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A STUDY IN WORKING CAPITAL WITH REFERENCE TO

( SIDDHARTH PVC PIPES PVT LTD ),NANDYAL


Project Report Submitted To

SRI RAMAKRISHNA DEGREE


&
P.G.(AUTONOMOUS) COLLEGE, NANDYAL
In partial fulfillment of the requirement for
The award of the degree of
MASTER OF COMMERCE (E-COMMERCE)
Submitted by
CHILAKALURI HUSSAIN VALI
(H.T.NO.1540011)
Under the guidance of
Mr.POTHULA RATHNA REDDYM.B.A
Assistant Professor

DEPARTMENT OF COMMERCE
SRI RAMAKRISHNA DEGREE & P.G.(AUTONOMOUS)
COLLEGE
(Affiliated to RAYALASEEMA UNIVERSITY, Kurnool)
Nandyal,Kurnool(Dt),AP
April 2017
CERTIFFICATE

This Is Certify That Mr.Chilakaluri Hussain Vali Regd No.1540011 Has

Successfully Completed The Project Entitled A STUDY IN WORKING

CAPITAL WITH REFERENCE TO ( SIDDHARTH PVC PIPES


PVT LTD ),NANDYAL In Partial Fulfillment Of The Requirement For
The Award Of The Degree Of MASTER OF COMMERCE
(E-COMMERCE) From Rayalaseema University ,Kurnool During The
Academic Year 2015-2017.

Mr.POTHULA RATHNA REDDYM.B.A


Assistant Professor
DECLARATION

I take a privilege to declare that project entitled A STUDY IN WORKING

CAPITAL WITH REFERENCE TO( SIDDHARTH PVC PIPES


PVT LTD ),NANDYAL has been carried out by me under the guidance of
MR.POTHULA RATHNA REDDY ,MBA, this project report is submitted in partial
fulfillment of the requirement for the award of MASTER OF COMMERCE degree.
This work has not been submitted else either in part or wholly where for any other
degree or diploma.

Date: CHILAKALURI HUSSAIN VALI


Place: HTNO: (1540011)
ACKNOWLEDGEMENT

I would like to thanks to Dr.G.RAMAKRISHNA REDDY

principal ,Dr.G.CHANDRASEKHAR RAO garu ,director,for giving moral support

to complete this project

I deem it a great privilege to express profound respect,deep sense of Gratitude to

my project guide Mr.POTHULA RATNA REDDY., MBA Asst.Professor in Sri

Ramakrishna PG College ,Nandyal, of his constant encouragement and valuable

guidance

I am grateful indebted to Mr. B.NAGESWARA REDDY ,(MD) SIDDHARTH

PVC PIPES PVT LTD Nandyal. Providing me an opportunity for this project work

in their prestigious organization,and staff of Siddharth Pvc Pipes for their valuable

guidance and useful advice and suggestions which made my work easy and

successful.

Finally I would like to thank one and all that helped me in going through my

project work.

CHILAKALURI HUSSAIN VALI

H.T.NO. 1540011
CONTENTS

CHAPTER NO PAGENO

Chapter-I Introduction 6-23


1.1 Introduction

Chapter- II Objective And Methodolohy 24-27


2.1 Research Methodology
2.2 Need Of The Study
2.3 Scope Of The Study
2.4 Objectives Of The Study
2.5 Limitations Of The Study

Chapter-III Industry & Company Profile 28-40


3.1 Industry Profile
3.2 Company Profile

Chapter-IV Data Analysis And Interpretation 41-63


4.1 Analysis &Interpretation

Chapter-V Finding, Suggestion And Conclusion 64-67


5.1 Findings
5.2 Suggestions
5.3 Conclusion
5.4 Bibliography
CHAPTER-I
INTRODUCTION
INTRODUCTION

One of the most important areas in the day-to-day management of the firm is
the management of working capital. Working capital management is the functional
area of the finance that covers all the current accounts of the firm. It is concerned with
management of the level of individual current assets as well as the management of
total working capital. Financial management means procurement of funds and
effective utilization of these procured funds. Procurement of funds is firstly concerned
for financing working capital requirement of the firm and secondary for financing
fixed assets.

1.1Meaning of working capital:


Ordinarily, the term working capital stands for that part of the capital, which
is required for the financing of working or current needs of the company. Working
capital is the lifetime of every concern. Whether it is manufacturing or non-
manufacturing one with out adequate working capital, there can be no progress in the
industry.

Inadequate working capital means shortage of raw materials, labor etc.,


resulting in partial current assets less current liabilities-has no economic meaning in
the sense of implying some type of normative behavior. According to this line of
reasoning, it is largely an accounting artifact. Working capital management, then, is a
misnomer.

The working capital of the firm is not managed. The term describes a category
of management decisions affects specific types of current assets and current liabilities.
In turn, those decisions should be rooted in the overall Valuation of the firm.
1.2 Definition:
According to Western and Brigham, Working capital refers to a firms
investment in short term assets- cash, short term securities, accounts receivables and
inventories.

According to Hoagland, working capital is descriptive of that capital which is


not fixed. But the more common use of the working capital is to consider it as the
difference between the book value of the current assets and the current liabilities.

1.3 Concepts of working capital


The term working capital can be used in two different ways: they are

1.3.1 Gross Working Capital:


The gross working capital refers to investment in all the current assets taken
together. The total of investments in all current assets is known as gross working
capital.

1.3.2. Net Working Capital:


The term net working capital refers excess of total current assets over total
current liabilities. It may be noted that the current assets refers to these liabilities
which are payable with in a period of one year.

1.4 Types of working capital:

From the point of view of time, the term working capital can be divided into
two categories.

1.4.1 Permanent working capital:


It is also refers to the hard core working capital. it is the minimum level of
investment in the current assets that is carried by the business at all times to carries
our minimum level of its activities.
1.4.2. Temporary working capital:
It refers to the part of total working capital which is required by a business
over and about permanent working capital. It is also called variable working capital.
Since the volume of the temporary working capital keeps on fluctuating from time to
time according to the business activities it may be financed from short term resources.

1.5 Permanent working capital can be further divided into:

1. Regular Working Capital


2. Reserve Working Capital

1.5.1. Regular Working Capital:


It is the minimum amount of liquid capital needed to keep up the circulation of
the capital from cash to inventories to receivables and again to cash. This would
include sufficient minimum bank balance to discount all bills, maintain adequate
supply of raw materials etc...

1.5.2. Reserve Working Capital:


It is the excess over the needs or regular working capital that should be kept in
reserve for contingencies that may arise at any time these contingencies include rising
prices, business depression, strikes and special operations such as experiments with
new products.

1.6 Composition of Working Capital:

1.Current Assets:
a. Inventories Raw Materials
Work in progress
Finished goods
Stores and spares
Miscellaneous Goods

b. Receivables Trade debtors


Loans and advances
Other debtor balances

c. Marketable securities Govt securities


Semi-Government securities
Shares, Debenture, etc.,

d. Cash and bank balance Cash in Hand


Cash At Bank
Cash in Transit
2.Current Liabilities:

a. Sundry creditors Interest accused on loan


Advances received from customs
Short term loans from banks
Trade dues and other liabilities
Deposits from public, etc.,

1.7 Sources of Working Capital:

Working Capital Sources

Long term sources Short-term sources

Internal External

1. Sale of shares 1. Depreciation funds 1.Trade credit


2. Sale of Debentures 2.Provision of Taxation 2.Credit papers
3. Sale of idle fixed assets 3.Accrued Expenses 3.Bank credit
4. Long-term loans 4.Public Deposits
5. Customers credit
6. Loans from directors
7. Security of employee
8. Factoring

1.8 General factors determining working capital requirements:


The working capital needs of a firm are determined & influenced by various
factors. A wide variety of considerations may affect the quantum of working capital
required & these considerations may vary from time to time. The working capital
needed at one point of time may not be good enough for some other situation. The
determination of working capital requirements is a continuous process & must be
undertaken on a regular basis in the light of the changing situations. Following are
some of the factors which are relevant in determining the working capital need of the
firms.

1. Production policy
2. Nature of the business
3. Credit policy
4. Inventory policy
5. Abnormal factors
6. Market conditions
7. Conditions of supply
8. Business cycle
9. Growth and expansion
10. Level of taxes
11. Dividend policy
12. Price level changes
13. Operating efficiency

1.8.1 Production Policy:


The production schedule i.e., the plan for production, has great influence on the
level of the inventories. In some cases raw materials can be produced only in a
particular season and have to be stocked for the production of the whole year. In many
others the production cycle is limited to a part of the year and raw materials have to
be accumulated throughout the year. thus, need for working capital will very
according to the production plans.

1.8.2. Nature of the Business:


The size of business also has an important impact on its working capital needs.
Size may be measured in terms of the scale of operations. A firm with large scale of
operation will need working capital than small term. The working capital
requirements of a firm are basically influenced by the nature of the business trading
and financial firm has a very less investment in fixed assets, but require a large sum of
money to be invested in working capital.

1.8.3 Credit Policy:


A company, which allows liberal credit to its customers, may have higher sales but
consequently will have large amount of funds tied up in sundry debtors. Credit terms,
Debt collection system also influences the level of working capital.

1.8.4 Inventory policy:


Large amount of funds is normally locked up in inventory. An efficient firm may
stock raw material for a smaller period and may therefore require lesser amount of
working capital.

1.8.5 Abnormal factors:


Abnormal factors like strikes, lockouts also require additional working capital.
Recessionary conditions necessitate a higher amount of stock of finished goods.

1.8.6 Market conditions:


Market conditions like competition large inventory are essential as delivery has to
be off the self or credit has to be extended on liberal terms when market competition
is fierce.

1.8.7 Conditions of supply:


If prompt and adequate supply of raw materials requires small investment in
inventory. If supply is scant, seasonal canalized, it is essential to keep longer stocks
increasing working capital requirements.

