Working Capital Kesoram Finance

CONTENTS
CHAPTER-I INTRODUCTION 1
CHAPTER-II RESEARCH METHODOLOGY 17
CHAPTER-III COMPANY PROFILE 20
CHAPTER-IV ANALYSIS & INTERPRETAION 39
CHAPTER-V CONCLUSION & SUGGESTIONS

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1
UNIT - I
INTRODUCTION
Working Capital
2
The total capital employed in a business organization can be
categorized as fixed capital and working capital. The fixed capital that
part of the funds, which is invested in current assets.
The investment in fixed assets is represented by land and buildings (for

factory, office go down and stores), equipment such as machinery,
furniture and fixtures, intangible assets in the form of patents and
goodwill etc. To employ these fixed assets gainfully current assets are
required. Current assets consists of raw materials, working progress,
finished goods, stores and spares accounts, receivables, cash in hand
and at bank and marketable securities.
Balanced working capital position:

The firm should maintain a sound working capital position. It
should have adequate working capital to run its business operations.
Both excessive as well as inadequate working capital positions are
dangerous from the firm’s point of view. Excessive working capital
means idle funds, which earn no profits for the firm. Paucity of working
capital not only impairs the firm’s profitability but also results in
production interruptions and inefficiencies.
WORKING CAPITAL MANGEMENT
Working capital management forms the inching of every

business. As Gilberth Harold puts the problems. Unfortunately, there is
so much disagreement among financiers, accountants, business men
and economists as to the exact meaning of the term Working Capital.
Definition of Working Capital:
3
Working Capital or Circulating Capital indicates circular flow of
funds in the routine activities of business.
Working Capital can be defined as “ Any acquisition of funds

which increases the current assets, increases working capital also, for
they are one and the same”
-Bonnevile.
The current assets are cash, marketable securities, accounts

receivable and inventory.
The current liabilities are those liabilities which are intended at

their inception to be paid in the ordinary course of business such as
bills payable, bank overdraft and outstanding expenses.
The goal of working capital management to manage the firms

current assets and current liabilities in such a way that a satisfactory
level of working capital is maintained. This is because if the firm cannot
maintain a satisfactory level of working capital, it is likely to become
insolvent and may even be forced into bankruptcy.
IMPORTANTCE OF WORKING CAPITAL
The source of any enterprise depends on the proper

management of working capital aims at protecting the purchasing
power of assets and maximizing the return on investments, sales
expansion, dividend declaration, plant expansion, increased salaries
and wages, rising price level etc., but added strain on working capital
maintenance.
CONCEPTS OF WORKING CAPITAL
There are two concepts of Working Capital
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1 Gross Working Capital
2 Net Working Capital
Gross Working Capital:
It refers to the company’s investments in Current assets. Current

Assets are the assets which can be converted into cash within an
accounting year and include cash, short-term securities, debtors, bills
receivables and stock.
Net Working Capital
It refers to the difference between current assets and current

liabilities. Current Liabilities are those claims of outsiders, which are
expected to mature for payment within an accounting year and include
creditors, bills payable, and outstanding expenses. Networking Capital
can be positive or negative.
A positive net working capital will arise when current liabilities

are in excess of current liabilities. A negative net working capital
occurs when current liabilities are in excess of current assets.
The two concepts of working capital – gross and networking
capital are not exclusive, rather they have equal significance from
management view point, the gross working capital concept focuses
attention on two aspects of current assets management..
1 Optimum investment current assets and

2 Financing of current assets.
Net working capital being the difference between current assets and
current liabilities . It is a qualitative concept. It aims at
1 The firms liquidity position and
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2 Financing of current assets
3 Suggests the extent to which working capital needs may be
financed by permanent sources of funds.
The consideration of the level of investment in current assets
should avoid two danger points.
Current assets have excessive and inadequate investments.
Investment in current assets should be just adequate, not more not
less to the needs of the business firm. Excessive investment in current
assets should be avoided because it impairs the firm’s profitability an
ideal investments nothing. On the other hand inadequate amount of
working capital can threaten solvency of the firm because of its
inability to meet its current obligations.
CHARACTERISTICS OF CURRENT ASSETS
In the management of working capital two characteristics of

current assets must borne in mind.
1 Short-term span
2 Swiftly transformation into other assets form
Current assets have a short life span. Accounts receivable may

have a life span of 30 to 60 days, inventories may be held for 30 days
to 100 days and cash may be held idle for week or two.
Each current asset is swiftly transformed into other assets form.

Cash is used for acquiring raw materials.
Raw materials are untransformed into finished goods (this

transformation may involve several stages of work in progress),
finished goods, generally sold on credit, are converted into accounts
6
receivable and finally, accounts receivables, on realization generates
cash.
The need for current assets arises because of the operating

cycle. The operating cycle is a continuous process and therefore, the
need for current assets is felt constantly. But the magnitude of current
assets needed in not always the same, it increases and decreases over
time.
However, there is always a minimum level of current assets

which time is continuously required by the firm to carry on its business
operations.
This minimum level of current assets is referred to as permanent

or fixed working capital. Depending upon the changes in production
and sales, the need for working capital, over and above permanent
working capital will fluctuate.
The extra working capital needed to support the changing

production and sales activities is called fluctuating or variable or
temporary working capital.
DETERMINANTS OF WORKING CAPITAL
There are no set rules to determine the working capital

requirements of firms. A large number of factors, each having a
different importance, influence working capital needs of firms.
7
Therefore, an analysis of relevant factors should be made in order to
determine total investment in working capital. The following is the
description of factors, which generally influence the working capital
requirements of firms.
NATURE AND SIZE OF BUSINESS:
The size of business also has an important impact on its working

capital needs. Size may be measured in terms of the scale of
operations. A firm with large scale of operations will need working
capital than small term. The working capital requirements of a firm are
basically influenced by the nature of business trading and financial firm
has a very less investment infixed assets, but require a large sum of
money to be invested in working capital.
TECHNOLOGY AND MANUFACTURING POLICY
The manufacturing cycle starts with the purchase and use of raw
materials and completes with the production of finished goods. Longer
the manufacturing cycle, larger will be the firms working capital
requirements. An extended manufacturing time span means a larger
tie-up of funds in inventories. Thus if there are alternative technologies
of manufacturing a product, the technological process with the shortest
manufacturing cycle may be chooses.
FIRMS CREDIT POLICY
The credit policy of the firm affects the working capital by

influencing the level of debtors. The credit term to be granted to
customers may depend upon the forms of the industry to which the
firm belongs.
8
AVAILABILITY OF CREDIT
Creditors also affect the working capital requirements of a firm.
A firm will need less working capital if liberal credit terms are available
to it.
OPERATING EFFICIENCY
The operating efficiency of the firm relates to the optimum
utilization of resources at minimum costs. The firm will be effectively
contributing in keeping the working capital investment at a lower level
if it is efficient to controlling operating costs and utilizing current
assets. The use of working capital is improved and pace of a cash
conversion cycle is accelerated with operating efficiency.
BUSINESS FLUCTUATIONS
Most firms experience seasonal and cyclical fluctuations in the

