Hypotheses

A Project Study on Working Capital Management of KAMCO Ltd.

INTRODUCTION Financial

management refers to that part of the management activity which is concerned with the

planning and controlling of firms financial resources .It deals with finding out various sources for raising funds for the firm .The sources must be suitable and economical for the needs of the business the most appropriate use of such funds a lso forms a part of financial management. Working capital management is concerned with the management of current asset .It is an integral part of financial management as short term survival is a prerequisite for long term success .One aspect of working capital management is the tradeoff between profitability and risk .If the firm doesn¶t have adequate working capital ,that is, it doesn¶t invest sufficient funds in current assets ; it may become illiquid and consequently may not have the ability to meet its current obligation .If the current assets are too large ,profitability is adversely affected . The key strategies and considerations in ensuring a tradeoff between profitability and liquidity is one major dimension of working capital management. The goal of working capital management is to manage the firm`s current assets and liabilities in such a way that a satisfactory level of working capital is maintained. Working capital, in general refers to the excess of current assets over current liabilities. Management of working therefore, is concerned with the problems that arise in attempting to manage the current assets, current liabilities and the inter-relationship inter-relationship that exist between them.

Nirmala College of Information Technology, Chalakudy

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OBJECTIVES OF THE STUDY

The main objective of the study is to evaluate the overall analysis ana lysis of working capital of KAMCO Ltd. Other specific objectives are

1. To analyze the working capital management of KAMCO 2. To ascertain the growth of KAMCO Ltd in respect of profit 3. To ascertain the liquidity of KAMCO Ltd 4. To ascertain the efficiency of the firm 5. To understand general performance of the KAMCO Ltd 6. To get acquainted with w ith the practical side of business




























NATURE OF THE PROBLEM

The problem for which this study has been undertaken is to analysis the financial statement and to find out the components of working capital.The problem of working capital management involves the problem of decision making regarding investment in various current assets with an objective of maintaining the liquidity of funds of the firm to meets its obligation promptly and efficiently. The study is done to have a general view of the financial management of the company .Major areas covered in the scope of the study is financing of the company ,capital employed and pro fitability. fitability.




























HYPOTHESIS H ypothesis

means a mere assumption or some supposition to be proved or disproved. But for a

researcher hypothesis is a formal question that he intends to resolve .Thus a hypothesis, may be defined as a proposition or a set of preposition set forth as an explanation for the occurrence of some specified group of phenomena either asserted merely as a provisional conjecture to guide some investigation or as highly probable in the light of established facts. A research hypothesis hypot hesis is a predictive statement, capable of being tested by scientific methods that relates an independent variable to some dependent variable. var iable. Characteristics of hypothesis y

H ypothesis

should be clear and precise.

y

H ypothesis

should be capable of being tested.

y

H ypothesis

should be in limited in scope and must be specific.

y

H ypothesis

should be stated as far as possible in most simple terms so that the same is

easily understandable by all concerned. y

H ypothesis

should be amenable to testing with a reasona ble time.

y

H ypothesis

must explain the facts that gave rise to t he need for explanation.

Basic concepts concerning testing of hypothesis hypot hesis There are two types of hypothesis, hypot hesis, 1. Null hypothesis: If we are to compare method A with method B about its superiority and if we proceed on the assumption that both methods are equally good then this assumption is termed as the null hypothesis. A Null hypothesis is generally symbolized symbolized as H0. 2. Alternative

Hypothesis:

As against this we may think that the method A is superior or the

method B is inferior inferior we are then stating what is termed as alternative alternative hypothesis. Alternative hypothesis as H1. Ho

is the non effective working capital




























INTRODUCTION TO THE INDUSTRY Agriculture is a very important sector of the Indian companies .It contributes sizably to the domestic product as also to exports .More than two-third of the workforce work in agriculture and large may depend upon it, being engaged in agricultural products, agro based industries etc.

