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A project report on working capital management with special reference to bagalkot cement industry ltd By Babasab Patil
1. WORKING CAPITAL MANAGEMENT With Special reference to BAGALKOT
CEMENT INDUSTRY LTD”
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2. WORKING CAPITAL MANAGEMENT With Special reference to BAGALKOT
CEMENT INDUSTRY LTD”
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INDEX
S.NO. PARTICULARS
Chapter 1
Chapter 2
Chapter 3
Chapter 4
Chapter 5
Executive summary
Introduction
--Industry Profile
--Company Profile
--Product Profile
--Organization structure
Project Details:
WC Management
Cash management
Receivables Management
DATA ANALYSIS
Statement of problem
Objectives of the study
Scope of the study
Methodology of data collection
Sampling design
Limitations of the study
DATA PRESENTATION
Financial ratio analysis
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Chapter 6
Chapter 7
Chapter8
FINDINGS, SUGGESTIONS, and CONCLUSIONS
BIBLIOGRAPHY
Annexure
EXECUTIVE SUMMARY
4. WORKING CAPITAL MANAGEMENT With Special reference to BAGALKOT
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The Bagalkot cements and industries ltd was incorporated on 6th
September 1955 it was
started by late shri. A.G.Tendulkar.The Company started its production with installation
of wet process kiln with a capacity of 300TPD in 1960. Initially it was started with one
Kiln, one raw mill and one cement mill as its machinery assets, 1200 strong workforce
and 990 acres of landed property.
The project report on “WORKING CAPITAL MANAGEMENT” is studied in
the “THE BAGALKOT CEMENT INDUSTRY LTD” at Bagalkot for a period of two
months as summer in plant training.
During the study I found that the company is carrying its activity in producing
cement. The company managers have co-operated with me a lot in completing my
summer-in-plant training. They have given me all the information that I need for my
study.
The study is conducted in order to know how the organization is maintaining the working
capital. So as to identify the problems of such a title and give suggestions and
conclusions. In addition to this concept studying the over all organization role of different
department functions of their respective departments, procedures and policies.
The basic objective of the study is to see the liquidity position of the company by
the help of ratio analysis.
The scope of the study is limited to working capital ratios and regarding the liquidity of
the company with whatever basic financial statements. It will help to understand the
company’s liquidity position.
PROJECT TITEL
A study on working capital management with special reference to Bagalkot Cement
Industry ltd.
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CEMENT INDUSTRY LTD”
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OBJECTIVES OF THE STUDY
To study efficiency of working capital components in the organization
To know the liquidity position of the company by the help of ratio analysis.
To asses the working capital requirement of the company.
SCOPE OF THE STUDY
Analysis of working capital components in the B.G.K Cement.
Analysis of last five years financial Statements
Evaluation of Financial ratios is adapted to working capital
management.
METHODOLOGY OF DATA COLLECTION
The methodology of data collection pertains to information to how the data is collected
i.e. either from primary sources or secondary sources. It explains the methods utilized
and the instruments used in data collection.
SOURCES OF DATA
The sources of data can be classified in two categories:
Primary sources
Secondary sources
PRIMARY SOURCES
The primary data are collected by the thorough and detailed discussion was
conducted with the Assistant General Manager-Finance and Accounts. And the
discussion.
SECONDARY SOURCES
I used secondary sources also for collecting the data. They are:
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Information from the text sources
Information form the internet sources
Information from the materials provided by the concern
LIMITATIOMS OF THE STUDY
The study is confined only to a period of 5 years
Time Constraint
The study is used on secondary data such as annual reports of the
company.
Findings
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1 liquidity ratios
Current ratios: The current assets ratio as per the stander is 2:1. Through
calculation it is observed that, it has been decreased by 0.52 to 0.49 to 0.40 from
2003 to 2005. And again it decreased to 0.20 in the year 2006 but 2008 it increased to
1.83 but it doesn‟t reach the standard ratio, so it is unfavorable to the company.
2 Quick ratio: the quick ratio of the company has been decreased by continuously i
.e 0.31 to 0.29 to 0.20 to 0.13 from 2003 to 2006 & in 2008 it is slightly increased by
0.69.But it doesn‟t reaches the standard ratio which it is 1:1 it shows that companies
liquidity position of the company is not good, so it is unfavorable to the company.
3 Working capital turns over ratio:
The working capital turn over ratio indicates that working capital is less in
company. The working capital ratio of the company was 1.61% in 2003 & 2004 also
same 1.61 but it was decreases 0.93 to 0.52 to 0.98 times from 2005- 2008
respectively. In the firm there is continuous decrease for 5 year. It has decreased in
working capital turnover ratio so the firm is weak in working capital turnover ratio.
4 According to the statement of changes of working capital, amount is decreased
from year to year up to 2003 to 2006 but there is slight increased in the year 2008.
5 According to the current asset to total asset ratio the company is having less
current asset so better they have increases the current assets.
Conclusion
By analyzing the topic of working capital management in Bagalkot cement industry
ltd. I conclude that the company is having less working capital but in the year 2008
the working capital is increasing. So if the company maintains the constant working
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capital which helps perform the day to day business by increasing the current
assets. And the liquidity position of the company is also not satisfactory.
This project report helped me to get the knowledge on the working capital
utilization for better maintenance of the company.
Suggestions
1. Company need to increase the current assets turn over ratio by increasing in
their current assets.
2. The company needs to increase its current ratio by increasing its current
assets so it helps to maintain standard form 2:1.
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3. Liquidity position of the company is weak hence it should increase
investment in current assets.
4. Company properly has not invested in working capital during last four
years, so company should constantly strive to maintain the working capital.
HISTORY OF CEMENT INDUSTRY:
The history of Cement can be traced to the days of Babylonia and Assyria. The Egyptians
used clay motor in the Pyramids and Romans produced a type of Cement of by
mixing Volcanic Ash with Quicklime which, to this day, is often entirely free from
fissures whenever mankind has undertaken to build with any degree of permanence
and using rock, stone or brick, it has been found that some form of Cement is
an indispensable construction material.
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Before the development of Portland cement the Principal Cements were
Natural Cement and Puzzolan. Natural Cement is made from Cement rock, naturally
occurring limestone that needs only to be burned and pulverized. Puzzolan Cement is a
mixture of slaked lime and granulated blast furnace slag.
The history of Portland cement traces back to 18th Century when a patent
for making of Portland cement was obtained by Joseph, a brick layer of Leeds, England
in 1824. This Cement was called as Portland cement because when it hardened it
produced a yellowish Gray mass resembling in appearance the stone from the famous
quarry of Portland, England. The new Cement did not receive ready acceptance because
of the established reputation of the natural Cements. It was not the until the 1850 that
Portland and by 1860 the industry had developed in the European continent, particularly
in Belguam, Germany and France. The industry was well established in Europe before
the first patent to produce Portland cement was granted in 1872 in the US in the year
1904 Portland Cement entered into India since then it has been one of the major industry
Indian economy constituting a major share.