1.8.8 Business cycle:


Business fluctuations lead to cyclical and seasonal changes in production, sales
and effect the working capital requirements.

1.8.9 Growth and expansion:


The working capital needs of firm increases in growth in terms sales of fixed
assets. If is difficult to precisely determine the relationship between volume of sales
and the working capital needs. The critical fact however that is the need for increased
working capital funds does not fallow growth in business activities but precedes it.

1.8.10 Level of taxes:


Taxation is a short term liability payable in cash. Advance payment of cash may
have to be paid on the basis of anticipated profits. Tax is first appropriation out of
profits. Higher the tax, greater is the stain on the working capital of the company.
Working capital varies with tax rate and advanced tax provisions.

1.8.11 Dividend policy:


Payment of dividend utilizes cash while retaining profits acts as a source of
working capital.

1.8.12 Price Level changes:


Inflationary trends in the economy necessitate more working capital maintain the
same level of activity.

1.8.13 Operating efficiency:


The operating efficiency of the firm relates to the optimum utilization of resources
at minimum costs. The firm will be effectively contributing in keeping the working
capital investment at a lower level if it is efficient to controlling operating costs and
utilizing current assets. The use of working capital is improved and pace of a cash
conversion cycle is accelerated with operating efficiency.

1.9 Advantages of good working capital management:

The main advantages of sound working capital are as follows:


Solvency of the business: adequate working capital helps in maintaining
solvency of the business by providing uninterrupted flow of production.

1. Goodwill: sufficient working capital enables a business concern to make


prompt payments and hence helps in crating and maintaining goodwill.

2. Easy loans: a concern having adequate working capital, high solvency and
good
Credit standing can arrange loans from banks on easy and favorable terms.

3. Cash discount: adequate working capital also enables a concern to avail cash
discounts on the purchases and maintaining goodwill.

4. Regular supply of raw materials: sufficient working capital ensures regular


supply of raw materials and continuous production.

5. Regular payment of salaries, wages and other day-to-day commitments: a


company which has ample working capital can make regular payment towards
it day-today commitments which would raise the morale of its employees,
increase their efficiency, reduce wastage cost and enhance production and
profits.

6. Exploitation of favorable market conditions: only concerns with adequate


working capital exploit favorable market conditions such as purchasing its
requirements in bulk when the prices are lower and holding its inventories for
higher prices.

7. Crisis handling ability: adequate working capital enables a concern to face


business crisis, such as depression, inflation successfully.

8. Quick and regular return on investments: sufficiency of working capital


enables a concern to pay quick and regular dividends to its investors, as there
may not be much pressure to plough back profits.

9. High morale: adequacy of working capital creates an environment of security,


confidence and high morale and improves the overall efficiency of a business.

1.10 Disadvantages of Inadequate Working Capital:

1. A concern which has inadequate working capital cannot pay its short-term
liabilities in time. Thus, it will lose its reputation and shall not be able to
obtain good credit facilities.

2. It cannot buy its requirements in bulk and cannot avail discounts.

3. It becomes difficult for the firm exploits favorable market conditions and
under take profitable projects.

4. The firm cannot pay its day-to-day expenses, which would increase cost and
reduce the profit of the business.

5. It becomes impossible to utilize efficiently the fixed assets due to the non-
availability of liquid funds.

6. The rate of return on investments will also fall with the shortage of working
capital.
1.11 Working capital cycle ( the operating cycle):

The working capital cycle refers to the length of time between the firms
paying cash for materials, etc., entering in to the production process/ stock and the
inflow of cash from debtors. Suppose a company has a certain amount of cash it will
need raw materials. Some raw materials will be available on credit but, cash will be
paid out for the other part immediately. Then it has to pay labour cost and incurs
factory overheads. These three combined together will constitute work-in-progress.
After the production cycle is complete, work-in-progress will get converted into
sundry debtors. Sundry debtors will be realized in cash after the expiry of credit
period. this cash can again be used for financing of raw materials, work-in-progress,
etc. thus there is a complete cycle from cash to cash where in cash gets converted into
raw materials, work-in-progress, finished goods, debtors and finally into cash again.
Short term funds are required to meet the requirements of funds during this period.
This time period is dependent upon the length of time within which the original cash
gets converted into cash again. This cycle is also known as operating cycle or cash
cycle.
1.12 OPERATING CYCLE

Cash

Bills Receivables Raw Materials


Or Debtors

Working in progress
Credit Sales

Finished goods
Working capital cycle indicates the length of time between companies paying
for materials, entering into stock and receiving the cash from sales of finished goods.
It can be determined by adding the number of days required for each stage in the
cycle. For e.g., a company holds raw materials on an average for 60 days, it gets
credit from the supplier for 15 days, production process needs 15 days, finished goods
are held for 30 days and 30 days credit is extended to debtors. The total of all these
120 days, i.e., 60-15+15+30+30 days is the total working capital cycle.

The determination of working capital cycle helps in the forecast, control and
management of working capital. It indicates the total time lag and the relative
significance of its constituting parts. The duration of working capital cycle may vary
depending on the nature of the business.

The Operating Cycle consists of the following events which continues through
the life of business

1. conversion of cash into raw materials


2. conversion of raw materials into work in progress
3. conversion of WIP into finished stock
4. conversion sales
5. conversion of account receivable into cash

1.13 Components of Working Capital

Working Capital management involves different components such as

1. Management of cash
2. Management of Inventory
3. Management of Receivables

1.13.1 Management of cash:


Cash is the important current asset for the operation of the business. Cash is
the basic input needed to keep the business running on continuous basis; it is also the
ultimate output expected to be realized by selling the services of product
manufactures by the firm. The firm should keep sufficient cash, neither more nor less.
Cash shortage will disrupt the firms manufacturing operations while excessive cash
will simply remain idle, with out contributing anything towards the firms
profitability. Thus, major functions of the financial manager to maintain a sound cash
position.

Cash is the money, which a firm can disburse immediately with out any
restriction. The term cash includes coins, currency and cheques held by the firm, and
balance in its bank accounts. Some times near cash items, such as marketable
securities or bank times deposits, are also includes in cash. The basic characteristic of
near cash assets is that they can readily be converted to cash. Generally when a firm
has excess of near cash, it invests it in marketable securities. This kind of investment
contributes some profit to the firm.
a. Facts of cash management:
Cash management is concerned with the managing of

1) Cash flows into and out of the firm


2) Cash flows with in the firm and
3) Cash balance held by the firm a points of time by financing
deficit or investing surplus cash. It can be represented by a cash management cycle as
showing fig1.sales generates cash, which has to be disbursed out. The surplus cash
has to be invested while deficit has to be borrowed. Cash management seeks to
accomplish this cycle at a minimum cost. At the same time, it also seeks to achieve
liquidity and control.

Cash management assumes more importance than other current assets because
it is the most significant and the least productive asset that a firm holds. It is a
significant because it is used to pay the firms obligations. However, cash is
unproductive. Unlike fixed assets or inventories, it does not produce goods for sales.
Therefore, the aim of cash management is to maintain adequate control over cash
position to keep the firm sufficiently liquid and to be use excess cash in some
profitable way.
b. Cash Planning:
Cash inflows and outflows should be planned to project cash surplus or deficit
for each period of the planning period. Cash budget should be prepared for this
purpose.
C. Managing the cash flows:
The flow of cash should be properly managed. The cash should be accelerated
while, as far as possible, the cash outflows should be decelerated.

d. Optimum cash level:


The firm should decide about the appropriate level of cash balances. The cost
of excess cash and danger of deficiency should be matched to determine the optimum
level of cash balances.

e. Investing surplus cash:


The surplus balance should be properly invested to earn profits. The firm
should decide about the division of cash balances between alternative short-term
investment opportunities such as bank deposits, marketable securities, or inter
corporation lending.

The ideal cash management system will depends on the firms products,
organization structure, competition, culture and option available. The task is complex,
and decisions taken can affect important areas of the firm. For example, to improve
collection if the credit period is reduced, it may affect sales. However, in certain
cases, even without fundamental changes, it possible to significantly reduce cost of
cash management system by choosing a right bank and controlling the collections
properly.

f. Motives for holding cash:


The firms needs for cash may be attributed to the following needs
i. Transaction motive
ii. Precautionary motive
iii. Speculation motive
iv. Translation motive
i. Transaction motive:
The transaction motive requires a firm to hold cash to conduct its business in the
ordinary cost. The firm needs cash primarily to make payments for purchases, wages
and salaries, other operating expenses, taxes, dividends etc. the need to hold cash
would not arise if there were perfect synchronization between cash receipts and cash
payments, i.e., enough cash is received when the payment has to be made. But cash
receipts and payments are not perfectly synchronized. For those periods, when cash
payments exceed cash receipts, the firm should maintain some cash balance to be able
to make required payments. For transaction purpose, a firm may invest its cash in
marketable securities; usually the firm will purchase securities whose maturity
corresponds with some anticipated payments. Such as dividends, or taxes in the
future. Notice that the transactions motive mainly refers to holding cash to met
anticipated payments whose timing is not perfectly matched with receipts.

ii. Precautionary motive:


Afirm also keeps cash balances to meet unexpected cash needs arising out of
unexpected contingencies such as floods, strikes, presentment of bills for payment
earlier than expected date, sharp increase in raw materials price etc,. The more is the
possibility of such contingencies, the more is the amount of cash kept by the firm for
meeting them.

iii. Speculative motive:


A firm also keeps cash balance to take advantage of unexpected opportunities
typically outside the normal course of business, such motive is therefore a purely
speculative for example a firm may like to take advantage of an opportunity to
purchase raw material at reduced prices in anticipation of decline prices, similarly, it
may like to keep some c ash balance to make profit by buying securities at ties when
their prices fall due to tight money conditions etc,.
g. Cash planning:
Cash planning is a technique to plan and control the use of cash. It protects the
financial condition of the firm by developing a projected cash statement from a
forecast of expected cash inflows and outflows for a given period. The forecast may
be used on the present operations or anticipated future operations. Cash plans are very
crucial in developing the overall operating plans of the firm.

h. Cash forecasting and budgeting:


Cash budget is the most significant device to plan for and control cash receipts
and payments. A cash budget is a summary of the firms expected cash inflows over a
projected period. It gives information on the timing and magnitude of expected cash
flows and cash balances over the projected period. This information helps the
financial manager to determine the future cash needs of the firm, plan for the
financing of these needs and exercise control over the cash and liquidity of the firm.

