Working Capital Management at Zinda Teli

A STUDY ON
WORKING CAPITAL MANAGEMENT
S. ANVITHA
H.T.NO:1206-17-672-054
ST. ANN’S P.G COLLEGE FOR WOMEN

(Affiliated to Osmania University)
Mallapur, Hyderabad
2017-2019
Project Submitted in partial fulfillment for the award of Degree of

MASTERS OF BUSINESS ADMINISTRATION (MBA)
By
Osmania University, Hyderabad-500007
MARCH 2019
DECLARATION
I here by declare that this project report title “A STUDY ON WORKING CAPITAL
MANAGEMENT ” at “KARKHANA ZINDA TILISMATH” is a bonafide work, which I
have executed for the award of the Degree “MASTER OF BUSINESS
ADMINISTRATION” from ST,ANN’S PG COLLEGE FOR WOMEN (AFFILIATED
TO OSMANIA UNIVERSITY) MALLAPUR, HYDERABAD and the work done by me
is genuine and is not submitted to any other university or published any time before.
Date:
Place: S.ANVITHA
ABSTRACT
The concept of “working capital” is much confusing in the business circles. It is very
unfortunate, that there is much disagreement among financiers, accountants, businessmen
and economists as to the exact meaning of the term “ working capital”. According to a
few, working capital means current assists. For some others it is an excess of current assets
over current liabilities. Some authorities prefer to call it circulating capital in place of
working capital in place of working capital.
The term working capital is commonly used for the capital required for day-to-day
working in business concern. Such as for purchases raw material for meeting day-to-day
expenditure on salaries, wages, rent rates advertising etc. but there is much disagreement
among various financial authorities as to the exact meaning of the term working capital
Working capital refers to that part of the firm’s capital, which is required for financing
short-term or current assets such a cash marketable securities, debtors and inventories.
Funds thus, invested in current assets keep revolving fast and are constantly into cash and
this cash flow out again in exchange for other current assets. Working capital is also known
as revolving or circulating capital or short term capital.
Working capital management included a number of aspects that make it especially

important for the financial health of the firm. Surveys indicate that the largest portion pf
the financial manager’s time is devoted to the day-to-day operations of the firm, which fail
under the heading working capital management. Current assets represent the largest
proportion i.e if total assets forms 1% then current assets fluctuate with sales and sales vary
over time. This managing current asset is the dynamic process and it requires the financial
manager to closely monitor sales to ensure that assets in hand are at the right level for actual
sales production levels.
ACKNOWLEDGEMENT
My heartful thank you to Almighty and Heavenly Father in whom all wisdom and
knowledge lies, whose wonderful presence was felt throughout this study.
I would like to express my gratitude to Mr .Mohd Saad Farooqui Chief Accounts Officer
of Karkhana Zinda Tilismath for his valuable guidance given to me for completion of my
project work within a stipulated time.
I would like to express my immense gratitude to SISTER. EMMY GRACY, Principal,

ST.ANN’S PG COLLEGE FOR WOMEN, Mallapur for giving me an opportunity to carry
out the project.
I express my gratitude to DR.Y.SUCHARITHA, Head of the Department ST.ANN’S PG

COLLEGE FOR WOMEN, Mallapur for giving me an opportunity to carry out the project.
I would like to express my gratitude to Mr Y.GIRI, the librarian and all the faculty members
for their guidance and the project guide Mrs .Shravani for the kind of encouragement and
constant support extended in completion of this project work.
My heartful thank you to my parents, for their prayer full support, constant encouragement
and love experienced during my project. And special thanks to my dear friends for their
constant support.
S.ANVITHA
INDEX
CHAPTER CHAPTER TITLE PAGE

NUMBER NUMBER
I INTRODUCTION 1-11
II REVIEW OF LITERATURE 12-27
III INDUSTRY PROFILE & 28-46

COMPANY PROFILE
IV&V DATA ANALYSIS & 47-63

DATA INTERPRETATION
VI FINDINGS, 64-66
CONCLUSIONS&
SUGGESTIONS.
BIBLIOGRAPHY 67
ANNEXURE 68-71
LIST OF TABLES
TABLE TITLE PAGE
NUMBER NUMBER
4.1 Tabular representation of Statement showing changes in

working capital for the year 2013-14.
47
49
51
53
4.5 Tabular representation of Current ratio for the years 2013-14,
2014-15, 2015-16, 2016-17.
55
4.6 Tabular representation of Quick ratio for the years 2013-14,
2014-15, 2015-16, 2016-17.
56
4.7 Tabular representation of Cash ratio for the years 2013-14,
2014-15, 2015-16, 2016-17.
57
4.8 Tabular representation of Inventory turnover ratio for the years
2013-14, 2014-15,2015-16, 2016-17.
58
4.9 Tabular representation of Debtors turnover ratio for the years
2013-14, 2014-15, 2015-16, 2016-17.
59
4.10 Tabular representation of Average collection period ratio for
the years 2013-14, 2014-15,2015-16, 2016-17.
60
4.11 Tabular representation of Creditors turnover ratio for the years
2013-14, 2014-15,2015-16, 2016-17.
61
4.12 Tabular representation of Average payment ratio for the years
2013-14, 2014-15, 2015-16, 2016-17.
62
4.13 Tabular representation of Working capital ratio for the years
2013-14, 2014-15,2015-16, 2016-17.
63
LIST OF GRAPHS
TABLE TITLE PAGE
NUMBER NUMBER
4.1 Graphical representation of Statement showing changes in
48

50

52

54
4.5 Graphical representation of Current ratio for the years 2013-14,

2014-15, 2015-16, 2016-17.
55
4.6 Graphical representation of Quick ratio for the years 2013-14,

2014-15, 2015-16, 2016-17.
56
4.7 Graphical representation of Cash ratio for the years 2013-14,

2014-15, 2015-16, 2016-17.
57
4.8 Graphical representation of Inventory turnover ratio for the

years 2013-14, 2014-15,2015-16, 2016-17.
58
4.9 Graphical representation of Debtors turnover ratio for the years

2013-14, 2014-15, 2015-16, 2016-17.
59
4.10 Graphical representation of Average collection period ratio for

the years 2013-14, 2014-15,2015-16, 2016-17.
60
4.11 Graphical representation of Creditors turnover ratio for the

years 2013-14, 2014-15,2015-16, 2016-17.
61
4.12 Graphical representation of Average payment ratio for the years

2013-14, 2014-15, 2015-16, 2016-17.
62
4.13 Graphical representation of Working capital ratio for the years

2013-14, 2014-15,2015-16, 2016-17.
63
CHAPTER I
INTRODUCTION
1.1 INTRODUCTION OF THE STUDY :
The business environment 1 the recent past has widened the role of a financial manager. The
need for financial planning and control has been increased due to increasing pace of
industrialization ,rise of larger scale units , innovation information processing techniques ,
intense competition etc. The size and extent of business activities are dependent upon the
availability of finance .Financial reporting may be used as a technique of control .In the present
business context ,a financial manager is expected to perform the various functions like financial
forecasting and planning ,acquisition of funds ,investment of funds ,helping in valuation
decisions ,maintain proper liquidity .
Working capital management refers to a company’s managerial accounting strategy designed

to monitor and utilize the two components of working capital ,current assets and current
liabilities , to ensure the most financially efficient operation of the company .The primary
purpose of working capital management is to make sure the company always maintains
sufficient cash flow to meet its short-term operating costs and short-term debt obligations.
Working capital (abbreviated WC) is a financial metric which represents operating liquidity
available to a business ,organisation or other entity ,including governmental entities .Along
with fixed assets such as plant and equipment ,working capital is considered a part of operating
capital .Gross working capital is equal to current assets .Working capital is calculated as current
assets minus current liabilities .If current assets are less than current liabilities , an entity has a
working capital deficiency ,also called a working capital deficit .A company can be endowed
with assets and profitability but short of liquidity if its assets cannot readily be converted into
cash .Positive working capital is required to ensure that a firm is able to continue its operations
and that it has sufficient funds to satisfy both maturing short-term debt and upcoming
operational expenses .The management of working capital involves managing inventories ,
accounts receivable and payable, and cash .There are many aspects of working capital
management which makes it important function of financial management .
 TIME : Working capital management requires much of the finance manager’s time .
 INVESTMENT : Working capital represents a large portion of the total investment in

assets .
 CREDIBILITY : Working capital management has great significance for all firms but
it is very critical for small firms .
1
 GROWTH : The need for working capital is directly related to the firm’s growth .
Working Capital Management is the functional area of finance that covers all the current
1accounts of the firm . It is concerned with management of the level of individual current assets
as well as management of total working capital.
1.2 Review of literature :
Sagan (1955) perhaps the first theoretical paper on the theory of working capital
management, emphasized the need for management of working capital accounts and warned
that it could vitally affect the health of the company. He realized the need to build up a theory
of working capital management. He discussed mainly the role and functions of money manager
inefficient working capital 48 management. Sagan pointed out the money manager’s operations
were primarily in the area of cash flows generated in the course of business transactions.
However, money manager must be familiar with what is being done with the control of
inventories, receivables and payables because all these accounts affect cash position. Thus,
Sagan concentrated mainly on cash component of working capital. Sagan indicated that the
task of money manager was to provide funds as and when needed and to invest temporarily
surplus funds as profitably as possible in view of his particular requirements of safety and
liquidity of funds by examining the risk and return of various investment opportunities. He
suggested that money manager should take his decisions on the basis of cash budget and total
current assets position rather than on the basis of traditional working capital ratios. This is
important because efficient money manager can avoid borrowing from outside even when his
net working capital position is low. The study pointed out that there was a need to improve the
collection of funds but it remained silent about the method of doing it. Moreover, this study is
descriptive without any empirical support.
Welter (1970), stated that working capital originated because of the global delay between
the moment expenditure for purchase of raw material was made and the moment when payment
were received for the sale of finished 52 product. Delay centres are located throughout the
production and marketing functions. The study requires specifying the delay centres and
working capital tied up in each delay centre with the help of information regarding average
delay and added value. He recognized that by more rapid and precise information through
computers and improved professional ability of management, saving through reduction of
working capital could be possible by reducing the length of global delay by rescuing and/or
favourable redistribution of this global delay among the different delay centres. However,
2
better information and improved staff involve cost. Therefore, savings through reduction of
working capital should be tried till these saving are greater or equal to the cost of these savings.
Thus, this study is concerned only with return aspect of working capital management ignoring
risk. Enterprises, following this approach, can adversely affect its short-term liquidity position
in an attempt to achieve saving through reduction of working capital. Thus, firms should be
conscious of the effect of law current assets on its ability to pay-off current liabilities.
Moreover, this approach concentrated only on total amount of current assets ignoring the
interactions between current assets and current liabilities.
Lambrix and Singhvi (1979), adopting the working capital cycle approach to the working
capital management, also suggested that investment in working capital could be optimized and
cash flows could be improved by reducing the time frame of the physical flow from receipt of
raw material to shipment of 53 finished goods, i.e. inventory management, and by improving
the terms on which firm sells goods as well as receipt of cash. However, the further suggested
that working capital investment could be optimized also (1) by improving the terms on which
firms bought goods i.e. creditors and payment of cash, and (2) by eliminating the administrative
delays i.e. the deficiencies of paper-work flow which tended to extend the time-frame of the
movement of goods and cash.
Warren and Shelton (1971), applied financial simulation8 to simulate future financial
statements of a firm, based on a set of simultaneous equations. Financial simulation approach
makes it possible to incorporate both the uncertainty of the future and the many
interrelationships between current assets, current liabilities and other balance sheet accounts.
The strength of simulation as a tool of analysis is that it permits the financial manager to
incorporate in his planning both the most likely value of an activity and the margin of error
associated with this estimate. Warren and Shelton presented a model in which twenty
simultaneous equations were used to forecast future balance sheet of the firm including
forecasted current assets and forecasted current liabilities. Current assets and current liabilities
were forecasted in aggregate by directly relating to firm sales. However, individual working
capital accounts can also be forecasted in a larger simulation system. Moreover, future financial
statements can be simulated over a range of different assumptions to portray inherent
uncertainty of the future.
3
Cohn and Pringle (1973) in their study illustrated the extension of Capital Asset Pricing
Model (CAPM)10 for working capital management decisions. They tried to interrelate long-
term investment and financing decisions and working capital management decisions through
CAPM. They emphasized that an active working capital management policy based on CAPM
could be employed to keep the firm’s shares in a given risk class. By risk, he meant
unsystematic risk, the only risk deemed relevant by CAPM. Owing to the lumpy nature for
long-term financial decisions, the firm is continually subject to shifts in the risk of its equity.
The fluid nature of working capital, on the other hand, can be exploited so as to offset or
moderate such swings. For example they suggested that a policy using CAPM could be adopted
for the management of marketable securities portfolio such that the appropriate risk level at
any point in time was that which maintains the risk of the company’s common stock at a
constant level.
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.
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 94 uncertainty and interdepencies while the remaining three
approaches - mathematical programming, multiple goals and financial simulation have a wider
systematic focus.
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 level is exercised
primarily through credit controls. The Tandon Study Group has provided a comprehensive
4
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.
Similarly, Copeland and Khoury (1980) applied CAPM to develop a theory of credit
expansion. They argued that credit should be extended only if the expected rate of return on
credit is greater than or equal to market determined required rate of return. They used CAPM
to determine the required rate of return for the firm with its new risk, arising from uncertainty
regarding collection due to the extension of credit. Thus, these studies show how CAPM can
be used for decisions involved in working capital management.
Bhattacharyya Hrishikes (1987) tries to develop a comprehensive theory and tool of

