INDEX TABLE

SL.NO CONTENTS
PAGE NO. 2 TO 6

1 2 3

PART I
EXECUTIVE SUMMARY

PART II
INTRODUCTION TO THE STUDY INDUSTRY PROFILE

7 TO 14

PART - III
INTRODUCTION OF COMPANY

1 TO 3

PART - IV
RESEARCH METHDOLOGY OB!ECTIVES OF THE STUDY

36 TO 3"

6 7 & "

PART - V
#OR$ING CAPITAL MANAGEMENT

4% TO 66

PART - VI
DATA ANALYSIS AND INTERPRETATION

67 TO &

PART VII
FINDINGS SUGGESTIONS ' CONCLUSIONS.

&6 TO &"

ANNEXURE
"% TO "2

FINANCIAL STATEMENT. BIBILOGROPHY.

PART - I
EXECUTIVE EXECUTIVESUMMARY SUMMARY
INDUSTRY PROFILE. INDUSTRY PROFILE. COMPANY PROFILE. COMPANY PROFILE. NEED FOR THE STUDY. NEED FOR THE STUDY. OB!ECTIVES OF THE STUDY. OB!ECTIVES OF THE STUDY. SCOPE OF THE STUDY. SCOPE OF THE STUDY. LIMITATIONS OF THE STUDY. LIMITATIONS OF THE STUDY. METHODOLOGY. METHODOLOGY. FINDINGS. FINDINGS. SUGGESTIONS. SUGGESTIONS. CONCLUSION. CONCLUSION.

EXECUTIVE SUMMARY

T()*+ ,- ).+ /)0123 4T.+ /)012 ,- 5,67(89 :;<();* =;8;9+=+8)>

As a part of curriculum, every student studying MBA has to undertake a project on a particular subject assigned to him/her. Accordingly I have been assigned the project work on the study of working capital management in Bahety "andeli. "ecisions relating to working capital # urrent assets$ urrent liabilities% and short term financing are known as working capital management. It involves the relationship between a firm&s short$term assets and its short term liabilities. 'he goal of working capital management is to ensure that the firm is able to continue its operation and that it has sufficient cash flow to satisfy both maturing short term debt and upcoming operational e(penses. )orking capital is used in B M private ltd., for the following purpose*$ +aw material, work in progress, finished goods, inventories, sundry debtors, and day to day cash re,uirements. 'he B M private ltd., keep certain funds which is automatically available to finance the current assets re,uirements. 'he various information regarding -)orking apital Management. such as classification, determinants, sources have been discussed relating to B M private ltd., +atio Analysis has been arried out using /inancial Information for last five accounting years i.e. from 0112 to 0131 +atios like )orking capital 'urnover +atio, 4uick +atio, urrent +atio, Inventory 'urnover +atio, "ebtor 'urnover +atio, reditors turnover rario have also been analy5ed. A 6tatement of analy5ed. At B M private ltd., the working capital management has shown increase in the period of study. 'his shows working capital is managed effectively and all the other departments are working in perfect co$ordination to ensure the progress of B M private ltd., but I have given some 6uggestions ! onclusions on the basis of my 7roject 6tudy. INDUSTRIAL PROFILE hanges in )orking apital has also been hemicals ! Minerals pvt ltd

'he chemical industry is one of the oldest domestic industries in India, contributing significantly to both the industrial and economic growth of the country since it achieved independence in 389:. 'he chemical industry currently produces nearly :1,111 commercial products, 'he industry covers a large spectrum of categories including inorganic and organic chemicals, drugs and pharmaceuticals, plastics and petrochemicals, dyes and pigments, fine and specialty chemicals, pesticides and agrochemicals and fertili5ers. COMPANY PROFILE Bahety chemicals and Minerals #7vt% ;imited is a small$scale industry. 'he company purchased and constructed building in the year 388<. It started production in the year 3882. Its main product is Aluminium 6ulphate. It is a private company situated in the Industrial estate, Ambewadi. =n the outskirts of "andeli city which is enjoying all the re,uired facilities like water, power, transport, labors and good environment and materials. NEED FOR THE STUDY 'he study has been conducted for gaining practical knowledge about )orking apital Management ! activities of Bahety hemicals ! Minerals pvt ltd., 'he study is undertaken as a part of the MBA curriculum from 13 >une 0131 to <3st >uly 0131 in the form of summer in plant training for the fulfillment of the re,uirement of MBA degree. OB!ECTIVES OF THE STUDY 'o study the sources and uses of the working capital. 'o study the li,uidity position through various working capital related ratios. 'o study the working capital components such as receivables accounts, ash management, Inventory management. 'o make suggestions based on the finding of the study. SCOPE OF THE STUDY

'he scope of the study is identified after and during the study is conducted. 'he main scope of the study was to put into practical the theoretical aspect of the study into real life work e(perience. 'he study of working capital is based on tools like +atio Analysis,
6tatement of changes in working capital. /urther the study is based on last ? years Annual +eports of Bahety hemicals ! minerals pvt ltd.

LIMITATIONS OF THE STUDY 'he study duration #summer in plant% is short. 'he analysis is limited to just five years of data study #from year 0112 to year 0131% for financial analysis. ;imited interaction with the concerned heads due to their busy schedule. 'he findings of the study are based on the information retrieved by the selected unit.

METHDOLOGY In preparing of this project the information collected from the following sources. P6(=;62 1;);3 'he 7rimary data has been collected from 7ersonal Interaction with /inance manager i.e., Mr. Mahesh @adkarni and other staff members. S+:,81;62 1;);3 'he major source of data for this project was collected through annual reports, profit and loss account of ? year period from 0112$0131 ! some more information collected from internet and te(t sources. SAMPLING DESIGN 1 3 0 T,,*/ U/+13 M6$A(cel has been used for calculations. 6ampling unit 6ampling 6i5e * /inancial 6tatements. * ;ast five years financial statements.

FINDINGS3
)orking capital of the Bahety hemicals ! Minerals 7vt ;td. was increasing and

showing positive working capital per year. 'he Bahety hemicals ! Minerals 7vt ;td has higher current and ,uick ratios are i.e., 0.B: and 0.<1 respectively. 6o the company&s li,uidity position is good. It shows that it is able to meet its current obligations. SUGGESTIONS )orking capital of the company has increasing every year. 7rofit also increasing every year this is good sign for the company. It has to maintain it further, to run the business long term. 'he urrent and ,uick ratios are almost up to the standard re,uirement. 6o the

)orking capital management. Bahety hemicals ! Minerals 7vt ;td. is satisfactory and it has to maintain it further.

CONCLUSION3
'he study on working capital management conducted in Bahety hemicals ! Minerals 7vt ;td. to analy5e the financial position of the company. 'he company&s financial position is analy5ed by using the tool of annual reports from 011?$12 to 0118$ 31. 'he financial status of Bahety hemicals ! Minerals 7vt ;td. is good. In the last year the inventory turnover has increased, this is good sign for the company. =n the whole, the company is moving forward with e(cellent management.

PART - II

INTRODUCTION INTRODUCTIONTO TOTHE THESTUDY STUDY

INDUSTRY INDUSTRYPROFILE PROFILE

INTRODUCTION TO THE STUDY

BAC$GROUND OF STUDY C ash is the lifeblood of businessC is an often repeated ma(im amongst financial managers. )orking capital management refers to the management of current or short$term assets and short$term liabilities. omponents of short$term assets include

inventories, loans and advances, debtors, investments and cash and bank balances. 6hort$ term liabilities include creditors, trade advances, borrowings and provisions. 'he major emphasis is, however, on short$term assets, since short$term liabilities arise in the conte(t of short$term assets. It is important that companies minimi5e risk by prudent working capital management. STATEMENT OF THE PROBLEM 'his project deals with the study about -)orking BAHETY CHEMICALS AND MINERALS PVT. LTD apital Management. in

IMPORTANCE OF THE STUDY 'here are numerous aspects of working capital management that makes it an important topic for the study. 'he management of assets in any organi5ation is an essential part of overall management. 'he enterprise, at the time of formation attaches great importance to fi(ed assets management, as a part of investment decision$making. Dowever, in the overall day$to$day financial management, after the initial investment, the management gives more importance to managing working capital. If we look at any financial statement it will be evident that the investment in fi(ed assets remains more or less static but the working capital is constantly changing. A healthy working capital position is the sine$ ,ua$non of a successful business. 'his is reflected in ade,uate inventories, lowest level of debtors, minimum utili5ation of bank facilities for working capital, etc. thus the study of working capital management occupies an important place in financial management.

INDUSTRIAL PROFILE HISTORY

'he chemical industry is one of the oldest domestic industries in India, contributing significantly to both the industrial and economic growth of the country since it achieved independence in 389:. 'he chemical industry currently produces nearly :1,111 commercial products, ranging from cosmetics and toiletries, to plastics and pesticides.

'he wide and diverse spectrum of products can be broken down into a number of categories, including inorganic and organic #commodity% chemicals, drugs and pharmaceuticals, plastics and petrochemicals, dyes and pigments, fine and specialty chemicals, pesticides and agrochemicals, and fertili5ers. 'he Indian pesticide industry has advanced significantly in recent years, producing more than 3,111 tons of pesticides annually. India is the 3<th largest e(porter of pesticides and disinfectants in the world, and in terms of volume, is the 30th largest producer of chemicals. 'he Indian agrochemical, petrochemical, and pharmaceutical industries are some of the fastest growing sectors in the economy. )ith an estimated worth of E0B billion, it accounts for 30.? percent of the countryFs total industrial production and 32.0 percent of the total e(ports from the Indian manufacturing sector. Daving a strong focus on moderni5ation, the Indian government actively promotes the advancement of the domestic chemical industry. 7olicy, planning, development, and regulation of the industry is all coordinated by the "epartment of hemicals and 7etro$ chemicals, which has been part of the Ministry of hemicals and /ertili5ers since 3883. 6everal organi5ations in the private sector are working towards growth of the industry and the e(port of Indian chemicals. Among these are the Indian hemical Manufacturers Association, the hemicals and 7etrochemicals Manufacturers Association, and the 7esticides Manufacturers and /ormulators Association of India.

INDIAN CHEMICAL INDUSTRY SCENARIO hemical Industry is one of the oldest industries in India, which contributes significantly towards industrial and economic growth of the nation. It is highly science based and provides valuable chemicals for various end products such as te(tiles, paper, paints and varnishes, leather etc., which are re,uired in almost all walks of life. 'he Indian hemical Industry forms the backbone of the industrial and agricultural development of India and provides building blocks for downstream industries. hemical Industry is an important constituent of the Indian economy. Its si5e is estimated at around G6E <? billion appro(., which is e,uivalent to about <H of IndiaFs I"7. 'he total investment in Indian hemical 6ector is appro(. G6E 21 billion and total employment generated is about 3 million. 'he Indian hemical sector accounts for 3<$39H of total e(ports and B$8H of total imports of the country. In terms of volume, it is 30th largest in the world and <rd largest in Asia. urrently, per capita consumption of products of chemical industry in India is about 3/31th of the world average. =ver the last decade, the Indian hemical industry has evolved from being a basic chemical producer to becoming an innovative industry. )ith investments in +!", the industry is registering 6ignificant growth in the knowledge sector comprising of specialty chemicals, fine hemicals and pharmaceuticals. 'he Indian hemical Market 6egment wise is as under* $ SEGMENT Basic hemicals 6pecialty hemicals Digh And / Jnowledge 6egment TOTAL MAR$ET VALUE ?BILLION US @A 01 8 2 <?

CHEMICAL INDUSTRY STRUCTURE

Dighly fragmented and widely dispersed. )estern India accounts for 9?$?1H of total Indian chemical Industry. ;arge players in bulk chemicals. Both large and small players in /ine and 6pecialty hemicals. 7resence of many multinational companies also.

FOREIGN TRADE
India was a net importer of chemicals in early 3881s, but has now become a net e(porter due to reduction in Imports because of implementation of many large scale petrochemical plants like +eliance etc. and also because of tremendous growth of e(ports in sectors like bulk drugs and pharma, pesticides, dyes and intermediates. B;/(: C.+=(:;*/ EB<,6) 1(1 +B:++1(89*2 5+**...

A(ports by the basic chemical sector in 388?$82 surpassed the target of +s 2,:90 crore by reaching a figure of +s :,8:8.<1 crores and showing a massive growth of 09H over the preceding yearFs figure of +s 2,91<.81 crores. "uring 3889$8? e(ports totaled +s 2,91<.81 crores against the target of +s ?,?19.21 crores, while in the preceding year shipments reached +s 9,819.91 crores against the target of +s 9,?B9.11 crore.

'he drugs and pharmaceuticals and the organic/inorganic/agro$chemicals contributed as much as 2<H of total e(ports. 'his has been a herculean task, which has been achieved by competing with big multinational corporations of the world. 'urnover for the year ended 388B$88 is close to +s.3?, 111 crores.

'he website carries detailed information regarding different varieties of chemical and terminology of chemical such as 'echnology, hemical Association, hemical 7rocessing, hemical Industry, hemical

hemical Angineering,

hemical @ews etc. 6uch

information will enable you to properly assess the usage of different chemicals in safe ! secure manner. 'he voluminous knowledge about chemical related issues can be easily and instantly obtained from this website.

