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INTRODUCTION
SRM University 1 AMARRAJA BATTERIES LIMITED

1. INTRODUCTION
In Indian situation on an average approximately 60, 70% of the total product

cost is contributed by raw materials costs which form the single major component of
current assets. It is even worse in the case of industries which strives on imported
components for it’s to day functioning. It is no exaggeration that in few Indian
industries imported components are stocked for more than 24 months.
One of the problem of inventory management is maintaining inventory of a

given financial investments, an adequate supply of something to meet an expected
demand patterns is very difficult to achieve. Inventory turn over ratio is an index of
business performance. A soundly managed organization will have higher turnover and
vice versa.
Inventory management deals with the determination of optimal policies and

procedures for procurement of commodities, since it is quite difficult to image a real
work situation in which the required material will be made available at the point of
use instantaneously, hence maintaining inventories become almost necessary.

1.1 INDUSTRY PROFILE
MANUFACTURING INDUSTRY:
India's manufacturing base, which is the fourth-largest among emerging economies, is

among the fastest growing and has seen more investments as a proportion of gross domestic
product than any country except China. The Government has taken several initiatives to
accelerate growth in this sector and improve competitiveness of Indian industry in general
and manufacturing in particular.
The Indian manufacturing sector has been witnessing a major revival, with a
significant turnaround in performance which is reflected in the increase in its growth rate
from 5 per cent in 2000-01 to an impressive growth rate of 12.5 per cent 2006-07. It has
continued its growth in the new fiscal by growing at a rate of 10.3 per cent during 2007-08
and is expected to continue the same next year also. In fact, growth in manufacturing has
been instrumental in the index of industrial production (IIP) growing at a rate of 9.8 per cent
during this period. As many as 15 out of the 17 industry groups have shown positive growth
during the month of August 2008 as compared to the corresponding period in the previous
year i.e. 2007.
The manufacturing industry in India has all the qualities which enhance economic
development, increase the productivity of the manufacturing industry and face competition
from the global markets. The Manufacturing industry in India is believed to have the
potential of improving the economic condition of India Manufacturing industry in a modern
economy operates under regulations framed by the Government. Studies conducted on the
manufacturing industry have concluded that India has a working population of 75%. Out of
this, only 600 million have acquired education till middle school. Due to this reason, the
manufacturing industry in India, which is labor intensive, can provide the requisite number of
employment units in the country.
Exports of manufactured goods in India accounted for 75% in comparison to exports
of manufactured goods all over the world. Owing to the performance manifested by the
export sector in India, the scenario indicates that there is less competition in the
manufacturing segment. Absence of competition is also established by the fact that in spite of
reducing the tariff in the early and mid 90s, India continued to be one of the protected
economies of the world. Contribution of India's export towards international market grew

from 0.5% to 0.7% during 1990 to 2000. During the same period, Malaysia, China, Thailand
and South Korea, registered almost double increase in exports.
The key driver of the huge growth of the manufacturing companies in India is due to the
multinational companies. The manufacturing companies in India are booming in every sector.
The Indian manufacturing companies are famous worldwide. Some of the top manufacturing
companies like Larsen & Turbo, Jindal steel, Bombay Dyeing, Hindustan Lever Network and
many others have made a landmark in the manufacturing industry.
ROAD AHEAD 2010
This identifies the key trends within the manufacturing sector in 2009. As the economic crisis
worsens, manufacturers are trying to safeguard the future of their businesses. Different
regions and industries are feeling the pressure in varying ways with the resulting impact on
technology investment grim. Still, opportunities exist for technology vendors to be able to
quickly adapt to the situation.
BATTERY MANUFACTURING INDUSTRY:
Power supply is a buffer circuit that provides power with the characteristics required by the
load from a primary power source with characteristics incompatible with the load. It makes
the load compatible with its source.
A Power supply is sometimes called a power converter and the process is called power
conversion. It is also sometimes called a power conditioner and the process is called power
conditioning.
A switching mode power supply is a power supply that provides power supply function
through low loss components such as capacitors, inductors and transformers and the use of
switches that are in one of two States, on or off. The advantage is that the switch dissipates
very little power in either of these two states and power conversion can be accomplished with
minimal power loss, which equates to high efficiency. The terms switch mode was widely
used for the this type of power supply unit Motorola, Inc., Who used the trademark SWICTH
MODE TM for products aimed at the switching mode power supply market, started to
enforce their trademark. Others the term switching power supply which seems to be the
popular term. PSMA does not define either switching mode Power supply, but does define
switching regulator.

Because of its emphasis on the efficiency, switching mode power supply design minimize the
use of loss components such as resistors and uses components that are ideally loss less such
as Switches, Capacitors, Inductors and Transformers. The primary design problem is how to
inter connect these components and control the switches so the desired results are obtained.
The secondary design problem is to select, design or over come the performance
characteristics of less than ideal components.
GLOBAL SCENARIO:
The global automotive battery market is highly competitive. Battery makers compete
on price, quality, technical innovation, service and warranty, and consolidation among the
major battery manufacturers continues to shape the industry. The outlook for the automotive
industry has significantly changed since 2008. As recently as the beginning of 2008, we were
looking at a 'managed slowdown' for the global economy and the automotive industry was
very much part of that.
The segment has a domestic market volume of roughly USD 900million, which is
expected to grow as high as USD 10-15 billion by 2015, according to Fraunhofer Magazine.
The automotive battery industry is growing at a rapid rate despite the economic crisis.
The increased focus on hybrid and electric vehicles has led to battery innovation and market
growth. With heavy investment in research and development, Germany is positioned to be a
global leader in this market segment.
It is estimated that the OE (original equipment) starter battery market across Europe,
Japan, North America and China was worth some EUR856m in 2007, and has a potential to
exceed EURlbn in 2014.
A number of other factors are also shaping the lead-acid automotive starter battery
market. Some are market driven, while others are outside manufacturers' control. With a
significant rise in the cost per metric ton of lead over the past year, the price of oil driving up,
the cost of polypropylene used in battery manufacture, and imported batteries flooding in
from emerging economies; they continue to pose a serious challenge to European
manufacturers. Cooperation in this field offers a number of possibilities for international
partnerships and investment. For example, Daimler has decided to take a ten percent share of
Tesla Motors, a California-based start-up. The company supplied batteries for the electric

versions of Daimler's Smart vehicles, which will begin production at the end of 2009.
Daimler has also entered into a strategic alliance with the German company Evonik to further
Lithium-ion battery development.
The industry benefits from political support, due to a number of factors: Battery-
powered cars hold long-term potential to reduce carbon dioxide emissions, curb global
warming, and reduce foreign oil dependency. At the same time, they reduce noise and
pollution in cities and contribute to higher quality of life.
Within the framework of the German economic stimulus program, over USD 700
million have been allocated for research funding in the area of electric mobility. Interest-
reduced loans and grants can be received for developing new battery technology, as well
another hybrid drives and fuel cell technologies.
LEADING BRANDS IN THE WORLD:
Blains Farm & Fleet
Blain's Farm & Fleet carries an extensive line of starting and deep cycle batteries to start or
run whatever you drive. From cars and trucks to boats and RV's, agricultural equipment to
garden tractors and wheelchairs. Blains Farm & Fleet has the batteries you need.
Mazda
A Mazda® battery is the best possible choice when it comes to replacing the battery in a
Mazda car, van or truck. It's the battery engineered to match the exact specs of your Mazda
vehicle including the unique requirements for the Mazda Miata today's filled lead-acid
batteries. With OPTIMA under your hood, you can count on longer lasting battery life under
starting and deep-cycle applications
DieHard
Since its introduction in 1967, DieHard has become a trusted household name. As the
DieHard batteries are built for reliable performance, low maintenance and long life.
Kirkland Signature
If you are a Costco member, you know the Kirkland Signature brand as a symbol of quality
and value, backed by the Costco Guarantee of satisfaction. Kirkland Signature batteries are
no exception to this tradition! There is a Kirkland Signature battery to meet most automotive
needs, each offering premium power and warranties at competitive pricing.

COUNTRY PROFILE:
Organized Sector set to capture market share from unorganized sector battery
manufacturers as growing automotive aftermarket demands novel, cost-effective products.
Steady growth in the automotive batteries aftermarket in India is attributed to burgeoning
vehicle sales across all vehicle segments. As batteries are non-discretionary replacement
products, the demand for them is expected to rise significantly. High replacement rates are
also helping the momentum a great deal. However, rising raw material] prices could be a
dampener for manufacturers. The battery industry is heavily dependant on lead, which
constitutes over 70 percent of the cost of inputs of a battery. In 2006, the automotive
batteries organized aftermarlcel stood at approximately 8.5 million units. While strict
regulations on legislations on recycling and smelting of lead have reined in the prospects of
the unorganized sector, it still accounts for a strong 58.1 percent of the total
aftermarket.
'The Battery Management Handling Rules (BMHR), laid down by the Ministry of
Environment and Forests in May 2001, stipulates that at least 90 percent of sales of new
batteries by a company has to be collected from the market for organized smelting/recycling,'
notes the analyst of this research service. The BMHR, if strictly enforced, will curb the
unorganized market to a considerable extent, as scrap batteries form a part of the raw material
for unorganized manufacturing and/or smelting.' Trends also indicate a preference for
technologically advanced, maintenance-free batteries, and market participants are cashing in
on the opportunity and enhancing their product offerings, driving units in the after market.
INDUSTRY STRUCTURE AND DEVELOPMENT:
The domestic Battery Industry is poised to grow by more than double within the next
five years. Though the un-organized sector is about three times the size of the organized
business but with stricter pollution control and regulatory norms, especially with regard to
recycling of toxic waste such as Lead, it may be difficult for small scale un-organised
business to sustain their operations in the long term. Notwithstanding the recent setback
arising out of the global meltdown, the automobile industry in India is poised for quantum
growth especially in the small car and two wheeler segments. With Tata Motors launching
the Nano and Bajaj and Renault announcing their plans, India would emerge as a small car
hub in the Region. Nearly all the major global automobile manufacturers have set up base in
India and are also looking at India for export of their products. Interestingly, several

commercial vehicle manufacturers have identified India as a manufacturing base for their
export market which would also lead to a higher demand for Indian batteries. This would
definitely expand the market base for automotive batteries manifold. In addition, with the
thrust on infrastructure, communication and power sectors, the consumption of industrial
batteries are also expected to rise substantially. That India is emerging as a global player is
evident from the fact that for the first time an International Battery Fair was hosted in India in
2008 instead of its traditional venues like the US, Europe or Asia-Pacific region.
In general, the storage Batteries Industry consists of two segments - automotive
and industrial. The major players in this industry include Exide Industries, Amara Raja
Industries, Amco and Tudor India. With relaxation of import duties and the recent removal of
quantitative restrictions, Indian Companies are facing the threat of cheaper imports.
Historically, the Indian automotive battery market was original equipment (OE)
driven by one dominant player, i.e., Exide Industries Ltd., in the organized segment followed
by many manufacturers from the unorganized segment especially in the light and heavy
commercial vehicle segment. Exide at a point of time controlled nearly 100 percent of the
Indian auto OE market and was the biggest name in the Indian automotive battery industry
All this was changed in the late 1990s with the entry of battery manufacturers like
Amara Raja Batteries Ltd. (ARBL) (JV with Johnson Controls Inc. USA) and Tudor India
Ltd. (the Indian arm of Exide Technologies). Both entered the market with technologically
advanced products and ARBL became the first company to launch the Zero Maintenance
Free Batteries for the automotive segment.
The total Indian battery market is estimated at close to Rs 2100 crores. Out of this the
industrial battery market is estimated at around Rs 860 crores which includes the VRLA
(valve regulated lead acid) battery market, which is estimated at around Rs 500 crores in the
current year. The telecom segment is the largest consumer of industrial batteries followed by
the railways. The power and UPS industries are other key user segments. The automotive
battery business is estimated at around Rs 1200 crores, including OE (original equipment)
and after-market or replacement market segments. The OE market is around 1.2 million units
and the replacement market is around 5 million units per annum The unorganized sector
comprises the small-scale assemblers and rebuilders, it is currently estimated to have a share
of around 60-65% of the replacement market. This sector largely dominates the tractor and

commercial vehicle segments although in some areas of the country they have a significant
presence in the car and multi-utility segments too.

