between the sale of goods
and their actual realization in cash. Working capital is required in order to sustain
the sales activities in this period. In case adequate working capital is not available
for this period.

3
 The company will not be in a position to purchase raw material, pay wages
and other expenses required for manufacturing the goods. Therefore sufficient
amount of working capital is to be maintained at any point of time.

ADEQUACY OF WORKING CAPITAL:

A firm must adequate working capital i.e., as much needed by the firm. It
should neither be excessive or inadequate. Both the situations are harmful to the
concern. Excessive working capital means the firm has idle funds, which earn no
profits for the firm inadequate working capital ultimately results in production
interruptions and lowering down of the profitability.

It will be interesting to understanding the relationship between working

capital, risk and return, In a manufacturing concern. It is generally accepted that
higher levels of working capital decrease the risk and have the potential of
increasing the profitability also.

The principle is based on the following assumptions:

 There is a direct relationship between risk and profitability, higher the risk
higher is the profitability, while lower the risk lowers is the profitability.

 Current assets are less profitable than fixed assets.

 Short-tern funds are less expensive than long term funds.

On accounts of the above principle, an increase in the ratio of current assets

to total assets will results in the decline of the profitability of the firm. This is
because investment in current assets as stated above is less profitable than in the
fixed assets. However an increase in the ratio would decrease the risk of the firm
of the becoming technically insolvent. On the other hand a decrease in the ratio
of current assets to total assets is would increase the profitability of the firm
because investment in current assets.

However these increase the risk of the becoming technically insolvent on

accounts of its possible inability in meeting its commitments in time due to
shortage of funds.

4
TYPE OF WORKING CAPITAL:

Working capital can be divided into categories on the basis of time:

 Permanent working capital

 Variable or temporary working capital

Permanent working refers to the minimum amount of investment in all current assets
which is required at all times to carryout minimum level of business activities in
other words. It represents the current assets required on a counting basis over the
entire yea the Tendon committee has referred tot his type of working capital as
“Core current assets”.

Temporary working capital refers to that amount of working capital, which keeps on
fluctuating, from time to time on the basis of business activities. In other words it
represents additional current assets required at different times the operating year.

5
RESEARCH METHODOLOGY:

The proposed study is carried with the help of both primary and secondary
sources of data.

PRIMARY DATA:

The primary data is collected by interacting with the finance manager and
other concerned executives at the administrative office this is natural occurring
material. It is obtained from cement rocks. These cement rocks are claying limestone
containing solicits, illuminates of calcium. The selling property of this cement is
more than the Portland cement but is comprehensive strength is half of its.

1. Ordinary Portland cement.

2. Repaid hardening Portland cement.
3. Lows heat cement.
4. White or colored cement.
5. Water proof Portland cement.
6. Portland slag cement.
7. Sulfate Resisting cement.
8. Oil-well cement
The proposed study is carried with the help of both primary and secondary sources
of data.

The primary data is collected by interacting with the finance manager and other
concerned executives at the administrative Of the company.
SECONDARY DATA:

All the secondary data used for the study has been extracted from the annual
reports, manuals and other published material of the company.

NEED FOR THE STUDY:

In the light of the various problems of working capital management in

Kesoram Cement. We felt that the need for A detailed study of working capital

6
management with a view to investigate the cause of such problems, the personal or
institutional factors responsible for the amendments necessary. In the policy
formulation, implementation, and the changes that should be brought about in the
current working capital management, for ensuring effective utilization of the
resource employed. The fundamental principle underlying the investigation is to
bring to fore the basic managerial factors responsible for the inefficiencies in
working capital management of Kesoram Cements.

7
OBJECTIVES OF THE STUDY:

The following are the objectives of the study

1. To present the conceptual framework relating to management of working

capital.

2. To examine the size of invest and turnover of working capital in an overall

manner including financing of current assets.

3. To know the inventory management practices of Kesoram Cement with a

view to determine the extent of blocking up of money inventory.

4. To assess the receivables management practices of Kesoram Cement in terms

of its size, turnover and collection policies.

5. To offer suitable suggestions for the efficient management of working capital

in Kesoram Cement, keeping in view the inadequacies highlighted by the
study.

SCOPE OF THE STUDY:

Since it will not be possible to conduct a micro level study of all cement
industries in Andhra Pradesh, the study is restricted to Kesoram Cement only.

LIMITATIONS OF THE STUDY:

The following are the limitations of the study

1. The study is limited based on data provided by the company’s financial

statements. So the limitations of the statements are equally applicable of this
study.

2. The study is limited for a period of 5 years i.e., from 2017-2022

8
 CHAPTER-II
REVIEW OF LITERATURE

9
 REVIEW OF LITERATURE

1. Bhatt V. V. (1972) widely touches upon a method of appraising working capital

finance applications of large manufacturing concerns. It states that similar methods
need to be devised for other sectors such as agriculture, trade etc. The author is of
the view that banks while providing short-term finance, concentrate their attention
on adequacy of security and repayment capacity. On being satisfied with these two
criteria they do not generally carry out any detail appraisal of the working of the
concerns.

2. Smith Keith V. (1973) believes that Research which concerns shorter range or
working capital decision making would appear to have been less productive. The
inability of financial managers to plan and control properly the current assets and
current liabilities of their respective firms has been the probable cause of business
failure in recent years. Current assets collectively represent the single largest
investment for many firms, while current liabilities account for a major part of total
financing in many instances. This paper covers eight distinct approaches to working
capital management. The first three – aggregate guidelines, constraints set and cost
balancing are partial models; two other approaches - probability models and
portfolio theory, emphasize future uncertainty and interdepencies while the
remaining three approaches - mathematical programming, multiple goals and
financial simulation have a wider systematic focus.

3. Chakraborthy S. K. (1974) tries to distinguish cash working capital v/s balance

sheet working capital. The analysis is based on the following dimensions:
a) Working capital in common parlance b) Operating cycle concept
b) Computation of operating cycle period in all the four cases. The purpose of the
analysis is to demonstrate operating cycle concepts based on published annual
reports of the firms.

4. Natarajan Sundar (1980) is of the opinion that working capital is important at

both, the national and the corporate level. Control on working capital at the national

10
level is exercised primarily through credit controls. The Tandon Study Group has
provided a comprehensive operational framework for the same. In operational terms,
efficient working capital consists of determining the optimum level of working
capital, financing it imaginatively and exercising control over it. He concludes that
at the corporate level investment in working capital is as important as investment in
fixed assets. And especially for a company which is not growing, survival will be
possible only so long as it can match increase in operational cost with improved
operational efficiency, one of the most important aspects of which is management of
working capital.

