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INTRODUCTION Financial Management is that managerial activity which is concerned with the planning and controlling of the firms

finance. Finance is one of the foundations of all kinds of economic activities. Finance is the life-blood of a business. The financial management study deals with the process of procuring necessary financial resource and their judicious use with a view to maximizing the value of the firm and there by the value of the owners i.e. equity share holders in a company. Practicing managers are interest in this subject because among the most crucial decisions of the firm are those which relate to finance, and an understanding of the theory of financial management provides them with conceptual and analytical insights to make those decisions skillfully. FINANCIAL MANAGEMENT Financial Management emerged as a distinct field of study at the turn of this century. Many eminent persons defined it in the following ways. DEFINITIONS: According to GUTHMAN AND DOUGHAL: Business Finance can broadly be defined as the activity concerned with planning, rising, controlling and administering of funds used in the business. According the BONNEVILE AND DEWEY: Financing consists in the rising, providing and managing of all the money, capital or funds of any kind to be used in connection with the business. According to Prof. EZRA SOLOMAN: Financial Management is concerned with the efficient use of any important economic resource, namely capital funds.

FINANCE FUNCTIONS: It may be difficult to separate the finance functions from production, marketing and other functions. The functions of raising funds investing them in assets and distributing returns earned from assets to shareholders are respectively known as, 1) Investment Decision: A firms investment decisions involve capital expenditures. A capital budgeting decision involves the decisions of allocation of capital or commitment of funds to long term assets that would yield benefits (cash flows) in the future. investment decisions are; A) The evaluation of the prospective profitability of new investments, and B) The measurement of a cut off rate against that the prospective return of new investments could be compared. 2) Financing Decision: Financing decision is the second important function to be performed by the financial manager. The mix of debt and equity is known as the firms capital structure. 3) Dividend Decision: The Financial Manager must decide whether the firm should distribute all profits, or retain them, or distribute a portion and retain the balance. The dividend policy should be determined in terms of its impact on the shareholders value. Two important aspects of

4) Liquidity Decision: Investment in current assets affects the firms profitability and Liquidity. Current assets should be managed efficiently for safeguarding the firm against the risk of illiquidity.

GOALS OF FINANCIAL MANAGEMENT 1. 2. 3. 4. Maximize the value of the firm to its equity shareholders. Maximization of profit. Maintenance of liquid assets in the firm. Ensuring maximum operational efficiency through planning directing and the utilization of the funds. 5. Enforcing financial discipline in the use of financial resources through the coordination of the operation of the various divisions in the organization. 6. 7. Building up of adequate reserves for financing growth and expansion. Ensuring a fair return to the shareholders on their investment. controlling of

The key challenges for the finance manager in India appear to be in the following areas: 1. Investment Planning 2. Financial Structure 3. Treasure Operations 4. Foreign Exchange 5. Investor communication 6. Management control Companies that manage their working capital well have reported strong profits and their share holders have been rewarded with capital appreciation deposits and overall trend of declining share profits. Especially commodity producers and companies whose products face cyclic demand have demand have floundered. Many a time the main cause of the failure of a business enterprise has been found to be shortage of current asset and their mishandling inadequate working capital is serious handicap in business, where a fixed capital investment generates production capacity component and administration of current assets solves the problem of under utilization of capacities. The firm needs certain inputs to make a finished product, which is sold to make a profit. These sale proceeds are reinvested to make more such products and generate further profits. The problem is there is a lag between the time a finished product is ready and the time its sale proceeds are realized. To conjure smooth operations in the company every business entity marks funds, this is known as working capital.

DEFINITIONS:-

The common definition of working capital is the amount of funds invested in current assets. Working capita is excess of current assets over current liabilities. -Guthmann & Dougall.

Working capital refers to a firms investment in short term assets, cash, short term securities, accounts receivables and inventories. -Weston & Beighan

Circulating Capital means current assets of the company that are changed in the ordinary course business from one to another, as for example, from cash to inventories, inventories to receivables, receivables to cash. Genestenberg

Working capital is the amount of funds necessary to cover the cost of operating the enterprise. Shubin

MEANING OF WORKING CAPITAL:

Capital required a business can be classified under two main categories (1) Fixed Capital. (2) Working Capital. Every business needs funds for two purposes for its establishment and to carry out its day-to-day operations. Long-term funds are required to create production facilities through purchase of fixed assets such as plant and machinery, land, building, furniture etc. Investments in the assets represent that part f firms capital which is blocked on a permanent or fixed basis and is called fixed capital. Funds are also needed for short-term purposes for the purchase of raw materials, payment of wages and other day-to-day expenses etc. These funds are known as working capital. In simple words, working capital refers to that part of the firms capital which is required for financing short term (or) current assets such as cash, marketable securities, bebtors and inventories. Funds thus invested in current assets keep revolving fast and are being constantly converted into cash and these cash flows out again in exchange for other current assets. Hence it is also knows as Revolving or Circulating capital or Short-term capital.

