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WORKING CAPITAL MANAGEMENT

A CASE STUDY OF PARADEEP PHOSPHATES LIMITED

FERTILIZER PLANTS IN ODISHA
There are a few big fertilizer plants in Odisha.These are • Paradeep Phosphates Limited - Asia's largest DAP fertilizer Plant in Paradeep. • Rourkela Fertiliser Plant - Set up to utilize the residue, by products and surplus gas from the Rourkela Steel Plant. • The Odisha Fertilizer and Chemical Limited is located near Kalunga, Sundargarh . The capacity of this fertilizer plant is 45,000 tones per annum. • The fourth plant is based in Talcher in Dhenkanal District. It produces 495,000 tons of Urea and 228,000 tones of Nitrogen. • The Odisha Fertilizer and Chemical Limited is located near Kalunga. The capacity of this fertilizer plant is 45,000 tons per annum.
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• Apart from the aforementioned plants there are fertilizer plants located elsewhere. These are the Oswal Chemicals and fertilizers plant located in Paradeep which has been bought by the IFFCO in recent years and the Indian Farmers and Fertilizers Corporation Ltd. is located at Baragarh. • A new phosphate fertilizer complex at Paradeep, a joint venture of Island Republic of Nauru and Government of India has been built. It produces Di-Ammonium Phosphate with a capacity of 2,400 tons per day in first phase. Its second phase also started and produces Phosphoric Acid and Phosphorus Pentaoxide. Deepak Fertilizers to set up ammonium nitrate project at Paradeep.

COMPANY PROFILE
•Paradeep Phosphates Limited (incorporated in 1981) is a premier fertilizer company engaged in manufacturing and marketing of complex phosphatic fertilizers. The company was initially commissioned as a joint venture between Government of India and Republic of Nauru and subsequently, in 1993 it was changed into a wholly owned Government of India Enterprise. After disinvestment by Government of India in February 2002, the

management of the company is presently with the fertilizer majors - ZuariChambal Group and OCP of Morocco. •PPL produces about 1.2 million metric tonnes of DAP and other complex fertilizers annually. The plant also produces intermediary products like Phosphoric Acid and Sulphuric Acid, which are critical raw materials in the manufacture of phosphatic fertilizers.

Cont…..

• The plant, located in the port town of Paradeep in the district of Jagatsinghpur in Odisha, has an installed capacity of 7,20,000 metric tonnes per annum of DAP (2,400 metric tonnes per day). PPL is one of the largest integrated DAP plants in India. With a market share varying around 13%, it has a strong presence in the complex fertilizer market - its products marketed under the popular NAVRATNA brand represent a combination of multiple nutrients like Nitrogen, Phosphorus, Potash and Sulphur etc. PPL’s range of products caters to almost all agricultural applications. • With a stellar turnaround, PPL is a case study in favour of privatization. The company’s focus on performance and continuous efforts towards development are reflected in the FAI Awards for Improvement in Overall Performance of the company in 2002-03, 2005-06, 2008-09 and the Best Technical Innovation in the year 2005 - 06. PPL received the ISO 14001: 2004 certification in May 2006 for good environment management systems, reflecting the fact that along with technical advancement, the company also values maintaining and working towards a clean and safe environment.

BRIEF HISTORY
• December 1981: Paradeep Phosphates Limited was incorporated as a joint venture of the Government of India and the Republic of Nauru. Subsequently, it became a wholly owned Govt. of India Enterprise in June 1993. • February 1986: Phase - I DAP plant came into operation. • June 1992: Phase - II Plants viz. SAP, PAP and a power plant with two turbines came into operation. • June 1993: Withdrawal of the Republic of Nauru by which PPL became a Public Sector Enterprise, wholly owned by the Government of India. • February 2002: Government of India divested 74% of stake. Zuari Maroc Phosphates Ltd., a 50-50 joint venture of Zuari Industries Limited and Maroc Phosphore S.A, a wholly owned subsidiary of OCP, Morocco took over PPL. • March, 2007: ZMPL holds 80.45% stake in PPL and the Government of India holds 19.55% stake.

