CHAPTER-I INTRODUCTION Finance is one of the major elements, which activates the overall growth economy.

Finance is the life blood of economic activity. In the present day economy, finance is defined as the provision of money at the time when it is required. Every enterprise, whether big, medium or small needs finance to carry on its operations and to achieve its targets. The subject finance has been traditionally classified in to two classes like below:

PUBLIC FINANCE PRIVATE FINANCE

Public finance deals with the requirements, receipts and disbursements of funds in the government institutions like states, local self governments and central government.

Private finance is concerned with requirements, receipts and disbursements of fund in case of an individual, a profit seeking business organizations and non-profit organizations.

INTRODUCTION TO WORKING CAPITAL Companies that manage their Working Capital will have relatively strong profit and their share holders have been rewarded with capital appreciation despite an over all trend of declining share prices. Others especially, Commodity procedures and Companies whose products take cyclic demand have floundered.

Many a times, the main causes of the failure of business enterprise have been found to be shortages of current assets and their mishandling. Inside amount Working Capital is a serious handicap in business where as fixed capital investment generates products. Companies

competent and administration of current assets sales the problems of underutilization of capacitance.

A firm contains input to make a finished product, which is sold to make a profit. These sales proceed are re-invested to make such products and generate further profits. The problem is, there is a lag between the time a finished product is ready and the time its sale proceeds are realized. If a Company waited till their products come in, its plant and machinery would lie idle until this amount accrues to it. So to conjure smooth operations through this time lag, every business activity make funds. This is its Working Capital, the rational for the Superior valuation. Since there is a cost associated with Working Capital, a Company that can generate more revenues from a special amount, Working Capital than others, will eventually be more profitable, better cash flows.

DEFINITION OF WORKING CAPITAL: Working capital is descriptive of that capital which is not fixed. But the more common use of working capital is to consider it as the difference between the book value of the current asserts and the current liabilities. HOAGLAND Working capital is the amount of funds necessary to cover the cost of operating the enterprise SHUBIN

Working Capital refers in a firms investment in short-term assets, Cash. short-term securities, accounts receivable and inventories Working Capital is amount of funds necessary to cover the cost of operating their enterprise

WORKING CAPITAL MANAGEMENT THEORETICAL CONCEPTS

Meaning of Working Capital: Capital required for the business is divided into two aspects Fixed capital Working Capital

Fixed capital: It is the amount of money required to maintain the fixed assets of the concern

Working Capital: The amount of money required to meet the day-to-day transactions of the business is termed as Working Capital.

Concepts of Working Capital: The concepts of Working Capital are Gross Working Capital: Gross Working Capital Net Working Capital

It refers to the firms investment in the current assets. Current assets are the assets, which can be easily converted into cash within one accounting year. The gross Working Capital focuses attention on two aspects of current assets management-

1. 2.

The way to optimize the investment in current assets. The opportunity to finance the current assets.

Net Working Capital: It is the excess of current assets over the current liabilities. Current liabilities are those claims of outsiders, which are expressed to mature for payment within one accounting year. Net Working Capital can be positive or negative. A positive Net Working Capital indicates the excess of current assets over the current liabilities. A negative Net Working Capital is a qualitative concept and indicates the liquidity position of the firm. It suggests the extent to which the Working Capital may be financed by permanent sources of funds. Approaches of Working Capital: Depending on the mix of short and long-term financing, the approach followed by any company fall under these three categories Matching Approach: It refers to the adoption of a financial plan, which matches the expected life of the assets with the expected life of the source of funds raised to finance assets. In this approach the long-term financing is used to finance the fixed assets and permanent current assets. The short-term financing will be used if the firm has the need of only fixed current assets. Matching Approach Conservation Approach Aggressive Approach

Conservative Approach: In this approach the financing of permanent assets and a part of temporary current assets the idle amount of long-term financing can be invested in the tradable securities and conserve liquidity. Aggressive Approach: In this approach the short-term financing is used more to finance a part of its permanent current asserts. Sometimes in a more aggressive way the short-term financing is used for financing the fixed assets. Sources of Working Capital The sources of finance for Working Capital are of two types. They are permanent and temporary sources of Working Capital. The Working Capital investments in minimum level of current assets are permanent Working Capital. The Working Capital required to meet the seasonal contingencies is called temporary (or) variable Working Capital requirements of a concern from the short term sources of finance. Permanent Sources of Working Capital: The permanent Working Capital sources of finance are done for having a uninterrupted finance for a long period. There are five important sources of permanent Working Capital. They are: Shares Debentures Public Deposits. Ploughing back of profits. Loans from financial institution.

Shares: Generally, a company should raise the maximum amount of Working Capital by the issue of shares. The preferences carry a preferential right in respect of the divided at a fixed rate. Equity shares do not have such obligation. A company should not issue different shares according to the companies act. Debentures: Debenture is an instrument issued by the company acknowledging its debt to the holder. A fixed rate of interests is paid on the debentures secured or paid in prior to the unsecured debenture holders. The company enjoys tax benefits. Public Deposits: They are the fixed deposits accepted by the business directly from the public. It has both advantages and dangers. The R.B.I has also down certain limits on the non-banking concerns. Ploughing Back of Profits: It is an internal source of finance and reinvestment of the surplus earnings of the business. It is the cheapest and cost-free sources of finance. Excessive resort to ploughing back of profits leads to over capitalization and speculation. Loans and Financial Institutions: Financial Institutions like Commercial Banks, IFCI, LIC provide short-term, medium-term, long term source of finance suitable to meet the demand of Working Capital. A fixed rate of interest is charged against such loans and is paid by way of installments.

Temporary Sources of Working Capital: The temporary sources of Working Capitals are:

Indigenous Bankers. Trade Credits Installment Credits Advances Accounts Receivable Credits. Accrued Expenses Deferred Expenses Commercial Paper

Indigenous Bankers: These are the private moneylenders who charge high rate of interest for the loan given by them. These Bankers are more prior to the establishment of the commercial banks. Now we can fine a few. Trade Credit: It is the credit extended by the suppliers of goods in the normal course of business. The credit worthiness of a firm and the confidence of its suppliers are the main basis of securing trade credit. There are some advantages such as convenient method of finance, flexibility as the credit increases. Installment Credit: In this method, the assets are purchased and the possession of goods is taken immediately but the payments are made in installments over a predetermined period of time.