The time horizon of a cash budget may differ from firm to firm. A firm whose
business is affected by seasonal variations may prepare monthly cash budgets. Daily
or weekly budgets should be prepared for determine cash requirements if cash flows
extreme fluctuations. Cash budgets for a longer interval may be prepared if cash flows
are relatively stable.

1.14. Management of Inventory:


The preceding two chapters basic strategies and consideration in managing
current assets namely, cash and receivables are stocks of product a company is
manufacturing for sale and components that make up a product. Inventories like
receivables are also a significant portion of most firms assets and accordingly require
substantial investment. To keep these investments from becoming unnecessarily large,
inventories must be managed efficiently. The various forms in which inventories exist
in a manufacturing company are
a) Raw Materials: Raw materials are those basic inputs that are
converted into finished products through the manufacturing process. Raw
material inventories are those units, which have been purchased and stored for
future productions.
b) Work-in-progress: The work-in-progress is that stage of stock, which is in
between raw materials and finished goods. They are semi-finished products that
need more work before they become finished products for sale. The quantum of
WIP depends on the time taken in the manufacturing process. The greater the
time taken in manufacturing, the more will be the amount of work-in-progress.
c) Finished goods: Finished goods inventories are those completely manufactured
products, which are ready for sale. Stocks of raw material and work-in-process
facilitate production while stock of finished goods is required for smooth
marketing operations.

The level of three kinds of inventories for a firm depends on the nature of its
business. A manufacturing firm will have substantially high level of all three kinds of
inventories.
A fourth kind of inventory Firm also maintains suppliers. Suppliers include office
and plant cleaning material Pipes, fuel, light bulbs etc. these materials do not directly
enter into production, but are necessary for production process, usually these supplies
are small part of inventory and do not involve significant investment. Therefore a
sophisticated system of inventory control may not be maintained for them.
2 (a) Need for holding inventory:
There are generally three major motives for holding inventories.

There transactions motive which emphasis the need to maintain inventories to


facilitate smooth production and sale operations.

The precautionary motive, which necessitates holding of inventories to guard


against the risk of unpredictable changes in demand and supply forces and other
factors.

The speculative motive which includes the decision to increase or reduce inventory
levels to take advantage of price fluctuations.

A company should maintain adequate stock of material, as it is not possible for


a company to procure raw material whenever it is needed and also for a continuous
and smooth and uninterrupted production process.
2(b) Inventory management techniques:
In managing inventories the firm should determine the optimum level of
inventory. Efficiently controlled inventories make the firm flexible. Inefficient
inventory control results in unbalanced inventory and inflexibility, the firm may be
sometimes out of stock and sometimes may pile up unnecessary stocks. This increases
the level of investment and makes the firm unprofitable.

To manage inventories efficiently and effectively answers should to the


following two questions? How much should be ordered? When should it be ordered?

The first question, how much to order, related in the problem of determining
economic order quantity (EOQ) and is answered with an analysis of costs of
maintaining certain level of inventories. The second question when to order arises
because of uncertainty and is a problem of determining the re-order point.

1.15 . Management of Receivables:


Accounts receivable or trade credit is the most prominent force of the modern
business. It is considered as an essential marketable tool, acting as a bridge for the
movement of goods through production and distribution stages to customers finally. A
firm grants credit to protect its sales from the competitor and to attract potential
customers. Trade credit, thus credit receivable or book debts, which the firm is
expected to, collect in future. It also involved an element of risk as the cash payment
has get to be received, hence they has to be carefully analyzed.

Receivables constitute a substantial portion of current assets of several firms.


They form about 1/3 part of current assets in India. As substantial amounts are tied up
in trade debtors, it needs careful analysis and proper management, for proper
management of receivable a concern must adopt an optimum credit policy.
CHAPTER-II

OBJECTIVES AND METHODOLOGY


2.1 Need for the study:

The pipes production serves as the index of the economic development of any
country. Thus PVC Pipes production is very vital from countrys agricultures point of
view. The demand would be growing with increasing technologies and is likely to
reach a staggering level in the decades to come.

On the other hand, the price of pipes has remained stagnant, because prices are
determined by market forces and presently production levels are greater than supply.

A number of industries for the past few years have been finding it difficult to
solve the increasing problems of adopting seriously the management of working
capital. Business concerns intent on developing their business have to use to the
utmost, their available resources for the improvement and development of the
business, there by enabling them profits.

Due to inflationary situation and restrictions imposed on borrowing facility,


the commercial institutions and manufacturing industrial units have been confronting
innumerable difficulties in meeting day-to-day financial needs. Hence effective
management of working capital has become a problem for such organizations and
industries. The purpose of study is to examine, analyze and evaluate working capital
management and its components in INTEGRATED THERMO PLASTICS PVC
PIPES PVT LTD.

2.2 Statement of the problem:

Working capital is an important aspect of financial management. It plays an


essential role in organizations financial success. The nature of such working capital is
very liquid. Valuation of working capital elements like cash, debtors, stock and
creditors itself is a difficult task for any organization. So there arises a requirement for
assessing working capital requirements, monitoring and managing it, from time to
time for greater efficiencies.
2.3 Objectives Of The Study:

1. To study the statement of changes in working capital.


2. To analyze the profitability-liquidity position of the company.
3. To examine and evaluate the cash, receivables and inventory management
performances.

2.3 Scope and Period of the Study:

The scope of the study is defined below in terms of concepts adopted and
period under focus.

First, the study management of working capital i.e. gross and net are
used in measuring profitability and liquidity respectively and also to arrive at various
objectives of the study.

Secondly, the study is based on the annual reports of the company for a period
of five years from 2013-14 to 2015-16 (so we study 2012,2013,2014,2015,2016).

2.4 RESEARCH METHODOLOGY

Research means a scientific systematic research for pertinent information on a


specific topic. It is a concept or symbol for the purpose journalizing to extend correct
or verify knowledge aids in construction of theory or in the practice of an art.

The data used for the analysis and interpretation is from annual reports of the
company i.e., secondary forms of data. Ratio analysis is used for calculation purpose.
The project is presented using tables, graphs and with their interpretations. No survey
is undertaken or observation study is conducted by evaluating fixed assets
performance of the company.
2.5 SOURCES OF DATA:
The data needed for this project is collected from the following sources:
1. The data is adopted purely from secondary sources.
2. The theoretical contents are gathered purely from eminent text books and
references.
3. The financial data and information is gathered from annual reports of the
company.
The study of Working Capital management is based on primary as well as secondary
data.
2.6 SECONDARY DATA:

The secondary data was collected from companys annual reports from 2014-15to
2016, various books and through Internet.

2.7 Tools for analysis:


To analyze the data acquired from the secondary sources the following tools
are used:
Statement of changes in working capital.
Ratio analysis.
2.8 Limitations:

1. As most of the financial information was considered confidential, the access to


the information was restricted.
2. The results of the study are limited to the available information.
3. Due to frequent camps and workload of the staff in the organization much time
could not be spared by them for the project.
4. The project is based mainly on secondary sources of information
CHAPTER-III
INDUSTRY
AND
COMPANY PROFILE
3.1 INDUSTRY PROFILE

Plastic have become synonymous with modern living. It is undoubtedly a


product, which has penetrated extensively into the common mans life. No wonder the
industry has achieved in terms of supply of raw material expansion and diversification
of processing capabilities and manufacturing of processing machinery and equipment.

This versatile material with its superior qualities such as light weight, easy
process ability corrosion resistance, energy conservation, no toxicity etc. many
substitute to a large extent many conventional and costly industrial materials like
wood, metal, glass, jute, lather etc., in the future. The manifold applications of plastics
in the field of automobiles,electronics,electrical,packaging and agriculture give
enough evidence of the immense utility of plastics.

At 80 percent of total requirement for raw material and almost all types of
plastic machines required for the industry are indigenously available. The present
investment in all the three segments of the industry namely production of raw
materials, expansion and diversification of processing capacities, manufacturing of
processing machinery and ancillary equipment is Rs.1250 crores and it provides
employment to more than eight lakh people.

On account of their inherent advantage in properties and versatility in adoption


and use, plastics have come to play a vital role in a variety of applications, the world
over. In our country, plastics are used in making essential consumer goods of daily use
for common man such as baskets, shopping bags, water bags, water bottles, school
bags, tiffen boxes, hair combs, tooth brushes, spectacle frames and fountain pens, they
also find applications in field like packaging, automobiles, and transportation,
engineering, electronics, telecommunications, defense, medicine, and building and
construction. Plastics are growing in importance in agriculture and water
management.
The Govt. of India recognizing the importance of plastics in agriculture appointed on
march 7th, 1981 a National Committee on the use of plastics in agriculture under the
chairmanship of Dr.G.V.K.Rao. This committee has forecast a tremendous growth of
drip irrigation through a net work of plastic pipes and tubes. In its opinion large scale
adoption of irrigation would lead to sports in demand for PVC pipes, L.D.P.E tubes
and polypropylene emitters. The committee made a number of recommendations for
promoting the use of plastics. The implementation of recommendations would go
along away in increasing the consumption of plastics, which at present is very low.
The rigid pipes, flexible pipes and sheeting, which are being used for agricultural
operations to carry out water place to place and also lining of ponds and reservoirs to
reduce seepage and most important in drip irrigation system.

3.1.1 Export of plastics goods:


Plastics have excellent potentialities. Our country is equipped with all kind of
processing machinery and skilled labor and undoable, and extra to boost export,
finished plastics products will yield rich divided.

