A

PROJECT REPORT
ON
A Study On Working Capital Management In
MPPKVVCL

In The Partial Fulfillment Of The Requirement Of

MASTER OF BUSINESS ADMINISTRATION
IN
RANIDURGAVATI VISHWAVIDALAYA JABALPUR

Under The Guidance of Submitted By:

Dr. Atul Dubey Sourabh Thakur
Semester - 3rd Semester
Enroll. No.- R21026P7260062

SHRI RAM INSTITUE OF MANAGEMENT

NEAR ITI MADHOTAL, JABALPUR (M.P.)
BATCH 2021-2023
 EXECUTIVE SUMMARY
The internship is an integral part of the MBA program. The organization that I
choose for my internship is MPPKVVCL, JABALPUR (M.P.).

During 45 days internship, I learnt many applications of management which

enhances my skills in real manner.

WORKING CAPITAL was the topic I choose for my project. I analyzed that
working capital plays a very important role in organization. Working capital is
the required for maintenance of the day- to – day business operation……
hence the goal of working capital management is not just concerned with the
management of current assets and current liabilities but also in maintaining a
satisfactory level of working capital.

For the reason, working capital management is often referred to as short-term

finance. The term working capital is closely related to the term funds and has
two common meaning .it is used to mean current assets of current assets means
current liabilities.

Current liabilities are those liabilities which are intended at their inception to be
paid in the ordinary course of business within a, year out of the current assets of
Earnings of the concern. This basis current liabilities are accounts payable, bank
overdraft and outstanding expenses. The goal of working capital management is
to management the firm’s current assets and current liabilities in such a way that
a satisfactory level of working capital is maintained.
 INTRODUCTION
Every business needs investment to procure fixed assets, which remain in use for a longer
period. Money invested in these assets is called ‘Long term funds’ or ‘Fixed Capital’.
Business also needs funds for short-term purposes to finance current operations. Investment
in short term assets like cash, inventories, debtors etc., is ‘called short -term Funds’ or
‘Working Capital’.

MEANING OF WORKING CAPITAL

The ‘Working Capital’ can be categorized, as funds needed for carrying out day-to-day
operations of the business smoothly. The management of the working capital is equally
important as the management of long –term financial investment. Even a business which is
fully equipped which all types of fixed assets required is bound to collapse without

 Adequate supply of raw materials for processing

 Cash to pay for wages, power and other costs
 Creating a stock of finished goods to feed the market demand regularly
 The ability to grant credit to its customers.

All these require working capital. Working capital is thus like the lifeblood of a business. The
business will not be able to carry on day-to-day activities without the availability of adequate
working capital. Working capital cycle involves conversions and rotation of various
constituents/components of the working capital. Initially ‘cash’ is converted into raw
materials. Subsequently, with the usage of fixed assets resulting in value additions, the raw
materials get converted into work in process and then into finished goods.

When sold on credit, the finished goods assume the form of debtors who give the business
cash on due date. Thus ‘cash’ assumes its original form again at the end of one such working
capital cycle but, in the course, it passes through various other forms of current assets too.
This is how various components of current assets keep on changing their forms due to value
addition. Thus, the working capital cycle involves rotation of various constituents of the
working capital. While managing theS working capital, two characteristics of current assets
should be kept in mind such as:

 Short life span

 Swift transformation into other form of current asset.
 CLASSIFICATION OR KINDS OF WORKING CAPITAL

KINDS OF
WORKING
CAPITAL

ON THE BASIS OF ON THE BASIS OF

CONCEPT TIME

PERMANENT OR TEMPORARY OR
GROSS WORKING NET WORKING
FIXED WORKING VARIABLE
CAPITAL CAPITAL
CAPITAL WORKING CAPITAL

 ON THE BASIC OF CONCEPT

There are two interpretations under this concept:

(a) Gross working capital: In broad sense, working capital refers to the
gross working capital and represents the amount invented in current assets.

(b)Net working capital: In narrow sense, net working capital refers to the
excess of current Assets over current liabilities.

