Analysis of Working Capital Management Sakshi Agarwal

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ANALYSIS OF WORKING CAPITAL

DISSERTION ON“ ANALYSIS OF WORKING CAPITAL MANAGEMENT ” CARRIED

OUT AT RSWM LTD. BANSWARA (RAJ.) UNDER THE GUIDANCE OF Sh. MANAK JAIN

SUBMITTED FOR THE EVALUATION UNDER INTERNSHIP

By : -By : -RAJRAJ TIWARITIWARIMBA (IInd Year) MBA (IInd Year) 33rdrd Semester Semester

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http://www.fabric.rswm.in/mayur.aspx

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AUTHENTICATION CERTIFICATE

This is to certify that the Internship Dissertation (MT 603), titled “ANALYSIS OF WORKING

CAPITAL MANAGEMENT” is a bonafide work carried out by me at “RSWM LTD.,

BANSWARA”. The matter embodied in the dissertation report has not been submitted earlier for

award of any degree or diploma to the best of my knowledge and belief.

(-----------)

Date : -

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TRAINING ORGANISATION CERTIFICATETRAINING ORGANISATION CERTIFICATE

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PREFACEPREFACE

This MBA curriculum has been architecture with the view of enabling the students to have an opportunity of

bringing their theoretical knowledge to practice. The concepts reinforce in the classroom would be better

expose if it could be actually observe being practiced complying with this objective the summer training is

designed to develop the student’s skills in analyzing and interpreting practical problems through the

application of theoretical concepts and techniques of management.

RSWM LTD. (A unit of LNJ Group), Banswara is known for its excellent survival from past 50 years. To

keep this organization evergreen was not so easy, with many whirlpools also company proved the theory of

survival of fittest. To know this company, I got a very good opportunity through summer training, exploring

a big scale & vibrant company is not so easy but I tried my level best to grab all the opportunities to know

this industry with the help of its employees who shared their experiences with me.

Banswara unit explains a lot of sagas related to its production, with the production the value of workforce

also. Any company is called as an organization, but a real organization is really hard to organize efficiently

& effectively. The power of machines or capital are not only enough for organization to run, but thousand

minds of different taste and culture, molded in one pot and to walk with so many diversity at one place and

show them single path of goal and productivity is really not very easy job.

As we say the world is changing, and to keep that same workforce changing with the environment is a real

challenge for any company. To train & manage workforce with a future goal is really very much planned and

effectively organized than only it is possible to stand in market where global scenario is flat and highly

competitive and with full of substitutes.

The financial sector is always the core of an economy’s growth. The subject matter of financial management

has been changing at a rapid pace. About three decades ago, the scope of financial management was

circumscribed to the raising of funds whenever needed., and little significance was attached to the financial

decision making and problem solving. The modern thinking in the financial management gives greater

importance to the management decision making and problem solving.

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ACKNOWLEDGEMENT

Gratitude is hardest of emotions to express and often does not find adequate words to convey all that we fell.

I owe gratitude to several people who helped me in my course of project. If I were to sit down to map out all

the contributors who have given time and shared their views to make this project possible. I would end up

mapping out the long list. I express my gratitude to all of them. No single contribution alone lead to the

success of endeavor and the same is true for this project study.

I would also like to express my gratitude towards Mr. Ashok Sodhani, AGM (Finance & Accounts) for

giving me a challenging project in the area, in which I aspired to build my core competency.

I am highly thankful to my guide and company mentor, Mr. Manak Jain, Deputy Manager (Finance &

Accounts) who took time from his busy schedule for providing information, guidance, valuable tips

regarding company’s practices in the field of Source, Application and Needs of Working Capital in Current

Business Scenario for RSWM Limited.

I would also like to thank all the employees and staff member of the organization, who knowingly or

unknowingly helped me throughout this project and also treated me as a part of them for providing me a

wonderful experience while working with them.

I also acknowledge from the deep of my heart, my gratitude to my college mentor ---------------------who

gave me the related information as and when the need arose.

I would also thank to-------------------------- for making such curriculum of industrial training integrated in

their 2 years program, which helped me to get such a valuable experience of working in the corporate world.

Last but not the least I can’t forget to thank God and my Parents, without their blessing and support nothing

would be possible and I would not have reached up till here.

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EXECUTIVE SUMMARY

Books are the treasures of knowledge and a theoretical base is pivotal for understanding the realities of

practical field. But, at the same time, practical knowledge is crucial for having an insight into the

implementation of theory in corporate world.

With the privilege of an opportunity provided to me by RSWM Ltd. Banswara, for the fulfillment of my

purpose “bridging the gap between theory and practical”, I undertook forty-five days summer training at

finance department of RSWM Ltd. Banswara. Working capital is a considered as a life - blood for any

organization and the optimum utilization of its necessary from the profitability, liquidity and activity point of

view. By considering the importance of the working capital, this report covers the following area.

1. Cash Management

2. Receivables (UGAI) Management

3. Working Capital Finance

4. Inventory Management

5. Sources and Application of Working Capital

Beside this the ratio given at the end of report reveals some facts about the financial position of the company

and performance during last five years. It shows how company’s finance & accounts department takes their

decisions and run company efficiently and with handsome profit. This report is study of various part of

working capital like sources, application of funds done by Rswm Ltd. in their daily practice.

Here I have mainly focus on the utilization of resources done by them and how they control their debt time

to time with hardly any bed debt for any unit till dated with their firm policies and business tactics.

Finally, on the basis of the analysis and the conclusions draw a SWOT analysis has been done and

recommendations given. Therefore, a financial analysis of working capital of RSWM realizes that the

company has been able to manage its working capital efficiently thereby strengthening its short term

financial position. However, there are certain areas where the company is lagging and is required to take

some effective steps.

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TABLE OF CONTENTS

Sr. No. TOPIC Page No.

1. CHAPTER I

1.1 Industry Scenario

1.2 Introduction of RSWM Group

1.3 Brief Introduction Of RSWM Ltd., Banswara

1.4 Objectives of the study

1.5 Methodology & Limitations

2. CHAPTER II

2.1 Introduction of Working Capital

2.2 Working Capital & Management

2.3 Issues & Factors Influencing for Working Capital

2.4 Assessment For The Sources & Application For

WC

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2.5 Needs Of & Resources Of Finance For WC

2.6 Fund Flow Statement

2.7 Uses of Working Capital In Business

2.8 Data Analysis of Working Capital Statements

2.9 Ratio Analysis & Interpretation

2.10 Estimation For Needs Of Working Capital

2.11 Importance Of MIS System (ERP) For Accounting

3. CHAPTER III

3.1 Conclusion

3.2 Bibliography

3.3 Annexure

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Chapter – 1

COMPANY PROFILE

Figure 1

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INDIAN TEXTILE INDUSTRYINDIAN TEXTILE INDUSTRY

The Indian Textile sector has its roots going back several thousand years. Over the last 50 years the textile industry is one of the largest in the world with a massive raw material and textile-manufacturing base.

Textile accounts for 14% of India’s industrial production and around 30% of its export earnings. Around 35 million people are directly employed in the textile manufacturing activities.

The textile policy of 2000 aims at achieving the target of textile and apparel exports of US $ 25 billion by 2010 of which the share of garments will be US $ 25 billion. The main markets for Indian Textile and apparels are USA, UAE, UK, Germany, France, Italy, Russia, Canada, Bangladesh and Japan.

At present India has the second largest spinning capacity and ranks among the world’s largest producers of cotton, cotton yarn, and manmade fibers and filament yarns; it also has a large domestic, fabric supply.

There has been a structural shift taking place in the global textiles industry with capacities moving from high cost developed economies to the developing countries. The end of the quota restrictions with the dismantling of Multi fiber agreement in 2005 further accentuated this trend. This has added further growth opportunities for cost efficient Indian Players who have the scale and produce quality products. Because of the lifting up of the import restrictions of the multi-fiber arrangement (MFA) since 1 st January, 2005 under the world Trade Organization (WTO) Agreement on textile and clothing, the market has become competitive on closer look however; it sounds an opportunity because better material will be possible with the traditional inputs so far available with the Indian Market.