5. Kaveri V. S. (1985) has based his writing on the RBI‟s studies on finances of
large public limited companies. This review of working capital finance refers to two
points of time i.e., the accounting years ending in 1979 and 1983 and is based on the
data as given in the Reserve Bank of India on studies of these companies for the
respective dates. He observes that the Indian industry has by and large failed to
change its pattern of working capital financing in keeping with the norms suggested
by the Chore Committee. While the position of working capital management showed
some investment between 1975-79 and 1979-83, industries have not succeeded in
widening the base of long-term funds to the desired extent. The author concludes
with the observation that despite giving sufficient time to the industries to readjust
the capital structure so as to shift from the first method to the second method,
progress achieved towards this end fell short of what was desired under the second
method of working capital finance. uncertainty and interdepencies while the
remaining three approaches -mathematical programming, multiple goals and
financial simulation have a wider systematic focus.

6. Fazzari Steven M. and Petersen Bruce C. (1993) throws light on new tests for
finance constraints on investment by emphasising the often neglected role of
working capital as both a use and a source of unds. The authors believe that working
capital is also a source of liquidity that should be used to smooth fixed investment
relative to cash-flow shocks if firms face finance constraints. They have found that

11
working capital investment is “excessively sensitive” to cashflow fluctuations.
Besides, when working capital investment is included in a fixed-investment
regression as a use or source of funds, it has a negative coefficient. They conclude
that controlling for the smoothing role of working capital results in a much larger
estimate of the long-run impact of finance constraints than reported in other studies.

7. Ahmed Habib (1998) points out that when the interest rate is included; money
loses its predictive power on output. The study explicates this finding by using a
rational expectations model where production decisions of firm required debt
finance working capital. Working capital is an important factor and its cost, the rate
of interest, affects the supply of goods by firms. Monetary policy shocks, thus, affect
the interest rate and the supply side, and as a result price and output produced by
firms. The model indicates that this can cause the predictive power of monetary
shocks on output to diminish when the interest rate is used in 97 empirical analysis.
The model also alludes to the effects of monetary policy on the price level through
the supply side (cost push) factors.

8.Prof. Mallick Amit and Sur Debasish (1998) attempt to make an empirical study
of AFT Industries Ltd, a tea producing company in Assam for assessing the impact
of working capital on its profitability during the period 1986-87 to 1995- 96. The
author has explored the co-relation between ROI and several ratios relating to
working capital management. On the whole, this study of the correlation between
the elected ratios in the area of working capital management and profitability of the
company revealed both negative and positive effects. Moreover, the WCL of the
company recorded a fluctuating trend during the period under study.

9. Hossain, Syed Zabid (1999) throws light on the various aspects of working
capital position. He has evaluated working capital and its components through the
use of ratio analysis. For each aspect of analysis certain ratios are computed and
then results are compared with the standard ratio or industry average.

12
10. Singaravel, P. (1999) focuses on the interdependency among working
capital, liquidity and profitability, of which sufficiency of liquidity comes in the
first preference followed by sufficiency of working capital and profitability. The
article is an in-depth analysis of liquidity and its interrelationship with working
capital and profitability. As the working capital, liquidity and profitability are in
triangular position, none is dispensable at the satisfaction of the other. Excess of
stock-in-trade over bank over-draft and excess of liquid assets over current
liabilities other than bank over-draft generate working capital for the business.
Alternatively, working capital requirements are made for long-term funds, which
affect the profitability.
11. Garg Pawan Kumar (1999) focuses on the study of working capital trend
and liquidity analysis in the selected public sector enterprises of Haryana. The
study suggests forecasting of working capital requirement confined mainly to
various components of working capital. After considering the facts, the author
realized the need for proper assessment and forecasting of working capital in the
public sector undertaking. For this purpose, he has suggested the analysis of
production schedule, sales trend, labor cost etc., should be taken into
consideration. He further suggested the need for better management of
components of working capital.
12. Bhatt V. V. (1972) He has given concentration on system to appraise
working capital management and its finance especially for the large-scale
companies. This tools also helpful to other sectors like agriculture as well retail
trade etc. As bank, provide short-term finance to operation of business at the
same time need to pay attention on repayment of loan and required finance
necessity. If these two area is to be, maintain properly no need to appraise the
working capital management concern.
13. Smith Keith V. (1973) Research has been given focused on the short-term
finance need to be given more attention for the success of the individual firm.
For that, finance manager has to give more attention on current assets and
current liability. Many firms do investment of current assets in a basket while
current liability in many different request. This paper consist eight distinct
approaches to working capital management out of it first three gives common

13
guidelines next three regarding constrain set and cost balancing and last two
about probability models and portfolio theory.
14. Rao K.V. and RaoChinta (1991):- This study observed that strong and
weak point of conventional techniques of working capital analysis. Outcomes of
this study shows that some of the conventional techniques, which could realize
the working capital behavior well. In addition, some of them fail to do so. Thus
authors suggest proper working capital management with conventional method
i.e. ratio analysis. Study suggests further inclusive factors, which are decisive
yardstick in working capital efficiency.
15. RaoGovinda D. and Rao P. M. (1999):- As per the study, management of
working capital is constant process. So that proper observation on various
components is needed. At the end relationship between different components are
needed. This provides proper direction.

14
THEORETICAL REVIEW
Working capital is that amount of funds, which is required to carry out the
day-to-day operations of an enterprise. It may also regard as that position of an
enterprise total capital, which is employed in its short-term operations. This
operation consists of primarily such items as raw materials, semi-finished goods,
finished goods, sundry debtors, short-term investments etc. Thus, working capital
also refers to all the short-term assets known as current assets used in day-to-day
operations of an organization.

Importance of Working Capital

 The goal of working capital management is to maximize operational
efficiency.
 Efficient working capital management helps maintain smooth operations
and can help to improve the company's earnings and profitability.
 Management of working capital includes inventory management and
management of accounts receivables and accounts payables. 

Definition of Working Capital:

“Working Capital sometimes called as Net Working Capital is represented
by the excess of current assets over the current liabilities and identifies the relatively
liquid portion to total enterprise capital which constitutes a margin or buffer for
maturing obligations within the ordinary operating cycle of the business”.

Working Capital is a excess of current assets over current liabilities’.

CONCEPT OF WORKIGN CAPITAL:

There are two concepts of working capital such as
1. Gross working capital
2. Net working capital

15
GROSS WORKING CAPITAL: (GWC)
The gross working capital simply called as working capital, refers to the
firm’s investment in current assets. Current assets are the assets which can be
converted into cash within an accounting year (or operating cycle) and include cash,
short-term securities, debtors, bills receivables, inventories and prepaid expenses.

Gross Working Capital = Total of Current Assets

16
NET WORKING CAPITAL: (NWC)

The Term Net Working Capital, can be defined in two ways

“The Excess of Current assets over Current liabilities”.
(or)
“That portion of a firm’s current assets which is financed with long term funds

Net Working Capital = Current Assets - Current Liabilities

Net working capital can be positive or negative. A positive net working

capital will arise when current assets exceed current liabilities. A negative working
capital occurs when current liabilities are in excess of current assets.
The two concepts of working capital gross and net are not exclusive; rather
they have equal significance from the management viewpoint.
The gross working capital focuses attention on two aspects of current assets
management such as

1. Optimum investment in current assets and

2. Financing of current assets

The consideration of the level of investment in current assets should avoid

two danger points “excessive and inadequate investment in current assets”. The
investment in current assets should be just adequate, not more, nor should less.
Excessive investment in current assets should be avoided because it impairs the
firm’s profitability, as idle investment earns nothing. On the other hand, inadequate
amount of working capital can threaten solvency of the firm because of its inability
to meet its obligations. It should be realized that the working capital needs of the
firm may be fluctuating with changing business activity.

