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INTRODUCTION
An enterprise whether industrial, trading in other acquires two types of assets to run its business. They are fixed assets, which are necessary for carrying the production/business. It is the current assets which are generally referred to as Working Capital. In managing fixed assets the time factor is very important thats why discounting and compounding play a very important role in any capital budgeting decision. But because the time frame of current assets is only one accounting period the time value of money is significant in the management of current assets. Any short run immediate need of the company whether that is need for cash or adjustments to fluctuations in sales can be made only through adjusting the levels of the various components of the current assets. This calls for efficient management of current assets, which forms part of working capital. Working capital management involves not only managing the components of current assets but also the managing the current liabilities. A set-financing pattern is evolved to meet the requirement of a unit for acquisition of fixed assets and current assets. Fixed assets are to be financed by owned funds and long term liabilities raised by a unit while current assets are partly financed by current liabilities and other short term loans arranged by the unit from the bank. Net working capital=current assets-current liabilities

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CONCEPTS OF WORKING CAPITAL There are two concepts of working capital:  Balance sheet concept or traditional concept.  Operating cycle concept. BALANCE SHEET CONCEPT OR TRADITIONAL CONCEPT It shows the position of the firm at a certain point of time. It is calculated on the basis of balance sheet prepared at a specific date. In this method there are two types of working capital.

 Gross working capital  Net working capital

GROSS WORKING CAPITAL It refers to a firms investment in current assets. The sum of the current assets is the working capital of the business. The sum of the current is quantitative aspect of working capital which emphasizes more on quantity than on its quality, but it fails to reveal the true picture of the financial position of the business because every increase in current liabilities will decrease the gross working capital. NET WORKING CAPITAL It is difference between the current assets and current liabilities or the excess of total current assets over total current liabilities. It can also be defined as that part of a firms current asset which is financed with long term funds. It may be either negative or positive. When the current assets exceed the current liabilities, the working capital is positive and vice-versa.

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OPERATING CYCLE CONCEPT The duration or time required to complete the sequence of events right from the purchase of raw materials for cash to the realization of sales in cash is called operating cycle or working capital cycle. The operating cycle consists of three phases: In phase 1, cash gets converted into inventory. This would include purchase of raw materials, conversion of raw materials into work-in-progress, finished goods and terminate in the transfer of goods to stock at the end of the manufacturing process. In the case of trading organization, this phase would be shorter as there would be no manufacturing activity and cash will be converted into inventory directly. The phase will, of course, be totally absent in case of service organizations. In phase 2 of the cycle, the inventory is converted into receivables as credit sales are made to customers. Firms which do not sell on credit will obviously not have phase 2 of the operating cycle. The last phase, phase 3, represents the stage when receivables are collected. This phase completes the operating cycle. Thus, the firm has moved from cash to inventory,receivables and to cash again.

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FIXED/PERMANENT WORKING CAPITAL To carry on business, a certain level of working capital is necessary on a continuous and uninterrupted basis, for all practical purpose, the requirement has to be met as with other fixed assets. Permanent working capital represents the minimum level of raw materials, work-in-progress, finished goods, stores, accounts receivables and cash which are in circulation to ensure continuity of production. Permanent working capital is again divided into two parts: regular working capital and reserve working capital. The portion of fixed working capital which is utilized to carry out the cyclical operation of current assets in the form of conversion of liquid cash into raw materials, raw materials into finished goods, finished goods into debtors and debtors into liquid cash in a continuous manner is known as regular working capital. On the other hand, the portion of fixed working capital, which is preserved for meeting uncertain and emergent working needs (like sudden price hike, abnormal scarcity in times of war, natural calamity, etc) is known as reserve working capital.
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VARIABLE/TEMPORARY WORKING CAPITAL Besides fixed working capital, a business may need additional working capital to meet the growing demands of busy seasons at stated intervals. If the demand for the products of the business goes up at any time it needs additional funds to pay for more materials, labour and other expenses and to meet the requirement of cash balance to be maintained in the changed situation. This additional working capital needed to feed the operating cycle in busy business periods is known as variable or temporary working capital. It is called variable or temporary because the business does not need it always but it is required according to the need of the situation. Generally the importance of variable working capital is more acute in business concern having seasonal market demands. Variable or temporary working capital may be further sub- divided into (a) seasonal working capital and (b) special working capital. The additional working capital required by a concern to carry out its operating activities in busy seasons of high market demands is known as seasonal working capital. Businesses which mostly have seasonal demands of their products like ice- cream, cold drinks, wool and likely products manufacturing concern may need huge amount of seasonal working capital. In other business concerns too the market may rise to the peak in some particular time period. So in all types of business a portion of working capital may be preserved for meeting seasonal needs. On the other hand, the portion of working capital that is needed by a concern to meet the extraordinary requirements of special situations is known as special working capital. This is called special working capital because it is needed in special situations and not in normal circumstances.

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Diagrammatic representation of the concept of working capital

IMPORTANCE OF WORKING CAPITAL  the adequate reserve of working capital ensures a steady flow of raw materials to the production process.  The adequate reserve of working capital indicates the good solvency position of the concern and helps it to get loan from the market at favorable terms.  The adequate stock of working capital makes it possible for a concern to purchase the trading goods in cash and cash purchase always carries the benefit of getting cash discount.  A strong working capital base is probably the only remedy to
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overcome the odd situations like dull market conditions, scarcity of raw materials and other components in case of any emergency, sudden market fluctuations, etc. A business concern can exploit the market opportunities with the help of adequate working capital. The regular flow of adequate working capital makes possible efficient use of fixed assets, reduces wastage, ensures quick replying of current assets, and establish a well- tuned working environment. A quick rotation of working capital cycle and an efficient management of working capital reduce cost and increases production and sales. The combined effect of all these favorably add to the profitability of the concern. The adequate amount of working capital and its quick rotation increases profit. The rate of dividend of the shareholders also increases as a result of such increase in profit. Sufficient working capital helps in research and development to face the present era of cut throat competition and quick technological advancement.

DETERMINANTS OF WORKING CAPITAL

The total working capital requirement is determined by a wide variety of factors. It should be, however, noted that these factors affect different enterprises differently. They also vary from time to time. In general, the following factors are involved in a proper assessment of the quantum of working capital required:GENERAL NATURE OF BUSINESS: The working capital requirements of an enterprise are basically related to the conduct of the business. According to the nature of business they have to maintain a sufficient amount of cash, inventories and book debts. The industrial concerns require fairly large amounts of working capital though it varies from industry to industry depending on their assets structure. PRODUCTION CYCLE: Another factor which has a bearing on the quantum of working capital is the production cycle. The term production or manufacturing cycle refers to
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the time involved in the manufacture of goods. It covers the time-span between the procurement of raw materials and the completion of the manufacturing process leading to the production of finished goods. To sustain such activities the need of working capital is obvious. BUSINESS CYCLE: The working capital requirements are also determined by the nature of the business cycle. The variations in business conditions may be in two directions: (i) upward phase when boom conditions prevail, and (ii) downward phase when economic activity is marked by a decline. During the upswing of the business activity the need of working capital is more as opposed to the downward phase of the business. PRODUCTION POLICY: The requirement of working capital also depends on the production policy of the firm. In manufacturing concerns having mostly seasonal demand for the product the production policy is a significant determinant of working capital. CHANGES IN PRICE LEVEL: General increase in price level increases working capital need of a firm because the firm has to pay more for maintaining the previous level on working capital GROWTH AND EXPANTION: As a company grows, it is logical to expect that a larger amount of working capital will be required. The critical fact is however, is that the need for increased working capital funds does not follow the growth in business activities but precedes it. AVAILABILITY OF RAW MATERIALS: In case raw materials are easily available on soft terms the firm does not require maintaining a huge inventory of raw materials. Such a firm does not require blocking up huge amount of working capital for this purpose. On the contrary if raw materials are scarce and its supply is irregular and seasonal in nature the firm needs to store a reasonable quantity of raw materials in hand. The working capital need of such a firm is significantly high. DIVIDEND POLICY: The payment of dividend consumes cash resources and, thereby, affects working capital to that extent. Conversely, if the firm does not pay dividend but
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retains the profits, working capital will increase. DEPRECIATION POLICY: Depreciation policy also exerts an influence on the quantum of working capital. Depreciation charges do not involve any cash outflow. The effect of depreciation policy on working capital is, therefore indirect. At DSP depreciation is provided on straight line method at the rates specified in schedule- XIV to the companies act, 1956. However where the historical cost of the depreciable asset undergoes a change, the depreciation on the revised amortized depreciable amount is provided prospectively over the residual useful life of the asset based on the rates specified in schedule- XIV to the companies act, 1956. Depreciation on assets installed/ disposed off during the year is provided with respect to the month of addition/ disposal there of.

STRUCTURE OF WORKING CAPITAL

The structure of working capital includes a study of the components of current assets and current liabilities. CURRENT ASSETS: The list of current assets comprises inventories (including raw materials, work-in-progress and finished goods and spares), sundry debtors including receivables, readily realizable securities and tax reserve certificates, short-term investments, accrued incomes, prepaid expenses (not in the nature of deferred charge), cash at bank, and cash in hand. In jocil limited current assets are:  Inventories (stores & spares, raw materials, semi-finished products)  Sundry debtors  Cash & bank balances  Interest receivable/accrued  Loans & advances etc CURRENT LIABILITIES: The list of liabilities includes trade creditors, accounts payable, outstanding or accrued expenses, bank overdraft, outstanding liabilities, shortterm loans and borrowings and certain obligations including different provisions, i.e., provision for taxation, proposed dividend etc.
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In jocil limited current liabilities are:  Sundry creditors  Advances from customers  Security deposit  Other liabilities etc.