LISTS OF CHEMICAL INDUSTRIES

01 Microns ;td AB+ =rganics Aimco 7esticides Alkyl Amines hemicals ;td Allied +esins ! hemicals ;td s Alpanil Industries hemplast 6anmar Iala(y 6urfactants Iulshan 7olyols Dindustan Insecticides ;imited Indo Ierman arbons >ainco Inks ! hemicals >yoti hemical

CHEMICAL INFORMATION 'he website carries detailed information regarding different varieties of chemical and terminology of chemical such as 'echnology, hemical Association, hemical 7rocessing, hemical Industry, hemical hemical Angineering, hemical @ews etc. 6uch

information will enable you to properly assess the usage of different chemicals in safe ! secure manner. 'he voluminous knowledge about chemical related issues can be easily and instantly obtained from this website. CHEMICAL COMPOUNDS hemical compound is formed by combination of two or more elements into one substance form. In a chemical compound atoms of its constituent elements are bonded together in molecules. Millions of chemical compounds can be made by combining the roughly 301 chemicals. 'he ratio determining the composition of chemical compound remains fi(ed. 'he ratio of each element in a chemical compound is generally e(pressed by chemical formula like,

water which is represented by chemical formula D0= is a chemical compound consisting of two hydrogen. hemical compounds are further divided into subcategories. 'hose chemical compounds which are based on carbon and hydrogen atoms are called organic compounds and other chemical compounds which are based on elements other than carbon and hydrogen are called inorganic compounds. Another form of chemical compound which contain bond between carbon and metal are called organ metallic compound. hemical compounds in which components share electrons are known as covalent compounds whereas compounds consisting of oppositely charged ions are known as iconic chemical. 'alking about property of chemical compounds, a chemical compound may have several possible phases. At low enough temperatures all compounds can e(ist as solids. 6ome chemical compounds may also e(ist as li,uids, gases, and even plasmas. Avery known chemical compound decompose when heat is applied.Indian chemicals industry during 011?$12 was G6E<1.?8 billion, a growth of 31.0<Hover the previous year and a AI+ of B.2BH during the last < years. hemical industry occupies an important place in the country&s economy. "uring 011?$12 contributed about <H of I"7 and 3:.2H of the manufacturing sector. Dowever, India continued to be a net importer in 011?$12, with imports of G6E:.80 billion and e(ports of E8.? billion the post )'= era, Indian chemical industry is undergoing a massive e(pansion, brand building and increased global reach. 'he industry is e(pected to grow at a AI+ of over 31H for the ne(t < years, in line with the growth of manufacturing industry. 'he wide and diverse spectrum of chemical products can be broken down into number of categories $ inorganic and organic #commodity% chemicals, drugs and pharmaceuticals, plastics an petrochemicals, dyes and pigments, fine and specialty chemicals, pesticides and agrochemicals and fertili5ers. 'his report covers all the segments e(cept petrochemicals, drugs and pharmaceuticals. 'he report covers overall industry scenario in the conte(t of global chemicals industry, various segments, growth drivers, critical success factors, issues and challenges and future outlook for the industry. 'he report also profiles the major 3:companies in the Indian industry #33 Indian companies and 2 M@ s%.'he report is useful for industry analysts, banks and financial institutions, investors, consultants, corporate engaged directly or indirectly in the chemicals industry and international readers who want to keep abreast of the Indian manufacturing sectors.

ORGANIC CHEMICALS
=rganic chemicals are compounds that are formed from the two basic building blocks of carbon and hydrogen. It is one of the most important sectors of the chemical industry, providing the basic feedstock for a variety of other industrial sectors such as drugs and pharmaceuticals, dyes and dye intermediates, leather chemicals, paints and pesticides. As in the case of most of the other chemical sectors, the domestic industry is a late starter, with the pioneers in the field being the @ational =rganic hemical Industries ;imited #@ocil% and Dindustan =rganic hemicals ;imited #Docl%. 'he Indian industry has traditionally used the alcohol route for the manufacture of many organic chemicals, but is now shifting over to the globally accepted petrochemical route, with the alignment of petrochemical feedstock prices with the international levels. 'he industry is valued at around G6E 9.? billion #3888$11%. 'he oil crisis of the 38:1s saw a shift to process$oriented research in the global economies. After a fall in the 38B1s, the last decade of the century has rekindled interest in the industry and has seen the emergence of Asia as a power to reckon in the industry. 'he Indian industry however saw a spurt in growth in the 38B1s, which was sustained in the last decade. 'he industry is today valued at G6E 3.3 billion and has emerged as a key player in the Asia 7acific region. A few large companies with a wide range of products dominate the industry. 'he industry is highly fragmented, there being more than 31,111 manufacturing units in total. SPECIALITY CHEMICALS 6pecialty chemicals are those that are customi5ed to perform specific functions, applications and operating conditions. 6peciality hemicals are high priced, low volume chemicals used for specific applications by various industries. Main specialty chemicals are rubber chemicals, water treatment chemicals, polymer additives, lubricating additives, specialty pigments etc. 'hese chemicals are mainly based on organic chemicals. Ilobally the contribution of specialty chemicals is up to 0?H of the chemical sector i.e. it is appro(imately worth G6E 9?< billion. 'he average annual growth Is e(pected to be :.?H. In India, the capacity of speciality chemical is ?0:0 'housand M's and production is appro(. <281 thousand M's.

PART - III

INTRODUCTION INTRODUCTIONOF OFCOMPANY COMPANY

COMPANY PROFILE. COMPANY PROFILE. VISION AND MISSION. VISION AND MISSION. BOARD OF DIRECORS. BOARD OF DIRECORS. OB!ECTIVES OF BCM.PVT.LTD. OB!ECTIVES OF BCM.PVT.LTD. PRODUCT PROFILE OF BCM.PVT.LTD. PRODUCT PROFILE OF BCM.PVT.LTD. EXPANSION AND DIVERSIFICATION. EXPANSION AND DIVERSIFICATION. S#OT ANALYSIS OF BCM.PVT.LTD S#OT ANALYSIS OF BCM.PVT.LTD ORGANICATION STRUCTURE. ORGANICATION STRUCTURE. DEPARTMENTAL STUDIES. DEPARTMENTAL STUDIES.

INTRODUCTION OF THE COMPANY

COMPANY PROFILE HISTORY OF THE COMPANY

Bahety chemicals and Minerals #7vt% ;imited is a small$scale industry. 'he company purchased and constructed building in the year 388<. It started production in the year 3882. It is a private company situated in the Industrial estate, Ambewadi. =n the outskirts of "andeli city which is enjoying all the re,uired facilities like water, power, transport, labors and good environment and materials. 'he company is achieving its sales target with some ups and downs. 'he company has been receiving good response from customers and e(pected to achieve better sales in coming years .'he ompany has its nature of business. 'he company has not accepted any deposits from public as per the provisions of section ?BA of the company Act, 38?2.

PROFILE OF BAHETY CHEMICALS AND MINERALS PVT. LTD

N;=+ ,- ).+ :,=<;82 Y+;6 ,- +/);E*(/.=+8) C.;(6=;8 T2<+ ,- :,=<;82 A6+; ,- ,<+6;)(,8

BAHETY CHEMICALS AND MINERALS PVT.LTDD DANDELI &132 . 388<. 6hri handrashekhar. >. Bahety 7rivate ;imited. Bahety hemicals and Minerals #7vt% ;td., K 3, Industrial Astate, Ambewadi, "andeli K ?B3<0?. "ist* Jarwar # u.k %, Jarnataka 6tate. 'el*$1B0B9 $ 0<0<90.

N;)06+ ,- B0/(8+// EB<,6) <*;:+/

7roduction and 6ale of Alumina 6ulphate #Alum%. "andeli, Darihar, Ioa, Dyderbad, Dubli, "harwad, Banglore, @agpur, Belgaum. 2 L6i(M "epartments.

N,. ,- 1+<;6)=+8)/

N0=E+6 ,- +=<*,2++/

30:

N0=E+6 ,- 5,67(89 1;2/ 2 days in a week.

P6,10:)(,8 :;<;:()2 S),6;9+ C;<;:()2

B11 M' of Aluminium sulphate #Alum% per month as per the 0118$0131 report. 3111 Metric '=@.

CAPITAL STRUCTURE OF BCM.CO.LTD

SHARE CAPITAL33. Authori5ed capital +s. 31,11,111 31,111 e,uity shares of +s. 311 each. 0. 6ubscribed/ paid$up share capital +s. 31,11,111 31,111 e,uity shares of +s .311 each.

BORRO#ED FUND*$ 'he ompany has taken long term loans from orporation Bank "andeli. It has also hemicals. 'he

taken unsecured loans from its joint associate 6hri. +aghavendra

company has also received government subsidy of 0?H on capital investments.

TABLE SHO#ING THE LONG TERM LOANS TA$EN BY BCM.CO.LTD L,;8 Y+;6 011? $0112 0112 $ 011: 011: $ 011B 011B $ 0118 0118 $ 0131 S+:06+1 L,;8 0138032.11 <2?3?88.11 <:90<21.11 00<BB9?.11 0?:92:0.11 U8/+:06+1 L,;8 ?28:<9.11 33?111.11 0229111.11 02?39:3.11 <198380.11

INVESTMENT IN FIXED ASSETS IS SO#N BELO#

SL.NO

F(B+1 A//+)/

T,);* I8F+/)=+8) ?R/.A

3 0 <

;and and Building Machinery Adjacent Building

<1,11,111.11 30,11,111.11 3?,11,111.11

VISION AND MISSION OF BCM .CO.LTD

4VISION>

-'o fulfill the growing demand of Alum and increasing the production.

4MISSION> 3. 'o provide employment. 0. 4uality product, <. Ma(imum satisfaction to customers. 9. 'o ensure enterprise growth. ?. 'o create clean and healthy environment. 2. 'o develop the establishing the organi5ation in the city.

COMPANY O#NERSHIP

SHARE HOLDERS

 6hri handrashekhar. >. Bahety 6hri >awaharlal Bahety. 6hri 7ritvipal Bahety. 6hri Badal Jumar Bahety. 6mt.;a(mi Bahety. BOARD OF DIRECTORS 6hri handrashekhar Bahety. 6hri >awaharlal. >. Bahety. MANAGING DIRECTOR 6hri handrashekhar Bahety. STAFF
@AMA6 Mr. Mahesh. @adkarni Mr.N.+. "eshpande Mr. +ajendra. Mahalkar Mr. @eil Mr. 7atil "A6II@A'I=@ /inance Manager Administrative Manager 7roduction Manager 7urchase Manager ;aboratory In$charge

N,)+3 Marketing "epartment is handled by M". OB!ECTIVES OF BCM.CO.LTD 'o e(pand their market into other states. 'o moderni5e the organi5ation by using the hi$tech machines in the production process. 'o increase the productivity. 'o produce chemical into different area. 'o know the customer attitude towards alum hemical.

PRODUCT PROFILE3'he B M ompany is engaged in the production of Alum #Aluminium sulphate%

Alum is used in water treatment as mordant in dyeing. Aluminium sulphate mainly used in paper si5ing and in water treatment. 7harmaceutically, it is employed in dilute solution as a mild astringent and antiseptic for the skin. 6oda alum or aluminium sulphate is used in some baking powders. Aluminium sulphate is known more as alum. It is a colourless solid, which is soluble in water but insoluble in alcohol.

MA!OR PRODUCTS OF THE COMPANY Ni5 ferric alum. Ni5 ferric li,uid alum. @on K ferric alum.

A*0=(8(0=-S0*<.;)+ F+66(:-A*0=

USES3 Industrial wastewater treatment. Municipal wastewater treatment. larification and phosphorus removal.

7otable and process water treatment olor and turbidity removal. 7ulp and paper mills, 7aper si5ing, 6oap manufacturers, Manufacture of glycerin from soap lyes 6wimming pools, oil well operators.

A*0=(8(0=-S0*<.;)+ F+66(: - *(G0(1 - A*0=

USE3 "yeing and purification, )ater treatment.

A*0=(8(0=-S0*<.;)+ N,8-F+66(:-A*0=

USES3 Gsed for dyeing and purification. Gsed in the pulp ! paper industry. Gsed in )ater and )aste water 'reatment 7lants.

EXPANSION AND DIVERSIFICATION

A(pansion of the company is under progress. 'he company is planning to produce alum ferric solid through conventional process, Boiler evaporation of water from li,uid alum. Astimated investment in e(pansion process is +s 0: ;acks. 'he funds re,uired for e(pansion is borrowed from bank through term loans. A(pansion of the company is likely to give 31 K 30 employment opportunities. 'he company is also planning to diversify. It is planning to manufacture crystal alum for which the market is better 6wimming pools are one of the markets for crystal alum. ?1H of the diversification process is already developed. 'he estimated investment re,uired starting up producing crystal alum is +s .< ;acks.

INFRASTRUCTURE FACILITIES PROVIDED BY BCM.CO.LTD3

#ELFARE FACILITIES3 'he workers in Bahety hemicals and Minerals are given some facilities for their. Betterment and comfort. 1. #ASHING RESTING FACILITIES3 /acility for washing, storing, drying materials, resting first aid facilities have been provided inside the factory for the benefits of workers on duty. 2. DRIN$ING #ATER3 'he company has made provision of clean, drinking water providing to the workers during the working hours. 'here are drinking taps and coolers placed in every department. 3. SHELTER AND LUNCHROOM3 After the working hours to take rest rooms have been made by the company and to have food in lunchtime. 4. CANTEEN3 anteen is also provided to the workers. It runs on -no profit and no loss basis.. . PAR$ING FACILITIES3 As the raw materials are brought in ;orries, there is a proper facility to park them and unload them.