I remain ever grateful to all respondents for their co-operation
INDUSTRY PROFILE
India is 3rd
largest producer with total production capacity exceeding 102.2 MT,
including mini sector. China & Japan stands first & second in the world in the production
of cement.
It is great centralization & control in cement industry then any other industry in
India. The industry is well diversified over all the states of India.
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Cement plays an important role in the development of the country. Cement is
being used from more than 150 years of construction. The cement consumption
determines the infrastructure strength and development of the nation.
Since the manufacture of cement require huge raw materials like limestone, clay
& gypsum. The industry has been attracted at the point of minimum transportation costs
in relation to raw materials .Lime stone of excellent quality exists in abundance in many
parts of the country.
The history of cement industry in India started when the first plant was set up in
1904 at Chennai (Madras) in their earlier stage.
Now-a-days cement has become the essential unit used for the construction
works. The cement industries have been growing with global competence for quality and
satisfaction of the products.
COMPANY OVERVIEW
Name of the company: Bagalkot cements and industries ltd
(Kanoria groups)
Chairman : Ajay Kanoria
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Board of directors : K.A.Kandelwala
Vinayak Kanoria
D.B.Mundra
Shettar
Location : Bagalkot Dist, Karnataka.
Registered office : Air – India Building 14th
floor, Nariman
Point.
Mumbai-400021
Year of establishment: 6th
September 1955.
Products : Bagalkot Shakti
Bagalkot supreme
Website : bulcement@reddiff.com
www.bagalkotudyoglimited.com
MISSION STATEMENTS
a. We will provide products of superior Quality at competitive price and ensures
sustained profitability and growth.
b. We will protect the interest of all concerned Promoters, Shareholders, Customers,
Distributors, Employees, Community.
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c. We believe in fair trade practices, principles of integrity standard and strive for
total customer satisfaction, keeping the environment friendly.
d. We believe that our people are the most valuable assets, personal and
organizational growth synonymous.
e. We will treat our people with dignity, look after the safety, welfare of individuals
and their Families.
f. We will be a World Class organization through leadership, in production,
efficiency, cost of leadership by achieving the lowest consumption levels of fuel
energy and raw materials.
g. We will continue to be a moving force in our national progress.
SWOT ANALYSIS
STRENGTH:
It’s more workable in Coastal area.
Abundance of Lime stone (raw material) available in the region.
Its local brand & can be capitalized around Bagalkot surrounding area.
It has a formal technical collaboration with M/S Blue Circle Industries
Ltd., PLC,UK
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A large number of dealers network helps in facilitating better width and
depth of penetration in the market.
WEAKNESS:
Lack of marketing oriented activities or strategies due to more sales
orientation and profit consciousness lags to capture the market.
There are no interactions in the means of meetings and seminars with
Dealers.
Old plant & machinery.
People prefer Brand names like ACC, Vasavadatta, L&T, Rajashree,
OPPORTUNITIES:
The company can look forward for a bigger market by changing the name
of the product.
By utilizing existing dealer’s network and skill force, they can look
forward for more ventures in coastal areas.
THREATS:
Due to more consciousness towards pollution control social groups in the
region will provoke public to stop the production.
Due to environmental problem and global warming there is shortage of
rain in the state, which will effect the generation of power. The company
has to solely depend on its DC.
Compared to other company the technology of the plant is quite old.
PRODUCT PROFILE
PRODUCT OF THE COMPANY
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BCIL’S cement division produces two types of cement namely,
1. BAGALKOT CEMENT (PSC Portland slag cement) it is not having any grade.
Even after final reading on 28th
days, the strength will increase.
2. BAGALKOT SUPREME (OPC Ordinary Portland cement) it is 43-Grade
cement, on 28th
day the final reading is done. Thereafter the strength of the
cement remains the same.
Features of Bagalkot Cement :
Improved soundness
Higher long term strength
Resistance to attack by sea water
No risk on early age of Thermal cracking
Resistance to corrosion proof Reinforcement in concrete
Application of cement:
Bridges & Fly-over
Roads & pathway
Deep Foundation & Marine works
Water storage tanks & Reservoirs
Marine constructions like Ports, Harbors & Jetties
Effluent treatment plants & swages treatment plants
Chemical factories where acids & alkali aggregates are present.
Canal Linings
DEPARTMENTAL OVERVIEW
HUMAN RESOURCES DEPARTMENT
HR FUNCTIONS
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1. Human resource planning:
HR functions analyses jobs, skills, task-present and future project needs and uses
statistical data to plan human resource activity.
2. Recruitment & Placement:
First of all notification is made by Company according to the required vacancy in the
respective units. The further procedure is carried out by HRD (Asit. chakrovorthi)
*Application is accepted according to required norms.
*Srcutinisation is done and call letters are sent to the eligible Candidate.
*Candidates are called for interview.
*Suitable candidates are selected in personal Interview
*After completing the training session successfully and satisfactorily, the trainees are
placed accordingly to their Job specialization.
Special recruitment is conducted for local people whose lands have acquired by
company.
Also recruitment for sc/st candidates is conducted time to time. All the trained
workers are placed in the workshop or offices by the GM of respective shops
according to the organization’s needs with qualified individuals.
3. Induction:
Newly selected candidates are oriented about the organization and its various
aspects, with help of Supervisors under whom they starts working as assistant or
trainees.
4. Training& Development:
Selected candidates are taken as management trainees and given Training according
to their requirement .Besides these new employees. T&D dept also provides
opportunities for learning skills, information and attitude related to job for existing
employees.
5. Performance appraisal:
The performance of employees is monitored by HR department periodically.
7. Compensation & Benefits
Company focuses time productivity & talents through Compensation & Reward.
FINANCE DEPARTMENT
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Finance is the backbone of any Organization and therefore efficient management of
finance leads the organization to the success. The different sections and there
functions are given:
1. MAIN ACCOUNTS: Deals with accounting of official assets, interplant
reconciliation, co-coordinating section for all accounts, MIS etc.
2. PURCHASE ACCOUNTS: Deals with the payments and accounting of supplies,
Bills against purchase order of raw materials.
3. CASH ACCOUNTS: Deals with disbursement and receipt of cash as per bills
passed by the officers of various sections.
4. PLANT EQUIPMENTS A/c: Deals with the accounting of IPO investments in
planning units and is related to project.
5. STORES A/c: Deals with accounting and maintenance of stores ledger, receipts,
balance of receipts.
