CONTENTS

CHAPTER I
INTRODUCTION
Introduction of topic
Statement of problem
CHAPTER II
METHODOLOGY
Objectives of the study
Need for the study
Scope of the study
Limitations of the study
Review of literature
CHAPTER III
COMPANY PROFILE & INDUSTRY PROFILE
CHAPTER IV
THEORITICAL BACKGROUND
CHAPTER - V
DATA ANALYSIS & INTERPRETATION
FINDINGS
SUGGESTIONS & CONCLUSIONS
BIBLIOGRAPHY
INTRODUCTION
INTRODUCTION
The concept of working capital is much confusing in the business circles. It is very unfortunate, there
is much disagreement among financiers, accountants, businessmen and economists as to the exact
meaning of the term working capital. According to a few, working capital means current assists. or
some others it is an excess of current assets over current liabilities. !ome authorities prefer to call it
circulating capital in place of working capital.

MEANING OF WORKING CAPITAL:-
The term working capital is commonly used for the capital re"uired for day#to#day working
in business concern. !uch as for purchasing raw material for meeting day#to#day expenditure on
salaries, wages, rent rates advertising etc. but there is much disagreement among various financial
authorities as to the exact meaning of the term working capital
DEFINITION OF WORKING CAPITAL
$orking %apital refers to that part of the firms capital, which is re"uired for financing short#term
or current assets such a cash marketable securities, debtors and inventories. unds thus, invested
in current assets keep revolving fast and are constantly converted into cash and this cash flow out
again in exchange for other current assets. $orking %apital is also known as revolving or
circulating capital or short#term capital.
IMPORTANCE OF WORKING CAPITAL MANAGEMENT:
$orking capital management includes a number of aspects that make it especially important
for the financial health of the firm. !urveys indicate that the largest portion of the financial manager
time is devoted to the day#to#day operations of the firm, which fall under the heading o working
capital management.
%urrent assets represent the largest proportion i.e. if total assets forms &' then current assets
are generally above ()'. *oreover current assets fluctuate with sales and sales vary over time. Thus
managing current asset is the dynamic process and it re"uires the financial mange to closely monitor
sales to ensure that assets in hand are at the right level for actual sales production levels.
DETERMINANTS OF WORKING CAPITAL
+ature of Industry
!easonality of ,perations
-roduction -olicy
*arket %onditions
%onditions of supply
!i.e of /usiness
0olume of !ales
Terms of -urchase and !ales
/usiness %ycle
1rowth and 2xpansion of the firm
-rice 3evel %hanges
,perating 2fficiency of the firm
-rofit Appropriation
%apital !tructure of the firm
STATEMENT OF THE PROBLEM :
The present study is titled 4problem of working capital management of 526ITA12 4
In order to study the statement it is necessary to define important terms used in
statement of the problem .
The term 4working capital management7 refers to total current assets of
526ITA12. 8uring a particular period of time. current assets are the assets which can be
converted into cash within accounting year.
The term working capital management implies
determination of re"uirements of working capital ,financing the re"uirements and efficient
utili.ation of working capital in 526ITA12 .
A study on working capital management is mainly related to
ade"uacy of inventories, recievebles, cash and bank balances and working finance in 526ITA12
during the period of under study.
METHODOLOGY
NEED OF THE STUDY
%urrent assets must be managed efficiently in order to maintain the li"uidity of the firm to know
about the financial mixed strategies .
5ence forth so far researchers not touched with said topic to
knowing the information in organi.ation exactly the working capital wants to know the balances of
current assets 9 current liabilities increases or decreases to know the corrected netprofit of
balance and we can know the difference of the year of balance how much it is profit or loss will be
there in company.
SCOPE OF THE STUDY:
The study is confined to 526ITA12 ltd and analysis of its financial statements .
The study period is :))(#:)&:
The main aim of the study is to assess the proper mgt of current assets 9 current liabilities .
The study concentrates more on the working capital mgt of 526ITA12 .
$orking capital gives only a good basis for "uantitative analysis of financial problem.
OBJECTIVES OF STUDY :
To study overall position of 526ITA12.
To examine the changes in working capital of 526ITA12.
To study existing system of working capital management in 526ITA12.
To analy.e financial performance of company with reference to its working capital
components.
To know the financial position of a company.
REVIEW OF LITERATURE :
The present study is related to working capital management in 526ITA12 , more effective and
interacted for research work in corporate sectors . for the assessment of working capital management .
T.anitha , ;nt university , hyd , researchers evalutated the working capital management
on his study on wcm in 4526ITA12 4. That working capital management is consider to involve the
administration of current assets and current liabilities . in such a way that an option level of working
capital maintained in the business .she also narrated that firm may resist without making profits but it
cannot survive with out li"uidity .
I therefore based on case study , I have selected my topic on different approach .
LIMITATIONS OF THE STUDY:
In present study the analysis is mainly based on secondary data given in annual audited balance
sheets , profit and loss a<c and reports of 526ITA12.
The study does not touch all the units of 526ITA12.
3imited span of time is a ma;or limitation of this pro;ect.
The present study cannot be used for inter firm comparision.
The result does not reflect the day to day transactions.
The study does not cover the all working capital.
/alancing li"uidity , profitability and risk in managing working capital .
PERIOD OF THE STUDY : the period of the study of these pro;ect of working capital
management on 526ITA12 is two months.
COLLECTION OF DATA:
To achieve a fore said ob;ective the following methodology has been adopted. The information
for this report has been collected through the -rimary and !econdary sources.
&. -rimary 8ata !ources
:. !econdary 8ata !ources
PRIMARY DATA SOURCES:
It is also called as first handed information the data is collected through the observation in the
organi.ation and interviews with the accounts and the persons in the financial department. A part from
these, some information is collected through the seminars which were held by 2%I3.
SECONDARY DATA SOURCES:
These secondary data is existing data which is collected by other sources, i.e. financial ;ournals
annual reports of 2%I3, website of 2%I3 and other publication of 2%I3.
TOOLS AND TECHNIQUES :
%urrent ratio = %urrent Assets
%urrent 3iabilities
>uick ratio = 3i"uid Assets
%urrent 3iabilities
%ash ratio = %ash 9 /ank balances
%urrent 3iabilities ? &))
$orking capital turnover ratio = sales@turnoverA
$orking capital
debtors turnover ratio = sales @ turnoverA
accounts recieveble
!tock turnover ratio = !ales @turnover A
inventory
COMPANY PROFILE
COMPANY PROFILE COMPANY PROFILE
About U !O"#$ V%#& o' t(# )o*+,-./
The 5eritage 1roup, founded in &BB: by !ri +ara %handra /abu +aidu, is one of the fastest
growing -rivate !ector 2nterprises in India, with four#business divisions vi.., 8airy, 6etail, Agri, and
/akery under its flagship %ompany 5eritage oods @IndiaA 3imited @5I3A. The annual turnover of
5eritage oods crossed 6s.&)B( crores in :)&)#&&.
-resently 5eritages milk products have market presence in Andhra -radesh, Carnataka,
Cerala, Tamil +adu, *aharashtra and ,rissa and its retail stores across /angalore, %hennai and
5yderabad. Integrated agri operations are in %hittoor and *edak 8istricts and these are backbone to
retail operations and the state of art /akery division at Dppal, 5yderabad, Andhra-radesh.
In the year &BBE, 5I3 went to -ublic Issue to raise resources, which was oversubscribed FE
times and its shares are listed under /& %ategory on /!2 @!tock %odeG F&BFF:A and +!2 @!tock
%odeG 526IT1,,8A
About the founder:
!ri %handra /abu +aidu is one of the greatest 8ynamic, -ragmatic, -rogressive and
0isionary 3eaders of the :&
st
%entury. $ith an ob;ective of bringing prosperity in to the rural families
through co#operative efforts, he along with his relatives, friends and associates promoted 5eritage
oods in the year &BB: taking opportunity from the Industrial -olicy, &BB& of the 1overnment of India
and he has been successful in his endeavour.
At present, 5eritage has market presence in all the states of !outh India. *ore than
three thousand villages and five lakh farmers are being benefited in these states. ,n the other side,
5eritage is serving more than ( lakh customers needs, employing more than H)) employees and
generating indirectly employment opportunity to more than F))) people. /eginning with a humble
annual turnover of ;ust 6s.E.IJ crores in &BBI#BE, the sales turnover has reached close to 6s.&)B(
crores during the financial year :)&)#:)&&.

