A STUDY ON WORKING CAPITAL MANAGEMENT OF HEX CARGO MOVER PRIVATE LTD., COIMBATORE.

PROJECT REPORT Submitted by C.PERIYANNAN

Register No: 088001201025

In partial fulfillment for the award of the degree Of MASTER OF BUSINESS ADMINISTRATION

DEPARTMENT OF MANAGEMENT STUDIES JAYAM COLLEGE OF ENGINEERING & TECHNOLOGY NALLANUR DHARMAPURI - 636813

MAY -2010

JAYAM COLLEGE OF ENGINEERING & TECHNOLOGY

NALLANUR DHARMAPURI -636 813 Department of Management Studies
PROJECT WORK MAY 2010

This is to certify that the project entitled

A STUDY ON WORKING CAPITAL MANAGEMENT OF HEX CARGO MOVER PRIVATE LTD., COIMBATORE.
is the bonafide record of project work done by C.PERIYANNAN Register No: 088001201025 of M.B.A (Master of Business Administration) during the year 2008-2010.
------------------------------------------------------

Project Guide

Head of the Department

Submitted for the Project Viva-Voce examination held on _________

------------------------------------------------------Internal Examiner External Examiner

DECLARATION I affirm that the project work titled A study on working capital management of hex cargo mover private ltd. Coimbatore. Being submitted in partial fulfillment for the award of Master of Business Administration is the original work carried out by me. It has not formed the part of any other project work submitted for award of any degree or diploma, either in this or any other University.

(Signature of the Candidate) C.PERIYANNAN (Register No. 088001201025)

I certify that the declaration made above by the candidate is true

Signature of the Guide,

ACKNOWLEDGEMENT The ultimate result of any research work depends upon the help and guidance of many persons. The help and guidance of such people cannot be left unnoticed. I take this opportunity to thank them for providing the relevant and necessary inputs for successful completion of this project I thank ANNA UNIVERSITY, COIMBATORE for this academic vision in integrating the class room learning with real lifes situational experience, by making the project work, a part of curriculum. I would like to express my deepest gratitude to Dr. R. PARTHIBAN. Our principal and Mr.B.ADHINARAYANAN.M.B.A. M.Phil. (Ph.D.,) our head of the department of management studies for bring the inspiration and motivation force which encourage to work towards excellence in the challenging task. I words cannot adequately express my gratitude to my guide Mr. R.D SURESH. M.B.A. for valuable guidance, constant encouragement and supervision, motivation especially in times of difficulty and stress. My special thanks Mrs.S.ANAND,Director of Hex cargo mover private ltd.,Coimbatore, For his consent and permission to undertake a project in the organization concerned and FINANCE department Hex cargo mover private ltd.,coimbatore for his valuable guidance and direction through out the project. I extended my thanks to my beloved parents, friends, who gave us encouragement and helped us at different stages of this project with warm gestures. (C.PERIYANNAN)

TABLE OF CONTENTS CHAPTER . NO List of tables List of charts Executive summary 1 Introduction 1.1 About the study 1.2 About the industry 1.3 About the company 2 Main theme of the project 2.1 Objectives of the study 2.2 Scope and limitations 2.3 Methodology 2.4 Review of literature 3 4 Analysis & Interpretation Finding, Recommendations and Conclusion 4.1 Findings 4.2 Recommendations 4.3 Conclusion Appendices Bibliography 79 81 82 83 85 31 32 34 37 40 1 22 26 DESCRIPTION PAGE NO.

LIST OF TABLES S. NO 3.1.1 3.1.2 3.1.3 3.1.4 3.1.5 3.1.6 3.1.7 3.1.8 3.1.9 3.1.10 3.1.11 3.1.12 3.2.1 3.2.2 3.2.3 3.2.4 3.2.5 3.3.1 3.3.2 3.3.3 3.3.4 3.3.5 3.4.1 3.4.2 3.4.3 3.4.4 3.4.5 TABLES TITLE Table showing current ratio Table showing quick ratio Table showing debt equity ratio Table showing interest coverage ratio Table showing gross profit Table showing net profit ratio Table showing operating ratio Table showing fixed asset ratio Table showing return on asset ratio Table showing earning per share ratio Table showing return on share holder fund Table showing cash position ratio Changes in working capital on(2004-2005) Changes in working capital on(2005-2006) Changes in working capital on(2006-2007) Changes in working capital on(2007-2008) Changes in working capital on(2008-2009) Funds flow statement(2004-2005) Funds flow statement(2005-2006) Funds flow statement(2006-2007) Funds flow statement(2007-2008) Funds flow statement(2008-2009) Comparative balance sheet on (2004-2005) Comparative balance sheet on (2005-2006) Comparative balance sheet on (2006-2007) Comparative balance sheet on (2007-2008) Comparative balance sheet on (2008-2009) PAGE NO 40 42 44 46 48 50 52 54 56 58 60 62 64 65 66 67 65 68 69 70 71 72 74 75 76 77 78

LIST OF CHARTS

S. NO 3.1.1 3.1.2 3.1.3 3.1.4 3.1.5 3.1.6 3.1.7 3.1.8 3.1.9 3.1.10 3.1.11 3.1.12

CHARTS TITLE chart showing current ratio chart showing quick ratio chart showing debt equity ratio chart showing interest coverage ratio chart showing gross profit chart showing net profit ratio chart showing operating ratio chart showing fixed asset ratio chart showing return on asset ratio chart showing earning per share ratio chart showing return on share holder fund chart showing cash position ratio

PAGE NO 41 43 45 47 49 51 53 55 57 59 61 63

EXECUTIVE SUMMERY This research work aims to study working capital management of hex cargo mover private limited Coimbatore. Financial position of a company plays a role in an organization. The study was confined past five years financial data i.e. 2004-2005 to 20082009. The study filly covered secondary data only. These data were collected from the annual reports of the company. From the data, ratio analyses were used. Changes in working capital and funds flow statement. In the ratio analysis liquidity ratio, leverage ratio. Activity ratio and profitability ratio were used fir analyzing the five year data, to addition to that trend percentage analysis were used for sales share capital/net profit and total assets.

CHAPTER -1 INTRODUCTION 1.1 INTRODUCTION ABOUT THE STUDY

DEFINITION Working capital is the amount of funds necessary to cover the of operating the enterprise MEANING: Working capital management may be regarded as lifeblood of a business. The working capital manage involves the management and control of the gross current asset. The current asset, mainly comprise cash, sundry debtors and inventories .Effective management and control of the various components of working capital has been rated as one of the most important and vital junction of financial management in any of the industrial and business units. Working capital management also had known as short term financial management, largely deal with the management and control of current assets and current liabilities. The problem of managing working capital has got a separate entity as against different decision-making issues concerning current assets individually. Working capital gas to be regarded as one of the conditioning factors in the long run operation of a firm which is inclined to treat it as an issue of short term analysis and decision making. The skills for working capital management are somewhat unique, viz, to make an efficient use of funds for minimizing the risk of loss to attain profit objectives Every business has to invest its funds for the purchase of land & building, furniture, machinery and other fixed assets. Investment decision on fixed assets or long-term investment is called capital budgeting decisions. Investment also has to be made in various current assets such as in stock ,Investment in current assets is called working capital management working capital is also known as circulating capital or revolving capital. Since investment in current assets represents a substantial portion of total investment, the study of working capital management becomes important.

CONCEPT OF WORKING CAPITAL: Working capital may be regarded as the life-blood of a business. Its effective provision can do much to ensure the success of a business, while its inefficient management can lead not to loss of profits, but also to the ultimate down fall of what otherwise might be considered as a promising concern. Much has been rightly made of the long term planning in the use of working capital is immeasurable. There are two concepts of working capital: Gross working capital Net working capital

GROSS WORKING CAPITAL It is refer to the firms investment in current assets. Current assets are the assets which can be converted in to cash with in an accounting year and include cash, short term securities, and debtors, bills receivable and stock. It also known as circulating capital or current capitals, for current assets are rotating in their nature. NET WORKING CAPITAL: It refers to the difference between current assets and current liabilities. Current liabilities are those claims of outsiders, which are expected to mature for payment with in an accounting year and include creditors, bills payable and outstanding expenses.Net working capital can be positive or negative. A positive net working capital occurs when current liabilities are in excess of current assets.

