FINAL RESEARCH PROJECT ON

WORKING CAPITAL ANALYSIS OF RAYMONDS

In fulfillment of PGDBM Program (2009-2011) Batch XV
SUBMITTED BY MAYANK NIGAM Roll No.: 1284 UNDER THE GUIDENCE OF MS. SUDHI SHARMA

ACKNOWLEDGEMENT

No project springs from virgin soil .This RESEARCH PROJECT especially owes its intellectual roots to the work of toiling. The satisfaction that accompanies the successful completion of any task is incomplete without the mention of people whose enormous co-operation made it possible. I am deeply indebted to my RESEARCH MENTOR Professor Ms. SUDHI SHARMA whose help and stimulating suggestions and encouragement helped me in all the times of research for and writing of this project. I want to thank her for all her help, support, interest and valuable hints. I would like to express my gratitude to all those who gave me the possibility to complete this project. I would like to thank college authorities and furthermore to thank to all who offered me various sources containing vital secondary data to do the necessary research work and confirmed this permission and encouraged me to go ahead with my research project. Finally, I would like to give my special thanks to my parents & friends whose patient love enabled me to reach such greater heights in my life and made me stand as an individual ready to take on the challenges that life has to offer.

Declaration
I am deeply indebted to my faculty guide Prof. Sudhi Sharma for coordinating the project work and giving me all the valuable guidance and constant inspiration to complete my project sincerely. This project couldnt have been possible without his help.

The Study on Working Capital Analysis of Raymond has been given to me during Final Research Project as a part of the curriculum during 2 years program of PGDM-IWI. I have tried my best to present the information as clearly as possible, that I collected during the two months of FRP.

I am grateful to Prof. Sudhi Sharma for his guidance helpful hints and valuable suggestions during the course of this project, who gave me the vital inputs and necessary information regarding the project.

MAYANK NIGAM

CHAPTERISATION
The research project has been articulated with the help of five chapters as follows_
CHAPTER I RESEARCH DESIGN AND METHODOLOGY :It details defines objective, their formulation & design of the research. It is most important chapter because it designs all the activity research. CHAPTER II THEORETICAL BACKGROUND :In this chapter includes theoretical concepts relating to subject of project it focuses theoretical knowledge in financial management books related to topic i.e. working capital. CHAPTER III INTRODUCTION OF COMPANY:Company profile it focus on introduction of company, human resource development, research & development, organizational set up. CHAPTER IVANALYSIS & INTERPRETATION OF DATA:-

In which after collection of data from the subordinates, the work of conclusion & suggestion are depending on analysis. CHAPTER V: CONCLUSION This chapter is based on analysis and interpretation. The researcher has alternative solution and suggestions give the origination. Last by the report contains appendix & bibliography. This contains the balance sheet and profit and loss accounts with help of this researcher has done research work & bibliography give the information about the books magazine & websites used by the researcher to complete the research work.

CHAPTER- I

Research Design
1.1 Introduction of the Subject 1.2 Objectives 1.3 Importance of Study 1.4 Methodology 1.5 Chapterisation 1.6 Limitations

CHAPTER NO. 1
RESEARCH DESIGN

INTRODUCTION OF THE SUBJECT

Management of working capital is a challenging task particularly in developing countries like India. In developing countries generally, there is shortage of funds, frequent changes in the monetary policy as an instrument of controlling inflation, vast demands on bank funds, high interest rates, shortage of goods and services luring both business houses and consumers to hoard and maintain large inventories and existence of parallel black economy. A large part of finance managers is devoted in managing working capital to get day-to-day needs of an organization. His prime attention is devoted to maintain sufficient liquidity in the form of cash, marketable securities, accounts receivables and inventories to grease the operations of business adequately. But at the same time he is to take care of the profitability of the organization. Too much liquidity is a burden on profitability, as these are inversely related to each other. It is to balance between these two conflicting objectives of liquidity and profitability. For the organization it is a continuous process. Thus the working capital is a qualitative concept 1. It indicates the liquidity position of the firm and 2. It suggests the extent to which working capital needs may be financed by permanent source of fund. Current assets should be sufficiently in excess of current liabilities to constitute a margin or buffer for maturing obligation within the ordinary cycle of business.

OBJECTIVES OF THE PROJECT The objectives of the study were

    To analyze working capital management. To calculate the operating cycle period. To analyze the liquidity position of the company by analyzing the various ratios. To learn and practice the financial concepts and tools using them during the project.

IMPORTANCE OF THE STUDY

In every business organization its financial transactions are recorded in the systematic term, which called Financial Statement such as Profit and Loss Account and Balance Sheet. Financial Statements shows the financial strength and weakness of the firm, hence, the Financial Statements are prepared for the decision-making. Management becomes able to this purpose such financial statement are necessary to be analyzed. The study was useful to understand the Working Capital Management at Raymond Ltd. It was useful in understanding all theoretical concepts, how they are practically implemented. Also the various types of ratios were studied which helps in analyzing the financial statements.

METHODOLOGY
Research in common parlance refers to a search for knowledge. Research may be defined as manipulation of things, concepts or symbols for the purpose of generalizing to extent, correct or verify knowledge, whether that knowledge aids in construction of theory or in the practice of an art. Research objectives: The main objectives of research in management are: 1. To verify and to test the existing facts and theories. 2. To gain familiarity with a phenomenon or to achieve new insights into it. 3. To establish generalization in various fields of knowledge. 4. To bring to limelight information that could have never been brought to the knowledge under normal course.

METHODS OF DATA COLLECTION Secondary data collected from: Since the study is based on the financial aspects of the company so the annual report of the organization, Trial Balance, Income & Expenditure accounts of the company brought in use. Besides the company profile and theoretical aspects taken from the secondary sources. PRESENTATION OF THE DATA The data collected is presented in the form of: (a) Tables (b) Bar diagrams (c) Pie charts

ANALYSIS OF DATA
For the analysis ratio has been used and for calculation of working capital and operating cycle three years figures has been compared crudely.

LIMITATIONS
This project is not far from limitations. The limitations are: -

A company generally cannot disclose its internal policies to outsiders. In such case, it is very difficult to find out and gather complete and true information in the forms of figures regarding financial matters.

CHAPTER- II

Theoretical Background
2.1 Introduction 2.2 Risk and return in Working Capital 2.3 Elements of Working Capital 2.4 Working Capital Finance 2.5 Ratios 2.6 Operating Cycle

INTRODUCTION
Working capital management refers to management of the working capital, or more precise, the management of current assets. A firms working capital consist of its investment in current asset which include short term asset such as cash and bank balance, inventories, receivables, and marketable securities.