!ri +aidu held various coveted and honorable positions including %hief *inister of Andhra
-radesh, *inister for inance 9 6evenue, *inister for Archives 9 %inematography, *ember of the
A.-. 3egislative Assembly, 8irector of A.-. !mall Industries 8evelopment %orporation, and %hairman
of Carshaka -arishad.
!ri +aidu has won numerous awards including K *ember of the $orld 2conomic
orumLs 8ream %abinetK @Time Asia A, K!outh Asian of the Mear K @Time Asia A, K /usiness -erson of
the Mear K @2conomic TimesA, and K IT Indian of the *illennium K @ India TodayA.
!ri +aidu was chosen as one of F) leaders at the forefront of change in the year :)))
by the /usiness $eek maga.ine for being an unflinching proponent of technology and for his drive to
transform the !tate of Andhra -radesh .
Fo$&,$0 1oo2%-3 t,t#*#-t:
4$e have grown, and intended to grow, focusing on harnessing our willingness to
experiment and innovate our ability to transform our drive towards excellence in "uality, our people
first attitude and our strategic direction.
M%%o- 4 "%%o-
M%%o-
/ringing prosperity into rural families of India through co#operative efforts and providing customers
with hygienic, affordable and convenient supply of Kresh and 5ealthyK food products.
V%%o-
To be a progressive billion dollar organi.ation with a pan India foot print by :)&F.
To achieve this by delighting customers with Kresh and 5ealthyK food products, those are a
benchmark for "uality in the industry.
$e are committed to enhanced prosperity and the empowerment of the farming community through
our uni"ue K6elationship armingK *odel.
To be a preferred employer by nurturing entrepreneurship, managing career aspirations and providing
innovative avenues for enhanced employee prosperity.
H#$%t,3# S1o3,-:
$hen you are healthy, we are healthy
$hen you are happy, we are happy
$e live for your K52A3T5 9 5A--I+2!!K
PROMOTERS !HINT :- CEO5 DIRECTORS/
Bo,$0 O' D%$#)to$
!ri 8. !eetharamiah %hairman
8r. A. Appa 6ao 8irector
8r. 0. +agara;a +aidu 8irector
8r. +. 6 !ivaswamy 8irector
!ri +. - 6amakrishna 8irector
!mt +. /huvaneswari 0ice#%hairman 9 *anaging 8irector
!ri 3okesh +ara 2xecutive 8irector
Co$# M,-,3#*#-t T#,*
8r. *. !amba!iva 6ao -resident
%A A -rabhakara +aidu 0ice -resident
Dmakanta /arik %ompany !ecretary
C 8urga -rasada 6ao %hief ,perating ,fficer
! Nagdish Crishnan %hief ,perating ,fficer
Anil Cumar !rivastava %hief ,perating ,fficer
Qu,1%t. +o1%). o' HFIL:
$e are committed to achieve customer satisfaction through hygienically processed and packed
*ilk and *ilk -roducts. $e strive to continually improve the "uality of our products and services
through upgradation of technologies and systems.
5eritageLs soul has always been imbibed with an unwritten perpetual commitment to itself, to
always produce and provide "uality products with continuous efforts to improve the process and
environment.
Adhering to its moral commitment and its continuous drive to achieve excellence in
"uality of *ilk, *ilk products 9 !ystems, 5eritage has always been laying emphasis on not only
reviewing 9 re#defining "uality standards, but also in implementing them successfully. All activities of
-rocessing, >uality control, -urchase, !tores, *arketing and Training have been documented with
detailed "uality plans in each of the departments.
Today 5eritage feels that the I!, certificate is not only an epitome of achieved targets,
but also a scale to identify 9 reckon, what is yet to be achieved on a continuous basis. Though, it is a
beginning, 5eritage has initiated the process of standardi.ing and adopting similar "uality systems at
most of its other plants.