This may cause excess or shortage of working capital frequently. The

management should be prompt to initiate an action and correct imbalances.

17
 Another aspect of the gross working capital points to the need of arranging
funds to the need of arranging funds to finance current assets. Whenever a need for
working capital arises due to the increasing level of business avidity or for any other
reason. Financing arrangement should be made quickly. Similarly, if suddenly, some
surplus funds arise they should not be allowed to remain idle, but should be invested
in short term securities. Thus, the financial manager should have knowledge of the
sources of working capital funds as well as investment avenues where idle funds
may be temporarily invested.
Net working capital, being the difference between current assets and current
liabilities, is a quality concept it

 Indicate the liquidity position of the firm and

 Suggests extent to which working capital needs may be financed by
permanent sources of funds.
Current assets should be sufficiently in excess of current liabilities to
constitute a margin or buffer for maturing obligations within the ordinary operation
cycle of a business. In order to protect their interests, short term creditors always
like a company to maintain current assets at a higher level than current liabilities.

It is conventional rule to maintain the level of current assets twice of the

level of current liabilities. However, the quality of the current assets should be
considered in determining the level of current assets vis-à-vis current liabilities.

We know that firm aim at maximizing the wealth of the share holder’s, a
firm should earn sufficient returns from its operations earning a steady amount of
profit requires successful sales activities. The firm has to invest enough funds in
current assets for the success of sales activity. Current assets are needed because
sales do not convert into cash instantaneously. There is always an operating cycle
involved in conversion of sales into cash.

18
OPERATING CYCLE:

Operating cycle is the time duration required to convert sales, after the
conversion of the resources into inventories, into cash. The operating cycle of a
manufacturing company involves three phases;

 Acquisition of resources such as raw material, labor, power fuel etc.,

 Manufacture of the product which includes conversion of raw material into
work-in-process into finished goods.
 Sales of the product either for cash or on credit. Credit sales create book
debts for collection.

Diagrams

CASH

Debtors Raw Materials

Sales Work-in-Progress

Finished
Goods

Operating Cycle of a manufacturing Firm

CASH

Receivables Inventory Cash Debtors

Operating Cycle of a Non manufacturing Firm Operating Cycle of Service and Finance Firm

19
 For calculation of net operating cycle, various conversion periods are
calculated using the following formulas:
1) Raw Material Conversion Period

RMCP = Average raw material inventory

Average raw material consumed per day

2) Work-In-Progress Conversion Period

WIPCP = Average work-in-progress

Average cost of production per day
3) Finished Good Conversion Period

FGCP = Average finished goods

Average cost of production of goods per day

4) Debtors Conversion Period

DCP = Average debtors

Average credit sales per day

5) Payables Deferrable Period

PDP = Average creditors

Average credit purchases per day

Inventory conversion period ICP = RMCP + WIPCP + FGCP

Gross operating cycle GOC = ICP + DCP
Net operating cycle NOC = GOC – PDP

20
Need for Working Cap ital:

Different industries have different optimum working capital profiles,

reflecting their methods of doing business and what they are selling.
a. Businesses with a lot of cash sales and few credit sales should have minimal
trade debtors. Supermarkets are good examples of such businesses;
b. Businesses that exist to trade in completed products will only have finished
goods in stock.
c. Some finished goods, notably foodstuffs, have to be sold within a limited
period because of their perishable nature.
d. Larger companies may be able to use their bargaining strength as customers
to obtain more favorable, extended credit terms from suppliers. By contrast,
smaller companies, particularly those that have recently started trading (and
do not have a track record of credit worthiness) may be required to pay their
suppliers immediately.
e. Some businesses will receive their money at certain times of the year,
although they may incur expenses throughout the year at a fairly consistent
level. This is often known as “seasonality” of cash flow.
Working capital needs also fluctuate during the year. The amount of funds
tied up in working capital would not typically be a constant figure throughout the
year.

Only in the most unusual of businesses would there be a constant need for
working capital funding. For most businesses there would be weekly fluctuations.
Many businesses operate in industries that have seasonal changes in demand.
This means that sales, stocks, debtors, etc. would be at higher levels at some
predictable times of the year than at others.
In principle, the working capital need can be separated into two parts:
(1) Permanent working capital
(2) Variable working capital

21
PERMANENT AND VARIABLE WORKING CAPITAL:

There is always a minimum level of current assets which is continuously

required by the firm to carry out its business operations. This minimum level of
current assets is referred to as permanent or fixed working capital.

The extra working capital, needed to support the changing production and
sales activities is called fluctuating, or variable or temporary working capital. Both
kinds of working capital permanent and temporary are necessary to facilitate
production and sale through operating cycle, but temporary working capital is
created by the firm to meet its liquidity requirements that will last only temporarily.

Diagrams

Temporary or
Fluctuating

(Fig-1a) Permanent

Time
Fig-1a illustrates differences between permanent and temporary working
capital. It is shown that permanent working capital is stable over time, while
temporary working capital is fluctuating some times increasing and sometimes
decreasing.
For a growing firm the difference between permanent and temporary working
capital can be depicted through fig-1b.
(Fig-1b)
Temporary or
Fluctuating

Permanent

22
Time
 ADEQUACY OF WORKING CAPITAL:

The firm should maintain a sound working capital position.It should have
adequate working capital to run its business operations. Both excessive as well as
inadequate working capital positions are dangerous from the firm’s point of view.
Excessive working capital means idle funds which earn no profits for the firm.
Paucity in working capital not only impairs firm’s profitability but also results in
production interruptions and inefficiencies.

THE DANGERS OF EXCESSIVE WORKING CAPITAL ARE AS FOLLOWS:

1) It results in unnecessary accumulation of inventories. Thus, chances of

inventory mishandling, waste, theft and losses increase.
2) It is an indication of defective credit policy and slack collection period.
Consequently, higher incidence of had debts results, which adversely affects
profits.
3) Excessive working capital makes management complacement, which
degenerates into managerial inefficiency.
4) Tendencies of accumulating inventories to make speculative profits grow.
This may tend to make dividend policy liberal and difficult to cope within
future when the firm is unable to make speculative profits.

INADEQUATE WORKING CAPITAL IS ALSO BAD AND HAS THE

FOLLOWING DANGERS:

a) It stagnates growth. It becomes difficult for the firm to undertake profitable

projects for the non-availability of working capital funds.
b) It becomes difficult to implement operating plans and achieve the firm’s
target.
c) Operating inefficiencies crept in when it becomes difficult even to meet the
day to day commitments.

