PROJECT REPORT (Submitted for the Degree of B.COM Honours in Accounting !in"nce under the #ni$ersit% of C"&cutt"'
Tit&e of the Proect )OR*+,- CAP+TA MA,A-EME,T O! JA+, +RR+-AT+O, S/STEM TD Submitted b% ,"me of the C"ndid"te0 Registr"tion ,o.0 Ro&& ,o.0 ,"me of the Co&&ege0
Su1er$ised b% ,"me of the Su1er$isor0 ,"me of the Co&&ege0
Month /e"r /e"r of Submission !ebru"r%2 3456
Ac7no8&edgement
I have chosen the topic of “Working Capital Management of Jain Irrigation System Ltd”, as my Entreprenership pro!ect" I have collected all the materials from varios #e$sites related to my topic" I am deeply gratefl to my spervisor, for all her gidance and help" I am also thankfl to my parents and friends #ho helped me in framing the $ase of the pro!ect and gided me in developing the infrastrctre of the pro!ect" I am also very thankfl to the %niversity of Calctta fraternity for introdcing a system of Entreprenership &ro!ect" 'his pro!ect has allo#ed me a practical e(posre in the society and a $rief introdction in the day)to)day #orking of an *rgani+ation"
CO,TE,TS
I have chosen the topic of “Working Capital Management of Jain Irrigation System Ltd”, as my Entreprenership pro!ect" I have collected all the materials from varios #e$sites related to my topic" I am deeply gratefl to my spervisor, for all her gidance and help" I am also thankfl to my parents and friends #ho helped me in framing the $ase of the pro!ect and gided me in developing the infrastrctre of the pro!ect" I am also very thankfl to the %niversity of Calctta fraternity for introdcing a system of Entreprenership &ro!ect" 'his pro!ect has allo#ed me a practical e(posre in the society and a $rief introdction in the day)to)day #orking of an *rgani+ation"
CO,TE,TS
P"rticu&"rs 5
3
P"ge ,o.
+ntroduction
Working Working capital management
-
.eed for #orking capital management
-
/eterminants of #orking capital
-)0
Introdction to the Company
1)2
3inancial 4ighlights
2)5
Conce1tu"& !r"me8or7
6esearch Methodology
9
78)7
An"&%sis "nd !indings
Working capital level
79)7:
Working capital trend analysis
7:)7-
Changes of #orking capital
7-)70
*perating cycle
70)71
Working capital leverage
71)72
)or7ing C"1it"& R"tio An"&%sis
19
Introdction Efficiency 6atio
19-24
Li;idity 6atio
25-27
Working Working Capital Management Components
28-35
:
Conc&usions "n "nd Re Recommend"tions
6
Bib&iogr"1h%
90)91
92
9
;
95):8
Anne
+,TROD#CT+O, 5.5' )or7ing C"1it"& M"n"gement
Working Working Capital is the life $lood of $siness" < managerial acconting strategy focsing on maintaining efficient levels of $oth components of #orking capital) crrent assets and crrent lia$ilities) in respect to each other" Working Working capital management ensres a company has sfficient cash flo# in order to meet its short)term de$t o$ligations and operating e(penses" 5.3' ,eed for )or7ing C"1it"& M"n"gement
'he need for #orking capital cannot $e over emphasi+ed" 'he o$!ective of financial decision making is to ma(imi+e the shareholders #ealth" 'o achieve this, it is necessary to generate sfficient profits" 'here is a need for #orking capital in the form of crrent assets to deal #ith the pro$lem arising ot of lack of immediate reali+ation of cash against goods sold" 'echnically, 'echnically, this refers to operating or cash cycle" 5.9' Determin"nts of )or7ing C"1it"&
'he amont of #orking capital cap ital depends pon the follo#ing factors=)
:
7" Nature of business Some $siness are sch, de to their very natre, that their re;irement of fi(ed cap ital is more rather than #orking capital" 'hese $sinesses sell services and not the commodities and that too on cash $asis"
t if the $siness start gro#ing after certain limit, the #orking capital re;irements may adversely affect $y the increasing si+e" :" Business/ Trade Cycle If the company is operating in the time of $oom, the #orking capital re;irement may $e more as the company may like to increase the prodction and sales, to take the $enefit of
-
favora$le market" Similarly in the case of depression, #orking capital may $e high as the sales in terms of vale and ;antity redces, there may $e nnecessary piling p of stock" -" Operating Efficiency If the $siness is carried on more efficiently, it can operate in profits #hich may redce the strain on #orking capital? it may ensre proper tili+ation of e(isting resorces $y eliminating the #aste and improved coordination etc" +,TROD#CT+O, TO THE COMPA,/ 5.:' CORPORATE H+STOR/ O! JA+, -RO#P
'he $eginning of the road to sccess@@@@@@@@@@ THE ROOTS
'he !orney of Jain Irrigation Systems Ltd" >egan in 7521 #hen their forefather left the desert of 6a!asthan, their home state, in search of #ater and food, reached W
0
&lastic &ark, Jalgaon In 7509, yong gradate, Shri" >havarlal Jain se to sell kerosene in pshcart" Bradally on that he fonded $siness" It #as a family partnership firm #ith a Meager 1888) rpees as capital #hich #as the accmlated savings of three Benerations" Soon >havarlal Jain took the agencies for t#o #heelers, ato vehicles and atomo$ile accessories #ere esta$lished in ;ick sccession" THE STOR/ O! S#CCESS
Shri" >havarlal Jain #as inspired $y the ;ote “
1
'his #as achieved throgh consistent high standard performance and personal $ehavior on one hand and a strong sense of commitment for meeting targeted lmes and for payment of de$ts in time on the other" 'he main contri$ting factors to#ards $ilding these attitdes #ere their principles and this helped the company to come to $e recogni+ed as repta$le, trst#orthy and prestigios hose" 'his $ackgrond helped #ell for an entry into the indstrial ventres" 5.6' !+,A,C+A H+-H+-HTS
7" Pioneers of Micro Irrigation Systems in India" " 'he only manfactrer of complete drip irrigation systems in the 8or&d. 9" 'he &"rgest 1roducer of &lastic &ipes in India" :" 'he on&% m"nuf"cturer prodcing #idest range of &lastic Sheets &C F &DCG nder one roof" -" .
5" Irrigation, &lastic &iping F &lastic Sheet divisions are IS*)5887=887 F IS*) 7:887=88: accredited $y 6W'%D, Bermany"
2
78" JISL food di$ision has achieved certifications of HACCP2 S-! *OSHER " 77" anana &lants in India"
CO,CEPT#A !RAME)OR* 5' Rese"rch Methodo&og%
6esearch methodology may $e nderstood as the procedres $y #hich researcher go a$ot their #ork of descri$ing, e(plaining and predicting phenomenon" &ro!ect is $ased on 7"
5
9"
7" 'o stdy the #orking capital management of Jain Irrigation Systems Ltd" " 'o stdy the optimm level of crrent assets and crrent lia$ilities of the company" 9" 'o stdy the li;idity position throgh varios #orking capital related ratios" :" 'o stdy the #orking capital components sch as receiva$les acconts, cash management, inventory position" -" 'o stdy the #ay and means of #orking capital finance of the Jain Irrigation System Ltd" 0" 'o estimate the #orking capital re;irement of Jain Irrigation System Ltd" 1" 'o stdy the operating cycle of the company" T"b&e 3.5?!in"nci"& High&ights for %e"r 344@?54 3454?55
