A Study On Working Capital

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CHAPTER-I
INTRODUCTION
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INTRODUCTION
The relationship between a company's short-term assets and short-term liabilities
is part of working capital management. Working capital management seeks to
make sure a company can carry on with its operations and has the resources to
pay off both maturing short-term debt and impending operating bills. Managing
cash, accounts receivable and payable, and inventories are all parts of managing
working capital.
Working capital, also known as current assets or short-term assets, refers to the
company's holdings of short-term assets like cash, receivables, inventory, and
marketable securities. These things are cyclical, which is why they are referred to
be circulating assets. In a retail setting, inventory is originally purchased with
cash and then sold on credit, creating accounts receivables.
When the accounts receivable are gathered, They generate cash, some of which
is used to buy more goods and some of which is lost as profit. It is impossible to
overstate the importance of working capital for keeping day-to-day operations
running smoothly. There aren't many businesses that don't need some sort of
operating capital. In fact, the amount of working capital required by different
businesses varies. Working capital is divided into two categories: gross and net.
Gross working capital is the amount invested by the company in short-term
assets. The assets that can be converted into cash within a fiscal year are known
as current assets, and they include cash, short-term securities, debtors, bills
receivable, and shares.
The difference between current assets and current liabilities is referred to as net
working capital. Current liabilities are those external claims that are anticipated to
become due for payment during an accounting year, such as unpaid bills to
creditors and unpaid expenses.
Working capital is the money needed for day-to-day operations in enterprises.

Depending on the type and duration of the working capital held by the business,
It can be classified as:
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KINDS OF WORKING CAPITAL :
KINDS OF WORKING CAPITAL
BASIS OFCONCEPT BASIS OF TIME
GROSS NET WORKING PERMINANT TEMPORARY

WORKING CAPITAL WORKING WORKING
CAPITAL CAPITAL CAPITAL
PERMANENT (OR) FIXED WORKING CAPITAL:
The amount of permanent working capital necessary to sustain the circulation of

current assets and to ensure the efficient capitalization of fixed facilities is the
absolute minimum that the company must always maintain in order to conduct its
regular business activities. For instance, each business must maintain a
minimum amount of raw materials, finished goods, work-in-progress, and cash
balance. This portion of capital is permanently blocked in current assets, which is
why the required level of current assets is known as permanent or fixed working
capital.
TEMPORARY (OR) VARIABLE WORKING CAPITAL:
The quantity of working capital needed to handle seasonal demand and certain
unique emergencies is referred to as temporary working capital. Variable Most
businesses must supply additional working capital to cover seasonal working
capital. Working capital can also be categorized as reasonable working capital
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and special working capital. To address unique requirements, such as those
related to marketing research, special working capital is needed.
GROSS WORKING CAPITAL:
The concept's benefits depend on how much money is put into the different current
asset components.
• Current assets are of utmost importance to financial managers.
• This will deliver the necessary working capital at the appropriate moment.
• It allows a business to get the best possible return on its investment.
• It aids in focusing on various financial responsibility issues.
• It gives affirms the ability to budget, manage funds, and maximise return on
investment.
NET WORKING CAPITAL:
It can be positive or negative when referring to the gap between current liabilities
and net working capital. When current assets are more than current obligations, a
positive networking result. When current obligations exceed current assets,
negative working capital results.
Definition: A company's investment in short-term assets, cash, short-term

securities, accounts receivables, and inventories is referred to as working capital.
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
Weston and Brisk
STRUCTURE:
Accounts Sales
Receivabl
Cash Finished Stock
Purchase of Work-in-
Raw material Progress
As a crucial component of general management, financial management is not a

field unto itself. It makes extensive use of allied fields of study and disciplines, such
accounting and economics, where there are important references. Financial
management describes its role, range, and goals in relation to other fields that are
closely related to it. The field of finance as an academic discipline has seen
significant modifications in its coverage. In the early stages of its development, it
was equated with the growth of funds. A broadly acknowledged principle in the
contemporary literature on financial management is efficient resource usage in
addition to the acquisition of funds.
Definition of Financial management:
"The Financial Function is the study of the challenges involved in the use
and acquisition of finances by a Business," according to Ezra Solomon.
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Scope of financial management:
For the sake of expositions, the approach to the scope and functions of
financial management is split into two major areas.
a) The conventional method.
b) The current strategy.
Traditional approach:
The traditional definition of financial management as a field of study refers

to its subject matter in academic literature at the time of its development as a
distinct field of study. What is known as financial management in the academic
community is referred to as "Corporation Finance" in this context.
Modern approach:
A conceptual and analytical framework for making financial decisions is

provided by the modern method, which interprets the word "financial management"
broadly.
Financial management's goals are:
The goals of financial management include
1) Profit maximization approach.
2) Wealth maximization approach.
1. Profit maximization approach:
This method states that acts that boost profits should be adopted, while
those that lower profits should be avoided. The profit maximization criterion means
that a firm's investment, financing, and dividend policy decisions should be focused
on maximizing profits in precise operational terms as they apply to financial
management.
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2. Wealth maximization:
Value maximization or net present worth maximization are other terms for
this. Since it does away with the technical restriction that characterized the prior
profit maximization criterion, value maximization is nearly widely regarded in
academic literature as a valid operational criterion for financial management
decisions. All three criteria for an appropriate operational objective of financial
courses of action—exactness, benefit quality, and time value of money—are
satisfied by its operational qualities. The financial components of a company are
only provided via the financial statements. To find the company's hidden strengths
and weaknesses, analysis is necessary. I decided to study ratio analysis in order
to understand a firm's efficiency and liquidity.
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NEED OF THE STUDY:
The primary objective of the study is to analyze the financial data of the company
in order to determine its short-term solvency or liquidity.
• To understand the company's capacity for quick surveys.
• To understand the impact working capital management has on a company.
• Understanding how finance functions within a typical organizational structure.
• To understand how working capital completely covers a company's existing
liabilities.
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SIGNIFICANCE OF THE STUDY:
The following Groups are significantly helped by the study:
An understanding of the various facets of working capital management is provided by the

study. Therefore, the business can adjust the Policy pertaining to it as needed. Studies of
this kind are more beneficial to academics and scholars in helping them gain additional
insights into the various facets of working capital management in other firms that are
similar to their own. Competitors can use studies of this kind to help them take the
necessary actions to enhance working capital management. Studies of this kind can help
policy makers make the required adjustments to the procedures for managing the working
capital at VISWATEJA SPINNING MILLS LTD.
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LIMITATIONS OF THE STUDY:
 Due to confidentiality, several components of financial data were not

disclosed.
 The majority of the information provided is secondary, which limits the
study's ability to be accurate.
 There is a strict eight-week time constraint on the study term
 The report's data and analysis can be used for studies with a similar goal.
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OBJECTIVES OF THE STUDY:
 To understand the expansion and development of Viswateja Spinning Mills

Ltd.
 To research the working capital management elements, including inventory
management, accounts receivable management, and cash management.
 To examine and assess Viswateja Spinning Mills Ltd.'s working capital

structure to research the company's cash status, cash inflows, and cash
outflows
 To examine the trends in how working capital requirements are financed.
 To make appropriate recommendations to enhance working capital
management.
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RESEARCH AND METHODOLOGY
The technique is a methodical process for gathering data so that you can examine
and confirm a phenomenon. Data and information are only gathered from primary
sources.
Primary data:
Information that is acquired directly without using a reference is known as primary
data. It was gathered with the aid of widely used methods that are acknowledged
as appropriate for this kind of research.
Structured questionnaires and in-person interviews were utilised to gather the
necessary primary data; questionnaires were chosen because of their adaptability,
speed, affordability, and dependability as well as their suitability for gathering all
relevant study-related information.
Secondary data:
This data was gathered from journals, manuals, departmental instructions,
periodicals, annual reports, statistical statements, and other sources.
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SCOPE OF STUDY:
The following topics are the only ones covered by the study:
The focus is only on VISWATEJA SPINNING MILLS LTD business. .'s
The information was only available to VISWATEJA SPINNING MILLS LTD. from
primary and secondary sources. The important performance metrics were
collected between 2016 and 2021. The balance sheet and operating results
covered the previous five years.
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CHAPTER-II
COMPANY AND
INDUSTRY PROFILE
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Profile of Cotton & Textile Industry:
The textile sector holds a special place in our nation. One of the earliest
industries in India, it contributes to over 30% of all exports, amounts for 14% of
total industrial production, and is the second largest employer after agriculture.
In the global commerce of cotton yarn, India makes up roughly 25% of the total.
As a result of domestic and multilateral policy reform, India, the second-largest
producer of cotton yarns and textiles in the world, is positioned to play an
increasingly significant role in the global cotton and textile markets.
About 22% of the world's spindle age and 6% of the world's installed rotor capacity
come from the textile sector in India. India, which has an installed capacity of 38.60
million spindles, has the second-highest spindle age in the world, behind China.
The Indian textile sector provides roughly 61% of the global loom age and has the
highest loom age (including handlooms). About 12% of the world's textile fibre and
yarn production comes from it. India, which ranks second to China in the
production of cotton yarn and fabrics and first in terms of installed spinning and
weaving capacity, is one of the world's top consumers of cotton.
One of the most fundamental human requirements is met by the textile
sector, which is crucial for maintaining steady growth and raising living standards.
It is a significant contributor to the economy of the nation since it occupies a special
position as an industry that is entirely self-sufficient, adding significant value at
every level of processing from the creation of raw materials to the delivery of
completed goods.
Its enormous potential to generate employment possibilities, particularly for

