EXECUTIVE SUMMAR

Introduction
Working capital may be regarded as lifeblood of business. Working capital is needed to meet the day-to-day requirement of the business unit. The various information regarding the project entitled A STUDY OF WORKING CAPITAL MANAGEMENT. Classification determinants, components, operating cycle has been discussed and aspects relating to the prospective of ghataprabha sugars ltd Gokak. The Operating cycle & Ratio analysis has been carried out using Financial information , Ratios like Average collection period, inventory Turnover Ratio and Debtors Turnover Ratio have also been analyzed. The objective of the study pattern and procedures followed for managing various components of working capital; so as to evaluate the efficiency of working capital management .The project study is based on five years Balance sheet Profit & Loss account of the company. The information is collected through discussion with concerned departmental persons.

1.2 Title of the study

A study on working capital management and operating cycle at PANDHE INFRACON CONSTRUCTION COMPANY

2.1 Introduction about sugar industry:

India is the largest consumer and second largest producer of sugar in the world. The Indian sugar is the second largest agro industry located in the rural area. About 50 million sugar cane fanners and a large number of agriculture Labor are involved in sugarcane cultivation and ancillary activities constituting 8% of the rural population. Sugar production is found in states like Uttar Pradesh, Maharashtra, Karnataka, Gujarat, Tamilnadu, Andhra Pradesh, Haryana, Punjab, Uttaranchal & Bihar. Overall turnover of states in the (2003-04) is 12% and 15%.sugar availability occupies about 3% of the total cultivated area and it is one of the most important cash crops in the country. It

is not only meant for Indian countries but also its global wide like Brazil, EU, U.S, Mexico, Australia, South Africa, Malaysia, Pakistan, Vietnam, Fiji. Internationally Brazil and India are the largest producing countries followed by china USA, Thailand, Australia, Mexico, Pakistan, France and Germany.

2.2 Introduction about the GSSKN :

The Ghataprabha co-operative sugar factory established in the year 1977-78 & it is registered under co-operative societies act. The sugar industry engages in the manufacture and distribution of sugar, molasses, press mud and bugasse in north Karnataka districts and its surrounding areas. The sugar industry started crushing during 1979-80 and crushes the sugarcane 1250 metric tons for per day. Further it has been increased its sugar cane crashing capacity to 2500 metric tons per day. The founder and promoter of this sugar industry shri.B.M kaujalgi and now the board of management is under the shri.lakhann jarakiholi. This sugar industry is situated near lolsur village left side of the Gataprabhah river. Its sugarcane area covered gokak, hukkeri, savadatti talluk (125 villages). This Sugar industry start its crashing during 1979-1980 procedure and activities of this industry mentioned in the by lows of the factory.

2.3 Company profile:

Name : Ghataprabha co-operative sugar industry Gokak. : - H1/RCS/SF/1434/74-75

Number and date of registration Address:

Ghataprabha co-operative sugar industry Gokak. Tq : Gokak Dist: Belgaum. : 1974-1975 : 1977-78 : B.M kaujalgi sugarcane

Registration year Established Founder Main Row material : Type of unit Area covered year

: private company limited : 125 villages (Gokak,

hukkeri, savadatti taluk) Crushing capacity : 2500metric tons per year

2.4 Objectives of the industry:

Offering best quality products. Maintaining consistency in quality. Processing the order in time. Meeting the statutory requirements in time. Increasing the turnover and profit. Running the business in lawful manner. Maintaining stability in distribution of the profit. Utilizing all assets to increasing the profit level. Reducing the waste.

 Following the lows. Provide better working conditions. Giving for wages to the employees.

Vision and mission of sugar industry: Vision:

The main vision of industry is to develop the rural area and provide the better infrastructure facility to the localities and the formers.

Mission:
The mission of the company is to pay better returns for its shareholders in terms of higher cane rate and to the shareholders in terms of reasonable salary and wages.

Quality policy:The quality policy of factory is producing the sugar in better quality which helps to compute with private sector.

Competitors Shri Renuka Sugars Munnoli. Nandi Sugars Hira Sugar Sankeshwar Satish Sugars, Gokak Dudha Ganga Sugars chikkodi

Awards and Achievements:Best tax payer award given by taxation department of the state government Bangalore During 2004-2005 financial year.

2.9 Availability of sugarcane in the area

a) 15,863 acres: - Sugarcane grower category.

b) 5,000 acres: - Non member sugar cane Grower.

ORGANISATION STRUCTURE
Board of directors

Voice chairman (Elected by chairman)

Managing director (Govt. executive director )

Secretary (M.D supervising all directors)

a) Administrative Department

b) Accounting
Department

c) Mechanical Department

d) Chemical Department

e) Other independent departments

Board of management
SL.No Name Designation

01. 02. 03. 04. 05 06 07 08 09 10 11 12 13

Shri. Lakkanna. L. Jharkehole Shri. Ashok. R. Patil Shri. Kenchagowda. S. Patil Shri. Basagowda. S. Patil Shri. Krishnappa. K. Bandrolli Shri. Tammanna. S. Paarshi Shri. Shivabasappa. M. Shilannavar Shri. Mallappa. U. Jaganur Shri. Laxman. Y. Gannapgo Shri. Adiveppa. L. Haadimani Shri. Girish. V. Hallur Shri. Ramappa. K.Bandi Shri. C. A. Upadhya

Chairman Vice Chairman Director Director Director Director Director Director Director Director Director Director Managing Director

DEPARTMENTS
Following are the departments maintained by the Ghataprabha CO-operative sugar Industry was as follows. 1. Administrative Department. 2. Labour Welfare Department. 3. Cane yard department.

4. Sales department. 5. Purchase department. 6. Sugar Department. 7. Medical Department. 8. Manufacturing Department. a. Mechanical Department. b. Chemical Department. 8. Civil Department. 9. Security Department. 10. Accounts Department.

3.1.1 Administrative Department

This department is supervised by office superintendent. Under this department operating the functions such as offering requirement, work transfer, disciplinary actions are held and conduct the board meetings of every month.

Structure of Administrative Department

Administrative department

Chief Head M D

Secretary

Office superintendent

Other departmental head

Functions of administrative departments

1) Maintain share holder bio-data. 2) Appointment/requirement of employee. 3) Discipline action against miss conducted employee. 4) Transfer & promotion etc. 5) Conducting board meeting & other department meeting. 6) Maintain of personal records of employees. 7) Supervising guesthouse, telephone section. 3.1.2 Labour welfare Department As per factory act any industry having more than 500 workers shall have a labour welfare department. This factory is having 800 employees. Therefore it has separate labour welfare department. It provides promotional facility, transfer facility, health facility and other facility like pension scheme, insurance scheme and so on.