Advances:

Firms having ling production cycle take advances from their customers and agents against their orders. This acts as a cheap source of finance and minimizes their investment in Working Capital. Accounts Receivable Credit: It is the services offered to manage the financing of debts arising out of the credit sales. This service is now available in India only on recourse basis. It has certain limitations such as the cost of factoring is high perception of financial weakness about the firm availing these services. Accrued Expenses: These are the expenses, which have incurred but not yet pain. It varies with the change in the level of the activity of the firm. The frequency and magnitude of accruals is beyond the control of the management. Deferred Incomes: These are the funds of incomes received by the firm for which it has to supply goods in future. These funds increase the liquidity of a firm and constitute an important source of short-term finance. Commercial paper: It is unsecured promissory notes issued by the firm to raise short-term funds. The maturity period of a commercial paper ranges from 91 to 180 days. The draw back is that can be redeemed only after the maturity date. The Working Capital management or short-term financial management is concerned with decisions relating to current assets and current liabilities. The key difference between long-term financial management and short-term financial management is in terms of timing of cash. Long term financial decisions (like buying capital equipment or issuing debentures) involve cash flow an extended period of time(5 to 15 years or more) short-term financial decisions typically involve cash flows within a year or

within the operation cycle of the firm. The Working Capital Management is a significant facet of the financial management. It is important stems from two reasons. Investment in current assets and the level of current liabilities have to gear quickly to changes in sales. Arranging short-term financing, negotiating favorable credit terms, controlling movement of cash, administrating accounts receivable, and monitoring the investment in inventories consume a great deal of time financial managers. The management of Working Capital depends upon certain basic principles. Principles of Working Capital Management: In examining the management of current assets (i.e. Working Capital management), certain principles have to be borne in the mind. These principles are the answers that are to be sought to the following questions.

The need of invests funds in the current assets. Amount of funds to be invested in each type of current assets. The required proportions of the long-term and short-term funds to finance current assets. The appropriate sources of funds needed to finance the current assets. Constituent of Current Assets and Current Liabilities

CURRENT ASSETS Inventories Raw material and components Work in progress

CURRENT LIABILITIES Sundry Creditors Trade advances Borrowings

Finished Goods Others Trade debtors Loans and advances Investments Cash and Bank Balances Table No: 4.1

Commercial Banks Others Provisions

Short life Span and Swift Transformation: In management of Working Capital, two characteristics of current assets must be borne in mind. Short life span Shift Transformation into other assets form

Current assets have a short life span. Cash balances are held idle for a week or two, accounts receivable may have a life span of 30 to 60 days, and inventories may be held for 30 to 100 days. The life span of current assets depends upon the time required in the activities of procurement, production, sales and collection and the degree of synchronization among them.

The nature of current assets is that they are swiftly transformed into other assets form. Cash is used for acquiring raw material. Raw materials are transformed into finished goods, finished are generally sold on credit are converted into accounts receivable finally accounts receivable, on realization, generate cash.

The swift transaction of current assets and the short life span of the components of Working Capital can be seen in the current assets cycle. However, this short life span and swift transformation has certain implications. Decisions relating to Working Capital management are repetitive and frequent. The difference between profits and present value is insignificant. The close interaction among Working Capital components implies that efficient management of one component cannot be undertaken without simultaneous consideration of other components. CURRENT ASSETS CYCLE:

Finished Working progress Account Receivable Wages, Salaries Factory

Cash Chart no: 4.2 OPERATION CYCLE AND CASH CYCLE:

Suppliers

Investment in Working Capital is influenced by four key events in the production and sales cycle of the company.

Purchase of material Payment of raw materials Collection of cash for sales.

These keys events affect the cash flows. The firm begins with the purchase of raw material, which is pain for after a delay, which is paid for after delay and which represents the accounts payable period. Customers pay their bills sometime after the sales the period that elapses between the date of sales and the date of collection of receivables is the accounts payable period (debit period)

OPERATION CYCLE: The time that elapses between the purchase of raw material and the collection of cash for sales is referred as operating cycle. The operating cycle is the sum of the inventory period and the accounts receivable period.

The behavior of the overall operating cycle and its individual components of a firm are monitored through time series analysis and cross section analysis. In time series analysis the duration of the operating cycle and its individual components is compared over a period of time for the same firm. In the cross section analysis the duration of the operation cycle and its individual components is compared with that of firms of a comparable nature. The operating cycle of the firm begins with acquisition of raw materials and ends with the collection of receivable. It may be divided into four stages. Raw material and stores stage. Work in progress stage.

 Debtors collection stage. Use of Operating Cycle: The operating cycle is helpful to the company in two ways:

It helps in forecasting Working Capital requirements.

Control of Working Capital can be done efficiently by the use of operating cycle. Determination of the Length of Operating Cycle:

The length of the operating cycle of a manufacturing firm is the sum of: Inventory conversion period. Book debts conversion period.

Inventory Conversion Period: It is the total time needed for producing and selling the product. It includes the raw material conversion period. Work-in-progress, conversion period and the finished goods conversion period. Book Debts Conversion Period: The book debts conversion period is the time required to collect outstanding amount from the customers. The total of inventory conversion period and book debts conversion period is the gross operating cycle. The difference between the gross operating cycle and the payable deferral period is net operating cycle.

Cash Cycle: Cash cycle is the length between the payment for raw material purchases and collection of cash for sales. Cash cycle is equal to the operating cycle less the accounts payable period. It also represents time interval over which additional funds, called Working Capital should be obtained in order to carry out the company operations. If depreciation is excluded from expenses in computation of operating cycle, the net operating cycle also represents cast conversion cycle.

OPERATING CYCLE OF THE LTD.: The operating cycle of the company has four stages:

Work in progress stage Finished goods stage Debtors stage Creditors stage.

Working in progress stage: The work in progress stage of the company is calculated as follows.

Work in progress stage =

Average stock of Work in progress Cost of Production per day

Cost of production per day = Manufacturing expenses + consumption of raw Material + Opening balance of work in Progress Closing balance of work in progress / 360 Finished goods stage:

The finished goods stage of the company is calculated as follows:

Average stock of finished goods Finished goods stage = Cost of goods sold

Cost of sales per day = selling and distribution expenses + excise duty + cost of Production + opening stock of finished goods closing Stock of finished goods/360. Debtors stage: The debtors stage of the company is calculated as follows: Average debtors Debtors stage = Sales per day

Sale per day = Net sales / 360.

Creditors stage: The creditors stage of the company is calculated as follows: Average creditors Creditors stage = Purchases per day Purchases per day = Net purchases / 360.

Cash management: Cash, the most liquid asset, is of vital importance to the daily operations of the company. Cash management is concerned with the managing of 1. Cash flows into and out of the firm. 2. Cash flows within the firm. 3. Cash balance held by the firm at a point of time by financing deficit of inventing surplus cash.

COLLECTIONS

INFORMATION AND CONTROL

BORROW (or) INVEST

PAYMENTS

Source: company magazine CASH MANAGEMENT CYCLE:

Chart no: 4.4

Sales generate cash, which has to be disturbed out. The surplus cash has to be invested while deficit has to be borrowed. Cash management seems to accomplish this cycle at a minimum cost. At the time, it also seeks to achieve liquidity and control. The management of cash is important because it is difficult to predict cash flows accurately, particularly the inflows and that there is no perfect coincidence between the inflows and outflows of the cash. In order to resolve the uncertainness about the cash flows, the firm should develop appropriate for cash

management. The firm should evolve strategies regarding the following four facts of cash management.