FACTORS TO BE CONSIDERED WHILE ESTIMATING WORKING CAPITAL REQUIREMENT

 Total costs incurred on materials, wages and overheads.  The length of time for which raw materials remain in stores before they are issued to production.  The length of the production cycle or work-in-progress, i.e., the time taken for conversion of raw materials into finished goods.  The length of the Sales Cycle during which finished goods are to be kept waiting for sales.  The average period of credit allowed to customers.  The amount of cash required to pay day-to-day expenses of the business.  The amount of cash required for advance payments if any.  The average period of credit to be allowed by suppliers.  Time-lag in the payment of wages and other overheads.

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INVENTORY MANAGEMENT
Inventories constitute the most significant part of current assets for a majority of companies in India. The term inventory refers to the stockpile of the product.

Inventories can be classified as three categories:

1) Raw material: Inputs that are converted into finished products through manufacturing process. 2) Work-in-progress: Semi finished products that require further work to be done before they are ready for sale. 3) Finished goods: Goods which are completely manufacture products and / or ready for sale.

Need to hold Inventories

There are three general motives for holding inventories. 1) The Transaction Motive: Which emphasis the need to maintain inventories to facilitate smooth production and sales operation. 2) The precaution Motive: Which necessitates holding of inventories to guard against the risk of unpredictable changes in demand and supply forces and other factors? 3) The Speculative Motive: Which influences the decision to increase or reduce inventory level to take advantage of price fluctuation.

OBJECTIVES
The objective of inventory management is to determine and maintain the optimum level of inventory management as both excessive and adequate inventories are not desirable. The optimum level inventory lies between the two danger points, excessive and inadequate inventories. The optimum level of inventory should be determined on the basis of trade off between costs and benefits associated with the levels of inventory.
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TECHNIQUES
Attention is given to the basic concepts relevant to the management and control of inventory. The aspects include:  Determination of the type of control required.  The basic economic order quantity.  The re-order point.  Safety stock. As a matter of fact the inventory management techniques are a part of production management. However a familiarity with them is essential for a financial manager in planning and budgeting inventory.

DETERMINATION OF THE TYPE OF THE CONTROL REQUIRED ABC System:

The ABC system is a widely used classification technique to identify various items of inventory for purpose of inventory control. This technique is based on the assumption that a firm should not exercise the same degree of control on all items of inventory. It should rather keep a more rigorous control on items that are (1) most costly, and / or (2) slowest turning while items that are less expensive should be given less control effort. On the basis of cost involved the various inventory items according to the system are categorized into three classes. A = Largest inventory leading to most sophisticated inventory control techniques. B = Midway and deserving less attention than A but more than C leading to employing less sophisticated techniques. C = Small investment with fairly large number deserving minimum attention.

Order Quantity Problem:

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Economic Order Quantity (EOQ) model: After various items are classified on the basis of the ABC analysis, the management becomes aware of the type of control that would be appropriate for each of the three categories of the inventory items. The group A items warrants the maximum attention and the most rigorous control. A key inventory problem particularly in respect of the group An items related to the determination of the size or quantity of inventory. Buying in large quantities implies a high inventory level, which will assure (i) Smooth production / sale operation and (ii) Lower ordering or set-up costs. However it increases the ordering costs and likelihood of interruption in the operation due to stock outs. Thus a trade-off between benefits derived from the availability of inventory and the cost of carrying that level of inventory as to be derived by placing an optimum level of inventory order that minimizes the cost associated with inventory order that minimizes the cost associated with inventory management. The optimum level thus derived is known as Economic Order Quantity. EOQ equates the cost of ordering with the cost of storage of raw materials. Ordering cost: It is difficult quantity this cost, as there are many factors involved. It includes cost of stationery, salaries of those engaged in preparing the purchase orders etc. Cost of storage (or) cost of carrying inventory: This includes the cost of store keeping, interest in capital locked up in stores, the incidence of insurance cost, evaporation etc. For effective material control and to avoid overstocking and under stocking of raw materials, an important requirement is to decide upon various levels of materials. These levels are minimum level, minimum level and re-order level. By taking action on the basis of these levels, each item of material will
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automatically be held within appropriate limits of control. These levels are not permanent, but need revision according to the changes in the factors, which determine these levels.

FACTORS INCLUDE  Rate of consumption of materials.  Storage capacity.  Availability of funds for investment in inventories.  Cost of storage.  Risks of loss due to deterioration, theft, fine etc.  Seasonal factors certain materials are cheaply available during certain
seasons.

 Fluctuation in market prices.  Insurance costs. CASH MANAGEMENT

Cash and near cash; what is blood to human body, cash is to company. It is like oil to lubricate the over turning wheels of business; without it the process grinds to a stop. Cash is an asset which earns only when it is in use. It is the basic input needed to keep the business running on a continuous basis.

MOTIVES OF HOLDING CASH

The firms need to hold cash may be attributed to the following three motives. Transaction motiveThe transaction motive requires cash to conduct its business in the ordinary course. The firm needs cash primarily to make payments for purchases, wages and salary, other operating expenses, taxes dividend etc.
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Precautionary motiveIt is need to hold cash to meet contingencies in the future. It provides a cushion or buffer to withstand some unexpected emergency. The precautionary amount of cash depends upon the predictability of cash flows. If cash flows can be predicted with accuracy, less cash will be maintained for an emergency. Speculative motiveThe speculating motive for holding of cash is to invest in profit making opportunities as and when they arise. The opportunities to make profit may arise when the security prices changes. The firm will hold cash, when it is expected that interest rate will rise and security price will fall. Securities can be purchased when the interest rate is expected to fall; the firm will benefit by subsequent fall in interest rates and increase in security prices. The firm may also speculate on material prices. If it is expected that the materials price will fall, the firm can postpone purchase of materials and make purchases in future when price actually falls. Some firm may hold cash for speculative purposes. By and large, business firms do not engage in speculations. Thus the primary motive to hold cash and marketable securities are: the transaction and precautionary motives. The firm should evolve strategies regarding the following four facets of cash management.

 Cash planningCash inflows and out flows should be planned to project cash surplus or deficit for each period of the planning period. Cash budget should be prepared for this purpose.  Managing the cash flows- The flow of cash should be properly managed. The cash inflows should be accelerated while, as far as possible, the cash out flows should be decelerated.  Optimum cash level- the firm should decide about the appropriate level of cash balances. The cost of excess cash and danger of cash deficiency should be matched to determine the optimum level of cash balances.

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OBJECTIVES OF THE STUDY

 To analyse the working capital management strategies of JOCIL LIMITED .

 To study the entire working capital cycle of the firm.

 To find out the working capital policies and procedures of the firm.

 To analyse the companys receivables, cash, inventory techniques.

 To examine the cash management policies through liquidity ratios.

 To analyse the inventory management in the firm through inventory turnover ratios.

 To study the liquidity position through cash inflows, outflows of the company.

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Significance of the study

The Study is significant of following groups  The study provide and inside into the various aspects of working capital management.  Studies of this type one more useful to Academicians and scholars to make further inside the working capital management.  Studies of these types of make necessary steps to improve working capital management.  Studies of these types are more useful to policy maker.  Studies of these types are also useful to competitors to more necessary steps to improve working capital management.

Limitations of the Study:

 The study was under taken with some market assumptions but in reality they are Unfortune.  These decisions are cannot be taken as ultimate tools for the estimation of company whether good or bad.  This study is also limited to the topic taken WORKING CAPITAL .  The study is limited by Cost & Time factors.  The limited period of the study may not by detail full-fledged in all aspects.  Other statistical tools for further in depth analysis could not be used due
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to constraint of time.  The study is conducted with the availability of Jocil Ltd expansion data & annual reports.
 The opinions or conclusions drawn may not be generalized in macro level.

SCOPE OF THE STUDY:

 The study is based on company analysis.

 The study is based on five consecutive years from 2006-10.

 The trend is in ratio analysis and comparative analysis.

 The study is only for three months period of time.

 The study is related with various aspects of working capital like current assets, current liabilities.

 The information collected from primary data and secondary data.

 The calculation may be done in various analysis through some selected ratio.

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NEED FOR THE STUDY:

Working capital refers to current assets of the company that are changed in the ordinary course of business and one firm to another, for instance from cash to inventories, inventories to receivables, receivables into cash. It refers to the firms investment in current assets. Current assets are the assets which can be converted in to cash with in the accounting year and include cash, short-term securities, debtors, bills receivables and stock. When current assets exceed. Current liabilities, the working capital is positives. Working capital is needed for financing current assets Whenever the requirements of working capital funds arises due to increasing level of business actively arrangements should be made quickly to rise the finance. In case of some surplus funds are there in the organization. It should not be allowed to remain idle should be invested short-term securities. Therefore, the need of working capital requirement cannot be over emphasized. The need for working capital to run the day-to-day business activities would be felt essential. However, firms differ in their requirement of working capital.

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METHODOLOGY OF THE STUDY:

For the preparation of a project the collection of data is very essential. There are two broad methods, from which date is to be collected. They are primary data and secondary data. Primary data: This is collected through discussions and by interviewing the personnel concerned within the Company. Secondary Data: This information is collected mainly from published information Viz., annual reports, journals, books, magazines, internet available on the subject.
   

Annual Reports of the Company Magazines Journal Internet

period of Study:

For the purpose of the project work we have considered five years from 200611.

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INDUSTRY PROFILE
INDUSTRY OF FATTY ACID
Fatty Acids, as the name itself indicates, are in the organic acids derived from fats and oils. Fats and oils are glycosides of Fatty Acids. Fatty acids are manufactured by hydrolysis of fats and oils, which is popularly known as Fat Splitting. Glycerin is obtained as a byproduct on the process of fatty acid manufacture.