Functions of labour welfare department

a) Supervising safety committees & He shall inspect accident case if happened to worker during working hour & providing medical aid. b) He should settle the issues demanded from trade unions through negotiations. c) Supervising welfare committee, canteen & works committee. d) He shall advise to the management regarding transfers, promotions of employees.

Labour Welfare Department

Labour welfare officer

Assistant

3.1.3 Cane yard Department:a) The main work of this section is to weight the sugar cane. b) They prepare three copy of weighment one for farmer , second for transport controller & third one is remitted to sugar cane accounts department. c) They give total information of sugarcane received to cane account department.

Cane yard Department

Cane Supervisor

Staff

3.1.4 Sales Department:a) The main product of G.S.S.K.N is sugar & bye products are bagasse, molasses, press mud. b) Sugar is sold by calling tenders because the factory has no right sales product directly in open market. c) The officer super intends does this work and sales officer with help of sugar directors officer Bangalore, central government, fixing selling quantity.

Sales Department

Sales in charge

Staff

3.1.5 Purchase Department:a) All kind of factory purchases are made by this section. b) Except stationary all purchase is based on negotiation supply will place by purchase in charge. c) A copy of supply orders goes to store department & account section. d) As per co-operative society rules low quoted supplier should be selected & even quality should also be considered.

Purchase Department

Purchase in -charge

Staff

3.1.6 Sugar Department

This department is maintained by one account officer. In this section prepare the sugarcane bill, transportation bill and making advance. Every once in 15 days will prepare the said bill on basis of sugar cane payment report.

Functions of sugar department

a) Preparation of cane bill, transport bill. b) The collected information about sugarcane received harvest labour, sugarcane harvested & sugarcane transported by each vehicle. c) The keep records of name of sugar cane supplier, place, & bank account. d) They will submit a copy of sugar cane bill harvesting bill & transport to account for factionary of amount. e) They prepare a single cheque to each circle & deposit to particulars circle bank.

3.1.7 Medical Department

According to provision of factory act is maintain dispensary with qualified medical officer on employee and his family are eligible to take free general treatment. Factory will help in case of major treatment is required for his family an amount in advance will be given to employees for treatment purpose an advanced amount will deducted for with salary two equal installment. The factory instant a hospital for higher treatment is j.j. co-operative Ghataprabha hospital and K.L.E hospital Belgaum, for employees sustain body while at work and the whole expenditure will be paid by the factory and wages also paid to him for absent period.

Functions of medical departments

a) Medical allowances are given to all workers. b) Free checkup & medicine to employees & other facilities.

c) Any accident cases happen during working time will treat and if needed his needs higher treatment will be reefers to change in co-operative hospital & K.L.E.Belgaum. d) Expenses of such accident cases will be consider from factory. e) Factory will provided Rs.250 per month as medical allowances to all employees with irrespective free medical checkup.

3.1.8 Manufacturing Department

Manufacturing department is divided into: a) Mechanical Department. b) Chemical Department.

a) Mechanical Department
A chief engineer is head of this department and he has six assistant engineers. Each assistant engineer is supervising their own unit.

Functions of mechanical department.

1) This department has mill unit, boiler unit, Boiling house unit ,Electrical unit , Store and workshop. 2) Each unit is supervised by one engineer along with other skilled techniques. 3) Before starting of sugar cane crushing boiler unit will be keep study before one unit. 4) To generate power store steam will be required that stream will produce from water, and then stream converting into power .Some quantity of stream is used for the purpose of boiling the juice. 5) Extract juice transported to boiling house.

Mechanical department

General manager

Chief engineer

Assistant engineer Senior technicians

Technicians

Workers

b) Chemical Department
Chief chemist is head of this department and this department receives sugar cane juice and boils it. Juice is converted into syrup.

Chemical department

Chief chemist

Lab in charge

Manufacturing chemist

Supervisors

Technicians

Workers

3.1.9 Civil Department

Civil engineering is supervising this department and other staffs are working as work inspector 3 members, plumber, water limens, guide and helpers are working. The main work of this department is maintains of resiqual quarters, factory road, plant cleaning work etc, In respect of building foundation work and plant work.

Civil department

Civil Engineer

Staff

3.1.10 Security Department

This department is maintained by one security officer with their staff (watch man and head watch man). The main duties are of this office is watch property of factory, maintaining of visitors registers, vehicle registers and observation on any scheme etc. If fire occurs at any place of the factory they will make effort to stop.

3.1.11 Account Department

In this factory the account department will be managed by the account officer. This department has a separate office like Sugar account department.

Functions of Accounting Department:

01) All Finance matters of the factory is control under this department. 02) They will receive receivable amount through cash. 03) They will make payment as factory & wages, sugar cane bill, Suppliers bill etc. 04) For the recovering of receipt & payments. 05) They will maintain separate ledger account A/c of each member. 06) They will prepare the balance sheet of ending the accounting year.

Accounting department

Chief account officer

General accountant

clerks

Chapter IV 4.1 Product profile

The main and direct product of sugar cane is sugar. The factory also produces by products like distillery, molasses, press mud, bagasse, etc.

Sugar cane

Main product

By product

1) Sugar a) L-30 b) M -30 c) S1-30 d) S2-30 1) Distillery 2) Press mud 3) Molasses 4) Bagasses

By products:1) Distillery:The factory has its own distillery unit as by product industry with capacity of 50000 liters per day .earlier it was 18000 liter taking in account the stage wise expansion of sugar mill and the excess availability of molasses, they installed capacity later increased to 27000 liters, this was further expanded to 54000 liters.

2) Press mud:Press mud is given to farmer to use fertilizers to grow sugarcane at a low cost. It is prepared by the remaining by product after they production of sugar.

3) Molasses:It is used in cattle feed as well as in the production industry alcohol, yeast, organic chemicals and rum. Molasses is used as a major content in production of wines and other alcoholic products .It is sold to liquor industries.

4) Bagasse:Bagasse is one of the byproduct obtained during the process. IT is used as fuel for boilers to produce steam through which electricity is obtained .The bagasse produced after extracting the juice from sugar cane is used to fuel to generate steam in factories. Increasingly large amounts of bagasse are being made into paper, installing boards and hard board, as well as furfural, a chemical intermediate for the synthesis of furan.

4.2 Manufacturing process 1) Pressing of sugar cane to extract the juice.

2) Boiling the juice until it begins to thicken and sugar begins to crystallize. 3) spinning the crystals in a centrifuge to remove the syrup ,producing row sugar. 4) Shipping the row sugar to a refinery where it is washed and filtered to remove remaining non sugar ingredients. 5) Crystallizing, drying and packaging the refined sugar.