working capital management from the system’s point of view. According to this study, capital
is often used to refer to capital goods consisting of a great variety of things, namely, machines
of various kinds, plants, houses, tools, raw materials and goods-in-process. A finance manager
of a firm looks for these things on the assets side of the balance sheet. For capital he turns his
attention to the other side of the balance sheet and never commits a mistake. His purpose is to
balance the two sides in such a way that net worth of the firm increases without increasing the
riskiness of the business. This balancing is financing, i.e., financing the assets of the firm by
generating streams of liabilities continuously to match with the dynamism of the former. The
study is an improvement of the concept of Park and Gladson who were not able to capture the
entire techno-financial operating structure of a firm.
Rao K.V. and Rao Chinta (1991) observe the strong and weak points of conventional
techniques of working capital analysis. The result has been obviously mixed while some of the
conventional techniques which could comprehend the working capital behaviour well; others
failed in doing the job properly. The authors have attempted to evaluate the efficiency of
working capital management with the help of conventional techniques i.e., ratio analysis.
Hamlin Alan P. and Heath field David F. (1991) opine that working capital is necessary
input to the production process and yet is ignored in most economic models of production. The
implications of modelling the time dimension of production, and hence, the working capital
requirements of firms are explored, with the particular stress placed on the competitive
5
advantage gained by firms that retained flexibility in the time structure of their production. In
this article they have attempted to explore only this most basic role of time in the production
process and so focus is on the implications of explicitly recognizing the need for working
capital.
Bansal S. P. (1999) opines that working capital management refers to the management of
current assets and current liabilities for maintaining the optimum levels of various components
and increasing the profitability of an enterprise. The author has insisted on application of
various techniques for management of working capital and its three main components cash,
receivables and inventories.
Chalam G. V. and Manohar Babu B. V. (1999) observe that liquidity performance is very
low as compared to the ideal norms. It is suggested that for managing working capital
effectively the operating and other required budgets should be prepared by the respective levels
of the management on short-term as well as long-term basis. It is further suggested that these
are the people concerned who can really influence the process of production activity to such an
extent that there should be optimum utilization of the investment in working capital.
Jain P. K. and Yadav Surendra S. (2001) study the corporate practices related to
management of working capital in India, Singapore and Thailand. In this paper the authors
have tried to understand the working capital management and current assets and current
liabilities, and their inter-relationship. Further the authors have shown an aggregative analysis
of current assets and current liabilities in terms of major liquidity ratios. It also states working
capital position in terms of these ratios pertaining to various industries. From the paper one can
infer that the available data in respect of the sample companies from the three countries confirm
the wide inter-industry variations in liquidity ratios. Towards the end, the authors suggest that
serious consideration needs to be given by the respective governments as well as industry
groups in these three countries in order to take corrective measures to take care of and rectify
the areas of concern.
Deloof Marc. (2003) presents a picture of how working capital management affects the
profitability of Belgium firms. The writer has made use of empirical analysis for the sample
firms. It was observed that most of the firms have a large amount of cash invested in working
capital. It can, therefore, be deduced that the way in which working capital is managed will
have a significant impact on the profitability of the firms.
6
Meszek Wieslaw and Polewski Marcin (2006) examine the profiles of selected
construction companies from the viewpoint of working capital formation and their management
strategies applied to working capital. The analysis is based on the financial ratios. The authors
conclude with the observation that complex working capital management requires controlling
methodology to be developed. A specific character of the construction industry, including
operational factors and market requirements make working capital management a task
exceeding the financial sphere, as it embraces the issues of organization of investment
processes, the organization of production processes and logistics.
Chowdhury Anup and Amin Md. Muntasir (2007) examine the working capital
management practice in pharmaceutical companies listed in Dhaka Stock Exchange. Among
all the problems of financial management, the problems of working capital management have
been recognized as the most crucial one. It is because of the fact that working capital always
helps a business concern to gain vitality and life strength. The objective of the study is to
critically evaluate the working capital management practices in the selected firms of the
pharmaceutical industry. To achieve this goal, the study also examines the policies and
practices of cash management and evaluates the principles, procedures and techniques of
inventory management, receivables management and payable management. From the analysis,
the authors conclude that the pharmaceutical firms operated in Bangladesh efficiently deal with
their liquidity preferences and investment criteria. And this is due to the competitive nature of
this industry.
Ramachandran Azhagaiah and Janakiraman Muralidharan (2009) have attempted to

analyse the relationship between working capital management efficiency (WCME) and
earnings before interest and taxes (EBIT) of the paper industry in India during 1997-98 to 2005-
06. To measure the working capital management efficiency three index values i.e., performance
index, utilization index and efficiency index, and EBIT have been used for all the firms over
the period of the study. At the end of the study it was noted that Indian paper firms performed
remarkably well during the period. Industry overall efficiency index was >1 in 3 out of 9 years
for the study period. Though some of the sample units had successfully improved efficiency
during the three years, the existence of a very high degree of inconsistency in this matter clearly
points out the need for adopting sound WCM (working capital management) policy in these
firms.
7
Sunday Kehinde James (2011) focuses on effective working capital management within
small and medium scale enterprises (SMEs). Most of the SMEs have little regard for their
working capital position and they don’t even have standard credit policy. They have very weak
financial position, and rely on credit facility to finance their operations. This credit facility is
available from accounts payable most of the time. In conclusion the authors recommend that
for SMEs to survive within the Nigeria economy they must design a standard credit policy and
ensure good financial report and control system. Besides, they must give adequate cognizance
to the management of working capital. All this requires systematic planning for the
management of working capital to ensure continuity, growth and solvency.
Akoto Richard K., Vitor Dadson A. and Angmor Peter L. (2013) closely study the
relationship between working capital management policies and profitability of the thirteen
listed manufacturing firms in Ghana. At the end of the study, a significantly negative
relationship between profitability and accounts receivable days is found to exist. Profitability
is significantly positively influenced by the firm’s cash conversion cycle (CCC), current assets
ratio and current asset turnover. It is also suggested that managers can create value for the
shareholders by creating incentives to reduce their accounts receivable to 30 days.
Joseph Jisha (2014) closely examines the study of working capital management in Ashok
Leyland and points out that the liquidity and profitability position of the company is not
satisfactory, and needed to be strengthened in order to be able to meet its obligations in time.
1.3 Need for the study:
The study has been conducted for gaining practical knowledge about Working Capital
Management & activities of Karkhana Zinda Tilismath. When a company does not have
enough working capital to cover its obligations, financial insolvency can result and lead to legal
troubles , liquidation of assets and potential bankruptcy.
Thus, it is vital to all the business to have adequate management of working capital. Working
capital management is essentially an accounting strategy with a focus on the maintenance of a
sufficient balance between a company’s current assets and current liabilities .
Inadequate working capital leads to excessive debtors and spare funds are of no use and
earn no profit , and firm fails to maintain the relationship with the banks due to non -
requirement of funds , leads to unnecessary purchasing .Working capital management seeks to
find the ideal level of working capital to ensure liquidity and maximize profitability. The
8
working capital of an organization is the result of deducting its current liabilities, such as debts
and utility bills , from its current assets, such as cash and inventory .
Managers use their companies working capital to cover everyday expenses and keep their
organizations running. The need for working capital arises due to the time gap between
production and realization of cash from sales. The working capital in the form of current assets
to deal with the problem arising out of the lack of immediate realization of cash against goods
sold.
It is helpful in knowing the company’s position of funds maintenance and setting the
standards for working inventory levels , current ratio levels , quick ratio , current assets turnover
and size of current liability etc. The study has been conducted for gaining practical knowledge
about working capital management and activities of Karkhana Zinda Tilismath.
1.4 Objectives of the study:
 To study the conceptual view of working capital .

 To understand the system of working capital management at Karkhana Zinda Tilismath .
 To determine the gross and net operating cycle of the unit.
 To suggest necessary measure to overcome the short falls if any in the company .
 To identify the financial strengths and weakness of the company.
1.5 Scope of the study:
The working capital refers to the current assets of a company that are changed from one form
to another in the ordinary course of business , i.e., from cash to inventory , inventory to work
in progress (WIP) , WIP to finished goods , finished goods to receivables and from receivables
to cash . There are two concepts of the working capital i.e., Gross Working Capital and Net
Working Capital.
Present study focuses on the Net Working Capital of the company . The report includes a
number of information tables analytical procedures etc. The present project report has been
provided in the project report starts with highlighting the working capital management and
collection of data ,analysing the data and interpretation .
9
1.6 Methodology of the study:
Sources of the data:
For the present study the information is collected from the following sources :
 Primary data:
The present data has been collected by the interaction with respective finance department
head.
 Secondary data :
The data required for literature survey and conceptual aspects of working capital was
extracted from text books , journals , and through various websites .
Sampling design:
Sampling unit: Financial Statements.
Sampling Size: The sample size selected is of last five years financial statements.
Tool Used for calculations: The tools used for calculations are MS-Word and MS-Excel.
Techniques of analysis:
The analysis of Working Capital Management can be conducted through a number of devices
such as statement of changes in working capital and ratio analysis .
Ratio analysis:
The technique of ratio analysis can be employed for measuring short-term liquidity or working
capital position of the firm . The following ratios can be calculated for these purposes :
 Current ratio
 Quick ratio
 Absolute liquid ratio
 Inventory turnover ratio
 Receivables turnover ratio
 Payable turnover ratio
 Working capital turnover ratio
10
 Working capital leverage ratio
 Ratio of current liabilities to tangible net worth
Statement of changes in working capital:
The statement of changes in working capital shows the net changes in working capital over
a period of operation. Preparing the statement of changes in working capital is one of the easiest
financial statements to do. Recall that working capital is the difference between current assets
and current liabilities.
1.7 Period of the study:
The analysis of financial statement of Karkhana Zinda Tilismath is made on the basis of
information abstracted, from the financial statements of the company for the period of five
years from the financial year 2013-2017.
1.8 Limitations of the study:
 The study is limited to working capital management of Karkhana Zinda Tilismath and
conducted within a short period .
 The study is restricted to only four years data of the company . During the limited time
period the study may not be relied , full-fledged and utilised in all aspects .
 The formula has been used according to the availability of the data .
 The topic working capital management is itself a very vast topic yet very important also.
Due to time restraints it was not possible to study in depth .
 To maintain the confidentiality of the information data availability is a big issue .
 The findings of the study are based on the information retrieved by the selected unit.
11
CHAPTER II
INDUSTRY PROFILE
AND
COMPANY PROFILE
2.1 INDUSTRY PROFILE:
The first Indian pharmaceutical company, Bengal Chemicals and Pharmaceutical Works,
which still exists today as one of 5 government-owned drug manufacturers, appeared in
Calcutta in 1930. These five public sector drug-manufacturing units under the Ministry of
Chemicals and Fertilizers are: Indian Drugs and Pharmaceutical Limited (IDPL), Hindustan
Antibiotics Limited (HAL), Bengal Immunity Limited (BIL), Bengal Chemicals and
Pharmaceutical Limited (BCPL) and Smith Stanistreet Pharmaceutical Limited (SSPL). In
addition, there are a number of pharmaceutical manufacturing units under the control of state
governments such as Goa Antibiotics Ltd. and Karnataka Antibiotics Ltd. For the next 60 years,
most of the drugs in India were imported by multinationals either in fully-formulated or bulk
form. There are 24,000 licensed pharmaceutical companies. Of the 465 bulk drugs used in
India, approximately 425 are manufactured here. India has more drug manufacturing facilities
that have been approved by the U.S. Food and Drug Administration than any country other
than the US. Indian generics companies supply 84% of the AIDS drugs that Doctors without
Borders uses to treat 60,000 patients in more than 30 countries.
The Indian pharmaceutical industry currently tops the chart amongst India's science-based
industries with wide ranging capabilities in the complex field of drug manufacture and
technology. A highly organized sector, the Indian pharmaceutical industry is estimated to be
worth $ 6 billion, growing 104 at about 10 percent annually. It ranks very high amongst all the
third world countries, in terms of technology, quality and the vast range of medicines that are
manufactured. It ranges from simple headache pills to sophisticated antibiotics and complex
cardiac compounds; almost every type of medicine is now made in the Indian pharmaceutical
industry.
The Indian pharmaceutical sector has expanded drastically in the last two decades. The
Pharmaceutical industry in India is an extremely fragmented market with severe price
competition and government price control. The Pharmaceutical industry in India meets around
90% of the country's demand for bulk drugs, drug intermediates, pharmaceutical formulations,
chemicals, tablets, capsules, orals and injectables. There are approximately 300 big and
medium scale Pharmaceutical companies and about 8000 Small scale units, which form the
core of the pharmaceutical industry in India.
12
In future it will be a growth period of the Indian Pharmaceutical Industry. The growth is
expected to emerge from three major areas:
1. Contract research and development services.
2. Export led business of generics and bulk drugs and
3. Growth in specialty therapeutic areas in the domestic market.
The growth in the institutional segment is likely to raise the market for diagnostics.
Increasing industrialization, literacy levels and urbanization are likely to increase the health
awareness of the general public. Consequently the demand for preventive medicine in general
and immunological like tetanus 105 toxoid, triple antigen (DPT), measles vaccine, Hepatitis
vaccine, anti-rabies vaccine, polio vaccine and typhoid vaccine are likely to increase.
Companies are likely to pay greater attention to their human resources development effort
in general and management developmental programs in particular.
The present state of armed truce between the trade and the industry is likely to continue in
the future. But with a difference. The industry is likely to be united more closely than before.
Companies, which have strong research, focus and competence only can achieve a
sustainable growth and performance in the borderless future market place. Now the companies
are steadily increasing their investment in Research and Development.
Companies that think strategically are the ones that are likely to succeed in the future.
Marginal firms are likely to be marginalized. Strategic thinking plays an even greater role in
the coming years. Unless the pharmaceutical companies in India start preparing for future
competition right now by upgrading in all areas it could be very difficult to exploit growth
opportunities. It might become difficult even to survive any longer.
The industry will continue to be in consolidation mode and mood. The last few years have
seen a spate of mergers and acquisitions of brands as well as companies. Indian companies
continue to be aggressive in pursuing merger and acquisition strategies to gain access to
international markets and to reinforce their position. Strategic alliances too will be on the rise
106 particularly in the areas of contract research, contract manufacturing and product licensing.
13
The top ten pharmaceutical companies in Indian market are listed here under:
Cipla ranks first with largest value growth rate of 18% and volume growth of 15.3%, with an
annual value turnover of ` 2155 crores and at the bottom of the table is Aristo Pharmaceutical
with 18.6% value growth rate and 20.1% volume growth on an yearly turnover of ` 966 crores.
The other pharmaceutical companies which tops in top 10, in Indian Pharmaceutical market
are Ranbaxy, Glaxo, Piramal, Zydus Cedilla, Sun pharmaceutical, Alkema, Mankind, Lupin .
The total scenario in this regard has a positive impact on growth of pharmaceutical industry
which is explained hereunder with the help of table as well as graphic presentation.
Top 10 Companies Driving Market
Pharmaceutical Industry In India:
Globally, the Indian pharmaceutical industry is the fifth largest in volume. At present, the
Indian pharma industry is US $ 10 billion. About 300 companies are of large size and about
10,000 are small. The top 100 large companies are contributing 70% of the total production.
The industry produces almost the entire range of formulations and over 400 bulk drugs. There
are more than 60,000 products; out of them 30,000 are branded while others are in therapeutic
segments.
The pharma industry is divided between the bulk drugs and the formulation segments.
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Bulk drugs:
The bulk drugs are the Active Pharmaceutical Ingredients (APLS) with medicinal properties
that are used to manufacture formulations. The APLS cannot be administered directly to the
patients; and other substances called recipients are added to stabilize the formulating drugs.
These end products, which include the APLS and the recipients, are called “formulations”.
The Indian pharma industry manufactures over 400 bulk drugs for several therapeutic
segments. As per a survey of ORG-Marg the annual cumulative growth rate of the bulk drugs
was recorded as 19.5% during the study period. It was higher than the growth rate of the overall
pharma productions. During the study period, growth of the bulk drugs and formulation in India
has increased by 117 %.
Domestic formulations:
Formulations are the end products of the medicine manufacturing process; it can be taken
in the form of tablets, capsules, injectables or syrups.
Profile of Pharmaceutical Industry in India 33 Whereas the average growth of formulations