Cash planning: cash inflows and outflows should be planned to project cash surplus or deficit for each period of the planned period.

Managing the cash flows: the flows of the cash should be properly managed.

Optimum cash level: the firm should decide about the appropriate level of cash balance. Investing surplus cash: The surplus cash balance should be properly invested to earn profits.

MOTIVES FOR HOLDING CASH: There are three possible motives for holding cash: Transitive. Precautionary. Speculative.

Transitive Motive: Firm needs cash to meet their transaction needs. The collection of cash is not perfectly synchronized with the disbursement of cash. Hence, some cash balance is required as buffer.

Precautionary Motive:

There may be some uncertainty about the magnitude and timing of cash inflows from sales of goods and services, sales of assets, and issuance of securities. To project it against such uncertainties, a firm may require some cash balance. Speculation Motive: Firms would like to tap profit-making opportunities arising from fluctuations in commodity prices, security prices, interest rates, and foreign exchange rates. A cash rich firm is better prepared to exploit such bargains. Hence, the financial manager should establish reliable forecasting and reporting system improve cash collections and disbursements and achieve optimal conservations and utilization of funds.

CASH BUDGETING: Cash budgeting or short-term cash forecasting is the principle tool of cash management. Cash budgets, routinely prepared by business firms are helpful in:

Estimating cash requirements. Planning short-term financing. Scheduling payments in connection with capital expenditure projects. Planning purchases of materials. Developing credit policies.

The principle method of short-term cash forecasting is the receipts and payments method. Sometimes the adjusted net income method is used through this method is employed mainly for long-term cash forecasting.

Long term cash forecasting: Long-term cash forecasting are generally prepared for a period ranging from two to five years and serve to provide a broad brush picture of a firms financing needs and availability of invest bile surplus in the future. The receipt and disbursements method is used for preparing the longterm cash forecast.

Monitoring collections and receivables: The efficiency of cash management can be enhanced by properly monitoring the collection and disbursements.

The followings are useful:

Prompt billing: By preparing and sending the bills promptly, a firm can ensure remittance. It should be realized that it is in the area of billing that the companys controls is high and there is a sizeable opportunity and others in accelerating invoice date, mailing bills promptly, and identifying payment locations.

Control of payable: When a firm issues a cheque it reduces the balance in its books. The balance in the banks books is not reduced till the bank makes the payment. The amount of cheques issued by the company but not paid for by the referred to as the payment float. The amount of cheques deposited by

the firm in the bank but not cleared is referred to as the collection float. The difference between payment float and collection float is referred to as net float. Optimal cash balance: If a firm maintains a small cash balance it has to sell its marketable securities (and perhaps buy them later) more frequently than if it holds a large cash balance. Hence, the trading costs will tend to diminish if the cash balance becomes increases. However, the opportunities costs of maintaining cash rise as the cash balance increases. The optimal cash balance is one were the total costs of holding cash (which consists of trading costs and opportunity costs) are at minimum for a particular size of cash balances. Credit management: Business firms would like to sell on cash. The pressure of competition and the force of customers persuade them to sell on credit. Firms grant credit to increase or facilitate their sales. The credit period extended by the business usually ranges from 15 days to 60 days. When goods are sold on credit, finished goods get converted into accounts receivable in view of seller. In the view of buyer, the obligation arising from credit purchase is represented as accounts payable (trade creditors).

CHAPTER II OBJECTIVES & METHODOLOGY

OBJECTIVES OF THE STUDY:

The presence study is intended to analyze the practice of Working Capital management in Bajaj capital Life Insurance Co. Ltd The efficiency of the Working Capital Management is determined by the efficient administration on its various components.

The main objectives of this study are depicted below: 1. To know the process of Working Capital Management at Bajaj capital Life Insurance Co. Ltd

2. To study the cash management, receivables management and inventory management. 3. To study the financial ability of Bajaj capital Life Insurance Co. Ltd. to meet its financial obligations 4. To know the extent to which Bajaj capital Life Insurance Co. Ltd. is efficiently using its assets in its operations. 5. This study attempts to understand the efficiency and effectiveness of the management in each segment of Working Capital.

NEED FOR STUDY:

In a perfect world there would be no necessity for current assets and current liabilities because there would be no uncertainty, no transaction costs, information search costs, scheduling costs, or production and technology constraints. However, the world in which we live is not perfect.

So, organization may be faced with an uncertainty regarding availability of sufficient quantity of critical inputs in future at reasonable price. This may necessitate the holding of inventory i.e. current assets. To ensure that each of the current assets is efficiently managed to ensure the overall liquidity of the unity and at the same time not keeping too high level of any one of them Working Capital management is a must. Working Capital attains a proper balance between the amount of current assets and the current liabilities in such away that the firm is always able to meet its financial obligations whenever due. Working Capital management ensures smooth working of the unit without any production held ups due to the paucity of funds. Thus as Working Capital is the life, blood and nerve center of a business. It is managed in order to attain a smooth running of the business METHODOLOGY: In methodology data collections are in two types. Those are Primary source and Secondary source.

PRIMARY DATA:

As for the study, primary data is gathered through a series of detailed discussions with managers, workers and executives of the company. Continuous interaction with the employees during the study helped me to arrive at certain conclusions about the study.

SECONDARY DATA:

As for the study, the secondary data was collected from company financial reports, reference books, websites, and various books and records from the Finance Department. Data have been collected from published books like Journals, from the reports of the Auditors and from sources such as annual reports published by Bajaj capital Life Insurance Co. Ltd., which is the main source to this study.

LIMITATIONS: The limitations that came across during the course of this work are listed below

Limited financial information is provided. i. e only 7 yrs data is given. Limited time is given to study these aspects. Literally through the study is not comprehensive; it is illustrative enough to arrive at reasonable conclusions. In spite of many efforts made for perfection, some inconsiderable mistakes may occur.