There will be opportunities as well as challenges for the Indian textile industry in the post-mfa era. But India has natural advantages, which can be capitalized on strong raw material base-cotton, man-made fibers, jute silk, large production capacity (spinning-21% of world capacity and weaving-33% of world capacity.)

The industry expects investment of Rs. 140000 crore in this sector in the post-MFA phase. A vision 2010 for textile formulated by the government after intensive interaction with the industry and export promotions councils to capitalize on the upbeat mood aims to increase India’s share in world textile trade from the current 4% to 8% by 2010 and to achieve export value of US $ 50 billion by 2010. Vision 2010 for textiles envisages growth in Indian textile economy from the current US $ 37 billion to $ 85 billion by 2010; creation of 12 million new jobs in the textile sector; and modernization and consolidation for creating a globally competitive textile industry.

The future of textile industry in India will be amazing if we continuously improve over quality and give proper attention towards research and development and we can take lead of the world textile market. We have to accept the fact that no organization is too large or too powerful to be “unsinkable”. In a rapidly changing business environment companies which do not change disappear without a trace. Change and adaption is must for growth and prosperity. The fierce competition in the market realities dictate: “Perform or parish”.

Thus realizing the need of the hour various groups and individual shifted their focus of business rather than continuing in the same manner. One amongst them was Shri Laxmi Niwas Jhunjhunwala the founder of LNJ Bhilwara Group.

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INTRODUCTION OF THE COMPANYINTRODUCTION OF THE COMPANY

Name of the concern RSWM Ltd.

Locations :- Regd. Office

Corporate Office

Works

Kharigram, P>O> Gulabpura-311021, Distt. Bhilwara, Rajasthan.

Bhilwara Towers,A-12, sector-1, Noida-201301 (U.P.)

Kharigram, P.O. Gulabpura-301021, Distt. Bhilwara, Rajasthan.

Lodha, P.O. Banswara-327001, Rajasthan. Mordi, Banswara-327001, Rajasthan. Mandpam, Bhilwara-311001, Rajasthan. Rishabhdev-33802, Distt. Udaipur, Rajasthan. Ringas, Distt. Sikar, Rajasthan. Bidadi, Banglore, Karnataka.

Constitution Public Limited Company

Date of Incorporation 17/10/1960

Lines of Manufacture Manufacturing of synthetic, blended, grey/dyed yarn, cotton mélange yarn, and cotton blended yarn and fabric under the brand ‘Mayur’. Now also entered into Garment Business.

RSWM Ltd. (RSWM), the leading company of the LNJ Bhilwara Group, is principally engaged in the manufacturing of synthetic, blended, mélange and specialty yarns, fabric and garments Business.

Date of commencement of commercial Business

1961

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RSWM Limited, the flagship Company of LNJ Bhilwara Group, is a professionally managed, progressive

and growth-oriented and one of the largest textile manufacturer in the

country, primarily producing synthetic, blended, mélange, cotton & specialty

yarn, fabric and denim.

RSWM was established in 1960, an IS/ISO 9001:2001 and SA

8000:2008 accredited Company, has 8 state-of-the-art manufacturing plants

which moved from strength to strength and today, it operates about 3,60,000 spindles, having 1,00,000

MTA yarn capacity. It is equipped with in-house fabric weaving and processing facilities of about 35.6

MMA for fabric and denim fabric. RSWM is self - reliant in Captive Power Generation of 46 MW that

feeds all its integrated units spread across the state of Rajasthan. Modern technologies and world class skills

have enabled the Company to produce the finest quality adhering to stringent international norms.

The main competitive strength of the Company is its innovative product range that includes specialty,

functional, technical and eco-friendly yarn and fabric along with basic and commodity products. The

Company recently has shifted its focus to produce more and more natural textiles in order to meet the

emerging needs of the market.

RSWM exports a complete range of yarn and fabric to over 70

countries worldwide, giving the Company a large, visible presence across

Europe, South Africa, North America, Australia, South Korea, Belgium,

Singapore, Italy, Egypt and the Gulf countries.

The Company holds the prestigious ‘Three Star Export House’ status

and has received Export Awards from the Synthetic and Rayon Textiles Export Promotion Council

consecutively for several years. The Company is a recipient of the “Rajiv Gandhi National Quality Award”

received from the Bureau of Indian Standards for the years 2006 and 2007. RSWM has also received

"Niryat Shree" - Certificate of Excellence (Non-SSI) award for the category of textile and textile products.

RSWM’s one of the leading brand `Mayur Suitings’ enjoys a high brand equity in its target segment

in the country.

Foundations that inspire

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ANALYSIS OF WORKING CAPITAL "To me, the LNJ Bhilwara Group is not a business house; I see it as an institution that is committed to

seeking excellence." BY L.N.Jhunjhunwala- Chairman Emeritus

Mission

With unique insight into consumer behavior, we strive to offer the best. Following distinct business

strategies, the company will continue its tradition of manufacturing

the finest products.

Vision

RSWM envisages itself as a trend setter of the textile industry. It is committed to introduce

innovative products in the industry which will set new standards.

Board of Directors 1 MR. LAKSHMI NIWAS JHUNJHUNWALA CHAIRMAN - EMERITUS

2 MR. RAVI JHUNJHUNWALA, CHAIRMAN

3 MR. SHEKAR AGRAWAL, VICE-CHAIRMAN

4 MR. A.K.CHURIWAL, MANAGING DIRECTOR & CEO

5 MR. J.C.LADDHA, EXECUTIVE DIRECTOR & CFO

6 DR. KAMAL GUPTA, DIRECTOR

7 MR. D.N.DAVAR, DIRECTOR

8 MR. SUSHIL JHUNJHUNWALA, DIRECTOR

9 MR. A. N. CHOUDHARY, DIRECTOR

10 MR. PRABHAKAR DALAL, DIRECTOR (NOMINEE EXIM BANK)

REGISTERED OFFICE :-

KHARIGRAM, P.O.GULABPURA, BHILWARA, RAJASTHAN

CORPORATE OFFICE :-

BHILWARA TOWERS, A-12, SECTOR-1, NOIDA, (U.P.)

THE LOGIC OF THE LOGO

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ANALYSIS OF WORKING CAPITAL The LNJ Bhilwara Group proudly presents the all new face of RSWM Limited (Formerly Rajasthan

Spinning & Weaving Mills Limited). Curve shape is symbolic of superlative quality, purity in nature and

global (infact cosmic) stature. The color Black connotes the strong heritage the Company enjoys, along with

unity and reliability, while the color Gold reflects passion, excellence, superlative quality and the diverse

expansion in the product range. The fine, international SSI font used symbolizes compactness, along with

unity and strong bonds.

With every change come new hopes, new aspirations, new achievements, new benchmarks... With it come

new responsibilities and a wider dimension, along with a continued commitment to performance. All this

demands a change in persona and thinking.

SOME WELL KNOWN BRANDS

The group boasts of some well-known brands, which include :-

MAYUR SUITINGS

BSL SUITINGS

LA ITALIA FASHIONS BUDDY DAVIS

GEOFFREY HAMMONDS SUPERFINE SUITINGS LEISUREWEAR.

These products are manufactured at various units spread across the country.

COMPITITORS OF RSWM

1 MUDRA

2 GRASIM

3 RAYMOND

4 SYNTAX

5 INDORMA

6 MARAL

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ABOUT RSWM BANSWARA

Established in 1989, The Banswara unit is the only one of its kind in India and the Company's largest

manufacturing facility. The unit has the capabilities to produce spun gray yarn out of any kind of fiber and

blend it with synthetic, regenerated cellulosic, natural, protein and cotton fiber.

The Banswara Unit has the exclusive rights for spinning Tensel Fiber into

yarn in India and is a modern textile-spinning unit employing state-of-the-art

technology from Switzerland, Germany, UK, Italy and Korea.

The unit's strength is its new product development. The unit can and does

manufacture any yarn delivering it in accordance with the customer's

deadlines. It is a 100% Grey Yarn Spinning unit producing Cotton blended

gray yarns and Polyester fibers. The unit has recently been expanded to

strengthen its product portfolio and giving it a greater product mix.