Fatty Acids are having diversified application in various fields of Industries like textile, type, plastic, surfactants, Rubber, cosmetics, Foods and Pharmaceuticals both as it is and as the derivatives

PRESENT STATUS OF INDUSTRY:

Present manufacture of Fatty Acids is dispersed all over the country with units in various states. Production of fatty acid in India was insufficient prior to the period of Second World War. Deduction on a small scale was initially started in the mid-forties that too with obsolete equipment. The quality of fatty acid coming out from these units is far from desirable and recovery of Glycerin was inefficient It is in 1953, the first high pressure Fat splitting plant in our country went stream in Bombay It started production as a batch operating Unit, which was soon converted to a semi continuous One. The industry, which started taking shape in the early fifties, was established process technology. A BRIEF NOTE ON FATTY ACID INDUSTRY IN A.P. The fatty Acid industry is dependent on availability of the oils& oil seeds for extraction and further processing, as mutton tallow is banned in India. The Industry found that Rice Bran Oil (R.B.Oil) in one such source, which is cheaper than other oil Thus, most of the fatty Acid / Stearic Acid manufactures have chosen rice bran oil as Their raw material and the rice bran oil extraction units found placement near the raw Material source i.e. Rice Bran even though
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the customers are well spread all over the Country. The consumption pattern of Rice Bran Oil depends on the level of free Fatty Acid Content available for industrial grade varies from time to time as the Rice Bran availability is seasonal, having direct relation to the rice roping and Harvesting schedules. Therefore, fluctuations are observed in the Rice Bran Oil Prices, which are almost fixed in their pattern. However, at times due to climate conditions and temperature variations, the status of the Rice Bran oil changes from edible grade and vice-versa. In India, as explained already Rice Bran Oil extraction is mostly valuable in the major rice growing states of Andhra Pradesh and Punjab Fatty Acid manufacturing units have also found their duration in these states to be nearer to the raw material source. Tamilnadu state, even though produces major quantities of rice, most of its consumed as boiled twice for local consumption. In Andhra Pradesh there are about 70-rice bran oil extraction units and 6 fatty acid manufacturing units. Another new unit is coming up. Among all these, M/s. Jocil limited is the second oldest and its products are well accepted among the customers the installed capacity of these units is more than one lack tones per annum. The Commercial sales of Stearic acid by these Andhra Pradesh based units account approximately for 48 per cent of the all India sales volume. The Fatty Acid manufacturing units in Andhra Pradesh are m/s. Food Fats and Fertilizers Ltd., M/s Sree Jocil Ltd., M/s. Sudha Agro Oil And Chemical Industries Ltd., M/s Sree Rayalaseema Alkalis and Allied Chemicals LTD, M/s. Swastik Oleo chemicals Ltd., M/s. Golden Agro Tech industries Ltd., are yet to start commercial production. All these are manufacturers of Stearic acid and other fatty acids. Some of them ate utilizing portion of their capacity for captive consumption (on all India basis about 52 Per cent of installed capacities is used for captive consumption and about 34 per cent is idle capacity. About 14 percent is used for commercial sales of fatty acids). The idle capacity of M/s. TOMCO, KSDL and vegetable
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vitamins and fats alone is about 73 per cent. Andhra Pradesh State is growing industrially and there is ample scope and potential for entry of new industries. Thus, the Stearic acid using industries like PVC, chemical, rubber retreating and related and related industries are still possible to be set up in Andhra Pradesh, is still to, grow, inspire of the competition among the fatty manufacturers. The idle capacity thus, is not a permanent feature. The industries using Stearic acid in Andhra Pradesh are mostly PVC pipes, rubber retarding, Hawaii Chapels, Cycle Tires, Chemical Auxiliaries, Stearates, Cement, Pints and cosmetics. The growth rate though is high in cosmetics industry at 25 per cent. The volumes are low due to lower production levels of cosmetics indust INDUSTRY OF STEARIC ACID: In the Stearic acid different grades are produced with standard specification for different industrial consumers. The following are the different grades of Stearic acids consumed by different industries in manufacturing their own Industrial products.

VARIOUS GRADES OF STEARIC ACID:

JOTEX JOTEX GRADE

GRADE, Used in drugs, pharmaceuticals, cosmetics, SPECIAL chemicals and plastics Chemicals, calcium carbonate.

JOSTRICPECIAL GRADE

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JOCIL GRADE JOCIL 9 JOCIL 11 JOMEL RUBBER GRADE

Metal polish, Grease, Metallic Polish, PVC Stabilizers and chemicals. Metal polish, Grease, Metallic Polish, PVC Stabilizers and chemicals. PVC. Rubber, Cement, Paint Rubber, Metallic polish

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PRESENT MARKET SHARE OF STEARIC ACID MANUFACTURES WISE:

QUANTITY NAME OF THE SHARE MARKET MANUFACTURER (%) (M.T) Godrej Soaps Ltd VVF Limited Jocil Limited FFF Limited Nahar Agro Raj Agro OCL & Thapar Wipro Limited Siris Agro Limited Sudha Agro Limited Rayalaseema Ltd Swastik Chemicals Imports & Alkalies Oleo 17000 9000 10000 6000 5000 5000 2000 2000 5000 2000 5000 7000 1000 22 12 13 8 7 7 3 3 7 3 7 9 1

REGION NORTH NORTH A.P. A.P. NORTH NORTH NORTH Karnataka A.P. A.P. A.P. A.P.

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SL.NO.

Name of the industry

Quantity (M.T.)

Industry Share (%) 17 16 24 12 4 8 4 1 4 4 4 3

Growth

1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12.

Rubber Tyre Rubber-Nontyre Stearates/Stabilisers PVC/Polymers Cement Paints Chemical Auxiliaries Calcium Carbonate Food/Pharma Metal Polishes Lubricants/Greases Cosmetics Others

13000 12000 15000 9000 3000 6000 3000 1000 3000 3000 3000 2000

5 3 6 7 6 5 6 9 5 8 30 5

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SOAP INDUSTRY:
The Rs.45 billion Indian soaps and detergents industry has been expiring low growth and intense competition in urban areas. The physical market for detergents at about 2.7 million tonnes is one of the largest markets in the world. It categorized popular economy, premium and super premium. In India, the per capita consumption of detergents is only 1.6 kg. Per annum as against over 16 kg. Western Europe. Soaps 1.4 kg. From 93-94 report. In Taiwan 6.2 kg. Thailand 32 kg. Per annum, Indonesia 2kg, Korea 7.3 kg per annum per capita, Malaysia 3.7kg per annum per capita, Japan 8.9 kg per annum per capita. The per capita consumption of toilet soap in India is at present whole fully low as compared to many developing countries. The Industry has made rapid progress after lifting of the price control. The overall growth rate of the industry in the recent years has been in the neighbourhood of 2% per annum. The total turnover of toilet soap industry is Rs.4000 crores. The market is estimated at more than 3 lakhs tones and its growth rate is about 2% per annum. The overall consumption of toilet soaps in the country has been increasing at the rate 6.7% and at more than 12% per annum in rural areas. The industry faces serious problem on account of inadequate availability of linear alkaline benzene, which has to be imported on a large scale. The gap between demand and supply of for production of toilet soap is a matter of serious concern.

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The working group has assessed the availability of oils by the year 1999 and 2000 A.D at 6.5 lakhs tones, which will have to be the basis of present reckoning by, imports. The soap market is divided into sub-popular and popular premium on the basis of price. But for the purpose of market study, the market is categorized into popular and premium soaps make up the remaining 13%.

Segmentation of the Total Toilet Soaps:

Price range (in Rs.) Ma rke t Sh are of Premium, Popular, Sub Popular. 6-10 11-15 16& above

Soap segment Sub-popular Popular Premium

Segment Premium Popular Sub-popular

Market share in (%) 31 45 24

Growth annum) 6% 2% 8%

rate

(per

The above table reveals the market share of premium, popular and sub-popular soaps where a major share of 45 % is captured by popular soap
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segment which is growing slowly at 2% per annum. While 31 % of total market share is contributed by premium soap segment which is growing at 6% per annum. But the sub-popular soap segment which is showing the least of all i.e. 24% is growing at a fast rate of 8% per annum.

Hindustan Lever Ltd., (HLL):

Hindustan Lever Ltd. has become a major player in the Indian personal wash market. In India HLL has gained 60% of share in the total toilet soap market. HLL gives its products in several brand names. The brand names of HLL are Liril, Pears, Dove, Lux, Denim, Fair & Lovely, Rexona, Lifebuoy, Hamam, Breeze, and Ayush. Different brands are popular in different regions. HLL have brought a few benefits to the consumer as a marketer of toilet soap has tried to woo. Consumers through up graded offerings and better quality soaps. As a result of sharp fall in farm disposable incomes, the consumers persuaded low-income households to down trade, that is, switch from high-tolow priced brands. HLL too appears to endorse the phenomenon of down trading. The major competitors of HLL are Nirma, Godrej consumer care and WIPRO, Godrej consumer care has introduced, fairness soap, fair glow which claims to enhance a fairness, has been a success too, as against this, spawning a competitive response from HLL in the form of Fair & Lovely soap. HLL offering to combine two benefits in a single tablet, Breeze 2-in-1 actually offers a cost-effective replacement to consumers who we hair wash products and soap. HLL claims Breeze is the largest brand in the discount segment. HLL has increased Lifebuoys market share by introducing, Lifebuoy Active, Lifebuoy Gold, Lifebuoy Plus. HLL has gained major share in discount segment.

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Now-a-days HLL has become a dominant player in the Indian personal wash market.