CHAPTER-III INDUSTRY AND COMPANY PROFILE Bajaj Capital Ltd is one of India's premier Investment Advisory and Financial Planning companies. The Company is also SEBI-approved Category I Merchant Bankers. The Company offers personalised Investment Advisory and Financial Planning services to individual investors, corporate houses, institutional investors, Non-Resident Indians (NRIs) and High Networth Clients, among

Bajaj capital Life Insurance Co. Ltd. is a joint venture between Allianz SE, one of the world's largest insurance companies, and Bajaj Finserv. Allianz SE is a leading insurance corporation globally and one of the largest asset managers in the world, that manage assets worth over a Trillion. With over 115 years of financial experience, Allianz SE is present in over 70 countries around the world. Bajaj Allianz is into both life insurance and general insurance. Today, Bajaj Allianz is one of India's leading and fastest growing insurance companies. Currently, it has presence in more than 550 locations with over 60,000 Insurance Consultants. In June 2008, Bajaj Allianz entered into partnership with Thomas Cook India to provide travel finance. Bajaj Allianz Life Insurance ensures excellent insurance and investment solutions by offering customized products, supported by the best technology. A comprehensive list of policies and products offered by Bajaj Allianz Life Insurance Co. Ltd. is as follows Whether its planning for your children's future or whether its planning for your requirement. Or for covering your risks. Or for a tax friendly investment option. Insurance companies in India have lined up an array of options. Life Insurance plans are classified into children's plans, pension plans, unit linked insurance plans (ULIP), term plans, endowment plans, whole-life plans and money-back plans.

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the most cost effective plan for a teenager. One should treat utility services seriously, since small payments made regularly add up over time. Well researched, properly compared and targeted purchases of broadband packages, mobile plans, DTH schemes made Credit cards Now, credit cards or plastic cards decreased the fear of cash loss or theft .Credit cards are the replacement of cash at the time of emergency. Compare free credit card offers by various banks. Apply online for credit card by filling easy credit card application form. We offer wide range of credit cards; you can choose and apply which one suit you best. Policy Bazaar will not only save money, but also ensure you choose the best services. Bajaj Allianz Life Insurance Co. Ltd. is a joint venture between Allianz SE, one of the world's largest insurance companies, and Bajaj Finserv. Allianz SE is a leading insurance corporation globally and one of the largest asset managers in the world, that manage assets worth over a Trillion. With over 115 years of financial experience, Allianz SE is present in over 70 countries around the world. Bajaj Allianz is into both life insurance and general insurance. Today, Bajaj Allianz is one of India's leading and fastest growing insurance companies. Currently, it has presence in more than 550 locations with over 60,000 Insurance Consultants.

In June 2008, Bajaj Allianz entered into partnership with Thomas Cook India to provide travel finance. Bajaj Allianz Life Insurance ensures excellent insurance and investment solutions by offering customized products, supported by the best technology. A comprehensive list of policies and products offered by Bajaj Allianz Life Insurance Co. Ltd. is Unit Linked Plans

Regular Premium New Unit Gain Super Unit Gain Plus Gold New Unit Gain Plus New Unit Gain Young Care Young Care Plus New Family Gain-R

Single Premium New Unit Gain Premier SP New Unit Gain Plus SP

Pension Plans

Annuity Pension Guarantee Retirement Future Income Generator Swarna Vishranti New Unit Gain Easy Pension Plus RP New Unit Gain Easy Pension Plus SP Future Secure

Traditional Plans

Endowment Invest Gain Save Care Economy SP Life Time Care Super Saver Money Back Cash Gain

Term Plans

Protector Term Care

New Risk Care

Women Insurance Plans

House Wives Working Women

Health Plans

Care First Health Care Family CareFirst

Children Plans

Child Gain

Group Plans

Non Employer Employee Credit Shield Group Term Life(Non Employer Employee) Group Suraksha Swayam Shakti Suraksha Group Loan Protector Group Income Protection Employer Employee Group Term Life(Employer Employee) New Group Gratuity Care New Group Superannuation Care Group Save Plus Group Term Life in lieu of EDLI

Group Leave Encashment Scheme Group Annuity Group Superannuation Gold Group Gratuity Gold

Micro Insurance

Alp Nivesh Yojana Jana Vikas Yojana Saral Suraksha Yojana

Other Plans

Family Assure Fortune Plus Capital Shield CenturyPlus II

CMD/ED

Finance Accounts Chief Finance Officer K. Suresh

Human Resources Vice President Jai Krishna

Supply Chain Management Vice President (SCM) G. Vijaya Naidu

IT Chief Information Officer K. Suresh

QMS & QA Vice President D. Naran Reddy

Finance Accounts D.G.M D. Ramesh Babu

Human Resiyrces Manager (HO) T. Damodhara Chowdary

D.G.M. B. Damodaram

DP & IM HOD L. Mahendra

Manager S. Sathish

QMS Manager K. Subba Reddy

Finance Manager G. Ramachandra Raju

ADMIN (HQ) Officer M. Parthasaradhi

Logistics Sr. Officer R. Chandra Raju

QA ARBL Manager P. Murali

Debtor Officer Padmaja

Costing Manager V. Venkatesh

Commercial Manager A. Venkatesh

CHAPTER 4 DATA ANALYSIS & INTERPRETATION Statement showing changes in Working Capital during the period 2001-2002. Particulars 2001 (Rs) 2002 (Rs) Changes in Working Capital Increase Current Assets: (a) inventories (b)sundry debtors (c)cash and bank balance (d)other current assets (e) loans and advances Total current Assets Current liabilities and provisions 1,46,63,08,018 1,36,24,00,236 Decrease 10,39,07,782

7,08,07,258 4,12,81,015

6,45,65,339 2,82,13,254

62,41,919 1,30,67,761

30,38,828 20,32,37,660 1,78,46,72,779 6,65,68,372

19,72,164 20,71,41,557 1,66,42,92,550 54,61,25,626 39,03,897

10,66,664

12,03,80,229 47,95,57,254

Total current Liabilities Changes in working Capital Decreasing in Working Capital

6,65,68,372

54,61,25,626

47,95,57,254

1,71,81,04,407

1,11,81,66,924

59,99,37,483

59,99,37,483

1,71,81,04,407 Table No: 5.1

1,71,81,04,407

60,38,40,780

60,38,40,780

Interpretation:

From the above table shows the working capital requirements for the company in the year 2001. In the year 2001 there is a significant change in current assets such as inventories has been decreased by Rs.1, 36, 24, 00,236 over the last year 2000. Sundry debtors have been decreased by Rs.6, 45, 65,339 compared to last year. Cash and bank balances have been decreased by Rs.2, 82, 13,254. Other current assets, loans, and advances have been decreased by Rs.19, 72,164 and Rs.20, 71, 41,557 over the last year 2000. In the financial year 2001 total current assets has been decreased by Rs.12, 03, 80,229. That means in flow of funds to the company and their impact decreasing the Working Capital requirement.

In the year 2001 there is a significant change in current liabilities increasing their value by Rs.47, 95, 57,254 compared to the last year 2000. The total current liabilities in the year 2002 increasing their value by Rs 47,95,57,254 over last year 2000. Increase the current liabilities means inflow of funds to the company that result in decreasing in working requirements to the company. The total net Working Capital decreased by Rs.59, 99, 37,483 compare to the last year 2000.