With the advent of newer more advanced technologies, the consumer is getting the
best of both worlds; a superior product at an affordable price. ARBL sells its automotive
battery under the brand name Amaron which is the country's first Zero Maintenance Free
Automotive battery while the competitors had only maintenance free batteries that needed
topping up of distilled water. Today, all the leading manufacturers are also offering a similar
product with focus shifting towards offering a technologically superior product. Amaron was
also the first to talk about what goes into making a great product. It spoke of having silver
inside which is used as an alloy mix that actually increases the battery life and this was the
first attempt by any battery manufacturer to educate the consumers.
The consumer becoming educated enough to make intelligent comparisons among

products to get a better bargain which in turn, has led to the erosion in the market share of the
unorganized sector and cheaper imports. This move towards branding a low interest product
will go a long way in setting some standards for the industry, increasing the entry barriers and
making quality products available at affordable prices.
The results are there for all to see. Exide Industries has more or less doubled its
dealer network and has also increased its share with the acquisition of Standard Batteries
some time back and a slew of new products thus making it the number one in the
replacement market. Amaron is the second largest selling brand in the country today with
Prestolite of Tudor India following it really close. In the coming months, there is bound to be
more action in the battery industry with an increase in the number of cars filling the Indian
highways and with the upturn in the economy.

1.2COMAPANY PROFILE
Amara Raja Batteries Private Limited (ARBL) was incorporated under the company's
act, 1956, on 13th February 1985, and converted into public limited company on 6 th
September 1990.
Amara Raja Batteries Ltd, (ARBL) is the largest manufacturer of Standby Valve
Regulated Lead Acid (VRLA) batteries in the Indian Ocean Rim comprising the area ranging
from Africa and the Middle East to South East Asia. Based in Chennai, with a fully integrated
manufacturing unit for its industrial batteries at Tirupati, Amara Raja has reached a position
of leadership in a short span of 7 years.
Amara Raja is in a strategic partnership with Johnson Controls Inc., USA. With this,
ARBL is in Global Supply Alliance with Varta AG of Europe and Enertec. Who are joint
venture partners of JCI in South America and Mexico. The Business Group of Amara Raja is
categorized as Industrial Battery Division, Automobile Battery Division and Power System
Division.
ARBL is the largest suppliers of stand-by power systems, catering to Indian utilities
such as Departments of Telecommunication, Indian Railways, Power Generation Stations,
MTNL, VSNL, IT! and HTL. The company has preferential status with most MNC-OEMs
such as ABB, Alcatel, Ericsson, Fujitsu, Lucent, Motorola, Nokia, Tata Liebert and Siemens.
ARBL has prestigious Automotive OE clients including Ford, GM, Daimler Chrysler,
Ashok Leyland, TELCO, and Mahindra & Mahindra. Amara Raja has a replacement Battery
Brand Amaron hi-life. ARBL has a capacity for manufacturing around 1,000,000 units at its
facility at Tirupati with an investment of US $ 10 million.
A Greenfield project is planned at the same site with an additional investment of US
$6 million to augment capacity to 2 million batteries. The Amaron hi-life battery is a product
of the collaborative efforts of engineers at Johnson Controls Inc. and Amara
Raja.
This Zero maintenance product incorporates the latest technological advances in the
field and is on par with batteries manufactured and marketed in developed countries. A fully
charged, factory-activated battery provides extra high starting performance and power at any
temperature. The Power System Division is an important supplier of SMR based power plants
to Telecom Industry.

The key customers being the Telecom switching Equipment Manufacturers. As the
company saw a growing business proposition in the integrated power supply, the production
capacities of the same have been augmented. IPS using SMPS technology, for usage in
Railways has been added into the product basket.
ARBL has also design custom-built power electronics products like Industrial Battery
Chargers, Charge Discharge Circuits, Formation Chargers, AC/DC distribution boards etc.
Progressive conformance of Amara Raja to changing global standards and processes made it
achieve ISO 9001 and the QS 9000 Certification.
VISION:
"To transform our spheres of influence and to improve the quality of life by building
institutions that provide better access to better opportunities, goods and services to more
people...................all the time."
> Introduce latest generation technologies.

> Adapt these technologies to suit the operating environment.
> Develop and manufacture globally competitive, Customer-focused products of world-
class quality.
> Responsibly introduce these products into relevant markets.
> Provide world-class customer support.
1.3 PRODUCT PROFILE:
> Automotive batteries
> Industrial batteries
Applications of Automotive batteries
• 3 Wheelers
• Passenger cars
• Two-wheelers
• Four-Wheelers

Applications of Industrial batteries
Telecom
Railways
BOARD OF DIRECTORS:
Power generation
Oil & gas The company has a non-executive
chairman and the number of independent
Process industry
UPS & EPABX directors is 3 representing 33.33% of the total
Defense number of directors i.e. more than one-third
of the total number of directors. The number
Motive power
of the total non-executive directors are 8 i.e.
88.89% which is more than 50% of the total number of directors. Hence the board of the
company has an optimum combination of executive and non-executive directors in
conformity with the provisions clause 49 of the listing agreement.
None of the members of the board is holding membership in more than 10 committees
or chairmanship in more than 5 committees as specified in clause 49 of the listing agreement.
The composition and category of the board of directors as at March 31, 2008 and the number
of other directorships/committee memberships held by them are as under:
Name of the Director Category
Dr. Ram Chandra N Galla Promoter/Non-executive chairman
Mr. Jayadev Galla Promoter/Managing Director
Dr. G.Ramadevi Promoter/Non-executive Director
Mr. Frank E Kraick Non-Executive Director
Mr. Raymond J Brown Non-Executive Director
Mr. Shu Qing Yang Non-Executive Director
Mr.P.Lakshmana Rao Independent Director
Mr.Ravi Bhamidi pati Independent Director
Mr.Nagarjun Valluripalli Independent Director
Mr. Rohit Kochhar Alternate director to Mr.Shu Qing Yan

AMARA RAJA NETWORK
Registered Office Karakambadi, Tirupathi.
Corporate Operations Office Chennai
Marketing Offices & Services Centers Bangalore, Mumbai, Kolkata,
New Delhi, Hyderabad and
Chennai
Selling Policy;-
The Company is adopting the policy of direct selling without any intermediates as the
product falls under the category of Capital Goods. The Company established it's based and in
major cities like Mumbai, Calcutta, New Delhi, Mysore, Bangalore and Hyderabad. All these
units are fully equipped with experienced staff and infrastructure. ARPS has also widened
services network. As a member of Amara Raja Batteries automotive branch's facilities for
service points to serve the need of its clientele better.
Product Line:-
Conventional Batteries Charges : Up to 220V / 500 A 24 V /2000 A.
Switch Mode Power Supply ( SMPS ) : Modules of 48 V/25A up to 200A
and 48V/100A up to 3200A
Integrated Power Supply (IPS) Systems Specially designed for Railway Signalling &
Telecommunications.
DC/AC Distribution Boards.

Amara raja battery products:
Power stacks (general purpose battery) : 40AH to 6000AH.
Brute (Motive Power Battery) : 40AH to 1500AH.
Combat (UPS battery) : 40AH to 80AH.
Diagnostic Tools
Beta Check (Health Monitor) : 100A & 300A.

BUSINESS OVERVIEW:
Industrial battery
In industrial batteries the company is the market leader in the Valve Regulated Lead
Acid (VRLA) batteries segment and has a presence in the telecom, railway, power, oil and
gas sectors, This segment contributes about 75 per cent of its turnover. Last year the company
increased its market share in this segment to 45 percent from 42 percent earlier.
Amara Raja has expanded the market for its products over a broader base of
applications to become a full range supplier of VRLA batteries .The company has launched
new products for motive power and genset applications and is now pursuing opportunities in
renewable energy to add to its existing customer base. Recently, it launched its new ‘Quanta’
medium range UPS batteries in the Rs. 250 crore domestic UPS market which is growing at
25 per cent per annum. The Quanta range of UPS batteries is being targeted at banks,
financial services, insurance companies, IT and IT-enabled services and educational
institutions.
Telecom is one of the major business areas for the company. Last year, there was a
decline in demand from this segment, but over the longer run this segment holds good
potential for the company. Recently, released data indicates that the Communications
Ministry's targets for enhanced teledensity of 15 per cent by 2010 are on course and will be
met. In India, presently, the telecom players use the basic 2 volt cells as back-up batteries at
their base stations. But ARBL has brought in the Front Access Terminal backup batteries
which are being widely used by telecom operators in other countries. It will be cost-efficient
and far more convenient for the operators.
Automotive batteries:
The company has increased brand recognition to a great extent and established an excellent
brand recall for its Amaron brand of batteries. Amara Raja has invested about Rs3 crore for
marketing Amaron, which contributed about 25 per cent to the turnover. Since its entry in the
automotive segment the company has notched a market share of a little more than 0.25
million in the 6-million total automotive sector and about 15 per cent in the passenger car
segment.The newly-launched two-wheeler battery Amaron ProBike Rider has received
overwhelming response and the volumes are growing exponentially.

