Working Capital Mahindra Finance

A
PROJECT REPORT
On
“WORKING CAPITAL MANAGEMENT WITH REFERENCE TO
(MAHINDRA& MAHINDRA FINANCIAL SERVICE LTD”
Submitted towards Partial Fulfillment of

BACHELOR OF BUSINESS ADMINISTRATION
(AFFILIATED TO C.C.S. UNIVERSITY, MEERUT)
(2020-2023)
UNDER THE GUIDANCE OF
Submitted to: Submitted By:

Mr.ATUL CHAUDHARY SAMARTH MEHNIDIRATTA
Faculty of Management . Roll No. 200986105079
BBA- V SEM
DEWAN INSTITUTE OF MANAGEMENT

STUDIES, MEERUT
1
STUDENT DECLARATION
I am SAMARTH MEHNIDIRATTA student of B.B.A. – V Sem, DIMS, Meerut here by
declares that the project report titled “WORKING CAPITAL MANAGEMENT WITH
REFERENCE TO(MAHINDRA& MAHINDRA FINANCIAL SERVICE LTD” is
completed and submitted under the guidance of “Mr. ATUL CHAUDHARY Faculty of
BBA Department DIMS, Meerut” is my original work.
The imperial finding in this report is based on the data collected by me. This project has been
submitted to CCS, University , Meerut or not any other university for the purpose of compliance of
any requirement of any examination or degree.
SAMARTH MEHNIDIRATTA
Roll No. 200986105079
BBA- V SEM
2
ACKNOWLEDGEMENT
I take this as an opportunity to thank with bottom of my hear all those without whom the journey of
doing my project would not have been as pleasant as it has been to me. Working on my project was a
constant learning experience with all sweat and tear which was its due but not without being richly
stimulating experience of life time.
I am very thankful to Mr. Geetika Shukla, H.O.D of BBA Department DIMS, Meerut for giving
me their valuable advice and guidance towards fulfillment of the project
For any project to be a success, it is very important to get the right guidance and support which I got
from my Teacher “Mr. ATUL CHAUDHARY H.O.D. of BBA Department DIMS, Meerut. I
express my gratitude to my faculty guide for inspiring me throughout the project.
I want to express my deep gratitude to our institution DIMS Meerut , for giving me the opportunity to
undertake this project and enhance my knowledge.
Finally I would like to convey my heartiest thanks to all my well wishers for their blessing and co-
operation throughout my study. They boosted me up every day to work with a new and high spirit.
SAMARTH MEHNIDIRATTA
3
PREFACE
Modern business world is full of competition, uncertainty and exposed to
different types of risks. The complexity of managerial problems has led to the
development of various managerial tools, techniques and procedures useful for the
management in managing the business successfully. One of the essential features of
modern business management is planning and control. There are a number of tools and
devices which assist management in planning and controlling business operations.
Performance appraisal is the most common, useful and widely used standard device of
planning and control. In the present project an attempt has been made to study and
understand
“WORKING CAPITAL MANAGEMENT WITH REFERENCE

TO(MAHINDRA& MAHINDRA FINANCIAL SERVICE LTD” and convert the
theoretical practices into the practical working life.
4
TABLE OF CONTENTS
S.no. Particulars Page No.
1. Executive Summery 6
2. Company Profile 7
Chapter -1
3. Introduction 35
4. Working Procedure 53
5. Objective of the study 76
6. Scope of the Study 78
7. Research Methodology 79
Chapter -2
8. Data Analysis And Interpretation. 82
9. Findings 96
10. Limitations Of The Study 97
Chapter -3
11. Recommendation & Suggestions 98
Chapter -4
12. Conclusion 100
13. Bibliography 102
14. Annexure 104
5
EXECUTIVE SUMMARY
Mahindra & Mahindra (M&M), the market leader in multi-utility vehicles in India. The
company started manufacturing commercial vehicles in 1945. M&M is the leader by far in
commercial vehicle and the second largest in the passenger vehicle market. The company
is the world‘s sixth largest medium and heavy commercial vehicle manufacturing.
Mahindra is best known for utility vehicles and tractors in India, Its automotive division, the
company's oldest unit (founded in 1945), makes jeeps and three-wheelers (not passenger
"auto rickshaws," but utilitarian delivery and flatbed incarnations). M&M‘s farm
equipment sector, formed in 1963 during India‘s green revolution, manufactures
tractors and industrial engines. M&M also produces military vehicles. The company
has facilities located throughout India.
The survey involved gathering wide information about the company, its products,
customer satisfaction and impact of various competitive firms on the company.
From the information collected, various aspects were identified where the company needs
to focus more to improve the efficiency of marketing team of Mahindra Automotives.
The research was conducted through collection of primary and secondary data. Secondary
data was collected through visiting various web sites, automobile magazines and
Other reliable sources. Primary data was collected through a well-framed
questionnaire, of which later a detailed analysis was done using various statistical I.T.
tools like MS Word and MS Excel.
On the basis, the secondary data analysis and the extensive analysis of the
primary data, interpretations were drawn for the questions and conclusion is drawn.
Certain suggestions are also drawn from the analysis to help. Mahindra
Automotives to increase its market share in commercial passenger segment and
MPVs. The main research that followed is to know
―Customer satisfaction towards Mahindra BOLA RO SLX‖, a new SUV recently
launched by Mahindra. Due to the limited resources and time constraints, the study
was conducted within the area Lucknow . city.
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COMPANY PROFILE
As commercialization of agriculture grew in intensity in the mid to late 1800s,
the British Raj, the local legislatures and provinces began investing in agricultural
development through support and establishment agricultural research farms and
colleges and large scale irrigation schemes yet the level of mechanization was low
at the time of independence in 1947. The socialist oriented five year plans of the
1950s and 60s aggressively promoted rural mechanization via joint ventures and
tie-ups between local industrialists and international tractor manufacturers.
Despite this aggressiveness the first three decades after independence, local
production of 4-wheel FINANCE grew slowly. Yet, by the late 1980s tractor production
was nearly 140,000 units per year and by the late 1990s with production approaching
270,000 per year, India over-took the United States as the world's largest producer of
four-wheel FINANCE with over 16 national and 4 multi-national corporations producing
FINANCE today. Despite these impressive numbers FAO statistics estimate that of total
agricultural area in India, less than 50% is under mechanized land preparation,
indicating large opportunities still exist for agricultural mechanization.
1945 to 1960
War surplus FINANCE and bulldozers were imported for land reclamation
and cultivation in 1940's. In 1947, central and state tractor organizations were set
up to develop and promote the supply and use of FINANCE in agriculture and up to
1960, the demand was met entirely through imports. There were 8,500 FINANCE in
use in 1951, 20,000 in 1955 and 37,000 by 1960.
1961 to 1970
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Local production began in 1961 with five manufacturers producing a total of
880 units per year. By 1965, this had increased to over 5000 units per year and the
total in use had risen to over 52,000. By 1970, annual production had exceeded
20,000 units with over 146,000 units working in the country.
1971 to 1980
Six new manufacturers were established during this period although three
companies (Kirloskar FINANCE, Harsha FINANCE and Pattie FINANCE) did not survive.
Escorts Ltd. began local manufacture of Ford FINANCE in 1971 in collaboration
with Ford, UK and total production climbed steadily to 33,000 in 1975 reaching 71,000
by 1980. Credit facilities for farmers continued to improve and the tractor market
expanded rapidly with the total in use passing the half million mark by 1980.
1981 to 1990
A further five manufacturers began production during this period but only one
of these survived in the increasingly competitive market place. Annual production
exceeded 75,000 units by 1985 and reached 140,000 in 1990 when the total in use
was about 1.2 million. Then India - a net importer up to the mid-seventies - became
an exporter in the 1980s mainly to countries in Africa.
1991 to 1997
Since 1992, it has not been necessary to obtain an industrial license for
tractor manufacture in India. By 1997, annual production exceeded 255,000 units
and the national tractor population had passed the two million mark. India now
emerged as one of the world leaders in wheeled tractor production.
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1997 to 1999
Five new manufacturers have started production since 1997. In 1998 Bajaj Tempo,
already well established in the motor industry, began tractor production in Pune. In April of
the same year, New Holland Tractor (India) Ltd. launched production of 70 hp FINANCE
with matching equipment. The company is making a $US 75 million initial investment in a
state of the art plant at Greater Noida in Uttar Pradesh state with an initial capacity of 35000
units per year. Larsen and Toubro have established a joint venture with John Deere, USA
for the manufacture of 35-65 hp FINANCE at a plant in Pune, Maharashtra and Grieves Ltd.
will produce FINANCE under similar arrangements with Same Deutz-Fahr of Italy.
Looking to South American export markets, Mahindra and Mahindra is also
developing a joint venture with Case for FINANCE in the 60-200 hp range. Total
annual production was forecast to reach 300,000 during the following year.
1999 to Present
Facing market saturation in the traditional markets of the North West (Punjab,
Haryana, and eastern Uttar Pradesh) FINANCE sales began a slow and slight
decline. By 2002, sales went below 200,000. Manufacturers scrambled to push into
eastern and southern India markets in an attempt to reverse the decline, and began
exploring the potential for overseas markets.
Sales remained in a slump, and added to the market saturation problems
also came increased problems of "prestige" loan defaults, where farmers who were
not financially able took FINANCE in moves to increase their families prestige.
9
Government and private banks have both tightened their lending for this sector
adding to the industry and farmers woes. By 2004, a slight up tick in sales once again due
to stronger and national and to some extent international markets. But by 2006 sales once
again were down to 216,000 and now in 2007-08 have slid further to just over 200,000.
10
MAHINDRA STORY
In 1962, M&M formed a joint venture with International Harvester to make
FINANCE carrying the name Mahindra name-plate for the Indian market. Armed with
engineering, tooling and manufacturing know-how gained from this relationship, M&M-a
major auto maker- developed its first tractor, the B-275. This successor to International
Harvester's incredibly popular B-414 is still the basis for some current Mahindra
models. Today, Mahindra is the third largest tractor manufacturer in the world with
sales of nearly 85,000 units annually in 10 countries. This places them ahead of John
Deere & Kubota. In India, Mahindra has been the number one selling brand since 1983.
Mahindra & Mahindra Ltd. (M&M)
Mahindra & Mahindra is the most respected company in India. For its SUV
model 'Scorpio,' the company won the National Award for outstanding in-house
research and development. Bolero, Commander, Voyager is the popular brands of
the company in automotive segment.
Quick Facts
Founder The two brothers, J.C. Mahindra and K.C. Mahindra and
Ghulam Mohammed
Country India
Year of Establishment October 2, 1945
Listings & its codes NSE: M&M; BSE: 500520
Plants Mumbai
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Company Flashback:
Mahindra & Mahindra Limited (M&M), the flagship company of US $ 2.59 billion
Mahindra Group, has a significant presence in key sectors of the Indian economy. M&M
is one of the most respected companies in India. The Company over the years has
transformed itself into a Group that caters to the Indian as well as foreign markets with
a presence in vehicles, farm equipment, information technology, trade and finance
related services, and infrastructure development. Now, they have started with a
separate Sector, Mahindra Systems and Automotive Technologies (MSAT) in order to
focus on developing components as well as offering engineering services.
Mahindra & Mahindra currently employs around 11,600 people and has eight
manufacturing facilities spread over 500,000 square meters. The company has 49
sales offices that are supported by a network of over 780 dealers across the
country. The company's outstanding manufacturing and engineering skills allow it to
innovate and launch new products constantly for the Indian market.
The "Scorpio", a SUV developed by the company from the ground up, resulted in the
Company winning the National Award for outstanding in-house research and development from
the Department of Science and Industry of the Government in the year 2003.
In the community development sphere, M&M has implemented several programs
that have benefited the people and institutions in its areas of operations. On the auspicious
occasion of its 60th anniversary, the Company announced a range of CSR activities
supported by a commitment of 1% of Profit after Tax for its CSR initiatives.
12
Mahindra & Mahindra Ltd.
Mahindra & Mahindra Limited (M&M) is the flagship company of US $ 2.59
billion Mahindra Group (F04 - US$ 1.96 billion, which has a significant presence in
key sectors of the Indian economy. A consistently high performer, M&M is one of
the most respected companies in the country.
Set up in 1945 to make general-purpose utility vehicles for the Indian market,
M&M soon branched out into manufacturing agricultural FINANCE and light commercial
vehicles (LCVs). The company later expanded its operations from automobiles and
FINANCE to secure a significant presence in many more important sectors.
M&M has two main operating divisions - Automotive Division manufactures utility
vehicles, light commercial vehicles and three wheelers. Tractor (Farm Equipment)
Division makes agricultural FINANCE and implements that are used in conjunction with
FINANCE, and has also ventured into manufacturing of industrial engines.
Tractor Division has won the coveted Deming Application Prize 2003, making
it the only tractor manufacturing company in the world to secure this prize. The
Company has recently entered into a JV with Renault of France for the manufacture
of a mid-sized sedan, the Logan, and with International Truck & Engine
Corporation, USA, for manufacture of trucks and buses in India.
Project Sankraman - SAP R/3 Enterprise (4.7) Implementation on Centralized
Architecture
M&M entered into a new phase in technology initiatives from April 2005 by virtue of two
important events:
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• Implementation of SAP R/3 Enterprise 4.7 on single instance and centralized
architecture
• Centralization of all servers located across various units to a single server at