S#OT ANALYSIS OF BAHETY CHEMICALS ' MINERALS PVT.LTD.

STRENTHS 3. Availability of manpower. 0. Digh ,uality product. <. ;ow price high ,uality. 9. Availability of raw materials.

#EA$NESS 3. Deavy transport charges. 0. Major consumption in paper industries but limited paper industries in Jarnataka.

OPPORTUNITIES 3. 'echnological up gradation. 0. /oreign market e(pansion. <. =nline ordering process. 9. 7roduct e(pansion. ?. Market e(pansion.

THREATS 3. Antry of competitors. 0. 7roduct substitution.

ORGANISATION STRUCTURE

MA@AII@I "I+A '=+

7G+ DA6A "A7'

;AB=+A'=+O "A7'

A"MI@I6'+A'I= @ "A7'

/I@A@ A "A7'

MA+JA'I@I "A7'

Manager

;aboratory In$charge

7+="G 'I=@ "A7'

Manager

Manager Manager

DEPARTMENTAL STUDIES OF BCM. CO.LTD

PURCHASE DEPARTMENT. LABORATORY DEPARTMENT. ADMINISTRATION DEPARTMENT. PRODUCTION DEPARTMENT. FINANCE DEPARTMENT. MAR$ETING DEPARTMENT.

PURCHASE DEPARTMENT3 'he purchase officers and assistance head the purchase department. 'he clearly take the re,uisition from various departments and forward to the purchase offices and then the purchase officer arranges to the purchase re,uired materials from the best seller available in the market. 'he purchase department plays a very important role in the company where the dealing made between the purchase officers and sellers is convenient then it can be help in reduction of the price of the materials and their by which will also result in increase of profit.

FUNCTIONS 7urchase the good ,uality materials. Dave a better dealing at present and future with the supplier. 7urchase only and re,uired materials.

THE IMPORTANT SUPPLIERS OF BAHETY CHEMICALS ' MINERALS PVT.LTD. TABLE SHO#ING SUPPLIERS RA# MATERIALS. SL.NO 1 2 3 4

SUPPLIERS ABDI'A> I@"G6'+IA6 DI@"A; = I@"G6'+IA6 A I" 7;G6 A"NA@ A 6G+/A 'A@ A I@"IA ;IMI'A" AG+A=;A DAMI A;

LOCATION J=;DA7G+ BA;IAGM BA@IA;=+A BA@IA;=+A MA@IA;=+A J=;DA7G+ BA;IAGM 6A'A+A IG>+A' 6A@I;I "DA+)A" I DA;JA+A@>I J=;DA7G+

6 7 & " 1% 11 12 13

BA;A>I I@"G6'+IA6 BA;IAGM MI@A+A;6 BA+A' DAMI A; A+B=+A@"AM G@INA+6A; ;'" DAMA D =+7=+A'I=@ "AA7AJ @I'+A'A AP A; '+A"A+6 /A+MA+ B+='DA+6

LABORATORY DEPARTMENT3 ;aboratory is also one of the important department here because this department is used for testing the raw materials and the finished goods for their ,uality. 'here is a lab incharge that looks after all the functions of the laboratory. ;ab incharge has certain other workers under him who help him in e(ecuting his functions. PRODUCTION DEPARTMENT3

'he 7roduction department is one of the important department in the company. It is the department that produces the product on which the company is established. 6pecial care is taken in this department on production. ;ist of critical raw materials presently in the production of Alum. RA# MATERIALS USED3
A;GMI@A =+ A;GMI@A DO"+A'A. A;GMI@A 6;G"IA. BAGPI'A. 6G;7DG+I A I" 67A@' 6G;7DG+I A I". )A'A+.

PRODUCTS PRODUCED3 'he company is engaged in the production of three types of Alum they are 3. Ni5 ferric alum. 0. Ni5 li,uid ferric alum. <. @on K ferric alum

PRODUCTION PROCESS OF FERRIC ALUM

6pent 6ulphuric Acid is led into +eactor through service tank Measured ,uantity of Alumina sludge and water is slowly added into the reactor. )hen the complete raw materials are together, e(othermic reaction takes place. #;ot of steam and heat is evolved in the process%. After about an hour time viscous /erric Alum Is ready in the reactor.

'he viscous /erric Alum is discharged through the outlet of the reactor through hose pipe into M6 moulds and it is left for 3 to 0 hour&s time for solidification. /erric Alum is either sold in blocks form or broken into pieces and bagged as per re,uirement of the customers. #OR$FLO# MODEL3-

SPENT SULPHURIC ACID STORAGE TAN$.

ALUMINA SLUDGE

#ATER SERVICE TAN$.

REACTOR.
A(othermic reaction

Avolvement of heat and 6team

FERRIC ALUM

PRODUCTION PROCESS OF LIHUID FERRIC ALUM

6pent 6ulphuric Acid is led into +eactor through service tank Measured ,uantity of
Bo(ite and water is slowly added into the reactor. )hen the complete raw materials are

together, e(othermic reaction takes place. #;ot of steam and heat is evolved in the process%. After about an hour time viscous ;i,uid /erric Alum Is ready in the reactor.

'he viscous ;i,uid /erric Alum is discharged through the outlet of the reactor through hose pipe into tank. ;i,uid /erric Alum is sold in tank form to the customers. #OR$FLO# MODEL3-

SPENT SUPHURIC ACID STORAGE TAN$. BAUXITE

#ATER SERVICE TAN$.

REACTOR.
A(othermic reaction

Avolvement of heat and 6team

LIHUID FERRIC ALUM

PRODUCTION PROCESS OF NON-FERRIC ALUM

6ulphuric Acid is led into +eactor through service tank Measured ,uantity of Alumina hydrate and water is slowly added into the reactor. )hen the complete raw materials are together, e(othermic reaction takes place. #;ot of steam and heat is evolved in the process%. After about an hour time viscous @on$ferric Alum Is ready in the reactor.

'he viscous @on$ferric Alum is discharged through the outlet of the reactor through hose pipe into Aluminium moulds and it is left for 3 to 0 hour&s time for solidification. @on$ferric Alum is either sold in blocks form or broken into pieces and bagged as per re,uirement of the customers. #OR$FLO# MODEL3-

SULPHURIC ACID STORAGE TAN$.

ALUMINA HYDRATE

#ATER SERVICE TAN$.

REACTOR.
A(othermic reaction

Avolvement of heat and 6team

NON-FERRIC ALUM

ADMINISTRATION DEPARTMENT3 Administration "epartment takes care of the whole activities happening in and

around the company. 'he personal manager heads the department and personal managers is responsible for the man power in the whole factory. 7ersonal Manager is concerned

with the most efficient use of people to achieve organi5ation and individual goals. It is the way of managing people at work so that they give the best to the organi5ation. Administration department also takes care of the planning, organi5ing, directing, controlling, procuring and developing and integrating of the company and human resources to the end. It also looks after the financial matters of the company. FUNCTIONS3 Maintenance of files, records etc., ollecting and presenting the data in the form of useful information from the records. Maintenance of time management in the company. Insuring smooth running of the office files by interacting with e(ternal agendas as re,uired. Iood relation between the employer and employee. Maintaining the financial matters of the company. Iood relations with supplier and customers. Maintenance of salary, wages records. Jeeping all the records of all the departments. FINANCE DEPARTMENT3 /inance is an essential component of the business to maintain its operations effectively. 'his dept. is concerned with day$to$day activities like purchases, sales salary etc. and proper management and maintenance of accounts of concerned year. 6ince B M is the small scale industry it maintains very good accounting system, 'he whole financial matter is mainly dealt by the separate dept called finance dept. 'he Major sources of finance are, 3. 6hares # A,uity 6hares% 0. ;oan from corporation banks. FUNCTIONS3 +ecording day to day transactions in a systematic manner.

 Maintaining proper accounts of purchases and sales. Maintaining profit ! loss A/c and 7reparing the Balance sheet of B M systematically. 7aying the interest on loans at right time. Maintain ! paying the ta(&s ! insurance. Make use of available finance resources properly. Maintain li,uidity of assets properly to earn the ma(imum profit.

MAR$ETING DEPARTMENT3 Marketing "epartment is also a one of the important department in the company. 'his department is important because it gives a clear picture of how much to produceQ )hich will also help in the investment to he made and to purchase department to purchase raw materials. 'he marketing department has a procedure, by which it is done i.e., fit receives the order from the buyers and forwards the order to the production department and as per the order production department produces the re,uired production and it makes the packing of materials and sends it to the buyers as per the order. Marketing department also take care of the time given to it by the buyer to produce the product. If there is any default in the order such as product not as per order or not at time or minimum product supplied the party will send back the sample to the organi5ation and the organi5ation gives certain percentage of discount for the default but no replacement is made

THE SOME OF THE IMPORTANT CUSTOMERS OF THE BAHETY CHEMICALS AND MINERALS PVT. LTD.D ARE3-

TABLE SHO#ING CUSROMERS

SL.NO
1 2 3 4

CUSTOMERS
)A6' =A6' 7A7A+ MI;;6 ;IMI'A" I+A6IM I@"G6'+IA6 ;'" RGA+I I@"G6'+IA6 ;'" BA;J+I6D@A DA+IJ+I6D@A JA+)A JA+ANAA+A BA"D+A '+A"A+6

LOCATION
"A@"A;I DA+IDA+ I=A DO"A+BA" DGB;I "DA+)A" BA@I;=+A JAIIA BA@I;=+A "A@"A;I @AI7G+ BA;IAGM

6 7 & " 1% 11 12

JI' ;AB MADA@"+A DAMI A;6 @G ;AA+ 7=)A+ =+7=+A'I=@ 6AMA+ DAMI A;6 6D+AOA6 7A7A+ MI;;6 NI = ;AB=+A'=+IA6

6D+I ;APMI I@"G6'+IA6

RESEARCH RESEARCHMETHDOLOGY. METHDOLOGY.

SCOPE OF THE STUDY. PART - IV OB!ECTIVES OF THE STUDY. METHDOLOGY. METHDOLOGY. SCOPE OF THE STUDY.

OB!ECTIVES OF THE STUDY.

SCOPE OF THE STUDY

'he scope of the study is identified after and during the study is conducted. 'he main scope of the study was to put into practical the theoretical aspect of the study into real life work e(perience. 'he study of working capital is based on tools like +atio Analysis,
6tatement of changes in working capital. /urther the study is based on last ? years Annual +eports of Bahety hemicals ! minerals pvt ltd.

OB!ECTIVES OF THE STUDY

'o study the sources and uses of the working capital.

'o study the li,uidity position through various working capital related ratios.

'o study the working capital components such as receivables accounts, ash management, Inventory management.

'o make suggestions based on the finding of the study.

RESEARCH METHDOLOGY
INTRODUCTION3 +esearch methodology is a way to systematically solve the research problem. It May be understood as a science of studying now research is done systematically. In that various steps, those are generally adopted by a researcher in studying his problem along with the logic behind them. -'he procedures by which researcher go about their work of describing, e(plaining and predicting phenomenon are called methodology..

TYPE OF RESEARCH3 'his project 4A S)012 ,8 #,67(89 C;<();* M;8;9+=+8) ,- B;.+)2 :.+=(:;*/ ' =(8+6;*/ P6(F;)+ L)1> is considered as an analytical research. Analytical +esearch is defined as the research in which, researcher has to use facts or information already available, and analy5e these to make a critical evaluation of the facts, figures, data or material.

SOURCE OF RESEARCH DATA3 'here are mainly two through which the data re,uired for the research is collected. PRIMARY DATA3 'he primary data is that data which is collected fresh or first hand, and for first time which is original in nature. In this study the 7rimary data has been collected from 7ersonal Interaction with /inance manager i.e., Mr. Mahesh @adkarni. and other staff members.

SECONDARY DATA3 'he secondary data are those which have already collected and stored. 6econdary data easily get those secondary data from records, annual reports of the company etc. It will save the time, money and efforts to collect the data.

'he major source of data for this project was collected through annual reports, profit and loss account of ? year period from 0112$0131 ! some more information collected from internet and te(t sources. SAMPLING DESIGN 6ampling unit 6ampling 6i5e * /inancial 6tatements. * ;ast five years financial statements.

'ool Gsed for calculations* $ M6$A(cel. TOOLS USED FOR ANALYSIS OF DATA 'he data were analy5ed using the following financial tools. 'hey are +atio analysis. 6tatement of changes in working capital.

LIMITATIONS OF THE STUDY

'he study duration #summer in plant% is short. 'he analysis is limited to just five years of data study #from year 0112 to year 0131% for financial analysis. ;imited interaction with the concerned heads due to their busy schedule. 'he findings of the study are based on the information retrieved by the selected unit.

PART PART -- V V

#OR$ING #OR$INGCAPITAL CAPITALMANAGEMENT. MANAGEMENT.

INTRODUCTION. INTRODUCTION. MEANIG OF CAPITAL. MEANIG OF CAPITAL. MEANING OF #OR$ING CAPITAL. MEANING OF #OR$ING CAPITAL. NEED OF #OR$ING CAPITAL. NEED OF #OR$ING CAPITAL. CLASSIFICATION OF #OR$ING CAPITAL. CLASSIFICATION OF #OR$ING CAPITAL. ESTIMATION OF 4#C> REHIUREMENTS ESTIMATION OF 4#C> REHIUREMENTS OPERATING CYCLE OF #OR$ING CAPITAL. OPERATING CYCLE OF #OR$ING CAPITAL. FINANCING OF #OR$ING CAPITAL. FINANCING OF #OR$ING CAPITAL. DETERMINANTS OF 4#C> REHUIREMENTS. DETERMINANTS OF 4#C> REHUIREMENTS. =M7=@A@'6 =/ -) M>. =M7=@A@'6 =/ -) M>.

