Welcome To Project Seminar 3

WELCOME TO PROJECT
SEMINAR
A STUDY ON WORKING CAPITAL MANAGEMENT AT
SIVASHAKTHI DAIRY PVT. LTD.
Oraganizational Guide
Mr. C. Purushotham Reddy
Project Guide
Ms. Radha
Department of Management Studies

EMERALDS ADVANCED INSTITUTE OF MANAGEMENT STUDIES
INTRODUCTION
WORKING CAPITAL MANAGEMENT
The term working capital stands for that part of

capital, which is required for the financing of
working or current needs of the company.
Working capital is the lifetime of every concern.
Whether it is manufacturing or non manufacturing
one with out adequate working capital, there can
be no progress in the industry.
INDUSTRY PROFILE
- India with 185 million cows and 154 million buffaloes. Have the largest
population cattle in the world.
- More than 50% of buffaloes and 20% of cattle in the world are found
in India and most of these are milk cows and milk buffaloes.
- Indian dairy sector contributes a large share in agriculture gross
domestic products.
•- Presently there are around 70,000 village dairy cooperatives across the
country.
•- The milk surplus states in India are Uttar Pradesh, Punjab, Haryana,
Rajasthan, Gujarat and Maharashtra, Andhra Pradesh, Karnataka and
Tamil Nadu.
•- Gujarat Cooperative Milk Marketing Federation ( GCMMF ) Is the largest
player.
COMPANY PROFILE
SIVASHAKTHI DAIRY PVT.LTD. Was started in the year 1994 by Dr. P.
RAMCHANDRA REDDY M.L.A.
Project Designed Company Details:
Name : Sivashakthi Dairy Pvt. Ltd

Location : Sadum Mandal,
Chittoor District,
Andhra Pradesh.
An area where basic raw material milk is available in plenty. The

main function of the company is to procure the milk in and around
sadum and process the milk at factory , pack the processed milk
and supply in to the Chennai and Bangalore cities.
PRODUCT PROFILE:
The Siva Shakthi Dairy Pvt. ltd has three products.

1. Milk ( toned full cream, skim )
2. Cream
3. Curd
Competitors for Siva Shakthi Dairy Pvt. Ltd.

1. Heritage
2. Tirumala
3. Dodla
4. Government Dairy
*
NEED FOR THE STUDY
– Any organization must have to
maintain adequate working capital to meet
its day to day operations. In order to
maintain flows of revenues from operations,
every firm need certain amount of current
assets. For example cash is required to pay
expenses or to meet obligations for services
received etc. By a firm on identical plan in
inventories are required to provide the line
between production and sales. The study
position in Siva Shakthi Dairy Pvt Ltd.
OBJECTIVES OF THE STUDY
• To study the working capital management at

Sivashakthi Dairy Pvt.Ltd.
• To study liquidity position of the Sivashakthi
Dairy Pvt.Ltd.
• To find out changes of Working capital of the
Sivashakthi Dairy Pvt.Ltd during the study
period.
REVIEW OF LITARATURE
The working capital management is the functional area of
the finance that covers all the current accounts of the firm.
It is concerned with management of the level of individual
current accounts as well as the management of total working
capital.
DEFINITION:
“Working capital is descriptive of that capital which is not
fixed. But the more common use of the working capital is to
consider it as the difference between the book value of the
current assets and the current liabilities.”
-Hoagland
Concepts of Working Capital:
- Gross Working Capital
- Net Working Capital
Types of Working Capital:
- Permanent Working Capital
- Temporary Working Capital
Statement of Changes of Working Capital :
Capital at the beginning and at the end of the period and to measure the increase or decrease
therein it is necessary to prepare a Statements or Schedule of Changes Working Capital. The increase or
decrease in Working Capital can be calculated by preparing the schedule of changes in working capital.
Working Capital represents the excess of current assets over current liabilities. Several
items of all current assets and current liabilities are the components of Working Capital. In order to
ascertain the Working
While preparing a schedule of changes in Working Capital it should be noted that :
1. (a) An increase in Current Assets increase in Working Capital.
(b) A decrease in Current Assets decrease in Working Capital.
(c) A increase in Current Liabilities decrease in Working Capital
(d) A decrease in Current Liabilities increase in Working Capital.
(e) An increase in Current Assets and increase in Current Liabilities does not affect Working Capital.
(f) A decrease in Current Assets and decrease in Current Liability does not affect Working Capital.
(g) Changes in fixed (no-current) assets and fixed (non-current) liabilities affect working capital.
2. The changes in all current assets and current liabilities are merged into one figure only either an
increase or decrease in working capital over the period for which funds statements has been prepared. If
the working capital at the end of the period is more than the working capital at the beginning thereof.
Capital = Current Assets – Current Liabilities

RESEARCH METHODOLOGY
Research Design:
Exploratory research design has been adopted in the present study.