10

NEED FOR WORKING CAPITAL: Modern business enterprises produce goods in anticipation of demand. Goods produced are not sold immediately. Cash for sales is also not realized immediately. From the time purchases of raw materials to the time of realization of cash for sales made, an operating cycle in involved. The following stages are usually found in the operating cycle of a manufacturing firm. Conversion of cash into raw material.

Conversion of raw material into work in progress.

Conversion of work in progress into finished goods.

Conversion of finished goods into debtors through sales.

Conversion of debtors into cash. WORKING CAPITAL IS NEEDED FOR THE FOLLOWING PURPOSE: To purchases of raw materials, spares and component parts. To pay wages and salaries. To incur day to day expenses.

11

 To meet selling cost such as packing, advertising. To provide credit facilities to customers. To maintain inventories of raw materials, work in progress and finished goods IMPORTANCE OF WORKING CAPITAL Working capital is the life-blood and nerve center of a business. No business can be run successfully without adequate of working capital. The importance of working capital is: Continuous production Solvency and goodwill Easy loan Cash discounts Regular payment of expenses Exploitation of market condition CONTINUOUS PRODUCTION Adequate of working capital ensures regular supply of raw materials and continuous production. SOLVENCY AND GOODWILL Adequate of working capital enables prompt payment to creditors. This helps in creating and maintaining goodwill.

12

EASY LOAN A concern having sufficient working capital enjoys liquidity and good credit standing. Hence, it can secure loans from banks and others on easy and favorable terms.

CASH DISCOUNT Adequate of working capital enables a concern to avail cash discounts on the purchases, leading to a reduction in costs REGULAR PAYMENT OF EXPENSES A company, which has ample working capital, can make regular payment of salaries, wages and other day to day commitments. Such prompt payment raises the morale of employees and increases their efficiency. As a result costs are minimized and profit increases. EXPLOITATION OF MARKET CONDITION A concern with adequate working capital can exploit favorable market conditions. It can buy its requirement of raw materials in bulk when the market price is lower. Similarly, it can hold stock of finished goods to realize better prices. ABILITY TO FACE: Adequate of working capital enables a concern to face business crises such as depression, because during such period there is much pressure on working capital. HIGH RETURN ON INVESTMENT

13

Adequate of working capital facilities continuous production and effective utilization of fixed assets. Because of this, the concern is able to generate more profits and ensure higher return on investment. KINDS OF WORKING CAPITAL: Net working capital Gross working capital Permanent working capital Temporary working capital Balance sheet working capital Cash working capital Negative working capital NET WORKING CAPITAL: The net working capital is the difference between current assets and current liabilities. The concept of net working capital enables a firm to determine how much amount is left for operational requirement. GROSS WORKING CAPITAL: Gross working capital is the amount of funds invested in the various components of current assets. This concept has the following advantages. Financial managers are profoundly concerned with current assets,

14

 Gross working capital provides the correct amount of working capital at the right time, It enables a firm to realize the greatest return on its investment. It enables in the fixation of various of financial responsibility. It enables a firm to plan and control funds and to maximize the return on investment. PERMANENT WORKING CAPITAL: Permanent working capital is the minimum amount required to ensure effective utilization of fixed assets and support the normal operational of the business. There is always a minimum level of current assets, which is continuously required by the enterprise to carry out its normal business operations. TEMPORARY WORKING CAPITAL: Temporary is the `amount of working capital required for short period. It is intended to meet seasonal demands and some special exigencies. Variable working capital cannot be permanently employed gainfully in the business. Therefore, only short term sources are employed to finance variable working capital. BALANCE SHEET WORKING CAPITAL: The balance sheet working capital is one, which is calculated from the items appearing in the balance sheet. Gross working capital, which is represented by current assets and net working capital, which is represented by the excess assets over current liabilities,

15

CASH WORKING CAPITAL: Cash working capital is one, which calculated from the item appearing in the profit and loss account. It shows the real flow of money or value at a particular time and is considered to be most realistic approach in working capital management. Negative working capital: Negative working capital emerges when current liabilities exceed current assets. Such a situation is not absolutely theoretical and occurs when a firm is nearing crises of some magnitude.

FACTORS DETERMINING OF WORKING CAPITAL: A firm should plan its operation in such a way that it should have neither too much nor too little working capital. The total working capital requirement is determined by a wide variety of factors. These factors, however, affect different enterprise differently. They also vary from time to time. In general, the following factors are involved in proper assessment of the quantum of working capital requirement: Nature of business Volume of business Production policy Length of manufacturing process. Operating cycle

16

 Condition of supply Speed of stock turnover Credit policy Market conditions Dividend policy Business policy Lead time Price level changes Other factors

NATURE OF BUSINESS Working capital requirement is considerably influenced by the nature of business. Example for trading concern the working capital requirement is more and requirement of fixed assets will be less. For manufacturing concern requirement of working capital is moderate and for public utility services like railways, hotels, electricity, transport the requirement of working capital is less. VOLUME OF BUSINESS:

17

For a small scale business the working capital requirement is less whereas for large scale operation the working capital requirement is more. PRODUCTION POLICY: Demand for some products may be seasonal. Example crackers, ceiling fan. Production of the above items should be continued regularly so as to meet the heavy demand for them in the season. Continuous production throughout the year requires more working capital because cash is invested in the form of stock. On the other hand if the production is intermittent the working capital requirement is less. LENGTH OF MANUFACTURING PROCESS: It is the time gap between the input of raw material and output of finished goods. In some manufacturing process output will be received after a short time, in

some other situation the output will be received after one week, one month, or more than one month. Longer manufacturing process results in accumulation of working capital. Simply shorter the length of manufacturing process the working capital requirement is less and vice versa. OPERATING CYCLE It is the speed at which the cash is converted into other current assets and current assets into cash. Cash-current assets cash If the of conversion is quick the working capital requirement is less and vice versa. CONDITION OF SUPPLY:

18

If the supply of raw material is prompt and adequate working capital requirement is less. Sometimes the regular and adequate supply may not be possible because availability of raw material may be in a particular season only. E.g. cotton will be purchased in bulk in the season which helps for uninterrupted production even in the offseason also. If the condition of supply is irregular the working capital requirement is more. SPEED OF STOCK TURNOVER: If the inventory or stock turnover is high the working capital requirement is less and vice versa. Speed of stock turnover is nothing but the number of times the stock has been converted into cash. CREDIT POLICY: Credit policy refers the credit given, to be given to the customers and credit received / receivable from suppliers and from others. If the purchase and sales is for cash working capital requirement will be less. If the purchase and sales are on credit depending upon the credit that is extended and received the working capital requirement will be more or less, Sometimes purchase may be for cash but sales may be for credit. Here, the working capital requirement will be less. If the purchase is on credit and sales is for cash. Here, the working capital requirement will be less.

19

Depending upon the credit facility the working capital requirement may be more or less. MARKET CONDITIONS: If the degree of competition is more, credit terms are to be extended the requirement of working capital will be more, and if the degree of competition is less the working capital requirement is also be less. DIVIDEND POLICY: If the firm follows liberal dividend policy it requires more working capital. On other hand, if it follows conservatives dividend policy, dividend can be paid from the retained earnings. Hence, the working capital requirement will be less. LEAD TIME: Lead time is the time gap between the date of placing an order and the dare of received goods. If the lead time is more, more stock should be kept as stock for uninterrupted production. Hence, more lead time leads to more working capital requirement will also be less.