HISTORY TO THE INDUSTRY India being an agricultural based economy provides livelihood to more than 75% of the population .Major portion of our income that is., about 70% is earned from agricultural activities .In spite of the very dominant place of agriculture, it is a depressed industry because of low productivity ,in agriculture ,small size of farms ,finance and defective equipments .Once government believed that only large land holdings were the most efficient and they could use the latest techniques in cultivation .how ever in recent years the emphasis has been shifted from large land holdings to small land holdings. After achieving her independence in 1947,India found herself to be badly lacking the means to meet the food demands for her vast population .The existing agricultural scenario presented a dismal picture ±traditional farming methods ,low yielding seeds and primitive implements wholly unsuited to large scale cultivation .The only solution lay in mechanized farming which could turn around the virtual fortune of India .In order to achieve this objective, indigenous agromachinery units were to be set up, without resorting to imports which undoubtedly passed a heavy burden on the nation¶s need. Agricultural is way of life ,tradition that for centuries has shaped the thought ,the outlook, the culture and economic life of the people of India, agriculture is considered to be the major activity of most of the people .Mover over 200million farmers and farm workers have been the backbone of Indian¶s agriculture .In the beginning, then farmers adopted ancient method. The entire process that is from the sowing the seed till harvesting were all done by the farmers itself .It was




























PRESENT STATUS OF THE INDUSTRY In the view of the spectacular success in the production and productivity achieved in developed countries through mechanization of agriculture, it was being agreed that India also should fall in line with these countries. Though India was backward in the use of machines for agricultural operations, yet in the past few years there has been an increase in the use of modern implements. The phase of mechanizations of farming in the country was slow during 1950¶s.There after, particularly since the middle of 1960¶s with the coming of the new agricultural technology ,this has increased .An associated effect of the new technology is the change in the agricultural practices .The preparation of land the sowing of seeds the watering of land ,the control of seeds ,the use of pesticides ,the quick harvesting of crops etc,are now done more scientifically than ever before






























FUTURE SCOPE OF THE INDUSTRY Agro-industry is looking proudly ahead into a more promising future .Future will also see diversification products in the farm mechanization field contributing significantly to the realization of the Indian dream of self sufficiency in food production and rededicating itself to the cause of self relevance and social responsiveness in the service of people peo ple without respite.




























PROFILE OF THE ORGANISATION The Kerala Agro Machinery Corporation Ltd. Popularly known as µKAMCO¶ was established in the year 1973 as a subsidiary of Kerala agro industries corporation Ltd .[KAIC]and subsequently became a fully owned Govt.of Kerala undertaking at Athani, 25km north of koachi .It all began in 1958, when Dr.Rajendra Prasad, the president of India was presented with a µKubota power tiller µ by the Japanese [M/S.Kubota Ltd. Japan,the world¶s leading manufacturer of power tiller and other agriculture machinery]. The kerala agro industries corporation Ltd.[KAIC Ltd.]Trivandrum,[Govt. of kerala company]promoted the establishment of KAMCO .The KAIC Ltd. Entered in to a technical collaboration agreement with M/S Kubota Ltd.Japan in February1972.On

15.11.1972 the kerala industrial and technical consultancy organization

Ltd.[KITCO]were entrusted with the worth of Rs.2cores as asubsidiary of M/S. KAIC Ltd. Which held the entire paid up capital shares in KAMCO .Even though the company was formed as a subsidiary of KAIC Ltd. Subsiquently the company become a fully owned Govt. company by transferringthe sheres held by KAIC Ltd. KAMCO hascompleted its 37 years and is running on profit for the last 26 years continuously inceasing its production ,turnover and pro fit fit year after year .




























HISTORY OF THE ORGANISATION Kerala agro machinery corporation Ltd was established in april 1973 as a subsidiary of the Kerala Agro Industries Corporation Ltd.specifically for the manufacture of KUBOTA power tiller in collaboration with M/S Kubota Ltd, Japan under industrial license already granded by the Govt. the company has its registered office at Athani in Ernakulam Dist. And the first manufacturing unit was also established there.Initially,the components were being imported from Japan in CKD condition,which were assembled and tested in the factory at Athani.The Company started indigenizing the components in a phased manner and the process of indigenization was completed by the year 1986.By this time,KAMCO became an independent Organization and the collaboration agreement with M/S Kubota also ceased to exist since full indigenization had been attained and the product coming out was fully Indian in all respects.The product was also renamed as KAMCO Power Tiller.At Athani, in addition to the Assembly shop, the Company also has got machine shop where most functionally critical components of the power tiller are being processed.Rest of the items is bought out from Small and Medium scale industries located mainly in South India. In 1992,KAMCO took over a sick unit of state SIDCO in Kalamassery major industrial estate and converted the same to a power tiller engine assembly plant.The unit was taken over along with employees of SIDCO and now the Company produces Engines needed for Power tiller.The approximate investment in this unit is Rs1.2 Crores.



