in India during the study period was 110% as against the bulk drugs average growth, it actually
works out to be 51%.
Advantage India
As regards the pharmaceutical marketing in the world, India is becoming one of the front
runner destinations because of its second largest population in the world, the pace of
development of its economy, adoption of technological advancements, economical medical
treatment cost and also availability of world renowned physician’s etc. Following are the
advantages of Indian Healthcare Scenario:
 Competent workforce: India possesses a skilful work force with high managerial and
technical competence.
 Cost-effective chemical synthesis: The track record for development, particularly in the
area of improved cost-beneficial chemical synthesis for various drug molecules is excellent.
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 Legal and Financial Framework: India is a democratic country with a solid legal
framework and strong financial markets. There is already an established international
industry and business community.
 Information and Technology: It has a good network of world-class educational
institutions and established strengths in Information Technology.
 Globalization: The country is committed to a free market economy and globalization.
Above all, it has a 70 million middle class market, which is constantly growing.
Until the 1970s, India pharmaceutical market was mainly supplied by large international
corporations. Only cheap bulk drugs were produced domestically by state-owned companies
founded in the 1950s and 60s with the help of the World Health Organization(WHO). These
state-run firms provided the foundation for the sectors growth since the 1970s. Back then,
Indian government aimed to reduce the country’s strong dependence on pharmaceutical
imports by flexible patent legislation and to create a self-reliant sector. In addition, introduced
high tariffs and limits on imported medicines and demanded that foreign pharmaceutical
companies reduce their shares in their Indian subsidiaries to two fifts,2001, Indians
pharmaceutical industry became the focus of public debate when CIPLA, the county’s second-
largest pharmaceutical company, offered an AIDS drug to African countries for the price of
USD 300, while the same preparation cost USD 12,000 in the US.
The best and the largest of pharmaceutical companies used to reach only Class I and II
towns. Still is many pharmaceutical companies, marketing in the villages possibly includes
some unplanned taxi tours or they leave it to the stockiest network to make the goods available
without any doctor promotion in the rural areas. Hence, the villages present a huge untapped
market.
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2.2 COMPANY PROFILE:
KARKHANA ZINDA TILISMATH
Karkhana Zinda Tilismath is one of the oldest firms of Hyderabad manufacturing Unani
medicines – Zinda Tilismath, Farooky Tooth Powder and Zinda Balm, which were formulated
by late Hakeem Mohd.Moizuddin Farooqui, who was a very prominent and qualified Unani
Hakeem. The factory was established in the year 1920 and since then, Zinda Tilismath, Farooky
Tooth Powder & Zinda Balm has become household names due to their unbelievable healing
effects, availability, and affordability cost all over India. Commonly addressed as the Magic
Potion, Zinda Tilismath, today is as popular as the Charminar is in the city of Hyderabad. Based
on the concept of Traditional Unani Medicine, all products manufactured by Karkhana Zinda
Tilismath are prepared using selected herbs with the promise of ‘Health from Nature’.
Factory, KARKHANA ZINDA TILISMATH
Concept Of Unani Medicine Or Unani-Tibb:
Unani medicine as a name suggests, originated in Greece or Unan. It was the Greek
philosopher- physician Hippocrates (460-377 BC) who freed medicine from the realm of
17
superstition and magic and gave the status of signs. The theoretical framework of Unani
medicine is based on the teachings of Hippocrates. He believed that whenever and wherever
possible medicine should be gentle and safe. This is the main objective of Unani medicine. The
fundamental principle of the Unani system recognises that disease is a natural process and
symptoms of a disease are body’s reaction to disease. The Unani Physician is popularly called
as Hakim. Based on this Traditional Unani concept of medicine, Zinda Tilismath was founded
by Hakim Mohammed Moizuddin Farooqui.
Founder: Hakim Mohammed Moizuddin Farooqui:
Late Hakeem Mohammed Moizuddin Farooqui founded the medical factory Karkhana
Zinda Tilismath in the year 1920 and was one of those distinguished personalities who took
the social life of Deccan to the age of industrial revolution. At the advent of the 20 th century,
the enlightened culture of Deccan and its social traditional life was taking a new turn. This was
the period when new industries were beginning to emerge on the surface of Hyderabad and
were adding to the grandeur of Deccan. Though these industries were started on a very small
scale, they not only flourished with the passage of time but also became a fountain head of
progress for others. Hakeem Saab’s, contribution towards serving the community and inventing
the unique medicine - Zinda Tilismath still stands unmatched till date in the field of Unani
Medicine.
Karkhana Zinda Tilismath Today:
Karkhana Zinda Tilismath has emerged today as makers of the best internationally known
products of the Unani Medicine, having production units in Hyderabad, India. Right from its
inception in 1920, Karkhana Zinda Tilismath has been charting an unwavering course that has
catapulted the group into international limelight. Today, 90 years later the company stands
majestically as a grand manufacturer of herbal Unani medicines across India and also acclaims
international popularity for the uniqueness of its products.
Products Manufactured:
The main three Unani products manufactured and sold by Karkhana Zinda Tilismath are:
1.Zinda Tilismath :Available in 5ml and 15ml bottles.
2.Farooky Tooth Powder :Available in 40gram, 80gram bottles and 3gram pouches.
3.Zinda Balm :Available in 10gram bottles.
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4.Zint Lozenges.
Zinda Tilismath :
Zinda Tilismath is a 100% herbal and natural Unani medicine, which used to treat many
common aliments like cold, cough, throat pain, body pain, headache, vomiting’s, stomach
disorders, ear pain, and many more. Prepared from selected herbs with the promise of ‘Health
from nature’, it is extremely effective and popularly known as the “Living Magic” and “Har
marz ki dawa” -i.e., “Cure for all aliments”. With no side effects and its uniqueness to take the
medicine both internal and external use, this product from the city of Hyderabad has become a
world famous herbal remedy to Zinda Tilismath is a liquid base Unani medicine and the main
ingredients involved in making are:
1.Eucalyptus Oil (Neel Gond ka tail)
2.Camphor (Sattay Caphoor)
3.Menthol (Sattay Pudina)
4.Thymol (Sattay Ajwain)
5.Alkanet root (Rangbasa / Ratanjot)
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Figure showing Eycalyptus leaves Thymol (Satty Caphoor)
Camphor (Sattay Caphoor) Menthol (Sattay Pudina)
Alkanet root (Rangbasa / Ratanjot)
Processes Of Manufacturing Zinda Tilismath:
The initial stage of manufacturing the medicine involves the mixing of all above mentioned
raw materials into a steel tank in the company’s laboratory. once these raw materials are mixed,
they are left in the tank for a period of 48 hours for the purpose of being completely dissolved
and thoroughly mixed into liquid, forming the medicine – Zinda Tilismath. This, medicine is
then transferred to the automated filling section to be filled into bottles of 5ml and 15ml
respectively. After the medicine is filled into the bottles, they are transferred to the packing
hall where they are packed into traditional orange colour boxes by a team of manual labour of
20
20 persons. Once packed the items are transferred into godown from where they are marketed
and sold. The entire process of manufacturing does not involve any type of heating or electrical
process for making the medicine.
Logos And Trademarks Of Zinda Tilismath:
Zinda Tilismath was invented during the Nizams rule in Hyderabad, for which it acquired
the Nizams Crown (Dastaar) as its trademark. It was only to a few privileged industries, that
the Nizams Royal Warrant the “Dastaar” was allocated. The Marketing logo was the African
Negros face which was symbolic of good health and trust. This got associated with Zinda
Tilismath because during the Nizams regime, this African Negros were in the Nizams security
forces and their overall physique was the sign of good health, strength and trust henceforth it
was used as the marketing logo by Hakim Moizuddin Farooqui for Zinda Tilismath.
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Uses Of Zinda Tilismath:
It is a highly effective medicine and provides immediate relief from many common
alignments like cold, cough, throat pain, stomach pain, headache, ear pain, body pains,
dysentery, and toothache etc. The dosage instructions are enclosed with every bottle of Zinda
Tilismath. Being totally herbal, Zinda Tilismath can be used both internally and externally and
has no side effects. It is a harmless medicine made from the extract of herbs which have been
used by people of all ages for nearly 94 years. It is considered to be so safe that it is used by
pregnant women and infant children as well. In recent times it has been observed by many users
of Zinda Tilismath that it also gives symptomatic relief from symptoms of Chikungunya and
used act as a preventive measure for swine flu. It is trusted by millions and also addressed as
Living Magic or Har Marz Ki Dawa by many of its lovers and users.
Farooky Tooth Powder:
The other unique herbal product manufactured by Karkhana Zinda Tilismath is the Farooky
Toothpowder, which is a unique combination of 16 herbal ingredients that give total dental
hygiene, strong and white teeth.
The pure extracts of 16 herbs and barks, tested over generations, have been blended into a
potent combination that not only cleans teeth, but also protects and strengthens them. For
perfect dental care, teeth and gums are to be massaged with Farooky Toothpowder, which with
the help of a brush, removes food particles from the cavities and crevices of the teeth, the
powder strengthens the gums by allowing the essences from which 16 rich herbs to percolate
down the gum layers.
22
Trademark Of Farooky Toothpowder :
The bottle of Farooky Toothpowder holds the symbol of shark fish as its trademark. The
shark known to have strong and sharp got itself associated with Farooky Toothpowder.
Zinda Balm :
The third invention of Karkhana Zinda Tilismath is its pain balm called as Zinda Balm. As
the name suggests it is used for treating body and muscular pains. Zinda Balm acts as a wonder
cure for backache, chest pain, muscular pains, and itching. Not only this, it also helps in getting
rid of nasty cough, cold and headaches. With its unique formulation specially made with herbal
ingredients which are proven safe and effective for many, that use this balm for treating
muscular and body pains.
Social Responsibility:
Karkhana Zinda Tilismath being as ISO-9001;2008 (QMS) Certified Organisation, we