WIPRO:
WIPRO has become a major player in the Indian personal wash market. In India Wipro has gained 50% of share in toilet soap market. Wipro gives its products in brand names of Santoor, Wipro Baby Soap, and Chandrika. It covers 1.6 million outlets across the country for its distribution. 50 percent of Wipro consumer care business comes from the toilet soap category. The biggest brand of Wipro is Santoor was launched in the late 80s. Wipro through Santoor is the leading Soap marketer in Andhra - Pradesh with 18 percent market share. Wipro baby soft diapers gained almost 65 percent of the business from Northern Markets. Wipro have come out with new mixes and are confident of delivering value. The company introduced Chandrika as an ayurvedic and herbal product as against Medimix. The companies further interests in naturals/ ayurvedic segment of the toiletries market. The company faces several competitions from HLL, Godrej, Nirma, and Henko. In spite of competition Wipro has generated consumer satisfaction.

Nirma:
Nirma has quickly become a significant player in the domestic toilet soap market. The companys aggressive pricing strategy has been the key behind its performance. Launches Such as Nirma have paid off because consumers have seen the brand as offering good value for money. The company has managed
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healthy top line growth in the market. Nirma has gained major market share just a couple of years after its entry. It tries to made brands such as Nirma available at least 10 percent lower than its nearest competitors. The company offers its brands Nirma Lime, Nirma premier, Nirma. The company faces competition from HLL, Wipro, and Godrej. The Nirma was succeeded within a short period due to its aggressive pricing strategy.

Godrej Consumer Care:

With at least three entirely new launches under its belt, Godrej consumer care has improved its market share in the personal wash market. The companys recent restructuring exercise, offer which the consumer products business was diverted from the Godrej industries and vested with Godrej consumer care, has also helped pep up profitability performance. Fair Glow, the fairness soap from Godrej Consumer Care, which claims to enhance fairness, has been a success too. As a relatively small player in the business, the company has managed a robust sale.

Market Share of Different Companies:

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Henkel Others 4% Wipro 6% Nirma 5% Godrej 6% Hull Karnataka Soaps 7% 60% 12%

Brand associations:
Every soap manufacturer is following brand associations to their product, which boosts promotion of the soap in the market. Thesewill attract the

customers towards the product and make them to buy. These brand associations can separate the product from other competitive products.

Brand positioning:

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Brand Santoor Lux Nirma Lliril Hamam Rexona Dettol Margo Fair glow

Positioning Younger looking skin Skin care, glamour Value Freshness Purity Skin care, silky soft skin Germy check, 100%bath Skin protection Fairness soap

Wind Energy Generators (WEG)

During the year 2 x 1.65 Mw WEG Sets generated 78.96 lakhs units as
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against 83.55 lakhs units in the previous year. The low generation is attributed to the extended rainy season during the year in which period wind velocity was low for power generation. The increase in rate for wind power supply to

TamiNadu Electricity Board (TNEB) from 2.70 to 2.75 has not come into effect from 1-4-2007 as was earlier expected. It is now proposed by TNEB to

implement the increased rate from the date of entering into new Energy Purchase Agreement (EPA) which contains a clause for binding the power producer for a period of 20 years. Since the matter regarding procurement price by TNEB is before the Honble Supreme Court on the appeal filed by the TNERC on the petition filed by Indian Wind Power Association inn which the company is a member, it is felt better to wait for the time being before entering into the new EPA. It is widely expected that the demand for non conventional energy will increase in future due to widening gap between generation and demand coupled with fuel shortages. Since the policy of the Government is also favourable for promotion of non conventional energy like wind energy and since the wind projects are found to be economically feasible after considering the CDM revenues, the Company set up one more WEG of 1.500 Mw in March 2007 at Kasturirangapuram Village, Tirunelveli Distirct, TaminalNadu. The plant was commissioned on 19-03-2008 and sonce then the WEG generated 25344 kwh u to 31-03-2008 and the same was exported to TNEB.

The data related to this project is follows

Wind energy generator (1x1.5MW): Land 34

18, 00,000

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Plant & Michinary 1500Mw wind turbine Generators

9, 12, 00,817

Total investment

9, 30, 00,817

Sales revenue (1 x 40, 00,000 x 2.72) Expenditure Insurance General expenditure Depreciation Taxation 1, 08, 80,000 5, 50,000 2, 00,000 50,000 48, 51,360 up to 15 years tax holidays

After tax holidays 33.99% tax will charge including with 10% surcharge s& education ces 3%.At first year the current charge power unit is Rs. 2.72 and we estimate that the price will increase 5% for every year. The depreciation is provided according to IT act in WDV method per year.

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COMPANY PROFILE
HISTORY OF JOCIL LIMITED: The company was incorporated on 20th February, 1978 as per the certificate of incorporation NO.2260 granted by the register of companies. A.P. Hyderabad under the name of APOCIL [Andhra Pradesh Oil and Chemical Industries Limited]. This was a joint venture with Andhra Pradesh Industrial Development Corporation (APIDC) and was promoted by Andhra Sugars Ltd, Tanuku. But later in MAY, 1982 A.P. Industrial Development Corporation withdrew it participation and the companys name was changed to JAYALAKSHMI COTTON AND OIL INDUSTRIES LIMITED. The

company was registered with director general of technology development New Delhi. The company name changed from JAYALAKSHMI COTTONN AND OIL INDUSTRIES LIMITED to JAYALAKSHMI OIL AND CHEMICAL INDUSTRIES LIMITED (JOCIL) on17th September 1992.

LOCATION OF THE COMPANY:

JOCIL Ltd is located at Dokiparru in Medikonduru Mandal of Guntur District in the state of Andhra Pradesh. The area was declared as backward one by the Government of Andhra Pradesh. It is well connected by both rail and road transportation. It is only 45 km from Vijayawada, which is industrially located.

Profile of Jocil Limited:

Type of the Company Small Scale Unit
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Nature of the Unit

Manufacturing

ORGANISATIONAL MANAGEMENT

STRUCTURE

OWNERSHIP

AND

BOARD OF DIRECTORS:
Dr. Mullapudi Harischandra Prasad J. Murali Mohan P. Narendranath Chowdary Mullapudi Thimmaraja Y.Narayanarao Chowdary V.S. Raju K. Srinivasa Rao K. Gopala Krishna Subbarao V. Tipirneni SENIOR EXECUTIVES: P.Kesavulu Reddy President & Secretary Chairman Managing Director Director Director Director Director Director Director Director

BANKERS: Andhra Bank Guntur

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State Bank of India AUDITORS: Brahmayya & Co., COST AUDITORS: Narasimha Murthy & Co., REGISTERED OFFICE & FACTORY: JOCIL LIMITED, Dokiparru, GUNTUR 522 438.

Guntur

Guntur

Hyderabad.

Board of Directors:
The Board of Directors of the company consists of 9 directors comprising of promoter directors, additional directors and outside directors. Normally, the chairman would be elected from the promoter directors. The board of directors will meet once in three months to review the working results, operations, financial and administrative matters and any other policy matters of the company. The Managing Directors about the progress of the company.

Managing Director:
Managing Director is the chief executive of the organization and looks after the day to day operations of the company. He is the top person in the hierarchical system of organization. He does business operations with the

assistance of all the departmental heads. He is the pivotal of the organization. President & Secretary: He is in charge of administrative and finance departments. He looks after all the matters relating to general administration, secretarial, central excise, purchases, accounts, and stores, personal and all other matters relevant for
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smooth operation of the company.

He coordinates matters with all the

departmental heads and takes policy decisions in the absence of the Managing Director.

General Manager-Production:
He is the head of the production department. He looks after the fatty acid plant & glycerin plant. He controls the over all production activities. A team of engineers, supervisors and helpers assists him.

General Manager - Development:

He is in charge of quality control, laboratory and also research and developmental activities. He is responsible for maintaining the standards of raw material in processing of finished products.

General Manager-Engineering:
He is the custodian of the entire plants and machinery. He looks after the smooth running of various plants and maintenance of work. He also takes the help of assistant engineers, supervisors, fitters and helpers etc.

Senior Manager-Power Plant and Instrumentation:

He is in charge of power house and responsible for all electrical installation in the company. With the help of engineers, supervisors and

electricians he looks after the matters like power supply, operation of diesel generation sets etc.

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Senior Manager-Soap:
Production Manager looks after the production of toilet soap and is assisted by various supervisory & other members.

Asst. General Manager (Marketing):

Marketing Manager is in charge of the marketing department. He coordinates matters with all the departmental heads in regard to production and sale of finished products of the company. He shoulders the responsibility in clearing of the stock of finished products. ll possible steps will be taken by him to satisfy the customers as regards to quality, price and prompt supply of the product. He is assisted by the sales officer, sales supervisor and other office staff.

Finance Manager:
Finance Manager looks after all the works relating to audit banks, commercial tax matters and takes care of the accounting systems in the company. He will attend to the works of income tax returns filling and clearance of income tax assessment orders given by the department. He will further attend to the works of submission of working capital limits.

Organization Structure of Jocil Ltd.

Board of Director Directors
Managing Director

President & secretary

Marketing AGM

GM Engg.

GM Manager Sr. Manager (Production (Developmen (Electrical) t) ) 40

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President & Secretary

Finance Manager

Stores Executive

Purchase Executive

Labour Officer

Security Officer Security Guards

Asst. Executive

Senior Manager

Senior Asst.

Asst. Time Keepers

Sr. Accounts Officer Asst. Accounts Officer

Clerk Costing Office Asst.

