Working Capital Management

A
PROJECT REPORT
ON
WORKING CAPITAL MANAGEMENT

IN
By:
DONTHA RAJESH
H.T.NO:093-07-0174
Submitted to
KARUNA PG COLLEGE
OSMANIA UNIVERCITY
Hyderabad
In partial fulfillment for the award of
Masters Degree in Business Administration
2007 – 2009
DECLARATION
I DONTHA RAJESH hereby declare that the project report on “Working

Capital Management” submitted by me to the Department Of Business
Management, KARUNA PG COLLEGE e as a partial fulfilment for the
award of master’s Degree in Business Administration of OSMANIA
UNIVERCITYS is of my own and it has not been submitted to any other
institute or published any where before.
DATE:
PLACE: DONTHA RAJESH
H.NO; 093-07-0174
ACKNOWLEDGEMENT
I would like to have this opportunity to place it on a record that this
project would never been successful without the kind co-operation and
support of certain individuals. Though it not possible to name all of them, it
would be unpardonable on my part if I do not mention some of the most
important persons.
I would like to thank my project guide, Mr.K.VENKATESH Deputy.
Manager-Costing, for all his support and cooperation during the course of
my study. I would like to thank the Accounts and Finance department
members, for giving me this opportunity to understand the various aspects of
Financial Management in their organization and understand the subject in a
better sense.
It’s my duty to express deep sense of gratitude to (external guide),
HOD (MBA) Mr K.VENKATESH for her valuable suggestion and
guidance throughout the project.
Last but not the least; I would also like to thank my parents, friends
for making this project a successful, as without their support and guidance,
this achievement would have been an impossible task.

ABSTARCT
The present project is on working capital in Tecumseh share

products India ltd. The position of the company was studied
data was collected he regarding growth in assets and
liabilities. Sales working capital ratio debtors on turnout
ratio, current ratio and other ratios was calculated
composition current of pass five year was collected sources
and funds statement for five years was collected. Interpreted
it was fund that working capital was increasing the begging
and latter on it was the declaiming it was suggested to
utilize the companies founds properly.
ONTENTS Page No.
CHAPTER – 1: 7-7
INTRODUCTION 8-8
 NEED FOR THE STUDY 9-9
 OBJECTIVES OF THE STUDY 10 - 10
 METHODOLOGY OF THE STUDY 11 - 11
 FRAMEWORK OF THE STUDY 12 - 12
 LIMITATIONS OF THE STUDY 13 - 13
CHAPTER – 2: 14 - 14
COMPANY PROFILE
INDUSTERY PROFILE 15 - 15
 REFRIGERATION COMPRESSOR 16 - 18
 HISTORICAL DEVELOPMENT OF COMPRESSORS 18 - 19
 STRUCTURE OF THE REFRIGERATION COMPRESSOR INDUSTRY

20 - 24
 TECHNOLOGICAL STATUS OF INDIAN INDUSTRY

25 - 28
PROFILE OF TECUMSEH PRODUCTS INDIA 30 - 30
PRIVATE LIMITED, HYD
 ORGANIZATION PROFILE 31 - 35
 DEPARTMENTS OF TRIPL 36 - 36
 5-S PHILOSOPHIES 37 - 40
 STRATEGIES AND PROCESSES AT TRIPL 40 - 40
 TRIPL’S VISON AND MISSION 41 - 44
 PRODUCTS AND SERVICES 45 - 45
 COMPETITORS ANALYSIS 46 - 47
Page No
CHAPTER – 3: 48 - 48
LITERATURE RIVEW 49 - 49
 INTRODUCTION 50 - 51
 WORKING CAPITAL CYCLE 52 - 54
 CONCEPT OF WORKING CAPITAL 54 - 56
 TYPES OF WORKING CAPITAL 56 - 59
 COMPOSITION OF WORKING CAPITAL 59 - 62
 OBJECTIVES OF WORKING CAPITAL

63 - 63
 FACTORS DETERMING WORKING CAPITAL

64 - 66
 RATIOS RELATING TO WORKING CAPITAL

67 - 71
 SOURCES OF WORKING CAPITAL 71 - 76
CHAPTER – 4: 77 - 77
DATA ANALYSIS 78 - 78
 CHART OF THE NET WORKING CAPITAL 79 - 80
 CHART OF THE SALES TO WORKING CAPITAL TURNOVE RATIO 81 - 82

 CHART OF THE DEBTORS TURNOVER RATIO 83 - 84
 CHART OF THE CURRENT RATIO 85 - 86
 CHART OF THE QUICK RATIO 87 - 88
 CHART OF THE COMPOSITION OF CURRENT ASSETS 89 - 90
 PROFIT AND LOSS ACCOUNTS 91 - 96
 COMPARATIVE BALANCE SHEETS 97-107
CHAPTER – 5: 108 - 108
SUMMARY & FINDINGS 109 - 109
 SUMMARY 110 - 115
 FINDINGS & SUGGESTIONS 116 - 118
 BIBLIOGRAPHY 119 - 119

CHAPTER -1
INTRODUCTION
- NEED FOR THE STUDY
- OBJECTIVES OF THE STUDY
- METHODOLOGY OF THE STUDY
- FRAMEWORK OF THE STUDY
- LIMITATIONS OF THE STUDY
NEED FOR THE STUDY
TRIPL (Tecumseh Products India Pvt. Ltd) is a successfully managed
company as evidenced in its financial performance. Evolution of financial
performance of company is a continues process for understanding the
direction in which the company is moving so as to decide and implement the
feature course of action with a view achieves the in the objectives in the best
interest of the organization
Financial performance can be done from the point of view of various interest
groups such as owners, management, leaders, etc.; however, here it is an
analysis to understand financial performance of TRIPL by using the
technique of the ratio analysis

OBJECTIVES OF THE STUDY
The present study has been conducted to achieve the following objectives.
1. To analysis and portray the existing position of TRIPL
2. To study the short term solvency position of TRIPL
3. To study the leverage position of the TRIPL.
4. Evaluate the efficiency utilization of assets of TRIPL.
5. To identify the problem, if any, in the overall performance of the
TRIPL and offer suggestions.

METHODOLOGY OF THE STUDY
With a view to achieve the objectives data and information for the study are
collected from both primary and secondary sources. The stress is however
more the later.
Primary data
The primary data was collected from the discussions with the concerned
officers and staff of the organization.
Secondary data
The secondary data was gathered from published and unpublished records
and annual reports of the company further magazines and the textbooks of
financial management and also from web sites of the company and from
other sources of secondary data
FRAME WORK OF THE STUDY
In the project report entitled financial performance of Tecumseh Products
India Private Limited, Hyderabad, is organized in six chapters.
The first chapter contains a brief description about the Objectives of the
study, frame work of the study, need for the study, methodology of the study
and Limitations of the study.
The second chapter provides industry profile.
The Third chapter provides the profile of TRIPL, Hyderabad.

The fourth chapter carries the theoretical aspects of the working capital and
ratio analysis.
The fifth chapter deals with the financial analysis of the TRIPL.
The sixth chapter presents the summary and findings.
LIMITATIONS OF THE STUDY
The study has been conducted in a systematic and comprehensive way so as
to make the project work an unable one. However, the topic under my study
may not be free from limitations due to the following factors
 The major limitation of the project under study was time. Since it was
to be completed within a short period of time, which is not sufficient
to undertake a comprehensive study.

 Since the financial matters are sensitive in nature the same could not
acquired easily.
 The study is concerned to only the five years of TRIPL.
CHAPTER-2
COMPANY PROFILE
&
INDUSTERY PROFILE
- REFRIGERATION COMPRESSOR
- HISTORICAL DEVELOPMENT OF COMPRESSORS
- STRUCTURE OF THE REFRIGERATION COMPRESSOR
INDUSTRY
- TECHNOLOGICAL STATUS OF INDIAN INDUSTRY
REFRIGERATION COMPRESSOR
Refrigeration compressor is the heart of any refrigeration system. The
compressor can be: reciprocating, rotary, centrifugal, screw or an axial flow
type, based on the principle of compression. Depending upon the location of
the drive, compressors are classified as hermetic, semi-hermetic and open
type. Reciprocating and rotary compressors, which have the compressing
element and drive motor sealed in a single, welded-housing, are called
hermetically sealed compressors. Instead of single, welded-housing, if the
enclosure is bolted together, then the assembly becomes semi-hermetic. In
this type, in addition to reciprocating and rotary types, screw and centrifugal
compressors are also manufactured. However, if the compressors and drive
units are not in single housing, the compressors are called open type.
Compressors manufactured in India are mostly the reciprocating type.
Centrifugal compressors are characterised by large capacity, suitable for
extremely low temperatures and ability to carry varying loads. Rotary
compressor is a hermetic type compressor where the mechanical structure
and motor assembly are directly fitted in the same shell, and where the shell
is sealed by means of welding. Rolling piston and sliding vane are the main
types of rotary compressors.