Working capital management arises from two considerations: 1. Existence of working capital is imperative in any firm. 2. The working capital involves investment of funds of the firm.

Working capital refer to current asset which may be defined as: 1. Those which are convertible into cash or equivalent within a period of one year. 2. Those which are required to meet day to day operations.

Though fixed asset and current asset both require investment of funds, working capital involve different concept and methodology than the techniques used in fixed asset management. Reason for this is that very basics of fixed assets decision process and working capital decision process are different. The fixed assets involve long period perspective, hence the concept of time value of money is applied in order to discount the future cash flows, where as in working capital the time horizon is limited, in general to one year only and the time value of money concept is not used. Fixed asset affect the long-term profitability of the firm while current assets affect the short-term liquidity of firm.

Managing current asset may require more attention than managing fixed assets, because level of investment in each of the current asset varies from day to day, and the financial manager must

there fore, continuously monitor these assets to ensure that the desired levels are being maintained. Too large an investment in current assets means tying up funds that can be productively used elsewhere. Excess investment may also expose the firm to undue risk e.g. in case, the inventory cannot be sold or the receivable cannot be collected. On the other hand, too little investment also can be expansive. For example, insufficient inventory may mean that sales are lost as the finish goods which customers wants are not available. Financial manager is faced with decisions involving some of the considerations are as follows: 1.What should be the total investment in working capital of the firm? 2.What should be the level of individual current assets? 3.What should be the relative proportion of different sources to finance the working capital requirement?

Thus working capital management may be defined as the management of firms sources and uses of working capital in order to maximize the wealth of the shareholders The term working capital may be used in two different ways. 1. Gross working capital: The gross working capital refers to the firms investment in all current assets taken together. 2. Net working capital: The term net working capital may be defined as the excess of total current assets over total current liabilities. The gross working capital denotes the total working capital or total investment in current assets. A firm should maintain an optimum level of gross working capital. This will help avoiding: 1. The unnecessarily stoppage of work or chance of liquidation due to insufficient working capital. 2. Effect on profitability because over flowing working capital implies cost. Therefore, a firm should have just adequate level of total current assets. The gross working capital also gives an idea of total funds required for maintaining current assets.

On other hand, net working capital refers to amount of funds that must be invested by the firm, more or less regularly in current assets. The net working capital also denotes the net liquidity being maintained by the firm. This also gives an idea of buffer available to the current liability. Need for adequate working capital: The need and importance of adequate working capital for day to day operation can hardly be underestimated. Every firm must maintain a sound working capital position otherwise; its business activities may be adversely affected. Thus every firm must have adequate working capital. The excess working capital, when the investment in working capital is more than the required level, may result in a). Unnecessary accumulation of inventories resulting in waste, theft, damage etc. b). Delay in collection of receivables resulting in more liberal credit terms to customers than warranted by the market conditions. c). Adverse influence on the performance of the management.

On the other hand, inadequate working capital situation is not good for the firm. Such a situation may have following consequences: 1) The fixed asset may not be optimally used. 2) Firm growth may stagnate. 3) Interruptions in production schedule may occur ultimately resulting in lowering of the profit of the firm. 4) The firm may not be able to take benefit of an opportunity. 5) Firm goodwill in the market is affected if it is not in a position to meet its liabilities on time.

Thus taking in to consideration financial manager must establish: a) A well defined working capital policy
b) A self-sufficient working capital management system.

DIFFERENT TYPES OF WORKING CAPITAL POLICIES

Current Assets Conservativ e Modera te Aggressive

Sales Level

Above figure show three policies in working capital management.

In moderate policy value of current asset increases in proportion with sales level.

In conservative policy value of current asset increases more rapidly than sales level. Such a policy tends to reduce the risk of shortage of working capital by increasing the safety component of current asset. The conservative policy also reduces the risk of nonpayment to liability.

In aggressive type of policy sales level increases more in percentage than increase in current assets.

This type of aggressive policy has many implications.

a) The risk of insolvency of the firm increases as it maintains law liquidity. b) The firm is expose to greater risk as it may not be able to face unexpected change in market c) Reduced investment in current asset will result in increase in profitability of the firm.

Risk and Return in Working Capital

Another important aspect of working capital policy is to maintain and provide sufficient liquidity to the firm. Having a large working capital may reduce the liquidity risk faced by the firm, but it can have a negative effect on the cash flows. Greater liquidity makes the firm meeting its obligation, but simultaneously greater liquidity involves cost also. Therefore, the net effect on the value of the firm should be used to determine the optimum amount of working capital. Risk return trade off in working capital management is trade off between the Firms liquidity and its profitability. By maintaining large investment in current asset firm can reduces chances of 1.Production stoppages and the lost sales from the inventory shortage 2.Inability to pay the creditors on time. However if the firms increase in investment does not increase the corresponding return, this mean that the firms return on investment drops because profit is unchanged. In addition to above, other things remain same, greater the firms reliance on the short term debt in financing its current asset, greater the risk of ill-liquidity. A firm can reduce its risk of illliquidity through the use of long-term debt at the cost of reduction on its return on investment. So the risk in this context is measured by the probability that firm will become technically insolvent by not paying current liabilities as they occur, and profitability here means the reduction of cost of maintaining of current asset. In other words, more liquid is the firm, the less likely it is to become insolvent. Conversely, lower levels of liquidity are associated with increasing levels of risk. So, the relationship of working capital, liquidity and risk of the firm is that the liquidity and risk move in opposite direction.

The Risk Return Syndrome Can Be Summed Up As Follows: When liquidity increases, the risk of insolvency is reduced, but profitability also reduced. However when the liquidity is reduced, the profitability increases but the risk of insolvency also increases. So profitability and risk move in the same direction. Moreover, the different elements of current assets should also be appropriately balanced. Each element and its position in the total working capital should be analyzed in the light of its characteristics. For e.g. the total current assets may be sufficient to cover the current liabilities

but when the composition of current asset is analyzed, it may be found that its is consisting mainly of the obsolete and slow moving stock. This stock may not provide desired level of liquidity to pay off the current liabilities. Similarly, higher level of cash and bank balance may provide liquidity but affect the profitability because keeping cash and bank balance is not profitable use of the resources. The effect of working capital changes on the liquidity risk depend on a number of factor such as: a) Stand-by sources: A firm with stand-by source of external financing is less exposed to liquidity risk than the firm, which does not have such access, because the former can tap these sources if it needs to cover the increasing current liabilities. b) Economic conditions: Holding other factors constant, firms typically experience larger changes in liquidity risk as a consequence of working capital change when the economy is in recession than when in boom. d) Future uncertainty: To the extent that future operations of the firm are predictable and stable, the firm can survive with lower investment in working capital than could, otherwise similar firms which have more uncertainty about the future operations.

