INTRODUCTION

Working capital is the money and assets that business uses to finance the day to
day operations that produce the goods or services supplied to customers .
The capital required for running the day to day business activities of a firm is
known as Working Capital . It refers to that part of total capital employed which
has been invested for financing of current assets and payment of day to day expe
nses.
E.g.- Inventories, Debtors, Bill receivable etc.
Working Capital is the amount of fund necessary to cover the cost of operating th
e enterprises.
Working Capital Gap = Current Assets - Current Liabilities
Working capital has two concepts:-
a) Gross concept: - Gross working capital usually referred to as working ca
pital represent investment in current assets. The gross concept of working capit
al focuses the attention on two aspects of current management.
These are:
i) Optimum investment in current assets.
ii) Financing of current assets.
This mean the level of investment in current assets should be adequate.
b) Net concept: - Net working capital is difference between current assets
and current liabilities. The net concept of working capital is an accounting con
cept that deals with management of net value of current assets in long run. Net
concept of working capital
i) Indicates liquidity position of the firm.
ii) Suggests the extent to which working capital needs may be financed by perman
ent source of funds.
OBJECTIVE OF STUDY
Aims and objective act as the limiting boundaries and keep the researcher on tra
ck and help to avoid any mistakes and errors during the project work.
The aims and objective of this project are listed below:
1) To learn more about working capital management and it s financing from ban
ks.
2) To know the importance of working capital from the company s point of view
.
3) To study the impact of working capital on liquidity position of the firm
.
4) To study the Credit Monitoring Arrangement of the firm with respect to B
ank Finance.
5) To determine the Maximum Permissible Bank Finance for the company.
6) To study the impact of working capital on the balance sheet of the compa
ny.
RESEARCH METHODOLOGY
Research is essentially a logical and an organized enquiry seeking facts through
objective methods in order to discover the relationship among them and to refer
from the broad principles or laws. It is really a method of critical thinking.
Research may be defined as a systematic and objective analysis and recording of
controlled abservations that may lead to the development of generalization of pr
inciples or theories resulting in prediction and possibly ultimate control of ev
ents.
Methodology is often used in a narrow sense to refer to methods, technology or t
ools employed fpr the collection data as well as its processing. This is also us
ed sometimes to designate data collection to arrive at the conclusion. In fact i
t describes that what should have been done. It provides answer to some of the m
ajor question while research like what must be done, how it will be done, what d
ata will be needed, what data gathering devices will be employed, how sources of
data will be analysed to arrive at the conclusion. For systematic research scie
ntific approach is necessary. It is therefore essential to follow systematic met
hodology to arrive at a proper conclusion.
There several ways of collecting the appropriate data, which defers considerable
in context of money, cost, time and other resources at the dispersal of the res
earcher. The data for this project has been collected by primary as well as seco
ndary sources.
PRIMARY SOURCES:-
The primary data will be collected from various books of financial management an
d various other reference materials.
SECONDARY SOURCES:-
The data required for the study will be collected from annual reports of the com
pany of the respective years. The company provided the annual reports. The analy
sis has been completed with the help of various tools and techniques of ratio an
alysis to evaluate company performance.
I. Annual Reports of the year 2006-07, 2007-08, 2008-09
II. Company s Website and other Internet sources.
The project mainly depends upon the secondary data.
HYPOTHESIS
Under this arrangement, the borrower is provided with working capital finance by
the bank against the security of movable property, generally inventories. The b
orrower does not transfer the property to the bank; he remains in the possession
of property made available as security for the debt. Thus hypothecation is a ch
arge against property for an amount of debt where neither ownership nor possessi
on is passed to the creditor. Banks generally grant credit hypothecation only to
first class customers with highest integrity. They do not usually grant hypothe
cation facility to new borrowers.
LIMITATION OF STUDY
1) Inter firm comparison is not possible because it is a multi product firm with
varying Competitors having multi product profile.
2) Working Capital Management is a vast subject covering many domains of current
assets and current liabilities management. It is not possible to cover all the
aspects in such a short tenure of the project.
Reference: http://www.seminarprojects.com/Thread-working-capital-management-in-r
aymond-ucodenim-ltd?pid=44037#ixzz1JQcuCiBW