firmly believes in giving back to the society and its customers. From our free sampling of
products in Government Hospitals, health camps in flood and natural disaster effected places
we have made a positive difference. Free samples are given out to pilgrims of HAJ each year,
wherein a camp is organised to educate people about many common ailments that can be treated
by using our 100% natural and safe medicines. We also run consumer loyalty schemes such as
lucky draws of gold coins etc. During the outbreak of Swine Flu and Chicken Guniea, we have
organised drinking of Zinda Tilismath to people in market places and educate them as how it
can be used as a preventive measure for such diseases. In future ,our plans are to reach out to
the younger generation and make them understand the importance of using herbal and ancient
Unani medicines in a day to day life, and this we intend to do so by inviting school and colleges
to come and visit our factory and learn about herbal Unani medicines.
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New Product Development ( Zint Lozenges ) :
Karkhana Zinda Tilismath also focuses towards Research and Development and in a step
towards diversifying its products ,the new product launched is the “Zint Lozenges” which
contains magical potion of Zinda Tilismath medicine in a sweetened base . The “Zint
Lozenges” are milder in taste and has an advantage to be easily administrated to young
children.“Zint Lozenges” helps relieve the symptoms of mouth and throat infections ,nasal
congestion and dry irritating coughs associated with the common cold we hope that our new
product will reach the younger generation and will satisfied their expectations in providing fast
symptomatic relief for the treatment of common ailments.
Swot Analysis:
Strengths:
 It is located in the place where good infrastructure is available.
 The company concentrated towards the quality of the product.
 High production efficiency.
 Good source of raw material.
 The highly effectively medicine and provides immediate relief from many common ailment
like cold, cough, throat pain, stomach ache, head ache, etc.
Opportunities:
 Zinda Tilismath has had only three product of decades – the liquid medicine of the same
name, to be integrated or applies in just a few drops, farooqui tooth powder and pain balm.
 Now it is going to enter in the market with Zint product. Where it slug it out with might
Vicks, strepsils and halls.
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 Planning as version of Zinda Tilismath.
Weakness:
 It is adding units at its Hyderabad facility attain initial cost of Rs.30 lakh. While plans zint‟s
marketing strategy are unclear now.
 Zinda Tilismath is planning an aggressive marketing drive, which will mainly be customer
loyalty programmes aimed at the younger generations. The owner family’s current generation
has many MBA graduates who are keen on giving the business corporate touch to appeal to
young customers.
 It may debut in the capital market in the next couple of years. Some of the plans are at an
early, but the spokespersons say the company will not tweak the traditional image of its brand,
whatever else it does.
Threats:
 Stiff competition by brands like Amruthanjum offer solution to aches and pains and cold and
other ailments.
Future Plannings:
 It will also setup an additional facility for existing manufacturing unit in Hyderabad at an
initial cost of about Rs. 30 lakhs to produce the lozenges.
 The firm, which had clung on its original logo.
 Is planning an aggressive marketing drive to consolidate its brand across India, with the tag
line – “The World Is Going Herbal, What About You”.
 It will include prominently events and TV campaigns.
Competitors Strategy (Analysis):
“In these days of e-business when companies are sinking huge money in publicity blitzkrieg
and relaunching products with elegant look, the makers of Zinda Tilismath are content with
their present marketing strategy which is nothing much to write about. Yet, the product sells
and sells fast. Reason – its high curative value and easy accessibility. This is often the only
antidote available in remote villages and comes handy for a variety of ailments. What is more
it has no side-effects and doesn’t run the risk of deterioration.”
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Zinda Tilismath And Its Uses:
Made from the extract of ancient herbs which have been used by people of all ages for more
than 93 years, Zinda Tilismath is used to treat the following common ailments.
Cough, Cold And Coryza: Take 4 drops of Zinda Tilismath in tea, coffee or warm milk twice
a day. It will also help if 4 drops of Zinda Tilismath are rubbed on the neck, nose and also chest
twice daily.
Throat Trouble: Such as Tonsillitis, Hard breaching and difficulty in swallowing/Add 12

drops in two to three glasses of boiling water and inhale vapour through mouth. Also paint the
inside throat with cotton swab dipped in Zinda Tilismath, repeat till relief.
Stomach Trouble: (Indigestion, Constipation, Flatulence, Loud Eructation’s, vomiting’s

Bilious retching and Loose Motions) take 8 drops of Zinda Tilismath, mixed with half cup of
warm water.
Dysentery: Mix 8 drops with one tea spoon of butter or 2 tea spoon of curd and take twice,
morning and evening on empty stomach till motions stop.
Cholera: Mix 8 drops with plain water or Soda and take its every 15 minutes till relief.
Breathing Trouble Of Children: Mix 2 drops of Zinda Tilismath with mother's Milk and feed
the child. Also rub the chest of the child with 6 drops and foment with warm cloth. Repeat till
relief. The above dosage is for children below 3 years.
Headache: Rub on the forehead 6 drops of Zinda Tilismath and if necessary repeat after two
hours.
Tooth Ache: 23 Apply cotton swab soaked in Zinda Tilismath to the affected part of the gum
every two hours till pain subsides.
Ear Pain: With the affected ear with warm water and put 4 drops of Zinda Tilismath mixed
with lukewarm coconut oil and plug with cotton.
Pains: In any part of the body viz Hands, Feet, Back, Knees etc, rub Zinda Tilismath on the
effected part and foment with warm cloth. If the pain is chronic, mix Zinda Tilismath, with an
equal quantity of kerosene oil/olive oil and rub slowly twice a day morning and evening foment
with warm cloth and bandage.
26
Zinda Tilismath has no side effects, and is considered to be so safe that it can be used by
infant children and pregnant woman. In recent times it has been observed and experienced by
many users of Zinda Tilismath to give symptomatic relief from symptoms of chicken guinea,
swine flu and dengue fever.
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CHAPTER III
THEORETICAL FRAMEWORK
WORKING CAPITAL MANAGEMENT
Working Capital:
Working capital is the life blood of an organization, like the blood circulates in human body
and keeps the human alive, the working capital also helps the organization to complete its
operations.
The management of working capital refers to the management of current assets and current
liabilities. Efficient management of working capital is prerequisite for the successful operation
of business enterprise and improving its return on invested in the short-term assets.
A firms working capital consists of its investments in current assets which include short term
assets such as cash and bank balance, inventories, receivables(including debtors and bills), and
marketable securities. Working capital management refers to the management of the level of
all these individual current assets.
The term “working capital” is often referred to “circulating capital” which is frequently used
to denote those assets which are changed with relative speed from one form to another i.e.,
starting from cash, changing to raw materials, converting into work-in-progress and finished
products, sale of finished products and ending with realization of cash from debtors.
Introduction Of Working Capital Management:
Decisions relating to working capital and short-term financing are referred to as working capital
management. These involve managing the relationship between a firm's short-term assets and
its short-term liabilities. The goal of working capital management is to ensure that the firm is
able to continue its operations and that it has sufficient cash flow to satisfy both maturing short-
term debt and upcoming operational expenses.
A managerial accounting strategy focusing on maintaining efficient levels of both components

of working capital, current assets, and current liabilities, in respect to each other. Working
capital management ensures a company has sufficient cash flow in order to meet its short-term
debt obligations and operating expenses.
28
Meaning Of Working Capital Management:
Working capital management refers to a company's managerial accounting strategy designed

to monitor and utilize the two components of working capital, current assets and current
liabilities, to ensure the most financially efficient operation of the company. The primary
purpose of working capital management is to make sure the company always maintains
sufficient cash flow to meet its short-term operating costs and short-term debt obligations.
Working capital is money available to a company for day-to-day operations. The formula for
working capital is:
Current Assets - Current Liabilities
Definition Of Working Capital Management:
Working capital management is defined as “the excess of current assets over current liabilities
and provisions”. But as per accounting terminology, it is difference between the inflow and
outflow of funds. In the Annual Survey of Industries (1961), working capital is defined to
include “Stocks of materials, fuels, semi-finished goods including work-in-progress and
finished goods and by-products; cash in hand and bank and the algebraic sum of sundry
creditors as represented by (a) outstanding factory payments e.g. rent, wages, interest and
dividend; (b) purchase of goods and services;(c) short-term loans and advances and sundry
debtors comprising amounts due to the factory on account of sale of goods and services and
advances towards tax payments”.
Working capital refers to the circulating capital required to meet the day to day operations of a
business firm. Working capital may be defined by various authors as follows:
According to Weston & Brigham - “Working capital refers to a firm’s investment in short
term assets, such as cash amounts receivables, inventories etc.”
According to Shubin - “Working capital is the amount of funds necessary to cover the cost of
operating the enterprise.”
29
According to Gene Stenberg - “Circulating capital means current assets of a company that are
changed in the ordinary course of business from one form to another, as for example, from cash
to inventories, inventories to receivables, receivables into cash.”
There are many aspects of working capital management which makes it important function
of financial management.
 Time: Working capital management requires much of the finance manager’s time.
 Investment: Working capital represents a large portion of the total investment in assets.
 Credibility: Working capital management has great significance for all firms but it is very
critical for small firms.
 Growth: The need for working capital is directly related to the firm’s growth.
The Concept Of Working Capital Can Also Be Explained Through Two Angles:
On The Basis Of Concept

(1) Gross Working Capital Concept
(2) Net Working Capital Concept
(1) Gross Working Capital:
Gross working capital; refers to firm's investment in current
assets. Current assets are the assets which can be converted into cash within an accounting
year and include cash, short-term securities, debtors, bill receivables and stock.
According to this concept, working capital means Gross working Capital which is the total of
all current assets of a business. It can be represented by the following equation:
30
Gross Working Capital = Total Current Assets
Definitions favouring this concept are:-
According to Mead, Malott and Field :
"Working Capital means total of Current Assets".
(2) Net Working Capital:
Net working capital refers to the difference between the current assets and current liabilities.
Current liabilities are those which are expected to mature for payment within an accounting
year and include creditors, bills payable, and outstanding expenses. Net working capital can be
positive or negative. A positive net working capital will rise when current assets exceed current
liabilities. A negative net working capital occurs when current liabilities are in excess of current
assets.
Net Working Capital = Current Assets - Current Liabilities
On The Basis Of Time Or Need
(1) Permanent working capital
(2) Temporary working capital
(1) Permanent Working Capital:
The need for working capital fluctuates from time to time. However, to carry on day-to-
day operations of the business without any obstacles, a certain minimum level of raw
materials, work-in-progress, finished goods and cash must be maintained on a continuous basis.
The amount needed to maintain current assets on this minimum level is called permanent or
regular working capital.
The amount involved as permanent working capital has to be meet from long-term
sources of finance, e.g.,
 Capital
 Debentures
 Long-term loans.
(2) Temporary Working Capital:
Depending upon the changes in production and sales, the need for working capital, over and
above the permanent level of working capital is called temporary, fluctuating or variable
working capital. It may be two types:-
(a) Seasonal - Due to seasonal changes, level of business activities is higher than normal
during some months of year and therefore additional working capital will be required along
with the permanent working capital. It is so because during peak season, demand rises and
more stock is to be maintained to meet the demand .
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(b) Special - Additional doses of working capital may be required to face cut throat competition
in the market or other contingencies like strikes, lock outs, theft etc.
Importance Of Working Capital Management:
Working capital is a vital part of a business and can provide the following advantages to a
business:
 Higher return on capital
Firms with lower working capital will post a higher return on capital. Therefore, shareholders
will benefit from a higher return for every dollar invested in the business.
 Improved credit profile and solvency:
The ability to meet short-term obligations is a pre-requisite to long-term solvency. And it is

often a good indication of counterparty’s credit risk. Adequate working capital management
will allow a business to pay on time its short-term obligations. This could include payment for
a purchase of raw materials, payment of salaries, and other operating expenses.
 Higher profitability:
According to research conducted by Tauringana and Adjapong Afrifa, the management of