Statement showing changes in Working Capital during the period 2002-2003. Particulars 2002 (Rs) 2003 (Rs) Increase Current Assets: (a) inventories (b)sundry debtors (c)cash and bank balance (d)other current assets (e) loans and advances Total current Assets Current liabilities and provisions Total current Liabilities Changes in Working Capital Net decrease in Working Capital Source: Company annual reports. Table No.5.2 111,81,66,924 1,29,81,153 111,81,66,924 1,29,81,153 8,38,23,781 8,38,23,781 54,61,25,626 1,11,81,66,904 62,99,49,407 110,51,85,771 8,38,23,781 54,61,25,626 62,99,49,407 8,38,23,781 1,66,42,92,530 1,73,51,35,178 7,08,42,648 1,36,24,00,236 6,45,65,339 2,82,13,254 19,72,164 20,71,41,557 1,43,85,65,711 4,80,26,504 3,45,07,202 24,67,261 21,15,68,500 62,93,948 4,95,097 44,26,943 7,61,65,475 1,65,38,835 Decrease Changes in Working Capital

Interpretation:

From the above table shows the working capital requirements for the company in the year 2002. In the year 2002 there is a significant change in current assets such as inventories has been increased by Rs.7, 61, 65,475 over the last year 2001. Sundry debtors have been decreased by Rs.1, 65, 38,835 compared to last year. Cash and bank balances have been increased by Rs.62, 93,948. Other current assets and loans and advances have been increased by Rs.4, 95,097 and Rs.44, 26,943 over the last year 2001. In the financial year 2002 total current assets has been increased by Rs.7, 08, 42,628. That means out flow of funds to the company and their impact increasing the Working Capital requirement. In the year 2002 there is a significant change in current liabilities increasing their value by Rs.8, 38, 23,781 compared to the last year 2001. The total current liabilities in the year 2002 decreasing their value by Rs.8, 38, 23,781 over last year 2001. Decrease the current liabilities means outflow of funds to the company that result in increasing in working requirements to the company. The total net Working Capital decreased by Rs.1, 29, 81,153 compare to the last year 2001.

Statement showing changes in Working Capital during the period 2003-2004

Particulars Current Assets: (a) inventories (b)sundry debtors (c)cash and bank balance (d)other current assets (e) loans and advances Total current Assets Current liabilities and provisions Total current Liabilities

2003 (Rs)

2004 (Rs)

Changes in Working Capital Increase Decrease

1,43,85,65,711 4,80,26,504 3,45,07,202 24,67,261 21,15,68,500 1,73,51,35,178

1,53,82,60,271 7,31,85,488 530,09,438 12,98,174 20,40,18,611 1,86,98,53,982

9,96,94,560 2,51,58,984 1,85,84,236 11,69,087 75,49,889 13,47,18,804

62,99,49,407

91,44,32,890

28,44,83,483

62,99,49,407

91,44,32,890

28,44,83,483

110,51,85,771 Changes in working Capital Net Decreasing in Working Capital 110,51,85,771

95,54,21,092

14,97,64,679

14,97,64,679

110,51,85,771

28,44,83,483

28,44,83,483

Table No.5.3 Interpretation:

From the above table shows the working capital requirements for the company in the year 2003. In the year 2003 there is a significant change in current assets such as inventories has been increased by Rs.9, 96, 94,560 over the last year 2002. Sundry debtors have been decreased by Rs.2, 51, 58,984 compared to last year. Cash and bank balances have been increased by Rs.1, 85, 84,236 compared to the last year 2002. Other current assets and loans and advances have been decreased by Rs.11, 69,087 and Rs.75, 49,889 over the last year 2002. In the financial year 2003 total current assets has been increased by Rs.13, 47, 18,804 over the last year 2002. That means out flow of funds to the company and their impact increasing the Working Capital requirement.

In the year 2003 there is a significant change in current liabilities decreasing their value by Rs.28, 44, 83,483 compared to the last year 2002. The total current liabilities in the year 2003 increasing their value by Rs.28, 44, 83,483 over last year 2002. Increase the current liabilities means outflow of funds to the company that result in increasing in working requirements to the company. The total net Working Capital decreased by Rs.14, 97, 64,679 compare to the last year 2002.

Statement showing changes in Working Capital during the period 2004-2005 Particulars 2004 (Rs) 2005 (Rs) Changes in Working Capital

Increase Current Assets: (a) inventories (b)sundry debtors (c)cash and bank balance (d)other current assets (e) loans and advances Total current Assets Current liabilities and provisions Total current Liabilities 1,53,82,60,271 1,35,29,84,499

Decrease 18,52,75,772

7,31,85,488 5,30,91,438 12,98,174

12,48,86,536 5,52,57,959 6,52,331

5,17,01,048 21,66,521 6,45,843

20,40,18,611 186,98,53,982

6,04,77,777 1,59,42,59,102

14,35,40,834 27,55,94,840

91,44,32,890

67,27,82,794

24,16,50,096

91,44,32,890

67,27,82,794

24,16,50,096

Changes in working Capital Decreasing in Working Capital

95,54,21,092

92,14,76,308

3,39,44,784

3,39,44,784

95,54,21,092

95,54,21,092

27,55,94,880

27,55,94,880

Source: annual reports.

Table No: 5.4

Interpretation:

From the above table shows the working capital requirements for the company in the year 2004. In the year 2004 there is a significant change in current assets such as

inventories has been decreased by Rs.18, 52, 75,772 over the last year 2003. Sundry debtors have been increased by Rs.5, 17, 01,048 compared to last year. Cash and bank balances have been increased by Rs.21, 66,521 compare to last year 2003. Other current assets and loans and advances have been decreased by Rs.6, 45,843 and Rs.14, 35, 40,834 over the last year 2003. In the financial year 2004 total current assets has been decreased by Rs.27, 55, 94,880. That means in flow of funds to the company and their impact decreasing the Working Capital requirement.

In the year 2004 there is a significant change in current liabilities decreasing their value by Rs.67, 27, 82,794 compared to the last year 2003. Decrease the current liabilities means outflow of funds to the company that result in increasing in working requirements to the company. The total net Working Capital decreased by Rs.3, 39, 44,784 compare to the last year 2003.