4.3Production report
Performance of the company for last 3 years Years 31st march MT 2009 2010 2011 76,040.948 2,43,900 4,41486.34 QTLS 76,940 2,47,020 4,68,945.00 Cane crushed Sugar produced

1.4 Sales report

1) LEVY SALES YEARS 2005 2006 2006 2007 2007 2008 2008 2009 2009 2010 2010 2011 QUINTALS 25,215 26,402 25,579 4,274 2,341 9,762 RATE 1398.65 1345.33 1459.35 1345.82 1346.90 1785.30 TOTAL 3,52,67,023 3,55,19,409 3,73,28,866 57,52,052 31,53,095 1,74,28,091

2) FREE SALES

YEARS 2005 2006 2006 2007 2007 2008 2008 2009 2009 2010 2010 2011

QUINTALS 5,20,596 62,848 2,93,732 4,17,763 74,350 4,42,780

RATE 1,635.07 1,523.09 1,183.75 1,611.09 2,815.13 2,504.42

TOTAL 85,12,15,513.00 9,57,23,420.00 34,77,01,629.00 67,30,54,904.00 20,93,05,191.00 110,89,07,285.00

4.5 This sugar firm share holders is mentioned.

Category A Category B : - Sugar cane Gross (members) 9 Directors : - 1 Director Co-operative societies (operated area) Nominated from distinct co-operative Bank. Category C : - State government (Managing Director & nominated director) 1+3. Category D : - Non-Grossers of sugar cane (members) 1 Director. Category E Chairman Voice chairman Managing Director : - Nominal Members : - Shri. Lakkan Jarkiholi : - A.R.Patil : - C.A.Upadhya (in charge MD)

Part b
Capital:
Capital means initial investment invested by businessman or owner at the time of commencing the business. Definition: capital is a factor of production with a specific, changeable value attached to it that could, potentially, proved its owner with more wealth.

Features of capital :
Capital has the following features 1) Capital is a man made. 2) Capital is a human control possible.

Every organization invests their funds in two terms of capital namely,

1. Fixed Capital. 2. Working Capital

Introduction
The aim of the present study is to examine the working capital management. Since the efficiency of the working capital management is determined the efficient administration of its various components cash, account receivables and inventory. The study attempts to determine the management of each component. Working capital is the life blood and nerve center of the business. As the circulation of blood is essential in the human body for maintains of life, in the same way working capital is essential to all the organizations to maintain the smooth running of business. Working capital refers to short term funds required for the purpose of business operations. The fund used for meeting day to day expenses like, purchase of row materials, payment of wages and other expenses, stoking of goods and maintenance of the minimum balance. It is not necessary that the funds should be in the form of cash only.

There is operative aspects of working capital i.e. current assets which is known as funds also employed to the business process from the gross working capital current assets comprises cash receivable, inventories, marketable securities held as short term investment and other items nearer to cash.

Definition: Working capital means current assets of company that are changed in the
ordinary course of business from one form to another, ex: from cash to inventories, inventories to receivables, receivables into cash.

Objectives of the study

1. To understand the different components of current assets and current liabilities and their impact on working capital 2. To understand the working capital management of the company. 3. To compare the present and previous years performance of the company in reference to working capital. 4. To understand functioning of different departments in the company.

Scope of the study

This study has a wider scope to cover components and determinants of capital sources and types of working capital, components of capital management such as cash, receivables and inventory.

Research Methodology
The level of any systematic research depends upon collection of data by keenly observing the existing conditions, classification and interpretation of data. The research design should be such that it maximizes reliability of the evidence collected. The data required for the preparation of financial statement analysis and working capital management was collected through primary and secondary data.

Primary data:
This method of data collection involves the fresh collection of data directly from the field. They are first-hand data. The primary sources of data are collected from the finance manager through personal discussion.

Secondary data:
In this project the sources of secondary data are annual report, Internet, published text books, balance sheet, profit and loss account etc.

CONCEPTS OF WORKING CAPITAL

THERE ARE TWO CONCEPTS OF WORKING CAPITAL: a) Balance sheet concept. b) Operating cycle concept.

(A)

BALANCE SHEET CONCEPT.

It is understood either as the total current assets or as the excess of current assets over current liabilities. The former is referred to the gross working capital and the later the net working capital.

There are two interpretations of working capital under the balance sheet concept: (i) Gross working capital.
Gross working capital is the amount of funds invested in various components of current assets. Current assets are those assets which are immediately converted into cash within short period of time. Current assets includes cash in hand and cash at bank, inventories, bills receivable, sundry debtors, short term loans and advances.

(ii)

Net working capital.

Net working capital is the excess of current assets over current liabilities. it is

explained in the form of equation as follows.

Net working capital = Current Assets -- Current Liabilities.

Net working capital may be positive or negative when the current assets exceed the current liabilities the working capital is positive and the negative working capital results when the current liabilities are more than the current assets. Current liabilities are those liabilities which are intended to be paid in the ordinary course of business.

Components of Working Capital There are two components of Working Capital

A. Current Assets B. Current Liabilities

A) Current Assets: Components of Current Assets are as follows: 1. Cash & Bank Balance
2. Stock of Raw Material at cost- work in process and Finished Goods. 3. Advanced Recoverable in Cash. 4. Debtors

B) Current Liabilities:
Components of Current Liabilities are as follows: 1. Sundry Creditors for the goods and expenses. 2. Income tax deducted at sources from contractors. 3. Expenses Payable. 4. Unclaimed Dividend. 5. Security Deposits. 6. Liabilities for bills discounted. 7. Bank Overdraft Acceptance

Classification of working capital 1) permanent working capital

Permanent working capital is the minimum amount of current assets, which is needed to conduct a business even during the dullest season of the year. This amount varies from year to year, depending upon the growth of a company. It is the amount of funds required to produce the goods and services, which are necessary to satisfy demand at a particular point. It represents the current assets, which are required on a continuing basis over the entire year.

2) Temporary or variable working capital

Variable working capital refers to the amount of working capital which goes on changing from time to time with the change in the volume of business activities. Difference between fixed and variable working capital.

3) Seasonal Working Capital:

There are many lines of business where the volumes of operations are different in different seasons and hence the amount of working capital varies with seasons. The capital required to meet the seasonal needs of the enterprise knows as Seasonal Working Capital.