Raw Material Purchase :-

POLYESTER RELIANCEVISCOSE GRASIMCOTTON GUJARAT, RAJASTHAN, M.P., MAHARASTRAACRYLIC PRASUPATI

Products :-

The Banswara Unit manufactures the following product range: Grey Yarn Specialty YarnFunctional YarnBrand SpecialtiesRegular Products Cotton 100%

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ORGANISATION STRUCTURE

CHAIRMAN - EMERITUS

CHAIRMAN

VICE CHAIRMAN & MANAGING DIRECTOR

EXECUTIVE DIRECTOR

COO

GENERAL MANAGERCOMI.

GENERAL MANAGER

ENGG

GENERAL MANAGER

NPD

GENERAL MANAGER

TECH.

DGM HRD

SR. MANAGER

P&A&L

SR. MANAGER

PROD.

SR. MANAGER

SPNG

GENERAL MANAGER

CPPC

SR.MGR MGR DS.MASTER MGR DY.MGR DSM SR.ENG

DY.MGR DY.MGR SR.OFFI.NFD SR.MGR ASTT.MGR ASTT.MGR FM

ASTT. MGR

ENGINEER SHIFT OFFICER

ASTT. MGR

SR.LABOUR OFFICER

SHIFT OFFICER

F.SUP.

SR.ASTT. SR.SUP. SHIFT OFFICER

LABOUR OFFICER

ASSTT. SUPERVISOR

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INTRODUCTION OF LNJ BHILWARA GROUP

The LNJ Bhilwara Group, founded in 1961, has today grown into a strong global presence worth

Rs. 2049 crores. The Group has been nurtured into a successful growth track by the able guidance of the

Founder and Chairman-Emeritus, Mr. L. N. Jhunjhunwala. Currently, the LNJ Bhilwara Group stands as one

of the largest firms on the corporate horizon in India with over 20,000 employees and 21 production units

positioned at strategic locations across the country. The Group’s export earnings comprise of 46% of the

Group’s turnover.

The LNJ Bhilwara Group is a well-diversified conglomerate. It has been actively seeking growth and

profitability by investing in a variety of systematically identified businesses making it a multi-product

conglomerate with interests in a range of industries such as textiles, graphite electrodes, power generation,

power engineering consultancy services, steel and IT enabled services.

Textiles :-

The pioneering textile division of the Group is not only a key player in the industry but also has

many firsts to its credit. The textile division has the sole distinction of producing a unique fire retardant yarn

called Trevira CS (now known as Lenzing, Austria). It is also the sole licensee for the highly specialized

yarn called Tensel. The Group has time and again been acknowledged for its world-class quality products in

the domestic market such as Mayur Suitings, BSL Suitings, La Italia Fashions and Geoffrey Hammond

superfine suitings. At the same time, their services to several leading global brands for knitted garments have

been recognized with the units garnering top export awards in different fields for several years in a row.

Graphite Electrodes :-

The LNJ Bhilwara Group also has the largest integrated graphite electrodes manufacturing plant in

South-east Asia with a reputed clientele comprising of major steel plants in the world. Graphite exports

constitute 70% of total sales volume. An evidence of their success can be seen in the fact that HEG, an

integral part of the Group, is all set to undertake a Rs. 450 crore expansion plan to tap opportunities in the

export market. The expansion of the Mandideep plant would double the capacity from 30,000 TPA to 60,000

TPA.

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Power Sector :-

Following the success of its earlier hydro-electric power project of 15 MW at Tawa Nagar (MP) in

1997, the Group has commissioned, India’s first IPP Hydro-electric Malana Power Project of 86 MW in a

record time of 30 months at Kullu (HP), in July, 2001 and is set to commence work on 200 MW Allain-

Duhangan Hydro Electric Project at Manali (HP).

Little wonder then, that the LNJ Bhilwara Group of companies have been awarded IS/ISO 9001:2000

& ISO 14001 certification for setting exemplary standards in quality.

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Nationwide Network

Figure 2

RSWM Ltd.

GulabpuraSynthetic, Regenerated Cellulosic, Blended, Dyed Yarn & Fabric

Banswara Synthetic, Regenerated Cellulosic & Cotton-Blended Grey Yarn Mandpam Cotton Mélange Yarn, Cotton-Blended Mélange & Dyed Yarn Rishabhdev Synthetic, Blended & Grey Yarn Ringas Synthetic & Blended Dyed Yarn Bangalore Apparels Mordi (Banswara) Process House

HEG Ltd. Mandideep Graphite Electrodes Durg SteelDurg Waste Heat Recovery Power Tawa Hydro Electric Power

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Maral Overseas Ltd.

Maral SarovarCotton Yarn, Cotton-Knitted (100% EOU) Fabric & Cotton Knitwear

Jammu Cotton-Knitted Fabric, Cotton Knitwear & Sweaters Noida Knit wears

BSL Ltd.

Mandpam:Yarn, Worsted & Synthetic Fabric, Readymade Garments & Accessories

Bhilwara Spinners Ltd. Bhilwara Synthetic, Blended Grey & Dyed yarn

Bhilwara Melba De Witte Pvt. Ltd. Mordi (Banswara) Specialized Automotive Fabric, Furnishing Fabric

Bhilwara Processors Ltd. Mandpam Processing of Synthetic & Worsted Fabric, Tops Fiber Dyeing

Malana Power Company Ltd. Malana Hydro Electric Power (Kullu)

AD Hydro Power Ltd. Manali Allian-Duhangan Hydro Electric Power

Indo-Canadian Consultancy Services Ltd. Noida Power Engineering Services

Bhilwara Scribe Pvt. Ltd. Bhopal IT-Enabled Services

Corporate Office Noida National Capital Region and Delhi

Regional / Marketing OfficesMumbai KolkataBangaloreDelhi Ludhiana

AWARDS

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The LNJ Bhilwara Group not only has several firsts to its credit but also recognition for its

commitment to quality and excellence with several national awards and certifications.

Graphite Electrode

Awarded ISO 9001:2008 & ISO 14001:2004 Certifications.

Awarded 'Rajiv Gandhi National Quality Commendation Award 2001 for Quality" by the Bureau of

Indian Standards, Government of India.

HEG Ltd bagged the prestigious National Export Award instituted by the Ministry of Commerce,

Government of India, for outstanding export performance for the year 1997-98.

HEG has also won the country's top export award instituted by the Chemical & Allied Products

Export Promotion Council (CAPEXIL) for outstanding exports for 18 consecutive years. For 2001-

02, HEG was awarded the “Highest” Export Award.

HEG has the largest Integrated Graphite Electrodes manufacturing plant in South Asia and the

Middle East. It is also the second largest in the world.

HEG has been regularly exporting electrodes since 1981 and today exports more than 80% of its

production.

HEG's graphite electrodes are exported to 25 countries around the world, including developed

countries like USA, Canada, Germany, France, Italy, South Korea, Australia etc. - a reward for our

commitment to World winning Quality and Performance.

Textiles: -

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ANALYSIS OF WORKING CAPITAL RSWM, Banswara unit has been awarded Ist Prize for the'' State Energy Conservation Award

2010 '' for the Energy Conservation Measures taken during 2010.

The coveted ISO 9001-2000 Quality Management System Certification was received in January

1997, which speaks volumes about the Company's.

RSWM is the winner of SRTEPC Highest Export Award for polyester / viscose yarn exports for the

last 13 years

RSWM bagged ‘The 2007 Excellence Award for Financial Performance and Analysis’ instituted by

Rajasthan Chamber of Commerce & Industries, Jaipur

RSWM’s Rishabhdev unit bagged National Export Award, and the SRTEPC Excellence award for

highest production in export of 100% Polyester Spun Yarn

An advanced machinery repertoire from world leaders ensures flawless quality and more versatility

at each and every stage.

Rajiv Gandhi National Quality Awards Commendation certificate in Large Scale Textile Industry to

Banswara and Kharigram unit in year 2006 and year 2007 respectively.

Our Banswara plant certified for producing and selling Organic Cotton yarn from "Control Union

Certification" (formerly known as SKAL)

Certificate of "Global Organic Textile Standard" (GOTS) for producing and selling 100% Organic

Cotton yarn to our Banswara plant.