account payables and receivables is an important driver of small businesses’ profitability.
 Higher liquidity:
A large amount of cash can be tied up in working capital, so a company managing it efficiently
could benefit from additional liquidity and be less dependent on external financing. This is
especially important for smaller businesses as they typically have limited access to external
funding sources. Also, small businesses often pay their bills in cash from earnings so efficient
working capital management will allow a business to better allocate its resources and improve
its cash management.
 Increased business value:
32
Firms with more efficient working capital management will generate more free cash flows
which will result in higher business valuation and enterprise value.
 Favourable financing conditions:
A firm with a good relationship with its trade partners and paying its suppliers on time will
benefit from favourable financing terms such as discount payments from its suppliers and
banking partners.
 Uninterrupted production:
A firm paying its suppliers on time will also benefit from a regular flow of raw materials,
ensuring that the production remains uninterrupted and clients receive their goods on time.
 Ability to face shocks and peak demand:
Efficient working capital management will help a firm to survive through a crisis or ramp up
production in case of an unexpectedly large order.
 Competitive advantage:
Firms with an efficient supply chain will often be able to sell their products at a discount versus
similar firms with inefficient sourcing.
Objectives of Working Capital Management:
Few of the importance objectives of working capital management are listed below:
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. The major objective 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 net working capital mentioned above is required to stay
in a stable equilibrium. The ratio of current assets and current liabilities should be optimized.
33
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 per say 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.
4. 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. Working capital management aims to extract maximum
from an investment in current assets to ensure higher profitability.
Why it Matters:
Working capital is a common measure of a company's liquidity, efficiency, and overall health.
Because it includes cash, inventory, accounts receivable, accounts payable, the portion of debt
due within one year, and other short-term accounts, a company's working capital reflects the
results of a host of company activities, including inventory management, debt management,
revenue collection, and payments to suppliers.
Positive working capital generally indicates that a company is able to pay off its short-term
liabilities almost immediately. Negative working capital generally indicates a company is
unable to do so. This is why analysts are sensitive to decreases in working capital; they suggest
a company is becoming overleveraged, is struggling to maintain or grow sales, is paying bills
too quickly, or is collecting receivables too slowly. Increases in working capital, on the other
hand, suggest the opposite. There are several ways to evaluate a company's working capital
further, including calculating the inventory-turnover ratio, the receivables ratio, days payable,
the current ratio, and the quick ratio.
34
One of the most significant uses of working capital is inventory. The longer inventory sits on
the shelf or in the warehouse, the longer the company's working capital is tied up.
When not managed carefully, businesses can grow themselves out of cash by needing more
working capital to fulfil expansion plans than they can generate in their current state. This
usually occurs when a company has used cash to pay for everything, rather than seeking
financing that would smooth out the payments and make cash available for other uses. As a
result, working capital shortages cause many businesses to fail even though they may actually
turn a profit. The most efficient companies invest wisely to avoid these situations.
Analysts commonly point out that the level and timing of a company's cash flows are what
really determine whether a company is able to pay its liabilities when due. The working-capital
formula assumes that a company really would liquidate its current assets to pay current
liabilities, which is not always realistic considering some cash is always needed to meet payroll
obligations and maintain operations. Further, the working-capital formula assumes that
accounts receivable are readily available for collection, which may not be the case for many
companies.
It is also important to understand that the timing of asset purchases, payment and collection
policies, the likelihood that a company will write off some past-due receivables, and even
capital-raising efforts can generate different working capital needs for similar companies.
Equally important is that working capital needs vary from industry to industry, especially
considering how different industries depend on expensive equipment, use different revenue
accounting methods, and approach other industry-specific matters. Finding ways to smooth out
cash payments in order to keep working capital stable is particularly difficult for manufacturers
and other companies that require a lot of up-front costs. For these reasons, comparison of
working capital is generally most meaningful among companies within the same industry, and
the definition of a "high" or "low" ratio should be made within this context.
Sources of Working Capital:
The working capital requirements should be met both from short term as well as long term
sources of funds.
35
 Financing of working capital through short term sources of funds has the benefits of
lower cost and establishing close relationships with banks.
 Financing of working capital through long term sources provides the benefits of reduces
risk and increases liquidity.
Adequacy of working capital:
A firm must have adequate working capital. It should neither be excessive nor inadequate.
Excessive working capital is a situation where in the firm invests excessive funds in working
capital. These excessive or idle funds earn no profit for the firm.
Advantages Of Working Capital Management
Ensures Liquidity
Businesses often get in trouble due to lack of cash needed for operations and to repay short-
term debts. It happens because of an ineffective or no working capital management policy in
the enterprise. Working capital management ensures liquidity by monitoring of account
receivables, account payable, stock management and debt management. It assists in keeping
sufficient liquid cash in the business at any point of time to pay operational costs and short-
term debts. Thus, it helps in allocating the resources in an optimum manner.
Evades Interruptions In Operations
Working capital management involves the use of ratio analysis. Ratios like working capital
ratio, quick ratio, accounts receivables turnover ratio, etc. are calculated and interpreted so as
to provide information to management. Such information helps managers in planning and
executing business operations in the most efficient way. Optimum use of working capital
management evades any future hindrances in business operations. Instances like delay in
paying accounts payable, lack of production would minimize by a substantial amount. This
would give the business a competitive edge over its competitors.
Enhance Profitability
Proper application of working capital management strategy would enhance the company’s
profitability in the long run. The policy properly manages inventory so as to avoid any
36
operational failures. Collection from trade receivables would be on time as receivables
management is a key part of working capital management. There would be no cases of default
in paying the trade payable on due date because of proper management and allocation of cash.
Improves Financial Health
Working capital management basically deals with the management of cash in an enterprise. It
assesses the sources of cash inflows and determines the outflow of cash in best possible
manner. Proper allocation of cash makes a scope for the investment of remaining cash or in
repaying short-term debts. It allows the business to be financially solvent at most of the times
and thus evading any legal troubles that could have arisen due to lack of working capital.
Higher profitability would imply higher return on capital employed. This, in turn, would attract
more capital from prospective investors leading to the unlocking of further capacities.
Value Addition
As explained earlier, working capital enhances company’s financial health and operational
success. It makes the company a standout amongst its peers. A sense of respect emerges in the
market for the business. This all, in turn, leads to value addition for the entity.
Disadvantages Of Working Capital Management
Only Monetary Factors
This strategy takes only monetary factors into account. Monetary items like the value of debts
receivables, the value of finished goods etc. are the basic determinants while implementing the
strategy. Non monetary factors like recession, unsatisfied workers, change in government’s
policy towards the industry etc. are not considered or hold no relevance in this policy.
Non-Situational
Another disadvantage of working capital management policy is that it’s not situational in
nature. The strategy does not acknowledge sudden changes in the market conditions as it is
based on past events and figures. The time taken to respond to certain recent events is
significant to impact business operations and profitability.
Based On Data
37
Working capital management operates around data. It is the key soul of any working capital
management strategy. Data would include every minute detail about the components of
working capital. For example, in trade receivables, it would require the date of sale, the period
of credit, number of grace days allowed, a penalty in case of non-fulfilment of payment etc.
Without data, this strategy holds no relevance in the practical world.
Problem In Interpretation
Working capital management involves techniques of ratio analysis. Ratios are just a number
which allows a user to interpret the result. In most cases, it is unclear to a user whether a
particular ratio is favourable to the company or not. For example, in case of currents assets
ratio, it is advisable that a ratio which is higher than 1:1 is favourable. But on the other hand,
it is also advisable that ratios bigger than 2:1 are unfavourable, keeping the business conditions
and trade cycle in mind. Now, if a business has a bigger trade receivables cycle than the
industry’s average, the business would not be able to interpret the ratio accurately.
Management of working capital:
Management will use a combination of policies and techniques for the management of working
capital. The policies aim at managing the current assets (generally cash and cash equivalents,
inventories and debtors) and the short-term financing, such that cash flows and returns are
acceptable.
 Cash management. Identify the cash balance which allows for the business to meet
day to day expenses, but reduces cash holding costs.
 Inventory management. Identify the level of inventory which allows for uninterrupted
production but reduces the investment in raw materials—and minimizes reordering
costs—and hence increases cash flow. Besides this, the lead times in production should
be lowered to reduce Work in Process (WIP)and similarly, the Finished Goods should
be kept on as low level as possible to avoid overproduction- Supply chain
management; Just In Time (JIT); Economic order quantity (EOQ); Economic quantity
 Debtors management. Identify the appropriate credit policy, i.e. credit terms which
will attract customers, such that any impact on cash flows and the cash conversion cycle
will be offset by increased revenue and hence Return on Capital .
38
 Short-term financing. Identify the appropriate source of financing, given the cash
conversion cycle: the inventory is ideally financed by credit granted by the supplier;
however, it may be necessary to utilize a bank loan (or overdraft), or to "convert debtors
to cash" through "factoring".
Factors effecting working capital:
• Nature of business: generally working capital is higher in manufacturing compared to

service based organizations.
• Volume of sales: higher the sale, higher the working capital required.
• Seasonality: peak seasons for sales need more working capital.
• Length of operating and cash cycle: longer the operating and cash cycle, more is the
requirement of working capital.
Computation (Or Estimation) Of Working Capital
Working Capital requirement depends upon number of factors, which are already discussed in
the previous parts. Now the discussion is on how to calculate the Working Capital needs of the
business concern. It may also depend upon various factors but some of the common methods
are used to estimate the Working Capital.
A. Estimation of components of working capital method Working capital consists of various

current assets and current liabilities. Hence, we have to estimate how much current assets as
inventories required and how much cash required to meet the short term obligations. Finance
Manager first estimates the assets and required Working Capital for a particular period.
B. Percent of sales method Based on the past experience between Sales and Working Capital
requirements, a ratio can be determined for estimating the Working Capital requirement in
future. It is the simple and tradition method to estimate the Working Capital requirements.
Under this method, first we have to find out the sales to Working Capital ratio and based on
that we have to estimate Working Capital requirements. This method also expresses the
relationship between the Sales and Working Capital.
39
C. Operating cycle Working Capital requirements depend upon the operating cycle of the
business. The operating cycle begins with the acquisition of raw material and ends with the
collection of receivables.
Statement Changes In Working Capital:
The statement of changes in working capital shows the net changes in working capital over
a period of operation. Preparing the statement of changes in working capital is one of the easiest
financial statements to do. Recall that working capital is the difference between current assets
and current liabilities.
Working Capital = Current Assets – Current Liabilities
The first step is copying down the current assets and current liabilities from the balance
sheet for both years. Then subtract total current liabilities from total current assets to get
working capital for each year. Finally determine the change in working capital between two
years (taking the more recent years working capital and subtracting the older years working
capital).
Current Assets: The term current assets represents all the assets of a company that are
expected to be conveniently sold, consumed, utilized or exhausted through the standard
business operations which can lead to their conversion to a cash value over the next one year.
Since current assets is a standard item appearing in the balance sheet, the time horizon
represents one year from the date shown in the heading of the company's balance sheet. Current
assets include cash, cash equivalents, accounts receivable, stock inventory, marketable
securities, pre-paid liabilities and other liquid assets. In a few jurisdictions, the term is also
known as current accounts.
Current Liabilities: Current liabilities are a company's debts or obligations that are due within
one year or within a normal operating cycle. Furthermore, current liabilities are settled by the
use of a current asset, such as cash, or by creating a new current liability. Current liabilities
appear on a company's balance sheet and include short-term debt, accounts payable, accrued
liabilities, and other similar debts.
40
41
Accounting Ratios:
Accounting ratios, also known as financial ratios, are used to measure the efficiency and
profitability of a company based on its financial reports. They provide a way of expressing the
relationship between one accounting data point to another, and are the basis of ratio analysis.
Liquidity Ratios:
Liquidity ratios are a class of financial metrics used to determine a debtor's ability to pay
off current debt obligations without raising external capital. Liquidity ratios measure a
company's ability to pay debt obligations and its margin of safety through the calculation of
metrics including the current ratio, quick ratio and operating cash flow ratio.
Current Ratio:
Current ratio is the ratio of current Assets to current liabilities. Current Assets are assets that
are expected to be realized in cash or sold or consumed during the normal operating cycle of
the business or within one year, whichever is longer. They include Cash in hand at bank, Bills
Receivable, Net Sundry debtors, Stock of raw materials, finished goods and work in progress,
prepaid expenses, outs ding incomes, accrued Incomes and short term or temporary
investments.
Current liabilities are liabilities that are to be repaid within a period of one . They include
Bills payable, Sundry Creditors, Bank Overdraft, Outstanding Expenses, Income received in
advance, Proposed Dividend, Provision for Taxation, Unclaimed Dividends and short term
loans and advanced repayable within year. Any instalment of a long-term liability payable
within the next 12 months is also a Current liability.
Current ratio = Current assets / Current liabilities
A Current Ratio of 2:1 is usually considered as ideal.
Acid-Test Ratio Or Quick Ratio:
Quick ratio is a ratio of Quick Assets to Quick Liabilities Quick Assets are assets that can
be converted into cash very quickly without much loss. Quick liabilities are liabilities, which
have to be necessarily paid Within 1 year. All Current Assets, except Stock and Prepaid
42
Expenses, are also Quick Assets. All Current liabilities, except Bank overdraft, are Quick
liabilities.
Quick ratio = Quick assets / Current liabilities
Quick Assets = Current Assets - (Stock + Prepaid Expenses)
Quick Liabilities = Current liabilities - Banks Overdraft.