CONCEPT OF WORKING CAPITAL: There are two concepts of working capital.

1) Gross Working Capital:- Gross Working Capital is the capital invested in total current assets of the enterprise. Current assets are those assets, which in the ordinary course of business can be converted into cash within a short period of normally one accounting year. 2) Net Working Capital: Net Working capital is the excess of current assets over current liabilities (or) Net working capital = Current assets Current Liabilities. Net working capital may be positive or negative. When the current assets exceed current liabilities the working capital is positive and the negative working capital results when the current liabilities are more than the current assets. Current Liabilities arte more than the current assets. Current Liabilities are more than the current assets. Current liabilities are those liabilities, which are intended to be paid in the ordinary course of business within a short period of normally on accounting year out of the current assets or the income of the business. Both gross and net concepts of working capital are important aspects of the working capital management. The net Concept of working capital may be suitable only for a proprietary from the organizations such as sole-trader (or) partnership firms. But the gross Concept is very suitable to the company form of organizations where there is a divorce between ownership, management and control. In general practice, net working capital is referred to simply as working capital. In the works of Hoagland, Working capital is descriptive of that capital which is not fixed. But the more common use f the working capital is to consider it as the difference between the book value of the current assets and current liabilities.

CLASSIFICATION OF WORKING CAPITAL Working capital maybe classified in two ways:1) On the basis of concept

(a) Gross working capital (b) Net working capital 2) On the basis of time (a) Permanent or Fixed working capital (b) Temporary or variable working capital a) Permanent or fixed working capital:- It is the minimum amount which is required to ensure effective utilization of fixed facilities and foe maintaining the circulation of curren assets. For example every firm has to maintain a minimum level of raw material, work in process, finished goods and cash balance. This requirement is referred to as permanent or fixed working capital. b) Temporary or variable working capital:- It is the amount of working capital which is required to meet the seasonal demands & some special exigencies. The permanent level of working capital is fairly constant, while temporary working capital is fluctuating. It is sometimes increasing and sometimes decreasing in accordance with seasonal and special needs.

GOALS OF WORKING CAPITAL MANAGEMENT The two important of working capital management are profitability and solvency. To ensure, solvency the firm should be very liquid, which means large current assets holdings.

However, there is cost associated with the maintaining a sound liquid position. Since the funds invested in current assets are higher due to higher investments, the firm profitability will suffer. To have high profitability, the firms may sacrifice solvency and maintain a relatively low level of current assets, which may expose the firm into the greater risk cash shortage and stock outs. The finance managers would have to look into the both these objectives, so that one may not suffer at the expenses of the other Hence while managing the working capital, the objective of the firm is to achieve an optimal combination of risk returns trade off. If the working capital pool is to function efficiently, the following matters must receive the attention of the management. The level of investment in stock. The level of investment in debtors. The ability of the concern to deal with its creditors. The maturing obligations such as taxes and dividends.

FACTORS AFFECTING THE WORKING CAPITAL PROBLEMS

The requirements of working capital difference form industry, with in the same industry from company and with in the company from time to time. A wide verity of factors influence

the volume of investment in, working capital which may be external and intenal and management must be familiar with these. Nature of Business The amount of working capital is related to the nature and volume of the business. In concerns, where the cost of the raw materials is to be used in the manufacture of product in very large in production to it total cost of its manufacturing the requirements of the working will be very large. Size of the business Size of the business unit is also determining factor in estimating the total amount of working capital.

Depreciation Policy In every manufacture business, depreciation is the most significant item of the cost and these forms largest item in the cost structure, which is the nature of the fixed cost. Profit Level The net profit level earned by the business firms the most important elements of the working capital structure. The management should try its best of the maintain the structure in a healthy start of earning satisfactory profits.

Taxes Taxation has an important impact of the earned by an enterprise. Nearly on half of the profit earned is drained off. Tax liability when assessed will be a drain on working capital fund.