78
6s" In millions, e(cept per share dataG PART+C#ARS
/e"r344@?54
/e"r 3454?55
Sales F *perating Income
::90"72
9:20:"99
Less=E(cise /ty
581"28G
00:":7G
*ther Income
1:"87
750"57
Less=*perating E(penses
99-57"7-
195:"0-
*perating profit &>/I'G
277":
188"72
Interest F finance charges
170"-:
759"57
/epreciation , amorti+ation, #ritten
7:88":5
770"0
:85:"7
9027"01
off &rofit $efore ta(ation &>'G &rovision for ta( ) Crrent
770:":7
512"10
)/eferredassetsGlia$ility
90":7
:":
)Wealth >enefit
8"
8"
&rofit for the year &<'G
228"0-
:21":2
B"sic EPS
1"91
0"-:
Di&uted EPS
1"90
0"-9
77
)OR*+,- CAP+TA A,A/S+S A,D !+,D+,-S 9.5' )or7ing C"1it"& e$e&
3443? 49
3449? 4:
344:? 46
3446? 4;
344;? 4
344? 4>
344>? 4@
344@? 54
3454? 55
Inventories
5728
7821
7-:91
72919
1:98
:2:92
-75-
0807-
57:5-
Sndry /e$tors
799:0
7088
98:
298-
::8-7
-5-09
12708
22108
7:272
Cash F >ank >alance
2
7912
771
075
9-00
190
2157
:9127
92989
*ther
7--0
9:5
95
-17
7878
88
98
:75
-770
A' Current "ssets
7
Loan F
110-
19:7
117
1-11
781-7
209
9-19
:025
-8958
Tot"& of A
9:46
9;4@6
:;:;>
::6
>;>4>
5:6;54
5:;@;
3::55:
999:>;
Crrent lia$ilities
7:-7-
70-1
8875
98125
:989
-507:
11858
21:17
7:708
&rovisions
792
982
905
9872
-5:
-709
12-2
708-1
0899
Tot"& of B
5:;69
5;>>4
349>>
99>4
:6@
;:;
>:@:>
54963>
5:;69
).C.(A?B'
5@:33
5@356
3;4>4
:9;9>
:5455
>4>9:
>@:>
5:46>;
5>6>99
B'Current i"bi&ities
200000 180000 160000 140000 120000 100000 Net Working Capital
80000 60000 40000 20000 0
Years
9.3' )or7ing C"1it"& Trend An"&%sis
79
T"b&e 9.3?)or7ing c"1it"& sie
6s" In LakhsG /e"rs
3443? 49
3449? 4:
344:? 46
3446? 4;
344;? 4
344? 4>
344>? 4@
344@? 54
3454?55
,et ).C.
75:
757-
0828
:9092
:7879
2829:
251:2
7:8-20
72-299
).C. +ndices
788
52"5:
79:"2
:"02
77"70
:70"8
:0"85
19:"2-
5-0"2
Chart Title
Amount
200000 180000 160000 140000 120000 100000 80000 60000 40000 20000 0
Net Working Capital Working Capital Indices
Observations & Inference
It #as o$served that in the year 88:)8- crrent assets increased $y arond 5 $t crrent lia$ilities increased only $y 75, as a reslt, #orking capital increased $y 9-" 3rom 88- to 880, net #orking capital increased to 6s :90: million from 6s" 082 million, the increase in #orking capital is close to 0 1, #hile crrent assets increased $y 00 and crrent lia$ilities $y 0-"
7:
9.9' Ch"nges in )or7ing C"1it"&
3ollo#ing led to the changes in #orking capital) 7" Changes in sales and operating e(penses=) 'he changes in sales and operating e(penses may $e de to long rn trend of change, cyclical changes in economy leading to ps and do#ns in $siness activity and changes in seasonal sales"
" &olicy changes=) 'he second ma!or case of change in the level of #orking capital is $ecase of policy changes initiated $y management" 9" 'echnological changes=) 'he third ma!or point is changes in technology $ecase change in technology leads to more re;irement of #orking capital" 9.:' O1er"ting C%c&e
'he need of #orking capital arised de to the length of time $et#een a companyKs paying for materials entering into stock and receiving the cash from sales of finished goods" 'his time gap is called “*perating Cycle” or “Working Capital Cycle”" 'he operating cycle analy+es the acconts receiva$le, inventory and acconts paya$le cycles in terms of days" < sefl tool for managing #orking capital is the operating cycle"
7-
Observations & Inference