 ON THE BASIC OF TIME

(A)Performance or fixed working capital

It is the minimum amount which is required to ensure effective utilization of fixed facilities
and for maintaining the circulation of current assets. There is always a minimum level of
current assets which is required by the enterprises to carry out its normal business operations.
It is two types:

Regular working capital: It is the capital required to ensure circulation of current

assets.
(B)Temporary or variable capital

It is the amount of working capital which is required to meet the seasonal and
some special exigencies. It can further be classified as:

 Seasonal working capital: It is capital required to meet the seasonal needs

of the organization.

 Special working capital: It is the capital required to meet special exigencies

such as launching of extensive marketing campaigns for conducting research.

Net working capital Permanent / fixed Temporary / variable

working capital working capital
requirement

3000 2500 500

2500 2500 0

2800 2500 300

3200 2500 700

 MANAGEMENT OF WORKING CAPITAL
For the purposes of optimizing working capital, the most important factors are:

 Liquidity and cash management

 Inventory management
 Accounts receivable management

CASH MANAGEMENT
Cash management is the process of collecting and managing cash flows. Cash management
can be important for both individuals and companies. In business, it is a key component of
a company's financial stability. For individuals, cash is also essential for financial stability
while also usually considered as part of a total wealth portfolio.

Individuals and businesses have a wide range of offerings available across the financial
marketplace to help with all types of cash management needs. Banks are typically a primary
financial service provider for the custody of cash assets. There are also many different cash
management solutions for individuals and businesses seeking to obtain the best return on cash
assets or the most efficient use of cash comprehensively.

INVENTORY MANAGEMENT

Inventory management and control module is utilized by companies to avoid product

overstock and outages. There are several components of an inventory management tool such
as order management, asset tracking, product identification, etc. The main purpose within the
inventory management system is to reduce the overall costs of carrying. An inventory
management tool helps in:

 Sustain a balance between too less and too much inventory.

 Track inventory between locations.
 Track inventory been received at warehouse.
 Track product sales and finished goods inventory.

The main advantage of an inventory management tool is cost savings, increased efficiency,
warehouse management, etc.
 Account Receivable Management
An account receivable management tool helps solve critical question like when payment is
due, how much payment is due, etc. The main features of account receivable tool are as
follows:

 Permits transfer of account receivable information for analysis, forecasting,

presentation, reports, etc.
 Maintain complete customer information, including sales history, current balance,
open deposit, last payment, etc.
 Minimize data entry errors and permit print invoice, credit memos, debit memos, etc.

Appropriate credit policy is essential to maintain the cash flow cycle and return on capital.

Average collection period = Trade debtors* Number of working days

NET SALES
 Working capital cycle
Definition

Working capital also known as net working capital.

Working capital is computed as the sum of: Inventories (+) Trade receivables
(+) Cash (-) Trade payables. The working capital cycle (WCC), also known as the
cash conversion cycle, is the amount of time it takes to turn the net current
assets and current liabilities into cash. The longer this cycle, the longer a
business is tying up capital in its working capital without earning a return on it.
Companies strive to reduce their working capital cycle by collecting receivables
quicker or sometimes stretching accounts payable. Under certain conditions,
minimizing working capital might adversely affect the company's ability to
realize profitability, e.g. when unforeseen hikes in demand exceed inventories,
or when a shortfall in cash restricts the company's ability to acquire trade or
production inputs.
 Meaning of Working Capital Cycle

A positive working capital cycle balances incoming and outgoing payments to

minimize net working capital and maximize free cash flow. For example, a
company

that pays its suppliers in 30 days but takes 60 days to collect its receivables has
a working capital cycle of 30 days. This 30-day cycle usually needs to be funded
through a bank operating line, and the interest on this financing is a carrying
cost that reduces the company's profitability. Growing businesses require cash,
and being able to free up cash by shortening the working capital cycle is the
most inexpensive way to grow. Sophisticated buyers review closely a target's
working capital cycle because it provides them with an idea of the
management's effectiveness at managing their balance sheet and generating
free cash flows.