PPL VISION, MISSION AND CORE VALUES
VISION:PPL vision is to be a major fertilizer company of India capable of meeting the

challenge of free market economy.
MISSION:PPL mission is to become more profitable, debt free and be ready for the free by scenario, by optimizing/enhancing capacities, reducing costs, focused marketing, financial restructuring and improved productivity. CORE VALUES:• Honesty and integrity


• •

Excellence
Discipline Caring for the people

PRODUCTS SERVICES
MOP Muriate of Potash (MOP), one of the major plant nutrients, is imported by PPL through various ports of India and is sold in the marketing territory along with other complex fertilisers. Quality of Potash • Provides strength to the stems and develops the root system • Increases resistance to diseases in plants • Improves nitrogen and phosphorous uptake. • Essential for grain filling and grain weight. Ammonia & Sulphuric Acid Ammonia is required by refrigeration units and steel plants. Sulphuric Acid is demanded by Alum manufacturing units, chemical units and steel plants. PPL has large storage capacities for these products, which are available for industrial consumption in and around Odisha.

PRODUCT SERVICES

cont…

Zypmite Zypmite is a micronutrient mixture containing Sulphur, Zinc, Boron, Calcium and Magnesium. Zypmite fortified helps improve soil fertility, increases the intake of NPK fertilisers and improves quality of yield. Di - Ammonium Phosphate (DAP - 18:46:0) • Highest nutrient content – More than 64%. • Contains 18 % Nitrogen, 46% Phosphorous, and 2% Sulphur. • Ammonia cal nitrogen improves phosphorous availability as compared to nitrate nitrogen. • Best basal fertiliser for all crops. • Suitable for all types of soil. • Less labor intensive NP - 20:20:0:13 (Ammonium Phosphate Sulphate) • Ammonium Phosphate Sulphate. • Best fertiliser for Oil seed crop and pulses. • Ideal for application in vegetables where frequent fertiliser application is done. • The high sulphur content improves the milling and baking quality of cereals

PRODUCT SERVICES
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• • • • • •

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• • •

NPK - 12:32:16 Contains three major plant nutrients. Highest total nutrient among NPK containing product (62%) with three major plant nutrients in granule form. Nitrogen in Ammoniacal (Ammonium Sulphate) form. Phosphates (P2O5) and Potash (K2O) contents are almost wholly in water soluble form making it easily and quickly available to plants. 1:1 ratio of Phosphorous & Potash most suitable fertilizer for sugarcane & potato cultivation. Less time and labor required to apply a single fertilizer than to apply straight fertilizer separately. 26%potassium in water soluble form. Also contains 2% sulphur enhances the yield and quality of crops such as Onions, Tobacco, Ginger, Garlic, Tomato, Cabbage, Oil Seed etc. NPK - 10:26:26 High constituent NPK containing (60%) three major plant nutrients. Phosphorous & Potash nutrient ratio of 12:32:16 is 2:1 most suitable fertilizer for basal application , where high rate of P2O5 is recommended as compared to potash. More than one essential plant nutrient are available in packet.

DIVESTMENT OF THE COMPANY:On the Feb 28, 2002 the government of India in line with its policy for disinvestments, of divested 74% of PPL stake in favour of Zuari Maroc Phosphates Pvt. Ltd. (ZMPPL). ZMPPL is a 51%-49% joint venture of Zuari Industries Ltd, the flagship fertilizer company of K.K.Birla group and Maroc Phosphate SA, a wholly owned company of fertilizer giant OCP, Morocco. After disinvestment, the company has become a subsidiary company of both Zuari Industries Ltd. and ZMPPL under section 4(1)(b)& (c) of the Companies Act 1956 with effect from Feb 28, 2002. Further the company was also converted from a public company to a private company with effect from April 29, 2002 after completion of necessary formalities under the Companies Act 1956.
Paradeep Phosphates Limited’s manufacturing capacity per annum is • DI-Ammonium Phosphate (DAP) - 7.20 lakh tons. • Phosphoric Acid - 2.25 lakh tons. • Sulphuric Acid - 6.60 lakh tons.

CORPORATE OBJECTIVES
PPL business objectives are as follows:• To maximize capacity utilization. • To optimize operational efficiency and productivity. • To maintain highest international standards of excellence in product quality. • To provide a steady growth in business by technology up gradation expansion and diversification. • To have global presence and earn foreign exchange. • To maintain leadership in domestic market. • To develop a strong R&D base and increase business development activities. • The major object of the corporation is to work towards maintaining the right balance of sustainable development. • PPL has taken appropriate measures towards building safe environment within and outside the plant.

