Additional 2 ND

WORKING CAPITAL MANAGEMENT
INDUSTRY PROFILE
History of Tyre industry:
In the year 1887 the word rubber industry came into existence, with the process of
tube vulcanization by Charles good year. However, the growth of the industry received a big
boost towards the end of the century, when the Bond Dunlop succeeded in making the
vulcanization rubber into inflatable pneumatic tyres. Since then the tyre industry has constituted
a major segment of the industry all over the worlds. Even in India, automotive tyres and tubes
account for a major part of the Indian rubber produce industry.
Tyre industry in India:
Indian tyre industry is about 60 years old. The tyre industry was and continues to be in the
core industry sector. Tyres are covered under the essential commodities Act. The predominance
of the foreign multinational prevailed in the foreign multinational prevailed in 60’s has
considerably reduced. The history of the Indian tyre industry could be divided into 4 periods.
 1920 to 1935 (multinational trading in tyre)

 1935 to 1960 (multinational manufacturing era)
 1961 to 1974 (Broadening of production base)
 1974 to 1975
Trading tyres in India was first started in 1920 by firestone, followed by good year in
1922 and later by develop in 1926. Dunlop set up the first tyre factory at Saharganj, West
Bengal, in the year 1936. Firestone set up a factory at Mumbai.
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MANGALORE INSTITUTE OF TECHNOLOGY & ENGINEERING
At present there are 20 licensed companies and 24 factories which include 11 large
companies manufacturing the full range of tyres and tubes. The Indian tyre companies are
having collaboration with tyres companies of U.S.A West Germany and Japan. Significant
changes occurred in the tyre manufacturing process, change over from rayon to nylon and
introduction of radial tyres of both steel belt and fiber glass are most important.
The hot cure conventional rethreading process is replaced with cold cure rethreading
process. The truck and bus tyre mileage and load carriage capacity has gone up by 25%. The
tyre industry in Rs.3500 crore plus which manufacture tyres for truck and buses, light trucks,
jeeps, cars, tractors, tractor trailer, power tiller, scooter, motor cycle, moped, cycle, earth
moving equipment’s and dumpers, aircrafts and special defense vehicles.
The large tyre units are APOLLO, Bombay tyres international, Ceat, Dunlop, good year,
J.K. Modi, M.R.F. premier, TCI, Birla tyres. The company which manufactures tyres
primarily for two and three wheelers are Metro tyres, Sri Chakra, Falcon, stallion, transport,
S.kumars.
The production of tubes by the large and medium sector is 80% of the tyre production. The
tubes are manufactured from natural rubber as well as imported butyl rubber. Tyre inner tubes
are covered under packaged commodities Act. The government for the industry set up various
committees in 1995, the tariff commission was set up. The major trust of the commission report
was the decentralization of the tyre industry.
Between 1974 and 1985 the government referred to Bureau of industry cost and price
(BICP) five timers for cost and price study of tyre industry. But the studies of the BICP were
not made public.
In May 1974 the government set up a committee on tyre industry with Mr. M. Satyapal as
chairman. The committee submitted its report to the government in 1985. Report has not been
published.
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MRF, Ceat, Dunlop, Apollo and Modi rubber dominates the industry together
accounting for much as 60% of total output. Among individual companies MRF is moving into
aircraft tyre manufacturing in collaboration with units Royal Goodrich. The total capacity of
ceat has gone up to 45 lakhs tyre with the commerce of walaj plant and has plans to
manufactures nylon cord tyres. Modi rubber industry has the modipuram plant and modinagar
plant and has plans to manufacture nylon cord tyres. Modi rubber industry has the modipuram
plant and modinagar plant is under implementation. A Vikrant tyre with a new all steel radial
tyre plant for trucks and buses is the only company modernizing the existing plant and
manufacturing and new technological tyres of international standards and acceptability Indian
tyre industry is all set to capture a major share in export market and increases its share of export
of various countries. The tyre industry is a raw material intensive industry. Raw materials
accounts for about 55% of the total production cost. Two of the four major raw materials used
in the tyre making i.e., nylon tyre cord and synthetic rubber and petroleum based derivatives.
Inputs for tyre industry:
The major raw materials and their weightage in the total raw materials structure are:
1. Natural rubber 25%
2. Synthetic rubber 14%
3. Carbon block 13%
4. Nylon tyre cord/yarn(fabric) 34%
5. rubber chemicals 14%
Natural rubber:
It is the most important rubber material used in the manufacture of tyres. Natural rubber
accounts for about 10% (by weight) of the total raw materials requirement in the manufacture of
a tyre. The productivity of natural rubber is India is one of the highest in the world, but still
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India is one of the highest consumption of natural rubber in the world. The tyre industry
consumes about 48% of the natural rubber produced in the country. Till the year 1988
government controls the price of natural rubber. Where as, now the government faces what is
known as “BENCH MARK PRICE” which is the minimum price to help small farmers to
maintain margins. There is no ceiling on the maximum price. Due to the above, the price of
natural rubber had been fluctuating widely.
Synthetic rubber:
Styrene butadiene rubber (SBR), manufactured from petroleum feed stocks, is mainly
used passenger car, jeep and LCV tyres.
Poly butadiene rubber (PBR), also manufactured from petroleum feed stocks is mainly
used in heavy duty truck tyres.
Butyl rubber is a synthetic rubber mainly used for making inner tubes used in tyres. Entire
quantum of 24,000 MT of this variety of tuber consumed in 96-97 was imported as no company
in India manufactures this kind of synthetic tuber.
Carbon block:
Carbon block is petroleum based in organic chemical in the form the quasi – graphite
powder of extreme fineness and with high surface area composed essentially of elemental
carbon. The main inputs required in the manufacture of carbon block are carbon block feed
stock (CBFS) and furnace oil carbon block is generally divided into two grades viz. soft and
hard grade.
:
Nylon yarn/fabric/tyres cord
Nylon tyre cord is an essential reinforcement material. Weightage of nylon tyre yarn in
terms of cost of raw materials used the highest at about 27%. Caprolactum is a major raw
material to the tyre. It also reduced the wear the tear of the tyre. The tyre cord is placed below
the tyre’s treads, which is in contact with the road.
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Functions of the tyre:

 Tyre provides steering response.
 Durable and easy to drive.
 Has loan carrying capacity.
 Provides cushioning ability.
 Cooler running and gives more mileage.
 Having a minimum noise and vibration.
2. COMPANY PROFILE:
JK tyre a division of JK industries is the flagship company under the umbrella of JK

organization. The advent of JK organization on the industrial land space of India almost
synchronizes with the beginning of an era of industrial awareness and endeavor for self-reliance
and the setting up of a dynamic Indian industry. This was way back in the middle of the 19 th
century and the rest, that followed is history.
JK organization has been a forerunner in the economic and social advancement of India.
It always aimed at creating job opportunities for a multitude of countrymen and to provide high
quality products. It has striven to make India self reliant by pioneering the production of a
number of industrial and consumer products, by adopting the latest technology as well as
developing its own know-how. It has also undertaken industrial ventures in several other
countries.
JK organization is an association of industrial and commercial companies and charitable

trusts. Its member companies, employing nearly 50,000 persons are engaged in the manufacture
of variety of products and in diverse fields of commerce.
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India’s ongoing automobile boom and expansion of the highway network have paved a
huge business opportunity for the countries tyre manufactures. Shrugging off a sluggish, phase
between the period 1999 and 2001, the industry is now climbing a steep growth curve that is
already peaking at an annual rate of 8% in an area marked by intense competition among home
growth players and imported brands, companies are recognizing their sales, Distribution,
marketing and brand strategies to stay one up in the battle. Though the competition is intense,
with several Indian and MNC players battling it out for top honors in reality the market is
veering around four or five type major who have already consolidated their position. These
companies constitute almost 80% of the total tyre production.
JK organization owes its name to late Lala juggilal singhania, a dynamic personality with
broad vision. Inspired by the swadeshi movement of Mahatma Gandhi, and driven by the zeal
to set up Indian enterprises, Lala kamlapat singhania, founded J.K. organization in the 19th
century and sharing in a new industrial era in India. The process of industrialization and
diversification was worthily and successfully carried on by Lala kamalapat’s three illustrious
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sons – Sir Padampat, Lala Kailashpat and Lala lakshmipat, aided in no small measure by the
late Gopal Krishna son of Sir Padampat.
J.K Tyre:
“Excellence come not from were words or procedures. It comes from an strive and deliver
the best. A mindset that says, when it is good enough, improve it. It is the way of thinking that
comes only from a power within”. -H.S.Singhania.
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The organization:
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The advent of JK organization on the industrial landscape of India almost synchronized

with the beginning of an era of industrial awareness-an endeavor for self reliance and the setting
up of a dynamic Indian industry. This was Ray back in the middle of 19th century the rest that
followed is history.
Core values:
JK organization has been a forerunner in the economic and social advancement of the India.
It always a aimed at creating job opportunities for a multitude of country men and provides high
quality of product. It has driven to make Indian self reliant by pioneering the production of
number of industrial and consumer products by adopting latest as well as developing its own
know-how. It has also under taken industrial ventures in several other countries.JK
organizations & its member companies, employing nearly 50,000 persons are engaged in the
manufacture of variety of products and diverse fields of commerce.
2.1. BACKGROUND AND INCEPTION OF THE COMPANY:
1933 First in India to manufacture calico prints-{Juggilal Kamlapat cottons

spinning and weaving mills company, Kanpur.}
1940 First in India to manufacture steel bailing hoops for jute and cotton and to
make the country self sufficient by meeting the entire demand- J.K Iron and
steel Co .Ltd.., Kanpur.
1944 First in India to produce Aluminum Virgin metal for Indian Bauxite-
Aluminum corporation of India Ltd.., Jaykayanagar.
1949 First in India to manufacture engineering files-J.K. Engineer’s files Bombay.
1959 First in India to set up a continuous process Rayon plant.