As an absolute rule of funders, each of them wants to see a positive working

capital because positive working capital implies there are sufficient current
assets to meet current obligations. In contrast, companies risk being unable to
meet current obligations with current assets when working capital is
negative.While it's theoretically possible for a company to indefinitely show
negative working capital on regularly reported balance sheets (since working
capital may actually be positive between reporting periods), working capital
will generally need to be non-negative for the business to be sustainable

Reasons why a business may show negative or low working capital over the
long term while not indicating financial distress include:

● Assets above or liabilities below their true economic value

● Accrual basis accounting creating deferred revenue while the cost of
goods sold is lower than the revenue to be generated

E.g. a software as a service business or newspaper receives cash from

customers early on, but has to include the cash as a deferred revenue liability
until the service is delivered. The cost of delivering the service or newspaper is
usually lower than revenue thus, when the revenue is recognized, the business
will generate gross income.
Importance of Working Capital Management
Working capital is part of the total assets of the company. Generally, it is the
difference between current assets and current liabilities. Practically speaking, it
is the daily, weekly and monthly cash requirement for the operations of a
business. Therefore, working capital management is a process of managing
short-term assets and liabilities. It makes sure that a firm has sufficient liquidity
to run its operations smoothly.

Working capital is a vital part of a business and can provide the following
advantages to a business:

1. Higher Return on Capital

2. Improved Credit Profile and Solvency
3. Higher Profitability
4. Higher Liquidity
5. Increased Business Value
6. Favorable Financing Conditions
7. Uninterrupted Production
8. Ability to Face Shocks and Peak Demand
9. Competitive Advantage

● Higher Return on Capital

Firms with lower working capital will post a higher return on capital.
Therefore, shareholders will benefit from a higher return for every dollar
invested in the business.

● Improved Credit Profile and Solvency

The ability to meet short-term obligations is a pre-requisite to long-term
solvency. And it is often a good indication of counterparty’s credit risk.
Adequate working capital management will allow a business to pay on
time its short-term obligations. This could include payment for a
purchase of raw materials, payment of salaries, and other operating
expenses.

● Higher Profitability
 According to research conducted by Tauringana and Adjapong Afrifa, the
management of account payables and receivables is an important driver
of small businesses’ profitability.

● Higher Liquidity
A large amount of cash can be tied up in working capital, so a company
managing it efficiently could benefit from additional liquidity and be less
dependent on external financing. This is especially important for smaller
businesses as they typically have limited access to external funding
sources. Also, small businesses often pay their bills in cash from earnings
so efficient working capital management will allow a business to better
allocate its resources and improve their cash management.

● Increased Business Value

Firms with more efficient working capital management will generate
more free cash flows which will result in higher business valuation and
enterprise value.

● Favorable Financing Conditions

A firm with a good relationship with its trade partners and paying its
suppliers on time will benefit from favorable financing terms such as
discount payments from its suppliers and banking partners.

● Uninterrupted Production
A firm paying its suppliers on time will also benefit from a regular flow of
raw materials, ensuring that the production remains uninterrupted and
clients receive their goods on time.

● Ability to Face Shocks and Peak Demand

Efficient working capital management will help a firm to survive through
a crisis or ramp up production in case of an unexpectedly large order.
● Competitive Advantage
Firms with an efficient supply chain will often be able to sell their
products at a discount versus similar firms with inefficient sourcing.
M.P. Poorv Kshetra Vidyut Vitran Company
Limited

Corporate Office: Block No. 7, Shakti Bhawan, Rampur

Jabalpur (M.P.) 482008
 Madhya Pradesh State Electricity Board

Madhya Pradesh State Electricity Board is further divided and distributed in 6

companies

1. MP POWER GENERATING CO LTD JABALPUR

2. MP POWER TRANSMISSION CO LTD JABALPUR

3. MP POWER MANAGEMENT CO LTD JABALPUR

4. MP POORV KSHERTA VIDYUT VITRAN COMPANY LTD JABALPUR

5. MP PASHCHIM KSHERTA VIDYUT VITRAN COMPANY LTD INDORE

6. MP MADHYA KSHERTA VIDYUT VITRAN COMPANY LTD BHOPAL

MP POWER DISTRIBUTION COMPANIES

 Introduction

Company started working since 16.07. 2002.The Government

of Madhya Pradesh vide order dated 1st July, 02 has
incorporated Madhya Pradesh Poorv Kshetra Vidyut Vitran
Company Limited as a wholly owned Government of Madhya
Pradesh Corporations under the Companies Act, 1956 to
undertake activities of distribution and retail supply for and
on behalf of Madhya Pradesh State Electricity Board in the
areas covered by the Commissionaires of Jabalpur, Sagar,
Rewa and Shahdol.
Registration no. of company 015120 dated 31.05.2002

MP East Zone Distribution

SLOOGAN OF MPPKKVVCL
 (The Brihadaranyaka Upanishad Chapter V. vii.1)

Vidyud brahmeti: 

'Where electricity is Brahman or God.'