23
 d) Fixed assets are not utilized for the lack of working capital funds. Thus the
firm’s profitability would deteriorate.
e) Paucity of working capital funds renders the firm unable to avail attractive
credit opportunities etc.,
f) The firm loses its reputation when it is not in a position to honour its short
term obligations. As a result the firm faces tight credit terms.

WORKING CAPITAL INVESTMENT POLICIES:

(a) Conservative Approach: Under this policy the firm holds relatively large
proportion of total assets in the form of current assets. This policy lowers expected
profitability, assuming that current liabilities remain constant. This policy also
increases the firm’s net working capital position resulting in a lower risk that firm
will encounter financial problems.

(b) Aggressive Approach: Under this policy a firm holds relatively small proportions
of total assets in the form of current assets and thus, has relatively less net working
capital. Consequently this policy yields higher expected profit and higher risk.

(c) Moderate Approach: Under this policy, expected profitability and risk will fall
between those by Conservative approach and Aggressive approach.
The relationship between current assets and sales under the above policies is shown
below in fig-c3.

Conservativ Moderat
e e
Aggressive

(Fig-c3)

24
DETERMINANTS OF WORKING CAPITAL:

There are no set rules to determine working capital requirements of the

firms. A large number of factors influence working capital needs of the firms. All
factors are of equal importance. Also, the importance of factors changes for a firm
over time. Some of the relevant factors are listed below

Nature and size of business

Sales growth
Business cycles
Production policy
Factors Price level changes
affecting
Working Operating efficiency and
Capital performance
Firm’s credit policy
Availability of credit
Inventory policy
Level of taxes
Abnormal factors
Seasonal fluctuations

DIMENSIONS OF WORKING CAPITAL MANAGEMENT:

There are many aspects of working capital management, which make it an
important function of financial management.

 Working capital management requires much of the financial manager’s time.

 Working capital represents a large portion of the total investment in the
assets.
 Working capital management has a greater significance for the smaller firms.
 The need for working capital is directly related to sales growth.

25
SOURCES OF WORKING CAPITAL
The typical sources of working capital are summarized as below
FUNDS FROM OPERATIONS (ADJUSTED NET INCOME).

1. SALES OF NON CURRENT ASSETS:

 Sales of long term investment (shares, debentures etc.,)
 Sale of tangible fixed assets (land, buildings etc.,)
 Sale of intangible fixed assets (goodwill, patents etc.,)
2. LONG TERM FINANCING:
 Long term borrowings (institutional loans, debentures, bonds etc.,)
 Issuances of equity and preference shares.

3. Short term financing - such as bank borrowings.

USES OF WORKING CAPITAL

The typical uses of working capital are as follows:
1) Adjusted net loss from operations
2) Purchase of non current assets
3) Repayment of long term debt and short term debt
4) Redemption of redeemable preference shares
5) Payment of cash dividend
A weak liquidity position poses a threat to solvency of the company and
makes it unsound. A negative working capital means a negative liquidity, and may
prove to be harmful for the company. Excessive liquidity is also bad.
Net working capital also covers the question of judicious mix of long term
and short-term funds for financing current assets. For every firm, there is a
minimum amount of net working capital, which is permanent. Therefore a portion
of the working capital should be financed by the permanent sources of funds such as
owner’s capital, debentures, long-term debt, preference capital or retained earnings.
Management must, therefore, decide the extent to which current assets should be
financed with equity capital and/or borrowed capital.

26
CHAPTER -III
INDUSTRY PROFILE
&
COMPANY PROFILE

27
 INDUSTRY AND COMPANY PROFILE
Kesoram Cement Industry is one among the industrial giants in the country,
today serving the nation on the Industrial front, Kesoram Industries Ltd has a
chequered and eventful dating back to the 1920’s .When the Industrial house of
Birla acquired it with only a textile mill under its banner in 1927 it grew from
strength and spread its activities to newer fields like Rayon, pulp, Transparent paper,
pipes refractory, tiers and other products.
The government of India-licensed the cement Industry in the year 1966
with a view to attract private entrepreneurs to argument the cement
production.Kesoram rose to the occasion and decided to setup few cement plants in
the country.
The company first unit was Basanth Nagar with a capacity of 2.5 Lakh tones
in corporation humbles suspension pre heater system was commissioned during the
year 1969.
The second unit was setup in 1971 which added 2.000 Lakh tones capacity.
The third unit with capacity 2.5 lakh tones went to stream in 1978. It was further
expanded to make it a 9.00 Lakh tones plant at Basanth Nagar.The coal for this
company is being a supplied singareni collieries and the power is obtained from
APSEDB.The power demand for the factory is about 21mw.
The Kesoram Cement Industry came up with the capacitive thermal power
plant of 18mv capacity for uninterrupted power supply. This is in addition to the
D.G.set’s generating 8mv of power. Which would ensure consistency in the supply
of cement even during power cut period?
Birla Supreme is popular brand of Kesoram Cement from its prestigious
plant of Basanth Nagar in A.P., which has out standing track record in performance
and productivity serving the national for the last three decaded.It has proved its
distinction by bagging several national and state awards. It also has the distinction of
achieving optimum capacity utilization.
Kesoram offers a choice of top quality Portland cement of light, heavy
construction and allied application. Quality is built in every fact of the operations.

28
 The plant layout is rational to begin with the lime stone is rich in calcium
carbonate, a key factor that influences the quality of the final product. The dry
process of technology used in the latest computerized monitoring.

Types of sales:
 Depot sales.
 Site sales.

Depot sales:
The required amount of cement is supplied to the dealer’s from the depot.
The branches of the company make these sales.
Site sales:
The required quantity of cement is directly sold by the company to required
group or organization dealer’s etc.
Distribution channel:
Kesoram cement follows intensive type of Distribution channel.
Intensive Distribution:
In an intensive distribution strategy the manufactures makes the goods or
services available in as many outlets as possible.
Dealer’s selection:
The company selects the Dealer’s after taking into consideration the financial
position the area, the dealer’s opinion regarding the product. The company takes
more attention for selecting dealers in the urban region.
The incentive facilities given to the Dealers by the company are quantity
(trade discount) cash discount and sliding scale discount (Annual Discount).
Keroram cement undertaking marketing activities extensively in the state of
A.p. Karnataka, Kerala, Maharashtra and Gujrat.In A.P. sales depots are located in
different areas like karimnagar,Warangal , Nizamabad,vijaywada and Nellore.In
other states it has opened 19 depots.
The market share of Kesoram cement in A.P. is 7.59% .The market share of
the company in various states is shown as under.