Amara Raja is all set for battery powered cars to be launched in India soon. The
company is already in talks with manufacturers of passenger cars, to develop batteries for
them. There are already hybrid versions being launched and the market for battery driven
cars will only increase. Amara Raja stands a competitive edge as its partner, Johnson
Controls, has the technology for Lithium Ion batteries. The technology would be backed
them as JC1 is already developing the next gen batteries for the same. India has also
witnessed a sharp growth in the niche segment of electric motorcycles. ARBL manufactures
two-wheeler batteries and the specific small batteries for these
Bikes. In the OEM and aftermarket segment of Rs 500 crores, which is growing at a CAGR
of 8%, Amara Raja with its current portfolio of products can cash on this. The new users of
un-geared scooters opt for kick start models which require higher technologies in battery,
and hence crucial demand. Amaron Pro Bike Rider is the longest lasting and most powerful
with 30% more cranking power Packs first ever 60 month warranty for 2-wheeler batteries.
Based on proprietary JCI technology designed and developed for Indian market by Arnara
Raja. Amaron Pro Bike Rider has been customized to meet the harsh conditions prevailing in
the Indian sub-continent at the in-house R&D lab of ARBL.
The company has continually added to its list of OEM clients which include Ford, General
Motors and Diamler Chrysler for whom it is the exclusive vendor. It is also a preferred
supplier to M&M, Ashok Leyland and has recently added Swaraj Mazda, Telco 407 and
Hindustan Motors - Lancer to its clients.
Overseas Markets
Amara Raja maintains its leadership in the automotive aftermarket in Singapore and is
stretching out to newer markets like Asia Pacific. Middle East and Africa. The exports of
ARBL for the year ended March 2008 was clocked at Rs 40 cr, In Japan, due to strict Quality
and technology norms, Amaron's presence can be experienced under private labels. Amaron
supplies automotive batteries to the entire fleet of 'Comfort Delgro' cabs in Singapore. In
Australia, Amaron has evidently confirmed to be the only battery that has twice the span
compared to the other batteries in the dry and humid conditions. Amara Raja is all set to
become a leading global player in the battery markets.
Amara Raja's Industrial and Automotive batteries are exported to Singapore , Malaysia,
Hongkong , Thailand , Indonesia , Vietnam , Taiwan , Philippines , China , Japan , Greece ,
SriLanka , Mauritius , Australia , Kuwait, Dubai, Iran , Yemen , Omen , Bahrain , Qatar,
UAE , Kenya, Tanzania and South Africa

Moderating lead prices:
Lead accounts for 70 per cent of the raw material used by ARB. Rising lead prices during a
major part of FY 2008 had taken a toll on the margins. Lead prices appear to have stabilised
currently but declining inventories and lower exports from China may again keep prices on
the higher side. Like Exide, the market leader, ARB has been able to pass on the increase to
its customers periodically. But Exide may score over ARB in shielding itself from volatilities
in lead prices as it has acquired two smelting companies from where it would partly source
lead over the next three years to save on raw material costs.
Growing share in the market
The company enjoys a comfortable market share of 26 percent in the automotive OEM
segment and nearly 28 percent in the organized segment of the after-market. The sales
volumes are growing by 27 percent Y-o-Y. It also has more than 27 percent market share of
industrial batteries in the domestic market.
Presence in lucrative, high-growth businesses
ARBL strategically entered the promising two wheeler segment which is showing an
increasing shift to self start. The significance and application of battery technology is vital in
this segment. We see great potential for the company from rewarding businesses like
telecom, automotives.
Amara Raja has major application areas which include Telecommunications, Power Utilities,
Railways, Defense and other heavy Industries. The company has a current production facility
for automotive 4-wheeler batteries of 4.9 million units per annum and after expansion in
Sep 2009, it would reach 5.4 million units by Sep 2009.
Expanding Horizons
With the soaring demand for batteries in the industrial and automotive sector, Amara Raja
plans to invest Rs 220 cr by the end of this fiscal in three projects to speed up its
manufacturing capacity. The company aims to:
Increase the capacity of large VRLA (valve-regulated lead-acid batteries) batteries to 900
million Ah from current 400 million Ah to be used in telecom applications. The project is
anticipated to be accomplished by Sep 2008.

Expand the capacity of two-wheeler and small VRLA batteries, aiming the mini UPS and
other similar applications. The capacity will be enhanced from 1 million units to 3.2 million
units. It is estimated to be concluded by June 2009.To further consolidate its growing
presence, the company is expanding its dominance in industrial battery markets with an
investment of Rs 52 crore.
ARBL's future plans
• Development of flooded batteries for motor cycle application
• Start supplies of motor cycle batteries to new OEMs
• Developing a variant for NANO and other equivalent small car segments
• Expansion of DIN range batteries for automotive battery application
• Development of batteries for various applications for Indian Railways
• New modular UPS & cellular application to make the installation process faster
• Development of suitable batteries for export requirement
• Develop technologies for motive power & other industrial Applications

• Study the relevant alternate energy storage technologies, thereby establish new
Business opportunities
Awards Received:
• 'Best Industry all round performance' award to 1988 by FAPCCI.

• 'Entrepreneur of the Year' award to Mr. ramachandra.N. Chairman & Managing
Director in 1988 by HMA.
• ‘Business Excellence Award' in 1988 by Industrial Economist.
• 'Udyog Rattan Award' in 1999 by the Institute of Economics Studies.
Environmental Prograrnmes:-
> Advancement for ISO-4001 Certification.

> Health monitoring and awareness Programme.
> Both personal and Industrial Safety Programme.
> Start up of EMS implementation Programme.
> Nil discharge and lowest emission awareness and implementation Programme.
> Waste Reduction Scheme.
> Energy Conservation Programme.

> Continuous and massive greenbelt development Programme.
> Ground Waste Collection, Treatment, Storage and Safe Disposal Programme.
> Central Waste Collection, Treatment, Storage and Safe Disposal Programme.
> Personal health Safe Guarding Programme.
Social Programmes:-
> Housing Colony to the Employees is in Progress.

> Total Plan 500 families over five years, 108 already commissioned.
> Plant provide Community Hall Open Auditorium, Recreation club,
> Park and play Ground.
> Training Centre for Employees.
> Bachelor's hostel, Co-operative Store and Banks in Operation.
> Roads, Water Supply, Street Lights, Greenery, Educational and Cultural Activities.
> Enhancement in neighboring villages. Awards and Rewards to the Younger
Generation for improvement of Education.
> Modernization of Public Parks for the fledged of Children.
AMARA RAJA GROUP OF COMPANIES

The Amara Raja Group consists of the following companies:-
1. Amara Raja Batteries Limited (ARBL).

2. Amara Raja Power Systems Limited (ARPSL )
3. Mangal Precision Pvt. Ltd., (1)
4. Mangal Precision Pvt.Ltd. (2).
5. Amara Raja Electro Systems Pvt.Ltd.
6. Galla Foods Pvt. Ltd.

AMARA RAJA BATTERIES LIMITED (ARBL).
Amara Raja Batteries Limited Were Established in the year 1985 as private limited and
converted in to Limited in the year 1990. the company is currently poised on a healthy
growth curve and the Turnover of the Financial Year -2001.20002 is of around 200 Crores.
Amara Raja Batteries have a strategic tie up with Johnson Control Inc, of the USA who owns
26% stake in the company ( Johnson Control is the largest manufacturer of lead acid batteries
in North America and a leading global supplier to major Automobile has always offered time
tested world class technology and process developed on International Standards be it high
integrity VRLA Systems like power Stack and Power plus are the recently launched high
performance UPS Batteries KOMBAT and Amaron High Life Automotive Batteries. Amara
Raja Batteries Limited comprises of two major divisions Industrial Battery Division (IBD)
and Automotive Battery Division (ABD).
INDUSTRIAL BATTERY DIVISION (IBD):-
Amara Raja has become the bench mark in the manufacture of Industrial Batteries. It is also
having the facility for producing Plastic Components required for Industrial Batteries. ARBL
is the 1 st company in India to manufacture VRLA advent of
GNB Industrial Battery Company U.S.A. or manufacturing sealed Value Regulated Lead
Acid storage batteries (VRLA).
Capacity:-
The actual installed capacity of IBD is 4, 00,000 cells per annum and utilization capacity is
reached to 3,25,000 cells per annum.
Products:-
Types of VRLA Batteries manufactured in the Industrial Battery Division are
• Power stack.
• Kombat (ups Battery)
• Brute.
• Genpro.

With the requisite approvals and manufacturing facilities, Amara Raja has established itself
as a reliable supplier of high quality products to the major segments like Telecom, Railway
and Power.
Competitors
The major Competitors for Amara Raja Batteries Products are Exide Industries,
Hyderabad batteries.
AUTO MOTIVE BATTERY DIVISION (ABD):-
Amara Raja Batteries Limited inaugurated its new automotive plant at Karakambadi in
Tirupathi on Sep 24th 2001. It is having complete control over inventory and product quality.
In this project Amara Raja's strategic alliance partners Johnson control. U.S.A. have closely
worked with their Indian counter parts to put together the largest advances in manufacturing
Technology and Plant Engineering. It is also having the facility for producing plastic
components required for Automotive Batteries.
Capacity:-
With an existing production capacity of 5,00,000 units of Automotive Batteries the new
Green Field Plant will now be able to produce 1 million batteries per annum. These are the 1 st
phase in the enhancement of Amara Raja Production capacity in which the company has
invested Rs.25 Crores, Production capacity will increase to 2 million units, the plant will
cover a built u p area of over 2,00,000sq.ft. And will be the single largest facility for Battery
manufacturing in Asia.
Products:-
• Amaron Hi-way.
• Amaron Harvest
• Amaron Shield,
• Amaron High Life,
• Amaron Pro.
• Amaron Flo.
• Amaron Go.
• Amaron Black,
• Amaron Fresh,
• Amaron Optima.
Customers:-
ARBL has prestigious OEM (Original Equipment Manufacture) clients like FORD, General
Motors, Daewoo Leyland and Hindustan Motors. The Company entered the replacement
Battery segment with launch of Amaron High Life Auto Batteries.
Competitors;-
Exide, Prestolite, AMCO.
HISTORY OF THE ORGANISATION
DEC 1985 -Foundation stone laid for Ainara raja.

MAY 1992 -Designed and implemented the most advanced battery manufacturing facility in
India.
FEB 1997 -Received the ISO 9001 certification.
DEC 1997 -Commissioned own plastics and tool room sections.
Signed Joint Venture with Johnson controls.
MAY 1999-Received QS 9000 certification.
JAN 2000- Launched Amaron batteries.
April 2001 --Launched the new corporate logo.
Sep 2001-Awarded the ISO 14001 certification.
New corporate logo launched.
May 2002-commissioned phasel of new automotive battery plant with a capacity of 2 million
batteries.
JUL 2002-Launched Quanta UPS batteries.
AUG 2002-Launched Amaron Hiway and Harvest batteries.

MAR 2004-Received Ford World Excellence Award.
SEP 2004-Launched Amaron PRO,GO and FRESH automotive batteries
OCT 2004-OE agreement with Maruthi Udyog Ltd.
JUN 2005-OE agreement with Hyundai Motors.
AUG 2005-NK series limited edition batteries launch.
DEC 2007-Launched power zone.
Launched new-look Amaron range with Amaron Black, Flo batteries.
MAY 2008-Launched Amaron PRO BIKE RIDER 2w batteries.
ORGANISATION STRUCTURE OF ARBL
Share holders
Chairman
Managing Director
VP VP VP VP HR VP VP
SCM QMD MKT F& A R&D
SCM-Supply Chain management
QMD-Quality management and Development
MKT-Marketing
HR-Human Resources
F&A-Finance and Accounts

R&D-Research and Development
VARIOUS DEPARTMENTS AT ARBL
 Supply chain management

 Quality management and development
 Finance and Accounts
 Marketing
 Human resources
 Research and Development
Finance and Accounts
The finance and accounts department handles all the finance matters of ARBL.ARBL
follows double entry system of book-keeping. In this method of book-keeping,, every
transaction is written in two accounts. Of the two accounts, one account is given debit while
the other account is given credit with an equal amount. Thus on any date, the total of all
debits must be equal to the total of all credits because every debit has a corresponding credit.
Transactions are recorded on accrual basis where all transactions relating to a period are
recorded. This department maintains all transactions on computerized accounting software
called Ramco package where all necessary records are automatically stored in a central database
to provide easy access to data for higher levels of management.
The sub departments under accounts department are:
 Commercials
 Costing
 Accounts Payable
 Accounts receivable
 General ledger

ORGANIZATION CHART OF FINANCE AND ACCOUNTS
Vice President
Dy. General Manager
Manager Manager Manager

(General Ledger) (Commercial) (Costing Head)
Sr. Officer
(General Ledger
Sr. Officer Sr. Officer
(Accounts Payable) (Accounts Receivable)
Commercials:
This department takes care of taxes and insurances.
Costing:
Costing department takes care of budget required for producing a product. It carries
out variance analysis in order to find the difference between budgeted cost and actual cost.
Accounts Payable:
This department maintains files or accounts that contain details of money that the
company owes to suppliers, but has not paid yet. Thus Accounts payable is a form of credit
that suppliers offer to their purchases by allowing them to pay for a product or service after it
has already been received.
Accounts Receivable:
Accounts receivable contains a series of accounting transactions dealing with billing

of customers who owe money to company for goods and services that have been provided to
the customer. This department takes care of such accounts and makes use of sales ledger.