Vidyud brahma ity ahuḥ; vidanad vidyut, vidyaty enam papmanaḥ: 

'This electricity of consciousness breaks through not only the darkness of ignorance, but also
breaks through the fortress of sins.'

OBJECTIVES OF MPPKVVCL
The main objectives are to achieving efficiency gains and making necessary changes to make
the Company commercially viable, progressively self-sustainable and less government
dependent and at the same time, balancing the interest of the consumers in regard to
quality of service and economical tariff. The plan would include among other things,
metering, billing, collection, identifying the present deficiencies and the improvements to be
made, mapping supply feeders, measurement of energy supplied to feeders and energy
audit, study of losses and scheme for progressive reduction, reduction in input costs,
consumer affairs handling, investments required for improvements in the distribution
system etc.

MISSION OF MPPKVVCL
Our Mission is to provide quality electricity supply services to each customer satisfying his /
her needs in most efficient and effective manner at reasonable prices through continuous
innovations and by maintaining commercial & financial viability of the company along with
employee’s satisfaction.

VISION
MPPKVVCL aspires to be the best electricity supply company in India by continuously
enhancing its technological leadership and commercial acumen to satisfy its customers

CORE VALUES
To achieve its mission, the Company and its employees commit themselves to honesty and
integrity, result oriented work, transparency in work, dedication to duty, Cost
consciousness, openness to suggestions and feedback from all stake holder.
 ADMINISTRATIVE UNITS

Poorv Kshetra encompasses an area 135162 SQ KM served by 111273 ckt kms of HT and
110614 ckt km of LT distribution network. Number of consumers are 60 lakhs. The size of
the administrative set-up is as below:

TITLE NUMBERS

Number of Regions 4

Number of Circles 21

Number of Divisions 54

Number of Sub-divisions 189

Number of Distribution
Centres 381

Number of Fuse Call Centres 1,888

Number of Districts 21

Number of Tehsils 95

Number of blocks 121

Number of Villages 24094

 M.P. Power Management Company Limited

In accordance with Government of MP decision the name of MP Power Trading Company

Ltd has been changed to MP Power Management Company Ltd. The MP Power
Management Company has been made holding company for all the DISCOMS of MP. The
Registrar of Companies MP has issued the Certificate of Incorporation Consequent upon
Change of Name on 10.04.2012
ORGANISATIONAL HIREARCHY
CORPORATE ORGANISATIONAL STRUCTURE
 AWARDS AND RECOGNITION

• Business Leader Summit & Awards (2017)

Awarded by World Wide Achiever.
• National Education Excellence Achievers Award
(2022)
Awarded for excellence in educational field as selected by NAVBHARAT RASHTRIYA
GYANPEETH, Pune, Maharashtra.
 Leadership Icon Awards
Awarded for BEST CORPORATE TRAINING at MPPLVVCL
CENTRAL TRAINING INSTITUTE (M.P. POORV KSHETRA V.V
CO. LT)
 INTRODUCTION
M.P. POORV KSHETRA VIDHYUT VITRAN CO. LTD. has established one
CENTRAL TRAINING INSTITUTE. The main objective behind the establishment of the
institute is to prevent accidents and bring safety measures for the employees who are engaged
in making. conducting and maintaining the electric lines.

QUALITY POLICY OF INSTIUTE

CENTRAL TRAINING INSTITUTE will focus its efforts on advanced level knowledge,
development of creative productivity, communication skills, critical thinking, and problem-
solving skills and appropriate accomplishment in the engineering and management with
teaching faculties having rich experience.

CERTIFICATE OF REGISTRATION

CENTRAL TRAINING INSTITUTE has been awarded NS-EN ISO 9001:2008 /ISO
9001:2008(Quality Management Systems).