29
 STATES MARKET SHARE
Karnataka 4.9%
Tamilnadu 0.94%
Kerala 0.29%
Maharashtra 2.81%

The share of kesoram cement in the all India cement market is 1.19%
PRODUCTION OF KESORAM CEMENT
YEAR TONES
2019-20 4,45,441
2020-21 8,14,921(more capacity)
2021-22 7,82,385(due to power cut)
An average sale of the company is between 2000 to 2200 metric tones per day.
The company takes order through its branch builders. Dealers and from any
organization if ordered for bulk quantity.
Sales promotion:
The company has got a healthy sales promotion it has taken much
concentration in advertising of the product through various means like.
1. News paper
2. Television.
3. Wall painting.
4. Bus panels
5. Shop paintings.
KESORAM CEMENT ADVANTAGES:
1. Helps in designing sleeker and more elegant structures giving greater
flexibility in design concept.
2. Due to its quality. Super fine constriction can be achieved.
3. It gives maximum strength at minimum use of cement with water in the
water cement ratio especially the 53 grade.
4. Better water proofing is achieved due to low heart of hydration. As the
shrinkage will be less. Which means fewer cracks

30
 5. Better finish is achieved due to fitness and hence better work ability. Thus
plastering becomes easier with better finish.

LIST OF AWARDS BAGGED BY KESORAM CEMENT

Kesoram cement distinguished it self among all the cement factories in India
bagging a number of awards.

Sino Years Details

01 1976 FAPCCI Award for best family planning efforts in state
02 1978 FAPCCI Award for best industrial promotion /Expansion
efforts in the state
03 1984 Best family planning in the state
04 1985 National productivity award
14 1985-86 National award for mines safety
15 1986 National productivity award
16 1986-87 National award for mines safety
17 1987-88 Best family planning in the state
18 1988-89 A.P. State award for best industrial relations
19 1989 A.P. state yajamanya ratna and best management award
14 1989 Best family planning in the state by FAPCCI
15 1989-90 NCBM’ S national award for energy performance
16 1990-91 India Gandhi memorial national award for excellence in
industry
17 1993 Best management award by A.P. Govt
18 1994 Mines safety award by A.P. Govt

19 1995 Award for mines safety in A.P.

17 1995-96 Best workers welfare (including family planning) by
FAPCCI
18 1996 Company got ISO-9002 certification from bureau of
Indian standards.
19 1997 The “best pay roll saving group award among private

31
 sector” First prize in the state level by the national
savings Govt of India.
20 1998-99 The “best Efforts in rural development by an industry in
the state” by the federation of A.P. chambers of
commerce& industry(FAPCCI), HYD.
20 1998-99 The “best Efforts in rural development by an industry in
the state” by the federation of A.P. chambers of
commerce& industry(FAPCCI), HYD.
21 1999 Mines environment & pollution control-first prize
22 1999-00 Award for best efforts in environmental protection in the
region by the Godavari pradushana pariharana
paryavarana parirakshana gavakshamu (GPPPPG) (A
voluntary organization for pollution control &
environmental protection). Godavarikhani.

23 2000 First prize for Horticulture show (for carambola fruit) held at
public gardens, HYD being organized by director of
Horticulture
24 2000-01 Award for the best environment protection efforts put in by
kesoram cement being organized by (GPPPPG) at Ravindra
Bharathi HYD on the occasion of “Earth Day” on 22-4-2001.
The award was presented by the Hon’ble minister of for
urban development Sri Bandaru Dattatreya.
25 2009 Company has got ISO-4001 certification pertaining to
environment from Bureau of Indian standards.
26 July2015 Vanamithra Award from the District collector
27 2016-17 Award for the Best efforts put in by kesoram cement for
PROTECTING THE ENVIRONMENT presented by the

32
 Godavari pradushana pariharana paryavarana parirakshana
gavakshamu (GPPPPG) on the occasion of “EARTH DAY”
celebrations at @ GODAVARIKHANI on 22-04-2003
28 2017 Company has got OHAS-18001(Occupational Health &
safety Assessment series) Certification from DNV new Delhi
29 2018-19 MINES SAFETY WEEK
(24-14-2003)
1. Over all performance -II prize
2. Operation and maintenance machines -I prize
3. Protection equipment, vocational and
Supervision standard -I prize
4. Environment & pollution control -II prize
5. Hose -II prize
6. Welfare amenities -II prize

30 2019 MINES ENVIRONMENT & MINERAL CONSERVATION

WEEK
1. Dump yard management -I prize
2. Afforestation -II prize
3. Noise& vibration -II prize
4. Air quantity& dust suppression -II prize
31 2020-21 Three first prizes in HORTICULTURAL SHOW (For sapota
banana & carambola fruits) held at Karimnagar organized by
Asst. director of horticulture in connecting with
“SHATHAVAHANA” Kalotsavalu

33
WELFARE AND RECREATION FACILITIES AT A GLANCE
1) RECREATION CLUB:
For the purpose recreation facilities two auditors provided for the
employee to indoor games like shuttle. Chess caroms and for
organizing functions and activities like drama, Music, and Dance
concert etc.
2) LIBRARIES AND READING ROOMS:
The company has provided libraries and reading rooms for the
benefit of the employee. About 5000 books available in read the
libraries. All kinds of newspapers and magazines are made
available in reading rooms for the daily reading of the employees
and their families.
3) CANTEEN:
Is provided to cater to the needs of the employees for the supply
of snacks, tea, coffee and meals.
4) SCHOOLS:
One English medium school and Telugu medium school are
provided to meet the education requirement of the employee’s
children.
5) DISPENSARY:
The company has provided a dispensary with a qualified medical
officer and paramedical staff for the benefit or the employee. The
employee’s covered under ESI scheme has to avail the medical
facilities from the ESI hospital.
6) KESORAM CONSUMER CO-OP, STORE:
Consumer co-op stores are available to meet the needs of the
employees for supply of essential commodities like rice. Wheat
sugar kerosene etc., on cash credit basis
7) SPORT AND GAMES:
Competitors in sport and games are conducted every year for Aug
18 and Jan 26 among the employees.

34
8) HOUSE JOURNAL:
A house journal in the name of basanthnagar samachar is brought
out
Quarterly where in the important of the plant are published.

AIMS:

 Continuous effort too improving productivity.

 Evaluating individual skill trough training and
motivations.
 Total involvement through participants management
activities.
 Creating healthy and safe environment.
 Social development.

35
CHAPTER- V

DATA ANALYSIS
&
INTERPRETETION

36
 DATA ANALYSIS AND INTERPRETATION

Working capital management is concerned with the resolution of the problem

in managing current assent and current liabilities, The goal of working capital
managing is to maintain optimum level of current assents and current liabilities by
ensuring the both liquidity and profitability if firms cannot maintain satisfactory
level of working capital managed to ensure that they are likely to fall in liquidity
trap. Source and used in the best possible way. Integrating the short-term obligation
with the short-term assets and liabilities is the main theme of working capital
management.
The working capital objective of the KCIP.LTD. Use of current Assets. The
company uses cash forecasting method to determine working capital requirement. It
takes sales as the basis for working capital determinations. The company prepares
working capital budget on long-term basis for a period of 5 years. The eyele of the
budget is and collection functions. The working capital budget is prepared in co
ordinations with the budget sales all-variable needs with short-term sources and only
for the period needed. The sources of working capital financing as per priority are
cash credit from banks. Advances from customers Equity and long-term sources and
working capital responsible for the overall working capital management. The
company follows Net Working Capital and current ratio as working capital norm
and the Company review the working capital shortage and also there were excess
working capital situations.
The current assets of the company mainly include inventories. Sundry
debtors cash and Bank Balance and Loan and Advances, Current liabilities
constitute Sundry creditors provision and other Liabilities. The structure of current
assets and current liabilities of KCIP LTD is given below.