Clerks

Marketing Manager
Superintende Asst. Clerk Marketing Marketing Executive Supervisor Asst. Sales Sales STAFF AND WORKERS PARTICULARS S.No. 1 2 3 Particulars Administration Accounts Marketing
41

Asst. Clerk

No. of Employees 23 13 5

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4 5 6 7 8 9 10 11 12 13 14 15 16 17

EDP Time office Stores Security Transport Production Labour ETP Maintenance Soap plant Electrical Power plant Civil Fatty acid plant

5 5 11 5 7 13 21 5 5 61 33 89 5 50

18

Hydrogenation plant

38

19 20 21 22 23

Flaker Cell room Oxygen plant DM plant FBC Boiler

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5 3 5 5 8

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24

Workshop Total

46 466

Number of Workers employed in the Firm:

At present more than 550 employees are working in the company. Recruitment in JOCIL is mainly though internal sources. Promotion is mainly based on seniority. It has good industrial relations with its workers. The company provides retirement benefits in the form of provident fund, superannuating and gratuity. Contributions to the provident fund are made at prescribed rates to the Provident Fund Commissioner and absorbed in the profit and loss account liability in respect of Superannuating benefits extended to certain employees is Contributed by the Company of life Insurance Corporation of India against a master policy at 13% of the basic salary of such employees. The company has taken a group gratuity insurance policy with Life Insurance Corporation of India to secure gratuity liability.

Job Contract:
The idle capacity in the company plant is utilized for the manufacturing of the company brand toilet soaps. At present Liril cool of HLL is being manufactured by JOCIL and job contract or principle-to-principle basis. This type of job contract is helping JOCIL to utilize the plant capacity fully.

OBJECTIVES OF JOCIL LIMITED

The main objective of the company is to manufacture Fatty acids and Toilet soaps. The company received letter of indent from department of industrial development. Ministry of Industries and Government of India, Delhi.
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Enhancing the annual licensed capacity of fatty acids, glycerin and toilet soap. The company has implemented this letter by increasing installation capacity of fatty acids plant from 6,205 M.T. per annum to 15,510 M.T. with effect from February 1991 this enhanced capacity came into operation. Later the company enhanced the capacity to 37,500 M.T. in March 1995.

Functions of Jocil Limited:  `To produce, manufacture, refine, process import, sell and generally to
deal in all kinds of fatty acids and soaps and in connection there with the construction of factories and workshop.  To fabricate manufacture and deal in all kinds of fatty acids plants.  To manufacture various brands of soaps under contract basis for HLL.  The company organizes annual general body meeting where it submits all the four quarterly reports regarding the actual performance with standard performance and predicts the courses of variances.

Performance and Achievements of Jocil Limited:

 Jocil is a leading manufacturer of all kinds of Fatty Acids. This also manufactures soaps.  Jocil supplies different grades of Stearic Acid and other fatty acids to other manufacturing companies of pharmaceuticals, chemicals, plastic etc.  Jocil supplies Fatty Acids to meet their specific requirement of Stearic Acid, Oleic Acid etc.  Jocil manufactures soaps on contract basis to HLL  Jocil supplies soap noodles of Margo brand to M/s Calcutta Chemicals Company.
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Jocils production of quality goods is due to the following factors: a. Usage of good quality raw materials like rice bran oils, coconut oils, cotton seed oils etc. b. The processing and purification of fatty acids is done by using latest technology. c. The technology and requirement of Jocil has been imported from C.M.B., Italy. d. Maintenance of quality control by experienced and committed operating personnel. e. Toilet Soaps and Glycerin are manufactured as per BISC (formerly known as ISI) standards. f. It uses high quality chemicals for the purification and process Is the g. fatty acids. INDUSTRIAL LICENCING: As the value of fixed assets envisaged in the project is less than Rs. 3.3 crores the Industrial license is not required for setting of this project. The company has been registered with Directorate General of Technical Development (DFTD), Government of India, New Delhi bearing No. DGTD/HQ/D-S-S/R-4733/C-26(N)/SE/79 with their letter dated 21-5-1979 and 31-3-1990 for the manufacture of

1 2 3

Processed Fatty Acids / Industrial Fatty Acids Glycerin Toilet Soaps

9,000 900 5,000

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SHAREHOLDERS PATTERN: 31-03-1997 Promoters (The Andhra Sugars Limited, Holding Company) Public &Bodies Corporate 30.63% Institutions (ICICI & ISEC) Face Value of share 14.35% Rs. 10/- each 55.02%

INITIAL INVESTMENT:
The Company has set up Rs.3.3 crores Fatty Acid and Soap Project on turn key basis through M/s. Ballestra (India) Limited, Bombay, with technology and equipment of C.M.B., Italy.

OUT LOOK
Fatty Acid and Soap
The production of fatty acids, soap noodles and glycerin has come down during the year due to lack of demand from customers to whom we have been manufacturing products on job work. As a result the capacity utilization of fatty acid plant and glycerin plant was low. However, the demand for

manufacture of soap oodles and toilet soap on job work has improved from January 2008 and therefore overall capacity utilization of soap plant during the year is better than last year. Barring unforeseen business conditions the present position in fatty acid and soap industry is expected to continue for some more

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time. The area based exemptions from payment of excise duty has been affecting the industries in non-exempt areas very severely. decision of the Government However, the

 To reduce the general rate of excise duty from 16% to 14%;  To limit excise duty exemption in exempted areas to units undertaking manufacturing activity only thereby excluding units taking up peripheral activities;

To restrict excise duty exemption in the exempted areas only to the extent of value addition undertaken in the manufacture of goods, subject to the rates fixed or actual duty paid which ever is lower;

Helped control misuse of the facility and reduce wide disparities in excise duty liability to some extent but the difference will still be a considerable amount to overcome. Further, the inverted customs duty structure on soap noodles

continues and the industry is at a great disadvantage for competing with imports. Palm Fatty Acid Distillate, the Major raw material for soap noodles is attracting 15% customs duty while toilet soap noodles; the finished product is attracting only 10% customs duty.

Biomass Power Plant

The availability of field residues like cotton stalks, chilli stalks etc.,
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has been coming down drastically due to installation of more plants close by requiring the same fuels. The Company has established biomass collection centers near the fields to improve procurement. However, due to shortage of labour the quantity procured is not to expectations. The power purchase price of AP Transco is not in pace with the rising fuel cost and AP Transcos restriction to purchase 2.4 Mw is resulting in low capacity utilization and high cost of generation. The suit filed by the Company for purchase of entire surplus power after meeting captive consumption and for payment of retained amounts for supply over 2.4 Mw is pending before the Appellate Tribunal for Electricity, New Delhi. The suit filed by the Biomass Energy Developers Association (BEDA) on behalf of its members for increase in power purchase rate by AP Transco was allowed by the Appellate Tribunal for Electricity, New Delhi. But AP Transco and APERC have both gone on appeal to the Supreme Court and hence the issue remains pending for final decision.

Wind Energy Generators (WEG)

During the year 2 x 1.65 Mw WEG Sets generated 78.96 lakhs units as against 83.55 lakhs units in the previous year. The low generation is attributed to the extended rainy season during the year in which period wind velocity was low for power generation. The increase in rate for wind power supply to

TamiNadu Electricity Board (TNEB) from 2.70 to 2.75 has not come into effect from 1-4-2007 as was earlier expected. It is now proposed by TNEB to

implement the increased rate from the date of entering into new Energy Purchase Agreement (EPA) which contains a clause for binding the power producer for a period of 20 years. Since the matter regarding procurement price
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by TNEB is before the Honble Supreme Court on the appeal filed by the TNERC on the petition filed by Indian Wind Power Association inn which the company is a member, it is felt better to wait for the time being before entering into the new EPA. It is widely expected that the demand for non conventional energy will increase in future due to widening gap between generation and demand coupled with fuel shortages. Since the policy of the Government is also favorable for promotion of non conventional energy like wind energy and since the wind projects are found to be economically feasible after considering the CDM revenues, the Company set up one more WEG of 1.500 Mw in March 2008 at Kasturirangapuram Village, Tirunelveli Distirct, TaminalNadu. The plant was commissioned on 19-03-2008 and since then the WEG generated 25344 kwh u to 31-03-2008 and the same was exported to TNEB.

New Business Opportunities

The Company is exploring new business opportunities to

expand/diversify the activities in the areas of business having growth potential by effective utilization of internal generations and for this purpose various alternatives are being explored. CONVERSATION OF ENENRGY & ENVIRONMENTAL SAFETY: During the year the following actions were taken for conservation of energy and environmental safety.  Power consumption in distillation plants has been reduced by replacing the over design pumps.  Power consumption for Air Compressors has been reduced by installing receivers and pipe line modifications of pipe lines.
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 Fire additives are being used in 30 TPH AFBC Boiler for improving efficiency.  Sodium Vapour Lamps have been replaced in power plant, boilers and thermic fluid heaters with Compact Fluorescent Lamps.

 Conventional air conditioners are being supplemented with chilled water air handling unit in fractionation plant control room to reduce power consumption. Power quality analyzers are being utilized to contain energy losses and for preventive maintenance.

JOCIL LIMITED ACCOUNTING POLICIES:

General
The Accounts are prepared on historical cost convention and in accordance with generally accepted Accounting policies.

Fixed Assets
Fixed Assets are stated at historical cost less accumulated depreciation. Cost of acquisition of fixed assets is inclusive of directly attributable cost of bringing the assets to their working condition for the intended use and interest on borrowings till the date of commissioning of the assets. CENVAT/VAT credit availed, if any, on fixed assets is not included in the cost of such fixed assets capitalized.

Depreciation
Depreciation is written off in accordance with the provisions of Schedule XIV of the Companies Act, 1956 as follows:  Under Straight line method in respect of plant and Machinery of Wind
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Mill division.  Under Written down value method on the remaining assets of the company.

Intangible assets
Intangible assets are stated at cost of acquisition less accumulated amortization. The intangible assets, being Computer Software is amortized over a period of 5 years on Straight Line Method.

Investments
Long term investments are stated at cost and income thereon are accounted for on accrual. Provision towards decline in the value of long term investments in made only when such decline is other than temporary.

Inventories
 Finished goods are valued at lower of cost or net realizable value.