demand for their products and services. This business variation effects
the working capital requirements especially the temporary working
capital requirement of the firm. When these is an upward swing in the
economy, sales will increase and vice-versa.
PRODUCTION POLICY
A steady production policy will cause inventories to accumulate

during the off-season periods and the firm will be exposed to greater
inventory cost and risk. Thus, if the cost and risks of maintaining a
constant production schedules are high, the firm may adopt the policy
9
of varying its production schedules in accordance with the change in
demand.
GROWTH AND EXPANSION ACTIVITIES
The working capital needs of firm increases it growth in terms of

sales of fixed assets. If is difficult to precisely determine the
relationship between volume of sales and the working capital needs.
The critical fact however is that the need for increased working capital
funds does not follow growth in business activities but precedes it.
PROFIT MARGIN AND PROFIT APPROPRIATION
Firms differ in their capacity to generate profit from business

operations. Some firms enjoy a dominant position, due to quality
product or good marketing management or monopoly power in the
market and earn a high profit margin. Some other firms may have to
operate in an environment of intense competition and may earn low
margin of profits. A high net profit margin contributes towards the
working capital pool. In fact the net profit is a source of working capital
to the extent it has earned in cash.
DIMIENSIONS OF WORKING CAPITAL MANAGEMENT
Working Capital Management refers to the administration of all

aspects of current assets namely cash, marketable securities, debtors
and are many aspects of working capital management, which makes it
an important function of the financial manager.
Empirical observations show that the financial managers have to

spend much of their time to the daily internal operations, relating to
the current assets and current liabilities of the firms. Investments in
current assets represents a very significant portion of the total
investment in assets. It is particularly very important for small firms to
10
manage their current liabilities in financing current assets is far
significant incase of small firms, as unlike large firms, the difficulties in
raising long terms finances.
There is a direct relationship between sale and working capital

needs. As sales grow, the firm needs to invest more in inventories and
book debts. These needs become very frequent and fast when sales
grow continuously.
It may thus be concluded that all precautions should be taken for

the effective and efficient management of working capital. To decide
the levels and financing of current assets, the risk return implications
must be evaluated.
FINANCING CURRENT ASSETS
The firm must find out the sources of funds to finance its current
assets. It can adopt different financing policies. Three types of
financing be distinguished as follows.
1 Long term financing
2 Short term financing
3 Spontaneous financing
The important sources of long-term financing are shares,

debentures, preference shares, retained earnings and debt from
financial institutions.
Short term financing refers to those sources of short credit that

the firm must arranged in advance. These sources include short term
bank loans, commercial papers and factoring receivable.
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Spontaneous financing refers to the automatic sources of short
term funds. The major sources of such financing are trade credit
( creditors and bill payable)and outstanding expenses. Spontaneous
sources of finance are cost free.
TECHNIQUES FOR THE MANAGEMENT OF WORKING CAPITAL
In this section a few important techniques of working capital are

presented. All techniques of working capital management can be
divided into two parts. Techniques relevant for the management of
working capital as a whole and the techniques relevant for the
management of each component of working capital cash account
receivable and inventory.
Techniques relevant for the management of working capital
One of the very important issues in the management of working

capital is to decide how much to invest in current assets. The
investment in current assets is generally influenced by sales volume.
Therefore before firm is able to decide about he quantum of working
capital. It should be forecast its feature sales volume accurately or
near accurately. This is equal true about the components of working
capital as well.
TIME SERIES MODELS
The time series models are based on the assumptions that the
past trend will continue repeating in the future. In the construction of
tikes series, models, historical recordings of the factors to be
forecasted is taken into the account and their pattern and the
relationship over the time is established on the basis of the pattern so
established future forecast is made.
ECONOMETRIC MODELS
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The models here are the equations consisting of dependent and
independent variable. These equations attempt to establish the nature
of relationship between variables enabling the analysts to study the
value of the dependent variable on the basis of the value of the
independent variable. These models are sophisticated, very useful
techniques.
WORKING CAPITAL FORECASTING TECHNIQUES
Having determined the sales accurately, steps can to taken to

forecast working capital and the various components of it. Working
capital requirements can be, determined into two.
1 Percentage Sales method.

2 Operational Cycle method.
NEED FOR WORKING CAPITAL
The need for working capital to run the day-to-day business

activities cannot be overemphasized. We will hardly find a business
firm, which does not require any amount of working capital. We know
that a firm should aim at maximizing the wealth of its shareholders. In
its endeavor to do so, a firm should earn sufficient return from its
operations. The firm has to invest enough funds in current assets of
generating sales. Current assets are needed because sales do not
convert into cash instantaneously. There is always an operating cycle
involved in the conversion of sales into cash.
OPERATING CYCLE:
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There is a difference between current assets and fixed assets in
terms of their liquidity. A firm requires many years to recover the initial
investment in fixed assets such as plant and machinery or land and
buildings. Investment in current assets such as inventories and debtors
is realized during the firms operating cycle which is usually less than a
year.
Operating cycle is the time duration required to convert sales,

after the conversion of resources into inventories into cash. The
operating cycle of a manufacturing company involves three phases
acquisition of resources such as raw material, labour, power and fuel
etc., manufacture of product which included conversion of raw material
into work-in-progress into finished goods, sale of the produce either for
cash or on credit create accounts receivable for collection.
Stocks of raw material and work-in-process are kept to ensure

smooth production and to guard against non-availability of raw
material and other components. The firm holds stock of finished goods
to meet the demands of customers on continuous basis and sudden
demand from some customers. Debtors are created because goods are
sold on credit for marketing and competitive reasons. Thus, a firm
makes adequate investment in inventories and debtors, for smooth,
uninterrupted production and sale.
Fig:
14
The total of inventory conversion period and debtors conversion
period is referred to as gross operating cycle. The difference between
operating cycle and payables deferral period is net operating cycle. Net
operating cycle is also referred to as cash conversion cycle.
Statement of the Problem

In order to maintain flows operations every firm needs certain
amount of current assets. For example cash is required to pay for
expenses or to meet obligations for services received or goods
purchased etc, by a firm. On the identical plane inventories are
required to provide the link between production and sale. Similarly
accounts receivable generate when goods are sold on credit.
Needless to mention cash, bank, debtors, bills receivables closing

stock (including raw materials, work in process, finished goods),
prepayments and certain other deposits and investments which are
temporary in nature present current assets of a firm.
15
Economists like Mead, Mallet, Backer and Field are of the opinion
that the whole of these current assets forms the working capital of a
firm. And this concept of working capital of a firm is frequently termed
as gross working capital, in the area of financial management.
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UNIT - II
RESEARCH METHODOLOGY
RESEARCH METHODLOGY
The proposed study is carried with the help of both primary and
secondary sources of date. Annual reports of the company and other
journals, magazines and manuals published by Kesoram Cement
Company. Some of the information related to topic was gathered from
website related to Kesoram Cement Company.
Secondary Data
17
All the secondary data used for the study has been extracted from the
annual reports, manuals and other published materials of the company.
Analysis and presentation