ELEMENTS OF WORKING CAPITAL

Working capital management is concerned with the problems that arise in attempting to manage the current assets, current liabilities and the interrelationship that exists between them. The major current assets are cash, marketable securities, accounts receivable and inventory. The current liabilities are accounts payable, bills payable, bank overdraft and outstanding expenses.

INVENTORY MANAGEMENT: Managing inventory is a juggling act. Excessive stocks can place a heavy burden on the cash resources of a business. Insufficient stocks can result in lost sales, delays for customers etc. The key is to know how quickly your overall stock is moving or, put another way, how long each item of stock sit on shelves before being sold. Obviously, average stock-holding periods will be influenced by the nature of the business. Factors to be considered when determining optimum stock levels include:

y y y y

What are the projected sales of each product? How widely available are raw materials, components etc.? How long does it take for delivery by suppliers? Can you remove slow movers from your product range without compromising best sellers?

It should be noted that stock sitting on shelves for long periods of time ties up money, which is not working. For better stock control, the following may be considered: y y y Review the effectiveness of existing purchasing and inventory systems. Know the stock turn for all major items of inventory. Apply tight controls to the significant few items and simplify controls for the trivial many. y Sell off outdated or slow moving merchandise - it gets more difficult to sell the longer you keep it. y Consider having part of your product outsource to another manufacturer rather than make it yourself. y Review your security procedures to ensure that no stock "is going out the back door!"

Higher than necessary stock levels tie up cash and cost more in insurance, accommodation costs and interest charges. The inventory of a manufacturing concern usually includes: y y y Raw material Work-in-Progress Finished goods

ACCOUNT RECEIVABLE: It is essential marketing tool, acting as a bridge for the movement of goods through production and distribution stages to customers.

Firms grant trade credit for following reason 1. To protect its sales from competitors 2. To attract potential customers to buy its product at favorable term 3. Buyers requirement 4. Companies bargaining power 5. Relationship with dealers 6. Marketing tool Receivable has three characteristics: 1. It involve an element of risk 2. It is based on economic value 3. It implies futurity. Receivable is a major component of current asset, granting credit and creating debtors amount to blocking of the Firms funds thus time interval between the date of sales and the date of payment has to be financed out of working capital.

A Firms investment in account receivable depends on 1. The volume of credit sales 2.Collection period Therefore average investment in Accounts receivable is Daily credit sales * Average collection period. Credit policy ranges from credit to any one to no credit. If credit is given to any one then there is chances of creating bad debt on other hand if credit is not given then sales will reduce. There are various costs and benefits attached with a credit policy.

Costs of Receivables 1. Costs of financing. 2.Administrative cost 3.Delinquency costs 4.Cost of default by customer Benefit of Receivables 1. Increase in sales 2 Increase in profits 3 Extra profits

CASH MANAGEMENT:

Financing of Current Assets: Another important aspect of working capital management is to decide the pattern of financing the current asset. Breaking down working capital needs into permanent components over time provides a useful by-product in terms of financing choice. Permanent component is predictable insofar as it is linked up to expected change in sale or cost of goods sales over time, temporary components is also predictable in general as it follows the same pattern every year. So two components need to be financed accordingly for which the different sources of funds can be grouped as follows: 1.Long term sources: e.g. share capital, retained earning, debentures and long term borrowings. 2.Short term sources: e.g. bank credits public deposit, commercial papers, factoring etc. 3.Transactionary sources: e.g. credit allowed by suppliers and outstanding labor and other expenses.

There are different approaches to take this decision relating to financing mix of working capital as follows: 1. Hedging approach: In this approach financing maturity should follow the cash flow characteristics of the assets being financed. The general rule is that the length of the finance should match with the life duration of assets. The financing mix as suggested by the hedging approach is a desirable financing pattern. However, it may be noted that the exact matching of maturity period of current assets and sources of finance is always not possible because of uncertainty involved. 2. Conservative approach: In this approach all or most of the working capital needs are met by long-term sources and thus the firm avoids the risk of uncertainty. 3.Aggerassive approach: In this approach the firm decides to finance a part of the permanent working capital by short-term sources.

Motives for holding cash: Though cash is the most liquid asset, but it doesnt earn any substantial return for the business. But every firm maintains some cash balance because of following motives: 1. Transaction motive 2. Precautionary motive 3. Speculative motive 4. Compensation motive

Objective of cash management: Following are the two main objective of the cash management 1.To provide the cash needed to meet the obligations: if the firm have sufficient cash in hand, it will help firm in a) avoiding a chance of default. b) Availing the opportunities of getting cash discounts by making early or prompt payments. c) Meeting unexpected cash outflows without more problems.

2. Minimize the cash balance: Investment in idle cash balance is a dead investment and has no earning. Therefore, whatever cash balance is maintained, the firm is foregoing interest income on the balance.

Factors affecting the cash: Various factoring which will determine the amount of cash balance to be kept by the firm are a) Cash cycle: the term cash cycle refers to the length of the time between the payment for purchase of raw material and the receipts of the sales revenue b) Cash inflow and cash outflows: every firm has to maintain cash balance because its expected inflows and outflows are not always synchronized. c) Cost of cash balance: another factor to be considered while determining the minimum cash balance is the cost of maintaining excess cash or of meeting shortages of cash. There is always an opportunity cost of maintaining excessive cash balance. In addition to above factors there are some other considerations also affecting the need for cash balance. They are uncertainties of a particular trade, staff required for cash management etc which will have a bearing on determining the cash balance required by a firm.

MARKETABLE SECURITIES:

Management of Marketable securities is an integral part of investment of cash as this may serve both the purposes of liquidity and cash provided choice of investment is made correctly. As the working capital needs are fluctuating, it is possible to park excess funds in some short-term securities, which can be liquidated which need for cash is left.

The selection of securities should be guided by three principles: (i) Safety- Return and risk go hand in hand. As the objective in this investment is ensuring liquidity, minimum risk is the criterion of selection.

(ii) Maturity- Matching of maturity and forecasted cash needs is essential. Price of long-term securities fluctuates more with change in interest rates and is therefore more risky. (iii) Marketability- It refers to the convenience, speed and cost at which a security can be converted into cash. If the security can be sold quickly without loss of time and price it is highly liquid or marketable. Marketable Security Alternative: The choice of marketable securities is mainly limited to government treasury bill, deposits with banks and inter-corporate deposits. Unit Trust of India and Commercial papers of corporate are other attractive means of parking surplus funds, for companies along with deposits with sister concerns or associate companies.