A Project Study on Working Capital Management of KAMCO Ltd. merger ,company established its forth forth unit at Mala in Thrissur Dist. In the year 2000at a cost of Rs.4.28crores and shifted the production of power reaper from Kalamassery to Mala .Production of power reaper is now regularly going on in this unit .All the investment had been met from company¶s own resours. The company has established a dealership arrangement throughout the country consisting of more

than

40

dealers

in

the

Govt.

and

Pvt.

Sector

.Tiller

is

inKerala,Thamilnadu,Orrisa,WestBangal,Maharashtra,Bihar,Meghalaya,Tripura,

being

sold

Manipur

,Gujarat ,Karnataka ,Andhrapradesh ,and Pondicherry. In all the places except West Bengal the product commends 45 to 50%of the market share whereas in West Bengal the pro duct commends about 85% .Company has procured 9647power tillers during 208-09from all units together which are sold in the above states .Company is also taking efforts to make its presents felt in other states also. Power reaper is now being sold in kerala ,Thamilnadu Andhrapradesh and Orissa and to some in Maharashtra also .In Andhrapradesh and Orrisa the product is very popular .During the year 2008-09 company produced1293 reapers and sold the entire quantity through the dealers . Kerala Govt.have invested invested Rs.161.46 lakhs by way of share capital capital in the company [161460 shares @Rs100 each ]the company is running on profit since 1984-85and regularly paying dividend to Govt.Divident at 30%is being sold paid to Govt.from the year 2001-02 onwords . Sales turn over for the year 2008-09has crossed 120crores of Rupees Reserves and surplus of the company as on 31.03.2009 is Rs 8112.94 lakhs .from internally generated funds company




























PRESENT STATUS OF THE ORGANISATION KAMCO is one of the professionally managed companies owned by state Govt.Present status of KAMCO is synonymous with service to the small and marginal farmers of the country .KAMCO through their precision and quality is revolutionzing the small and marginal holdings throughout the country .Today kamco¶s products are widely used and demanded all over India ,enjoying over 50%market share at national level .The co mpany with its four plants at Athani ,Kalamassery ,Kanjicode ,and Mala unit is confidently meeting the demand for KAMCO products in India and abroad .The main markets for the products are are

at

West Bangal ,Assam ,Tamil Nadu

,Thripura,kerala ,Megalaya ,Bihar ,Gujarat ,and Manipur presently KAMCO have 45 dealers all over India .

Organisation structure of KAMCO KAMCO is governed by the board of directors. Board includes Chairman ,Managing Director and other Directors .The Govt. of kerala nominates the Chairman of the board .The chief executive officer of the company is the Managing director who shall exercise powers ,subject to the overall control and supervision of the board.The Managing Diector is the top most official and the Govt gives deligation of authority to the Managing Director .He may be entrusted and delegated from time to time by the board . The Managing Director is the operational head of the company supported by General manager and Deputy general managers for for different sections sections .Manegers and Deputy managers will assist the General Managers and Deputy General Managers





























A Project Study on Working Capital Management of KAMCO Ltd. 8. K.K.Gangadharan

Director (Director of Agricultural Dpt. Of Kerala)

9. M.Albertian

Director (Deputy Secretary, Agriculture, Govt. of Kerala)

Departments of KAMCO KAMCO- The Govt. company works with the help and support from the different department .All departments work uniquely for the attainment of the organizational goal .The performance of different departments was amazing for the past several years ,which are the reason why the company¶s profit volume is increasing at a higher rate The head of each department is Deputy General Manager Manager [DGM] assisted assisted by managers and and

DY.managers add ASST. ASST. managers at

different levels .Department heads are directly liable to report to Manageing Director . KAMCO haue totally 8 departments .They .T hey are as follows 1. Production Department 2. Marketing Department 3.

