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MVR COLLEGE OF ENGINEERING&TECHNOLOGY

PPT ON WORKING CAPITALMANAGEMENT

Presentation by Y.V.R. PRAVEENKUMAR MBA

KUSALAVA INTERNATIONAL LIMITED


INDIA

KUSALAVA INTERNATIONAL LIMITED


MANUFACTURERS OF TIGER POWER CYLINDER LINERS

Sri.CH.KUSALAVA Chairman

Sri.CH.VENKATESWARARO WHOLE TIME DIRECTOR

Sri.CH.R.K. PRASAD MANAGING DIRECTOR

SRI CH. KUSALAVA aged about 83 years is a veteran in Finance and Automobile businesses in Krishna District and has over five decades of experience in this field right from manufacturing to retailing and from transportation to financing . He started the Automobile business activities in the year 1950 and slowly expanded the business empire under the able leadership of his sons Mr.CH. VENKATESWARA RAO & Mr. CH. R.K. PRASAD. Sri Kusalava, Honorary Chairman of Kusalava Group was the Founder President of Andhra Motor Merchant Association and Andhra Chamber Of Commerce and also Treasurer for Sr. Citizens Forum,; Vijayawada.

Mr. CH. VENKATESWARA RAO aged about 55 years is a Whole Time Director in Kusalava Motors Pvt Ltd., (Dealers for Hyundai Motor India Ltd & TVS Motor Company) and with his good experience of more than 25 years in Automobile Dealer ship management played a important role in growth of company. He is also Managing partner of Bharat Automobiles (Distributors for Automobile parts and components) and Director in Kusalava International Ltd.

Mr. Ch.R.K. PRASAD aged about 50 years is a Graduate in Mechanical Engineering and the main Pillar behind the rapid growth and expansion of Kusalava Group of Companies since 1984. He is the Managing Director of Kusalava Motors Pvt. Ltd., Kusalava International Ltd., and Managing Partner of M/s Bharat Automobiles. He is having a good experience of more than 20 years in managing Automobile Dealer ship. He has played a key role in the growth of the company.

KUSALAVA MOTORS PVT LTD

KUSALAVA FINANCE LIMITED

KUSALAVA GROUP OF COMPANIES

BHARAT AUTOMOBILES

SNEHA BIO TECH.

CHUKKAPALLI TRANSPORT COMPANY

KUSALAVA INTERNATIONAL LIMITED


Kusalava International Ltd established in the year 1964 is in forefront in the area of Sleeves / Cylinder Liners for internal combustion engine. The company has so far established a reputable clientele in India. It also caters the needs of replacement market through wellorganized distribution network. The unit has established a strong foot holds in the Exports front.

Cummins

Darton

Hino

Peugeot

AUTOMOBILE INDUSTRY PROFILE

annual production of over 2.3 million units. The monthly sales of passenger cars in India exceed 100,000 units. By 2016 the size of the Indian automobile industry is expected to grow by 13%, to reach a mark of US$ 120-159 billion.

9TH LARGEST AUTOMOBILE INDUSTRY IN WORLD

AUTOMOBILE INDUSTRY
9th largest in the world with an annual production of approximately 2 million units

AUTOMOBILE

2 WHEELER

3 WHEELER

PASSENGER VEHICLE

COMMERCIAL VEHICLE

SALES:
Company name Maruti Suzuki Mahindra & Mahindra ltd Hyundai motors India ltd Vehicles/units 7,64,842 2,31,355 360,934 Growth in % 13.3 30 16.13 Year 2006-07 2007-08 2007-08

Skoda
General Motors

14,187
66,543

14.06
71

2007-08
2007-08

Funds required for short term purposes or day to day expenses are working capital. WC refers to part of firms capital reqd. for financing short term or current assets also known as revolving or short term capital or circulating capital.

IMPORTANCE OF NET WORKING CAPITAL


It is a qualitative concept which indicates firms ability to meet its operating expenses and short term liabilities. It indicates the margin of protection available to the short term creditors. Indicator of financial soundness of an enterprise. Net WC is referred to as working capital.

TYPES OF WORKING CAPITAL


1.On the basis of concept
(a) gross working capital:The firms investment in current assets.

(b) Net working capital:- Net working capital can be defined as current assets, which are finance with long-term funds.
NWC = Current

Assets - Current Liabilities.

2.On the basis of Requirement (a) permanent:- it represents the assets required on continuing basis over the inter year. Tendon committee has reserved to this type of working capital as core current assets. (b) Variable exp- seasonal:- it represents additional assets required at different times during the operation year. The amount of working capital over permanent working capital is known as variable working capital.

OPERATING CYCLE
Working capital
Accounting receivable

cash

finished Goods

RAW material

WIP

IMPORTANCE OF WC:Maintains solvency of business. Helps in creating & maintaining goodwill. Helps in arranging loans from banks & others on easy and favourable terms. Enables a concern to avail cash discount and hence reduce cost. Ensures regular supply of raw materials. Regular payment of salaries, wages & other day to day commitment. Exploitation of favorable market condition. Enables a concern to face business crisis.

ANALYSIS OF WC

RATIO ANALYSIS
It is a simple arithmetical expression of one number to another. The technique of ratio analysis can be employed for measuring short term liquidity or working capital position of the firm. The following ratios may be calculated for this purpose:

Current ratio. Acid test ratio. Absolute liquid ratio. Inventory turnover ratio. Receivables turnover ratio. Payables turnover ratio. Working capital turnover ratio.

Working capital leverage.


Ratio of current liabilities to tangible net worth.

FUNDS FLOW ANALYSIS

Fund flow analysis is a technical device designated to study the

sources from which additional funds were derived and the use to
which these sources were put. It is an effective management tool to study changes in the financial position (WC) of a business enterprise

between beginning and ending financial statements. Funds flow


analysis consists of:

Preparing schedules of changes in WC. Statement of sources and application of funds.

WORKING CAPITAL BUDGET


Budget is a financial or quantitative expression of business plans & policies to be pursued in the future period of time. WC budget as a part of total budgeting process of a business is prepared estimating future long term & short term WC capital needs & sources to finance them & then comparing the budgeted figures with the actual performance for calculating variances. The successful implementation of WC budget involves the preparing of separate budgets for various elements of WC such as cash inventories and receivables etc. The objectives of a WC budget is to ensure availability of funds as and when needed and to ensure effective utilization of these resources.

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