BUSINESS CYCLE: Cyclical changes in the economy viz depression, boom also influence the quantum of working capital. In case of depression sales will be less, collection will be delayed. Hence, there requirement of working capital will be more. In case of boom sales will be more, more stock should be maintained which also requires more working capital. PRICE LEVEL CHANGES:

20

Increase in price normally requires more amount of working capital for the same level of stock. Some firms may be affected because of the changes in price level. OTHER FACTORS: Availability of labor at all times, availability of credit facilities ability of the management to invest etc also influences the amount of working capital. WORKING CAPITAL FINANCING BY BANKS: It is a well known fact that working capital financing by the commercial banks, by other financial institution the ICICI, IDBI, IFCI, etc still contributes a major portion of much financing. According, the assessment and disbursed of working capital loans by banks. ASSESSMENT OF WORKING CAPITAL REQUIREMENT: There are several determinant factors that go to influence. The assessment of the quantum of working capital requirement of a company. Nature of business Seasonal industries Production policy Market conditions Supply conditions

NATURE OF BUSINESS:

21

The quantum of working capital requirement is closely related to the nature of business of the company. This in turn, is related to the operating cycle. The working capital requirement may be much ten as the operating cycle will be much shorter. Mainly due to the fact that most of their sales will be on cash basis. The whole time lag between credit sales and collection of bills will be saved. SEASONAL INDUSTRIES: Seasonal industries, manufacturing fans, fridges heater, coolers and airconditioner, woolen clothes and blankets may require a high level of working capital requirement in peak reasons and much lower requirement during the slack reason. The commercial banks stipulate working capital limits for such companies for peak and slack reasons. PRODUCTION POLICY: Most of the companies may find it a better financial decision to keep manufacturing goods even in the off-reason so as keep on working capital above the breakeven point to meet at least the fixed assets cost. This may go to add to the profitability of the company. This way the working capital requirement even of seasonal industries may remain almost stable and uniform throughout the year. As against the seasonal industries, the units manufacturing items like function or tube lights fitting, would be having stable and uniform sales, round the year and correspondingly the level of production activities. Therefore special much industries, the working capital requirement may be almost uniform throughout. MARKET CONDITIONS:

22

The companies may have to keep sufficient quantities of finished goods in them ready stock so as to be able supply then to the prospective buyer of the shelf and theyre by try to get an edge over their competitions. Thus the additional

inventory of finished goods and the larger amount of sundry debtors may proportionately increase the quantum of working capital requirement. SUPPLY CONDITIONS OF MATERIALS: If the required raw materials and consumable stores and spares are in short and scarce supply or objectives of working capital management. To manage the firms current assets and current liabilities in such a way that an adequate and satisfactory level of working capital maintained. To maintain a proper balance between different components of working capital namely liquidity, inventories accounts receivable. The working capital mix shows be such may ensure profitable use of resources. To device such working capital management policies in respect of each component as may ensure higher profitability and which may lead to maximization of shareholder wealth of the lead time is long enough, the working capital need may go as much as higher level of inventory of raw materials and consumable stores and spares may have to be stocked to ensure uninterrupted production throughout the year similar will be position of the supply of material is seasonal but the production proves is uniform throughout the year. That is the company may have to store sufficiently large stocks of material during the haven Tory season when these are available in plenty and at much cheaper rates.

23

ESTIMATION OF WORKING CAPITAL REQUIREMENT Current assets 1. Stock of raw materials 2. Work-in-process (a) Raw materials (b) Labour (c) Overheads 3.stock of finished goods (d) Raw material (e) Labour (f) Overheads 4.credit allowed to debtors (g) Raw materials (h) Labour (i) Overheads 5. advance paid XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX RS XXXXX RS

24

6. cash balance to be maintained Total current assets(A) Less current liabilities 1. Credit allowed by suppliers

XXXXX XXXXX XXXXX

XXXXX

2. Delay or lag in payment of (wages, XXXXX salaries, rent) Total current liabilities(B) Working capital(A-B) XXXXX XXXXX XXXXX

Add provision for contingencies if any

XXXXX XXXXX

Net working capital required `

ADVANTAGES OF WORKING CAPITAL Business can be run only with adequate amount of working capital. The various advantages of maintaining adequate. Working capitals are as follows. It helps for continuous supply of raw materials which leads for uninterrupted production.

25

 It helps for prompt payment of wages, salaries, and other day to day expenses, and it also increases the goodwill of the firm. It helps for utilize the favorable market conditions.i.e, by purchasing in bulk at chapter price. It helps for reduction of costive, purchases at cheaper rate reduces the cost of production. It helps for maintaining the solvency of the business. It helps for raising short-term loans especially from banks. It also helps for prompt payment of dividend, results in maintaining or increasing the market value of the shares and makes raising additional capital easy. It creates high morale and provides job security for employees. DANGERS OF EXCESS: Like excess working capital inadequacy of working capital is also dangerous because of the following reasons. Possibility of under utilization of available fixed facilities. It may result in non-payment or delay in payment of day-to- day expenses and other short-term liabilities. Exploitation of favorable market conditions and reduction of overall cost may not be possible.

26

 Under utilization of fixed facilities will result in low rate of return, which may result in reduction of the market value of shares.

1.2 ABOUT THE INDUSTRY It was during a midnight in 1990s group of worries toiled over an idea of starting a very big express industry with its own fleet of aviation covering the

27

whole world with mere am investment of time and determination the vision was clear and so do the road to success. Thus a seed was shown on 9th April 1990 to set a historic legendary in future. The warriors were highly qualified and professionally experienced people from the Express industry. The legendary began with just a singly office with four delivery points and within six month HEX became a reliable and trustworthy name exclusively among export segment. Hex is strongly to conquer the market at a remarkable growth rate of 400% during the last four year against 30%prevailing in the express industry .HEX became more powerful; by adding up its own fleet of eighteen trucks covering the whole network. HEX is strongly backed up by committed hard working people and it takes motherly axe for them. With the philosophy of delight the customer fever and ever. FedEx provides customer and business worldwide with a broad portfolio of transportation E-commerce and business service. With annual revenue of 36billions the company offers integrated business application through operation companies competing collectively and managed collaboratively, under the respected FEDEX brand. Consistently ranked among the worlds most admired and trusted employers FedEx inspires its more than largest express transpiration company. Over 280000 employees and highest and professional standard and need of their customer and communication. FedEx corporation has been recognized as one of the world most respected companied for the strategic leadership. FEDERAL EXPRESS CORPORATION, Worlds number one Air Express Transportation company, having its worldwide headquarters at Memphis, USA. Backed up with highly sophisticated real-time electronic tracking and tracing systems, the companies have got an air fleet of 643 aircrafts, serviing 215 countries covering more than 366 airports around the globe. They have a ground fleet of more than 43,000 vehicles with the trained manpower of 1, 45,000 employees worldwide, with the turnover of 23 billion dollars. Hex Cargo Movers P Ltd, India which has got a credential of 14 years of rich

28

experience in the industry, have been appointed as the first ASP of FedEx in south India. The top executives and professional have been trained by the FedEx team from Dubai and Brussels. As a part of winning participation, Hex have been awarded as the top performer in training of "Essential Selling Skills" derived by FedEx. With this joint venture Hex aims to reach the world on time every time. This will enhance the global coverage and to meet out the required superior service level of the customers through Hex in the International market place. AIR FREIGHT AND SEA FREIGHT

With an association of a recognized and licensed CHA and IATA approved freight forwarder, Hex will cater to the requirement of the customers to move their valued commercial shipments to all locations in the globe, either through AIR or through SEA. This ultimately means, Hex can suffice the requirements of an exporter, whether you name it-courier, express, commercial, on commercial, through air or through sea, whether door to door, door to airport, airport to airport, giving the option to the valued customer with a quality service forever. AIR FREIGHT Dimerco airfreight service offers scheduled consolidation services, direct air carrier, airport-to-airport and door-to-door delivery features. Our real-time on-line tracking system enables customers to accurately monitor the actual status of their freight while it moves through the logistics supply chain from point of origin to destination.