In reciprocating compressors, a connecting rod is used to convert the rotary
movement of the crankshaft to the reciprocating movement of the piston. The
piston slides, in a cylinder to compress the refrigerant gas. When the
difference between condensing temperature and evaporating temperature is
high, the pressure ratio for compression also becomes high and conducting
compression in two stages becomes desirable. A screw compressor is a
positive displacement rotary machine. Depending upon mountings, there are
two types viz. vertical and horizontal screw compressors. Depending upon
the number of screws, there are mono- screw and twin-screw compressors.
Application of refrigeration compressors can be: for refrigerators, deep-
freezers, water coolers, bottle coolers, room air-conditioners, packaged air-
conditioners, water chillers, self-contained A/Cs, bus/train/ship air-
conditioning, refrigerated vans and cold-storages. End-uses of refrigeration
compressors can be in: domestic, commercial and industrial sectors. In
domestic sectors, the end- uses are for preserving and storing food and for
comfort air-conditioning. In the commercial sector, the end-uses are: in
central air-conditioning, water coolers, and commercial refrigerators. End-
uses in the industrial sector include preservation of food, fruit juice
concentrates, and alcoholic drinks; preserving systems for meat, fish, poultry
and dairy products. Other applications of refrigeration compressors are
process refrigeration such as in the drugs and pharmaceutical industry; textile
industry, rubber industry and thermal power generation.
HISTORICAL DEVELOPMENT OF COMPRESSORS
For refrigeration compressors, development of technology started around the
year 1865. In the period 1865 to 1875, a few types of refrigeration
compressors were made each year. These were massive steam-engine driven
machines with their weights in tons, considerably in excess of their capacity
in tons of refrigeration. Before 1900, some compressors were equipped with
cylinder by-pass valves for capacity control. Electric motor belted-drives
also started to make their appearance. Rare use of sulphur dioxide as
refrigerant was made. In the period from 1900 to 1925, rotating seals were
tried in small compressors. Automatic capacity controls were developed.
Operating speed increased to 800 rpm. Compressors came to be directly
driven by synchronous motors. During the period 1925 to 1950, reed valves
began to appear. The 2-pole electric motors at 3500 rpm were used for drive.
Freon refrigerants such as R-ll, R-114, and R-22 were invented. During the
period 1950 to 1975, the refrigerant R-22 was used in place of R-12 and 2-
pole motors in place of 4-pole motors were used. The ozone depleting effects
of chlorofluorocarbons (CFCs) have resulted in a large number of countries
signing the Montreal Convention, according to which the developed
countries have to phase out use of R-ll, R-12, R-113, R-114, R-115, R-13, R-
lll, R-112, R- 211, R-212, R-213, R-214, R-215, R-216 and R-217 by the
year 2000, and developing countries by the year 2015., The use of new CFCs
which are ozone friendly and are under development at present necessitate
modifications in compressor designs in some cases. They may also affect the
energy efficiency of compressors also. As regards the compressor type wise
development; the reciprocating compressors were the pioneers, followed by,
centrifugal, rotary and screw compressors. Among these types, the
reciprocating compressors have almost reached their technological
development limits. Regarding the future trend, scroll and eccentric cam
compressors are being developed in advanced countries.

STRUCTURE OF THE REFRIGERATION COMPRESSOR
INDUSTRY
a) Manufacturers
The manufacture of the refrigeration compressors started in India around the
year 1960 for small hermetic compressors for refrigerators as well as the
larger capacity open type compressors. Today, a wide variety of compressors
are produced in India with the capacity as high as 700 HP. The industry is
composed of both organized sector of medium and large-scale manufacturers
and an unorganized sector of small-scale units. The small units produce
slow-speed compressor models, which are still used in India for limited
purposes. There are 14 manufacturers in the organized sector. They are:
i) Sanden Vikas (India) Ltd., Faridabad (Haryana) - A/C compressor for
motor cars.
ii) Kirloskar Brothers Ltd., Karad (Maharashtra) – Hermetic compressors.
iii) Shriram Refrigeration Industries Ltd., Hyderabad (A.P.) Hermetic
compressors.
iv) Godrej & Boyce Mfg, Co, Private Ltd Bombay – Hermetic
compressors.
v) Kelvinator of India Ltd., Faridabad (Haryana) – Hermetic
compressors.
vi) Hyderabad Allwyn Ltd., Hyderabad (A.P.) – Hermetic compressors.
vii) Voltas Ltd., Bombay & Warora (Maharashtra) - Hermetic, Semi-
hermetic and Open type compressors.
viii) Kirloskar Pneumatic Co. Ltd., Pune (Maharashtra) – Open type
compressors.
ix) Vulcan Laval Ltd., Satara (Maharashtra) - Open type compressors.
x) Frick India Ltd., Faridabad (Haryana) - Open type compressors.
xi) Air Control & Chemical Engineering Co. Ltd., Nandej (Gujarat) -
Open type compressors.
xii) Utility Engineers (India) Ltd., Dharuhera (Haryana) – Open type and
Semi-hermetic compressors.
xiii) Blue Star Ltd., Bombay (Maharashtra) - Open type compressors.
xiv) Batliboi & Co., Udhna (Gujarat) compressors.Semi-hermetic

b) Installed capacity and its utilisation
At present, the total licensed capacity of these companies is 13,87,250 Nos.
per annum, whereas the total installed capacity is 10,22,170 Nos. As regards
the utilization of installed capacity, the industry presents an unbalanced
picture for different types of compressors as shown in the following table.
Utilisation of capacity
(In Numbers)
Total
Total
Installed Capacity
Compressor type Production
capacity utilisation
(1985-86)
(1985-86)
Air-conditioning
compressors for 10,000 25,000 40%
automobile
Hermetic
7,78,614 8,81,000 88.4%
compressors
Open type and
Semi hermetic
2,444 15,440 15.8%
compressors
(all varieties)
c) Import and export
Refrigeration compressors are imported in India as part of initial import in
the phased production programme under the collaboration agreements or
some special types or capacities, which are not manufactured in the country.
Some compressors are also imported as part of projects awarded to foreign
companies. Export of compressors is usually as a part of an end-project or a
part of an air-conditioning or refrigeration project. The export performance
of the industry is not very encouraging.
The main reasons for this are:
Price The international prices are at least 40% cheaper than the Indian
export prices.
Quality The quality of products of advanced countries is superior
and more reliable.
Models The advanced countries do continuous product
improvement and are able to bring new models every year
in the market.
Marketing The marketing and after sale service is not properly
undertaken by the Indian manufacturers, barring a few
exceptions. The Indian manufacturers will have to
improve on all these disadvantages with appropriate help
from the Government.
d) Financial status and scale of operation:
Most manufacturers are multi-product companies producing compressors as
one of their products: hence the data of separate investment and costs for
compressors vis-a-vis income is not available. The financial health of a
company as a whole has, therefore, been studied. It was observed that all
companies, except ACCEL, are making profit. ACCEL had been making
losses for some years and it has been taken over by Best & Crompton Ltd.,
since 1986 and is under rehabilitation. Amongst the companies, Frick India
Ltd., Vulcan Laval Ltd., Blue Star Ltd., and Kelvinator of India show sound
financial health with the return on capital employed is consistently above
10% and return on share capital above 35%.

TECHNOLOGICAL STATUS OF INDIAN INDUSTRY
a) Sources of technology
Since the beginning of the refrigeration industry in India, refrigeration
compressors have been manufactured with foreign technical collaboration.
Even today, most of the established manufacturers continue to enter into
fresh foreign collaborations for producing new types of compressors or for
updating and expanding the present range. The only notable exception in this
regard is Godrej & Boyce Mfg. Co. Ltd. which has developed a hermetic
compressor for its refrigerator entirely with its own research and
development. .
There is no example of technology transfer among Indian manufacturers.
Moreover, collaborations with the same foreign companies have been
concluded at different times for updating or manufacturing new types of
compressors. All this goes to show that there is hardly any original design
and development work undertaken in India; or, whatever has been attempted
so far has not met with much success. The R&D effort in India is mainly
aimed at indigenisation of the compressors as per the collaborator's
specifications and according to the phased manufacturing programme.
b) Selection of foreign collaborator
The selection of foreign collaborator was found to be based on many factors
such as:
i) Quality of products
ii) Financial participation of collaborator
iii) Willingness of collaborator
iv) Previous trading relations i.e. the Indian company importing the
collaborator's compressor for use in own products or projects
v) Availability of collaborator for collaboration in India.

There are three companies, namely, Sanden Vikas (India) Ltd., Kelvinator of
India Ltd. and Frick India Ltd., in which there is a financial participation of
the collaborator in addition to technical collaboration.
c) Restrictive clauses in collaboration agreements
The restrictive clauses pertain to export, use of collaborator's brand name and
transfer of technology to other Indian manufacturers. Regarding exports,
most collaborators have barred the Indian manufacturers to export to
countries where the collaborators have their own licensing arrangements or
trade interests.
Regarding the use of collaborator's brand-name, in most cases the words
"manufactured under license of." etc., can be used during the period of
agreement.
The transfer of technology has not been allowed during the tenure of
agreement in the case of any company. After the tenure is over, the Indian
company is free to transfer technology to others.
d) Technical support of collaborator
In all the collaborations, the collaborator has agreed to give all technical
support for indigenisation of the compressor. Adequate training in
collaborator's plant as well as in Indian company's plant is provided.
e) Research and development activities
The research and development carried out by the Indian manufacturers is of
applied nature. The main effort is to indigenize the collaborator's design
within the agreement period. Once this is achieved, many manufacturers
have done development in compressor components by way of change of
material, little modification in design and such other improvements. Some
have developed compressor models of intermediate capacities in the range by
making suitable dimensional changes. No manufacturer has designed a

compressor on his own except Godrej & Boyce. The reasons for this state of
affairs are:
i) The low volume of turnover of business does not permit sizeable
investment in original research.
ii) It is faster to update technology through collaboration than through
own research.
PROFILE OF TECUMSEH PRODUCTS

INDIA
PRIVATE LIMITED, HYD
- ORGANIZATION PROFILE
- DEPARTMENTS OF TRIPL
- 5-S PHILOSOPHIES
- STRATEGIES AND PROCESSES AT TRIPL
- TRIPL’S VISON AND MISSION
- PRODUCTS AND SERVICES
- PRODUCT PROFILE
- COMPETITORS ANALYSIS
ORGANIZATION PROFILE
Tecumseh Products India private Limited is an ISO 14001 and 9001 certified
American based multination company, with as core expertise in
manufacturing hermitically sealed compressors. Tecumseh India is a 100%
subsidiary to Tecumseh Products Company (TPC) USA, which the world’s
only full line independent manufacturer of compressors. TPC has 29
manufacturing locations in four continents. In India the company has 20
sales offices and in extensive networks of over 200 dealers and more than
600 registered small-scale manufacturers.