ACCOUNTS PAYABLE: Paying according to best terms is a critical component in maximizing the organizations purchasing profitability. Timely payments to suppliers, vendors and employees reduces costs, relieves administrative burden and helps in better utilization of short term working capital. Payable management gives an effective control over the expenses. Tracking vendors, processing payments and analyzing the vendors performances gives a clear picture of cash flow and provides the level of payables processing needed for the business.

Payable management for an organization contributes to operational excellence by, Optimizing the workforce with improved productivity. Improve the cash flow and enhance vendor relations. Achieve higher levels of accounting efficiency and accuracy.

Payable management helps in achieving more accurate cost of goods sold, manage cash flow and generate payments with speed, accuracy and efficiency.

WORKING CAPITAL FINANCE

After determining the level of working capital, then comes the question of financing of the same. The source of finance for working capital may be categorized as (a) Trade Credit (b) Bank Finance (c) Accrued Expenses & Deferred Income (d) Commercial Papers Trade Credit Trade credit refers to the credit that a customer gets from suppliers of goods in the normal course of business. The buying firms do not have to pay cash immediately for the purchase made. This deferral of payments is a short-term financing called trade credit. Bank Finance Bank finance is the most commonly negotiated source of the working capital finance. It can be availed in the forms of overdraft, cash credit, purchase/discount of bills and loan. Banks are the largest providers of working capital finance to firms. Each companys working capital need is determined as per the norms. These norms are based on the recommendations of the following committees y y The Tandon Committee The Chore Committee

Accrued Expenses & Deferred Income Accrued expenses represent a liability that a firm has to pay for the services, which it has already received. For e.g. salaries & wages, tax & interest. Deferred income represents funds received by the firm for goods and services, which it has agreed to supply in future. For e.g. advance payments made by the customers. Accrued expenses and deferred income also provide some funds for financing working capital. It is a limited source as payment of accrued expenses cannot be postponed for a long period and similarly advance income will be received only when there is a demand-supply gap or the firm is a monopoly. Commercial Paper Commercial paper is an important money market instrument for raising short-term finances. The Reserve Bank of India introduced the commercial paper scheme in the Indian money market in 1989. Commercial paper is a form of unsecured promissory note issued by the firms to raise short-term funds.

RATIOS
Ratios are relative figures reflecting the relation between variables. In simple words, a ratio is an arithmetical relationship between two figures. They enable analyst to draw conclusions regarding financial operations. The use of ratios as tool of financial analysis, involves their comparisons, for a single ratio, like absolute figures, fails to reveal the true position. It predicts strength and weakness of the firm in various areas as well as helps in assessing corporate excellence, judging credit worthiness, forecasting bond ratings, predicting bankruptcy and assessing market risk Thus ratio basically represents the relationship between two groups of items taken either from profit and loss account or from the balance sheet or both. In other words, the ratios measure the relationship among the tangible factors affecting the performance and profitability of the company. TYPES OF RATIOS: Various accounting ratios can be classified as follows:

Ratios

Traditional Classification Or
Statement Ratio

Functional Classification Or
Classification According to Test

Significance Ratio Or
Ratio According

Importance 1) Balance sheet Ratios or Position statement Ratio 1) Liquidity Ratios 2) Leverage Ratios 3) Activity Ratios 2) Profit and Loss account Ratio 4) Profitability Ratios. Or Revenue/Income Statement Ratio 3) composite/Mixed Ratio or Inter-Statement Ratios 1) Primary Ratios 2) Secondary Ratio

LIQUIDITY RATIO Liquidity mainly relates to the quick availability of cash. While managing the working capital quick availability of cash against the blocked assets is need to be taken into consideration. Cash is needed to pay the liabilities relating working capital such as creditors and bank o/d .On the other hand this cash is collected through debtors or cash sales. Thus various liquidity ratios give us the idea about how the current liabilities can be covered by the current assets. These are short term blocking of funds and normally dont need a bigger amount of funds.

It is worthy to mention that in emergency to pay-off short term current liabilities, long term debts can be used but those are rarely covered by the working capital analysis because it is mainly deal with pay-off of liabilities by realization of current assets.

Current Ratio: This ratio states that how many times the current liabilities can be covered by current assets. Whether the organization has short-term liquidity (solvency) to cover its debt and how strong the company is in paying its current liability. Normally 2:1 is the ratio, which is considered satisfactory.

Quick Ratio: It is modified form of current ratio, which gives the comparison of immediately available and required cash. It excludes the liabilities and assets, which are accrued but not due; such as provisions. Thus it is wholly based on the cash liquidity aspects. TURNOVER RATIO Turnover is the total sales of the company i.e. the main source of the organization can gain. Various turnover ratios are calculated to see the exact proportions of the sales to various other items, which are related to sales. To build up the figure of the sales there are many other items, which contributes to it. There are many factors, which are part and parcel of working capital cycle, which creates the importance in working capital management. Though the sales is the important aspect of any business cost of sales blocking of funds into sales also gains important position in working capital management.

Inventory Turnover Ratio: How the cost of production is blocked in the nature of stock, lying in the go down is one of the important aspects. Huge nature of cost of production and huge inventory built up in the godown can affect the liquidity adversely and vice-a-versa. On the other hand shortage of stock cannot be beneficial to grab the market demand profits. Thus inventory turnover ratio says about, how the cost of goods sold is blocked in the stock. Inventory Period: This is more useful form of inventory turnover ratio as it gives the time period for which the funds are locked. Thus with comparison of inventory turnover and period ratio we can say that the first gives us the amount blocked and the other says how long it is blocked. Debtors Turnover Ratio: Debtors turnover ratio is calculated to give an idea about how the debtors can be covered by the total sales i.e. basically for how much times sales realization is blocked in the debtors. As organization receives credit facility from suppliers, it also allows credit period to the debtors for larger volume of sales. Though the funds are blocked in Debtors or B/R this is one of the major marketing strategies to increase the sales. Debtors Collection Period: In any business, whenever something is sold, the payment has to be received from the other party. Now, Debtor Collection mean indicated is the average number of days taken to receive the money from the other party. Low ratio implies quick cash collection andless working capital required. Creditors Turnover Ratio: These ratios say that how early you have to make the payments.