Co**%t*#-t:
M%12 P$o0u)#$:
%hange in life styles of rural families in terms ofG
6egular high income through co#operative efforts.
$omen participation in income generation .
!aved from price exploitation by un#organi.ed sector .
6emunerative prices for milk .
Increase of milk productivity through input and extension activities
!hift from risky agriculture to dairy farming
5eritage
inancial support for purchase of cattleO insuring cattle
2stablishment of %attle 5ealth %are %enters
!upplying high "uality %attle feed
,rgani.ing K6ythu !adasuK and 0ideo programmes for educating the farmers in dairy farming
Cuto*#$:
Timely !upply of >uality 9 5ealthy -roducts
!upply high "uality milk and milk products at affordable prices
ocused on +utritional oods
*ore than E lakh happy customers
5igh customer satisfaction
:E hours help lines @ P&) complaints a dayA
E*+1o.##:
2nhancing the Technical and *anagerial skills of 2mployees through continuous training and
development
/est appraisal systems to motivate employees
Incentive, bonus and reward systems to encourage employees
5eritage forges ahead with a motto Kadd value to everything you doK
S(,$#(o10#$:
R#tu$-:
%onsistent 8ividend -ayment since -ublic Issue @Nanuary &BBFA
S#$"%)#:
5ighest impotence to investor serviceO no notice from any regulatory authority since :))& in
respect of investor service
0ery transparent disclosures
Su++1%#$:
Do#(1,$: technical collaboration in *ilk drinks, yogurts drinks and fruit flavoured drinks Alfa#
3avalG supplier of high#end machinery and technical support ocusing on Tetra pack association for
products package.
QUALITIES OF MANAGEMENT PRINCIPLES:
&. %ustomer focus to understand and meet the changing needs and expectations of customers.
:. -eople involvement to promote team work and tap the potential of people.
I. 3eadership to set constancy of purpose and promote "uality culture trough out the organi.ation.
E. -rocess approach to assess the efficiency and effectiveness of each process.
F. !ystems approach to understand the se"uence and interaction of process.
(. actual approach to decision making to ensure its accuracy.
H. %ontinual improvement processes for improved business results.
J. 8evelopment of suppliers to get right product and services in right time at right place.
F,)t S(##t !M%1#to-#/
A&,$0 4 R#)o3-%t%o-
6t +$%7# %- E-#$3. Co-#$",t%o-
*ain 8airy -lant, 1okul, near Casipentla on Tirupati# %hittoor 5ighway had won the -restigious &st
pri.e in 2nergy %onservation for the Mear :)&) at the +ational 3evel for itLs outstanding performance
in conserving the +atural 6esources through the most efficient use of 2nergy.
THE GREAT INDIAN ICE CREAM CONTEST 899:
Co-t,)t u !H%-t :- A00$# O' t(# )o*+,-. o$ +1,-t 1o),t%o- ;H#,0 O''%)#</
Co$+o$,t# O''%)#
5eritage oods @IndiaA 3imited
(#I#FE&<%, -an;agutta,
5yderabad, A-.
-hone G )E) # :IIB&::&<:::
ax G )E) # :II&J)B)
2mail G hfilQheritagefoods.co.in
L,t#t F%-,-)%,1 I-'o$*,t%o- !H%-t :- Ho& t(# )o*+,-. % +#$'u*%-3 %- t(# $#)#-t .#,$/ - IT
IS NOT COMPULSORY
P$o0u)t o' t(# )o*+,-. !Fo$ M,$2#t%-3 P$o=#)t &%t( Lo3o %' %t % +o%b1#/
M%12
&.Toned *ilk
:.ull %ream
*ilk
I.8ouble
Toned *ilk
E.1olden %ow
*ilk
F.!tandardised
*ilk (.!lim *ilk
H.D5T Toned
*ilk
J.D5T !lim
*ilk
B.!mart
*ilk
&).*an;unatha
*ilk
&&.2.humalai
*ilk
&:.-admanabha
*ilk
M%12 P$o0u)t - F$#(
&.Toned *ilk
%urd %up
:.ull %ream
*ilk %urd
%up
I.%urd
-ouch E.ruit n %urd %up F./utter *ilk
(.Neera /utter
*ilk
H.1arlic
/utter *ilk J.-aneer
B.%ooking
/utter
&).-asturised Table
/utter
&&.%heese
%hiplets &:.%heese !lice
&I.%heese #
%arton 9 Tin
-acks &E.8oodhpeda
&F.*ilk
%ake &(.*alai 3addu &H.!unundalu &J.!oan -apidi
M%12 P$o0u)t - Lo-3 S(#1' L%'#
&.1hee
-olypack #
%ow 9
/uffalo
:.1hee Alu
oil # %ow 9
/uffalo
I.1hee Nar #
%ow
E.1hee Tin #
/uffalo
F.!kimmed
*ilk -owder
(.8airy
$hitener
I)# C$#,*
&.!mall %up :.3arge %up I.Culfi E.Twin /ars F.!undae (.+ovelties
H.%elebration
%one J.%hocobars
B./ar
+ovelties &).Nuicy /ar
&&.!undae
*agic &:.5ome -acks
&I.2co#-acks
&E.-remium
Tubs
&F.Dtsav
-acks &(.-arty -acks
B#"#$,3#
&.-ackaged
8rinking
$ater
:.-remium
Tea
I.-opular
Tea
E.lavoured *ilk #
/ottles
F.lavoured
*ilk #
Tetrapack (.!weet 3assi
H.ruit 3assi
J.Instant
%offee
B.1round
%offee
C1#,-%-3 A%0
&.Dtensil
%leaners
:.Toilet
%leaners
I.!olid
reshener
E.1lass<,ther
%leaners
F./ar
8etergents
(.loor
%leaners
D,%1. F$#( N##0
&.-oultry
2ggs
:.5eritage
*ilk /read
I.5eritage
/rown
E.5eritage
-remium *ilk
F.5eritage
!andwich
(.5eritage ruit
/read
/read /read /read
H.5eritage
*umbai -av
J.Instant *ix
ood
G#-#$,1 M#$)(,-0%#
&.Toilet
Tissues
:.-aper
Towels
I.ace
Tissues E.%andles F.Agarbatti
(.Citchen
Towels
H#,1t( 4 B#,ut.
&.5air ,ils
:.3i"uid 5and
$ash
I.Tooth
/rush
I-t,-t Foo0
&.Appalams :.%ereal /ased I.ryums
E.+orth Indian
6eady *ixes F.-apads
(.!outh Indian
6eady *ixes
H.0ermicelli
R#,0. Foo0
&.%hilly<!oya
/ased :.5oney
I.Indian
!weets E.Nams<*armalades F.+amkeens (.-ickle
H.Tomato
/ased
INDUSTRY PROFILE INDUSTRY PROFILE
India is the worldLs second largest producer of food next to %hina, and has the potential of being the
biggest with the food and agricultural sector. The total food production in India is likely to double in
the next ten years and there is an opportunity for large investments in food and food processing
technologies, skills and e"uipment, especially in areas of %anning, 8airy and ood -rocessing,
!pecialty -rocessing, -ackaging, ro.en ood<6efrigeration and Thermo -rocessing. ruits 9
0egetables, isheries, *ilk 9 *ilk -roducts, *eat 9 -oultry, -ackaged<%onvenience oods,
Alcoholic /everages 9 !oft 8rinks and 1rains are important sub#sectors of the food processing
industry. 5ealth food and health food supplements is another rapidly rising segment of this industry
which is gaining vast popularity amongst the health conscious.
India is one of the worlds ma;or food producers but accounts for less than &.F per cent of international
food trade. This indicates vast scope for both investors and exporters. ood exports in &BBJ stood at
D! RF.J billion whereas the world total was D! REIJ billion. The Indian food industries sales turnover
is 6s &E),))) crore @& crore = &) millionA annually as at the start of year :))). The industry has the
highest number of plants approved by the D! ood and 8rug Administration @8AA outside the D!A.
IndiaLs food processing sector covers fruit and vegetablesO meat and poultryO milk and milk products,
alcoholic beverages, fisheries, plantation, grain processing and other consumer product groups like
confectionery, chocolates and cocoa products, !oya#based products, mineral water, high protein foods
etc. $e cover an exhaustive database of an array of suppliers, manufacturers, exporters and importers
widely dealing in sectors like the #ood Industry, 8airy processing, Indian beverage industry etc. $e
also cover sectors like dairy plants, canning, bottling plants, packaging industries, process machinery
etc.
The most promising sub#sectors includes #!oft#drink bottling, %onfectionery manufacture, ishing,
a"uaculture, 1rain#milling and grain#based products, *eat and poultry processing, Alcoholic
beverages, *ilk processing, Tomato paste, ast#food, 6eady#to#eat breakfast cereals, ood additives,
flavors etc.
ood processing
The 'oo0 %-0ut$. is the complex, global collective of diverse businesses that together supply much of
the food energy consumed by the world population. ,nly subsistence farmers, those who survive on
what they grow, can be considered outside of the scope of the modern foodindustry.
ood processing is the methods and techni"ues used to transform raw ingredients into food for human
consumption.ood processing takes clean, harvested or slaughtered and butchered components and
uses them to produce marketable food products.there are several different ways in which food can be
produced.
O-# O'' P$o0u)t%o- This method is used when customers make an order for something to be made to
their own specifications, for example a wedding cake. The making of ,ne ,ff -roducts could take
days depending on how intricate the design is and also the ability of the chef making the product.
today...
B,t)( P$o0u)t%o- This method is used when the si.e of the market for a product is not clear, and
where there is a range within a product line. A certain number of the same goods will be produced to
make up a batch or run, for example at 1reggs /akery they will bake a certain number of chicken
bakes. This method involves estimating the amount of customers that will want to buy that product.
M, +$o0u)t%o- This method is used when there is a mass market for a large number of identical
products, for example, chocolate bars, ready meals and canned food. The product passes from one
stage of production to another along a production line.
Jut I- T%*# This method of production is mainly used in sandwich bars such as !ubway, it is when
all the components of the product are there and the customer chooses what they want in their product
and it is made for them fresh in front of them.
WHOLESALE AND DISTRIBUTION
A vast global transportation network is re"uired by the food industry in order to connect its numerous
parts. These include suppliers, manufacturers, warehousing, retailers and the end consumers. There are
also those companies that, during the food processing process, add vitamins, minerals, and other
necessary re"uirements usually lost during preparation. $holesale markets for fresh food products
have tended to decline in importance in ,2%8 countries as well as in 3atin America and some Asian
countries as a result of the growth of supermarkets, which procure directly from farmers or through
preferred suppliers, rather than going through markets.
The constant and uninterrupted flow of product from distribution centers to store locations is a critical
link in food industry operations. 8istribution centers run more efficiently, throughput can be increased,
costs can be lowered, and manpower better utili.ed if the proper steps are taken when setting up a
material handling system in a warehouse.
The Indian food market is estimated at over D!R &J: billion, and accounts for about two thirds of the
total Indian retail market. urther, according to consultancy firm *cCinsey 9 %o, the retail food
sector in India is likely to grow from around D!R H) billion in :)&: to D!R &F) billion by :):F,
accounting for a large chunk of the world food industry, which would grow to D!R E)) billion from
D!R &HF billion by :):F.
E>PORTS
2xports of agricultural products from India are expected to more than double to top D!R :).( billion
in the next five years, according to the commerce ministry.
According to estimates by the Agricultural and -rocessed ood -roducts 2xport 8evelopment
Authority @A-28AA, the share of IndiaLs farm product exports in the global trade will grow from : per
cent now to over F per cent.
2xports of fresh and processed vegetables, fruits, livestock and cereals rose &) per cent to D!R J.(H
billion in :)&&#:)&:.
SPICES
8espite a global slowdown, Indian spice exports are growing. India exported EH),F:) tonnes of spices
valued at D!R &&.(J billionSan all#time highSin :)&&#:)&:.
8uring the :)&&#&: , EEE,:F) tonnes valued at D!R &&.)& billion were exported. %ompared with :)&&#
&: , exports had shown an increase of &B per cent in rupee value and six per cent in dollar terms.
FOOD PROCESSING
The Indian packaged processed foods industry is estimated at D!R &).JH billion T D!R &I.)F billion,
including biscuits, chocolates, ice#cream, confectionery, snacks, cheese and butter. 1rowing at a
healthy &E#&F per cent over the past two#three years, ma;or players in the sector include /ritannia,
+estle, Amul, IT% oods, -arle, Celloggs, 1laxo!mithCline, $rigley and rito#3ay, among others.
The industry received foreign direct investments @8IA totalling D!R &EI.J) million in :)&&#
:)&:against D!R F.H) million in the previous fiscal. The cumulative 8I received by the industry
from April :)))#August :)&& stood at D!R JHJ.I: million.
5owever, Indias share in exports of processed food in global trade is only &.F per centO whereas the
si.e of the global processed#food market is estimated at D!R I.: trillion and nearly J) per cent of
agricultural products in the developed countries get processed and packaged.
In order to further grow the food processing industry, the government has formulated a 0ision#:)&F
action plan under which specific targets have been set. This includes tripling the si.e of the food
processing industry from around D!R H) billion to about D!R :&) billion, raising the level of
processing of perishables from ( per cent to :) per cent, increasing value addition from :) per cent to
IF per cent, and enhancing Indias share in global food trade from &.F per cent to I per cent. This
would re"uire an investment of D!R :).( billion.
According to an 2rnst and Moung @29MA presentation, the food processing industry in India will grow
I)#E) per cent as against the present &F per cent in the next &)#years.
-rime *inister 8r *anmohan !ingh on ,ctober (, :)&& laid out a blueprint for rapid growth in the
countrys food processing sector. The -rime *inister said that this can be achieved by simplifying the
tax structure, formulating a +ational ood -rocessing -olicy and improving rural infrastructure.
*oreover, according to Dnion *inister for ood -rocessing Industries, !ubodh Cant !ahai the central
government is envisaging an investment of D!R :&.F) billion in the food processing industry over the
next five years, a ma;or chunk of which it plans to attract from the private sector and financial
institutions.
SNACKS AND CONFECTIONERY
The Indian market holds enormous growth potential for snack food, which is estimated to be worth
D!R I billion, with the branded snack market estimated to be around D!R &.IE billion, growing at &F#
:) per cent a year. $hile the growth rate of the D!R &.F( billion unorganised sector is H#J per cent.
HEALTH FOOD
6ecognising the growth potential of the branded health food sector in India, fast moving consumer
goods @*%1A ma;ors are foraying into this sector in a big way. As 5industan 3ever 3td @5D3A is test
marketing its health food brand, Cissan Ama.e, in three southern states in India, 1odre; 5ershey
oods 9 /everages 3td @15/3A, a ;oint venture between 1odre; /everages 9 oods 3td and
5ershey %ompany, is planning to introduce select brands from its international portfolio in the
domestic market.
DAIRY
According to 8airy India :)&& estimates, the current si.e of the Indian dairy sector is D!R (:.(H
billion and has been growing at a rate of F per cent a year. The dairy exports in :)&&T&) rose to D!R
:&).F million against D!R &&I.FH last fiscal, whereas the domestic dairy sector is slated to cross D!R
&&) billion in revenues by :)&:.
India continues to be the largest producer of milk in the world. It produced &&) million tonne of milk
in :)&&#:)&:.
BEVERAGES
According to industry experts, the market for carbonated drinks in India is worth D!R &.F billion while
the ;uice and ;uice#based drinks market accounts for D!R ).:F billion. 1rowing at a rate of :F per cent,
the fruit#drinks category is one of the fastest growing in the beverages market. !ports and energy
drinks, which currently have a low penetration in the Indian market, have sufficient potential to grow.
The market for alcoholic beverages has been growing consistently. LThe uture of $ineL, a report on
the state of the wine industry over F) years, suggests that the market for wine in India was growing at
over :F per cent per year.
MAJOR INVESTMENTS
-rivate investment has been one of the key drivers for growth of the Indian food industry. The LIndia
ood 6eport :)&:L, reveals that the total amount of investments in the food processing sector in the
pipeline for the next three years is about D!R :I billion.
The government has received around E) expressions of interest @2oIA for the setting up of &)
*-s with an investment of D!R F&E.IH million.
6eliance Industries 3td has invested D!R &.:F billion in a dairy pro;ect.
ocusing on India as a rapidly growing market, D! soft drinks giant -epsico would pump in an
estimated D!R &F:.I) million to set up four new food and beverages pro;ects by :)&:.
1eneva#based food service chain 1lobal ranchise Architects @1AA aims to open :F) stores
around the world by *arch :)&:, of which &)) will be in India.
GOVERNMENT INITIATIVES
The new trade policy places increased focus on agro#based industries.
ood processing industries have been put in the list of priority sectors for bank lending. The
%entre has also announced a series of new initiatives which include a separate policy at the
state level, thrust on contract farming and making the sector tax#free.
The government plans to open I) mega food parks by the end of the &&th five year plan @:)&&#
:)&:A.
ruit and vegetable processing units have been completely exempted from paying excise duty.
Automatic approval for foreign e"uity up to &)) per cent is permitted for most of the processed
food items.
Items like fruits and vegetables products, condensed milk, ice cream, meat production have
been completely exempted from %entral 2xcise 8uty.
2xcise duty on ready to eat packaged foods and instant food mixes has been brought down to J
per cent from &( per cent.
2xcise duty on aerated drinks has been reduced to &( per cent from :E per cent.
The *inistry of ood -rocessing Industry would assist in the setting up of more food
processing units so that the industry could create &) million ;obs by :)&F, according to *r
!ubodh Cant !ahai, Dnion *inister for ood -rocessing.
LOOKING AHEAD
According to the India ood and 8rink 6eport >I :)&: by research analysis firm 6esearch and
*arkets, by :)&:, Indias processed food output is likely to grow by EE.: per cent to touch D!R B).&
billion, while packaged food sales will increase by (H.F per cent to reach D!R :&.H billion. ,n a per
capita basis, per capita packaged food spending is expected to grow by F(.F per cent to D!R &J.)( by
:)&:.
*oreover, according to a I%%I#29M study on the Indian food industry, investment opportunities in
the Indian food industry are set to shoot up by a huge E:.F per cent to D!R &J& billion in :)&F and to
D!R I&J billion by :):).
CONCEPTUAL FRAME
WORK
INTRODUCTION
CONCEPT:-
$,6CI+1 %A-ITA3 *2A+I+1 A+8 !I1+I%A+%2