 Cost of Work-in-progress and Finished goods includes appropriate portion of overheads etc., and excise duty wherever applicable.

 Raw materials, Stores and spares are valued at cost using weighted average method.

Work-in-Progress, raw materials, stores, spares, material in transit, are valued at cost except where the net realizable value of the finished goods they are used in isles than the cost of finished goods and in such an event, if the replacement cost of such materials etc., is less than their book values, they are valued at replacement cost.
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 By-products and scrap are valued at net realizable value.  Dedicated machinery spares which can be used only in connection with an item of fixed assets and whose use is expected to be irregular are amortized over the estimated useful life of the principal assets.

Sales
Sales are inclusive of Excise Duty, packing Charges and net of rebates and Sales Tax. Sales tax collected from customers and remitted to the

authorities is not reflected in the Profit and Loss account and on completion of the sales tax assessments, the net liability, if any, payable by the company, is charged to the Profit and Loss account. Power consumed in other units is accounted at the rate fixed for payment for sale to A.P.Transco.

Taxes on Income
Current tax is determined as per the provisions of Income Tax, 1961 in respect of taxable income for the year. Deferred tax liability is recognized, subject to the consideration of prudence on timing differences, being the difference between taxable incomes and accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax assets account of brought forward losses and unabsorbed depreciation as per Income Tax laws are recognized only when there is virtual certainty supported by convincing evidence that such assets will be realized. Deferred tax assets arising on other temporary differences are recognized only if

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there is a reasonable certainty of realization

Segment reporting
The accounting policies adopted for segment reporting are in line with the accounting policies of the Company with the additional policies for segment reporting. Inter segment revenue has been accounted for based on the market related prices. Revenue and expenses have been identified to segments on the basis of their relationship to the operating activities of the segment. Revenue and expenses which relate to the enterprise as a whole and are not allocable to segments on a reasonable basis have been included under Unallocated expenses.

Retirement benefits
The Company provides retirement benefits in the form of Provident fund, Superannuation and Gratuity etc. Contribution to Provident Fund, a defined Contribution schemed, is made at the prescribed rates to the Provident Fund Commissioner and is charged to the Profit and Loss account. There is no other obligation other than the contribution payable. Gratuity, a defined Benefit scheme is covered by a Group Gratuity cum Life Assurance policy with LIC. Annual contribution to the fund as determined by LIC is expensed in the year of contribution. The short fall between the accumulated funds available with LIC and liability as determined on the basis of actuarial valuation is provided for as at the year end. The actuarial valuation is done as per the Projected Unit Credit method. Actuarial gains / losses are immediately taken to Profit and Loss account.

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Contribution to Superannuation Fund, a defined contribution scheme, is made to the LIC as per arrangement with them.

Research and Development Expenditure

Revenue expenditure is charged to Profit & Loss Account and Capital Expenditure is added to the cost of Fixed Assets in the year in which it is incurred.

Foreign exchange transportations

Transactions in foreign currency are initially accounted at the exchange rate prevailing on the date of transaction, and adjusted appropriately, with difference in the rate of exchange arising on actual receipt/payment during the year. At each Balance Sheet date  Foreign currency monetary items are reported using the rate of exchange on that date.  Foreign currency non-monetary items are reported using the exchange rate at which they were initially recognized.

Impairment of assets
internally, indications of the impairment if any, to the carrying amount of its fixed and other assets. If any indication does exist, the recoverable amount is estimated at the higher of the realizable value and value in use, as considered appropriate. If the recoverable amount is less than the carrying amount, an impairment loss is recognized. Reversal of impairment losses recognized in prior years is recorded when there and indication that the impairment losses recognized for the asset no longer exists or has decreased. However, the increase in carrying amount of an asset due to reversal of an impairment loss is recognized to the extent it does not exceed the carrying amount that would have been determined (net of
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depreciation) had impairment loss been recognized for the asset in prior years.

Contingent Liabilities
Contingent Liabilities are not recognized in the accounts, but are disclosed after careful evaluation of the concerned facts and legal issues involved.

Dividends
Provision is made in the Accounts for the Dividends payable by the Company recommended by the Board of Directors, pending approval of the Shareholders at Annual General Meeting. Tax on distributable Profits is

provided for in the year which such distributable Profits relate.

Products of JOCIL Ltd:

              Stearic Acid of 11 acids Distilled Hydro-generated rice bran fatty acid Distilled Rice Bran Fatty Acid Oleic Acid Soap Noodles Finished soap Industrial Oxygen Power (KWH) Jotex Jostric Special-Fostric Jocil-9 Jocil-11 Jomel, rubber grade Rubber grade (economy)
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Jocil has set up a modern plant for the manufacturing of fatty acids, toilet soaps and refined glycerin. The major equipments were imported with latest technology. The products manufactures are of international standards to suit different industrial users. The by-products in the production of fatty acids are Glycerin of two-types  Chemically pure grade  Industrial white grade

TDP (Tones Per Day): Fatty acid Glycerin Soap products 200 metric tones 4.5 metric tones - 150 metric tones 2100 Cubic meters

Industrial oxygen -

Fatty Acids, refined Glycerin and other Fatty Acids Pitches fall under the category of industrial goods whereas soaps come under the category of consumers goods. Fatty acids are manufactured from vegetable oils and fats. There are different types of fatty acids for different industrial applications. The following are the different kinds of fatty acids which can be manufacture in JOCIL.  Crude Fatty Acids of Vegetable Acids & Fats.  Distilled Fatty Acids of Vegetable Acids & Fats.
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 Hydrogenated Fatty Acids of Vegetable Acids & fats. Out of the above type of Fatty Acids. JOCIL is manufacturing the following fatty acid which is a major portion of their sales.  Stearic Acid  Oleic Acid  Distilled & Hydrogenated Fatty acids. FATTY ACID: Process Description 1. Pre Treatment: The raw oils/fats are given pre treatment with sulphuric acid in the presence of water to remove impurities like gums, resins and suspended particles. These oils are washed free of mineral acidity and then taken for further process. 2. Fat-Splitting: Pre treated oils/ fats are sent to high pressure and high temperature autoclaves for fat splitting. This is a hydrolysis process. Oils/fats are split in presence of water under high temperature and pressure. The triglycerides arte spilt into crude fatty acids and glycerin in the form of sweet water. The crude fatty acids are then separated from sweet water in splitting tanks. The crude fatty acids are then sent to distillation plant. 3.Fatty acid distillation Crude fatty acids are distilled under high vacum at a high temperature under controlled conditions. The distilled fatty acids are condensed leaving behind residue which mainly consist of un desired impurities like un split fat, colour, and odour, un soap matter, metal impurities etc. the distilled fatty acids are then sent to hydrogenation plant for the manufacture of stearic
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acid. 4.Hydrogenation: Distilled fatty acids are taken in hydrogenation autoclave which is operated under high pressure and high temperature. Activated nickel catalyst is used for hydrogenation reaction high pressure hydrogen gas is continuously bubbled inn the autoclave to reduce the iodine value of distilled fatty acids to the desired level. Stearic acids with different iodine Values are manufactured to suit the different industrial application. As soon as the reaction is over the material is filtered to remove nickel catalyst and then sent to flaking section. 5.Flaking: Stearic acid produced in the hydrogenation plant is converted into flakes in a rotating drum flake which is cooled with chilled water. The flakes collected through a screw conveyor are packed in gunny bags with inner polymers. Distilled Fatty Acids: The Fatty Acids of different oils are tailor made products to suit different industrial users specifications. At present JOCIL is manufacturing distilled hydrogenated rice bran fatty acids, distilled cotton seed oils fatty acids, distilled coconut fatty acids. They plan to manufacture some more varieties of fatty acids in future. Distilled Hydrogenated Rice Bran Fatty Acids and distilled palm oil fatty acids are acids are also being manufactured for consumption in soap plant for the manufacture of Toilet Soaps.
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Fatty Acid Pitches: Fatty Acid pitches are obtained during distillation of crude fatty acids. These products are supplied to laundry soaps, grease, foundry chemicals uses.  Jotex: Jotex is used in pharmaceuticals, chemicals auxiliarys plastics, like PVC compounds, cosmetics, metallic stearates etc.  Jostric: Jostric is used in metallic stearates metal polishes, lubricants etc.  Jocil-9: Jocil-9 is mostly use in rubber cements, paints and metal polishes etc.  Jocil-11: It is used in PVC stabilizers, chemicals.  Rubber Grade (Economy): Rubber grade is used in rubber industry & trade rubber.  Jomel: Jomel is used in rubber, cement, paints.  Jostric special: It is used in chemical industry.

Refined Glycerin:
There varieties of refined glycerin are produced namely.  Chemically pure grade (C.P)  Industrial White (I.W)  Pale Straw (P.S) Glycerin is used in pharmaceuticals, cosmetics, explosives, paints stroke ink, chemicals, tooth paste etc. Oleic Acid: Only one variety of Oleic Acid namely Commercial Grade is manufacture by JOCIL. It is used in fertilizers, cutting oils, liquid soaps and other chemicals manufactures.

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Stearic Acid: In the stearic acid, different grades are produced with standard specifications for different industrial consumers. The following are the different grades of Stearic acids consumed by different industries in manufacturing their own industrial products.

VARIOUS GRADES OF STEARIC ACIDS

JOTEX GRADE-JOTEX Used in drugs, pharmaceuticals,

SPECIAL GRADE JOSTRIC SPECIAL GRADE

cosmetics, chemicals & plastics Chemicals, Calcium carbonate Metal polish, Grease, Metallic polish PVC Stabilizers and Chemicals Metal polish, Grease, Metallic polish PVC Stabilizers and Chemicals PVC Rubber, Cement and Paints Rubber, Metallic polish

JOSTRIC GRADE

JOSTRIC 9

JOSTRIC 11 JOMEL RUBBER GRADE Soap Manufacturing:

Different types of distilled fatty acids and hydrogenated fatty acids are mixed to obtain a desired quality of toilet soaps. Generally features of toilet soaps should be good lather, good perfume, stability use.