secure data centre located at Kandivli
Although the implementation work of the project was completed in F05, the post-
launch and benefit realization were major activities in F06. This signified M&M moving
closer towards being a real-time organization. It provided access to new functionalities
directly catering to the Indian taxation and auto industry requirements.
It also facilitated standardization of business processes, harmonized master data
and better system compliance. Single sign-on and role-based authorization features
provided enhanced user experience. Organization-wide information now being
available on single server resulted in on-line availability of consolidated information
with drill-down up to transaction level.
Implementation of SAP APO (Advance Planner and Optimizer) for Automotive Sector
Implemented SAP APO at Farm Equipment Sector in F04, and rolled-out at
Automotive Sector in F06. SCM processes are streamlined using SAP APO. Forecasting,
planning, and decision support has been facilitated through on PPDS (Production Planning
Demand Scheduling) & SNP (Supply Network Planning) modules. APO-DP (Demand
Planning) facilitated collaborative planning between dealers and sales offices.
Roll - out of SAP SRM (Supplier Relationship Management)
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The objective of this project was to extend visibility of supply end of the value chain.
The supplier portal - www.mahindrasrm.com - enables suppliers to do transactions and also
track material supplied to M&M from the stages of receiving, bill passing & payment.
M&M buyers get online information about e-invoice created by suppliers.
Suppliers are also able to view analysis related to their supplies. As a result of the
roll-out, all major suppliers are now accessing SRM portal. Implementation of
Strategic Sourcing supporting sourcing module is now under process.
Implementation of SAP DMS-CRM (Dealer Management System - Customer
Relationship Management)
It is essential for Auto OEMs to keep in close contact with the end consumers, build
brand loyalty and provide total customer experience. Implementation of centrally hosted
Mahindra Dealer Management System (DMS) covers - Marketing, Pre-sales, Sales,
Services, Spares, Warranty, Dealer Financials, Analytics, CRM and Business Intelligence.
The pilot involving 50+ dealer locations initiated last year is in the final phase
of implementation, to be followed by roll-out across Mahindra Dealer Community.
Appropriate infrastructure including dealer connectivity is being established.
Implementation of SAP DMS-CRM has provided an additional opportunity to ensure
process standardization and compliance across all dealers of M&M. Enhanced the
ability to integrate a change more easily across the entire dealer chain. Facilitated
better customer information management, end-customer database, along with
seamless integration with back-end SAP systems.
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Bar-coding Enabled Warehouse Management System at Spares Business Unit
The Spares Business Unit (SBU) has a Warehouse at Wagholi. The spare
parts required for Automotive & Farm Equipment Sector dealers are managed
through this warehouse. Wireless hand-held terminals are used to scan the bar-
codes on the component packs.
The same is integrated with SAP R/3 System and being used to track the
material during Pre-packing, Binning, Picking & Packing and error-free warehouse
processes. This has facilitated substantial improvement in productivity and
efficiency of warehouse staff to support high volume needs of the business.
Implementation of SAP CFM (Corporate Finance Management)
Loans, Investment SAP CFM were implemented in F05 for Corporate
Finance function. This year focused on Forex module and Market risk analyzer.
This has facilitated online monitoring of financial measures such as Forex
exposures, Investment portfolios, Yield to Holding etc.
Project Suraksha
Considering the criticality of Information Security in current business
environment an organization wide security project has been initiated leading to
BS7799 Certification. The scope covers all Information assets in Paper or Digital
format across all the locations of M&M and underlying IT Infrastructure.
Organization wide information security policies and all the relevant systems &
processes have been documented and published on company intranet. All business
heads/ department heads are directly responsible for ensuring policy compliance.
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All the information and IT assets across locations have been identified, risk
analysis carried out, risk mitigation plan defined by the users and concerned
departmental heads supported by Information Security team. A well defined Information
Security organization structure consisting of Apex council, Information Security
Councils at each location and departmental representatives is in place. Information
Security Cell within Corporate IT coordinates all activities related to this initiative.
M&M has deployed a world class Security Infrastructure, designed to both
protect and enable business, thus ensuring Confidentiality, Integrity and Availability of
the information systems at all times. Among the Security Infrastructure components are
- Firewalls & Intrusion Detection System, Antivirus Architecture, Virtual Private Network
and Web Access, Strong Authentication, Anti-spam & Content Filtering.
M&M has always been in the forefront of Information Technology adoption
for business benefits. Today, Information Technology touches every corner of the
business and enhances capabilities of every process taking M&M towards its IT
vision of being the "Best IT Enabled Real-time Enterprise".
M&M was one of the First organizations to implement SAP R/3 way back in
1998. It was the largest site in the world on Windows NT platform at that time. Today
SAP R/3 Enterprise (version 4.7) integrates all the organizational processes across all
the locations. Built on this platform, Information Technology has been extended to
integrate with business partner processes through New Dimension solutions such as:
• Supplier Relationship Management (SAP-SRM) - First to implement in

Asia-Pacific region
• Advance Planner & Optimizer (SAP-APO) - First to implement APO in India.
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• Dealer Management System - Customer Relationship Management
(SAP DMS-CRM)
All these are driven with the objective of providing the best products and services to
the customer at optimal cost and simultaneously ensuring the value to M&M's business
partners. Other decision support and productivity improvement modules include:
• Strategic Enterprise Management (SAP SEM - BCS)
• Business Information Warehouse (SAP BIW)
• Employee Self Service (ESS) through Enterprise Portal
Entire design process and product data management is through Team

Center Enterprise from UGS
All the above business solutions are effectively delivered through state-of-art
Mahindra IT Infrastructure (Mahindra Net) connecting all manufacturing plants,
Corporate Office, regional offices, sales offices and Data Centers with the best in class
security architecture, Network Operations Center to monitor and manage this network.
Redundancy for power, network, bandwidth, hardware, Data Center and DRS set-up
ensure almost 100% availability of applications to users. The whole organisation is geared
towards complying with the BS 7799 information security standard, which adds to the
confidence of M&M customers and partner organisations. M&M will be the first BS: 7799
certified organization in India, in the manufacturing sector, with such comprehensive scope.
M&M users are using various value-added IT Services such as VPN, Desktop Web
Conferencing - Video & Audio interaction from desktop, Video Conferencing - Video &
Audio interaction and conferencing between multiple locations, Live Chats and FTP.
18
Live Interactive chats have been a successful platform for M&M employees
to communicate with Mahindra Senior Management. Senior executives share their
vision, thoughts and also answer to queries from employees. This technology is
used successfully for interaction between senior executives and subject experts
during Finance Minister's Union Budget speech.
The adoption of Information Technology has moved up the value chain, from
cost savings to business enablement. The business benefits of various business
solutions implemented have resulted in standardization, synergistic operations,
inventory reduction, easier consolidation, and cycle time reduction and optimized
business processes leading to faster operations and informed decision-making.
However more importantly, IT has impacted all the business functions and
processes in the organization, the value of which can be seen more in creation
strategic capabilities - such as anytime, anywhere availability of secured
information, facilitating collaboration and improved communication within and
outside the organization, effective leveraging knowledge within the organization for
business benefits, enabling organization to be more customer centric and agile.
VISION
To Be an Engineering Company of International Repute, Providing Best of