Certificate of "Organic Exchange" (OE) for producing and selling Blended yarns with Organic

Cotton to our Banswara plant.

Certificate of SA-8000 speaks that all the material produced by the RSWM Ltd. by respecting the

environment and ethical values for our Banswara unit.

Certificate of Fair Trade from Fair Trade Labelling Organization for producing selling 100% Fair

trade cotton and its Blended yarn, for Banswara unit.

Certificate of Global recycle standards (GRS) for producing selling the recycled cotton and Blended

yarn with and without recycled manmade fibers.

Having Oekotex standard 100 certificate for most of the products

Power : -

Malana Power bagged “Greentech Environment Excellence’ Award.

SWOT ANALYSIS25

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STRENGTH :-

Demand of blended yarn will increase as the production of cotton is (limited attraction of PV is

replacing cotton, great share in exports one of the biggest earners).

Won SRTEPC highest export award for PV yarn exports it was also accorded “golden trading house

status”.

Experienced & enthusiastic marketing team. Strong sales depots & marketing offices at Mumbai,

Delhi, Bhilwara, Ludhiana, Ahemadabad and Indore.

Brand Reputation Global Marketing – LNJ Bhilwara group is famous in textiles in all over the world.

Well-equipped R&D SQC lab.

Modern machinery with latest techniques.

Not depended for power & water RSWM Banswara has its own power generation plant & presently

there are about 20000 surplus units of power is available. The daily requirement of power for

weaving project is only 93111 units per day. Water is also available in plenty at company’s own

campus & presently company has adequate water storage capacity.

Wide product range & flexibility in production according to requirement of market. RSWM

Banswara manufacturers various type of yarn of different counts & blends.

All the units are connected through V-SAT Gulabpura, Mumbai, Delhi, and Indore & Rishabdev.

The company has a great share in exports, one of the biggest earners.

Quality conscious approach as per ISO product & TQM gulabpura unit was the first India composite

textile unit to be certified with ISO 9002 1st September 1993, ISO certificate is necessary to

penetrate in the export market specially in the European in US market.

The most important thing is that they have good and healthy working atmosphere in company and

they provide ample no. of opportunities for everyone to satisfy their job desire.

Better packaging, carriage and transportation system with all modern equipments and good after

sales services.

Regular seminars and meeting are conducted in entire department in order to find their loopholes and

solution for the same.

WEAKNESS :-

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ANALYSIS OF WORKING CAPITAL Banswara is not connected through railway line & condition of roads is also poor so there is an

infrastructure problem.

Skill labor is not available at Banswara and Purchase Raw Material from one type of organization

only and bigger process cycle causes higher stock of raw materials.

Locations of depots (Consuming Centers) are far away from factory. Hence transportation cost and

time duration is increases in inventories.

Many process steps and process are more sensitive to normal process variations and small error

causes the big amount of wastage of material.

Being highly labor intensive unit, HR department is always under pressure and many times fails to

meet expectations of various departments and employees.

OPPORTUNITIES :-

After starting weaving project, Rajasthan spinning & weaving mills Ltd. Banswara may further go

for forward integration in garments sector, as people in domestic market are gradually moving

towards ready-made garments.

To develop & improve working environment of processing by using Eco-Friendly methods.

The company can rush into retail business and support from government like TUFF Schemes i.e. 5%

interest rebates to enhance investment in the textile industry.

Strategic alliances: Tie-ups with global manufacturers & brands for technology & market.

Tilt towards ready-made. India can become a major player in the textile export market at a global

market at a global level given the declining share of south-east Asian countries in this niche market

& rising wages in ASEAN region, wiping out their competitive edge.

RSWM may be innovating new product using different types of yarn & fiber like lyre & tennel.

Increased export demand is expected from planning out of capacities in developed world.

Efficiency can increase with the help of IT & ERP.

Post-MFA as on January-1, 2005, the world trade in textile & clothing will be fully liberalized. It

can capture a large market share if it provides quality product as reasonable price.

Market share of India is world trade of textile is only 2.8% therefore, another advantage that India

could have is that for countries which are not the member of WTO, imposing countries will have

obligation to proceed with removal of quota restriction. This is especially important with respect to

China, Taiwan, who accounts for 32% of world trade in textile, but are still not a member of WTO.

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THREATS :-

Today textile industry is planning through in unpredicted recession. The reason for that is supply is

more than demand.

Cheap imports textiles from China, that is increasing free trade & competition.

Removal of quotas after – 2005 increasing more quality awareness i.e. competition in quality.

Changing trend in textile Indus try, changing requirement as people now preferring ready-made

garments.

Polyester Viscose is a substitute of cotton & is made from wood pulp & its supply is also limited.

Government policies are the main hurdles of division’s performance.

Finally, On the basis of preliminary discussions and referring to document Projects were prepared

and final reports were analyzed through ratio analysis. Definitive views about the entire gamut of

working capital management were formed. The various issues connected with working capital

management were understood.

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PROJECT INTRODUCTION

Working capital is as import in business firm as blood in a human life. Each and every business

concern should have adequate funds to meet out day-to-day expenses and to finance current assets, debtors,

receivables and inventories. Proper management of working capital is necessary to maintain both liquidity

and profitability.

The goal of working capital management is to manage the firm’s current assets and current liabilities

in such a way that a satisfactory level of working capital is maintained. It is the process of planning and

controlling the level and mix of the current assets of the firm as well as financing these assets.

SCOPE OF PROJECT

Scope of project is to determine the short-term debt paying capacity of the firm through a financial

analysis of Working capital. It tends to find out the effectiveness in the management of Working capital at

RSWM LTD.

For this purpose data were collected from the past financial statements of the company.

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RESEARCH METHODOLOGY

&

LIMITATIONS AND PROBLEMS FACED

30

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General Information

The research work carried out here was actually a study work conducted at Rajasthan Spinning and

Weaving Mills Ltd, Banswara in finance & accounting department on the topic of the Working Capital

Management. The various data collected through method of discussion and no questionnaire was

designed for the purpose of the study. The information about the design of sampling is given as under.

Sampling

As discussing above, no questionnaire requires being prepared during the study and the selection of the

sampling was an easy task compare to other research work. Starting from the officer level (very bottom

level) to the general manager almost all 10 staff members were asked the different question related to

the Working Capital Management and department’s policy about it.

Sampling Design

The topic of the discussion is varied from person to person based on their position in the organization

and experience of working in the organization. The manager is asked to provide information about the

policy formation feasibility of its implementation where persons at officer or Sr. officer level are asked

to provide information about the current assets and current liabilities.

Research Tools

The figures of RSWM’s balance sheets are taken for last five years i.e. from F.Y. 2006 - 07 to 2010 –

11. They are used for calculating the ratio and also for interpreting the financial position of the

organization during that period of time. The annual reports of Rajasthan Spinning and Weaving Mills

Ltd are also used as a research tool for various other needs.

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PRIMARY DATA

The primary data has been collected from experts, officials and employees working in RSWM LTD.

(A UNIT OF LNJ GROUP, BHILWARA).

SECONDARY DATA

For secondary data, I have referred books related to working capital management.

Information has been taken from the books and audited records of RAJASTHAN SPINNING AND

WEAVING MILLS LTD

I have collected information from RSWM annual reports and different manuals referred by them.

Various web sites were also considered and taken data from there along with network of RSWM LTD.

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LIMITATIONS AND PROBLEMS FACED

Various information regarding unit is not shared in the report due to maintaining secrecy of the

company and following their terms and regulation.

Various information regarding unit was also not shared with trainee by company due to their rules,

regulation and policies.

Working Capital is wider concept and it requires more time for learning each and every aspect of it.

Hence there was time constraint too.

Unfamiliarity with culture and department of the company was also becoming a hurdle for producing

efficient output for trainee.

Trainee had less time for practicing regarding the learning of ERP at the time of training.

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INTRODUCTON

OF

WORKING CAPITAL

34

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There are two concepts of working capital

Gross Working Capital

Net Working Capital

Gross Working Capital : - Simply called as working capital, refers to the firm’s investment in current

assets. Current assets are the assets which can be converted into cash within an accounting year (or operating

cycle) and include cash. Short-term securities, debtors, bills receivables and stock (Inventory).