The data is analyzed by using comparative analysis between the two
years performance and financial data of the company. The former year
is considered as a base year values and later is considered as current
year values. The current year values are dividing with base year values
the change between the two years are presented in change n amount
and change in percentage. If the revenue center information is treated
as good. If the cost centers have negative charging it is considered
with help of ration analysis and a detailed interpretation for tables
were presented in the report. In order to understand the pictorial
presentation is made with simple histograms.
OBJECTIVES OF THE STUDY

The following are the objective of the study
1.To present the conceptual framework relating to management of
working
capital
2.To Examine the size of invest and turnover of working capital in an
overall
manner including financing of current assets.
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3.To know the inventory management practices of Kesoram Cement in
terms of
its size, turnover and collection polices
4.To assess the receivables management practices of Kesoram
Cement in
terms of its size, turnover and collection polices
5.To offer suitable suggestion for the efficient management of working
capital in
Kesoram Cement. Keeping in view the inadequacies highlighted by
the study
SCOPE OF THE STUDY

Since it will not be possible to conduct a micro level study of all cement
industries in Andhra Pradesh, the study is restricted to Kesoram
Cement only.
The Project was done in only 45 days

The study is focused on financial performance through comparative
analysis of Kesoram Cement Limited. The purpose the tools
comparative and ratio analysis applied.
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CHAPTER – III
COMPANY PROFILE
PROFILE OF THE COMPANY
Kesoram cement industry is one among the industrial gains in the

country, today serving the nation on the industrial front. Kesoram
Industries Ltd has a chorused and eventful history dating back to the
1920’s. When the Industrial house of Birla acquired it with only a textile
mill under it’s banner in 1927 it grew from strength to strength and
spread its activity to newer fields like rayon, pulp, transparent paper,
spun pipes, refractories and other products.
The Government of India de-licensed the cement industry in the year

1966 with a view to attract private entrepreneurs to argument the
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cement production. Kesoram rose to the occasion and decided to setup
few cement plants in the country.
Kesoram cement industry in corporate by the promoter of Birla group

came up with a cement plant at Basantnagar located in Karimnagar
dist of A.P which is 8 KM away from Ramagundam railway station
linking Chennai and New Delhi. The capacity of the plant was 8.26
Lakhs tonnes per annum.
The company first unit at Bassantnagar with a capacity of 2.5 Lakh

tonnes in corporation humbolts, suspension preheater system was
commissioned during the year 1969.
The second unit was setup in 1971, which added 2.00 Lakh tonnes
capacity. The third unit with a capacity 2.5 Lakh tonnes went to stream
in 1978. It was further expanded to make it a 9.00 lakh tonnes plant at
Basantnagar. The coal for this company is being a supplied singareni
colliery and power is obtained from APTRANSCO. The demand for the
factory is about 21 MW.
The Kesoram cement industry came up with captive thermal power
plant of 15.7 MW capacities for uninterrupted power supply. Which
would ensure consistency in the supply of cement even during power
cut periods?
Birla supreme is popular brand Kesoram cement from its prestigious

plant of Basantnagar in AP., which has out standing track record in
performances and productivity, serving the national for the last three
decades. It has proved its distinction by bagging several national and
state awards. It also has the distinction of achieving optimum capacity
utilization.
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Kesoram offers a choice of top quality Portland cement of light, heavy
construction and allied application quality is built in every fact of the
operations.
The plant layout is rational begin with the limestone is rich in calcium
carbonate, a key factor that influenced the quality of the final product.
The dry process technology used in the latest computerized
monitoring.
Type od Sales:
1.Depot Sales
2.Site Sales
Depot Sales:
The required amount of cement is supplied to the dealer’s from the the
depot. The Branches of company make these sales.
Site Sales:
The company directly sell the required quantity of cement to required
group or organization dealer’s etc.
Distribution Channel :
Kesoram Cement follows intensive type of Distribution channel
Intensive Distribution:
In an Intensive distribution strategy the manufacture makes the goods
or services in as many outlets as possible.
Dealers Selections:
The company select the dealer’s after taking into consideration the
financial position the are, the dealer’s opinion regarding the product.
The company takes more attention for selecting dealers in the urban
region.
22
The incentive facilities given to the dealers by the company are
quantity (trade discount) has count and sliding scale discount (A
Annual Discount)
Kesoram Cement undertaking marketing activities extensively In the

state of AP,Karnataka, Kerala, Maharastra & Gujarat. In AP Sales
depots are located in different areas like a Karimnagar, Warangal
Nizamabad, Vijaywada and Nellore. In other states it has opened 10
depots.
The market share of Kesoram cement in AP is 7.59%. The market share

of the company in various states is shown as under.
States Market Share

Karnataka 4.94%
Tamil Nadu 0.94%
Kerala 0.29%
Maharastra 2.81%
The share of Kesoram Cement in the all India cement market is 1.19%
PRODUCTION OF KESORAM CEMENT
Year Tonnes
1985-86 4,45,441
1995-96 8,05,921(more capacity)
2005-06 7,82,385(Due to power cut)
An average sale of the company is between 2000 to 2200 metric

tonnes per day. The company takes order through its branch builders,
dealers and from any organization if ordered for bulk quantity.
Sales Promotion
The company has got a health sales promotion it has taken much
concentration in advertising of the product through various mean like
1.News paper
2.Television
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3.Wall Painting
4.Bus Panels
5.Shop Paintings
KESORAM CEMENT ADVANTAGES
1.Helps in designing seeker and more elegant structures, giving

greater
flexibility in design concept.
2.Due to its fine quality, super fine construction can be achieved
3.It gives maximum strength at minimum use of cement with water in

the water
cement ration especially the 53 grade
4.Better water proofing is achieved due to low heat of hydration, as the

shrinkage will be less, which means fewer cracks.
5.Better finish is achieved due to fitness and hence better workability.