Exploratory research design largely interprets the already available information;
it makes use of secondary data and lays emphasis on analysis and
interpretation of the existing and available information.
RESEARCH TOOLS:
•Analysis of working capital

•Ratio Analysis
*
Data Collection Methods
Methodology :
Methodology is a systematic procedure of collecting information in order to analyze
and verify a phenomenon. The collection of information is done through two principle
sources viz.
❖ Primary data
❖ Secondary data
Primary data :
It is the information collected directly without any reference. In the study, it is
mainly interviews with concerned officers and staffs either individually or collectively.
Some of the information had been supplemented with personal observations.
Secondary data :
The secondary data was collected from already published sources such as annual
reports and internal records. The data includes.
Collection of required data from annual reports of integrated thermoplastic ltd Reference
from text books and journals relating to financial management Articles published in
business dailies like the economic times, Business time etc.
DATA ANALYSIS AND INTERPRITATION
Statement of changes in working capital for the year 2010 - 2011
Particulars 2010 2011 Increase Decrease
Current Assets :
Cash and Bank 55,12,130 58,01,648 2,89,518
balance
Sundry Debtors 48,01,648 45,12,121 2,89,527

Short term loans 10,91,340 10,91,318 22
Total Current Assets
–A 1,14,05,118 1,14,05,087
Current Liabilities :
Loan and Bank 43,57,212 45,75,212 2,18,000
balance
Employees 45,22,122 43,22,122 2,00,000
Liabilities
Other Current 18,94,615 18,94,615
Liabilities
Total Current
Liabilities - B 1,07,73,949 1,07,91,949
Working Capital ( A 6,31,169 6,13,138
–B)
Net decrease in
Working Capital _ 18,031 18,031
Total 6,31,169 6,31,169 5,07,549 5,07,549
INTERPRITATION :
The net working capital requirement of the
company during the year 2011 has increased than in the
Year 2010, and the net working capital of the company
was recorded RS. 6,31,169 and it was been decreased to
RS. 6,13,138 in the year 2011.
Current Assets :
Cash and Bank 58,01,648 85,42,212 27,40,564
balance
Sundry Debtors 45,12,121 44,32,211 79,910
Short term loans 10,91,318 9,48,009 1,43,309

–A 1,14,05,087 1,39,22,432
Loan and Bank 45,75,212 54,21,984 8,46,772
balance
Employees 43,22,122 36,54,655 6,67,467
Liabilities
Other Current 18,94,615 29,29,042 10,34,427
Liabilities
Total Current
Liabilities - B 1,07,91,949 1,20,05,681
–B)
Net Increase in
Working Capital 13,03,613 _ 13,03,613
Total 19,16,751 19,16,751 34,08,031 34,08,031
INTERPRITATION :
was recorded RS. 6,13,138 and it was been increased to
RS. 19,16,751 in the year 2012.
Current Assets :
Cash and Bank 85,42,212 90,01,221 4,59,009
balance
Sundry Debtors 44,32,211 72,46,521 28,14,310
Short term loans 9,48,009 19,26,193 9,78,184

–A 1,39,22,432 1,81,73,935
Loan and Bank 54,21,984 52,43,554 1,78,430
balance
Employees 36,54,655 47,24,215 10,69,560
Liabilities
Other Current 29,29,042 41,97,963 12,68,921
Liabilities
Total Current
Liabilities - B 1,20,05,681 1,41,65,732
–B)
Net Increase in
Working Capital 20,91,452 _ 20,91,452
Total 40,08,203 40,08,203 44,29,933 44,29,933
INTERPRITATION :
RS. 40,08,203 in the year 2013.
Current Assets :
Cash and Bank 90,01,221 91,89,751 1,88,530
balance
Sundry Debtors 72,46,521 75,54,321 3,07,800
Short term loans 19,26,193 38,96,353 19,70,160