ADVANTAGES OF WORKING CAPITAL OR IMPORTANCE OF WORKING CAPITAL : The following are the advantages 1) It protects the solvency of the firm
Adequate working capital helps in maintaining solvency of the business , because suppliers of the goods, creditors, customers, and the like keep their faith in such a firm that is in a position to meet all its financial obligations promptly.

2) Good will
Sufficient working capital helps the firm concern to make prompt payment to creditors which in turn results in the creation of goodwill.

3) Easy loan
An organization having sufficient working capital creates goodwill, high solvency. This will help to obtain term the loans from the banks and others on easy and favorable terms.

4) Cash discount
Adequate working capital helps the concerned to purchase in bulk. This will get more cash discount. Ultimately it reduces the costs.

5) High morale
Adequate working capital helps the organization for regular payment of salary to staff and prompt payment to creditors. So it creates an environment of security, confidence, in tern its result increases the morale of employees.

OBJECTIVES OF THE WORKING CAPITAL

Every business needs some amount of working capital. The need for working capital arises due to the time gap between production and realization of cash from sales. Working capital is needed for the following purpose 1. for the purchase of raw materials and components. 2. To pay wages and salaries.

3. To incur day-to-day expenses 4. To provide credit facilities to the customers. 5. To maintain the inventories of raw material, work-in-progress, stores.

FACTORS AFFECTING WORKING CAPITAL

The following factors affect not only the requirements of working capital but also influence to a great extent the composition or structure of working capital it is believed that any attempt at working capital management could be improved upon with greater understanding of the underlying factors.

The following factors are important a) Nature of business

The nature of the business effects the working capital requirements to a great extent. For instance public utilities like, railways electric companies, etc. The GSSKNG is a manufacturing firm having a longer operating cycle for manufacturing the products and investing more funds in its current assets. Therefore it requires more working capital.

b) Size of the firm

The size of business unit is also important factor in influencing working capital needs of the firm. Large scale industries required huge amount of working capital compared to small scale industries.

c) Changes in technology
Technology used in manufacturing process is mainly determined need of working capital. Modernize technology needs low working capital, where as old and traditional technology needs grater working capital.

d) Production policies

Production policies also determined the working capital requirement. Through the production schedule i.e. the plan for production, production process etc. The GSSKNG has large production process.

d) Type of industry
A capital intensive industry is purely based on machines required more fixed capital and less working capital. Whereas, a labour intensive industry based on manpower resources required more working capital for the payment of salaries and wages etc.

ESTIMATION OF WORKING CAPITAL REQUIREMENT

Managing the working capital is a matter of balance. The firms must have sufficient funds on hand to meet its immediate needs. The GSSKNG is manufacturing oriented organization; the following aspects have to be taken into consideration while estimating the working capital requirements. They are: Total costs incurred on material, wages and overheads The length of time for which materials are to remain in stores before they are issued for production. The length of production cycle or work in process, i.e., the time taken for conversation of row material into finished goods. The length of sales cycle during which finished goods to be kept waiting for sales. The average amount of cash required to make advance payments. The average credit period expected to be allowed by suppliers. Time lag in the payment of wages and other expenses.

5.10 Efficient Utilization of Working Capital Management

Well working capital management refers to the administration of all aspects of the current assets and liabilities. It is necessary to get maximum benefit. 1) Cash Management

Cash is required to meet the firms transactions and precautionary needs. The firm needs cash to make payments for acquisition of resources and services, for the normal consist of the business. It keeps addition funds to meet any emergency situation. Cash Management involves three things. Managing cash flow in and out of the firm. Managing cash flow within the firm. Financing deficit or investing surplus cash. And thus controlling of cash balance at the point of time. 2. Receivables Management: Business firm generally sell goods on credit to facilitate sales. When goods are sold on credit finished goods are converted into receivable. Receivable when realized generate cash for forecasting standard ratio of accounts receivables based on analysis of part data of two years. Recessions analysis and making may be appeared. 3. Inventory management: Every enterprise needs inventory for smooth running of its activities. It serves as a link between production and distribution process. There is, generally a time lag between the recognition of a need and its fulfillment. The greater the time lag, the higher the requirements for inventory. The unforeseen fluctuations in demand and supply of goods necessitate the need for inventory. Moreover, it provides a cushion for future price fluctuations

ANALYSIS AND INTERPRETATION: Statement showing working capital on 2008-09 Particulars

A)current assets Cash in hand Bank account Advances General machinery Road and bridges Furniture and fixtures Stores Tools and equipment Receivable account Factory electrification Other assets Deposits Closing stock Total current assets 77,366.98 34,91575.46 1,06,06,555.53 42,49,295.88 16,68,061.53 16,68,680.87 3,58,47,490.47 78,67,794.07 27,09,64,000.01 9,30,899.91 36,82,648.52 32,79,962.00 61,61,01,923.60 96,04,36,254.83

Amount

B) Current liabilities Deposits Suspense account Other liabilities Bank O D accounts Total current liabilities 5,19,33,166.58 33,62,872.13 31,63,28,635.95 6,21,36,129.90 43,37,60,804.56

Net working capital

52,66,75,450.27

Statement showing working capital on 2009-10

Particulars A)current assets Cash in hand Bank account Advances General machinery Road and bridges Furniture and fixtures Stores Tools and equipments Receivable account Factory electrification Other assets Deposits Closing stock Total current assets B) Current liabilities Deposits Suspense account Other liabilities Bank O D accounts Total current liabilities

Amount

36,562.02 9,56,534.49 1,25,35,830.58 42,49,295.88 16,68,016.53 16,68,680.87 2,86,77,675.24 78,67,794.07 60,95,39,841.45 9,30,899.91 29,80,957.72 32,79,962.00 17,41,92,388.84 84,77,23,539.6

4,16,44,779.01 72,00,094.44 26,43,21,513.57 3,01,52,509.57 34,33,18,896.59

Net working capital

50,44,04,643.01

Statement showing working capital on 2010-11

PARTICULARS A )Current Assets Cash in hand Bank account Advances General machinery Road and bridges Furniture and fixtures Stores Tools and equipments Receivable account Factory electrification Other assets Deposits Closing stock Total current assets B) Current liabilities Deposits Suspense account Other liabilities Bank O D accounts Total current liabilities 4,14,93,090.81 67,61,584.49 25,69,71,610.03 99,98,369.65 31,52,24,654.97 5,43,31,411.03 1,72,43,808.98 1,35,53,683.66 4249295.88 16,68,061.53 16,68,680.87 2,71,35,787.48 79,08,392.82 15,68,23,616.75 9,30,899.91 30,23,800.99 28,12,047.00 74,93,63,571.50 1,04,07,13,058.40 AMOUNTS