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The management should be to calculate this liability and make provision for the payment when due. Credit Policy Credit Policy of a firm has a direct bearing in the level working capital liberal credit policy demands a higher level of working capital. If there is lack in collection effectors, the problem would be further intensified decussating higher levels of working capital. Dividend Policy Divided policy is a dominant influence of working capital position of an organization dividend policy connects liquidity the ability of the concern to find necessary cash to meet the dividend declared and the same has to be paid in cash. Attitude risk The level of working capital is also influenced by the attitude of the management towards the risk. If the management is mote concern with the liquidity then there is need higher level of working capital.

COMPONENTS OF WORKING CAPITAL The components working capital are CURRENT ASSETS Cash and bank balances CURRENT LIABILITIES Short-term borrowings including 11 bill

Sundry debtors Bills receivables Prepaid expenses

purchases and discounted from banks and others. Unsecured loans maturing within one year.

Investments (marketable securities maturing Public deposit maturing within one year. within one year) Sundry creditors.

Fixed deposits with banks (maturing within Bills payables. one year) Interest & other charges due for payments for

Installments of deferred receivables due payment. within one year. Advance/progress payment from customers.

Raw materials and components used in the Deposit from dealers selling agents. process of Outstanding expenses.

Stocks in process including semi finished Statutory liabilities: goods. Finished goods including semi finished goods. Inventory Outstanding income Advance payment of tax. Provident fund dues Provision for taxation Sales tax, excise, etc.,

RESEARCH METHODOLOGY

DATA SOURCES

1. Primary Data

2. Secondary Data

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Primary data as it is known as synonymous to first hand information that is exclusively collected for the sake of the study. Secondary data that has been already collected for some other purpose and now which is being for the study. Initially preliminary discussion with the general managers and chief accountant was carried on. Information of the theoretical part was taken from reference book. Profit/Loss and Balance Sheets are taken from companys annual reports. The various concepts covered in the report are calculated by studying Balance Sheet and Profit/Loss Accounts.

Research can be defined as Methodical, unbiased and compete investigation of subject matter to establish principles Investigation of a problems to discuss pertinent information to help solve it .

The term methodical, refers to carefully planned procedures ( should consistently follow the same procedure). The will facilitate the comparison of results of similar investigation over a period of similar investigations, over a period of time as that are arrived at by other researches investigating similar problems in various parts of the same country of in any corner of the world . Both primary data and secondary data was collected from carious sources for conducting the study. Primary data was collected from the company, whereas the secondary data was collected from various newspapers, journals textbooks and websites.

SOURCES OF DATA Primary data Secondary data

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WORKING CAPITAL

Tools for data collection: Secondary Data: Observations Reference books Magazines Journals Newspapers Websites

NEED OF THE STUDY As we well known that working capital is flesh and blood of organization, in order to maintain day to day activities. The present study working capital management reveals each every aspect of the organization. Maintenance of the optimal level of working capital is must 14

Utilizing the available working capital in an effective way.

OBJECTIVES OF THE STUDY To determine optimal level of Current Assets To study the changes in working Capital To know the company liquidity position To know the company turn over ratios

LIMITATIONS Due to the limited time available, the authenticity of conclusions drawn based on the observations made cannot be ensured. The analysis of financial performance is based on information available and any mistake inherent would be reflected in the study.

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The figures and facts claimed in the annual reports and other forms are assumed to be true. It is based in the data supplied by the factory personnel Since only four years data is used for the analysis, the outcome may not be generalized. It concentrates only on working capital aspects and does not look in to the long- term financing.

LIMITATIONS OF THE STUDY

The ratios are generally calculated from past financial statements and thus are no indications of the future. Lack of adequate standards These are no accepted standards or rules for all ratios which can be accepted as norms. It renders interpretation of ratios difficult Price level changes While making ratio analysis no consideration is made to the changes in price levels and this makes the interpretation of ratios invalid.

COMPANY PROFILE

The vision To empower ourselves with excellence and to thes, grow and reach the pinnacle of market leadership.

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The Mission To provide products and services of international standards through pioneering innovations, while keeping in sight, our responsibility towards the society we dwell in. Chairman's foreword: The new age enterprise has thrown open the doors to a world of seamless opportunities. Time and space barriers no longer hold any significance. Thanks to the pervasiveness of IT and the advent of the Internet, there's never been more to learn. Or to utilize. Or to provide. Knowledge, and its acquisition, is at hand. It is indeed heartening that India has kept pace with the sweeping changes in the global economy. Throwing open its doors to globalization has meant the advent of multinational corporate giants. The Indian economy is already gearing itself, both qualitatively and quantitatively, to put up a fierce competition. Given our manpower and natural resources base, there is little that can stop us from emerging winners. At TGV, we aim to harness this power to bring our clients, customers and associates closer to the line of satisfaction. Without limits, without restrictions.