Statement showing changes in Working Capital during the period 2005-2006. Particulars Current Assets: (a) inventories (b)sundry debtors (c)cash and 1,35,29,84,499 12,48,86,536 143,18,24,825 11,21,33,122 7,88,40,326 12,75,3,414 2005 2006 Changes in Working Capital Increase Decrease

bank balance (d)other current assets (e) loans and advances Total current Assets Current liabilities and provisions Total current Liabilities Changes in working Capital Decreasing in Working Capital

5,52,57,959 6,52,331

5,02,62,789 10,21,849

49,95,170 3,69,518

6,04,77,777 1,59,42,59,102 67,27,82,794

38,99,83,272 198,52,25,857 135,19,50,925

32,95,05,495 39,09,66,755 67,91,68,131

67,27,82,794 92,14,76,308

135,19,50,925 63,32,74,932

67,91,68,131

28,82,01,376 28,82,01,376 92,14,76,308 92,14,76,308 67,91,68,131 67,91,68,131

Interpretation: From the above table shows the working capital requirements for the company in the year 2005. In the year 2005 there is a significant change in current assets such as inventories has been increased by Rs.7, 88, 40,326 over the last year 2004. Sundry debtors have been decreased by Rs.1, 27, 53,414 compared to last year. Cash and bank balances have been decreased by Rs.49, 95,170. Other current assets and loans and advances have been increased by Rs.3, 69,518 and Rs.32, 95, 05,495 over the last year 2004. In the financial year 2005 total current assets has been increased by Rs.39, 09, 66,755. That means out flow of funds to the company and their impact increasing the Working Capital requirement.

In the year 2005 there is a significant change in current liabilities increasing their value by Rs.67, 91, 68,131 compared to the last year 2004. Increase in current liabilities means inflow of funds to the company that result in decreasing in working requirements to the company. The total net Working Capital decreased by Rs.28, 82, 01,376 compare to the last year 2004.

Statement showing changes in Working Capital during the period 2006-2007. Particulars Current Assets: (a) inventories (b)sundry debtors (c)cash and bank balance (d)other current assets (e) loans and advances Total current Assets Current 2006 143,18,24,825 11,21,33,122 5,02,62,789 10,21,849 38,99,83,272 198,52,25,857 135,19,50,925 Changes in Working Capital Increase Decrease 135,93,30,982 7,24,93,843 10,80,11,642 6,81,47,393 15,13,709 46,65,45,285 200,35,49,011 131,17,17,583 1,78,84,604 4,91,860 76,56,2,013 1,83,23,154 4,02,33,342 41,21,480 2007

liabilities and provisions Total current Liabilities Changes in working Capital Decreasing in Working 5,85,56,496 69,18,31,428 69,18,31,428 5,85,56,496 5,85,56,496 5,85,56,496 63,32,74,932 69,18,31,428 135,19,50,925 131,17,17,583 4,02,33,342

Capital Source: annual reports.

Table No: 5.6

Interpretation: From the above table shows the working capital requirements for the company in the year 2006. In the year 2006 there is a significant change in current assets such as inventories has been decreased by Rs.7, 24, 93,843 over the last year 2005. Sundry debtors have been decreased by Rs.41, 21,480 compared to last year. Cash and bank balances have been increased by Rs.1, 78, 84,604. Other current assets and loans and advances have been increased by Rs.4, 91,860 and Rs.7, 65, 62,013 over the last year 2005. In the financial year 2006 total current assets has been decreased by Rs. 5, 85, 56,496. That means out flow of funds to the company and their impact decreasing the Working Capital. In the year 2006 there is a significant change in current liabilities increasing their value by Rs.4, 02, 33,342 compared to the last year 2005. Increase in current liabilities means inflow of funds to the company that result in decreasing in working requirements to the company. The total net Working Capital increased by Rs. 5, 85,56,496compare to the last year 2005.

Statement showing changes in Working Capital during the period 2007-2008. Particulars Current Assets: (a) inventories (b)sundry debtors (c)cash and bank balance (d)other current assets (e) loans and advances Total current Assets Current liabilities and provisions Total current Liabilities Changes in working Capital Decreasing in 69,18,31,428 Working Capital Source: annual reports 18,07,38,488 69,18,31,428 Table No: 5.7 18,07,38,488 24,17,34,550 24,17,34,550 131,17,17,583 69,18,31,428 125,07,21,521 51,10,92,940 6,09,96,062 5,85,56,496 2007 135,93,30,982 10,80,11,642 6,81,47,393 15,13,709 46,65,45,285 200,35,49,011 131,17,17,583 Changes in Working Capital Increase Decrease 132,75,07,945 3,18,23,037 11,45,09,441 17,67,30,095 28,08,246 14,02,58,734 176,18,14,461 125,07,21,521 6,09,96,062 64,97,799 10,85,82,702 12,94,537 32,62,86,551 24,17,34,550 2008

Interpretation: From the above table shows the working capital requirements for the company in the year 2007. In the year, 2007 there is a significant change in current assets such as inventories has been decreased by Rs.3, 18, 23,037 over the last year 2006. Sundry debtors have been increased by Rs.64, 97,799 compared to last year. Cash and bank

balances have been increased by Rs.10,85,82,702. Other current assets, loans, and advances have been increased by Rs.12,94,537 and decreased by Rs.32,62,86,551 over the last year 2006. In the financial year 2007 total current assets has been decreased by Rs. 24,17,34,550. That means out flow of funds to the company and their impact decreasing the Working Capital. In the year, 2007 there is a significant change in current liabilities decreasing their value by Rs.6,09,96,062 compared to the last year 2006. Decrease in current liabilities means inflow of funds to the company that result in increasing in working requirements to the company. The total net Working Capital decreased by Rs. 18,07,38,428 compare to the last year 2006.

LIQUIDITY RATIOS:

Current Ratio: Current Ratio = Current Assets Current Liabilities Year 2002 2003 2004 2005 2006 2007 2008 Current Assets 1,66,42,92,550 1,73,51,35,178 1,86,98,53,982 1,59,42,59,102 1,98,52,25,857 2,00,35,49,011 1,76,18,14,461 Current Liabilities 54,64,25,626 62,99,49,407 91,44,32,890 77,35,72,424 101,65,48,666 85,25,17,150 1,16,87,78,350 Table No. 5.6 Ratio 3.05 2.75 2.04 2.37 1.47 2.35 1.51

Source: company annual reports.

Current Ratio
4 3
Ratio

2 1 0 2002 2003 2004 2005 2006 2007 2008

Years Ratio

Chart No.5.1 INTERPRETATION:

Current Ratio is used to measure the liability position of the concern and thus it reflects the short-term solvency of the concern. In other words it shows the ability of the concern to meet its entire current obligation as and when there are due during the short term period. As a convention, the minimum of 2:1 ratio is referred to as Bankers Thumb Rule. The company current ratio position is far better till 2003. In the year 2002 the current ratio relatively high then the Bankers Rule.

1.Quick Ratio: Quick Ratio = Quick Assets

Current Liabilities Year Quick Assets Current Liabilities 54,61,25,626 62,99,49,407 91,44,32,890 67,27,42,794 101,35,19,50,925 85,25,17,150 1,16,87,78,350 Table No. 5.7 Ratio 0.55 0.47 0.36 0.36 0.41 0.76 0.37

2002 30,18,92,314 2003 29,65,69,467 2004 33,15,93,711 2005 24,12,74,603 2006 55,34,01,032 2007 64,42,18,029 2008 43,43,06,516 Source: company annual reports.