women and the underprivileged, in the agricultural, industrial, organised and
decentralised sectors, as well as rural and urban areas, is noteworthy.
Although the growth of the textile industry had previously been governed by
general policies, a distinct policy statement regarding the development of the
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textile sector was first released in 1985 in acknowledgment of the sector's
significance. By 2010, the textile and apparel sector is expected to export $50
billion worth of goods, of which $25 billion would be made up of clothing, according
to the textile policy of 2000. India's top export destinations for textiles and clothing
include the USA, United Arab Emirates, UK, Germany, France, Italy, Russia,
Canada, Bangladesh, and Japan.
The primary goal of the textile policy of 2000 is to provide clothing of acceptable
quality at affordable prices for the vast majority of the country's population, to
increasingly contribute to the creation of sustainable employment and the nation's
economic growth, and to compete with confidence for an increasing share of the
global market thanks to a large pool of skilled labor, entrepreneurship, flexibility in
the production process, and extensive experience with the US and EU.
In addition, there are bottlenecks and constraints related to the industry's
fragmentation, processing limitations, cotton quality, concerns about electricity
costs, labour reforms, and other infrastructure issues. For instance, in China, the
cost of electricity was only Rs. 2, compared to Rs. 8 per garment in India.
Furthermore, a state-owned cargo shipping system should exist for the advantage
of exporters. The government has already taken a number of actions to address
some of these issues, including the rationalisation of fiscal obligations, the
advancement of technology through the Technology Upgradation Fund Scheme
(TUFS), the establishment of Apparel Parks, and the easing of restrictive
regulatory practices.
Current scenario:
Following the end of the textile quota regime of quantitative import restrictions
under the multi-fiber arrangement (MFA) under the World Trade Organization
(WTO) Agreement on Textiles on January 1, 2005, developing countries with
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capacity for both textile and apparel production may be able to thrive in the new
competitive environment.
Given the phase-out of the multi-fiber arrangement (MFA) quota regime and the
resulting increase in orders for the industry, the atmosphere in the Indian textile
industry is positive. As a result, capacities are fully booked through April 2005. In
the past five years, the textile industry has seen fresh investment of Rs. 50,000
crore as a result of several government programmes.
Nine big textile companies have already spent 2,600 crore rupees and expect to
another 6,400 crore. Further, 3 million extra spindles and 30,000 shuttle-free looms
were constructed, and India's cotton production surged by 57% over the previous
five years.
In the post-MFA era, the industry anticipates investments worth Rs.

1,40,000 crore in this area. To take advantage of the positive atmosphere, the
government developed a Vision 2010 for Textiles that intends to expand India's
share of global textile trade from the present 4% to 8% by 2010 and to achieve
export value of US $ 50 billion by the same year. The Indian textile industry is
expected to increase from its present US$ 37 billion to US$ 85 billion by 2010,
create 12 million new employment, and modernise and consolidate in order to
make the sector competitive on a worldwide scale.
In the post-MFA era, there will be both possibilities and problems

for the Indian textile sector. However, India has natural advantages that can be
capitalised on thanks to a strong base of raw materials, including cotton, synthetic
fibers, jute, and silk, as well as a large production capacity (spinning accounts for
21% of the world's capacity and weaving, 33%, but with low technology).;
Investment in Indian Textile Industry:

Following the introduction of the unique "Textile Package" during the 2003–
2004 budget, the outlook for investment in the Indian textile industry began to
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change. The improvements that must be made to the fiscal policy of the Indian
textile industry in order to attract investment were included in the budget's
proposals. This budget also addresses the policy issues related to debt
restructuring for the financial sustainability of this industrial sector. In compliance
with the recommendations of the aforementioned budget, a fund was established
with a $3 billion starting principle. This fund was established to help the textile
industry restructure.
Factors responsible for wooing the investors in Indian textile

industry:
In India, there is a sizable market for clothing and textiles. This industry's
performance has remained steady since the turn of the millennium.
In comparison to other countries throughout the world, skilled labour is relatively
inexpensive in India.
Comparatively tolerant and transparent in nature among all the developing nations,
India's regulations on foreign direct investment are favourable. Since there are no
restrictions on foreign direct investment in the textile sector, international investors
can invest 100% directly in the Indian textile industry.
An easy approach to invest is through automatic foreign
investments made in the Indian textile industry. The government or the RBI, India's
central bank, are not obligated to authorise these investments. After receiving the
remittance, the overseas investors are the only ones obliged to notify the regional
office of the apex bank. Within thirty days of the day the remittance was received,
this notification must be made.
A separate cell has been established by the ministry responsible for the growth of
the Indian textile industry in order to draw foreign direct investment to it.
Objectives of this special cell for wooing FDI are:
This cell assists willing foreign businesses in locating potential partners for
establishing a joint venture company to produce textiles. The foreign investor and
the many organisations involved in establishing the textile sector are intermediated
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through the FDI Special Cell. This cell offers assistance and advisory support as
part of its specialist services.
Certain issues could arise when the textile sector is operating under the foreign
investor's direction. The FDI cell handles solving these issues.
The FDI cell keeps track of and updates the data pertaining to the total production
of the textile industry. Additionally, they gather production data that has been
stratified by both native and foreign investor-created industries. It has been
determined that the textile industry contributed 1.02% of all foreign investments
made.
When Blackstone, a US investment management firm, acquired a 50.1% share in

the domestic garment manufacturer Gokaldas Exports, it was a significant step for
the textile industry. The price agreed upon for the transaction was Rs. 275 per
share. The promoters of Gokaldas Exports, the Hindujas, retained a part worth
20% when the stock transfer was complete.
The rise of the local textile industry is also attracting investments from businesses
with Indian roots. Arvind Mills Limited is building two new industrial facilities in
Bangalore and Ahmadabad to increase both output and capacity.
The purchase of two sick Madurai units by Super Spinning Mills, another Indian
textile manufacturer, will increase their ability to meet the demands of the US
market. construct a textile plant in the state of Gujarat at the original capital of US$
220 million.
Growth of Indian Textile Industry:

An industry's expansion and investment are significantly influenced by
the nation's economic situation. The Indian economy expanded quickly in the fiscal
year 2007–2008, with an annual growth rate of 9.4%. In addition, India has shown
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impressive growth over the past three years, with an estimated 8% average annual
growth rate.
The rising per capital income of India is proof that the benefits of economic
prosperity have trickled down to the state's citizens. According to statistics, India's
per capita income climbed by 62 percent between 2002 and 2008 (through March
2008) to reach Rs 25,778 (or US$ 581.37) annually.
The middle class has been one of the groups in society that has benefited the
most from this economic boom saga. It has been determined that this class has a
total strength of 216 million, which is anticipated to increase to 351 million by 2010.
A new class of people from the burgeoning IT-BPO sector who are still in their
prime and are visibly fashion-conscious are driving most of the demand. As a result
of the enormous demand for trendy outfits, numerous top-tier Indian designers
have emerged with their most recent collections of clothing.
The ordinary Indian's propensity to consume climbed at a rate of 5% to a total of

US$ 219 billion in 2005 (after eliminating all expenditure on necessities like
housing, health, education, etc.). Currently, the organised retail sector has access
to a market worth about US$ 8.2 billion, and by 2010, that market is expected to
grow to US$ 25 billion.
One of the main contributors to the overall output of the rapidly expanding
Indian industrial sector, which is now fluctuating about 4%, is the textile industry.
India's textile industry currently contributes 4% of the country's GDP, which is a
sizeable amount.
It is abundantly evident to us from the discussion above that India's market is

expanding at a rapid rate. In order to get a piece of this growing market, foreign
investors are swarming to India for investment objectives. pie. With increasing
demand for the products of Indian Textile Industry, new players are jumping in the
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Trying to take a piece of the lucrative pie, and the already-existing textile mills are
growing their supply by expanding their capacity. Consequently, the domestic
industry's process of expansion is also not far behind.
As a result, it can be claimed that the Indian economy as a whole is developing,

which obviously has an effect on all relevant sectors, including the Indian Industry.
Following the termination of the Multi-Fiber Agreement, the outlook for the Indian
textile industry has significantly changed.
The Multi-Fiber Agreement was established in 1974 as a short-term strategy

intended to provide wealthy nations a set amount of time to change their textile
industries to match those of developing nations. The labor-intensive nature of
commodity production is a defining characteristic of the textile industries. In
developing nations, surplus labour is widely available. These nations are able to
supply items at extremely low prices because they have a comparative advantage
in the production of goods connected to textiles. The main goal of this strategy was
to eliminate any kind of quota system from the global apparel and textile sector in
order to create a level playing field..
Experts now view the post-MFA age as a mechanism by which the Indian
textile and apparel sector will grow at a far faster rate and will, as a result, be able
to make an impact on the entire world. Integration of this Indian industry with that
of the global world commenced from the last decade of 1980s. After 1998, it
advanced to the top 10 league of nations exporting textile and clothing goods. The
United Nations Statistical Division's statistics from 2005 show that for the whole
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1990s, the average compounded growth rate of exports of apparel items was more
or less.
Let's look at a few numbers to better comprehend the absolute and relative
changes predicted for the textile sector from the financial years 2002–2003 to
2007–2008, where the last financial year reflects the expected figure.
The aforementioned graph displays the overall output of the Indian textile industry
in the fabric sector, as well as output from all of its related subsectors. This
demonstrates how the Indian textile industry's overall production of manufactured
goods expanded moderately from 41973 million square metres to 45378 million
square metres over the years 2002–2003 and 2004–2005. However, between the
years 2004–2005 and 2006–2007, the same rose from 45378 million square
metres to 54260 million square metres after the MFA era (i.e., after 01.01.2005).
Thus, it is clear that the percentage increase in the fabric textile product between
the years 2004–2005 and 2006–2007 increased by almost 16.37%, compared to
7.5% between the years 2002–2003 and 2004–2005.
National Textile Policy:

The following goals were considered when creating the national textile policy:
the expansion of India's textile industry in order to protect and uphold its status as
the world's largest exporter of garments. Elimination of import penetration to
maintain a dominant position in the domestic market. fostering a sense of
competition through the relaxation of restrictive rules. encouraging both research
and development in this area as well as foreign direct investment. putting an
emphasis on the diversity of manufacturing and upgrading it while taking
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environmental issues into account. creation of a solid base made of several fibres
and craftsmanship of the weavers and craftspeople.
Such goals are set to meet the following targets:
 ·By 2010, the value of textile and clothing exports must equal US$50 billion.
 Strict application of the Technology Upgradation Fund Scheme is required.
 The clothing sector ought to be dropped from the list of small-scale
industries.
In order for the handloom industry to compete on a global scale, it should be
supported and encouraged to join into overseas initiatives. The National Textile
Policy has also developed regulations for a few particular industries. The
availability, productivity, and quality of the raw materials are some of the most
crucial topics on the agenda. Additionally, special consideration is given to
minimising raw material price fluctuations. Additionally, measures have been
conducted to increase silk to the preamble of the international standard.
to comprehend the textile industry's aims, which include meeting one of society's
most fundamental necessities and fostering long-term expansion in order to raise
living standards. recognising the textile industry's significant economic contribution
to the nation and its self-sufficiency in generating raw materials and delivering
finished goods. should appreciate its enormous potential for generating
employment opportunities for women and the underprivileged in important
industries, organised sectors, decentralised sectors, metropolitan areas, and rural
areas. Recognize the Textile Policy of 1985, which increased per capita fabric
availability by 3.6%, textile exports by 13.32%, and yearly growth rates of cloth
output by 7.13%.
to examine the concerns and issues facing the textile sector as well as the
recommendations made by the expert group formed for this particular purpose. To
give a new specification to the objectives and thrust areas of textile business. to
provide high-quality clothing at competitive prices in order to meet public demand.
in order to keep the global market competitive.
Trust zones
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The following are some of the sectors of textile that the Indian government is
focusing on to help the industry grow:
 Creative marketing techniques