Bank Overdraft is not treated as Quick liability as it is usually a permanent arrangement of
the business with the bank. However, even Bank Overdraft, in ' its pure form, is Quick liability.
A quick ratio of 1 is usually considered as ideal.
Cash Ratio Or Absolute Liquidity Ratio:
The cash ratio measures the absolute liquidity of the business. This ratio considers only the
absolute liquidity available with the firm. This ratio is calculated as:
Cash ratio = (Cash and cash equivalents + Marketable securities)/ Current liabilities
The Absolute Liquidity ratio only tests short-term liquidity in terms of cash and marketable
securities/current investments.
Inventory Turnover Ratio:
This ratio is also known as stock turnover ratio which establishes the relationship between
the cost of goods sold during the year and average inventory held during the year. It measures
the efficiency with which a firm utilises or manages its inventory. It is calculated as follows:
Inventory Turnover Ratio = Cost of Revenue from Operations / Average Inventory
Average inventory = (Opening stock + Closing stock)/2
In the case of inventory of raw material the inventory turnover ratio is calculated using the
following formula:
Inventory Turnover Ratio = Raw Material Consumed / Average Raw Material Stock
43
This ratio indicates that how fast inventory is used or sold. A high ratio is good from the
view point of liquidity and vice versa. A low ratio would indicate that an inventory is not
used/sold/lost and stays in a shelf or in the warehouse for long time.
Receivables (Debtors) Turnover Ratio:
In case firm sells goods on credit, the realization of sales revenue is delayed and the
receivables are created. The cash is realised from these receivables later on.
The speed with which these receivables are collected affects the liquidity position of the
firm. The debtors turnover ratio throws light on the collection and credit policies of the firm. It
measures the efficiency with which management is managing its accounts receivables. It is
calculated as follows:
Accounts receivable turnover ratio = Net credit sales / Average accounts receivables
Receivables (Debtor’s) Velocity:
Debtors turnover ratio indicates the average collection period. However, the average
collection period can be directly calculated as follow:
The formula for calculating the average collection period ratio is:
Average collection period = 365 (Average accounts receivables / sales revenue)
The average collection period measures the average number of days it takes to collect an
account receivable. This ratio is also referred to as the number of days of receivable and the
number of day’s sales in receivables.
Creditors/Payables Turnover:
This ratio is calculated on the same lines as receivable turnover ratio is calculated. This ratio
shows the velocity of payables payment by the firm. It is calculated as follows:
Creditors turnover ratio = Credit purchases / Average creditors
Creditors turnover ratio can also expressed in terms of number of days taken by the business
to pay off its debts. It is termed as ‘Debt Payment Period’. A low creditor’s turnover ratio
44
reflects liberal credit terms granted by supplies. While a high ratio shows that accounts are
settled rapidly.
Payable Velocity/Average Payment Period:
Average payment period = 365 / Creditors turnover ratio
In determining the credit policy, debtors turnover and average collection period provide a
unique guideline.
The firm can compare what credit period it receives from the suppliers and what it offers to
the customers. Also it can compare the average credit period offered to the customers in the
industry to which it belongs.
The above three ratios i.e. Inventory Turnover ratio/ Receivables Turnover Ratio is also
relevant to examine liquidity of an organization.
Working Capital Turnover Ratio:
Working capital turnover is a ratio that measures how efficiently a company is using its
working capital to support a given level of sales. Also referred to as net sales to working capital,
work capital turnover shows the relationship between the funds used to finance a company's
operations and the revenues a company generates as a result.
The working capital turnover ratio is calculated by dividing net annual sales by the average
amount of working capital—current assets minus current liabilities—during the same 12-
month period.
A high turnover ratio shows that management is being very efficient in using a company’s
short-term assets and liabilities for supporting sales. In contrast, a low ratio may indicate that
a business is investing in too many accounts receivable and inventory to support its sales, which
could lead to an excessive amount of bad debts or obsolete inventory.
Working capital turnover is further segregated into Inventory Turnover, Debtors Turnover,
and Creditors Turnover.
45
Note: Average of Total Assets/ Fixed Assets/ Current Assets/Net Assets / Working capital/ also
can be taken.
Working capital turnover ratio = Net sales / Net working capital
46
CHAPTER IV
DATA ANALYSIS AND
DATA INTERPRETATION
DATA ANALYSIS AND INTERPRETATION:
Table 4.1: Tabular representation of Statement showing changes in working capital for
the period 2013-2014.
Statement showing the changes in working capital of Karkhana Zinda Tilismath for the
year ending 2013-2014
Particulars 2013 2014 Increase Decrease

Current Assets:
National Defence 532.00 532.00 - -

Certificate
Telephone Deposit 1,290.00 1,290.00 - -
Electricity Deposit 75,924.58 75,924.58 - -
Stock in Trade 1,68,58,452.33 2,52,39,569.92 83,81,117.59 -
Sundry Debtors 77,10,309.94 73,84,474.37 - 3,25,835.57
Cash in Hand 3,67,437.59 4,95,271.59 1,27,834.00 -
Cash at Bank 56,80,993.10 74,23,668.70 17,42,675.60 -
Total Current 3,06,94,939.54 4,06,20,731.16 - -

Assets (A)
Current Liabilities:
Sundry Creditors 28,33,383.00 23,75,010.23 23,75,010.23 -
Advance from 1,01,579.99 - 1,01,579.99 -

Dealers
Provision 6,67,910.62 6,94,912.47 - 27,001.85
Total Current 36,02,873.61 30,69,922.70 - -

Liabilities (B)
WORKING 2,70,92,065.93 3,75,50,808.46 - -
CAPITAL (A-B)
Net Increase in 1,04,58,742.53 - - 1,04,58,742.5
Working Capital
3,75,50,808.46 3,75,50,808.46 1,08,11,579.9 1,08,11,579.9
47
Graph 4.1: Graphical representation of Statement showing changes in working capital
for the period 2013-2014.
STATEMENT CHANGES IN WORKING CAPITAL FOR

THE PERIOD 2013 AND 2014
4,50,00,000.00
4,00,00,000.00
3,50,00,000.00
3,00,00,000.00
2013
2,50,00,000.00
2,00,00,000.00 2014
1,50,00,000.00 Increase
1,00,00,000.00
Decrease
50,00,000.00
0.00
Total Total WORKING Net Increase
Current Current CAPITAL (A- in Working
Assets (A) Liabilities (B) B) Capital
Interpretation:
The statement of changes in working capital shows the net change in working capital over
a time period of operation. The working capital for 2013 was 2,70,92,065.93 and for 2014 was
3,75,50,808.46. Working capital increased by 1,04,58,742.53.
This is because there was an increase in the current assets such as stock in trade by
83,81,117.59, cash in hand by 1,27,834.00 and cash at bank by 17,42,675.60. Coming to current
liabilities there was a decrease in sundry creditors by 23,75,010.23, advance from dealers by
1,01,579.99 and an increase in provision by 27,001.85.
48
year ending 2014-2015.
Current Assets:

Certificate
Telephone Deposit 1,290.00 1,290.00 - -
Electricity Deposit 75,924.58 75,924.58 - -
Remedy Health Product - 1,00,000.00 1,00,000.00 -

(Deposit)
Stock in Trade 2,52,39,569.92 2,19,90,235.80 - 32,49,334.12
Sundry Debtors 73,84,474.37 90,38,516.87 16,54,042.50 -
Cash in Hand 4,95,271.59 3,57,007.84 - 1,38,263.75
Cash at Bank 74,23,668.70 70,33,666.60 - 3,90,002.10
Total Current Assets 4,06,20,731.16 3,85,97,173.69 - -

(A)
Current Liabilities:
Provision 6,94,912.47 11,08,350.77 - 4,13,438.30
Total Current Liabilities 30,69,922.70 33,73,925.00 - -

(B)
WORKING CAPITAL 3,75,50,808.46 3,52,23,248.69 - -
(A-B)
Net Decrease In - 23,27,559.77 23,27,559.77 -
Working Capital
3,75,50,808.46 3,75,50,808.46 41,91,038.27 41,91,038.27
49
Graph 4.2: Graphical representation of Statement showing changes in working capital
for the year 2014-2015.
STATEMENT SHOWING CHANGES IN WORKING

CAPITAL FOR THE PERIOD 2014-2015
4,50,00,000.00
4,00,00,000.00
3,50,00,000.00
3,00,00,000.00
2,50,00,000.00
2,00,00,000.00
1,50,00,000.00
1,00,00,000.00
50,00,000.00
0.00
Total Current Total Current WORKING Net Decrease In
Assets (A) Liabilities (B) CAPITAL (A-B) Working Capital
2014 2015 Increase Decrease
Interpretation:
3,52,23,248.69. Working capital has been decreased by (23,27,559.77).
This is because there was an decrease in the current assets such as stock in trade by
32,49,334.12, cash in hand by 1,38,263.75 and cash at bank by 3,90,002.10 and on the other
side current liabilities, there was a decrease in the sundry creditors by 1,09,436.00, and an
increase in provision by 4,13,438.30.
50
year ending 2015 -2016.
Current Assets:

Certificate
Telephone 1,290.00 1,290.00 - -
Deposit
Electricity 75,924.58 75,924.58 - -
Deposit
Remedy Health 1,00,000.00 1,00,000.00 - -
Product (Deposit)
Stock in Trade 2,19,90,235.80 3,27,97,972.95 1,08,07,737.15 -
Sundry Debtors 90,38,516.87 70,30,517.42 - 20,07,999.45
Cash in Hand 3,57,007.84 5,22,183.34 1,65,175.50 -
Cash at Bank 70,33,666.60 84,16,140.16 13,82,473.56 -
Total Current 3,85,97,173.69 4,89,44,560.45 - -

Assets (A)
Current
Liabilities:
Provision 11,08,350.77 9,34,349.77 1,74,001.00 -
Total Current 33,73,925.00 27,39,972.77 - -

Liabilities (B)
WORKING 3,52,23,248.69 4,62,04,587.68 - -
CAPITAL (A-B)
Net Increase In 1,09,81,338.99 - - 1,09,81,338.99
Working Capital
4,62,04,587.68 4,62,04,587.68 1,29,89,338.44 1,29,89,338.44
51
Graph 4.3: Graphical representation of statement showing changes in working capital

5,00,00,000.00
4,50,00,000.00
4,00,00,000.00
3,50,00,000.00
3,00,00,000.00 2015
2,50,00,000.00
2016
2,00,00,000.00
1,50,00,000.00 Increase
1,00,00,000.00 Decrease
50,00,000.00
0.00
Current Current CAPITAL (A- In Working
Interpretation:
4,62,04,587.68. Working capital increased by 1,09,81,338.99.
1,08,07,737.15, cash in hand by 1,65,175.50 and cash at bank by 13,82,473.56. Coming to
current liabilities there was a decrease in sundry creditors by 4,59,951.23, and an decrease in
provision by 1,74,001.00.
52
year ending 2016 - 2017.
Current Assets:

Certificate
Telephone 1,290.00 1,290.00 - -
Deposit
Electricity 75,924.58 75,924.58 - -
Deposit
Remedy Health 1,00,000.00 1,00,000.00 - -
Product (Deposit)
Stock in Trade 3,27,97,972.95 1,35,79,202.99 - 1,92,18,769.96
Sundry Debtors 70,30,517.42 1,23,70,297.67 53,39,780.25 -
Cash in Hand 5,22,183.34 45,77,045.14 40,54,861.80 -
Cash at Bank 84,16,140.16 6,07,43,101.12 5,23,26,960.96 -
Total Current 4,89,44,560.45 9,14,47,393.50 - -

Assets (A)
Current
Liabilities:
Sundry Creditors 18,05,623.00 1,32,49,705.00 - 1,14,44,082.00
Provision 9,34,349.77 19,22,727.77 - 9,88,378.00
Total Current 27,39,972.77 1,51,72,432.77 - -

Liabilities (B)
WORKING 4,62,04,587.68 7,62,74,960.73 - -
CAPITAL (A-B)
Net Increase In 3,00,73,073.05 - - -
Working Capital
7,62,74,960.73 7,62,74,960.73 6,17,21,603.01 6,17,21,603.01
53
Graph 4.4: Graphical representation of statement showing changes in working capital