Quick Ratio
1
Ratio 0.5 Ratio

0 2002 2003 2004 2005 2006 2007 2008

Years

TABLE-1 Interpretation: From the above table shows the quick ratio of the company. As conventional rule 1:1 is satisfactory level. The company maintains high quick ratio in the year 2002 and later years gradually decreasing up to 0.36 in the year 2004 and 2005. It is advisable that the company maintains high quick ratio.

2.Absolute liquid Ratio or Cash Ratio: Cash Ratio = Absolute Liquid Assets Current Liabilities

Year

Absolute Liquid

Current liabilities 54,61,25,626 62,99,49,407 91,44,32,890 67,27,82,794 135,19,50,925 85,25,17,150 1,16,87,78,350

Ratio 0.054 0.055 0.058 0.082 0.037 0.080 0.151

Assets 2002 2,82,13,254 2003 3,45,07,202 2004 5,30,91,438 2005 5,52,57,959 2006 5,02,62,789 2007 6,81,47,393 2008 17,67,30,095 Source: company annual reports.

Cash Ratio
0.2
Ratio

0.1
Ratio

0 2002200320042005200620072008
Years

TABLE-2

INTERPRETATION: From the above table shows the cash ratio of the company. Cash is the most liquid asset a financial analysis may examine the company maintain high cash ratio in the year 2004-05. In the current year 2005-06 the cash ratio of the company is 0.037. It is advisable that the company maintains high cash ratio.

3. LEVERAGE RATIO:

Total Debt Ratio =

Total Debt

Net Sales

Year Debit 2002 57,71,88,270 2003 45,63,15,310 2004 35,36,06,280 2005 86,55,61,433 2006 54,11,87,847 2007 50,11,72,102 2008 37,35,99,300 Source: company annual reports.

Net sales 2,20,42,39,579 132,90,33,413 146,09,80,106 2,05,22,67,476 3,10,49,48,667 4,07,14,44,781 3,97,24,59,539

Ratio 0.26 0.34 0.24 0.42 0.17 0.12 0.09

Total Debt Ratio

0.5
Ratio

Ratio

0 2002 20032004 20052006 20072008

Years

TABLE-4 INTERPRETATION: From the above table shows the debt ratio of the company. The company maintains high debt ratio which is 0.42 in the year 2004-05 and later years gradually decreasing up to 0.18 in the financial year 2005-06 in which is the lowest ratio. It is advisable that the company maintains high debt-equity ratio,

4.DEBT-EQUITY RATIO:

Debt Equity Ratio =

Total Debt Equity Capital

Year Total Debt 2002 57,71,88,370 2003 45,63,15,310 2004 35,36,06,280 2005 86,55,61,433 2006 54,11,87,947 2007 50,11,72,102 2008 37,35,99,300 Source: company annual reports

Share Holders 11,33,85,000 11,33,85,000 11,33,85,000 11,33,85,000 11,33,85,000 11,33,85,000 11,33,85,000

Ratio 5.09 4.02 3.12 7.63 4.77 4.42 3.29

Debt Equity Ratio

8 6
Ratio 4 Ratio

2 0 2002 2003 2004 2005 2006 2007 2008

Years

TABLE-4

Interpretation: From the above table shows the debt equity ratio of the company. The debt equity indicates the relationship describing the lenders contribution for each rupee of the owner. The company maintains high debt equity in the year 2004-05 and later years gradually decreasing up to 3.12 in the year 2003-04.

II. ACTIVITY RATIOS

5.Debt Collection Period:

Debt Collection Period =

Total No. of Days Debtors Turnover Ratio

Year

No. of Days

Debt Turnover Ratio 34.13 27.67 22.20 18.49 28.78 39.13 34.69

Days 10.69 13.19 16.44 19.74 12.68 9.33 10.52

2002 365 2003 365 2004 365 2005 365 2006 365 2007 365 2008 365 Source: company annual reports

Debtors Collection Period

20 15
Ratio 10

5 0 2002 2003 2004 2005 2006 2007 2008

Years

Ratio

TABLE-5

Interpretation:

The debt collection period indicates the efficiency of trade credit management years 1998-99 is in 98 days implies that debtors on an average are collected in 98 days and it has been raised to 149 days in the year 2003-04. A very high long collection period would imply either poor credit selection or an inadequate collection effort. So, short collection period is preferable.

6.Debtors Turnover Ratio:

Debt Turnover Ratio =

Sales Sundry Debtors

Year Sales 2002 2,20,42,39,579 2003 1,32,90,33,413 2004 1,69,48,61,973 2005 2,31,01,73,398 2006 3,22,66,58,786 2007 4,22,60,31,645 2008 3,97,24,59,539 Source: company annual reports.

Debtors 6,45,65,339 4,80,26,504 7,31,85,488 12,48,86,536 11,21,33,122 10,80,11,642 11,45,09,441

Ratio 34.13 27.67 22.20 18.49 28.78 39.13 34.69

Debtors Turnover Ratio

40 30
Ratio 20

10 0 2002 2003 2004 2005 2006 2007 2008

Years

Ratio

TABLE-6

Interpretation:

The debtors turnover ratio indicates the efficiency in the management of credit. The higher credit the more efficient it is in credit management. In Bajaj capital Life Insurance Co. Ltd the debtors turnover ratio on an average is 28.146, in the year 20022003 it is high 27.67 after which continuous decline is observed. This represent the increased from 18.49

Working Capital Turnover Ratio

7.Working Capital Turnover Ratio =

Net Sales Net Working Capital

Year 2002 2003 2004 2005 2006

Sales 2,20,42,39,579 1,32,90,33,413 1,69,48,61,973 2,31,01,73,398 3,22,66,58,786

Working Capital 111,81,66,924 110,51,85,771 95,54,21,092 77,14,76,308 63,62,74,932

Ratio 1.97 1.20 1.53 2.23 5.67

2007 42,27,60,31,645 6,91,18,31,428 2008 3,97,24,59,539 51,10,92,940 Source: company annual reports. Table No. 5.13

6.11 7.77

Working Capital Turnover Ratio

10
Ratio

5
Ratio

0 2002200320042005200620072008
Years

TABLE-7 INTERPRETATION:

The Working Capital turnover ratio relates net current assets to sales. The Working Capital ratio in Bajaj capital Life Insurance Co. Ltd in very progressive pattern in 2005 and 2006 when compared to all the previous 4 years.

8. TURNOVER TO FIXED ASSETS:

Fixed Assets Turnover Ratio =

Sales Fixed Assets

Year Total Sales 2002 2,20,42,39,579 2003 1.,32,90,33,413 2004 1,46,09,80,106 2005 2,05,22,67,476 2006 2,95,67,60,674 2007 4,22,60,31,645 2008 3,97.24,59.539 Source: company annual reports.