1960 First in India to set up a Hydraulically operated cane crushing mill for
kandsari sugar plant and completed 100 ton plant.
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1961 First in world to set up a plant for production of Hydrosulphite of soda by

sodium Amalgam process-J.K chemical Ltd.., Bombay.
1962 First in India to produce Nylon-6 with its own polymerized raw material-J.K.
Synthetics Ltd..,Kota.
1965 First to produce sodium sulphoxylate formaldehyde [Rangolite C of
formosul] in India-J.K. chemicals Ltd.., Bombay.
1968 First to manufacture TV sets in India –J.K.Electronics, Kanpur.
1976 First in India to produce steel belted radial tyres for passenger car, trucks
and buses-JK tyre plant, Kankroli.
1980 First in the world to make steel belted radial tyres for 3 wheelers.
1984 First in India to produce white cement through dry process.
1985 First in India to produce cathonic dye able polyester fiber.
1989 First in India to produce magnetic tapes with cobalt technology.
1991 Banmore tyre plant {BTP} set up with the capacity of 5.7 lacks tyres pa.
1992 R & D centre setup at HASTERI.
1994 India’s first T-rated tyre launched Banmore tyre plant {BTP} crossed 100
TDP.
1995 Mercedes Benz launched on JK STEEL RADIALS first tyre manufacturer in
the world to get ISO 9001.
1996 India’s first dual contact high tractions steel radial- aqua sonic launched.
{Introduce steel wheelers}.
1998 First tyre manufacturer in the world to get QS 9000. Awarded CAPEXIL’S
highest export award for 1997-98.
1999 Synergy with VTL in procurement, marketing and production flexibility.
Completion of states of the art modernization of truck radials J.K tyres
ranked 16th largest tyre company in the world ISO-14001 accreditation for
environment and safety.
2000 JK introduced national Go-carting championships.
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2001 JK industries received FOCUS LAC EXPORT award for year 1999-2000.
Commendation certificate of CII ND National exam. Go- carting
championships held.
2002 JK industries ltd (JKI) has informed BSE that CRISIL has assigned a p1+
rating to the commercial paper programmed of the company.
2003 JK completes its comprehensive restructuring exercise of businesses that
Leads to its emergence as a pure automotive tyre company.
2004 JK industries ltd has informed that its securities are delisted from Delhi stock
exchange association ltd (DSE) w.e.f. Jan 29, 2004.
2007 JK industries ltd has informed that the name of the company has been
changed from JK industries ltd to JK tyre & industries ltd.w.e.f. April 02
2007.
2008 The company has issued rights in the ratio of 1:3 at a premium of Rs.75 per
share.
2009 Green tech environment award-Gold category
2010 Green tech safety award – gold category
OHSAS certification.
JK TYRES PLANTS:
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 Kankroli - Rajasthan
 Banmore - Madhya Pradesh
 VTP – 1 (Mysore) - Karnataka
 RTP - 2 (Mysore) - Karnataka
 OTR - 3 (Mysore) - Karnataka
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2.2. NATURE OF THE BUSINESS CARIED:
JK industries are engaged in manufacturing and marketing of Automotive tyres

and it also outsourcing the tubes and flaps.
Products involved:1
 Cross ply and radial tyres for light commercial vehicles.

 Cross ply tyres for passenger cars.
 Cross ply tyres for agricultural vehicle.
 Cross ply tyres for of the road (OTR) vehicles.
 Automotive inner tubes for trucks, buses, light commercial vehicles.
2.3. VISSION, MISSION, QUALITY POLICY:
VISSION:
“TO BE AMONGST THE MOST ADMIRED COMPANIES IN INDIA

COMMITED TO EXCELLENCE”
MISSION:
 To be a customer obsessed company.

 To be a largest and most profitable tyre company in India.
 To retain No 1 position in truck and bus segment and to be amongst top 2 in all
other 4 wheelers tyres.
 To make truck/bus radial operation profitable and retain leadership in the
passenger radial market.
 To enhance value to shareholders and services to all stake holders.
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 To excel as a value driven organization.

 To be the most preferred tyre brand in India.
QUALITY POLICY:
The people of JK tyre have an organization committed to quality in everything they do.
They continuously anticipate and understand customer requirement, convert these performance
standards for their product and services and to meet the standards every time.
CERTIFICATE OF QUALITY:
 ISO 9001
 QS 9000
 Environment management system (ISO 14001).
 ISO/TS 16949
 DOT (department of transport)
 INMETRO (Institute National De Materiologia - Brazil)
Quality management:
ISO 9001:
JK Tyre world’s first tyre company to receive ‘ISO 9001’ certification
for its entire operations in 1995 in one go. Their Quality Management System
is completely integrated into all aspects of our operations.
QS 9000:
JK Tyre the world’s first company to receive quality management
system certification QS 9000’, in 1998 for multi location operations. They
are using ‘QS 9000’ system as tool for continuous incremental improvement.
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Environment Management System (ISO 14001):

JK Tyre recognizes the impact that our business has on the environment and takes our
responsibilities for maintaining harmony with nature. We are the first tyre company in India to
receive 'ISO 14001' certification for multi location operations in 1999
Total Product Management Policy:
JK Tyres are committed to TPM Methodology and strive to achieve:

 Zero Accidents
 Zero Breakdowns
 Zero Losses
 Zero Defects
Through total employee involvement and competency enhancement.
They are committed to enhance employee morale and costumer delight through
continual improvement in the entire sphere of their activities and create a clean and pleasant
work place in their endeavor to be amongst the most admired companies in India.
Environmental Policy:
JK tyre is committed to protect, consume and restore natural habitat and conduct
all their activities in an environmental friendly manner. They continually improve environment.
 Complying with al legal environmental requirements.
 Taking measures to protect the environment by being proactive innovative way.
 Conserving natural resources and energy by optimizing efficiency minimizing waste &
supporting environmental friendly programs.
 Enhancing effectiveness of the environmental management through reviewing its
objectives and targets.
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 Increasing environmental awareness amongst their employees and sub contractors.
Environment Management System:
JK Tyre recognizes the impact that their business has the environment and takes the
responsibilities for maintaining harmony with nature. JK tyres are the first tyre company in
India to receive ‘ISO 14001’ certification for multi location operations in 1999.
E-mark:
JK Tyre is the only Tyre Company in India having the E-mark certification on their
products, a mandatory requirement for exporting tyres to European Markets.
2.4. PRODUCTS AND SERVICE PROFILE:
The major products of JK Company are automobile tyre (Nylon tube tyre, radial tube
and tubeless tyre) tubes and flaps.
The products are sold under different brand names.
1. Truck tyres:
a) Jet rib.
b) Vikrant truck king.
c) Star lug.
d) Super T.K.
e) JT king
f) Hi life.
g) Jet star.
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h) Jet truck.
i) Sand cum hiway.
j) Truck plus.
k) J T classic.
l) JETRK.
2. Light trucks:
a) Jet rib.
b) Star lug.
c) Fleet king.
d) Truck king.
3. O.T.R (Of the Road):
e) VEM 99 E-3 T/L.

f) VEM 99 E-4 T/T.
g) VEM 99 SS E-4 T/L.
h) EG04 G2 T/T.
2.5. AREA OF THE OPERATION:
“JK Tyre” has been successful in establishing its brand name in the world market. It
gives immense pride to India as “JK tyre” has been rated amongst premium brands in highly
sophisticated global tyre markets. The export account for over 30% of India’s total tyre export
and they sell their products across 75 countries over six continents in whole world, thus making
a leading mark in the industry. In order to meet the growing demand of JK tyre across the globe,
the company is enhancing out sourcing activities from China in its own brand.
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Today, JK tyres products compete with the best international players in the premium
international bias market in more than 75 countries in 6 continents. The exports operate through
a strong and distribution network, and our distributors are fully supported by the company’s
technical team in terms of continued international accreditation for its products in the US,
Europe, South America and the Middle East.
JK export its products to over 75 countries. The major countries include United States
of America, Australia, United Kingdom and New Zealand, Hong Kong and Host of Middle
East, African and Asian countries.
2.6. OWNERSHIP PATTERN:
No of securities % of
Category Sub category held Holding
Promoter’s Holding Indian promoter’s 16376700 43.72
Foreign promoters 0 0.00
Persons acting in 0 0.00
concept
Sub Total 16376700 43.72
Institutional Mutual funds and 33,904,248 8.82
investors UTI
Banks, FLS, 35,87,706 9.57
Insurances Co’s,
Central/state govt.
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Non govt
Institutions
FIIs 26,29,787 7.02
Sub total 95,21,741 25.41
Others Private corporate 37,48,225 10.01
Bodies
Indian public 37,51,796 10.02
NRI/OCBS 40,60,884 10.84
Any other 0 0.00
Sub total 1,15,60,905 30.87
Grand total 3,74,59,346 100.00
2.7. COMPETITORS INFORMATION:
Competitors for JK tyres in national market and international market:-
National market International m
1) MRF 1) Bridge stone

2) Good year 2) Copper
3) CEAT 3) Michelin
4) Apollo 4) Sumitomo
5) Falcon 5) Pirelli
2.8. INFRASTRUTURAL FACILITIES:

Infrastructure facilities mean the basic requirement that the company should look
after in order to ensure free flow of activities. The company is providing following
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infrastructural facilities in order to satisfy its workers, distributors and customers. The
company provides all facilities in order to satisfy its workers, distributors and customers.
The company provides all facilities stated by factories act of 1948.
1) SHE (SAFETY, HEALTH, AND ENVIRONMENT)
a) Safety:
Sec 21 stands for protection of hazardous. Management is providing its

employees with earplugs, goggles, gloves, fire extinguisher, etc as safety measures. The
employees are also trained on the safety measures. In order to encourage trade union
activities the 7 offices bearer who are elected are given only with general shifts.
b) Health:
• Sec 16 stands for drinking facilities.
• Sec 19 stands for rest room facilities

1. Management is providing pure aqua guard water facility to its employees and its staff
members.
2. In J.K. Industries provide rest room to the employers. During the interval the
employee’s can relax.
3. According to the section 46(1) it is obligatory on the part of every factory to provide
canteen facility where in more than 250 employees are employed and hence Vikrant also
provides canteen facility for its employees, which is well constructed, furnished with good
furniture, equipments and also with good accommodation..
c) Environment:
a) First – aid appliances:
If there is an accident, the workers will be taken to the health centre which is
inside the plant. All the minor and first aid is done here itself and when there is major
accident first aid is done in the health centre and then they are taken to the hospital. Every
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day at least 2 ambulances will be inside the plant, which will be kept ready to carry the
injured whenever there is a major accident.
2) Welfare activities:
• Sec 45 stands for ambulance.

• Sec 43 stands for first-aid-appliances. (Occupational health centre).
• Sec 46(1) stands for canteen facilities
Sports and cultural activities are conducted every year on Kannada Rajyothsava day for
employees, their spouses and children. This is conducted in order to provide recreation
facility to the employees and their family.
Outside experts for counseling is hired to conduct counseling serious on carries

guidance to employees children and health care to spouses.
2.9. ACHIEVMENTS/AWARDS:
 JK tyres ranked 16th largest company in the world.