CAPITAL I8)6,10:)(,83

apital is the keynote of economic development. In this modern age, the level of economic development is determined by the proportion of capital available.

M+;8(89 ,- C;<();*3
In the ordinary sense of the word apital means initial investment invested by

businessman or owner at the time of commencing the business. apital #economics%, a factor of production that is not wanted for itself but for its ability to help in producing other goods.

D+-(8()(,83
Capital is a factor of production with a specific, changeable value attached to it that could, potentially, provide its owner with more wealth. It is an abstract economic concept, and, as such, has many different definitions and classifications, but the unifying feature of capital is that it has a certain value, so it in itself is a type of wealth, and it has the potential of generating more wealth.

F+;)06+/ ,- C;<();*3
apital has the following features. 3. 0. <. 9. ?. 2. :. apital is a man made. apital is a perishable. apital is a human control possible. apital is a mobile. apital is a human sacrifice. apital is a scarce. apital is a passive factor.

INTRODUCTION OF #OR$ING CAPITAL3

)orking capital is the life blood and nerve centre of a business. >ust as circulation of blood is essential in the human body for maintaining life, working capital is very essential to maintain the smooth running of a business. @o business can run successfully without an ade,uate amount of working capital.

'here is operative aspects of working capital i.e. current assets which is known as funds also employed to the business process from the gross working capital urrent asset comprises cash receivables, inventories, marketable securities held as short term investment and other items nearer to cash or e,uivalent to cash. )orking capital comes into business operation when actual operation takes place generally the re,uirement of ,uantum of working capital is determined by the level of production which depends upon the management attitude towards risk and the factors which influence the amount of cash, inventories, receivables and other current assets re,uired to support given volume of production. )orking capital management as usually concerned with administration of the current assets as well as current liabilities. 'he area includes the re,uirement of funds from various resources and to utili5e them in all result oriented manner. It can be stated without e(aggeration that effective working capital management is the short re,uirement of long term success. 'he importance of working capital management is indisputableS Business liability relies on its ability to effective management of receivables, inventory, and payables. By minimi5ing the amount of funds tied up in current assets. /irms are able to reduce financing costs or increase the funds available for e(pansion. Many managerial efforts are put into bringing non$optimal level of current assets and liabilities back towards their optimal levels.

MEANING OF #OR$ING CAPITAL

)orking capital means the funds #i.e.S capital% available and used for day to day operations #i.e.S working% of an enterprise. It consists broadly of that portion of assets of a business which are used in or related to its current operations. It refers to funds which are used during an accounting period to generate a current income of a type which is consistent with major purpose of a firm e(istence.

In Accounting*

DEFINITIONS3 Many scholars& gives many definitions regarding term working capital some of these are given below.

According to Weston & Brigham -)orking capital refers to a firm&s investment in short$term assets cash, short term securities, accounts receivables and inventories.

Mead Mallott & Field -)orking capital means current assets..

Bonnerille -Any ac,uisition of funds which increases the current assets increases working capital for they are one and the same..

7ositive working capital means that the company is able to pay off its short$term liabilities companies that have a lot of working capital will be more successful since they can e(pand and improve their operations.

@egative working capital means that a company currently is unable to meet its short$term liabilities with its current assets. . ompanies with negative working capital may lack the funds necessary for growth

OB!ECTIVES OF #OR$ING CAPITAL MANAGEMENT

Affective management of working capital is means of accomplishing the firm&s goal of ade,uate li,uidity. It is concerned with the administration of current assets and current liabilities. It has the main following objectives$

3. 'o ma(imi5e profit of the firm. 0. 'o help in timely payment of bills. <. 'o maintain sufficient current assets. 9. 'o ensure ade,uate li,uidity of the firms. ?. It protects the solvency of the firm. 2. 'o discharge current liabilities. :. 'o increase the value of the firm. B. 'o minimi5e the risk of business.

THE NEED FOR THE #OR$ING CAPITAL

'he need for working capital arises due to the time gap between production and reali5ation of cash from sales. )orking capital is must for every business for purchasing raw$materials, semi finished goods, stores ! spares etc and the following purposes.

1. T, <06:.;/+ 6;5 =;)+6(;*/D /<;6+ <;6)/ ;81 ,).+6 :,=<,8+8). A manufacturing firm needs raw$materials and other components parts for the purpose of converting them in to final products, for this purpose it re,uires working capital. 'rading concern re,uires less working capital.

2. T, =++) ,F+6 .+;1 +B<+8/+/. )orking capital is re,uired to meet recurring over head e(penses such as cost of fuel, power, office e(penses and other manufacturing e(penses. 3. T, .,*1 -(8(/.+1 ;81 /<;6+ <;6)/ +):. 6tock represents current asset. A firm that can afford to maintain stock of re,uired finished goods, work in progress ! spares in re,uired ,uantities can operate successfully. 6o for that ade,uate ,uantity of working capital is re,uired.

4. T, <;2 /+**(89 ' 1(/)6(E0)(,8 +B<+8/+/. )orking capital is re,uired to pay selling ! distribution e(penses. It includes cost of packing, commission etc.

. )orking capital is re,uired for repairs ! maintenance both machinery as well as factory buildings. 6. )orking capital is re,uired to pay wages, salaries and other charges. 7. It is helpful in maintain uncertainties involved in business field.

#OR$ING CAPITAL MANAGEMENT

)orking apital Management refers to management of current assets and current ;iabilities. 'he major thrust of course is on the management of current assets .'his Is understandable because current liabilities arise in the conte(t of current assets. )orking apital Management is a significant fact of financial management. Its Importance stems from two reasons*$ Investment in current assets represents a substantial portion of total investment. Investment in current assets and the level of current liabilities have to be geared

,uickly to change in sales. 'o be sure, fi(ed asset investment and long term financing are responsive to variation in sales. Dowever, this relationship is not as close and direct as it is in the case of working capital components.

CLASSIFICATION OF #OR$ING CAPITAL

#OR$ING CAPITAL

=n 'he Basis of oncepts

=n 'he Basis of 'ime

Iross )orking apital

@et )orking apital

7ermanent / /i(ed )orking apital

'emporary / /luctuating )orking apital

Initial )orking apital

+egular )orking apital

6easonal )orking apital

6pecial )orking apital

I. O8 T.+ B;/(/ ,- C,8:+<)/

1A G6,// #,67(89 C;<();*

Iross working capital is the amount of funds invested in various components of current assets. urrent assets are those assets which are easily / immediately converted urrent assets includes

into cash within a short period of time say, an accounting year.

ash in hand and cash at bank, Inventories, Bills receivables, 6undry debtors, short term loans and advances. 'his concept has the following advantages*$ i. ii. /inancial managers are profoundly concerned with the current assets. Iross working capital provides the correct amount of working capital at the right time.
iii. iv. v. It enables a firm to reali5e the greatest return on its investment. It helps in the fi(ation of various areas of financial responsibility. It enables a firm to plan and control funds and to ma(imi5e the return on investment.

/or these advantages, gross working capital has become a more acceptable concept in financial management.

2A N+) #,67(89 C;<();* 'his is the difference between current assets and current liabilities. creditors, bills payable and outstanding e(penses. )orking apital Management is no doubt significant for all firms, but its significance is enhanced in cases of small firms. A small firm has more investment in current assets than fi(ed assets and therefore current assets should be efficiently managed. 'he working capital needs increase as the firm grows. As sales grow, the firm needs to invest more in debtors and inventories. 'he finance manager should be aware of such needs and finance them ,uickly. urrent liabilities are those that are e(pected to mature within an accounting year and include

II. O8 T.+ B;/(/ ,- C,8:+<)/

1A P+6=;8+8) I F(B+1 #,67(89 C;<();* 7ermanent or fi(ed working capital is minimum amount which is re,uired to ensure effective utili5ation of fi(ed facilities and for maintaining the circulation of current assets. Avery firm has to maintain a minimum level of raw material, work$ in$process, finished goods and cash balance. 'his minimum level of current assts is called permanent or fi(ed working capital as this part of working is permanently blocked in current assets. As the business grow the re,uirements of working capital also increases due to increase in current assets. ;A I8()(;* 5,67(89 :;<();* At its inception and during the formative period of its operations a company must have enough cash fund to meet its obligations. 'he need for initial working capital is for every company to consolidate its position. EA R+90*;6 5,67(89 :;<();* +egular working capital refers to the minimum amount of li,uid capital re,uired to keep up the circulation of the capital from the cash inventories to accounts receivable and from account receivables to back again cash. It consists of ade,uate cash balance on hand and at bank, ade,uate stock of raw materials and finished goods and amount of receivables. 2A T+=<,6;62 I F*0:)0;)(89 #,67(89 C;<();* 'emporary / /luctuating working capital is the working capital needed to meet seasonal as well as unforeseen re,uirements. It may be divided into two types. ;A S+;/,8;* #,67(89 C;<();* 'here are many lines of business where the volume of operations are different and hence the amount of working capital vary with the seasons. 'he capital re,uired to meet the seasonal needs of the enterprise is known as seasonal )orking capital. EA S<+:(;* #,67(89 C;<();* 'he apital re,uired to meet any special operations such as e(periments with new products or new techni,ues of production and making interior advertising campaign etc, are also known as special )orking apital. IMPORTANCE OF #OR$ING CAPITAL

3. S,*F+8:2 ,- ).+ E0/(8+//3 Ade,uate working capital helps in maintaining the solvency of the business by providing uninterrupted of production. 0. G,,15(** 3 6ufficient amount of working capital enables a firm to make prompt payments and makes and maintain the goodwill. <. E;/2 *,;8/3 Ade,uate working capital leads to high solvency and credit standing can arrange loans from banks and other on easy and favorable terms. 9. C;/. 1(/:,08)/3 Ade,uate working capital also enables a concern to avail cash discounts on the purchases and hence reduces cost. ?. R+90*;6 S0<<*2 ,- R;5 M;)+6(;*3 6ufficient working capital ensures regular supply of raw material and continuous production. 2. R+90*;6 <;2=+8) ,- /;*;6(+/D 5;9+/ ;81 ,).+6 1;2 ), 1;2 :,==()=+8)/ 3 It leads to the satisfaction of the employees and raises the morale of its employees, increases their efficiency, reduces wastage and costs and enhances production and profits. :. EB<*,();)(,8 ,- -;F,6;E*+ =;67+) :,81()(,8/3 If a firm is having ade,uate working capital then it can e(ploit the favorable market conditions such as purchasing its re,uirements in bulk when the prices are lower and holdings its inventories for higher prices. B. AE(*()2 ), F;:+ C6(/+/* A concern can face the situation during the depression. 8. H0(:7 ;81 6+90*;6 6+)068 ,8 (8F+/)=+8)/3 6ufficient working capital enables a concern to pay ,uick and regular of dividends to its investors and gains confidence of the investors and can raise more funds in future. 31. H(9. =,6;*+3 Ade,uate working capital brings an environment of securities, confidence, high morale which results in overall efficiency in a business. ADEHUACY OF #OR$ING CAPITAL3

)orking capital should be ade,uate so as to protect a business from the adverse effects of shrinkage in the values of current assets. It ensures to a greater e(tent the maintenance of a company&s credit standing and provides for such emergencies as strikes, floods, fire etc. It permits the carrying of inventories at a level that would enable a business to serve satisfactorily the needs of its customers. It enables a company to operate its business more efficiently because there is no delay in obtaining materials etcS because of credit difficulties. INADEHUATE OF #OR$ING CAPITAL3
)hen working capital is inade,uate, a company faces many problems. It stagnates the growth and it becomes difficult for the firm to undertake profitable projects for non$ availability of working capital funds. "ifficulty in implementing operating plans and achieving the firm&s profit targets. =perating inefficiencies creep in when it becomes difficult even to meet day$to$day commitments. /i(ed assets are not utili5ed efficiently thus the firm&s profitability would deteriorate. 7aucity of working capital funds renders the firm unable to avail attractive credit opportunities. 'he firm loses its reputation when it is not in a position to honor it short$term obligations thereby leading to tight credit terms.

DANGERS OF EXCESSIVE #OR$ING CAPITAL3

'oo much working capital is as dangerous as too little of it. A(cessive working capital raises problems. 3. It results in unnecessary accumulation of inventories. 'hus chances of inventory mishandling, waste, theft and losses increase. 0. Indication of defective credit policy and slack collection period. results in higher incidence of bad debts, adversely affecting profits, <. Makes the management complacent which degenerates in to managerial inefficiency. 9. 'he tendencies of accumulating inventories to make a speculative profit, which tends to liberali5e the dividend policy, make it difficult for the concern to cope in the future when it is not able to make speculative profits. onse,uently, it

ESTIMATION OF #OR$ING CAPITAL REHIUREMENTS

Managing the working capital is a matter of balance. 'he firms must have sufficient funds on hand to meet its immediate needs. 'he Bahety chemicals ! minerals #pvt% ;imited is manufacturing oriented organi5ation.