Net Working

capital (A-B)

72,54,88,403.43

Statement showing working capital on 2011-12

PARTICULARS A )Current Assets Cash in hand Bank account Advances General machinery Road and bridges Furniture and fixtures Stores Tools and equipment Receivable account Factory electrification Other assets Deposits Closing stock Total current assets B) Current liabilities Deposits Suspense account Other liabilities Bank O D accounts Total current liabilities 9,46,92,206.91 67,40,659.00 39,50,84,626.40 1,95,72,867.75 51,60,90,360.06 12,03,151.39 56,52,907.70 1,69,43,939.61 4249295.88 16,68,061.53 16,68,680.87 3,32,61,102.07 82,84,103.40 35,51,08,313.76 9,30,899.91 31,59,234.79 28,12,047.00 73,04,12,683.69 116,53,54,421.60 AMOUNTS

Net Working

capital (A-B)

64,92,64,061.54

Table showing net working capital Ghataprabha sugars, ltd. ( Rs in crore )

Particulars Current assets 96,04,36,254 84,77,23,539 1,04,07,13,058 116,53,54,421 2008-09 2009-10 2010-11 2011-12

Current liabilities net working capital 52,66,75,450 50,44,04,643 72,54,88,403 64,92,64,061 43,37,60,804 34,33,18,896 31,52,24,654 51,60,90,360

Statement of changes in working capital Particulars A)current assets cash in hand cash at bank advances General machinery Road and bridges Furniture and fixtures Stores Tools and equipment Receivable account Factory electrification Other assets Deposits Closing stock Total current assets 5,43,31,411.03 1,72,43,808.98 1,35,53,683.66 42,49,295.88 16,68,061.53 16,68,680.87 2,71,35,787.48 7908392.82 15,68,23,616.75 9,30,899.91 30,23,800.99 28,12,047.00 74,93,63,571.50 104,07,13,058.40 12,03,151.39 56,52,907.70 1,69,43,939.61 42,49,295.88 16,68,061.53 16,68,680.87 3,32,61,102.07 82,84,103.40 35,51,08,313.76 9,30,899.91 31,59,234.79 28,12,047.00 73,04,12,683.69 116,53,54,421.60 2010-11 2011-12 Effect of w c increase

(Rs in crore) Effect of w c decrease 5,31,28,259.64 1,15,90,901.28 33,90,255.95

61,25,314.59 3,75,710.58 19,82,84,697.01 1,35,433.8 1,89,50,887.81

B)current liabilities Deposits Suspense account Other liabilities Bank O D account Total current liabilities Net working capital Decrease in working capital Total working capital

4,14,93,090.81 67,61,584.49 25,69,71,610.03 99,98,369.65 31,52,24,654.98 72,54,88,403.42

9,46,92,206.91 67,40,659.00 39,50,84,626.40 1,95,72,867.75 51,60,90,360.06 64,92,64,052.54 7,62,24,350.88 208332337.42 7,62,24,350.88 284556679.30 20,925.49

5,31,99,116.1 13,81,13,016.37 95,74,498.1

284556679.30

72,54,88,403.42

72,54,88,403.42

28,45,56,679.30

INTERPRETATION
Reduction in inventory is favorable however reduction in cash is not favorable hence it can be inferred that inventory turnover ratio may be low in the year 2011-12 and 201011. Hear debtors have increased which is not favorable. Due to this debtors turnover ratio in 2010-11 is less than that of 2011-12 and collection period is more in 2010-11 than in 2011-12. An advance is increased in the year 2011-12 significantly which is not favorable. Advances increased hence the company seems to be more earning from non core activities. Bank over draft is increased in the year 2011-12 because seems debtors increased they have less liquid cash with them so the current liability has increased.

Statement of changes in working capital Effect of w c increase

(Rs in crore) Effect of w c decrease

Particulars A)current assets cash in hand cash at bank advances General machinery Road and bridges Furniture and fixtures Stores Tools and equipments Receivable account Factory electrification Other assets Deposits Closing stock Total current assets B)current liabilities Deposits Suspense account Other liabilities Bank O D account Total current liabilities Net working capital increase in working capital Total working capital

2009-10 36,562.02 9,56,534.49 1,25,35,830.58 42,49,295.88 16,68,016.53 16,68,680.87 2,86,77,675.24 78,67,794.07 60,95,39,841.45 9,30,899.91 29,80,957.72 32,79,962.00 17,41,92,388.84 84,77,23,539 4,16,44,779.01 72,00,094.44 26,43,21,513.57 3,01,52,509.57 34,33,18,896.59 50,52,65,543.01 22,02,22,860.41 72,54,88,403.42

2010-11

5,43,31,411.03 1,72,43,808.98 1,35,53,683.66 42,49,295.88 16,68,061.53 16,68,680.87 2,71,35,787.48 79,08,392.82 15,68,23,616.75 9,30,899.91 30,23,800.99 28,12,047.00 74,93,63,571.50 1,04,07,13,058.40

5,42,94,849.01 1,62,87,274.49 10,17,853.08

15,41,887.76 40,598.75 45,27,16,224.7 42,843.27 4,67,915.00 57,51,71,182.66

4,14,93,090.81 67,61,584.49 25,69,71,610.03 99,98,369.65 31,52,24,654.98 72,54,88,403.42

1,51,688.2 4,38,509.95 73,49,903.54 2,01,54,139.92

67,49,48,842.87

45,47,26,027.46 22,02,22,860.41

72,54,88,403.42

67,49,48,842.87

67,49,48,842.87

INTERPRETATION
Inventory has increased more than that of cash so it is favorable. Reduction in inventory is favorable however reduction in cash is not favorable hence it can be inferred that inventory turnover ratio may be high in the year 2010-11 and 2009-10. Here debtors have decreased which is favorable. Due to this debtors turnover ratio in 2009-10 is more than that of 2010-11 and collection period is less in 2009-10 than in 2010-11. An advance is increased in the year 2010-11 significantly which is not favorable. Advances increased hence the company seems to be more earning from non core activities. Bank over draft is decreased in the year 2010-11 because seems debtors decreased they have more liquid cash with them so the current liability has decreased.