Basically these ratios are calculated to know the exact cash flow required at the appropriate time. Say, on particular day creditors of Rs.X has to be paid then it should be considered that whether on that bank or cash account has sufficient balance or any debtors or B/R are realizing on that day. Thus creditors turnover ratio is calculated by dividing credit purchase by average creditors carried by the company i.e. how many times the creditors cover the total purchases. Creditors Payment Period: In any business, whenever something is purchased from another party, then the party needs to be paid. Creditor Payment indicates the average number of days within which other party is paid. High ratio is more credit period and less working capital required. To find the average credit available by the suppliers can be obtained, by dividing 365 to turnover ratio. Working Capital Turnover Ratio: It is the relationship between turnover (sales) and working capital. It highlights how effectively working capital is being used in terms of the turnover it can

help to generate. It enables to find the structure of working capital cycle of the Organization. No ideal values, but higher the ratio stronger the position of the working capital. Current Assets to Total Assets: Total Assets acquired by Finance Manager can be applied by him in various ways such as expenses and assets. It can be divided into two major aspects Current Assets and Fixed Assets. It should be worth while to observe that how much of the portion of the total assets is occupied by the current assets, as current assets are mainly involved in forming in working capital. Thus the ratio should not be so large to ignore the application of the funds in fixed assets. Also care should be taken that main investment of the organization should be in the operating items. Hence, the ratio of current assets to total assets though depend upon industry to industry should not vary largely. Inventory Ratio: It states how much portion of current assets is blocked in current assets. It is important from the view of quick realization of the current assets. Inventories can be transformed into cash or debtors depending upon the sales. Thus inventory ratio helps in working capital management as well as production life cycle, costing and management. PROFITABILITY RATIO
Profitability ratio reveals how good a business or a company is in terms of earnings. It helps in assessing the adequacy of profits earned by the company and also to discover whether profitability is increasing or decreasing. The profitability of the firm is net result of large number of policies and decisions. The profitability ratios show the combined effect of liquidity, asset management and debt management on operating results. Profitability ratios are measured with reference to sales, capital employed, total assets employed, shareholders funds etc. Cash Profit Ratio: This ratio is very important from the point of view of liquidity and working capital ratio. Cash profit gives all those expenses and incomes, which are accrued due and receive. The portion of such profit to the sales is a cash profit ratio. Higher the ratio higher will be the profit gaining position of the company, which gives a liberty to the organization to use the liquid profit in another income generating operations or projects. The difference between the cash profit and normal profit is that cash profit is what is actually realized in the hands of the organization to be used for other purposes. Return on Capital Employed: This ratio is not very important from working capital management point of view but to obtain the funds for short term as well as long term purposes, supplier of the firm will invariably ask of earning capacity of the organization. Return on capital employed is the major indicator of earning capacity, which is compared with market return and the investment decision are taken. How the organization is managing to maintain the profit above the market level shows the success ratio as compared to the other companies in the industry.

OPERATING CYCLE
The working capital requirement of a firm depends, to a great extent upon the operating cycle of the firm. The operating cycle is defined as the time duration starting from the procurement of goods or raw materials and ending with the sales realization. The length and nature of the operating cycle differs from one firm to another depending upon the size and nature of the firm. A companys operating cycle typically consists of three primary activities: purchasing resources, producing the product and selling the product. These activities create fund flows that are both unsynchronized and uncertain. They are unsynchronized because cash disbursements usually take place before cash receipts. They are uncertain because future sales and costs, which generate the respective receipts and disbursements, cannot be forecasted with complete accuracy. The concept of operating cycle is useful in controlling as well as forecasting working capital. Longer the operating cycle the more working capital funds the firm needs, while shorter operating cycle period indicates that the locking up of funds in current assets is relatively for short duration.

C a sh

D e b to r s/B R

R a w M a teria l

S a les

W o rk -in P r o g re ss

F in ish ed G o o d s

Thus the operating cycle of a firm consists of the time required for the completion of the chronological sequence of the following: . Procurement of raw materials and services. . Conversion of raw materials into work-in-progress.

. Conversion of work-in-progress into finished goods. . Sale of finished goods (cash or credit). . Conversion of receivables into cash. The segments of the operating cycle include raw material storage period, conversion period, finished goods storage period and average collection period before getting back cash along with profit. The total duration of all the segments mentioned above is known as gross operating cycle period. When the average payment period of the company to its suppliers is deducted from the gross operating cycle period the resultant period is called the net operating cycle period or the operating cycle period. LENGTH OF OPERATING CYCLE: The length of the operating cycle can be calculated in two ways: a) Gross Operating Cycle b) Net Operating Cycle GROSS OPERATING CYCLE: The gross operating cycle of a manufacturing concern is the sum of Inventory Conversion Period and debtors (receivable) conversion period. Thus, Gross Operating Cycle is gives as follows: Inventory conversion Period + Debtors Conversion Period Inventory Conversion Period: The inventory conversion period is the total time needed for producing and selling the product. It is the sum of (1) raw material conversion period, (2) work-in-progress conversion period, and (3) finished goods conversion period. y Raw material conversion period

The raw material conversion period is the average time period taken to convert material into work-in-progress. Raw material conversion period depends on: (a) Raw material consumption per day, and (b) Raw material inventory. Raw material consumption par day is given by the total raw material consumption divided by the number of days in the year (say 360). The raw material conversion period is obtained when raw material inventory is divided by raw material consumption per day.

Raw material conversion period = Raw material inventory [Raw material consumption]/360

Work-in-progress conversion period

Work-in-progress conversion period is the average time taken to complete the semi-finished or work-in-progress. It is given by the following formula:

Work-in-progress conversion period =

work-in-progress inventory

[Cost of production]/360

Finished goods conversion period

Finished goods conversion period is the average time taken to sell the finished goods. It can be calculated as follows= Finished goods inventory

[Cost of goods sold]/360

Debtors conversion period: Debtors conversion period is the average time taken to convert debtors into cash. It represents the average collection period. It is calculated as follows: = Debtors

[Credit sales]/360

CHAPTER- III

Company Profile
3.1 Introduction

3.2 History

3.3 Group Companies

3.4 Brands

CHAPTER NO. 3
COMPANY PROFILE
The company has completed 79 years. During this period the company has grown from a small woollen mill to a leading global producer of woollen fabrics. The company is engaged in many divisions like textile, ready-made & accessories, engineering files & tools, denim, prophylactics and cosmetics. Raymond group having businesses in Textiles, Readymade Garments, Engineering Files & Tools, Prophylactics and Toiletries.
The group is the leader in textiles, apparel, & files & tools in India and enjoys a pronounced position in the international market. Raymond belie, which has resulted in path-breaking new products. Perceived as pioneer and innovator, Raymond ves in Excellence, Quality and Leadership. Quality and Leadership.

Raymond Textile is India's leading producer of worsted suiting fabric with over 60% market share. With a capacity of 25 million meters of wool & wool-blended fabrics, Raymond Textiles is the worlds third largest integrated manufacturer. The company exports its suiting to more than 50 countries including USA, Canada, Europe, Japan and the Middle East. Over the years, Raymond Textile has developed strong in- house skills for research & development Textile has been responsible for raising the standard of the Indian textiles industry.