 ISO 14001 accreditation for environment and safety.
 India’s first T rated tyre launched.
 Mercedes Benz launched on JK tyres radials first tyre manufacture in the world to
get ISO 9001.
 Only tyre manufacture to get E mark certification.
 First tyre manufacture in the world to get QS 9000.
 Awarded CEPEXIL’S highest export for 1997-98.
 JK introduced national Go-carting championships.
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 JK industries received FOCUS LAC EXPORT award for the year 1999 and 2000.
 Certified to ISO 9000 (1994 quality management system).
 First Indian Tyre Company to adopt process based management process based
management through business re-engineering (BPRO).
 It has ranked No.1 in customer satisfaction by the JD power Asia pacific study.
 VTP own the prestigious Green tech environment award in gold category on 12-10-
2009.
 JK tyres & industries ltd. wins the CAPEXIL ‘Top’ export award for the year 2008-
2009.
 Employee branding awards 2009.
 JK team owns the top “PAR EXCELLENCE AWARD” in kaizen competition. Held
in Mysore on 25-04-2010.
2.10. WORK FLOW MODEL:
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Compound at Ban bury:
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Compounding is the process of mixing the necessary raw materials with selected
elastomeric in the banbury. Banbury is an internal mixer, which consists of completely enclosed
mixing chamber with two spiral shaped rotors. There is a hoper to feed the ingredients and door
to discharge the mix. The rubber ingredients like chemicals are weighted as mentioned in
specification file and fed into the hoper, then the mixing time is fixed to get better quality
mixing.
Extruder:
The main function of an extruder is to produce tread and side wall, bead, apex.
Extrusion is a process of forcing the mixed compound by means of screw, which rotates inside
the barrel. There are two types of extruder.
a. Screw extruder
b. Ran extruder
a. Screw extruder
In screw extruder the screw is rotated by means of a motor through reduction gear. The
extruder consists of hoper, a dye-hard, barrel and dyes.
There are two types of screw extruder

 Cold feed extruder.
 Hot feed extruders.
In cold extruder the feeding compound is in cold condition while in hot feed extrusion
the feeding compound is in hot or warm condition.
Screw is commonly used because they cannot get the continuous extrusion from the ram
extruder. The extruder temperature is about 100 to 200c.
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Zell plant:
The dipping process takes place in a zell plant. Here rayon, nylon, polyesters are dipped
in a solution containing normally a latex based resorcinol formaldehyde to improve adhesive
properties. Then the fabric is dried at a temperature of about 280-300 for 150-180 sec the fabric
stretches to about 0-15%.
Calendaring:
Calendar is a machine, which consists of three or four rolls held in a frame work used to
produce the rubber sheets of required lengths. To get a better quality calendared fabric with
uniform gauges, viscosity is important.
Bias cutter:
It is machine used to make the ply’s or to cut the rubber coated fabrics at required width
and angle, which are used in the production of tyres. Bias angle of cords in tyres with respect to
central line. Based on the ideal curd angle, required for particular type size and pattern, bias
angle is calculated for the particular drum. If the angle is not as per the specification, it will
affect the tyre. In general the angle 45 and the width of the sheet is 100-137mm.
Pocket Making:
It is a process of the pocket from the angle cutter fabrics. In pocket making section,
three type of pockets are constructed. They are first, second and third pocket. The plys used for
the first and second pocket are known as inner ply band those used for third pocket are known
as outer ply, pocket are made for easy building of heavy vehicle tyres.
Bladder:
Butyl rubber compound is used for making the bladder. As first, butyl rubber is mixed
with specified chemicals properly and then it enters the extruder section by the use of the
extruder, a specific length and width of slug is extruded. Then the ends of the slugs are cut into
the specified angle for proper joining.
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Bladder press: there are two numbers of bladder presses namely 400 tones and 800 tones
presses. These presses operate with hydraulic pressure. The hydraulic pressure aid used is bill.
At first the bladder run is lowered down and the slugs are loaded. Then the lower portion of the
mould is raised to touch the upper pattern. After sufficient curing is specified time mould will
automatically opened and the bladder is released. It is then trimmed of for excess materials.
Some of the possible defects that occur during the manufacturing of bladders are.
a. Splice opening: this is due to improper joining caused by pressure.
b. Porosity: this is due to highly extrusion temperature.
Tyre moulding:
Before moulding operations, the green type has to be made ready for painting with inner
lubricants inside the tyre for easy release from the bladder and the side walls are to be coated
with blemish paints. Blemish paint contains carbon blacks, NAPTHA, styrene butadiene rubber
components and this enables easy flow of compound while curing to the, mould pattern. The
blemish paint is applied to minimize the surface flow marks. On the whole, to get better results,
green tyre should not be any contamination on the tyre surfaces.
Tyre moulding is a complex type of compression moulding normally cured in presses.

The raw tyre has to be placed over a bladder, then the bladder and tyre expands together due to
steam pressure and simultaneously the tyre gets compressed between 2 moulds in closed
position. In this operation cycle time, pressure, temperature, are important to get optimum
vulcanization during moulding on tyre.
Tyre Curing:
It is a process of cross linking the rubber compounds through heat and pressure. For the
process of curing tyres presses are used. These presses are pre warmed before loading of green
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tyre is done in top ring raise condition with vacuum. Shaping is done by centering the green tyre
correctly. Bladders are used as modern technology for tyre curing.
Tyre finishing and inspection:
After curing, the tyres obtained are further finished by trimming of the extensions on the
tyres surfaces are checked for defects. Thus the process of removing excess materials from the
tyre after curing is finishing. The finishing process is done either by buffing or trimming
method. Buffing is done by using emery paper wrapped on a cylindrical rubber press.
All cured tyres are inspected and the defective tyres are separated. They are then repaired
and non-defective tyres and Okayed. But some defective tyres, which cannot be repaired, are
scraped.
2.11. FUTURE GROWTH AND PROSPECTUS:
 To be the No.1 tyre company in India.

 To be the largest tyre export company in India.
 To be a customer observed company.
 High quality of products.
 Profit maximization.
 Green tyre project.
 Leadership style.
 To enhance value to share holders and service to all stakeholders.
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3. Mc KINSEY 7-S MODEL
The 7-S model is better known as Mc Kinsey 7-S. This is because the two persons who
developed this model, Tom Peters and Robert Waterman, have been consultants at Mc Kinsey
& Co, at that time. They published their 7-S model in their article “Structure Is Not
Organization” (1980) and in their books, “The Art of Japanese Management” (1981) and “In
Search of Excellence” (1982).
The model starts on the premise that an organization is not just structure, but consists of
seven elements.
STRUCTUE
STRATEGY SYSTEMS
SUPER
ORDINATE
GOALS
SKILLS
STYLE
STAFF
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The Mc Kinsey 7-S model is a widely discussed framework for viewing the inter-relationship of
strategy formulation and implementation.
• It helps to focus manager’s attention on the importance of linking the chosen strategy to
a variety of activities that can affect the implementation of that strategy.
• Originally developed as a way of thinking more broadly about the problem of

organizing effectively, the 7-S framework provides a tool for judging the “do ability” of
strategies.
According to one of its developers, Robert H. Waterman Jr, the framework suggests that it is
not enough to think about strategy implementation as a matter only of strategy and structure, as
has been the traditional view.
The conventional wisdom used to be that if you first get right, the right organization
follows. And when most people in western cultures think about organization, they think
structure. We find in practice, however, that these notions are too limiting.
To think comprehensively about a new strategy and the problem with carrying in out, a
manager must think of his company as a unique culture and must think about the ability of the
company to get anything really fundamental (i.e., not tactical) accomplished as a matter of
moving the whole culture.
STRUCTURE:
The JK tyres has a very well developed structure, it consists of various departments
which contribute towards the operations of the organization.
It consists of department’s such as:-
Production departments, engineering dept, technical dept, production planning dept,

quality assurance material dept, human resource dept, personnel and administration
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secretarial dept, internet audit, electronic data processing dept, industrial engineering dept,
finance dept, marketing dept, & technical services dept.
Bankers assisting VTL:-
1) Corporation Bank 5) Indian Bank

2) Punjab National Bank 6) Syndicate Bank
3) State Bank of India 7) Vijaya Bank
4) State Bank of Mysore
JK industries (VTP) Board of directors:-
Name Designation
Mr. Kalpataru Tripathy Additional director
Mr. Hari Shankar Singhania Chairman/chair person
Mr. Vikrampathy Singhania Deputy managing director
Mr. Arvind Singh Mewar Director
Mr. Bakul Jain Director
Mr. Om Prakash Khiatan Director
Mr. Bharath Hari Singhania Managing director
Mr. Ashok U Katra Nominee director
Mr. Arun K Bajoria President and director
Dr. Raghupathy Singhania Vice chairman & mng, director
Mr. Swaroop Chand Sethi Whole time director
SKILL:
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A skill is the ability, knowledge, understanding and judgment to accomplish a task. Skills
may be defined as what the company does best, the distinctive capabilities and competencies
that reside in the organization. The job requirements, type of job gives rise to different skills in
the different jobs and different department of the company.
The skills differ with respect to performance of job the skills differ with the performance of
job for instance- in quality control they need and engineer and in HR department they require a
post graduate with specialization in Human Resource Management.
Types of training programmes followed at JK:-
1) Need based training.

