A STUDY ON WORKING CAPITAL MANAGEMENT IN TI CYCLES OF INDIA By R.

ASHOK (Reg No: 35104043)

A PROJECT REPORT

Submitted to the Department of MASTER OF BUSINESS ADMINISTRATION In the FACULTY OF ENGINEERING & TECHNOLOGY

In partial fulfillment of the requirements for the award of the degree Of

MASTER OF BUSINESS ADMINISTRATION

IN SRM SCHOOL OF MANAGEMENT S.R.M INSTITUTE OF SCIENCE AND TECHNOLOGY (DEEMED UNIVERSITY)

JUNE 2006

S.R.M SCHOOL OF MANAGEMENT S.R.M INSTITUTE OF SCIENCE & TECHNOLOGY (Deemed University) S.R.M Nagar, Kattankulathur, Kancheepuram District 603203. Phone: 044-27451317, 27453901, 27453804, 27453377, 27452270. E-mail: srmec@vsnl.com Internet: www.srmec.ac.in Dr.Jayashree Suresh Professor & HOD Date:

BONAFIDE CERTIFICATE

Certified that this project report titled A study on working capital management in TI Cycles of India is the bonafide work of Mr. R. ASHOK carried out the research under my supervision. Certified further, that to the best of my knowledge the work reported herein does not form part of any other project or dissertation on the basis of which a degree or award was confirmed on an easier occasion on this or any other candidate.

Signature of the Guide Dr. A. Chandra Mohan MBA, PhD, HDSE

Signature of HOD

External In-charge

Acknowledgement

I would like to thank our head of the department (HOD) Dr. Jayashree suresh B.A.,M.B.A.,Ph.D., for giving necessary support during the course.

I would also express my sincere thanks to Dr. A. Chandra Mohan MBA, PhD, HDSE, for his invaluable guidance and constant encouragement which enable me to approach the project systematically.

I extend my sincere thanks to Thiru. Senthil Accounts Executive, Finance dept. TI CYCLES OF INDIA For his continued support to carryout this project work.

CONTENTS SL.NO. 1 1.1 1.2 1.3 2 2.1 2.2 2.3 2.4 2.5 3 3.1 3.2 3.3 3.4 4 4.1 4.2 5 6 TITLE INTRODUCTION Meaning of working capital Definition of working capital Concept of working capital RESEARCH METHODOLOGY Objective of the study Method of data collection Statement of the problem Review of literature Limitations of the study AN OVERVIEW OF THE COMPANY Industry profile Company profile Product profile Organization structure DATA ANALYSIS AND INTREPRETATION Balance sheet Key working capital ratios FINDINGS SUGGESTIONS BIBLIOGRAPHY 44 55 61 62 63 26 33 40 42 5 6 7 8 25 PAGE NO. 1 2 3

LIST OF TABLES Working capital statement 2001-02 Working capital statement 2002-03 Working capital statement 2003-04 Working capital statement 2004-05 Working capital statement 2005-06 Current ratio Quick ratio 45 47 49 51 53 55 57

Turnover ratio 9 LIST OF CHARTS Working capital chart 2001-02 Working capital chart 2002-03 Working capital chart 2003-04 Working capital chart 2004-05 Working capital chart 2005-06 Current ratio Quick ratio Turnover ratio

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46 48 50 52 54 56 58 60

WORKING CAPITAL MANAGEMENT 1.1 Meaning A business undertaking requires funds for two purposes: To create productive capacities through purchase of fixed assets, etc. To finance current assets required for day to day running of the business. Working capital refers to the funds invested in current assets i.e., investment in stock, sundry debtors, cash and current assets. Current assets are essential to use fixed assets profitably. For example a machine cannot be used without providing necessary raw materials. It is obvious that a certain amount of funds is always tied up in raw material inventories working progress, finished goods, consumable stores, sundry debtors and day-to-day cash requirements. However, the business also enjoys credit facilities from his suppliers who may give the raw materials on credit. Similarly a businessman may not pay immediately for various expenses. But labours are paid periodically. Therefore certain amount of funds is automatically available to finance the current assets requirements. However, the requirements for current assets are usually greater than the amount of funds available through current liabilities. In other words, the current assets are to be kept at higher level than the current liabilities. This difference is known as working capital.

1.2 Definition There is no universally accepted definition for working capital. The financiers, accountants, businessmen and economist are giving different explanations for working capital. The working capital is called as circulating capital or revolving capital. In general working capital denotes the current assets. Following are some of the definitions of working capital: In the words of Shubin, Working capital is the amount of funds necessary to cover the cost of operating the enterprise. According to Genestenberg, Circulating capital means current assets of a company that are changed in the ordinary course of business from one form to another, as for example, from cash to inventories, inventories to receivables, receivables into cash. According to J.S. Mill, The sum of the current assets is the working capital of a business. Normally working capital means current assets minus current liabilities. The working capital may be positive or negative. 1.3 Concepts THERE ARE TWO CONCEPTS OF WORKING CAPITAL: 1. Gross working capital. 2. Net working capital. The gross working capital is the capital invested in total current assets of the enterprise. Current assets are those assets, which in the ordinary course of business can be converted into cash within a short period of normally one accounting year. Net working capital is the excess of current assets over current liabilities, or say: Net working capital = Current assets Current liabilities Advantages of adequate working capital The firm will be able to proceed with uninterrupted flow of production. The company can be able to make prompt payments which help in creating and maintaining goodwill. Loan facilities are easily available. It avails cash discounts on the purchases and hence it reduces costs. Regular supply of raw materials. Regular payment of salaries, wages and other day-to-day commitments Exploitation of favorable market conditions

 Ability to face crisis Quick and regular return on investments High morale Disadvantages of adequate working capital It results in unnecessary accumulation of inventories. Excessive working capital implies excessive debtors and defective credit policy which may cause higher incidence of bad debts. It may result into overall inefficiency in the organization The business cannot earn a proper rate of return on investments Due to the lower rate of return on investments, the value of shares may also fall Disadvantages of inadequate working capital A concern, which has inadequate working capital, cannot pay its short-term liabilities in time. It cannot buy its requirements in bulk and cannot avail of discounts It becomes difficult for the firm to exploit favorable market conditions The firm cannot pay day-to-day expenses of its operations and it creates inefficiencies, increases costs and reduces the profits of the business It becomes impossible to utilize efficiently the fixed assets due to nonavailability of liquid funds

2.1 OBJECTIVE OF THE STUDY Since working capital management is one of the most important aspects of finance, it enables to study in-depth the methods involved in it; so that as a student of finance it gives me a chance to study the financial perspectives of the industry. It offers scope to understand various aspects of finance and all these aspects are reflected in this report. The estimation of required working capital differs from organization to organization. So doing this project in an industry will help in knowing more about the working capital, its preparation and execution.