CARRIER PARTNERSHIP

29

Quality service and space availability are two of the most critical factors for customer satisfaction in international transportation. Based on the concept of mutual growth and cost/risk sharing, Demerol has established strategic alliances with a host of prominent carriers and shipping lines. Dimerco Market Focus Dimerco has been dedicated to the development of the Greater China logistics market since 1991. As "Your China Logistics Specialist Dimerco is constantly growing with its customers and partners by providing time-defined international freight forwarding services as well as designing, implementing customized logistics management solutions. Today, Dimerco operates more than 70 offices in Greater China providing air, ocean, warehousing, trucking, domestic air/road transportation, cargo insurance brokerage, customer brokerage and AQSIQ inspection. EXPORT SHIPPING;

Outbound Ocean Freight FCL & LCL Export Packing & Crating Inland Hauling of export bound Cargo, from any point in the USA Drayage of Containers from and back to harbor Full Export Documentation US Export and Import Customs Services Overseas Customs Clearance On-Carriage - Overseas Inland Delivery to Final Destination Inbound Ocean Freight (Import)

1.3 ABOUT THE COMPANY

30

Hex cargo mover private limited a private company was established on 19th may 1997, sir.C.S.KALAISELVUM as the chairman cum managing director of the hex cargo mover private limited because of his sustained efforts to promote the company with aspirations to bring if branches around the world and gain momentum through positive dynamic approach for the companys continuous growth. The constitution of the board K.S. ELANGOVAN DIRECTOR N. SEETHARAMAN DIRECTOR S.ANAND DIRECTOR The board has appointed the directors as regional directors with the responsibilities of managing the zonal offices more efficiently and to take decisions appropriately for the promotion and progress of the industry as a wholly with concurrence from the M.D. director to the overall control and direction of the board the managing director vested with over all managerial power as a whole time ex official director. Apart from regional branch offices hex cargo mover private limited vide their objects clause of the memorandum, have appointed franchisees 68in effective control and operation for quick delivery the franchisees are representing the company for business promotion effective functioning of deliveries. The total no of delivery points in and around Tamil Nadu is about 240 to facilitate quick delivery operating through rules Hex cargo mover private limited owns its own fleet of sixteen in number the operation is direct throughout Tamil Nadu Kerala Andhra Karnataka Maharashtra Bombay & Delhi .there is a proposal for increasing the fleet up to 50 in the near future including 15more vehicles immediately this will cover the nook and corner of the Tamil Nadu state as well as all India level maneuver and quick operations The collections centers are opened only deliver on presentation by the local people and to hubs franchisees and to H .O operations. The collection centers are not canvassing like the franchisees of hex cargo mover private limited.

31

The multiple and multipurpose activities of hex cargo mover private limited will go a long way in making the company foremost and a pioneer u break service to the business people . Industrialists and the common man in professionalism hex cargo mover private limited have many more programmers for promotion and consolidation of business in industrial circles. Hex cargo mover private limited is in the dedicated service to the nation for more than 15 years with glorious moments. The win- win group spreads its wings further by offering solutions in India. A wide range of services are available through each one tailored to suit the need of the business corporate exclusively. Among the various products of service offered break bulk service serves by accepting bilk consignment at one destination being distributed delivered to different consignees according to the requirement. Open delivery service is ready to help the customers by serving from pointy to point express courier service teaching the valued shipment is shortest time frame whats more door to door service is also offered where the shipments are picked up from the specified destination and delivered at the exact doorstep. Further seaport to seaport and airport to airport services are offered by us fir import and export. Full trick load and consolidation of part loads are yet other handy product where the loads are accepted for delivery according tit hr requirement if the customers. The containers available are or size 20/40 ft. above all us cover all major metros cities and towns and cater it the needs of every client in every major center with ware house facilities. DISTRIBUTIONS WORLDWIDE We distribute through an exclusive distributor in each country why is responsible for indenting distributing servicing assisting and providing marketing support for the service. THE WORLD OF HEX CARGO We have revolutionized service retailing in India by setting up a chain of high profile store provide an international ambience showcasing our entire range. This

32

provides the customer with the complete service experience making it the most preferred place. FEDEX CORPORATION FedEx corporation FedEx introduced express delivery to the world in 1973 and remained the worlds largest express transportation company .today over 280000 employees worldwide serve more than 220 countries and territories across the global with a fleet of 669 aircraft more than 75000 vehicles to deliver more than 6.5 million packages per day. FEDEX EXPRESS FedEx express a wholly owned company of FedEx, is divided into five global regions: Asia pacific Canada Europe, Middle East, Indian subcontinent and Africa Latin American and the Caribbean United states

RECOGNITION FOR FEDEX CORPORATION FedEx corporation has been recognized as one of the worlds most respected companies for the strategic leadership it provides to the independent companies that make up todays FedEx express, FedEx ground, FedEx freight, FedEx Kinkos office and print services, FedEx custom critical, FedEx trade networks, FedEx supply services and FedEx services recent recognition of its leadership, workplace environment and contribution to the community includes.

33

MAJOR ACTIVITIES OF THE COMPANY

Air freight

Sea freight

Courier

Cargo

Surface

Express

Imports and exports

Exhibtion

34

CHAPTER- 2 2.1 OBJECTIVE OF THE STUDY

To study the working capital position of the company. To prepare and analyze the statement of changes in working capital. To study and identify the sources of working capital of the company. To identify the working capital requirements of the company. To suggest the ways to improvement the working capital management. .

35

2.2 SCOPE OF THE STUDY The study is conducted mainly to review the financial strength of the company for a period of five years from 2004-2005 to 2008-2009 as revealed from the financial data of the companies annual reports. Manual and accounting records it also helps in bringing out of the various factors which a lead to down fall of the company performance.

36

LIMITATIONS OF THE STUDY

The study is mainly depends upon the secondary data. I.e. The Final report of the company for the period of five years only. The Financial data cannot be estimated accurate for the future period The analyses & Interpretation of the concern is based only past performance. The technical aspects of the production process are not considered for the Analysis. It cannot be compared with those of other concern Ratios are only post mortem of what has happened between two balance sheets, they also given no clue to future.

37

2.3 RESEARCH METHDOLOGY Research methodology is a systematic procedure of collecting the information in order to analyze and verify phenomenon with the help of the data. The research process includes various steps such as formulating research problems extensive literature survey , preparing the research design, collection of data & processing, testing & preparation of the report etc.,
RESEARCH DESIGN The research design of this project study is exploratory and descriptive. Here the facts and information are already available in order to make. Data Collection The data used for the research are collected from the secondary sources and also primary data collected through interviewing the co- officials. In this secondary data, most of the data gathered are the internal sources such as Companys annual report from 2004-05 to 2008-09. PRIMARY DATA This data is collected from the head of department like accounts and finance. SECONDARY DATA

The secondary data those which have been already been collected by someone else and which have already been passed through analytical processes. In this study, the secondary data are collected through company annual reports and websites (www.hexcargo.com) etc.

38

SOURCE OF SECONDARY DATA. Trading and profit and loss Account Balance sheet Books Newspaper Journals

39

TOOLS USED FOR ANALYSIS Ratio analysis Changes of working capital Funs flow statement

40

2.4 REVIEW OF LITERATURE

A personal of research study in projects reveals that the topic of

financial performance and analysis of major interest to finance students over the last decade the topic has been researched by a good number of management students. In this chapter the researcher briefly brings to light some selected studies on the topic.

Shree javalgekar (1977) says that, the return on investment is inextricably linked with the method of controlling the size of the concerned firms investments .investment in current asset is of great significance as it generally constitutes more than 50% of the total assets of the firm. Further the sales growth and the demand for funds in order to fianc the current assets are directly and closely interlinked. For a small firm or having enough capital, working capital is of greater importance. One way of increasing the working capital for the would be reducing the investment in fixed assets.

41

Bhabatosh banerjee (1997) have analyzed the different turnover ratios such as debtors and creditors as also the stock turnover ratio. The cash position and cash movement is also examined with the effect of the liquidity ratio.

Surendra s.Yadav p.k.jain ashish k.Raslogi (2001) estimated the importance of working capital in any industrial concern needs no emphasis. The management of working capital in one of the most important aspects of the overall financial management. The existence of an adequate working capital and its careful management can make substantial difference between the success and failure of an enterprise.

S.A. Mohammed Ali in his financial performance analysis of stances and company Ltd says that profitability does not show satisfactory position. The company has to concentrate on profitability. The current ratio also shows there is an inadequate short- term fund. He suggested that the company must utilize its capital and assets to a greater extent to increase its returns.