J.K. Files & Tools and Ring Plus Aqua Ltd. are the group companies that are engaged in the manufacture of precision engineering products such as steel files, cutting tools, hand tools, agri tools and auto components.

The Aviation division, Million Air was launched in 1996 to provide air charter services. Known for high quality and reliable services, Million Air has a fleet of three helicopters and one executive jet The company also diversified its business interests into cement and steel. In a restructuring exercise, the company divested its cement business to Lafarge India for Rs7.85bn and the steel business to German steel major, Thyssen-Krupp steel, for Rs4.21bn. With the divestment of its steel and cement businesses, the company has focussed on its textile business. Raymond is further consolidating by merging its textile subsidiaries with itself and is planning to expand the ready-made garments segment, which enjoys higher growth rates as well as margins, through the inorganic route. After restructuring the company's textile business's share including garments, worsted fabric and denim has gone up to around 90%.

History
Around the time the Singhania family was building, consolidating and expanding its various businesses in Kanpur, one Mr. Wadia, was in a similar manner engaged in fulfilling his dream: he set up a small woollen mill in the area around Thane creek, 40 kms away from Bombay. The Sassoons, a well-known industrialist family of Bombay, who renamed it as The Raymond Woollen Mills, soon acquired this mill. When the Singhanias were looking for new regions to establish their presence and new fields to venture into, they concurred that textiles appeared to hold promise. A piece of information that a woollen mill was available on the outskirts of Bombay clinched the issue. When the grandson of Lala Juggilal, Lala Kailashpat Singhania took over Raymond in 1944, the mill was primarily making cheap and coarse woollen blankets, and modest quantities of low priced woollen fabrics.

The vision and foresight of Mr. Kailashpat Singhania helped greatly in establishing the J.K. Group s presence in the western region. Under his able stewardship, Raymond embarked upon a gradual phase of technological upgradation and modernization producing woollen fabrics of a far superior quality. Under Mr. Gopalakrishna Singhania, the mill became a world-class factory and the Raymond brand became synonymous with fine quality woollen fabrics. At Raymond, quality did not rest on its laurels. When Dr. Vijayapat Singhania took over the reins of the company in 1980, he injected fresh vigour into Raymond, transforming it into a modern, industrial conglomerate. His son Mr. Gautam Hari Singhania, the present chairman and managing director has been instrumental in restructuring the Group. With the divestment of the Synthetics, Steel and Cement divisions he initiated, the Group has emerged stronger with a better bottom line, more focused approach, become market oriented and achieved a consolidated position. Today, the woollen mill by the creek has turned into a Rs. 1400 crores conglomerate and is Indias leading producer of worsted suiting fabric with 60% market share. It is also the largest exporter of worsted fabrics and readymade garments to 54 countries including Australia, Canada, USA, the European Union and Japan. The Raymond group is also the leader among readymades in India with a turnover of Rs. 2000 million with its three brands Park Avenue, Parx and Manzoni. In its pursuit of excellence Raymond continues to achieve enhanced customer satisfaction through ongoing innovation. And happily the growth graph continues to rise higherand higher.

THE GROUP COMPANIES OF RAYMOND ARE: Raymond Ltd. is Indias leading producer of worsted suiting fabric with a 60% market share. Raymond Apparel Ltd. has three highly regarded menswear brands in its folio: Park Avenue, Parx & Manzoni. J.K. Ansell Ltd. is the manufacturer and marketer of KamaSutra brand of premium condoms. J.K. Helene Curtis Ltd. is the marketers of the Park Avenue and Premium brands of mens toiletries. Color Plus Fashions Pvt. Ltd. Established in 1994 Color plus is one of the leading domestic brands for premium casual wear in the country.

THE BRANDS OF RAYMOND GROUP ARE The largest and most respected textile brand in India for 'The Complete Man' addressing the innate need of men to look good and at the same time possess strength of character.

Formal readymade garments & accessories for men it has recently bagged the "Most Admired Brand" and "Most Admired Trouser Brand" awards.

The semi formal and casual range of cottons, blends and denim wear catering to the smart, fashionable and comfortable clothing segment.

The luxury range of mens shirts and ties acknowledged for its high quality and international styling.

An exclusive prt-a-porter line of ready-to-wear designer clothing for women and men in western, ethnic and fusion styles.

The premium condom brand with the unique for the pleasure of making love positioning in textured & flavored variants.

The range of cosmetics & toiletries including after-shaves, shampoos, cologne, shaving cream, soaps deodorants, room fresheners

Premium casual wear brand in high quality natural fibers like cotton and linen, in superior mixed and performance oriented weaves. Raymond exports fabrics, blankets, garments, denim, readymade accessories such as tie, socks handkerchiefs and leather belts to Africa, America, Asia, Australia, Europe etc.

OGNAI N AT RAI T R SO

MAINDETR A GGIRC N O

CROAEINNE CRO TLG /P OPRTFAC O REEA R PA L

G EAMAE E RL A G N NR (ETEIVIO TXILDISN )

G EAMAE G EAMAE E RL A G N N R E RL A G N NR ( EIMIVIO (ILS TO DISN DN DISN FE&OL IVIO) ) S

PO C N MKTG PRO E RD T A EIN ESN L U IO R N

NR ZN ESZN WTO SU ZN OHO ATOE E ZN OHO T E S E T E

CHAPTER- IV

Analysis and Interpretation of Data

CHAPTER NO. 4

ANALYSIS AND INTERPRETATION OF DATA

Calculation of Working Capital
Introduction: Working Capital refers to the capital required to meet day to day operations. It is calculated by deducting current liabilities from current assets.

2009
Particulars

2008

2007

Current Assets, Loans and

Advances:

-Inventories
340.4 cr. 329.74 cr. 289.89 cr. 21.82 cr. 283.66 cr. 268.77 cr. 25.62 cr.

-Sundry Debtors -Cash and Bank Balances -Other Current Assets -Loans and Advances

304.4 cr. 46.8 cr.

981.65 cr. 25.62 cr.

932.82 cr. . 291.37 cr

824.91 cr. 246.86 cr.

Gross Working Capital (a) Current Liabilities and Provisions:

1698.87 cr.

1865.64 cr.

1649.82 cr.

-Current Liabilities -Provisions

410.1 59.66

357.65 75.54

371.47 80.63

TOTAL (b) Net Working Capital (a-b)

469.79 cr. 1229.08 cr.

433.19 cr. 1432.45 cr.

452.1 cr. 1197.72 cr.