The concept of working capital is much confusing in the business circles. It is
very unfortunate, there is much disagreement among financiers, accountants, businessmen and
economists as to the exact meaning of the term working capital. According to a few, working capital
means current assists. or some others it is an excess of current assets over current liabilities. !ome
authorities prefer to call it circulating capital in place of working capital.

MEANING OF WORKING CAPITAL:-
The term working capital is commonly used for the capital re"uired for day#to#
day working in business concern. !uch as for purchasing raw material for meeting day#to#day
expenditure on salaries, wages, rent rates advertising etc. but there is much disagreement among
various financial authorities as to the exact meaning of the term working capital.
IMPORTANCE OF WORKING CAPITAL MANAGEMENT :
$orking capital management includes a number of aspects that make it especially important
for the financial health of the firm. !urveys indicate that the largest portion of the financial manager
time is devoted to the day#to#day operations of the firm, which fall under the heading o working
capital management.
%urrent assets represent the largest proportion i.e. if total assets forms &' then current assets
are generally above ()'. *oreover current assets fluctuate with sales and sales vary over time. Thus
managing current asset is the dynamic process and it re"uires the financial mange to closely monitor
sales to ensure that assets in hand are at the right level for actual sales production levels.
$orking capital management is particularly important for small firms. Although these firms
minimi.e their investment in fixed assets by renting or leasing plant and e"uipment, they cannot avoid
investment in cash, receivables and inventories. urther, because small firms have relatively limited
access to long#term capital markets they must relay heavily on trade and short#term loans, both of
which affect working capital by increasing current liabilities.