Having proved our credentials as quality service/product providers in fields as varied as chemicals and hospitality, finance and healthcare, real estate and IT, we are all set to make our mark in the power sector too. The success of our initial forays in this direction has invested us with the confidence to undertake projects of greater dimension and magnitude in the near future The Human Touch

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The TGV conglomerate is headed by the dynamic and versatile personality, Tumbalam Gooty Venkatesh(TGV). An entrepreneur par excellence, his track record spans a very illustrious three-decade period during which he has notched up achievements and accolades galore. "There is no substitute for hard work" is what this simple man believes in, and has staunchly displayed in deed during his vibrant career. The diversity of activities within the conglomerate portrays his vast experience and understanding of various streams of knowledge and his ability to harness the same for the generation of economic and social wealth. A shining example of his futuristic bent of mind is the pioneering of the Bipolar Membrane Cell Technology in the manufacture of Caustic Soda and allied products in India.

The philanthropic facet of TG Venkatesh has come to the fore on innumerable occasions. A host of educational institutions have been established under his aegis. He is closely associated with national programs for human well-being such as immunizations, eye camps, family planning measures etc. To safeguard the health of his employees, he has mooted a unique 'Nonsmoking and Non-Alcoholic Allowance' that'll be forwarded to the wife/parent of each of those who desist from indulging in the hazardous activity. He is also credited with mooting the Gowri Gopal Educational Society that has set up a number of educational institutions under its umbrella including Lakshmi Venkatesh TG College of Physiotherapy, affiliated to the Govt. of Andhra Pradesh. A Nursing College, coming up as part of Lakshmi Venkatesh TG Educational Academy, re-establishes TG Venkatesh's humane nature. His dynamism, his obvious compassion for his people and his sense of service for his state have earned for TG Venkatesh, the coveted position of a member of the Andhra Pradesh Legislative Assembly. Recognition has poured in from various corners of the country. He was

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honored as the Jaycees Man of the Year for his invaluable contribution to social welfare. The Best Entrepreneur Award, FICCI Award, Industrial Promotion Award, Kinnera Award, Vijayshree Award, Udyogshree Award, Rajiv Ratna Award and scores of others speak for his deep involvement in whatever he undertakes to do. The Best Sales Tax payer Award proves his uprightness as a responsible Indian citizen. The TGV scion TG Bharath, is a new age visionary. Overseas education - a post graduation in Business Administration with International Management as elective - and work experience, plus a disciplined Indian upbringing have inculcated in him, a deep sense of values and an abiding respect for the state-of-the-art. A combination that has worked wonders for the conglomerate. As the Chairman and Managing Director of Sree Rayalaseema Hi-strength Hypo Ltd. and as Chairman for TGV Infosystems Ltd., TGV Projects and Investments Pvt. Ltd., Sree Rayalaseema Dutch Kassenbouw Ltd. and Brilliant Securities Ltd., he has commandeered the companies to the highest echelons of achievement within two years. Turnover has doubled, resulting in phenomenal profit soaring as in the case of Sree Rayalaseema Hi-strength Hypo Ltd., thanks to the imaginative cost-cutting measures introduced by him. Brilliant Securities has established many branches under his able steering. TG Bharath aims at making the conglomerate a force to reckon with in the very near future, and spares no effort in this direction.

The Conglomerate The USD 150 million/Rupees 750 crores TGV onglomerate, backed by a rich and varied experience spanning more than two glorious decades, is a rapidly growing, welldiversified one, with interests in Chemicals, Financial services, Merchant Banking, Securities, Real Estate, Power, Pharmaceuticals, Healthcare, Hospitality, Entertainment, Information

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Technology, Personal Products, Salt and Aquaculture. A constant effort to keep pace with change underlines all its endeavours. A 3000+ strong manpower base strengthens the conglomerate's resolve to excel. The conglomerate's quality consciousness and achievements have not gone unrecognised. National Awards for Unity, Safety, Scientific & Industrial Research, Environmental Protection, Research and Development and Energy Conservation, adorn the office walls as testimonials of its dedicated efforts in these directions. The conglomerate has also made significant philanthropic contributions to the society. Sree Rayalaseema Hi-Strengh Hypo Ltd (SRHHL) was incorporated on 24 October, 1986 as a public limited company and obtained its certificate commencement of business on 30 October, 1986. Initially the company has set up facilities for manufacture of chemicals and later on the company has diversified into generation of power through wind turbines and biomass. Promotions: Mr. T G Venkatesh, who hails from an industrial family promoted SRHHL. He is bestowed with experience in the art of industrial management. Since its inception, he bestowed all the devotion and hard work and ensured that the company worked at optimum capacity and post a stellar performance, both in financial and technical areas. Technology: The company has very strong Research and Development team. They have won nation level awards in Research and Development. They are only manufactures of Calcium Hypochlorite in India using the Sodium process. There are very few companies in the world with this level of technology. Our other division benefit from the cutting edge research. 20