Process of Soap Manufacturing:

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Fatty Acids Soapanification Neat Soap Spray drying (to reduce moisture to desired level) Soap noodles Amalgamation (addition of colour, perfume) Mixing (homogenization) Extrusion (taking of sop bars) Soap bars Cutting Stamping Packing Finished soap

ANALYSIS OF WORKING CAPITAL IN JOCIL LTD

Working Capital plays the most important role in managing any business. It refers to the part of firms capital. Capital is required for financing short term or current assets such as Cash, Marketable Securities, debts and Inventories.
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Working Capital is life blood of a business. The management of working capital in a business is carried on in these areas.

CASH MANAGEMENT IN JOCIL LIMITED:

Cash management means usage of cash in several ways. Usage of cash includes expenses and commission and the amount spent by the company for running into profits. Cash management in Jocil is done by preparing a cash budget availing the information from the pay order books, which will in turn help to eliminate over keeping of cash. To reduce the delay of clearing the cheques, Jocil Provides the facility of electronic fund transfer. The cash management in Jocil helps to estimate the cash requirements and other day-today payments. INVENTORY MANAGEMENT IN JOCIL LIMITED: Inventory management is done in intermittent system. The goods are manufactured specially to fulfill orders made by the customers. Here the production facilities are flexible enough to handle a wide variety of products and varied sized. It manufactures products like Toilet Soap, Mixed Fatty Acids; other soaps Product etc., on intermittent basis. It also manufactures Stearic Acid which occupies 60% of overall production on order basis only. The customers supply raw materials for production of products on job work contract. In such cases there is no need for the company to finance for raw materials. The inventory management in Jocil Limited is done effectively. RECEIVABLES MANAGEMENT IN JOCIL LIMITED:
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The collection procedure for the receivables has been classified in two ways. 1. Bills Discounting Procedure 2. Bills Collection Procedure

Bills Discounting Procedure:

After dispatch of goods, a bill is drawn in the name of the debtor. After acceptance by the debtor, the bill is discounted instantly with the bank and the debtor is requested to send the amount on due date and it will be credited to OCC account held by the company with Andhra Bank, Gunter after adjusting the charges. If the bill is cleared beyond the due date the debtors are charged 16% interest per annum for the delayed period.

Bills Collection Procedure:

In this procedure the documents are sent to the banker of the party who is required to present the documents to the party on payment. If the party fails to retire the documents within a grace period of seven days, he is subjected to an interest rate of 16% p.a. after collection of the amount, reports. In the words of Anthony, financial statements, essentially, are interim reports, presented annually and reflect a division of the life of an enterprise in to more or less arbitrary accounting period more frequently a year.

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Statement of Changes in Working Capital during the period

2006-2007
Particulars 2006 2007 Increase in Working Capital Decrease in Working Capital

Current Assets Cash on hand Cash at bank Sundry debtors Closing stock Other current assets Total (A) Current Liabilities Current Liabilities Provisions Working Capital from banks Total (B) Net Working Capital (A-B) Increase in Working Capital Total 13,72,07,626 3,63,87,091 5,29,90,750 17,44,11,546 11,77,05,280 5,67,06,266 2,37,36,244 20,72,957 2,16,63,287 1,66,03,659 6,03,109 67,97,011 12,06,318 6,03,209

4,25,73,957 3,57,76,946

11,37,30,833 13,61,88,751 2,24,57,918 18,88,86,937 13,14,05,030 32,10,95,175 30,95,89,967 63,11,13,065 62,09,64,023 5,88,38,073 5,74,81,907 1,15,05,208 6,89,87,115

23,45,34,881 17,27,68,987 7,83,69,553 39,65,78,184 44,81,95,036 13,72,07,626

1,66,03,659 8,55,90,774

5,16,16,852

13,72,07,626

Interpretation:
During the period 2006 to 2007, there was an increase in the Working Capital of the Company.

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Statement of Changes in Working Capital during the period

2007-2008
Particulars 2007 2008 Increase in Working Capital Decrease in Working Capital

Current Assets Cash on hand Cash at bank Sundry debtors Closing stock Other Current assets Total (A) Current Liabilities Current liabilities Provisions 12,06,318 11,29,951 76,367 1,81,09,560

4,25,73,957 2,44,64,397 13,61,88,751 15,10,96,317 1,49,07,566 13,14,05,030 10,52,91,435 30,95,89,967 22,31,33,878 62,09,64,023 50,51,15,978 1,49,07,566 5,29,90,750 11,77,05,280 5,15,67,655 14,23,095 20,72,957 11,72,94,657 4,10,623

2,61,13,595 8,64,56,089 13,07,55,611

Working Capital from 17,27,68,987 1,92,92,894 banks Total (B) Net Working Capital (A-B) Decrease in Working Capital Total 44,81,95,036 18,81,55,206 18,33,718 31,69,60,772 1,67,41,284

1,72,19,937

1,72,19,937 14,79,75,548

13,12,34,264

14,79,75,548

14,79,75,548

Interpretation: During the period 2007to 2008, there was an increase in the working capital of the Company.
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Statement of Changes in Working Capital during the period

2008-2009
Particulars 2008 2009 Increase in Working Capital Decrease in Working Capital

Current Assets Inventories Sundry Debtors 10,52,91,435 13,39,45,023 2,86,53,588 15,10,96,317 15,22,91,708 11,95,391

Cash + Bank balances 2,55,94,348 12,10,34,896 9,54,40,548 Others current Assets Loans + Advances Total (A) Current Liabilities Current Liabilities Provisions 5,15,67,655 8,98,41,079 11,72,94,657 11,29,88,519 43,06,138 3,82,73,424 57,986 13,89,848 13,31,862

22,30,75,892 23,61,87,286 1,31,11,394 50,51,15,978 64,48,48,761 13,97,32,783

Working Capital from 1,92,92,894 1,52,87,300 40,05,594 banks Total (B) Networking Capital (A-B) Increase Working Capital Total 18,81,55,206 21,81,16,898 83,11,732 31,69,60,772 42,67,31,863 3,82,73,424 10,97,71,090

14,80,44,515

14,80,44,515

14,80,44,514

Interpretation:

There was some change in current assets which leads to all the increase stages where it shows the higher utilization of working capital.
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Increase of current liabilities the utilization has come down. However, during the year 2008 & 2009there was decreasing in utilization of working capital.

Particulars

2009

2010

Increase in working Capital

Decrease in Working Capital

Current assets Inventories Sundry Debtors Cash and bank balance Other current assets Loans and advances Total (A) Current Liabilities Current Liabilities Provisions Working Capital from banks Total (B) Net Working Capital (A-B) Decrease Working Capital Total 89,841,079 64,484,799 112,988,519 125,994,772 13,006,253 15,287,300 7,964,793 7,322,507.00 25,356,280 133,945,023 138,918,033 4,973,010 152,291,708 206,245,483 53,953,775 121,034,896 64,796,749 1,389,848 1,536,064 146,216 22,817,037 79,055,184 56,238,147

236,187,286 213,370,249 644,848,761 624,866,578 59,073,001

218,116,898 198,444,364 13006253 426,731,863 426,422,214 46066748

32,678,787 46,376,397

309649

46376397

46,376,397

Statement of Changes in Working Capital during the period 2009-2010

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Interpretation: During the period 2009to 2010, there was a decrease in the Working Capital of the Company.

Statement of Working Capital during the period

2010-2011
Particulars 2010 2011 Increase in Working Capital Decrease in Working Capital

Current assets Inventories Sundry debtors Cash and bank balance Other Current assets Loans and advances Total (A) Current Liabilities Current Liabilities Provisions Working Capital from banks Total (B) 6,44,84,799 11,79,36,595 5,34,51,796 12,59,94,772 18,38,19,408 5,78,24,636 79,64,793 2,82,41,585 2,02,76,792 13,89,18,033 16,89,68,061 3,00,50,028 20,62,45,483 22,87,71,563 2,25,26,080 6,47,96,749 23,91,49,881 17,43,53,132 15,36,064 18,78,444 3,42,380

21,33,70,249 21,54,32,118 20,61,869 62,48,66,578 85,42,00,067 229,333,489

19,84,44,364 32,99,97,588 11,12,76,432

2,02,76,792 2,02,76,792

Net Working Capital (A- 42,64,22,214 52,42,02,479 11,80,57,057 B) Increase in Working Capital

9,77,80,265

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Total

11,80,57,057

11,80,57,057

Interpretation: During the period 2010to 2011, there was an increase in the Working Capital of the Company.