DETERMINANTS OF WORKING CAPITAL
FACTORS INFLUENCING WORKING CAPITAL NEEDS:-
6? N,tu$# o' Bu%-#: - The amount of working capital is basically related to the nature and
volume of the business. In concerns, where the cost of raw materials to be used in the
manufacture of a product is very large in proportion to its total cost of manufacture the
re"uirements of working capital will be very large. or instance, a cotton or sugar mill re"uires
a large amount of working capital. ,n the contrary, concerns having large investments in fixed
assets re"uire less amount of working capital.
8? S%7# o' Bu%-# U-%t: - !i.e of the business unit is also a determining factor in estimating the
total amount of working capital. The general principle in this regard is that the bigger the si.e
the larger will be the amount of working capital re"uired as because the larger business units
are re"uired to maintain big inventories for the flow of the business.
@? S#,o-,1 V,$%,t%o-: # !trong seasonal movements create certain special problems of working
capital in controlling the internal financial swings. A great many companies have to carry on
seasonal business such as sugar mills, oil mills or woolen mills etc. and therefore they re"uire
large amount of working capital in the season to purchase the raw materials in large "uantities
and utili.e them throughout the year.
A? T%*# Co-u*#0 I- M,-u',)tu$#: # The average time taken in the process of manufacture is
also an important factor in determining the amount of working capital. The longer the period of
manufacture the large the investor re"uired.
B? Tu$-o"#$ o' C%$)u1,t%-3 C,+%t,1: # Turnover means the ratio of annual gross sales to average
working assets. In simple words, it means the speed with which circulating capital completes
its rounds or the number of times the amount invested in working assets has been converted
into cash by sales of the finished goods and reinvested in working assets during a year.
C? L,bo$ I-t#-%"# V C,+%t,1 I-t#-%"# I-0ut$%#: - In labor intensive industries, large
working capital is re"uired because or regular payment of heavy wage#bills and more time
taken in completing the manufacturing process. %onversely, the capital intensive industries
re"uire lesser amount of working capital because of the heavy investment in fixed and shorter
period in manufacturing process.
D? N##0 to Sto)2+%1# R,& M,t#$%,1 ,-0 F%-%(#0 Goo0: - In industries where it is necessary to
stockpile the raw materials and finished goods increase the amount of working capital lied up
in stocks and stores in certain lines of business where the materials are bulky and best
purchasable in large "uantities such as cements stockpiling of raw material is very usual or
where labor stoppage is fre"uent finished goods stock have to be large in stored "uantities.
E? T#$* o' Pu$)(,# ,-0 S,1#: - Terms of purchase and sales also affect the amount of
working capital. If a company purchases all goods in cash and sells its finished product on
credit also naturally it will re"uire large amount of working capital. ,n the contrary a concern
having credit facilities and allowing no credit to its customers will re"uire lesser amount of
working capital
:? Co-"#$%o- o' Cu$$#-t A#t I-to C,(: # The need of having cash in hand to meet the day
to day re"uirements payment of wages and salaries rent rates has an important bearing in
deciding the ade"uate amount of working capital. The greater the cash re"uirement the higher
will be the need of working capital but if a company has ample stock of li"uid current assets
will re"uire lesser amount of working capital because the company can en cashes such assets
immediately in the open market.
69? G$o&t( ,-0 EF+,-%o- o' Bu%-#: # 1rowing concerns re"uire more working capital than
those that are static. It is logical to expect larger amount of working capital in a growing
concern to meet its growing needs of funds for its expansion programmers though it varies with
economic condition and corporate practices.
66? Bu%-# C.)1# F1u)tu,t%o-: - /usiness cycle affects the re"uirement of working capital. At
times when the prices are going up and up and boom conditions prevail the tendency
management is to pile up a big stock of raw materials and to maintain a big stock of finished
goods with an expectation to earn more profits.
68? P$o'%t M,$3%- ,-0 P$o'%t A++$o+$%,t%o-: # !ome firms en;oy a dominant position in the
market due to "uality product or good marketing management or monopoly power in the
market and therefore earn a high profit margin. ,n the other hand form facing tough
competition earn low margin of profit.
6@? P$%)# 1#"#1 )(,-3#: - The financial manager should also anticipate the effect of price level
changes on working capital re"uirements of the firm. 1enerally, rising price levels will re"uire
a higher amount of working capital because to maintain the same levels of current assets will
re"uire higher investment. 5owever if companies may revise their product prices will not face
a severe working capital problem. The effects of rising price levels will be different for
different firms depending upon their price policies nature of the product etc.
6A? D%"%0#-0 +o1%).: # There is a well established relationship between dividend and working
capital in companies where conservation dividend policy is followed. The changes in working
capital position bring a about an ad;ustment in dividend policy. $ith a view to maintain and
established dividend policy is the management before declaring a dividend gives due
consideration to its effects on cash and cash re"uirements.
DEFINITION OF WORKING CAPITAL
$orking %apital refers to that part of the firms capital, which is re"uired for financing short#term
or current assets such a cash marketable securities, debtors and inventories. unds thus, invested
in current assets keep revolving fast and are constantly converted into cash and this cash flow out
again in exchange for other current assets. $orking %apital is also known as revolving or
circulating capital or short#term capital.
WORKING CAPITAL MANAGEMNENT-AN OVER VIEW
$orking capital of a firm may be different as the amount by which its current assets exceed its current
liabilities. $orking capital management is concerned with the problem that arises attempting to
manage current assets, current liabilities and the interrelationship that exists between them. The
current assets to those assets, which in the ordinary course of the business can be, or will be, turned
into cash with in & year without disrupting the operations of the firm. The ma;or current assets are cash
marketable securities account receivable and inventories. %urrent liabilities are those liabilities, which
are intended at their inception to be payee in the ordinary course of business with in the year, out of
current assets or earning of the concern. The basic current liabilities are account payable, bills payable,
bank overdraft and outstanding expenses.
The goal of working capital management is to manage the firms current assets and current
liabilities in such a way that the satisfactory level of the working capital is maintained. The Interaction
between the current assets and current liabilities is the main theme of the theory of the working capital
management.
The important elements of working capital includes inventory management, cash management,
credit and collection policy and short term borrowings where as long term financial analysis is
primarily concerned with strategic planning, working capital management is primarily concerned with
day to day operations making shore, production lines out stop as firms run our of the raw material and
thus preventing the slowing down of the process. ,bviously with out good working capital
management no firm can be efficient and profitable.
CONCEPT OF WORKING CAPITAL
There are two possible interpretations of working capital conceptG
6? B,1,-)# (##t )o-)#+t
8? O+#$,t%-3 ).)1# )o-)#+t
B,1,-)# (##t )o-)#+t : There are two interpretations of working capital under the
balance sheet concept.
a. EF)# o' )u$$#-t ,#t o"#$ )u$$#-t 1%,b%1%t%#
b? 3$o o$ tot,1 )u$$#-t ,#t
U 2xcess of current assets over current liabilities are called the net working capital or net current
assets.
U $orking capital is really what a part of long term finance is locked in and used for supporting
current activities.
U The balance sheet definition of working capital is meaningful only as an indication of the
firms current solvency in repaying its creditors.
U $hen firms speak of shortage of working capital they in fact possibly imply scarcity of cash
resources.
U In fund flow analysis an increase in working capital, as conventionally defined, represents
employment or application of funds.
U O+#$,t%-3 ).)1# )o-)#+t :
U A companys operating cycle typically consists of three primary activitiesG
U -urchasing resources,
U -roducing the product and
U 8istributing @sellingA the product.
U These activities create funds flows that are both u-.-)($o-%7#0 and u-)#$t,%-?
Dnsynchroni.ed because cash disbursements @for example, payments for resource
purchasesA usually take place before cash receipts @for example collection of receivablesA. The
firm has to maintain cash balance to pay the bills as they come due.
U In addition, the company must invest in inventories to fill customer orders promptly.
U And finally, the company invests in accounts receivable to extend credit to customers.
U ,perating cycle is e"ual to the length of inventory and receivable conversion periods.