Today India exports plastic products to as many as 80 countries all over the
world. The exports, which were stagnant at around rest 60-70 cores per annum double
to 129 craters. The Plastic industry has taken up the challenge of achieving an export
target of Rs.17 cores.

Major export markets for plastic products and linoleum are Australia,
Bangladesh, Canada, Egypt, Hong Kong, Italy, Kuwait, Federal Republic of Germany,
Sri Lanka, Sweden, Taiwan, U.K., U.S.A., and Russia.

With view to boosting the export, the plastics and linoleums export promotion
council has urged the government to reduce import duty of plastic raw material,
supply indigenous raw materials at international prices, fix duty, draw backs on
weighted average basis and charge freight rate on plastic products on weights basis
instead of volume basis.
3.1.2 Prospects:
The Production of various plastics a raw materials in the country is expected
to double by the end of seventh plan, the consumption of commodity plastics
including LDPE, HDPE, PP, PS AND PVC is immense scope for the use of plastics in
agriculture, electronics, automobile, telecommunications and irrigation and thus, the
plastic industry is on the threshold of an explosive growth.
Role of plastics in the national economy:
Plastics are got perceived as just simple colorful household products in the
mind so common person. A dominant part of the plastics of the percent and future find
their utilization in the areas.

1. Agriculture, forestry and water-management.


2. Automobile and transportation
3. Electronics and telecommunications, buildings, construction and.
4. Food processing and packaging
5. Power and gas distributor.

3.1.3 Importance of Pipes Industry:


We shall look at the basic data about plastics and particularly those properties,
which are so, fuse in practical working with plastics. Plastics are man-made materials.
The oldest raw material for producing plastics is carbonaceous material obtained from
coal tar (benzene, phenol).

Today the majority of raw materials are obtained from petrol chemical source
and they can be economically produced in large quantities.

Plastics have changed our world and day-by-day they are becoming important.
They own their success to whole series of advantage, which they have over
conventional materials such as:

1. Lightweight
2. Excellent mould ability
3. Attractive colors
4. Low energy requirements for convention
5. Low labor and cost of manufacture
6. Low maintenance & High strength weight ratio
3.1.4 Economic role:
Agriculture is the chief occupation in India. For the developing countries like
India modernization of the agriculture practices assumes pivotal places in improving
the economic status and the process of modernization. Includes usage of higher
productive plastics supplement to greater extent manufacturing of tools required for
new agricultural practices.

The usage of poly vinyl chloride pipes in agricultural fields, lesser water
seepage, which was predominant in earlier practices, with services of P.V.C pipes,
water can be transported efficiently with lesser from the place of higher potential to
the place of lower water potential.

Presently the revolutionary tried in water management speaks much about drip
irrigation, which is developed in Israel and is practiced by all agricultural based
nations in the world. Drip irrigation greatly P.V.C pipes as core tools of
implementation with the services of this sort, P.V.C pipes one way or the other
strengthening the hands of countrys economy.

A part with the referred P.V.C pipes supplemented with fitting is used in
houses for electrical connection and other domestic purposes. Apart from these two
applications it has got wide applications even in industrial sectors. P.V.C pipes with
much unique heart, chemical and physical characteristics serve many industrial
purposes.
Even characteristics of weight and low price attract many more applications.
Rigid PVC pipes have been manufactured in India from the 60s on imported
extrusion lines and there after indigenous plan were few pipes manufactures upto
1979-83. When many extrusion lines were imported from batten field, Cincinnati,
kraaus-maffi etc. the Govt. allowed the imports of sophisticatedand high output
plants, which were not available indigenously.
3.1.5 Pvc pipes in India:
Pipes products have found wide acceptance in India and abroad. PVC is one of
the more versatile plastics. It can be extruded, moulded, calendared and thermoformed
into a multitude of furnished products. The PVC resin can be formulated to give a
wide range of properties ranging from hand, tough materials for load bearing
application lime pipes, windows and doors to flexible materials for products a due as
wire and cable insulation and shooting and flooring.
PVC products cater to both interiors and exteriors. In interiors it can be used
for flooring, profile and cable tray, wall covering modular office systems, houses and
furniture. For exteriors it is used for doors and windows, fencing partitions and
paneling, roofing and rain systems.
The other external applications are in the field of irrigation, portable water
supplies. In the field of irrigation there are several methods to irrigate the fields. There
are minor irrigation projects and major irrigation projects apart from individual
sources like lift irrigation schemes etc., will have canals and lift irrigation schemes
etc., will have pipelines. Cement and GI pipes were the pipes used in conventional
methods of irrigation. Now-a-days PVC pipes replaced the conventional pipes and
they constituted almost 90% in this respect.
Drip irrigation popular in the agricultural sector especially in the field of
horticulture commercial cropping and green ply houses. The drip irrigation concept is
becoming more popular with its advantages like highly yield, water conversion, less
labour cost, less fertilizer, less past management costs, less power costs and many
more advantages. The demand for this concept is increasing at a place of 30%-40%
per annum.

Agriculture a sunrise industry in the Indian economy is mainly dependent on the PVC
pipes for the seawater sector and pumping to their aqua ponds. They are using
pipelines of four to five kilometers of 10-16 diameters pipes.
The state Govt. of A.P is using rigid PVC pipes for the irrigation water
supplies for the past few years. The state Govt. is producing PVC pipes through
APSIDC (AndhraPradesh State Irrigation Development Corporation) for its lift
irrigation schemes. The panchayatraj department is producing pipes for public water
supply schemes. These pipes can be used for the main distributors, sub-distributors
and individual connections.
3.2 COMPANY PROFILE
rayalaseema is economically backward area in andhra pradesh, was rarefied region for
industries. A dynamic entrepreneur sri Gelivi Ramakrishna he determination and hard
work of sri Gelivi Ramakrishna helped him to overcome the problems faced by the
company in the initial years, and with financial assistance from local commercial
banks. The company could overcome the problems of the merger and is running
smoothly.
later the company started manufacturing of pvc pipes, which terminated the
manufacturing of black pipes. This resulted in the formation of a pvt. Ltd. Company
called siddarth pipes pvt ltd. With sri Gelivi Ramakrishna as the managing director.
Step by step companys growth
siddarth pipes pvt.ltd is commission with the objectives of catering to the agriculture
needs of the region. In earlier days tool used for water flow were every ineffective
with high percentage of seepage losses. To counter this has been of siddarthpipes pvt.
Ltd., . the manor irritants in agriculture practices like lack of rain fall ground water
licking. water transport with in the fields has provided magnified thrust to pvc pipes
market. These factors helped siddarth pipes pvt.ltd, to record an excellent growth of
sales. Well-equipped laboratory and quality office looks after the quality. The
department people always striving to the quality.

Siddharth Pvc Pipes Pvt Ltd is a Private incorporated on 18 January 1993. It is


classified as Non-govt company and is registered at Registrar of Companies, Kurnool.
Its authorized share capital is Rs. 3,000,000 and its paid up capital is Rs. 3,000,000.It
is inolved in Manufacture of plastic products

Siddharth Pvc Pipes Pvt Ltd's Annual General Meeting (AGM) was last held on 13
September 2016 and as per records from Ministry of Corporate Affairs (MCA), its
balance sheet was last filed on 31 March 2016.

3.2.1 Directors of Siddharth Pvc Pipes Pvt Ltd areGelivi Madhusudhan

Introduction: -
the basis for financial planning, analysis and decision-making is the counting
reports. Two basics financial statements prepared for the purpose of external
reporting to owners, investors and creditors are; balance sheet \annual report
\statement of financial position & profit and loss account \income statement)
3.2.1Sizes:
various sizes ranging from to 10 area offered to customers. Even pipes with
different gauges and sizes are manufactured to suit specific conditions.
3.2.2 Packing:
packing plays less important role in to the products like pvc pipes because the
hallow space inside can be utilized. For the purpose of cubic space utilization in
trucks while transport, organization is adopting the technique like pipes in pipes.

3.2.3 Payment period:


for monarch brand the company adopts zero credit policy and goods are not
delivered unless cash remittances are made. For monarch and sager brands credit is
entitled up to a week. The difference between these brands is due to brand image.
3.2.4. Coverage:
at present andhra pradesh, parts of southern states of karnataka, tamilnadu and
kerala are ambit of siddarth pipes pvt. Ltd. The company extended their sales in the
below regions as shown below.
1979 : nandyal region (polyphone pipes)
1984-85 : rayalaseema region (pvc pipes)
1985-86 : telangana region
1986-87 : karnataka and andhra pradesh
1988-91 : tamilnadu and karnataka
1991-94:kerala

3.2.5. Transportation:
the transportation department of siddarth pipes pvt. Ltd. Is very admirable.
This unique strength of the organization enables the dealers to reduce inventory levels
to the minimum. Thus dealers are also supplemented with dealers to reduce inventory
levels to the minimum. Thus dealers are also supplemented with the benefit of the
lower tied-up capital in the form of inventory.
3.2.6. General Information About The Company
the company is equipped with sophisticated laboratory to carry all tests in
ascertain out going quality level of the pipes. A nandi pipe has got isi trade mark.
Which speaks for itself for the quality of the pipes? Numbers of statistical quality
control techniques are applied to sustain the quality level of the product. Managers at
the company are dynamic and are well educated. Supervisory staff or intermediate
managerial staff are able in talking their area are not highly educated. Most of the
employees are skilled is uniqueness of workers in siddarth pipes pvt. Ltd., there is
non-indulgence in trade union activities.as the company is located in industrial estate
of nandyal, it is facilitated with good communication networks, which includes telex,
fax machine, and internet company has also got the support of electronic data
processing. The companys major strength is considered to be transportation vehicles,
a unique cash outflow justifies itself by providing good reputation of the company
through improved customer service.