Human

4.

Finance

Resource Department Department



























A Project Study on Working Capital Management of KAMCO Ltd. Power tiller is the main product of kamco .It is a versatile machine that has radically changed the old labour intensive method of agriculture ,by making almost all farming operations faster ,cheaper and easier .The coat on Tiller Tiller is around 1.10lakh Features

A. Simple movement control for easy o f handling B. Perfectly balanced and vibration ±free engine to reduce operator fatigue C. Unique radiator cooling system helps in non stop operation D. µfail safe¶safety devices to prevents accidents E. Automatic fuel control to save precious energy F.

Distinctive radiator control system for continuous operations

G. It is faster H.

Make cleaner windrows for easier collection co llection

I. 6 forward speed ,2 reserve speed ,4 , 4 tilling J. Rotary ,diesel ±powered ,water cooled ,with radiater K. Weight is 485kg



























A Project Study on Working Capital Management of KAMCO Ltd. Features

A. Power reaper harvests and makes windrows at t he rate of 3-4 hours of hectare B. It is light enough to carry by two t wo persons C. Smooth chain conveyer action deliver plants gently making clean windrows D. Weight is 136 kg E. Engine type is single cylinder ,4stroke ,4 stroke CSD RR ,side value air cooled coo led engine F.

Maximum H P 3.6 Ps

Manufacturing KAMCO¶s Power tiller have more than 850 different components, majority of which are supplied by dedicated small and medium scale industries from near by states .Functionally critical components (almost 13)are manufactured in kamco¶s house itself Company has got a modern machine shop with special purpose machine ,which ensure conformity with prescribed quality quality standards .Inspection at at various stages off manufacturing is carried out ,which help in reducing the process to the minimum.




























Objectives of the company The main objective of the company is to manufacture or assemble in India ,either in collaboration or otherwise tractors ,power , power tillers ,power reapers ,combine harvesters ,tansplanters .diesel engine s, pump pu mp sets, accessories and attachments and spares thereto. The other objectives are as follows; 1.To organize , conduct or manage engineering workshops or repair shop. 2.To manufacture, import, buy, sell, or deal in workshop machinery machine tools and metals of all kinds and to undert ake repairs. 3.Servicing of agricultural machinery or other equipments,implements and tools 4.Rendering other kinds of services for co nsideration or otherwise.

Milestones of the Company



























A Project Study on Working Capital Management of KAMCO Ltd. As far as KAMCO Ltd. Products having having heavy demand in the market , their un able to meet the requirement of the customers .The company is functioning in a cordial and happy atmosphere . The officers and staff in the company compan y are very co-operative and friendly moving .The Cochin Port and Cochin Aerodrome are situated very near to the company and this will also help to boost the business .The company is running a stabilized canteen for their employees to maintain a harmonious atmosphere resulting to make maximum output.

Corporate Governance Being a non-listed GOVT. company, provisions of the company¶s Act 1956 with 8regard to corporate governance is not applicable. Pollution Controlling System System of KAMCO Athani, Palakkad and Mala units of the company have installed effluent treatment systems designed by the LBS centre for Science and Technology and approved by State Pollution Control Board. The all new engines will reduce pollution and it also reduces the fuel consumption than






























Industrial Relations The industrial relation in the KAMCO is cordial which forms the basis for sustained growth of the organization .

Quality of products The company enjoys the position of premier manufacture in the field .The products



























A Project Study on Working Capital Management of KAMCO Ltd. 4. To detect and prevent non-conformance and defects as early as possible and to eliminate them through appreciate changes to the quality management system. 5. To achieve and maintain quality leadership through continuous technology up-gradation improvements in techniques system and procedures pro cedures and to meet customers changing needs.