10,00,00,000.00
9,00,00,000.00
8,00,00,000.00
7,00,00,000.00
6,00,00,000.00 2016
5,00,00,000.00
2017
4,00,00,000.00
3,00,00,000.00 Increase
2,00,00,000.00 Decrease
1,00,00,000.00
0.00
Current Current CAPITAL (A- In Working
Interpretation:
The statement of changes in working capital shows the net change in working capital over a
time period of operation. The working capital for 2016 was 4,62,04,587.68 and for 2017 was
7,62,74,960.73. Working capital has been increased by 3,00,73,073.05.
1,08,07,737.15, cash in hand by 1,65,175.50 and cash at bank by 13,82,473.56. Coming to
current liabilities there was a decrease in sundry creditors by 4,59,951.23, and an decrease in
provision by 1,74,001.00.
54
CURRENT RATIO:
Current ratio = Current assets / Current liabilities
Table 4.5: Tabular representation of Current ratio for the years 2013-14, 2014-15,
2015-16, 2016-17.
YEAR CURRENT ASSETS CURRENT CURRENT
LIABILITIES RATIO
2013-2014 40620731.16 3069922.70 13.23
2014-2015 38597173.69 3373925.00 11.44
2015-2016 48944560.45 2739972.77 17.86
2016-2017 91447393.50 15172432.77 6.03
Graph 4.5: Graphical representation of Current ratio for the years 2013-14, 2014-15,
2015-16, 2016-17.
CURRENT RATIO
18
16
14
12
10
8
6
4
2
0
2013-2014 2014-2015 2015-2016 2016-2017
Interpretation:
The current ratio of 2:1 is usually considered as ideal. The current ratio of Karkhana Zinda
Thilismath has been decreased from 2013-14 to 2014-15 by 13.23% to 11.44% respectively
and increased in the year 2015-16 by 17.86% and fallen down in the year 2016-17 by 6.03%.
55
QUICK RATIO:
Quick ratio = Quick assets / Quick liabilities
Table 4.6: Tabular representation of Quick ratio for the years 2013-14, 2014-15,
2015-16, 2016-17.
YEARS QUICK ASSETS CURRENT QUICK RATIO
LIABILITIES
2013-2014 15381161.24 3069922.70 5.01
2014-2015 16606937.89 3373925.00 4.92
2015-2016 16146587.50 2739972.37 5.89

2016-2017 77868190.51 15172432.77 5.13
Graph 4.6: Graphical representation of Quick ratio for the years 2013-14, 2014-15,
2015-16, 2016-17.
QUICK RATIO
6
5.8
5.6
5.4
5.2
5
4.8
4.6
4.4
2013-2014 2014-2015 2015-2016 2016-2017
Interpretation:
The quick ratio of 1:1 is usually considered as ideal. The current ratio of Karkhana Zinda
Tilismath has been decreased from 2013-14 to 2014-15 by 5.01% to 4.92% respectively and
increased in the year 2015-16 and by 4.89% and there slight decrease by 5.13% in the year
2016-17.
56
CASH RATIO:
Cash ratio = (Cash and Bank balances + Marketable securities) / Current Liabilities
Cash ratio is also called as absolute liquid ratio.
Absolute liquid ratio = Absolute liquid assets / Current liabilities
Table 4.7: Tabular representation of Cash ratio for the years 2013-14, 2014-15, 2015-16,
2016-17.
YEAR ABSOLUTE CURRENT ABSOLUTE

LIQUID ASSETS LIABILITES LIQUID RATIO
2013-2014 7918940.29 3069922.70 2.58
2014-2015 7390674.44 3373925.00 2.19
2015-2016 8938323.50 2739972.77 3.26
2016-2017 65230146.26 15172432.77 4.31
Graph 4.7: Graphical representation of Cash ratio for the years 2013-14, 2014-15,
2015-16, 2016-17.
ABSOLUTE LIQUID RATIO
0
2013-2014 2014-2015 2015-2016 2016-2017
Interpretation:
This ratio shows that the company carries maximum amount of cash. An Absolute Liquid
ratio of 1:2 is usually considered as ideal. The absolute liquid ratio of Karkhana Zinda
Tilismath has been decreased from 2013-14 to 2014-15 by 2.58% to 2.19% respectively and
increased in the year 2015-16 and 2016-17 from 3.26% to 4.31%.
57
INVENTORY TURNOVER RATIO:
Inventory turnover ratio is also called as Stock turnover ratio.
Inventory turnover ratio = ( sales / Average Inventory )
Average Inventory = ( Opening Inventory + Closing Inventory ) / 2
Table 4.8: Tabular representation of Inventory turnover ratio for the years 2013-14,
2014-15, 2015-16, 2016-17.
YEAR SALES AVERAGE INVENTORY

INVENTORY TURNOVER
RATIO
2013-2014 97,00,129.29 1,23,79,256.29 7.84
2014-2015 11,31,51,369.50 1,25,07,697.83 9.05
2015-2016 11,74,27,467.45 1,63,08,082.61 7.20
2016-2017 14,85,48,935.00 1,52,53,214.41 9.74
Graph 4.8: Tabular representation of Inventory turnover ratio for the years 2013-14,
2014-15, 2015-16, 2016-17.
INVENTORY TURNOVER RATIO
10
9
8
7
6
5
4
3
2
1
0
2013-2014 2014-2015 2015-2016 2016-2017
Interpretation:
A stock or an Inventory turnover ratio of 8 is considered as ideal. An inventory turnover
ratio of Karkhana Zinda Tilismath has been increased from 2013-14 to 2014-15 by 7.84% to
9.05% and has been decreased in the year 2015-16 by 7.20% and again it has been increased
in the year 2016-17 by 9.74%.
58
DEBTORS TURNOVER RATIO:
Debtors turnover ratio = Credit sales / Average accounts receivables
Table 4.9: Tabular representation of Inventory turnover ratio for the years 2013-14,
2014-15, 2015-16, 2016-17.
YEARS CREDIT SALES AVERAGE DEBTORS
ACCOUNTS TURNOVER
RECEIVABLES RATIO
2013-2014 9700129.29 7547392.16 12.85

2014-2015 113151369.50 8211495.62 13.78
2015-2016 117427467.45 8034517.15 14.62
2016-2017 148548935.00 9700407.55 15.31
Graph 4.9: Tabular representation of Inventory turnover ratio for the years 2013-14,
2014-15, 2015-16, 2016-17.
DEBTORS TURNOVER RATIO
15.5
15
14.5
14
13.5
13
12.5
12
11.5
2013-2014 2014-2015 2015-2016 2016-2017
Interpretation:
A debtors turnover ratio of 10-12 is usually considered as ideal. The debtors turnover ratio
of Karkhana Zinda Tilismath shows an increase in trend for the year 2013-14 ,2014-15,2015-
16 and 2016-17 as 12.85,13.78,14.62 and 15.31 respectively.
59
AVERAGE COLLECTION PERIOD:
Average collection period = Net working days (12/52/365) / Debtors turnover ratio
Table 4.10: Tabular representation of Average collection period ratio for the years
2013-14, 2014-15, 2015-16, 2016-17.
YEARS NET WORKING DEBTORS AVERAGE

DAYS TURNOVER RATIO COLLECTION
PERIOD
2013-2014 365 12.85 28.40
2014-2015 365 13.78 26.50
2015-2016 365 14.62 24.96
2016-2017 365 15.31 23.80
Graph 4.10: Tabular representation of Average collection period ratio for the years
2013-14, 2014-15, 2015-16, 2016-17.
AVERAGE COLLECTION PERIOD
29
28
27
26
25
24
23
22
21
2013-2014 2014-2015 2015-2016 2016-2017
Interpretation:
An Average Collection Period of 30-36 days is considered as ideal. An Average Collection

Period of Karkhana Zinda Tilismath has been decreasing continuously during the years 2013-
14, 2014-15, 2015-16, 2016-17 from 28.40, 26.50, 24.96, and 23.80 respectively.
60
CREDITORS TURNOVER RATIO:
Creditors Turnover Ratio = Credit Purchases / Average Creditors
Table 4.11: Tabular representation of Creditors turnover ratio for the years 2013-14,
2014-15,2015-16, 2016-17.
YEARS CREDIT AVERAGE CREDITORS

PURCHASES CREDITORS TURNOVER
RATIO
2013-2014 2,42,93,162.00 26,54,986.61 9.15
2014-2015 2,36,17,127.00 23,20,292.23 10.26
2015-2016 3,17,98,482.00 20,35,598.65 15.62
2016-2017 2,76,55,099.00 75,27,664.00 3.67
Graph 4.11: Tabular representation of Creditors turnover ratio for the years 2013-14,
2014-15,2015-16, 2016-17.
CREDITORS TURNOVER RATIO
16
14
12
10
8
6
4
2
0
2013-2014 2014-2015 2015-2016 2016-2017
Interpretation:
A creditors turnover ratio of 12 or more is considered as ideal. The creditors turnover ratio
of Karkhana Zinda Tilismath has been increased during the years 2013-14, 2014-15, 2015-16
from 9.15%, 10.26%, 15.62% respectively and has been decreased in the year 2016-17 by
3.67%.
61
AVERAGE PAYMENT PERIOD:
Average Payment Period = Net working days (12/52/365) / Creditors turnover ratio
Table 4.12: Tabular representation of Average payment ratio for the years 2013-14,
2014-15, 2015-16, 2016-17.
YEARS NET WORKING CREDITORS AVERAGE

DAYS TURNOVER PAYMENT
RATIO PERIOD
2013-2014 365 9.15 39.89
2014-2015 365 10.26 35.58
2015-2016 365 15.62 23.36
2016-2017 365 3.67 99.46
Graph 4.12: Graphical representation of Average payment ratio for the years 2013-14,
2014-15, 2015-16, 2016-17.
AVERAGE PAYMENT PERIOD
100
80
60
40
20
0
2013-2014 2014-2015 2015-2016 2016-2017
Interpretation:
An average payment period of 30 days or less number of days is considered as ideal. An

average payment period of Karkhana Zinda Tilismath has been decreased during the years
2013-14, 2014-15, 2015-16 from 39.89%, 35.58%, 23.36% respectively and has been increased
in the year 2016-17 by 99.46%.
WORKING CAPITAL TURNOVER RATIO:
62
Working Capital Turnover Ratio = Sales / Net Working Capital
Table 4.13: Tabular representation of Working capital ratio for the years 2013-14,
2014-15, 2015-16, 2016-17.
YEAR SALES NET WORKING WORKING

CAPITAL CAPITAL
TURNOVER
RATIO
2013-2014 97,00,129.29 3,75,50,808.46 2.58
2014-2015 11,31,51,369.50 3,52,23,248.69 3.21
2015-2016 11,74,27,467.45 4,62,04,587.68 2.54
2016-2017 14,85,48,935.00 7,62,74,960.73 1.95
Graph 4.13: Tabular representation of Working capital ratio for the years 2013-14,
2014-15,2015-16, 2016-17.
WORKING CAPITAL TURNOVER RATIO
3.5
2.5
1.5
0.5
0
2013-2014 2014-2015 2015-2016 2016-2017
Interpretation:
A good working capital is considered anything between 1.2 to 2.0. A high working capital
turnover ratio indicates better utilisation of the firm’s funds. However, it should not result in
over trading. Working capital turnover ratio of Karkhana Zinda Tilismath has been increased
from 2013-14 to 2014-15 by 2.58% to 3.21% and has been decreased from 2015-16 to 2016-
17 by 2.54% to 1.95%.
63
CHAPTER V
FINDINGS, CONCLUSIONS &
SUGGESTIONS
5.1 FINDINGS
 The Statements of Changes in Working Capital of Karkhana Zinda Tilismath shows

the net changes i0n working capital over a time period of operation. During the
study period of 4years i.e., 2013-14, 2014-15, 2015-16, and 2016-17. There is a
positive working capital during the years 2013-14, 2015-16 and 2016-17 which
indicates, a sign of financial strength in Karkhana Zinda Tilismath. There is a
negative working capital in the year 2014-15, this is because there is decrease in
current assets and an increase in the current liabilities, which indicates that If
working capital is temporarily negative, it typically indicates that the company may
have incurred a large cash outlay or a substantial increase in its accounts payable as
a result of a large purchase of products and services from its vendors. Finally, at the
end of the study period there is an increase in net working capital indicates that the
business has either increased current assets or decreased its current liabilities.
 There is relatively high current assets turnover ratio during the years 2013-14, 2014-
15, 2015-16, and 2016-17 which indicates, that the Karkhana Zinda Tilismath is
highly liquid and has an ability to pay its current liabilities in time.
 There is a high quick ratio during the study period which indicates that the Karkhana
Zinda Tilismath is liquid and has an ability to pay its current liabilities in time.
 The cash ratio of the Karkhana Zinda Tilismath is more than the ideal ratio, which
reveals that the company holds more cash and cash equivalents to pay off its debts.
 The stock turnover ratio of Karkhana Zinda Tilismath is satisfactory only during
the years 2014-15 and 2016-17 which indicates that the stocks are fast moving and
get converted into sales quickly.
 The debtors turnover ratio of the Karkhana Zinda Tilismath is high and an average
collection period, of Karkhana Zinda Tilismath is low which indicates sound credit
management policy.
 The creditors turnover ratio and an average payment period of Karkhana Zinda
Tilismath is low and high respectively during the years 2013-14, 2014-15, and
2016-17 which indicates, that the firm’s inability in meeting its obligations in time.
64
5.2 CONCLUSIONS
The performance of working capital management of Karkhana Zinda Tilismath

during the study period is fulfilled. The ratios used in working capital management of
company is satisfactory. The overall working capital management of Karkhana Zinda
Tilismath is satisfying as per the data provided by the company.
This study concludes that working capital management is a very efficient tool at the
hands of the management to properly allocate its current assets towards its current
liabilities. It offers many pros to the entity but it comes with slight disadvantages too.
But to conclude, its merits outweigh its merits by a huge margin. Thus, business
managers must use it keeping in mind the situational needs of the business.
65
5.3 SUGGESTIONS
 The current ratio of Karkhana Zinda Tilismath is too high (much more than 2),
which indicates, that the company may not be using its current assets or its short-
term financing facilities efficiently. This may also indicate problems in working
capital management.
 The company's cash ratio is greater than 1, the company has more cash and cash
equivalents than current liabilities. In this situation, the company has the ability to
cover all short-term debt and still have cash remaining. However, this may also
indicate that a company is not using its capital for its best use, since it could be
invested in a profitable project instead of earning the risk-free rate of interest.
 The company’s Inventory turnover ratio measures how fast a company sells
inventory and how analysts compare it to industry averages. The company Low
turnover during the study period, which implies weak sales and there is an excess
inventory by the end of the study period, also known as an overstocking. It may
indicate a problem with the goods being offered for sale or be a result of too little
marketing. A high ratio implies either strong sales or insufficient inventory, which
leads to lost business. Sometimes a low inventory turnover rate is a good thing, such
as when prices are expected to rise (inventory pre-positioned to meet fast-rising
demand) or when shortages are anticipated. So, I suggest the company to maintain
the exact inventory turnover.
 The creditors turnover ratio of the company is low during the study period, which
indicates that the company is taking longer to pay off its suppliers than in previous
periods (or) low creditors turnover ratio usually signifies that a company is slow in
paying its suppliers. The company should increase the creditors turnover ratio.
66
BIBLIOGRAPHY
BOOKS
Prasanna Chandra , “ Financial Management Theory and Practice”, 7th Ed. Tata
McGraw Hill.
James C. Vanhorne , “A Risk-Return Analysis of a firm’s Working Capital Position”,