Statement of changes in working capital Rs.in crore) Effect of w c increase Effect of w c decrease

Particulars A)current assets cash in hand cash at bank advances General machinery Road and bridges Furniture and fixtures Stores Tools and equipments Receivable account Factory electrification Other assets Deposits Closing stock Total current assets B)current liabilities Deposits Suspense account Other liabilities Bank O D account Total current liabilities Net working capital Decrease in working capital Total working capital

2008-09

2009-10

77,366.98 34,91,575.46 1,06,06,555.53 42,49,295.88 16,68,061.53 16,68,680.87 3,58,47,490.47 78,67,794.07 27,09,64,000.01 9,30,899.91 36,82,648.52 32,79,962.00 61,61,01,923.60

36,562.02 9,56,534.49 1,25,35,830.58 42,49,295.88 16,68,016.53 16,68,680.87 2,86,77,675.24 78,67,794.07 60,95,39,841.45 9,30,899.91 29,80,957.72 32,79,962.00 17,41,92,388.84 84,77,23,539 1,02,88,387.57 4,16,44,779.01 72,00,094.44 26,43,21,513.57 3,01,52,509.57 34,33,18,896.59 50,52,65,543.01 2,14,09,907.26 45,61,94,109.03 43,47,84,246.77 2,14,09907.26 5,20,07,122.38 3,19,83,620.33 33,85,75,841.44 19,29,275.05

40,804.96 25,35,040.97

71,69,815.23

7,01,690.8 44,19,09,534.76

96,04,36,254.83 5,19,33,166.58 33,62,872.13 31,63,28,635.95 6,21,36,129.90 43,37,60,804.56 52,66,75,450.27

38,37,222.31

45,61,94,109.03

45,61,94,109.03

52,66,75,450.27

52,66,75,450.27

INTERPRETATION Cash has decreased more than that of inventory so it is not favorable.

Reduction in inventory is favorable however reduction in cash is not favorable hence it can be inferred that inventory turnover ratio may be low in the year 2008-09 and 2009-10. Here debtors have increased which is not favorable. Due to this debtors turnover ratio in 2008-09 is less than that of 2009-10 and collection period is more in 2008-09 than in 2009-10 An advance is increased in the year 2009-10 significantly which is not favorable. Advances increased hence the company seems to be more earning from non-core activities. Bank overdraft is decreased in the year 2009-10 because seems debtors increased they have more liquid cash with them so the current liability has decreased.

Table showing changes in working capital Ghataprabha sugars, ltd. Years

2008-09 and 2009-10 2009-10 and 2010-11 2010-11and 2011-12

Changes in working capital

2,14,09,907.26 (decrease) 22,02,22,860.41(increase) 7,62,24,350.88 (decreased)

Ratio Analysis Current ratio:

The current ratio is a measure of short- term solvency of the company. It indicates the rupee of current assets available for each rupee of current liability. The higher the current ratio the larger the amount of rupees available per rupee of current liability and the greater the safety of the short- term creditors. This margin of safety to the creditors is essential due to the unevenness of the flow of funds through current assets and current account Formula: Current Assets /Current Liabilities

Years 2008-09 2009-10 2010-11 2011-12

Current assets 96,04,36,254 84,77,23,539 1,04,07,13,058 1,16,53,54,421

Current liabilities 43,37,60,804 34,33,18,896 31,52,24,654 51,60,90,360

Ratio 2.214 2.46 3.3 2.25

3.5 3 2.5 2 1.5 1 0.5 0 2008-09 2009-10 2.46 2.214

3.3

2.25 2008-09 2009-10 2010-11 2011-12

2010-11

2011-12

Interpretation:

The ratio is above standard that shows short term solvency of GSSKN is good. GSSKN has sufficient current assets to meet its short term liabilities. Current ratio indicates a good liquidity and satisfactory debt payment capacity of the company.Current ratio has increased in 2010-11 to 3.3 because of increase in cash and stock. GSSKN has managed comparatively higher current assets to pay off its liabilities and have smooth flow of production which can be seen by ratio of 2.214 , 2.46and 2.25 in 2008-09 ,2009-10 and 2011-12 respectively

Inventory turnovers ratio

It indicate the efficiency of the firm in producing the selling its product. The ratio indicates how fast inventory is sold. A high ratio is good from viewpoint of liquidity and vice versa. A low ratio would signify that inventory does not sell and stay on the shelf or in warehouse for a long time.

Inventory Turnover Ratio =

cost of goods sold Average Inventory

( Rs in crore) Year 2008-09 2009-10 2010-11 2011-12 Cost of goods sold 32,53,92,497.76 67,90,24,925.86 14,63,40,898.08 118,92,31,382.39 Average inventory 50,98,45,157.565 39,51,47,156.22 44,82,77,980.17 73,98,88,127.6 Ratio 0.63 1.71 0.32 1.60

Ratio
1.8 1.6 1.4 1.2 1 0.8 0.6 0.4 0.2 0 1.71 1.6

2008-09 0.63 0.32 2009-10 2010-11 2011-12 2008-09 2009-10 2010-11 2011-12

year

Interpretation
The above graph shows that inventory turnover ratio was more in the year 200910 but a decline was seen in the ratio in the year 2010-11. Again in the year 2008-09 there was increase in the ratio compared to 2011-12. In the year 2010-11 the inventory turnover ratio was very less compared to 2008-09. In the year 2011-12 again an increase was seen

in the ratio. We can conclude that a higher ratio is preferable.

Debtors turnover ratio

The high ratio is indicative of shorter time between credit sales and cash collection. A low ratio shows that debts are not being collected rapidly. Deters turnover ratio = Net credit sales Average debtors

(Rs in crore) Years 2008-09 2009-10 Net credit sales 43,23,07,539 74,6323879 Average debtors 29,10,42,702.35 44,02,51,920.73 Ratio 1,48 1.69

2010-11 2011-12

22,91,63,839 126,74,32,116

38,31,81,729.1 25,59,65,965.2

0.59 4.95

Ratio
4.95 5 4 amount 3 2 1 0 1.48 1.69 0.59 2007-08 2008-09 2009-10 2010-11

2008-09

2009-10

2010-11

2011-12

years

Interpretation
The above graph shows that the debtors turnover ratio was more in the year 2011-12 but a decline was seen in the ratio in the year 2010-11. Again in the year 2009-10 there was increase in the ratio compared to 2008-09. In the year 2010-11 the debtors turnover ratio was very less compared to 2011-12. In the year 2011-12 again an increase was seen in the ratio. We can conclude that a higher debtors turnover ratio is better.