*perating cycle of JISL sho#s the nm$ers of days are decreasing in recent year" 'his reflects the efficiency of management" /ays of operating c ycle sho#s period of lack of fnds in crrent assets" 9.6' )or7ing C"1it"& e$er"ge
'he term #orking capital leverage refers to the impact of level of #orking capital on companyKs profita$ility" 'he #orking capital management shold improve the prodctivity of investment in crrent assets and ltimately it #ill increase the retrn on capital employed" Working capital leverage measres the responsiveness of 6etrn on Capital Employed for changes in crrent assets" Changes in 6*CE Working Capital Leverage ))))))))))))))))))))))))))))))))))))))) Changes in Crrent
70
/e"r
3449? 4:
344:? 46
3446? 4;
344;? 4
344? 4>
344>? 4@
344@? 54
3454? 55
Ch"nges in ROCE
90"22
8"20
8"1:-
9"
8"-5
7"8
7":-
"87
Ch"nges in C.A
-"59
2"29
0-"55
7"85
5"9-
9":-
9-"87
99"77
).C. e$er"ge s
;.33
4.3
4.455
5.@3
5.6;
3.:9
5.>6
3.6
70 60 50 40 % Canges in !"C#
30
% Canges in C$
20
W$C$ &e'erages
10 0
Observations & Inference
Working capital leverage of the compan y has decreased in the year 881 as compared to the year 889)8:" In the year 88:)8- and 88-)80 the crrent assets has increased $y high rate of 2 and 0- respectively" It adversely affects on 6*CE, #hich increased $y only rate of 8"20 and 8"1: respectively, that reslted in psh do#n the #orking capital leverage to 8"1 and 8"877 respectively"
71
)OR*+,- CAP+TA RAT+O A,A/S+S
:.5' +ntroduction
6atio analysis is the po#erfl tool of financial statements analysis" < ratio is defined as “the indicated ;otient of t#o mathematical e(pressions” and as “the relationship $et#een t#o or more things”" 'he a$solte figres reported in the financial statement do not provide meaningfl nderstanding of the performance and financial position of the firm" 6atio helps to smmarise large ;antities of financial data and to make ;alitative !dgement of the firmKs financial performance" Working Capital ratios can $e classified into= 7" Efficiency 6atio " Li;idity 6atio
:.3' Efficienc% R"tio
7G Working Capital 'rnover 6atio
72
It signifies that for an amont of sales, a relative amon t of #orking capital is needed" If any increase in sales is contemplated #orking capital shold $e ade;ate and ths this ratio helps management to maintain the ade;ate level of #orking capital" Sales Working Capital 'rover ratio
)))))))))))))))))))))))))))))))))) .et Working Capital
T"b&e :.5 ? ).C Turno$er P"rticu&"rs
3443? 49
3449? 4:
344:? 46
3446? 4;
344;?4 344?4> 344>?4@ 344@?54 3454?55
S"&es
97:8
9507
08:27
2-587
782:2
7-7
0:72
::907
9:20:9
,et ).C
75:
7579
0827
:90:0
:7879
2829:
251:2
7:8-20
72-299
).C TOR
7"80
"80
"9
7"51
"5-
7"21
"5:
9"87
7"22
Chart .o" :"7
75
Chart Title 200000 150000 100000 Axis Title
Net W$C W$C ("!
50000 0
Observations & Inference
4igh #orking capital ratio indicates the capa$ ility of the organisation to achieve ma(imm sales #ith the minimm investment in #orking capital"
G Inventory 'rnover 6atio Inventory trnover ratio indicates the efficiency of the firm in prodcing and selling its prodcts" Cost of goods sold Inventory '*6 ))))))))))))))))))))))))))))))))
6s" In lakhsG 344;?4 344?4> 344>?4@ 344@?54 3454?55
P"rticu&"rs
3443? 49
3449? 4:
344:? 46
3446? 4;
Cost of goods so&d
9118
98898
:0:58
0:-58
5258
78:-8
752088
195:0
99-577
A$er"ge +n$entor%
5712
78878
79799
70582
590
0-97
9-8:
950:-
:-21
+n$entor% TOR
"-5
9"88
9"-:
9"2
:"8-
:"-:
0"77
0"57
1"99
8
Chart .o" :"
Chart Title 8 7 6 5 4 3 2 1 0
In'entor) ("!