3.2.7 Financial Department:

through initially the company approached the external sources for financial aid
now the financial status of the company is the very sound and is being run only with
self-finance excepting for loans taken for hypothecation of machinery and stock from
sbi nandyal. The company follows cash and carry policy for nandi brand. The product
is not delivered until the cash is paid and financial department with the help of
marketing department looks after these transactions.
3.2.8.Marketing Department:
marketing manager who reports to executive director, an assistant marketing
manager who reports and 20 salesmen headed by 30 sales representatives who are
headed by assistant marketing manager heads the marketing departments effective
management of the marketing department in the organization.
3.2.9 Personal Department:
the personal department consists the details of the executives and workers of
the organization. The organization is formed with sri Gelivi Ramakrishna as the
managing director and executive director who reports managing director. Two
marketing managers, financial manager, public relations officer and quality control
officer who all reports to executive director. Other than executives there are thousand
works in the organization.

panel consisting of managing director, executive director and managers of


concerned departments makes the recruitment and selections of persons. A part from
the attractive salaries company provides health card facilities.
3.2.10 Purchasing Department:
the perplexing situation i.e. conformed by the manufacturers of the pvc pipes
is scarcity of resin. Though the govt. Of india has taken various steps to improve
supply conditions of pvc resin the indian manufacturers could meet only 50 percent is
met from imports.
The major petrochemical companies are:

1. Sri ram vinyl ltd.,


2. Chem-plast ltd.,
3. Reliance petrochemical ltd.,
4. National organic chemical industries ltd.,
5. Indian petrochemical industries ltd.,
Process:
the main raw materials are hdpe granules, pp granules. The manufacturing for
pipes consists of mixing various resins along with coloring materials in a mixture and
the prepared material is fed to the extruder. In the extruder, the material is heated to
the required politicizing temperature (190 centigrade to 230 centigrade) the extruded
through the die hard to from the pipe. The hot pipe coming out of the extruder is
cooled in a water bath to retain the final shape.
the pipe coming out of the extruder is guided through the water bath suitable
traction system. The temperature of the water is maintained by circulating through the
cooling toward and with the help of a chilling plant. The required length of the pipe is
cut with a planetary saw. The cut lengths are titled by titling units and get corrected in
the pipe rack attached to the titling frames. Later they are stocked separately. The
companyhas entered into a technical has its own processing technology.
The company is managed by a term of professionals under the guidance of a young,
experienced and well-qualified dynamic managing director mr. S. Thirupathaiah.
Applicaions of pvc pipes:
1. Agriculture and irrigation schemes.
2. Rural & urban water supplies scheme.
3. Tube well casing.
4. Gas and Pipes supply lines.
5. Industrial effluent disposal.
6. Sewerage and drainage scheme.
7. Air-condition ducting.
8. Building installations.
9. Industrial ducting.
organisation structure of anantha pvc pipes (pvt), ltd.
3.2.11 Gelivi Ramakrishna

sri Gelivi Ramakrishna locally well known industrialist with the base at
nandyal, kurnool district has been successful entrepreneur and management. Is
technically qualified person with b.e.(mechanical) from r.e.c.(warangal) and with
work experience at baarc(bombay). He has daringly ventured and established
industries in and around nandyal from 70s. As year went of he has established most
successfully the following nandi group of companies.
1. Gelivi Pipes
2. Gelivi School
3. Gelivi Venkata subbaiah settee cotton mill
4. Chandra banu Pipes industries
5. Gelivi weigh bridge
6. Gelivi mobile pollution testing center

pipe hollow structure usually cylindrical, for conducting materials. It is used


primarily to convey liquids, gases or solid suspended in a liquid for e.g. slurry and
also used for electric wires. The earliest pipes were probably made of bamboo. Used
by the chinese to carry water c.5000 bc. The egyptians made the first metal pipe of
copper c.3000 bc until the cost iron became relatively, copper or bronze. Modern
materials include cast iron weight iron, steel, copper, brass, bead, concrete, wood, and
glass, plastic. Bending strips of steel into the form of a tube and welding the
longitudinal seam either by electric resistance, by fusion welding or by heating the
tube and pressing the edges together makes welded steel pipe. Seamless pipe is made
from a solid length of metal pierced lengthwise by a mandrel with a rounded nose.
Steel pipe introduced in the early 20th century is widely used for conducting
substances at extremely high pressures and temperatures.
cast-iron pipes, which came into common use in the 1840s resist corrosion better
than steel pipes and are therefore frequently, used underground. Clay and concrete
pipes usually carry sewage and concrete pipes are also used to carry irrigation water at
low pressures, for moderate pressures the concrete is reinforced with steel or mixed
with asbestos.
seamless copper and brass pipes are used for plumbing and bPipesers because of
its softness and resistance to corrosion. Lead is used for flexible corrections and for
plumbing that doesnt carry drinking water. The chemical and food industries are sued
glass pipes. During world war ii manufacturers developed plastic pipes to replace
metals that were in short supply to pvc pipe is widely used to carry waste water as
well as certain corrosive liquids. A pipeline carries water, gas, petroleum, and many
other fluids, long distance.
in lying an Pipes pipeline, 40ft (12-m) sections of seamless steel pipe are
electrically welded together while held over a trench. Before being lowered into place
the pipe is coated with a protective paint and wrapped with a substance composed of
treated asbestos felt and fiberglass.
pumping section located 50 to 75 ml (80-120km). A part boosts the dwindling
pressure backup as much as 1500lb per inch. The piping must be kept clean either by
applying a negative electronic charge to the pipe or by regular use of a pig, or
scrubbing ball, inserted at one end and carried along by the current. An Pipes pipe line
6 inches (15 cm) to 24 inches (60 cm) in diameter will move it contents at about 3 to 6
ml (5-10) per hr. Water has moved since ancient times in pipelines called aqueducts.
The first natural gas and petroleum pipe line in us. Were builds during the 19th
century? Today in most part of the world pipelines are as extremely important means
of transporting divers fluids. The trans arabian pipeline, which carried Pipes from
the persian gulf to the mediterranean, is over 1000ml (600 km) long.
There is more than 180(288000km) of pipelines in the united states alone.
3.2.12 The Balance Sheet:-
the balance sheet shows the financial condition or the state of affairs of a firm at a
particular point of time. More specifically the balance sheet contains detailed
information about the firms assets and liabilities. Assets represents economic
resources possessed by the firm while the liabilities are the amounts payable by the
firm. The balance sheet gives concise summary of firm resources and obligations and
measures the firms liquidity and solvency

3.2.13 Profit And Loss Accounts:


the profit and loss a\c shows the profitability of the firm by giving details about
income and expenses. It is simply income and expenditure account. Revenues are
benefits, which customers contribute to the firm in exchange of goods and services.
The cost of economics resources used in providing goods and services to the customer
are called expenses. Profit and loss account provides a concise summary of firms
revenues and expenses during the period of time and measures its profitability.
the above two statements provide useful information regarding the operations of the
firm. They fail to explain the financial data required for financing and investing
decisions by the management i e causes for changes in assets and liabilities and
owners equities. They do not indicate the movement of funds between sources and
uses from the end of the period to the end of next periods. It is therefore, necessary to
prepare an additional called funds flow statements to overcome the above difficulties.
CHAPTER-4
DATA ANALYSIS
AND
INTERPRETATION

4.1 Comprehensive Study of Indian Market


Overview of the Indian Edible Pipes Industry

India has a vibrant private sector driven edible Pipes industry. With the right macro-
economic policies now in place, the sub-sector has made a huge turn around and it is
no longer an eyesore.

The edible Pipes industry is now one of the leading sustainers of the positive annual
economic growth rates India has enjoyed for over a decade now.
Indias demand for edible Pipes has been growing at a rate of 8-9 per annum. The
national demand for edible Pipes is projected to reach over 110.25 lakh MT in 2005
up from 100.96 lakh MT in 2016. National production as of 2016 stood at 54.54 lakh
MT making India a net importer of edible Pipes to the tune of over 46.92 lakh MT.
This gives investment opportunities into the edible Pipes industry. Trained, trainable
as well as unskilled labour is readily available for prospective investors in the sector
to utilize.

4.2 Importance of Edible Pipess in the Countrys Economy

Pipesseeds and edible Pipess are two of the most sensitive essential commodities.
India is one of the largest producers of Pipesseeds in the world and this sector
occupies an important position in the agricultural economy covering an area of 24.38
million hectares and accounting for the production of 20.87 million tonnes of
Pipesseeds during the year 2014-2015. India contributes about 9% of the world
Pipesseeds production, about 7% of the global production of protein meal and is the
4th largest edible Pipes economy in the world. Export of Pipes meals, Pipesseeds and
minor Pipess for the financial year 2014-2015 slightly declined from 3.96 million
MTs in 2013-99 to 3.15 million tons in 2014-2015. However, in terms of value,
realization has gone up from Rs.3180/- crores to Rs.3327/- crores. The share of India
in the world Pipes meal export market is about 7%.

4.3 Types of Pipess commonly used in India


India is fortunate in having a wide range of Pipesseeds crops grown in its different
agro climatic zones. Groundnut, mustard/rapeseed, sesame, linseed, Niger seed/castor
are the major traditionally cultivated Pipesseeds. Soya bean and sunflower have also
assumed importance in recent years. Coconut is most important amongst the
plantation crops. Efforts are being made to grow Pipes palm in Andhra Pradesh,
Karnataka, Tamil Nadu in addition to Kerala and Andaman & Nicobar Islands.
Among the non-conventional Pipess, rice bran Pipes and cottonseed Pipes are the
most important. In addition, Pipesseeds of tree and forest origin which grow mostly in
tribal inhabited areas are also a significant source of Pipess.

4.4 Consumption Pattern of Edible Pipess in India

India is a vast country and inhabitants of several of its regions have developed
specific preference for certain Pipess largely depending upon the Pipess available in
the region. For example, people in the South and West prefer groundnut Pipes while
those in the East and North use mustard seed/rapeseed Pipes. Likewise several
pockets in the South have a preference for coconut and Sesame Pipes.