42

G. Ravichandran has studied the ratio analysis of L.G. Balakrishnan and Brothers Ltd, Coimbatore. His aim was to study the ratio analysis of the company for a period of 5 years 1986 1990. He concluded that the financial position of company was not continuously steady. The rate of return of the company has a declining trend till 1988 89. He stressed the need of maintaining a desirable collection and payment period.
CHAPTER -3 ANALYSIS AND INTERPRETATION

3.1 RATIO ANALYSIS: 3.1.1 CURRENT RATIO In order to measure the short term liquidity or solvency of a concern, comparison of current assets and current liabilities is inevitable.

Current ratio

current asset / current liabilities

Table no.3.1.1 current Ratio CURRENT RATIO Current Year 2004-2005 2005-2006 2006-2007 2007-2008 2008-2009 assets 15,85,11,71 2,43,89,650 4,47,52,184 5,25,32,442 6,34,23,302 91,32,649 14,18,7,302 30,74,55,92 3,17,31,407 4,04,47,177 Current liabilities Ratio 1.73 1.72 1.46 1.66 1.57

Source; Annual report. INFERENCE;

43

From the above table shows that the current ratio for the year 2004-05 is 1.73. In the year 2005-06 it decrease to 1.72. In the year 2006-07 it decrease to 1.46 and in the year 2007-08 increases in 1.66. In the year 2008-09 is 1.57.current ratio standard norm is 2;1,current asset and current liabilities was not meet out to the norms so current ratio is not satisfied.

Chart no.3.1.1 current Ratio

44

3.1.2 QUICK RATIO

45

The ratio is also termed as acid test ratio or liquidity ratio is ascertained by comparing the liquid assets. Quickratio=Quickasset/currentliabilities Table no.3.1.2 quick ratio QUICK RATIO Current Year 2004-2005 2005-2006 2006-2007 2007-2008 2008-2009 assets 15,85,11,71 2,43,89,650 4,47,52,184 5,25,32,442 6,34,23,302 91,32,649 14,18,7,302 30,74,55,92 3,17,31,407 4,04,47,177 Current liabilities Ratio 1.73 1.72 1.46 1.66 1.57

Source; Annual reports. INFERENCE; From the above table shows that the quick ratio for the year 2004-05 is 1.73..In the year 2005-06, it decrease to 1.72. In the year 2006-07 it decrease to 1.46 and in the year 2007-08 increases in 1.66. In the year 2008-09 is 1.57.the quick ratio standard norm is 1;1,it shows the current liabilities would meet out quick ratio norm so quick ratio satisfactory. Maintain the position in future

46

Chart no.3.1.2 quick Ratio

47

3.1.3 DEBT EQUITY RATIO The ratio is ascertained to determine long term solvency position of a company. It known external equity ratio. Debt equity ratio = external equity / internal equity. Table no.3.1.3 Debt Equity Ratio DEBT EQUITIY RATIO year 2004-2005 2005-2006 2006-2007 2007-2008 2008-2009 INFERENCE; From the above table shows that the debt equity ratio for the year 2004-05 is 0.46.In the year 2005-06 it increase to 0.51. In the year 2006-07 it increase to 0.53 and in the year 2007-08 increases in 0.57. In the year 2008-09 is 0.52.the debt equity ideal ratio is 1,it shows the debt equity ratio was not meet ideal debt equity ratio so debt equity ratio should need improve this position in future. outside funds 5531119 9260361 12275511 17422420 15890918 share funds 12006114 18084519 22802790 30323571 30432711 holder ratio 0.46 0.51 0.53 0.57 0.52

Source; Annual reports.

48

Chart no.3.1.3 Debt equity Ratio

49

3.1.4 INTEREST COVERAGE RATIO. It ratio establishes the relationship between profit before interest and tax and fixed interest charged. Interest coverage ratio=profit before interest and tax/fixed interest charges. Table no.3.1.4 interest coverage Ratio year earnings before@ tax 2004-2005 2005-2006 2006-2007 2007-2008 2008-2009 1178389 2113406 1703713 2347125 1858121 fixed charges 974844 1513241 2228612 3626630 2.17 1.13 1.05 0.51 interest ratio

Source; Annual reports. INFERENCE; From the above table shows that the interest cover ratio for the year 2004-05 is NIL. In the year 2005-06 is 2.17. In the year 2006-07 it decrease to 1.13 and in the year 2007-08 decreases in 1.05. In the year 2008-09 is 0.51.it shows the interest coverage ratio is decreased year by year so it should need improve this position in future.

50

Chart no.3.1.4 interest coverage Ratio

51

3.1.5 GROSS PROFIT RATIO. This ratio is also known as gross margin or trading margin ratio. Gross profit ratio indicates the difference between sales and direct cost. Gross profit ratio= gross profit / net sales x100 Table no.3.1.1 Gross Profit Ratio GROSS PROFIT RATIO. year Gross Net sales 69847961 65700205 96309295 99456283 102482753 ratio 90.55 87.35 85.83 87.93 87.85 profit 2004-2005 63249832 2005-2006 57394263 2006-2006 85359736 2007-2008 87452801 2008-2009 90034274 Source; Annual reports.

INFERENCE; From the above table shows that the gross profit ratio for the year 2004-05 is 90.55.In the year 2005-06 it decrease to 87.35. In the year 2006-07 it decrease to 85.83 and in the year 2007-08 increases in 87.93. In the year 2008-09 is 87.85.it shows the gross profit ratio is decreasing year by year, so it should need improve this level in future.

52

Chart no.3.1.5 Gross profit Ratio

53

3.1.6 NET PROFIT RATIO It measure of management. Efficiency in operation the business successfully from the owner .it indicates the return on shareholder investment. Net profit ratio = net profit after tax / net sales. Table no.3.1.6 Net Profit Ratio NET PROFIT RATIO

54

year 2004-2005 2005-2006 2006-2007 2007-2008 2008-2009

Net profit 1178389 1972613 1589213 2231844 1750406

sales 69847961 65700205 96309295 99456283 102482753

Ratio 1.69 3.00 1.65 2.24 1.71

Source; Annual reports. INFERENCE; From the above table shows that the net profit ratio for the year 2004-05 is 1.69.In the year 2005-06 it increase to 3.00. In the year 200607 it decrease to 1.65 and in the year 2007-08 increases in 2.24. In the year 200809 is 1.71.here net profit ratio has average level so it should improve this position in future.

55

Chart no.3.1.6 Net Profit Ratio

3.1.7 OPERATING RATIO. This ratio indicates the relationship between total operating expense and sales. Operating ratio =cost of goods sold operating expense / sales. X 100 Table no.3.1.7 operating Ratio

56

OPERATING RATIO year 2004-2005 2005-2006 2006-2007 2007-2008 2008-2009 Operating profit. 13196250 16611884 21899118 24006964 24896958 sales 69847961 65700205 96309295 99456283 102482753 Ratio 18.89 25.28 22.73 24.13 24.30

Source; Annual reports. INFERENCE;

From the above table shows that the operating ratio for the year 2004-05 is 18.89.In the year 2005-06 it increase to 25.28. In the year 2006-07 it decrease to 22.73 and in the year 200708 increases in 24.13. In the year 2008-09 is 24.30.it shows the operating profit ratio has average position so company should reduce the operating expanse in future.

57

Chart no.3.1.7 operating Ratio

3.1.8 FIXED ASSETS RATIO.

58

The ratio establishes the relationship between fixed assets and long term funds. It calculating ratio is oil ascertain the proportion of long term funds invested in fixed assets. Fixed assets ratio = fixed assets/ long term funds. Table no.3.1.8 fixed assets ratio. fixed assets ratio year 2004-2005 2005-2006 2006-2007 2007-2008 2008-2009 fixed assets 5236142 7847871 8779048 9522537 7456585 long term Ratio 0.46 0.46 0.41 0.32 0.25 funds 11278855 16980710 21585074 28963827 29182731

Source; Annual report INFERENCE; From the above table shows that the fixed asset ratio for the year 2004-05 is 0.46.In the year 2005-06 it increase to 0.46. In the year 2006-07 it decrease to 0.41 and in the year 2007-08 decreases in 0.32. In the year 2008-09 is 0.25.the ideal fixed ratio ratio is 0.67. it shows fixed assets ratio was not meet ideal fixed assets ratio so fixed assets ratio is not satisfactory.