2) Induction training.
3) On the job.
4) Of the job.
5) In house training.
The man power at JK is huge and capable. The workers are very skilled so the company
is capable of accepting and performing any type of the orders and executing it before schedule
and to the expectations of the customers.
STYLE:
The style in an organization, according to Mckinsey’s frame work refers to the

“Reporting Relationship” between the superiors and the subordinates. It also conveys the flow
of communication between them.
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Referring to the organization structure of JK industries Ltd, (VTP Mysore) it can be said
that the company is following the type of “Line and staff” organization.
Reporting relationship at JK industries Ltd follows a formal channel. The

communication follows the routes formally laid down in the organization structure and
deliberately associated with the status or the position of the sender and the receiver. Both
downward and upward communication follows the path of formal channel.
STRATEGY:
The integrated vision and direction of the company, as well as the manner in which it
derives, articulates, communicates and implements that vision and direction.
The main strategy is to ensure maximum utilization of available resources. For this
purpose the company believes in mainly promoting from with in the organization and there by
encourages its people to strive for higher management stability. The set up also allows them to
take the advantage of common pool of technical and marketing talent of the highest quality.
SUB strategy and the functional strategies.
Waste elimination strategy:
The company insists on education on a continues basis both for the workers and the staff.
Total productivity maintenance (TPM) and quality circles are practiced from the lowest level, as
a management seeks continuous improvement from workers in every record. There exists
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clarity of vision and goal with the company as a result of which the productive efficiency of the
company goes up.
SYSTEM:
System refers to the procedure and the process such as the information system,
manufacturing process, budgeting and control process. The managerial function of controlling
or the measurement and correction of the performance in order to ensure that the enterprise
objectives and plans devised to attain them are being accomplished. It is a function of every
manager from of every manager from the president to the supervisor.
The JK has a wide scope and covers all most all areas of Human Resources, mainly it
covers the following areas:
a) Payroll package:
It has provision for deductions with respect to PF, VPF, HRA, Special allowance,
etc. Leave encashment, arrears, over time, loan details, deductions etc..
b) Attendance:
Attendance recording system is maintained daily, covering issue like daily attendance,
late punching reports, employees who have omitted to punch out details, pertaining to man-hour
utilization, obsentism etc.
c) Leave Maintenance:
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It is a part of time keeping, and has provisions for issues like, daily updating leave
cancellation, punching omissions, compensatory off, out door duty, indoor duty, leave details,
leave credit or change.
d) Personnel/HR:
It has a robust HR practices like Recruitment, selection, individual and career

development path succession plan, performance management system, talent management
system, training and development, etc.
STAFF:
The person in an organization is called staff. Here it is very useful to think not about
individual personality but corporate demographics.
An analysis of the corporate demographics of it reveals that most of the worker and
staff belong to the 30-40 age groups. As such they are very active and learning oriented. The
workers are quality conscious and aid the management to produce better quality of products, by
co-operating with them in the most efficient manner.
Almost all the employees are punctual and rate of accidents is very less in the staff as
compared to the workers. The workers are provided with the uniform this is the important way
of ensuring equality among the workers and there by aiding the concept of team work and
interdependence, for better production both qualitative and quantitatively.
The employees demographic are follows:
 Workers - 1721
 Executive - 368
 Staff - 70
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 Badly workers - 1090

 Contractors - 1360
Total number of employees - 4609.
Duties and responsibilities of technical staff:
 To maintain safe working conditions.

 To maintain quality systems.
 Operation and maintenance of equipment.
 Issue of spares.
 Following statutory norms like factories act, boilers act.
SHARED VALUES:
The values that go beyond, but might well include simple goal statement in determining
corporate destiny. To fit the concept, these values must be shared by most people in the
organization.
JK is a company that insist the following some core values most of these can be found in the
companies vision statements as well as quality policy. The company considers employees are
the greatest of its assets. Production and productivity is a derivative of employee welfare.
JK industries Ltd.., takes initiative to do social project such activities like literacy program
for village people. Conduct medical camps in villages, digging bore wells in villages, building
bus shelter and employee welfare program. Like wise the company is always willing to
participate in welfare activities.
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The company’s focus on the customer and creating culture of interdependence are embodied
in its statements of vision and quality. While the concept of TQM, TPM and QC are visible in
the form of slogans, posters and well meaning cliche’s. The first serious attempt to
institutionalize has started.
Thus some of the values that are shared by the both employees and the management at JK
industries limited is as follows;-
• Product and service quality.

• Productivity efficiency.
• Punctuality.
• Compensation.
• Employees and societal welfare.
• Customer satisfaction.
• Team work concept.
• TQM (Total Quality Management)
• TPM ( Total productivity maintenance)\
• Quality circle.
4. SWOT ANALYSIS:
SWOT analysis stands for strengths, weakness, opportunities, and threats. It is a tool
for auditing and organization and its environment. It is the first stage of planning and helps
marketers to focus on key issues. Strengths and weakness are internal factors. Opportunities
and threats are external factors.
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STRENGTHS:
 Strong brand image.

 Being quality oriented rather than quantity oriented.
 Large product width & line (product mix).
 Economies of scale due to optimum capacity utilization.
 Collaboration with Vikrant, know for their technological superiority bringing
together performance, economy, durability & comfort.
 Strong financial position.
 Very large distribution channel.
 Reasonable price.
 Effective employee in JK.
 Well-knit distribution network.
 Exports to more than 75 countries in the world.
 It has 21% market share in India.
 Tyre is easily available and serviced even in remotest parts of the country.
WEAKNESS:
 Less brand awareness.

 Target will be fixed by the head office.
 It doesn’t manufacture two wheelers tyres.
 The company is incurring more cost compare to other tyre manufacturer.
 Low productivity of labor, in comparison to world standards.
OPPORTUNITIES:
 High growth potential for its exports as demand for JK tyres in Europe increasing.
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 Indian customers are mainly value buyers demanding a better overall package JK is
poised in a better position than other players in the market to capitalize on the
opportunity.
 Robust economic growth, particularly vehicle production growth resulting in healthy
demand growth for tyres in the future.
 Excellent brand equity of Indian cross ply/bias truck tyres in the world market.
 Export brand inculcated enabling participation of small car is expected to give a
thrust of auto component and tyre segment.
 The company has the knowledge of entire tyre industry and businesses conditions
prevailing in the market. So it can easily start two wheeler tyre productions.
THREATS:
 Faster pace of opening up of the economic will increase import of tyres.

 Entry of new players with newer & better technologies in the small car tyre segment.
 So many close competitors like Apollo, Birla, Ceat, Modi, etc
 Reduction in important duties will lead to high volume of tyre imports.
 Confessional import tariffs for countries like china and South Korea under regional
trade agreement will lead to additional imports.
 Competition posed by the national and international market.
 Government policies about the tyre industry.
 Multinationals with financial muscle setting up of manufacturing facilities in the
country.
ANALYSIS OF FINANCIAL STATEMENTS:
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PARTICULARS SEPT 04- SEPT 05- SEPT 06- SEPT 07- SEPT 09-
05 06 07 09 10
SOURCE OF FUNDS
Total Share Capital 37.46 37.46 30.79 30.79 41.06
Reserves 818.76 745.14 560.93 503.13 534.77
Net worth 856.22 782.6 591.72 533.92 575.83
Secured loans 656.51 671.28 724.77 686.82 850.31
Unsecured Loans 94.16 159.22 219.1 228.13 251.49
Total Debt 750.67 830.5 943.87 941.95 1101.8
TOTAL LIABILITIES 1606.89 1613.1 1535.59 1448.87 1677.6
05 06 07 09 10
APPLICATION OF FUNDS
Gross block 1884.26 1938.72 2084.22 2156.07 2270.3
Less: Accumulated depreciation 677.15 764.74 860.03 957.27 1101.5
Net Block 1207.11 1173.98 1224.19 1198.9 1168.8
Working Capital Progress 16.43 61.63 22.51 20.34 240.19
Investments 252.26 250.04 61.46 62.6 89.75
Inventories 178.17 244.03 368.59 502.85 414.45
Sundry Debtors 449.52 411.79 477.89 435.52 442.47
Cash& Bank balance 26.83 30.22 33.03 23.87 39.27
TOTAL CURRENT ASSETS 654.52 686.44 879.51 962.24 896.19
Loans & Advances 112.71 134.92 144.14 155 217.54
Fixed Deposits 11.4 5.89 6.29 5.35 2.72
TOTALCA , LOANS & 778.63 826.85 1029.94 1122.59 1116.4
ADVANCES
Deferred Credit 0 0 0 0 0
Current liabilities 641.54 686.44 784.08 927.78 883.08
Provisions 21.42 25.9 27.59 35.9 59.77
Total CL&Provissions 662.96 712.34 811.67 963.68 942.85
Net Current Assets 15.42 12.94 9.16 8.22 5.21
Miscellaneous Expenses 15.42 12.94 9.16 8.22 5.21
TOTAL ASSETS 1606.89 1613.1 1535.59 1448.87 1677.6
Contingent Liabilities 121.77 131.32 84.74 78.94 117.41
Book Value 228.57 208.92 192.15 173.38 140.24
Profit & loss a/c Information:
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05 06 07 09 10
INCOME
Sales Turnover 2237.5 2383.82 2952.69 3195.71 5490.32
Excise Duty 306.85 305.27 362.92 400.64 556.21
Net Sales 1930.65 2078.55 2589.77 2795.07 4934.11
Other Income 15.98 26.53 12.87 12.16 22.79
Stock Adjustments -71.92 28.86 110.33 127.51 -73.23
TOTAL INCOME 1874.71 2133.94 2712.97 2934.74 4883.67
EXPENDITURE
Raw Material 1213.08 1452.88 1941.93 2013.1 3476.04
Power& Fuel Cost 97.52 111.08 139 139.79 246.53
Employee Cost 138.84 142.66 155.7 176.72 294.99
Other Manufacturing Expenses 43.24 58.79 73.87 68.65 84.7
Selling & Administration 180.79 184.86 197.31 219.47 376.93
Expenses
Miscellaneous Expenses 59.79 44.03 27.84 45.39 0.12
Preoperative Expenses 0 0 0 0 0.12
Capitalized
TOTAL EXPENSES 1733.26 1994.3 2535.65 2663.12 4479.31
05 06 07 09 10
Operating Profit 125.47 113.11 164.45 259.46 381.57
PRDIT(EBDIT) 141.45 139.64 177.32 271.46 404.38
Interest 85.51 67.33 79.06 91.62 244.24
PBDT(EBDT) 55.94 72.31 98.26 180.52 160.12
Deprecation 61.34 63.65 70.93 75.44 148.49
Other Written Off 5.21 5.7 5.68 4.35 4.86
Profit Before Tax -10.61 2.96 21.65 100.73 6.77
Extra-Ordinary Item 0.43 36.9 0.15 0.22 0
PBT(Post Extra-Ordinary Item) -10.18 39.86 21.8 100.75 6.77
Tax 4.29 -13.32 4.75 34.02 22.86
Reported Net Profit 12.19 16.76 17.05 66.73 19.05
Total Value Addition 520.18 541.42 593.72 650.02 1003.27
Reference Dividend 0 0 0 0 0
Equity Dividend 7.49 7.49 7.7 8.32 11.09
Corporate Dividend Tax 0.98 1.05 1.08 1.41 1.88
Shares In Issue 374.59 374.59 307.95 307.95 410.59
Earning Per Share (Rs) 3.25 4.47 5.54 21.67 4.64
Equity Dividend 20 20 25 27 27
Book Value 228.57 208.12 192.15 173.38 140.24
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6. LEARNING EXPERIENCE:
During my visit to JK TYRE, I learnt extensively about company, its products, and their
mission; vision etc. a brief study was conducted at their various departments like marketing,
finance, production, human resource, vigilance, welfare, safety, productivity, dispatch,
management information system etc. each department has its own specific function to do. Some
of the departments contain some sections in it for example the finance department consists of
the establishment section, internal audit section etc in the mean time I also come across the
company’s different strategies.
I gathered information about the recruiting process. I was also briefed about how the final
settlement will be done when employee leaves the organization. In JK tyre & industry the
human resource department takes care of functions like training and developing the employees
of the company, training of the management trainees, providing the support in the arrangement
of the functions like seminars, workshops, conferences, etc
From the study we came to know that management can play a vital role in every
organization, when the management is efficient in its performance, there is absence of lockout,
strike, fear of loss & other managerial problems.
I also learned the people’s attitude towards his job & organization plays a major role in the
success of every organization. The people should feel their work as their own work & should
maintain good attitude towards their job, this attitude will provide more support to the
development of the organization, if the people who are appointed by the company work for the
sake of getting salary & other benefits then it will results in inefficiency & failure of
organization.
It was really a very good experience to carry out my in project work at JK industries because
it gave a clear idea about the working of each department practically.
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INTRODUCTION
JK Tyre a division of JK Industries is the Flagship Company under the umbrella of JK