Inhabitants of northern plain are basically hard fat consumers and therefore prefer
Vanaspati, a term used to denote a partially hydrogenated edible Pipes mixture.
Vanaspati has an important role in our edible Pipes economy. Its production is about
one million MT annually. It has around 13% share of the edible Pipes market. It has
the ability to absorb a heterogeneous variety of Pipess which do not generally find
direct marketing opportunities because of consumers preference for traditional Pipes
such as groundnut Pipes, mustard Pipes, sesame Pipes etc. For example, newer Pipess
like Soya bean, sunflower, ricebran and cottonseed and Pipess from tree and forest
sources have found their way to the edible pool largely through vanaspati route.

Of late, things have changed through technological means such as refining, bleaching
and De-odouraisation, all Pipess have been rendered practically colorless, odorless
and tasteless and, therefore, have become easily interchangeable in the kitchen. Newer
Pipess which were not known before have entered the kitchen, like those of
cottonseed, sunflower, palm Pipes or its liquid fraction, palmolein, Soya bean and
ricebran. All of them are again essentially bland, processed edible Pipess. About 60-
70% predominantly groundnut and mustard seeds are used to make non-refined or
filtered Pipess. These tend to have a strong and distinctive test preferred by most
traditional customers.

About 70% of these filtered Pipess produced are by the organized and semi-organized
sector plants producing from 2015-10000 MT per month. It is often branded by large
manufacturers. The lower quality and generally lower cost filtered Pipes produced is
mainly by the small scale village based processors. The Pipes is mostly sold loose
directly to the consumers from a variety of containers, often within 2-3 days of
production. These local crushers will produce between half and two MTs per month.
This decentralized production and marketing pattern may account for around 20% of
all edible Pipess in the country. The share of raw Pipes, refined Pipes and vanaspati in
the total edible Pipes market is respectively 42.0%, 42.7% and 13.4%.

4.5 Developments in the Industry

All agricultural activities in the country will be guided under the Plan for the
Modernization of Agriculture (PMA). The PMA is part of the Government of Indias
broader strategy of poverty eradication contained in the Poverty Eradication Action
Plan (PEAP). Strategically the PMA objectives include:
1. Deepening decentralization
2. Reduction in public sector activities in favour of the private sector
3. Adoption of productivity enhancing technologies

The overall government policy framework in the agricultural sector therefore


continues to emphasize private sector participation and investments. This emphasis is
highlighted in a comprehensive strategy to deal with major constraints to private
sector development

Specifically, in the edible Pipes industry:


1. The sub-sector has been fully liberalized to create competition in production,
processing and marketing,
2. he taxation system is being harmonized so that Pipes millers operate on a
level playing field, and
3. Institutions that promote raw material production have been set up and are
adequately financed.

4.6 Trends in the edible Pipes industry

Raw material production


Production of raw material in the edible Pipes industry has shown an upward trend. In
2016, 208.72 lakh MT of locally available Pipesseeds were crushed and this scenario
is projected to grow positively. Today, the number of farm families involved in
Pipesseeds growing has been expanding. This trend has reduced the reliance on
imports to meet the national edible Pipes.

Institutional support to raw material production


A number of institutions have been created to boost production of raw materials for
crushing:
1. The National Agricultural Research Organization (NARO) spearheads
research in the production and dissemination of improved varieties for
vegetable Pipes processing.
2. The Cotton Development Organization (CDO) was set up to revive the cotton
industry. Already modest progress has been recorded in the supply of
crushable cottonseed.
3. Solvent Extractions Association of India (SEA), a private sector organization,
is very instrumental in coordinating the rehabilitation and development of
edible Pipes sub-sector. SEA has established a sustainable seed multiplication
and distribution system in the country.

4.7 National milling capacity


There are presently 1,50,000 Pipes crushing units utilizing 10-30% of their
capacity,785 Solvent Extraction Units utilizing 32% of their capacity,950 Refineries
utilizing 32% of their capacity and 222 Vanaspati Units utilizing 41% of their
capacity, in the country.
The large-scale processors have sophisticated refining, downstream manufacturing
and packaging facilities. Medium-scale mills follow a similar design of 4 or 5 low-
capacity expellers, a decorticator, a low-pressure bPipeser and a crude Pipes
neutralizing vessel.

4.8 Production of edible Pipes and fat


Large-scale commercial production of refined vegetable Pipes and fat is a possible
investment.
National demand for vegetable Pipes exceeds local production, making India a net
importer of Edible Pipes and fat. Currently, national demand stands at about 108.65
lakh MT and about 45% of this is met by imports. Out right purchase of existing mills
or joint venture arrangement with the owners are possible investments in this area. By
Indian standards, a large-scale Pipes processing facility is estimated to require a
minimum of US $ 350,000 450,000 on equipment and accessories.

4.9 Local Market


1. The local market for Pipes in India is comprised of households, baking and
confectionery industry, and the food service industry. Most urban areas have a
range of cooking Pipess in shops and markets.
2. National demand for vegetable Pipes is growing at 8-9% p.a. Demand for
vegetable Pipes is expected to reach 110.25 lakh MT in 2005. This is an
indicator of potential investment in the sub sector.

Health consciousness

4.10 Steps Taken by Government in the wake of the Dropsy Epidemic.

In the wake of the dropsy epidemic Delhi High Court banned the sale of loose
mustard Pipes in Delhi on 26th August, 2013. Several States including Delhi banned
the sale of loose mustard Pipes. As a consequence, availability of mustard Pipes
reduced considerably and prices went up.
In order to improve the situation and restore the confidence of the consumers, trade
and industry as also of the farmers, the Honble Minister for Food & Consumer
Affairs and the Secretary, Department of Sugar & Edible Pipess held a series of
meetings with the Government officials as also with the trade & industry, and the
following measures were taken:-

(i) State Governments were advised, as a precautionary measure, not to allow


the edible Pipess to be marketed in loose form.

(ii) The Department of sugar & Edible Pipess, (Directorate of Vanaspati, Vegetable
Pipess & Fats) intensified Quality Control measures so as to ensure quality of edible
Pipes including vanaspati;

(iii) Operation of a few manufacturing units whose products were found adulterated
were suspended till they ensured adequate analytical facilities for checking the purity
of the samples to the satisfaction of the Government of India.

(iv) Use of mustard Pipes in the manufacture of vanaspati was banned on 11.9.2013.
The ban was lifted on 5.11.2013 only after adequate quality measures were ensured;
Again an order has been issued on 12.06.2015 for use of indigenous Pipess @25% by
weight and use of 30% expeller mustard Pipes in the manufacture of Vanaspati Crude
Palm Pipes (CPO) and its fraction thereof shall not be used by the producers other
than those who are equipped with fully capture hydrogen generation facilities.

(v) Monitoring of quality of edible Pipes was made stringent and surprise checks and
frequency of regular inspections also increased.

(vi) In order to expeditiously normalize the sale of safe edible Pipes in the market to
the consumers, on the recommendations of the Coordinating Group, 39 laboratories of
the DMI/BIS were initially accorded recognition for the purpose of analysis of edible
Pipes samples. Department has so far recommended for according recognition to a
total of 560 laboratories equipped with necessary analytical facilities. Among the
laboratories recommended for according recognition are the laboratories of NDDB at
Mother Dairy, Delhi, a laboratory of Delhi Vegetable Pipes Traders
Association also at Delhi, etc;
(ix) In order to ensure uniformity of approach and uniformity of results, the procedure
for sampling and methods of analysis for fats and Pipess including the Thin Layer
Chromatography (TLC) method for detection of argemone Pipes in edible Pipes in all
testing laboratories was prescribed.

(x) A number of Institutes such as Central Food Technological Research Institute


(CFTRI), Mysore; Department of Applied Chemistry, Calcutta University; Ganesh
Scientific Research Foundation, New Delhi; Mechanical Engineering Research and
Development Organization (MERADO), Ludhiana; Harcourt Butler Technological
Institute, Kanpur have availed of this facility and have made important contributions.

4.11 Technological Factors:

Technological Mission on Pipes Seeds (1986)

There are two major features which have very significantly contributed to the
development of this sector. One was the setting up of the Technology Mission on
Pipesseeds in 1986. This gave a thrust to Government's efforts for augmenting the
production of Pipesseeds. This is evident by the very impressive increase in the
production of Pipesseeds from about 11.3 million tonnes in 1986-87 to 24.9 million
tonnes in 2013-2015. There was some setback in 2014-2015 because of the
unseasonal rain followed by inclement weather. The production of Pipesseeds
declined to 20.8 million tonnes in 2014-2015. However, as per available information,
the Pipesseeds scenario in 2015-01 was expected to be again discouraging. Because of
the swift measures taken by the Government to restore the confidence of the
consumers, trade and industry and the farmers, the mustard Pipes controversy does
not seem to have had a perceptible adverse effect on the farmers. In fact, as per
available information, mustard seed production in 2015-01 could decline from 6
million tonnes. The other dominant feature which has had significant impact on the
present status of edible Pipesseeds/Pipes industry has been the programme of
liberalization under which the Government's economic policy allows greater freedom
to the open market and encourages healthy competition and self regulation rather than
protection and control. Controls and regulations have been relaxed resulting in a
highly competitive market dominated by both domestic and multinational players.

R&D Plan Schemes

This Department is operating three Plan Schemes which are as under: R&D
Programme for "Development of Vegetable Pipess". This is mainly to augment the
availability of quality products; "Modernization of the Laboratory of the Directorate
of VVO&F. This is for introducing modern equipments for testing of Pipess and fats;
and "Strengthening of Directorate of VVO&F". This is for providing more technical
staff to widen the scope of monitoring the Pipess industry.

The basic objective of the Plan Schemes is to coordinate and concentrate research
efforts designed to improve the yield of Pipess and co-products, both quantitatively
and qualitatively. The R&D work is basically carried out in three phases:- Phase-I:
Research and Development Phase-II: Technology propagation including
demonstration of the technology developed Phase-III: Efforts for the adoption of
technology by the industry.