Source: Balance Sheet

From the above table, taking individually, the company has favorable working capital. However, comparing the given years it is seen that there is increase in stock year by year also increase in debtors. This may be due to ability to sell the products. This means that the company is purchasing the material but not able to sell in the market and as such the sales is increasing and so are the debtors and also the stock is increasing because of increased purchase and reduced sales. Thus, many a times it may happened that liquidity position are favorable but in fact, they may not be this due to increased stock. Cash is fluctuating over the period of three years. Other current assets are decreasing. Loans and advances are favorably stable along the period of three years. Current liabilities are decreasing; as such, the company has enough cash reserves to pay-off the creditors in stipulated time. This may be due to the trust on the suppliers about the material quality. Provisions on other hand were stable in 2007 and 2008 but sudden shoot up in the year 2009. This may be due to increase in proposed dividend and tax for the same.

Calculation of Operating Cycle

Operating cycle is the time duration starting from the procurement of goods or raw materials and ending with the sales realization. RAW MATERIAL CONVERSION PERIOD:

Years Opening Stock of Raw Materials

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

36.74

27.18

24.7

34.43

50.86

60.01

70.02

44.76

31.5

28.65

purchases direct xpenses

355.08

205.07

220.53

299.39

319.88

372.57

320.04

330.6

333.54

309.01

Total Closing stock of Raw Materials raw material consumed Avg Raw material inventry

391.82

232.25

245.23

333.82

370.74

432.58

390.06

375.36

365.04

337.66

27.18

24.7

34.43

50.86

60.01

70.02

44.76

31.5

28.65

29.48

364.64

207.55

210.8

282.96

310.73

362.56

345.3

343.86

336.39

308.18

31.96

25.94

29.565

42.645

55.435

65.015

57.39

38.13

30.075

29.065

RMCP

31.99155

45.61841

51.19177

55.00928

65.1169

65.45255

60.66421

40.47418

32.63288

34.42379

To calculate the Raw Material. storage period on an average divide the average stock maintain by the organization by daily consumption, resulting in giving the blocking period. From the observation of the figures it can be seen that from the year 2001 to 2006 the increasing consumption of Raw Material. is leading to increasing requirement of higher level of stock, surely affecting the Raw Material storage period. Thus the Raw Material storage period is increasing from 32 days in 2001 upto 65 days in 2004.This shows that more funds are blocked in Raw Material. for the year 2006 onwards the decreasing consumption of raw material is leading to decreasing the requirement of stock.

WORK-IN-PROGRESS CONVERSION PERIOD:

Ye`ars Opening Stock of WIP purchases direct xpenses Closing Stock Of WIP Avg. WIP Cost of production WPCP 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

92.02 355.08

75.82 205.07

75.4 220.53

76.58 299.39

75.86 319.88

93.26 372.57

100.04 320.04

86.73 330.6

118.96 333.54

90.73 309.01

75.82 83.92

75.4 75.61

76.58 75.99

75.86 76.22

93.26 84.56

100.04 96.65

86.73 93.385

118.96 102.845

90.73 104.845

103.48 97.105

380.84 80.42958

207.97 132.7001

209.62 132.3173

283.68 98.0693

293.33 105.2207

355.78 99.15467

358.61 95.04901

311.63 120.4583

364.62 104.9543

295.43 119.972

WPCP
140 120 100 80 60 40 20 0 1 2 3 4 5 6 7 8 9 10

WPCP

The observation is showing increasing daily Cost of Production which is the obvious result of increasing production pattern of the organization. The organization has successfully maintained the stock level of Work in Progress with a very little variation. The average daily Cost of Production is increasing from Rs. 207cr. to Rs. 368cr. Over the period of three years maintaining the same level of Work in Progress is reducing the conversion period. It can be said that increased Raw Material storage period of 9 days is very much compensated by the conversion period which is reduced by 12 days.

FINISHED GOODS CONVERSION PERIOD:

Years Opening Stock of Finished Goods Opening Stock of Raw Materials Opening Stock of WIP Closing Stock of Finished Goods Closing stock of Raw Materials Closing Stock Of WIP Purch Ases direct xpenses Cost of sales Avg. Finished Goods FGCP 355.08 205.07 220.53 299.39 319.88 372.57 320.04 330.6 333.54 309.01 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

139.05

95.97

130.87

130.97

136.82

98.3

97.63

117.22

135.88

190.22

36.74

27.18

24.7

34.43

50.86

60.01

70.02

44.76

31.5

28.65

92.02

75.82

75.4

76.58

75.86

93.26

100.04

86.73

118.96

90.73

95.97

130.87

130.97

136.82

98.3

97.63

117.22

135.88

190.22

111.68

27.18

24.7

34.43

50.86

60.01

70.02

44.76

31.5

28.65

29.48

75.82

75.4

76.58

75.86

93.26

100.04

86.73

118.96

90.73

103.48

423.92

173.07

209.52

277.83

331.85

356.45

339.02

292.97

310.28

373.97

117.51 101.1775

113.42 239.1997

130.92 228.0727

133.895 175.905

117.56 129.3036

97.965 100.3148

107.425 115.6573

126.55 157.6638

163.05 191.805

150.95 147.3293

FGCP
300 250 200 150 100 50 0 1 2 3 4 5 6 7 8 9 10 FGCP

It is mainly dependent on sales trend of the company. Company is constantly showing fluctuation and the figures can be taken as indicator of the same from the operating cycle point of view. Though the average daily Cost of Sales and average stock of Finished Goods figures are increasing, no specific trend can be observed in their proportion which can be easily pointed out by Finished Goods storage period which is initially 43 days in 2002 increased to 49 days in 2003 and again came down to 45 days in 2004. The lesser period of Finished Goods stock gives favorable view towards organization s operating cycle management.

AVG. COLLECTION PERIOD:

Years

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

Net Sales Sundry Debtors Avg Collection period

1287.07

865.47

927.38

1008.18

1149.26

1320.13

1291.25

1327.69

1388.1

1346.5

280.66

327.45

290.71

246.14

226.28

248.47

268.77

289.89

304.48

296.95

79.59233

138.0975

114.4182

89.11216

71.86555

68.69895

75.97371

79.6947

80.06282

80.49517

Through this we conclude that our collection period should be low because the lower the collection period , it is good for us because our dues will be collected soon. In this we conclude that from 2001 to 2004 the collection period is high so its not favourable for us as we will not be able to collect our payments soon . but afterwards it declines but still not showing good results.