WORKING CAPITAL MANAGEMENT

WORKING CAPITAL MANAGEMENT
Working capital management originally started as a systematic approach of controlling the incoming, outgoing and remaining balances of cash, receivables and inventories. Working capital management is concerned with the problems that arise in attempting to manage the current assets, the current liabilities & the inter relationship that exists between them. . Working Capital is the key difference between the long term financial management and short term financial management in terms of the timing of cash. Working capital management is a short term financial management. WHAT IS WORKING CAPITAL? Working capital refers to the investment by the company in short terms assets such as cash, marketable securities. Net current assets or net working capital refers to the current assets less current liabilities. DEFINITIONS OF WORKING CAPITAL: Working capital is defined as “The excess of current assets over current liabilities and provisions. In other words it is the Net Current Assets or Net Working Capital.” Symbolically, Net Current Assets = Current Assets - Current Liabilities.

COMPOSITION OF WORKING CAPITAL
Main theme of the theory of working capital management is interaction between the current assets & current liabilities.

Major Current Assets i. Cash ii. Accounts Receivables iii. Inventory iv. Marketable Securities

Major Current Liabilities i. Bank Overdraft ii. Outstanding Expenses iii. Accounts Payable iv. Bills Payable

TYPES OF WORKING CAPITAL
PERMANENT WORKING CAPITAL The need for current assets arises because of the operating cycle. The operating cycle is a continuous process and, therefore, the need for current assets is felt constantly. But the magnitude of current assets needed is not always a minimum level of current assets which is continuously required by the firm to carry on its business operations. This minimum level of current assets is referred to as permanent, or fixed, working capital. For example, extra inventory of finished goods will have to be maintained to support the peak periods of sales, and investment in receivable may also increase during such periods. VARIABLE WORKING CAPITAL The extra working capital, needed to support the changing production and sales activities is called FLUCTUATING, or VARIABLE, or TEMPORARY working capital. Both kinds of working capital PERMANENT and TEMPORARY are necessary to facilitate production and sale through the operating cycle, but temporary-working capital is created by the firm to meet liquidity requirements that will last only temporary working capital. It is shown that permanent working capital is stable over time. While temporary working capital is fluctuating- sometimes increasing and sometimes decreasing.

CONCEPT OF WORKING CAPITAL
There are 2 concepts: • Gross Working Capital • Net Working Capital Gross working capital: - It is referred as total current assets. Focuses on, • Optimum investment in current assets: Excessive investments impair firm s profitability, as idle investment earns nothing. Inadequate working capital can threaten solvency of the firm because of its inability to meet its current obligations. Therefore there should be adequate investment in current assets. • Financing of current assets: Whenever the need for working capital funds arises, agreement should be made quickly. If surplus funds are available they should be invested in short term securities. Net working capital (NWC) defined by 2 ways, • Difference between current assets and current liabilities • Net working capital is that portion of current assets which is financed with long term funds. • NET WORKING CAPITAL = CURRENT ASSETS - CURRENT LIABILITIES If the working capital is efficiently managed then liquidity and profitability both will improve. They are not components of working capital but outcome of working capital. Working capital is basically related with the question of profitability versus liquidity & related aspects of risk.

DETERMINANTS OF WORKING CAPITAL MANAGEMENT
• • • • • • • Nature of Business Length of production cycle Supply situation Seasonal Variations Scale of operations Credit policy Growth and diversification of business

OPERATING CYCLE
The Working capital requirements of a firm mainly depend, to a great extent upon the operating cycle of the firm. It may be defined as the time duration starting from the procurement of goods or raw materials and ending with the sales realization. Length and nature of the cycle depends on the size and nature of firm. In case of a manufacturing concern like PPL series starts from the procurement of raw material and ending with the sale realization of finished goods (after going through the different stages of production). It involves three phases. So, the time gap between the happening of the first event and happening of the last event is called as operating cycle. The operating cycle in PPL (generally in all manufacturing firms) consists of the time required for both completion of the chronological sequence of all the following: • Procurement of raw materials and services. • Conversion of raw materials into work-in-progress. • Conversion of work-in-progress into finished goods. • Sale finished goods (Cash or Credit). • Conversion of receivables into cash.