The study has the following objectives: To see whether the working capital in TI CYCLES OF INDIA LIMITED is an effective one. To find out the extent of the need and adequacy of the working capital of the firm. To evaluate or analyze the organizational financial discipline and fiscal soundness. To find out the variance attained in related to projected and actual figure. To see the liquidity position of the company. To see the changes in the working capital. To see the components of working capital is properly maintained. To determine the requirements of working capital. 2.2 METHOD OF DATA COLLECTION The collection is the process of enumeration together with the proper recording of results. The success of an enquiry is based up on the proper collection of data. The data may be classified as primary and secondary. Primary Data: Primary data are those, which are collected for the first time, and they are original in character. This study covers the enquiry regarding the inventory data. Under this research the data collected personally. Secondary Data: Secondary data are those that are already collected by someone for some purpose and are available for the present study. The covers various sources of secondary data including published and unpublished sources like news papers, published books, magazines etc, 2.3 STATEMENT OF THE PROBLEM The need for the working capital cannot be over emphasized. Every business needs some amount of working capital. The need for working capital arises due to the time gap between production and realization of cash from sales. Thus, in general working capital is needed for the following purposes: 1. For the purchase of raw materials, components and spares. 2. To pay wages and salaries.

3. To incur day-to-day expenses and overhead costs such as fuel, power, office expenses, etc. 4. To meet the selling costs as packing, advertising, etc. 5. To provide credit facilities to the customers. 6. To maintain the inventories of raw material, work-in-progress, stores and spares and finished stock. 2.4 REVIEW OF RELATED LITERATURE Working Capital Cycle Cash flows in a cycle into, around and out of a business. It is the business life blood and every manager's primary task is to help keep it flowing and to use the cash flow to generate profits. If a business is operating profitably, then it should, in theory, generate cash surpluses. If it doesn't generate surpluses, the business will eventually run out of cash and expire. The faster a business expands the more cash it will need for working capital and investment. The cheapest and best sources of cash exist as working capital right within business. Good management of working capital will generate cash will help improve profits and reduce risks. Bear in mind that the cost of providing credit to customers and holding stocks can represent a substantial proportion of a firm's total profits. There are two elements in the business cycle that absorb cash Inventory (stocks and work-in-progress) Receivables (debtors owing you money). The main sources of cash are Payables (your creditors) and Equity and Loans.

Each component of working capital (namely inventory, receivables and payables) has two dimensions ........ TIME ......... and ..MONEY. When it comes to managing working capital - TIME IS MONEY. If you can get money to move faster around the cycle (e.g. collect monies due from debtors more quickly) or reduce the amount of money tied up (e.g. reduce inventory levels relative to sales), the business will generate more cash or it will need to borrow less money to fund working capital. As a consequence, you could reduce the cost of bank interest or you'll have additional free money available to support additional sales growth or investment. Similarly, if you can negotiate improved terms with suppliers e.g. get longer credit or an increased credit limit; you effectively create free finance to help fund future sales.

If you .......

Then ......

Collect receivables (debtors) You release cash faster from the cycle Collect receivables (debtors) Your receivables slower soak up cash Get better credit (in terms of You increase your duration or amount) from cash resources suppliers Shift inventory (stocks) faster Move inventory (stocks) slower You free up cash You consume more cash

It can be tempting to pay cash, if available, for fixed assets e.g. computers, plant, vehicles etc. If you do pay cash, remember that this is no longer available for working capital. Therefore, if cash is tight, consider other ways of financing capital investment - loans, equity, leasing etc. Similarly, if you pay dividends or increase drawings, these are cash outflows and, like water flowing downs a plug hole, they remove liquidity from the business.

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More businesses fail for lack of cash than for want of profit.

Factors determining working capital 1. Production policies: The production policies pursued by the management have a significant effect on the requirement of working capital of the business. The decision about the management regarding automation, etc. will also have its effect on working capital. On case of labour intensive industries the working capital requirements will be more. While in the case of highly automatic plant the requirement of long term funds will be more. 2. Nature of the business: Working capital also depends upon the nature of the business. Public utility concerns like railway, electricity etc. have a very little need of working capital since most of their transaction are on cash basis. On the other hand ordinary manufacturing and trading concerns require sufficient working capital, since they have to invest substantially in inventories and debtors. 3. Length of manufacturing process: Longer the manufacturing process the higher will be the requirement of working capital and vice versa. 4. Credit policy: A company which allows liberal credit to its customers may have higher sales but will need more working capital. A concern that purchases its requirements on credit and sells its products/services on cash requires less amount of working capital. 5. Rapidity of turnover: A company having high rate of turnover will need lower amount of working capital as compared to a company which has a lower turnover. 6. Seasonal fluctuations: In case of seasonal industries like sugar and woolen textiles, their working capital required during the particular season will be higher than other periods.

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7. Price level changes: Changes in the price level also affect the working capital requirements. Generally, the rising prices will require the firm to maintain larger amount of working capital as more funds will be required to maintain the same current assets. The effect of rising prices may be different for different firms. Some firms may be affected much while some others may not be affected at all by the rise in prices. 8. Other factors: Certain other factors such as operating efficiency, management ability, irregularities of supply, import policy, asset structure, importance of labour, banking facilities, etc. also influences the requirements of working capital. Management of working capital Working capital management in general refers to the administration of all aspect of current assets viz. cash, marketable securities, debtors and stock and current liabilities. Working capital management policies have a great effect on firms profitability, liquidity and its structural health. In order to achieve this objective the financial manager has to perform basically following two functions: (a) Estimating the amount of working capital. (b) Sources from which these funds have to be raised. Estimating the amount of working capital: Following are the various techniques for assessments of a firms working capital requirement: (i) Estimation of components of working capital method: An assessment of working capital requirement can be made by estimating the amount of different constituents of working capital e.g., Inventories, account receivables, cash and account payables. (ii) Percent of sales method: This is a traditional method of estimating the working capital requirements. According to this method on the basis of past experience between sales and working capital requirement, a ration can be determined for estimating the working capital requirement in future.