Debtors collection period

The shorter the collection period the better is the quality of debtors as a short collection period implies quick payment by debtors. Similarly a higher collection period implies an inefficient collection performance, which in turn adversely affects the liquidity or short term paying capacity of a firm out of its current liabilities. Debtors collection period = 365 days Debtors turnover ratio

Years

No of days in a year

Debtors turnover ratio

Ratio

2008-09 2009-10

365

1,48 1.69

246.6 215.9

365 2010-11 2011-12 365 365 0.59 4.95 618.6 73.73

ratio
700 600 500 amount 400 300 200 100 0 2007-08 2008-09 2009-10 2010-11 years 246.6 215.9 73.3 2007-08 2008-09 2009-10 2010-11 618.6

Interpretation
The debt collection period is 246 days for 2007-08, 215 days for 2008-09, 618 days for 2009-10 and 73 days for 10-11. Low debtors turnover period is preferable on an average debtors take this much days to pay money

Total asset turnover ratio

This ratio measures how efficiently assets are using to generate the sales .it is calculated as follows.

Total asset turnover ratio

cost of goods sold Average total assets

(Rs in crore )
Years 2008-09 2009-10 2010-11 2011-12 Cost of goods sold 32,53,92,497.76 67,90,24,925.86 14,63,40,898.08 118,92,31,382.39 Average total assets 1,20,75,66,541.56 1,21,00,61,686.18 1,23,68,90,667.55 1,39,52,29,641.54 Ratio 0.26 0.56 0.11 0.85

Ratio
0.9 0.8 0.7 0.6 0.5 0.4 0.3 0.2 0.1 0 2008-09 2009-10 2010-11 2011-12 0.26 0.11 0.56 2008-09 2009-10 2010-11 2011-12 0.85

Interpretation
The above graph shows that total asset turnover ratio was more in the year 2011-12 but a decline was seen in the ratio in the year 2010-11. Again in the year 2009-10 there was increase in the ratio compared to 2008-09. In the year 2010-11 the total asset turnover ratio was very less compared to 2011-12. In the year 2011-12 again an increase was seen in the ratio. We can conclude that a higher ratio is preferable. Because it means the assets are used very efficiently.

7.5 Current asset turnover ratio

Current asset turnover ratio = cost of goods sold Average current assets (Rs in crore ) Years 2008-09 2009-10 2010-11 2011-12 Cost of goods sold 32,53,92,497.76 679024925.86 146340898.08 118,92,31,382.39 Average current assets 90,03,78,747.91 90,45,10,347.215 94,46,48,749 1,10,30,33,740 Ratio 0.36 0.75 0.15 1.07

Ratio
1.2 1 0.8 0.6 0.4 0.2 0 2008-09 2009-10 2010-11 2011-12 0.36 0.15 0.75 2008-09 2009-10 2010-11 2011-12 1.07

Interpretation
The above graph shows that current asset turnover ratio was more in the year 2011-12 but a decline was seen in the ratio in the year 2010-11. In the year 2010-11 the current asset turnover ratio was very less compared to 2011-12. In the year 2011-12 again an increase was seen in the ratio. We can conclude that a higher ratio is preferable. Because it means the assets are used very efficiently.

Working capital turnover ratio

Working capital turnover ratio = cost of goods sold Net working capital

(Rs in crore) Years 2008-09 2009-10 2010-11 2011-12 Cost of goods sold 32,53,92,497.76 679024925.86 146340898.08 118,92,31,382.39 Net working capital 52,66,75,450.27 50,44,04,643.1 72,54,88,403.42 64,92,64,061.54 Ratio 0.61 1.34 0.20 1.83

ratio
2 1.8 1.6 1.4 1.2 1 0.8 0.6 0.4 0.2 0 2008-09 2009-10 2010-11 2011-12 0.2 0.61 1.34 2008-09 2009-10 2010-11 2011-12 1.83

Interpretation
The above graph shows in the year 2009-10 there was increase in the ratio compared to 2008-09. In the year 2010-11 the working capital turnover ratio was very less compared to 2011-12. In the year 2011-12 again an increase was seen in the ratio. We can conclude that a higher ratio is preferable. Because it means the assets are used very efficiently.

Capital turnover ratio

Capital turnover ratio =

cost of goods sold Average capital employed

(Rs in crore) Years Cost of goods sold Average capital employed 2008-09 2009-10 2010-11 32,53,92,497.76 67,90,24,925.86 14,63,40,898.08 82,00,15,183.565 82,06,21,835.6 90,76,18,891.78 0.39 0.82 0.16 Ratio

2011-12

118,92,31,382.39

97,95,72,134.02

1.21

Ratio
1.4 1.2 1 0.8 0.6 0.4 0.2 0 2008-09 2009-10 2010-11 2011-12 0.39 0.16 0.82 2008-09 2009-10 2010-11 2011-12 1.21

Interpretation
The above graph shows that capital turnover ratio was more in the year 2011-12 but a decline was seen in the ratio in the year 2010-11. Again in the year 2009-10 there was increase in the ratio compared to 2008-09. In the year 2010-11 the capital turnover ratio was very less compared to 2011-12. In the year 2011-12 again an increase was seen in the ratio. We can conclude that a higher ratio is preferable. Because it means the assets are used very efficiently.

CONSOLIDATED STATEMENT OF THE RATIOS FOR FOUR YEARS

Particulars Inventory Turnover Ratio Debtors turnover ratio Debtors collection period Total asset turnover ratio Current asset turnover ratio 2008-09 0.63 1,48 246.6 0.26 0.36 2009-10 1.71 1.69 215.9 0.56 0.75 2010-11 0.32 0.59 618.6 0.11 0.15 2011-12 1.60 4.95 73.73 0.85 1.07

Working capital turnover ratio Capital turnover ratio

0.61

1.34

0.20

1.83

0.39

0.82

0.16

1.21

Chapter VIII Operating cycle of working capital

Every business firms requires fund for two purpose viz. for investing in fixed assets and for investing current assets. Funds required for investing in current assets such as inventories, debtors, bills, etc. keep on changing shape and volume. For example a company has some cash in beginning. It may use this cash balance for making payment to the suppliers of raw materials, for payment of wages, salaries and to meet over head costs. Those costs viz. cost of raw materials cost of labor and other over heads costs together would generate workin-process which will be converted into finished goods on the completion of production process. On the sale of these goods, they get converted into debtor or bills and promissory notes i.e., account receivables and when the debtors pay, the company will get cash.

This cash will again be utilized for financing raw materials, work-in-process, labor, overhead cost etc. to produce finished goods, which when sold, will be converted into debts, which will be finally converted into cash. Thus there will be a complete cycle when cash converted into raw materials, work-inprogress, finished goods, and debtors finally again into cash. In manufacturing concern, the duration of time required to complete the sequence of events is called operating cycle.