ANALYSIS OF FINANCIAL POSITION 0F LAST 7 YEARS
Year Ratios 1 2 Current Ratio Liquid Ratio Absolute Liquid Ratio Inventory to sales Ratio Age of Inventory (Days) 2004 1.48 0.65 2005 1.60 0.43 2006 1.38 0.83 2007 1.61 1.07 2008 2.13 1.52 2009 1.46 1.13 2010 1.49 0.81

3

0.04

0.03

0.02

0.02

0.16

0.38

0.09

4

0.99

1.85

3.80

3.62

4.17

5.58

4.19

5

37

197

96

102

88

65

87

ANALYSIS OF FINANCIAL POSITION 0F LAST 7 YEARS
Year Ratios 2003 2004 2005 2006 2007 2008 2009

Debtors to sales 1.34 Ratio Average 7 Collection 27 Period W.C 8 Turnover 1.71 Ratio C.A 9 To 65 total asset C.A 10 To Sales 178.88 Ratio Creditor 11 Turnover 1 Ratio 6

5.34

2.60

1.86

1.75

2.12

1.31

37

14

19

20

17

27

3.60

5.42

3.20

2.24

3.98

1.26

64

69

76

77

63

80

73.85

65.76

82.31

84.08

79.63

94.5

3

2

3

6

7

7

LIQUIDITY POSITION OF PPL (from 2003-04 to 2009-10
Year Current Assets Current Liabilities Working Capital Increase / Decrease in Working Capital 1734

2003-2004 2004-2005

56,835 54,161

38,204 33,796

18,631 20,365

2004-2006
2006-2007 2007-2008

68,413
98,305 1,00,297

49,237
61,018 47,004

19,176
37,287 53,293

-1189
18,111 16,006

2008-2009
2009-2010

95,550
2,45,314

65,395
1,65,373

30,155
79,941

-23,138
49,786

COMPONENT OF WORKING CAPITAL WITH RESPECTIVE % OF PPL
Year Inventory to Gross Working Debtors to Gross Working Cash/ Bank to Gross Working Other Current Asset to Gross Working Capital (%)

Capital

Capital (%)

Capital

2003-2004 2004-2005 2004-2006 2006-2007 2007-2008 2008-2009 2009-2010

53.46 69.47 38.67 32.77 27.77 17.12 22.49

39.90 24.09 56.49 63.90 66.27 45.04 35.32

2.26 1.62 1.53 1.71 3.37 13.95 1.68

4.38 4.82 3.31 2.16 2.59 23.90 42.20

ANALYSIS OF LIQUIDITY POSITION COMPONENT OF WORKING CAPITAL
As per the balance sheet of PPL for the year ended March 31, 2004 the current assets were only 56845 and the current liabilities were 38204. It is because the company had been making losses for the past consecutive years. But after the divestment, the company has been able to increase its production level, its resource utilization and its profitability position. At the end of March 31, 2010 the total current assets were Rs.2, 45,314 and total current liabilities were Rs.1, 65,373. The net working capital for the period is 79,941 which is very high as compared to the year 2004. So, the company has been able to meet its day to day requirement. In order to protect the interests, short-term creditors always like a company to maintain current assets at a higher level than current liabilities. It is conventional rule to maintain the level of current assets twice the level of current liabilities. PPL also maintains the level of current assets more than price of the level of current liabilities. As PPL is maintaining that level so it’s a good sign for the company and its shareholders. But one thing must be hold that excessive liquidity is also very hard because the current assets would remain idle.

PROFIT AFTER TAX (Rs. In Lakh)
20000 15000 10000 5000 0 -5000 -10000
Series1

1

2

3

4

5

6

7

Interpretation According to this graph after paying tax PPL makes a profit of less than Rs.15000 lakh in comparison to previous year which is not a good sign for the company.

ANNUAL TURNOVER (Rs. In Lakh)
600000 500000

400000
300000 200000 100000 0
Series1

1

2

3

4

5

6

7

Interpretation Due to increase in production and sales or due to high commodity prices in the first half of the year, company recorded a higher turnover of more than Rs.5000 crore. But it is less than previous years performance which is not a good sign for the company.

NET PROFIT OF PPL THROUGHOUT TEN YEARS
60000
50000 40000 30000 20000
Series1

10000 0 -10000 -20000 -30000 Interpretation According to this analysis the company faces net loss for five year before privatization but after privatization it become a profit making company.
1 2 3 4 5 6 7 8 9 10

PROCUCTION AND SALES FOR LAST 7 YEARS
Chart Title
14 12 10 8 6 4 2 0 Series1 Series2

Axis Title

1 8.5 8

2 10 11.2

3 12.1 12.2

4 12.9 13

5 12.5 12.8

6 10 9.9

7 11.9 12

Interpretation As compared to previous year the production is decreased by1.5 lakh metric ton and sales decreased by 2.9 lakh metric ton. This year sales remain stable according to production.