Types of Working Capital
-ermanent working capital
Temporary or variable working capital
P#$*,-#-t &o$2%-3 ),+%t,1
= minimum amount of investment in all current assets which is re"uired at all times to carry out
minimum level of business activities.
-ermanent working capital = core current assets
T#*+o$,$. &o$2%-3 ),+%t,1:
The amount of temporary working capital fluctuates depending upon the changes in the production
and sales.
Temporary working capital = fluctuating working capital # variable working capital
TYPES OF WORKING CAPITAL
WORKING CAPITAL
BASIS OF
CONCEPT
BASIS OF
TIME
G$o
Wo$2%-3
C,+%t,1
N#t
Wo$2%-3
C,+%t,1
P#$*,-#-t
G F%F#0
WC
T#*+o$,$.
G V,$%,b1#
WC
R#3u1,$
WC
R##$"#
WC
S+#)%,1
WC
S#,o-,1
WC
MANAGEMENT OF WORKING CAPITAL ! WCM /
*anagement of working capital is concerned with the problems that arise in attempting to manage
the current assets, the current liabilities and the inter#relationship that exists between them. In
other words, it refers to all aspects of administration of %A and %3.
$orking %apital *anagement -olicies of a firm have a great effect on its profitability, li"uidity
and structural health of the organi.ation
3D Nature of Working Capital 3D Nature of Working Capital
Management Management
D%*#-%o- I
P$o'%t,b%1%t.5
R%25 4 L%Hu%0%t.
D%*#-%o- I
P$o'%t,b%1%t.5
R%25 4 L%Hu%0%t.
D%*#-%o- II
Co*+o%t%o- 4
L#"#1
o' CA
D%*#-%o- II
Co*+o%t%o- 4
L#"#1
o' CA
D%*#-%o- III
Co*+o%t%o- 4
L#"#1
o' CL
D%*#-%o- III
Co*+o%t%o- 4
L#"#1
o' CL
OBJECTIVES OF WOEKING CAPITAL MANAGEMENT :
To study on working capital a large portion of total investment in assets .
To study on working capital re"uires much of financial managers time .
To study on working capital changes in price level .
To study on working capital day#to#day activities .
To study on working capital current assets and current liabilities .
RATIO ANALYSIS
M#,-%-3 o' R,t%oG# A ratio is simple arithmetical expression of the relationship of one number to
another. It may be defined as the indicated "uotient of two mathematical expressions.
According to Accountants 5andbook by $ixon, Cell and /edford, 4a ratio is an expression of the
"uantitative relationship between two numbers7.
R,t%o A-,1.%:- 6atio analysis is the process of determining and presenting the relationship of items
and group of items in the statements. According to /atty N. *anagement Accounting 46atio can assist
management in its basic functions of forecasting, planning coordination, control and communication7.
It is helpful to know about the li"uidity, solvency, capital structure and profitability of an organi.ation. It
is helpful tool to aid in applying ;udgement, otherwise complex situations.
R,t%o *,. b# #F+$##0 %- t(# 'o11o&%-3 t($## &,. :
&. -ure 6atio or !imple 6atio G# It is expressed by the simple division of one number by another. or
example , if the current assets of a business are 6s. :))))) and its current liabilities are 6s. &))))), the
ratio of %urrent assets to current liabilities will be :G&.
:. 6ate or !o *any Times G# In this type , it is calculated how many times a figure is, in comparison to
another figure. or example , if a firms credit sales during the year are 6s. :))))) and its debtors at the
end of the year are 6s. E)))) , its 8ebtors Turnover 6atio is :)))))<E)))) = F times. It shows that the
credit sales are F times in comparison to debtors.
I. -ercentage G# In this type, the relation between two figures is expressed in hundredth. or example, if
a firms capital is 6s.&)))))) and its profit is 6s.:))))) the ratio of profit capital, in term of
percentage, is :)))))<&))))))?&)) = :)'

T.+# o' $,t%o !&o$2%-3 ),+%t,1 ,o)%,t#0 $,t%o/
1) CURRENT RATIO:
%urrent 6atio may be defined as the relationship between current assets and current liabilities.
This ratio is also known as working capital ratio, is a measure of general li"uidity and is most widely
used to make the analysis of a short#term financial position or li"uidity of a firm. It is calculated by
dividing total current assets by total of the current liabilities.

2) QUICK RATIO:
s Liabilitie Current
Assets Current
= Ratio Current
>uick ratio is a ratio of assets to "uick liabilities. >uick assets are assets that can be converted
into cash very "uickly without much loss. >uick liabilities one liabilities, which have to he necessarily
paid with in one year.
The acid test ratio is a measure of li"uidity designed to over come of firms ability to convert its
current assets "uickly into cash in order to meet its current liabilities. Thus, it is measure of "uick or
acid li"uidity.
The acid test ratio is the ratio between current assets and current liabilities and is calculated by
dividing the "uick assets by the current liabilities.

>uick Assets = %urrent Assets T @Inventory V -repaid 2xpenses)
s Liabilitie Current
Assets Quick
= Ratio Quick
3) CASH RATIO !SUPER QUICK RATIO/:
Definition
Total dollar value of cash and marketable securities divided by current liabilities. or a bank
this is the cash held by the bank as a proportion of deposits in the bank. The cash ratio measures the
extent to which a corporation or other entity can "uickly li"uidate assets and cover short#term
liabilities, and therefore is of interest to short#term creditors. ,1o ),11#0 li"uidity ratio or cash asset
ratio.
4) WORKING CAPITAL TURNOVER RATIO:
$orking capital of a concern is directly related to sales.
The working capital is taken asG
$orking capital = %urrent assets T %urrent 3iabilities
The working capital turnover ratio indicates the velocity of the utili.ation of net working
capital.
s Liabilitie Current
es bankbalanc cash9
6atio %ash =
100 x
Capital Working Net
Sales
= Ratio Turnover Capital Working
5) DEBTORS TURNOVER RATIO
D#'%-%t%o-:
8ebtors turnover ratio indicates the velocity of debt collection of a firm. In simple words it indicates
the number of times average debtors @receivableA are turned over during a year.
Fo$*u1, o' D#bto$ Tu$-o"#$ R,t%o:
D#bto$ Tu$-o"#$ R,t%o I N#t C$#0%t S,1# G A"#$,3# T$,0# D#bto$
The two basic components of the ratio are net credit annual sales and average trade debtors. The trade
debtors for the purpose of this ratio include the amount of Trade 8ebtors 9 /ills 6eceivables. The
average receivables are found by adding the opening receivables and closing balance of receivables
and dividing the total by two. It should be noted that provision for bad and doubtful debts should not
be deducted since this may give an impression that some amount of receivables has been collected.
/ut when the information about opening and closing balances of trade debtors and credit sales is not
available, then the debtors turnover ratio can be calculated by dividing the total sales by the balance of
debtors @inclusive of bills receivablesA given. and formula can be written as follows.
8ebtors Turnover 6atio = Total !ales < 8ebtors
C/ STOCK TURNOVERGINVENTORY TURNOVER RATIO:
DEFINITION:
!tock turn over ratio and inventory turn over ratio are the same. This ratio is a relationship between the
cost of goods sold during a particular period of time and the cost of average inventory during a
particular period. It is expressed in number of times. !tock turn over ratio<Inventory turn over ratio
indicates the number of time the stock has been turned over during the period and evaluates the
efficiency with which a firm is able to manage its inventory. This ratio indicates whether investment in
stock is within proper limit or not
Formula of Stock Turnover/Inventory Turnover Ratio:
The ratio is calculated by dividing the cost of goods sold by the amount of average stock at cost.
!,/ I-"#-to$. Tu$-o"#$ R,t%o I Cot o' 3oo0 o10 G A"#$,3# %-"#-to$. ,t )ot

1enerally, the cost of goods sold may not be known from the published financial statements. In such
circumstances, the inventory turnover ratio may be calculated by dividing net sales by average
inventory at cost. If average inventory at cost is not known then inventory at selling price may be
taken as the denominator and where the opening inventory is also not known the closing inventory
figure may be taken as the average inventory.
b) [Inventory Turnover Ratio = Net Sae! " Avera#e Inventory at Co!t$
%) [Inventory Turnover Ratio = Net Sae! " Avera#e inventory at Sein# Pri%e$
&) [Inventory Turnover Ratio = Net Sae! " Inventory$
DATA ANALYSIS AND
INTERPRETATION


STATEMENT OF CHANGES IN WORKING CAPITAL FOR 8966-8968
'Ru(ee! in a)*!)