Thus plastering becomes easier with better finish.
ABOUT THE INDIAN CEMENT INDUSTRY
By starting production in 1914 the story of Indian cement industry is a

stage of continuous growth.
India is the worlds 4th largest cement producer after China, Japan and
USA. So far annual production and demand have been growing a pace
at roughly 68 million tonnes with an installed capacity of 82 million
tonnes.
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In the remaining two years of 8th plan an additional capacity of 23
million tonnes has been planned. Assuming that at latest 16 million
tonnes will actually come up. India will have an installed capacity of 98
million tonnes.By the turn of the country would be well over 100 million
tonnes.
India is well endowed with cement grade limestone (90 billion tonnes)
and coal (190 billion tonnes). The basic raw material required cement
manufactured and is self sufficient in manufacture of cement making
machinery’s. During the nineties it has particularly impressive
expansion with a growth rate of 10 percent.
The strength and vitality of Indian cement industry can be gauged by

the interest shown and support given by world bank considering the
excellent performance of the industry in utilizing the loans and
achieving the objectives and targets. The World Bank is examine the
feasibility of providing a third line of credit for further upgrading the
industry n varying areas, which will make it global, with the
liberalization polices of India government the industry is posed for high
growth rates in nineties and the installed is expected to cross 100
million tonnes and production 90 million tonnes by 2000 AD. India’s
cement industry has added just about 10 million tonnes of additional
capacity “1994-96”.
The industry has fabulous scope for exporting its product to countries
like the USA, UK , Bangladesh, Nepal and other several countries. But
there are not enough wagons to transport cement for shipment. A
leading producer of eastern India say his order book is full for the
coming 8 to 9 months, but “where are the wagons” in 1994-95, 75%
indent made for wagons. The rail dispatches decreased from 50% to
45%. Demand growth rate in India 6.5% compare to other countries.
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Wagon shortage hits the industry’s prospects harder because of the
uniqueness of the plant location. Most of the plants are located in
interior and backward areas. One tonne of cement has to pay in excise
duty of Rs 350 and central sales tax 4%. Western part of India
production growth rate of 176%,9% to north and 6% for the east.
Government purchases have gone down about 20% following
privatization of infrastructure activities.
India inspire of being the 4th biggest producer of cement in the world
has still a very low per capital consumption of cement. India’s cement
industry has indeed “tableau’s prospect” added Large Plants (in India).
Cement companies 51 Nos

Cement plant 99 Nos
Installed capacity 64.84 million
Tonnes
a) Private Sector 55.34
b) Public Sector 9.50
Total Investment approximately 10,000 crores

Manpower Over 1.25 lakhs
Captive power generation capacity installed

Diesel 54.77 MW
Thermal 174.75 MW
Consumption norms for producing one tonne of cement

Coal 20%
Power 100 KW
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TECHNOLOGY
Cement may be manufactured employing three alternative

technologies.
a) The largely out model well process technology
b) The more modern dry process that requires only 19% coal
utilization
c) The latest precipitator technology through which optimum
utilization may be achieved. Here the calculator or raw.
Material is partly completely carried out before the feed enters the
rotator kiln-besides saving power, the adoption of this technology
enable an increase in installed capacity by 30-50% the 30,000 tonnes
per day plan being set in the country use this technology
PRICING POLICY
The price of cement was first determined by the Government in
August 1942 on “cost plus” first determined the price of cement. The
price there after was basically on the recommendation of the tariff
commission after their successive enquiries held in 1953, 1958, 1974
and 1978.
In 1974 the government retained the uniform retention price but

rejected the rehabilitation allowances as also the creation of the
revolving fund for establishing new plant 9 million tonnes capacity.
In December 1978 a high level committee of Lavaraj Kumar appointed

by the Government recommended a new price structure based on
costs prevailing at that time.
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DISTRIBUTION SYSTEM
Distribution of cement was entirely under government control until

1982. At present the industry has to make an arrangement towards the
levy quota, which is to be sold compulsorily to the government. The
rest of the output or open market quota may be sold in the open
market evolved prices. The output lifted by the government is
allocated state wise.
PACKAGING OF CEMENT
Cement is packed in bags of 50 kg Per bag. The types of packing

material are as follows.
a) Jute Bags: Jute Bags conforming of IS-2580 are used as packing
material.
b) HDPE/PP Bags: These are manufactured from poly propylene
(PP) and High-Density Poly ethylene tapes, Woven into fabric on
circular looms.
c) Paper linked HEPE Bags/Paper Bags: At present there is no
ISI specification for these bags. These are made from HDPE line
with Kraft paper on the outside.
d) Light Weight Jute Bags: These are similar to suggest, is of
light weight. This is covered under ISI 2154 . These bags are
cheaper by about 0.50ps, as compared to jute bags.
e) Ploy Jute Bags: These are made of fabric woven with twine and
HDPF types.
STORING OF CEMENT
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Portland cement is a very fine material and as such it is highly
Hygroscopes that is say readily absorbs moisture not only in the form
of mistier but also from the air it is necessary, therefore to protect it
from dampness before it is to fulfill its function.
Every year and particularly in the monsoon, large quantities if cement

are spoilt due to neglect in keeping the cement bags absolutely dry.
There cement is stored flowingly.
The first requisite for storing bagged Portland cement is a building or

ashes, which is completely weather proof. The walls are of waterproof
concrete masonry constructions, overload with a waterproofing. Course
the window are few and small and kept tightly shut. This is to prevent
moisture from outside atmosphere entering the building. The floor is a
150 mm thick concrete slab laid on a dry course of soiling and 1.20
mm above ground level. The ground is sloping way from the building to
prevent accumulations of rain water in its vicinity. All these precautions
ensure that the floor will remain absolutely dry. The plinth is fairly high
so that a lorry can back conveniently to the door and the chassis and
building floor are almost same level, thus making loading and
unloading of bags very easy.
GOVERNMENT POLICY ON CEMENT INDUSTRY.
The cement factories were facing problem of large problem of large-

scale absence of their plant and machinery. There id immense scope
for rejuvenation modernization and expansion of our cement industry,
modernization in nutshells, means using modern technological
advances to ensure that productivity increases, quality improved and
the cost of input is reduced to the maximum extend possible.
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The Government policy lays much emphasis on modernization and up
gradation of technology, the planning commission in its approach
paper of the seventh plan has observed that the focus of industrial
development in the seventh plan will be a graduation technology,
modernization better utilization of assets and promotion of efficiency.
In this context, the government ought to bare in mind that capacity

expansion and modernization could be effected only if the industry’s
unable to secure the promises 12% post tax return on net worth. Hither
to the cement units have been obliged to absorb completely the
escalation in cost in the absence of a suitable like in cement price and
hence there has been considerable reduction in the internal generation
of funds.
It is therefore of vital importance that the deterioration in the financial I

if the industry is arrested and the industry rejuvenated to continue
unimpeded the process accelerated growth to attain the capacity
target of 62 million tonnes by the end of seventh plant. This would call
for necessarily the adoption of formula under which there should be an
automatic increase in the price of levy cement off set the escalation in
costs.
STATEWISE CEMENT PLANTS

Serial No State Number of cement plant (Large)
01 Andhra Pradesh 19
02 Assam 01
03 Bihar 07
04 Delhi 01
05 Gujarat 13
06 Harayana 02
07 Himachal Pradesh 04
08 Jammu Kashmir 01
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09 Karnataka 09
10 Kerala 01
LIST OF AWARDS BAGGED KESORAM CEMENT