The thrust areas identified by STAC for R&D work are: Application of frontier areas
of technology such as membrane refining technology, bio-interesterification etc. of
Pipesseed/Pipes processing. Technology for upgradation of non-edible Pipess to
edible Pipess/edible grade Pipess such as neem Pipes, castor Pipes, non-edible rice
bran Pipes etc. Detoxification of Pipesseeds/Pipes-cakes/extraction. Upgradation of
huller rice bran and refining of rice bran Pipes. Development of Soya bean Pipes with
improved stability. Storage suitability of unrefined and refined edible vegetable
Pipess. Work relating to nutritional aspects of newer Pipess particularly with regard to
the suitability for human consumption.

Development of simple, reliable, low cost analytical methods/techniques for


detection/determination of adulterants in fats and Pipess including vanaspati.
Development of low cost safe packaging material for edible Pipess etc. Proposals for
tie-up arrangement between R&D institution/organization and industry for up-scaling
of technology developed. Popularization of technology found suitable. There are 13
on-going R&D projects which are running in the various Institutes, namely, CFTRI,
Mysore, IICT, Hyderabad, OTRI, Anantapur, University of Mumbai, University of
Kolkata, GSRF, RRL, Trivandrum, RRL, Jorhat. The total outlay for the year 2015-
2016 is Rs. 40 lakhs.

4.12 Some of the Technologies got Recognised for Improvement in Quality of


Products and Co-products of Vegetable Pipess Industry.

The need for modernisation of equipments and technological up gradation of process


so as to enable optimal use of available sources, improved efficiency operation,
improvement in the quality of products and co-products, etc. has been stressed upon.
Recognition of newer process technologies such as extruder-expander technology,
intereterification, physical refining, refined, bleached, hydrogenated, winterized and
deodorized (RBHWD) soya bean with improved stability etc. is a result of the
sustained efforts of the Directorare of Vanaspati, Vegetable Pipess and Fats
(DVVO&F). Revision of technical parameters without compromising with the quality
of the product has also been a continuing efforts of the Directorate.
In 2011, the Government set up a Technology Mission on Pipes seeds, to increase
production of other Pipes seeds and Pipes, and to reduce dependence on imports.

The strategy followed was to:-

1. Increase productivity with better farm inputs and practices.

2. Increase area under Pipesseed crop.

3. Encourage winter (Rabi) Pipesseed crops.

This led to a sharp increase in Pipesseed production driven mainly by rapeseed,


sunflower, castor seed and Soya Pipes seed production jumped from 6.1mn ton in the
mid 80's to around 22mn ton currently. India is today worlds third largest producer of
rapeseed and cottonseed and the largest producer of castor seed.
4.13 Opportunities & Threats Analysis

Opportunities:

Investment Opportunities
The edible Pipes industry is now one of the leading sustainers of the positive annual
economic growth rates India has enjoyed for over a decade now. Indias demand for
edible Pipes has been growing at a rate of 8-9% per annum. The national demand for
edible Pipes is projected to reach over 110.25 lakh MT in 2005 up from 100.96 lakh
MT in 2016. National production as of 2016 stood at 54.54 lakh MT making India a
net importer of edible Pipes to the tune of over 46.92 lakh MT. This gives investment
opportunities into the edible Pipes industry.

Strategic location
India is strategically positioned within the South of the Asian continent that includes
the SAARC countries, an economic grouping with a market of over 1500 million
people. This location gives India a commanding importance as a base for regional
trade and investment.

Predictable and stable economic environment


Since 1985, India has been on the path of economic reconstruction and development,
which has made her the new face of emerging Asia. The economic reforms
undertaken, coupled with political stability, have contributed to growth rates
averaging 6.5% over the last decade.
Inflation has consistently been maintained below 6 %. India is now rated the second
best improving Countries in the Asian continent after China.
Cheap but quality labour
The quality of labour force is one of Indias main strengths. With hundreds of
universities and polytechnics, all levels of skills and training needed to run the edible
Pipes industry are adequately covered.

Indias labour is cheap compared to that of most developed countries.


Trained, trainable as well as unskilled labour is readily available for prospective
investors in the sector to utilise.

Macroeconomic factors

1. Population growth:-

2. Per capita income:

3. Purchasing power:

4. Pipesseeds crop:

4.14 Threats:

Monsoon dependent Agriculture

Raw materials supply of edible Pipes industry is directly related with the agricultural
production of Pipes seeds. That agricultural production in India has a fluctuating trend
is now a new thing. Agriculture here still depends largely on monsoon rains and the
intensity of the latter has significant influence on production. Significantly, even the
agriculturally rich state with better irrigation network; have witnessed sharp changes
in their production of late.

4.15 Micheal Porters five force analysis

1) Threat of new entrants:

A firm profitability will tend to be a higher when other firms are blocked from
entering the industry. New entrants can reduce the industry profitability because
they add new production capacity and can substantially erode existing firm market
position
In the Edible Pipes industry threat of new entrants is moderate
because of these reasons.
1. Higher capital requirement:-
In this industry high investment is required and there is a high fixed
cost so new entrant cant enter easily.
2. Higher economies of scale:-
In this industry production cost per unit is high so economies of
scale are very low in edible Pipes industry.
3. Less capacity utilization:-
In this industry particularly in India, there is a very less capacity
utilization of total available production capacity.

Type of Vegetable Pipes


Capacity Utilization
Industry
Pipesseed Crushing Units 10 - 30 %
Solvent Extraction Units 32 %
Refineries(Independent
&Attached with
32 %
Vanaspati, Solvent
Extraction Plant)
Vanaspati Units 41 %

4. Customer Loyalty:-
In this industry switching probability is low so customers hesitate
to switch to other new brands.

2) The nature of rivalry industry:

The intensity of rivalry in an industry is a sufficient determinant of industry


attractiveness and profitability the intensity of rivalry can influence cost of
supplies, of distribution can attracting customer so directly affect profitability
In edible Pipes industry rivalry among firms is very high because of these
reasons
1. Fragmented Market
2. Well established local players
3. High fixed cost
4. Availability of different Edible Pipess

3) Bargaining power of suppliers:


In edible Pipes industry various seeds are the raw material, so there is a need to
purchase them from other people (suppliers). The supply of Pipesseeds also
depends upon certain uncontrollable factors like monsoon, production, etc.
because of these factors the bargaining power of suppliers is moderate.

1) Bargaining power of buyers:

Buyers of an industrys product or service can sometimes exert considerable


pressure on existing firm to secure lower price or better service.
In this industry the bargaining power of the buyers is very low, because the prices
of the Pipess are provided according to the demand-supply & production trends
and government influence.

2) Threat of substitute product:

Substitutes are alternative product types that perform essentially the same
function. In edible Pipes industry there are no perfect substitutes as it is an
essential requirement.
Table of five force analysis

1 Threat of new entrants Moderate

2 Rivalry among existing firms High

3 Bargaining power of Moderate


suppliers
4 Bargaining power of buyers Low

5 Threat of substitute product Very low

4.16 Statistical Profile of Indian Edible Pipes Industry

Status of the Edible Pipes Industry


The market liberalization and delicensing of the industry in 1990-91 has resulted in
both increased capacity and intense competition at low margin. The status of the
Edible Pipes Industry is summarized below:-

Type of Vegetable Pipes No. of Annual Capacity Capacity


Industry Units (Lakh MTs) Utilization
1,50,000 425 (In terms of
Pipesseed Crushing Units 10 - 30 %
(Approx.) Pipes Seeds)
337 (In terms of
Solvent Extraction Units 785 Pipes-bearing 32 %
material)
Refineries(Independent
950 60 (In terms of
&Attached with Vanaspati, 32 %
(Approx.) Pipes)
Solvent Extraction Plant)
48.76 (In terms of
Vanaspati Units 222 41 %
Vanaspati)

(Source: Directorate of VVOF)


1. Pipes seeds crushing units include crushing units in the small scale sector as
also in the organized sector. The capacity utilization generally ranges from an
average of 10% for the ghanis (small scale sector) to around 30% in case of
the expellers in the organized sector.

2. Unrestricted growth of the industry consequent upon de-licensing of the


vegetable Pipes industry.

3. Creation of capacity totally incommensurate with availability of raw materials.

4. Obsolete technology.
5. Very low margin because of stiff competition, inefficiency of operations etc.
Speculative nature of the trade.

4.16 Supply Situation of Pipesseeds and Edible Pipess in the Country

To enhance the production of Pipesseeds, the strategy for area expansion was adopted
in the late 1980s and early 1990s by the Technology Mission on Pipesseeds & Pulses
(TMOP), which was set up in May, 1986. The production of Pipesseeds, which
increased significantly in the 1980s, has hit a plateau in the 1990s. In fact, the target
fixed by the Ministry of Agriculture was during the year 1990-1991 to 1993-1994. In
the year 2012-98 to 2014-2015 the production of Pipesseed has considerably reduced
which is evident from the following table

Year Target@ Production@


2010-2011 22.50 22.10
2011-2012 23.00 24.38
2012-2013 25.50 21.32
2013-2014 27.00 24.75
2014-2015 28.00 20.87
2015-2016 28.00 18.20

Source: @ Ministry of Agriculture


PRODUCTION OF PIPESSEEDS AND NET AVAILABILITY OF EDIBLE PIPESS
FROM ALL SOURCES

[Figures in
Lakh MT]
NAME OF THE PIPES 2014-2015 2015-2016 *
Pipesseeds Pipess Pipesseeds Pipess
A.PRIMARY SOURCE
Groundnut 53.11 12.22 64.10 14.74
Rapeseed & Mustard 59.58 18.47 40.90 12.68
Soya bean 67.92 10.87 50.90 8.14
Sunflower 8.00 2.64 6.60 2.18
Sesame 5.18 1.61 5.40 1.67
Nigerseed 1.50 0.45 1.00 0.30
Safflower 2.77 0.83 1.70 0.51
Castor 7.77 3.11 9.00 3.60
Linseed 2.89 0.87 2.40 0.72
Sub Total 208.72 51.07 182.00 44.54
B.SECONDARY SOURCE
Coconut 4.50 5.60
Cottonseed 5.00 4.60
Rice-bran 5.00 4.80
Solvent Extracted Pipess 2.50 2.00
Tree & Forest Origin