6. PROVIDENT FUND A/c: Deals with the accounting of provident fund, gratuity
etc.
7. SALES TAX A/c: Deals with the accounting of sales tax matters.
ORGANISATION STRUCTURE
Mktg
Mgr
System
Regional
Manager
Area
Sales
Manager
A/C
Mgr
A/C
Officer
Asst
Peons
L&P
Person
al
Officer
s
Security
Officer
Clerk
HR
D
Office
rHR
D
R/M
Officer
Mgrs(store
s)
Asst Mgr
Purchase
Officer
Clerk
VP
(Power)
Mgr Elect
Asst Mgr
Elect
Jr. Engg
Mgr Elect
Mgr DG
Asst Engg
Mgr Mgr
Kiln
Burner
Engg
Worker
Sr. Mgr
Mines
Asst Mines
Mgr
Asst Engg
Foreman
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DEPARTMENTAL OVER
PRODUCTION DEPARTMENT
It is the one of the essential unit of the organization, which converts available raw
material into saleable goods. It looks after the production of the cement and without this
department there is no question of running the industry. All the functions like crushing,
kiln, heating, packing all will be taken care by this department.
LABORATORY AND QUALITY CONTROL
He laboratory of BCIL, is well equipped with all modern instruments of testing
cement, here the cement sample is taken for test & is tested on the base of specialization
as recommended by the ISI & cement association of India. The features like setting time,
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compressive strength, color limestone, quality, clinker quality, gypsum, iron & grade of
cement is tested to its satisfaction & the similar process is carried on for all production of
cement tones.
STORE DEPARTMENT
In store department the things, which are required by the various department of
factory, are stored in proper way & in systematic racks. Every item from pin to bag is
stored & made available to the department as & when required so that there won’t to be
any stores manager & is assisted by this staff ever requirement of the employees like
dress etc stored.
ELECTRICAL DEPARTMENT:
It is the department which stores the power so generated in & center of power
supply & thus it regulates the power supply to the department in an economical way.
PRODUCTION PROCESS OF CEMENT PLANT
Cement is manufactured from various methods for eg wet process and dry process.
Bagalkot Cement Industries Ltd., manufacturers cement adopting Dry process method.
Various processes in the production are as follows.
1. Limestone:
The process starts with quarry where the limestone is found. Lime stone is chief
raw materials used. The contents of limestone are calcium carbonate (caco3 98%).
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Lime is formed after heating the limestone & carbon dioxide is released as by
product. Further the limestone has to be processed by reducing them in there size.
This is done by feeding the limestone into the crusher. The limestone is reduced
to the size round about 20-25mm.
2. Stockpile/blending:
The crushed raw materials are stored ready for use in many plants; a buildings
stockpile is used in order to assist in checking any chemical variations in the raw
materials coming from quarries. A stocker builds up a layer upon layer to from
the stockpile.
Depending on area of the quarry it comes from each layer may have slightly
different composition.
3. Raw milling/Ball mill
After milling in the correct proportions the limestone & the shale are fed to a mill
where they are ground to a fine powder called raw meal. In most modern plant, a
closed circuit hall milling system is used.
The ball mill basically a steel tube containing steel balls ranging is size typically
from 90mm downwards. The balls gradually grind the raw materials to a fine
powder. The mill is usually of single chamber design & may be fitted with a
classifying liming.
The lining has the effect of grinding the ball sizes of that the larger balls at the
inlet end when the larger pieces of raw material have to be broken & smaller balls
at the outlet end where the finger grinding takes place
4. Raw meal blending
The raw meal is then conveyed to silos for the future blending. It is essential for
raw meal to be of consistent chemical quality, if problems at the kiln stage are to
be avoided.
The base of the blending silo is divided into segments covered with porous tiles or
canvas blending is achieved by arranging for up to three times as much air to be
blown through one action of the base compared to the others tumbling mixing
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action is imported the raw meal after predetermined mixing time, or when the
technical department is satisfied, that the raw meal is of consistent chemical
composition.
5. Raw meal storage
The raw meal is from blending silo’s blow. It is now ready to be
Introduced to the next stage of the process, the kiln system.
6. Pre-heater (4 stage suspension):
The raw meal passes through a pre-heater. This 4 stages suspension pre-heater is
just one of the many types in use. It consists the 4 stage of cyclones. Hot exhaust
gases from the kiln enter the bottom of the pre-heater column at the stage 4 cycle
one & travel upwards through each of the other stage. The raw meal is fed the gas
dust from the stages 2 cyclone. The meal is immediately picked up by the hot gas
& carried into the stage 1.
This process continues until the meal falls from the stage 4 cyclone & into the
kiln in let chute or hearth. At reaching pre-heat stage, heat from the hot gases is
transferred to the meal. Then gases from the kiln enter the pre-heater at about
1000 degree centigrade & leaves stage 1 at about 350*c the raw meal leaves stage
at about 800*c.
7. Calcinations
At this temperature of 800 c, the calcinations of the calcium carbonate in the raw
meal, that is conversion of cac3 to line has started. About 30% of calcinations will
have take place by the time the raw meal reaches the kiln
8. Dust control electrostatic precipitators:
To prevent dust from the kiln or raw milling system entering the atmosphere, the
gas is passes through electrostatic precipitators. To condition the dust laden gas
using a water spray, either in the preheater or in as external conditioning lower.
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As the dust laden gas enters the chamber in which electrodes & earthed collector
plates by vibrating the collector plates periodically the dust drops into the happer
& is returned with the raw meal to the kiln system.
The cleaned exhaust gas, mainly carbon dioxide nitrogen & water vapor, can then
be safely released into the atmosphere.
9. The kiln:
The partially pre-heated clacinized raw meal is fed to kiln through a steel tube
typically with a length to diameter ratio of 16:01 & in cloned at an angle of about
3*.
It rotates at a speech of 3rpm on a system of rollers & is driven through a
mounted belt around the circumference. The seals at either end of the kiln are
designed to prevent the ingress of cold air & to accommodate expression &
rotation. The kiln is lined refractory bricks & fired either by oil or gas at the lower
end.
If coal is used, it must be pulverized often using a ring roller mill such as this. If
heavy fuel oil is used, it must first be heated to reduce its viscosity & aid
atomization. Raw meal from the pre-heater enters at the end & gradually moves
down that the kiln
Rotates. At firstly of the calcinations takes place so that the feed consists mostly
of lime, silica, alumina & iron all in a hot reactive state.
The hottest part of the kiln is near the tip of the frame. This is the burning zone
where the feed as at temperature of around 1450*c & is in a partially molten state
it is here that the four main constitutes of the feed by chemical reaction from
cement clinker.