37
 Current Assets:

1. Inventories
a) Raw and packing material
b) Stock –in-progress
c) Finished goods.
d) Consumables
e) Stores and spares
2. Sundry Debtors
a) Debts
b) Others
3. Cash and Bank Balance
a) Cash in hands
b) Cash at bank
4. Loans and advances
a) Advances recoverable in cash
b) Prepaid expanses
c) Deposit recoverable
d) Tax deducted at source
e) Advance tax
f) Advances to supplies

Current Liabilities:
1. Sundry Creditors
a) Creditors for material
b) Creditors for capital expenditure.
2. provisions
a) provisions for Income-tax
b) Provisions for Bonus.
c) Proposed Divided
d) Dividend tax

38
 3. Other liabilities:
a. Deposits
b. Advances from customers
c. Interest accrued but not due
d. Tax deducted at source payable
e. Others

In order to oases the adequacy and effectiveness for working policies OF KCI P Ltd
over the last five years a detailed analysis into working Capitals as take up with the
help of trend analysis and accounting ratios.

NET WORKING CAPITAL (NWC):

Net working capital is the excess of current assets over current

liabilities.Symbolically.NCW =CA-CL.In order to know the NCW of KCI P.Ltd.it is
commencing from 2017-2018 to 2021-2022.

39
 STATEMENT OF CHANGES IN WORKING CAPITAL

PARTICULARS YEAR YEAR INCREASE DECREASE

2016-2017 2017-2018

Current assets:
a)Inventories 1828415214 1960349214 431943015
b)Sundry debtors 1839981476 1835619883
c)Cash&Bank 315181523 198618590 4363663
d) Other C.A. 182147852 263218444 81493592 146588533
e)Loans&Advances 997149989 1933537983 19635494

Total
4559802218 4971632141
Current liabilities:
a)Liabilities
b)Provisions
1787645302 1772822282 285176980

547416821 637159286 89718465

Total 2035149153 2418951868

NWC(A-B) 36837451
2524743182 2561881473
Increase in W.C.
36837451

2561881473 2561881473 529682182 529682182

40
STATEMENT OF CHANGES IN WORKING CAPITAL

PARTICULARS YEAR YEAR INCREASE DECREASE

2017-2018 2018-2019

Current assets:
a)Inventories 1960349214 2031562246 70316035
b)Sundry debtors 1835619883 2017943703 467963187
c)Cash&Bank 198618590 243527953
d) Other C.A. 263218444 219176744 44918363 44041700
e)Loans&Advances 1933537983 893837399 149701484

Total
4971632141 5395178045
Current liabilities:
a)Liabilities 1772822282 1757923487
b)Provision 637159286 694329841

Total 2418951868 2178179665 323226151

NWC(A-B)
2561881473 3247148380
Increase in W.C.

685477837
685477837
3247148380 3247148380 915421576 915421576

41
 Current Assets:
Inventories
 Raw and packing material
 Stock –in-progress
 Finished goods.
 Consumables
 Stores and spares
Sundry Debtors
 Debts
 Others
Cash and Bank Balance
 Cash in hands
 Cash at bank
Loans and advances
 Advances recoverable in cash
 Prepaid expanses
 Deposit recoverable
 Tax deducted at source
 Advance tax
 Advances to supplies

Current Liabilities:
Sundry Creditors
 Creditors for material
 Creditors for capital expenditure.
Provisions
 Provisions for Income-tax
 Provisions for Bonus.
 Proposed Divided
 Dividend tax

42
 4. Other liabilities:
 Deposits
 Advances from customers
 Interest accrued but not due
 Tax deducted at source payable
 Others

In order to oases the adequacy and effectiveness for working policies OF KCI P
Ltd over the last five years a detailed analysis into working Capitals as take up with
the help of trend analysis and accounting ratios.

NET WORKING CAPITAL (NWC):

Net working capital is the excess of current assets over current liabilities.
Symbolically. NCW =CA-CL.In order to know the NCW of KCI P.Ltd.it is
commencing from 2017-2018 to 2021-2022.

43
 STATEMENT OF CHANGES IN WORKING CAPITAL

PARTICULARS YEAR YEAR INCREASE DECREASE

2018-2019 2019-2020

Current assets:
a)Inventories 1821777224 1828415214 293371919
b)Sundry debtors 1914577269 1839981476 61987649 376344854
c)Cash&Bank 251992974 315181523 239031854
d) Other C.A. 559181714 182147852 376975953
e)Loans&Advances 763166566 997149989

Total
Current liabilities: 5315374838 4559802218 162769002
a)Liabilities 1920417304 1787645302
b)Provisions 433233217 547416821

Total

2146647518 2035149153
NWC(A-B)
727984228 147181516
3252727320 2524743182
Decrease in W.C.
727984228

3252727320 3252727320 1491772433 1491772433

44
 STATEMENT OF CHANGES IN WORKING CAPITAL

PARTICULARS YEAR YEAR INCREASE DECREASE

2019-2020 2020-2021

Current assets:
a)Inventories 1828415214 1960349214 431943015
b)Sundry debtors 1839981476 1835619883
c)Cash&Bank 315181523 198618590 4363663
d) Other C.A. 182147852 263218444 81493592 146588533
e)Loans&Advances 997149989 1933537983 19635494

Total 4559802218 4971632141

Current liabilities:
a)Liabilities 1787645302 1772822282 285176980
b)Provisions 547416821 637159286
89718465

Total 2035149153 2418951868

36837451
NWC(A-B)
2524743182 261881473
Increase in W.C.
36837451

2561881473 2561881473 529682182 529682182

45
STATEMENT OF CHANGES IN WORKING CAPITAL

PARTICULARS YEAR YEAR INCREASE DECREASE

2020-2021 2021-2022

Current assets:
a)Inventories 1960349214 2031562246 70316035
b)Sundry debtors 1835619883 2017943703 467963187
c)Cash&Bank 198618590 243527953 44918363 44041700
d) Other C.A. 263218444 219176744 149701484
e)Loans&Advances 1933537983 893837399

Total 4971632141 5395178045

Current liabilities:
a)Liabilities 1772822282 1757923487
b)Provision 637159286 694329841

Total 2418951868 2178179665 323226151 57201555

NWC(A-B) 685477837
2561881473 3247148380
Increase in W.C.
685477837

3247148380 3247148380 915421576 915421576

46
RATIOS

TYPES OF RATIOS:
Several ratios calculated from the accounting data can be grouped into
various classes according to the financial activity of function to be valuated. The
parties which generally interested in financial analysis are short and long term
creditors owners and management short-term creditors are mainly Interested in
liquidity or the short-term solvency of the firm.