S. YEAR DETAILS
No
01 1984 FAPPCI Award for Best Family Planning Efforts in states
02 1985 FAPPCI Award for Best Industrial Promotion/Expansion Efforts
in the state.
03 1986 Best Family Planning in the state
04 1987 National Productivity Award
05 1987-88 National Award for Mines Safety
06 1988 National Productivity Award
07 1988-89 National Award for Mines Safety
08 1989-90 Best Family Planning Efforts in states
09 1990-91 AP State Award for Best Industrial Relations
10 1991 AP State Yahamanya Rathna and best management Award
11 1991 FAPPCI Award for Best Family Planning Efforts in states
12 1991-92 NCBM’s National Award for Energy Performance
13 199394 Indira Gandhi Memorial National award for Excellence in
industry
14 1993 FAPPCI Award Jawaharlal Nehru Silver Trophy
15 1995 Best Management Award by AP Govt.
16 1996 Mines Safety Award in AP
17 1997 Mines Safety Award in AP
18 1997-98 Best Workers Welfare by FAPCCI
19 1998 Achieved ISO-9002 Certification from Bureau of Indian
Standarsd
20 1999 The “Best Pay roll saving group award among private sector”.
1st Prize in the level by International savings organization,
Govt of India.
21 2000-01 The Best efforts in rural development by an industry in ther
state by the federation of AP of Commerce 7 industry (FAPCCI)
22 2001 1st prize Mines environment and pollution control
23 2001-02 Award for efforts in environmental protection in the region by
the Godavari Pradushana Pariharana Paryavarna Parieractiona
Avkhamu (GPPPPG) ( A Voluntary organization for pollution
and control and environmnent)
24 2003 First prize for HORTICULTURE SHOW (for corombola fruit) held
31
at public gardens, Hyderabad being organized by the director
of Horticulture
25 2002-03 Award for best efforts in environmental protection in the
region by the Godavari Pradushana Pariharana Paryavarna
Parieractiona Avkhamu (GPPPPG) ( A Voluntary organization
for pollution and control and environmnent)
26 2003 Achieved ISO14001 certification pertaining to environment
from Bureau of Indian Standards
27 2003 Vana Mithra Awards from the district collector
28 2002-03 Award for the best efforts put in by kesoram cement for
protecting the environment.
29 2004 Achieved OHSAS-18001 certification from DNV Delhi
30 2005 First prize for HORTICULTURE SHOW (for sapota, Banana &
corombola fruit) in connection with Shathavahanakalotsavalu.
WELFARE AND RECREATION FACILITIES AT A GLANCE

1) Recreation Club : For the Purpose of recreation facilities tow
auditors are provided for the employees to indoor games like
shuttle, chess, caroms and for organising culture functions and
activities like drama, music and dance concert etc.
2) Libraries and Reading Rooms : The company has provided
libraries and reading rooms for the benefit of the employee.
About 5000 books are available in read the libraries. All kinds of
newspaper and magazines are made available in reading rooms
for the daily reading rooms for the employees and their families.
3) Canteen : Is provided to cater to the needs of the employees for

the supply of snacks, tea, coffee and meals.
4) Schools : One English Medium school and Telugu Medium school
are provided to meet the educational requirements of the
employee’s children.
5) Dispensary: The Company has provided a dispensary with a
qualified medical officer and Para medical staff for the benefit or
32
the employee. The employees conversed under ESI scheme has
to avail the medical facilities from the ESI Hospital.
6) House Jounal : A House Jounral in the name of Basantnagar
Samachar is brought out quarterly where in all the important
activities of the plant are published.
7) Kesoram Consumer Co-Operative Store : Consumer Co-
Operative stores are available to meet the needs of the
employees for supply of essential commodities like rice, wheat,
sugar, kerosene on cash credit basis.
8) Sport and Games : Competitors in sport and games are
conducted every year for 15th August & 26th January.
MANAGEMENT WORKING CAPITAL IN KESORAM
CEMENT INDUSTRIES-An Analysis
Working capital management is connected with the resolution of the

problem in managing current assets and current liabilities. The goal of
working capital management is to maintain optimum level of current
assets and current liabilities by ensuring the both liquidity and
profitability. If firm cannot maintain satisfactory of working capital their
are likely to fall in liquidity trap. Sources of short term financing must
be cautiously managed to ensure that there are obtained and used in
the best possible way. Integrating the short term obligation with the
short-terms assets and liabilities in the main them of working capital
management.
The working capital objective of the KCI Pvt Ltd uses forecasting
method to determine working capital requirement, It takes sakes as the
basis for working capital determination, The company prepares
working capital budget are prepared in coordination with budget, sales
and collect function. The company’s policy regarding financing of
33
working capital is all variable needs with short-term sources and only
for the period needed. The sources of working capital financing as per
priority are cash credit from banks. Advance from customer’s equity
and long-term sources and working capital loans for central
government.
In this organization, Finance Director is the executive responsible for

the over all working capital management. The company follows new
working capital and current ratio as working capital norm and the
company review the working capital shortage and also there were
excess working capital situations.
The current assets of the company mainly include inventories, sundry

debtors, cash and bank balance and loan and advances. Current
liabilities constitute sundry creditors provisions and other liabilities.
The structure of current assets and curreny liabilities of KCI Pvt. Ltd. Is
given below.
Current Assets:
i) Inventories:
a) Raw and packing material
b) Stock in progress
c) Finished goods
d) Consumables
e) Stores and Spares
ii) Sundry Debtors:
a) Debts
34
b) Others
iii) Cash and bank balance
a) Cash in hand
b) Cash at bank
iv) Loans and Advances
a) Advance recoverable in cash
b) Prepaid expenses
c) Deposit recoverable
d) Tax deducted at source
e) Advance tax
f) Advances to suppliers
Current Liabilities
i) Sundry Creditors
a) Creditors for material
b) Creditors for capital expenditure
ii) Provisions
a) Provision for Income-Tax
b) Provision for Bonus
c) Proposed Dividend
d) Dividend tax
iii) Other Liabilities

a) Deposits
b) Advances from customers
c) Interest accrued but not due
d) Tax deducted at source payable
e) Others
35
In order to assess the adequacy and effectiveness for working policies
of KCI PVt Ltd. Over the last five years a detailed analysis in to working
capital as takes up with help of trend analysis and accounting rations.
NETWORKING CAPITAL (NWC)
Net working capital is the excess of current assets over current

liabilities symbolically, NWC=CA-CL. IN order to know the NWC of KCI
Pvt. LTd.
COMPARATIVE STATEMENT ANALYSIS
As the very name signifies, comparative financial statements are
statements of the financial position of a business so formulated as to
focus on the elements contained there in and provide the necessary
time perspective.
So normally, it is the balance sheet and profit and loss account, which
alone are prepared in a comparative form, since it is these two
statements, which are considered as important financial statements.
More over, it is thought these two statements and financial positional
and the operation al results of any business can be determined.
Comparative financial statements are designed to disclose the