Main products: The main products include Sulphuric Acid, Oleum, Chioro Sulphonic Aid, Calcium Hypochiorite, Stable Bleaching powder, Monochloro Acetic Acid, Bleach Liquor, MCA, Sodium Hypo, Hydrochioric Acid and Non-Ferric alum. Geared up for Exports: Sree Rayalaseema Hi-Strength Hypo Ltd, the torch bearer of the conglomerate, is only indina manufacturer of C alcium Hypochlorite, and one of the very few in the world. A state of the art sodium process technology developed through in house Research Development efforts helps the company in manufacturing the product with a chlorine content of 65% to 70% Sree Rayalaseema Hi-Strength Hypo Ltd, exports Calcium Hypochlorite to countries all across the globe Viz. Australla, Bangladesh, Belgium, Brunei, China, Colombia, Cyprus, Durban, England, France, Germany, Hungary, Iran, Kenya, Korea, Malaysia, Mauritius, Netherlands, Oman, Peru, Philippines, Sri Lanka, Saudi Arabia, Singapore, Tanzania, Thailand, USA, Vietnam, etc. the certificate of Merit awarded by CHEMEXCIL for outstanding export performance reinforces its status as a recognized export house. Calcium Hypoclorite touches vital facets of human existence and its of proven importance in many areas of day-to-day activity. Sree Rayalaseema Hi-Strength Hypo Ltd, has distinctive edge in the maucfacture of this product, thanks to the twin advantages of indigenous raw materials availability and supply of some specialized chemicals by Sree Rayalaseema Alkalis and Allied Chemicals Ltd. The company is also a front-ranking producer of Monochioro Actic Acid. Manufactured by the scientific Crystallizer technology, the product meets international quality standards. All

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leading manufacturer of Non-Seroid Anti-Inflammatory Drugs, other pharmaceuticals, pesticides, organ chemicals, etc use Monochloro Acetic Acids. Product Range and Applications: Calcium Hypochlorite (Gramules and Tablets) Stable Bleaching Powder Monochloro Acetic Acid Chloro Sulphonic Acid Oleum 23% and 65% Bromine Battery and commercial grades Sulphuric Acid

Calcium Hypoclorite is used extensively in aquaculture, textile, leather, Paper and Sugar Industries. Stable Bleaching powder has taker in sanitization, water treatment, and aquaculture and pesticide markers. Chloro Sulphonic Acid Caters to the Pharmaceutical, and dyes & Intermediaries Industry. Producers of dyes & intermediaries, soaps and dtergetns, explosives and others use application in various industries including petrochemicals, dye intermediates photography, pesticides, pharmaceuticals, bleaching of paper, pulp and others. Sulphuric Acid finds widespread usage in sulphonation, fertilizer industry, as an intermediary in pharmaceutical industry amongst others.

Production Capacity: 22

Product

installed Capacity (Tons Per annum)

Calcium Hypochlorite Stable Bleaching Powder Monochloro Acetic Acid Sulphuric Acid Chloro Sulphonic Acid Bromine

6600 9900 2400 49500 33000 65

Sree Rayalaseema Hi-Strength Hypo Ltd has provided capacitors and also uses steam for refrigeration to conserve energy. Brick lined CSA operating efficiencies. A 9 MW biomass powder project at Kurnool cater to the companys growing power requirements. Sree Rayalaseema Hi-Strength Hypo Ltd adheres to all international standards of quality. The ISO 14001 certification for Environmental Management and the ISO 9002

certification for Quality systems bear out the companys commitment to ensuring quality of implacable standards STATEMENTS OF CHANGES IN WORKING CAPITAL FOR THE YEAR ENDING OF 31-03-04 Particulars CURRENT ASSETS Inventories Sundry debtors Cash and bank Balance Loans and advances TOTAL (I) CURRENT LIABILITIES 2003 2004 Increase in working capital 1502405 504630 9953486 Decrease working Capital 202494

49786564 95733900 8692695 148863395 303076550

49584070 97236305 9197321 158816881 314834577

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Sundry creditors Other dues Lease and rentals Other liabilities Advances from customer Due to directors Provisions for taxation Provisions for others TOTAL(II) Working Capital (I-II) Increase in W.C