P,$t%)u1,$ @6-@- 8966 @6-@-8968 I-)$#,# D#)$#,#
Cu$$#-t A#t
Inventories
!undry 8ebtors
%ash and /ank /alance
/ills 6eceivables
3oan and Advances
Total %urrent Assets @6A
Cu$$#-t L%,b%1%t%#
!undry %reditors
8eposits
,ther 3iabilities and -rovisions
Interest
Total %urrent 3iabilities @8A
Wo$2%-3 C,+%t,1 W @6A # @8 AX
I-)$#,# %- &o$2%-3 ),+%t,1 :
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Sou$)# : annual reports of 526ITA12 for the year :)&&#&:

STATEMENT OF CHANGES IN WORKING CAPITAL FOR 8969-8966
'Ru(ee! in a)*!)

P,$t%)u1,$ @6-@- 8969 @6-@-8966 I-)$#,# D#)$#,#
Cu$$#-t A#t
Inventories
!undry 8ebtors
%ash and /ank /alance
/ills 6eceivables
3oan and Advances
Total %urrent Assets @6A
Cu$$#-t L%,b%1%t%#
!undry %reditors
8eposits
,ther 3iabilities and -rovisions
Interest
Total %urrent 3iabilities @8A
Wo$2%-3 C,+%t,1 W @6A # @8A X
I-)$#,# %- &o$2%-3 ),+%t,1 :
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Sou$)# : annual reports of 526ITA12 for the year :)&)#&&

STATEMENT OF CHANGES IN WORKING CAPITAL FOR 899:-8969
'Ru(ee! in a)*!)

P,$t%)u1,$ @6-@- 899: @6-@-8969 I-)$#,# D#)$#,#
Cu$$#-t A#t
Inventories
!undry 8ebtors
%ash and /ank /alance
/ills 6eceivables
3oan and Advances
Total %urrent Assets @6A
Cu$$#-t L%,b%1%t%#
!undry %reditors
8eposits
,ther 3iabilities and -rovisions
Interest
Total %urrent 3iabilities @8A
Wo$2%-3 C,+%t,1 W @6A # @8A X
D#)$#,# %- &o$2%-3 ),+%t,1 :
::JI&.(B
:)I&(&.(:
&(J&.EF
&):E:.)(
BH::.EI
8ADC@:?8B
EB)E(.(H
&H(B&.EB
EI)BH.B(
J:JB.E(
66EDDC?6A

68EEC@?66
8DEDE?6C
6BCDA6?8D
:JJJF.EJ
&BHBEE.E&
H)H:.EH
:BJE(.)&
JH)I.E&
8D8AB6?DE
IBBBE.EH
&BJ().&)
EFJ:).HJ
JH:E.):
66BD69?B6
6BCDA6?8D
6BCDA6?8D

()FI.HB
FIB&.):
&B()I.BF
:EJ&:.FI
:&(J.FB
I)(F.(I
:HJHJ.&(
F:&H.:&
&)&B.):
B)F:.:
:H::.J:
EIE.F(
:HJHJ.&(
:HJHJ.&(
Sou$)# : annual reports of 526ITA12 for the year :))B#&)
STATEMENT OF CHANGES IN WORKING CAPITAL FOR 899E-899:
'Ru(ee! in a)*!)

P,$t%)u1,$ @6-@- 899E @6-@-899: I-)$#,# D#)$#,#
Cu$$#-t A#t
Inventories
!undry 8ebtors
%ash and /ank /alance
/ills 6eceivables
3oan and Advances
Total %urrent Assets @6A
Cu$$#-t L%,b%1%t%#
!undry %reditors
8eposits
,ther 3iabilities and -rovisions
Interest
Total %urrent 3iabilities @8A
Wo$2%-3 C,+%t,1 W @6A # @8A X
D#)$#,# %- &o$2%-3 ),+%t,1 :
:JHB&.(F
&J(&BJ.F)
(:):.:H
&:E(H.&J
&:HIB.JH
8AC@::?AD
J(B(F.(F
&H&(I.(&
:FIIH.JF
(&&:.&J
6@C6D6?C9
66988D?ED
6EC@B?8A

68EEC@?66

::JI&.(B
:)I&(&.(:
&(J&.EF
&):E:.)(
BH::.EI
8ADC@:?8B
EB)E(.(H
&H(B&.EB
EI)BH.B(
J:JB.E(
66EDDC?6A
6
8EEC@?66
68EEC@?66


&(B(I.&:
&:IB.HJ
IHB&J.BJ
&HIBF.E(
&J(IF.:E
FBFB.B(
EF:).J:
:::F.&:
I)&H.EE
F:H.JJ
&HH().&&
:&HH.:J
&J(IF.:E
&J(IF.:E
Sou$)# : annual reports of 526ITA12 for the year :))J#)B