Tecumseh India is the preferred supplier to the who’s who of the AC & R
Industry in India and in the Middle Ease, SAARC courtiers. The company
was originally established and registered in 1963 under the name of the Usha
Refrigeration Industries Limited (URIL) started in 1963. URIL manufactured
compressors for water coolers, air coolers and air conditioners, Lala Charath
Ramji who was from a renowned industrial family of DC and Ceremonial
Group of Companies started URIL.
In 1970 the URIL was changed to C. Shriram Refrigerations Ltd., and the
business was also diversified towards manufacturing of diesel engines and
water coolers. Sriram Industries played a great role in the field and captured
more than 50% markets shares in India. Shriram Industries also kept its
hands in international trade and were successful in exporting their products
to the neighboring countries, Nepal and Bangladesh.
In 1980 Lala Charath Ramji son Mr. Siddharth C Shriram became the
chairman cum Managing Director of the Company. The period was sea
change in industrial policy, which resulted in a great change in the industrial
sector.
In the process for survival, Shriram went to Tech collaboration with Westing
House US and was named as Siel Compressors. Siel compressors were the
first Indian company to manufacture compressor. Later Westing House
stopped manufacturing compressors and Siel went into technological
collaboration with Tecumseh Products Company USA in1988. Tecumseh
means ‘Crouching Panther’ derived from chief of the Shawnee Tribe (1768 –
1813). It started its operations to offer new state of AW series to Indian
customer. Subsequently Tecumseh Products Company took over Siel group
in 1997 and Siel Group became 100% subsidiary to Tecumseh Products
Company. As soon as Tecumseh took over the company its stopped
manufacturing water coolers restricted its products to CFA / hermitically
sealed compressors.
Tecumseh Products Company invested $80 million in Indian operation
known as Tecumseh Products India Pvt. Ltd (TRIPL). TRIPL has two states
of art manufacturing facilities at Hyderabad, Andhra Pradesh and Ballabgarh,
Haryana with a CADEM Center at the Hyderabad plant to meet global
engineering needs.
TRIPL has gained core expertise in Research and Development, AW
assembly as a AW machine shop such that it acquired a lion’s share of the
Indian compressor market by gaining a 50% share.
HYDERABAD PLANT:
The Hyderabad plant is on a sprawling 54-acre land at the Balanagar
Industrial belt 15 km. Away from Hyderabad city on the highway line going
towards HMT Ltd Nassau road. At Hyderabad plant TRIPL manufacturers
Air conditioners, from 1200 BTU to 60000 BTU and compressors for deep
freezers, bottle cooler and water coolers which are considered to be world’s
No. 1 in the 150 million compressor market a year.

The Hyderabad Plant has a capacity of manufacturing more than 3000 units
per day. The Hyderabad has a technology development center with full
Research and Development facility. The plant is also supported by two
service vendors: AW service center and Mc Service center. The Hyderabad
plant has 6 regional offices among which four offices are at the Metro cities;
Delhi, Mumbai, Kolkata and Chennai and remaining two are at
Ahmedabad and Secunderabad. Besides these there are branch offices and
depots located in prime cities across the country. The Hyderabad plant also
has a network of about 177 dealers across the nation and are proffered
Suppliers to key original equipment manufacturers (OEM’s) like LG, Voltas,
Bluster, Gore, Videocon, Fodders, Matrix, Hitachi, etc.,
TRIPL, Hyderabad plant was successful in getting the ISO 9001 certification
for maintaining quality of the compressors in 1994 and for the Eco friendly
environment maintenance the company has got ISO 14001 certification
The Management has started development activities in the following areas:
 Effluent treatment plant
 Tree Plantation
 Rain Water Harvesting is to increase the ground water level and TRIPL
has the distinction of being the first organization in thus record.
 Vermi Culture is the process of utilizing the canteen food wastage for
converting into natural manner
Department of TRIPL:
 Human Resource Management
 Accounts Department
 Attendance and Pay Office (A&PO)
 Export Oriented Unit (AK Kit)

 Technology Development Centre (TDC)
 Maintenance and Engineering Department
 Quality Development of A W assembly
 A W Press Shop
 A W Machine Shop
 Service Center
 Dispensary
 Chemical and technological laboratories
TRIPL has a total of 766 permanent employees as on which include
o 172 officers
o 232 staff
o 362 workers
BALLABGARH PLANTS:
At Ballabgarh, Haryana TRIPL has invested Rs. 200 crores for
manufacturing if Non – CFC Compressors. The Ballabgarh Plant is one of
the best compressors manufacturing unit in Asia. The plant is extended on 21
– acre land on the Delhi – Matura National high way. The plant has a
capacity to manufacture 25000 units per month.
5 – S Philosophies
Tecumseh encourages its employees to follow these philosophies, which is
the Japanese way of working.
1) SERI(Sorting Out):
a. Look around your work area and ask yourself “Is it really necessary
for all items to be there? “
b. Separate items “O. K” re-workable a rejected items
c. Re-work there – workable items and dispose off the rejected items
2) SEITION (Systematic Arrangement):
a. Items must be place in prefixed locations so that they are accessible
and can be easily use
b. Items should be clearly identified by labeling them properly
3) SEISO (Spic and Span):
a. Clean the work place yourself
b. Clean all the equipment including table etc. yourself
4) SEIKETSU (Serene Atmosphere):

a. A clean work place properly selected with a proper arrangement will
soon become dirty if SEIRI, SEITON and SEISO are not practiced
regularly
b. To achieve serene atmosphere the three steps of SEIRI, SEITON and
SEISO should be continuously repeated
c. We would keep our area of work neat and clean including your own
attire
5) SHITSHUKE (Stick to Self Discipline):
a. Follow rules and regulation strictly
b. Adhere to timings and respect time.
c. Confirm to standards while working
d. Follow the prescribed operational standards
The company pays a incentives of Rs.75 per month to its employee for
following these 5 – S philosophies
ADVANTAGES OF 5’S:
By thoroughly enforcing 5-8 in each work area.
 Operations can be performed without error proceeding in, well-
regulated fashion, resulting in fewer defective items. Thereby
increasing the overall quality of product.
 Operations can be performed safely and comfortably, reducing the
chances of accidents.
 Machinery and equipment can be carefully maintained, reducing
the number of breakdowns.
 Operations can be performed efficiently, eliminating waste thereby
increasing the efficiency and productivity.
HOW TO ACHIEVE 5’S:
Every employee can achieve ‘5-S’ easily by having a close look at his/her
work place. He/she is to ensure that
 No rejected /unwanted items are lying at his/her work place.
 All items are kept in proper locations/order.
 Everybody should co-operative in keeping his/her and other’s area and
the Machines clean.
 Follow the rules and regulations and maintain required standards.

Strategies and Process of TRIPL
 Work place improvements (5 – S philosophies)
 Creativity club
 KRA’s (improvements / suggestions)
 Variable earnings – Sharing of value addition
 Agreement process – organization needs
 Non – conformance reporting / audits
 Open / House communication meetings
 Team Assessments and feedback
 Changing life style

TRIPL’S VISION AND MISSION
VISION
It is our goal to be the global leader in all of the markets in which we choose
to participate. We will pursue disruptive technologies to redefine our
products.
MISSION
 We will leverage our global expertise in mechanical, electrical, fluid
handling, related components and services to provide comprehensive
solutions for our customers needs – compressors, engines, electric
motors, pumps, electronics, and controls.
 We will be best in class and the most effective producer by utilizing
the principles of TQM, 6 sigma and lean.
 Our organization will modify itself in response to change in
environment at a pace and amount of change that can be made without
eliminating or impeding our ongoing effectiveness.
 Incisive, continuous strategic thinking will be well communicated and
shared by the organization.

IMPORTANT EVENTS
2000-01
TECUMSEH FULLY ACQUIRED
 SRIRAM, HYDERABAD
 WHIRLPOOL’S COMPRESSOR.
 Facility at Faridabad, Ballabgarh.
2001-02
 Development of plant in Ballabgarh.
2002-03
 Amalgamation with TIPL.
2003-04
 Voluntary retirement scheme.
 Industrial unrest and lockout in the first half of the year.
 Export obligations not met during the year & high foreign outgo.
 Obligations met towards customers by importing finished goods
and selling loss.
2004-05
 Setting up of the CADAM center.

2005-06
 Setting up of a 100% EOU for export of compressors and its parts.
 Expansion in installed capacity at the Hyderabad plant.
 Total foreign outgo reduced drastically.
 Improvement in the market for compressors as a result of an improvement in
market for air-conditioners and refrigerators.
2006-07
 This year exports showed a growth of three times over previous
years in volumes.
 A W capacity has launched two new commercial models of MLA
sense country wide competition among the engineering industries.
 Won the “GREENTECH environment excellence silver award” in
the countrywide competition among the engineering industries.
2007-08
 Tecumseh compressors for china.
 Tecumseh posts 84% rise in exports earnings.
 Tecumseh India to set up rotary compressors unit.
2008-09
 Won the “GREENTECH environment award” in the countrywide
competition among the engineering industries.
AWARDS AND RECOGNITIONS
 Hyderabad plant was awarded the commendation in safety,
health & SHE conducted by CII Chennai.
 Hyderabad plant achieved the GREENTECH
ENVIRONMENT EXCELLENCE GOLD AWARD in the
countrywide competition among the engineering achievement in
environment management.
Products and Services
With a widely used range of Reciprocating, Rotary and Scroll compressors
for varied applications, Tecumseh caters to the entire spectrum of cooling
needs for Air Conditioning, Refrigeration, and Commercial Refrigeration
Application. The superior technology that is built into these compressors
ensures that they operate with high-energy efficiency and at low noise levels.
Compressors manufactured in India are trivialized to suit the exacting Indian
conditions. Which means that they with stand wide voltage fluctuations and
perform well even under extreme weather conditions.

The range includes the energy efficient AW Series, super silent AWQ Series,
and the study, reliable and eco-friendly MLA series of compressors.
Product Range
1. Refrigerator Compressors.
2. Commercial Refrigeration Compressors.
3. Air-Conditioning Compressors.
4. Commercial Air-conditioning Compressors.
5. Condensing units.
COMPETITORS ANALYSIS
In India TRIPL has four man competitors viz., Kirloskar, Volts, Bluestar
and Carrier Air Con Ltd. TRIPL is the market leader with an overall 50%
market share impressed in terms of valued. In this segment of Air-condition
compressor, it has stiff competition with Kirloskar Copeland. The other
manufacturers i.e., Carrier Air con is looking for divestment of their
compressor division as a part of their comeback strategy they have been on a
downside since 1999 it has also delisted its share during their period.
Tecumseh Refrigeration and air condition products have concerned a large
chunk of the Indian market as its clients include most of the OEM’s
Tecumseh has a 40% of market share of the domestic Air-condition and 30%
of the refrigerator compressor market.
Kirloskar is 51:49 joint between Kirloskar brother and Copeland
Corporation, a global competitor of TPC, USA. The joint venture company
took over the compressors manufacturing and sell business of hermitic
compressors division at Karadand a title of Kirloskar brother limited started,
production, of hermetic compressor way back in 1996, at Kirloskar Wadi, it
was then with a technical collaboration with TPC,USA, Which had not yet
entered India, Kirloskar Copeland as part of their strategy to increase their
sales have started manufacturing of condensers, which are mainly used in
dairies, cold storage, industrial chillers and water coolers. The estimated
market size in India being RS.25 Crores.