Observations & Inference
It #as o$served that Inventory trnover ratio indicates ma(imm sales a chieved #ith the minimm investment in the inventory" 'he general rle, high inventory trnover is desira$le $t high inventory trnover ratio ma y not necessary indicates the profita$le sitation"
9G 6eceiva$le 'rnover 6atio 'he derivation of this ratio is made in follo#ing #ay=
Bross sales 6eceiva$le trnover ratio ))))))))))))))))))))))))))))))))))))))))
7
/e$tor trnover indicates the nm$er of times de$ tors trnover each year" Benerally the higher the vale of de$torKs trnover, the more is the management of credit"
90- days /e$torKs trnover ratio )))))))))))))))))))))))))))))))))))))))))) 6eceiva$le trnover ratio
T"b&e :.9? C"&cu&"tion of Debtors turno$er r"tio
6s" In lakhsG P"rticu&"rs
3443? 49
3449? 4:
344:? 46
3446? 4;
344;?4 344?4> 344>?4@ 344@?54 3454?55
-ross s"&es
97:78
:7108
090:8
5788
71:8
797-08
887-8
9:-028
9152-0
A$g. Debtors
799-8
7:128
75-8
-918
90728
92-8
:-58
:20-:
:5-28
Recei$"b&e TOR
"9-
"29
9"97
9"-5
9"-
9"::
:"18
1"78
1"00
Chart .o" :"9
Observations & Inference
It #as o$served from receiva$le trnover ratio that receiva$les trned arond the sales #ere less than : times" 'he actal collection period #as more than normal collection period allo#ed to cstomer"
:G Crrent
Sales Crrent assets '*6 )))))))))))))))))))))))))) Crrent assets
9
T"b&e :.:?C"&cu&"tion of current "ssets turno$er r"tio
6s" In lakhsG P"rticu&"rs
3443?49
3449?4:
344:?46
3446?4;
344;?4 344?4> 344>?4@ 344@?54 3454?55
S"&es
97:88
95078
08:28
2-228
782:8
7988:8
88858
9:88:8
9-8878
Assets
9:81-
9085-
:0:02
11::-
20282
7:-078
71:050
::77:
999:20
Recei$"b&e TOR
8"5
8"25
7"7-
7"95
7"8-
7"7
7"9
7"7
7"95
Chart .o" :":
Observations & Inference
It #as o$served that crrent assets trnover ratio does not indicate any trend over the period of ime" 'rnover ratio #as 8"5 in the year 88)89 and increase to 7"78 and 7"98 in the year 88: nd 88- respectively, $t it decreased in the year 88-)80, $ecase of high cash $alance" In the year 880)81 company increased its sales #ith increased
:
investment in crrent assets, ths crrent assets trnover ratio increased to 7"95 from 7"7 in the year 88-)80"
:.9' iFuidit% r"tio
7G Crrent 6atio 'he crrent ratio is calclated $y dividing crrent assets $y crrent lia$ilities= Crrent assets Crrent ratio )))))))))))))))))))))))))))))))) Crrent lia$ilities Crrent assets '*6 Crrent assets inclde cash and those assets #hich can $e converted into cash #ithin a year, sch marketa$le secrities, de$tors and inventories"
T"b&e:.6?Current r"tio P"rticu&"rs
3443?49
3449? 4:
344:?46
3446? 4;
344;? 4
6s" In lakhsG 344?4> 344>? 344@?54 4@
Current Assets
9:81-
9085-
:0:02
11::-
20282
7:-078
71:05 0
::77:
999:20
Current i"bi&ities
7:0-9
70228
8922
99281
:-151
0:110
2:5:2
789-2
7:10-9
Current R"tio
"7:
"5
7"58
"99
"2
-
"-
"80
"90
3454?55
"0
Chart .o" :"-
Chart Title 2$5 2 C*rrent !atio
1$5 1
Axis Title
0$5 0
Observations & Inference
'he crrent ratio indicates the availa$ility of fnds to payment of crrent lia$ilities in the form of crrent assets"
G ick 6atio
0
ick ratio esta$lishes the relationship $et#een ;ick or li;id assets and lia$ilities" Cash is the most li;id asset, other assets #hich are considered to $e relatively li;id and inclded in ;ick assets are de$tors, $ills receiva$le and marketa$le secrities" Inventories are considered as less li;id"
Crrent asset N Inventory ick ratio )))))))))))))))))))))))))))))))))))))))))) Crrent lia$ilities 'a$le :"0) ick 6atio P"rticu&"rs 3443? 49
6s" In lakhsG 344?4> 344>?4@ 344@?54 3454?55
3449? 4:
344:? 46
3446? 4;
344;? 4
iFuid Current Assets
:587
-19
9789
-5817
-5928
775778
7:50
8::0:
21020
Current i"bi&ities
7:0-9
70228
8922
99281
:-288
0:110
2:5:2
789-2
7:10-9
Guic7 R"tio
7"18
7"-8
7"-
7"1-
7"98
7"2:
7"02
7"51
7"5-
Chart .o" :"0
Chart Title 2$5 2 1$5 1
+*ick !atio
0$5 0
1
Observations & Inference