Share of Major States in Area and Production of Pipesseeds


State
% of Total
Madhya Pradesh 24.13
Gujarat 11.61
Andhra Pradesh 11.53
Rajasthan 11.4
Maharashtra 10.84
Karnataka 9.46
Uttar Pradesh 6.02
Others 15.01
All India 100
State
% of Total
Madhya Pradesh 22.55
Andhra Pradesh 12.99
Maharashtra 11.36
Rajasthan 11.03
Gujarat 9.24
Tamil Nadu 8.59
Karnataka 7.45
Others 16.79
All India 100

(Source: www.kisanwatch.org )

Net Availability of Edible Pipess/Import/Actual Consumption

There has been a persistent gap between demand and domestic availability of edible
Pipess. The Government, with a view to avoiding scarcity of this item and
consequential rise in prices, has been allowing import of edible Pipess. The net
availability of Edible Pipess from all domestic sources, Actual Consumption and
Import during the years 2011-2012 to 2015-2016 are as under
SUPPLY OF EDIBLE PIPESS FOR THE YEARS 2011-97 to 2015-2016 (In Lakh
MT)

YEAR Net availability Actual Import @


of Edible Pipess Consumption/Demand
from all *
domestic
sources

2011-2012 70.89 83.72 11.29

2012-2013 60.32 87.69 23.78

2013-2014 69.61 91.99 41.96


2014-2015 61.07 96.43 39.75

2015-2016 54.54(T) 100.96* 46.92

Source: Ministry of Agriculture

* Computed as per parameter given by Planning Commission


@ Actual Consumption / Demand

A number of factors seem responsible for this situation :-


(i) Only about 20% of the Pipesseed crops are being irrigated. Thus the extent and
spread of rainfall has a critical role in production.
(ii) There is limitation of land availability for crops other than food grains in the
country.
(iii) Lack of Hybrid/HYV seeds. As per the available information, the availability of
this quality of seeds is grossly inadequate to meet the requirement.
(iv) Susceptibility of Pipesseeds to pests and diseases.
(v) Pipesseeds production is yet to receive the desired priority in the extension set-up
in the country.
Volume of Imported Edible Pipess under OGL and on Government Account
(i) Import of Edible Pipes under OGL
With decimalization, import of edible Pipes under OGL started in 1994-2010, peaked
during the subsequent years due to reduction in duty and enlarged basked of Pipess
under OGL. Based on the reports received from the post Customs, the details of edible
Pipess imported under OGL has been as under

IMPORT OF EDIBLE PIPESS DURING PIPES YEARS 2011-2012 2012-2013,


2013-2014, 2014-2015 AND 2015-2016

(in Lakh MT )

Pipes Year Imported Quantity


2011-2012 12.87
2012-2013 11.30
2013-2014 23.78
2014-2015 41.96
2015-2016 22.47
Source : DGCI&S , Kolkata

ii) Import of Edible Pipes on Government Account (for PDS)


The Government of India has been engaged in import of edible Pipess through the
State Trading Corporation (STC) as the canalising agency for a number of years. Till
1988-1989 a variety of edible Pipess like RBD palmolein, palm Pipes, rapeseed Pipes,
soya bean Pipes, sunflower Pipes, etc. were being imported both in crude and refined
form, which were also supplied to the vanaspati industry for manufacturing vanaspati,
in addition to distribution to consumers for direct use under the network of the Public
Distribution System (PDS). From 1989-1990, onwards imports through STC have
been made only for distribution through PDS. As production of indigenous edible
Pipess has increased considerably, and import of edible Pipess is also made under
OGL, a limited quantity is now being imported for PDS mainly to meet the enhanced
demand of edible Pipess during the festival season, which incidentally falls during the
lean supply season. Edible Pipes (RBD Palmolein) imported during the last five years,
for PDS has been as under

(Lakh MTs)

Year (April - March) Import of Edible Pipes for PDS


2010-2011 2.02
2011-2012 1.49
2012-2013 0.89
2013-2014 1.67
2014-2015 0.82
2015-2016 -
Indication the Central Issue Price For Pipes For Public Distribution System
(PDS).
The Central Issue Prices of Pipes supplied to States/UTs for Public Distribution
System have been revised w.e.f. 1st August, 2013.
These prices are as under :-
(i) Pipes Supplied in Bulk Rs 30,000 per MT
(ii)Pipes Supplied in 15 kg tin Rs 33,000 per MT
States/UTs have been advised to fix the end retail prices themselves. Supply of Pipes
to the States/ UTs at the above CIPs also involves an element of subsidy, as the actual
cost of Pipes is more than the CIP, and the Edible Pipes Account of STC is, therefore,
running in deficit which the Central Government has to reimburse through its
budgetary provisions

EXPORT:
The total exports during 2014-2015 in terms of quantity declined from 3.96 Million
MT to 3.15 Million MT and FOB earnings increased from Rs.332/- Crores to Rs.
189/- Crores mainly due to drastic fall in exports of rapeseed meal and rice bran
extractions and lesser of FOB realisation. The exports of Pipes, minor Pipess/fats and
Pipes during the last five years are as under
Value in Rs/Crores] [Qty.InLakhMT]

YEAR PIPESS/IMPORTIN PIPESS/EXPORTIN PIPES/EXTRACTI


G G ONS

Quantit Value Quantit Value Quantit Value


y y y

2010- 1.63 422.45 1.78 442.7 43.14 2361.46


2011

2011- 2.39 574.76 1.95 507.4 43.00 3157.05


2012

2012- 3.40 907.06 1.89 509.1 41.70 3236.20


2013

2013- 1.40 522.96 1.96 614.6 36.26 2042.90


2014

2014- 2.40 672.10 2.37 918.6 26.76 1736.90


2015

Source : Solvent Extraction Association Of India (SEAI), Mumbai

Business Concerns

Free imports, low import duties and slump in global prices - lead to`dumping

1. Domestic industries of edible Pipess affected - low realization and idle


capacities in Pipes industries

2. Production slippages have also forced imports

3. Excessive (cheap) imports of Pipesseeds - led to unremunerative prices, local


4. Hence, farmers have shifted to other cash cropsIncreasing health awareness -
impact of Pipess usage on individuals cholesterol levels

CHAPTER-V

FINDING AND SUGGESTIONS CONCLUSIONS


5.1 Findings:

1) Networking capital of SUJALA PIPES is increasing year by year during the


period of study and which is good for the company.

2) The working capital is financed mostly by the long-term sources and


marginally by short-term sources. The company also used the retained earning
to finance the working capital needs. As per the annual reports, working
capital demand loan is secured by the hypothecation of raw materials, stores
and spares, work in progress finished goods and book debts both present and
future.

3) Current ratio of the company for the years 2011-12, 2012-13, 2013-14, 2014-
15 and 2015-16 are 1.92,3.93,6.73,8.03,9.40 respectively. Higher the ratio
better is coverage. Standard ratio is 2:1, which shows that the companys
current ratio is more than the standard ratio.

4) Quick ratio during the study period has been increasing that is for the year
2011-12 is 1.14, 2012-13 is 3.34, 2013-14 is 4.21, 2014-15 is 7.24, 2015-16 is
7.42, which shows these ratios are above the standard ratio of 1:1

5) Cash ratio which shows the short-term solvency of the firm in terms of cash
during the study period are 0.02, 0.03, 0.06, 0.10, 0.14 which is not up to the
standard ratio of 0.5:1.

6) The liquidity ratios indicate that SUJALA PIPES liquidity position is


satisfactory.

7) Debtors turnover ratio has been showing the decreasing trend during the study
period except in the year 2015-16 which is not good for the company.

8) The components of working capital as well as sales are showing fluctuating


trends.
5.2 Suggestions:
1) The company depends more on bank borrowings and long term sources of
funds for working capital needs. The working capital required by the company
is increasing over years. The company should try to curtail the unnecessary
expenditure in order to reduce the cost of production and promote high return
on sales.

2) As the companys current ratio is more than the standard ratio, it should
decrease the current assets which are in the form of sundry debtors, inventory
etc.

3) The firm so maintaining the current assets satisfactory, but at the same time
more than 50% of current assets are blocked in the form of receivables. This is
due to giving credit sales to his customers and maximum portion of sales are
in credit terms only. If at all there is any possibility, the company should
reduce the credit sales and receivables holding period and to bridge the gap
between the excess and shortage of working capital.

4) The inventory position of the company is satisfactory. If the company will


increase its stock of inventory, then it will be more satisfactory in future.

5) The company needs to invest in marketable securities in order to increase its


cash ratio.

6) Debtors turnover ratio has been showing fluctuating trend. So it is suggested


to the company that it should have proper control on debtors turnover ratio.

7) As the company maintaining low cash resources it should try to maintain


balance between debtors and cash. That means it should reduce its debtors and
increase cash resources.

8) The sales of the company are showing fluctuating trends. So the company
should maintain proper control on sales.
5.3 Conclusion:

Under the light of the inferences drawn from the analysis, it is no exaggeration

to conclude with information that the overall working capital management of

SIDDARTH PVC PVT LTD is fair and reasonably good and thus promising future

awaits the company.


BIBLIOGRAPHY
I.M. PANDEY, Financial Management, 3rd Edition, Himalaya Publications,

S.N. Maheswari, Financial Management, 3rd Edition, Himalaya Publications,

C.R.Kothari, Research Methodology, Kalyani publications, Hyderabad.

Web Sites

Company website:

www.siddhrtha pvc pies.com

www.gelivi.com

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