10. Clinker:
A mix of complex compounds referred to in cement chemist’s nations as c2s, c3a
and c4af.
11. Grate cooler:
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Another type of cooler is commonly used in the grate cooler. There is an empty
cooler; the reciprocating grate through which air is blown is visible.
As the clinker moves along the grate air cools it & the air itself cools the pre-
heater prior to relating the kiln as secondary combustion air. However, more air is
required for combustion is blown through the gate some of this excess hot air is
used to dry & cool the fired plants after cooling the clinker is stored ready for
grinding into cement.
12. Cement milling:
The mixture of clinker & gypsum now passes to the cement mill. Ordinarily, the
cement ball mill is similar to the raw mill. The cement mill is divided into 2 or 3
chambers by perforated steel diaphragms, each chamber containing a range of ball
sizes, but because cement required finer grinding the smallest balls is smaller than
those in a raw mill.
Classifying lining are often used in the 2nd
chamber mill to separate the ball size.
13. Open circuit milling:
Open circuit milling is often used for ordinary Portland cement (opc). Here the
cement is ground to required fineness in one pass through the mill. Open circuit
mills are generally longer than closed circuit mills for this reason. The ground
cement is conveyed directly away & the mill is vented in a dust filtration system.
14. Closed circuit milling:
In a certain circumstances closed milling can have advantage consuming less
power overall. The closed circuit system is similar classifier to that used raw
milling a separating out the coarse fiction of the mill production & returning it to
the mill for further grinding. This particularly suitable for hardening cement RHC
that has to be ground very finally.
15. Storage:
From milling the system, the cement is often pumped through pipes by what is
basically a screw fed blower. The speed screw delivers the cement into a high
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volume airflow provided by compressors. The air conveys the cement along a
pipeline to storage silos.
16. Dispatch:
Cement is bagged, prior to bulk dispatch by either rail or road. The latest packing
plants are fully automatic. For packing, various types of the bags are used like HDPE,
polythene bags, paper bags.
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PROCESS CHART
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GROWTH OF THE COMPANY
The present Management of Kanoria Group Keeping in view of the good prospect for the
Cement Industry has made many changes. In order to economize the Cost of production,
Management modernized the machinery’s and changed the production process from Wet
to Dry method. As a result, its capacity of production changed from 90 thousands tones/
annum to 3.3 lakh tones/annum. To bring more Technological changes in production the
management reached an agreement with M/s Blue Circle Industries PLC in 1985. Under
the services of BCI, it has been envisaged that the existing capacity 1000TPD will reach
to 1200 to 1500 TPD under existing resources only.
To meet the growing needs of the nation, another Wet process Kiln of 300TPD
was installed. The entire machinery for the two kilns was imported from M/s Krupps of
West Germany. In order to upgrade the capacity of the Kiln and bring operational
improvement, the company entered into a technical agreement with PLC UK, who is one
of the largest operating cement companies in the world.
The chief advantages of this technical agreement with Blue Circle are:-
1. Sustained increased production of cement.
2. Improved thermal efficiency of the Kiln.
3. Energy conservation.
4. Training.
5. Improved method of plant maintenance
In September 1982, to achieve fuel saving, the two wet process Kilns were replaced by a
new 1000TPD dry process Kiln, supplied by ACC Ltd. The precision and care observed
at Bagalkot cements and Industries Ltd., throughout the manufacturing process, reflects
in quality and product which surpasses the specifications laid down by the Indian
Standards Institution (ISI).The cement produced undergoes a number of physical tests
such as Compressive strength, Fineness, Setting time, Soundness etc.
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In order to overcome the chronic power shortage of the state electricity grid,
Bagalkot has installed a Diesel Generator set of 4000Kw capacity from Japan. With the
assistance of M/s Blue Circle BCI Ltd as set up a separate training department in the
company, which caters to complete training needs of the managerial, supervisory &
operating staff? BCI Ltd enjoys a unique distinction of offering cement in a variety of
packing bags viz. jute, & paper bags etc. according to customer needs & preferences.
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INTRODUCTION
MEANING OF WORKING CAPIPAL
FACTORS INFLUENCING WC REQUIMENTS
ESTMATION OF WC REQUIREMENTS
COMPONENTS OF WORKING CAPITAL MANAGEMENT
CASH MANGEMENT
RECIEVABLES MANAGEMENT
INVENTORY MANAGEMENT
INTRODUCTION
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As every enterprise knows that, working capital is the lifeblood and control of nerve
center of the business. Just as circulation of blood is the essential for maintaining
life, working capital is also essential for maintaining the smooth running of the
business.
The importance of working capital management is indisputable; Business
liability relies on its ability to effective management of receivables, inventory, and
payables. By minimizing the amount of funds tied up in current assets. Firms are able
to reduce financing costs or increase the funds available for expansion. Many
managerial efforts are put into bringing non-optimal level of current assets and
liabilities back towards their optimal levels.
Working Capital refers to the amount of capital which is readily available to
an organization that is, working capital is the difference between resources in cash
and readily convertible into cash (current assets) and organizational commitments for
which cash will soon be required (current liabilities).
Thus, working capital involves activities such as arranging the short-term
finance, negotiating favorable credit terms, controlling the movement of cash,
administrating accounts receivables and monitoring the investments also a great deal
of time.
Definition of working capital
Gerstenberg
“Working capital means current assets of company that are changed in the ordinary
course of business from one form to another, ex: from cash to inventories, inventories to
receivables, receivables into cash”
Shubin “Working capital is the amount of funds necessary to the cost of operating the
enterprise. Operating expenses involve investment in current assets, payment towards
overhead and expenses. Investment made in these heads is classified as working capital”.
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J. smith
“The sum of the current assets is the working capital of the business”
’’WORKING CAPITAL = CURRENT ASSETS – CURRENT LIABILITY”
Factors influencing working capital requirements
Nature of business – Important factor that determines requirement of working
capital is nature of business a firm is undertaking. Firm those are engaged in
production and marketing need more working capital compared to the firm
that are in trading or service oriented business. This is because
manufacturing units need more current assets compared to service oriented
units.
Seasonality of operations – Some firms’ products sell only during particular seasons.
For instance, air conditioners sell more during the summer than in the winter. Such firms
have greater working capital requirements during peak seasons and lower requirements
during other seasons. Firms whose sales are not affected by seasons have stable working
capital requirements.
Market conditions – The level of competition existing in the market also influences
working capital requirement. When competition is high, the company should have
enough inventories of finished goods to meet a certain level of demand. Otherwise,
customers are highly likely to switch over to competitor’s products. It thus has greater
working capital needs. When competition is low, but demand for the product is high, the
firm can afford to have a smaller inventory and would consequently require lesser
working capital.