 Product diversification
 Improvement of technologies focused on textiles
 Quality Consciousness
 Increasing raw material input
 Productivity growth
 Exports have increased.
 Financial stipulations
 Providing job possibilities
 Personnel Development
Government of India has set several aims to intensify and promote textile
industry. The following efforts are being done in order to achieve these targets:
By 2010, textile and clothing exports will top $50 billion USD. The TUFS will apply
to all textile industry manufacturing sectors (Technology Up gradation Fund
Scheme) Improve cotton's productivity and quality. The goal is to enhance
production by 50% while keeping the level of quality at an international standard.
Create the Technology Mission on Jute with the goal of boosting the nation's cotton
production. Encourage private institutions to help the textile industry financially
Encourage the private sector to create a world-class textile industry. Encourage
the handloom industry to produce products with added value. Encourage the
private sector to establish a top-tier textile industry with several textile processing
facilities across India. Restore the TRA's (Textile Research Associations) functions
to emphasise research into cotton and synthetic fibres in government policy.
One of the key objectives of government policy is to improve the quality

and output of synthetic and cotton fibres. The primary parties in charge of
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achieving this goal are the cotton-growing states, the Ministry of Agriculture, and
the Ministry of Textiles.
Additional areas of trust:

computer technology:
plays a critical role in the expansion of India's textile industry. IT (Information
Technology) can assist in creating a strong business network to help the textile
industry prosper..
Human Resource Development:

Effective use of human resources can considerably boost the textile
industry. The Indian government has put in place a number of helpful programmes
to utilise the labour force of the country in support of the textile industry.
Arrangement for financing:

To entice talented designers and technologists to work in the nation's textile
industry, the Indian government is collaborating with financial institutions to
establish a venture capital fund.
The Textile Undertakings Act of 1995 The Indian government is sincerely working
to provide the textile industry with all the tools required to reach its full potential
and accomplish the aim. The average yearly growth rate for the textile sector at th
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the moment is It is expected that by 2012, its value will rise by 16%, achieving the
intended level of US $ 115 billion, at a rate of 9–10%.
COMPANY PROFILE:
A subsidiary of "SRINIVASA COTTON & OIL MILLS," a considered limited
company with a 60 crore annual revenue, is "VISWATEJA SPINNING MILLS LTD."
It's a family-run business. Cotton merchants are essentially the major promoters.
VISWATEJA SPINNING MILLS LTD began operations in 2005 with a capacity

installed of 13104 spindles. This capacity increased to 26208 spindles in 2006,
43104 spindles in 2007, and 45000 spindles in 2008.
With the assistance of highly qualified directors and a dedicated workforce, the
company has made tremendous success over the previous three years and has
elevated to the status of one of India's top enterprises in Andhra Pradesh.
Factory Location:
On the national highway (NH5) at Boyapalem, Guntur (dist), Andhra Pradesh,
India, is where you can find VISWATEJA SPINNING MILLS LTD.
Information on the creation and application
Timetable for execution Start Finish

Purchase of land - June 2004
Building of structures Aug 2004 Dec 2005
Machine requests Jun 2004 Aug 2004
Delivery of machinery Jan 2005 May 2005
Building a machine Jan 2005 July 2005
Path runs - July 2005
Operation stabilisation - Sep 2005
Production for market - Oct 2005
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Details of civil construction proposed:
Nature of work Estimated cost

(Lakhs)
Acc - Main machinery hall in the sheds – 160.00
467’.4”  90’.9”= 42410 sft ( includes trenches
beneath the ground )
Rcc – Plant for humidification – 467’.4” 20’ 36.05
= 9346 sft
Rcc – Energy room -30’.9” 40’ = 1230 sft 5.01
Acc –Generator room- 30’.9” 94’ = 2890 sft 8.77
Rcc-Rest sheds -58’.6” 40’.9” = 2383 sft 8.24
Rcc-Office structures -60’.9” 40’.9” = 2475 9.90
sft
Acc-Storage go down – 131’ 40’.9” = 5338 13.35
Workers quarters – 68’ 34’-2 floors-3 blocks- 48.55
13872 sift
Manufacturing Process:
Opened and combined cotton boras and bales are then delivered through the blow
chamber. Major contaminants and foreign particles are removed from cotton during
the blow room cleaning process, and cleaned cotton is then sent straight to the
carding through chute feeding.
Cotton fibre individualization and additional washing are done during carding. At
this point, processed material is referred to as "Card slivers." In HDPE cans, these
Card slivers are placed.
Card slivers obtained through carding are sent to the breaker draw frame, which
is comber preparatory, followed by the lap former and combers, where combed
slivers obtained from combers will be fed to the finisher drawing, where there will
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be an improvement in fibre parallelization and uniformity. At this point, the treated
material is referred to as Drawing Sliver.
Drawing Slivers from the drawing portion are sent to the simplex, where yarn is
produced into roving bobbins for easy feeding to ring frames.
In Ring Frames, where Final yarn is received in the shape of Cops, bobbins
received from Simplex will be fed.
In order to produce auto cones and coned yarn, cops acquired from ring frames
are fed into auto coner/cone winding machines.
BOARD OF DIRECTORS
Sri Dasari Sheshagiri Rao : Managing Direcotr
Sri D. Lakshmi Prasad : Executive Director

Sri Dasari Chandra Shekar : Executive Director
Sri Kakaraparthy Ramesh : Executive Director
Sri Kakaraparthy Sheshagiri Rao : Executie Director

Sri Narra Subramahaya : Director
Sri Kollipara Narashimha Rao : Director
Sri Dasari Sathyanarayana : Director
Sri Kakaraparthy Kirshna Murthy : Director
Sri G. Seethaiah : Technical Director
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Functions of Head of Departments in Viswateja Spinning Mills Ltd:
The following are the department head duties that are most important to the
project.
Functions of Finance Manager:
He oversees daily financial and accounting activities in the Accounts Departments.
He has a tight working relationship with the completion of The Company's statutory
audit under the Companies Act of 1956 as well as the yearly Tax Audit under the
Income-tax Act. In addition to providing the necessary information under the
Quarterly Information System, he is solely responsible for submitting working
capital renewal applications to banks. Additionally, he presents data to the board
meeting for each quarter's profit and loss account, balance sheet, details of the
turnover, unaudited results, etc. In addition to the aforementioned, he manages
the company's sales tax issues and appears before sales tax departments to
complete assessments.
Functions of Marketing Manager:

He works in conjunction with the production department, quality assurance, and
dispatch to plan the production and offer the proper product to the clients at the
appropriate time.
He is constantly looking for new markets or clients. The association maintains
regular client connections in order to promote its producers.
Maintaining the market scenario in order to keep the clients given the industry's
modest growth. In order to keep the clients, he monitors the plans of the
competition by assessing the state of the market. One of the responsibilities is
keeping track of the sales organization's overall performance.
Functions of Production Manager:

The Production Department is under his direction. According to the indents
provided by the marketing department, he prepares the raw material requirements.
30
From the level of processing raw materials to the stage of packing finished goods,
he assumes full accountability.
In order to increase productivity, he makes an attempt to reduce labour costs,
inventory, and waste. As part of his duties, he must advise the management on
capacity use and future needs.
Accounting Policies of Viswateja Spinning Mills Ltd:
General
to create financial statements in compliance with Indian accounting standards that
are now in effect. Additionally, the financial statements were created in conformity
with pertinent presentational guidelines established by the Companies Act of 1956.
Revenues:
The company's policy is to report turnover, which is the invoiced value of goods
sold less taxes, insurance, and shipping costs. The business uses a mercantile
accounting system, which means that revenues and expenses are recorded as
and when they are incurred.
Inventories
According to the explanations provided to us, accounts read with the significant
accounting policies, and in our judgement, to the best of our knowledge, the
inventories are valued as follows:
The cost or net realisable value, whichever is lower, has been used to value raw
materials, stores & spares, and materials in transit.
Fixed Assets
According to accounting standard 10, fixed assets are reported at cost or original
value. The cost incurred for building the new plant was capitalised. The purchase
price of fixed assets is included in the cost of the asset as well as any additional
expenses directly related to putting the asset in working order for its intended use,
31
such as site preparation costs, initial delivery and handling fees, installation costs
for special foundations, and professional fees paid to architects and engineers.
Depreciation
Depreciation on fixed assets is computed using the SLM method and is done so in
accordance with ICA I's Accounting Standard No. 6 and Schedule XVI of the
Companies Act of 1956, as modified.
Prior period items
Insurance on buildings, machinery, and equipment was capitalised and posted to
building accounting. The cost of insurance was Rs. 204421. During the financial
year 2004–2005, an expense that was incorrectly capitalised was written back and
claimed as a revenue expense.
Speculation Business
foreign business loss (Loss in euro sales) The amount claimed as revenue
expense was Rs. 5, 34,562.
Contingencies
For the purpose of purchasing equipment from Schlafhorst Pvt. Ltd., S.B.I. LC
Loan RS. 28723860/- was approved. When the machinery is obtained, the
obligations will start to exist.
Taxes on Income
In relation to taxable income for the year, current tax is calculated in accordance
with the requirements of the Income Tax Act, 1961. The recognition of deferred
tax liabilities. The distinction between taxable earnings and accounting income
that originates in one period but is capable of being reversed in one or more
subsequent periods is subject to the consideration of sensible timing
discrepancies.
According to Income Tax regulations, deferred tax assets resulting from bringing
forward losses and unabsorbed depreciation are only recognised when there is a
virtual certainty backed by compelling evidence that such assets would be
realised.According to Income Tax regulations, deferred tax assets resulting from
bringing forward losses and unabsorbed depreciation are only recognised when
there is a virtual certainty backed by compelling evidence that such assets would
32
be realised.Deferred tax assets arising on other temporary differences are
recognized only if there is a reasonable certainty of realization.
Dividends
Tax on distributable Profits is prepared for in the year to which such distributable
Profits relate. Provision is made in the accounts for the Dividends payable by the
firm as recommended by the Board of Directors, pending approval of the
Shareholders at the Annual General Meeting.
Information Related to Viswateja Spinning Mills Ltd:

The organisation has kept accurate records that include all pertinent
information, including quantitative details, and the management manages fixed
assets in line with the rotational plan that is intended. At regular periods throughout
the year, the management has performed physical inventory verification. The
management's processes for performing physical inventory verification are
reasonable and sufficient. For the acquisition of inventory & financial accounting,
as well as the sale of goods, there are sufficient internal control methods
appropriate to the size of the firm and the nature of its operation. The public has
made 64 lakhs in deposits with the company.
In line with its scale and the nature of its operations, the corporation has an internal
audit system. At the end of the fiscal year, the corporation had no accumulated
losses, and the current and previous fiscal years had also had no cash losses. The
business is not a mutual benefit fund, chit fund, or nidhi society. As a result, the
company is exempt from the terms of clause 4(xiii) of the corporations (auditor's
report) order, 2003.
There are no shares, securities, debentures, or other investments that the
corporation deals in or trades. As a result, the company is exempt from the
restrictions of clause 4(xiv) of the corporations (auditor's report) order, 2003.
The corporation is not required by the act's section 209(1)(d) to maintain cost
records, as the central government has not mandated. According to the business's
records, The business consistently deposits uncontested statutory obligations,
33
such as withheld taxes, provident fund contributions, employee state insurance
premiums, income tax, value-added tax, wealth tax, customs duties, and other
statutory obligations, with the authorised authorities.
For debts obtained by others from banks or other financial institutions, the
company has not provided any guarantees. The term loans were used for the
intended purpose for which they were received; the company did not receive any
term loans. Throughout the year, the corporation had no outstanding debentures;
this continues now.
34
CHAPTER-III
THEORETICAL
FRAMEWORK
35
SOURCES OF WORKING CAPITAL
A major manufacturing company may get finances from a variety of sources,

which can be split into two groups, to meet its working capital needs..
 Long-term or consistent funding sources for operations.

 Temporary or seasonal sources of working capital.
36
LIST OF CURRENT ASSETS AND CURRENT LIABILITIES
CURRENT ASSETS: CURRENT LIABILITIES:

Cash in hands Bills payable
Cash at banks Secondary creditor
Bills receivables Accrued expenses
Secondary Debtors Short-term loans
Stocks Dividends payable
Prepaid expenses Bank over draft
Accrued income Provison for Taxation
INADEQUATE WORKING CAPITAL:
Every business should have enough operating cash to keep running. There
shouldn't be any unnecessary excess working capital or insufficient working
capital.
KINDS OF WORKING CAPITAL:
Working Capital
Types
According to the According to

Concept Time
Gross Working Net Working Permanent Temporary

Capital capital Working Capital Working Capital
37
Importance of working capital:
Working capital's significance cannot be emphasised. Every business needs a
certain amount of working capital since there is a delay between the start of
production and the realisation of cash flow from sales. One operating cycle
includes both the sales process and the cash realisation phase
.
The working capital is needed for the following purpose:-
 To buy accessories, replacement parts, and supplies.
 To pay wages and salaries.
 To incur ongoing costs, such as fuel, electricity, and office expenses, etc.
 To cover the costs of distribution, packaging, and advertising for sales.
 To offer the company financial facilities.
There are two standard types of working capital: gross working capital and
net working capital. While "late" refers to the difference between all current
liabilities and all current assets, "farmer" refers to the amount of all current assets.
They are relevant terminology from a managerial standpoint. Gross working capital
addresses the problems related to managing specific current assets in ongoing
activities. To view working capital from a long-term perspective, we must
concentrate on the new value of current assets. Currently practised asset
management involves analysis and decision-making in the short term, but is
flexible and managed in the long run.
The Net Working Capital is a quality. It displays the company's liquidity
status and indicates the extent to which long-term funding sources may be able to
satisfy working capital needs.
However, it is said that searching for long-term funding sources is beneficial to

management as working capital under this strategy does not increase with short-
term borrowing. The management is primarily concerned with the general makeup
of the current assetsFixed and current assets can be used to compare the total
amount of cash available for operational periods to the sources from which profits
are generated using assets, which are partially fixed and partially current in order
38
to assess degree. In order to partially finance, borrow, and produce profit above
and over the cost of interest, management must pay close attention to the total
amount of current assets and the cash earned from their profitability. It therefore
costs more than borrowing money.
Factors Effecting: The Working Capital Assessment.
The amount of working capital required is influenced by a variety of factors. Each
of them is significant in their own unique ways. These elements are:
Nature and size of Business:
An asset's composition is influenced by a company's size and the sector it
serves. While trading and financial institutions need very little working capital,
manufacturing enterprises need somewhere in the middle, and public utilities
typically need considerable amounts.
The size of a corporation has an impact on how much working capital it requires.
Size can be determined by looking at the scale of processes. A larger company
will require more working capital than a smaller one because of its larger operating
scale.
Manufacturing cycle:
The period of time required to convert raw materials into finished goods is known
as the manufacturing or production cycle. Therefore, the company needs more
working capital the longer the manufacturing cycle lasts.
Business cycle fluctuations:

As a company's business changes, so does its requirement for working capital.
For the majority of organisations, seasonal and cyclical fluctuations in demand for
goods and services occur.
Sales will increase during economic upswings, which will lead to an increase in the
company's working capital investment. Conversely, when the economy is in a
39
depression, sales will decline, which will have an impact on the quantity of working
capital.
Credit policy:
The credit policy of the organisation in question affects the volume of account
receivables, which affects the demand for working capital. Due to a lengthy
collection process, money in accounts receivable will accumulate.
Growth and Expansion Activities:

Businesses need more working capital as they expand, but it can be challenging
to precisely predict how the volume of turnover and the need for working capital
relate to one another.
Availability of credit:
The terms of credit provided by a company's creditors also have an effect on the
requirement for working capital. A corporation will require less working capital if it
has access to loans with forgiving conditions. Similar to this, the availability of bank
credit affects a company's need for working capital.
Other factors:
First off, since its policies for creating and distributing commodities are not
coordinated, a corporation requires a lot of operating capital. Second, a lack of
knowledge in product distribution may result in a greater requirement for working
capital.
Thirdly, if transportation and communication infrastructure are poor, the company

might need a substantial working capital expenditure. Fourth, the requirement for
operating capital may be impacted by the government's import regulations.
Organization for working capital
40
Inventory:
In most cases, a sizable percentage of current assets is inventory. The turnover of
working capital, which in turn heavily depends upon the turnover of inventory,
determines a company's profitability.
Receivables:
Receivables are essential to the company's ability to increase turnover. Lower
collection expenses relative to cash collection, less sales volatility, and better
levels of near-term sales are a few advantages of carrying receivables.
Cash:
Since cash is a form of liquid money that can be used to purchase anything, it is
one of the most crucial resources for operating a business on a daily basis.
Marketable Securities:
They can prevent having too much spare cash by putting a portion of their income
in assets that can be swiftly transformed into cash. Known to be readily
transferable government securities, bonds, debentures, and shares that can be
These assets include those that can be instantly transformed into cash as needed.
In creating the working capital structure, current assets and liabilities, such as bank
overdrafts, creditors, taxes, and dividends, were considered.
WORKING CAPITAL POLICIES:
The working capital policy typically addresses two areas.
The Goals for each Type of Current Asset; The Financing Method for Current
Assets.
GOALS OF WORKING CAPITAL POLICIES:

Minimization of risk:
It may only cost a small amount to choose its source of financing for short-
term obligations like payables. The company needs to make sure that these short-
term liabilities don't grow too large in relation to the cash on hand to cover them.
41
The task of reducing the risk of not being able to pay bills and other commitments
involves matching assets and liabilities among current accounts.
assist in maximising Company Value Working capital is held by the company for
the same reason it holds other assets: to increase the firm's worth and the present
value of its common stock. Both idle fixed assets and idle current assets should
not be held by the entity. investing extra money, reducing inventory, and acting
quickly.
ESTIMATING WORKING CAPITAL REQUIREMENTS:

In order to assess the amount of working capital needed by a firm a number
of elements such as production policies, nature of business, duration of
manufacturing process, credit policy, speed of turnover, seasonal changes etc.,
has to be evaluated by the Finance Manager. Each of these aspects has previously
been briefly explained above. In addition, a finance manager can use any of the
methods listed below to determine a company's need for working capital. There
are primarily two approaches to assess the amount of working capital needed:
PERCENTAGE-OF-SALES METHOD:
It is a time-tested and straightforward way for figuring out the components and
quantity of working capital. This approach calculates working capital as a
percentage of anticipated sales. Based on prior knowledge, it is decided. If over
the course of the year it is discovered that the relationship between sales and
working capital is consistent, this relationship may be used as a foundation for
calculating the working capital in the future. This approach is straightforward,
basic, and helpful for working capital forecasting. The fundamental flaw in this
approach is the supposition that sales and working capital have a linear
relationship.
42
OPERATING CYCLE METHOD:
An organization's opening cycle starts with the purchase of raw materials
and ends with the collection of receivables. It might be broken down into four
phases.
Raw material and stores stage.
 Work-in-process stage.
 Finished goods inventory stage.
 Receivables collection stage
The sum of the durations of each of these stages, less the credit time permitted by
the concern's suppliers, is the operating cycle duration for the purpose of
evaluating working capital.
Symbolically the duration of the working capital cycle can be put as follows:
=R+W+F+D–C
Where:
O = Duration of operating cycle.
R = Raw materials and stores storage period.
W = Work in process period.
F = Finished stock storage.
D = Debtors collection period.
C = Creditors payment period.
43
Each of the components of the operating cycle can be calculated as follows:
Average stock of raw materials and stores

R= ------------------------------------------------------------------------
Average raw materials and stores consumption per day
Average work in process inventory

W= -----------------------------------------------------------------------
Average cost of production per day
Average finished stock inventory