Statement of Changes in Working Capital of Jocil Limited

lakhs)
Year Current Assets Current Liabilities

(Rs. in

Working Capital Changes in Working Capital

(Rs.)
31-3-2007 62,09,64,023 31-3-2008 50,51,15,978 31-3-2009 64,48,48,761 31-3-2010 62,48,66,578 31-3-2011 85,42,00,067 Average 64,99,99,081

(Rs.)
17,27,68,987 18,81,55,206 21,81,16,898 19,84,44,364 32,99,97,588 22,14,96,609 44,81,95,036 31,69,60,772 42,67,31,863 42,64,22,214 52,42,02,479 42,85,02,473 5,16,16,852 13,12,34,264 10,97,71,091 3,09,649 9,77,80,265 7,81,42,424

131234264 14000000 109771091 12000000 10000000 80000000 6000000051616852 40000000 20000000 309649 0 2004-05 2005-06 2006-07

97780265 78142424

2007-08

2008-09

Avearge

average

Interpr etation:

There were some changes in the Working Capital statement. During the year 2007, it shows low utilization of Working Capital and during the years 2008 and 2009, the utilization has increased. However, during the year
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2010utilization has very come down. 2011 was again an increase in utilization of Working Capital low. RATION OF WORKING CAPITAL IN JOCIL LTD: LIQUIDTY RATIO

Current Ration:
The Current Ratio is a measure of firms short/term solvency. It indicates the availability of current assets in rupees for every one rupee of current liability. Current Ration = Current Assets Current Liabilities Current Ratio in Jocil ltd
(Rs. in lakhs)

Year

Current Assets

Current Liabilities

Ratio

2006-2007 2007-2008 2009-2009 2009-2010 2010-2011

62,09,64,023 50,51,15,978 64,48,48,761 62,48,66,578 85,42,00,067

17,27,68,987 18,81,55,206 21,81,16,898 19,04,79,571 30,17,56,003

3.59 2.68 2.95 3.28 2.83

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Ratio 4 3.5 3 2.5 2 1.5 1 0.5 0 20052006 20062007 20072008 20082009 20092010 Ratio

Interpretation:
A Current Ratio of 2:1 or more is considered satisfactory. This rule is based on the logic that in a worse situation, even if the value of current assets becomes half, the firm will be able to meet its obligations. The Current Ratio represents a margin of safety for creditors. It measures only total rupees worth of current assets and current liabilities and does not measure the quality of assets and current liabilities and does not measure the quality of assets. However, it is measure of the firms liquidity. From the above table, it is evident that Current Ratio of Jocil is more than 2.50, which indicates its creditors are having a very high margin safety.

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Quick Ratio:
Quick Ratio establishes a relationship between quick or liquid assets and current liabilities. An asset is liquid if it can be converted into cash immediately or reasonably soon without a loss of value. Cash is the most liquid asset. Quick Ratio = Quick Assets

Current Liabilities Quick Ratio in Jocil Ltd (Rs in lakhs)

Year Quick Assets Current Liabilities Ratio

2006-07

49,30,56,255

17,27,68,987

2.85

2007-08

39,98,24,545

18,81,55,206

2.12

2008-09

38,87,30,521

20,28,29,598

1.92

2009-10

38,16,38,171

19,04,79,571

2.00

2010-11

53,03,61,167

30,17,56,003

1.76

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Ratio 3 2.5 2 1.5 1 0.5 0 2005-06 2006-07 2007-08 2008-09 2009-10 Ratio

Interpretation: Generally a Quick Ratio of 1:1 is considered to represent a satisfactory current financial condition. From the above table, it is evident that Jocil Quick Ratio is more than 2.00 in all yeas except in the years 2008-09, and 2010-11 which indicates it can very well meet its current obligations without any funds crunch.

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Stock Turnover Ratio:

This ratio indicates the efficiency of the firm in producing and selling its product. The average of opening and closing balances of inventory. In a manufacturing company, inventory of finished goods is used to calculate this ratio. Stock Turnover Ratio = Cost of Goods Sold Average Inventory Stock Turnover Ratio in Jocil Ltd (Rs in lakhs)
Year Cost of Goods sold (Rs.) Opening Closing Inventory Average Inventory (Rs.) (Rs.) Inventory Ratio

2006-07

57,65,55,039

4,99,06,963

3,34,64,972

4,16,85,968

13.83

2007-08

61,02,59,100

3,34,64,972

5,88,07,804

4,61,36,388

13.22

2008-09

73,98,04,529

5,88,07,804

7,79,59,405

6,83,83,604

10.82

2009-10

104,09,24,257

7,79,59,405

8,77,98,748

8,28,79,076

12.56

2010-11

172,64,33,594

8,77,98,748

10,75,76,033

9,76,87,390

17.67

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Ratio 20 18 16 14 12 10 8 6 4 2 0 2005-06 2006-07 2007-08 2008-09 2009-10

Ratio

Interpretation: If the Turnover Ratio is high, it means that the Company can rotate its turnover for more number of times. During the year 2010-11, this stood at17.67.

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Stock Conversion Period:

Stock Conversion Period shows the average time for clearing the stock through sales. The formula is to divide the No. of days in a year with the Stock Turnover Ratio. Stock Conversion Period = 365 Days Stock Turnover Ratio Stock Conversion Period in Jocil Ltd
(RS IN Lakhs)

Year

Days

Stock Turnover Ratio

Stock Conversion Period

2006-07 2007-08 2008-09 2009-10 2010-11

365 365 365 365 365

13.83 13.22 10.82 12.56 17.67

26 28 34 29 21

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Stock Conversion Period 40 35 30 25 20 15 10 5 0 2005- 2006- 2007- 2008- 200906 07 08 09 10 Stock Conversion Period

Interpretation: If the Stock Conversion Period is low, it means that the Company can rotate its stocks so fact and more number of times in a year. Further, during last two years 2009-10, 2010-11 the Conversion Period has 1st decrease and next increase due to holding higher inventory of finished goods.

Average Collection Period:

Average Collection Period tells us how and in what time the debtors are collected. The Debtors Turnover Ratio tells about how many times the debtors are to that of sales. These two are reciprocities at each other. Average Collection Period =
365 Days

Debtors Turnover Ratio

Average Collection Period in Jocil Ltd (Rs. in Lakhs)

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Year

Days

Debtors Turnover Average Collection Period Ratio (Days) 6.82 5.71 6.23 7.12 9.84 54 64 59 51 37

2006-07 2007-08 2008-09 2009-10 2010-11

365 365 365 365 365

Average Collection Period (Days) 70 60 50 40 30 20 10 0 2005- 2006- 2007- 2008- 200906 07 08 09 10 Average Collection Period (Days)

Interpretation:
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Generally, the higher the value of debtors turnover, the more efficient is the management of credit. From the above table, it is evident that the Average Collection Period of debtors was increase during the year 2007-08. The Average Collection Period was low in the year 2008-09 due to maintenance of debtors at a lower level compared to hike in turnover. However it was decrease to 37 days during the 2010-11.

Working Capital turnover Ratio:

A firm may also likes to relate net current assets to sales. Net current assets are thing but the difference between current assets and current liabilities. The result of this ratio indicates how many times the working capital has rotated for generating the sales. Working Capital Turnover Ratio = Sales

Net Current Assets Working Capital Turnover Ratio in Jocil Ltd

(Rs. in Lakhs)

Year

Sales (Rs.) Current Asset Current Net Current (Rs.) Liabilities (Rs.) Assets (Rs.) 17,65,68,731 44,78,92,554

Ratio

2006-07 77,22,61,37 62,44,61,285 6 2007-08 73,02,58,57 50,51,15,978 2 2008-09 84,55,85,49 64,48,48,761 4

1.72

16,88,62,312

33,62,53,666

2.17

20,28,29,598

44,20,19,163

1.91

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2009-10 112,91,96,2 62,48,66,578 44 2010-11 193,41,67,6 85,42,00,067 17

19,04,79,571

43,43,87,007

2.60

30,17,56,003

55,24,44,064

3.50

Ratio 4 3.5 3 2.5 2 1.5 1 0.5 0 2006-07 2007-08 2008-09 2009-10 2010-11 Ratio

Interpretation: If Working Capital Turnover Ratio is high, it is better to the organization. In the years 2010-11, 2009-10, 2007-08,the ratio was more than 2.00 times working capital has rotated to that of sales. It shows an improvement in these years. However, the ratio was below 2.00 times in the years 2006-07, 2008-09 as the level of current assets have gone up substantially due to which the ratio has fallen down.

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FINDINGS & SUGGESTIONS

FINDINGS OF THE STUDY:  Schedule of changes in working capital showed increases in working capital from 2006 to 2011.  Quick ratio is also increasing from 31-3-2006 and it is decreased as on 31-3-2008 to 31-3-11.  Current ratio of the company decrease into the 2006 to 2011.  The Debt Ratio and Debt Equity Ratio are less than 0.18 as against normally permitted level of up to 2 in the manufacturing companies. It indicates that the Company has repaid the term loans and is almost Debt free.  Company is always maintaining high liquidity to meet daily operations. And also maintaining good cash management. The excess in banks always converted into fixed deposits.  The net profit ratio is increase 3.59 in 2008; again it is decrease to 1.83in 2010  Cash ratio showed decreasing balance between the periods 2011 working capital of the company showed an increase balance.

SUGGESTIONS:  Working Capital turnover ratio should be high. To increase this ratio, Jocil has to reduce its net working capital. Net working capital can be reduced when inventory level is to minimum.  At present the raw material holding period is 27 days. This can be
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reduced to a maximum of 7 days, as the raw materials are available at nearby places. When an order is placed they can have required material within 2 to 3 days.  Inventory turnover ratio indicates the efficiency of the firm in producing and selling its products.  As Jocil, this ratio is gradually increasing. In 2006, it is 12.97 whereas in 2010, it was 17.69.  In order to increase this ratio, sales should be increased. To increase the sales company has to concentrate in capturing the foreign markets.  This is easily possible as they are linked with multi-nationals and reputed business houses.  Through them they can enter into the foreign market by sending some samples of their products. Once they are able to attract foreign customers they can utilize their licensed capacity which is 69500TPA. At present it is utilizing only 37227 TPA.

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GLOSSARY

Gross Working Capital : It is also known as current capital. Net Working Capital : It refers to the difference between current assets and current liabilities. Permanent Working Capital : The minimum level of current assets is referred to as permanent or fixed or long-term working capital. Temporary Working Capital : The extra working capital, needed to support the changing production and sale activities is called the temporary working capital or short-term working capital.

Operating Cycle : Operating cycle is the time duration required to sales after the conversion of resources into inventories into cash.

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