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 to payment within an accounting year

and include creditors, bills payable and outstanding expenses. Net working capital can be positive and

negative. A positive working capital will arise when current assets excess current liabilities and vice – versa.

The concept of working capital – gross and net – are not exclusive, rather they have equal significance from

management view point.

Focusing on Management of Current Assets

The gross working capital concepts focuses attention on two aspects of current assets management: (A)

How to optimize investment in current assets? (B) How should current assets be financed?

The considered of the level of investment in current assets should avoid to danger points – excessive and

inadequate investment in current assets. Investment in current assets should be just adequate, not more than

less, to needs of the business firm. Excessive investment in current assets should be avoided because it

impairs firm’s profitability, as idle investment earns nothing. On the other hand, inadequate amount of

working capital can threaten the solvency of the firm because of its inability to meet its current obligations.

It should be realizing that the working capital needs of the firm might be fluctuating with changing business

activity. This may cause excess or shortage of working capital frequently. The management should be too

prompt to initiate an action and current imbalances.

Another aspect of the gross working capital points in the need of arranging funds to finance current assets.

Whenever needs for working capital arise due to do the increasing level of business activity or for any other

reason, arrangement should be made quickly. Similarly, if suddenly some surplus fund arises, then they

should not be allowed to remain idle, but should be invested in short term securities. Thus financial manager

should have knowledge of source of working capital fund as well as investment avenues where idle fund

may be temporarily invested.

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Focusing on Liquidity Management

Net working capital, begin the difference between current assets and current liabilities, is a qualitative

concept. It (A) indicates the liquidity position of the firm and (B) Suggest the extent to which working

capital needs may be finance by permanent sources of funds. Current assets should be sufficiently in excess

of current liabilities to constitute a margin or buffer to maturing obligations within the ordinary operation

cycle of a business. In order to protect their interest, short-term creditors always like a company to maintain

current assets at a higher level than current liabilities. However, the quality of current assets should be

considered in determinate the level of current assets vice-versa current liabilities. A weak liquidity position

poses a threat to solvency of the company and makes it unsafe and unsound. A negative working capital

means a negative liquidity, and may prove to be harmful for the company. Excessive liquidity is also bad. It

may be due to mismanagement of current assets therefore, prompt and timely action should be taken by

management to improve and current the imbalance in the liquidity position of the firm.

Net working capital concept also covers the question of judicious mix of long-term and short-term funds for

financing current assets. For every firm, there is a minimum amount of net working capital, which is

permanent. Therefore, a portion of the working capital should be financed with permanent sources of funds

such as owner’s capital, debentures, long-term debts, preference capital or retained earnings. Management

must, therefore decide the extent to which current assets should be financed with equity capital or borrowed

capital.

In summary, it may be emphasized that both gross and net concepts of working capital are equally important

for the efficient management of working capital. There is no precious way to determine the exact amount of

gross, or net, working capital for any firm. The data and problems of each company should be analyzed to

determine the amount of working capital. There is no special rule as to how current assets should be

financed.

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WORKING CAPITAL

AND

MANAGEMENT

37

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Working capital is concerned with management of current asset. It is an important and integral part of

financial management as short term survival is prerequisite for long term success.

The divisional management of RSWM Ltd. manages the working capital within the board frame work laid

by and with consultation of Corporation Finance Division (CFD). Decision regarding the utilization of the

current assets is made in accordance with the policy of company.

Working capital management or short term financial management is concerned with decision relating to

current assets and current liabilities.

WCM = Current Assets (CA) – Current Liabilities (CL)

The key difference between long-term finance management and short-term financial management is in term

of timing cash. While long- term financial decision like buying capital equipments or issuing debentures

involves cash flows over extended period of time i.e. more than one to five years or even more while short

term financial decision typically involve cash flows within a year or within the operating cycle of the firm.

WCM is management for the short- term which is critical to the firm. Managers spent about 70% in

managing for the short- term capital.

The operating cycle can be said to be at eh heart of the need for working capital.

38

Cash

Receivable

Inventory

\


The management of the finances of a business / organization is done in order to achieve financial

objective.

Taking a commercial business as the most common organizational structure, the key objectives of financial

management would be to:

Create wealth for business

Generate cash and

Provide an adequate return on investments bearing in mind the risks that the business is taking and

the resources invested.

There are three key elements to the process of financial management:

FINANCIAL PLANNING :-

Management need to ensure that enough funding is available at the right time to meet the needs of the

business. In short term, funding may be needed to invest in equipment and stocks, pay employees and fund

sales made on credit. In the medium and long term, funding may be required for significant additions to the

productive capacity of the business or to make acquisitions.

FINANCIAL CONTROL :-

Financial control is a critically important activity to help the business ensure that the business is meeting its

objectives.

FINANCIAL DECISION-MAKING :-

A key financing decision is whether profits earned by the business should be retained rather than distributed

to shareholders via dividends. If dividends are too high, the business may be starved of funding to reinvest in

growing revenues and profits further.

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ORGANIZATION STRUCTURE OF FINANCE DEPARTMENT

AREA WISE SALES OFFICE

40

Chief Financial Officer

Chief Operating Officer

Commercial Head

Accounts Head

Deputy Manager

Cash

Deputy Manager Creditors

Deputy Manager

Bank

OfficerOfficer

Officer Officer

Officer Officer

Deputy Manager Debtors

BANSWARAUNIT

Mumbai Amritsar Delhi Indore Bangalore

Sr. Manager Accounts

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ISSUES & FACTORS

INFLUENCING

FOR WORKING CAPITAL

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ISSUES IN WORKING CAPITAL

Working Capital refers to the administration of all components of working capital-cash, marketable

securities, debtors (receivable) and stock (inventories) and creditors (payables). The financial manager must

determine levels and composition of current assets. He must that right sources are trapped to finance current

assets, and that current liabilities are paid in time.

There are many aspects of working capital management, which make it an important function of the

financial manager.

Time :- working capital management requires much of the financial manager time.

Investment :- working capital represents a large portion of the total investment in assets.

Critically :- working capital management has great significance for all firms but it is very critical for

small firms.

Growth :- the need for working capital is directly related to the firm’s growth.

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FACTORS INFLUENCING WORKING CAPITAL

There is not set of rules or formula to determine the working capital requirement of the firms. Therefore, an

analysis of relevant factor should be made in order to determine total investment in working capital.

The main factors are :-

1. Nature of Enterprise :-

The nature and the working capital requirements of an enterprise are interlinked. While a manufacturing

industry has a long cycle of operation of the working capital, the same would be short in an enterprise

involved in providing services. The amount required also varies as per the nature; an enterprise involved in

production would require more working capital than a service sector enterprise.

RSWM is a manufacturing organization, because of which it requires lot of funds to be blocked in raw

materials for the production of Yarn. The cycle of operations at RSWM is quite long and thus it needs large

amount of working capital. 48% of total funds are invested in raw materials.

2. Manufacturing/Production Policy :-

Each enterprise in the manufacturing sector has its own production policy, some follow the policy of

uniform production even if the demand varies from time to time, and others may follow the principle of

'demand-based production' in which production is based on the demand during that particular phase of time.

Accordingly, the working capital requirements vary for both of them. RSWM follows continuous production

policy. The plants are operated 24 hours in different shifts. Demand factor is not considered here as Yarn is

sold by its marketing department. As the production continues for 24 hours, the investment in raw material

inventories is very high as interruption in production causes increase in cost of production because of high

set up cost of plants even need of raw material for power plant is always in demand for the same.

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3. Operations :-

The requirement of working capital fluctuates for seasonal business. The working capital needs of such

businesses may increase considerably during the busy season and decrease during the slack season. Ice

creams and cold drinks have a great demand during summers, while in winters the sales are negligible.

As RSWM has policy of continuous production, it does not have to consider seasonal factors for its working

capital requirements. Its working capital does not vary with seasons.

4. Market Condition :-

If there is high competition in the chosen product category, then one shall need to offer sops like credit,

immediate delivery of goods etc. for which the working capital requirement will be high. Otherwise, if there

is no competition or less competition in the market then the working capital requirements will be low.