59

Chart no.3.1.8 fixed assets ratio

60

3.1.9 RETURN ON ASSETS RATIO (ROA) This ratio is calculated to measure the productivity of total asset. Return on asset ratio = (net profit after tax / total asset x 100). Table no.3.1.9 return on asset Ratio RETURN ON ASSETS RATIO YEAR 2004-2005 2005-2006 2006-2007 2007-2008 2008-2009 NET PROFIT 1178389 1972613 1589213 2231844 1750406 TOTAL ASSETS 12006114 18084519 22802790 30323571 30432711 RATIO 9.81 10.91 6.97 7.36 5.75

Source; Annual report. INFERENCE; From the above table shows that the return on asset ratio for the year 2004-05 is 9.81.In the year 2005-06 it increase to 10.91. In the year 2006-07 it decrease to 6.97 and in the year 2007-08 increases in 7.36. In the year 2008-09 is 5.75. Here the ratio is decreasing year by year so productivity of total assets decreasing .it should improve this position in future.

61

Chart no.3.1.9 return on asset Ratio

62

3.1.10 EARNING PER SHARE RATIO In order to avoid confusion on account of their varied meaning of the term capital employed. It determination of market price of equity share. Earning per shares = (net profit - preference dividend / No of equity shares). Table no.3.1.10 earning per share Ratio EARNING PER SHARE RATIO year 2004-2005 2005-2006 2006-2007 2007-2008 2008-2009 INFERENCE; net profit 1178389 1972613 1589213 2231844 1750406 No. Of equity shares 17000 46000 46000 215000 169000 Ratio 69.32 42.08 34.55 10.38 10.36

Source; Annual reports.

From the above table shows that the earning per share ratio for the year 2004-05 is 69.32..In the year 2005-06 it decrease to 42.08. In the year 2006-07 it decrease to 34.55 and in the year 2007-08 decreases in 10.38. In the year 2008-09 is 10.36.it shows the earning per share is decreasing year by year so company mark price of equity share decreasing it should improve in future.

63

Chart no.3.1.10 earning per share ratio

64

3.1.11. RETURN ON SHAREHOLDER FUND. This ratio determines the profitability from the shareholder point of view. Return on share holder funds = net profit after interest and tax/ shareholder funds x100 Table no.3.1.11. Return on shareholder fund. RETURN ON SHAREHOLDER FUND year 2004-2005 2005-2006 2006-2007 2007-2008 2008-2009 Net profit 1178389 1972613 1589213 2231844 1750406 shareholder fund 12006114 18084519 22802790 30323571 30432711 Ratio 9.82 10.9 6.96 7.36 5.75

Source; Annual reports. INFERENCE;

From the above table shows that the earning per share ratio for the year 2004-05 is 9.85..In the year 2005-06 it decrease to 10.90. In the year 2006-07 it decrease to 6.96 and in the year 200708 increases in 7.36. In the year 2008-09 is 5.75.it shows the return on shareholder fund is decreasing year by year so company profitability of share capital decreasing it should improve in future.

65

Chart no.3.1.11. Earning per share ratio

66

3.1.12: CASH POSITION RATIO: This ratio is also called Absolute liquidity ratio or super quick ratio. This is a variation of quick ratio. Cash position ratio = Cash & bank balance / current liabilities Table no 3.1.12: Cash position ratio CASH POSITION RATIO year 2004-2005 2005-2006 2006-2007 2007-2008 2008-2009 CASH&BANK CURRENT BALANCE 388522 302000 671346 294469 1000762 LIABILITIES 9132649 14187302 30745592 31731407 40447177 RATIO 0.042 0.021 0.022 0.0092 0.025

Source; Annual reports. INFERENCE;

From the above table shows that the cash position ratio for the year 2004-05 is 0.042..In the year 2005-06 it decrease to 0.021. In the year 2006-07 it increase to 0.022 and in the year 200708 decreases in 0.0092. In the year 2008-09 is 0.025. it shows the cash position ratio is decreasing year by year so it should need improve in future

67

Chart no.3.1.12.cash position ratio

68

3.2.1 Statement showing the changes in working capital (2004-2005) PARTICULARS current assets Deposits advances Sundry debtors Cash and bal Total-A Liability provision Total-B Total A-B increase on working capital TOTAL 6718526 Source; Annual reports INFERENCE From above table shows the working capital increased (1073991).In this year 2004-2005 6718526 8625000 8625000 and 2837883 13972088 507374 17317345 and 11791662 11791662 5525683 1073991 3273459 12189190 388522 15851171 9132645 9132645 6718526 -435576 2659017 --1782898 118852 118852 --1073991 2004 2005 INCREA SE DECREA

69

3.2.2 Statement showing the changes in working capital (2005-2006). PARTICULARS 2005 2006 INCREASE DECREASE

current assets Deposits advances Sundry debtors Cash and bal Total-A Liability provision Total-B Total A-B increase on working capital TOTAL Source; Annual reports INFERENCE From above table shows the working capital increased (3483827).In this year 2005-2006. 10202347 10202347 8625000 8625000 12189190 388522 15851171 and 9132650 9132650 6718521 34838227 20593397 302001 24389650 14187302 14187302 10202347 ----5054652 --3483827 8404207 --86521 and 3273459 3494252 220793 --

70

3.2.3 Statement showing the changes in working capital (2006-2007). PARTICULARS Current assets Deposits and 3439252 20593398 302000 24334650 and 14187303 14187303 10202347 3804245 14006591 4627429 394553408 671347 399852184 30745592 30745592 369106592 --14006591 20362534 1133177 18860010 369347 ---3804245 20362254 ----16558289 -advances Sundry debtors Cash and bal Total-A Liability provision Total-B Total A-B increase on working capital total Source; Annual reports INFERENCE From above table shows the working capital increased (3804245).In this year 2006-2007. 2006 2007 INCREASE DECRE ASE

3.2.4 Statement showing the changes in working capital (2007-2008)

71

PARTICULARS

2007

2008

INCREASE DECREASE

current assets Deposits advances Sundry debtors Cash and bal Total-A Liability provision Total-B Total A-B increase on working capital total Source; Annual reports INFERENCE From above table shows the working capital increased (6794443).In this year 2007-2008. 20801035 20801035 8157135 8157135 39453408 45028453 5575045 671347 294470 -376877 -985815 --6794443 and 4627429 7209519 2582090 -

44752184 52532442 -and 30745592 31731407 30745592 31731407 -14006591 20801035 -6794443 ----

3.2.5 Statement showing the changes in working capital (2008-2009)

72

PARTICULARS current assets Deposits advances Sundry debtors Cash and bal Total-A Liability provision Total-B Total A-B increase on working capital total

2008

2009

INCREASE DECREASE

and 7209519

9056295

1846776

--

45028453 294470 52532442 and 31731408 31731408 20801034 2175091

53366245 1000762 63423302 40447177 40447177 22976125 --

8337792 706292 ------

---8715769

2175091

22976125 Source; Annual reports

22976125

10890860

10890860

INFERENCE From above table shows the working capital increased (2175091).In this year 2008

3.3.1 Statement showing the funs flow statement (2004-2005)

73

SOURCE OF FUNDS Capital Reserve and surplus TOTAL LOANS AND ADVANCE Secured loans unsecured loans DEFERRED TAX LIABILITY TOTAL APPLICTION OF FUNDS FIXED ASSETS Current asset Less; currents liabilities provisions Net current assets Miscellaneous expenditure TOTAL

2004 560000 2789346 3349346

2005 1780000 3967735 5747735

4074368 1054500 414110 8892324

4851119 680000 727259 12006114

3298042 17317343 11791661 5525682 68600 8892324

5236142 15851171 9132649 6718521 51450 12006114

INFERENCE From above table shows the inflow increased (2004-2005) the outflow shows the also increased.