–A 1,81,73,935 2,06,40,425
Loan and Bank 52,43,554 31,00,242 21,43,312
balance
Employees 47,24,215 23,83,017 23,41,198
Liabilities
Other Current 41,97,963 16,65,792 25,32,171
Liabilities
Total Current
Liabilities - B 1,41,65,732 71,49,051
Working Capital ( A 40,08,203 1,34,91,374
–B)
Net Increase in
Working Capital 94,83,171 _ 94,83,171
Total 1,34,91,374 1,34,91,374 94,83,171 94,83,171
INTERPRITATION :
RS. 1,34,91,374 in the year 2014.
Current Assets :
Cash and Bank 91,89,751 96,93,182 5,03,431
balance
Sundry Debtors 75,54,321 76,27,573 73,252
Short term loans 38,96,353 54,49,876 15,53,523

–A 2,06,40,425 2,27,70,631
Current Liabilities : 8,07,597
Loan and Bank 31,00,242 39,07,839
balance
Employees 23,83,017 28,81,605 4,98,588
Liabilities
Other Current 16,65,792 18,41,288 1,75,496
Liabilities
Total Current
Liabilities - B 71,49,051 86,30,732
Working Capital ( A 1,34,91,374 1,41,39,899
–B)
Net Increase in
Working Capital 6,48,525 6,48,525
Total 1,41,39,899 1,41,39,899 21,30,206 21,30,206
INTERPRITATION :
was recorded RS. 1,34,91,374 and it was been increased to
RS. 1,41,39,899 in the year 2015.
RATIO ANALYSIS
CURRENT RATIO
CURRENT RATIO= current assets / Current Liabilities
Year Current Assets Current Liabilities Ratio
2010 – 11 1,14,05,087 1,07,91,949 1.06

2011 – 12 1,39,22,432 12,00,568 1.16
2012 – 13 1,81,73,935 1,41,65,732 1.28
2013 – 14 2,06,40,425 71,49,051 2.89
2014 - 15 2,27,70,631 86,30,732 2.64
4
3
2 Column2
1
0
2010 – 11 2011 – 12 2012 – 13 2013 – 14 2014 - 15
INTERPRETATION:
The above graph shows that the current ratio is fluctuating year by year. In the year
2010 - 11 the ratio is 1.06, 2011 - 12 the ratio is 1.16, 2012 -13 the ratio is 1.28, 2013 -14
the ratio is 2.89, 2014 - 15 the ratio is 2.64. The current ratio is gradually increased.
*
Quick Ratio
Quick Ratio = Quick Assets / Current liabilities
YEAR QUICK ASSETS CURRENT LIABILITIES RATIO
2010 – 11 1,14,05,087 1,07,91,949 1.06

2011 – 12 1,39,22,432 1,20,05,681 1.16
2012 – 13 1,81,73,935 1,41,65,732 1.28
2013 – 14 2,06,40,425 71,49,051 2.89
2014 - 15 2,27,70,631 86,30,732 2.64
4
3
2 RATIO
1
0
2010 – 11 2011 – 12 2012 – 13 2013 – 14 2014 - 15
INTERPRETATION:
The above graph shows that the current ratio is fluctuating year by year. In
the year 2010 - 11 the ratio is 1.05, 2011 - 12 the ratio is 1.15, 2012 -13 the ratio
is 1.28, 2014 -15 the ratio is 2.64, 2013 - 14 the current ratio of the company
was 2.88 which are quite high compared to the ideal ratio.
Working Capital Turnover Ratio
= Sales / Net working capital
Year Sales Networking capital Ratio
2010 – 11 65,79,980 6,13,138 10.73

2011 – 12 1,37,76,540 19,16,751 7.19
2012 – 13 80,12,850 40,08,203 2.00
2013 – 14 77,31,472 1,34,91,374 0.57
2014 - 15 74,96,210 1,41,39,889 0.53
12
10
8
6 Column2
4
2
0
2010 – 11 2011 – 12 2012 – 13 2013 – 14 2014 - 15
INTERPRETATION:
The higher working capital turnover ratio indicated the better management of
working capital in the year 2010 – 11 to 2015 the ratio is 2.63 and 0.60, 0.22, 0.68,
0.72 respectively.
LIMITATIONS OF THE STUDY
•It is based on the data supplied by the company personnel.
•Time is the major limitation for the study i.e., study

conducted based on the 5years financial reports based on
5years we cannot determine the over All financial position
of the company.
•Due to limitations of time, it was unable to go far a depth a