General ledger:
General ledger is the main accounting record of a business which uses double-entry
bookkeeping. It includes accounts for such items as current assets, fixed assets, liabilities,
revenue, expense items, gains and losses. This department in ARBL acts as link between
Accounts payable and Accounts receivable and takes care of everything
PROCESS FLOW CHART OF BATTERIES:
Input Converting pure Lead Pasting mixing by

Pure into Lead Oxide adding Sulphuric acid
Lead with water
Grid casting
Pasting Grid with
Lead Oxide paste
Winding the pasted

Grid with separator
Group insertion Jar
Sealing the Jar
Formation
Finishing

RESEARCH METHOLOGY

2. RESEARCH METHODOLOGY
2.1 STATEMENT OF OBJECTIVES:
1. To study the working capital management of Amara Raja Batteries Ltd.
2. To find out liquidity position of the company threw working capital ratios.
3. To study the profitability of the company through the net and gross working capital of
the organization.
4. To estimate the working capital requirement of the company by using operating cycle
approach.
5. To analysis the past and present financial performance of the
company.
Primary objective
To find out working capital position of the company for the last 5 financial years.
Secondary objective
> To know the liquidity position of the firm
> To know the company's sources and application of funds.
> To identify the performance in terms of efficiency in cash receivable and

inventory management.
> To study the financial performance of the company.
> To analyze the operating cycle of the company
> Analysis of the current assets and current liabilities.

2.2 NEED OF THE STUDY:
 Working capital management plays a vital role in any organization and one should
have a thorough knowledge about the working capital position.
 In view of this context, I have undertaken this study and it would be a great advantage to
the company also, to know it's working capital position.
2.3 SCOPE OF THE STUDY:
The scope of the study is confined to the analysis of solvency & profitability position
of the company. The data collected from both primary and secondary data.
Primary data
Primary data has been collected through personal interviews with finance department
and the executive
Secondary data
Secondary data collected from the records like B/S, income statement and necessary
records. The information is also collected from the annual reports of the company, Internet data
and books and brochures.
1. Disclosed fully. This is set back while drawing the conclusion.
2. The study is based on 5 annual financial reports only.
3. The information from annual reports is insufficient to calculate few ratios.
4. Limited time does not allowed to do more analysis.

2.4 PERIOD OF THE STUDY:-
The period of the study was two months from May to July 2010; during the period all the
required data was collected through secondary sources and analyzed with the help of
financial tools of analysis. It includes data collection analysis of data and interpretation.
TOOLS APPLIED IN THE STUDY:-
 Working capital ratios

 Operating cycle
 Analysis of current assets and current liabilities.
2.5 METHODOLOGY:
The objective of the study is to analyze the working capital position of the company for the
past five years from 2004 - 05 from and to achieve those objective the following
methodology was adopted.
> Firstly to find out liquidity and solvency position of the company through working
capital ratios.
> Secondly, to estimate the working capital requirement of the company by using
Operating cycle.
> Finally Analysis of current assets and current liabilities.
2.6 LIMITATIONS OF THE STUDY :
1. The analysis was confined to a period of five years during 2004-09.

2. Financial statement of prepare on the basis of certain accounting concepts in
conventions any change in methods are procedures of accounting will limit the utility
of financial statements. So, the reliability of results depends on the accuracy of the
published information.
3. Time of two months is one of the limiting factors.
4. The analysis and interpretation is restricted of collected data is restricted to necessary
information.

INTRODUCTION
OF
WORKING CAPITAL

3. INTRODUCTION TO WORKING CAPITAL MANAGEMENT
Working capital management is concerned with the problem that arises in
attempting to manage the current assets, the current liabilities and the interrelationship that
arises between them.
Current assets refer to those assets, which in the ordinary course of business can be or
will be turned into cash within one year. The major current assets are cash, marketable
securities, accounts receivables and inventory. Current liabilities are those liabilities which
are intended, at their inception, to be paid in the ordinary course of business, with in a year.
The basic current liabilities are accounts payable, bills payable, Bank Overdraft and
Outstanding expenses.
The goal of working capital management is to manage the firms Current Assets
and Current Liabilities in such a way that a satisfactory level of working capital is
maintained.
Working capital ensures normal and smooth working of a business unit. It is

required for the raw materials and stores, payments of wages and other regular expenses like
electricity, water charges, taxes etc. working capital is necessary when regular manufacturing
activities are under taken and normal production activities are conducted. Such capital is
required for a short period as it is recovered from the customers when the products are sold to
them. Therefore, interaction between Current Assets and Current Liabilities are the main
theme of working capital management. Profits are earned with the help of assets, which are
partly fixed and partly current. Working capital some times referred to as “CIRCULATING
CAPITAL”.
The management of fixed and current assets is differs in three ways:
• In managing fixed assets, time is a very important factor, consequently, discounting

and compounding techniques play a significant role in capital budgeting and minor
one in the management of current assets.
• The large holding of current assets especially cash, strengthens the firm’s liquidity
position(and reduces risk ness) but also reduces the overall profitability. Thus a risk-
return trade off is involved in holding current assets.
• The level of fixed as well as current assets depends upon expected sales, but it is only
current assets which can be adjusted with sales fluctuations in the short run. Thus, the
firm has a greater degree of flexibility in managing current assets.
DEFINITIONS:-
“Working Capital is the amount of funds necessary to cover the cost of operating the
enterprise. Working capital in a going concern is a revolving fund; it consists of cash receipts
from sales which are sed to cover the cost of current operations”.
- Shubin

“Working capital means a sum of Current Assets only”
- Field, Backer & Malott
“Working capital refers to managing the firms Current Assets and Current Liabilities in such
a way that a satisfactory level of working capital is maintained”.
- M Y Khan & P.K.Jain
“Working capital is an amuont which is necessary to cover the cost of operating the
enterprise”.
- Cubing
3.1 CONCEPTS:-
3.1.1 GROSS WORKING CAPITAL:-
The Gross working capital is the firm’s investment in current assets. The current
assets are the assets which can be converted into cash with in an accounting year and includes
cash, short term securities like debtors, bills receivables and inventory.
Gross working capital constitutes current assets i.e. (1) inventory which are further
classified into (a) Raw materials (b) Work in progress (c) Finished Goods
(2) Accounts Receivables (3) Cash and Bank balance. Any business firm needs to provide
these current assets. So that it can carry on its business operations smoothly.
These assets are to be essential which are circulating in nature. That is to say that
the business buys raw materials with cash or credit and receives in the form of sales that may
in cash or credit.
3.1.2 NET WORKING CAPITAL:-
Net working capital refers to the difference between current assets and current
liabilities, which are expected to mature for payment within an accounting year and includes
Creditors, Bills payable and outstanding expenses.
Net working capital helps the management to look after the permanent sources for
its financing of working capital under this approach does not increase with increase in short
term borrowing.

PROPRIETORS
FUNDS
CASH
CASH FROM CREDITORS

DEBTORS
DEBTORS
3.2 NEED FOR WORKING CAPITALS:

Business firms aim at maximizing the wealth of shareholders. In its endeavor to
maximize shareholder’s wealth a firm should earn sufficient return from its operation earning
a steady amount of profits required successfully sales activity. The firm has to invest enough
funds in current assets for the success of sales activity current assets are needed because sales
doesn’t convert into cash instantaneously there is always an operating cycle involved in the
conversion of sales into cash.
Level of working capital is necessary on a continuous and uninterrupted basis. This
requirement is referred to as permanent level of working capital is temporary. Fluctuating or
variable working capital. This is portion of the required working capital is needed to meet
fluctuating in demand consequent upon changes in production and sales as a result of
seasonal changes.

TEMPORARY
Permanent
TIME
The above shows permanent level is fairly constant. While temporary working capital
is fluctuating some times increasing and some times decreasing in accordance with seasonal
demand. In the case an expanding firm the permanent working capital may not be a
horizontal. This is because the demand for permanent current assets might be increasing or
decreasing supports a rising level of activity. In that the line should be a rising one.
3.3 PERMANENT AND TEMPORARY WORKING CAPITAL:

Both kinds of working capital are necessary to facilitate the sale process through the
operating cycle. Temporary working capital is created to meet liquidity requirements that are
purely transient in nature.
3.4 CHANGES IN WORKING CAPITAL:

The changes in working capital occur for the following basic reasons
1. Changes in level of sales and operating expenses.
2. Policy changes.
3. Changes in technology.

1. CHANGES IN SALES AND OPERATING EXPENSES :
The first factor causing a change in the working capital requirement is a change in
the sales and operating expenses. The changes in this factor may occur due to top three
reasons first there may be a long run trend of changes for instance the price of raw
materials any oil may constantly rise necessitating the holding of a large inventory. The
secular trends would mainly affect the need for permanent current assets. In the second
place cyclical changes in the economy leading to ups and downs in business activities will
influence level of working capital. The third source of changes is seasonality in sales
activity.
The changes in sales always and operating expenses may either in the form of an
increase or decrease an increase in the volume of sales is bound to be accompanying by
higher levels of cash in inventory and receivables. The decline in sales will have exactly
the opposite effect a decline in the need for working capital. Changes in the operating
expenses rise or fall will have a similar effect on the level of working capital.
2. POLICY CHANGES:
The second major cause of changes in the level of working capital is policy
changes initiated by the management there is wide choice in the matter of current assets
policy. The term current assets and sales value. A following a conservative policy in this
respect having a very level of current assets in relation to sales may deliberately opt for
less conservations policy and vice versa these conscious managerial decisions will
certainly have an impact on the level of working capital.
3. TECHNOLOGIAL CHANGES:
Finally another factor that can change in the level of working capital is technology
changes if a new process emerges as results of technological development. This shortens
the operating cycle it will reduce the need for working capital.