RSWM have to depend on market conditions as Polyester, Viscose and Cotton are always considered

essential for textile and for various manufacturing unit. So there is not much competition in this

industry for example: - Grasim Ind. has the monopoly for Viscose in the whole industry and Reliance

has the monopoly for Polyester.

5. Availability of Raw Material :-

If raw material is readily available then one need not maintain a large stock of the same, thereby reducing

the working capital investment in raw material stock. On the other hand, if raw material is not readily

available then a large inventory/stock needs to be maintained, thereby calling for substantial investment in

the same raw materials are very important aspect for arriving at working capital requirements at RSWM

because of two reasons mainly. First RSWM follows continues production policy so the raw materials are

used in very large quantum and second the raw materials like Cotton, Polyester (Reliance), Viscose (Grasim)

for manufacturing of Yarn. These raw materials are available in the lead time of maximum 4 days in each

case thereby large inventory stock is not needed to maintain but the market prices are very much fluctuating

therefore when the prices are favorable then raw material is purchased in adequate quantity.

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6. Growth and Expansion :-

Growth and expansion in the volume of business results is enhancement of working capital requirement. As

business grows and expands, it needs a larger amount of working capital. Normally, the need for increased

working capital funds precedes growth in business activities.

RSWM has grown incredibly since its inception. Because of high growth it needs large amount of working

capital as the operations are handled at very large scale. RSWM has expanded its operations through

investing in many other important projects which compel them to invest immensely in working capital.

7. Price Level Changes :-

Generally, rising price level requires a higher investment in the working capital. With increasing prices, the

same level of current assets needs enhanced investment. The price level changes in raw materials hit very

hard to RSWM as the major investments are being done in raw materials. Most of the materials are imported

for outside India which involves risk of exchange rate fluctuations thus it needs high amount of working

capital.

8. Manufacturing Cycle :-

The manufacturing cycle starts with the purchase of raw material and is completed with the production of

finished goods. If the manufacturing cycle involves a longer period, the need for working capital would be

more. At times, business needs to estimate the requirement of working capital.

Manufacturing cycle affects a lot on working capital requirements at RSWM as the cycle takes lot of time to

convert raw material into finished goods. It takes around 7 to 8 days to complete one process of converting

raw material into final product. Therefore it is very necessary for RSWM to invest sufficient amount in

working capital.

At times, business needs to estimate the requirement of working capital in advance for proper control and

management. The factors discussed above influence the quantum of working capital in the business. The

assessment of working capital requirement is made keeping these factors in view. Each constituent of

working capital retains its form for a certain period and that holding period is determined by the factors

discussed above.

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9. Technology :-

In Yarn Division, the technology used for production process is labor intensive in the manufacturing of yarn

which also involves heavy machinery due to which requirement if working capital is high.

10. Credit Policy :-

The credit policy of the firm affects working capital by influencing the level of the book debts. The RSWM

division allows different credit periods to its customers depending on the type of yarn and from which depo

it is purchased i.e. for SYNTHETIC YARN it is as follows:- a) Bhilwara- 7 days b) Ludhiana- 15 days c)

except Bhilwara and Ludhiana- 10 days and for COTTON YARN it is 20 days. If the payment is not made,

the high rate of interest is charged i.e. around 18 %. But for special customer they provide credit of around 3

months too. The company for the improvement of working capital ratio also allows the cash discount of 1%

if the payment is received in advance or the cheque is deposited in bank on the next day of dispatch.

11. Banking Facility :-

The RSWM Division mainly uses the banking facility of RTGS i.e. Real Time Gross Settlement for the

payment of suppliers. RSWM Ltd. has major account and deals it’s transaction with State Bank of Bikaner

and Jaipur and Punjab National Bank.

12. Business Fluctuation :-

The Operating Efficiency of the firm relates to the optimum utilization of resources at minimum costs. Better

utilization of resources improves profitability and thus helps in releasing the pressure on working capital.

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ASSESMENT FOR THE SOURCES

AND

APPLICATION FOR WORKING CAPITAL

47

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The assessment of the working capital in the RSWM’s unit is done by the CFD with the consultation with

the management staff of the Co. and on the basis of the Co.’s previous year experience. This helps to

maintain efficiently fund for operation of the organization. There are main four components which plays

vital role for it which are as follows :-

INVENTORY

RECIEVABLE, (UGAI), (DEBTORS)

CASH MANAGEMENT

PAYABLES, (VENDORS), (CREDITORS)

INVENTORY

Inventory includes all types of stocks. For effective working capital management, inventory needs to be

managed effectively. The level of inventory should be such that the total cost of ordering and holding

inventory is the least. Simultaneously, stock out costs should also be minimized. Business, therefore, should

fix the minimum safety stock level, re-order level and ordering quantity so that the inventory cost is reduced

and its management becomes efficient.

Following are the types of inventory, which the company generally holds.

1 Raw Material :-

A raw material is the goods, which are required to produce the product of the firm. Raw materials are the

basic input of the production which is converted into finished goods after manufacturing process.

2 Goods in Production Process :-

These are the goods or inventories, which are under the production process, in other words we can say

goods in process or semi finished goods. They represent the products that need more work before they

become finished goods for sale.

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3 Finished Goods :-

Finished goods inventory are those which are completely manufactured and ready for sale. Stock of raw

material or work in progress facilitates production, while stock of finished goods is required for smooth

marketing operations.

4 Stock Of Stores Materials :-

Stock of store materials includes spare and tools. Spares means the parts of the machinery and tools are

equipment, which are provided to the employees to the firm. These materials do not directly enter into

production but they are essential for production process.

NEEDS FOR HOLDING INVENTORY :-

Mainly there are two motives of holding inventories.

1. Transaction motive :-

A transaction motive emphasizes the need to maintain inventories to facilitate smooth production

operation

2. Precautionary motive :-

Precautionary motive necessitates holding of inventories to guard against the risk of unpredictable

changes in demand and supplies forces and other factors.

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TECHNIQUES OF INVENTORY MANAGEMENT :-

1. ABC ANALYSIS : - In ABC analysis, the entire goods in stores are divided into three categories

A, B, and C. it is the most effective way of the inventory management. Most of the firms are adopting

this technique. That is why ABC is also known as ALWAYS BETTER CONTROL. How the goods

are divided into three categories is mentioned below:

“A” category goods : - A category goods are high value goods, which incurred maximum cost of the

total inventory cost.

“B” category goods :- “B” category goods are those, which costs between Rs.10,000/- to Rs.50,000/-

“C” category goods :- “C” category goods involves goods which costs below Rs.10,000/-

2. FSN ANALYSIS :- In FSN technique all goods are categorizes into three categories. Fast moving

goods, slow moving goods and non moving goods. The rules of the FSN analysis may vary according to

company’s norms. The norms of FSN analysis at RSWM are mentioned below.

Fast Moving Goods :- Fast moving goods are those, which are used within three months.

Slow Moving Goods :- Slow moving goods are those, which are used between three to six months.

Non Moving Goods :- Non moving goods are those, which are used since in above six months

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FUND FLOW STATEMENT

51

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Meaning of Fund :-

Funds may means of changes in financial resources, arising from changes in working capital items and from

financing and investing activities of the enterprise, which may only involve non - current items.

Fund Flow Statement :-

The statement of changes in financial position, prepared to determine only the sources and uses of working

capital between dates of two balance sheets, is known as the funds flow statement.

As historical analysis, the statement of changes in working capital reveals to management the way in which

working capital was obtained. With this insight, management can prepare the estimates of the working

capital flows. A statement reporting the changes in working capital is useful in addition to the financial

statements. A projected statement of changes in working capital is immensely useful in the firm’s long-range

planning.

The working capital flow of fund arises when the net effect of a transaction is to increase or decrease the

amount of working capital.

The concept of working capital flow may be summarized as follows:

The net working capital increases or decreases when a transaction involves a current account and a

non-current account.

The net working capital remains unaffected when a transaction involves only current accounts.

The net working capital remains unaffected when a transaction involves only non-current accounts.