'he following aspects have to be taken into consideration while estimating the working capital re,uirements. 'hey are* 3. 0. 'otal costs incurred on material, wages and overheads. 'he length of time for which raw material are to remain in stores before they are issued for production. <. 'he length of the production cycle or work$in$process, i.e., the time taken for conversion of raw material into finished goods. 9. 'he length of sales cycle during which finished goods to be kept waiting for sales. ?. 'he average period of credit allowed to customers. 2. 'he amount of cash re,uired paying day$today e(penses of the business. :. 'he average amount of cash re,uired to make advance payments. B. 'he average credit period e(pected to be allowed by suppliers. 8. 'ime lag in the payment of wages and other e(penses.

OPERATING CYCLE OF #OR$ING CAPITAL3

'he working capital cycle reserves to the length of time between the firm paying cash for materials etc., this working capital also known as operating cycle. )orking capital cycle or operating cycle indicates the length or time between companies paying for materials entering into stock and receiving the cash from sales of finished goods. 'he operating cycle #)orking apital% consists of the following events. )hich continues throughout the life of businessQ

CASH

DEBTORS

RA# MATERIALS

FINISHED STOC$

#OR$-IN-PROGRESS

onversion of cash into raw materials. onversion of raw materials into work in progress. onversion of work in progress into finished stock. onversion of finished stock into accounts receivables#"ebtors%through sale and onversion of account receivables into cash.

FINANCING OF #OR$ING CAPITAL

I8)6,10:)(,83 After determining the level of working capital, a firm has to decide how it is to be financed. In that B M, it was financing the working capital from the following four common sources. 'hey are, 1. SHARES3 'he B M has issued the e,uity shares for raising the funds. 'he A,uity shares do not have any fi(ed commitment charges and the dividend on these shares is to be paid subject to the availability of sufficient funds. 'hese funds have been injected from the company&s own personal resources and from the members.

2. TRADE CREDIT3 'he trade credit refer to the credit e(tended by the suppliers of goods in the normal course of business. 'he firm has a good relationship with the trade creditors. 6o that suppliers send the goods to the firm for the payment to be received in future as per the agreement or sales invoice. In this way, the firm generates the short$term finances from the trade creditors. It is an easy and convenient method to finance and it is informal and spontaneous source of finance for the firm.

3. BAN$ CREDIT3 ommercial banks play an important role in financing the trade ! industry Bank provides short$term, medium term ! long term finance to an industrialist or a business man.

1. L,;8/3 'he B M #7N'% ;'"., has taken loan from the commercial bank for working capital re,uirement for a certain period at certain interest rate.

2. C;/. C6+1() I OF+616;-)/3 Gnder cash credit/overdraft from/arrangement of bank finance, the bank specifies a determined borrowings/credit limit. 'he borrower can draw/borrow up to the stipulated credit/overdraft limit. )ithin the specified limit/ line of credit, any number of drawals/drawings are possible to the e(tent of his re,uirement periodically. 'his form of financing of working capital is highly attractive to the borrowers because, firstly, it is fle(ible in that although borrowed funds are repayable on demand, banks usually do not recall cash advances/roll them over and, secondly, the borrower has the freedom to draw the amount actually outstanding. Dowever, cash credit/overdraft is inconvenient to the banks and hampers credit planning.

4. CUSTOMER ADVANCES3 'he B M #pvt% ;imited follow the practice of collecting advance money from the customers as soon as orders are placed and before the actual delivery of the goods. 6uch an advance received from the customers constitutes one of the short$term sources of finance.

ertain H of the price of the goods to be sold to the customers is collected in the of an advance. 6eller can utili5e the advance money so collected for meeting these urgent financial obligations.

DETERMINANTS OF #OR$ING CAPITAL REHUIREMENTS

In order to determine the amount of working capital needed by the firm a number of factors have to be considered by finance manager. 'hese factors are e(plained below.

1. N;)06+ ,- B0/(8+//3 'he @ature of the business effects the working capital re,uirements to a great e(tent. /or instance public utilities like railways, electric very little working capital because they need companies, etc. need

not hold large inventories and

their operations are mostly on cash basis, but in case of manufacturing firms and trading firms, the re,uirement of working capital is sufficiently large as they

have to invest substantially in inventories and accounts receivables . B M is a production firm, there for working capital re,uired is more in period of production as compared to other period. 2. P6,10:)(,8 P,*(:(+/3 'he production policies also determine the )orking capital re,uirement. 'hrough the production schedule i.e. the plan for production, production process etc. 'he B M has small production process. 3. C6+1() P,*(:23 'he credit policy relating to sales and affects the working capital. 'he credit policy influence the re,uirement of working capital in two ways* 3. 'hrough credit terms granted by the firm to its customers/buyers. 0. redit terms available to the firm from its creditors.

'he credit terms granted to customers have a bearing on the Magnitude of )orking capital by determining the level of book debts. 'he credit sales results is higher book debts #re available% higher book debt means more )orking capital.

=n the other hand, if liberal credit terms are available from the suppliers of goods L'rade creditorsM, the need for working capital is less. 'he working capital re,uirements of business are, thus, affected by the terms of purchase and sale, and the role given to credit by a company in its dealings with reditors and "ebtors. In B M company raw materials are purchased with a credit or cash and finished goods are sold on cash basis and also credit basis. 4. C.;89+/ (8 T+:.8,*,923 'echnology used in manufacturing process is mainly determined need of working capital. Moderni5e technology needs low working capital, where as old and traditional technology needs greater working capital. . S(J+ ,- ).+ B0/(8+// U8()3 'he si5e of the business unit is also important factor in influencing the working capital needs of a firm. ;arge 6cale Industries re,uires huge amount of working capital compared to 6mall scale Industries. 6. G6,5). ;81 EB<;8/(,83 'he growth in volume and growth in working capital go hand in hand, however, the change may not be proportionate and the increased need for working capital is felt right from the initial stages of growth.

7. D(F(1+81 P,*(:23 Another appropriation of profits which has a bearing on working capital is dividend payment. 7ayment of dividend utili5es cash while retaining profits acts as a source as working capital 'hus working capital gets affected by dividend policies. 'he B M follows liberal dividend policy will re,uire more working capital than company that follows a strict dividend policy.

&. S0<<*2 C,81()(,8/3 If supply of raw material and spares is timely and ade,uate, the firm can get by with a comparatively low inventory level. If supply is scarce and unpredictable or available during particular seasons, the firm will have to obtain raw material when it is available. It is essential to keep larger stocks increasing working capital re,uirements. ". M;67+) C,81()(,8/3 'he level of competition e(isting in the market also influences working capital re,uirement. )hen competition is high, the company should have enough inventories of finished goods to meet a certain level of demand. =therwise, customers are highly likely to switch over to competitor&s products. It thus has greater working capital needs. )hen competition is low, but demand for the product is high, the firm can afford to have a smaller inventory and would conse,uently re,uire lesser working capital. But this factor has not applied in these technological and competitive days. 1%. B0/(8+// C2:*+3 'he working capital re,uirements are also determined by the nature of the business cycle. Business fluctuations lead to cyclical and seasonal changes which, in turn, cause a shift in the working capital position, particularly for temporary working capital the variations in the business conditions may be in two directions* 3. Gpward phase when boom condition prevail, 0. "ownswing phase when economic activity is marked by a decline.

11. P6,-() L+F+*3 7rofit level also affects the working capital re,uirements as a concern higher profit margin results in higher generation of internal funds and more contributing to working capital.

ESTIMATION OF CURRENT ASSETS

1. R;5 M;)+6(;* I8F+8),62* 'he Investment in +aw Material can be computed with the help of the following formula*$ Budgeted 7roduction # In units % ost of +aw Average Inventory

Material#s% per unit

Dolding 7eriod #months/days%

30 months / ?0 weeks / <2?days 2. #,67-(8-<6,96+// ?#IPA I8F+8),62* 'he relevant cost of determine work in process inventory are the proportionate share of cost of raw material and conversion costs # labors and Manufacturing over Dead cost e(cluding depreciation% In case, full until of raw material is re,uired in the beginning the unit cost of work is process would be higher, i.e., cost of full unit T ?1H of conversion cost compared to the raw material re,uirement. 'hroughout the production ycle, working process is normally e,uivalent to ?1H of total cost of production. 6ymbolically, Budgeted 7roduction # In units % Astimated work$ Average 'ime 6pan

in$progress cost per unit

of work$in$progress inventory #months/days%

30 months / ?0 weeks / <2?days 3. F(8(/.+1 G,,1/ I8F+8),623 )orking capital re,uired to finance the finished goods inventory is given by factors summed up as follows*$ Budgeted 7roduction # in units % ost of Ioods 7roduced /inished Ioods

per unit #e(cluding depreciation%

Dolding 7eriod #months/days%

30 months / ?0 weeks / <2?days

4. D+E),6/3 'he working capital tied up in debtor should be estimated in relation to total cost price # e(cluding depreciation % symbolically, Budgeted 7roduction # In units % ost of 6ales per Average "ebt

unit e(cluding depreciation

ollection 7eriod #months/days%

30 months / ?0 weeks / <2?days . C;/. ;81 B;87 B;*;8:+/3 Apart from )orking apital needs for /inancing Inventories and "ebtors, /irms also find it useful to have such minimum cash Balances with them. It is difficult to lay down the e(act procedure of determining such an amount. 'his would primarily be based on the motives of holding cash balances of the business firm, attitude of management towards risk, the access to the borrowing sources in times of need and past e(perience.

ESTIMATION OF CURRENT LIABILITIES

'he )orking apital needs of business firms are lower to the e(tent that such urrent ;iabilities#other than Bank redit% arising in the

needs are met through the

ordinary course of business. 'he Important reditors, )ages and =verheads*$ 1. T6;1+ C6+1(),6/3

urrent ;iabilities in this conte(t are 'rade$

'he /unding of )orking apital from 'rade reditors can be computed with the help of the following formula*$ Budgeted Oearly 7roduction # In units % +aw Material redit 7eriod

ost per unit

Allowed by creditors #months/days%

30 months / ?0 weeks / <2?days N,)+3- 7roportional adjustment should be made to cash purchases of +aw Materials.

2. D(6+:) #;9+/3 'he /unding of )orking help of the following formula*$ apital from "irect )ages can be computed with the

Budgeted Oearly 7roduction # In units %

"irect ;abor

Average 'ime$lag in

ost per unit

7ayment of wages #months/days%

30 months / ?0 weeks / <2?dayss

N,)+3- 'he average redit 7eriod for the payment of wages appro(imates to half$a$month in the case of monthly wage payment. 'he first days monthly wages are paid on the <1 th of the month, e(tending credit for 08 days, the second day&s wages are, again , paid on the <1th day, e(tending credit for 0B days, and so on. Average credit period appro(imates to half$a$month.

3. OF+6.+;1/ ?,).+6 ).;8 D+<6+:(;)(,8 ;81 A=,6)(J;)(,8A3 'he /unding of )orking apital from =verheads can be computed with the help of the following formula*$

Budgeted Oearly 7roduction # In units %

=verhead

Average 'ime$lag in

ost per unit

7ayment of overheads #months/days%

30 months / ?0 weeks / <2?days N,)+3- 'he amount of =verheads may be separately calculated for different types of =verheads. In the case of 6elling =verheads, the relevant item would be sales volume instead of 7roduction Nolume.

FORMAT FOR DETERMINATION OF #OR$ING CAPITAL3

SL.NO

PARTICULARS A6'IMA'I=@ =/ CURRENT ASSETS 1A Minimum desired cash and Bank balances. 2A Inventories +aw material )ork$in$progress /inished stock 3A "ebtors 'otal urrent Assets ((( ((( ((( ((( (((

AMOUNT

XXX

A6'IMA'I=@ =/ CURRENT LIABILITIES 1A reditors ((( ((( (((

2A )ages 3A =verheads 'otal current liabilities

XXX XXX XX XXXX

NET #OR$ING CAPITAL #'otal urrent assets K 'otal urrent liabilities% Add * Margin for contingency net )orking capital re,uirement

COMPONENTS OF #OR$ING CAPITAL

'he components of working capital are*

CASH MANAGEMENT RECEIVABLES MANAGEMENT INVENTORY MANAGEMENT CASH MANAGEMENT3 ash is the important current asset for the operation of the business. ash is the Basic input needed to keep the business running in the continuous basis, it is also the ultimate output e(pected to be reali5ed by selling or product manufactured by the firm. 'he firm should keep sufficient cash neither more nor less. ash shortage will disrupt the firm&s manufacturing operations while e(cessive cash will simply remain ideal without contributing anything towards the firm&s profitability. 'hus a major function of the financial manager is to maintain a sound cash position. ash is the money, which a firm can disburse immediately without any restriction. 'he term cash includes coins, currency and che,ues held by the firm and balances in its bank account. NEED FOR HOLDING CASH 'he need for holding ash arises from a variety of reasons which are, 1. T6;8/;:)(,8 M,)(F+3 A company is always entering into transactions with other entities. )hile some of these transactions may not result in an immediate inflow/outflow of cash #A.g. redit purchases and 6ales%, other transactions cause immediate inflows and outflows. 6o firms keep a certain amount of cash so as to deal with routine transactions where immediate cash payment is re,uired. 2. P6+:;0)(,8;62 M,)(F+* ontingencies have a habit of cropping up when least e(pected. A sudden fire may break out, accidents may happen, employees may go on a strike, creditors may present bills earlier than e(pected or the debtors may make payments earlier than warranted. 'he company has to be prepared to meet these contingencies to minimi5e the losses. /or this purpose companies generally maintain some amount in the form of ash. 3. S<+:0*;)(F+ M,)(F+3

/irms also maintain cash balances in order to take advantage of opportunities that do not take place in the course of routine business activities. /or e(ample, there may be a sudden decrease in the price of +aw Materials which is not e(pected to last long or the firm may want to invest in securities of other companies when the price is just right. 'hese transactions are purely of speculative nature for which the firms need cash. OB!ECTIVES OF CASH MANAGEMENT 7rimary object of the cash management is to maintain a proper balance between li,uidity and profitability. In order to protect the solvency of the firm and also to ma(imi5e the profitability. /ollowing are some of the objectives of cash management. 3. 'o meet day to day cash re,uirements. 0. 'o provide for une(pected payments. <. 'o ma(imi5e profits on available investment opportunities. 9. 'o protect the solvency of the firm and build up image. ?. 'o minimi5e operational cost of cash management. 2. 'o ensure effective utili5ation of available cash resources.