The operation cycle of a manufacturing concern with the following events

Conversion cash of raw materials Conversion of raw materials into work-in-progress Conversion of work-in-progress into finished goods Conversion of finished goods into sales. Conversion of sales into debtors. Conversion of debtors into A/C Receivable

Operating cycle

In the picture of operating cycle cash is converted into raw material which is converted into Work-in progress which I turn into finished stock which will be converted into

sales and sales into debtors and again which is circulating from one into another. Hence working capital is sometimes called as circulating capital. Working capital cycle indicates the length of time between firms paying of raw material entering into finished stock and receiving cash on the sale of such finished goods.

Computation of Operating Cycle

Average Inventory

Opening Inventory + Closing Inventory 2

Average Account Receivables = Opening Receivables + Closing Receivables 2 Inventory Period = Average Inventory Annual COGS 365

Average Account Receivables Period = Average Account Receivables Annual Sales 365 Operating Cycle = Inventory Period + Average Account Receivables Period

Calculation of operating cycle Financial information of THE GSSKN 2009-2010

Particulars Sales Cost of goods sold P&L a/c data Particulars Beginning Ending

74,63,23,879 Inventory 67,90,24,925.86 A/c Receivable

61,61,01,923.60 17,41,92,388.84 27,09,64,000.01 60,95,39,841

1) Average Inventory

Opening Inventory + Closing Inventory 2

616101923.60 +174192388.84 2

395147156.22

2) Average Account Receivables

= Opening Receivables + Closing Receivables

2 = 270964000.01 + 60,95,39,841.45 2 = 440251920.72

3) Inventory Period

Average Inventory Annual COGS 365

395147156.22 679024925.86 365

395147156.22 1860342.2

212.40

4) Account Receivables Period =

Average Account Receivables Annual Sales 365 = 440251920.72 74,6323879 365 = 440251920.72 2044722.95 = 215.31

Operating cycle = Inventory period + Account receivable period = 212.40 + 215.31 = 427.71 Days

Interpretation:
Here the firms operating cycle is 427 days during 2008-09. However it is also observed that the debtors collection period has decreased. Due to company is in loss from several years.

Financial information of THE GSSKN 2010-2011

Particulars Sales Cost of goods sold P&L a/c data Particulars Beginning

Rs in crores
Ending

22,91,63,839 Inventory 14,63,40,898.1 A/c Receivable

17,41,92,388.84 74,93,63,571.50 60,95,39,841.45 15,68,23,616.75

Sales

= sugar sales +molasses sales+ press mud sales+ other sales = 21,98,16,763 + 41,15,086 +11,01,358+ 41,30,632 = 22,91,63,839

1) Average Inventory

Opening Inventory + Closing Inventory

2 =
17,41,92,388.84 + 74,93,63,571.50 2 = 46,17,77,980.2

2) Average Account Receivables = Opening Receivables + Closing Receivables

2 = 60,95,39,841.45 + 15,68,23,616.75

2 = 3) Inventory Period = 38,31,81,729.1 Average Inventory Annual COGS 365 = 46,17,77,980.2 14,63,40,898.1 365 = 46,17,77,980.2 4,00,933.96 = 1,151.75

4) Account Receivables Period = Average Account Receivables

Annual Sales 365 = 38,31,81,729.1 22,91,63,839 365 = 38,31,81,729.1 6,27,846.13 = 610.3

Operating cycle = Inventory period + Accounts receivable period

= 1151.75 + 610.3 = 1762.05 Days Interpretation

Here the firms operating cycle has increased from 427 days during 2008-09 to 1762 days during 2009-10. The operating cycle of the firm is not satisfactory because it has

increased by 1300days. However it is also observed that the debtors collection period has increased . Due to company is in loss from several years.

Financial information of THE GSSKN 2011-2012

Particulars Sales Cost of goods sold P&L a/c data Particulars Beginning Ending

126,74,32,116 Inventory 118,92,31,382 A/c Receivable

74,93,63,571.50 73,04,12,683.69 15,68,23,616.75 35,51,08,313.76

Sales = sugar sales +molasses sales+ pressmud sales+ other sales

= 117,04,65,387 + 7,98,29,676 + 12,52,258 + 1,58,84,795

= 126,74,32,116

1) Average Inventory

Opening Inventory + Closing Inventory 2

74,93,63,571.50 +73,04,12,683.69 2 = 73,98,88,127.6

2) Average Account Receivables

= Opening Receivables + Closing Receivables

2 = 15,68,23,616.75 + 35,51,08,313.76

2 = 3) Inventory Period = 25,59,65,965.2 Average Inventory Annual COGS 365

73,98,88,127.6 118,92,31,382 365

73,98,88,127.6 32,58,168.17 = 227.08

4) Account Receivables Period = Average Account Receivables

Annual Sales 365

25,59,65,965.2 126,74,32,116 365 = 25,59,65,965.2 34,72,416.756 = 73.71

Operating cycle = Inventory period + Accounts receivable period = 227.08 + 73.71 = 300.79 Days

Interpretation:
Here the firms operating cycle has decreased from 1762 days during 201011 to 300 days during 2011-12. The operating cycle of the firm is satisfactory because it has come down by 1400days. However it is also observed that the debtors collection period has decreased because company is in loss from several years. Findings: This study was undertaken at GSSKNG to understand and analysis working capital management to find out companys present financial status. Accordingly last five years balance sheet was considered for analyzing working capital management. The major findings with respect to study are given below The changes in working capital of 2008-09 and 2009-10 is Rs 52,66,75,450.27 and Rs 50,52,65,543.01 respectively. It shows working capital decreased to Rs 2,14,09,907.26 in 2009-10 which compared to 2009-10 has decreased the net working capital of firm may not satisfactory with its working capital. The changes in working capital of 2009-10 and 2010-11 is Rs 50,52,65,543.01 and Rs 72,54,88,403.42 respectively. It shows the working capital increased of Rs 22,02,22,860.41 in the year 2010-11 compare to 2009-10. By decreasing net working capital the firm is satisfactory with its working capital. The working capital decreased of Rs 7,62,24,350.88 in the year 2011-12 compared to 2010-11. Inventory turnover ratio was highest in the year 2009-10 i.e. 1.71 which came down in the year 2010-11 at 0.32 because of increase in the average inventory, further it increased in the year 2011-12 at 1.60 due to the increase in the amount of cost of goods sold compared to that of average inventory. On an average , inventories are converted to sales 2.11 number of times. So higher ratio is preferable. Debtor turnover ratio has increased in the year 2011-12 but in 2010-11 it has decreased, suddenly increased in the year 2011-12 by 4.95. . The total assets turnover ratio has been decreasing through the years from 0.11 in the year 2010-11. The high ratio is favorable because it means the assets are used very efficiently.