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Statement of Changes in Financial Position from 31/3/2010 to 31/3/2011 (Rs. In Lakhs)

Liabilities 2009-10 2010-11 difference Source/Application

Share capital 0 0 0 Source

Share Warrants 0 0 0 Source

Reserves and Surplus 6628.66 9842.95 3214.29 Source

Differed Tax Liabilities 0 0 0 Application

Secured Loans 11914.29 9486.44 -2427.85 Source

Unsecured Loans 112.81 171.43 58.62 Source

Inter Unit Balance 2210.57 -4435.34 -6645.91 Application

Current liabilities and Provisions 1671.34 2855.18 1183.84 Source

Working Capital Loans From Banks 3493.95 6515.24 3021.29 Source

Assets : 2009-10 2010-11 difference Source/Application

Fixed assets ( Net Block) 11172.3 11422.53 250.23 Application

Capital WIP 7.22 1281.74 1274.52 Application

Other Current Assets 688.76 553.51 -135.25 Application

Inventories 6114.14 12972.27 6858.13 Application

Debtors 2863.65 5383.98 2520.33 Application

Cash and Bank 18.33 15.67 -2.66 Source

Loans and Advances 310.4 729.18 418.78 Application

Export Incentive Receivable 435.68 947.7 512.02 Application

Interest Accrued on Investments 0 0 0 Source

FUND FLOW STATEMENT ON WORKING CAPITAL BASIS

(All Figures in Rs. Crores)

Sources Amount Application Amount

Share capital 0 Fixed assets 250.23

Reserves and Surplus

3214.29 Inventories 6858.13

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Secured loans -2427.85 Capital WIP 1274.52

Unsecured Loans 58.62 Debtors 2520.33

Current liabilities & provisions

1183.84 Loans and Advance

418.78

Working Capital Loans From Banks

3021.29Export Incentive

Receivable

512.02

Cash and Bank 2.66 Inter Unit Balance -6645.91

Other Current Assets135.25

Total 5188.1 Total 5188.1

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USE OF WORKING CAPITAL IN BUSINESS

The typical uses of working capital are as follows:

1. Adjusted net loss from operations.

2. Purchase of non-current assets:

Purchase of long-term investments like shares, bond / debentures etc.

Purchase of tangible fixed assets, like land, building, plant, machinery, equipment etc.

Purchase of intangible fixed assets, like goodwill, patents, copyrights etc.

3. Repayment of long-term debt (debentures or bonds) and short-term debt (bank borrowing).

4. Redemption of redeemable preference shares.

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ANALYSIS OF WORKING CAPITAL 5. Payment of cash dividend.

6. Payment of taxes and various other expenses.

7. Payment of other liabilities which are hidden but their payment plays crucial role in production cycle

and also in working capital cycle.

8. Provide more R&D options and wider scope as resources are more available in terms of money for

company.

9. To reduce one’s liabilities by paying them from making working capital profit.

10. To keep control on providing credit to its debtor or customer.

11. To keep control on operational expenses and to know the requirement of capital for inventory.

DATA ANALYSIS56

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OF

WORKING CAPITAL STATEMENTS

ANALYSIS OF THE WORKING CAPITAL STATEMENT :-

The working capital statement for the last six financial years and the comparison between two successive

years are given in details as under. Along with the comparison the reasons for the changes in working capital

is also given here under.

Working Capital Statement comparison for the year 2005-06 and 2006-2007 (Rs. in Lakhs)

Particulars 31/03/2006 31/03/2007 Increase Decrease

Current Assets, Loan & Advance:

Inventories 4605.62 4868.82 263.2

Sundry Debtors 2372.83 2279.98 92.85

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ANALYSIS OF WORKING CAPITAL Cash & Bank Balance 75.98 14.04 61.94

Loan & Advances 279.18 385.05 105.87

Other Current Assets 1092.39 935.56 156.83

Export Incentive Receivables 1677.69 1033.7 643.99

Inter Unit Balances -80.07 162 242.07

TOTAL (A) 10023.62 9679.15 611.14 955.61

Less:- Current Liabilities & Provisions:

Sundry Creditors 64.32 121.03 56.71

Interest accrued but not due on Loans 3 0.36 2.64

Security Deposits 55.79 68.55 12.76

Advances from customer 69.59 246.78 177.19

Other Liabilities 767.29 733.4 33.89

Working Capital Loans From Banks 4636.7 3480.98 1155.72

Provisions 72.72 0 72.72

TOTAL(B) 5669.41 4651.1 1264.97 246.66

Working Capital (A - B) 4354.21 5028.05 1876.11 1202.27

Increase in Working Capital 673.84

Total 1876.11 1876.11

ANALYSIS & INTERPRETATION :-

From the working capital statement comparison for the year ended on 31 st March, 2006 and 31st March, 2007

given above some of the fact revealed are as under.

The current assets decrease in the latter year by Rs. 344.47 Lacs.

The current liabilities decrease in the latter year by Rs. 1018.31 Lacs.

The reasons behind the decrease in current assets are as follows :-58

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Decrease in debtors due to high competition in the market. Though company is giving more credit to

its customer as per needs of its segment through its various units but efficient credit policy has made

payments faster. Hence it caused a less application of funds for RSWM working capital.

Increase in inventory of Rs.263.20 Lacs is to meet the demand and requirements of its customers and

also the increased capacity of various units respectively for RSWM.

Decrease in Cash and bank balance was due to the fund used for expansion and renovation of various

units and due to such reasons cash balance decreased and it was used more by Rs. 61.94 Lacs. Hence

RSWM had to made more availability of fund for such application occurred in working capital.

Decrease in Export Incentive Receivable by Rs. 643.99 Lacs due to decline in government schemes of

DEPB, FMS, etc. on the export sales.

The reasons for the decrease in current liabilities are given as.

Increase in creditors for RSWM are due to expansion of various plants or units and hence requirement

of such plants or units increased in terms of raw materials and various other services. Hence to fulfill

such needs, more materials were purchased and creditors also provided good deal by giving more

credit days for making better relations with RSWM units respectively. Therefore amount increased by

Rs 56.71 Lacs and also become source of fund for working capital.

To make deal final and for guarantee purpose advance are taken from customer’s by various units of

RSWM. Such advance also generate source of fund for working capital and it provides more liquidity

to company needs of short – term fund, Banswara unit of RSWM has taken more advance of Rs.

177.19 Lacs in latter year.

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RSWM has taken working capital loans from banks. Such funds work as sources for working capital

and they are one kind of short – term loans. But this year such loan decreased by Rs. 1155.72 Lacs as

they were paid off and in spite of being source they became as more application of fund for working

capital.

Due to all the above affect the net working capital increased by Rs. 673.84 Lacs.

Working Capital Statement comparison for the year 2006-07 and 2007-08

(All the Figures in Lakhs)Particulars 31/03/2007 31/03/2008 Increase Decrease

Current Assets, Loan & Advances:

Inventories 4868.82 4487.42 381.4

Sundry Debtors 2279.98 2788.93 508.95

Cash & Bank Balance 14.04 17.25 3.21

Loan & Advances 385.05 196.1 188.95



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ANALYSIS OF WORKING CAPITAL Inter Unit Balances 162 4103.94 3941.94

TOTAL (A) 9679.15 13577.83 4514.26 615.58



Interest accrued but not due on Loans 0.36 1.68 1.32





Provisions 0 76.22 76.22

TOTAL(B) 4651.1 5563.52 190.27 1102.69


Increase in Working Capital 2986.26

Total 4704.53 4704.53



given above some of the facts revealed are as under.

The current assets increase in the latter year by Rs. 3898.68 Lacs.

The current liabilities increase in the latter year by Rs. 912.42 Lacs.

The reasons behind the increase in current assets are as follows :-

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Decrease in inventory by Rs. 381.40 Lacs is may be due to more risk taking capacity of the firm in

terms of investing in raw materials.

Increase in debtors due to sluggishness in demand of the product at all levels of the system such as

decrease in demand of cotton lead to decrease in demand of yarn at the manufacturing level leads to

increase in debtors to avoid more storage of goods in the store by the amount Rs. 508.95 Lacs.

Increase in Inter unit Balances i.e. RSWM’s Banswara Unit receive funds from the Head Office for

the annual working requirement in the unit which has proved as the source of working capital for the

company and has affected the company’s working capital by Rs. 3941.94 Lacs.