CHAPTER – 3
LITERATURE REVIEW
- WORKING CAPITAL CYCLE
- CONCEPT OF WORKING CAPITAL
- TYPES OF WORKING CAPITAL
- COMPOSITION OF WORKING CAPITAL
- OBJECTIVES OF WORKING CAPITAL
- FACTORS DETERMING WORKING CAPITAL
- RATIOS RELATING TO WORKING CAPITAL
What is Working Capital?

Firms need cash to pay for all their day-to-day activities. They have to pay
wages, pay for raw materials, pay bills and so on. The money available to
them to do this is known as the firm’s working capital. The main sources of
working capital are the current assets as these are the short-term assets that
the firm can use to generate cash. However, the firm also has current
liabilities and so these have to be taken account of when working out how
much working capital a firm has at its disposal.
Working capital is therefore: -
WORKING CAPITAL = Current Assets - Current liabilities
||
stock + debtors + cash
Working capital management means management of current assets of the
firm. It can be defined in simple terms as excess of current assets over
current liabilities. In short it is the difference between inflow and outflow of
funds. Working capital includes stock of raw material, semi finished goods
including work in progress, cash in hand and bank and debtors after
deducting current liabilities i.e. sundry creditors for expenses ex: salaries and
other administration expenses, interest payable to term lending institutions
and other financial institutions with in 12 months and creditors for purchase
of Raw Material and any short term advances towards sale of goods.
The working capital is an important part of the top half of the firm's balance
sheet. It is vital to a business to have sufficient working capital to meet all its
requirements. Many businesses have gone under, not because they were
unprofitable, but because they suffered from shortages of working capital.

Working Capital Cycle
Cash flows in a cycle into, around and out of a business. It is the business's
life blood and every manager's primary task is to help keep it flowing and to
use the cash flow to generate profits. If a business is operating profitably,
then it should, in theory, generate cash surpluses. If it doesn't generate
surpluses, the business will eventually run out of cash and expire.
The faster a business expands the more cash it will need for working capital
and investment. The cheapest and best sources of cash exist as working
capital right within business. Good management of working capital will
generate cash will help improve profits and reduce risks. Bear in mind that
the cost of providing credit to customers and holding stocks can represent a
substantial proportion of a firm's total profits.
There are two elements in the business cycle that absorb cash - Inventory
(stocks and work-in-progress) and Receivables (debtors owing you money).
The main sources of cash are Payables (your creditors) and Equity and
Loans.
Each component of working capital (namely inventory, receivables and
payables) has two dimensions: TIME and MONEY. When it comes to
managing working capital - TIME IS MONEY. If you can get money
to move faster around the cycle (e.g. collect monies due from debtors
more quickly) or reduce the amount of money tied up (e.g. reduce
inventory levels relative to sales), the business will generate more cash
or it will need to borrow less money to fund working capital. As a

consequence, you could reduce the cost of bank interest or you'll have
additional free money available to support additional sales growth or
investment. Similarly, if you can negotiate improved terms with
suppliers e.g. get longer credit or an increased credit limit; you
effectively create free finance to help fund future sales.
It can be tempting to pay cash, if available, for fixed assets e.g. computers,
plant, vehicles etc. If you do pay cash, remember that this is now longer
available for working capital. Therefore, if cash is tight, consider other ways
of financing capital investment - loans, equity, leasing etc. Similarly, if you
pay dividends or increase drawings, these are cash outflows and, like water
flowing down a plughole, they remove liquidity from the business.
CONCEPT OF WORKING CAPITAL:
There are three types of working capital, Gross working capital, Net working
capital and fixed working capital.
1. Gross Working Capital: It refers to the firms investment in current
assets i.e., mainly stock, debtors, bills receivables and cash. This is
also known as ‘Current capital concept’ or ‘Circulating capital
concept’. It is represented by the sum total of the current assets of the
enterprise. It is known as Circulating capital’ because current assets of

a company are changed from one form to another, for e.g. from cash to
inventories, inventories to receivable to cash.
The Gross capital concept focuses attention on two aspects of current
assets management:
a). Optimum investment in current assets and
b). Financing of current assets.
The gross capital concept takes into consideration that: every increase
in the funds of the enterprise would increase its working capital. This
concept is more useful in determining the rate of return on investments
in working capital.
2. Networking capital: It is Excess of Current Assets over Current
Liabilities. Alternatively it is that portion of the firm’s current assets,
which is financed by long-term funds.
Net working capital being the difference between current assets and
current liabilities is quantitative concepts.
 It indicates the liquidity position of the firm.
 Suggests the extent to which working capital needs may be
financed by permanent sources of funds.

3. Fixed working capital: Every firm is required to maintain a
minimum balance of cash, inventory etc, in order to meet the business
requirement even in the slack seasons. This part of current assets is
called as permanent or fixed working capital.
TYPES OF WORKING CAPITAL:
Depending upon the nature of the funds blocked, working capital can
be of two types
1. PERMANENT OR REGULAR WORKING CAPITAL
2. VARIABLE WORKING CAPITAL
PERMANENT WORKING CAPITAL:
The magnitude of the current assets depends upon the firms operating cycle.
The operating cycle is a continuous process and the need for current assets is
also continuously. But the level of current assets needed is not always same.
It increases or decreases overtime. However there is always minimum level
of current assets which is continues required by a firm to carry out its
business operations. The minimum level of current assets is called permanent
or fixed working capital.

It represents the minimum amount of investment in current assets that is
seemed necessary to carry on operations at time. It is also known as ‘hard
core’.
It is of two kinds:
a). INITIAL WORKING CAPITAL:
At its inception and during the formation period of its operations, a company
must have enough cash funds to meet its obligations. In the initial year it as
revenues may not be regular and adequate credit arrangements may not be
available from banks, financial institutions, etc till it has established its credit
standing, credit may have to be granted on sales to attract the customers.
b). REGULAR WORKING CAPITAL:
It is the amount of working capital needed for the continuous operations of
the business of the company. It refers to the excess of current assets over the
current liabilities so that the process of conversion of cash into stock, stock
into sales, receivables and collections is maintained without any breaks.
VARIABLE WORKING CAPITAL:

This working capital required over and above the permanent working capital
depends upon changes in production and sales are called fluctuating or
variable working capital or temporary working capital. There may be
changes either increase or decrease in working capital. Many the variable
working capital required in season dependent.
It represents additional assets required at different times during the operating
year to cover any change or variability from the normal operations. It can be
of two parts:
A. Seasonal working capital
B. Special Working Capital
A. Seasonal working capital:
The amount to be blocked due to seasonal nature of industry. Examples are
package tours and summer tours. Obviously it refers to financial
requirement that cope up during that particular season. Beyond their initial
and regular circulating capital most business will require at stated intervals a
large amount of current assets to fill the demands of the seasonal busy
periods.
B. Special Working Capital:

Extra funds are needed to meet contingencies, festivals, and special
occasions.
All business enterprises have to be prepared to meet unforeseen eventualities
that may arise in the course of their operations. Therefore, they must have
extra funds at ‘Unstated Periods’ to meet contingencies.
COMPOSITION OF WORKING CAPITAL:
Working capital consists of
Current Assets
Current Liabilities
Current Assets:
Current Assets are those, which can be converted into cash with one year
without affecting the operations of the firm.
In the management of working capital, two characteristics of current assets
must be borne in mind:
1. Short life span

2. Swift transformation into other asset forms.
The life span of current assets depends upon the time required in the
activities of procurement, production, and sales.
List of Current Assets:
 Cash and Bank Balances
 Investments:
a) Government and Other Trustee Securities
b) Fixed deposits with Banks
 Receivables arising out of Sales
 Instalments of Deferred receivable due within a year
 Raw Material and components used in the process of manufacture
including those in transit
 Stock in Process including semi-finished goods
 Other consumable spares
 Advance payment of tax
 Advance for purchase of raw materials, components and consumable
stores
 Prepaid Expenses
 Deposits kept with public bodies for the business operations.

Current Liabilities:
Current Liabilities are those, which are expected to fall due or mature for
payment in a short period not exceeding a year and represent short term
sources of funds.
List of Current Liabilities:
 Short term Borrowings (including bills purchased and discounted)
from
a) Banks and
b) Others
 Unsecured Loans
 Public deposits maturing in one year
 Sundry creditors for raw materials and consumable stores and spares
 Interest and other charges accrued but not due for payment
 Deposits from Dealers, Sellers agents, etc
 Instalments of term Loans, Deferred payments, Credits, Debentures,
Redeemable preference shares and long term deposits, payable within
one year
 Statutory Liabilities
a) P F dues
b) Provision for taxation
c) Sales tax and excise tax
d) Obligations towards workers considered statutory
e) Others
 Miscellaneous Current Liabilities
a) Dividends
b) Liabilities for expenses
c) Gratuity payable within one year
d) Other provisions
e) Any other payment due within one year

OBJECTIVES OF WORKING CAPITAL:
The main aim of Working Capital Management is to attain a Trade-off
between Profitability and Risk. Here Risk refers to profitability that a firm
will become technically insolvent. Risk is commonly measured by using the
amount of net working capital or the current ratio. Thus, more the new
working capital, the more liquid the firm and therefore less likely it is to
become technically insolvent. On the other hand, Lower levels of liquidity
are associated with increasing levels of Risk. To increase the amount of
profits, a firm, may sacrifice solvency i.e. taking risk of technical insolvency
and maintain relatively low levels of current assets. When the firm does so,
its profitability would improve but would be exposed to greater risk of
technical insolvency. Thus, if a firm wants to increase profitability it must
also increase its risk and if it wants to decrease risk, it must decrease
profitability. Therefore, Working capital management involves a Trade-off
between Risk and Profitability.