CASH BUDGETING ash budgeting is an important tool for controlling the cash. It is prepared for future period to know the estimated amount of cash that may be re,uired. ash budget is a statement of estimated cash inflows and outflows relating to a future period. It gives information about the amount of cash e(pected to be received and the amount of cash e(pected to be paid out by a firm for a given period. ash budgeting indicates probably cash receipts and cash payments for an under consideration. It is a statement of budgeted cash receipts and cash payment resulting in either positive or negative cash or for a week or for a year and so on.

RECEIVABLES MANAGEMENT3

+eceivables or debtors are the one of the most important parts of the current Assets which is created if the company sells the finished goods to the customer but not receive the cash for the same immediately . 'rade credit arises when a company sales its products or services on credit and does not receive cash immediately. It is an essential marketing tool, acting as a bridge for the moment of goods through production and distribution stages to customers. 'he receivables include three characteristics 3% It involve element of risk which should be carefully analysis. 0% It is based on economic value. 'o the buyer, the economic value in goods or services passes immediately at the time of sale, while seller e(pects an e,uivalent value to be received later on. <% It implies futurity. 'he cash payment for goods or serves received by the buyer will be made by him in a future period. A company gives trade credit to protect its sales from the competitors and to attract the potential customers to buy its products at favorable terms. 'rade credit creates receivables or book debts that the company is accepted to collect in the near future. 'he customers from who receivables have to be collected are called as -'rade "ebtors. receivables constitute a substantial position of current assets. Iranting credit and crediting debtors, amounts to the blocking of the company&s funds. 'he interval between the date of sale and the date of payment has to be financed out of working capital as substantial amounts are tied up in trade debtors. It needs careful analysis and proper management.

In B M ltd., they are selling the goods on cash basis and also on credit basis.

INVENTORY MANAGEMENT3

Inventories are goods held for eventual sale by a firm. Inventories are thus one of the major elements, which help the firm in obtaining the desired level of sales. Inventories includes raw materials, semi finished goods, finished products.

In company there should be an optimum level of investment for any asset, whether it is plant, cash or inventories. Again inade,uate disrupts production and causes losses in sales. Afficient management of inventory should ultimately result in wealth ma(imi5ation of owner&s wealth. It implies that while the management should try to pursue financial objective of turning inventory as ,uickly as possible, it should at the same time ensure sufficient inventories to satisfy production and sales demand. 'he main objectives of inventory management are operational and financial. 'he operational mean that means that the materials and spares should be available in sufficient ,uantity so that work is not disrupted for want of inventory. 'he financial objective means that investments in inventories should not remain ideal and minimum working capital should be locked in it. 'he following are the objectives of inventory management*$ 'o ensure continuous supply of materials, spares and finished goods. 'o avoid both over and under stocking of inventory. 'o maintain investments in inventories at the optimum level as re,uired by the operational and sale activities. 'o keep material cost under control so that they contribute in reducing cost of production and overall purchases. 'o minimi5e losses through deterioration, pilferage, wastages and damages. 'o design proper organi5ation for inventory control so that management. account ability should be fi(ed at various levels of the organi5ation. 'o ensure perpetual inventory control so that materials shown in stock ledgers should be actually lying in the stores. 'o ensure right ,uality of goods at reasonable prices. lear cut

BENEFITS OF HOLDING INVENORIES3 Dolding of large and ade,uate inventories is very beneficial to every firm. 'he benefits or advantages of holding inventories area as follows. 3. +educing orders cost. 0. ontinuous production. <. 'o avoid loss. 9. Availing ,uantity discount. ?. It enables the firm to avoid scarcity of goods meant for either production o sale. COST OF HOLDING INVENTORIES3 Dolding of inventory e(poses the firm to a number of risks and costs. +isks of holding inventories can be put as follows. 3. Material cost 0. =rder cost <. 6torage cost 9. Insurance ?. =bsolescence 2. 6poilage In the B M, each of the above mentioned costs have to be controlled through efficient inventory management techni,ue. 'hat is* E:,8,=(: O61+6 H0;8)()2 ?EOHA3 'his refers to the optimal ordering ,uantity that will incur the minimum total cost #order cost and carrying cost% for an item of inventory. )ith the increase in the order si5e, the ordering cost decreases but the carrying cost increases and the optimal order, ,uantity is determined where these two costs are e,ual. 'he company is always tried to keep an eye on the level of safety stock and the lead$time associated with the orders made. A.=.4 U

K 0A=

Dere, AU Annual consumption. =U =rdering cost per order. U arrying cost per unit.

PART - VI

DATA DATAANANLYSIS ANANLYSISAND ANDINTERPRETATION. INTERPRETATION.

AL NET #OR$ING CAPITAL

An analysis of the net working capital will be very help full for knowing the operational efficiency of the company. 'he following table provides the data relating to the net working capital of B M. NET #OR$ING CAPITAL M CURRENT ASSETS-CURRENT LIABILITIS Oears 011?$12 0112$1: 011:$1B 011B$18 0118$31 urrent Asset 9?2<188.11 8?88292.11 81::23:.11 3311<90B.11 33892222.11 urrent ;iabilities 0193?9<.11 <BB::2?.11 0B081:8.11 <BB8B88.11 932?2?8.11 @) 0?03??2.11 ?:33BB3.11 209B?<B.11 :33<?08.11 ::B311:.11

C.;6) /.,5(89 N#C

"%%%%%% &%%%%%% 7%%%%%% 6%%%%%%

N#C

%%%%%% 4%%%%%% 3%%%%%% 2%%%%%% 1%%%%%% % 2%% -%6 2%%6-%7 2%%7-%& 2%%&-%" 2%%"-1%

N#C

Y+;6

INTERPRETATION3'he above chart shows that during the year 011?$12 the company has 0?03??2.11 @.). . In the year 0112$1: huge increase in the @.). 011:$1B the company has 209B?<B.11 @.). :33<?08.11 @.). the @.). is ?:33BB3.11 and in the year in the year 011B$18 the company has

of the company is increasing compared to the previous

years, in the year 0118$31 the company has ::B311:.11 @.). this means the company in a positive position ! @.). has improved vary fast as compared to the previous years which show li,uidity 7osition of the Bahety chemicals ! minerals 7vt ;td has always more ! sufficient working capital available to pay off its current liabilities.

BL RATIO ANALYSIS

INTRODUCTION3 +atio Analysis is a powerful tool of financial analysis. Ale(ander Dall first presented it in 3883 in /ederal +eserve Bulletin. +atio Analysis is a process of comparison of one figure against other, which makes a ratio and the appraisal of the ratios of the ratios to make proper analysis about the strengths and weakness of the firm&s operations. 'he term ratio refers to the numerical or ,uantitative relationship between two accounting figures. +atio analysis of financial statements stands for the process of determining and presenting the relationship of items and group of items in the statements. N,)+* I have used the ratio analysis in this project in order to substantiate the managing of working capital. /or this, I used some of the ratios to get the re,uired output. V;6(,0/ 5,67(89 :;<();* 6;)(,/ 0/+1 E2 =+ ;6+ ;/ -,**,5/3 1. LIHUIDITY RATIOS3 ;i,uidity refers to the ability of a firm to meet its current obligations as and when these become due. 'he short$term obligations are met by reali5ing amounts from current, floating or circulating assets. /ollowing are the ratios which can help to assess the ability of a firm to meet its current liabilities. 1. 2. 3. urrent ratio Acid 'est +atio / 4uick +atio / ;i,uidity +atio Absolute li,uid ratio

2. TURNOVERIACTIVITY RATIOS3 'hese are the ratios which indicate the speed with which assets are converted or turned over into sales. 1. 2. 3. 4. Inventory 'urnover +atio. "ebtors/ Accounts receivables 'urnover +atio. reditors/Accounts 7ayables 'urnover +atio. )orking apital 'urnover +atio.

1. CURRENT RATIO3-

It is a ratio, which e(press the relationship between the total current Assets and current liabilities. It measures the firm&s ability to meet its current liabilities. It indicates the availability of current assets in rupees for every one rupee of current liabilities. A ratio of greater than one means that the firm has more current assets than current liabilities claims against them. A standard ratio between them is 0*3. C066+8) R;)(,3 C066+8) A//+)/ C066+8) L(;E(*()(+/ Oear 011?$12 0112$1: 011:$1B 011B$18 0118$31 urrent Assets 9?2<188.11 8?88292.11 81::23:.11 3311<90B.11 33892222.11 urrent ;iabilities 0193?9<.11 <BB::2?.11 0B081:8.11 <BB8B88.11 932?2?8.11 urrent +atio 0.0< 0.9: <.03 0.B< 0.B:

C.;6) /.,5(89 C066+8) R;)(,

3. 3
C066+88) R;)(,

2. 2 1. 1 %. %
2%% -%6 2%%6-%7 2%%7-%& 2%%&-%" 2%%"-1%

C066+8) R;)(,

Y+;6

INTERPRETATION3It is seen from the above chart that during the year 011?$12 the current ratio was 0.0<, during the year 0112$1: it was 0.9: and in the year 011:$1B it was <.03. 'his shows the current ratio increases every year but in the year 011B$18 the current ratio was dropped to 0.B< due to increase in current liabilities. In the year 0118$31 the current ratio has increases 0.B:. 'he current ratio is above the standard ratio i.e., 0*3. Dence it can be said that there is enough current assets in Bahety chemicals ! minerals 7vt ;td to meet its current liabilities. 2. ACID TEST RATIO I HUIC$ RATIO I LIHUIDITY RATIO3'his ratio establishes a relationship between ,uickIli,uid assets and current liabilities. It measures the firms& capacity to pay off current obligations immediately. An

asset is li,uid if it can be converted in to cash immediately without a loss of valueS Inventories are considered to be less li,uid. Because inventories normally re,uire some time for reali5ing into cash. 'his ratio is also known as acid$test ratio. 'he standard ,uick ratio is 3*3. Is considered satisfactory. H0(:7 R;)(, M H0(:7 A//+)/ ?:066+8) ;//+)/ - I8F+8),62A C066+8) L(;E(*()(+/ Oear 011?$12 0112$1: 011:$1B 011B$18 0118$31 urrent Assets 9?2<188.11 8?88292.11 81::23:.11 3311<90B.11 33892222.11 Inventories 3?<09??.11 03231:3.11 <<<29<1.11 0200813.11 0<21233.11 4uick Assets <1<1299.11 :9<B?:?.11 ?:933B:.11 B<B1?0:.11 8?B21??.11 urrent ;iabilities 4uick +atio 0193?9<.11 3.9B <BB::2?.11 3.83 0B081:8.11 0.1< <BB8B88.11 0.3? 932?2?8.11 0.<1

C.;6) /.,5(89 H0(:7 R;)(,

2.

2 H0(:7 R;)(,

1.
H0(:7 R;)(,

%.

2%% -%6

2%%6-%7

2%%7-%&
Y+ ;6

2%%&-%"

2%%"-1%

INTERPRETATION3"uring the year 011?$12 the ,uick ratio was 3.9B, in the year 0112$1: it increases to 3.83 'his shows the company maintains satisfactory ,uick ratio, in the year 011:$1B the ,uick ratio increases to 0.1<, in the year 011B$18 it increases 0.3?, in the year 0118$31 it increases 0.<1, due to increase in ,uick assets. 'he ,uick ratio is above the standard ratio i.e., 3*3. Dence it shows that the li,uidity position of the company is ade,uate. 3. ABSOLUTE LIHUID RATIO3Absolute li,uid ratio may be defined as the relationship between Absolute li,uid assets and current liabilities. Absolute li,uid assets include cash in hand and cash at bank. 'he standard ratio is 1.?* 3.