DISTRIBUTION OF EXPENSES ( %)

Interpretaion From this analysis it is concluded that PPL expenses is more while consuming raw material. Then after while in purchasing traded goods and in other expenses. Expenses are made through selling and distribution of products. Through this distribution analysis we know about the area or field where expenses are made.By knowing this PPL was able to minimise or maximise the expenses. PPL import raw material from outside to make its finished products which cost is very high.

COMPONENTS OF WORKING CAPITAL
RECEIVABLES MANAGEMENT CASH MANAGEMENT INVENTORY MANAGEMENT

WORKING CAPITAL MANAGEMENT

CASH MANAGEMENT AT PPL
In order to effectively manage its cash, so as to sustain liquidity and profitability, PPL has chosen to go for a centralized cash management system. The centralized management system means the cash of PPL is basically managed from the corporate office situated at Bhubaneswar. In order to manage the cash smoothly PPL takes the services of Syndicate Bank, State Bank of India, State Bank of Hyderabad and Punjab National Bank. These banks play an important part in maintaining the daily fund position of PPL i.e. the receipt of cash and payment of different expenses are man aged on a daily basis. This centralized cash management at PPL also helps its it to check the idle cash, which would be otherwise have a cost structure attached to it. Though this system, cash is not allowed to remain idle at various branches and it is used by the company to pay its short term liabilities which may arise.

All the payments and remittances are being controlled from PPL corporate office by monitoring the daily position of collection and requirement of payments. The requirement of various units are sent to corporate office and considering the requirement and availability of funds the corporate office advices different units to release various payment by remitting such amount by telegraphic transfers.

CASH MANAGEMENT AT PPL
All the sales are realized at the marketing state offices of PPL. The state office at Bhubaneswar through the help of the consortium bankers. At plant level, cash transaction involving petty expenses is maintained by a petty cashier and cash transaction involving payment of salary, spare parts etc are managed by the banks. Payment is made according to the particular condition. Generally payment is made in two ways: • Direct payment • Bank payment In case the supplier is from outside of India payment is made to bank. Bank issues letter of credit to the supplier. PPL makes the payment in India currency equivalent to the supplier’s price. Bank then converts it into foreign currency and makes the supplier payment in foreign currency. PRACTICES FOLLOWED BY PPL In PPL, they prepare short-term forecast i.e. daily, weekly and monthly basis. At first state the branch offices do their forecasts on monthly basis and send it to the head office Bhubaneswar. After collecting all branch offices the head office combines them and prepare a consolidated monthly forecasts which is changed to weekly forecasts i.e. 4 weeks in a month. The head office aggregates the actual expenditure in that week which was made before. In this stage the forecast have three sub column (i.e. month, week & next week) and actual have three sub columns.

INVENTORY MANAGEMENT OF PPL
TYPES OF INVENTORIES The common type of inventories of PPL may be classified as:RAW MATERIAL It forms the major part of inventory. They are required for the production activities uninterruptedly at PPL, it continues 60% of total inventory. The various raw material P205, ammonia, rock phosphate, sulphur etc. PACKING MATERIAL The inventory of packing material has increased from 3.44 lakh in 2007-08 to 5.26 lakh in 2008-09 due to increase in inventory. CHEMICALS AND CATALYST The level of the inventory has increased from 35.18 lakh in 2007-08 to 61.64 lakh in 2008-09. STORES AND SPARES The inventory of stores and spares constitutes about 13% of the total value of plant inventory. The expenditure on repair and maintenance was lower in the current years because of low consumption.

RECEIVABLES MANAGEMENT
Receivable is a type of loan extended by the seller to the buyer to facilitate the purchase process. The receivable is an asset as it represents a claim of firm against its customer expected to be realized in near future. Since credit sale assumes a regeable portion of total sales in PPL, so here the receivable management is an area of attention PPL has set of a credit terms and policies under which goods are sold on credit. CREDIT POLICY OF PPL • PPL has been holding a good rank in Odisha and in Indian market. It is happened due to a credit policy and proper management of receivable. The following is the summary of the company’s credit policies. • The company has adopted SAP technology in almost all the departments by which all the works are being done automatically. • The company sells most of its products on cash basis. It doesn’t give more credits to its dealer and agents those who market its product. • The company always takes some advances before giving any delivery. It also accepts the letter of credit and cheques. If any default arises, then they cancel the deal over there.