FACTORS DETERMING WORKING CAPITAL:
There are no hard and past rules for determining working capital of the firm.
There are several factors which influence working capital need of the firm
and the factors may change from time to time. The following are the factors
that generally influence the working capital requirement of firm.
a. Nature & size of the business
b. Trading & service orient firms have very small investment in
fixed assets, but require a large sum of money to be invested in
working capital. Manufacturing business requires much working
capital but it also depends nature of business.
 REVENUE GROWTH:
The working capital requirement of the firm increase as it revenue
grow. But to establish a direct relationship between volume of revenue
and working capital requires is difficult. Practically current assets will
have to employ before revenue growth takes place. It is therefore
necessary to make advance planning of working capital requirement
for a firm on a continuous basis.

 DEMAND CONDITION:
Many firms are seasonal in nature and cyclical fluctuations in demand
for their products and services. These business variations effect the
working capital requirement i.e., temporary requirement of working
capital of the firm. Under the boom conditions the firm requires more
working capital. As they will invest huge funds infixed assets.
Seasonal fluctuations i.e., peek season demand in more resources a in
production, in certain month, will also effect working capital
requirement. Therefore financial arrangements for seasonal working
capital requirement can be made in advance. The financial plan should
be flexible enough to take care of some abrupt seasonal fluctuation.
 OPERATING EFFICIENCY AND PERFORMANCE:
The operating efficiency and performance of the firm relates to the
optimum utilization of resources at minimum cost. If the firm can
efficiently controlling operating costs then it can effectively
contributing to its working capital. Better utilization of resources
includes profitability and internal cash profit can be utilized as a part
of working capital. The availability of cash generated will be available

for working capital depends upon taxation, dividend, retention policy
and depreciation policy of firm.
 FIRM CREDIT POLICY:
Every firm must allowed credit to its customers. The credit period
depends upon the norms of the industry and market conditions. Effect
the credit policy i.e. credit to customers allowed after properly
accessing the credit worthily ness of the customers and firms
collections will maintain the level of book debts which anti effect the
working capital of the company.
RATIOS RELATING TO WORKING CAPITAL:
To evaluate the financial condition and the purpose of a firm the financial
analyst needs certain yardsticks frequently use are a ratio relating two pieces
of financial data to each other. Different types of ratios relating to working
capital management are

1) CURRENT RATIO:
The current ratio is calculated by dividing current assets by current
liabilities.
Current ratio =Current assets /Current liabilities
Current Assets include cash and those assets, which can be converted into
cash within a year, such as marketable securities, debtors, and inventories.
Prepaid expenses are also included in current assets as they represent the
payments that will not be made by the firm in the future. All obligations
maturing within a year are included in current liabilities. Current liabilities
include creditors, bills payable accrued expenses, short-term bank loan,
income tax liability, long-term debt5, maturing in the current year.
The current ratio is a measure of firm’s short-term solvency. it indicates the
availability of current assets in rupees for every one rupee of current liability.
A ratio of greater that one means that the firm has more current assets than
current claims against them.

2) QUICK RATIO
It establishment a relationship between quick or liquid assets and current
liabilities. An asset is liquid if it can be converted into cash immediately or
reasonably soon without a loss of value. Cash is the most liquid asset. Other
assets, which are considered to be relatively liquid and included in quick
assets, are considered to be relatively liquid and included in quick assets, are
debtor’s bills receivables marketable securities (temporary quoted
investments). Inventories are considered to be less liquid. Inventories
normally require some time to rely into cash; their value also has a tendency
to fluctuate. The quick ratio is found out dividing quick assets by current
liabilities.
Quick ratio = Current assets – inventories / Current liabilities.
Generally, a quick ratio of 1 to 1 is considered to represent a satisfactory
current financial position. Although quick ratio is more penetrating test of
liquidity than the current ratio, yet it should be used cautiously. A quick ratio
of 1 to 1 or more does not necessarily imply sound liquidity position. A
company with a high value of quick ratio can suffer from shortage of funds if
it has slow paying its current obligation in time if it has been turning over its
inventories efficiency, nevertheless, the quick ratio remains an important
indeed of the firm’s liquidity.
3) INVENTORY TURNOVER RATIO:
This ratio expresses the relation between the cost of goods sold during a give
period and the average amount of inventory outstanding during a period. The
formula for these ratios is as follows:
Inventory Turnover Ratio = cost of goods sold/Avg. Inventory at cost
Avg. Inventory = opening stock + closing stock / 2
Inventory turnover ratio may also be calculated by making use of the
following formulation.
Inventory turnover ratio = net sales / Avg. inventory at selling price
Inventory turnover indicates the velocity with which goods move through the
business. It gives the rate at which inventories are converted into sales and
then into cash. Thus it helps to measure the liquidity of the firm. A high ratio
indicates quick movement of inventories and the efficiency of inventory
control. A low ratio, on the other hand, indicates existence of slow moving
and obsolete stocks.

4) DEBITORS TURNOVER RATIO:
This ratio express the relationship between net credit sales of affirm and its
trade debtor’s bills receivable there by indicates the rate at which book debts
are converted into cash. In other words, it shows how many days credit is
outstanding by debtors or the time taken to collect the debts.
Debtors turnover ratio = Net credit sales / Avgas, debtors
To calculate the debt collection period just to following:
Debt collection period = Number of working days in a year / debtors
turnover ratio
Usually the number of working days in a year is taken as 365.

The debtor’s turnover ratio or the average collection period should be
compared with the period of credit allowed to judge the efficiency of the
collection department. As a rule of thumb, the average collection period
should no exceed 11/2 times the credit period.
Sources of working capital:
Out of the total current requirement of funds some portion of current funds is
more of permanent nature and its refers to fixed working capital. Balance
portion of funds cyclical and its refers to variable working capital. Every
industrial enterprise as to maintaining a minimum stock of raw material,
work-in-progress, finished goods. Loose tools and spare parts. It always
requires money for the payment of wages and salaries throughout the year.
Funds require for these is known as fixed or permanent working capital.
Depending upon the size and volume of the business, additional working
capital is required for buying materials and for meeting the current
operational expenses. This is the variable part of the working capital. The
fixed working capital should be financed from long-term sources and
variables working capital should be financed from short-term sources.

Sources of regular working capital
Issue of share:
Rising of funds by issue of shares has certain distinct edges over others
sources, especially borrowed capital. Once procure it is not refundable
except in cash of liquidation and does not create any changes on the assets of
the company .so it is advantages for affirm to finance its fixed working
capital out of proceeds of the issuing of shares.
Issue of debenture or long term borrowing
Debentures are fixed interest-bearing securities, besides being redeemable at
the option of the company. The entire surplus after payment of debentures
interest goes to the credit of equity shareholders either in the form of interest
goes to the credit of equity shareholders either in the form of increased rates
of dividend or in the form of increased relation. Similar advantages are also
accrued if working capital is financed by long term borrowing.

Retention
Retention in the form of general reserve and or credit balance of profit and
loss account may also be used to finance fixed working capital
Sources of seasonal or variable working capital
For firms, which are in seasonal character in their business a large amount of
working capital, is required for holding inventory in peak period. But as soon
as peak period is over, their working capital becomes idle. So such firms may
not prefer to finance working capital from long-term sources. They may find
it convenient to meet working capital from short-term sources may find it
convenient to meet their working capital from short-term sources as follows
Cash Credit
This represent the over draft facilities as the hypothecation of inventories and
bad debts. The cash credit system is unique to the Indian banking system.
Such as flexible system of bank finance is nowhere in the world.

Discount of bills
Banks discount the bills raised on the buyers of companies’ goods. This
facility helps in realizing funds without wasting for the credit period to get
over.
Bank guarantees
A Banks Issues specific guarantee to facilities business transaction between
various parts is, including government agencies.
Determination of Working capital
The factors, which usually influence working capital needs in
manufacturing undertaking, cover;
1. The nature of and size of business.
2. Manufacturing process, technology and facilities.
3. Competitive forces.
4. Speed of operating cycle.
5. Growth and expansion activities
6. Credit terms
7. Dividend policy
8. Production policy
9. Attitude towards policy
10.Inventory procedures, depreciation policy, business cycle management
attitude etc.,
11. Infrastructure the abysmal economic and physical infrastructure in
India also effects to working capital needs adversely prolonging the
operating cycle
Working capital management is an integral part of overall corporate
management. The effective management of working capital like other
areas of management requires a clear statement of goals to be pursed and
responsibility to be allocated. Cash management and short-term loans
along with the level of debtors are the responsibility of financial
executives. Inventory and credit control are managed in the other

departments these division of responsibilities makes a coordinate
approach to working capital management.
Profitability and liquidity are the twin objectives of working capital
management. Profitability and liquidity frequently conflict with each
other. Attempts to procedure maximum profitability and out of various
elements of working capital do create severe liquidity problems. At the
same time, over concentration on liquidity does dilute profits.
Management of working capital establish the best possible credit off
between the profitability of net current assets employed and the ability to
pay current liabilities as there fall due. Working capital management
includes
1. Cash management
2. Receivable management
3. Inventory management
CHAPTER - 4
DATA ANALYSIS
- CHART OF THE NET WORKING CAPITAL
- CHART OF THE SALES TO WORKING CAPITAL TURNOVER

RATIO
- CHART OF THE DEBTORS TURNOVER RATIO
- CHART OF THE CURRENT RATIO
- CHART OF THE QUICK RATIO
- CHART OF THE COMPOSITION OF CURRENT ASSETS
- PROFIT AND LOSS ACCOUNTS
- COMPARATIVE BALANCE SHEETS
Size and growth of current assets and liabilities and Net working capital of
TRIPL during the period 2003-2004 to 2007-2008
(All amounts are in thousands)
Year Current Growth Current Growth Net Growth