F= ------------------------------------------------------------------------
Average cost of goods sold per day
Average book debts

Debtors = -----------------------------------------------------------------
Average credit sales per day
Average trade creditors

Creditors = ---------------------------------------------------------------
Average credit purchases are day
The operating cycle's duration The total number of operating cycles that can be
performed in a year can be calculated after determining the length of an operating
cycle by dividing 365 days by the number of operating days in an operating cycle.
The average amount of working capital requirements is calculated by dividing the
annual operating expenses by the number of operating cycles. The duration of
44
each of these steps added together, minus the credit time permitted by the
company's suppliers, is the le for the period of estimated working capital.
NOTE:
For the sake of simplicity, considering both the information that is easily available
in the unit and the historical data of the unit, which demonstrates a linear
relationship between sales and debtors/receivables.
CASH MANAGEMENT:
By financing a company's shortfall or investing its surplus funds, cash
management focuses on controlling (1) cash flows into and out of the company,
(2) cash flows within the company, and (3) cash balances maintained by the
45
company at any one time. A financial management cycle might serve as a
metaphor for it.
Since cash is a company's most valuable and most recently produced asset,
managing it is more crucial than managing other current assets..
Cash planning:
For each phase of the planning period, cash inflows and outflows should be
projected to determine if there will be a cash surplus or deficit. For this, a cash
budget should be created.
Managing the cash flows:

Cash flow needs to be controlled effectively. As much as feasible, the cash
withdrawals should be slowed down while the cash inflows should be expedited.
Optimum cash level:

The company should determine the ideal level of cash balances. The
optimal level of cash balances should be determined by balancing the costs of
having too much cash and the risk of having too little.
Putting extra money to use:
46
CASH PLANNING:
A approach for controlling and managing cash utilisation is called cash
planning. It is possible to arrange your finances on a daily, weekly, or monthly
basis. Cash planning involve cash forecasts and budgeting. The information
provided by the cash budget includes the estimated time, volume, and balance of
the cash reserves. The finance manager can estimate the company's future cash
requirements using this information. Forecasting for time spans of one year or less
is regarded as short-term, whereas forecasting for time periods more than one
year is seen as long-term.
short-term projections. To assess the amount of operational cash needed,
To plan for temporary financing
To oversee the extra money in investments.
1. Receipts and disbursements method:
Forecasting cash flows in and out over a set period is the main goal of
receipts and disbursements projections. The net cash inflows and outflows for
each month can be calculated by combining the projections for cash payments and
receives. The net balance for each month will show whether the company has a
surplus or deficit of cash.
2. Adjusted net income method:

This cash forecasting technique involves tracking working capital flows. The
sources and uses approach is another name for it. The adjusted net income
approach has two goals: (1) to forecast the company's future cash needs; and (2)
to demonstrate if the company can internally generate the necessary funds and, if
not, how much will need to be borrowed or raised in the capital market.
MANAGING CASH COLLECTIONS AND DISBURSEMENTS:

The finance manager should make sure there isn't a sizable difference
between expected cash flows and actual cash flows after the cash budget has
47
been created and the proper net cash flow has been established. Increasing cash
disbursement speed should be one of the twin goals of controlling cash flow.
Accelerating cash collections:

If a company can increase its cash receipts, it can lower its need for cash
balances and conserve cash. The amount of time between when a consumer pays
a bill and when the check is cashed and the money is accessible for the business'
use can be reduced, which can speed up cash collections. The amount of a
customer's check that hasn't been cashed yet is known as the collection or deposit
float.
Decentralized collections:
If a company can increase its cash collections, it can save money and lower
the amount of cash it needs on hand. Reducing the lag helps hasten cash
collections or the time between when a consumer pays a bill and when the check
is cashed and money is made available for the business' use. Collection or deposit
float refers to the amount of a customer's check that has not yet been picked up.
Lock-box system:
A bank-controlled post office box is referred to as a lock box. Mail is
collected and the checks are deposited into the company's account by the bank
offering the lock box service. The company's accounting department receives a
copy of the cheques together with any correspondence or other papers in the
envelopes after being sent by the bank. The most popular service for quickening
receivables collection is a lock box. Because lockboxes can be installed at various
places, a lock system decreases the amount of mail that floats and shortens the
sending process.
INVENTORY MANAGEMENT:
managing money. Components, Consumables, and Loose Tools of these,
of Raw Material, Work in Process, and Finished Goods form a sizeable component
48
of the overall assets - often fluctuating between 15% and 45 percent, with an
average around 30%.
TYPES OF INVENTORY:
1. Raw material inventory:
This consists of fundamental materials that a manufacturing company has
not yet committed to manufacture. Raw materials that the company purchases
from suppliers and uses in its manufacturing processes.
2. Stores and spares:
Products produced with the intention of being sold are included in this
category as accessories.
3. Work-in-process inventory:
The content that has been committed to the production process but has not
yet been finished falls under this category. The investment in work-in-process
inventory will increase in proportion to how complicated and drawn out the
production process is.
4. Finished Goods Inventory:

These are the goods that are ready for purchase. The goal of a finished
goods inventory is to separate the production and sales processes so that the
production of the goods is no longer required before a sale can take place.
INVENTORY CONTROL:
Carrying expenses are prone to rising. On the other hand, carrying costs
are typically high if the unit maintains a sizable safety stock to cut down on
shortage expenses. Inventory control refers to the transformation of undesirable
resources into desirable ones.
The objectives of inventory control are:
To ensure the lowest cost to the manufacturing / production / assembly
department. to uphold manufacturing product quality standards. to provide a
49
constant supply of inputs of a consistent quality in order to satisfy the customers'
delivery deadlines. the creation of processes and procedures to achieve the ideal
level without running out of stock and reduce the amount of money locked up in
inventory.
to lower the cost of maintaining the inventory by limiting the organization's
investment in stock. to decrease material waste from deterioration and
obsolescence. must keep an eye on the extra, useless materials.
INVENTORY MANAGEMENT TECHNIQUES:

Economic orders quantity, reorder points, and stock level are the three
subsystems that make up an efficient inventory management system. AMOUNT
OF ECONOMIC ORDER (EOQ): The order quantity (EOQ) that minimises the
overall cost of placing the order, keeping inventory, and experiencing shortage is
determined using the following model:
2CD
EOQ 
H
Where C = Ordering cost

D = annual demand
H = holding cost
There are two questions to inventory management”
1. What should be the size of the order
2. At what level should
Reorder point:
In order to ensure that there is enough inventory to meet demand up until the
purchase order is fulfilled, the level of stock at the point of reorder is equal to the
average projected consumption of the item during the lead period. To guard
50
against a potential stock-out, it is important to add an additional buffer stock or
safety stock to the anticipated average consumption during the lead time when
determining the reorder point.
Safety Stock:
Extra inventory kept as backup in case of a stock out is referred to as "safety
stock." Higher inventory carrying costs result from keeping more safety stock on
hand.
The factors that influence safety stock are:

 Lead time
 Consumption rate
 Stock out costs
 Nature of the item
 Risk of obsolescence or deterioration
 Storage space
 Category of items
The valuation of stocks and the pricing of raw material issues are two crucial
components of inventory management from a financial perspective.
VALUATION OF INVENTORIES
The cost of procuring raw materials and the price of raw materials released
for production are taken into account when valuing raw material stockpiles.
Depending on how materials are priced and how fixed manufacturing overhead
expenses are allocated (direct costing vs. absorption costing), work-in-process
and finished goods inventory valuations are determined. Production, buying, and
marketing department executives make judgments about inventory. Executives in
51
purchasing and manufacturing influence raw material policies. The choices made
by production executives have an impact on work-in-process inventory.
ABC ANALYSIS:
Analysis is a methodical way to decide how much control should be
exercised over each item in an inventory. Giving management a more thorough
understanding of costs, it highlights the factors that influence costs the most.
The process entails calculating each item's cost and consumption, sorting the
resulting consumption value by magnitude, and calculating the percentage of the
inventory that accounts for a specific percentage of the overall expenses. Such a
study reveals that the majority of the items in the inventory represent just around
5% of the overall value of the order, while a relatively small percentage of things
(about 10%) account for a very big amount (about 70%).
It goes without saying that "A" class items need to be under stringent
management oversight. These could be reviewed periodically with a brief review
cycle or continuously. The "C" class items only need minimal attention and can
52
undergo periodic reviews every year or so. Items in the "B" class should be under
the same control as those in the "A" and "C" classes.
100
80 Item-C
60
Item-B
40
20 Item-A
JUST IN TIME (JIT) CONCEPT

In this technique, consumers, as opposed to the traditional method of pushing the
product onto the market, draw their needs from the shop floras. The advanced
stage of production in the it system uses the appropriate amount of inventory from
the earlier stage to maintain activity. Since the cycle time for production of different
models is only provided to the final assembly point of a mixed production line,
manufacturing activity in this process is scheduled up to the real demand, as
opposed to a predetermined schedule. Every stage of the process, from raw
materials to goods that were subcontracted, is repeated.
MAINTANANCE OF DEBTORS
Trade credit develops when a business offers its goods or services on credit
rather than in cash up front. It is a crucial marketing strategy that spans the
movement of commodities through the production and distribution processes to
end users. A business offers trade credit to shield its sales from rivals and entice
53
potential clients to purchase its items on advantageous terms. Trade credit
generates receivables or book debts that the company anticipates collecting soon.
Working capital must be used to finance the period from the date of sale to
the date of payment. The amount of credit sales and the length of the collection
period both affect a company's investment in accounts receivable. The
combination of three decision-making factors—credit standards, credit conditions,
and collection efforts—over which the financial management has control is referred
to as credit policy. The selection of the customers to whom items may be sold on
credit is based on credit standards. An organization's investment in accounts
receivable will rise if it has more slow-paying clients. The danger of default for the
company will also increase. Credit terms outline the length of credit and the
conditions for client payment.
Goals of credit policy:

A company may have a lax or strict credit policy. Customers who are given
credit on very flexible terms and standards by a company with a lax credit policy
often receive extended durations of credit, even if their creditworthiness or financial
situation are uncertain. In contrast, a business that adheres to strict credit policies
sells on credit in a very selective manner only to clients who have established their
creditworthiness and who are in good financial standing. In reality, businesses
adhere to credit policies that range from strict to lax.
Optimal credit policy:

When total costs are kept to a minimum for a specific level of income, a
company's operational profit is maximised. A credit policy that maximises the firm's
worth is an optimal credit policy. When the incremental rate of return on an
investment equals the incremental cost of the capital used to finance the
investment, the firm's value is maximised. time is continuously longer than the net
credit period that the company extends to its clients, then the collection activities
54
must be more successful since cash is locked up for a longer period than what is
justified by the conditions of the credit that have been extended.
Factors influencing working capital requirements:

Numerous factors affect the company's requirement for operating cash. The ones
from abroad are
Business Nature: Trading in financial enterprises often requires considerable

working capital holdings, whereas public utilities only require minor quantities.
Between these two categories is manufacturing-related concerns.
Manufacturing Process: The quantity of inventory in the form of semi-finished

items increases with the length of the production cycle. Consequently, more
working capital is required.
Terms of purchasing and sales:

An organisation will need less working capital if it makes purchases on credit and
sells its products in cash.
Transportation bottle necks/conditions of supply:

The company can function with a modest amount of inventory if the supply is fast
and sufficient. However, if supply were erratic and sparse, the company would
need to carry a lot of inventory on average and buy goods as they become
available to assure the continuation of production.
When an item is imported, the amount of available space at the store affects how
quickly it is supplied. Transportation from the remote reaches of the nation
lengthens the operational cycle by incorporating.
Profit levels:
A company with significant profits can contribute a significant quantity of money to
the pool of working capital. However, these businesses should resist the urge to
55
grow beyond what is necessary, divert funds to wasteful capital investments, or
permit overhead to rise over what is necessary. Companies with strong profit
margins are frequently observed to manage money more carelessly by placing an
excessive amount of money in debts or stocks.
Tax levels and Planning:

spending money Excise and sales taxes are due when goods are shipped
from the manufacturer and at the point of sale, respectively, in accordance with
income tax laws that allow for the payment of advance tax in instalments. Any
working capital management must make sufficient and thoughtful allowances for
the same, as they are all involved.
Retained earnings and dividend policy:
Retained earnings and dividend policy are closely tied. The requirement to protect
cash resources must be balanced with the obligation to appease shareholders,
which turns into a short-term liability that must be settled in cash and, as a result,
has an influence on the working capital budget.
Depreciation policy:
The amount of depreciation that is taken into account when preparing the financial
statements has a direct impact on the dividend policy and retained earnings. This
is true since higher depreciation rates would leave lower profits, which would lead
to lower earnings and dividends.
You can determine the amount of depreciation by selecting several ways to
guarantee the usage of assets. Depreciation, on the other hand, is actually only a
56
record in the books and doesn't reflect any cash flow at the time, so it won't affect
working capital save to the degree that it delays dividend payment.
Importance of adequacy of Working Capital:

A business's working capital serves as its heart and brain. The smooth operation
of a business depends on blood flow, just as it does in the human body. Without
sufficient operating capital, no business can operate successfully.
Solvency of the Business:

By ensuring an uninterrupted flow of production, adequate working capital supports
the maintenance of the company's solvency.
Good will:
A company that has enough working capital may make prompt payments, which
helps build and preserve goodwill.
Easy loans:
A company with sufficient working capital, strong solvency, and good
credit can secure loans from banks and others on simple, benevolent terms.
Cash discounts:
A company with sufficient working capital can also take advantage
of cash discounts on purchases, which lowers costs.
Regular supply of raw material:
A sufficient working capital base guarantees consistent raw material supply
and ongoing production.
Regular payment of salaries, wages and other day-to-day commitments:
A business that has access to working capital can pay employees'
salaries, wages, and other daily obligations on time, which boosts morale.
CONSTRUCTION CAPABILITY
For the implementation of the capacity addition programme and improvement of
business, construction capability, availability of construction equipment, proper
construction technology, and labour are essential.
VISWATEJA SPINNING MILLS LTD has expanded considerably and amassed
sufficient expertise in the sphere of infrastructure and construction projects.
57
The business has a "Philosophy of Expert Service." Maddi Lakshmaiah and Co.
Ltd. would offer the infrastructure industry a one-stop shop for an integrated,
knowledge-based end-to-end solution provider.
In order to prevent the need to redeploy personnel and resources for correction,
Maddi Lakshmaiah and Co. Ltd. is also committed to achieving greater quality
standards throughout the board.
To guarantee zero accidents, Maddi Lakshmaiah and Co. Ltd. strives to achieve
OHSAS 18001 - 2000, Occupation Health Safety and Services.
CORPORATE PROFILE
To be acknowledged as a leading infrastructure company in the power sector
industry based on superior creative thinking, cutting-edge techniques, thorough
project execution, and devotion to the client with complete assurance.
"A VISION IS NOT A PLAN TARGET OR PROJECT REPORT. IT IS A

BROADER ARTICULATION OF THE DESIRED END RESULTS
- APJ Abdul Kalam
MISSION
to guarantee high-quality work that meets or exceeds customer expectations. to
improve organisational skills and development by implementing new strategies.
human resources' capacity by improving their knowledge and abilities.
CORPORATE VALUES
We are aware that individuals are our main argument. Maddi Lakshmaiah and
Company must be a fulfilling place to work if it is to succeed. We give people the
chance and support they need to realise their potential. Together, we collaborate
with our client. Respect for one another serves as the cornerstone of our
success. and motivation to support our individuals in realising their potential.
Together, we collaborate with our client. Respect for one another serves as the
cornerstone of our success.
We continue to uphold our original principles of excellence, integrity, and

diligence. We hold ourselves to the greatest ethical standards in our field. We try
to act morally. The foundation of Maddi Lakshmaiah and Company Limited's
operation is trust.
58
It is common knowledge that Maddi Lakshmaiah and Company Limited ltd upholds
the highest levels of ethics, quality, and customer service.
Due to its renown, the business has the honour of overseeing some of INDIA's
most high-profile and distinctive projects.
QUALITY POLICY
To be the most favoured in the national and international market, Maddi
Lakshmaiah and Company T Limited will adhere to established quality standards
in all endeavours and pursue ongoing improvements in the quality of its services
and performance, leading to Total Customer Satisfaction and Business Growth
through unwavering commitment, innovation, and teamwork of all employees.
59
CHAPTER-IV
DATA ANALYSIS AND
INTERPRETATION
60
TABLE-1
Changes in working capital during the period 2015-2016 to 2016-2017
Effect on Working Capital

2015-16 2016-2017
Particulars Increase Decrease
A Current Assets
Inventories 131405030 105291435 26113595
Sundry 136188751 151096317 14907566
Cash & Bank balance 43780275 25594348 18185927
Other current assets 307761 57986 249775
Loans & Advances 312779468 223075892 89703576
Total current assets 624461285 505115978

B Current liabilities 52990750 51567655 1423095
Provisions 117705280 117294657 410623
Total Current liabilities 170696030 168862312
A-B Working capital 453765255 336253666 117511589
Decrease in working 134252873 134252873

capital
61
TABLE-2
Changes in Working Capital during the period 2016-17 to 2017-18
Effect on Working
2016-17 2017-18 Capital
Particulars
Increase Decrease
A Current Assets
Inventories 105291495 138918033 33626598
Sundry debtors 151096317 206245483 55149166
Loans& Advances 223075892 213370249 9705643

Provisions 117294657 125994772 8700115
Total Current liabilities 168862312 190479571 98133341
A-B Increase in working capital 336253666 434387007 31322902 31322902
62
TABLE-3
Changes in Working capital during the period 2017-18 to 2018-19.
Effect on Working
2017-18 2018-19 Capital
Particulars
Increase Decrease
A Current Assets
Inventories 138918033 168968061 30050028
Sundry debtors 206245483 228771563 22526080
Loans& Advances 213370249 216409662 3039413

provisions 125994772 183819408 57824636
Increase in Working 230311033 230311033

capital
63
TABLE-4
Effect on Working
2018-19 2019-2020 Capital
Particulars
Increase Decrease
A Current Assets
Inventories 168968061 285942551 116974490
Sundry debtors 228771563 355316081 126544518
Loans& Advances 216409662 279719429 63309767
Provisions 183819408 239320244 55500836
Increase in working capital 306828775 306828775
64
TABLE-5
Effect on Working
2019-2020 2020-21 Capital
Particulars
Increase Decrease
A Current Assets
Inventories 285942551 675506154 389563603
Sundry debtors 355316081 438561908 83245827
Loans& Advances 279719429 416213300 136493871

provisions 239320244 295563415 56243171
A-B Working Capital 633639251 980465809 346826558
Increase in working capital 609303301 609303301
TABLE-6
65
STATEMENT SHOWING CHANGES IN WORKING CAPITAL
YEAR CURRENT CURRENT WORKING CHANGEIN
ASSETS LIABILITES CAPITAL WORKING CAPITAL
2016-17 505115978 168862312 336253666 117511589
2017-18 624866578 190479571 434387007 98133341
2018-19 855177611 301756003 553421608 119034601
2019-20 1025271228 391631987 633639251 80217643
2020-21 1574976034 594510225 980465809 346826558
GRAPH-1
Change in Working Capital
350000000
300000000
250000000
Crores
200000000
150000000
100000000
50000000
0
2016-17 2017-18 2018-19 2019-20 2020-21
Years
Interpretation:
According to the aforementioned table, Viswateja Spinning Mills Ltd. saw
an increase in working capital in 2020–2021 as compared to the previous years,
while it had a decrease in working capital in 2019–2020.
66
CURRENT RATIO:
Current Assets
Current ratio = ──────────
Current liabilities
TABLE-7
Current ratio of Viswateja Spinning Mills Ltd. In the year 2016-17 to 2020-21
Year Current assets Current liabilities Current Ratio
2016-17 505115978 168862312 2.99
2017-18 624866578 190479571 3.28