Fixed Assets 95,86,36,933 1,01,14,89,111 1,01,41,13,437 96,49,20,932 1,04,48,76,936 1,39,70,66,294 1,55,41,25,127

Ratio 2.29 1.31 1.44 2.13 2.83 3.02 2.56

Fixed Assets Turnover Ratio

4
Ratio

2
Ratio

0 2002 2003 2004 2005 2006 2007 2008

Years

TABLE-8 INTERPRETATION: It indicates whether there was adequate; investment fixed assets turnover investment or under investment in fixed assets. The ratio is an index to the efficiency of the management. In Bajaj capital Life Insurance Co. Ltd the fixed assets. Turnover ratio in the years 2002,2003,2004,2005 and 2004-05 is 2.29, 1.31, 1.44, 2.13, 2.83

9.Gross profit ratio: Gross Profit Ratio = Gross Profit x 100

Sales

Year Gross Profit 2002 37,20,16,000 2003 25,42,94,000 2004 15,35,38,000 2005 30,22,50,000 2006 80,33,82,000 2007 1,04,93,99,000 2008 66,85,88,000 Source: company annual reports.

Sales 2,20,42,39,579 1,32,90,33,413 1,46,09,80,106 2,05,22,67,476 2,95,67,60,474 4,22,60,31,645 3,97,24,59,539

Ratio 16.87 19.13 10.50 14.72 27.17 24.83 16.83

Gross profit ratio

30 20
Ratio

10 0 2002200320042005200620072008
Years

Ratio

TABLE-9

INTERPRETATION: From the above table shows gross profit ratio of the company. This ratio shows the relationship between the prices, sales volume and costs. It indicates the efficiency of the production and trading operations of the organization. The company maintains high gross profit in the year 2002-03 and gradually decreasing in the financial years 2003-04 and 2004-05.

10.Net Profit Ratio:

Net Profit Ratio =

Profit After Tax Sales

Year Net Profit 2002 13,68,16,069 2003 3.40.18.935 2004 (4,22,12,528) 2005 19,11,78,692 2006 40,65,21,252 2007 57,11,04,726 2008 2,35,55,05,448 Source: company annual reports.

Sales 2,20,42,39,579 1,32,90,33,413 1,46,09,80,106 2,05,22,67,476 2,95,67,60,674 3,59,13,09,940 3,97,24,59,539

Ratio 0.06 0.03 (0.03) 0.09 0.13 0.16 0.06

Net Profit Ratio

0.2 0.15 0.1 Ratio 0.05 0 -0.05 2002 2003 2004 2005 2006 2007 2008
Years

Ratio

TABLE-10

Interpretation: The net profit ratio measures relationship between Net Profit and sales of a firm and influence the management efficiency in manufacturing, administration and selling of the product. The net profit ratio in Bajaj capital Life Insurance Co. Ltd reflecting fluctuations and in the year 2006 it was 0.13. A high net profit margin would ensure adequate returns to the owners of an organization.

CHAPTER V FINDINGS AND SUGGESTIONS INTRODUCTION:

Working Capital attains a proper balance between the amount of current assets and the current liabilities in such away that the firm is always able to meet its financial obligations whenever due. Working Capital management ensures smooth working of the unit without any production held ups due to the paucity of funds. Thus as Working Capital is the life, blood and nerve center of a business. It is managed in order to attain a smooth running of the business.

OBJECTIVES OF THE STUDY:

The presence study is intended to analyze the practice of Working Capital management in Bajaj capital Life Insurance Co. Ltd. The efficiency of the Working Capital Management is determined by the efficient administration on its various components.

The main objectives of this study are depicted below:

1. To know the process of Working Capital Management at Bajaj capital Life Insurance Co. Ltd

2. To study the cash management, receivables management and inventory management.

3. To study the financial ability of Bajaj capital Life Insurance Co. Ltd meet its financial obligations

4. To know the extent to which Bajaj capital Life Insurance Co. Ltd is efficiently using its assets in its operations.

5. This study attempts to understand the efficiency and effectiveness of the management in each segment of Working Capital.

METHODOLOGY:

In methodology data collections are in two types. Those are

Primary and Secondary.

PRIMARY DATA:

As for the study, primary data is gathered through a series of detailed discussions with managers, workers and executives of the company. Continuous interaction with the employees during the study helped me to arrive at certain conclusions about the study.

SECONDARY DATA: As for the study, the secondary data was collected from company financial reports, reference books, websites, and various books and records from the Finance Department. Data have been collected from published books like Journals, from the reports of the Auditors and from sources such as annual reports published by Bajaj capital Life Insurance Co. Ltd, which is the main source to this study.

FINDINGS:

1. Current Ratio of the firm in satisfactory position from the period 2002-2006.

2. The quick assets are half of the current liabilities, which may be a problem to meet the obligation.

3. The cash ratio, which is only 55% of current liabilities, which needs improvement.

4. The inventory is maintained consistently but the inventory turnover ratio fluctuates due to change in sales.

5. The fixed assets turnover ratio is maintained consistently at 2% above. Which to favorable to organization.

6. The debts collection period is 12.68 days. This helps in quick recovery of debts.

7. The debt of the organization is 4 times than equity. This has to be reduced or else, may create a problem for the organization.

8. The Working Capital ratio is satisfactory year to year

SUGGESTIONS:

1. It is the immediate responsibility of the management to improve the position of cash and bank balances. 2. The amount of current liabilities should be reduced to a significant level 3. It is advisable to maintain the same and study growth in sales. 4. By applying various inventories maintenance methods try to reduce the level of inventories by which the company will get sufficient financial resources to re pay the huge amount of its current liabilities.

5. As the Government decides about the price for sugar it would be suggestible to maintain sufficient cash reserves with the Organization to maintain stability in its operations if low price is fixed. 6. Debt collection performance of the company should be improved. 7. Quick Assets have to be increase cash and bank balances. 8. The debtors turnover ratio was increasing year by year and should be continued so. 9. The return on equity satisfactory which should be so. 10. The cash ratio is to be improved by increasing cash bank balances and loans and advances.

BIBLOGRAPHY:

1.

JAIN , SP & NARANGE, KV ADVANCEDACCOUNTING

KALYANIPUBLICATIONS Newdelhi-1986. 2. Maheswari, Sn. finance management Sultan chand & sons Newdelhi-1997. finance management Tata McGraw hill Newdelhi-1998. finance management Vikas publications Newdelhi-1999. management accounting Kalyani publications Newdelhi-1986. Essential of managerial Finance The bryden press Horcourt brce Jovanovich College Publishers Footwoth-1990.

3.

Prasanna chandra

4.

I. M. Pandey

5.

R.K. Sharma, Shashi, K. Gupta

6.

Weston & Brigham