AE/,*0)+ L(G0(1()2 R;)(, M

C;/. ' B;87 B;*;8:+ C066+8) L(;E(*()(+/

Oears 011?$12 0112$1: 011:$1B 011B$18 0118$31

ash ! Bank Balance 98<:90.11 301?221.11 31<<3?0.11 3:01B3?.11 38:B8<B.11

urrent ;iabilities 0193?9<.11 <BB::2?.11 0B081:8.11 <BB8B88.11 932?2?8.11

Absolute ;i,uidity +atio 1.09 1.<3 1.<2 1.99 1.9:

C.;6) /.,5(89 AE/,*0)+ L(G0(1()2 R;)(,

%. %.4

AE/,*0)+ L(G0(1()2 R;)(,

%.4 %.3 %.3 %.2 %.2 %.1 %.1 %.% % 2%% -%6 2%%6-%7 2%%7-%& 2%%&-%" 2%%"-1%

AE/,*0)+ L(G0(1()2 R;)(,

Y+;6

INTERPRETATION3 "uring the year 011?$12 the Absolute li,uidity ratio was 1.09, during the year 0112$1: it was 1.<3 and in the year 011:$1B it was 1.<2, in the year 011B$18 it was 1.99 'his shows the Absolute li,uidity ratio increases every year but it is below the standard ratio. In the year 0118$31 the Absolute li,uidity ratio has increases 1.9:. Dence it shows that the li,uidity position of the company is satisfactory. 1. INVENTORY TURNOVER RATIO3Inventory turnover ratio is the ratio, which indicates the number of times the stock is turned over i.e., sold during the year. 'his measures the efficiency of the sales and stock levels of a company. A high ratio means high sales, fast stock turnover and a low stock level. A low stock turnover ratio means the business is slowing down or with a high stock level. I8F+8),62 T068,F+6 R;)(, M N+) S;*+/

C*,/(89 I8F+8),62 Oear 011?$12 0112$1: 011:$1B 011B$18 0118$31 @et 6ales 38?901B3.11 <3<03008.11 0:B890B?.11 <B982192.11 90<9?2?3.11 losing inventory 3?<09??.11 03231:3.11 <<<29<1.11 0200813.11 0<21233.11 Inventory 'urnover ratio 30.:? 'imes 39.98 'imes B.<2 'imes 39.2B 'imes 3:.89 'imes

C.;6) /.,5(89 I8F+8),62 T068,F+6 R;)(,

2% 1& 16 14

ITR

12 1% & 6 4 2 % 2%% -%6INTERPRETATION3 2%%6-%7 2%%7-%& 2%%&-%" 2%%"-1%

I8F+ 8),62 T068,F+6 R;)(,

It is seen from the above chart that "uring the year 011?$12 the Inventory t/o ratio is 30.:? times, in the year 0112$1: it increased to 39.98 times, But in the year 011:$1B it decreased to B.<2 times . 'here was a subse,uent increase in the year 011B$18 and 0118$ 31 to 39.2B times and 3:.89 times respectively. 'his shows the company has more sales. 2. INVENTORY HOLDING PERIOD 3'his period measures the average time taken for clearing the stocks. It indicates that how many days& inventories take to convert from raw material to finished goods. I8F+8),62 H,*1(89 P+6(,1 M D;2/ (8 ; 2+;6 I8F+8),62 )068 ,F+6 6;)(,

Y+ ;6

Oear 011?$12 0112$1: 011:$1B 011B$18 0118$31

"ays in a Oear <2? <2? <2? <2? <2?

Inventory 'urnover +atio 30.:? 'imes 39.98 'imes B.<2 'imes 39.2B 'imes 3:.89 'imes

Inventory Dolding 7eriod 0B.2< "ays 0?.38 "ays 9<.22 "ays 09.B2 "ays 01.<9 "ays

C.;6) /.,5(89 I8F+8),62 H,*1(89 P+6(,1

% 4 4% 3 3% 2 2% 1 1% % 2%% -%6 2%%6-%7 2%%7-%&
Y+;6

N0=E+6 ,- 1;2/

I8F+8),62 H,*1(89 P+6(,1

2%%&-%"

2%%"-1%

INTERPRETATION3 Inventory holding period fluctuating over the years. It was 0B.2< days in the year 011?$12. It decreased to 0?.38 days in the year 0112$1:, it increased to 9<.22 days in the year 011:$1B, there was a subse,uent decrease in the year 011B$18 and 0118$31 to 09.B2 days and 01.<9 days respectively. 'his shows the company is minimi5ing these inventory$holding days thereby to increase the sales. 3. DEBTORS I ACCOUNTS RECEIVABLES TURNOVER RATIO3"ebtor&s turnover ratio indicates the speed of debt collection of the firm. 'his ratio computes the number of times debtors #receivables% has been turned over during the particular period. D+E),6/ T068,F+6 R;)(, M N+) S;*+/ AF+6;9+ D+E),6/ N,)+3 in B M, we have taken the total net sales instead of the credit sales, because the credit sales information has not available for the calculation of "'+.

Oear 011?$12 0112$1: 011:$1B 011B$18 0118$31

@et 6ales 38?901B3.11 <3<03008.11 0:B890B?.11 <B982192.11 90<9?2?3.11

Average "ebtors 0013<B3.11 98?B?0:.11 3B1?89B.11 <:B:0:9.11 9<??<2?.11

"ebtors 'urnover +atio B.BB 'imes 2.<0 'imes 3?.99 'imes 31.32 'imes 8.:0 'imes

C.;6) /.,5(89 D+E),6/ T068,F+6 R;)(,

1& 16 14 12 D+ E),6/ T068,F+ 6 R;)(,

DTR

1% & 6 4 2 % 2%% -%6 2%%6-%7 2%%7-%& Y+ ;6 2%%&-%" 2%%"-1%

INTERPRETATION3 It is clear that debtor turnover ratio fluctuating over the years. It was B.BB times in the year 011?$12. It decreased to 2.<0 times in the year 0112$1:, It again increased to 3?.99 times in the year 011:$1B but it decreased to 31.32 times and 8.:0 'imes in the year 011B$18 and 0118$31 respectively. 'his shows the company is not collecting debt rapidly. 4. DEBTORS COLLECTION PERIOD 3"ebtors collection period measures the ,uality of debtors since it measures the rapidity or the slowness with which money is collected from them a shorter collection period implies prompt payment by debtors. It reduces the chances of bad debts. A longer collection period implies too liberal and inefficient credit collection performance. AF+6;9+ C,**+:)(,8 P+6(,1 M D;2/ (8 ; Y+;6 D+E),6/ T068,F+6 R;)(,

Oear 011?$12 0112$1: 011:$1B 011B$18 0118$31

"ays in a Oear <2? <2? <2? <2? <2?

"ebtors 'urnover +atio B.BB 'imes 2.<0 'imes 3?.99 'imes 31.32 'imes 8.:0 'imes

"ebtors ollection 7eriod 93.31 "ays ?:.:? "ays 0<.29 "ays <?.80 "ays <:.?? "ays

C.;6) /.,5(89 D+E),6/ C,**+:)(,8 P+6(,1

7% 6%

N0=E+6 ,- 1;2/

% 4% 3% 2% 1% % 2%% -%6 2%%6-%7 2%%7-%& Y+;6 2%%&-%" 2%%"-1% D+E),6/ C,**+:)(,8 P+6(,1

INTERPRETATION3 "ebt collection period changing over the years. It was 93.31 days in the year 011?$12. It increased to ?:.:? days in the year 0112$1:, but in the year 011:$1B it decreased to 0<.29 days. 'here was a subse,uent increase in the year 011B$18 and 0118$ 31 to <?.80 days and <:.?? days respectively. 'his shows the inefficient credit collection performance of the company. . CREDITORSIACCOUNTS PAYABLES TURNOVER RATIO3reditor&s turnover ratio is the ratio, which indicates the number of times the debts are paid in the year. 'his ratio is calculated as follows. C6+1(),6/ T068,F+6 R;)(, M N+) P06:.;/+/ AF+6;9+ C6+1(),6/ N,)+3 In the B M, we have taken the total 7urchases instead of the credit purchases, because the credit purchases information has not available for the calculations of '+. Oear 011?$12 @et 7urchases 33283181.11 Average reditors 32:<?3?.11 reditors 'urnover +atio 2.8B 'imes

0112$1: 011:$1B 011B$18 0118$31

3:::B2:?.11 3BB82B0B.11 0<21?::<.11 0:3922<8.11

<98030:.11 0298:B3.11 02?B888.11 <1?:B98.11

?.18 'imes :.3< 'imes B.BB 'imes B.BB 'imes

C.;6) /.,5(89 C6+1(),6/ T068,F+6 R;)(,

1% " & 7 CTR 6 4 3 2 1 % 2%% -%6 2%%6-%7 2%%7-%& Y+;6 2%%&-%" 2%%"-1% C6+1(),6/ T068,F+6 R;)(,

INTERPRETATION3 It is clear that creditor turnover ratio changing over the years. It was 2.8B times in the year 011?$12. It decreased to ?.18 times in the year 0112$1:, there was a subse,uent increase in the year 011:$1B and 011B$18 to :.3< times and B.BB times respectively. In the year 0118$31 it is same as compared to 011B$18. It shows that company has making prompt payment to the creditors. 6. CREDITORS PAYMENT PERIOD3'he reditors 7ayment 7eriod represents the average number of days taken by the firm to pay the creditors and other bills payables. AF+6;9+ P;2=+8) P+6(,1 M D;2/ (8 ; Y+;6 C.;6) /.,5(89 C6+1(),6/ P;2=+8) P+6(,1 C6+1(),6/ T068,F+6 R;)(,
&% 7%

Oear 011?$12 0112$1: 011:$1B 011B$18 0118$31

"ays in a Oear <2? <2? <2? <2? <2?

reditors 'urnover +atio 2.8B 'imes % ?.18 'imes 4% :.3< 'imes 3% B.BB 'imes B.BB 'imes 2%
6% 1% % 2%% -%6 2%%6-%7

Average 7ayment 7eriod ?0.08 "ays :3.:3 "ays ?3.38 "ays 93.31 "ays 93.31 "ays

N0=E+6 ,- 1;2/

C6+1(),6/ P;2=+8) P+6(,1

2%%7-%&
Y+;6

2%%&-%"

2%%"-1%

INTERPRETATION3 Average payment period changing over the years. It was ?0.08 days in the year 011?$12. It increased to :3.:3 days in the year 0112$1:, But in the year 011:$1B and 011B$18 it decreased to ?3.38 days and 93.31 days respectively. In the year 0118$31 it is same as compared to 011B$18. It indicates that the company has taken the steps to prompt payment to the creditors. 7. #OR$ING CAPITAL TURNOVER RATIO3'his ratio indicates the number of times the working capital is turned over in the course of the year. 'his ratio measures the efficiency with which the working capital is used by the firm. A higher ratio indicates efficient utili5ation of working capital and a low ratio indicates otherwise. But a very high working capital turnover is not a good situation for any firm. #,67(89 C;<();* T068,F+6 R;)(, M N+) S;*+/ N+) #,67(89 C;<();*

C.;6) /.,5(89 #;67(89 C;<();* T068,F+6 R;)(,

#CTR

Oear & 011?$12 7 0112$1: 6 011:$1B 011B$18 0118$31 4

3 2 1 %

"

@et 6ales 38?901B3.11 <3<03008.11 0:B890B?.11 <B982192.11 90<9?2?3.11

@et )orking apital 0?03??2.11 ?:33BB3.11 209B?<B.11 :33<?08.11 ::B311:.11

) '+ :.:? 'imes ?.9B 'imes 9.92 'imes ?.93 'imes #CTR ?.99 'imes

2%% -%6

2%%6-%7

2%%7-%&

2%%&-%"

2%%"-1%

Y+;6

INTERPRETATION3 'he working capital t/o ratio is fluctuating year to year that was high in the year 011?$12, :.:? timesS there was a subse,uent decrease in the year 0112$1: and 011:$1B to ?.9B times and 9.92 times. But it increases in the year 011B$18 and 0118$31 to ?.93 and ?.99 times respectively. 'his shows the company is utili5ing working capital effectively.

CL FUND FLO# STATEMENTS

7rinciples of working capital for calculation purpose

CURRENT ASSETS
1 3 If the current assets increase as a result of this, working capital also increases. If the current assets decreases as a result of this working capital decreases.

CURRENT LIABILITIES
If the current liabilities increases as a result of this working capital decreases. If the current liabilities decreases as a result of this working capital Increase.

S);)+=+8) ,- C.;89+/ (8 #,67(89 C;<();*3

'he purpose of preparing this statement is for finding out the increase or decrease in working capital and to make a comparison between two financial years.

T;E*+ 13 S);)+=+8) ,- C.;89+/ (8 #,67(89 C;<();* -,6 ).+ Y+;6 2%% -2%%6 P;6)(:0*;6/
CURRENT ASSETS Inventories 6undry debtors ash ! Bank balance =ther current assets ;oans and Advances ?AAT,);* C066+8) A//+)/ CURRENT LIABILITIES 6undry creditors 7rovisions ?BAT,);* C066+8) L(;E(*()(+/ ?AA-?BA N+) #,67(89 C;<();* I8:6+;/+ (8 #,67(89 C;<();* E--+:) ,8 5,67(89 :;<();*

A/ ,8 31-32%%
0113<1?.11 39<BB31.11 ?1<22:.11 3<9<29.11 38<1B3.11

A/ ,8 31-32%%6
3?<09??.11 0013<B3.11 98<:90.11 39BB00.11 3B2288.11

I8:6+;/+
VV :20?:3.11 VV 399?B.11 VV

D+:6+;/+
92BB?1.11 VV 880?.11 VV 2<B0.11

4271227.%%
321238?.11 ?33?23.11

4 63%"".%%
32:<?3?.11 <2B10B.11 VV 39<?<<.11 2:<01.11 VV

21177 6.%% 21 3471.%% 36&%& .%%N 2 21 6.%%

2%41 43.%% 2 21 VV 2 21 6.%% 6.%% VV "2% 62.%% 36&%& .%%N "3%4&7.%%

TOTAL

INTERPRETATION3 In the above table, it is seen that during the year 0119$1? and 011?$12 there was a net increase in working capital of +s <2B1B?.11. It indicates an ade,uate working capital in Bahety chemicals ! minerals pvt ltd., 'his is because of 3. Increase current assets such as 6undry debtors by +s :20?:3.11, other current assets by +s 399?B.11. And decrease in Inventories by +s 92BB?1.11, ash ! Bank balance by +s 880?.11, ;oans and Advances by +s 2<B0.11. 0. Increase in current liabilities such as in 6undry creditors by +s 2:<01.11 and decrease in 7rovisions by +s 39<?<<.11.