LIQUIDITY RATIOS:

It is externally essential for a firm to the table to meet obligations as they

become due. Liquidity ratios measure the ability of the firm to meet its current
obligations. In fact analysis of liquidity needs the preparations of Cash budgets and
cash and funds flow statements. But liquidity ration by establishing a relationship
between cash funds flow statements. But liquidity ration .A firm should ensure that
it does not suffer from lack of liquidity. And also that is not too much highly liquid.
The failure of a company to meet its obligations due to lake of sufficient liquidity
will result in bad credit image, loss of creditors of the company. A very high degree
of liquidity is also bad, idle assets earn current assets. Therefore it is necessary to
strike a proper balance between liquidity and lake of liquidity.
The most common ratio which indicates the extent of lack of it is:
a) Current ratio.
b) Quick ratio.

47
CURRENT RATIO:
The current ratio is calculated by dividing current assets by current liabilities
current ratio=current assets/current Liabilities current assets include cash and those
assets which can be converted into cash within in a year, such as marketable
securities, debtors and inventories prepaid expenses are also include in current assets
as they representing the payments that will have not to make by the firm in the near
future.
All obligations maturing within a year one included in current liability thus
current liabilities include creditors .Bills payable accrued expenses short them loans.
Income tax liability and long term debts maturing in the current year. The current
ratio is a measure of the firm’s short-term sloveney.It indicates the availability of
current assets in rupees for every one rupee of current liability. Ratio grater than one
means that the firm has more current assets claims against them.

CURRENT RATIO:

YEAR CURRENT CURRENT RATIO

ASSETS LIABILITIES
2017-2018 428770.78 9475.2 3.04
2018-2019 53153.75 21466.47 2.58

2019-2020 45598.02 20350.59 2.24

2020-2021 49716.32 24189.51 2.145

2021-2022 53951.48 2178.89 2.515

48
 CURRENT RATIO

3.5
3
2.5
RATIO

2
Series1
1.5
1
0.5
0

INTERPRETATION:
a) The current ratio shows fluctuating trend during review period 2019.
b) During they year 2017-2018 the current ratio was shown at 3.04 times where
as it has decreased to 0.46 during the year 2021-2022.
c) The highest current ratio was shown at 3.04 times during year 2017-2018
which shown that idle evolved and its more that idle ratio is of 2:1.
d) The current ratio of the company more that the idle ratio of 2;1 .In all years
over the review period 2017-2022 and average current ratio was 2.49 times
regarded during the review period.
e) The liquidity position of the firm is very sound.

49
QUICK RATIO:
This ratio establishes a relationship between quick of liquid and current
liabilities. Assets liquid if it can be converted into cash immediately or reasonably
soon without a loss of cash value. Other assets which are considered to be relatively
liquid and include in quick assets are books debts means debtors and bills
receivables and marketable securities which are temporary quoted ones. Inventories
are considered to be less liquid. Inventories normally require sometimes for
releasing into cash, their values also tendency to fluctuate.
The quick ratio is found out by dividing the total of the quick assets by total
current liabilities.

Quick ratio=Quick assets/Current liabilities.

QUICK RATIO:

YEAR CURRENT CURRENT RATIO

ASSETS LIABILITIES
2017-2018 21670.14 9475.2 2.19
2018-2019 34345.97 21466.47 1.7

2019-2020 30316.96 20350.59 1.49

2020-2021 30199.87 24189.51 1.24

2021-2022 33878.28 2178.89 1.57

50
 QUICK RATIO

2.5

2
RATIO

1.5
Series1
1

0.5

INTERPRETATION:

a) The current ratio shown fluctuating trend during review period 2020.
b) During the year 2017-2018 the current ratio was shown at 2.19 times where
as it has decreased to 0.48 during the year 2021-2022.
c) The highest current ratio was shown at 2.19 times during year 2018-2019
which shows that idle evolved and its more that idle ratio is of 2:1.
d) The current ratio of the company more that the idle ratio of 2:1 .In all the
years over the review period 2021-2022 and average current ratio was 2.49
times regarded during the review period.
e) The liquidity position of the firm is very sound.

51
INVENTORY OR STOCK TURNOVER RATIO:
This ratio indicates the number of times inventory or stock is replaced during
the year. It measures the relationship between goods sold and inventories level. The
ratio can be calculated in two ways.
a) By dividing the cost of goods sold by average stock. Thus inventory
Turn over =Cost of goods sold/average inventory.
Cost of goods sold=opening stock+manufacturing cost+purchase
+closing stock of inventory.
Average inventory (opening stock+closing stock)/2.
b) Sometimes the analyst feels difficult in getting the information
regarding . inventory level or cost of goods. The
second approach can be followed.
i.e. by dividing total sales by closing inventory thus
Inventory turnover=Total sales/Closing stock in theory the second approach is not
logical as because the variable the variable are not strictly comparable.

INVENTORY OR STOCK TURNOVER RATIO:

YEAR COST OF GOODS AVERAGE RATIO

SLOD INVENTORY
COST
2017-2018 59021.41 18319.88 3.22
2018-2019 151851.7 16199.21 9.27

2019-2020 157533.6 19750.21 7.61

2020-2021 159243.34 17443.77 7.40

2021-2022 188350.32 18932.15 8.36

52
 INVENTORY TURNOVER RATIO

10

8
RATIO

6
Series1
4

INTERPRETATIONS:

 The inventory turnover ratio was shown the fluctuating trend during the
review period.
 The inventory turnover ratio was recorded at 5.64 times during the year
2017-2018 and gradually increases to 9.27, which are the highest of the
review period.
 The average turnover ratio was observed 6.55 times during the review period
2017-2018.
 This ratio indicates the efficiency of the firm in selling its products or
services. A high ratio indicates management of inventory. In the above ratio
it indicates that the inventory is getting converted in to cash in the 5 years.
This implies that the management of inventory is satisfied.

53
INVENTORY CONVERSION PERIOD:
It indicates the average time taken for clearing the stocks .This period is
calculated as flowing.
Inventory conversion period=365/inventory turnery turnover ratio
I.C.P=current asset inventory *no of working days /net sales.
YEAR PERIOD INVENTORY RATIO
TURNOVER
RATIO
2017-2018 365 3.22 146
2018-2019 365 9.27 39

2019-2020 365 7.61 48

2020-2021 365 7.40 49

2021-2022 365 8.36 44

INTERPRETATIONS:
 Inventory conversion period has shown the fluctuation trend during
the review period.