Expansion and Diversification As per the decisions of Board of Directors to diversify into production of low

HP

Tractor and

various kinds of pesticides sprayers, action had been taken to acquire the technology. Memorandum of Undertaking has been signed with M/s Barbieri

Srl, Italy for for providing



























A Project Study on Working Capital Management of KAMCO Ltd. FINANCIAL HIG HLIGHT

2004-05

(Rs in Lakhs)

2005-06

2006-07

2007-08

2008-09

A.SALES REVENUE Kamco power tiller t iller

6661.79

6599.54

7558.47

8300.56

9930.36

Power reaper

364.77

440.30

475.64

636.59

858.21

1.00

2.01

Power stone cutter




























PER FORMANCE During the year 2008-09 the total turnover of the company increased from 101.22 crores to Rs 120.28 crores. During the first half of 2008-09 material costs showed an increasing trend. During the second half of 2008-09 economic recession all over the world hit the Indian economy also to a very great extend. In spite of the recessional tendency which adversely affected the production of engineering&automobile industry, the company could improve the sales mainly because of the improved quality of the product. The company could also reduce the material cost to some extent




























FUTURE SCOPE OF THE ORGANISATION KAMCO is looking proudly ahead into more promising future . Future will also See KAMCO¶s diversification products in the farm mechanization field contributing significantly in food production and predicting itself to the cause of self relevance and social responsibility in the service of people without respite. Today KAMCO is a multi- product, multi- location company with two production units at Ernakulam dist., one production unit at Palakkad dist. And one production unit at






























LITERATURE REVIEW




























However

and

the picture changes when uncertainty (i.e. uncertain growth ) is introduced (Brigham

Houston

2000). Larger amounts of cash, securities, accounts receivables, marketable




























THEORETICAL CONCEPTS




























CONCEPT O F WORKKING CAPITAL There are two concepts of working capital



























A Project Study on Working Capital Management of KAMCO Ltd. flow out again in exchange for other current assets .Hence it is also known as revolving or circulating capital .The circular flow concept of working capital is based up on this operating or working capital cycle of a firm .The cycle starts with the purchase of raw material and other





















































































































































































































































































































































































































































































































































































































































































































































































































































































Interpretation An increase in the asset effects the working capital increasing trend. An increase in the liability shows a decreasing trend of working capital. A decrease in the asset effects the working capital in a decreasing trend. A decrease in the liability shows an increasing trend. But an increase in the liability shows a decreasing trend of working capital. For example in the year 2005current asset like loose tools inventories and debtors de btors shows a decreasing trend. Its percentage of change is also a lso negative. But in the liabilities like current liability and provision shows a decreasing trend but its percentage of change is positive.




























CASH MANAGEMENT The main aim of cash management is to maintain adequate control over cash position to keep the firm sufficiently liquid liquid and to use excess excess cash in some some profitable profitable way.

The

management of cash also important because it is difficult to predict cash flows accurately, particularly the inflows, and there is no perfect coincidence between the inflows and outflows of cash. During some periods, cash outflows will exceed cash inflows, inflows, because payments for taxes, dividends¶ or seasonal inventory buildup. At other times cash inflow will be more than cash payments because there may be large cash sales and debtors may be realized in large sums promptly. The firm should evolve strategies regarding the following four facets of cash management. P lanning g: Cash inflows and outflows should be planned to project cash surplus or 1. Cash Plannin

deficit for each period of the planning period. anaging ing the cash cash f lows: ows: The flow of cash should be properly managed. The cash 2. Manag

inflows should be accelerated while, as far as possible, the cash outflows should be decelerated 3. Optimum Cash Level: The firm should decide about the appropriate level of cash balance. The cost of excess cash and danger of cash deficiency deficiency should be matched matched to determine the optimum be decelerated. 4. Inves nvesting ting Surplus urplus Cash: The surplus cash balance should be properly invested to earn profits. The firm should decide about the division of such cash balance between alternative short term investment opportunities such as bank deposits, marketable securities or interoperate lending. The ideal cash management system will depend on the firm¶s product, organization structure, competition, and culture.






