Supply conditions – If supply of raw material and spares is timely and adequate, the
firm can get by with a comparatively low inventory level. If supply is scarce and
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unpredictable or available during particular seasons, the firm will have to obtain raw
material when it is available
Current Assets
Current Assets are resources, which are in cash or will soon be
converted into cash in “the ordinary course of business”.
Current Assets of a firm include –
Cash balances
Accounts receivables
Inventories of: -
- Raw material
- Work-in-progress
- Finished goods
The two major characteristics of current assets are –
They have a short life span. Cash balances are held only for a week or so;
accounts receivables typically are held for duration of 30-60 days and inventories
may be held for 30-100 days.
They are rapidly transformed into other asset forms. Cash is utilized to purchase
raw material. Raw material is converted to work-in-progress, which in turn is
converted to finished goods. Finished goods are sold for cash or credit, which
creates accounts receivables. Accounts receivables are finally realized in cash.
Current Liabilities
Current Liabilities are commitments, which will soon require cash
settlement in “the ordinary course of business”.
The Current Liabilities of a firm include-
1. Bills Payables
2. Sundry creditors/Accounts receivables
3. Accrued/outstanding expenses
4. Dividend payable.
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CLASSIFICATION OF WORKING CAPITAL
Working capital can be classified on the basis of concept and on the basis of time.
Various types of working capital are as follows
1) On the basis of concept:
Working capital on this basis of concept is classified into
A) Gross working capital: It refers to total investment made in current asset.
Current assets are the asset which can be converted into cash within a short period of
KINDS OF
WORKING
CAPITAL
1. ON THE
BASIS OF
CONCEPT
2. ON THE
BASIS OF
TIME
GROSS
WORKING
CAPITAL
NET
WORKING
CAPITAL
PERMANEN
T OR FIXED
TEMPORAR
Y OR
VARIABLE
REGULAR RESERVE SEASONAL SPECIAL
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an accounting year. Current assets include cash, debtors, bills receivables and short
term securities etc.
B) Net working capital: It is the difference between current assets and current
liabilities. Current liabilities are those claims of outsiders which are expected to
mature for payment within an accounting year and include creditors, bills payable and
outstanding expenses. Net working capital can be positive or negative. Positive net
working capital will arise when current asset exceeds current liabilities. A negative
net working capital occurs when current liabilities are in excess of current assets.
2) On the basis of time :
Classification of working capital in this case is made on the basis of time for which
investment is required. Kinds of working capital in this category are:
1) Permanent: Some portion of working capital always remains permanent or fixed.
This refers to minimum investment a firm has to make and keep in certain current
assets. Firm has to always maintain minimum cash balance, inventory, debtors etc. as
there current assets are required permanently. They are normally financed through
long term capital.
Such permanent working capital is further classified into
a) regular and b) reserve
a) Regular: regular permanent working capital is used in
Routine business operations.
b) Reserve: reserve working capital refers to some portion of working capital that is
kept as reserve to meet any contingency.
2) Temporary working capital: required of such capital varies or fluctuates depending
on season. Its requirement is not continuous it is normally finance through short term
sources, like overdraft, cash credit and other short term liabilities.
Temporary working capital is further classified into:
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a) Seasonal working capital: requirement of working capital is based on
particular seasons
ex; winter, summer or festival seasons etc during these seasons there will be
additional demand for the products. To meet out such demand firm has to make
additional arrangement of working capital.
b) Special working capital: requirement of such working capital is necessitated to
meet demands of special occasion’s ex. Occasion of world cup cricket, Olympics,
kumba mela, elections. During these special occasions demand for goods and service
will increase. To meet such special demand firm has to make temporary arrangement
of working capital
ESTIMATION OF WORKING CAPITAL
REQIUREMENTS
Managing the working capital is a matter of balance. The firms must have sufficient
funds on hand to meet its immediate needs. The manufacturing oriented organizations are
the following aspects have to be taken into consideration while estimating the working
capital requirements. They are:
Total costs incurred on material, wages and overheads.
The length of time for which raw material are to remain in stores before
They are issued for production.
The length of the production cycle or work-in-process, i.e., the time
taken for conversion of raw material into finished goods.
The length of sales cycle during which finished goods to be kept waiting
for sales.
The average period of credit allowed to customers.
The amount of cash required paying day-today expenses of the business.
The average amount of cash required to make advance payments
The average credit period expected to be allowed by suppliers.
Time lag in the payment of wages and other expenses.
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COMPONENTS OF WORKING CAPITAL
The components of working capital are:
Cash management
Receivables management
Inventory management
CASH MANAGEMENT
Cash is the liquid form of an asset. It is the ready money available in the firm or
with the business, essential for its operations. A firm needs the cash for the following
three purposes:
Transaction Motive: The firm must and should keep the funds for transactions like
purchase, sales etc. These activities, which are not known in advance, are not considered
while preparing a cash budget
Precautionary motive: The firm also keeps funds for the safeguard against
uncertainties, which are an integral part of business operations.
Speculative Motive: To tap profits from opportunities arising from fluctuations in
commodity prices, security prices, interest rates etc. The company with surplus cash is in
a better position to exploit such situations.
RECEIVABLES MANAGEMENT
Receivable represents amounts owed to the firm as a result of sale of goods or services
on the ordinary course of business. These are claims of the firm against its customers and
form part of its current assets. These receivables are carried for the customers. The
period of credit and extent of receivables depends upon the credit policy followed by the
firm. The main purpose of maintaining or investing in receivables is to meet competitors,
to increase sales, and to maintain a cordial relationship with the clients.
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Receivables management is the process of making decisions relating to
investment in trade debtors. However, at the same time, investment in this current asset
involves cost considerations also. Therefore, there is always a risk of bad debts too.
Credit Evaluation
There are three approaches used for credit evaluation. These are:
Traditional Credit analysis
Numerical Credit Scoring
Traditional credit analysis
In the, assessment of the prospective customer is done based on the "five
C's of credit". They are:
Character- Identifies the moral attribute of the customer
Capacity - The customer's ability to meet credit obligations from the operating
cash flow.
Capital - Financial soundness of the customer
Collaterals- The goods pledged by the customers in the form of security
Conditions - The conditions prevailing in the economy.
Numerical credit scoring
The credit rating obtained under the traditional approach is judgmental in nature and
based on the assigned weights, which are subjective in nature. So, a more systematic
approach known as the numerical credit policy is used. Under this method, the factors for
credit evaluation are identified, and weightage is given to each according to their
importance.
INVENTORY MANAGEMENT
Every enterprise needs inventory for smooth running of its activities. It serves as a link
between production and distribution process. There is, generally a time lag between the
recognition of a need and its fulfillment. The greater the time lag, the higher the
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requirements for inventory. The unforeseen fluctuations in demand and supply of goods
necessitate the need for inventory. Moreover, it provides a cushion for future price
fluctuations.