3.5 FACTORS INFLUENCING WORKING CAPITAL
REQUIREMENTS:
1) NATURE OF BUSINESS:
The working capital requirement of a firm is closely related to the nature of its
business a service firm lie an electricity undertaking or a transport corporation which a short
operating cycle and which sells predominantly on cash bases has most requirement on the
other hand a manufacturing concern like a machine tool unit which has long operating cycle
and sells largely on credit has a very substantial working capital requirement.
2) SEASONALITY OF OPERATIONS:
Firms which have marked seasonality in their operations usually have fluctuating
working capital requirements. For during the summer months and drops sharply during the
winter period. The working capital need for such a firm likely to increase considerably in
summer months and decrease significantly during the winter period. On the other hand a firm
manufacturing a product laps which have fairly even round the year trends to have stable
working capital need.
3) CHANGE IN PRICE:
The increase shifts in price level makes the functions of financial manager difficult.
He should anticipate the effect of rising price level will require a firm to maintain higher
amount of working capital same level of current assets will need increased investment when
prices are increasing.
4) CREDIT POLICY:
The level of working capital is also influenced by credit policy which relates to sales
and purchase. If influences the working capital in two ways
1. Through credit terms granted by the firm to its customers buyers of goods.
2. Credit terms available to the firm from its of creditors.
5) LEVEL OF PRODUCTIONS: -
The quantum of working capital is also determined by production level. In case of
seasonal products the demand for product is seasonal i.e. they will be purchased during
certain months of the year. For this purpose it has to serve its needs either by confirming their
production only to periods when goods are purchased or they follow a steady production
policy through out the year.
6) PROFIT LEVEL: -

The level of profits earned differs from an enterprise to enterprise. In general the
nature of the products hold on the market quality of management and monopoly power would
by a large determined the profits earned by a firm. Higher profits margin would improve the
prospects of generating more internal funds there by contributing to the working capital.
7) PRODUCTION POLICY:
A firm marketed by pronounced seasonal fluctuations in its sales may pursue a
production which may reduce the sharp variance in working capital requirement for example
a manufacturer of ceiling fans may maintain a steady production through out the year rather
then intensity the production activity peak business season. Such production policy may
dampen the fluctuation in working capital requirements.
8) MARKET CONDITIONS:
The degree of competition prevailing in the market place gas an important bearing on
working capital needs when promptly serve customers who may be inclined to attract in a
who may be inclined to wait because other manufacturers are ready to be offered to attract
customers in a highly competition market. Thus working capital needs tends to be high
because of greater investment in finished goods inventory and accounts receivables.
9) CONDITIONS OF SUPPLY:
The inventory of raw materials spears and stores depend on the conditions of supply.
If the supply is prompt and adequate the firm can manage with small inventory however if the
supply is unpredictable and scant them the firm to ensure continuity of production would
have to acquire stocks as and when they are available and carry large inventory on an
average. A similar policy may have to be followed when the raw material is available only
seasonally and production operations are carried out around the year.
10) SALES GROWTH:
The working capital of the firm increase as it sales growth. It is difficult to determine
the relation between volume of sales and working capital needs. It is necessary to make
advance planning of working capital for a growth from on a continuous basis. The firm has to
make use of its external swell as internal sourced to meet increasing needs of funds.
3.6 PERMANENT AND TEMPORARY WORKING CAPITAL

Both kinds of working capital are necessary to facilitate the sale process through the
operating cycle. Temporary working capital is created to meet liquidity requirements that are
purely transient in nature.
3.7 THE DANGERS OF EXCESSIVE WORKING CAPITAL
1. It results in unnecessary accumulation of inventories thus chances of inventory
mishandling waste theft and losses increase.
2. It is an indication of defective credit policy and slack collection period. Consequently
higher incidence of bad debts results, which adversely effect degenerated into
managerial inefficient.
3. Excessive working capital makes management complacent, which degenerates in to
managerial in efficiency.
4. Tendencies of accumulating inventories to make speculation profits grow this may
tend to make dividend policy liberal and difficult to cope with in future when the firm
is unable to9 make speculative profits.
3.8 INADQUATE WORKING CAPITAL

1. It stages growth become difficult for the firm to undertake profitable projects for non
– availability of working capital funds.
2. It becomes difficult to implement operating plans and achieve the firms profit target.
3. Operating inefficiencies creep in when it becomes difficult even to meet day – to –
day commitments.
4. Fixed assets are not efficiently utilized for the lack of working capital funds thus the
firms profitability would deteriorate.
5. Paucity of working capital funds renders the firm unable to avail attractive credit
opportunities etc.
6. The firm losses its reputation when it is not in position to honor its short term
obligation as results the firm faces tight credit terms.
Thus enlightened management should there fore maintains a right amount of working
capital on a continuous basis which help to develop the organization effectively and
efficiently.

ROLE OF FINANCIAL MANAGER IN WORKING CAPITAL
MANAGEMENT
1. Working capital management requires must of the finance manager time as it
represent a large position of investment is assets.
2. Working capital management requires much of the finance management time as it
represent larger position of investment in assets.
3. Action should be taken to curtail unnecessary investment in current assets.
4. All precaution should be taken for the effective and efficient management of working
capital.
5. I agree have to manage their current assets and current liabilities very carefully and
should see that the work should be done properly in order to achieve predetermined
organizational goals.
6. The financial manager should pay special attention to the management of current
assets on continuing basis.

CASH MANAGEMENT
Cash is the important current assets for the operations of the business.
Cash is the basis input needed to keep the business running on a basis. The firm should keep
sufficient cash, neither more nor less.
The term cash includes coins, currency, and cheques held by the firm,
and balances in its bank accounts. Sometimes near cash items such as marketable securities
or bank deposits are also included in cash. Generally, when a firm has excess cash, it invests
it in marketable securities. This kind of investment contributes some profit to the firm.
CASH MANAGEMENT STRATEGIES:-
The cash management strategies are intended to minimize the operating

cash balance requirement. The basic strategies of the firm is
1. Stretching account payable without affecting the credit of the firm.
2. Efficient inventory management.
3. Speedy collection of accounts receivables.
Thus the main objective of cash management are to reconcile two mutually contradictory and
conflicting tasks to meet the payment schedules and to minimize funds committed to cash.
USES OF CASH MANAGEMENT:-
1. It indicates company’s future financial need especially for its working capital
requirement.
2. To help in evaluating proposed capital projects.
3. It pinpoints the cash required to finance these projects as well as the cash to be
generated by the company to support them.
4. It helps to improve corporate planning.
5. Cash forecasting helps to future and to formulate projects carefully.
MOTIVE OF HOLDING CASH:-
The firm need to held cash to the following three motives

1. TRANSACTION MOTIVE:-
This refers to holding cash to meet anticipated payments whose timing is not
perfectly matched with cash receipt.
2. PRECAUTIONARY MOTIVE:-
The precautionary motive is the need to hold cash to meet contingencies in
the future. Cash provides a cushion or bffer to withstand some unexpected emergency.
Thus precautionary balance should be hold more in marketable securities and relatively
less in cash.
3. SPECULATIVE MOTIVE:-
The speculative motive relates to the holding of cash for investing in profit
making opportunities as and when they arise. Thus the primary motive to cash and

marketable securities are transaction and precautionary motives.
ACTS OF CASH MANAGEMENT:-
• MANAGING THE CASH FLOWS:-

The flow of cash should be properly managed. The inflows should be
accelerated while as far possible decelerating the cash outflows.
• OPTIMUM CASH LEVEL:-

The firm should decide about the appropriate level of cash balance. The cost
of excess cash and danger of cash deficiency should be matched to determine the
optimum level of cash balance.
• INVESTING SURPLUS CASH:-

The surplus cash balance should be properly invested to earn profits. The
firm should decide about divisions of such balance between bank deposits, marketable
securities and inter corporate lending.

RECEIVABLES MANAGEMENT
The receivables represent an important component of the current assets of a

firm. The term receivables are defined as debt owned to the firm by customers arising from
sale of goods or service in the ordinary course of business. Receivables management is also
called trade credit management. The maintenance of receivables involves direct and indirect
costs. Direct cost includes the cost of investments allowance and concessions to customers
and also losses on account of bad debts.
OBJECTIVES OF RECEIVABLES MANAGEMENT:-
The goals of receivables management are
• To maintain an optimum level of investment in receivables.

• To keep down the average collection of sales.
• To obtain the optimum volume of sales.
• To control the cost of credit allowed and to keep it at the minimum possible level
The three crucial decision of receivables management are:

• Credit standards and analysis
• Credit terms
• Collection policy
CREDIT STANDARDS AND ANALYSIS:
Credit standards represent the basic criteria for the extension of credit to
creditors. The quantitative bases of establishing credit standards are factors such as credit
financial ratio. Credit standards are divided into
a) Tight or restrictive
b) Liberal or non-restrictive
CREDIT TERMS:-
The stipulations under which goods are sold on credit to customers are called
credit terms. These stipulations are
a) Credit period
b) Cash discount
COLLECTION POLICY:-
It determines the actual collection period. Lower the collection period, lower the
investment in accounts receivables and vice-versa.

INVENTORY MANAGEMENT
Inventories are stock of the product that a company is manufacturing for sale and
components that make up of the product. The various forms in which inventories exist in a
manufacturing company are raw materials, work in progress and finished goods. The three
kinds of inventories for a firm depends on nature of its business.
• RAW MATERIALS:- Raw materials are those basic inputs that are converted
into finished product through the manufacturing process. Raw materials inventories
are those units, which have been purchased and stored for future production.
• WORK IN PROGRESS:- Inventories are semi-manufactured products. They

represent products that need more work before they become finished products for
sale.
• FINISHED GOODS:- Finished goods inventories are those completely

manufactured products, which are ready for sale. Stock of raw materials and work in
progress facilitates production, while stock of finished goods is required for smooth
marketing operations.
OBJECTIVES OF INVENTORY MANAGEMENT:-
• To maintain sufficient stocks of raw materials in the periods of short supply and
anticipate price changes.
• To ensure a continuous supply of raw materials to facilitate uninterrupted production.
• To maintain sufficient finished goods inventory for smooth sales operations and
efficient customer service.
• To minimize the carrying costs and time.
• To control investments in inventories and keep it at an optimum level.
INVENTORY MANAGEMENT TECHNIQUES:-
The firm should determine the optimum level of inventory. Efficiently controlled inventories
make the firm flexible. Determining an optimum level involves two types of costs.
a) Ordering costs.
b) Carrying costs.
a) Ordering costs:- The term ordering cost is used in case of raw materials and
includes the entering costs of acquiring raw materials. Ordering costs are involved in
1. Preparing purchase or requisition form.
2. Receiving inspecting and records the goods receiving to ensure both quality
and quantity. The cost of acquiring materials consists of clerical costs of
stationary.
b) Carrying costs:- Carrying costs are involved in maintaining or carrying inventory

may be divided into four categories

1. Storage cost i.e. tax, depreciation, insurance and maintain acre of building,
utilities and services.
2. Insurance of inventory against fire and theft.
3. Depreciation in inventory because of technical obsolescence, fire, style
obsolescence and price declines.
4. Serving cost such as labor for holding inventory, clerical and accounting costs.

CALCULATION
AND
INTERPRETATION

4.DATA ANALYSIS AND INTERPRETATION
STATEMENT SHOWING THE CHANGES IN WORKING CAPITAL
Table – 4.1 (Rs. In Lakhs)
Particulars 2004-2005 2005-2006 2006-2007 2007-2008 2008-2009

1.Current
Assets
Inventory 4,409.59 5,719.62 9,217.13 19,433.35 16,082.68

Sundry debtors 6,497.06 8565.20 14,595.44 22,646.82 20,784.93
Cash & Bank 1,691.22 2,052.12 2,560.00 5,114.53 7,028.51
balance
Loans,Advances 3,429.30 6,349.73 8,598.24 12,484.78 8,612.87

& Deposits
Other current 99.26 120.35 31.10 80.11 90.01

assets
Total Current 16,126.43 22,807.02 35,001.93 59,759.61 52,599.00

Assets(A)
2.Current
Liabilities
Liabilities 3,450.43 6,738.95 7,353.04 10,273.73 11,379.68

Provisions 2,939.15 4,801.48 5,769.68 9,933.71 7,051.23
Total Current 6,389.58 11,540.44 13,122.72 20,207.44 18,430.91
Liabilities(B)
Net working 9,736.84 11,266.58 21,879.20 39,552.16 34,168.09

capital(A-B)

CHART-1
Gross working capital and Net working

capital
70000
Rupees in Lakhs
60000
50000 Gross working
40000 capital
30000 Net working capital
20000
10000
0
2004- 2005- 2006- 2007- 2008-
2005 2006 2007 2008 2009
Years
INFERENCE:
From the plot of Gross working capital and Net working capital it can be
observed that the increase in Gross working capital is more than the increase in Net working
capital, this is due to increase in the investments in current assets.