TOTAL STAFF MEMBERS-18:

 4 TRAINING OFFICERS
 16 GUEST FACULTY
 2 CLERKS
 2 POENS –REGULAR
 2 POENS –CONTRACT BASIS
 2 COMPUTER OPERATOR

INSIDE THE INSTITUTE

 THERE ARE 4 CLASS ROOMS-All class rooms are well furnished with white
boards & computer systems.
 4 toilets-With hygienic conditions
  Passages and corridors –all were clean with motivational and inspiring thoughts on
walls.

OBJECTIVES OF STUDY

The study of working capital management is an important-aspects in any firm to measure its
structure and operational liquidity and profitability. It is the management of composition and
level of current assets and current liabilities in an organization. It is important for an
organization to maintain adequate amount of working capital to carry on with its daily
activities without any hindrance.

 To analyze the effective utilization of working capital.

  To evaluate the performance of receivables and cash.
 To study the sources of working capital finance.
 To suggest for better proposals.
 To study the various components of working capital.
 To analyze the liquidity trend of MPLVVCL.
 To appraise the utilization of current asset and current liabilities and find out short-
coming if any.
 To suggest measure for effective management of working capital.

MEANING OF RESEARCH METHODOLOGY

Research is a logical and systematic search for new and useful information on a particular
topic. It is an investigation of finding solutions to scientific and social problems through
objective and systematic analysis. It is a search for knowledge that is, discovery of hidden
truths. Research is indeed civilization and determines the determines the economic, social
and political development of a nation.
OBJECTIVES OF RESEARCH METHODOLOGY

The purpose of research is to discover answers to questions through the application of

scientific procedures. The main aim of research is to find out the truth which is hidden and
which has not been discovered as yet. The objectives of a research can be stated as follows: -

 To gain familiarity with a phenomenon or to achieve new insights into it.

 To portray accurately the characteristics of a particular individual, situation or a
group.
 To determine the frequency with which something occurs or with which it is
associated with something else.

 To test a hypothesis of a causal relationship between variables.

 To develop new scientific tools, concepts and theories to solve and understand
scientific problems.

Research methods are various procedures, schemes and algorithms used it research. They are
essentially planned, scientific and value-neutral. Research methods help collect samples, data
and find a solution to a problem. Research methodology Is a systematic way to solve a
problem.

TYPES OF RESEARCH METHODOLOGY

 TYPES
OF
RESEARCH

Descriptive vs Applied vs Quantitative vs Conceptiual vs

Analytical Fundamental Qualitative Empirical

For the purpose of studying this project the research is based on analytical research where the
data is available and the researcher makes his observations on the basis of data by analysing
it. Here the balance sheet and profit and loss account of the company have been analysed to
figure out the working capital position in the company. Thus, secondary data has been
utilized for the purpose of this project.

Sample Area: Madhya Pradesh Poorv Khestra Vidyut Vitran Company Limited

Sampling Design: I have been used judgement method in simple random

sampling. Because all will not be good respondents to answer my questions.
I have selected those who know about working capital, debtors, creditors,
stock etc

Time Frame: I have done this research activity in 45 Days

RESEARCH DESIGN
MPKVVCL, for 3 years there is negative ,relationship between current assets and current
liabilities. Collection period is more than payment period so cash conversion cycle is more
which should be less or negative. This is main pressure on working capital.

The main objective of research is to appraise the utilization of current asset and current
liabilities and find out short-comings if any and to suggest measure for effective management
of working capital.

Data Collection:

I have been collected data through Secondary data from annual reports and company
websites.

Time Frame:

I have done this research activity in 45 Days.