organization. The advent of JK Organization on the industrial landscape of India almost
synchronizes with the beginning of an era of industrial awareness and endeavor for self-reliance
and the setting up of a dynamic Indian Industry. This was way back in the middle of the 19th
century and the rest, that followed is history.
JK Organization has been a forerunner in the economic and social advancement of India.
It always aimed at creating job opportunities for a multitude of countrymen and to provide high
quality products. It has striven to make India self reliant by pioneering the production of a
number of industrial and consumer products, by adopting the latest technology as well as
developing its own know-how. It has also undertaken industrial ventures in several other
countries.
JK Organization is an association of industrial and commercial companies and

charitable trusts. Its member companies, employing nearly 50,000 persons are engaged in the
manufacture of variety of products and in diverse fields of commerce.
Trusts are devoted to promoting industrial, technical and medical research, education,
religious values and providing better living and recreational facilities with the spirit of social
consciousness uppermost in mind, JK Organization is committed to the cause of human
advancement.
JK Tyre increased production and sales volumes. It out performed the industry by
registering a growth of 4% against a negligible growth of 0.2% of the industry, in the 4
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wheelers tyre segment. In the commercial tyre segment, this constitutes 70% of the Rs. 10,000
crores in Indian tyre markets. The company holds number one position in the country. “JK
Tyre” along with “Vikrant Tyre” further improved the market share to 23% in the truck / bus
category.
JK Tyre continues to be the dominant player in the passenger car radials and his stepped
up its production capacity during the year. The current year will have full benefit of increased
production of passenger car radials.
JK Industries achieved these results in the wake of reduction in tyre prices during the
year on the one hand and increase input costs, particularly in the petro-based raw materials on
the other. Its export turnover was Rs. 140 crores with exports to 75 countries across the 6
continents. JK Tyre is a preferred brand in many leading international markets. “JK Tyre”
along with “Vikrant Tyre” maintained its leadership, both in the domestic as well as export
markets. With a view to cater to the growing demand for JK Tyre in the world markets; the
company has entered into an alliance with an international manufacturer to out-source tyre for
export.
The other divisions of the company are Sugar and Agri-genetics have also performed
well during the year. JK Sugar has recorded a massive increase of 35% in production. Sale of
power of UP Power Corporation has also increased by 30%. Besides, JK Sugar has completed
the expansion of its Sugar Mill to 4300 TCD. With substantial investments having made in the
cane development, JK Sugar is poised for further growth in the years ahead.
JK Agri-genetics, an established player in the Hybrid Seed industry has continued to

show encouraging results. The company has stepped up investment in Research and
Development Centre at Hyderabad to bring out technologically superior products in major
agricultural crops. In addition, a new R & D centre has also been set up at Jaipur, which will
help JK Seeds to serve over 6 lakh formers across 9 states covering average of over 2 million
acres of farming land.
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NATURE OF THE BUSINESS CARRIED:
JK Industries is one of the tyre manufacturing companies in India, which is engaged in

designing, development, manufacturing, automotive tyres tubes, flaps, and camel back. JK
industries produce all type of tyres, which are used for four wheelers and other.
STATEMENT OF THE PROBLEM:
The working capital is the most critical problem in financial management. Importance
of working capital management stems from two reasons viz.,
• A substantial portion of total investment is invested in current assets.

• Level of current assets and current liabilities will change quickly with the variation in
sales.
• Rising raw material prices of natural rubber and carbon black.
• Increase in competition due to entry of other players.
Hence the study of working capital position in the company is needed to understand the
concepts adopted by the top management.
OBJECTIVES OF THE STUDY:
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• To understand and analyze the working capital position of JK Tyres during the period
of 2004-05 to 2009-10.
• To study various source of funds used for financing the working capital of JK Tyres.
• To study the efficiency and effectiveness of working capital management of the
company.
• To calculate the operating cycle of JK Tyres for the above period.
• To analyze the rank correlation between liquidity and profitability position of JK Tyres
for the above period.
SCOPE OF THE STUDY:
• The study gives fair idea of improvement in efficiency of working capital

management.
• This study will help JK Tyres Ltd., to have proper control over the components of
working capital and mange of efficiency.
METHODOLOGY:
The methodology used in the present study entitled “To know the efficiency of working
capital management and working capital policy of JK Tyres Limited” given in this chapter.
This is prepared with the help of both secondary and primary data collected.
DATA COLLECTION METHOD:
In order to fulfill the objectives of the study, the data was collected from primary and
secondary sources.
Secondary Sources
• Annual report of 2001 to 2010
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• Journals, magazines
• Newspapers
• Websites
• Text books of financial management
Primary Sources
• Discussion with accounts manager and other department’s executives.

• By personal observation of the activities of organization.
LIMITATIONS OF THE STUDY:
The study is purely of academic interest. The inexperience makes the analysis less
precious when compared to professional analysis. Hence conclusions from analysis of
statement are not sure indicators.
• The study in this project does not solve into the problems of capital budgeting, fund
flow analysis, tax and finance planning, foreign exchange, management and treasury
operations.
• The study is limited to the study of published financial statements.
Through a complete attempt has been made to include all the factors affecting the case
study putting into writing, there is every possibility of some factors being left out due to the
shortage of time and some due to the policy of the management to keep them confidential.
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ANALYSIS AND INTERPRETATION:
The findings of the present study titled, “A study on working capital management at JK
Tyres Ltd.,” is presented and discussed in this chapter.
INTRODUCTION TO WORKING CAPITAL:
Working capital may be regarded as the life blood of business. Working capital
management is an important aspect in the study of financial management. The goal of working
capital management is to maintain the firm current assets and liabilities in such a way that a
satisfactory level of working capital is maintained. This is so 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. The interaction between current assets and current liabilities is
therefore, the main theme of the theory of working capital management.
CONCEPTS OF WORKING CAPITAL:
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The working capital can be classified into two concepts;
• Gross working capital

• Net working capital
GROSS WORKING CAPITAL:
It refers to the firm’s investment in current assets. Current assets are the assets which
can be converted into cash within an accounting year (generating cycle) and include cash, short-
term securities, debtors, (accounts receivable books debts) bills receivable and stock
(inventory).
NET WORKING CAPITAL:
It refers to the difference between the current assets and current liabilities. Current
liabilities are those claims of outsiders, which are expected to major for payment within an
accounting year and include creditors (accounts payable), bills payable, and outstanding
expenses. Net working capital can be positive or negative. A positive net working capital will
arise when current assets exceeds current liabilities. A negative net working capital occurs
when current liabilities are in excess of current assets.
Management of working capital encompasses the following problems
• Problem of deciding the optimal level of investments in current assets.

• Problems of deciding the optimal mix of short-term funds in relation to long term
capital.
• Location of sources of short-term financing.
• The study of working capital management is incomplete unless we have an overlook
on the management of current liabilities.
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DEFINITION OF WORKING CAPITAL:
Working capital can be defined as the excess of current assets over current liabilities.
Current assets are those assets, which can be converted into cash within the current accounting
period and current liabilities are the debts of the firm that have to be paid during the current
accounting period or within a year.
According to Prof. Harry G. Guthaman and Hebert I Dangall, working capital is the
excess of current assets over current liabilities.
WORKING CAPITAL MANAGEMENT:
Working capital management refers to the administration of all aspects of current assets,
namely cash, marketable securities, debtors and stock and current liabilities.
COMPONENTS OF WORKING CAPITAL MANAGEMENT:
1. Management of Cash and Marketable Securities

Cash is the most important current assets for the operation of the business. Cash is
the basic input needed to keep the business running on a continuous basis; it is also the
ultimate output excepted to be realized by selling the service or product manufactured
by the firm. The management of cash raises similar issues to those raised in relation to
the management of stocks. There are costs involved in holding too much cash and also
costs in holding too little cash (e.g. interest costs, lost goodwill etc.). Thus, there is a
need for careful planning and monitoring of cash flows overtime.
2. Receivables Management
The term receivables mean the amount due from the debtors. They also include the
bills receivables. An efficient management of these receivables in necessary because it
involves a large amount of investment in current assets. It is funding that 1/3rd of the
current assets and nearly 11% to 15% of total assets are constituted by these receivables.
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In order to keep current customers and attracts new ones. Most manufacturing firms
find it necessary to offer trade credit. Trade credit thus creates receivables as book debts,
which the firm accepts to collects in near futures.
3. Inventory Management
Inventories constitute the most significant part of current assets of a large majority of
companies in India. On an average, inventories are approximately 60% of current assets
in public limited companies in India. Because of the large size of inventories
maintained by firms, a considerable amount of funds in required to be committed to
them. It is, there fore, absolutely imperative to manage inventories efficiently and
effectively in order to avoid unnecessary investment. A firm neglecting the
management of inventories will be jeopardizing its long-run profitability and may fail
ultimately. It is possible for a company to reduce its levels of inventories to a
considerable degree, e.g. 10% to 20% without any adverse effect on production and
sales, by using simple inventory planning and control techniques. The reduction in
‘excessive’ inventories carries a favorable impact on a company’s profitability.
OBJECTIVE-1
• TO UNDERSTAND AND ANALYZE THE WORKING CAPITAL POSITION OF

JK TYRES DURING THE PERIOD OF 2001-02 TO 2009-10 (18 MONTHS)
ANALYSIS OF WORKING CAPITAL:
The financial management always tries to maintain an adequate working capital at every
time, so as to carry on day-to-day operations of the firm successfully and economically. These
are dangers in having too little or too more working capital. Therefore a through scouting into
the current assets and current liabilities is to be made to control the working capital. The
working capital balance of a concern has a positive value but often due to the intensive user of
working capital, if it exceeds the sources thus indicating a deficit. These deficits must be
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detected and set off immediately. This process is known as analysis of working capital. It is a
test of short-term solvency.
The analysis of working capital becomes necessary to know;
• If the management is using the working capital effectively.