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(iii) Operating cycle approach: In the case of a manufacturing company the operating cycle is the length of time necessary to complete the following cycle of events: (I) Conversion of cash into raw materials

(II) Conversion of raw materials into work in process (III) Conversion of work in process into finished goods (IV) Conversion of finished goods into account receivable (V) Conversion of account receivable into cash Operating cycle of a manufacturing concern

Debtors (Receivables)

Cash

Finished goods

Raw materials

Work in process

(b) Sources from which these funds have to be raised. Following are the various sources of working capital: LONG SOURCES Shares Debentures Long term loans Retained earnings Sources of Additional Working Capital Sources of additional working capital include the following: TERM SHORT SOURCES Trade credits Outstanding expenses Bank loans Commercial paper Factoring public Deposits TERM SPONTANEOUS SOURCES

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Existing cash reserves. Profits (when you secure it as cash!). Payables (credit from suppliers). New equity or loans from shareholders. Bank overdrafts or lines of credit. Long-term loans.

If you have insufficient working capital and try to increase sales, you can easily overstretch the financial resources of the business. This is called overtrading. Early warning signs include:

Pressure on existing cash. Exceptional cash generating activities e.g. offering high discounts for early cash payment.

Bank overdraft exceeds authorized limit. Seeking greater overdrafts or lines of credit. Part-paying suppliers or other creditors. Paying bills in cash to secure additional supplies. Management pre-occupation with surviving rather than managing. Frequent short-term emergency requests to the bank (to help pay wages, pending receipt of a cheque).

All these indicate that proper estimation of working capital requirement is a must for running the business efficiently and profitability. Therefore the study on working capital management in a company like TI CYCLES OF INDIA LIMITED has its own importance. This project is mainly based on a study on working capital management of TI CYCLES OF INDIA LIMITED. Classification or kinds of working capital Working capital may be classified in two ways: (a) On the basis of concept (b) On the basis of time On the basis of concept, working capital is classified as gross working capital and net working capital. This classification is important from the point of view of the finance manager. On the basis of time, working capital may be classified as:

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Permanent or fixed working capital Temporary or variable working capital

Permanent or fixed working capital: It is the minimum amount which is required to ensure effective utilization of fixed facilities and for maintaining the circulation of current assets. For example, every firm has to maintain a minimum level of raw materials, work-inprocess, finished goods and cash balance. As the business grows, the requirements of permanent working capital also increase due to the increase in current assets. The permanent working capital can be further classified into: Regular working capital Reserve working capital Temporary or variable working capital: It is the amount of working capital which is required to meet the seasonal demands and some special exigencies. It can be further classified into: Components of working capital 1. Handling Receivables (Debtors): Cash flow can be significantly enhanced if the amounts owing to a business are collected faster. Every business needs to know.... who owes the money.... how much is owed.... how long it is owing.... for what it is owed. Slow payment has a crippling effect on business; in particular on small businesses who can least afford it. If you don't manage debtors, they will begin to manage your business as you will gradually lose control due to reduced cash flow and, of course, you could experience an increased incidence of bad debt. The following measures will help manage your debtors: 1. Have the right mental attitude to the control of credit and make sure that it gets the priority it deserves. 2. Establish clear credit practices as a matter of company policy. 3. Make sure that these practices are clearly understood by staff, suppliers and customers. Seasonal working capital Special working capital

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4. Be professional when accepting new accounts, and especially larger ones. 5. Check out each customer thoroughly before you offer credit. Use credit agencies, bank references, industry sources etc. 6. Establish credit limits for each customer... and stick to them. 7. Continuously review these limits when you suspect tough times are coming or if operating in a volatile sector. 8. Keep very close to your larger customers. 9. Invoice promptly and clearly. 10. Consider charging penalties on overdue accounts. 11. Consider accepting credit /debit cards as a payment option. 12. Monitor your debtor balances and ageing schedules, and don't let any debts get too large or too old. Recognize that the longer someone owes you, the greater the chance you will never get paid. If the average age of your debtors is getting longer, or is already very long, you may need to look for the following possible defects:

Weak credit judgement. Poor collection procedures. Lax enforcement of credit terms. Slow issue of invoices or statements. Errors in invoices or statements. Customer dissatisfaction.

Debtors due over 90 days (unless within agreed credit terms) should generally demand immediate attention. Look for the warning signs of a future bad debt. For example.........

Longer credit terms taken with approval, particularly for smaller orders. Use of post-dated checks by debtors who normally settle within agreed terms. Evidence of customers switching to additional suppliers for the same goods. New customers who are reluctant to give credit references. Receiving part payments from debtors.

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The act of collecting money is one which most people dislike for many reasons and therefore put on the long finger because they convince themselves there is something more urgent or important that demands their attention now. There is nothing more important than getting paid for your product or service. A customer who does not pay is not a customer. Here are a few ideas that may help you in collecting money from debtors:

Develop appropriate procedures for handling late payments. Track and pursue late payers. Get external help if your own efforts fail. Don't feel guilty asking for money.... its yours and you are entitled to it. Make that call now. And keep asking until you get some satisfaction. In difficult circumstances, take what you can now and agree terms for the remainder. It lessens the problem.

When asking for your money, be hard on the issue - but soft on the person. Don't give the debtor any excuses for not paying.

Make it your objective is to get the money - not to score points or get even.

2. Managing Payables (Creditors): Creditors are a vital part of effective cash management and should be managed carefully to enhance the cash position. Purchasing initiates cash outflows and an over-zealous purchasing function can create liquidity problems. Consider the following:

Who authorizes purchasing in your company - is it tightly managed or spread among a number of (junior) people?

Are purchase quantities geared to demand forecasts? Do you use order quantities which take account of stock-holding and purchasing costs?

Do you know the cost to the company of carrying stock?

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Do you have alternative sources of supply? If not, get quotes from major suppliers and shop around for the best discounts, credit terms, and reduce dependence on a single supplier.

How many of your suppliers have a returns policy? Are you in a position to pass on cost increases quickly through price increases to your customers?

If a supplier of goods or services lets you down can you charge back the cost of the delay?

Can you arrange (with confidence!) to have delivery of supplies staggered or on a just-in-time basis?