Assets Rate Liabilities Rate W.C of
(%) (%)
W.C
(%)
2004- 1500977 100 862668 100 638301 100
05
2005- 1688733 112.5 1029208 119 659525 103
06
2006- 2307604 153.74 1155154 134 115245 180
07 0
2007- 2150110 143.24 1359165 157 790945 123
08
2008- 2011272 133.99 1470284 170 540988 84
09
Asset,libilities And Working Capital
2500000
2000000
1500000
100Rs
Year
1000000
Current Assets
500000 Current Liabilities
0
1 2 3 4 5 6 7
2004-2009 Years
WORKING CAPITAL TURNOVER RATIO
Year Networking
Sales Ratio
Capital
2004 – 2005
2648791 638309 4.15
2005 – 2006
3423153 659525 5.19
2006 – 2007
4225506 1152450 3.69
2007 – 2008
3901375 790945 4.93
2008 – 2009
4748354 540988 8.77
Sales ToWorkingCapital Ratio
10
9
8
7
6
5 Ratio
4
3
2
1
0
5
9
0
0
0
0
2
2
2
–
–
–
–
5
8
4
6
0
0
0
0
2
Turnover Ratio:
Debtors Turnover Ratio expresses the relationship between debtors and sales.
A high Debtors Turnover Ratio or low Debt collection period is indicative of
sound credit management policy.
Table shows Debtors Turnover Ratio of TRIPL during the period 2003-
2004 to 2007-2008

Year Net Credit Sales Avg. Debt Ratio
2004 – 2005 2648791 567931 4.67
2005 – 2006 3043448 682289 4.46
2006 – 2007 3925325 612590 6.24
2007 – 2008 3614471 442498 8.17
2008 – 2009 4417677 47842 9.34
Debitor Turnover Ratio
10
8
6
Ratio
4
2
0
2004 – 2005 – 2006 – 2007 – 2008 –
2005 2006 2007 2008 2009
From the above table, it is observed that the TRIPL’s debtor’s turnover ratio
shows a good sigh. The company noted a maximum ratio of 9.34 in the year
2008 – 2009 and the maximum ratio of 4.46 in the year of 2004 -05.
If we observed the above table the ratio is increasing from 4.46 in the year
2005-2006 to 9.34 in the year 2008-09 in the year but it is decreased to 4.46
in the year 2005-06. It shows a good sign for the company.
Current Ratio:
It is the ratio of the current assets current liabilities this ratio is used to know
the company’s ability to meet its current obligations. The standard norm for
the current ratio is 2:1
Current ratio = current Assets / Current liabilities.
Table showing current ratio of TRIPL during the period 2004-2005 to
2008 -2009
Year Current Assets Current Liabilities Ratio
2004 – 2005 1500977 862668 1.74
2005 – 2006 1688733 1029208 1.64
2006 – 2007 2307604 1155154 1.99
2007 – 2008 2150110 1359165 1.54
2008 – 2009 2009547 1427828 1.40

Current Ratio
2.5
2
1.5
Ratio
1
0.5
0
2004 – 2005 – 2006 – 2007 – 2008 –
2005 2006 2007 2008 2009
It is observed that the TRIPL’s current ratioowing a increasing trend;
the company’s liquidity position is satisfactory

The current ratio increased slightly up to 2007. But in 2008 it declined
because of increase in current liabilities, and then it started to decrease
further in2009 as 1.40. if the company maintains to increase the ratio it can
meet obligations.
Quick Ratio:
Quick ratio is relation between quick assets and current liabilities. The term
quick assets, which can be converted into cash with a short notice. This
category also includes cash bank balances short – term investments and
receivables.
Quick ratio = Quick Assets / current liabilities
Table showing quick ratio of TRIPL during the period 2004 - 2005 to
2008– 2009
(All amounts are in

thousands)
Current
Year Current Assets Ratio
Liabilities
2004 – 2005 870459 862668 1.01
2005 – 2006 923353 1029208 0.89
2006 – 2007 1056852 1155154 0.91
2007 – 2008 1005863 1359165 0.74
2008 – 2009 1082902 1427828 0.76

Quick Ratio
1.5
1
Ratio
0.5
0
2004 – 2005 – 2006 – 2007 – 2008 –
2005 2006 2007 2008 2009
It is observed from the table that the TRIPL’s Quick Ratio is satisfactory.
The company has noted a maximum ratio of 1.01 in the year of 2006 – 2007.
Except the 2004 year, the remaining is below the standard of the norm 1:1.
But we observed the ratio of the company, it is decreasing gradually. so it is
a bad sign for the company.
Composition of current Assets
(all the amounts are in thousands)
Particulars 2004 – 05 2005 – 06 2006 – 07 2007 – 08 2008 – 09 Avg.

630518 765380 1250752 1144247 926645 48.16
Inventory (42%) (45.32%) (54.2%) (53.41%) (46.07%)

Sundry 708107 656472 568707 316288 523360 30.17
Debtors
(47.17%) (38.87%) (24.64%) (14.71%) (23.02%)
Cash and 56675 35502 25034 58827 17636 4.11
Bank
(3.77%) (2.1%) (1.08%) (2.74%) (2.74%)
Loans & 105677 29032 93380 192467 204545 6.38
Advances
(7.04%) (1.71%) (4.04%) (8.95%) (10.62%)
Other -- 202347 369731 438281 339086 12.94
current
Assets
Total 1500977 1688744 2307604 2150110 2011272
(100%) (100%) (100%) (100%) (100%)

PROFIT AND LOSS ACCOUNT:
The income statement is also called as income statement, it is considered to
be the most useful of all financial statements. It prepared by a business
concern in order to know the profit earned and loss sustained during a
specified period. It explains what has happened to a business as a result of
operations between two balance sheet dates. For this purpose it matches the
revenues and cost incurred in the process of earning revenues and shows the
net profit earned or loss suffered during a particular period.
The nature of Income which is a focus of the income statement can be well
understood if business is taken as an organization that uses “Input” to
produce “Output”. The output of the goods and services that the business
provides to its customers. The values of these outputs are the goods and
services that the business provides to its customers. The values of these
outputs art the amounts paid by the customers for them. These amounts are
called “revenues” in the accounting. The inputs are the economic resources
used by the business in providing these goods and services. These are termed
“expenses” in accounting.
Statements of profit & loss for the year ended Dec 31, 2005
(All amount in thousands of rupees)
PARTICULARS Schedule 2004 2005
INCOMES
sales and services

sales (gross) 1,983,391 3,015,714
less: excise duty 286,365 366,923
Net sales 1,697,026 2,648,791
Add: service Incomes 224,878 173,847
1,921,904 2,822,638
other incomes 13 125,693 114,172
TOTAL(A) 2,047,597 2,936,810
EXPENDITURES
Material costs 14 1,232,971 1,737,661

decrease/increase in stock 15 (93,224) (28,949)
excise duty on stocks, scrap sales etc., 29,236 32,655
employee costs 16 426,585 482,580
manufacturing and other expenses 17 314,637 382,604
Depreciation 157,225 143,832
Interest 18 24,758 25,793
miscellaneous expenditure written off 5,300 2,759
TOTAL(B) 2,097,488 2,778,935
profit before tax(A-B) (49,891) 157,875

TAXATION ---- -----
Deferred ----- (46,315)
Net profit for the year (49,891) 111,560

Profit & loss a/c beginning of the year (420,294) (470,185)
Profit & loss a/c end of the year (470,185) (358,625)

Earnings per share basic & diluted 5.60
(All amounts in thousands of rupees)
INCOMES
sales and services

sales (gross) 3,015,714 3,423,153
Net sales 2,648,791 3,043,448
2,822,638 3,145,630
other incomes 13 114,172 258,985
TOTAL(A) 2,936,810 3,404,615
EXPENDITURES
Material costs 14 1,737,661 2,219,601

decrease/increase in stock 15 (28,949) (59,818)
employee costs 16 482,580 588,770
Interest 18 25,793 44,428
miscellaneous expenditure written off 2,759 ----
TOTAL(B) 2,778,935 3,347,142
Profit before tax(A-B) 157,875 57,473

TAXATION
current(Net of excess provisions of earlier year
written back rs.5086(2002 nil) ----- (86)
Deferred (46,315) (40,971)
Net profit for the year 111,560 16,588


Earning per share basic & diluted 5.60 0.80
INCOMES
sales and services

sales (gross) 3,423,153 4,255,506
Net sales 3,043,448 3,925,325
3,145,630 3,991,993
other incomes 13 258,985 426,626
TOTAL(A) 3,404,615 4,418,619
EXPENDITURES
Material costs 14 2,219,601 3,387,645

decrease/increase in stock 15 -59,818 -315,934
employee costs 16 588,770 668,065
Interest 18 44,428 36,532
miscellaneous expenditure written off ----- ------
TOTAL(B) 3,347,142 4,448,593
Profit before tax(A-B) 57,473 (29,974)

TAXATION
current(Net of excess provisions of earlier year
written back rs.5086(2002 nil) (86) ------
Deferred (40,971) (3,779)
Net profit for the year 16,588 (33,753)


Earnings per share basic & diluted 0.80 1.55
INCOMES
sales and services

sales (gross) 4,255,506 3,903,005
Net sales 3,925,325 3,614,471
3,991,993 3,681,833
other incomes 13 426,626 493,559
TOTAL(A) 4,418,619 4,175,392
EXPENDITURES
Material costs 14 3,387,645 2,828,104

decrease/increase in stock 15 -315,934 186,135
612,4
employee costs 16 668,065 67
Interest 18 36,532 69,032
miscellaneous expenditure written off
TOTAL(B) 4,448,593 4,455,127
Profit before tax(A-B) (29,974) (279,735)

Provision for taxation
Current Tax ---- (4000)
Fringe benefit Tax ---- (8056)
Deferred (3,779) ----
Net profit for the year (33,753) (291,791)


Earning per share basic & diluted 1.55 13.25
INCOMES
sales and services

sales (gross) 3,903,005 4,748,354
Net sales 3,614,471 4,417,676
3,681,833 4,455,104
other incomes 13 493,559 386,261
TOTAL(A) 4,175,392 4,841,365
EXPENDITURES
Material costs 14 2,828,104 3,722,053

decrease/increase in stock 15 186,135 88,800
employee costs 16 612,467 685,159
Interest 18 69,032 133,955
miscellaneous expenditure written off
TOTAL(B) 4,455,127 5,414,600
Profit before tax(A-B) (279,735) (573,235)

Provision for taxation
current taxation (4000) ----
fringe benefit tax (8056) (7,355)
Net profit for the year (291,791) (580,590)

Profit & loss a/c end of the year (667,581) (1,248,171)