depth study into the subject.
FINDINGS
The standard ratio of current ratio is 2 : 1. the higher the current ratio the grater the margin
of safety. In the year 2010 – 2011 from 2015 the current ratio is gradually increased. In 2014
the current ratio is 2.88 which are quite high compared to the ideal ratio
The standard quick ratio is 1 : 1. It represents the satisfaction of a firm. In the year 2010 –
11 from 2015 the quick ratio is gradually increased. Hence we can say that the company has
maintained more than ideal quick ratio 1 : 1 overall the 5 financial years.
The higher working capital turnover ratio indicated the netter management of working
capital in the year 2010 – 11 to 2011 – 12 the ratio is 10.73 and 7.19. In the year 2013 to
2015 not shown the better management of working capital of the firm.
The SS Dairy has performed well over the past five years is evident from the Gross and
Net Profits.
The Company is suffering from lack of adequate working capital.
The Company is using Current Assets and Fixed Assets well.
The Company has maintained relationship between Working Capital and Sales.
SUGGESTIONS
The Company has to take steps to improve Gross and net profits.
Working Capital is decreasing Year by year so adequate Working Capital

has to be maintained.
The Turnover Ratios are fluctuating so the Company must detect the cause
for that and solve it.
The company maintains standard level of current ratio 1.0. So the company
should have maintained above standard level of current ratio for better
management of working capital.
The company must have maintained the quick ratio above the standard
ratio for the better the management of working capital.
The company should have maintained working capital turnover ratio with
out fluctuations for better management of working capital.
CONCLUSION
Working capital management is life blood for the company. If it

functions well, then the company has no problems.
Finally I conclude saying that the liquidity position is
satisfactory, performance of the company is satisfactory but still
needs to cut down the expenses to earn more net profits and see that
turnover ratios are increased so that it can enjoy reduce in non-
operating costs, due to large scale production and results in increase
in profits. Working Capital is in fluctuating trend so the company
must maintain adequate working capital.
The company short term solvency position is good.
SHIVA SHAKTHI DAIRY PVT.LTD.
TRADING AND PROFIT & LOSS A/C FOR THE YEAR ENDED 31-03 2011
Particulars Amount Particulars Amount
To opening stock 1061067 By sales of milk 3436700

To purchase of milk products 1382998 By sales of milk products 3143280
To Transport charges 857491 By closing stock 2849860
To Packing materials 472920
To Processing and conversion 769820
To Share consumed 628297
To Gross profit 4257247
9429840 9429840
To salaries & wages 226950 By Gross profit 4257247

To Depreciation 192321 By Other Incomes 1989573
To Interest on loan 258929
To Insurance charges 236281
To Travelling & conveyance 183699
To Advertisement 148329
To Milk payment 448496
To selling and distribution 238294
To Net profit 4313522
6246821 6246821
Balance sheet as on 31 – 03 - 2011
Particulars 31-03-2010 31-03-2011
Sources of Funds:
1.share holders funds:
Equity share capital 5892421 3138642
Reserves & Surplus 4113048 1794637
Add :profit & loss A/C 0000000 4313521
10005469 9245800
2.Loan Funds:
Secured Loans 282720 0000000
Unsecured loans 194242 184552
TOTAL: 10482431 9430352

Application of funds:
3.Fixed Assets 4559280 16431124
Gross Block 2545171 11783959
Add: Additions during the year 102490 19397869
Less: Accumulated dep.
Net Block 7001961 8817214
4.Current Assets:
Cash and bank balance 5512130 5801648
Sundry debtors 4801648 4512121
Short term loans & advances to employees 1091340 1091318
Less: Current Liabilities:
Loan and bank balances 4357212 4575212
Employees liabilities 4522122 4322122
Other current liabilities 1894615 1894615
Net Current Assets 631169 613138
5. Miscellaneous expenditure: 2849301 000000
Profit & loss 10482431 9430352


2729210 5478250
To purchase of milk products By sales of milk products
1229211 2713280
To Transport charges By closing stock
728500
To Gross profit
16489820 16489820
By Gross profit 6896890

To salaries & wages 629621 By Other Incomes 1680008
To Depreciation 789987
791357
To Net profit
8576898
8576898
Particulars 31-03-2011 31-03-2012
Sources of Funds:
1.share holders funds:
Add :profit & loss A/C 4313521 2246039
9245800 8745800
2.Loan Funds:
Unsecured loans 184552 91784
TOTAL: 9430352 8837584