Products & Services With Contemporary Technologies To suit Customer needs.
MISSION
To focus on our customers' market challenges and needs by providing

excellent products in order to consistently create maximum value for our customers
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BOARD OF DIRECTORS
Anand Mahindra Chairman & Managing Director –
Bharat Doshi Executive Director & Group CFO
HemantLuthra President – Systech Sector
AnoopMathur President – Two Wheeler Sector
PawanGoenka President – Automotive & Farm
Rajeev Dubey President – Group HR & Aftermarket
S.P. Shukla President – Group Strategy and Chief
UlhasYargop President — Information Technology
Anita Arjundas CEO – Real Estate Sector and Managing
ZhoobenBhiwandiwala Executive Vice President & Managing
S Durgashankar Executive Vice President - Mergers &
C.P. Gurnani Chief Executive Officer – Mahindra
Ramesh Iyer Managing Director – Mahindra &
RuzbehIrani Chief Executive – International
Harsh Kumar Managing Director – Mahindra
Bishwambhar Mishra Chief Executive - Tractor & Farm
Rajiv Sawhney CEO, Mahindra Holidays & Resorts India
V.S. Parthasarathy Group CIO, EVP – Group M&A, Finance
RomeshKaul Global CEO – Gears Business, Systech
Pravin Shah Chief Executive – Automotive Division
Ashok Sharma Chief Executive - Auto & Farm Strategy,
RajanWadhera Chief Executive —Technology, Product
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Profile of Mahindra & Mahindra financial service ltd., showroom
Meerut
s1
Mahindra & Mahindra financial service ltd. was established on 1 April. 1987. By
nature, it is a sole proprietorship. Proprietor of the showroom is Mr. A. J. AnathaRao.
It is a not manufacturing unit and on the other hand it is a showroom for the products
of MAHINDRA & MAHINDRA limited. This showroom is located at Meerut.
Objectives of the Organization
• To sell the Mahindra &Mahindra products.
• To provide services to the ultimate consumers of the vehicle.
• To provide efficient & effective services to its consumers in time.
• To facilitate financial assistance to the consumers.
BRIEF HISTORY OF MAHINDRA FINANCE
• 1945: On October 2, Mahindra & Mohammed formed
• 1945: The Company was renamed Mahindra & Mahindra Limited (M & M)
Steel Trading business was started in association with suppliers in UK
• 1945: Business connections in USA through Mahindra Wallace
• 1950: The first business with Mitsubishi Corporation (for 5000 Tons) for
building plates for supply from Yawata Iron & Steel
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• 1953: Otis Elevator Co. (India) established 1956: Shares listed on the Bombay
Stock Exchange Dr. 'Beck & Co. formed - a JV with Dr. Beck & Co. Germany
• 1957: Mahindra Owen formed - a JV with Ruble' Owen & Co. Ltd., UK
• 1958: Machine Tools Division started
• 1963: International Tractor Co. of India (ITCI) formed - a JV with
International. Harvester Co., USA
• 1970: Mahindra Engineering & Chemical Products Ltd.(MECP)

Commenced operations
• 1971: International Harvester collaboration ended
• 1979: License from Automobiles Peugeot, France for manufacture of

XDP 4.90 Diesel Engines
• 1982: License from KIA for manufacture of 4 Speed Transmissions

Mahindra brand of FINANCE born SiroPlast formed
• 1983: M&M becomes market leader in Indian Tractor Market (Position

retained ever since)
• 1984: Mahindra Hellenic Auto Industries S.A. formed - a JV in Greece

to assemble and market utility vehicles in Europe
• Mahindra British Telecom (MBT) formed - a JV with British Tele

communications plc (BT), UK acquired International instruments Ltd.
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• 1989: Automotive Pressing Unit (now MUSCO Stampings) acquired
from GKW
• Introduction of Commander series
• Triton Over water Transport Agency Ltd., formed implementation of the
Service Center project at Kahn Merged diverse activities of Steel,
Machine Tools, Graphics into Inter trade Division
• 1994: Mahindra Realty & Infrastructure Developers Ltd. (MRIDL) formed
Mahindra USA Inc., formed for distribution of FINANCE in the USA EAC
Graphics (India) Ltd., formed in collaboration with The East Asiatic Company
Ltd. A/S, Denmark Reorganization of the Group creating six Strategic
Business Units MSL Division (Auto Components) hived off to form Mahindra
Sona ltd. Mahindra Nissan Aileen Limited merged with tile Company
• 1996:Mahindra Ford India Ltd. (MFIL) - a JV with Ford, Motor Co. USA
to manufacture passenger cars. The Company made a Foreign
Currency Convertible Bond (FCCB) issue of US$ 115 million
• 1997: A new die shop was inaugurated at Nasik Inauguration of the

Mahindra United World College of India
• 1999: Launch of 'Bijlee' a battery operated, 3-wheeler environmental-friendly
vehicle. The largest online used vehicle website in India launched by
Mahindra Network Services. The business of Inter trade Division and
Mahindra Exports Ltd. combined and renamed Mahindra Inter trade ltd.. The
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Company acquired major stake in Gujarat FINANCE. Mahindra & Mahindra
Financial Services Limited becomes a subsidiary of M&M
• 2001: A 3-wheeler diesel vehicle "Champion" is launched. The Company
launches Mahindra MaXX a MUV positioned with the caption Maximum
Space, Maximum Comfort. M&M ties up with Renault for petrol engines.
M&M established a separate division to provide Defense Solutions
24
AWARDS
2016:
• Mahindra receives the Gold award for 'Brand Communicator of the

Year' at the 9th Asia Pacific PR Awa
• Mahindra's Auto Two wheeler sectors receive top awards from

automotive media
• Mahindra announces Mahindra Samriddhi India Agri Awards 2016
• Mahindra Navistar Recognizes the Heroes of the Indian Transport Industry
• Mahindra and Mahindra honours Indian farmers at the Mahindra

Samriddhi India Agri Awards 2016
• Mahindra XUV500 to open All India bookings from 8th June 2016
• Mahindra Finance receives the Information Week Edge awards
• Mahindra was honoured with the 6th Social and Corporate Governance
Awards 2010 by Bombay Stock Exchange Limited in the category of
BEST CORPORATE SOCIAL RESPONSIBILITY PRACTICE for its
Esops Initiative.
• Nashik Plant was awarded the prestigious JSW TOI Earth Care Award
2010 for Excellence in Climate Change Mitigation & Adaptation
• MHRIL's Club Mahindra Tusker Trail (CMTT), Thekkady received the
coveted Rotary-Binani Zinc CSR Award in association with NIPM
Kerala Chapter.
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• Mahindra & Mahindra was the proud recipient of the India Shining Star
CSR Award for the exceptional work it has done in the Automobile Sector.
• Mahindra Finance won the award for "Best in Corporate Social
Responsibility Practice”
• Mahindra and Mahindra received prestigious Annual PRCI (Public

Relations Council of India) Awards under 3 categories:
➢
Corporate Brochure - Lifeline Express - Silver Award
➢
Newsletter (Tabloid) - Esops Digest - Bronze Award
➢
Corporate Film - Documentary film on Bihar Flood Rehabilitation at Pattori - Bronze
Award
2011:
• Anand Mahindra receives Business Leader of the Year Award at Asian

Awards 2011 held in London
• Mahindra Excellenc in Theatre Awards kicks off in the city
• Mahindra partners Zee News for India Agri Awards 2011
• Mahindra honours Indian farmers at the first Mahindra Samriddhi India

Agri Awards 2011
• Mahindra Group wins a record 9 awards at the annual ABCI awards nite
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2010:
• Mahindra Excellence in Theatre Awards Celebrates its 5th Anniversary
About Farm Equipment Manufacturers leaders in India.Poised to take on the world.
For over two decades, Mahindra FINANCE is the undisputed leader of the
Indian tractor market, which is the largest tractor market in the world. A
division of over US$ 6 billion conglomerate, Mahindra & Mahindra, we began
as a joint venture with International Harvester. And with that began a new era
in power, control and reliability in farm equipment manufacturing.
Today, with the largest manufacturing set up in India, Mahindra FINANCE is
among the top three players in the global market. And as we step into the 27th
year of excellence, we continue on our journey of cultivating golden harvests
across the globe. Mahindra FINANCE conferred with the global honour.
In the year 2003, Mahindra FINANCE bagged the Deming Prize, a global
honour for quality practices. Three years later, the company was eligible to
qualify for the Japan Quality Medal, the highest honour for excellence in Total
Quality Management practices. In 2007, Mahindra FINANCE became one of
the 20 companies worldwide to receive this rare honour. Till date, we are the
only tractor company in the world to bag this prestigious award.
Mahindra FINANCE goes global.
Mahindra FINANCE have reached all four corners of the world. And wherever we
went, we‘ve proved ourselves nothing less than the best. That explains the great
27
demand for Mahindra FINANCE across the United States, Australia, Brazil,
Turkey, South Africa & Syria etc among many more.
In the US market, Mahindra USA, a subsidiary company of Mahindra
FINANCE, sells more than 10,000 FINANCE annually. A nationwide network
of over 300 dealers, total product support and prompt after sales service
ensure that every tractor functions for years without any hassles.
Another big leap took us past the Great Wall of China. We acquired Jiangling
Motor Co., to form Mahindra China Tractor Company Ltd. (MCTCL). Started
operation with Jiangsu YuedaYancheng Tractor Manufacturing Co. in the year
2008 & formed MYYTCL.The 18-35 HP FINANCE manufactured here cater to
domestic as well as overseas markets.
From China, we crossed the Pacific Ocean and entered the Australian farms.
Assembled at Mahindra Australia, theseFINANCE are sold all over the
Australian continent. The variety includes a range of 2WD and 4WD compact
FINANCE (20-30 HP range) and utility tractor models (45-85 HP range) along
with attachments like loaders and mowers. These attachments can also be
put to multiple uses with utmost reliability and ease.
Heading eastwards from Australia, we entered the European continent and
launched Mahindra FINANCE at the Novi Sad fair in May 2005. Today, we
have a significant presence in Turkey, Macedonia and Serbia.
In the massive African continent, we have already spread across 20 countries that
include Angola, Tchad, Democratic Republic of Congo, Mali, Morocco, Nigeria,
Sudan, The Gambia, Zambia, Egypt, Algeria, Ghana, Niger, Uganda, Tanzania,
28
Mallawi, Mozambique, Zimbabwe, Botswana& South Africa. Besides that we
have set up assembly plants in Ghana, The Gambia, Nigeria Mali &Tchad,
which were technically guided and commissioned along with our channel
partners in these countries. And it won‘t be too long before our brand of red
FINANCE are found across the rest of the African continent.
But the journey doesn‘t end here. We look forward to tapping the remotest
farms of the globe and continue to cultivate countless smiles.
Various products of Mahindra & Mahindra available in this showroom are:
FINANCE, Autos, and other Agricultural implements.
29
Models in FINANCE
MAHINDRA 275 DI
BHOOMIPUTRA - 265 Dl
BHOOMIPUTRA - 275 DI
SARPANCH - 265 DI
SARPANCH - 275 DI
SARPANCH - 475 DI
SARPANCH - 575DI
ARJUN - 605 DI
ARJUN - ULTRA
ARJUN - CRPTO
Others agricultural implements available in Panchasheel Enterprises are:
Disk plough, Cultivators, Harvesters, Spring cultivators etc.
30
MAHINDRA FINANCE - MODELS
NBP SERIES
MODEL : 235 DI ENGINE HP: 24 HP
This single cylinder air cooled tractor is tough, economical and reliable.
With 8 forwards speeds and maximum road speed of 30 Km per hour, these
FINANCE are especially suitable for road operations as well.
This particular line of FINANCE is tough, economical and reliable. With
8 forwards speeds and maximum road speed of 30 Km per hour, these
31
NST SERIES
A complete package of a large capacity engine, heavy-duty
transmission, high lift capacity hydraulics and a very robust cast iron chassis.
These machines perfectly suit almost all kinds of farming operations ranging
from basic chores to commercial landscaping.
A complete package of a large capacity engine, heavy-duty transmission, high lift
capacity hydraulics and a very robust cast iron chassis. These machines perfectly
32
suit almost all kinds of farming operations ranging from basic chores to
commercial landscaping.
Ultra SERIES
33
These tough and reliable FINANCE are designed to perform multiple tasks
and take on the rigors of work with ease. They specialise in all kinds of farming
operations, ranging from secondary tillage to crop protection and mowing.
34
Chapter -1
INTRODUCTION
35
INTRODUCTION
Management is an art of anticipating and preparing for risks, uncertainties
and overcoming obstacles. An essential precondition for sound and consistent
assets management is establishing the sound and consistent assets
management policies covering fixed as well as current assets. In modern
financial management, efficient allocation of funds has great scope, in finance
and profit planning, for the most effective utilization of enterprise resources, the
fixed and current assets have to be combined in optimum proportions.
Working capital in simple terms means the amount of funds that
accompany requires for financing its day-to-day operations. Finance manager
should develop sound techniques of managing current assets.
WORKING CAPITAL
Working capital refers to the investment by the company in short terms
assets such as cash, marketable securities. Net current assets or networking
capital refers to the current assets less current liabilities. Symbolically, it means,
Net Current Assets= Current Assets - Current Liabilities.
DEFINITIONS OF WORKING CAPITAL:
The following are the most important definitions of Working capital:
36
1) Working capital is the difference between the inflow and outflow of
funds. In other words it is the net cash inflow.
2) Working capital represents the total of all current assets. In other words
it is the Gross working capital, it is also known as Circulating capital or
Current capital for current assets are rotating in their nature.
3) Working capital is defined as the excess of current assets over current
liabilities and provisions. In other words it is the Net Current Assets or
Net Working Capital.
37
NEED OF THE STUDY
Working capital can be used for the purpose of meeting the day to day
financial requirements and providing the credit facilities to the
customers in the organization. Managing the working capital in an
efficient way is not an easy task. There is a need to study how the
Mahindra& Mahindra financial service Ltd., focus on managing the
working capital and how it uses the capital in an efficient way.
38
WORKING CAPITAL
IMPORTANCE OF WORKING CAPITAL
Working capital may be regarded as the lifeblood of the business.
Without insufficient working capital, any business organization cannot run
smoothly or successfully.
In the business the Working capital is comparable to the blood of
thehuman body. Therefore the study of working capital is of major importanceto
the internal and external analysis because of its close relationship withthe current
day to day operations of a business. The inadequacy or mismanagement of
working capital is the leading cause of business failures.
To meet the current requirements of a business enterprise such as the
purchases of services, raw materials etc. working capital is essential. It is also
pointed out that working capital is nothing but one segment of the capital
structure of a business.
In short, the cash and credit in the business, is comparable to the blood inthe
human body like finance s life and strength i.e. profit of solvency to the business
enterprise. Financial management is called upon to maintain always the right cash
balance so that flow of fund is maintained at a desirable speed not allowing slow
down. Thus enterprise can have balance between liquidity and profitability. Therefore
the management ofworking capital is essential in each and every activity.