8620197 37299449 1716533 24558480 15407673 453552 2244144 14314222 104014250 198462300 8006158 206468458

11623374 36648382 261416 37604601 3147954 0 3254865 15825527 108366119 206468458 206468458

3003177 651067 1455117 13046121 12259719 453552 1511305 8006158 26779976

26779976

INTERPRETATION 1. The comparative balance sheet of the company during the year 2003-2004 reveals that the current assets have increased by 11758027 2. 3. 4. 5. The current liabilities have increased by 4351869 The working capital for the year 2004 is 206468458 and for the year 2003 is 198462300 There is a increase in working capital of 8006158 compared to previous year Hence financial position of the company during the year 2003-2004 is good. .

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STATEMENTS OF CHANGES IN WORKING CAPITAL FOR THE YEAR ENDING OF 31-03-05 Particulars CURRENT ASSETS Inventories Sundry debtors Cash and bank Balance Loans and advances TOTAL (I) CURRENT LIABILITIES Sundry creditors Other dues Lease and rentals Other liabilities Advances from customer Provisions for taxation Provisions for others TOTAL(II) Working Capital (I-II) Increase in W.C 2004 2005 Increase in working capital 245872 2082261 10120084 6178552 1333373 261416 28636933 6226245 266533 2632410 42583177 52167960 52167960 Decrease working Capital 3769064

49584070 97236305 9197321 158883881 314934577 11623374 36648382 261416 37604601 3147954 3254865 15825527 108366119 206535458 206535458

45815006 97482177 7115060 148763797 299176040 5444822 37981755 0 66241534 9374199 2988332 13193117 135223759 163952281 42583177 206535458

INTERPRETATION

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1.

The comparative balance sheet of the company during the year 2004-2005 reveals that the current assets have decreased by 15725537.

2. 3.

The current liabilities have increased by 26857631 The working capital for the year 2004 is 206535458 and for the year 2005 is 163952281.

4. 5.

There is a decrease in working capital of 42583177 compared to previous year Hence financial position of the company during the year 2005 2006 is not good.

STATEMENTS OF CHARGES IN WORKING CAPITAL FOR THE YEAR ENDING OF 31-03-07

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Particulars CURRENT ASSETS Inventories Sundry debtors Cash and bank Balance Loans and advances TOTAL (I) CURRENT LIABILITIES Sundry creditors Other dues Other liabilities Advances from customer Provisions for taxation Provisions for others TOTAL(II) Working Capital (I-II) Increase in W.C

2005

2006

Increase in working capital 18836194 48461008 4202078

Decrease working Capital

45815006 97482177 7115060 148763797 299176040 5444822 37981755 66241534 9374199 2988332 13193117 135223759 163952281 1041003 164993284

64651200 145943185 11317138 135979526 357891049 2436925 57460774 86688147 19043802 2413396 24854721 192897765 164993284 164993284

12784271 3007897 19479019 20446613 9669603 574936 11661604 1041003 75082113 75082113

INTERPRETATION 1. The comparative balance sheet of the company during the year 2005-2006 reveals that the current assets have increased by 58715009. 2. 3. 4. 5. The current liabilities have increased by 57674006. The working capital for the year 2005 is 163952281 and for the year 2006 is 164993284 There is a increase in working capital of 1041003 compared to previous year. Hence financial position of the company during the year 2005-2006 is good.

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STATEMENTS OF CHARGES IN WORKING CAPITAL FOR THE YEAR ENDING OF 31-03-07 Particulars CURRENT ASSETS Inventories Sundry debtors Cash and bank Balance Other current assets Loans and advances TOTAL (I) CURRENT LIABILITIES Sundry creditors Other dues Other liabilities Advances from customer Provisions for taxation Provisions for others TOTAL(II) Working Capital (I-II) 2006 2007 Increase in working capital 18727975 8211964 3842228 32537037 5582102 9890500 73323549 4615537 22570848 2053147 Decrease working Capital 1341076

64651201 111519702 11317138 12736054 157666956 357891051 2436925 57460774 86688147 19043802 2413396 24854721 192897765 164993286

63310125 130247677 19529102 16578282 190203993 419869179 8019027 67351274 13364598 14428265 24984244 26907868 155055276 264813903

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Increase in W.C

99820617 264813903

264813903

99820617 141258290 141258290

INTERPRETATION 1. The comparative balance sheet of the company during the year 2006-2007 reveals that the current assets have increased by 61778128 2. 3. The current liabilities have decreased by 37842489 The working capital for the year 2006 is 164993286 and for the year 2007 is 264613903. 4. 5. There is a increase in working capital of 99820617 compared to previous year . Hence financial position of the company during year 2006-.2007 is very goods.