54
  The highest inventory conversion recorded was in 2017-2018 was
146 days and was lowest days is recorded as 37 days during the year
2018-2019.
 The average conversion period was 62 days during review period.
 The company maintains a good level of stock

DEBTORS TURNOVER RATIO:

A firm sells goods for cash and credit issued as marketing total by a number
of companies. When the firm extends creditors to its customer’s book debts are
credited in the firm accounts. Book debts are expected to be converted into cash
over short period and therefore are included in current assets. The liquidity position
of the firm depends on the quality of debtors to a great Extent. Financial analysis
applies two ratios to judge the quality or liquidity of debtors.
Debtor’s turnover ratio is found out by dividing credit sales by average debtors.
Debtors turnover= Credit sales/Average debtors.

Debtors turnover indicates the number of times on the average that debtor’s
turnover each year. Generally the higher value of the debtors turnover the more
efficient is the management of credit.
To outside analyst information about credit sales and operating and closing
balances of debtors may not be available. Therefore the debtors turnover can be
calculated by dividing total sales by the year end balances of debtors.

55
DEBTORS TURNOVER RATIO:
YEAR SALES AVERAGE RATIO
DEBTORS
2017-2018 6716348218 931933314 7.2
2018-2019 16447903215 175179494 9.2

2019-2020 16444031783 1728182973 7.7

2020-2021 16891783189 1837798718 9.03

2021-2022 18657217978 2017943703 7.79

INTERPRETATIONS;
 The receivables turnover ratio was shown fluctuation during the review
period.
 The receivable turnover ratio was recorded 7.8 times during the year and was
gradually declined to 7.2 times during 2017-2018.
 The highest ratio was recorded at 9.2 times during the year 2018-19 and
lowest recorded at 7.2 during the year 2017-18..

56
 The average receivable turnover ratio was observed at 8.18 times during
review period

57
AVERAGE COLLECTION PERIOD OR COLLECTION PERIOD:
The ratio indicates the days within which debtors are collected or sales
remain uncollected prompt debt collection is always in the interest of the Business
because cash will be readily available. It can be calculated on the basis of the
following formula.
Average collection period=receivables/daily credit sales.
Or
=receivables/monthly credit sales.
Receivables= debtors + bills receivables
Daily credit sales= total credit sales / 365days
Monthly credit sales=total credit sales /15 months.
AVERAGE COLLECTION PERIOD:

YEAR PERIOD DEBTORS RATIO

TURNOVER
2017-2018 365 7.2 51
2018-2019 365 9.2 40

2019-2020 365 7.7 47

2020-2021 365 9.03 40

2021-2022 365 7.79 46

58
 AVERAGE COLLECTION PERIOD

60

50
RATIO

40

30 Series1
20
10

INTEPRETATIONS:

 Average collection period was fluctuation trend during review period.

 Average collection period was recorded at 51 days highest review period in
2017-2018and was recorded as lowest at 40 days in year 2018-2019 and also
2020-2021.
 The average collection period was 45 days during the review period.
 The quality debtors of the firm are satisfied.

59
WORKING CAPITAL TURNOVER RATIO:

Working capital turnover ratio measures the relationship between working

capital and sales. The ratio shows the number of times the working capital results, in
a sale working capital as usual is the excess of current assets over the current
liabilities the following formula is used to measure this ratio.

Working capital turnover ratio=sales or cost of sales /working capital.

WORKING CAPITAL TURNOVER RATIO:

YEAR COST OF SALES NET WORKING RATIO

CAPITAL
2017-2018 59021.41 19295.58 3.15
2018-2019 151851.7 32527.28 3.73

2019-2020 157533.6 25247.93 5.14

2020-2021 159243.34 25616.80 5.04

2021-2022 186572.17 32470.58 4.82

60
 WORKING CAPITAL TURNOVER RATIO

6
5
RATIO

4
3 Series1

2
1
0

INTERPRETATIONS:
 The above ratio was shown the fluctuating trend during the review period.
 It was recorded at 4.82 times during the year 2021-2022 and was gradually
decreased to 3.15 times in the year 2017-2018and thereafter it has shown the
fluctuating rend and recorded at 0.73 times during the 2021-2022 and again
increased to 5.14 which is shown as the highest of the review period.
 The average working capital turnover ratio observed times during review
period.
 The highest working capital turnover ratio was recorded at 5.14 times during
year 2019-2020 and lowest of working capital turnover ratio was recorded at
3.15 in the year 2017-2018.

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CHAPTER- V
FINDINGS
SUGGESTIONS
CONCLUSION

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FINDINGS & SUGGESTION

 Network capital requirement of kesoram cement during the study period of

five years showed abnormal fluctuation during 2017-2022.The NWC of the
company way recorded at 177,32,18,640 year 2017, and it is increased to
256,16,80,543 in the year 2018-2019.Which shown there is net increasing
the net working capital to the extent of 198,81,70,903.
 The current assets of the company showed abnormal fluctuation during the
review period in the year 2017,is 241,72,33,283 and it is increased
287,70,76,781 in the year again it is increased to 497,16,22,141 in the year
2021-2022.
 The current liabilities of the firm has shown abnormal fluctuation it is
944,02,36,43 in the year 2017 and it is decreased to the extent of 34,96,346
in the 2018 and again it is increased 214,36,47,518 and there after it is
declined to 203,50,59,153 in the 2017 and then increased 204,99,51,568.
 The average investment in NWC of the organization during the review
period was shown at 200, 18,23477.
 The growth rates in all components current assets has shown fluctuating
trend during the study period.
 The current ratio of the company was more then the idle of 2:1 in all years
over the review period.
 Average current ratio recorded 2.49 times during the review period.
 The quick ratio was shown 1.71 times during the review period.
 Average inventory turnover ratio observed of 6.55 times during the review
period.
 The average period for conversation of inventory is recorded at 62 days
during the review period.
 The debt was recorded at 5.17 highest of the review period and conversation
period was recorded at 45 days during review period.
 The debtor turnover ratio was shown fluctuation trend 9.24 this is recorded
of the highest in 2021-2022 and 7.2 times as the in 2017-2018 during the
review period 8.1 times the average ratio of the firm during review period.

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CONCLUSIONS

1. The Operating Ratio of Kesoram isn’t satisfactory. Due to increase in cost of

production, this ratio is decreasing. So the has to reduce its office
administration expenses
2. The Kesoram Net Working Capital Ratio is satisfactory.
3. The Kesoram Gross Profit Margin of Kesoram increases in decreases due to
the increase in sales
4. The company position is quite favorable with regards to a sale which
indicates rapid progress in sales and realizations.
5. Even though working capital turnover ratio has improved in the current year
compared to last 3 years it is suggested to take steps for improving this ratio
further by reducing inventory levels.
6. Improve position funds should be utilized properly.
7. Better Awareness to increaser the sales are suggested.

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BIBLIOGRAPHY

65
 BIBLIOGRAPHY

BIBLIOGRAPHY

BOOKS

Financial Management Written By M.Y. Khan & P.K. Jai

Financial Management Written By Prasanna Chandra

Financial Management Written By I. M. Pandey

Financial Management Written By S. N. Maheswari

WEBSITES

 www.evanimics.com
 www.damodaram.com
 www.kesoramcements.com
 www.investopedia.com
 www.valuebasedmanagement.net

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