ick ratio indicates that the company has sfficient li;id $alance for the payment of crrent lia$ilities" 'he li;id ratio of 7=7 is sppose to $e standard or ideal $t here ratio is more than 7=7 over the period of time, it indicates that the firm maintains the over li;id assets than actal re;irement of sch assets"
)OR*+,- CAP+TA MA,A-EME,T COMPO,E,TS 6.5' Recei$"b&es M"n"gement
6eceiva$les is an essential marketing tool, acting as a $ridge for the movement of goods throgh prodction and distri$tion stages to the c stomers" 'rade credit creates receiva$les #hich the firm is e(pected to collect in the near ftre" 'he receiva$les inclde three characteristics= 7G It involve element of risk #hich shold $e careflly analy+ed" G It is $ased on economic vale" 'o the $yer, the economic vale in goods or services passes immediately at the time of sale, #hile seller e(pects an e;ivalent vale to $e received later on" 9G It implies ftrity" 'he cash payment for goods or serves received $y the $yer #ill $e made $y him in a ftre period" 'a$le -"7)Si+e of receiva$les of JISL 6s" In lakhsG
2
P"rticu&"rs
3443?49
3449?4:
344:?46
3446?4;
344;?4
344?4>
344>?4@
344@?54
Sundr% Debtors
799:0
7088
98:
298-
::8-7
-5-09
12708
22108
Sundry Debtors
Debtors
160000 140000 120000 100000 80000 60000 40000 20000 0
,*ndr) e.tors
Years
5
3454?55
7:272
7" In determining the collecta$ility of de$tors and ths, the efficiency of collection efforts" " In ascertaining the firmKs comparative strength and advantages related to its credit policy and performance" 90- days
'a$le -")
P"rticu&"rs
3443?49
3449? 4:
344:? 46
3446? 4;
344;?4 344?4> 344>?4@ 344@?54 3454?5
-ross s"&es
97:78
:7108
090:8
5788
71:8
797-08
887-8
9:-028
9152-
A$g. Debtors
799-8
7:128
75-8
-918
90728
92-8
:-58
:20-:
:5-28
Recei$"b&e TOR
"9-
"29
9"97
9"-5
9"-
9"::
:"1
1"7
1"00
A$er"ge Co&&ection Period(D"%s'
566
53@
554
545
549
546
554
536
55;
98
Chart .o"-"
Average Collection PeriodDays!
Days
160 140 120 100 80 60 40 20 0
Years
Observations & Inference
'he si+e of receiva$les are steadily increasing" It indicates that the company #as allo#ing more credit year to year"
97
of 58 days, it #as clear that the company re;ired to increase efficiency of collection of receiva$les" 3or effective management of credit acconts shold involve follo#ing steps= 7G Credit information G Credit investigation 9G Credit limits :G Collection procedre" 6.3' +n$entor% M"n"gement
'he term OinventoryK is sed to designate the aggregate of those items of tangi$le assets #hich are= 7" 3inished goods Osalea$leKG " Work)in)progress Oconverti$leKG 9" Material and spplies Oconsma$leKG 'he natre of inventory is largely depending pon the type of operation carried on" 3or instance, in the case of a manfactring concern, the inventory #ill gen erally comprise all three grops mentioned a$ove #hile in the case of a trading concern, it #ill simply $e stock) in) trade or finished goods" 'he o$!ectives of inventor y management consist of t#o conter$alancing parts= 7" 'o minimi+e the firmKs investment in inventory"
9
" 'o meet a demand for the prodct $y efficiently organi+ing the firms prodction and sales operation" 90- days Inventory 'rnover in days ))))))))))))))))))))))))))))))))))))))))) Inventory 'rnover 6atio
P"rticu&"rs +n$entor % TOR in d"%s
3443?49
7:7
3449?4:
344:?46
3446?4;
344;?4
344?4>
344>?4@
7
789
50
58
28
08
344@?54
-9
Chart .o" -")
"nventory T#$ in days 150 100 50
In'entor) ("! in da)s
0
Years
6.9' M"n"gement of C"sh
99
3454?55
-8
Cash refers to crrency F demand deposits? it is one of the key assets of the firm" It is critically important as the firm mst meet its immediate o$ligations" 4olding of some cash is essential to operate the firm $t holding e(cessive cash is costly $ecase it doesnKt earn any income" t these opportnities do not come in reglar manner neither they can $e scientifically predicted" T"b&e 6.9?Sie "nd indices of c"sh in J+S
6s" In lakhsG
P"rticu&"rs
3443?49
3449?4:
344:?46
3446?4;
344;?4
344?4>
C"sh B"n7 B"&"nce
2
7912
771
075
9-00
190
9:
344>?4@
2157
344@?54
3454?55
:9127
92989
Chart .o -"9) Indices of cash in JISL
