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A STUDY ON
WORKING CAPITAL MANAGEMENT
OF
REGENCY CERAMICS LTD, HYDERABAD



. Working capital is the lifeblood and nerve center of
any business. Every business needs funds for two
purposes, for its establishment and to carry its day-
to-day operations.
Long-term funds are required to create
production facility through purchase of fixed
assets such as plant, machinery, land, building,
furniture etc.
Historically, man has desired to create living
spaces which were beautiful, durable and user
friendly. With that in mind, ceramic tile has
been made by man for 4000 years.
In Europe decorated tiles did not come into
general use outside Moorish Spain until the
second half of the 12th century.
In India the industry was born in 1958 when
H&R JOHNSON with the collaboration
of Johnson (U.K).

The government continued to lower the excise
duty by on Ceramic tile from as high as54% in
1995-96 budgets in 2002-03 budgets.
Indias ceramic tile industry emerged in the
1950s.
Vitrified and porcelain tiles are recent entrants
into the ceramic tile industry and have
increased the size of the market considerably.
Regency Ceramics Ltd. is a versatile ceramic tile
company with over twenty five years of experience
in the art of fine living.
The company is also the largest exporter of ceramic
tiles in India.
The company was established in the year 1983
under the leadership Dr G.N. Naidu.
Started with a capacity to manufacture 4000 sq.m.
per day, today the company has one of the largest
manufacturing capacities in ceramic tiles with a
daily production exceeding 44,000 sq.m.

It has 700 dealers across all over India to ensure
efficient, smooth and seamless operations.
The company is driving its exports growth
constantly and expanding its reach to different
territories across the continents.
The company is the first in the ceramic industry to
receive OHSAS 18001 certification for its
commitment to implement the international
standards.

The data related to Regency ceramics has
been collected through annual reports, financial
statements operating results, reports and the
relevant statement of the company has been
studied. To analysis the working capital and for
assessing the working performance of working
capital management, accounting ratios are used.

The sources of data is divided into two types
Primary data
Secondary data



Primary data:
The primary data is collected through discussion with
the staff members in finance department and authorities
of Regency ceramics (p) Ltd., Hyderabad.

Secondary data:
The secondary data has been collected from published
annual reports of the administrative of the firm, which
were available at the administration office standard text
books, various accounting and financial materials
collected from Regency ceramics (p) Ltd.

To find out the schedule of changes whether there is
an increase decrease in every year.
To find out the short term and long term debt equity
ratios of the Regency ceramics (p) Ltd.
To find out the liquidity position of the company for
the years of 2006-2011
To find out the performance of the cash, inventory,
current debtors, marketable securities in assets.
To find out the suggestions and recommendations
findings etc for the financial performance.

The scope of the study is confined to the analysis of
solvency and profitability position of the Regency
ceramics (p) Ltd.
The study aims to study the financial position of the
firm.
The working capital analysis may help the company
to like appropriate financial decision in the future.
Working capital is useful for investments
money analysis.

The study is based on the data provided by the
companys financial statements. So, the limitations
of the statements are equally applicable to this
study.
The study is limited for a period of 5 years i.e. from
2008 2013.
Time period is limited.
Mostly preferred secondary data.


CURRENT RATIO (2008-2009 to 2012-2013)











YEARS CUTTENT
ASSETS(Lakhs)

CURRENT
LIABILITIES
(Lakhs)
CURRENT
RATIO
2008- 2009 9054.12 3216.35 2.82
2009- 2010 10176.76 3900.90 2.61
2010- 2011 9180.69 3828.58 2.40
2011- 2012 9112.23 2825.46 3.23
2012- 2013 9960.7 3395.22 2.93
0
0.5
1
1.5
2
2.5
3
3.5
2008-
2009
2009-
2010
2010-
2011
2011-
2012
2012-
2013
CURRENT RATIO
CURRENT RATIO
A current ratio of 2:1 is usually considered to ideal for
the company. In the above graph in the year 2010-2011
the current ratio was 2.40 which show the firms
liquidity position is very good & the firm in a position
to meet all its short term expenditures.

But the high current ratio shows the firms not
utilizing it resources properly & a large amount of funds
were blocked up current position of the company. In the
year 2011-2012 it reached all time high in the last 5
years to 3.23 which is not good for the company.
YEARS QUICK ASSETS
(Rs. In lakhs)
CURRENT
LIABILITIES
(Rs. In lakhs)
QUICK RATIO
2008- 2009
4720.23 3216.35 1.47
2009- 2010
5166.41 3900.90 1.32
2010- 2011
4790.59 3828.58 1.25
2011- 2012
5879.12 2825.46 2.08
2012- 2013
6370.98 3395.22 1.88
0
0.5
1
1.5
2
2.5
2008-
2009
2009-
2010
2010-
2011
2011-
2012
2012-
2013
QUICK RATIO
QUICK RATIO
As a conventional rule, quick ratio should be 1:1. The
above graph shows the quick ratio is the year 2012-
2013 was 1.88: 1 which is above the conventional
rule. It says that large amount of funds were locked
in the quick assets where the company is not
generating any revenue (or) return on those assets,
as an effect the profitability of the company is
affected with the excess of quick assets over the
required. The next 3 years continuously decrease
and the next year increased.

A current ratio of 2:1 is usually considered to ideal for
the company. In the above graph in the year 2010-2011
the current ratio was 2.40 which show the firms
liquidity position is very good & the firm in a position
to meet all its short term expenditures.

In the quick assets where the company is not generating
any revenue (or) return on those assets, as an effect the
profitability of the company is affected with the excess
of quick assets over the required. The next 3 years
continuously decrease and the next year increased.

A higher fixed assets turnover ratio indicates an
efficient utilization of fixed assets and greater
efficiency & profitability. In 2012-2013 it reached
the highest point of 1.52 in the review period which
is good for the company.

In the year 2009-2010 the ratio was 0.51:1, 2010-
2011 0.52:1, 2011-2012 0065:1 and 2012-2013
0.64:1. In the case of REGENCY CERAMICS this
ratio is moderate. Proper cash balance is maintained
in current assets. It leads to better maintenance of
current assets.

The working capital position is good. It was slightly
fluctuated. More over it indicates enough working at the
maintain future estimation in Regency ceramics limited.

The current ratio of the company is good. All the years it is
over than the standard time a performed by Regency
ceramics industries. It should continue for better
performance of the company in the competition market.

The cash and bank balances position in current assets are
very huge. So it should utilize properly in order to invest in
various innovative production strategies. The position of the
debtors in the current assets is good. So it should maintain in
future market.


From the above analysis the researcher
conclude that the working capital position is good in
Regency ceramics, Hyderabad. The current ratio and
quick ratios of the company is more than the
standard norm, and the researcher suggested that the
company should utilize the excess working capital
in order to invest in various investments for
improving the profitability and more over the firm
should decrease the inventory turnover i.e.
implementing the new strategies in production
department







Websites:
www.biztantra.com
www.rinfra.com
BOOK AUTHOR PUBLISHER
Financial
Management
Prasanna Chandra TaTa Mc Graw
Hill
Financial
Management &
Policy
V.K. Bhalla Anmol
Publications Pvt
Ltd