following
1.Absolute data
2.Increase and decrease in absolute data
3. Increase and decrease in absolute data in terms of percentage
4.Comparision expressed in ration
5.Percentage of totals.
Comparative financial statements are very useful to the financial

analyst since they contain figures drawn from single statement and
36
also provide necessary information for the study of financial and
operating results over a period of time. They point out the direction are
the trend of the movement as regards financial position and operating
results of the business concern.
Comparisons will become effective, only if the data compared truly

reflects the consistency in the application of generally accepted
accounting principles for date-to-date or period-to-period.
The analyst should also keep in mind the price level change that have
taken place between the dates of different transaction and that of
preparation of financial statements. Where there is a substantial price
fluctuation. The analyst must exercise great caution while interpreting
the values.
CHAPTER – IV
37
DATA ANALYSIS
&
INTERPRETATION
COMPARATIVE STATEMENT OF WORKING CAPITAL FOR

THE YEAR 2010-2011
Absolute Change in
Particular 2010 2011
Change %
Current Assets
a) Inventories 800065303 1821777224 1021711921 127.7
b) Sundry Debtors 991705719 1911277269 919571550 92.72

c) Cash & Bank
91528024 251092974 159564950 174.3
Balance
d) Other current
115506801 559090805 443584004 384
assets
e) Loans and
878270934 763136566 -115134368 -13.1
Advances
Total Current Assets (A) 2877076781 5306374838 2429298057 84.43
Current Liabilities (B) 804261757 1620414304 816152547 101.5
Working Capital (A-B) 2072815024 3685960534 1613145510 77.82
(+) Provisions 143258232 433233214 289974472 202.4
38
Net Working Capital 2216073256 419193748 1903119982 85.87
Interpretation
Interpretation of comparative working capital statement of Kesoram
cement company Ltd between the years 2009-2010 to 2010-2011
In the year 2010-11 the closing stock 0% raw materials work in

progress and finished goods in Kesoram cement was Rs 1,82,17,77,224
and the year 2009-2010 the inventory is Rs 80,00,65,303 there is an
increased in the stock balance by 127.7% i.e Rs 1,02,17,11,921. The
Average inventory for two years study period is Rs 1,31,09,21,263.
In the year 2010-11 sundry debtors in Kesoram cement company ltd

was Rs 1,91,12,77,263 and the year 2010-2011 the sundry debtors Rs
99,17,17,05,719 there is increased by 92.72% i.e Rs 95,95,71,550.
Cash and bank balance have increased to Rs 25,10,92,974 from Rs

9,15,28,024 and other current assets also increased.
In the year 2010-11 the loans and advances of kesoram cement

company Ltd was Rs 76,31,36,556 and in the year 2009-10 loans and
advances of kesoram cement company Ltd is Rs 87,82,70,934. It is
decreased to (-) Rs 11,51,34,368.
The total current assets increased from Rs 2,87,70,76,781 to Rs

5,30,63,74,838 i.e Rs 2,42,92,98,057 (84.43%)
In the year of 2010-11 the current liabailities was Rs 80,42,41,757 and

in the year of 2010-11 current liabilities are Rs 1,62,04,14,14,304.
There is increase by Rs 81,62,52,547 i.e 101.47% this is resulted is to
increase in current liabilities.
39
The working capital of Kesoram cement company Ltd is increased from
Rs 2,07,28,15,024 to Rs 3,68,59,60,534. But the provisions of kesoram
cement company Ltd have increased from Rs 14,32,58,232 to Rs
43,32,33,214 i.e Rs 28,99,74,982 i.e 202.14%
In the year 2010-11 the net working capital was Rs 2,21,60,73,256 and
in the year 2010-11 Rs 4,11,91,93,748 i.e 85.87% it is increased. The
net working capital is very beneficial to company for the purpose of
maintaining managing day-today activities of the kesoram cement
company Ltd.
Compare to the 2009-10 to 2010-11. It is increased Rs 4,11,91,93,748

i.e 85.87%.It is most beneficial for the company
THE YEAR 2011-2012
Absolute Change in
Change %
Current Assets
a) Inventories 1821777224 1528406205 -293371019 -16.10
b) Sundry Debtors 1911277269 1539980546 -376344854 -19.63

c) Cash & Bank
251092974 312180623 61087649 24.32
Balance
d) Other current
559090805 182114852 -376975953 -67.42
assets
e) Loans and
763136566 997119989 239031554 31.53
Advances
Total Current Assets (A) 5306374838 4559802215 -746572623 -14.06
Current Liabilities (B) 1620414304 1487645302 -1372769002 -8.19
Working Capital (A-B) 3685960534 3072156913 613803621 -16.65
(+) Provisions 433233214 547413821 114180607 26.35
Net Working Capital 419193748 3619570734 499623014 -12.12
Interpretation
40

and the year 2011-12 the inventory is Rs 1,82,17,77,224 there is an
increased in the stock balance by 16.10% i.e Rs 29,33,71,019. The

was Rs 1,53,99,80,546 and the year 2010-2011 Rs 19,11,27,72,269 So
it was decreased in the sundry debtors by 19.63% i.e Rs 37,63,44,854.
Cash and bank balance have increased to Rs 6,10,87,549 and it is

2011-12 Rs 31,21,80,623 and it is increased from 2010-11 it is Rs
25,10,92,974.

advances of kesoram cement company Ltd is Rs 99,71,19,989 It is
increased to Rs 23,90,31,554.
The total current assets decreased from Rs 5,30,63,74,838 to Rs

4,55,98,02,215 i.e. –Rs 74 65,72,623 (-14.06%)
In the year of 2010-11 the current liabailities was Rs 1,62,04,14,304

and in the year of 2011-12 current liabilities are Rs 1,48,76,45,302.
There is decrease by Rs 13,27,69,002 i.e 8.19% this resulted too
decrease in current liabilities.
41
The working capital of Kesoram cement company Ltd is increased from
Rs 3,68,59,60,534 to Rs 3,07,21,56,913 i.e Rs 61,38,03,621 (16.65%).
In the year 2010-11 the net working capital was Rs 4,11,91,93,748 and
in the year 2011-12 Rs 3,61,95,70,734.This means that the the net
working capital is decreased to Rs 49,96,23,014 i.e 12.12%
Compare to the 2010-11 to 2011-12 the total networking is decreased

Rs 49,96,23,014, it is not satisfactory.
.