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STATEMENTS OF CHARGES IN WORKING CAPITAL FOR THE YEAR ENDING OF 31-03-08 Particulars CURRENT ASSETS Inventories Sundry debtors Cash and bank Balance Other current assets Loans and advances TOTAL (I) CURRENT LIABILITIES Acceptances Sundry creditors Other dues Other liabilities Advances from customer Provisions for taxation Provisions for others TOTAL(II) Working Capital (I-II) Increase in W.C 2007 2008 Increase in working capital 49438904 31043957 8145424 3483669 37542509 5903149 6085645 22147363 570498 8728887 29986678 4678607 18028250 99397770 Decrease working Capital

63310125 112749029 1302476787 99203720 19529102 27674526 17079962 13596293 189673318 152130809 419840184 405354377 32011049 8019027 123718821 13364598 14428265 24984244 26862125 243388129 176452055 18028250 194480305 26107900 1933382 101571458 13935096 23157152 21985566 22183518 210874072 194480305 194480305

99397770

INTERPRETATION 1. The comparative balance sheet of the company during the year 2007-2008 reveals that the current assets have decreased by 14485807 2. The current liabilities have decreased by 32514057.

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3.

The working capital for the year 2007 is 176452055 and for the year 2008 is 194480305.

4. 5.

There is a increase in working capital of 18028250 compared to previous year. Hence financial position of the company during year 2007.2008 is average.

CALCULATIONS

1.

Current ratio : = Current Assets Current Liabilities 31

(In Rs) Year 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 Current Assets 303076550 314901577 299176040 357891049 419869179 405354377 Current liabilities 104014250 108366119 135223759 192897765 155055276 210874072 Ratio 2.91 2.90 2.21 1.85 2.71 1.92

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cuurent ratio
3.5 3 2.5 ratio 2 1.5 1 0.5 0 2002- 2003- 2004- 2005- 2006- 200703 04 05 06 07 08 year Series1

INTERPRETATION 1. 2. 3. 4. Current ratio shown up the short term financial position on of the firm The ideal current ratio is 2:1 In the year 2003-04 the current ratio was 2.91 This indicates that the firm is liquid and has the ability to pay its current obligation in time as and when they become due. 5. But during the year 2002-03 , 2003-04, 2004-05 2005-06, 2006-07, 2007-08 the current ratios are lesser than ideal ratio .

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2.

QUICK RATIO : Quick Ratio = Quick Assets Current Liabilitie s

(In Rs) Year 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 Quick Assets 253289986 265250507 253361034 293239850 356559054 292605348 Current liabilities 104014250 108366119 135223759 192897765 155055276 210874072 Ratio 2.42 2.44 1.87 1.52 2.36 1.38

Quick ratio
3 2.5 2 ratio 1.5 1 0.5 0 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 34 year Series1

INTERPRETATION 1. Quick ratio is an indication that the firm is liquid and has the ability to meet its current or liquid in time and on the other hand a low quick ratio represent that the firm liquidly position is not good . 2. 3. 4. 5. 6. As a rule of thumb or as a convention quick ratio of 1:1 is considered satisfactory The quick ratio was 2.42 in the year 2002-03 It increases in the year 2003-04 up to 2.44 After that there was a decrease in the remaining years. The company is in a favorable position which indicates that the firm has the ability to meet its current or liquid liabilities in time

3. WORKING CAPITAL TURN OVER RATIO: NetSales NetCurrentasset 35

(in Rs) Year 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 Net sales 565270887 588430865 566190292 830982499 1128416539 1175530328 Net working capital 198462300 206468458 163952281 164993284 176452055 2194480305 Ratio 2.84 2.85 3.45 5.03 6.39 6.04

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working capital turn over ratio


7 6 5 ratio 4 3 2 1 0 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 year Series1

INTER PRETATION: 1. 2. 3. 4. From the table it is observed that sales to working capital ratio have been decreasing. The firm recorded ratio in 2002-03 2.84 it is decreased in the year 2003-04 to 2.85 Again there is an increase in remaining years. How ever the firm recorded the highest ratio in the year 2007-08 i.e. 6.04

4. FIXED ASSET TURN OVER RATIO: 37

NetSales Netfixedasset

(In Rs) Year 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 Net sales 565270887 588430865 566190292 830982499 1128416539 1175530328 Net Fixed asset 561264570 589102224 577751344 414440767 467712460 536578490 Ratio 1.01 0.99 0.97 2.01 2.41 2.19