DATA ANALYSIS AND INTERPRTATION

 Relationship between Long term borrowings and Long-term loans &advances
(Rs. In crore)

Year Long term borrowings Long term loans & advances

2021-22 9,103.48 26-

2020-21 8,924.98 0.13

2019-20 9,565.14 0.02

2018-19 14,445.55 0.09

Total 42,039.225250 0.24

Relationship between Long term borrowings and Long-term loans

&advances
45,000.00

40,000.00

35,000.00

30,000.00

25,000.00

20,000.00

15,000.00

10,000.00

5,000.00

0.00
2021-22 2020-21 2019-20 2018-19 Total

Long term borrowings Long term loans & advances

INTERPRETAION:

The relationship between Long term borrowings and loans & advances is not good. For
positive working capital, company should decrease borrowings and increase loans. Company
should take care of borrowings; if they are borrowing, they should clear supplier’s payment.
 Relationship between Receivables and Payables. (Rs. in crore)

years Receivables Payables

2021-22 3,156.48 1,752.41

2020-21 3,064.54 1,701.37

2019-20 2,027.38 1,254.64

2018-19 2,505.57 2,398.38

2017-18 2,443.21 2,324.74

2016-17 2,715.05 2,688.59

Total 15,912.23 12,120.13

Relationship between Receivables and Payables

Receivables Payables
30,000.00

25,000.00

20,000.00

15,000.00

10,000.00

5,000.00

0.00
2021-22 2020-21 2019-20 2018-19 2017-18 2016-17 Total

INTERPRETATION:

There is not better relationship between receivables and payables.

Always receivables should be much more than payables. For effective working capital
company should always count back debtor days and count forward creditor days. Therefore,
company can maintain liquidity position. Here receivables are more so company should
convert it into cash as soon as possible.
Relationship between Current Assets and Current Liabilities.
(Rs. in Crore)

Years Current Assets Current

Liabilities

2021-22 1222312,223.22 79387,938.48

2020-21 1186711,867.33 77077,707.26

2019-20 1023710,237.35 61556,155.02

2018-19 913,734.56 965,213.55

2017-18 1043,928.18 646,590.92

2016-17 161 123

Total 53241,9909.64 52033,605.23

Relationship between Current Assets and Current Liabilities.

100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
2021-22 2020-21 2019-20 2018-19 2017-18 Total

current assests current liabilities

INTERPRETATION:

On an average company’s working capital ratio is good. The relationship between current
assets and current liabilities is good. An average current asset is 532cr and current liabilities
is 520cr so current assets is more than current liabilities. Average current ratio is 1.023 which
should not be less than 1. This much ratio is enough to release fund from bank to meet day to
day operations.
 RATIO’S RELATED TO WORKING CAPITAL

 INVENTORY TURNOVER RATIO

YEAR Sales AVERAGE INVENTORY TURNOVER

INVENTORY RATIO

2,218,490,920 371,098,120 5.97

2015-16

2016-17 2,228,549,828 374,102,223 5.96

3,499,805,230 506,460,567 6.91

2017-18

5,324,665,192 746,837,818 7.13

2018-19

9,782,463,974 1,432,524,559 6.83

2019-20

I.T.R. = Cost of Goods Sold OR Sales

Average stock Closing Stock

 Inventory Turnover Ratio
7.5

6.5
Inventory Turnover Ratio

5.5

5
2015-16 2016-17 2017-18 2018-19 2019-20

INTERPRETATION- Inventory turnover ratio is 5.97 times in the year 2015-

16. But it is decreased to 5.96 in the year 2016-17. Then, it is increased to 6.91
in the year 2017-18 and again increased to 7.13 in the year 2018-19 . But it is
decreased to 6.83 in the year 2019-20. Inventory turnover ratio increased for
year that is company production is also increased. Subsequently sales are also
increased.
  WORKING CAPITAL TURNOVER RATIO

YEARS SALES WORKING WORKING CAPITAL TURNOVER

CAPITAL RATIO

2,751,456,125 96,58,52,720
2015-16
2.84

2 ,685,436,096
2016-17 97,36,84,291
2.76

4 ,458,295,779
2017-18 109,97,00,330
4.05

2018-19 7 ,451,032,998
218,79,20,684 3.41

2019-20 13,499,867,4 99
3,95,52,16,073 3.41

WORKING CAPITAL TURNOVER RATIO- Sale

Working capital
 Working Capital Turnover Ratio
4.5

3.5

2.5 Working Capital Turnover Ratio

1.5

0.5

0
2015-16 2016-17 2017-18 2018-19 2019-20

INTERPRETATION-From the above data in the year 2015-16 the

working capital turnover ratio is 2.84 after that it decreased in the year 2016-17
is 2.76 after that it is increased to 4.05 in the year 2017-18. It decreased to 3.41
in the year 2018-19 and it is constant in 2019-20.
 FINDINGS AND SUGGESTIONS

FINDINGS:

 company facing many problems from suppliers because of low capital they are
unable to make payment on time so more than 50% of suppliers are not
supplying on credit basis. So that company has to make payment in advance and
on delivery.