T;E*+ 23 S);)+=+8) ,- C.;89+/ (8 #,67(89 C;<();* -,6 ).+ Y+;6 2%%6-2%%7

E--+:) ,8 5,67(89 :;<();*

P;6)(:0*;6/

A/ ,8 31-32%%6
3?<09??.11 0013<B3.11 98<:90.11 39BB00.11 3B2288.11

A/ ,8 31-32%%7
03231:3.11 98?B?0:.11 301?221.11 :B021.11 338230B.11

I8:6+;/+
20B232.11 0:?:392.11 :3383B.11 VV 3118908.11

D+:6+;/+
VV VV VV :1?20.11 VV

CURRENT ASSETS Inventories 6undry debtors ash ! Bank balance =ther current assets ;oans and Advances ?AAT,);* C066+8) A//+)/ CURRENT LIABILITIES 6undry creditors 7rovisions ?BAT,);* C066+8) L(;E(*()(+/ ?AA-?BA N+) #,67(89 C;<();* I8:6+;/+ (8 #,67(89 C;<();*

4 63%"".%%
32:<?3?.11 <2B10B.11

" ""646.%%
<98030:.11 <8?2<B.11 VV VV 3B3B230.11 0:231.11

2%41 43.%% 2 21 6.%% 31"%32 .%%N 711&&1.%%

3&&776 .%% 711&&1.%% VV 711&&1.%% VV 1%71%".%% 31"%32 .%%N 1%71%".%%

TOTAL

INTERPRETATION3

In the above table, it is seen that during the year 011?$12 and 0112$1: there was huge net increase in working capital by +s <381<0?.11 As 'his is because 3. 'here is Increase in current assets such as Inventories by +s 20B232.11, 6undry debtors by +s 0:?:392.11, ash ! Bank balance by +s :3383B.11, ;oans and Advances by +s 3118908.11. And decrease in other current assets by +s :1?20.11. 0. 'here is Increase in current liabilities such as 6undry creditors by +s 3B3B230.11, 7rovisions by +s 0:231.11. ompare to 0119$1? and 011?$12.

T;E*+ 33 S);)+=+8) ,- C.;89+/ (8 #,67(89 C;<();* -,6 ).+ Y+;6 2%%7-2%%&

E--+:) ,8 5,67(89 :;<();*

P;6)(:0*;6/

A/ ,8 31-32%%7
03231:3.11 98?B?0:.11 301?221.11 :B021.11 338230B.11

A/ ,8 31-32%%&
<<<29<1.11 3B1?89B.11 31<<3?0.11 3B82B<.11 0:30919.11

I8:6+;/+
33:?<?8.11 VV VV 33390<.11 3?320:2.11

D+:6+;/+
VV <3?0?:8.11 3:0?1B.11 VV VV

CURRENT ASSETS Inventories 6undry debtors ash ! Bank balance =ther current assets ;oans and Advances ?AAT,);* C066+8) A//+)/ CURRENT LIABILITIES 6undry creditors 7rovisions ?BAT,);* C066+8) L(;E(*()(+/ ?AA-?BA N+) #,67(89 C;<();* I8:6+;/+ (8 #,67(89 C;<();*

" ""646.%%
<98030:.11 <8?2<B.11

"%77617.%%
0298:B3.11 3:808B.11 B90<92.11 032<91.11

VV VV

3&&776 .%% 711&&1.%% 366 7.%%N 624& 3&.%%

2&2"%7".%% 624& 3&.%% VV 624& 3&.%%

VV 3&61744.%%

366 7.%%N 3&61744.%%

TOTAL
INTERPRETATION3

In the above table, it is seen that during the year 0112$1: and 011:$1B there was also net increase in working capital by +s ?<22?:.11. As compare to 011?$12 and 0112$1:. 'his is because 3. 'here is Increase in current assets such as Inventories by +s 33:?<?8.11, other current assets by +s 33390<.11, ;oans and Advances by +s 3?320:2.11 and decrease in 6undry debtors by +s <3?0?:8.11, ash ! Bank balance by +s 33<23B.11.

0.

'here is "ecrease in current liabilities such as 6undry creditors by +s B90<92.11,

7rovisions by +s 032<91.11.

T;E*+ 43 S);)+=+8) ,- C.;89+/ (8 #,67(89 C;<();* -,6 ).+ Y+;6 2%%&-2%%" P;6)(:0*;6/
E--+:) ,8 5,67(89 :;<();*

A/ ,8 31-32%%&
<<<29<1.11 3B1?89B.11 31<<3?0.11 3B82B<.11 0:30919.11

A/ ,8 31-32%%"
0200813.11 <:B:0:9.11 3:01B3?.11 012012.11 02220<0.11

I8:6+;/+
VV 38B3<02.11 2B:22<.11 32?0<.11 VV

D+:6+;/+
:3<?08.11 VV VV VV 923:0.11

CURRENT ASSETS Inventories 6undry debtors ash ! Bank balance =ther current assets ;oans and Advances ?AAT,);* C066+8) A//+)/

"%77617.%%

11%%342&.% %

CURRENT LIABILITIES 6undry creditors 7rovisions ?BAT,);* C066+8) L(;E(*()(+/

0298:B3.11 3:808B.11

02?B888.11 30<1811.11

VV VV

803B.11 31?3210.11

2&2"%7".%% ?AA-?BA N+) #,67(89 C;<();* 624& 3&.%%

I8:6+;/+ (8 #,67(89 C;<();*

&64""1.%%N 7113 2".%%

3&&"&"".%% 7113 2".%% VV 7113 2".%%

VV 2667 12.%%

&64""1.%%N 2667 12.%%

TOTAL

INTERPRETATION3 In the above table, it is seen that during the year 011:$1B and 011B$18 there was also net increase in working capital by +s B29883.11 As compare to 0112$1: and 011:$1B. 'his is because 3. 'here is Increase in current assets such as 6undry debtors by +s 38B3<02.11, ash ! Bank balance by +s 2B:22<.11, =ther current assets by +s 32?0<.11 and decrease in Inventories by +s :3<?08.11, ;oans and Advances by +s 923:0.11. 0. 'here is Increase in current liabilities such as 6undry creditors by +s 803B.11, 7rovisions by +s 31?3210.11.

T;E*+ 3 S);)+=+8) ,- C.;89+/ (8 #,67(89 C;<();* -,6 ).+ Y+;6 2%%"-2%1%

E--+:) ,8 5,67(89 :;<();*

P;6)(:0*;6/

A/ ,8 31-32%%"
0200813.11 <:B:0:9.11 3:01B3?.11 012012.11 02220<0.11

A/ ,8 31-32%1%
0<21233.11 9<??<2?.11 38:B8<B.11 3B??B?.11 <12232:.11

I8:6+;/+
VV ?2B183.11 0?B30< .11 VV <888<?.11

D+:6+;/+
020081.11 VV VV 01203.11 VV

CURRENT ASSETS Inventories 6undry debtors ash ! Bank balance =ther current assets ;oans and Advances ?AAT,);* C066+8) A//+)/

11%%342&.% %

11"46666.% %
<1?:B98.11 331:B31.11 VV 30<181.11 <8BB?1.11 VV

CURRENT LIABILITIES 6undry creditors 7rovisions ?BAT,);* C066+8) L(;E(*()(+/ ?AA-?BA N+) #,67(89 C;<();* I8:6+;/+ (8 #,67(89 C;<();*

02?B888.11 30<1811.11

3&&"&"".%% 7113 2".%% 66747&.%%N &27%"&1.%%

416 6 ".%% 77&1%%7.%% VV &27%"&1.%% VV 134"23".%% 66747&.%%N 134"23".%%

TOTAL

INTERPRETATION3 In the above table, it is seen that during the year 011B$18 and 0118$31 there was also net increase in working capital by +s 33?:9?0.11 As compare to 011:$1B and 011B$18. 'his is because 3. 'here is Increase in current assets such as 6undry debtors by +s ?2B183.11, ash ! Bank balance by +s 0?B30<.11 ;oans and Advances by +s <888<?.11 and decrease in Inventories by +s 020081.11, other current assets by +s 01203.11. 0. 'here is Increase in current liabilities such as 6undry creditors by +s <8BB?1.11 and decrease in 7rovisions by +s30<181.11.

PART - VII
FINDINGS. FINDINGS.

SUGGESTIONS SUGGESTIONS' ' CONCLUSIONS. CONCLUSIONS.

FINDINGS.

 )orking capital of the Bahety

hemicals ! Minerals 7vt ;td. was increasing and

showing positive working capital per year. 'he Bahety hemicals ! Minerals 7vt ;td has higher current and ,uick ratios are i.e., 0.B: and 0.<1 respectively. Inventory turnover ratio is very low in the year 011:$1B. In the year 011B$18 it has

increased by 2.<0 times as compared to 011:$1B and in the last year 0118$31 it has again increased by <.02 times as compared to 011B$18. "ebtor&s turnover ratio is very high in the year 011:$1B. In the year 011B$18 it has decreased by ?.0B times as compared to 011:$1B and in the last year 0118$31 it has again decreased by 1.99 times as compared to 011B$18. reditor&s turnover ratio has increased in the years of 011:$1B and 011B$18. It is same

in the last year 0118$31 as compared to 011B$18. )orking capital turnover ratio is very low in the year 011:$1B. In the year 011B$18 it has increased by 1.8? times as compared to 011:$1B and in the last year 0118$0131 it has again increased by 1.1< times.

SUGGESTIONS.

)orking capital of the company has increasing every year. 7rofit also increasing

every year this is good sign for the company. It has to maintain it further, to run the business long term. 'he urrent and ,uick ratios are almost up to the standard re,uirement. 6o the

)orking capital management. Bahety hemicals ! Minerals 7vt ;td. is satisfactory and it has to maintain it further. 'he company has sufficient working capital and has better li,uidity position. By efficient utili5ing this short$term capital, then it should increase the turnover. 'he company should take precautionary measures for investing and collecting funds from receivables and to reduce the bad debts. 'he company has sufficient working capital and has better li,uidity position. By efficient utili5ing this short$term capital, then it should increase the turnover. reditor&s turnover ratio has increasing from 011:$1B to 011B$18 and in the last year 0118$0131 it is same as compared to 011B$18. ompany is making prompt payment to its creditors. 'his is good sign for the company. =n$time payment to suppliers will increase the credibility of the firm. It has maintain it further to survive in the market. 'he company is utili5ing working capital effectively this is good for the company. It has to maintain it further.

CONCLUSIONS.
'he study on working capital management conducted in Bahety hemicals ! Minerals 7vt ;td. to analy5e the financial position of the company. 'he company&s financial position is analy5ed by using the tool of annual reports from 011?$12 to 0118$ 31. 'he financial status of Bahety hemicals ! Minerals 7vt ;td. is good. In the last year the inventory turnover has increased, this is good sign for the company. 'he company&s li,uidity position is very good )ith regard to the investments in current assets there are ade,uate funds invested in it. are should be taken by the company not to make further investments in current assets, as it would block the funds, which could otherwise be effectively utili5ed for some productive purpose. =n the whole, the company is
moving forward with e(cellent management.

 FINANCIAL STATEMENT. BIBILOGROPHY.

FINANCIAL STATEMENT 2%%"-2%1%

PROVISIONAL BALANCE SHEET AS AT 31/) MARCHD 2%1%

LIABILITY SOURCES OF FUNDS 6hare capital +eserves and surplus LOAN FUNDS 6ecured ;oans Gnsecured ;oans "eferred ta( liability CURRENT LIABILITIES 6undry creditors 7rovisions <1?:B98.11 331:B31.11 0?:92:0.11 <198380.11 B1318B.11 3111111.11 8B0:031.11 AMOUNT ASSETS FIXED ASSETS Iross block ;ess* "epreciation @et Block apital )I7 CURRENT ASSETS Inventories 6undry debtors ash ! bank balance =ther current assets ;oans and Advances TOTAL 21417&31.%% 0<21233.11 9<??<2?.11 38:B8<B.11 3B??B?.11 <12232:.11 21417&31.%% 3183<<21.11 ?3<?8?8.11 ?:::913.11 <28<:29.11 AMOUNT

BIBLIOGRAPHY
TEXT BOO$S
M.Y.$.;8 I P.$ !;(8D F(8;8:(;* M;8;9+=+8) T+B)D P6,E*+=O/ C;/+/D TH E1()(,8DT;); M:G6;5 H(** P0E*(/.(89 C,=<;82 L(=()+1D N+5 D+*.(D 2%%7.

 P6;/;88; C.;816;D F(8;8:(;* M;8;9+=+8) T.+,62 ;81 P6;:)(:+D TH E1()(,8D T;); M:G6;5 H(** P0E*(/.(89 C,=<;82 L(=()+1D N+5 D+*.(D 2%%1. A880;* R+<,6) ,- B;.+)2 C.+=(:;*/ ' M(8+6;*/ P6(F;)+ L(=()+1.

#EB SITE VISITED

555.9,,9*+.:,= 555.5(7(<+1(;.,69 555.)6;8/)0),6/.:,=