There is an old adage in business that if you can buy well then you can sell well. Management of your creditors and suppliers is just as important as the management of your debtors. It is important to look after your creditors - slow payment by you may create ill-feeling and can signal that your company is inefficient (or in trouble!). Remember, a good supplier is someone who will work with you to enhance the future viability and profitability of your company. 3. Inventory Management: Managing inventory is a juggling act. Excessive stocks can place a heavy burden on the cash resources of a business. Insufficient stocks can result in lost sales, delays for customers etc. The key is to know how quickly your overall stock is moving or, put another way, how long each item of stock sit on shelves before being sold. Obviously, average stock-holding periods will be influenced by the nature of the business. For example, a fresh vegetable shop might turn over its entire stock every few days while a motor factor would be much slower as it may carry a wide range of rarely-used spare parts in case somebody needs them. Nowadays, many large manufacturers operate on a just-in-time (JIT) basis whereby all the components to be assembled on a particular today, arrive at the factory early that morning, no earlier - no later. This helps to minimize manufacturing costs as JIT

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stocks take up little space, minimize stock-holding and virtually eliminate the risks of obsolete or damaged stock. Because JIT manufacturers hold stock for a very short time, they are able to conserve substantial cash. JIT is a good model to strive for as it embraces all the principles of prudent stock management. The key issue for a business is to identify the fast and slow stock movers with the objectives of establishing optimum stock levels for each category and, thereby, minimize the cash tied up in stocks. Factors to be considered when determining optimum stock levels include:

What are the projected sales of each product? How widely available are raw materials, components etc.? How long does it take for delivery by suppliers? Can you remove slow movers from your product range without compromising best sellers?

Remember that stock sitting on shelves for long periods of time ties up money which is not working for you. For better stock control, try the following:

Review the effectiveness of existing purchasing and inventory systems. Know the stock turn for all major items of inventory. Apply tight controls to the significant few items and simplify controls for the trivial many.

Sell off outdated or slow moving merchandise - it gets more difficult to sell the longer you keep it.

Consider having part of your product outsourced to another manufacturer rather than make it yourself.

Review your security procedures to ensure that no stock "is going out the back door !"

Higher than necessary stock levels tie up cash and cost more in insurance, accommodation costs and interest charges. 2.5 LIMITATIONS OF THE STUDY

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Working capital management is an effective tool for management control. The following is the limitation which I observed in TI CYCLES OF INDIA LIMITED. Since the report is exclusively made from secondary source of data, the direct observation is literally impossible. There was no scope for gathering sufficient financial information as it is confidential. During the time allotted for the project the internal audit is going on and they could not spare much time for the detailed discussion on the subject. They themselves have not maintained the data so accurately but seem to be sufficient for the project. These limitations were mainly due to the organizational setup of the company. The companys Corporate Office is located at Parrys, where all the data are available; but it is accessible to me. 3.1 INDUSTRY PROFILE ABOUT BICYCLE A bicycle, or bike, is a pedal-driven land vehicle with two wheels attached to a frame, one behind the other. First introduced in 19th-century Europe, bicycles evolved quickly into their familiar, current design. Numbering over 1,000,000,000 in the world today, bicycles provide the principal means of transportation in many regions and a popular form of recreational transport in others. To distinguish a bicycle from a motorcycle, it is also called a push-bike.

The bicycle is one of the most notable of human inventions. The basic shape and configuration of the frame, wheels, pedals, saddle and handlebars has hardly changed since the first chain-driven model was developed around 1885, although many important detail improvements have been made since, especially in recent years using modern materials and computer-aided design.

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A remarkable aspect of the bicycle is its widespread adoption in many different fields of human activity, e.g. as a Child's toy, in adult recreation and fitness, as a means of everyday transport, in cyclo-touring, as a basis of cycle sport (branches: track, off-road or MTB, downhill, cyclo-cross, time trialing, road racing, cycle speedway, cycle polo, BMX), and as a basis for static gymnasium or home fitness versions. A human being traveling on a bicycle at low to medium speeds of around 1015 mph (16-24 kph), using only the energy required to walk, is the most energyefficient means of transport generally available. Air drag, which increases with the square of speed, requires increasingly higher power outputs relative to speed. A bicycle in which the rider lies in a prone position and which may be covered in an aerodynamic fairing to achieve very low air drag is referred to as a Recumbent bicycle or Human Powered Vehicle. The bicycle has affected history considerably in both the cultural and industrial realms. In its early years, bicycle construction drew on pre-existing technologies; more recently, bicycle technology has contributed, in turn, to other, newer areas. Beyond recreation and transportation, bicycles have been adapted for use in many occupations, including the military, local policing, courier services, and sports. A recurrent theme in bicycling has been the tension between bicyclists and drivers of motor vehicles, each group arguing for its fair share of the world's roadways. The History of Bicycle Industry THE STORY No single time or person can be identified with the invention of the bicycle. Its earliest known forebears were called velocipedes, and included many types of humanpowered vehicles. One of these, the scooter-like dandy horse of the French Comte de Sivrac, dating to 1790, was long cited as the earliest bicycle. Most bicycle historians now believe that these hobby-horses with no steering mechanism probably never existed, but were made up by Louis Baudry de Saunier, a 19th-century French bicycle historian. The most likely originator of the bicycle is German Baron Karl von Drais, who rode his 1817 machine while collecting taxes from his tenants. He patented his draisine, a number of which still exist, including one at the Paleis het Loo museum in

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Apeldoorn, the Netherlands. These were pushbikes, powered by the action of the rider's feet pushing against the ground. Scottish blacksmith Kirkpatrick MacMillan shares creative credit with von Drais for adding a treadle drive mechanism, in1840, that enabled the rider to lift his feet off the ground while driving the rear wheel. However, some reports describe MacMillan's vehicle as more of a "quadricycle". In the 1850s and 1860s, Frenchman Ernest Michaux and his pupil Pierre Lallement took bicycle design in a different direction, placing pedals on an enlarged front wheel. Their creation, which came to be called the "Boneshaker", featured a heavy steel frame on which they mounted wooden wheels with iron tires. Lallement emigrated to America, where he recorded a patent on his bicycle in 1866 in New Haven, Connecticut. The Boneshaker was further refined by James Starley in the 1870s.

He mounted the seat more squarely over the pedals, so that the rider could push more firmly, and further enlarged the front wheel to increase the potential for speed. With tires of solid rubber, his machine became known as the ordinary. British cyclists likened the disparity in size of the two wheels to their coinage, nicknaming it the penny-farthing. The primitive bicycles of this generation were difficult to ride, and the high seat and poor weight distribution made for dangerous falls.

The subsequent dwarf ordinary addressed some of these faults, by adding gearing, reducing the front wheel diameter, and setting the seat further back with no loss of speed. Having to both pedal and steer via the front wheel remained a problem. Starley's nephew, J. K. Starley, J. H. Lawson, and Shergold solved this problem by introducing the chain and producing rear-wheel drive. These models were known as dwarf safeties, or safety bicycles, for their lower seat height and better weight distribution. Starley's 1885 Rover is usually described as the first recognizably modern bicycle. Soon the seat tube was added, creating the double-triangle, diamond frame of the modern bike.