Earnings per share basic & diluted 13.25 26.37
Balance sheet
Balance sheet is a statement of financial position of a business at a specified
moment of time. It represents all assets own by the business at a particular
moment of time and the claim of the owners and outsiders against those
assets at that time. It in a way of the financial condition of the business at
that time.
The important distinct an income statement and balance sheet is that the
income statement is for a period while balance which is for a particular date.
Income statement is therefore a flow report, as contrasted with the balance
sheet which is a static report
Comparative Balance Sheets
The comparative balance sheet analysis is the study of the same items, group
of items and computed items in two or more balance sheets of the same
enterprise on different dates. The changes in periodic balance sheet items
reflect the conduct of a business. The changes can be observed by
comparison of the balance sheet at the beginning and at the end of a period
and these changes can help in informing an opinion about the progress of and
enterprise.
Balance Sheet of Tecumseh Products India Pvt. Ltd.
During the year 2003- 2004
**All amounts are in thousands

2003 2004 Inc/Dec
Amoun Amoun Amoun
t t t %
SOURCES OF FUNDS
Share Holders Funds
199053 199053
Share Capital 4 4 0 0
Reserves and Surplus 218647 362394 143747 66
Advance share Application Amount 7
220918 235292 14374
(A) 1 8 7
Loan Funds
Secured Loans 166539 200909 34370 25
Unsecured Loans 0 180000 180000 0
21437 12
(B) 166539 380909 0 9
237572 273383 35811
(A +B) = (C) 0 7 7 15
APPLICATION OF FUNDS
Fixed Assets
197862
Gross block 189464 8 83985 4
LESS: Accumulated Depreciation 446313 588836 142523 32
144833 138979
Net Block 0 2 -58538 4
58
ADD: Capital Work in progress 3693 248639 212246 3
(including Capital Advances), Net 10
10
Fixed Assets held for disposal 856 0 -856 0
148557 163843 15685
(D) 9 1 2 10
Investments
(E) 1040 1040 0 0
Deferred Tax Asset-Net 10
(F) 0 97432 97432 0
Current Assets, Loans and Advances
Inventories 561630 630518 68888 12
Sundry Debtors 387771 708107 320336 83
12
Cash and bank balances 24837 56675 31838 8
Loan and Advances 103140 105677 2537 2
other current Assets
107737 150097 42359
(G) 8 7 9 39
Less: Current Liabilities and Provisions
Current Liabilities 614498 809145 194647 32
Provisions 46723 53523 6800 15
(H) 661221 862668 20144 30
7
Net Current Assets 22125
(G - H) = (I) 417053 638309 6 53
10
Miscellaneous Expenditure (written off) 2759 0 -2759 0
-
Profit and Loss Account 11156
(J) 470185 358625 0 24
Total 23757 27338 35811
15
(D+E+F+I+J) 20 37 7
Interpretation (2003-2004):
1. The comparative balance sheet of the company during the year 2003-
2004 records that the current assets have increased by 423599
thousands i.e.,39%
2. Because of increase in current assets we can say that the short – term
solvency of the company is good.
3. The current liabilities have increased by 201447 thousands i.e.,30.4%
4. Fixed assets have decreased by 153708 thousands i.e.,10%
5. The shareholders funds of the company have increased when
compared to previous year. So we can say that long-term solvency of
the company is satisfactory.

6. There is increase in working capital of 222152 thousands when
compared to the previous year. So we can say that the financial
position of the company is good.

2004 2005 Inc/Dec
Amoun Amoun Amoun
t t t %
SOURCES OF FUNDS
Share Holders Funds
199053 210199
Advance share Application Amount
23529 246438 11146
(A) 28 9 1 5
Loan Funds
Secured Loans 200909 136179 -64730 -32
Unsecured Loans 180000 293101 113101 63
(B) 380909 429280 48371 13
273383 289366 15983
(A +B) = (C) 7 9 2 6
Fixed Assets
197862 240188
Gross block 8 4 423256 21
138979 163823
Net Block 2 2 248440 18
ADD: Capital Work in progress 248639 197374 -51265 21
(including Capital Advances), Net 163843 183560 197155 12
1 6
Fixed Assets held for disposal 0 0 0
163843 183560 19717
(D) 1 6 5 12
Investments -
(E) 1040 40 -1000 96
Deferred Tax Asset-Net -
(F) 97432 56461 -40971 42
Inventories 630518 765380 134862 21
Sundry Debtors 708107 656472 -51635 -7
Cash and bank balances 50675 35502 -15173 -31
11
other current Assets 0 0 0 0
150097 168873 18775 -
(G) 7 3 6 13
13
Provisions 53523 125183 71660 4
102920 16654
(H) 862668 8 0 19
Net Current Assets
(G - H) = (I) 638309 659525 21216 3
Miscellaneous Expenditure (written off)
Profit and Loss Account
(J) 358625 342037 -16588 -5
Total 27338 28936 15983
6
(D+E+F+I+J) 37 69 2
Interpretation (2004-2005)
1. The comparative balance sheet of the company during the years 2004-
thousands i.e.,13%
3. The current liabilities have increased by 166540 thousands i.e.,19%

6. There is an increase in working capital of 212216 thousands when

2005 2006 Inc/Dec
Amoun Amoun Amoun
t t t %
SOURCES OF FUNDS
Share Holders Funds
210199 220186
Reserves and Surplus 362394 362394 0
246438 256425
(A) 9 5 99866 4
Loan Funds
13
Secured Loans 136179 324407 188228 8
Unsecured Loans 293101 549874 256773 88
(B) 429280 874281 44500 10
1 4
289366 343853 54486
(A +B) = (C) 9 6 7 19
Fixed Assets
240188 273371
163823 176889
Net Block 2 2 130660 8
-
ADD: Capital Work in progress 197374 87601 109773 -56
183560 185649
(including Capital Advances), Net 6 3 20887 1
Fixed Assets held for disposal 0 1081 1081
183560 185757
(D) 6 4 21968 1
Investments
(E) 40 40 0 0
Deferred Tax Asset-Net
(F) 56461 52682 -3779 7
125075
Inventories 765380 2 485372 63
Sundry Debtors 656472 568707 -87765 -13
Cash and bank balances 35502 25034 -10468 -29
22
168873 230760 61887
(G) 3 4 1 37
100108
Provisions 125183 154071 28888 23
102920 115515 12594
(H) 8 4 6 12
Net Current Assets 115245 49292
(G - H) = (I) 659525 0 5 75
Profit and Loss Account
(J) 342037 375790 33753 10
Total 28936 34385 54486
19
(D+E+F+I+J) 69 36 7
thousands i.e.,37%
4. Fixed assets have increased by 21968 thousands.
6. There is increase in working capital of 492925 thousands when

2006 2007 Inc/De
c
Amoun Amoun Amou
t t nt %
SOURCES OF FUNDS
Share Holders Funds
220186 220186
25642 25642
(A) 55 55 0 0
Loan Funds
Secured Loans 324407 384509 60102 19
100359 45372
87428 13881 51382
(B) 1 03 2 15
34385 39523 51382
(A +B) = (C) 36 58 2 15
Fixed Assets
273371 344102 70731
118742 22260
176889 225359 48470
Net Block 2 8 6 27
185649
(including Capital Advances), Net 3
Fixed Assets held for disposal 1081 0 -1081 0
18575 24411 58353
(D) 74 10 6 31
Investments
(E) 40 40 40 0
(F) 52682 52682 52682 0
-
125075 114424 10650
Inventories 2 7 5 -9
-
25241
Sundry Debtors 568707 316288 9 -44
Cash and bank balances 25034 58827 33793 135
-
23076 21501 15749
(G) 04 10 4 -7
100108 119201 19092
Provisions 154071 167153 13082 8
11551 13591 20401
(H) 54 65 1 18
Net Current Assets 11524 79094 - -31
(G - H) = (I) 50 5 36150
5
Profit and Loss Account 37579 66758 29179
(J) 0 1 1 78
Total 34385 39523 5138
15
(D+E+F+I+J) 36 58 22
Interpretation (2006-2007):
2007 records that the current assets have decreased by 157494
thousands i.e.,7%
2. Because of decrease in current assets we can say that the short – term
solvency of the company is not good.
3. The current liabilities have increased by 204011 thousands i.e., 18%
4. Fixed assets have increased by 583536 thousands i.e.,10%

the company did not yield any increase when compared to previous
year.
6. There is an decrease in working capital of 361505 thousands compared
to the previous year.
7. Hence the financial position of the company is not satisfactory.

During the year 2007 – 2008

2007 2008 Inc/Dec
Amoun Amoun
t Amount t %
SOURCES OF FUNDS
Share Holders Funds
220186
256425 256425
(A) 5 5 0 0
Loan Funds
Secured Loans 384509 318621 -65888 17
100359
138810 150130 19319
(B) 3 2 9 14
395235 414555 19319
(A +B) = (C) 8 6 8 5
Fixed Assets
344102
Gross block 3 3668021 226998 7
118742
225359
Net Block 8 2190732 -62866 -3
- -
(including Capital Advances), Net
Fixed Assets held for disposal 0 0 0 0
-
244111 226135 17975
(D) 0 2 8 -7
Investments
(E) 40 40 0 0
(F) 52682 52682 0 0
114424 - -
Inventories 7 926645 217602 19
Sundry Debtors 316288 629396 313108 99
-
Cash and bank balances 58827 17637 -41190 70
- -
-
215011 200954 14056
(G) 0 7 3 -7
119201
Provisions 167153 202313 35160 21
135916 141278
(H) 5 28 68663 5
-
Net Current Assets 20922 -
(G - H) = (I) 790945 581720 5 26
Profit and Loss Account 124970 58218
(J) 667581 2 1 87
Total 39523 41455 19319
5
(D+E+F+I+J) 58 56 8
2008 records that the current assets have decreased by -157497
thousands i.e.,7%
2. Because of decrease in current assets we can say that the short – term
solvency of the company is not good.
5. The shareholders fund of the company is decreased when compared to
previous year.
6. There is a decrease in working capital of 2029225 thousands compared
to the previous year.
7. Hence the financial position of the company is not satisfactory.

CHAPTER - 5
SUMMARY & FINDINGS
 SUMMARY
 FINDINGS & SUGGESTIONS
 BIBLIOGRAPHY
SUMMARY
Tecumseh Products Company’s (TPC) global vision of providing Comfort,
health and convenience to million worldwide, gives an impetus for the
company’s steady diversification into new frontiers. And today, this cooling
giant’s products are available in over a 100 countries across the globe.
TPC entered India through a dual acquisition of SIEL compressors limited-
Hyderabad and the compressor division of whirlpool India limited-
Hyderabad and the compressor division of whirlpool India limited at
Ballabgrah in July 1997.
Tecumseh products India private limited (TRIPL) is a fully owned subsidiary
of TPC. Tecumseh products India private limited is largest independent
manufacturer of compressors in the country.
Since acquisition, TPC has invested about US&85 million into its facilities in
India for capacity and quality infrastructure improvement.