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Fixed asset turnover ratio


3 2.5 2 ratio 1.5 1 0.5 0 2002- 2003- 2004- 2005- 2006- 200703 04 05 06 07 08 year Series1

INTERPRETATION 1. It is the ratio, which shows the relationship of fixed asset turnover ratio and net fixed asset which indicates how efficiently the working capital is used for the net sales and on what ratio they are used . 2. 3. 4. In the year 2002-03 the ratio is 1.01 In the next year i.e. 2003-04 the 5ratio is decreased at 0.99 Afterwards it in decrease till 2004-05 to 0.97 and remaining the year 2005-06 and 200607, 2007-08 the ratios are again increase to 2.01, 2.41 and 2.19.

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5. SHARE HOLDER FUND RATIO & PROPRITORY RATIO:

Shareholderfund Totalasset (In Rs)

Year 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08

Share holder fund 646601662 664798164 667216595 256764913 312868446 360382161

Total asset 1040270744 995144384 1060966835 580036591 733716949 762013232

Ratio 0.62 0.66 0.63 0.44 0.42 0.47

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share holder funds


0.7 0.6 0.5 ratio 0.4 0.3 0.2 0.1 0 2002- 2003- 2004- 2005- 2006- 200703 04 05 06 07 08 year Series1

INTERPRETATION 1. 2. It is the ratio which shows the relationship of share holders funds and total assets Which indicates how efficiently share holders is used for the total asset and on what ratio they are used . 3. 4. 5. In the year 2002-03 the ratio is 0.62 In the next year i.e. 2003-04 the ratio is 0.66 It is increased. From the year 2004-05 to 2007-08 the is an up and down in the ratio.

6.

CURRENT ASSETS TURNOVER RATIO :

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Sales Current Assets (In Rs)

Year 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08

sales 565270887 588430865 566190292 830982499 1128416539 1175530328

Current assets 303076550 314901577 299176040 357891049 419869179 405354377

Ratio 1.86 1.89 1.89 2.32 2.69 2.90

current asset turnover ratio


3.5 3 2.5 ratio 2 1.5 1 0.5 0 2002- 2003- 2004- 2005- 2006- 200704 05 06 07 08 09 year Series1

INTERPRETATION

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1.

This ratio indicates the extent to which the sales in current Assets contributed to sales it indicates whether the investment in current assets has been judicious or not.

2. 3.

A high current assets turnover ratio indicates better utilization of the firms assets . In the year 2002-03 the ratio was 1.86 that means the assets of the business enterprises were contributed well to the sales. There after the ratio decreased gradually which is not a good sign?

FINDINGS The inventory has been continuously increased from 2006-2008 . The increase is also due to finished goods awaiting customer clearance The loans and advances are decreased in 2006-2007 and increased in 2007 2008 which mainly contributes to payments made to suppliers and materials to be received and accounted in the plant. There is an increase in sundry debtors in 2006-2008 The current liabilities of the company increase in 2006-2008 The Net Current assets of the company increase in 2006-2008 The current Ratio on has been fluctuating through out the year and in the year 20052008 The Quick Ratio has been facing downs through out the years and below the ideal ratio of 1:1 The cash Ratio has been facing ups & down

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SUGGESTIONS The company should adopt efficient cash management system so as to invest surplus cash in profitable ventures, depending on the amount of surplus cash and duration of surplus cash in hand.

The company should take necessary steps to maintain working capital as far as possible at standard ratio.

It is advisable for the company to keep as much amount of cash as necessary and invest the surplus money in short term deposits.

It is advisable to the management to retract investment in fixed assets as there are adequate fixed assets already installed further investment in fixed assets will affect the WC of the company . 44

The Companies liabilities in the form of loans and advance taken from different institutions are increasing year by year . So the company should utilize the available resources in proper manner .

The company has maintained rules and regulations and reduces the wastage material

BIBLIOGRAPHY

TEXT BOOK FINANCIAL MANAGEMENT FINANCIAL MANAGEMENT FINANCIAL MANAGEMENT I.M. PANDEY KHAN & JAIN PRASSANACHANDRA

COMPANY ANNUAL REPORTS ANNUAL REPORT 2003-2004 ANNUAL REPORT 2004-2005 ANNUAL REPORT 2005-2006 ANNUAL REPORT 2006-2007 ANNUAL REPORT 2007-2008

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WEB SITES www.google.com www.tgvgroup .com

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