WORKING CAPITAL MANAGEMENT
Working Capital is the key difference between the long term financial
management and short term financial management in terms of the timing of cash.
Long term finance involves the cash flow over the extended period of timei.e 5 to 15
years, while short term financial decisions involve cash flow within a year or within
operating cycle. Working capital management is a short term financial management.
Working capital management is concerned with the problems that arise
in attempting to manage the current assets, the current liabilities &theater
relationship that exists between them. The current assets refer to those
assets which can be easily converted into cash in ordinary course of
business, without disrupting the operations of the firm.
Composition of working capital
Major Current Assets
• Cash
In English vernacular cash refers to money in the physical form of currency,
such as banknotes and coins. In bookkeeping and finance, cash refers to current
assets comprising currency or currency equivalents that can be accessed
immediately or near-immediately (as in the case of money market accounts). Cash is
seen either as a reserve for payments, in case of a structural or incidental negative
cash flow or as a way to avoid a downturn on financial markets.
40
• Accounts Receivables
Accounts receivable also known as Debtors, is money owed to a
business by its clients (customers) and shown on its balance sheet as an
asset. It is one of a series of accounting transactions dealing with the billing of
customer for goods and services that the customer has ordered.
Inventory
In a business accounting context, the word inventory is commonly used in
American English to describe the goods and materials that a business holds for the
ultimate purpose of resale. In the rest of the English speaking world stock is more
commonly used, although the word inventory is recognized as a synonym. In British
English, the word inventory is more commonly thought of as a list compiled for some
formal purpose, such as the details of an estate going to probate, or the contents of a
[1]
house let furnished. In American English, the word stock is commonly used to
describe the capital invested in a business, while in British English, the word share is
more widely used in the same context. In both British and American English, stock is
the collective noun for one hundred shares as shares were usually traded in stocks
on Stock Exchanges. For this reason the word stock is used by both American and
British English in the term Stock Exchange.
• Marketable Securities
Very liquid securities that can be converted into cash quickly at a reasonable
price. Marketable securities are very liquid as they tend to have maturities of less than
41
one year. Furthermore, the rate at which these securities can be bought or
sold has little effect on their prices.
Major Current Liabilities
• Bank Overdraft
A bank overdraft is when someone is able to spend more than what is
actually in their bank account. Obviously the money doesn't belong to them but
belongs to the bank so this money will need to be paid back; normally automatically
done when money goes into the persons account. The overdraft will be limited. A
bank overdraft is also a type of loan as the money is technically borrowed.
• Outstanding Expenses
Making liability provision for the expenses relating to current year but
actual payment to be incurred in the next financial year is outstanding
expenses. Example of this case may be salary arrears.
• Accounts Payable
Accounts payable is money owed by a business to its suppliers and shown on its
Balance Sheet as a liability. An accounts payable is recorded in the Account Payable
sub-ledger at the time an invoice is vouchered for payment. Vouchered, or vouched,
means that an invoice is approved for payment and has been recorded in the General
Ledger or AP sub ledger as an outstanding, or open, liability because it has not been
paid. Payables are often categorized as Trade Payables, payables for the
42
purchase of physical goods that are recorded in Inventory, and Expense
Payables, payables for the purchase of goods or services that are expensed.
• Bills Payable
Similar to accounts payable, this term is used to describe a bank's
indebtedness to other banks, principally a Federal Reserve Bank, that is
backed by collateral consisting of the bank's promissory note and a pledge of
government securities. In other words, bills payable is the money a bank
borrows, mainly on a short-term basis, and owes to other banks.
The Goal of Capital Management is to manage the firm s current
assets &liabilities, so that the satisfactory level of working capital is
maintained. If the firm can not maintain the satisfactory level of working
capital, it is likely to become insolvent & may be forced into bankruptcy. To
maintain the margin of safety current asset should be large enough to cover
its current assets .Main theme of the theory of working capital management is
interaction between the current assets & current liabilities.
CONCEPTS OF WORKING CAPITAL:
There are 2 concepts:
• Gross Working Capital
• Net Working Capital
43
Gross working capital: It is referred as total current assets. Focuses on,
Optimum investment in current assets: Excessive investments impair firm s
profitability, as idle investment earns nothing. Inadequate working capital can
threaten solvency of the firm because of its inability to meet its current
obligations. Therefore there should be adequate investment in current assets.
Financing of current assets: Whenever the need for working capital funds
arises, agreement should be made quickly. If surplus funds are available they
should be invested in short-term securities.
Net working capital (NWC)defined by 2 ways
Difference between current assets and current liabilities Net working

capital is that portion of current assets which is financed with long term funds.
NET WORKING CAPITAL = CURRENT ASSETS-CURRENT
LIABILITIES
If the working capital is efficiently managed then liquidity and
profitability both will improve. They are not components of working capital but
outcome of working capital. Working capital is basically related with the
question of profitability versus liquidity & related aspects of risk.
44
Implications of Net Working Capital:
Net working capital is necessary because the cash outflows and inflows
donot coincide. In general the cash outflows resulting from payments of current
liability are relatively predictable. The cash inflows are however difficult to predict.
More predictable the cash inflows are, the less NWC will be required. But where
the cash inflows are uncertain, it will be necessary to maintain current assets at
level adequate to cover current liabilities that are there must be NWC.
For evaluating NWC position, an important consideration is tradeoff
between probability and risk. The term profitability is measured by profits after
expenses. The term risk is defined as the profitability that a firm will become
technically insolvents that it will not be able to meet its obligations when they
become due for payment. The risk of becoming technically insolvent is measured
by NWC. If the firm wants to increase profitability, the risk will definitely increase.
If firm wants to reduce the risk, the profitability will decrease.
PLANNING OF WORKING CAPITAL:
Working capital is required to run day to day business operations. Firms
differ in their requirement of working capital (WC). Firm s aim is to maximize the
wealth of share holders and to earn sufficient return from its operations.WCM is a
significant facet of financial management. Its importance stems from two reasons:
• Investment in current asset represents a substantial portion of total investment.
• Investment in current assets and level of current liability has to be
gearedquickly to change in sales.
45
• Business undertaking required funds for two purposes:
• To create productive capacity through purchase of fixed assets.
• To finance current assets required for running of the business.
The importance of WCM is reflected in the fact that financial managers
spend a great deal of time in managing current assets and current liabilities.
The extent to which profit can be earned is dependent upon the magnitude of
sales. Sales are necessary for earning profits. However, sales do not convert into
cash instantly; there is invariably a time lag between sale of goods and the receipt of
cash. WC management affect the profitability and liquidity of the firm which are
inversely proportional to each other, hence proper balance should be maintained
between two. To convert the sale of goods into cash, there is need for WC in the
form of current asset to deal with the problem arising out of immediate realization of
cash against good sold. Sufficient WC is necessary to sustain sales activity. This is
referred to as the operating or cash cycle.
46
WORKING CAPITAL CYCLE:
A firm requires many years to recover initial investment in fixed assets. On
contrary the investment in current asset is turned over many times a year.
Investment in such current assets is realized during the operating cycle of the firm.
It can be tempting to pay cash, if available, for fixed assets e.g.
computers, plant, vehicles etc. If you do pay cash, remember that this is now
longer available for working capital. Therefore, if cash is tight, consider other
ways of financing capital investment - loans, equity, leasing etc. Similarly, if
you pay dividends or increase drawings, these are cash outflows and, like
water flowing down a plughole, they remove liquidity from the business
Operating cycle:
The working capital cycle refers to the length of time between the firms
paying the cash for materials, etc., entering into production process/stock &the inflow
of cash from debtors (sales), suppose a company has certain amount of cash it will
need raw materials. Some raw materials will be available on credit but, cash will be
47
paid out for the other part immediately. Then it has to pay labor costs & incurs factory
overheads. These three combined together will constitute work in progress.
After the production cycle is complete, work in progress will get
converted into sundry debtors. Sundry debtors will be realized in cash after
the expiry of the credit period. This cash can be again used for financing raw
material, work in progress etc. thus there is complete cycle from cash to cash
wherein cash gets converted into raw material, work in progress, finished
goods and finally into cash again. Short term funds are required to meet the
requirements offends during this time period. This time period is dependent
upon the length of time within which the original cash gets converted into cash
again. The cycle is also known as operating cycle or cash cycle.
Working capital cycle can be determined by adding the number of days
required for each stage in the cycle. For example, company holds raw material on
average for 60 days, it gets credit from the supplier for 15 days, finished goods
are held for 30 days & 30 days credit is extended to debtors. The total days are
120, i.e., 6015 + 15 + 15 + 30 + 30 days is the total of working capital.
The duration may vary depending upon the business policies. In light of
the facts discusses above we canbroadlyclassify the operating cycle of a firm
into three phases viz.
1. Acquisition of resources.
2. Manufacture of the product and
3. Sales of the product (cash / credit).
48
First and second phase of the operating cycle result in cash outflows, and be
predicted with reliability once the production targets and cost of inputs are known.
However, the third phase results in cash in flows which are not certain because sales
and collection which give rise to cash inflows are difficult to forecast accurately.
Operating cycle consists of the following:
• Conversion of cash into raw-materials;
• Conversion of raw-material into work-in-progress;
• Conversion of work-in-progress into finished stock;
• Conversion of finished stock into accounts receivable through sales;
• And Conversion of accounts receivable into cash.
In the form of an equation, the operating cycle process can be expressed as follows:
Operating cycle = R + W + F + DC
R = Raw material storage period
W = Work in progress holding period
F = Finished goods storage period
D = Debtors collection period
C = Credit period availed
49
Operating cycle for manufacturing firm:
The firm is therefore, required to invest in current assets for