TO IMPROVE THE WORKING CAPITAL POSITION, VARIOUS STEPS HAVE BEEN TAKEN BY THE MANAGEMENT OF PPL, WHICH INCLUDES
• Depositing of cheques collected by different reasons on the same day in the specified bank and the statement of such cheques deposit e-mailed to corporate office. • Agreement with the respective banks to give credit to their respective branches in Bhubaneswar by second or third day from the date of deporting the cheques and transfer of such amount consortium of banks accounts under cash management system. • All the payment and remittances are being controlled from PPL corporate office by monitoring the daily position of collection and requirements of payments. • The requirement of various units are being sent to corporate office and considering their requirement and availabilities of funds, the corporate office advise different unit to release various payments by remitting such amounts by telegraphic transfers.

SWOT ANALYSIS OF PPL
Strength • The company has large amount of gypsum storage which can be sold to the cement manufacturing companies by which it can earn some profit out of that. • Widespread client with the backup of a strong stockiest network. • Capacity aided by large mills with state-of-art technology and modern equipment and facilities. • Rapport and credibility with Central and State Governments. Opportunities • Competitive market with demand for better quality fertilizers. • By optimum capacity utilization PPL can make significant surpluses. • Gap between demand and supply expected to widen.
Weaknesses • The company doesn’t have its own transportation facility to its amounts to huge expenditure. • Heavy transportation cost and long delivery period and hence high transit inventory for both inputs and finished products. • The mineral resources required for production of fertilizer are imported from outside of India which is very costlier. • Limited scope for product quality improvement owing dependence on single raw material. Threats • Increase in raw material costs and change in government pricing policies can affect the future production process. • Competition from homogeneous plants going in for expansion, modernization, and emergence of new plants using superior imported raw materials.

FINDINGS
•PPL also maintains the level of current asset more than twice of the current liabilities; so it may be integrated to be sufficiently liquid. PPL has also gone for long term financing with short terms source keeping in view contains of the individual company, a judicious mix of long and short-term finances should be invested in current assets.
•PPL maintains a healthy amount of current assets which shows an increasing trend but at the same time the company should recover is debt amount by which there would be sufficient cash balance. If the company can have sufficient cash balance then it can utilize its current assets in innovative projects for further profit maximization. The operation cycle of PPL is gradually becoming efficient. •Although PPL has been holding a good rank in Odisha and Indian market but it is not maintaining a good credit policy and management or receivables. The company sells most of its product on credit basis. •The company has a system of centralized control and decentralized collections. The control office at Bhubaneswar receives a statement of sales and outstanding daily from all branches to initiate appropriate action. •The company sells to corporate client only through a bank guarantee. Initially new dealers are given no credit. The company has many branches in India and abroad for the quick collection from customers. But the sundry debtors have been increasing continuously. The company does not receive most of its revenue from cash sales. It has been using the perpetual inventory system for inventory management. The corporate office records all the event of inventory after it is recorded in the production centre. It has also good internal management system for better prosperity.

SUGGESTIONS AND RECOMMENDATIONS
• The company must supply the surplus gypsum to the cement industries by which there will be growth in the cement industry at the same time it can make sufficient income out of that. • The government must take adequate steps to open more cement industries by which both these industries will grow. • The management of PPL should try to avoid low danger points of excessive or inadequate investment in current assets. • The management of PPL should have knowledge of the sources of working capital funds as well as investment avenues where idle funds may be temporarily invested. • The PPL has satisfactory liquidity ratios but the debtors turnover and creditors turnover ratio must be brought under control. • PPL is selling a major part of its finished goods on credit it would be better if it can increase its cash sales. • The company should try to hold the required amount of inventory in every time to reduce its idle fund. • The company should try to accelerate the cash conversion cycle for better management of cash. • If PPL invest more in its operating activities rather than financing activities then it may become a no.1 fertilizer company of the country..

CONCLUSION
PPL continues to be a vital and crucial company for Odisha as well as India. The approach will be to enhance the capacity of PPL to enable them to meet these objectives efficiently and effectively and to formulate the regulatory framework aimed at strengthening the supervision of PPL to enhance its safety and soundness. It includes operational reengineering to be undertaken by PPL to gear them towards meeting their expected roles more efficiently and effectively and to ensure that this will be achieved without resulting in financial problems to the company. Improvement in quality of PPL is the need of the hour. Proper coordination, strengthening of financial strength and proper corporate governance can hopefully achieve the desired result. Last two year it could able to get that much profit as it had got the year before the last some year. But this year touches another milestone. So it is conducted the company has a very strong financial position almost in every respect because the company is going to profit. In the liberalization, privatization and globalization (LPG) era those organizations can survive, if they have sound capital structure.