• If the amount of working capital is adequate.
• If the current financial position is improving.
The needs for the analysis are
• To maintain adequate working capital at every time.

• To minimize the cost of short term financing.
• To choose from the various sources of short term finance and employ them in times
of need.
• To asses the effectiveness of the management of current assets.
• To study the trends in working capital positions.
• To maximize the earning per share of the equity shareholders.
ANALYSIS OF WORKING CAPITAL AT JK TYRES:
Important functions of the management and the prime duty of the finance department as
to maintain an optimum level of working capital has got such an important position because of
its nature of revealing the clear cut position of the liquidity of the firm.
Though there are several tools of analyzing working capital, the below mentioned are
note worthy.
• Statement of changes in working capital.
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• Working capital ratios.
STATEMENT OF CHANGES IN WORKING CAPITAL AT JK TYRES:
Statement of changes in working capital shows the trend to the changes in working
capital. This statement is prepared with the help of current assets and current liabilities of two
periods. It is comparative statement that is used to calculate increase or decrease in working
capital. It also indicates the overall effects of the changes, which shows the trend in changes of
working capital and its components.
Statement of changes in working capital at JK Tyres shows the changes in working

capital over the period of 2001-02 and 2009-10 (18 months). The net working capital of the
company has Rs. 200.95 crores from year 2002-03. It decreased to Rs. 127.14 crores from year
2003-04, and again decreases to Rs. 111.46 crores from year 2004-05. And in the year 2005-06
there was increase the working capital of Rs. 216.66 crores. There is an increase of Rs. 251.67
crores in the working capital over the period of 5 years. The main reasons for this are increase
in the receivables, inventory and cash. But 2007-08 (18 months) it’s decreased to Rs. 170.88.
The sales of the company also increased from Rs. 3195.71 crores to Rs. 5490.32 crores. It
made the company to have a huge stock as inventory and receivables. These things mainly
changes in the working capital requirements over the period of time. .
WORKING CAPITAL OF JK TYRES UNDER GROSS CONCEPT:
It refers to the firm’s investment 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 (accounts receivable or book debts) bills receivable and stock.
The gross working capital of the JK Tyres in the year 2006-07 was Rs. 117.24 crores
and in 2007-09 was Rs. 1113.73 crores which shows that the gross working capital is increased
due to more investment on current assets.
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Table 3.6 shows the working capital of JK Tyres under Gross concept.
WORKING CAPITAL OF JK TYRES UNDER NET CONCEPT:
It refers to the difference between the 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 (accounts payable), bills payable, and outstanding
expenses.
The net working capital of JK Tyres in the year 2006-07 was Rs. 153.56 crores and in
2007-09 (18 months) was Rs. 170.88 crores. There is an increase of Rs. 17.32 crores which
indicates the company can meet its short term obligations and enjoys the liquidity position.
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Statement of Changes in Working Capital for the year 2002-03 when compared
To 2003-04.
(Rs. In crores)
Particulars 2002-03 2003-04 Increase Decrease
Current Assets
Inventories 187.07 211.31 24.24 0
Sundry Debtors 342.49 412.59 71.1 0
Cash and Bank 39.07 25.32 0 13.75
Balance
Loans and Advances 148.13 137.14 0 10.99
Total Current Assets 716.76 786.36
(A)
Current Liabilities (B)
Current Liabilities 545.19 585.41 0 40.22
Net Working Capital 171.51 200.95 0
(A-B)
Increase in Working 29.38 0 0 29.38
Capital
Total 200.95 200.95 94.24 94.24
To 2004-05.
(Rs. In crores)
Current Assets
Inventories 211.31 178.17 0 33.14
Sundry Debtors 412.59 449.52 36.93 0
Cash and Bank Balance 25.32 38.23 12.91 0
Loans and Advances 137.14 110.38 0 26.76
Total Current Assets (A) 786.36 776.3
Net Working Capital (A- 200.95 127.14 0
B)
Increase in Working 0 73.81 73.81 0
Capital
Total 200.95 200.95 123.65 123.65
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To 2005-06
(Rs. In crores)

Current Assets
Inventories 178.17 244.03 65.86 0
Sundry Debtors 449.52 412.17 0 37.35
Cash and Bank Balance 38.23 36.11 0 2.12
Loans and Advances 110.38 120.18 9.8 0
B)
Increase in Working 0 15.68 15.68 0
Capital
Total 127.14 127.14 91.34 91.34
To 2006-07.
(Rs. In crores)
Current Assets
Inventories 244.03 368.59 124.56 0
Sundry Debtors 412.17 478.07 65.9 0
Cash and Bank Balance 36.11 39.32 3.21 0
Loans and Advances 120.18 127.54 7.36 0.33
B)
Increase in Working 105.2 0 0 105.2
Capital
Total 216.66 216.66 201.03 201.03
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To 2007-09.
(Rs. In crores)
(18 Months)
Current Assets
Inventories 368.59 502.85 134.26 0
Sundry Debtors 478.07 435.52 0 42.55
Loans and Advances 127.54 155 27.46 0
Net Working Capital (A-B) 216.66 153.56 0
Increase in Working Capital 0 63.1 63.1
Total 216.66 216.66 224.81 224.81
Statement of Changes in Working Capital for the year 2007-09 (18 months) when
compared to 2009-10.
(Rs. In crores)
(18 Months)
Current Assets
Inventories 368.59 502.85 134.26 0
Sundry Debtors 478.07 435.52 0 42.55
Loans and Advances 127.54 155 27.46 0
Net Working Capital (A-B) 216.66 153.56 0
Increase in Working Capital 0 63.1 63.1
Total 216.66 216.66 224.81 224.81
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Working Capital at JK Tyres under Gross Concept:
(Rs. In Crores)
Particulars 2007-09 2009-10

Current Assets
Inventories 502.85 414.42
Sundry Debtors 435.52 442.47
Cash Bank Balance 23.87 39.27
Loans & Advances 155.00 217.54
Gross Working Capital 1117.24 1113.73
Working Capital at JK Tyres under Net Concept:
(Rs. In Crores)
Particulars 2007-09 2009-10

A. Gross Working Capital 1117.24 1113.73
Current Liabilities
Liabilities 927.78 883.08
Provisions 35.90 59.77
B. Current Liabilities 963.68 942.85
Net Working Capital (A – B) 153.56 170.88
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OBJECTIVE-2
• TO STUDY VARIOUS SOURCES OF FUNDS USED FOR FINANCING THE

WORKING CAPITAL OF JK TYRES LIMITED.
TRADE CREDITS:
Trade credit refers to the credit extended by the supplier of raw materials in a normal
course of business. According to trade practices cash is not paid immediately for purchase but
after an agreed period of time. At present day commerce is built upon credit arrangement of a
concern with its suppliers is an important source of short term finance.
The JK Tyres limited also uses trade credit period of 10-20 days from its tyre suppliers.
The cash payment will be done 15 days after the procurement of tyre.
LOANS AND ADVANCES:
Loans and advances are another type of working capital source. The JK Tyres Ltd., also
uses loans and advances to finance its working capital.
The loans raised by the company are short term working capital loans. The company
usually raises its funds from the Bank of India, Canara Bank, Corporation Bank, UTI Bank and
SBI Bank. It also has over draft facility from the above banks. The loans takers by the
company are for 2-5 years repayable as half yearly or yearly installment.
DEFERRED INCOME:
Another source used by JK Tyres Ltd., is deferred income or advance collected from
dealers of the company. The company follows a policy of collecting advance before
dispatching the goods to the dealers. The dealers have to pay an advance amount with the order
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they place in the company. The advances thus collected by the company are used to meet the
day to day requirement of the company.
ACCRUED EXPENSES:
Accrued expense represents a liability that a firm has to pay for the service, which it has
already received. They are spontaneous interest free sources of financing the most important
component of accrued are wages and salaries, tax’s and interest.
The JK Tyres Ltd., use accrued expenses as a source of working capital. It has a policy
of paying the workers and other employees of the company monthly. The workers in the factors
are paid according to the amount of work done by the workers.
The cash credit facility is similar to the over draft agreement. The JK Tyres Ltd., has its
cash credit facility in SBI, UTI Canara Bank. The company can borrow funds up to sanctioned
limit of credit periodically when it is need of fund. The repayment will be done through the
credit account only. Usually cash credits are transformed upon the security of current assets.
OBJECTIVE-3
• To study the efficiency and effectiveness of working capital management of the

company.
• Ratio Analysis
A ratio is a statistical yardstick that measures the relationship between the two
concerned terms. The important of the ratio analysis lies in the fact that it presents facts
on a competitive basis and enables the drawing of influences regarding the performance
of the given terms.
With the help of ratios the following can be determined;
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• The overall operating efficiency and performance of the company.