While the Starley design was much safer, the return to smaller wheels made for a bumpy ride. The next innovations increased comfort and ushered in the 1890s Golden Age of Bicycles. In 1888 Scotsman John Boyd Dunlop introduced the

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pneumatic tire, which soon became universal. Shortly thereafter the rear freewheel was developed, enabling the rider to coast without the pedals spinning out of control. This refinement led to the 1898 invention of coaster brakes. Derailleur gears and hand-operated, cable-pull brakes were also developed during these years, but were only slowly adopted by casual riders. By the turn of the century, bicycling clubs flourished on both sides of the Atlantic, and touring and racing were soon the rage. Successful early bicycle manufacturers included Englishman Frank Bowden and German builder Ignaz Schwinn. Bowden started the Raleigh Company in Nottingham in the 1890s, and soon was producing some 30,000 bicycles a year. Schwinn emigrated to the United States, where he founded his similarly successful company in Chicago in 1895. Schwinn bicycles soon featured widened tires and spring-cushioned, padded seats, sacrificing some efficiency for increased comfort. Facilitated by connections between European nations and their overseas colonies, European-style bicycles were soon available worldwide. By the mid-20th century bicycles had become the primary means of transportation for millions of people around the globe.In many western countries the use of bicycles levelled off or declined, as motorized transportation became affordable and car-centered policies led to an increasingly hostile road environment for bicycles. In North America, bicycle sales declined markedly after 1905, to the point where by the 1940s, they had largely been relegated to the role of children's toys. In other parts of the world however, such as China, India, and European countries such as Germany, Denmark, and the Netherlands, the traditional utility bicycle remained a mainstay of transportation, its design only gradually changing to incorporate hand-operated brakes and internal hub gears allowing up to seven speeds. In the Netherlands, such so-called 'granny bikes' have remained popular, and are again in production. Especially in Amsterdam they are often colourfully painted and/or otherwise decorated. In North America, increasing consciousness of physical fitness and environmental preservation spawned a renaissance of bicycling in the late 1960s. Bicycle sales in the United States boomed, largely in the form of the racing bicycles long used in such events as the hugely popular Tour de France. Sales were also helped by a number of technical innovations that were new to the US market, including higher performance steel alloys and gear sets with an increasing number of gears. While 10-speeds were the rage in the 1970s, 12-speed designs were introduced in the

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1980s, and today most bikes feature 18 or more speeds. By the 1980s these newer designs had driven the three-speed bicycle from the roads. In the late 1980s the mountain bike became particularly popular, and in the 1990s something of a major fad. These task-specific designs led many American recreational cyclists to demand a more comfortable and practical product. Manufacturers responded with the hybrid bicycle, which restored many of the features long enjoyed by riders of the time-tested European utility bikes. BICYCLE INDUSTRY IN INDIA INDUSTRY SCENARIO 4 major manufacturers Hero, TICI, Atlas and Avon Industry Capacity 119 lacs Cycles p.a. (as on 2004) Industry Capacity Utilization 89 per cent (as on 2004) Industry Penetration 45 per cent (as on 2004) Concentration of component suppliers at Ludhiana / Delhi MAJOR PLAYERS (As on 2004) VOLUME (LAC NOS.) MARKETSHARE (%) HERO TI ATLAS OTHERS 53.85 28.83 28.30 7.68 45% 24% 24% 6%

COMPANY

India is the second largest maker of bicycles in the world. Around 9 million bicycles (valued at Rs.1500 Crore) are produced each year. Ludiana has been the prime source of components fir the cycle industry in India. Recently, Vendor bases have come up in other parts of the country thereby diluting the geographical risk.

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Cycles can be classified into two segments-standards and specials. There are four major players-Hero Cycles, TI Cycles, Atlas Cycles and Avon Cycles. With changing environment, the market for standards for standard bicycles has become highly price sensitive allowing small players to take aggressive price postures. The special category bicycles are more differentiated by design and finds markets in kids, students and youth, for fitness and leisure.

The bicycle industry in India has witnessed a continuous downward trend in demand over the last three years. In 2004-2005, there was 7 percent drop in volume over the previous year. Increased urbanization, improved public transport systems, increased affordability of motorized vehicles and limited road-space for bicycles (there is complete absence of Cycles only lanes even in most congested and polluted cities) are said to be some of the causes for the down turn. However, the bicycle is still the first vehicle for most children and there is growing use of bicycles as health and leisure products. 3.2 COMPANY PROFILE MURUGAPPA GROUP The Murugappa Group, headquartered in Chennai, India, is a $1.5-billion conglomerate with interests in engineering, abrasives, sanitaryware, fertilisers, finance, bio-products and plantations. It has 29 companies under its umbrella, of which eight are listed and actively traded on the National Stock Exchange and the Bombay Stock Exchange. Together, they have over 28,000 employees. The business has its origins in 1900, when Dewan Bahadur A M Murugappa Chettiar established a money-lending and banking business in Burma (now Myanmar), which then spread to Malaysia, Sri Lanka, Indonesia and Vietnam. A century down the line, it has withstood enormous vicissitudes (including strategically moving its assets back to India and restarting from scratch in the '30s, before the Japanese invasion in World War II) to become one of the country's biggest industrial houses. The group turnover crossed the $ 1 billion mark in 2003-04, with an impressive growth of 25% Rs 42,060 million in 2002-03. The group clocked a 40 per cent jump in profit before tax over the previous year. Murugappa Group's

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consolidated turnover for 2004-05 crossed $1.44 billion. The Group achieved a growth of 20 per cent over the previous year. The group is a market leader in India across a spectrum of products like sanitaryware, fertilisers, abrasives, automotive chains, car door frames and steel tubes. Neemazal, a neem-based organic pesticide, is the market leader in bio-pesticides. Some of the country's best-known brands like BSA and Hercules in bicycles, Parryware in sanitaryware, Parrys Spirulina and Parrys Beta Carotene in nutraceuticals, Ballmaster and Ajax in abrasives, Gromor and Paramfos in fertilisers, and many more come from the Murugappa Group. The Murugappa Group has 29 companies active in the areas of engineering, abrasives, sanitaryware, fertilisers, finance, bio-products and plantations. The major companies of the group are: Carborundum Universal Limited Cholamandalam Investment and Finance Company Limited Coromandel Fertilisers Limited EID Parry India Limited Godavari Fertilisers Limited Parry Agro Industries Limited Parry Nutraceuticals Limited Tube Investments of India Limited

OTHERS

14%

NAME OF COMPANY TII EIDP CFL CUMI

THE % OF TURNOVER 28% 34% 16% 8%

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TUBE INVESTMENTS OF INDIA LIMITED

A Reputed Engineering Company in India, driving excellence in work and part of the US $ 1.5 billion Indian conglomerate - The Murugappa Group.