smooth and uninterrupted functioning.
• RMCP- Raw Material Conversion Period
• WIPCP- Work in Progress Conversion Period
• FGCP- Finished Goods Conversion Period
• ICP- Inventory Conversion Period
• RCP- Receivables Conversion Period
• Payables (PDP)- Payables Deferral Period
• NOC- Net Operating Cycle
• GOC- Gross Operating Cycle
Calculations:
On the basis of financial statement of an organization we can calculate the
inventory conversion period. Debtors / receivables conversion period and the
creditors conversion period and based on such calculations we can find out the
length of the operating cycle (in days) both gross as well as net operating cycle.
As mentioned above, on the basis of information presented in the
Balancesheet and CMA statement of Kirloskar Pneumatics Company Limited,
the length of gross as well as net operating cycle is calculated as follows:
Theneedforcurrentassetsarisesbecauseoftheoperatingcycle.Theoperating cycle is
a continuous process and, therefore, the need for current assets is felt constantly.
50
But the magnitude of current assets needed is not always a minimum level of current
assets which is continuously required by the firm to carry on itsbusinessoperations.
Finance
Department
Mr. A. D. Kale Mr. R. M.

Sawai
D. G. M.
D. G. M.
Accounting
Cash and Bank Purchase Purchase and Exports Sales Accounts Sales and
Receivables Sales accounts
costing
activities
51
PLANT LAYOUT
YARD
VACANTLAND
9450 Sq.
STORE
ET
M.
P
S
UP AREA INLUSIVE
UTILITIES
CANTEEN
YARDS:
IL
U
B
T
STORAGE
EXPORT
45165 Sq. M.
PLANT
MAIN
FI
GAT
AREA:
O
LAND
E
F
M
N
liabilities, value engineering etc. To achieve all the things effective and efficient
working of capital is necessary.
52
WORKING CAPITAL
POLICY
i. WORKING CAPITAL POLICY
ii. TYPES OF WORKING CAPITAL
iii. NEED FOR WORKING CAPITAL
iv. CHARACTERISTICS OF CURRENT ASSETS
v. CURRENT ASSETS CYCLE
vi. FACTORS INFLUENCING WORKING CAPITAL
vii. CURRENT ASSET FINANCING POLICY
viii. THEORY OF RATIO ANALYSIS
53
PROJECT ON WORKING CAPITAL
▪
WORKING CAPITAL POLICY:
Working capital management provides a summarized view of

the position of the current assets and current liabilities and how to manage
them and have an efficient and effective and optimum working capital. For
day to day working of the concern is known as working capital and to fulfill
this need, working capital management is necessary.
This introduces working capital management or short term financial

management which is concerned with decisions relating to current assets and
current liabilities.
The key difference between long term financial management and

working capital management is in terms of the timing of cash. While long term
financial decisions like buying capital equipment or issuing debentures involve
cash flows over an extended period of time( 5 to 15 years or even more),
short term financial decisions typically involves cash flows within a year or
within the operating cycle of the firm.
There are two concepts of working capital: gross working capital and
net working capital. Gross working capital is the total of all current assets. Net
working capital is difference between current assets and current liabilities.
Management of working capital refers to the management of current assets
as well as current liabilities. The major thrust, of course, is on the
management of current assets. This is understandable because current
liabilities arise in the context of current assets.
Working capital management is a significant facet of financial

management. Its importance stems from two reasons;
54
An investment in current assets represents a substantial portion of the total
investment.
Investment in current assets and the level of current liabilities have to

be geared quickly to change in sales. To be sure, fixed asset investment and
long term financing are also responsive to variation in sales. However, this
relationship is not as close and direct as it is in the working capital
components.
The importance of working capital management is reflected in the fact

that financial managers spend a great deal of time in managing current assets
and current liabilities. Arranging short term financing, negotiating favorable
credit terms, controlling the movement of cash, administering accounts
receivable, and investing short term surplus funds consume a great deal of
time of financial managers.
▪
TYPES OF WORKING CAPITAL:
There are two types of working capital:
o Fixed working capital

o Variable working capital
o Fixed working capital :
To carry on business a certain minimum level of working capital is necessary

on a continuous and uninterrupted basis and for all practical purpose this
requirement will have to be met with long term sources. This requirement is
referred to as permanent or fixed working capital.
Variable working capital :
Any amount over and above the permanent level of working capital is known
as temporary, fluctuating or variable working capital. This portion of the
working capital is needed to meet fluctuations in demand consequent upon
changes in production as a result of seasonal changes.
55
FACTORS INFLUENCING WORKING CAPITAL REQUIREMENTS:
The working capital needs of a firm are influenced by numerous
factors. The important ones are;
▪
Nature of business
▪
Seasonality of operations
▪
Production policy
▪
Market conditions
▪
Conditions of supply
▪
Credit Policy
▪
Inventory Policy
▪
Abnormal Factors
▪
Business Cycle
▪
Growth And Expansion
▪
Level Of Taxes
▪
Dividend Policy
▪
Price Level Changes
▪
Operating Efficiency
Few of them are given bellow;
a. Nature of business: The working capital requirement of a firm is

closely related to the nature of its business. A service firm, like an
electricity undertaking or a transport corporation, which has a short
operating cycle and which sales prominently on cash basis, has a
modest working capital requirement. On the other hand, a
manufacturing concern likes a machine tools unit, which has a long
operating cycle and which sales largely on credit have a very substantial
working capital requirement.
56
b. Seasonality of operations: Firms which have marked seasonality in
their operations usually have highly fluctuating working capital
requirements. To illustrate, consider a firm manufacturing ceiling fans.
The sale of ceiling fan reaches a peak during summer months and drops
sharply during winter period. The working capital requirements of such
a firm are likely to increase considerably in summer months and

decrease significantly during winter period. On the other hand, a firm
manufacturing product like lamps, which have fairly even sales round
the year, tends to have stable working capital
c. Production Policy: A firm marked by pronounced seasonal

fluctuations in its sales may pursue a production policy which may
reduce the sharp variations in working capital requirements. For
example, a manufacturer of ceiling fans may maintain a steady
production throughout the year, rather than intensify the production
activity during the peak business season. Such a production policy may
dampen the fluctuations in working capital requirements.
d. Market Conditions: The degree of competition prevailing in the

market place has an important bearing on working capital needs. When
competition is keen, a larger inventory of finished goods is required to
promptly serve customers who may not be inclined to wait because
other manufacturers are ready to meet their needs. Further, general
credit terms may have to be offered to attract customers in a highly
competitive market. Thus, working capital requirements tend to be
high because of greater investments in finished goods, inventory and
accounts receivable.
If the market is strong and the competition is weak, a firm can

manage with a smaller inventory of finished goods because customers
can be served with some delay. Further, in such a situation the firm can
57
insist on cash payment and avoid lock-up of funds in accounts
receivable- it can even ask for advance payment, partial or total.
e. Conditions of Supply: The inventory of raw materials, spares and

stores depends on the conditions of supply. If the supply is prompt and
adequate, the firm can manage with small inventory. However, if the
supply is unpredictable and scant, then the firm, to ensure continuity of
production, would have to acquire stocks as and when they are
available and carry larger inventory, on an average. A similar policy may
have to be followed when the raw material is available seasonally and
production operations are carried out round the year.
▪
CURRENT ASSETS FINANCING POLICY:
After establishing the level of current assets, the firm must determine
how these should be financed. What mix of long term capital and short
term debt should the firm employ to support its current assets?
For the sake of simplicity, assets are divided into two classes, viz. fixed
assets and current assets. Fixed assets are assumed to grow at a
constant rate which reflects the secular growth in sales. Current assets,
too, are expected to display the same long-term rate of growth;
however, they exhibit substantial variations around the trend line,
thanks to seasonal (or even cyclical) patterns in sales and/or purchases.
The investment in current assets may be broken into two parts:
Permanent Current Assets and Temporary Current Assets. The former

represents what the firm requires even at the bottom of its sales cycle;
the latter reflects the variable component that moves in line with
seasonal fluctuations.
58
Several strategies are available to a firm for financing its capital
requirements. These strategies are illustrated by lines A, B and C in
following diagram.
WORKING CAPITAL FINANCING:
▪
INTRODUCTION:
The investment in raw materials, stock-in-progress, finished goods, and receivables
(the principal constituents of current assets) often varies a great deal during the
course of the year. Hence, the financial manager generally spends a good chunk of
his time in finding money to finance current assets.
▪
TYPES OF FINANCING WORKING CAPITAL:
The firm must find out the sources of finds to finance its working capital. There are
three different financial policies which are as follows;
• Long Term Financing: The sources of long term financing