Cash % &ank &alance
Cash % &ank
45000 40000 35000 30000 25000 20000 15000 10000 5000 0
Years
Observations & Inference
'he si+e of the cash in the crrent assets of the company indicates the mismanagement of cash the company" 'he cash $alance in the year 88-)80 #as e(tremely increased? $ecase of encashment of deposits from schedles $ank of PCC> fnds" Company failed to properly invest availa$le cash" 'he firm shold hold an optimm $alance of cash and invest any temporary e(cess amont in short term marketa$le secrities sch as treasry $ills, commercial papers, certificates of deposit, $ank deposits and inter corporate deposit"
9-
CO,C#S+O,S A,D RECOMME,DAT+O,S .5' Conc&usion
Working capital management is an important aspect of financial management" 'he stdy of #orking capital management of Jain Irrigation system ltd" has $een condcted on #orking capital ratio analysis, #orking capital leverage, #orking capital components #hich helped the company to manage its #orking capital efficienctly and affectively" 7" Working capital of the company #as increasing and reveals good li;idity position"
90
" &ositive #orking capital indicates that company has the a$ility of payments of short terms lia$ilities" 9" Working capital increased $ecase of increment in the crrent assets" :" CompanyKs crrent assets #ere al#ays more than re;irement, affecting on profita$ility of the company" -" Crrent assets are more than crrent lia$ilities, indicates that company sed long term fnds for short term re;irement, #here long term fnds are most costly then short term fnds" 0" Crrent assets components sho#s sndry de$tors as the ma!or part depicting inefficient receiva$les management" 1" In the year 880)81 #orking capital decreased $ecase of increase in e(penses and increase in the price of ra# material de to inflation" 2" Inventory #as spporting to sales, ths inventory trnover ratio #as increasing, $t company increased the ra# material holding period" 5" Stdy of the cash management of the company sho#s that company lost control on cash management in the year 88-)80, #here cash came from fi(ed deposits and PCC> fnds, company failed to make proper investment of availa$le cash" .3' Recommend"tions
3ollo#ing recommendations can $e sed $y the firm for its $etterment)
91
7" Company shold raise fnds throgh short term sorces for short term re;irements, #hich comparatively is economical" " Company shold take control on de$torKs collection period #hich is ma!or part of crrent assets" 9" Company has to take control on cash $alance $ecase cash is non)earning assets and increasing cost of fnds" :" Company shold redce the inventory holding period #ith se of +ero inventory concepts" *ver all company has good li;idity position and sfficient fnds for repayment of lia$ilities" Company has accepted conservative financial policy and ths maintaining more crrent assets $alance" Company is increasing sales volme per year #hich spported the company to sstain nd position in the #orld and 7st position in
B+B+O-RAPH/ Boo7s Referred
7" I" M" &andey ) 3inancial Management ) Dikas &$lishing 4ose &vt" Ltd " M"Q" Ahan and &"A" Jain, 3inancial management N Dikas &$lishing hose ltd"
92
9" A"D" Smith) management of Working Capital) Mc)Bro#)4ill .e# Qork :" Satish Inamdar) &rinciples of 3inancial Management)Everest &$lishing 4ose )ebsites References
7" ###"!ains"com " ###"google"co"in 9" ###"#orkingcapitalmanagement"com
Su1er$isors Certific"te
'his is to certify that Mr" @@@@@@@@"" a stdent of >"Com 4onors in Working Capital management of Jain Irrigation Systems Ltd of @@@@@"" College nder the
95
%niversity of Calctta has #orked nder my spervision and gidance for her &ro!ect Work and prepared a &ro!ect 6eport #ith the title Working Capital Management of Jain Irrigation Systems Ltd" 'he pro!ect report, #hich he is s$mitting, is his genine and original #ork to the $ est of my kno#ledge"
Signatre= &lace= /ate=
.ame= /esignation= .ame of the College=
Students Dec&"r"tion
:8