• The efficiency with which the firm in utilizing its various assets in generating
revenues.
• The ability to the firm to meet its current obligations.
WORKING CAPITAL ANALYSIS THROUGH RATIOS OF JK TYRES
The liquidity position of JK Tyres can be determined by application of the following ratios.
The financial executive to check upon the efficiency with which working capital is being used
in the enterprise can use ratio analysis of working capital following are the important working
capital ratios.
• Leverage Ratios
 Total debt ratio
 Debt equity ratio
 Coverage ratio
• Activity Ratios
 Debtors turnover ratio
 Cash turnover ratio
 Inventory turnover ratio
 Inventory to working capital ratio
 Net assets turnover ratio
 Working capital turnover ratio
 Fixed assets turnover ratio
 Current assets turnover ratio
LEVERAGE RATIOS:
Long-term solvency or leverage ratios convey a firm’s ability to meet the interest costs
and repayment schedules of its long term obligations.
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ACTIVITY RATIOS:
Activity ratios are the ratios calculated to measure the efficiency with which the
resources of a firm have been employed. These ratios are also called as turnover ratios because
they indicate the speed with which assets are being turned over into sales. They help the
management to judge how effectively the facilities available at its command have been utilized.
LEVERAGE RATIOS:
 TOTAL DEBT RATIO:
Debt ratios may be used to analyze the long term solvency of the firm. The firm may be
interested in knowing the proportion of the interest bearing debt in the capital structure.
The debt ratio compares a company's total debt to its total assets, which is used to gain a
general idea as to the amount of leverage being used by a company. A low percentage means
that the company is less dependent on leverage, i.e., money borrowed from and/or owed to
others. The lower the percentage, the less leverage a company is using and the stronger its
equity position. In general, the higher the ratio, the more risk that company is considered to
have taken on.
FORMULA:
TOTAL
TOTAL DEBT RATIO LIABILITIES
TOATAL ASSETS
CALCULATION OF TOTAL DEBT RATIO:
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Years Total Debt Net Assets Ratio

2002-03 850.04 1302.3 0.65
2003-04 838.06 1264.83 0.66
2004-05 750.67 1207.11 0.62
2005-06 830.5 1173.98 0.7
2006-07 943.87 1224.19 0.77
2007-09 914.95 1198.8 0.76
2009-10 1101.8 1168.88 0.94
GRAPH SHOWING TOTAL DEBT RATIO,
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INTERPRETATION:
This ratio indicates percentage of amount with the lender as invested in the current
assets; JK Tyres total debt ratio 0.94 in the year 2009-10 as against 0.76 in the previous year
2007-09. This says that the lenders invest only 0.94 of the net fixed assets. Debt has increased
due to non-repayments.
 DEBT-EQUITY RATIO:
Debt Equity Ratio is also known as External Internal Equity Ratio, it is used to analyze
the long-term solvency of the firm. Debt-Equity ratio expresses the relationship between debt
and equity.
It is also known as external internal equity ratio. It is determined to ascertain soundness

of the long term financial policies of the company.
FORMULA:
DEBT
DEBT EQUITY RATIO
EQUITY
CALCULATION OF DEBT EQUITY RATIO:
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Years Total Debt Net Worth Ratio

2002-03 850.04 912.91 0.93
2003-04 838.06 893.99 0.94
2004-05 750.67 856.22 0.88
2005-06 830.5 782.6 1.06
2006-07 943.87 591.72 1.6
2007-09 914.95 533.92 1.71
2009-10 1101.8 575.83 1.91
GRAPH SHOWING DEBT EQUITY RATIO,
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INTERPRETATION:
The standard ratio for the debt equity mix is 2:1, compared to that of the last year; the debt
equity ratio has increased, which implies that the financial structure of the company is unsound.
This ratio indicates the contribution in the business i.e., 1.91 is the creditor’s contribution is the
business of JK Tyres, that the financial structure of the company is sound
 COVERAGE RATIO:
Coverage ratio is also known as net income to debt service ratio or interest coverage
ratio. It is computed by dividing earnings before interest and taxes by interest charges.
A ratio used to determine how easily a company can pay interest on outstanding debt. The
interest coverage ratio is calculated by dividing a company's earnings before interest and taxes
(EBIT) of one period by the company's interest expenses of the same period
FORMULA:
EBIT
coverage Ratio
INTEREST
EXPENSE
CALCULATION OF COVERAGE RATIO:
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Years EBIT Interest Ratio

2002-03 243.94 155.68 1.57
2003-04 196.88 98.7 1.99
2004-05 141.45 85.51 1.65
2005-06 139.64 67.33 2.07
2006-07 177.32 79.06 2.24
2007-09 271.62 91.01 2.98
2009-10 404.36 244.24 1.65
GRAPH SHOWING COVERAGE RATIO,
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INTERPRETATION:
This ratio indicates the coverage of interest payable from the total profit earned by the
company. As per the table coverage ratio in the 2002-03 is. 1.57, 2003-04 is 1.99, 2004-05 is
1.65, 2005-06 is 2.07, and 2006-07 was 2.24. In the year 2007-09 and 2009-10 are 2.98 and
1.65 respectively it shows the coverage ratio is increased from year to year. These trends show
the company’s debt serving capacity is sound.
 DEBTORS TURN OVER RATIO:
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Debtors’ turnover ratio indicates the velocity of debt collection of the firm. In simple
words, it indicates the number of time the debtors are turned over during a year. Generally, the
higher value debtor’s turnover the more efficient management of debtors/sales or more liquid
are the debtors. Similarly, a low debtor turnover implies inefficient is the management of
debtors / sales and less liquid debtors. But a precaution is needed while interpreting a very high
ratio may imply a firm’s inability due to lack of resources to sale on credit thereby losing sales
and profits. There is no rule of thumb, which may be used as a norm to interpret the ratio, as it
may be different from firm, depending upon the nature of business. This ratio should be
compared with ratio of other firm doing similar business and a trend may also be making a
better interpretation of the ratio.
FORMULA:
TOTAL
SALES
debtors turn over ratio
AVG
DEBTORS
CALCULATION OF DEBTORS TURNS OVER RATIO:
Years Sales Average Ratio

Debtors
2002-03 2315.29 270.49 8.55 Times
2003-04 2077.34 377.54 5.50 Times
2004-05 2257.87 431.05 5.23 Times
2005-06 2383.82 430.84 5.53 Times
2006-07 2952.69 445.12 6.63 Times
2007-09 3195.71 456.7 6.99 Times
2009-10 5490.32 439 12.50 Times
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GRAPH SHOWING DEBTORS TURNS OVER RATIO,
INTERPRETATION:
This ratio indicates the number of times the debtors are collected in a year. In JK Tyres
Ltd., debtors turnover ratio was 8.55 times n 2002-03, it is decreased to 5.50 times in 2003-04
and again decrease to 5.24 times in the year 2004-05 and also decreased to 5.52 times in the
year 2005-06 and it increases to 6.63 times in the year 2006-07 and it increase to 6.99 times in
the year 2007-09 and also increase to 12.50 times in the year 2009-10. The increasing trend
shows the more efficient management of debtors.
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 CASH TURNOVER RATIO
Cash turn over ratio indicates the relationship between sales and cash. This ratio
indicates the extent to which cash resources are efficiently utilized by the enterprise.
They reduce risk for lenders and investors and enable owners, managers and consultants
to increase productivity and business profits. These spreadsheets are bargain priced to provide a
huge return on investment.
FORMULA
TOTAL
SALES
cash turnover Ratio
CASH
CALCULATION OF CASH TURNOVER RATIO:
Years Sales Cash Ratio

2002-03 2315.29 39.07 59.26
2003-04 2077.34 25.32 82.04
2004-05 2257.87 26.83 84.15
2005-06 2383.82 30.22 78.88
2006-07 2952.69 33.03 89.39
2007-09 3195.71 23.87 133.87
2009-10 5490.32 39.27 139.8
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GRAPH SHOWING CASH TURNOVER RATIO,
INTERPRETATION:
The company as a cash turnover ratio was 59.26 in 2002-03 it was increased to 82.04 in
2003-04 and it was decreased to 84.15 in 2004-05 and it was increased to 78.88 in 2005-06 and
again increases to 89.39 in the year 2006-07 and again increase to 133.87 in the year 2007-09
and it was increase to 139.8 in the year 2009-10, which indicates the cash in the firm is being
used efficiently. The increasing the cash ratio is due to increase in total sales.
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 INVENTORY TURNOVER RATIO
Inventory turnover ratio also known as stock velocity is normally calculated as sales /
average inventory or cost of goods sold / average inventory. It would indicate whether
inventory has been efficiently used or not. Inventory turn over ratio indicates the number of
times the stock has been turned over during the period and evaluated the efficiency with which
a firm is able to manage its inventory.
FORMULA:
COST OF GOODS
inventory turnover Ratio SOLD
AVG INVENTRY
CALCULATION OF INVENTORY TURNOVER RATIO:
Years Sales Average Inventory Ratio

2002-03 2315.29 181.99 12.72
2003-04 2077.34 199.19 10.42
2004-05 2257.87 194.74 11.59
2005-06 2383.82 211.1 11.29
2006-07 2952.69 306.31 9.63
2007-09 3195.71 435.72 7.33
2009-10 5490.32 458.65 11.97
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GRAPH SHOWING INVENTORY TURNOVER RATIO,
INTERPRETATION:
This ratio is indicates the efficiency of the firm in selling its product. The inventory
turnover ratio in the JK Tyres was 12.72 times in the year 2002-03, it starts decreases to 10.42
times in the year 2003-04, again it increases to 11.59 times and 11.29 in the years 2004-05 and
2005-06 respectively. In the year 2006-07 and 2007-09 again it decreases to 9.63 and 7.33
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times respectively. In the year 2009-10 it increased to 11.97. As compared to previous years in
the year 2009-10 the inventory turnover ratio is increased, it indicates that efficient utilization
of inventory.
 INVENTORY TO WORKING CAPITAL RATIO:
This ratio indicates the relationship between inventory and working capital. Inventory to
working capital ratio, defined as a method to show what portion of a company’s inventories is
financed from its available cash, is essential to businesses which hold inventory and survive on
cash supplies. In general, the lower the ratio, the higher the liquidity of a company is. However,
the value of inventory to working capital ratio varies from industry and company.
FORMULA:
inventory to working capital INVENTRY
Ratio WORKING
CPITAL
CALCULATION OF INVENTORY TO WORKING CAPITAL RATIO:
Years Inventory Net Working Ratio

Capital
2002-03 187.07 171.57 1.09
2003-04 211.31 200.95 1.05
2004-05 178.17 127.14 1.4
2005-06 244.03 111.46 2.19
2006-07 368.59 216.66 1.7
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2007-09 502.85 153.56 3.27

2009-10 414.45 170.88 2.42
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GRAPH SHOWING INVENTORY TO WORKING CAPITAL RATIO
INTERPRETATION:
In the year 2002-03 the inventory to working capital ratio is 1.09, than it decreased to
1.05 in the year 2003-04 and it increased to 1.4 and 2.19 in the year 2004-05 and 2005-06. In
the year 2007-09 the inventory to working ratio is 3.27, than it decreased to 2.42. It shows the
inventory and working capital is good, the firm is able to pay off its current liabilities, and the
ratio will increases with the standard ratio.
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 NET ASSETS TURNOVER RATIO:
Assets are used to generate sales. A firm should manage its assets efficiently to
maximize sales. Relationship between sales and net assets is called net assets turnover. A firm
ability to produce a large volume of sales for a given amount of net assets is the most important
aspects of it operating performance.
FORMULA:
INVENTRY
net assets turnover Ratio WORKING
CPITAL
CALCULATION OF NET ASSETS TURNOVER RATIO:
Years Sales Net Assets Ratio