THE YEAR 2012-2013
Absolute Change in
Change %
Current Assets
a) Inventories 1528406205 1970349211 441943006 28.91%
b) Sundry Debtors 1539980546 1535631209 -4349337 -0.28%

c) Cash & Bank
312180623 198671674 -113508949 -36.36%
Balance
d) Other current
182114852 263218444 81103592 44.53%
assets
e) Loans and
997119989 106263342 65343353 6.55%
Advances
Total Current Assets (A) 4559802215 5030333880 470531665 10.31%
Current Liabilities (B) 1487645302 1773856653 286211351 19.23%
Working Capital (A-B) 3072156913 3256477227 184320314 5.99%
(+) Provisions 547413821 638879286 91465465 16.70%
Net Working Capital 3619570734 3895356513 275785779 7.61%
Interpretation
42

was Rs 1,53,99,80,546 and the year 2012-13 Rs 1,53,56,31,209 So it
was decreased in the sundry debtors by 0.28% i.e Rs 43,49,337.
Cash and bank balance have been decreased in the year 2012-13
36.36% i.e Rs 11,35,08,949
Other Current assets of the year 2011-12 Rs 18,21,14,852 and it are

increased in the year 2012-13.The increased amount is Rs 8,11,03,592
i.e 44.53%

advances of kesoram cement company Ltd is It is increased to Rs
6,3,43,353 i.e 6.55%.
The total current assets increased from Rs 4,55,98,02,215 to Rs

5,03,03,33,880.
In the year of 2011-12 the current liabilities was Rs 1,48,76,45,302 and

in the year of 2012-13 current liabilities are Rs 1,77,38,56,653 There is
increase by Rs 28,62,11,351 i.e 19.23% this resulted too increase in
current liabilities.
43
The Net working capital of Kesoram cement company Ltd is increased
from Rs 3,61,95,70,734 to Rs 3,89,53,56,513 i.e. Rs 27,57,85,779 i.e.
7.61%.
Compare to the 2011-12 to 2012-13 the net working capital is very

beneficial to company for the purpose of maintaining (or) managing
the day today activities of Kesoram cement Ltd.

THE YEAR 2013-2014
Absolute Change in
Change %
Current Assets
a) Inventories 1970349211 2030662246 60313035 3.06%
b) Sundry Debtors 1535631209 2007943703 472312494 30.75%

c) Cash & Bank
198671674 243527953 44856279 22.57%
Balance
d) Other current
263218444 219176744 -44041700 -16.73%
assets
e) Loans and
106263342 893837399 -168625943 -15.87%
Advances
Current Liabilities (B) 1773856653 1453759824 -320096829 7.25%
(+) Provisions 638879286 694329841 55450555 8.67%
Interpretation
44

was increase in the sundry debtors by 30.75% i.e Rs 47,23,12,494.
Cash and bank balance have been decreased to Rs 4,48,56,279 and
other current assets have been decreased to Rs 4,40,41,700 in the
year 2012-13 the loans and advance of Kesoram cement Ltd was Rs
1,06,24,63,342 and in the year 2013-14 the loans and advance of
Kesoram cement Ltd was Rs 89,38,37,399 it has decreased by 15.87%
i.e Rs 10,86,25,943.
The total current assets were increased Rs 5,03,03,33,880 to Rs

5,39,51,48,045.
In the year of 2012-13 the current liabilities was Rs 1,77,38,56,653 and

in the year of 2013-14 the current liabilities are Rs 1,45,37,59,824, so
there was decreased by Rs 32,00,96,829 i.e. 18.04%.
The working capital of the loans and advance of Kesoram cement Ltd in
the year 2013-14 was Rs 3,94,13,88,221 and in the year 2012-13 Rs
3,25,64,77,227, so there was an increased Rs 68,49,10,994 this was
happened due to the increased total current assets in the present
financial year 2013-14.
Provisions of Kesoram Cement Ltd., in the year 2013-14 was Rs
6,94,33,29,841 and in the year 2012-13 was Rs 63,88,79,286 by this
we can indentify that the provisions has been increased by Rs
5,54,50,555 i.e. 8.67% in the financial year 2013-14.
45
In the year 2013-14 the Net working capital of Kesoram cement
company Ltd was Rs 4,63,57,18,062 and in the year 2013-14 the net
working capital was Rs 3,89,53,56,513 so there was an increased the
net working capital by 19.06% i.e Rs 74,03,61,549
Increasing net working capital was very beneficial to the company for
the purpose of maintaining (or) managing the day today activities of
Kesoram cement Ltd.
COMPARATIVE STATEMENT OF WORKING CAPITAL FOR THE

YEAR
2014-2015
Absolute Change in
Change %
Current Assets
a) Inventories 2030662246 3768827777 1738165531 46.11%
b) Sundry Debtors 2007943703 2459452581 451508878 18.36%

c) Cash & Bank
243527953 272422341 28894388 10.60%
Balance
d) Other current
219176744 118199412 100977322 -85.42%
assets
e) Loans and
893837399 2062247261 1168409862 56.65%
Advances
(+) Provisions 694329841 1357049231 662719380 48.83%
Interpretation
cement company Ltd between the years 2013-2014 to 2014-2015.
46
and the year 2013-14 the inventory is 2,03,06,62,246 there is an
increased in the stock balance by 46.11% i.e Rs 1,73,81,65,531. The
Cash and bank balance have been decreased to Rs 2,88,94,388 and

other current assets have been decreased to Rs 10,09,77,322. In the
Kesoram cement Ltd was Rs 89,38,37,399 it has decreased by 56.65%
i.e Rs 1,16,84,09,862.
8,68,11,49,372
In the year of 2013-14 the current liabailities was Rs

1,45,37,59,824and in the year of 2014-15 the current liabilities are Rs
2,26,82,92,085, so there was increase by Rs 81,45,32,261 i.e. 35.91%.
The working capital of Kesoram cement Ltd in the year 2014-15 was Rs
6,41,28,57,287 and in the year 2013-14 Rs 3,94,13,88,221, so there
was an increased Rs 2,47,14,69.066 this was happened due to the
increased total current assets in the present financial year 2014-15.

1,35,70,49,221 and in the year 2013-14 was Rs 69,43,29,841 by this
66,27,19,380 i.e. 48.83% in the financial year 2014-15.
47
working capital was 4,63,57,18,062 so there was an increased the net
working capital by 40.33% i.e 3,13,41,88,446.
Kesoram cement Ltd.
COMPARATIVE STATEMENT OF WORKING CAPITAL FOR THE
YEAR
2015-2016
Absolute Change in
Change %
Current Assets
a) Inventories 3768827777 4421701810 652874033 14.77%
b) Sundry Debtors 2459452581 2730735205 271282624 9.93%

c) Cash & Bank
272422341 405421333 132998992 32.81%
Balance
d) Other current
118199412 214691785 96492373 44.94%
assets
e) Loans and
2062247261 4290179191 2227931930 51.93%
Advances
(+) Provisions 1357049231 3303927056 1946877825 58.93%
Interpretation
48

Cash and bank balance have been increased to Rs 13,29,98,992 and

other current assets have been increased to Rs 9,64,92,373. In the
Kesoram cement Ltd was Rs 2,06,22,47,261 it has increased by
51.93% i.e Rs 2,22,79,31,930.