Cash maintenance is higher in the case of KAMCO comparing with the industry. It shows increasing trend and it creates more liquidity liquidity to the company. (Rs. In Lakhs)

KAMCO

2005

Cash & Bank 2006 2007

2008

2009

2771.42

2878.75

3525.63

3585.66

3922.46

Cash & Bank 4500 4000 3500 3000 2500 2000

Cash & Bank




























INVENTORY MANAGEMENT The aim of inventory management should be to avoid excessive and inadequate levels of inventories and to maintain sufficient inventory for the smooth production and sales operation. Effort should be made made to place an order at the right right time with with the right source to acquire the right quantity at the t he right price and quality. An effective inventory management should y

Ensure a continuous supply of raw materials to facilitate facilitate uninterrupted production

y

Maintain sufficient stocks of raw materials in periods of short supply and anticipate price changes

y

Maintain sufficient finished goods inventory for smooth sales operation and efficient customer service

y

Minimize carrying cost and time, and

y

Control investment in inventories and keep it at an optimum level

Maintaining and inadequate level level of inventories is also dangerous. The consequences of under investment in inventories are production hold ups and failure to meet delivery commitments. Inadequate raw material material and work in progress inventories will result in in frequent production production interruptions. Similarly, if finished finished goods inventories are not sufficient sufficient to meet the demand of




























The inventory contribution is higher higher for the raw materials than the finished goods. Normally the other players keeping finished finished goods more than raw materials as inventory. But KAMCO keeps on maintaining raw materials more than the finished goods. Inventories are listed of stock-raw sto ck-raw materials, work in progress, or finished goods wa iting iting to be consumed ;in production or to be sold. The total balance of inventory inventory is the sum the value of each stock line. (Rs. In Lakhs)

KAMCO

2005

Raw Material & Stores 2006 2007

2008

2009

838.85

856.26

1274.05

1531.34

984.91

Raw Material & Stores 1800 1600 1400 1200 1000 800

Raw Material & Stores



























A Project Study on Working Capital Management of KAMCO Ltd. Finished

2005 KAMCO 588.71

2006

Goods 2007

2008

2009

944.34

553.60

294.27

109.76

Finished

Goods

1000 900 800 700 600 500 Raw Material & Stores

400 300 200 100 0 2005

KAMCO

2006

2007

2008

2009

2005

Work in Progress 2006 2007

2008

2009

298.47

338.99

425.54

538.84

353.76




























Effective inventory management management requires an effective control system system for inventories. inventories. A proper inventory control not only helps in solving the acute problem of liquidity but also increases profits and causes substantial reduction in the work ing capital of the concern

Invento nventory Turn urno over R atio atio Inventory Turnover Ratios are calculated to indicate whether inventories have been used efficiently or not. The purpose is to ensure the blocking blocking of only required minimum minimum funds in inventory. Inventory Turnover Ratio= Net sales sales Inventory YEAR

NET SALES

INVENTORY

2004-05 2005-06 2006-07 2007-08 2008-09

7934.39 7998.07 9114.09 10118.62 12027.56

1781.91 2207.78 1948.86 2040.91 2252.04

inventory Turnover Ratio 6

INVENTORY TURNOVER RATIO 4.45 3.62 4.67 4.95 5.34






























Invento nventory Conver Converssion Perio eriod Inventory conversion period is calculated to find out the average time taken for clearing the stocks. Inventory Conversion period =

365

Inventory turnover ratio

YEAR

2004-05 2005-06 2006-07 2007-08 2008-09

DAYS

INVENTORY

365 365 365 365 365

4.45 3.62 4.67 4.95 5.34

INVENTORY TURNOVER RATIO 82 100 78 73 68




























Stock records are needed y

To provide an account to activity within each stock line

y

As evidence to support the balances used in financial reports

Inventory Management is an important aspect of working capital Management because inventories themselves do no earn any revenue.

Holding

incurs costs.