3.3.2 Statement showing the funs flow statement (2005-2006)

74

SOURCE OF FUNDS Capital Reserve and surplus TOTAL LOANS AND ADVANCE Secured loans unsecured loans DEFERRED TAX LIABILITY TOTAL APPLICTION OF FUNDS FIXED ASSETS CURRENT ASSETS TOTAL Less; current liability Net current assets Miscellaneous expenditure TOTAL

2005 1780000 407735 2187735

2006 1780000 59265349 61045349

4851119 680000 727259 12006114 5236142 15851171 15851171 9132649 6718521 51450 12006114

8580361 6800000 1103809 18084159 1245348 24389649 24389650 14187302 10202347 34300 18084519

INFERENCE From above table shows the inflow increased (2004-2005) the outflow shows the also increased.

3.3.3 Statement showing the funs flow statement (2006-2007) SOURCE OF FUNDS 2006 2007

75

Capital Reserve and surplus TOTAL LOANS AND ADVANCE Secured loans unsecured loans DEFERRED TAX LIABILITY TOTAL APPLICTION OF FUNDS FIXED ASSETS Current assets TOTAL Less; currents liabilities provisions Net current assets Miscellaneous expenditure TOTAL INFERENCE

1780000 5940349 7720349

1780000 7529562 9309562

8580361 6800000 1103809 18084519

11560511 715000 1217716 22802790

7847871 5855589 24389650 14187302 10202347 34300 18084519

8779048 44752182 44752184 30745592 14006591 17150 22802790

From above table shows the inflow increased (2004-2005) the outflow shows the also increased.

3.3.4 Statement showing the funs flow statement (2007-2008) SOURCE OF FUNDS 2007 2008

76

Capital Reserve and surplus TOTAL LOANS AND ADVANCE Secured loans unsecured loans DEFERRED TAX LIABILITY APPLICTION OF FUNDS FIXED ASSETS Current assets TOTAL Less; currents liabilities provisions Net current assets Miscellaneous expenditure TOTAL

1780000 7529562 9309562

1780000 6761406 11541406

11560511 715000 1217716

16987420 435000 1359744

8779048 40587496 44752184 30745592 14006591 17150 22802790

1752589 52532440 52532442 31731407 20801034 ----------30323571

INFERENCE From above table shows the inflow increased (2004-2005) the outflow shows the also increased.

3.3.5 Statement showing the funs flow statement (2008-2009)

77

SOURCE OF FUNDS Capital Reserve and surplus TOTAL LOANS AND ADVANCE Secured loans unsecured loans DEFERRED TAX LIABILITY TOTAL APPLICTION OF FUNDS FIXED ASSETS Current assets TOTAL Less; currents liabilities provisions Net current assets Miscellaneous expenditure TOTAL

2008 1780000 9761406 11541406

2009 1780000 11511813 13291813

16987420 435000 1359744 30323571

15455918 435000 1249980 30432711

9522537 52532440 52532442 31731407 20801034 0000 30323571

7656585 63423301 63423302 40447177 22976125 000 30432711

INFERENCE From above table shows the inflow increased (2004-2005) the outflow shows the also increased. 3.4.1 ANALYSIS COMPARATIVE BALANCE SHEET 3.4.1COMPARATIVE BALANCE SHEET (2004-2005)

78

Inc/Dec Particulars current assets fixed assets TOTAL ASSETS currents liabilities miscellaneous share capital 2004 1731734 4 3298042 2061538 6 1179166 1 68600 560000 2005 1585117 1 5236142 2108731 3 9132649 51450 1780000 3967735 1493183 4 680000 4851119 727259 6258378 2119021 2 Inc/Dec -1466173 1938100 471927 -2659012 -17150 1220000 1178389 -277773 -374500 776751 313150 1464401 1742174 (%) -8.46 58.76 2.28 -22.54 -25 217.85 42.24 -1.82 -35.51 19.06 75.62 26.41 8.4

reserve & surplus 2789346 TOTAL LIABILITIES 1520960 [A] secured unsecured deferred tax 7 1054500 4074368 414110

TOTAL LOANS [B] 5542978 TOTAL LIABILITIES 2075258 [A+B] Source; Annual reports INFERENCE 5

From the above table total assets is increasing (2.28%), In this year (2004-2005) and total liabilities decreased (1.82%)

3.4.2 COMPARATIVE BALANCE SHEET (2005-2006)

79

Inc/Dec Particulars current assets fixed assets TOTAL ASSETS currents liabilities miscellaneous share capital 2005 1585117 1 5236142 2108731 3 9132649 51450 1780000 2006 24389650 7847872 32237522 14187302 34300 1780000 5940349 21941951 680000 8580362 1103809 10364171 32306122 Inc/Dec 8538479 2611730 1115020 9 5054653 -17150 0 1972614 7010117 0 3729243 376550 4105793 1111591 0 (%) 53.86 49.87 52.87 55.34 -33.33 0 49.71 46.94 0 76.87 51.77 65.6 52.45

reserve & surplus 3967735 TOTAL LIABILITIES 1493183 [A] secured unsecured deferred tax 4 680000 4851119 727259

TOTAL LOANS [B] 6258378 TOTAL LIABILITIES 2119021 [A+B] 2 Source; Annual reports. INFERENCE

From the above table total assets is increasing (52.87%), In this year (2005-2006) and total liabilities increased (46.94%).

3.4.3 COMPARATIVE BALANCE SHEET (2006-2007)

80

Inc/Dec particulars current assets fixed assets TOTAL ASSETS currents liabilities miscellaneous share capital 2006 2438965 0 7847872 3223752 2 1418730 2 34300 1780000 2007 44752184 8779048 53531232 30745592 17150 1780000 7529562 40072304 715000 11560511 1217716 13493227 53565531 Inc/Dec 2036253 4 931176 2129371 0 1655829 0 -17150 0 1589213 1813035 3 35000 2980149 113907 3129056 2125940 9 (%) 8.34 11.86 66.05 116.71 -50 0 26.75 82.62 5.15 34.73 10.32 30.19 65.8

reserve & surplus 5940349 TOTAL LIABILITIES 2194195 [A] secured unsecured deferred tax 1 680000 8580362 1103809 1036417

TOTAL LOANS [B] 1 TOTAL LIABILITIES 3230612 [A+B] 2 Source; Annual reports INFERENCE

From the above table total assets is increasing (66.05%),In this year (2006-2007) and total liabilities increased (82.62%)

3.4.4 COMPARATIVE BALANCE SHEET (2007-2008)

81

Inc/Dec Particulars current assets fixed assets TOTAL ASSETS currents liabilities miscellaneous share capital 2007 4475218 4 8779048 5353123 2 3074559 2 17150 1780000 2008 52532442 9522537 62054979 31731407 0 1780000 9761406 43272813 435000 16987420 1359744 18782164 62054977 Inc/Dec 778025 8 743489 852374 7 985815 0 0 223184 4 320050 9 -280000 542690 9 142028 528893 7 848944 6 (%) 17.38 8.46 15.92 3.2 0 0 29.64 7.98 -39.16 46.94 11.66 39.19 15.84

reserve & surplus 7529562 TOTAL LIABILITIES 4007230 [A] secured unsecured deferred tax 4 715000 1156051 1 1217716 1349322

TOTAL LOANS [B] 7 TOTAL LIABILITIES 5356553 [A+B] 1 Source; Annual reports INFERENCE

From the above table total assets is increasing (15.92%),In this year (2007-2008) and total liabilities increased (7.98%).