2018-19 855177611 301756003 2.83
2019-20 1025271238 391631987 2.61
2020-21 1574976034 594510225 2.64
67
GRAPH-2
Current Ratio
3.5 3.28
2.99
3 2.83
2.61 2.64
2.5
2
1.5
1
0.5
0
2016-17 2017-18 2018-19 2019-20 2020-21
Years
INTERPRETATION
Viswateja Spinning Mills Ltd. improved its current ratio to 3.28 in the
second year of 2017–18, as seen in the above table. The quality of the rate fell
from 2016–17 to 2018–19, peaking at 2.81, and peaking at 2.61 in 2019–20. The
best ratio is generally 2:1. The company's current ratio is 2.64 points higher than
the average current ratio, indicating that it is in a liquid situation. because, on
average, the current to ideal ratio is the same.
68
QUCIK RATIO:
Current assets - Inventories
Quick ratio = ──────────────────
Current Liabilities
TABLE-8
Quick ratio of Viswateja Spinning Mills Ltd during the period 2016-17 to
2020-21
Year Quick assets Current Liabilities Quick Ratio
2016-17 399824483 168862312 2.3682
2017-18 485948545 190479571 2.5511
2018-19 686209550 301756003 2.2740

2019-20 739328687 391631987 1.8878
2020-21 899469880 594510225 1.5129
69
GRAPH-3
Quick Ratio
3
2.55
2.5
2.36 2.27
1.88
2
1.51
Ratio1.5
1
0.5
0
2016-17 2017-18 2018-19 2019-20 2020-21
Years
INTERPRETATION:
A quick ratio of 1:1 is typically thought to signify a favourable current financial
situation with sound liquidity. Viswateja Spinning Mills Ltd.'s fast ratio is more than
1:1 in the aforementioned table for all the years. 2017–18 Viswateja Spinning Mills
Ltd. fast ratio. The quality of increased 2019–20 is 2.55, up from the quality of rate
2017–18. The company's current quality rating is 1.88. 2.55 in the 2017-18. In the
years 2016–17 and 2017–18, it is at its highest 2.36. In 2017–18, it is at a minimum
of 1.51, primarily because of the quality rate.
70
TABLE-9
CASH AND BANK BALANCE TO CURRENT ASSETS:
YEAR CASH AND BANK CURRENT RATIO
BALANCE ASSETS
2016-17 25594348 505115978 0.0506
2017-18 64796749 624866578 0.1036
2018-19 239149881 855177611 0.2796
2019-20 103757796 1025271238 0.1012
2020-21 44615362 1574976034 0.0283
GRAPH-4
Ratio
0.3 0.27
0.25
0.2
Ratio 0.15
0.1 0.1
0.1
0.05
0.05 0.02
0
2016-17 2017-18 2018-19 2019-20 2020-21
Years
INTERPRETATION:
The company's rate for the year 2017–18 was 0.27; it was slightly
reduced to 0.2 in 2018–19 and raised 0.1 in 2019–20; at this time, the company's
quality rate for the year 2018–19 is 0.27.
71
TABLE-10
CASH TO WORKING CAPITAL RATIO:
YEAR CASH AND BANK WORKING CASH TO WORKING
BALANCE CAPITAL CAPITAL RATIO
2016-17 25594348 336253666 0.0761
2017-18 64796749 434387007 0.01491
2018-19 239149881 553421608 0.43212
2019-20 103757796 633639251 0.1637
2020-21 44615362 980465809 0.0455
GRAPH-5
Cash to working capital ratio
0.5
0.43
0.4
0.3
0.2 0.16
0.1 0.07
0.04
0.01
0
2016-17 2017-18 2018-19 2019-20 2020-21
Years
INTERPRETATION:
The accompanying table demonstrates that there are yearly fluctuations in the
amounts of current assets, cash, and bank balances. The balance of cash and
bank accounts and current assets fluctuate.
72
TABLE-11
LOANS AND ADAVNCES TO WORKING CAPITAL:
YEAR LOANS AND WORKING RATIO
ADVANCES CAPITAL
2016-17 223075892 336253666 0.6634
2017-18 213370249 434387007 0.4911
2018-19 216409662 553421608 0.3910
2019-20 879719429 633639251 0.4414
2020-21 416213300 980465809 0.4245
GRAPH-6
Ratio
0.7 0.66
0.6
0.49
0.5 0.44 0.42
0.39
0.4
Ratio
0.3
0.2
0.1
0
2016-17 2017-18 2018-19 2019-20 2020-21
Years
INTERPRETATION:
The loans to advances ratio is high between 2016 and 2017, at 0.6 and 0.49
respectively, while it is low between 2018 and 2019, at 0.39. Less loans and
advances are advantageous to the business. The corporation is currently in a
better position because it is keeping fewer ratios.
73
TABLE-12
DEBTORS RATIO
YEAR SUNDRY CURRENT DEBTORS RATIO
DEBTOR Rs. ASSETS
2016-17 151096317 505115978 0.29913
2017-18 206245483 624866578 0.33006

2018-19 228771563 855177611 0.2675
2019-20 355316081 1025271238 0.3465
2020-21 438561908 1574976034 0.2784
GRAPH-7
Debtors Ratio
0.33 0.34
0.35
0.299
0.3 0.26 0.27
0.25
0.2
0.15
0.1
0.05
0
2016-17 2017-18 2018-19 2019-20 2020-21
Years
INTERPRETATION:
Between 2017–18 and 2019–20, the ratio remains nearly steady at 0.33
and 0.34, respectively. Then it began gently growing and shrinking. Debtors stand
in for the company's credit sales. If the ratio fell, it indicated that credit sales fell as
well.
74
WORKING CAPITAL TURNOVER RATIO:
Sales
Working capital turnover ratio = ──────────
Net working capital
TABLE-13
Working capital turnover ratio of Viswateja Spinning Mills Ltd .
YEAR SALES WORKING WORKING CAPITAL
CAPITAL TURNOVER RATIO
2016-17 946000240 336253666 2.8133
2017-18 1277135937 434387007 2.9400
2018-19 1983567289 553421608 3.5841
2019-20 3123375516 633639251 4.9292
2020-21 3971706169 980465809 4.0508
GRAPH-8
Working Capital Turnover Ratio

4.9
5
4
4 3.5
2.81 2.94
3
0
2016-17 2017-18 2018-19 2019-20 2020-21
Years
INTERPRETATION:
The working capital turnover ratio in 2019–20 is more comparable to other
years at 4.9%. Each year, the turnover ratio goes up. It shows that the business is
performing well..
75
INVENTORY TO CURRENT ASSETS RATIO:
TABLE-14
YEAR INVENTORY CURRENT ASSETS INVENTORY TO

CURRENT
ASSETS RATIO
2016-17 105291495 505115978 0.2084
2017-18 138918033 624866578 0.2223
2018-19 168968061 855177611 0.1975
2019-20 285942551 1025271238 0.2788
2020-21 675506154 1574976034 0.4288
GRAPH-9
Inventory to Current assets ratio
0.5
0.42
0.4
0.3 0.27
0.2 0.22
0.19
0.2
0.1
0
2016-17 2017-18 2018-19 2019-20 2020-21
Years
INTERPRETATION:
The link between inventory and current assets is depicted in the table above. The
ratio significantly increases in 2020–2021 to 0.42. The company's sales are down
this year. When the ratio is low and the stock of finished goods is high, the situation
is positive for the business. The current rate increased by 0.27 in the 2019–20
fiscal year, and it will increase by 0.42 in the 2020–21 fiscal year.
76
INVENTORY TURNVOER RATIO:
Sales
Inventory turnover ratio = ────────────
Average Inventory
TABLE-15
YEAR SALES AVERAGE INVENTORY

INVENTORY TURNOVER RATIO
2016-17 946000240 105291435 8.9845
2017-18 1277135937 138918033 9.1934
2018-19 1983567289 168968061 11.7393
2019-20 3123375516 285942551 10.9230
2020-21 3971706169 675506154 5.8796
GRAPH-10
Inventory Turnover Ratio
11.73
12 10.92
10 8.9 9.19
8
5.87
6
0
2016-17 2017-18 2018-19 2019-20 2020-21
Years
77
INTERPRETATION:
Inventory turnover counts the number of times a stock has changed hands
during a given time period and assesses how effectively a company can manage
its inventory. The year 2018–19 has a high inventory turnover rate of 11.73. High
inventory turnover is a sign of effective inventory management. Inventory turnover
at Viswateja Spinning Mills Ltd. is high overall, which shows effective inventory
management by the business. Less money is needed to finance the inventory
because the merchandise is sold more frequently.
DEBTORS TO WORKING CAPITAL:

Sundry debtor
Debtors to working capital ratio = ──────────
Working capital
TABLE-16
Debtors to working capital ratio of Sri AP Textiles
YEAR SUNDRY WORKING DEBTORS TO WORKING

DEBTORS CAPITAL CAPITAL RATIO
2016-17 151096317 336253666 0.4493
2017-18 206245483 434387007 0.4747
2018-19 228771563 553421608 0.4133
2019-20 355316081 633639251 0.5607