2002-03 2315.29 1302.3 1.78
2003-04 2077.34 1264.83 1.64
2004-05 2257.87 1207.11 1.87
2005-06 2383.82 1173.98 2.03
2006-07 2952.69 1224.19 2.41
2007-09 3195.71 1198.8 2.67
2009-10 5490.32 1168.88 4.69
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GRAPH SHOWING NET ASSETS TURNOVER RATIO,
INTERPRETATION:
The net assets turnover of JK Tyres was 1.78 times in the year 2002-03 and decreased in
the year 2003-04. Again it started to increases and in the year 2006-07 it reached to 2.41 times
at 2009-10 it reach to 4.69. It indicates that JK Tyres is producing Rs. 4.69 of sales for a rupee
of capital employed in net assets.
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 WORKING CAIPTAL TURNOVER RATIO:
Working capital turnover ratio indicates the velocity of the utilization of net working
capital. This ratio indicates the number of times the working capital is turned over in the course
of a year. This ratio relates to net current assets to sales.
FORMULA:
workig caiptal turnover TOTALSALES
Ratio NET WORKING

CAPITAL
CALCULATION OF WORKIG CAIPTAL TURNOVER RATIO:
Years Sales Net Working Capital Ratio

2002-03 2315.29 171.57 13.49 times
2003-04 2077.34 200.95 10.34 times
2004-05 2257.87 127.14 17.76 times
2005-06 2383.82 111.46 21.39 times
2006-07 2952.69 216.66 13.63 times
2007-09 3195.71 153.56 20.81 times
2009-10 5490.32 170.88 32.12 times
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GRAPH SHOWING WORKING CAPITAL TURNOVER RATIO,
INTERPRETATION:
The standard norm is 8 times. This ratio indicates that for one rupee of sales the amount
the organization need for net current assets. JK Tyres working capital turnover ratio in the year
2002-03 was 13.49 times; again it decreased to 10.34 times in the year 2003-04. After that it
stated to increase and in the year 2006-07 the ratio is 13.63 times which is lower than the
previous years. It indicates that there is no proper utilization of working capital in the year
2006-07 as compared to previous years. But it increased in 2009-10 at 32.32 times.
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 FIXED ASSET TURNOVER RATIO:
Fixed assets turnover ratio is used to measure the efficiency of utilizing fixed assets.
This ratio indicates the relationship between the sales and net fixed assets. The use of fixed
assets in computing the fixed assets in computing the fixed assets turnover may render
comparison of firm’s performance over period or with other firms meaningless. Therefore,
gross fixed assets may be used to calculate the fixed assets turnover for a meaningful
comparison.
FORMULA:
TOTALSALES
fixed asset turnover ratio
FIXED
ASSEETS
CALCULATION OF FIXED ASSET TURNOVER RATIO:
Years Sales Fixed Assets Ratio

2002-03 2315.29 1302.3 1.78
2003-04 2077.34 1264.83 1.64
2004-05 2257.87 1207.11 1.87
2005-06 2383.82 1173.98 2.03
2006-07 2952.69 1224.19 2.41
2007-09 3195.71 1198.8 2.66
2009-10 5490.32 1168.88 4.69
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GRAPH SHOWING FIXED ASSETS TURNOVER RATIO,
INTERPRETATION:
The standard norm is 5 times. The fixed assets turnover ratio was 1.78 times in the year
2002-03 and it was decreased to 1.64 times in the year 2003-04 and it was increased to 1.87
times in the year 2004-05 and again it was increased to 2.03 times of 2005-06 and it was
increased to 2.41 times in the year 2006-07 and again its increase to 2.66 and 4.49 times in the
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year 2007-09 and 2009-10 respectively. From the year 2002-03 to 2009-10 it is less than 5
times. It indicates excessive investment in fixed assets and under utilization of fixed assets.
 CURRENT ASSETS TURNOVER RATIO:
This ratio indicates the efficiency with which working capital turns into sales. A lower
ratio implies by and large a more efficient use of funds. Thus, a high turnover ratio indicates
reduced lock up of fund in working capital. An analysis of current assets to sales ratio over a
period of time shows overall working capital management of a firm.
FORMULA:
TOTALSALES
current assets turnover ratio
CURRENT
ASSETS
CALCULATION OF CURRENT ASSETS TURNOVER RATIO:
Years Sales Current Assets Ratio

2002-03 2315.29 716.76 3.23
2003-04 2077.34 786.36 2.64
2004-05 2257.87 776.3 2.91
2005-06 2383.82 812.49 2.93
2006-07 2952.69 1013.52 2.91
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2007-09 3195.71 1122.59 2.84

2009-10 5490.32 1116.45 4.91
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GRAPH SHOWING CURRENT ASSETS TURNOVER RATIO,
INTERPRETATION:
The JK Tyres Current Assets Turn over Ratio was 3.23 times in the year 2002-03. It
decreased to 2.64 times in the year 2003-04, again it started to increased and it reached to 2.91
in the year 2006-07, again 2.84 and 4.91 in the year 2007-09 and 2009-10 respectively. This
shows that the company is very quick in converting the sales into liquid assets either as debtors
or as cash.
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FINDINGS:
1. The inventory management system of the company is came down compare to the
previous year.
2. The company is giving more importance to the liquidity aspects.
3. The company is not having the departments like environmental changes and economic
trends etc.
4. The collection from the debtors in the company is less and the company should give
discounts for the payments.
5. The items which are used in working capital is not maintained property.
SUGGESTIONS:
The company is expanding day by day to meet the challenges of competitions in the
market. Thus, with a good infrastructure and efficient human forces the company is moving
towards the success rapidly.
From the above analysis of working capital at JK Tyres Ltd., it is clear that the
management of working capital is satisfactory, but still there is some improvements are required
to be made in the company. Following are the some suggestions to improve the existing system
of working capital followed by JK Tyres Ltd.
• The effort should be made by the company to increase the availability of cash with an
effective control of inflows and outflows.
• The company has to improve its inventory management system. The investment in
inventory should be properly controlled to maximize the production and reduce the cost.
• The JK Tyres should think of creating a separate cell for looking after the credit
collections, which would be responsible for formulation of credit policies, setting up of
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credit terms, analysis, investigation and selection of the customers, collection of debts
follow up.
• The attitude of the management towards working capital needs an urgent change.
Normally they give importance to the liquidity aspect leaving behind the profitability of
funds employed in the form of working capital resulting in an over investment in various
current assets. It is suggested to the managements to consider both the facts of working
capital as equally significant and realize that only proper balance liquidity and
profitability would ensure effective and efficient working capital management.
• Company should adopt frequent decision-making is involved in the management of
working capital; a separate department should be established to assess the environmental
changes and economic trends and their impact on working capital requirements.
• Company should make efforts to increase its collection from debtors by giving discount
for the payments with in the credit period.
• The items contributing to working capital should be identified and managed efficiently.
• A still better working capital management can raise more profits for the company taking
it to the heights of prosperity, which make to reduce the company’s working capital.
CONCLUSION:
The study of working capital management at JK Tyres revealed that the management of
working capital has been greatly responsible for level of profits earned by the firm along with
tremendous expansion activities. The turnover of current assets employed by JK Tyres
efficiently used its working capital funds, which happens to be most important factor for the
running of business enterprise with normal profits. The basic objective of working capital
management is to have a balanced liquidity position. Hence efforts should be made to ensure a
positive trend in the estimation and maintenance of working capital.
Page 88
BIBLIOGRAPHY:
Financial management --- I .M Pandey

Financial management --- M .Y. Khan & Jain
Contemporary financial management --- Kothari & Dutta
www.google.com
www.jktyre.com
www.wikipedia.com
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WORKING CAPITAL MANAGEMENT

History of Tyre industry:

Tyre industry in India:

 1920 to 1935 (multinational trading in tyre)

Inputs for tyre industry:

Functions of the tyre:

JK tyre a division of JK industries is the flagship company under the umbrella of JK

JK organization is an association of industrial and commercial companies and charitable

The advent of JK organization on the industrial landscape of India almost synchronized

2.1. BACKGROUND AND INCEPTION OF THE COMPANY:

1933 First in India to manufacture calico prints-{Juggilal Kamlapat cottons

1949 First in India to manufacture engineering files-J.K. Engineer’s files Bombay.

1959 First in India to set up a continuous process Rayon plant.

1961 First in world to set up a plant for production of Hydrosulphite of soda by

2.2. NATURE OF THE BUSINESS CARIED:

JK industries are engaged in manufacturing and marketing of Automotive tyres

 Cross ply and radial tyres for light commercial vehicles.

2.3. VISSION, MISSION, QUALITY POLICY:

“TO BE AMONGST THE MOST ADMIRED COMPANIES IN INDIA

 To be a customer obsessed company.

 To excel as a value driven organization.

Environment Management System (ISO 14001):

Total Product Management Policy:

JK Tyres are committed to TPM Methodology and strive to achieve:

Through total employee involvement and competency enhancement.

 Increasing environmental awareness amongst their employees and sub contractors.

Environment Management System:

2.4. PRODUCTS AND SERVICE PROFILE:

The products are sold under different brand names.

3. O.T.R (Of the Road):

e) VEM 99 E-3 T/L.

2.5. AREA OF THE OPERATION:

2.6. OWNERSHIP PATTERN:

2.7. COMPETITORS INFORMATION:

Competitors for JK tyres in national market and international market:-

National market International m

1) MRF 1) Bridge stone

2.8. INFRASTRUTURAL FACILITIES:

The company provides all facilities stated by factories act of 1948.

1) SHE (SAFETY, HEALTH, AND ENVIRONMENT)

Sec 21 stands for protection of hazardous. Management is providing its

• Sec 16 stands for drinking facilities.

• Sec 19 stands for rest room facilities

a) First – aid appliances:

• Sec 45 stands for ambulance.

Outside experts for counseling is hired to conduct counseling serious on carries

 JK tyres ranked 16th largest company in the world.

2.10. WORK FLOW MODEL:

Compound at Ban bury:

There are two types of screw extruder

Tyre moulding is a complex type of compression moulding normally cured in presses.

Tyre finishing and inspection:

2.11. FUTURE GROWTH AND PROSPECTUS:

 To be the No.1 tyre company in India.

3. Mc KINSEY 7-S MODEL

• Originally developed as a way of thinking more broadly about the problem of

It consists of department’s such as:-

Production departments, engineering dept, technical dept, production planning dept,

Bankers assisting VTL:-

1) Corporation Bank 5) Indian Bank

JK industries (VTP) Board of directors:-

Types of training programmes followed at JK:-