CORPORATE CHRONICLE Incorporated in 1949 TI Cycles of India (TICI) in collaboration with TI, UK, the worlds largest manufacturer of bicycles. Tube Products of India (TPI) was established in 1955 with the objective of providing backward integration to bicycles. TPI merged with TICI in 1959. Name of the company changed to Tube Investments of India Ltd. TPI established a Cold Rolling Mill in 1962 for the production of Cold Rolled close annealed steel strip. TPI established EOU at Avadi in 1996. Tube Plant commissioned in 1997 at Shirwal, Maharashtra. Facilities to produce doorframes for Maruti 800 cc and Hyundai Santro in 1998. Cycle plant at Nasik set up in 2001.

Tube Investments of India Limited is the flagship Company of Rs. 6250 cr. Murugappa Group. It manufactures precision steel tubes and strips, car doorframes, automotive and industrial chains and bicycles.

TI is the market leader in precision tubes with 61 percent market share by virtue of its quality and application engineering capabilities.

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TI is the market leader in roll formed car doorframes with 57 percent market share by virtue of its cost efficiency, association with key auto majors and roll forming capabilities.

TI is a leading player in automotive chain with 35 percent market share by virtue of its quality, cost and delivery and association with two wheeler majors.

TI is a leading player in bicycle segment with 30 percent market share by virtue of its brand equity, product development capability and proximity to the markets.

The Company also has an interest in the services sector through its investments in Cholamandalam Investment and Finance Company Ltd. and Cholamandalam MS General Insurance Co. Ltd. Tube Investments of India Limited was one of the most important postIndependence forays of the Murugappa Group into manufacturing. It was a niche the group identified as a trump card for a nascent nation; making the poor man's vehicle, the bicycle. It was originally founded as TI Cycles of India, in 1949. Group companies Tube Products of India and TI Miller which manufactured cycle lamps and dynamo sets were merged with the company in 1959 and 1984, respectively. TII is the second-largest manufacturer of bicycles in India, marketing top brands like Hercules, BSA and Philips, and had a market share of 31 per cent in 200304. In the value-added special segment, TI is the leader, with a 50 per cent market share. More recently, the company entered the promising health conscious 'exercise bicycle' segment in 2002-03. TI Cycles of India, one of the leading bicycle manufacturers in India, started in 1949, has been at the forefront of innovations and is a pioneer in the market of cycles. TI cycles are the makers of countrys most famous brands like Hercules, BSA and Philips cycles. The companys vision is to be a worldwide leader in cycling and cycling solutions by instilling the pride of ownership in the customers.

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Brands:

- The flag ship brand of TI cycles portfolio, this brand of ours is still as young as ever. Hercules stands for a unique pride of possession - anchored in the time-tested values of heroism and integrity, to which the brands customers subscribe in their own lives. - Another Flagship Brand of TI cycles, BSA stands for Birmingham Small Arms. It signifies the joy of cycling; fun and comfort go hand in hand with BSA. BSA today is an intrinsic part of the Indian family with cycles for everyone - kids, teens and adults. Certificates: Certified with ISO 9002 and ISO 14001. Exports: TI Cycles is an exporter to many regions across the global - Europe, South East Asia and Africa; being some of them. Locations: Chennai (Corporate HO), Nashik, Noida, Durgapur, Bangalore, Kolkatta, Patna and Ludhiana. A subsidiary, Tube Products of India was set up in 1955 in collaboration with Tube Products (Oldbury) Ltd, UK, to produce electric resistance welded (ERW), cold drawn welded (CDW) tubes and drawn over mandrel (DOM) tubes. In 1957, Tube Investments of India started production of cold-rolled close annealed steel strips, in collaboration with TI, UK, primarily to meet in-house and group requirements. Another subsidiary, TI Metal Forming, is a pioneer in cold roll forming. It manufactures and supplies value-added metal formed components like car door frames, sash / division channels, door guide rails, window frames, side impact beams, rail and bar assembly. It has plants in in Chennai and Bawal (near Gurgaon). Both plants are QS 9000 certified. The Chennai plant is ISO 14001 certified. TIDC INDIA formerly known as TI Diamond Chain Ltd, was established in 1960 in collaboration with the Diamond Chain Co, USA. Starting as a maker of bicycle chains, it now makes over 1,000 varieties of chains in Industrial chains TIDC produces from tiller chains, leaf chains and conveyor chains to industrial power drive

29

chains, engineering class chains; in automotive TIDC produces motorcycle drive chains and engine mechanism chains and fine blank parts . Annually production runs to 45 million ESS feet, and commands 40 per cent of the domestic market share. The company is known for developing high performance chains, for specific applications and machinery. Some of TIDC's popular brands are Diamond and Xtron. TIDC exports to over 50 countries worldwide. Units T.I.CYCLES OF INDIA TUBE PRODUCTS OF INDIA T.I.METAL METAL FORMING OF INDIA

Associate Company T.I.DIAMOND CHAIN LTD

TII Business Portfolio

BUSINESS Cycle Engineering Metal Forming

(%) TURNOVER 41% 56% 3% 3.3 PRODUCT PROFILE

TUBE INVESTMENT CYCLES OF INDIA, is one of the largest integrated cycle manufacturers in Asia, manufactures high quality bicycles for both domestic and international market. TI cycles manufactures and market the HERCULES, PHILIPS and BSA brands.

30

BSA brand include: BSA Deluxe BSA Mach BSA Diana BSA Fairy BSA Crusader BSA Cuberbibe BSA Streetcat BSA Mangoose Rock N Roll BSA Trialblazer BSA Holiday BSA Champtt BSA Champ BSA Champ SR, BSA Ace BSA Boost BSA Dinosaur BSA Basooka BSA Zipcat BSA Snowhite BSA Scoobee BSA Ladybird BSA Sinderllam BSA SLR Photon BSA Perz. HERCULES brand include: Hercules Popular Hercules Captain Hercules Commander Hercules MTB Y Bike Hercules Top Gear 5 SPD, Hercules Top Fear Y Series Hercules MTB DX,

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 Hercules Cannon Barrel Hercules AXN. The latest introductions from TI cycles are five to eighteen geared bicycles. They are: Hercules Top Gear Hercules EZY