Operating Cycle
Years operatin g cycle 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

293.19

555.61

526

418.0

371.50

333.6

347.34

398.29

409.4

382.22

: This is the jumbled effect of R.M storage period, Conversion period, F.G storage period, and Collection period reduced by Average payment period to creditors. Slight decrease from 2002 to 2003 and significant reduction in 2004 is the main observation of total operating cycle. The whole operating cycle was of 389 days which increased to 489 days in 2009 and came down to 382 days in 2004, showing the favorable working capital position in comparison of earlier two years. But in this we don t able to know the payment period through which our operating cycle period would be reduced and we would able to convert our receivables into cash in lesser days.

Calculations of Financial ratios:

Introduction: Ratios are used as tool for financial analysis. They measure the relationship among the tangible factors affecting the performance and profitability of the company. LIQUIDITY RATIO:
Current Ratio Years

2001
223.73

2002
258.84

2003
277.35

2004
294.91

2005
287.56

2006
319.04

2007
283.66

2008
329.7

2009
340.4

2010
284.5

Current Assets
Inventories Cash & Bank Loans & Advances 8.97
217.99

34.42
149.07

14.94
153.8

26.76
140.1

13.25
127.92

25.03
177.57

25.62
246.86

21.82
291.4

46.8
289.97

26.56
321.6

Total Current Assets Avg Current Assets Current Liabilities

W. Cap . Advances Commercial papers Liabilities Total Liabilities

450.69 0

442.33 446.51

446.1 444.2

461.8 453.9

428.7 445.3

521.6 475.2

556.1 538.9

643 600

677.2 660.1

632.7 654.9

84.1 0 1400.68 1484.78

108.35 147.29

95.05 124.57

96.93 189.33

107.3

35.69

11.38

90 25 0 0 0 0 1426.4 1435.8 1525.1 1676.7 1957.8 2143.8 1624.7 1608 1620.1 1801.3 2054.8 2333.1

0 175 75 2296 2492.9 2425.6 2403 2703.6 2512

Avg. Current Liabilities Current Ratio

0 0.000

1554.7 0.287

1616 0.275

1614 0.281

1711 0.260

1928 0.246

2194 0.246

2368 0.253

2553 0.258

2608 0.251

Current Ratio: On the observation and review of current ratio it can be analyzed that the company is enough strong to take care of its current short-term liabilities. Quite higher than normally accepted ratios gives the short-term solvency to the company. Similarly the ratio has gone upto .258 in 2009 as compared to 2.46 in 2007 which shows the growing strong position of the working capital management.there is a wide fluctuations in their assets and liabilities

Current Ratio
0.35 0.3 0.25 0.2 0.15 0.1 0.05 0 1 2 3 4 5 6 Current Ratio 7 8 9 10 11

ACITIVITY RATIO:
Inventory Turnover Ratio Year Sales Inventories

2001
1457.3 223.73

2002
972.15 258.84

2003
1011.52 277.35

2004
1089.98 294.91

2005
1158.76 287.56

2006
1340.5 319.04

2007
1306.84 283.66

2008
1342.48 329.74

2009
1402.16 340.4

2010
1350.9 284.5

Inventory turnover ratio

6.5137

3.756

3.647

3.6960

4.0296

4.202

4.6071

4.071

4.1192

4.7483

Inventory Turnover Ratio: The inventory turnover ratio measures how quickly inventory is sold. In general, a high inventory turnover ratio is better than a low ratio as it implies good inventory management. However, a very high inventory turnover ratio may be indicative of a very low level of inventory or under-investment in inventory. A very low inventory turnover ratio is equally dangerous. It may be indicative of a very high level of inventory or over-investment in inventory thereby involving high carrying cost in terms of interest on funds locked up, rental of space/warehouse, possible deterioration, etc.

Inventory turnover ratio

7 6 5 4 3 2 1 0 1 2 3 4 5 6 7 8 9 10 11 Inventory turnover ratio

Debtors Turnover Ratio:

Debtors Turnover ratio

Year

2001
1457.3

2002
972.15

2003
1011.52

2004
1089.98

2005
1158.76

2006
1340.5

2007
1306.84

2008
1342.48

2009
1402.16

2010
1350.9

Sales

Debtors

280.66

327.45

290.71

246.14

226.28

248.47

268.77

289.89

304.48

296.95

Debtors turnover ratios

5.192

2.969

3.479

4.428

5.121

5.395

4.862

4.6310

4.6051

4.5492

Debtors Turnover Ratio is showing wide fluctuation i.e. 5.19 in 2001,2.969 in 2003 and 3.47 in 2003, which is quite good but then again risesin 2004 - 2006. The main reason behind it is increasing sales of the company and thus though the sales are increasing there is no major change in the debtors structure maintained by the company. Increasing debtors turnover ratio naturally will lead to decreasing credit period allowed to the customers; which is going down f; which is quite good from the liquidity point of view. On the contrary company could have increased the sales by maintaining average credit or allowed at the same level.

Debtors turnover ratios

6 5 4 3 Debtors turnover ratios 2 1 0 1 2 3 4 5 6 7 8 9 10 11

CHAPTER- V

Conclusions and Suggestions

5.1 Conclusion

5.2 Suggestions

CHAPTER NO 5
CONCLUSIONS

CONCLUSIONS
General Conclusions: y Despite the difficult conditions in the international market the company continued to be on the growth path, both in terms of volume and revenue. y Raymond shops network, already representing largest retailing space under any single brand crossed the 300 mark(20 overseas) reduces the commission paid to dealers, agents etc thereby increasing the profit within the company.

Specific Conclusions: y Though the consumption of Raw Material, cost of production and cost of sales is fluctuating, net working capital is fluctuating in collection period..w y The operating cycle Lock In Period came down to 209 days in 2004 compared to 236 days in 2003 and 239 days in2002, which shows that the working capital position of the company is favorable as compared to the earlier 2 years.

BIBLIOGRAPHY
BOOKS:
Khan M. Y. & Jain P. K., Financial Management (Text & Problems) , Tata McGraw-Hill Publishing Co. Ltd., New Delhi, Third Edition. Chandra Prasanna, Financial Management (Theory & Practice) , Tata McGraw-Hill Publishing Co. Ltd., New Delhi, Fifth Edition. Rustagi R. P., Financial Management (Theory, Concepts and Problems) , Galgotia Publishing Co., New Delhi, Second Revised Edition. Bodhanwala R. J., Taxmann s Learning Financial Management using Financial Modelling , Taxmann Allied Services Pvt. Ltd., New Delhi, July 2003 Edition. Pandey I. M., Financial Management , Vikas Publishing House Pvt. Ltd., New Delhi, Eighth Edition. Annual Reports, Raymond Ltd., 2002 to 2004.

WEBSITES:
www.raymondindia.com www.indiainfoline.com www.managementor.com www.capitalmarket.com www.icicidirect.com