82

3.4.5 COMPARATIVE BALANCE SHEET (2008-2009) Inc/Dec Particulars current assets fixed assets TOTAL ASSETS currents liabilities miscellaneous share capital reserve & surplus TOTAL LIABILITIES [A] secured unsecured deferred tax TOTAL LOANS [B] TOTAL 2008 52532442 9522537 62054979 31731407 0 1780000 9761406 43272813 435000 16987420 1359744 18782164 2009 63423302 7456585 70879887 40447177 0 1780000 1511813 43738990 435000 15455918 1249980 17140898 11519888 Inc/Dec 1089086 0 -2065952 8824908 8715770 0 0 -8249593 466177 0 -1531502 -109764 -1641266 5053508 9 (%) 20.73 -21.69 14.22 27.46 0 0 -84.52 10.77 0 -9.01 -8.07 -85.86 81.43

LIABILITIES [A+B] 62054977 Source; Annual reports INFERENCE

From the above table total assets is increasing (14.22%),In this year (2008-2009) and total liabilities increased (10

83

CHEPTER-4 4.1 FINDINGS The current ratio in this year increased (04-05) ratio is 1.73 in this years decreased (05-06), (06-07), (07-08), (08-09). Ratio is 1.72, 1.46, 1.66, 1.57.The current ratio standard norms 2; 1 but current ratio was not met out the current liabilities so current ratio is not satisfied. The quick ratio standard norms is 1; 1, the quick ratio is 1.73, in this years (05-06) 1.72, (06-07), 1.46 (07-08) 1.66, (08-09) ratio is 1.57.the quick ratio could meet out standard norms so here quick ratio satisfactory.. The debt equity ratio standard norms is 1,(04-05) 0.46,(05-06 0.51,9), (06-07) 0.53,(07-08) 0.57 ,(08-09) 0.52, it ratio wasnt meet standard norms so debt equity ratio here not satisfied. Interest coverage ratio is decreased year by year. ratio is (04-05) nil (05-06) 2.17, (06-07) 1.13, (07-08) 1.05, (08-09) 0.51.so company fixed charges is reducing. The gross profit ratio is (04-05) 90.55,(05-060 87.35,(06-070 85.83 ,90708) 87.93, (08-09) 87.85.it shows the gross profit ratio decreased year by year . Net profit ratio is decreased year by year. In this years (04-05),(05-06), (06-07),(07-08),(08-09).{1.69,3.00,1.65,2.24,1.71}. It shows the net profit has average level so should want change this level in coming year. Operating ratio has increasing level. Companies try to avoid the operating expense years (04-05), (05-06), (06-07), (07-08), (08-09). Ratio is {18.89 25.28 22.73 24.13 24.30}. Fixed assets ratio norms 0.67. The company fixed assets ratio wasnt meet ideal ratio so company fixed ratio is not in the good position. The coverage ratio decreased year by year. Years is (04-05) nil, (05-06) 2.17, (06-07) 1.13, (07-08)1.05,(08-09) 0.51. The company fixed assets interest charges is not satisfied.

84

 Gross profit ratio has average level just try means get more profit in future so it try. Ratio is {90.55, 87.35, 85.83, 87.93, and 87.85}. Net profit ratio has average level try to improve this profit.(04-05 1.69, (05-06) 3.00,(06-07) 1.65,(07-08) 2.24,(08-09)1.71. The company has been maintained operating expense average level so try to reduce the expense in future time. . (04-05 18.89,(05-06) 25.28,(06-07) 22.73,(07-08) 24.13,(08-09)24.30. The company productivity of total assets year by year decreased ratio is . (04-05 9.81,(05-06) 10.91,(06-07) 6.97,(07-08) 7.36,(08-09) 5.75. The earnings per share is year by year reducing this position affect to share value so company should concentration own this ratio. .(04-05 69.32,(05-06) 42.08,(06-07) 34.55,(07-08) 10.38,(08-09) 10.36. The company cash position is going very low level.

85

4.2 SUGGESTION The company current assets could not meet out current liabilities so company should improve current assets. The company quick ratio norms 1; 1. So it is satisfactory. The companies try maintaining the ratio. The company should try to improve long term fund and out side fund from share holders. There must be an increase in future. The company has to take steps improve interest coverage ratio because long fund and risk reduce. The gross profit ratio has average level so should need improve the position in coming period. Operating Ratio Company has maintained good position. It should reduce good way running the concern. Company productivity of fixed assets has low level so should try to improve base on return on assets. Earning per share coming low level so should need improve the position. The company should try to investing in more amount of working capital. The company should reduce the operating expenses by cost control and cost reduction in order to increase the net profit margin. The company should be improving the investment in future.

86

CONCLUSION: The project did as an analysis on the working capital management system. It was doing use comparative balance sheet profit and loss of common size balance sheet. The ratios of current ratio, quick ratio, debtors turnover ratio, inventory turnover. Working capital turnover ratio, operation ratio, operating profit ratio, net profit ratio and return on investment were also formed, the findings were given and suggestions were made for the working capital management. The project has provided me with both theoretical and practical knowledge in the field with the current trend in business.

87

APPENDIX Balance sheet as on (2004-2009) PARTICULARS AS AT 31.03.04 AS AT 31.03.05 AS AT 31.03.06 AS AT 31.03.07 AS ON 31.03.08 AS ON 31.03.09

I. SOURCES OF FUNDS 1. Share Holders Fund (1) SHARE CAPITAL Authorised Share Capital 500000 Shares of Rs. 10/- each 1500000 Shares of Rs. 10/- each (a) Issued, Subscribed and Paid up 46000 Equity Shares of Rs.10/- each (b) Share Application Money (c) Reserves & Surplus (d) Profit and Loss Account 2. Caution Deposit 3. Loans & Advances 4. Deferred Tax Liability

5000000.00

5000000.00

5000000.00 0.00

5000000.00 5000000.00

15000000.00

NIL 460000.00 100000.00 2775000.00 14346.00 1054500.00 4074368.00 414110.00 460000.00 1320000.00 3950000.00 17735.52 680000.00 4851119.83 460000.00 1320000.00 5925000.00 15349.50 680000.00 8580361.02

460000.00 0.00 1320000.00 7525000.00 4562.60 715000.00 11560511.6 7

1690000.00 90000.00 9750000.00 11406.78 1690000.00 90000000.00 11500000.00 11813.00 435000.00 16987420.9 1 1359744.00 28633571.6 9 AS ON 31.03.08 435000.00 15455918.06

PARTICULARS II. APPLICATION OF FUNDS 1. FIXED ASSETS : (a) Gross Block (+) Additions (b) Depreciation (c) Net Block 2. CURRENT ASSETS, DEPOSITS &

727259.00 1103809.00 1217716.00 12006114.3 18084519.5 22802790.2 8892324.49 5 2 7 AS AT AS AT AS AT AS AT 31.03.04 31.03.05 31.03.06 31.03.07

30432711.13 AS ON 31.03.09

3695979.00 397937.00 3298042.00

3298042.00 2719760.00 781659.36 5236142.64

5236142.64 3857078.00 1245348.87 7847871.77

7847871.77 2574573.12 1643396.46 8779048.43

8748247.68 2526879.00 1752589.68 9522537.00

9103666.59 114391.00 1761471.00 7456585

88

ADVANCES (a) Deposits & Advances (b) Sundry Debtors (c) Cash & Bank Balances (ii) Less: CURRENT LIABILITIES AND PROVISIONS 3. MISCELLANEOUS EXPENDITURE (Preliminary & Preoperative Expenses to the extent not written off)

2837883.00 13972087.0 0 507373.00 #########

3273459.00 12189190.3 0 388522.40 15851171.7 0

3494252.05 20593397.4 3 302000.75 24389650.2 3 14187302.4 8 10202347.7 5

4627428.87 39453408.2 8 671346.98 44752184.1 3 30745592.2 9 14006591.8 4

7209518.71 45028453.4 6 294469.88 52532442.0 5 31731407.3 6 20801034.6 9

9056294.00 53366245.00 1000762.00 63423302.00

11791661.0 0

9132649.99 6718521.71

40447177.00 22976125.00

68600.00 8892324.49

51450.00 12006114.3 5

34300.00 18084519.5 2

17150.00 22802790.2 7

0.00 30323571.6 9

0.00 30432711.16

89

BIBLIOGRAPHY:

T.S. Reddy & Y Hariprasad ready, Management accounting Margham publication:7th edition 2006 (P. 3.26 to 3.75) S.N. Maheswari, Management accounting Sultan chand & sons,1995 6th edition (P. 81 to 120) C.R Kothari, Research methodology Methods and Techniques, (2nd ed ; New Delhi: Viswa Prakasham, 1996)ch.1,p.30-38 M.Y khan & p.k jain, Financial management (5th ed: Tata Mc Graw-Hill publishing company limited) ch.16,p.16.1 M.P pandikumar. Management accounting(1st ed: Excel books, New Delhi)ch.12,p.271 WEBSITES: www.hexcargomover.com www.sivakumarho@hexcargo.com

90

91