12,06,27,29,324.
In the year of 2014-15 the current liabilities was Rs. Rs 2,26,82,92,085

and in the year of 2015-16 the current liabilities are Rs 3,03,03,23,592
so there was increase by Rs. 76,20,31,507 i.e. 25.15%.
The working capital of Kesoram cement Ltd in the year 2014-15 was Rs
9,03,24,05,732 and in the year 2014-15 was Rs 6,41,28,57,287, so
there was an increased Rs. 2,61,95,48,445 this was happened due to
the increased total current assets in the present financial year 2014-
15.
49
3,30,39,27,056 and in the year 2015-16 was Rs 1,35,70,49,221by this
1,94,68,77,825 i.e. 58.93% in the financial year 2015-16.

working capital was 7,76,99,06,508 so there was an increased the net
working capital by 37.02% i.e 4,56,64,26,280.
Kesoram cement Ltd.
50
51
CHAPTER – IV
CONCLUSIONS AND
SUGGESTION
52
 It is clear from the study net working capital of kesoram cement
2010-2016.The net working capital of the company recorded
85.87% in the year 2010-16. Again in the year of 2011-12 net
working capital was decreased 12.12% again it is increased
7.61% in the year of 2012-13.And in the year 2013-14 it is
recorded 19.06% & in the year 2014-15 it is recorded 40.33%
Finally in the year 2015-2016 it was recorded 37.02.
 It is observed from the study the current of the kesoram cement

from 2010-2016. Current assets of the company recorded in the
year of 2010-2011 i.e. 84.43%. In the year 2011-2012 it is
decreased to 14.06%.Again it is decreased 10.31% in the tear
2012-2013.IN the year 2013-2014 it is recorded 7.25%. In the
year 2014-2015 it is recorded 37.85%. In the year 2015-2016 it
is recorded 28.03%.
 It is understood from the study the current liabilities of kesoram

cement during the year 2010-2016. In the year 2010-2011 it is
recorded 101.47% in the year of 2011-2012 it is declined 8.19%
in the year 2012-2013 it is reached 19.23% again in the year
2013-2014 it is decreasing 18.04% , in the year 2014-2015 it is
increased by 35.91% and in the year 2015-2016 it is decreased
by 25.15%
 It is clear the study ratio is satisfactory as it is more than the
53
thumb rule 2.1
 It is concluded the quick ratio is above the standard rule and this
concludes it as satisfactory.
 Fixed assets turn over ratio indicates the extent to which assets
are utilized to maximize the sales.The company has managed
fixed assets efficiently.
 Net profit ratio we can describe that the company net profit is
very sound.
 it is concluded that the gross profit is satisfactory
 The debt-equity ratio proportion as per equality concerned is less
the low equity that there is less risk to the creditors and they
have sufficient safety margin.
54
SUGGESTIONS
 it is suggested that the company has to maintain sufficient
inventory and which should be on par with the working capital
requirement for strengthen it.
 It is clear from the study liquidity position was increased which
has satisfactory the company has to maintain the same in future.
 It is observed from the study that employ can more debt to take
the advantage of leverage.
 A high fixed turn over ratio indicates better utilization of the
firm’s fixed assets. A ratio of around 5 is considered ideal.
 It is clears from the study the net profit ratio over all profitability.
The higher the ratio the more profitable is the business.
 It is observed from the study the company has to decrease its
direct expenses to improve its net profit. The company has to
utilize its current assets efficiently only it’s maintaining as
smooth liquid position.
55
BIBILOGRAPHY
Authors Name Title of the Book, Publisher and
Edition
I.M.Pandey Financial Management, Vikas
Publisher 8th Edition
Prasanna Chandra Financial Management, Tata
McGraw Hill 5th Edition
R.K.Sharma and Shashi Management Accounting,
K.Gupta Kalyani Publishers, 8th Edition
S.P.Jain & K.L.Narang Financial Accounting and
Analysis, Kalyani Publishers, 3rd
Edition
56

Working Capital Kesoram Finance

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Working Capital Kesoram Finance

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CONTENTS

CHAPTER-II RESEARCH METHODOLOGY 17

CHAPTER-III COMPANY PROFILE 20

CHAPTER-IV ANALYSIS & INTERPRETAION 39

CHAPTER-V CONCLUSION & SUGGESTIONS

The investment in fixed assets is represented by land and buildings (for

Balanced working capital position:

WORKING CAPITAL MANGEMENT

Working capital management forms the inching of every

Definition of Working Capital:

Working Capital can be defined as “ Any acquisition of funds

The current assets are cash, marketable securities, accounts

The current liabilities are those liabilities which are intended at

The goal of working capital management to manage the firms

The source of any enterprise depends on the proper

There are two concepts of Working Capital

It refers to the company’s investments in Current assets. Current

Net Working Capital

It refers to the difference between current assets and current

A positive net working capital will arise when current liabilities

1 Optimum investment current assets and

CHARACTERISTICS OF CURRENT ASSETS

In the management of working capital two characteristics of

Current assets have a short life span. Accounts receivable may

Each current asset is swiftly transformed into other assets form.

Raw materials are untransformed into finished goods (this

The need for current assets arises because of the operating

However, there is always a minimum level of current assets

This minimum level of current assets is referred to as permanent

The extra working capital needed to support the changing

DETERMINANTS OF WORKING CAPITAL

There are no set rules to determine the working capital

NATURE AND SIZE OF BUSINESS:

The size of business also has an important impact on its working

TECHNOLOGY AND MANUFACTURING POLICY

FIRMS CREDIT POLICY

The credit policy of the firm affects the working capital by

Most firms experience seasonal and cyclical fluctuations in the

A steady production policy will cause inventories to accumulate

The working capital needs of firm increases it growth in terms of

Firms differ in their capacity to generate profit from business

Working Capital Management refers to the administration of all

Empirical observations show that the financial managers have to

There is a direct relationship between sale and working capital

It may thus be concluded that all precautions should be taken for

FINANCING CURRENT ASSETS

The important sources of long-term financing are shares,

Short term financing refers to those sources of short credit that

In this section a few important techniques of working capital are

Techniques relevant for the management of working capital

One of the very important issues in the management of working

WORKING CAPITAL FORECASTING TECHNIQUES

Having determined the sales accurately, steps can to taken to

1 Percentage Sales method.

NEED FOR WORKING CAPITAL

The need for working capital to run the day-to-day business

Operating cycle is the time duration required to convert sales,

Stocks of raw material and work-in-process are kept to ensure

Statement of the Problem

Needless to mention cash, bank, debtors, bills receivables closing

Analysis and presentation

OBJECTIVES OF THE STUDY

SCOPE OF THE STUDY

The Project was done in only 45 days