Are;
o Shares (Equity shares and preference

shares) o Debentures
o Retained earnings and
o Long term loan from financial institution
• Short Term Financing: The sources of short-term financing are short term credit,
which the firm arranges. These sources include.
o Short term bank credit or loans
o Commercial papers
o Factoring receivable and
o Public deposit
59
• Spontaneous Financing: Spontaneous financing refers to the automatic sources
of short term funds.
E.g. Trade credit and outstanding expenses. The main features of these sources are
that they are cost free.
Normally permanent working capital is financed by long term sources where

as temporary working capital is financed by short term sources.
While taking the decision of financing working capital requirement, certain

factors are to be taken into consideration;
i. cost of financing
ii. flexibility
o Cost of Financing: The interest rates increased with the time. Longer the
maturity of debit greater the interest rate. The decision of the company is
guided by risk-return trade off.
o Flexibility: Short term funds are more flexible. Short term funds can be easily
refunded as compared to long term funds, because long term funds can not be
refunded before its maturity period. Financing for the domestic order is majority
met by letter of credit. In case of any shortage company uses the surplus into
various activities such as;
a) short term investments
b) Inter corporate deposit – In case any sister factory is in need of funds,

the surplus fund is used as given to the sister concern.
c) Paying for Overdrafts
Typically, current assets are supported by a combination of long-term and short-

term sources of finance. Long-term sources of finance primarily support fixed assets
and secondarily provide the margin money for working capital. Short-term sources
of finance, more or less exclusively support the current assets.
60
▪
CASH FLOW STATEMENT:
Cash flow statements indicate movement of cash only. The preparation
of cash flow statement is important to understand the paradoxical
situation in which the firm finds difficulty in honoring its short period
business
Indicated by the funds flow statement (working capital basis).

▪
FUNDS FLOW STATEMENT:
The funds flow statement reveals the sources from which the funds are
made available and how they are utilized or applied. Difference
between cash flow and funds flow statement is given bellow;
61
REQUIREMENTS OF FUNDS
Funds Requirements of company
• Fixed Capital
• Working Capital
• Preliminary Expenses
• Raw Material
• Purchase of Fixed Assets
• Inventories
• Establishment work exp.
• Goods in Process
• Fixed working capital
• Others
Every company requires funds for investing in two types of capitalize.
fixed capital, which requires long-term funds, and working capital, which
requires short-term funds.
SOURCES OF WORKING CAPITAL
Long- term source Short-term source
(Fixed working capital) (Temporary working capital)
a)Loan from financial institution a) Factoring
62
b)Floating of Debentures b) Bill discounting
c)Accepting public deposits c) Bank overdraft
d)Issue of shares d) Trade credit
e)Cash credit
f)Commercial paper
Sources of additional working capital include the following:
• Existing cash reserves
• Profits (when you secure it as cash!)
• Payables (credit from suppliers)
• New equity or loans from shareholders
• Bank overdrafts or lines of credit
• Term loans
If you have insufficient working capital and try to increase sales, you can
easily over-stretch the financial resources of business. This is called overtrading.
the Early warning signs include:
• Pressure on existing cash
• Exceptional cash generating activities e.g. offering high discounts for

early cash payment
• Bank overdraft exceeds authorized limit
• Seeking greater overdrafts or lines of credit
63
• Part-paying suppliers or other creditors
• Paying bills in cash to secure additional supplies
Management pre-occupation with surviving rather than managing Frequent short-term
emergency requests to the bank (to help pay wages, pending receipt of a cheque).
64
LONG TERM SOURCES
ISSUE OF SHARES
Ordinary shares are also known as equity shares and they are the most
common form of share in the UK. An ordinary share gives the right to its owner to
share in the profits of the company (dividends) and to vote at general meetings of
the company. Since the profits of companies can vary wildly from year to year, so
can the dividends paid to ordinary shareholders. In bad years, dividends may be
nothing whereas in good years they may be substantial. The nominal value of a
share is the issue value of the share - it is the value written on the share
certificate that all shareholders will be given by the company in which they own
shares. The market value of a share is the amount at which a share is being sold
onthe stock exchange and may be radically different from the nominal value.
When they are issued, shares are usually sold for cash, at par and/or at
premium. Shares sold at par are sold for their nominal value only - so ifRs.10
share is sold at par, the company selling the share will receive Rs. 10for every
share it issues. If a share is sold at a premium, as many shares are these days,
then the issue price will be the par value plus an additional premium.
DEBENTURES
Debentures are loans that are usually secured and are said to have either fixed
or floating charges with them. A secured debenture is one that is specifically tied to the
financing of particular asset such as a building or a machine. Then, just like a mortgage
for a private house, the debenture holder has a legal interest in that asset and
65
the company cannot dispose of it unless the debenture holder agrees. If the
debenture is for land and/or buildings it can be called a mortgage debenture.
Debenture holders have the right to receive their interest payments before any
dividend is payable to shareholders and, most importantly, even if accompany makes
a loss, it still has to pay its interest charges. If the business fails, the debenture
holders will be preferential creditors and will be entitled to the repayment of some or
all of their money before the shareholders receives anything.
LOANS FROM OTHER FINANCIAL INSTITUTIONS
The term debenture is a strictly legal term but there are other forms of
loaner loan stock. A loan is for a fixed amount with a fixed repayment
schedule and may appear on a balance sheet with a specific name telling the
reader exactly what the loan is and its main details.
SHORT TERM SOURCES
FACTORING
Factoring allows you to raise finance based on the value of your
outstanding invoices. Factoring also gives you the opportunity to outsource your
sales ledger operations and to use more sophisticated credit rating systems.
Once you have set up a factoring arrangement with a Factor, It works this way:
Once you make a sale, you invoice your customer and send a copy of the
invoice to the factor and most factoring arrangements require you to factor all your
sales. The factor pays you a set proportion of the invoice value within a pre-arranged
66
time - typically, most factors offer you 80-85% of an invoice‘s value within 24 hours.
The major advantage of factoring is that you receive the majority of the cash
from debtors within 24 hours rather than a week, three weeks or even longer.
INVOICE DISCOUNTING
Invoice discounting enables you to retain the control and confidentiality of
your own sales ledger operations. The client company collects its own debts.
‗Confidential invoice discounting ‗ensures that customers do not know you are
using invoice discounting as the client company sends out invoices and
statements as usual. The invoice discounter makes a proportion of the invoice
available to you once it receives a copy of an invoice sent. Once the client
receives payment, it must deposit the funds in a bank account controlled by
the invoice discounter. The invoice discounter will then pay the remainder of
the invoice, less any charges. The requirements are more stringent than for
factoring. Different invoice discounters will impose different requirements.
OVERDRAFT FACILITIES
Many companies have the need for external finance but not necessarily ona
long- term basis. A company might have small cash flow problems from time to time
but such problems don't call for the need for a formal long-term loan. Under these
circumstances, a company will often go to its bank and arrange an overdraft.
Bank overdrafts are given on current accounts and the good point is that the
interest payable on them is calculated on a daily basis. So if the company borrows
67
only a small amount, it only pays a little bit of interest. Contrast the effects of
an overdraft with the effects of a loan.
TRADE CREDIT
This source of finance really belongs under the heading of working capital
management since it refers to short-term credit. By a 'line of credit' they mean that a
creditor, such as a supplier of raw materials, will allow us to buy goods now and pay
for them later. Why do they include lines of credits a source of finance? They ll, if
they manage their creditors carefully they can use the line of credit they provide for
us to finance other parts of the agribusiness. Take a look at any company's balance
sheet and see how much they have under the heading of Creditors falling due within
one year' - let's imagine it is Rs. 25,000 for a company. If that company is allowed an
average of 30days to pay its creditors then they can see that effectively it has a
short-term loan of Rs. 25,000 for 30 days and it can do whatever it likes with that
money as long as it pays the creditor on time.
CASH MANAGEMENT:
Cash management is one of the key areas of WCM. Apart from the fact
that it is the most liquid asset, cash is the common denominator to which all
current assets, that is, receivables & inventory get eventually converted into cash.
Cash is oil of lubricate the ever-turning wheels of business: without it
the process grinds to a shop. Motives for holding cash Cash with reference to
cash management is used in two senses:
68
• It is used broadly to cover currency and generally accepted equivalents
of cash, such as cheques, drafts and demand deposits in banks.
• It includes near-cash assets, such as marketable securities & time

deposits in banks.
The main characteristic of these is that they can be readily sold
&converted into cash. They serve as a reserve pool of liquidity that provides
cash quickly when needed. They provide short term investment outlet to
excess cash and are also useful for meeting planned outflow of funds.
CASH IS MAINTAINED FOR FOUR MOTIVES:
A. Transaction motive:
Transaction motive refer to the holding of cash to meet routine cash requirements
to finance the transactions which a firm carries on in a variety of transactions to
accomplish its objectives which have to be paid for in the form of cash. E.g. payment for
purchases, wages, operating expenses, financial charges like interest, taxes, dividends
etc. Thus requirement of cash balances to meet routine need is known as the transaction
motive and such motive refers to the holding of cash to meet anticipated obligations
whose timing is not perfectly synchronized with cash receipts.
B. Precautionary motive:
A firm has to pay cash for the purposes which cannot be predicted or
anticipated. The unexpected cash needs at the short notice may be due to:
69
• Floods, strikes & failure of customer
• Slow down in collection of current receivables
• Increase in cost of raw material
• Collection of some order of goods as customer is not satisfied
• The cash balance held in reserves for such random and unforeseen
fluctuations in cash flows are called as precautionary balance.
Thus, precautionary cash provides a cushion to meet unexpected
contingencies. The more unpredictable are the cash flows, the larger is the
need for such balance.
C. Speculative motive:
It refers to the desire of the firm to take advantage of opportunities which
present themselves at unexpected moment & which are typically outside the normal
course of business. If the precautionary motive is defensive in nature, in that firms
must make provisions to tide over unexpected contingencies, the speculative motive
represents a positive and aggressive approach. The speculative motive helps to take
advantages of: An opportunity to purchase raw material at reduced price on payment
of immediate cash. A chance to speculate on interest rate movements by buying
securities when interest rates are expected to decline. Make purchases at favorable
price. Delay purchase of raw material on the anticipation of decline in prices.
70
RATIO ANALYSIS
1. LIQUIDITY RATIOS:
It is the ability of a firm to satisfy' its short term obligations as they

become due.
But Liquidity implies from the view point of utilization of the funds of the
firm that funds are idle or they earn very little. And it reflects the short term
financial strength / solvency ofa firm.
A firm should not suffer lack of liquidity and also that it does not have
excess liquidity. Low liquidity implies the firm's inability to meet its obligations
and high liquidity is also bad; idle masses earn nothing. Therefore it is
necessary to strike a proper; balance between high and lack of liquidity,
CURRENT RATIO:
This ratio establishes the relationship between Current Assets and Current Liabilities.
Components:
Meaning:
1 Current Assets: This means the assets which are held for their
conversion into cash within a year.
2 Current liabilities: This means liabilities which are expected to be