 Customers delaying invoice payment was deemed by survey respondents to

have had a high or very high impact on working capital over the past 12 months.
Similarly, customers exerting pressure on businesses to extend their credit and
payment terms were also placing high or very high pressure on working capital.

 The main problem from suppliers i.e., 80% suppliers are from India from that
70% suppliers allowing 30 - 45 days credit and for rest of them company has to
make payment in advance. 20% suppliers from rest of the country from that
40% of suppliers allowing 60 - 90 days credit and for rest of them company has
to make payment in advance.

 Stretching credit period of suppliers is the main source to improve working

capital but here it is not there. So, this is one of the causes for working capital.
Company spending a lot for unnecessary things therefore Company’s
expenditure is also more than income since 3 years.

 Since three years Receivables is more than Payables and borrowings is also
more than advances & loans.
SUGGESTION:
Debtors & Receivables:

 Company should keep reminding customers about outstanding amount on a

weekly basis.
 Company should call and inform customers about cash discount offered
for early payment.
 Company should try to convince customer for acceptance of bill so you
can release cash from bank with discount.
 Company should count back debtor days as far as possible.

Creditors and Payables:

 Because of long outstanding amount suppliers are not ready to supply on

credit so company should try to clear outstanding amount of suppliers so
that they can ask more credit days as far as possible.
 Company should maintain good relationship with suppliers, for that they
have to make payment on due date.
 Company should make payment on due date so they can escape from interest.

Inventory:

 Company should try to reduce inventory cycle.

 Company should ensure that on time delivery.

Liquidity:

 Company should maintain liquidity in bank so they can meet urgent needs.

Cash Conversion Cycle:

 Since 3 years inventory days and receivables days are more than payables
days which should be less. So they should work on it.
 LIMITATIONS OF THE STUDY

 The data used in the project mostly is by nature secondary as it is based on the
financial accounts provided by the company.
 The analysis is based on monetary factors only and non-monetary factors are not
taken into consideration.
 The interpretations of the data provided may be different for different persons.
 The analysis can be a means to take decisions but cannot be the only basis on which
decisions need to be based.

Some data could not be provided by the company due to confidentiality.

 CONCLUSION

1) Liquidity is an attribute that signifies the capacity to meet financial obligations of

the company when required. The importance of liquidity to meet the day to day
operations and urgent payment to suppliers.

2) A firm should maintain adequate level of working capital to meet the day to day
operations and maintain business operations. The effective management of
working capital requires both medium-term planning and immediate reactions to
the fast changes taking in the present business environment. The effectiveness of
working capital depends on all current assets and current liabilities.

3) They are spending more for unnecessary things even though they are in loss. For
effective working capital company needs to be taken care of current assets and
current liabilities i.e. Receivables, Payables, Inventory, liquidity etc.

4) MPKVVCL should count back credit days of customers and they should keep
reminding them about outstanding amount and they should give discount offers
for early payment. Company should settle outstanding amount of suppliers and
maintain good relationship then they should pull suppliers credit days as far as
possible.

5) Raw materials used to be in factory for high period to convert into finished
goods. Receivables days also more so more days tied up with inventory and
receivables. Therefore MPKVVCL should be taken care of operating cycle and
cash conversion cycle.
 BIBLIOGRAPHY/WEBLIOGRAPHY

 MANAGEMENT ACCOUNTING ( Principle and practice ),

Shashi.K.Gupta R.K. Sharma, Kalyani Publishers, 11th revised edition

 RESEARCH METHODOLOGY, C.R.Kothari, New Age International Pvt Limited,

Second revised edition
 FINANCIAL MANAGEMENT, I.M. Pandey, Vikas Publishing House Pvt Limited,
Ninth Edition
 FINANCIAL ACCOUNTS OF MADHYA PRADESH POWER GENERATING
COMPANY LIMITED
 www.mpez.co.in

 http://mperc.in/250118-Annex-FY18-19_EZ.pdf