India’s No.1
Today TRIPL is the largest independent manufacturer of both Air
conditioner and Refrigerator compressor in India.
Testimonials to Excellence
The superior products and services offered by TRIPL have made it the first
choice of leading multinational brands in the Air conditioning and
Refrigeration business in India. TRIPL has also begun exports to Middle
East, U.S.A, Pakistan, Bangladesh, Sri Lanka and other countries.
Just the Right compressor
Covering the entire gamut of cooling needs, Tecumseh’s range of
compressors is widely used in Air conditioners, Refrigerators, and
commercial Refrigeration Applications.
Hyderabad facility:
This is the first compressor manufacturing facility in India. Built on 55 acres
of land, the manufacturing facility at Hyderabad, Andhra Pradesh caters to

Air-conditioning and commercial Refrigeration Application. The facility is
both ISO 9001 and 14001 certified.
One of the four global technology Development centers (TDS) of TPC is
located in this facility.
The in-house Application Engineering testing facility is well equipped to
optimize and ensure performance improvement of the appliance.
Ratio Analysis:
The ratio analysis is one of the most powerful tools of financial analysis. it is
the process of establishing and interpreting various ratios (Quantities
relationship between figures and groups of figures).it is with the help of
ratios that the financial statements can be analysis more clearly and decision
are made from such analyses.
A ratio is simple arithmetic expression of the relationship of one to another.
According to accountants Handbooks by Ixen and Bedford a ratio is an
expression of the quantities relationship between two numbers.
Types of Ratios:
i. Liquidity Ratios
ii. Leverage Ratios
iii. Profitability Ratios

iv. Activity Ratios
i. Liquidity Ratio
Measures firms ability to meet its obligation; leverage ratios show the
proportions of the debt equity in financing the firm’s assets; activity
ratios reflect the firm efficiency in utilizing its assets, and profitability
ratios measure overall performance and effectiveness of the firm.
ii. Leverage Ratio
The short-term creditors, like bankers and suppliers of raw materials,
are more concerned with the forms current debt paying ability. On the
other hand, long term creditors like debenture holder’s financial
institution etc. are more concerned with the firm’s long term financial
strength. A firm should have strong short as well as long-term
financial position.
iii. Profitability Ratio

Profitability refers to net result of business operation two types of
ratios are used to measure profitability. These are profit margin ratios
rate of return ratios. While profit margin ratios shows the relationship
between profit and investment.
The important profit margin ratios are:
Gross profit Ratio,
Operating profit ratio,
Net profit Ratio.
The important rate of return ratios are:
Return on assets Return of capital employed,
Return on shareholders’ equity,
Return on equity share capital.
iv. Activity Ratio
These ratios are also referred to activity ratios asset management
ratios. They measure how efficiency a firm employs the assets. They
are based on the relationship between level of activity and levels of

various assets. The important turnover ratios are inventory turnover
ratio, debtors’ turnover ratio, creditors’ turnover ratio, fixed turnover
ratio, total assets turnover ratio.
Comparative balance sheet
The comparative balance sheet analysis is the study of the trend of the same
items, group of items and computed items in two or more balance sheets of
the same enterprise on different dates. The changes in periodic observed by
comparison of the balance sheet at the end of a period and these changes can
help in informing an opinion about the progress of and enterprise.
While interpreting comparative balance sheet the interpreter is expected to
study the following aspects;-

1. Current interpreting comparative and liquidity
position
2. Long term financial position
3. Profitability of the concern
Findings & Suggestions
1. The TRIPL’s net working capital is satisfactory between the years
2003- 2006 since it shows increasing trend ; but after that it is in
declining position
2. The current ratio of TRIPL is satisfactory during the period of study
2003 – 2004 to 2005-2006. It is increased from 1.74 to 1.99 but after
that it is declining.
3. The average quick ratio of TRIPL is not good though the quick ratio is
showing maximum value of 0.91 in the year 2005-06 and then it is
declining to be deal
4. Fixed assets turnover ratio of TRIPL increased from .84 times to 1.95.
The company has to maintain this.

5. Inventory turnover ratio of TRIPL is also increased gradually, without
any fit falls up to 2005-06. But in the year 2005-06 it is declined to
3.02, and again it has increased to 4.02 in the year 2007-2008. Good
inventory management is good sign for efficient management
6. Total Assets turnover ratio of TRIPL is not satisfactory because it is
always below one, except in the year 2007 – 2008 having a value of
1.03
7. Return on investment is not satisfactory. This indicates that the
company’s funds are not being utilized in a better way.
8. Return on Net worth is not satisfactory since it is decreased from 4.95
to 0.69 in the year 2004 -2005, -1.34 in the year 2005 – 2006, -11.61
in the year 2005 – 2006 and -23.1 in the year 2007 – 2008
9. The TRIPL’S Net Profit Ratio is showing negative profit in the year
2005 – 2006. These event is an expected one because since from the
previous two years it is showing the decline stage in Net Profit Ratio
10.The TRIPL’S Gross Profit Margin of TRIPL increases in decreases
due to the increase in sales

11.Profit Margin of TRIPL is decreasing and showing negative profit
because there is increase in the price of copper
12.The TRIPL’S Net Working Capital Ratio is satisfactory.
13.The total Debt ratio is increased from 0.14 to 0.59 during the years
2001 to 2006 this means the company is borrowing money from the
banks well.
14.The TRIPL’s return on Total Assets ratio shows a negative sign in the
year 2005 – 2006
15.The Operating Ratio of TRIPL increase from 64.24 to 101.16 in the
year 2005 -06, 114.3 in the year 2006-07 and reached to 124.1 in the
year 2007-08. So the company has to reduce its operating costs.
16.The Operating Ratio of TRIPL isn’t satisfactory. Due to increase in
cost of production, this ratio is decreasing. So the has to reduce its
office administration expenses
17.Improve position funds should be utilized properly.
18.Better Awareness to increaser the sales are suggested.
19.Cost cut down mechanics can be employed.

20.Better production technique can be employed.
BIBLIOGRAPHY
www.evanimics.com
www.damodaram.com
www.investopedia.com
www.valuebasedmanagement.net
www.nepz.org
www.Lsbn.ac.uk
www.lmu.ac.uk
www.isixsigma.com
www.tecumsehindia.com
BOOKS
Financial Management Written By M.Y. Khan & P.K. Jain

Financial Management Written By Prasanna Chandra
Financial Management Written By I. M. Pandey
Financial Management Written By S. N. Maheswari

Working Capital Management

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A

WORKING CAPITAL MANAGEMENT

I DONTHA RAJESH hereby declare that the project report on “Working

I would like to have this opportunity to place it on a record that this

support of certain individuals. Though it not possible to name all of them, it

would be unpardonable on my part if I do not mention some of the most

I would like to thank my project guide, Mr.K.VENKATESH Deputy.

my study. I would like to thank the Accounts and Finance department

members, for giving me this opportunity to understand the various aspects of

Financial Management in their organization and understand the subject in a

It’s my duty to express deep sense of gratitude to (external guide),

HOD (MBA) Mr K.VENKATESH for her valuable suggestion and

guidance throughout the project.

this achievement would have been an impossible task.

The present project is on working capital in Tecumseh share

 NEED FOR THE STUDY 9-9

 OBJECTIVES OF THE STUDY 10 - 10

 METHODOLOGY OF THE STUDY 11 - 11

 FRAMEWORK OF THE STUDY 12 - 12

 LIMITATIONS OF THE STUDY 13 - 13

 HISTORICAL DEVELOPMENT OF COMPRESSORS 18 - 19

 STRUCTURE OF THE REFRIGERATION COMPRESSOR INDUSTRY

 TECHNOLOGICAL STATUS OF INDIAN INDUSTRY

PROFILE OF TECUMSEH PRODUCTS INDIA 30 - 30

PRIVATE LIMITED, HYD

 STRATEGIES AND PROCESSES AT TRIPL 40 - 40

 TRIPL’S VISON AND MISSION 41 - 44

 PRODUCTS AND SERVICES 45 - 45

 WORKING CAPITAL CYCLE 52 - 54

 CONCEPT OF WORKING CAPITAL 54 - 56

 TYPES OF WORKING CAPITAL 56 - 59

 COMPOSITION OF WORKING CAPITAL 59 - 62

 OBJECTIVES OF WORKING CAPITAL

 FACTORS DETERMING WORKING CAPITAL

 RATIOS RELATING TO WORKING CAPITAL

 SOURCES OF WORKING CAPITAL 71 - 76

 CHART OF THE SALES TO WORKING CAPITAL TURNOVE RATIO 81 - 82

 CHART OF THE CURRENT RATIO 85 - 86

 CHART OF THE QUICK RATIO 87 - 88

 CHART OF THE COMPOSITION OF CURRENT ASSETS 89 - 90

 PROFIT AND LOSS ACCOUNTS 91 - 96

 COMPARATIVE BALANCE SHEETS 97-107

CHAPTER – 5: 108 - 108

SUMMARY & FINDINGS 109 - 109

 SUMMARY 110 - 115

 FINDINGS & SUGGESTIONS 116 - 118

 BIBLIOGRAPHY 119 - 119

- OBJECTIVES OF THE STUDY

- METHODOLOGY OF THE STUDY

- FRAMEWORK OF THE STUDY

- LIMITATIONS OF THE STUDY

NEED FOR THE STUDY

TRIPL (Tecumseh Products India Pvt. Ltd) is a successfully managed

company as evidenced in its financial performance. Evolution of financial

performance of company is a continues process for understanding the

direction in which the company is moving so as to decide and implement the

interest of the organization

groups such as owners, management, leaders, etc.; however, here it is an

analysis to understand financial performance of TRIPL by using the

technique of the ratio analysis

1. To analysis and portray the existing position of TRIPL

2. To study the short term solvency position of TRIPL

3. To study the leverage position of the TRIPL.