Costs carrying too much inventory are y

Opportunity cost of forgone internal-insurance

y

Ware housing Costs

y

Damage and pilferage

y

Obsolescence

either too little or too much inventory




























Carrying cost can be minimized by making frequent small orders but these increases ordering cost and the risk risk of stocks-outs. Risk of stock-outs can be reduced by carrying carrying ³safety stock´ (at a cost) and reordering reordering ahead of time. The best ordering strategy strategy requires balancing of various various cost factors to ensure the department incurs minimum minimum inventory costs. The optimum inventory inventory position is known as the Economic Reorder Quantity (ERQ) Analytical review of the inventories can help to identify areas where inventory management management can be improved. Slow moving moving items, continual stock outs, obsolescence, are signals that stock lines need closer analysis and contro




























RECEIVABLES MANAGEMENT A sound managerial control requires proper management of liquid assets and inventory.These assets are a part of working capital capital of the business. An efficient use use of financial resources resources is necessary to avoid avoid financial distress. distress. Receivables result from from credit sales sales . A concern is is required to allow credit sales in order to expand its sales volume. Receivables constitute a significant significant portion of current assets of a firm. firm. But for investment investment in receivables, a firm has to incur certain costs, Further, there is a risk risk of bad debts also. It is therefore very necessary to have a proper control and management of receivables. rece ivables. The following factors will help in forecasting receivables y

Credit period allowed

y

Effect of cost of goods sold

y

Forecasting

expenses

Forecasting

Average Collection period and discounts




























Debt ebto ors Turn T urno over R atio atio Debtors turnover ratio =

YEAR

NET SALES

DEBTORS

2004-05 2005-06 2006-07 2007-08 2008-09

7934.39 7998.07 9114.09 10118.62 12027.56

891.42 891. 42 1025.97 1220.42 1989.42 2616.75

Net sales Debtors

Debtors Turnover Ratio 10 9 8 7

DEBTORS TURNOVER RATIO 8.90 7.79 7.46 5.08 4.59






























Compared against the firm¶s credit terms and po licy to judge its credit and collection efficiency Average collection period =

No. of Working Days Debtors Turnover Ratio

YEAR

2004-05

NO. OF WORKING DAYS 365

DEBTORS TURNOVER RATIO 8.90

AVERAGE COLLECTION PERIOD 41




























FINDINGS 1) There was an increasing trend in the working capital of KAMCO Ltd, the period under study 2) Inventory , cash and bank balance where the major parts of the current assets during the period under study . Cash and bank balance constitute highest position of the total current assets .It helps to keep the firm sufficiently liquid liquid 3) Inventory conversion period shows the average time taken for clearing stokes .Here the inventory conversion period is decreasing .It is good for the company




























SUGGESTIONS 1. Debtor¶s turnover ratio of KAMCO Ltd shows a decreasing trend. Here lower the value of debtor¶s turnover indicates the inefficient management of credit . so the company should have to maintain maintain an efficient of credit 2. Debtor¶s collection period shows an increasing trend .It indicates the company¶s inefficient credit credit and collection performance .This certainly delays the collection of cash and impairs the firm¶s liquidity .The changes of bad debt losses are also increased .So the




























CONCLUSION Working capital is the life blood of o f an organization so it must be handled care fully. Working capital is a key operational operat ional and financial driver, holding strong business risk and pot entially huge opportunities. Optimal working capital management will guide bus iness along the road to achieving their strategies while minimizing these risks and realizing the o pportunities. In most markets, competition and innovation are a fact of life that means no firm can afford to stand still for long




























BIBLIOGRAPHY 1. I M PANDEY VIKAS PUBLISHING HOUSE PVT LTD (NINTH EDITION) 2. M Y K HAN& P K JAIN TATA MC GRAW HILL( THIRD EDITION) 3. S K GUPTHA & NEETHI GUPTHA, KALYANI PUBLISHERS 4.

PRASANNA CHANDRA TATA MC GRAW HILLS PUBLISHERS CO LTD NEW DELHI 1997

5. S P JAIN & K L NARANG N ARANG CORPORATE ACCOUNTING






























CONTENTS

CHAPTER TITLE

PAGE NO




























LIST OF TABLES TABLE NO

TITLE

PAGE NO



























A Project Study on Working Capital Management of KAMCO Ltd. 24

Cash& Bank

67

25

Raw Materials and Spares

69

26

Finished

70

Goods




























LIST OF GRAPHS








































































































































































































Hypotheses

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