Inventory is the list of raw materials, work-in-process, or finished goods have
been waiting to be consumed in production or to be sold.
Inventory management involves the control of the current assets, namely raw
materials; work in process and finished goods. The main objective of inventory
management is to minimize the total cost- both direct and indirect, which are associated
with holding the inventories. A reduction in the excessive inventories has a favorable
impact on the company’s profitability.
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STATEMENT OF PROBLEM
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This project deals with the study about “Evaluation of Working Capital
requirements” in Bagalkot Cement Industry Limited.
OBJECTIVES OF THE STUDY
To study efficiency of working capital components in the organization
To know the liquidity position of the company by the help of ratio analysis.
To asses the working capital requirement of the company.
SCOPE OF THE STUDY
Analysis of working capital components in the B.G.K Cement.
Analysis of last five years financial Statements
Evaluation of Financial ratios is adapted to working capital
management.
METHODOLOGY OF DATA COLLECTION
The methodology of data collection pertains to information to how the data is collected
i.e. either from primary sources or secondary sources. It explains the methods utilized
and the instruments used in data collection.
SOURCES OF DATA
The sources of data can be classified in two categories:
Primary sources
Secondary sources
PRIMARY SOURCES
The primary data are collected by the thorough and detailed discussion was
conducted with the Assistant General Manager-Finance and Accounts. And the
discussion.
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SECONDARY SOURCES
I used secondary sources also for collecting the data. They are:
Information from the text sources
Information form the internet sources
Information from the materials provided by the concern
LIMITATIOMS OF THE STUDY
The study is confined only to a period of 5 years
Time Constraint
The study is used on secondary data such as annual reports of the
company.
SAMPLING DESIGN
Sampling unit : Financial Statements
Sampling Size :Last five years financial statements
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43. WORKING CAPITAL MANAGEMENT With Special reference to BAGALKOT
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RATIO ANALYSIS
INTRODUCTION
The financial statement of a company contains a lot of information about the financial
performance of the company. Financial statements mainly consist of the Balance Sheet
and Profit and Loss Accounts. These statements give the overall picture of the company,
but to analyses each aspect of business extensively, financial ratios are used. The Balance
Sheet and the Statement of Income are essential, but they are only the starting point for
successful financial management. Financial Ratio Analysis derived from Financial
Statements analyses the success, failure, and progress of business.
Ratio Analysis is a very powerful analytical tool useful for measuring the
performance of an organization. The ratio analysis concentrates on the interrelationship
among the figures appearing in the mentioned financial statements. The ratio analysis
helps the management to analyze the past performance of the firm and to make further
projections.
Note: we have used the ratio analysis in this project in order to substantiate the managing
of working capital. For this, we used some of the ratios to get the required output.
Various working capital ratios used by me are as follows:
Liquidity ratios
Turnover/activity ratios
LIQUIDITY RATIOS
The liquidity ratios measure the firm’s ability to meet its short-term (less than one year)
obligations as and when they become due. Liquidity ratios establish a relationship
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between cash and other current assets to provide a measure of then liquidity of the
organization.
The corporate liquidity has two dimensions namely, quantitative and qualitative
concepts. The quantitative concept includes the quantum, structure and utilizations of
liquid assets and in qualitative concepts, it is the ability to meet all present and potential
demands on cash from any source in manner that minimizes cost and maximize the value
of the form. Thus corporate liquidity is vital facto in business excess liquidity, through a
generator of solvency would reflect lower profitability, deteriorations in managerial
efficiency increased speculation and unjustified expansion, extension of too liberal credit
and dividend policies. Too little liquidity then may lead to frustrations of business
objections, reduced rate of return, business opportunity missed and weakening of morale.
The important ratios to measure the liquidity of a firm are:
A) Current Ratio
B) Quick/Acid Test Ratio
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1) CURRENT ASSETS TO TOTAL ASSETS RATIO = Current Assets /
Total Assets
Interpretation
An increase in the ratio of current assets to total assets will leads to a increase in
profitability and decrease leads to technical solvency. The ratio’s fluctuating like during
the year 2003 it 0.216% and it is increased to 0.249% and it increased to 0.532% and
0.403% in the year 2007 and 2008 and in the last a slight decreased to 0.1867% in 2008
2) CURRENT LIABILITIES TO TOTAL ASSETS RATIO
Year Current
assets
Total asset Ratio
2002-2003 199735 922175 0.216
2003-2004 221599 887919 0.249
2004-2005 200370 376591 0.532
2005-2006 106758 264602 0.403
2006-2008 135060 723385 0.186
0.216
0.249
0.532
0.403
0.186
0
0.1
0.2
0.3
0.4
0.5
0.6
times
2003 2004 2005 2006 2008
year
current asset to total asset ratio
times
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=CURRENT LIABILITIES
TOTAL ASSETS
Year Current
Liabilities
Total Assets Ratio
2002-2003 377914 922175 0.409
2003-2004 451021 887919 0.507
2004-2005 499078 376591 1.325
2005-2006 524239 264602 1.981
2006-2008 73665 723385 0.101
Interpretation
Effect of an increase in this ratio of current liabilities to total assets would be
that profitability is decreased and increased the risk. In the above ratio it is increased
from 0.409% to 0.507% from 2003 to 2004 but increase in the year 2005 up to 1.325%
and in the next year again is increased from 1.981% and decreased the year 2008 from
0.101% as compared to last two years.
3) Sales to fixed assets ratio
0
0.5
1
1.5
2
times
2003 2004 2005 2006 2008
year
current liabilities to total asset ratio
Series1
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This ratio is differ from industry to industry. Increase in this ratio means trading is
slack or mechanization has been used. A decline in this ratio means that debtors and
stocks are increased too much or fixed assets are more intensively used. If current assets
increase with the corresponding increase in profit, it will show that the business is
expanding
Fixed assets to current assets ratio: fixed assets/current asset
Year Fixed asset Current
asset
Ratio
2002-2003 709638 199735 3.55
2003-2004 653518 221599 2.94
2004-2005 163419 200370 0.81
2005-2006 145042 106758 1.35
2006-2008 588310 135060 4.35
Interpret
3.55
2.94
0.81
1.35
4.35
0
0.5
1
1.5
2
2.5
3
3.5
4
4.5
times
2003 2004 2005 2006 2008
year
fixed asset to current asset ratio
Series1
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The sales to fixed assets ratio is 3.55% in 2003 and it is decreased to 2.94% in 2004 and
it is increased to 0.81% 2005 and 2006 it increased to1.35% and it is increased to 4.35%
in 2008. High ratio indicates favorable to company and low ratio indicates unfavorable to
company.