A Statement of Changes on Working Capital in the Year2004- 05
Table -4.2 amount in Rupees

Particulars 2004 2005 Increase Decrease
CURRENT ASSETS
Inventories 307,245,534 440,958,913 133,713,379
Debtors 471,673,642 649,706,121 178,032,479
Cash & bank balances 152,292,556 169,121,827 16,829,271
Loans, Advances & 251,402,682 342,929,588 91,526,906
Deposits
Other current Assets 7,622,683 9,926,048 2,303,365
TOTAL CURRENT 1,190,237,097 1,612,642,49
ASSETS[A]
7
CURRENT LIABILITIES
Current liabilities 162,283,498 345,042,817182,759,319
Provisions 198,416,622 293,915,449
95,95,498,827
TOTAL CURRENT
LIABILITIES [B]
NET WORKING 829,536,977 973,684,231
CAPITAL [A-B]
WORKING CAPITAL 144,147,254 700,663,546
INCREASE
Total 973,684,231 973,684,231 700,663,546 700,663,546

INTERPRETATION:-
• It is observed from Table-4.2 that the net working capital was increased by
Rs.144,147,254 in the year 2004-05. The current assets and the current liabilities both
have increases compared to the previous year. But still as the liabilities did not exceed
the assets the net working capital of the company turned out to be positive.
• Total current assets were increased by Rs. 422,405,400 in the year 2004-05
percentage is 35.5%.
• Total current liabilities were increased by Rs. 278,258,146 in the year 2004-05
• Inventories were increased by Rs. 133,713,379 for the year 2004-05
• Debtors were increased by Rs. 178,032,479 for the year 2004-05,percentage is
37.7%
• Cash on hand &bank balance increased by Rs. 16,829,271 to the year 2004-
05.precentage is 11.1%.
• Loans & Advance's were increased by Rs. 91,526,906 for the year 2004-05
• Other assets were increased by Rs. 2,303,365 for the year 2004-05, percentage
is 30.2%.
• Current liabilities were increased by Rs. 182,759,319 in the year 2004-05
• Provisions were increased by Rs. 95,498,827 in the year 2004-05 percentage is
48.1 %.

Table-4.3 amount in Rupees

Particulars Years Increase Decrease
2005 2006
CURRENT ASSETS
Inventories 440,958,913 571,962,221 131,003,308 ----------
Debtors 649,706,121 856,520,556 206,814,435 -----------
Cash & bank balances 169,121,827 205,212,363 36,090,536 ----------
Loans, Advances & 342,929,588 634,973,597 292,044,009 ----------
Deposits
Other current Assets 9,926,048 12,035,439 2,109,391
TOTAL CURRENT 1,612,642,497 2,230,704,176
ASSETS [A]
CURRENT LIABILITIES
Current liabilities 345,042,817 700,855,298 355,812,481
Provisions 293,915,449 480,148,548 186,233,099
TOTAL CURRENT 638,958,266 1,181,003,846
LIABILITES [B]
NET WORKING 973,684,23 1 1,099,700,330

CAPITAL [A-B]
WORKING CAPITAL 126,016,099 1,210,107,259
INCREASE
Total 1,099,700,330 1,099,700,330 1,210,107,259 1,210,107,259

INTERPRETATION:-
• It is observed from Table-4.3 that the net working capital was increased by Rs.126,
016,099 in the year 2005-06. The current assets and the current liabilities both have
increases compared to the previous year. But still as the liabilities did not exceed the
assets the net working capital of the company turned out to be positive.
• Total current assets were increased by Rs.668, 061,679 in the year 2005-06
• Total current liabilities were increased by Rs.542, 045,580 in the year 2005-06
• Inventories were increased by Rs. 131, 003,308 for the year 2005-06 percentage is
29.7%.
• Debtors were increased by Rs.206,814,435 for the year 2005-06,percentage is 31.8%
• Cash on hand &bank balance increased by Rs.36, 090,536 to the year 2005-
• Loans & Advance's were increased by Rs.292, 044,009 for the year 2005-06
• Other assets were increased by Rs.2, 109,391 for the year 2005-06, percentage is
21.2%.
• Current liabilities were increased by Rs.355, 812,481 in the year 2005-06 percentage
is 103.1%.
• Provisions were increased by Rs. 186, 233,099 in the year 2005-06 percentage
is 63.3%.


2006 2007
CURRENT ASSETS
Inventories 571,962,221 921,713,415 349,751,194 ------------
Debtors 856,520,556 1,459,544,977 603,024,421 ------------
Cash & bank balances 205,212,363 256,000,280 50,787,917 ------------
Loans, advances & 634,750,549 859,824,054 225,073,505 ------------
deposits
Other current assets 12,035,439 3,110,568 8,924,871
TOTAL CURRENT 2,280,481,128 3,500,193,294
ASSETS [A]
CURRENT
LIABILITIES
Current liabilities 673,895,907 735,304,583 61,408,676
Provisions 480,148,548 576,968,027 96,819,479
TOTAL CURRENT 1,154,044,455 1,312,272,610
LIABILITES
NET WORKING 1,126,436,673 2,187,920,684
CAPITAL [A-B]
WORKING CAPITAL 1,061,484,011 1,377,940,321
INCREASE
Total 2,187,920,684 2,187,920,684 1,386,865,192 1,386,865,192

INTERPRETATION:
• It is observed from Table-4.4 that the net working capital was increased by
Rs.l, 061,484,011 in the Year 2006-07. The current assets and the current liabilities
both have increases compared to the Previous year. But still as the liabilities did not
exceed the assets the net working capital of the Company turned out to be
positive.
• Total current assets were increased by Rs.l, 219,712,166 in the year 2006-07
percentage is 53.5 %.
• Inventories were increased by Rs.349, 751,194 for the year 2006-07
• Debtors were increased by Rs.603,024,421 for the year 2006-07,percentage is
70.4%
• Other assets were decreased by Rs.8, 924,871 for the year 2006-07, percentage
is 74.5%.
• Current liabilities were increases by Rs.61, 408,676 in the year 2006-07
• Provisions were increased by Rs.96, 819,479 in the year 2006-07 is.2%.


2007 2008
CURRENT ASSETS
Inventories 921,713,415 1,943,335,704 1,021,622,289 ------------
Debtors 1,459,544,977 2,264,682,019 805,137,042
Cash & bank balances 256,000,280 511,453,739 255,453,459
Loans, advances and 859,824,054 1,248,478,477 388,654,423 ------------
Deposits
Other current assets 3,110,568 8,011,086 4,900,518 -------------
TOTAL CURRENT 3,500,193,294 5,975,961,025
ASSETS [A]
CURRENT
LIABILITIES
Current liabilities 735,304,583 1,027,373,819 292,069,236 -----------
Provisions 576568.027 993,371,133 416,403,106 -----------
TOTAL CURRENT 1,312,272,610 2,020,744,952
LIABILITES [B]
NET WORKING 2,187,920,684 3,955,216,073
CAPITAL [A-B]
WORKING 1,767,295,389 3,184,240,073
CAPITAL
INCREASE
Total 3,955,216,073 3,955,216,073 3,184,240,073 3,184,240,073

INTERPRETATION:
• It is observed from Table 4.5 that the net working capital was Rs. 1,
767,295,389 increased in the year 2007-08. The current assets and the current
liabilities both have increases compared to the previous year. But still as the liabilities
did not exceed the assets the net working capital of the company turned out to be
positive.
• Total current assets were increased by Rs.2, 475,767,731 in the year 2007-08
• Inventories were increased by Rs.l, 021,622,289 for the year 2007-08
percentage is 110%.
• Debtors were increased by Rs.805,137,042 for the year 2007-08,percentage is
55.5%
08.precentage is 99.8%..
• Other assets were increased by Rs.4, 900,518 for the year 2007-08, percentage
is 157%.
• Current liabilities were increased by Rs.292, 069,236 in the year 2007-08
• Provisions were increased by Rs.416, 403,106 in the year 2007-08 percentage
is 72.2%.


2008 2009
CURRENT ASSETS
Inventories 1,943,335,704 1,608,268,673 ------------ 335,067,031
Debtors 2,264,682,019 2,078,493,040 ------------ 186,188,979
Cash & bank balances 511,453,739 702,851,806 191,398,067 ------------
Loans, advances and 1,248,478,477 870,287,297 ------------ 378,191,180
Deposits
Other current assets 8,011,086 ----------- 8,011,086
TOTAL CURRENT 5,975,961,025 5,259,900,816
ASSETS [A]
CURRENT
LIABILITIES
Current liabilities 1,027,373,819 1,137,968,083 110,594,264 ------------
Provisions 993,371,133 705,123,629 ----------- 288,247,504
TOTAL CURRENT 2020,744,952 1,843,091,712 339,284,308
LIABILITES [B]
NET WORKING 3,955,216,073 3,416,809,104 538,406,969
CAPITAL [A-B]
WORKING 538,406,969
CAPITAL
DECREASE
Total 3,955,216,073 3,955,216,073 1,187,694,694 1,187,694,694

INTER PRETATION:
• It is observed form table 4.6 that the net working capital was Rs. 538,406,969
decreased in the year 2008-09. The current assets and the current liabilities both have
decreased compared to the previous year. But still as the liabilities did not exceed the
assets the net working capital of the company turned out to be positive.
• Total current assets were ildecreased by Rs. 1,187,694,694 in the year 2008 – 09
• Total current liabilities were decreased by Rs. 117,653,240 in the year 2008 -09
• Inventories were decreased by Rs. 335,067,031 for the year 2008 -09 percentage is 90%.
• Debtors were decreased by Rs. 186,188,979 for the year 2008 – 09 percentage 70%
• Cash on hand & bank balance increased by Rs. 191,398,068 to the year 2008 -09
percentage 60%.
• Loans & ADVANCE WERE DECREASED BY Rs. 378,191,180 for the year 2008-09
percentage is 30%.
• Other assets were increased by Rs. 8,011,086 for the year 2008-09 percentage is 169%
• Current liabilities were increased by Rs. 110,594,264 in the year 2008-09 percentage is
49.5%
• Provisions were decreased by Rs. 288,247,506 in the year 2008-09 percentage is 50.3%.