3.Fixed Assets 16431124 6460087
Gross Block 11783959 2472088
Net Block 8817214 6920833
4.Current Assets:
Profit & loss 9430352 8837584


250800 1569450
To Transport charges By closing stock
495000
9582300

7193790
7193790
Particulars 31-03-2012 31-03-2013
Sources of Funds:
1.share holders funds: 3620300 3529120
Add :profit & loss A/C
8745800 8745800
2.Loan Funds: 0000000 000000

Unsecured loans
TOTAL: 8837584 8845519
3.Fixed Assets 6460087 18565780
Gross Block 2472088 7394564
Net Block 6920833 4837316
4.Current Assets: 8542212 9001221

Short term loans & advances to employees
Profit & loss 8837584 8845519

8239440
8239440

6874500 6874500
Particulars 31-03-2013 31-03-2014

Sources of Funds:
8745800 9020302
2.Loan Funds: 000000 9771572

Unsecured loans
TOTAL: 8845519 19921649
3.Fixed Assets 18565780 25516561
Gross Block 7394564 3053897
Net Block 4837316 6430275
4.Current Assets:
Profit & loss 8845519 19921649


8698724
8698724
By Gross profit 5220356
To salaries & wages 1172440 By Other Incomes 2530170
To Depreciation 325742
7750526 7750526
Particulars 31-03-2014 31-03-2015

Sources of Funds:
9020302 11931612
2.Loan Funds:
9771572 6771572
Secured Loans
1129775 2572506
Unsecured loans
19921649
TOTAL: 21275690
Application of funds: 25516561
3.Fixed Assets 26222077
3053897
Gross Block 3289069
22140183
Add: Additions during the year 22375355
Less: Accumulated dep. 6430275
Net Block 7135791
4.Current Assets: 9189751
Short term loans & advances to employees 5449876
Less: Current Liabilities: 3100242
5. Miscellaneous expenditure: 00000
19921649
Profit & loss 21275690

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WELCOME TO PROJECT

Department of Management Studies

The term working capital stands for that part of

Project Designed Company Details:

Name : Sivashakthi Dairy Pvt. Ltd

An area where basic raw material milk is available in plenty. The

The Siva Shakthi Dairy Pvt. ltd has three products.

Competitors for Siva Shakthi Dairy Pvt. Ltd.

• To study the working capital management at

Capital = Current Assets – Current Liabilities

Exploratory research design has been adopted in the present study.

•Analysis of working capital

Sundry Debtors 48,01,648 45,12,121 2,89,527

Short term loans 10,91,318 9,48,009 1,43,309

Total Current Assets

Short term loans 9,48,009 19,26,193 9,78,184

Total Current Assets

Short term loans 19,26,193 38,96,353 19,70,160

Total Current Assets

Short term loans 38,96,353 54,49,876 15,53,523

Total Current Assets

2010 – 11 1,14,05,087 1,07,91,949 1.06

2010 – 11 1,14,05,087 1,07,91,949 1.06

2010 – 11 65,79,980 6,13,138 10.73

•It is based on the data supplied by the company personnel.

•Time is the major limitation for the study i.e., study

•Due to limitations of time, it was unable to go far a depth a

The Company is suffering from lack of adequate working capital.

The Company is using Current Assets and Fixed Assets well.

Working Capital is decreasing Year by year so adequate Working Capital

Working capital management is life blood for the company. If it

Particulars Amount Particulars Amount

To opening stock 1061067 By sales of milk 3436700

To salaries & wages 226950 By Gross profit 4257247

TOTAL: 10482431 9430352

Profit & loss 10482431 9430352

Particulars Amount Particulars Amount

To opening stock 2849860 By sales of milk 8298290

By Gross profit 6896890

TOTAL: 9430352 8837584

Profit & loss 9430352 8837584

Particulars Amount Particulars Amount

To opening stock 2713280 By sales of milk 4892450

To salaries & wages 1123945 By Gross profit 4829870

2.Loan Funds: 0000000 000000

4.Current Assets: 8542212 9001221

Particulars Amount Particulars Amount

To opening stock 1569450 By sales of milk 4278900

To salaries & wages 948996 By Gross profit 4279400

Particulars 31-03-2013 31-03-2014

2.Loan Funds: 000000 9771572

Profit & loss 8845519 19921649

Particulars Amount Particulars Amount

To opening stock 507968 By sales of milk 4596330

Particulars 31-03-2014 31-03-2015

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