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4) Current assets turn over ratio:
This ratio is also known as the investment turnover ratio. This is based on the relation
between the sales and assets of the company.
Current assets turn over ratio= Sales
Current assets
Year Sales Current
assets
Ratio
2002-2003 288341 199735 1.44
2003-2004 371190 221599 1.67
2004-2005 278734 200370 1.39
2005-2006 218403 106758 2.04
2006-2008 60435 135060 0.44
Interpretation
The current assets turn over ratio is 1.44% in 2003 and in further year increased to 1.67%
& decreased in the year 2005 1.39% to 2.04% to 0.4474% in the year 2008.high ratio
indicates favorable to company and low ratio indicates unfavorable to company.
1.44
1.67
1.39
2.04
0.44
0
0.5
1
1.5
2
2.5
times
2003 2004 2005 2006 2008
year
current asset turnover ratio
Series1
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Liquidity Ratio
5) Current ratio:
Current ratio is the most common ratio for measuring liquidating being related to
working capital analysis it is also called the working capital ratio. Current ratio expenses
relationship between current assets and current liabilities.
Current ratio= Current assets
Current liabilities
Year current
assets
Current
liabilities
Ratio
2002-2003 199735 377914 0.52
2003-2004 221599 451021 0.49
2004-2005 200370 499078 0.40
2005-2006 106758 524239 0.20
2006-2008 135060 73665 1.83
INTREPRETATION
This ratio indicates higher the current ratio the larger amount of rupees available
per rupee of liability its standard rate is 2 ; 1 the above mentioned. The companies current
ratio is not satisfactory because there is an less amount in current asset than the standard
the firm. Because up to 2003 to 2008 it does not reaches the standard ratio.
0.52 0.49 0.4
0.2
1.83
0
0.5
1
1.5
2
times
2003 2004 2005 2006 2008
year
current ratio
Series1
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6) Quick ratio:
Quick ratio is also known as liquid ratio or acid test ratio or near money ratio. It
is the ratio between quick or liquid assets and quick liabilities. As pointed out, the current
ratio in the study of solvency may be sometimes misleading due to high ratio of stock to
current assets.
Quick ratio= Quick assets
Quick liabilities
Quick assets = current assets- inventories
Quick liability= current liability- bank over draft
Year Quick assets Quick
liabilities
Ratio
2002-2003 118488 377914 0.31
2003-2004 131886 451021 0.29
2004-2005 104048 499078 0.20
2005-2006 72918 524239 0.13
2006-2008 50839 73665 0.69
INTREPRETATION
Here the quick ratio standard is 1:1 were as the considered to a satisfactory for the
financial condition here the companies quick ratio is below one so the quick ratio is not
satisfactory. Because up to 2003 to 2008 it does not reaches the standard ratio.
0
0.2
0.4
0.6
0.8
2003 2004 2005 2006 2008
0.31 0.29
0.2
0.13
0.69
times
year
quick ratio
Ser…
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7) Working capital turnover ratio:
It is taken as one of the primary indicators of the short-term solvency of the business. It
establishes the relationship with the net sales. This ratio represents the number of times
the working capital is turned over in course of a year i.e. it measures the efficiency with
which the working capital is being used by the firm.
WORKING CAPITAL TURNOVER RATIO = Net Sales
Net Working Capital
Year Net Sales Net working capital Ratio
2002-2003 288341 178179 1.618
2003-2004 371190 229422 1.61
2004-2005 278734 298708 0.93
2005-2006 218403 417481 0.52
2006-2008 60435 61395 0.98
Interpretation
The ratio establishes relation between sales and net working capital The working
capital ratio of the company was 1.61% in 2003 & 2004 also same 1.61 but it was
decreases 0.93 to 0.52 to 0.98 times from 2005- 2008 respectively. In the firm there is
continuous decrease for 5 year. It has decreased in working capital turnover ratio so the
firm is unsatisfactory with its working capital turnover ratio. .
1.618 1.61
0.93
0.52
0.98
0
0.2
0.4
0.6
0.8
1
1.2
1.4
1.6
1.8
times
2003 2004 2005 2006 2008
year
working capital turnover ratio
Series1
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CALCULATION OF
WORKING CAPITAL
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1] Statement of changes in working capital
Particulars As @ 31/3/03
Amts in
Rs‟000
As @ 31/3/04
Amts in
Rs‟000
Effect of wc
Increase decrease
A. Current assets
Cash and bank balance
Other current assets
Loans and advances
Inventories
Sundry debtors
Total current assets
B. Current liabilities
Current liabilities
Provisions
Total current liability
Net current assets(A-B)
Increase or decrease in
working capital
Total working capital
14716
6300
36169
81247
61303
199735
367970
9944
377914
-178179
-178179
16680
6300
32726
89713
76180
221599
441154
9867
451021
-229422
51243
- 178179
1964
-
-
8466
14877
-
77
25384
51243
-
76627
-
-
3443
-
-
73184
-
76627
76627
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Interpretation
The statement shows that the changes in working capital in the year 2002-
2003&2003-2004 it shows how the current assets & current liabilities are changes
in the two years. The different between current assets & current liabilities is net
working capital of the two years. 2003-2004 calculation shows that the working
capital was decreased.
2] Statement of changes in working capital
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Particulars As @ 31/3/04
Amts in Rs.
„000
As @ 31/3/05
Amts in
Rs‟000
Effect of wc
Increase
decrease
A. Current assets
Cash and bank balance
Other current assets
Loans and advances
Inventories
Sundry debtors
Total current assets
B. Current liabilities
Current liabilities
Provisions
Total current liability
Net current assets(A-B)
Increase or decrease in
working capital
Total working capital
16680
6300
32726
89713
76180
221599
441154
9867
451021
-229422
-
-229422
9679
63,00
42916
96322
45153
200370
487569
11509
499078
-298708
69286
- 229422
-
-
10190
6609
-
-
-
16799
69286
86085
7001
-
-
-
31027
46415
1642
86085
-
86085
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Interpretation
The statement shows that the changes in working capital in the year 2003-
2004 to 2004-2005 it show that the working capital was decreased .the cash
& bank balance has decreased to 7001.
And sundry debtor was decreased to 31027.