4.1 RATIOS
CURRENT RATIO:
This is the most widely used ratio. It is the ratio of current assets and current
liabilities. It shows a firm’s ability to cover its current liabilities with its current assets.
Generally 2:1 is considered ideal for a concern i.e., current assets should be twice of the
current liabilities. If the current assets are two times of the current liabilities, there will be no
adverse effect on business operations when the payment of current liabilities is made. If the
ratio is less than 2 difficulty may be experienced in the payment of current liabilities and day-
today operation of the business my suffer. If the ratio is higher than w it is comfortable for
the creditor but. For the business concern it is indicator of idle funds and a lack of
enthusiasm for work. It is calculated as follows:
CURRENT RATIO = CURRENT ASSETS / CURRENT LIABILITIES
For the calculation of this ratio
 Current assets include inventories sundry debtors, cash and bank balances and loans
& advances.
 Current liabilities include Current liabilities and provisions.
YEAR CURRENT CURRENT RATIOS

ASSETS LIABILITIES
2004-05 1,190,237,092 360,700,120 3.2:1
2005-06 1,612,642,497 636,958,266 2.5:1
2006-07 2,280,704,176 1,181,003,846 11.9:1
2007-08 3,500,193,294 1,312,272,610 2.6:1
2008-09 5,975,961,025 2,020,744,952 2.9:1

CURRENT RATIO
3.5
2.5
2
RATIO
1.5
series
1
0.5
0
2004-05 2005-06 2006-07 2007-08 2008-09
YEARS
INFERENCE:
The current ratio normal standards are 2 : 1. In the above diagram we show that all
years are above the standards. In the 2004-05 the current ratio is so high i.e.3: 1. So it is
profitable to the company as current increase. In 2007-08 the current ratio is 2.6: 1 and in the
year 2008-09 the ratio is 2.9:1.

QUICK RATIO (OR) ACID TEST RATIO:
This is the ratio of liquid assets to current liabilities. Is shown a firm’s ability to meet
current liabilities with its most liquid or quick assets. The standard ratio 1: 1 is considered
ideal ratio for a concern. Liquid assets are those which can be easily converted in to cash
within a short period of time without loss of value. This ratio can be calculated by using the
formula:
LIQUID RATIO = LIQUID ASSETS / CURRENT LIABILITIES
For the calculation this ratio
 A liquid asset of quick asset includes sundry debtors, cash and bank balance and loan
& advances.
 Current liabilities include current liabilities and provisions.
YEAR QUICK ASSETS QUICK RATIOS

LIABILITIES
2004-05 882,991,558 360,700,120 2.4:1
2005-06 1,171,683,584 638,958,266 1.8:1
2006-07 1,708,741,995 1,181,003,846 1.4:1
2007-08 3,150,442,100 1,312,272,610 2.4:1
2008-09 4,032,625,321 2,020,744,952 1.9:1

QUICK RATIO
2.5
1.5
RATIO
1 series
0.5
0
2004-05 2005-06 2006-07 2007-08 2008-09
YEARS
INFERENCE:
The standard norm of the ratio is 1; 1. A clear position of liquidity can be known from
Quick ratio. From the above table &graph. Company can able to the Current Liabilities with
the help of Quick Assets. In 2005 and 2008 ratio is that effective which same percentage.
This ratio is more profitable to the company, and in the year 2008-09 the ratio is 1.9:1.

ABSOLUTE LIQUID RATIO:
Absolute liquid ratio is the relationship between absolute liquid assets and current
liabilities. The standard is 0: 5: 1 for this ratio even though the ratio gives a more meaningful
measure of liquidity. But it is not in much use because the idea of keeping large cash balance
or near cash items has long since been disproved. This ratio can be calculated by using the
formula.
ABSOLUTE LIQUID RATIO = ABSOLUTE LIQUID ASSETS / CURRENT

LIABILITIES
For the calculation this ratio
 Absolute liquid assets included cash in hand, cash at bank and short – term
marketable securities.
 Current liabilities included Current liabilities and provisions.
YEAR ABSOLUTE QUICK RATIOS

QUICK ASSETS LIABILITIES
2004-05 152,292,556 360,700,120 0.42:1
2005-06 169,121,827 638,958,266 0.26:1
2006-07 205,212,363 1,181,003,846 0.17:1
2007-08 256,000,280 1,312,272,610 0.19:1
2008-09 511,453,739 2,020,744,952 0.25:1

ABSOLUTE QUICK RATIO
0.5
0.4
0.3
RATIO
0.2
series
0.1
0
2004-05 2005-06 2006-07 2007-08 2008-09
YEARS
INFERENCE:
The standard of absolute Quick Ratio is 0.5:1. From the table and graph from 2004 to
2008, there are no sufficient absolute Quick Assets to pay -off the current liabilities expect in
2005, and in the year 2009 the ratio is 0.25:1.

OPERATING RATIO:
The operating ratio Explain t6he changes in the profit margin (EBIT) to sales ratio
this is computed by dividing the operating expenses to sales operating expenses calculated as
cost of good sold +selling genera! And administrative expenses this ratio lower is profitable
to the company.
OPERATING PROFIT = OPERATING EXPENCES / SALES X 100
YEAR OPERATING SALES RATIOS

EXPENCES
2004-05 390,766,202 1,999,232,783 19.55%
2005-06 392,609,728 2,685,436,096 14.62%

2006-07 581,551,589 2,685,436,096 21.66%
2007-08 819,239,302 7,451,032,998 10.99%
2008-09 152, 868, 7425 13,499,867,499 11.32%
OPERATION RATIO
25
20
15
RATIO
10 series
0
2004-05 2005-06 2006-07 2007-08 2008-09
YEARS
INFERENCE:

Operating expenses in general will changes in sales. From the above table & graph, is
decrease with slight variation from 2004 to 2006.but in 2007 it is increased which in term
more expenses. Then the company in 2008 it is decrease, which in term improved the profits
and in the year 2009 the ratio is 11.32%.
NET PROFIT RATIO:

Net profit ratio tells the Relationship between net profit ratio and sales higher this
ratio profitability to the company. This ratio is expressed as fallows.
NETPROFIT RATIO = NETPROFIT / SALES X 100
YEAR NET PROFIT SALES RATIOS

2004-05 13,897,597 1,999,232,783 0.70 %
2005-06 86,900,563 2,685,436,096 3.24 %
2006-07 238,465,730 2,685,436,096 8.88 %
2007-08 470,434,575 7,451,032,998 6.31 %
2008-09 943,631,511 13,499,867,499 6.98%
NET PROFIT RATIO
10.00%
8.00%
6.00%
RATIO
4.00%
series
2.00%
0.00%
2004-05 2005-06 2006-07 2007-08 2008-09
YEARS
INFERENCE:
Profit increase generally when sales increase. From the above table and graph, it is
identified that in 2006. Here the company was having more net profit. Compared with 2004,
2006, 2008. 2005 the company was having less net profit and in the year 2009 the ratio is
6.98%.
CURRENT ASSETS TO FIXED ASSETS RATIO:

This ratio will differ from industry to industry and therefore no standard can be laid

down. A decrease in the ratio may mean that trading is slack or more mechanization has been
put through. An increasing in the ratio may reveal that inventories and debtors have unduly
increased or fixed assets have been intensively used. This ratio worked out as
RATIO OF CURRENT ASSETS TO FIXED ASSETS = CURRENT ASSETS / FIXED

ASSETS
YEAR CURRENT FIXED ASSETS RATIOS

ASSETS
2004-05 1,190,237,092 991,886,349 119.9%
2005-06 1,612,642,497 948,631,374 169.9%

2006-07 2,280,704,176 1,043,547,559 218.5%
2007-08 3,500,193,294 1,568,304,581 223.1%
2008-09 5,975,961,025 1,888,508,475 316.4%
CURRENT ASSETS TO FIXED ASSETS RATIO
250.00%
200.00%
150.00%
RATIO
100.00%
series
50.00%
0.00%
2004-05 2005-06 2006-07 2007-08 2008-09
YEARS
INFERENCE:
A constant level of fixed assets, a high Current Asset to Fixed Assets ratio indicates a

conservative current policy. Low current assets to fixed assets Ratio indicate aggressive
current policy. So the above table and graph indicates a conservative current policy.
NET WORKING CAPITAL TURNOVER RATIO:
The Net Working Capita! Turnover Ratio tells that how many numbers, of times

working capital funds are utilized in generation of sales. A higher working capita turnover
Ratio indicates the efficient turn of the company.
NET WORKING CAPITAL TURNOVER RATIO: NET SALES/ NET WORKING

CAPITAL X100
(Net working capital =current assets-Current Liabilities)
YEAR SALES NET WORKING RATIOS

CAPITAL
2004-05 1,759,017,304 829,536,972 2.12times

2005-06 2,363,765,256 973,684,231 2.43times
2006-07 3,636,709,293 1,099,700,330 3.31times
2007-08 5,958.016,404 2,187,920,684 2.72 times
2008-09 10,833,256,904 3,955,216,073 2.73 times
NET WORKING CAPITAL TURNOVER

RATIO
3.50
3.00
2.50
2.00
RATIO
1.50
1.00 series
0.50
0.00
2004-05 2005-06 2006-07 2007-08 2008-09
YEARS
INFERENCE:
From the above table and graph, net working capital has increase from 2004 to 2009,
and then the company sales are maximum 3 times repeated. Working capita turnover Ratio
indicates the efficient turn of the company. So the company in efficient position.
RECEIVABLE MANAGEMENT
DEBTORS TURN OVER RATIO:

Debtors Turn over Ratio is also known as receivables turn Over Ratio, ft is the Ratio
between Sales and the amounts due from the Debtors to sell the goods are sold on credit.
Higher the debtor’s turnover indicates the management of credit. This Ratio is formulated as
DEBTORS TURN OVER RATIO = CREDITS SALES/ AVERAGE ACCOUNTS

RECEIVABLES
• Accounts receivables = debtors +bill receivables

• Average Accounts receivables = Opening (debtors +bill receivables) + closing
(debtors +bill receivables)
YEAR SALES AVG.ACCOUNTS RATIOS

RECEIVABLES
2004-05 1,999,232,783 1,077,966,399 2 times
2005-06 2,685,436,096 796,526,703 3 times
2006-07 2,685,436,096 691,556,481 4 times
2007-08 7,451,032,998 681,343,243 10.94 times
2008-09 13,499,867,499 2,264,682,01 4.78 times
DEBTORS TURN OVER RATIO
12
10
RATIO 6
4 series
2
0
2004-05 2005-06 2006-07 2007-08 2008-09
YEARS
INFERENCE:
From the above table and graph, comparing with 2004-2009 it is having in increasing
trend, which shows a positive response to the company. Overall it indicates an improvement
in collection from debtors on an average basis

DEBTORS COLLECTION PERIOD:
Debtor's collection period measures the quality of the debtors. Since it indicates the
speed of their collection. The shorter the collection period it is better quality of the debtors.
Since the shorter collection period indicated the debtors. The debtor collection period is
expressed as follows.
DEBTORS COLLECTION PERIOD= NUMBER OF DAYS IN YEAR / DEBTORS

TURN OVER RATIOX100
YEAR NO OF DAYS DEBTORS RATIOS

TURNOVER
RATIO
2004-05 365 1.85 196 days
2005-06 365 3.37 108 days
2006-07 365 3.88 94 days
2007-08 365 10.94 33 days
2008-09 365 4.78 28 days
DEBTORS COLLECTION PERIOD
300
250
200
RATIO 150
100
series
50
0
2004-05 2005-06 2006-07 2007-08 2008-09
YEARS
INFERENCE:

From the above table and graph, in 2008 debtors collection period is lower comparing
with other 4 years which indicates a positive sign. In remaining years 2004, 2005, 2006
&2007, 2008, 2009 which are196, 108, 94, 33, 28 days indicates a moderate period.
INVENTORY MANAGEMENT
INVENTORY TURN OVER RATIO:
This Ratio is also known as stock turnover ratio. This indicates the number of times
inventory is replaced during the year. It measures the Relationship between cost of good sold
and the inventory level. This Ratio is expressed as.
INVENTORY TURN OVER RATIO= COST OF GOOD SOLD/AVERAGE

INVENTORY
• Cost of good sold = Sales - gross profit

• Average inventory = Opening inventory +closing inventory / 2
YEAR COST OF AVERAGE RATIOS

INVENTORY
GOODS SOLD
2004-05 1,987,713,446 447,836,553 4.4
2005-06 2,549,624,940 527,724,991 4.8
2006-07 2,311,971,873 726,940,023 3.1
2007-08 6,739,048,550 1,032,818,929 6.5

2008-09 120, 404, 860, 74 143, 25, 24,559 8.4
INVENTORY TURN OVER RATIO
4
RATIO
3
series
2
0
2004-05 2005-06 2006-07 2007-08 2008-09
YEARS
INFERENCE:
Inventory turn over ratio measures the conversation of stock into sales. From 2004 to
2006, there is an increasing trend from 3 to 5 times. In 2006 ratio is decreased from 5 to 3.
Hence it is concluded that in 2008 and in the year 2009 the ratio is 8.4, the company
converted it stock into sales fastly.
INVENTORY CONVERSATION PERIOD (HOLDING PERIOD):

Inventory Conversation Period expressed as in how many days that stock is replaced
or in how ma days the stock is covered into sales. This ratio is formed as follows
INVENTORY CONVERSATION PERIOD =NO OF WORKING DAYS/

INVENTORY TURNOVER RATIO
YEAR NO OF DAYS INVENTORY RATIOS

TURNOVER
RATIO
2004-05 365 4.4 82 Days
2005-06 365 4.8 75 Days
2006-07 365 3.1 114 Days
2007-08 365 6.5 55 Days

2008-09 365 8.4 43.4 Days
HOLDING PERIOD
120.00
100.00
80.00
RATIO 60.00
40.00
series
20.00
0.00
2004-05 2005-06 2006-07 2007-08 2008-09
YEARS
INFERENCE;
From the above table and graph, in 2008 conversation period is lower which is good
to the company. But in 2004 & 2007 it is increased. In 2008 and 2009 ratio was decreased in
which is a positive sign. Finally concluded that in 2009 the company converted it stock into
sales fastly
RAW MATERIAL CONVERSION PERIOD:
RAW MATERIAL CONVERSION PERIOD= INVENTORIES/ RAW MATERIAL

CONSUMEDX365 DAYS
YEAR INVENTORIES RAW MATERIAL RATIOS

CONSUMED
2004-05 100,350,715 831,843,012 44 Days

2005-06 139,746,690 1,382,962,610 36 Days
2006-07 151,830,013 2,229,601,146 24 Days
2007-08 300,836,280 3,937,812,454 27 Days
2008-09 631,703,870 7,794,794,675 29 Days
RAW MATERIAL CONVERSATION PERIOD
50
40
30
RATIO
20 series
10
0
2004-05 2005-06 2006-07 2007-08 2008-09
YEARS
INFERENCE:
Always raw material conversation period is low which reduce the maintenance cost of
stores. In 2004 and 2005 was high for 43 and 44 days which a very bad sign to the company.
The period was lower in 2006, 2007, 2008, 2009 like 36, 24, 27, 29 days, which is good to
the company.

CASH MANAGEMENT
CASH TO CURRENT ASSETS RATIO:
Cash is an important and sensitive Current Asset; it is viewed as the most liquid
assets. When the proportion of cash in Current Assets in more then it is said that the company
had more liquid. High-proportion of cash in Current Assets also indicates the good stock in
receivables turn over of the company. This kind of analysis is helpful to the management to
understand the turn over capacity of the concern. This ratio indicates the cash proportion in
current assets.
CASH TO CURRENT ASSETS RATIO=CASH AND BANK BALANCES/CURRENT

ASSETSX100
YEAR CASH AND CURRENT ASSETS RATIOS

BANK
BALANCES
2004-05 152,292,556 1,190,237,092 12.7
2005-06 169,121,827 1,612,642,497 10.4
2006-07 205,212,363 2,280,704,176 8.9
2007-08 256,000,280 3,500,193,294 7.3
2008-09 511,453,739 5,975,961,025 8.5

CASH TO CURRENT ASSETS RATIO
14
12
10
8
RATIO
6
series
4
0
2004-05 2005-06 2006-07 2007-08 2008-09
YEARS
INFERENCE:
From the above table and graph, In 2007 & 2008 the ratios are 8.9 and 7.3 which is
not good to the company as cash and bank balances are very negligible. But in 2004, 2005 &
2006 are in good position to the company like 12.4, 12.7 & 10.4. In general company should
not maintain much cash which will lead to wastage of cash.
CASH TO CURRENT LIABILITIES RATIO:
Percentage of cash in relation to Current Liabilities will enable to us understand the

creditor repayment capacity of the concern without damaging the regular operation. The Idle

ratio to cash to Current Liabilities is 0.5: 1, which means that for very 1 rupee of the Current
Liabilities. The company will able to pay 50 paise of cash and bank balances.
CASH TO CURRENT ASSETS RATIO=CASH AND BANK BALANCES/CURRENT

LIABILITIESX100
YEAR CASH AND BANK CURRENT LIABILITIES RATIOS

BALANCES
2004-05 152,292,556 360,700,120 0.42
2005-06 169,121,827 638,958,266 0.26
2006-07 205,212,363 1,181,003,846 0.17
2007-08 256,000,280 1,312,272,610 0.19
2008-09 511,453,739 2,020,744,952 0.25
CASH TO CURRENT LIABILITIES RATIO
0.45
0.4
0.35
0.3
0.25
RATIO
0.2
0.15 series
0.1
0.05
0
2004-05 2005-06 2006-07 2007-08 2008-09
YEARS
INFERENCE:
From the above table and graph, we depict that in ail the years expect 2005, the ratio
is bellow 0.5: 1. But it is not good to the company and will not able to pay the credit.

FINDINGS
AND
SUGGESTION

5. FINDINGS AND SUGGESTIONS
5.1 FINDINGS
 The company maintenance reserves and surplus in an increasing trend.
 A current asset position has increased over the four year period current ration has also
increased steability.
 Resources were allocated mainly to increase the fixed assets over the 5 years period
and inventory was also raised.
 Working Capital position has strengthened over the years
 Employee salary & Benefits are in an increasing trend.

5.2 SUGGESTIONS
 The idle working capital should be fully utilized by reducing the operating cycle to a
minimum level.
 The company increases the contract receipts volume. So as results in optimum
utilization of capacity and maximization of profit.
 Cost control techniques are to be adopted on the company where ever possible.
 Company can utilizes the reserves and surplus by either capitalizing or an invest the
money some where an investment to get benefit.
 The debtor’s position should have maintained at 60 to 75 days

6. CONCLUSION
From the study of the working capital management, I conclude that from the
findings that the company is using its current assets more in its development. The Net profit
ratio is also showing a positive sign. To improve its performance more, the company needs to
concentrate on reducing operating expenses.
The company has a good credit policy and is able to collect from its debtors at a
faster rate.

BIBILOGRAPHY

BIBILOGRAPHY
BOOKS
FINANCE MANAGEMENT - I.M. PANDEY

Vikas Publishing House
New Delhi.
FINANCE MANAGEMENT - M.Y KHAN & P.K. JAIN

Vikas Publishing House
New Delhi.
FINANCE MANAGEMENT - PRASANNA CHANDRA

THEORY & PRACTICES Tata McGraw Hill Publishing
Company Ltd. New Delhi.
WEB SITES
• www.arbl.com
• www.amararaja.co.in
• www.wikipedia.com

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INTRODUCTION

SRM University 1 AMARRAJA BATTERIES LIMITED

In Indian situation on an average approximately 60, 70% of the total product

One of the problem of inventory management is maintaining inventory of a

Inventory management deals with the determination of optimal policies and

SRM University 2 AMARRAJA BATTERIES LIMITED

India's manufacturing base, which is the fourth-largest among emerging economies, is

SRM University 3 AMARRAJA BATTERIES LIMITED

ROAD AHEAD 2010

BATTERY MANUFACTURING INDUSTRY:

SRM University 4 AMARRAJA BATTERIES LIMITED

SRM University 5 AMARRAJA BATTERIES LIMITED

LEADING BRANDS IN THE WORLD:

Blains Farm & Fleet

SRM University 6 AMARRAJA BATTERIES LIMITED

INDUSTRY STRUCTURE AND DEVELOPMENT:

SRM University 7 AMARRAJA BATTERIES LIMITED

SRM University 8 AMARRAJA BATTERIES LIMITED

SRM University 9 AMARRAJA BATTERIES LIMITED

The consumer becoming educated enough to make intelligent comparisons among

SRM University 10 AMARRAJA BATTERIES LIMITED

SRM University 11 AMARRAJA BATTERIES LIMITED

> Introduce latest generation technologies.

1.3 PRODUCT PROFILE:

> Automotive batteries

> Industrial batteries

Applications of Automotive batteries

SRM University 12 AMARRAJA BATTERIES LIMITED

SRM University 13 AMARRAJA BATTERIES LIMITED

Registered Office Karakambadi, Tirupathi.

Corporate Operations Office Chennai

Marketing Offices & Services Centers Bangalore, Mumbai, Kolkata,

New Delhi, Hyderabad and

Conventional Batteries Charges : Up to 220V / 500 A 24 V /2000 A.

Switch Mode Power Supply ( SMPS ) : Modules of 48 V/25A up to 200A

and 48V/100A up to 3200A

DC/AC Distribution Boards.

SRM University 14 AMARRAJA BATTERIES LIMITED

SRM University 15 AMARRAJA BATTERIES LIMITED

SRM University 16 AMARRAJA BATTERIES LIMITED

Growing share in the market

Presence in lucrative, high-growth businesses

SRM University 17 AMARRAJA BATTERIES LIMITED

ARBL's future plans

• Development of flooded batteries for motor cycle application

• Start supplies of motor cycle batteries to new OEMs

• Expansion of DIN range batteries for automotive battery application

• Development of batteries for various applications for Indian Railways

• Development of suitable batteries for export requirement

• Develop technologies for motive power & other industrial Applications

• 'Best Industry all round performance' award to 1988 by FAPCCI.

> Advancement for ISO-4001 Certification.

SRM University 18 AMARRAJA BATTERIES LIMITED

> Housing Colony to the Employees is in Progress.

AMARA RAJA GROUP OF COMPANIES

1. Amara Raja Batteries Limited (ARBL).

SRM University 19 AMARRAJA BATTERIES LIMITED

INDUSTRIAL BATTERY DIVISION (IBD):-

Types of VRLA Batteries manufactured in the Industrial Battery Division are

SRM University 20 AMARRAJA BATTERIES LIMITED

AUTO MOTIVE BATTERY DIVISION (ABD):-

Exide, Prestolite, AMCO.

HISTORY OF THE ORGANISATION