2020-21 438561908 980465809 0.4472
78
GRAPH-11
Debtors to working capital ratio
0.6 0.56
0.5 0.44 0.47 0.44
0.41
0.4
0.3
0.2
0.1
0
2016-17 2017-18 2018-19 2019-20 2020-21
Years
INTERPRETATION:
Gradually over the years, the ratio increased from 0.44 in 2016–2017 to 0.47
in 2017–18. Debtors stand in for the company's credit sales. If the ratio fell, credit
sales fell as well. There is a possibility of suffering some losses due to bad loans
if the debtor ratio is large. The ratio is currently slightly rising, therefore the
corporation needs to pay attention. The working capital rate for the company in
2019–20 was 0.56; this is a minor decline from 0.41 in 2018–19 and an increase
from 0.41 in 2019–20.
79
TABLE-17
NET WORKING CAPITAL:
YEAR Net working capital
2016-17 336253666
2017-18 434387007
2018-19 553421605
2019-20 633639251
2020-21 980465809
GRAPH-12
Networking capital
1E+09
800000000
600000000
Crores
400000000
200000000
0
2016-17 2017-18 2018-19 2019-20 2020-21
Years
INTERPRETATION:
According to the study above, the increase in networking capital for the
years 2016–17 was 336253666, 2017–18 was 434387007, 2018–19 was
553421605, 2019–20 was 633639251, and 2020–21 was 980465809. The
company had the highest net working capital in the year 2019–20.
80
TABLE-18
GROSS WORKING CAPITAL:
YEAR Gross working capital
2016-17 505115978
2017-18 324866578
2018-19 855177611
2019-20 1025271238
2020-21 1574976034
GRAPH-13
Gross working capital
1.6E+09
1.4E+09
1.2E+09
1E+09
Crores 800000000
600000000
400000000
200000000
0
2016-17 2017-18 2018-19 2019-20 2020-21
Years
INTERPRETATION:
From the aforementioned study, we can see that 2016-17 to 2019-20 three is
continuous improvement, with 2017-18 being the Gross Working Capital for
2016-17, 2017-18 324866578, 2018-19 855177611, 2019-20 1025271238, and
2019-20 1574976034. It has the largest gross working capital for the company in
2020–2021.
81
CHAPTER-V
FINDINGS AND SUGGESTIONS
82
FINDINGS
The results of a thorough investigation into working capital management at
Viswateja Spinning Mills Ltd. are as follows.
 Working capital of Viswateja Spinning Mills Ltd. is steadily rising over time.
 From 2016–17 through 2020–21, the current ratio is higher than the ideal
ratio, demonstrating the firm's ability to pay its current liabilities as they fall
due.
 1:1 is the ideal fast ratio. The quick ratio at Viswateja Spinning Mills Ltd. is
rising yearly. Viswateja Spinning Mills Ltd. appears to have strong liquidity,
according to this. The quick ratio for the most recent year, or 2017–18, is
2.5511.
 The ratio of Viswateja Spinning Mills Ltd's cash and bank balance to working
capital is as follows: in the 2016–2017 fiscal year, it was 0.0506; in the
subsequent two, it fell to 0.0283; and in the most recent fiscal year, it was
0.0283.
 Year after year, the borrowers' share of current assets rises. The ratio is
0.2991 in the 2016–17 fiscal year and stays constant at 0.2784 in the 2020–
21 fiscal year.
 The ratio of working capital turnover rises annually. The ratio is 2.8133 in
the 2016–17 fiscal year and rises to 4.0508 in the 2010–21 fiscal year.
 In the period from 2016–17 to 2018–19, the inventory turnover ratio
increased, rising from 8.9845 to 11.7393. It shows that the company is doing
extremely well, and when the ratio decreases from the years 2018–19 to
2020–21—from 11.7393 to 5.8793—it shows that the company is not doing
very well.
 The stock conversion period is getting longer every year, which is positive
for the company.
83
SUGGESTIONS
The following recommendations are made for Viswateja Spinning Mills Ltd's
working capital management to be more effective:
 In order to increase its current ratio, Viswateja Spinning Mills Ltd. needs
address the declining current ratio in 2019–20.
 The corporate quick ratio is steadily rising year over year. Maintaining a
rapid ratio is bad for the organisation.
 Viswateja Spinning Mills Ltd is keeping less money in the bank and in cash.
It occasionally causes issues for the organisation. Therefore, Viswateja
Spinning Mills Ltd. must have a high bank balance and cash on hand.
Rotating the organization's cash and bank accounts is beneficial.
 The debtor turnover ratio for Viswateja Spinning Mills Ltd is rising over time.
Therefore, it benefits the organisation.
 The ratio of working capital turnover is steadily declining. An organisation
benefits from a high ratio. Therefore, organisations strive to keep high
ratios.
 The ratio of inventory turnover is From year to year, Viswateja Spinning Mills
Ltd. is steadily growing. It's advantageous for the company. In the future, try
to sustain some levels of growth.
 The business currently uses concentrated banking techniques to collect
debt from customers. As a sophisticated method of cash collection from
debtors, lock box systems. The organisation is urged to follow this process
because it is better for the business..
 Fixed deposits are replaced with marketable securities at the company
since they are the next most liquid asset class after cash.
84
CONCLUSION
The parties and workers to whom the company has granted loans and advances
are required to pay the stated principle amount. Following the sales and disposal
of recyclable scrap, the company has kept reasonable records. In comparison to
prior years, the company has decreased its loss to a greater level, and it is
optimistic that the current fiscal year will bring better results.
A private sector firm has distinct goals and policies than any other private
organisation since it must adhere to the standards set by many connected public
and private sectors. Therefore, drawing conclusions and making
recommendations about how well such a company is performing is a very delicate
undertaking. I've provided some recommendations in consideration of certain by
scrutinising Viswateja Spinning Mills Ltd.'s financial performance and other
significant factors.
85
Balance sheet as at March, 2017
Particulars Schedule As on As on
No. 31.03.2016 31.03.2017
Sources of funds
Share holders’ funds
Share capital 01 44410500 44410500
Reserves and surplus 02 786649362 746940867
Loans funds
Secured loans 03 7964793 15287300
Unsecured loans 04 19101224 18073236
Deferred Tax Liability 105107275 95501587
Total 963233154 920213490
Application of funds
Fixed assets
Gross block 05 1081678271 983303759
Less: depreciation 559463088 508712556
Net block 522215183 474591203
Capital works – in – progress 374784 1266944
Investments 06 6256180 2336180
Current assets Loans & Advances:
Inventories 07 138918033 105291495
Sundry debtors 08 206245483 151096317
Cash and bank balance 09 64796749 25594348
Loans and advances 11 213370249 223075892
Less: Current liabilities & Provisions
Current liabilities 12 64484799 89841079
Provisions 13 125994772 112988519
Net current assets 434387007 442019163
Total 963233154 920213490
86
Balance sheet as at 31st March, 2018
No. 31.03.2017 31.03.2018
Sources of funds
Share capital 01 44410500 44410500
Loans funds
Secured loans 03 28241585 7964793
Un secured loans 04 32598876 19101224
Total 1057151105 963233154
Fixed assets
Gross block 05 1093852232 1081678271
Net block 483340925 522215183
Investments 06 6256180 6256180
Inventories 07 168968061 138918033
Sundry debtors 08 228771563 206245483
Provisions 13 183819408 125994772
Total 1057151105 963233154
87
No. 31.03.2018 31.03.2019
Sources of funds
Share capital 01 44410500 44410500
Loans funds
Secured loans 03 34793615 28241585
Unsecured loans 04 78292794 32598876
Total 1268835891 1057151105
Fixed assets
Gross block 05 1210002136 1093852232
Net block 550574891 483340925
Investments 06 10010125 6256180
Inventories 07 285942551 168968061
Sundry debtors 08 355316081 228771563
Provisions 13 239320244 183819408
Total 1268835891 1057151105
88
No. 31.03.2019 31.03.2020
Sources of funds
Share capital 01 44410500 44410500
Loans funds
Secured loans 03 249510370 34793615
Unsecured loans 04 232151374 78292794
Total 1799051468 1268835891
Fixed assets
Gross block 05 1394435216 1210002136
Less : depreciation 726315450 659427245
Net block 668119766 550574891
Investments 06 14540374 10010125
Inventories 07 675506154 285942551
Sundry debtors 08 438561908 355316081
Provisions 13 295563415 239320244
Total 1799051468 1268835891
89
No. 31.03.2020 31.03.2021
Sources of funds
Share capital 01 44410500 42311401
Loans funds
Secured loans 03 34793615 23694625
Un secured loans 04 78292794 89393784
Total 1268835891 1160835991
Fixed assets
Gross block 05 1210002136 1310072136
Net block 550574891 460564981
Investments 06 10010125 1101023
Inventories 07 285942551 675506154
Sundry debtors 08 355316081 438561908
Provisions 13 298946810 295563415
Total 1268835891 136994891
90
BIBILOGRAPHY
91
BIBLIOGRAPHY
1. Financial Management - I. M. Pandey
2. Management Accounting - R. S. Guptha
3. Management Accounting - R. K. Sharma & Shasik
4. Financial Management - S. N. Maheswari
Annual reports of Viswateja Spinning Mills Limited.
92

A Study On Working Capital

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Working capital is the money needed for day-to-day operations in enterprises.

KINDS OF WORKING CAPITAL

BASIS OFCONCEPT BASIS OF TIME

GROSS NET WORKING PERMINANT TEMPORARY

PERMANENT (OR) FIXED WORKING CAPITAL:

The amount of permanent working capital necessary to sustain the circulation of

TEMPORARY (OR) VARIABLE WORKING CAPITAL:

GROSS WORKING CAPITAL:

• Current assets are of utmost importance to financial managers.

• It allows a business to get the best possible return on its investment.

• It aids in focusing on various financial responsibility issues.

NET WORKING CAPITAL:

Definition: A company's investment in short-term assets, cash, short-term

Cash Finished Stock

As a crucial component of general management, financial management is not a

Definition of Financial management:

a) The conventional method.

b) The current strategy.

The traditional definition of financial management as a field of study refers

A conceptual and analytical framework for making financial decisions is

Financial management's goals are:

The goals of financial management include

1) Profit maximization approach.

2) Wealth maximization approach.

1. Profit maximization approach:

An understanding of the various facets of working capital management is provided by the

 Due to confidentiality, several components of financial data were not

 To understand the expansion and development of Viswateja Spinning Mills

 To examine and assess Viswateja Spinning Mills Ltd.'s working capital

Its enormous potential to generate employment possibilities, particularly for

In the post-MFA era, the industry anticipates investments worth Rs.

In the post-MFA era, there will be both possibilities and problems

Investment in Indian Textile Industry:

Factors responsible for wooing the investors in Indian textile

When Blackstone, a US investment management firm, acquired a 50.1% share in

Growth of Indian Textile Industry:

The ordinary Indian's propensity to consume climbed at a rate of 5% to a total of

It is abundantly evident to us from the discussion above that India's market is

As a result, it can be claimed that the Indian economy as a whole is developing,

The Multi-Fiber Agreement was established in 1974 as a short-term strategy

National Textile Policy:

 Creative marketing techniques

One of the key objectives of government policy is to improve the quality

Additional areas of trust:

Human Resource Development:

Arrangement for financing:

VISWATEJA SPINNING MILLS LTD began operations in 2005 with a capacity

Timetable for execution Start Finish

Nature of work Estimated cost

Sri Dasari Sheshagiri Rao : Managing Direcotr

Sri D. Lakshmi Prasad : Executive Director

Sri Kakaraparthy Ramesh : Executive Director

Sri Kakaraparthy Sheshagiri Rao : Executie Director

Sri Kollipara Narashimha Rao : Director

Sri Dasari Sathyanarayana : Director

Sri Kakaraparthy Kirshna Murthy : Director

Sri G. Seethaiah : Technical Director

Functions of Marketing Manager:

Functions of Production Manager:

Information Related to Viswateja Spinning Mills Ltd:

A major manufacturing company may get finances from a variety of sources,

 Long-term or consistent funding sources for operations.