IN THE YEAR 05, THE COMPANY HAS INTRODUCED 32 NEW MODELS AND INCOME FROM NEW PRODUCTS ACCOUNTED FOR 36 PERCENT OF TURNOVER. Health segment BSA BSA Trimgym Trimgym Jogger & BSA Trimgym Stepper 3.4 ORGANISATION STRUCTURE

Head-Business

Exports

Operations

Sales & Marketing Sales Brands

Design

Shared Services

Sourcing Regional Operations Engg. Quality

Design Team

Health & Retail Mktg. Services

Support Team HR

Finance & IT

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FINANCE DEPARTMENT-STRUCTURE

DGM-FINANCE

MANAGER (Management a/c)

MANAGER

DEPUTY MANAGERCOSTING

DEPUTY MANAGERMIS

EXECUTIVES PAYABLES

EXECUTIVESRECEIVABLES

PLANT/REGIONAL ACCOUNTING

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4.1 BALANCE SHEET ITEMS (Rs. in lakhs) Current year(Proj.) 2006-07 5912 500 0 (753) 5659

2001-02 4931 501 (867) (469) 4096

Past 4 years 2002-03 2003-04 4096 691 (489) (425) 3873 4259 1213 0 (674) 4798

Description 2004-05 5183 1385 0 (605) 5963 1. FIXED ASSETS NET BLOCK (Opening) (+) Additions (-) Deletions (-) Depreciation NET BLOCK (Closing) 2. NET WORKING CAPITAL A. Current Assets - Inventories - Receivables - Other current assets Total Current Assets B. Current Liabilities NET WORKING CAPITAL (A-B) TOTAL CAPITAL EMPLOYED Break up of Inventories - Raw Materials - Work In Progress - Finished Goods - Stores & Spares Total Inventory

Last year 2005-06 5963 650 0 (701) 5912

2380 9375 5344 17099 7031 10068 14164 992 326 965 95 2380

2112 10723 4164 16999 6971 11960 13902 984 126 910 93 2112

3052 10773 4024 17849 5889 11960 16758 1592 320 1047 93 3052

3086 9707 2571 15364 7757 7607 13570 1564 190 1274 58 3086

2644 10813 1959 15416 9618 5798 11709 1333 193 1059 59 2644

2411 11393 2010 15814 9980 5834 11492 1205 209 947 50 2411

Source : BUSINESS PLAN 2006 TI CYCLES OF INDIA

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Changes in the working capital statement for the year ended 2001-2002 (Rs. In lakhs) Particulars Current Assets: - Inventories - Receivables - Other current assets A Total 2380 9375 5344 17099 2112 10723 4164 16999 1348 1348 1180 1448 268 2001 2002 Increase Decrease

Current liabilities B Total A-B Working Capital Decrease in the Working Capital

7031 7031 10068

6971 6971 10028 40

60 60 1408 40 1448

10068

10068

1448

1448

Working Capital chart 2001-2002:-

Changes in the Working Capital for the year ended 2001-2002

10080 10070 10060 10050 10040 10030 10020 10010 10000 2001 2002 10028 Working Capital 10068

Inference:

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The above chart clearly shows the decrease in the working capital for the year 2001 to 2002. All the Current assets except receivables have decreased in year 2002 as compared to year 2001.The end result of the statement of changes in working capital after comparing all the increases and decreases is the net decrease in the amount of working capital. The above chart focuses on the fact that the decrease in working capital is Rs.40 lakhs.

Changes in the working capital statement for the year ended 2002-2003 (Rs. In lakhs) Particulars Current Assets: - Inventories - Receivables - Other current assets A Total 2112 10723 4164 16999 3052 10773 4024 17849 990 940 50 140 140 2002 2003 Increase Decrease

Current liabilities B Total A-B Working Capital Increase in the Working Capital

6971 6971 10028 1932

5889 5889 11960

1082 1082 2072 140 1932

11960

11960

2072

2072

Working Capital chart 2002-2003:-

Changes in the Working Capital for the year ended 2002-2003

12500 12000 11500 11000 10500 10000 9500 9000 2002 2003 Working Capital 10028 11960

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Inference: The above chart clearly shows the increase in the working capital for the year 2002 to 2003. All the Current assets except other current assets have increased in year 2003 as compared to year 2002. The end result of the statement of changes in working capital after comparing all the increases and decreases is the net increase in the amount of working capital. The above chart focuses on the fact that the increase in working capital is Rs.1932 lakhs.

Changes in the working capital statement for the year ended 2003-2004 (Rs. In lakhs) Particulars Current Assets: - Inventories - Receivables - Other current assets A Total 3052 10773 4024 17849 3086 9707 2571 15364 34 34 1066 1453 2519 2003 2004 Increase Decrease

Current liabilities B Total A-B Working Capital Decrease in the Working Capital

5889 5889 11960

7757 7757 7607 4353 34 4353 4387

1868 1868 4387

11960

11960

4387

Working Capital chart 2003-2004:-

Changes in the Working Capital for the year ended 2003-2004

14000 12000 10000 8000 6000 4000 2000 0 2003 2004 7607 Working Capital 11960

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Inference: The above chart clearly shows the decrease in the working capital for the year 2003 to 2004. All the Current assets except inventories have decreased in year 2004 as compared to year 2003. The end result of the statement of changes in working capital after comparing all the increases and decreases is the net decrease in the amount of working capital. The above chart focuses on the fact that the decrease in working capital is Rs.4353 lakhs.

Changes in the working capital statement for the year ended 2004-2005 (Rs. In lakhs) Particulars Current Assets: - Inventories - Receivables - Other current assets A Total 3086 9707 2571 15364 2644 10813 1959 15416 1106 1106 612 1054 442 2004 2005 Increase Decrease

Current liabilities B Total A-B Working Capital Decrease in the Working Capital

7757 7757 7607

9618 9618 5798 1809 1106 1809 2915

1861 1861 2915

7607

7607

2915

Working Capital chart 2004-2005:Changes in the Working Capital for the year ended 2004-2005
8000 7000 6000 5000 4000 3000 2000 1000 0 2004 2005 Working Capital 7607 5798

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Inference: The above chart clearly shows the decrease in the working capital for the year 2004 to 2005. All the Current assets except receivables have decreased in 2005 as compared to year 2004. The end result of the statement of changes in working capital after comparing all the increases and decreases is the net decrease in the amount of working capital. The above chart focuses on the fact that the decrease in working capital is Rs.1809 lakhs.