And current liabilities is increased of rs 46415 & provisions 1642
3] Statement of changes in working capital
58. WORKING CAPITAL MANAGEMENT With Special reference to BAGALKOT
CEMENT INDUSTRY LTD”
Babasabpatilfreepptmba.com 58
Interpretation
Particulars As @ 31/3/05
Amts in
Rs‟000
As @ 31/3/06
Amts in
Rs‟000
Effect of wc
Increase decrease
A. Current assets
Cash and bank balance
Other current assets
Loans and advances
Inventories
Sundry debtors
Total current assets
B. Current liabilities
Current liabilities
Provisions
Total current liability
Net current assets(A-B)
Increase or decrease in
working capital
Total working capital
9679
63,00
42916
96322
45153
200370
487569
11509
499078
-298708
-
-298708
9217
6300
56818
33840
583
10,67,58
51,72,04
70,35
52,42,39
-417481
118773
-298708
-
-
13902
-
-
-
4474
-
18376
118773
-
141623
462
-
-
62482
44570
29635
-
-
137149
-
141623
59. WORKING CAPITAL MANAGEMENT With Special reference to BAGALKOT
CEMENT INDUSTRY LTD”
Babasabpatilfreepptmba.com 59
The statement shows that the changes in working capital in the year 2004-
2005 to 2005-2006 it show that the working capital was decreased .the cash
& bank balance has decreased to 44570.
And sundry debtor was decreased to 31027 & inventory also.
And current liabilities are increased of rs 29635.
4] Statement of changes in working capital
60. WORKING CAPITAL MANAGEMENT With Special reference to BAGALKOT
CEMENT INDUSTRY LTD”
Babasabpatilfreepptmba.com 60
Interpretation
Particulars As @ 31/3/06
Amts in
Rs‟000
As @ 31/3/08
Amts in
Rs‟000
Effect of wc
Increase decrease
A. Current assets
Cash and bank balance
Other current assets
Loans and advances
Inventories
Sundry debtors
Total current assets
B. Current liabilities
Current liabilities
Provisions
Total current liability
Net current assets(A-B)
Increase or decrease in
working capital
Total working capital
96,79
63,00
4,29,16
9,63,22
4,51,53
20,03,70
48,75,69
1,15,09
49,90,78
-29,87,08
360103
61395
13618
-
34813
84221
2408
135060
66597
7068
73665
61395
61395
3939
-
-
-
-
420972
4441
-
429352
-
429352
-
6300
8103
12101
42745
-
-
69249
360103
429352
61. WORKING CAPITAL MANAGEMENT With Special reference to BAGALKOT
CEMENT INDUSTRY LTD”
Babasabpatilfreepptmba.com 61
The statement shows that the changes in working capital in the year 2005-
2006 to 2006-2008 it show that the working capital is increased compare to
last 4 years. So the company is satisfactory with last year.
Findings
1 liquidity ratios
Current ratios: The current assets ratio as per the stander is 2:1. Through
calculation it is observed that, it has been decreased by 0.52 to 0.49 to 0.40 from 2003 to
62. WORKING CAPITAL MANAGEMENT With Special reference to BAGALKOT
CEMENT INDUSTRY LTD”
Babasabpatilfreepptmba.com 62
2005. And again it decreased to 0.20 in the year 2006 but 2008 it increased to 1.83 but it
doesn’t reach the standard ratio, so it is unfavorable to the company.
2 Quick ratio: the quick ratio of the company has been decreased by continuously i .e
0.31 to 0.29 to 0.20 to 0.13 from 2003 to 2006 & in 2008 it is slightly increased by
0.69.But it doesn’t reaches the standard ratio which it is 1:1 it shows that companies
liquidity position of the company is not good, so it is unfavorable to the company.
3 Working capital turns over ratio:
The working capital turn over ratio indicates that working capital is less in company. The
working capital ratio of the company was 1.61% in 2003 & 2004 also same 1.61 but it
was decreases 0.93 to 0.52 to 0.98 times from 2005- 2008 respectively. In the firm there
is continuous decrease for 5 year. It has decreased in working capital turnover ratio so the
firm is weak in working capital turnover ratio.
4 According to the statement of changes of working capital, amount is decreased from
year to year up to 2003 to 2006 but there is slight increased in the year 2008.
5 According to the current asset to total asset ratio the company is having less current
asset so better they have increases the current assets.
Suggestions
1. Company need to increase the current assets turn over ratio by increasing in their
current assets.
2. The company needs to increase its current ratio by increasing its current assets so
it helps to maintain standard form 2:1.
3. Liquidity position of the company is weak hence it should increase investment in
current assets.
63. WORKING CAPITAL MANAGEMENT With Special reference to BAGALKOT
CEMENT INDUSTRY LTD”
Babasabpatilfreepptmba.com 63
4. Company properly has not invested in working capital during last four years, so
company should constantly strive to maintain the working capital.
Conclusion
By analyzing the topic of working capital management in Bagalkot cement industry ltd. I
conclude that the company is having less working capital but in the year 2008 the
working capital is increasing. So if the company maintains the constant working capital
which helps perform the day to day business by increasing the current asset.
This project report helped me to get the knowledge on the working capital
utilization for better maintenance of the company..
64. WORKING CAPITAL MANAGEMENT With Special reference to BAGALKOT
CEMENT INDUSTRY LTD”
Babasabpatilfreepptmba.com 64
BIBLIOGRAPHY
1. Financial Management By M.Y.Khan & P.K.Jain Edition
2. Financial Management BY I.M.PandeEdition
65. WORKING CAPITAL MANAGEMENT With Special reference to BAGALKOT
CEMENT INDUSTRY LTD”
Babasabpatilfreepptmba.com 65
ANNEXURE
Balance sheet
Sources of funds 2003 2004 2005
Share shareholders funds
Loan funds
610762
457758
570,077
472636
98,480
495773
Total 1068520 1042,713 594,253
66. WORKING CAPITAL MANAGEMENT With Special reference to BAGALKOT
CEMENT INDUSTRY LTD”
Babasabpatilfreepptmba.com 66
Application of funds
Fixed assets
Investments
Current assets loans and advances
Less: current liabilities & provisions
Net current assets
Miscellaneous expenditure
Profit & loss account
709638
12802
199735
377914
(178179)
3971
520288
653,518
12,802
221,599
451,021
(229,422)
2,978
602,837
163,419
12,802
200,370
499,078
(298,708)
2,163
714,577
Total 1068520 1,042,713 594,253
Balance sheet
Sources of funds 2006 2008
Share shareholders funds
Loan funds
98,480
109311
106,476
543,244
--
67. WORKING CAPITAL MANAGEMENT With Special reference to BAGALKOT
CEMENT INDUSTRY LTD”
Babasabpatilfreepptmba.com 67
Total 207,791 649,720
Application of funds
Fixed assets
Investments
Current assets loans and advances
Less: current liabilities & provisions
Net current assets
Miscellaneous expenditure
Profit & loss account
145,042
12,802
106,758
524,239
(417,481)
1,481
465,947
588,310
15
135,060
73,665
61,395
--
--
Total 207,791 649,720