matured with a year.
71
Computation:
This ratio is computed by dividing the current assets by current

liability. Generally 2 : 1 is considered ideal for a concern.
Formula:
Current Assets
Current ratio = ---------------------------
Current liabilities
ABSOLUTE LIQUID RATIO:
Meaning:
This ratio establishes the relationship between absolute liquid

assets and current liabilities.
Components;
1. Absolute quick assets (cash in hand, cash at bank short term or

temporary investment)
2. Current Liabilities
Computations
This ratio is computed by dividing the absolute quick assets by

the current liabilities.
Formula:
Absolute Liquid Assets

Absolute Liquid Ratio = -----------------------------
72
Current Liabilities
QUICK RATIO:
Meaning:
This ratio establishes the relationship between quick assets

and current liabilities.
Components:
1 Quick Assets: This means those current assets, which can be converted
Into cash immediately or at a short notice without a loss of value.
2 Current Liabilities.
Computation:
This ratio is computed by dividing the quick assets by current

liabilities. Generally 1: 1 is considered ideal for a concern.
Formula:
Quick Assets
Current Ratio = -----------------------
Current Liabilities
INVENTORY TURNOVER RATIO:
Meaning:
This Ratio establishes a relationship between Cost of goods sold or sales and
average inventory.
Components:
1. Sales or Cost of Goods Sold.
2. Average Inventory (average ofopening closing balance of inventory).
Computation:
This ratio is computed by dividing the sales or COGS by average inventory.
73
Formula:
Cost of goods sold

Inventory turnover Ratio = --------------------------
Average inventory
OR
Sales
Inventory turnover ratio = -----------------------
Inventory
WORKING CAPITAL TURNOVER RATIO:
Meaning:
This ratio establishes a relationship between net sales and working capital.
Components:
1. Net sales (Gross sales - sales returns)
2. Working capital (CA - CL) Computation:
This ratio is computed by dividing the net sales by the net working capital
Formula:
Net sales
Working capital Turnover Ratio = ------------------------
Working capital
CURRENT ASSETS TURNOVER RATIO:
Meaning:
This ratio establishes a relationship between net sales and current assets.
Components:
74
1. Net sales (Gross sales - sales returns)
2. Current assets.
Formula:
Net sales
current assets Turnover Ratio = -------------------------
Current assets
75
OBJECTIVES OF
THE STUDY
76
OBJECTIVES OF THE STUDY
• To study and analyse working capital management at

Mahindra & Mahindra financial service Ltd. Which
includes
❖ Inventory management
❖ Receivable management
❖ Cash management
• To learn how to manage working capital needs of the organization.
• To learn the different ways through which theoretical learning is

applied practically in the organization.
• To learn and gain knowledge of the day to day working of the

organization as to how does the different decision are taken and on
what basis.
• To gaining the knowledge of different steps of raising the short

term funds and their effective management.
• To assess the efficiency of the working capital management

of the company.
• To evaluate company performance relating to financial statement

analysis.
• To know the liquidity position of the company with the help of
current ratio.
77
SCOPE OF THE STUDY
 The study is limited to Mahindra & Mahindra financial service Ltd.,
 The study is based on availability of information relating to

Mahindra & Mahindra financial service Ltd., past 5 years data.
 The study focuses on analyzing the working capital management.
 To understand the financial position of Mahindra & Mahindra

financial service Ltd., for the current year.
78
RESEARCH
METHODOLOGY
79
RESEARCH METHODOLOGY
Research is an academic activity and as such the term should be used in

a technical sense. D. Slazenger and M. Stephenson in the Encyclopedia of Social
Sciences define research as ―the manipulation of things, concepts or symbols

for the purpose of generalizing to extend, correct or verify knowledge, whether
that knowledge aids in construction of theory or in the practice of an art.‖
Secondary Data:
Secondary data is data collected by someone other than the user. Common
sources of secondary data for social science include censuses, organizational
records and data collected through qualitative methodologies or qualitative research.
The data is collected through the secondary sources like:
 Annual Reports of the company.

❖
Office manuals of the department.
❖
Reports in the company.
❖
Data analysis.
▪
Through graphs
▪
Trend analysis
Source of data: Working capital can be used for the purpose of meeting the
day to day financial requirements and providing the credit facilities to the customers
in the organization. Managing the working capital in an efficient way is not an easy
task. There is a need to study how the Mahindra& Mahindra financial service Ltd.,
focus on managing the working capital and how it uses the capital in an efficient way.
Methodology can be defined as:
1. The analysis of the principles of methods, rules, and postulates

employed by a discipline.
2. The systematic study of methods that are, can be, or have been applied
within a discipline.
3. A particular procedure or set of procedures.
80
Field of study
The field of study has been restricted. The focus is to conduct market
survey on Mahindra to Mahindra.
• Specification purpose
The main purpose of this survey is to find the consumer opinion towards
Mahindra to Mahindra Total emphasis is laid on general perception of
consumers and the products, their purchase intention, awareness and
buying behavior.
Sampling plan:-
The sample consisted of 100 consumers. The convenience sampling

method was adopted.
The sampling plan includes-
1. Project Goals
2. Parameters to be measured
3. Sampling Locations
4. Sampling Timing and Frequency
5. Methods
Area :- Meerut
Data collection instruments:-
The research instrument in this study to avail information needed

was the questionnaire. Questionnaire was prepared for consumers.
Questionnaire includes both general information and specific information

as framed according to the objectives set in the required order.
81
Chapter -2
DATA ANALYSIS
82
DATA ANALYSIS
STATEMENT SHOWING CHANGES IN WORKING CAPITAL FOR THE
YEARS 2012-13 (IN ‘000)
INCREASE DECREASE
PARTICULARS 2012 2013
IN IN
WORKING WORKING
A) Current
Assets
Current
2016.00 3429.00 1413.00
investment
Sundry debtors 157.00 229.00 72.00
Cash and Bank 3680.00 5704.00 2024.00
Loans & 115138.00 143806.00 28668.00

Advances
Other current 369.00 413.00 44.00
assets
Total Current 121360.00 153581.00 32221.00
Assets
B) Current
Liabilities
Short term
15000.00 15103.00 103.00
borrowing
Sundry Creditor 4893.00 4507.00 386.00
Other current
54352.00 69812.00 15460.00
liability
Provisions 6662.00 9212.00 2550.00
83
Total Current
80907.00 98634.00 386.00 18113.00
Liabilities
Net working
40453.00 54947.00 14494.00
capital
Increase in
14494.00
working capital
INTERPRETATION:
From the above table, it is clear that
• Current assets increased from 121360.00 in the year 2012 to

153581.00 in the year 2013.
• Current liabilities increased from 80907.00 in the year 2012 to

98634.00 in the year 2013.
• Net Working capital increased from 40453.00 in the year 2012 to

54947.00 in the year 2013.
84
YEARS 2013-14 (IN ‘000)
2013 2014 INCREASE DECREASE

IN IN
PARTICULARS
WORKING WORKING
CAPITAL CAPITAL
A) Current
Assets
Current
3429.00 945.00 2484.00
investment
Sundry debtor 229.00 145.00 84.00
Cash and Bank 5704.00 4936.00 768.00
Loans &
143806.00 167620.00 23814.00
Advances
Other current
413.00 475.00 62.00
assets
Total Current
153581.00 174121.00 23876.00 3336.00
Assets
B) Current
Liabilities
Short term
15103.00 52586.00 37483.00
borrowing
Sundry Creditor 4507.00 4954.00 447.00
Other current
69812.00 81823.00 12011.00
liability
Provisions 9212.00 11844.00 2632.00
Total Current
98634.00 151207.00 52573.00
Liabilities
Net working
54947.00 22914.00 32033.00
capital
85
Decreasing in
32033.00
working capital
INTERPRETATION:
• Current assets increased from 153581.00 in the year 2013 to

174121.00 in the year 2014.

151207.00 in the year 2014.
• Net Working capital decreased from 54947.00 in the year 2013 to

22914.00 in the year 2014.
86
YEARS 2014-15
INCREASE DECREASE
IN IN
PARTICULARS 2014 2015
WORKING WORKING
CAPITAL CAPITAL
A) Current
Assets
Current
945.00 5467.00 4522.00
investment
Sundry debtor 145.00 200.00 55.00
Cash and Bank 4936.00 6098.00 1162.00
Loans &
167620.00 194669.00 27049.00
Advances
Other current
475.00 885.00 410.00
assets
Total Current
174121.00 207319.00 33198.00
Assets
B) Current
Liabilities
Short term
52586.00 52175.00 411.00
borrowing
Sundry Creditor 4954.00 5073.00 119.00
Other current
81823.00 99103.00 17280.00
liability
Provisions 11844.00 15691.00 3847.00
Total Current
151207.00 172042.00 411.00 21246.00
Liabilities
Net working
22914.00 35277.00 12363.00
capital
87
Increasingin
working capital
INTERPRETATION:
• Current assets increased from 174121in the year 2014 to 207319 in

the year 2015.