Changes in the working capital statement for the year ended 2005-2006 (Rs. In lakhs) Particulars Current Assets: - Inventories - Receivables - Other current assets A Total 2644 10813 1959 15416 2411 11393 2010 15814 580 51 631 233 233 2005 2006 Increase Decrease

Current liabilities B Total A-B Working Capital Decrease in the Working Capital

9618 9618 5798 36 5834

9980 9980 5834 631

362 362 595 36

5834

631

631

Working Capital chart 2005-2006:Changes in the Working Capital for the year ended 2005-2006
5840 5830 5820 5810 5800 5790 5780 2005 2006 5798 Working Capital 5834

Inference: The above chart clearly shows the increase in the working capital for the year 2005 to 2006 All the Current assets except inventories have increased in 2006 as

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compared to year 2005. The end result of the statement of changes in working capital after comparing all the increases and decreases is the net decrease in the amount of working capital. The above chart focuses on the fact that the decrease in working capital is Rs.36 lakhs. 4.2 KEY WORKING CAPITAL RATIOS 1. Current Ratio: Current Ratio = Total current assets / Total current liabilities Current Assets are assets that can readily turn in to cash or will do so within 12 months in the course of business. Current Liabilities are amount that are due to pay within the coming 12 months. For example, 1.5 times means that you should be able to lay your hands on Rs.1.50 for every Rs.1.00 you owe. Less than 1 times e.g. 0.75 means that you could have liquidity problems and be under pressure to generate sufficient cash to meet oncoming demands. The following table shows the current ratio for the years 2001-2005: Years Current Assets (Rs. in lakhs) 2001-2002 2002-2003 2003-2004 2004-2005 2005-2006 17099 16999 17849 15364 15416 Current Liabilities (Rs. in lakhs) 7031 6971 5889 7757 9618 2.43 times 2.44 times 3.03 times 1.98 times 1.60 times Current Ratio

Current Ratio chart for the years 2001-05:

Current Ratio
3.5 3 2.5 No. of times 2 1.5 1 0.5 0 2001-02 2002-03 2003-04 2004-05 2005-06 Years 2.43 2.44 1.98 1.6 Series1 3.03

Inference: The amount of liabilities is fluctuating for the entire 5 years, where as amount of assets is not much fluctuating in these periods. The current ratio is high in the

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year 2003, due to decreased amount in liability. So in that year alone the company has reduced its borrowings. The ratio is maintained in the couple of first & last years, which shows that the liquidity problem is avoided by the firm. 2. Quick Ratio: Quick Ratio = (Total current assets Inventory) / Total current liabilities It is similar to the Current Ratio, but takes into account of the fact that it may take time to convert inventory into cash. The following table shows the quick ratio for the years 2001-2005: (Rs. In lakhs) Years Current Assets Inventory Current Liabilities Quick Ratio

2001-2002 2002-2003 2003-2004 2004-2005 2005-2006

17099 16999 17849 15364 15416

2380 2112 3052 3086 2644

7031 6971 5889 7757 9618

2.09 times 2.14 times 2.51 times 1.58 times 1.33 times

Quick Ratio chart for the years 2001-05:

Quick Ratio
3 2.5 2.09 2 No. of times 1.5 1 0.5 0 2001-02 2002-03 2003-04 2004-05 2005-06 Years 2.51 2.14 1.58 1.33 Series1

Inference:

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The chart clearly shows that the last two years stocks are quickly converted in to cash, when compared to the first three years. This is mainly due to the implementation of VMI method by the company. The year 2003 is the highest time taken year to convert stock into cash. This is due to their clearance of the stock to some extent. 3. Working Capital Turnover Ratio: Working Capital ratio measures the effective utilization of Working Capital. The ratio establishes relationship between cost of sales and Working Capital. Working Capital Turnover Ratio = Sales / Net Working Capital Where: Net Working Capital = Current Assets Current Liabilities The following table shows Working Capital Turnover Ratio for years 2001 to 2005: Years Sales (Rs. in lakhs) 2001-2002 2002-2003 2003-2004 2004-2005 2005-2006 45364 45165 48262 55153 48350 10068 11960 11960 7607 5798 4.50 times 3.80 times 4.04 times 7.25 times 8.33 times Net Working Capital (Rs. in lakhs) Working Capital Turnover Ratio

Working capital turnover chart 2001-2005: Working Capital Turnover Ratio 9 8 7 6 5 No. of times 4 3 2 1 0

Series1

2001- 2002- 2003- 2004- 20052002 2003 2004 2005 2006 Years

Inference:

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In the current year 2005 the higher is the ratio i.e. 8.3 times. It indicates the lower investment of Working Capital and the company plans to attain more profits. But in the year 2001 it has a Working Capital of 4.5 times, which indicates a higher investment of Working Capital. For the years 2002 and 2003 the sales is comparatively lower than the rest of the years.

FINDINGS From the past 5 year data, it is very clear that the working capital amount is fluctuating. In the company also, they are not taking much care in reducing the working capital. The working capital turnover ratio is quite good in the years 2004 and 2005. The quick ratio is quite good in the last two years. The sales figure is very much fluctuating due to incompetent marketing department. This turnover ratio should be maintained by the company by putting more efforts in its sales volume. Last but not the least, the different parts of finance department itself is not having a very good contact with each other. This doesnt make a way for the improvement of the company in the future. SUGGESTIONS Inventories constitute a major part of current assets. Thus the company should take stem action with reducing its inventory. Even though the company is already equipped with the VMI method, they should try to implement JIT method also for certain high cost products. This implementation should be done immediately.

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 A sundry debtor is also a major constituent of current assets. But the company should reduce the level of debtors, either by collecting money as advance at in case of Government orders, receive cheques which could be forfeited. TI CYCLES OF INDIA LIMITED should take steps to increase the level of current assets to current liabilities. If this procession could be increased, TI CYCLES can get more credit from its suppliers, as suppliers look into the ability of the firm to pay its cash. The cash level maintained by TI CYCLES is quite weak. But personal investigation with the staffs revealed that the bank facility will offer the cushion and would be in a position to repay its contingencies. Additionally TUBE INVESTMENTS OF INDIA LIMITED also helps them. TI CYCLES should improve its corporate image for increasing the credit grant given by the suppliers. This would facilitate TI CYCLES to reduce the working capital. BIBLIOGRAPHY BOOK NAME NAME AUTHOR

- FINANCIAL MANAGEMENT &

Shashi K. Gupta

R.K. Sharma

- FINANCIAL MANAGEMENT

I.M. Pandey

- ACCOUNTING FOR MANAGEMENT Ramachandran

T.

- MANAGEMENT ACCOUNTING

R.S.N. Pillai & Bagavathi

WEBSITE : www.planware.org Data are collected from Annual Reports of TI CYCLES INDIA LIMITED.

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