STATEMENT OF WORKING CAPITAL FOR 899C-8968
'Ru(ee! in a)*!)
Y#,$ Cu$$#-t
,#t
Cu$$#-t
1%,b%1%t%#
Wo$2%-3
C,+%t,1
N #t Wo$2%-3 C,+%t,1
I-)$#,# D#)$#,#
:))J#)B
:))B#&)
:)&)#&&
:)&&#&:
:EH(IB.:F
:H:EF&.HJ
:()((J.B:
:JBIFH.&F
&&JHH(.&E
&&FH&).F&
&F)&J&.FJ
:):F:B.(H
&:JJ(I.&&
&F(HE&.:H
&&)EJH.IE
J(J:H.EJ
&J(IF.:E
:HJHJ.&(
E(:FI.BI
:I(FB.J(
InterpretationG
or the periods :))(#)Hand :))H#)J the net working capital is decreased due to high of
current assets and current liabilities .
or the periods :))(#)Hand :))H#)J increase in working capital due to remaining year
figures, because in these : years current assets are high and current liabilities are low.
In the year :))H#)J the current liabilities are very low 9 current assets are high ,so the
working capital is increased.
COMPARISION OF INCREASE AND DECREASE OF WORKING CAPITAL
Y#,$ N #t Wo$2%-3 C,+%t,1
I-)$#,# GD#)$#,#
:))J#)B
:))B#&)
:)&)#&&
:)&&#&:
@#A&J(IF.:E
@#A:HJHJ.&(
@VAE(:FI.BI
@VA:I(FB.J(
InterpretationG
or the periods :))(#)Hand :))H#)J the net working capital is decreased due to lower
investments in ac"uisition of fixed assets and making less payments to the payables
or the periods :)&&#&: and :)&&#:)&:increase in working capital leads to ma;or investments
in fixed assets as well as capital expenditure.
6? C,1)u1,t%o- o' Cu$$#-t R,t%o:
-rinciple :))J#)B :))B#&) :)&)#&& :)&&#&:
Cu$$#-t R,t%o
= %urrent Assets
%urrent 3iabilities
:EH(IB.:F
&&JHH(.&E
=:.&)E
:H:EF&.HJ
&&FH&).F&
=:.IFE
:()((J.B:
&F)&J&.FJ
=&.HIF
:JBIFH.&F
:):F:B.(H
=&.E:J
InterpretationG
0ariance of current ratio in the year :))H#)J shows that increase in current assets as
well as decrease in current liabilities when compare to :))(#)Hfigures.
or the year :)&&#&: and :)&&#:)&:the current ratio has been declined due to increase
in current liabilities and decrease in current assets.
The above ratio clearly indicates that for the period :)&&#&: and :)&&#:)&: the current
ratio is below : hence it indicates that the firm has not maintaining sufficient current
assets to meet current liabilities.
X
8? C,1)u1,t%o- o' Qu%)2 R,t%o:
-rinciple :))J#)B :))B#&) :)&)#&& :)&&#&:
Qu%)2 R,t%o
= 3i"uid Assets
%urrent 3iabilities
::EJ)H.F(
&&JHH(.&E
=&.JB:
:EIF((.I)
&&FH&).F&
=:.&)E
:IEE:B.EH
&F)&J&.FJ
=&.F()
:EBB(J.((
:):F:B.(H
=&.:IE
InterpretationG
or the years :))(#)Hand :))H#)J the firm has maintained sufficient current assets
@excluding inventory of stockA in order to meet its current liabilities.
8ue to the increase in current liabilities for the year :)&&#&: and :)&&#:)&:it leads to
decrease in >uick ratios when compare to :))(#)Hand :))H#)J figures
@? C,1)u1,t%o- o' C,( R,t%o:
-rinciple :))J#)B :))B#&) :)&)#&& :)&&#&:
C,( R,t%o
= %ash 9 /ank balances
%urrent 3iabilities
&(J&.EF
&&JHH(.&E
=).)&E
H)H:.EH
&&FH&).F&
=).)(&
IH&).IB
&F)&J&.FJ
=).):E
IBJ:.E&
:):F:B.(H
=).)&B
InterpretationG
The cash ratio of the organi.ation clearly indicates that the firm has maintaining moderate cash
balances to meet its current liability obligations
In order to maintain sufficient cash balance the firm has to maintain control over its credit sales
@8ebtorsA and making payments to the suppliers
A? C,1)u1,t%o- o' Wo$2%-3 C,+%t,1 Tu$- O"#$ R,t%o:
-rinciple :))J#)B :))B#&) :)&)#&& :)&&#&:
Wo$2%-3 C,+%t,1 Tu$-
O"#$ R,t%o
= !ales @Turn ,verA
$orking %apital
E&H:FF.F(
&:JJ(I.&&
=I.:IH
IJJJ(J.)(
&F(HE&.:H
=:.EJ)
E&BBBB.F&
&&)EJH.IE
=I.J)&
E(&H)I.::
J(J:H.EJ
=F.I&H
InterpretationG
The overall position of the working capital turn over ratio is positive
or the year :)&&#&: and :)&&#:)&:there is a substantial growth in sales turn over due to this
the firm has huge working capital turn over ratio for the above said periods
or the period :))H#)J the sales turn over of the firm has been decreased when compare to
:))(#)Hfigures due to this the working capital turn over ratio is declined.
F. C,1)u1,t%o- o' 0#bto$ Tu$- O"#$ R,t%o :
-rinciple :))J#)B :))B#&) :)&)#&& :)&&#&:
D#bto$ Tu$- O"#$ R,t%o
= !ales @Turn ,verA
Accounts recieveble
E&H:FF.F(
:)I&(&.(:
= :.)FI
IJJJ(J.)(
&BHBEE.E&
= &.B(E
E&BBBB.F&
&(F((F.JJ
= :.FIF
E(&H)I.::
&EJB&H.HJ
= I.&))
Account recieveble includes sundry debtors and bills recieveble
InterpretationG
The debtors turn over ratio of the firm is ideal for the year :))(#)(
There is substantial decrease in sundry debtors for the year :))H#)J due to this the
debtors turn over ratio is decreased when compare to :))(#)Hand remaining years
figures .
or the year :)&&#&: and :)&&#:)&:the firm has maintained sufficient debtors turn
over ratio.
C? C,1)u1,t%o- o' to)2 o$ %-"#-to$. Tu$- O"#$ R,t%o:
-rinciple :))J#)B :))B#&) :)&)#&& :)&&#&:
Sto)2 Tu$- O"#$ R,t%o
= !ales @Turn ,verA
inventory
E&H:FF.F(
::JI&.(B
= &J.:HF
IJJJ(J.)(
:JJJF.EJ
= &I.E(:
E&BBBB.F&
:(:IB.EF
= &(.))(
E(&H)I.::
IBIJJ.EB
= &&.H:&
InterpretationG
The stock turn over ratio of the firm is ideal for the year :)&&#&:
There is substantial decrease in stock for the year :))(#)Hdue to this the stock turn over
ratio is decreased in :)&&#:)&:when compare to :))(#)Hand remaining years figures .
In the year :))(#)Hthe firm has maintained sufficient stock turn over ratio.
FIN+INGS AN+
CONCL,SIONS
FINDINGS:

The profits are in the increasing trend. There is a drastic improvement in profit from the year
:)&&#&: to :)&&#:)&:where the profit is almost doubled. This indicates the good financial
soundness of the company.
!undry 8ebtors have been reduced which indicates increase in realisation of amount from
debtors which indicates higher li"uidity of the business.
!undry %reditors showed a fluctuating trend. %oncentrating on the last two years we can see
that though the profit have been increasing, creditors have decreased indicating more cash
purchases than credit purchases.
It is obvious that as the net profit ie., profit before tax is increased the tax paid are also shown
an increasing trend.
The working capital has increased for the first three years. /ut in :)&&#&: and :)&&#:)&:
working capital reduced ,though the net profit is increased during the years. This shows that
more of cash transactions have taken place and cash if available in excess is the least
productive asset.
or the year :)&&#&: and :)&&#:)&:the firm has maintained sufficient working capital turn
over ratio .
SUGGESTIONS:
As the working capital has been reduced in :)&&#&: and :)&&#:)&: though the profit has
increased, the company is advised to take all necessary steps to find out the reasons for
reduction in the working capital.
5igh availability ensuring minimum cost of generation
To add generating capacity, with in prescribed time and cost
To maintain the financial soundness of 526ITA12
*anaging financial operations in accordance with good commercial utility practices
To develop 698 for achieving improved plant reliability
In order to increase the working capital, discount should be given to debtors and see that
the average collection period reduces.
6eference to A-0($, P$,0#( 3,7#tt#, the generating company and distribution license
may actually agree to a maximum rebate of :' on bill amount. these provisions in the act
may utili.e by 526ITA12 .

CONCLUSIONS:
The efficiency of management at financial position of 526ITA12 is good
rom the analysis it is clear that the share capital remained intact during the five years upto
:)&&#:)&:and the reserves and surplus reached to &BH(I.FB 3akhs.
rom the observation it is clear that capital expenditure on fixed assets is increased gradually
over the period of time which might be due to construction and commission of new thermal
and hydel pro;ects.
%ompany inventories observed an increment except in the year :))(#)(.
%ash and bank balances was increased during the years :))H#)J and :)&&#&: .
*iscellaneous expenses observed decrement over the years and is +il during the year :)&&#
&: .
%urrent liabilities also increased from :))F#)( to :)&&#:)&:which shows prompt clearance of
liabilities.
The 526ITA12 uses more of long term loans<debts than owners e"uity.
rom the observation it is clear that e"uity share capital of 526ITA12 remained fixed over
the years. There is no preference share capital in 526ITA12.
/ased on the analysis made the total financial position is good.
BIBLIOGRAPHY
BIBLIOGRAPHY
BOOKS :
Aut(o$ #0%t%o- +ub1%),t%o-
inancial management Im pandey B
th
vikas publishers
inancial management khan 9 ;ain E
th
tata mc.graw hills
inancial management -rasad chandra :
nd
tata mc.graw hills
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