172042.00 in the year 2015.
• Net Working capital increased from 22914.00 in the year 2014 to

35277.00 in the year 2015.
88
1. CURRENT ASSETS
CURRENT ASSETS
YEAR
(In Million)
2012-13 121360.00
2013-14 153581.00
2014-15 174121.00
2015-16 207319.00
INTERPRETATION:
• In the year 2012-13 the current assets are 121360
• In the year 2013-14 the current assets are 153581 i.e., increased when
compared to previous year
89
• In the year 2014-15 the current assets are 174121 and again increased
when compared to last year
• In the year 2015-16 the current assets are 207319 when compare to
previous year it is increased.
2. CURRENT LIABILITIES
CURRENT
YEAR LIABILITIES
(In Million)
2012-13 80907
2013-14 98634
2014-15 151207
2015-16 172042
90
INTERPRETATION:
• In the year 2012-13 the current liabilities are 80907
• In the year 2013-14 the current liabilities are 98634 i.e., increased
when compared to previous year
• In the year 2014-15 the current liabilities are 151207 and increased
when compared to last year.
• In the year 2015-16 the current liabilities are 172042 when compare to
previous year it is increased
91
3. NET WORKING CAPITAL
NET WORKING
YEAR CAPITAL
(In Million)
2012-13 40453
2013-14 54947
2014-15 22914
2015-16 35277
INTERPRETATION:
• In the year 2012-13 the net working capital is 40453.00
• In the year 2013-14 the net working capital are 54947.00 i.e., increased
when compared to previous year
• In the year 2014-15 the net working capital are 22914.00 and again
decreased when compared to last year
• In the year 2015-16 the net working capital are 35277.00when

compare to previous year it is increased.
92
4. CURRENT RATIO:
YEAR CURRENT CURRENT CURRENT RATIO
ASSETS LIABILITIES
2012-2013 121360 80907 1.4999
2013-2014 153581 98634 1.5570
2014-2015 174121 151207 1.1515
2015-2016 207319 172042 1.2050
164095.25 125697.50 1.3534

AVERAGE
INTERPRETATION
From the above graph, it is clear that the current ratio is fluctuating
year by year. The current ratio in 2012-13 is 1.49. It increased to 1.55 in the
year 2013-14. It decreased to 1.15 in the year 2014-15. The ratio in the last
year is 1.20 in the year 2015-16. Average current ratio of the company is 1.35
93
5. WORKING CAPITAL TURNOVER RATIO
WORKING
WORKING CAPITAL
YEAR SALES
CAPITAL TURNOVER
RATIO
40453
2012-13 29786474 736.3229
2013-14 37418109 54947 680.9854
2014-15 38796051 22914 1693.1156
2015-16 40173993 35277 1138.8154
Average 146174627 153591 1062.3098
INTERPRETATION
From the above analysis we can know that the working capital ratio is
fluctuating over the years from 2012-13 to 2015-16. In the year 2012-13 the
ratio is 736.3229 and it decreased to 680.9854 at the year 2013-14. And at
the last year i.e., 2015-16, the ratio is 1138.8154.The average working capital
turnover ratio of the company is 1062.3098.
94
CURRENT ASSETS TURNOVER RATIO:
Net sales
current assets Turnover Ratio = ------------------
Currentasset
Current assets
Current
Year Net sales
turnover ratio
Assets
2012-13 29786474 121360 245.4389
2013-14 37418109 243.6376

153581
2014-15 38796051 222.8108

174121
2015-16 40173993 193.7786

207319
Average 146174627 656381 226.4165
INTERPRETATION
From the above analysis we can know that the current assets turnover
ratio is fluctuating over the years from 2012-13 to 2015-16. In the year 2012-
13 the ratio is 245.4389 and it decreased to 243.6376at the year 2013-14.
And at the last year i.e., 2015-16, the ratio is 193.7786.The average current
assets turnover ratio of the company is 226.4165.
95
FINDINGS
Debtors for the year (In Million)
❖
2015-16: 157
Cash and bank balances for the year ( In Million)
 2015-16:3680
Loan & Advances for the year ( In Million)

❖
2015-16 : 194669
Creditors for the year ( In Million)

❖
2015-16 : 5073
Provisions for the year ( In Million)

❖
2015-16 : 15691
The average working capital turnover ratio of the company is 1062.309.
96
LIMITATIONS OF THE STUDY
• The study is limited only for a period of 5 years i.e. 2008-2016
• The study having limited scope of gathering sufficient financial

information as it is confidential.
• The study is limited up to the data and information provided by
Mahindra & Mahindra financial service ltd., and its annual reports.
• This study is confined to the Mahindra & Mahindra financial service ltd.,
Meerut only.
• The current study based on only the secondary data.
• As the some secrecy is maintained by the industry at the time of

disclosing the data, complete information has not secured.
97
Chapter -3
RECOMMENDATION &
SUGGESTION
98
SUGGESTIONS
❖
Company should not rely on Long-term debts.
❖
Overall financial position of the company can be improved from the
point of view of liquidity.
❖
Increase volume based sales so as to stand in the competition.
❖
Stretch the credit period given by the suppliers.
❖
Maintain optimum level of cash in the business in order to maintain a
proper liquidity
99
Chapter -4
CONCLUSION
100
CONCLUSIONS
• Cash and bank balances are increasing showing an upward trend of

liquidity position of the firm.
• The company should administrate their credit on the basis of certain
well recognized and established principle of credit administration.
• The management has to decrease the loans taken by outsiders as it

demands more interest.
• Total assets of the firm must be properly maintained because the value
of total assets was decreased.
• From the above study, current liabilities are increasing. So the
company has to pay the loans and bills to reduce the liabilities and
interest burden.
101
BIBLIOGRAPHY
102
BIBLIOGRAPHY
BOOK TITLE AUTHOR NAME
Financial management IM Pandey
Financial management Prasanna Chandra
WEBSITES
www.mahindra.com/
www.mahindratractorworld.com/
103
103
103
Questionnaire
Section 1
a. Gender
Male
Female
b. Your Age
< 40
40-49
50-59
≥60
c. Your Education
Undergraduates/ MBA / Non MBA/ Doctrate
d. General state of Company
Outstanding
Strong
At industry average
Underperforming
e. Industry
Energy/ Finance/ Health Care/ Industrial/ It/

Medicals/Telecomm/ others
f. Company Type
Australian listed
Overseas listed
Not listed
g. Working capital % Sales
≥ 8%
<8%
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104
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h. Size By No. of Employees
<100
100-999
1000-4999
5000-9999
≥10000
i. Size By Annual Revenue
= $5 billion
j. Foreign Sales
0%
1-24%
25-49%
≥ 50%
Section 2
1. Which of the following policies best describes your company’s financing?
Moderate
Aggressive
Conservative
2. Which of the following working capital practices does your firm adopt?
Emphasize the importance of working capital within the organisation

Put in place structure, governance and dedicated resources
Understand and design performance drivers
Outperform industry average targets
Embed with change management
Goal setting approaches
Other
3. What are the key value metrics for your working capital management?
Net working capital
Return on investments
105
105
105
Risk management
Net cash conversion cycle (DSO+DIO-DPO)
Benchmark against competition
Weighted average capital cost
Other
4. Which of the following methods does your company use in working

capital management?
Roll over agreements
Term sheet
Collection agency
Securitization
Outsourcing
Factoring
5. Please indicate the cash management approach used by your company:
Managing cash through

netting Diversification of banks
Centralization of cash management decisions

Meet payment in a timely manner
Account structure / set-offs

Minimize float
Managing cash through leading and lagging
Streamline bank relationships (e.g. Prime Revenue online

platform) Policy on key liquidity parameters (e.g. cash, equity,
dividend forecasting) Emergency liquidity reserves
Tender for banking services Reduce

timeframes / error margins
Section 3
1. Does your firm deal with inventory management?
Yes
No
If 'No' proceed to Question 16
106
106
106
2. What approaches does your firm use for inventory management?
Material requirement planning
Sales forecasting
Just-in-time
Inventory models (EOQ or EPQ etc.)
ERP system
Supply chain management
3. What are the factors considered in purchasing inventory for production?
Price discounts
Shortage costs
Availability
Inflation
Credit terms offered by suppliers
Storage costs
4. What are the factors considered in producing your finished product?
Seasonality of demand
Production schedule
Inflation
Shortage costs
Storage costs
5. What factors motivate your firm to use accounts receivable rather than cash?
Financial motives
Price motives
Transaction motives
Operating motives
Tax-based motives
N/A (your company only uses cash rather than accounts receivable)
Section 4
1. Does your firm deal with debt management?
107
107
107
Yes
No
2. Is your company negatively geared?
Yes
No
3. What are the preferred funding sources of your company?
Overdraft/Line of credit
Bonds
Money market
Debentures
Cash advances
Term loans
Bank bills
Stocks
4. When your firm is in financial distress to what extent do you blame any of the
following?
0 (Not at all) to 4 (Very much)
Your own financial policy
0. 1. 2. 3. 4.
The economic environment
0. 1. 2. 3. 4.
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Working Capital Mahindra Finance

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A

Submitted towards Partial Fulfillment of

UNDER THE GUIDANCE OF

Submitted to: Submitted By:

DEWAN INSTITUTE OF MANAGEMENT

I am SAMARTH MEHNIDIRATTA student of B.B.A. – V Sem, DIMS, Meerut here by

REFERENCE TO(MAHINDRA& MAHINDRA FINANCIAL SERVICE LTD” is

BBA Department DIMS, Meerut” is my original work.

Roll No. 200986105079

stimulating experience of life time.

me their valuable advice and guidance towards fulfillment of the project

express my gratitude to my faculty guide for inspiring me throughout the project.

undertake this project and enhance my knowledge.

Modern business world is full of competition, uncertainty and exposed to

management in managing the business successfully. One of the essential features of

devices which assist management in planning and controlling business operations.

“WORKING CAPITAL MANAGEMENT WITH REFERENCE

theoretical practices into the practical working life.

5. Objective of the study 76

6. Scope of the Study 78

8. Data Analysis And Interpretation. 82

10. Limitations Of The Study 97

11. Recommendation & Suggestions 98

12. Conclusion 100

13. Bibliography 102

14. Annexure 104

As commercialization of agriculture grew in intensity in the mid to late 1800s,

development through support and establishment agricultural research farms and

tie-ups between local industrialists and international tractor manufacturers.

four-wheel FINANCE with over 16 national and 4 multi-national corporations producing

indicating large opportunities still exist for agricultural mechanization.

use in 1951, 20,000 in 1955 and 37,000 by 1960.

20,000 units with over 146,000 units working in the country.

Escorts Ltd. began local manufacture of Ford FINANCE in 1971 in collaboration

of these survived in the increasingly competitive market place. Annual production

an exporter in the 1980s mainly to countries in Africa.

tractor manufacture in India. By 1997, annual production exceeded 255,000 units

emerged as one of the world leaders in wheeled tractor production.

Looking to South American export markets, Mahindra and Mahindra is also

exploring the potential for overseas markets.

Sales remained in a slump, and added to the market saturation problems

In 1962, M&M formed a joint venture with International Harvester to make

Mahindra & Mahindra Ltd. (M&M)

research and development. Bolero, Commander, Voyager is the popular brands of

the company in automotive segment.

Year of Establishment October 2, 1945

Listings & its codes NSE: M&M; BSE: 500520

a presence in vehicles, farm equipment, information technology, trade and finance

separate Sector, Mahindra Systems and Automotive Technologies (MSAT) in order to

focus on developing components as well as offering engineering services.

country. The company's outstanding manufacturing and engineering skills allow it to

In the community development sphere, M&M has implemented several programs

supported by a commitment of 1% of Profit after Tax for its CSR initiatives.

Mahindra & Mahindra Limited (M&M) is the flagship company of US $ 2.59

the most respected companies in the country.

FINANCE to secure a significant presence in many more important sectors.

FINANCE, and has also ventured into manufacturing of industrial engines.

Corporation, USA, for manufacture of trucks and buses in India.

Project Sankraman - SAP R/3 Enterprise (4.7) Implementation on Centralized

• Centralization of all servers located across various units to a single server at

closer towards being a real-time organization. It provided access to new functionalities

directly catering to the Indian taxation and auto industry requirements.

It also facilitated standardization of business processes, harmonized master data

provided enhanced user experience. Organization-wide information now being