The Engineering Economist , Winter 1969 , pp. 50-58.
Paul Welter , “How to Calculate Savings Possible Through Reduction of Working

Capital” , Financial Economist , October 1970, pp. 50-5 .
R.A. Cohen and J.J. Pringle , “Steps Towards as Integration of Corporate Financial
Theory” ,1973 in K.V. Smith , Readings on The Management of Working Capital ,
West Publishing Company , U.S.A., 1980.
N.K. Agarwal , Management of Working Capital ,Sterling Publications Pvt. Ltd., New
Delhi, 1983 74.
WEBSITES
https://www.investopedia.com
https://en.wikipedia.org/wiki/working_capital
https://cleartax.in/s/working-capital-management-formula-ratio
https://sol.du.ac.in/mod/book/view.php?id=829&chapterid=491
https://www.edupristine.com/blog/ratio-analysis-ratios-formulae
http://www.zindatilismath.net/
ARTICLES
An overview of Working Capital Management and corporate financing .
Working Capital Management manages flow of funds of funds (2009).
“Working Capital Management -An Effective Tool for Organisational Success” (2008).
67
APPENDIX
68
M/s.KARKHANA ZINDA TILISMATH,AMBERPET,HYDERABAD.A.P
BALANCE SHEET FOR THE YEAR ENDED 31.03.2014
PREVIOUS YEAR L IAB IL ITIE S AMOUNT PREVIOUS YEAR AS S E TS AMOUNT
ENDED 31-03-13 ENDED 31-03-13
FIXED ASSETS:
99,14,577.83 Partner's Capital Accounts 99,14,577.83 46,52,564.50 Fixed Assets: 54,33,594.50
1,05,66,180.52 Partner's Current Accounts 2,18,05,953.05 (At Cost less Depreciation)
1,12,83,167.08 Partner's Reserve Fund Accounts 1,12,83,167.08 19,295.00 Land 19,295.00
CURRENT ASSETS:
CURRENT LIABILITIES: 532.00 National Defence Certificate 532.00
1,01,579.99 Advance from dealers 1,290.00 Telephone Deposit 1,290.00
28,33,383.00 Sundry Creditors (As per Schedule) 23,75,010.23 75,924.58 Electricity Deposit 75,924.58
1,68,58,452.33 Stock in Trade 2,52,39,569.92
PROVISION: SUNDRY DEBTORS:

56,844.00 VAT Maharastra 65,886.30 1,46,762.07 V.P.P.Realisable
66,454.00 VAT Karnataka 39.55 49,00,661.00 Sundry Debtors (As per Schedule) 39,88,820.50
3,34,270.82 VAT Andhra Pradesh 4,14,319.82 26,62,886.87 Staff Loans 33,95,653.87
1,028.00 Central Sales Tax 4,032.00
10,953.70 E.S.I Account (Employees) 26,644.70 CASH AND BANK BALANCE:
1,20,016.00 Provident fund Account 1,25,580.00 3,66,232.64 Cash in hand 4,93,726.64
9,401.00 Profession Tax Employees 7,681.00 1,204.95 Petty Cash 1,544.95
46,736.10 T.D.S Payable 46,587.10 22,95,942.95 State Bank of Hyderabad 1,70,059.65
22,207.00 Income Tax Employees 4,142.00 68,700.90 Canara Bank 12,93,946.82
28,50,454.80 Central Bank of India 56,31,050.23
4,65,894.45 Ing Vysya Bank Ltd. 3,28,612.00
3,53,66,799.04 T o t a l:- Rs:- 4,60,73,620.66 3,53,66,799.04 T o t a l:- Rs:- 4,60,73,620.66

As per our seperate report in Form 3CB of even date attached herewith.
for M/s.M.A.Mohiaddin & Co.,Chartered Accountants, Hyderabad. (FRN-02124S)
(MOHAMMED.SHOEB,PARTNER)
M.No.020112
69
M/s.KARKHANA ZINDA TILISMATH,AMBERPET,HYDERABAD.T.S.
ENDED 31-03-14 ENDED 31-03-14
FIXED ASSETS:
CURRENT LIABILITIES: CURRENT ASSETS:

23,75,010.23 Sundry Creditors (As per Schedule) 22,65,574.23 532.00 National Defence Certificate 532.00
1,290.00 Telephone Deposit 1,290.00
75,924.58 Electricity Deposit 75,924.58
Remedy Health Product (Deposit) 1,00,000.00
2,52,39,569.92 Stock in Trade 2,19,90,235.80
PROVISION:
65,886.30 VAT Maharastra 1,35,635.30 SUNDRY DEBTORS:
39.55 VAT Karnataka 1,20,710.55 39,88,820.50 Sundry Debtors (As per Schedule) 59,36,888.00
4,14,319.82 VAT Andhra Pradesh 5,31,366.82 33,95,653.87 Staff Loans 31,01,628.87
7,681.00 Profession Tax Employees 7,781.00 1,544.95 Petty Cash 1,461.45
4,142.00 Income Tax Employees 2,100.00 12,93,946.82 Canara Bank 8,99,791.37
56,31,050.23 Central Bank of India 33,05,658.08
3,28,612.00 Ing Vysya Bank Ltd. 8,69,201.00
4,60,73,620.66 T o t a l:- Rs:- 4,32,94,293.19 4,60,73,620.66 T o t a l:- Rs:- 4,32,94,293.19

M.No.020112
70
M/s.KARKHANA ZINDA TILISMATH,AMBERPET,HYDERABAD. TELANGANA STATE.
ENDED 31-03-15 ENDED 31-03-15
FIXED ASSETS:

22,65,574.23 Sundry Creditors (As per Schedule) 18,05,623.00 532.00 National Defence Certificate 532.00
1,00,000.00 Remedy Health Product (Deposit) 1,00,000.00
2,19,90,235.80 Stock in Trade 3,27,97,972.95
PROVISION:
1,35,635.30 VAT Maharastra 1,03,871.30 SUNDRY DEBTORS:
1,20,710.55 VAT Karnataka 77,862.55 59,36,888.00 Sundry Debtors (As per Schedule) 49,74,368.55
5,31,366.82 VAT Telangana 4,50,618.82 31,01,628.87 Staff Loans 20,56,148.87
7,781.00 Profession Tax Employees 7,731.00 1,461.45 Petty Cash 516.45
2,100.00 Income Tax Employees 8,99,791.37 Canara Bank 5,39,942.18
With Held Discount 7,547.00 33,05,658.08 Central Bank of India 33,68,525.77
8,69,201.00 Kotak Mahindra (Ing Vysya Bank Ltd.) 9,84,462.00
4,32,94,293.17 T o t a l:- Rs:- 5,48,30,806.62 4,32,94,293.19 T o t a l:- Rs:- 5,48,30,806.62

M.No.020112
71
M/s.KARKHANA ZINDA TILISMATH,AMBERPET,HYDERABAD. TELANGANA STATE.
ENDED 31-03-16 ENDED 31-03-16
FIXED ASSETS:

18,05,623.00 Sundry Creditors (As per Schedule) 1,32,49,705.00 532.00 National Defence Certificate 532.00
1,00,000.00 Remedy Health Product (Deposit) 1,00,000.00
3,27,97,972.95 Stock in Trade 1,35,79,202.99
PROVISION:
1,03,871.30 VAT Maharastra 2,74,790.30 SUNDRY DEBTORS:
77,862.55 VAT Karnataka 1,19,256.55 49,74,368.55 Sundry Debtors (As per Schedule) 98,60,658.80
4,50,618.82 VAT Telangana 10,70,608.82 20,56,148.87 Staff Loans 25,09,638.87
7,731.00 Profession Tax Employees 11,131.00 516.45 Petty Cash 1,443.45
18,792.10 T.D.S Payable 1,37,873.10 35,23,210.21 State Bank of Hyderabad 68,12,431.21
Income Tax Employees 13,000.00 5,39,942.18 Canara Bank 4,74,69,194.94
7,547.00 With Held Discount 33,68,525.77 Central Bank of India 62,50,049.97
9,84,462.00 Kotak Mahindra (Ing Vysya Bank Ltd.) 2,11,425.00
5,48,30,806.62 T o t a l:- Rs:- 9,66,45,966.67 5,48,30,806.62 T o t a l:- Rs:- 9,66,45,966.67

72
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A STUDY ON

WORKING CAPITAL MANAGEMENT

ST. ANN’S P.G COLLEGE FOR WOMEN

Project Submitted in partial fulfillment for the award of Degree of

Working capital management included a number of aspects that make it especially

I would like to express my immense gratitude to SISTER. EMMY GRACY, Principal,

I express my gratitude to DR.Y.SUCHARITHA, Head of the Department ST.ANN’S PG

CHAPTER CHAPTER TITLE PAGE

II REVIEW OF LITERATURE 12-27

III INDUSTRY PROFILE & 28-46

IV&V DATA ANALYSIS & 47-63

4.1 Tabular representation of Statement showing changes in

4.2 Graphical representation of Statement showing changes in

4.3 Graphical representation of Statement showing changes in

4.4 Graphical representation of Statement showing changes in

4.5 Graphical representation of Current ratio for the years 2013-14,

4.6 Graphical representation of Quick ratio for the years 2013-14,

4.7 Graphical representation of Cash ratio for the years 2013-14,

4.8 Graphical representation of Inventory turnover ratio for the

4.9 Graphical representation of Debtors turnover ratio for the years

4.10 Graphical representation of Average collection period ratio for

4.11 Graphical representation of Creditors turnover ratio for the

4.12 Graphical representation of Average payment ratio for the years

4.13 Graphical representation of Working capital ratio for the years

Working capital management refers to a company’s managerial accounting strategy designed

 INVESTMENT : Working capital represents a large portion of the total investment in

1.2 Review of literature :

Bhattacharyya Hrishikes (1987) tries to develop a comprehensive theory and tool of

Ramachandran Azhagaiah and Janakiraman Muralidharan (2009) have attempted to

1.3 Need for the study:

1.4 Objectives of the study:

 To study the conceptual view of working capital .

1.5 Scope of the study:

Sources of the data:

Statement of changes in working capital:

1.7 Period of the study:

1.8 Limitations of the study:

1. Contract research and development services.

2. Export led business of generics and bulk drugs and

3. Growth in specialty therapeutic areas in the domestic market.

Top 10 Companies Driving Market

Pharmaceutical Industry In India:

Profile of Pharmaceutical Industry in India 33 Whereas the average growth of formulations

KARKHANA ZINDA TILISMATH

Factory, KARKHANA ZINDA TILISMATH

Concept Of Unani Medicine Or Unani-Tibb:

Founder: Hakim Mohammed Moizuddin Farooqui:

Karkhana Zinda Tilismath Today:

1.Zinda Tilismath :Available in 5ml and 15ml bottles.

3.Zinda Balm :Available in 10gram bottles.

1.Eucalyptus Oil (Neel Gond ka tail)

2.Camphor (Sattay Caphoor)

3.Menthol (Sattay Pudina)

4.Thymol (Sattay Ajwain)

5.Alkanet root (Rangbasa / Ratanjot)

Camphor (Sattay Caphoor) Menthol (Sattay Pudina)

Alkanet root (Rangbasa / Ratanjot)

Processes Of Manufacturing Zinda Tilismath:

Logos And Trademarks Of Zinda Tilismath:

Farooky Tooth Powder:

Karkhana Zinda Tilismath being as ISO-9001;2008 (QMS) Certified Organisation, we

 It is located in the place where good infrastructure is available.

 The company concentrated towards the quality of the product.