The reasons for increase in current liabilities are as follows :-

Decrease in creditors is due to premature payment done by organization to increase their business

liquidity and to sustain in the recession era which a good manager of an organization do in order to

make their suppliers sustain in the market so as they can also sustain and grow the RSWM’s

diversified business portfolio by Rs. 69.5 Lacs.

RSWM also accepted more amounts of money as working capital loans from banks as a short – term

loans for its various units. Such loans are always useful for any business as the generate sources of

fund at very less expense. Hence the generation was of Rs. 1025.15 Lacs more in latter year.

Due to all above affect the net working capital increased by Rs. 2986.26 Lacs.

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(All the figures are in Rs. Lakhs)



Inventories 4487.42 3159.16 1328.26

Sundry Debtors 2788.93 2324.07 464.86


Loan & Advances 196.1 1271.3 1075.2


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ANALYSIS OF WORKING CAPITAL Export Incentive Receivables 988.47 465.72 522.75

Inter Unit Balances 4103.94 489.12 3614.82

TOTAL (A) 13577.83 8394.47 1075.2 6258.56








Provisions 76.22 103.59 27.37

TOTAL(B) 5563.52 4078.93 1696.33 211.74


Decrease in Working Capital 3698.77

Total 2771.53 2771.53



given above some of the facts revealed are as under:

The current assets decrease in the latter year by Rs. 5183. 36 Lacs.

The current liabilities decrease in the latter year by Rs. 1484.59 Lacs.

The reasons behind the decrease in current assets are as follows :-

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ANALYSIS OF WORKING CAPITAL Decrease in debtors is due to global recessionary trend in the market which has affected all the units

and business of RSWM. Being a diversified business portfolio company tried to maintain its customer

and market share but due to the pressure on immediate customers export sales faced a steep downfall

and hence it brought decrease in debtor’s amount by Rs. 464.86 Lacs.

Decrease in inventory due to less demand of products in various field has caused the reduction of Rs.

1328.26 Lacs from previous year and it worked as a source for working capital.

Increase in loans & advances due to need seen by RSWM’s various units for making advance

payments for taxes and creditors as market was as demanding from previous year. Hence the amount

made used by them was Rs. 1075.20 Lacs and also decreased their source of working capital in huge

amount.

Heavy decline in Inter Unit Balance i.e. funds received from head office by Rs. 3614.82 Lacs resulted

in application of working capital which resulted in decrease in current assets.

The reasons behind the decrease in current liabilities are as follows :-

Increase in creditors due to recessionary trend in the market thus the market being not so demanding

creditors have also provided more credit days for various items in order to retain the same and which

caused the addition of Rs. 95.77 Lacs and it also increased the sources of working capital for various

units of RSWM.

RSWM has taken working capital loans from banks. Such funds work as sources for working capital

and they are one kind of short – term loans. But this year such loan decreased by Rs. 1695.12 Lacs as

they were paid off and in spite of being source they became as more application of fund for working

capital

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ANALYSIS OF WORKING CAPITAL Due to above all affect net working capital decreased by Rs. 3698.77 Lacs.

Working Capital Statement comparison for the year 2008-09 to 2009-10

(All the figures are in Lakhs)



Inventories 3159.16 6114.14 2954.98

Sundry Debtors 2324.07 2863.65 539.58


Loan & Advances 1271.26 310.4 960.86

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Inter Unit Balances 489.12 2210.57 1721.45

TOTAL (A) 8394.48 12641.53 5237.95 990.9








Provisions 103.59 74.13 29.46

TOTAL(B) 4078.93 5165.29 29.49 1115.85


Increase in Working Capital

3160.69

Total

5267.44 5267.44

ANALYSIS & INTERPRETATION

From the working capital statement comparison for the year ended 31 st March, 2009 and 31st March, 2010

given above some of the facts revealed are as under



The reasons behind the increase in current assets are as follows :-

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As the market was getting over from the recession era especially in the second half of 2009 the

purchase of raw material increased to a huge amount to meet the increasing demand especially in the

export market as the pressure was called-off from the immediate customers. Thus the investment in

inventory was increased by Rs. 2954.58 Lacs.

Due to competition in the market RSWM have given more credit to its debtors around Rs. 539.58

Lacs for various products like Cotton Yarn, Synthetic Yarn etc.

Decrease in loans & advances due to no need seen by RSWM’s various units for making advance

payments for taxes and creditors as market was not as demanding from previous year. Hence the

amount made free by them was Rs. 960.86 Lacs and also increased their source of working capital in

huge amount.

Increase in Inter unit Balances i.e. RSWM’s Banswara Unit receive funds from the Head Office for

the annual working requirement in the unit which has proved as the source of working capital for the

company and has affected the company’s working capital by Rs. 1721.45 Lacs.

The reasons behind increase in current liabilities are as follows :-

Due to the upward trend in market the production has been increased as there was rebound in

consumption, increase in exports, increase in finished goods realization, etc. the creditors are

substantially increased by Rs. 149.9 Lacs.

RSWM’s various units had accepted money in form of “Advances from customer” from various

customers, creditors and outsiders and “Working Capital Loans” form Banks. Due to this effect the

rise of Rs. 197.20 Lacs and Rs. 682.94 Lacs respectively in current liabilities has occurred and it

worked as source of working capital for RSWM’s various units. It is also one kind of short – term loan

taken from market.

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Due to above all affect net working capital increased by Rs. 3160.69 Lacs.


(All Figures are in Rs. Lakhs)



Inventories 6114.14 12972.27 6858.13

Sundry Debtors 2863.65 5383.98 2520.33


Loan & Advances 310.4 729.18 418.78


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ANALYSIS OF WORKING CAPITAL Export Incentive Receivables 435.68 947.7 512.02

Inter Unit Balances 2210.57 -4435.34 6645.91

TOTAL (A) 12641.53 16166.97 10309.26 6783.82








Provisions 74.13 134.58 60.45

TOTAL(B) 5165.29 9370.42 5.16 4210.29



Total 10314.42 10314.42



given above some of the facts revealed are as under:



The reasons behind the decrease in current assets are given as :-

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ANALYSIS OF WORKING CAPITAL Increase in debtors due to competition for RSWM’s various units and financial crises was over so

more customers lead to increased demand in market which resulted in increase debts in less credit

period. Due it the increase in amount is of Rs. 2520.33 Lacs.

Increase in inventories is due to low prices of raw material in market and increased market demand

leads to heavy production of final goods resulted in heavy investment in inventories of around Rs.

6858.13 Lacs which was a high application of funds requiring high working capital.

Increase in loans and advance given in order to take benefit of various tax policies and made payments

for various licenses renewal and also for acquiring new ones which made effect of Rs. 418.78 Lacs for

RSWM’s Banswara unit. It has worked as more of application in working capital.

Decrease in cash balance was for the above reasons and also due to less credit available for company in

market for its credit due economy meltdown and bad position of market along with it various unit’s

modernization for better performances. Hence due to this effect cash balance reduced by Rs. 2.66 Lacs

in latter year and it worked as application of fund in working capital.

Due to high application of funds in inventories, debtors, etc. funds from head office was not sufficient

for meeting the requirements and therefore more funds was required which was not available so the

Inter Unit Balance was got heavily decreased by Rs. 6645.91 Lacs.

The reasons for the increase in current liabilities are given as :-

Increase in creditors because of sustaining their customer’s in this low demand market. This has caused

more days of credit and increased the amount by Rs.556.83 Lacs for RSWM’s Banswara unit. Such

effect has worked as useful source of working capital for the company.

Due to addition in production and keeping the market scenario in mind, RSWM has increased its other

liabilities by Rs. 455.76 Lacs. Hence it caused an effect of source of working capital.

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ANALYSIS OF WORKING CAPITAL RSWM also accepted more amounts of money as working capital loans from banks as a short – term

loans for its various units. Such loans are always useful for any business as the generate sources of

fund at very less expense. Hence the generation was of Rs. 3021.29 Lacs more in latter year to meet its

daily requirements of working capital.

Seeing demand and production the provisions for taxed has also decreased by Rs. 60.45 Lacs.

Due to all the above affect the net working capital decreased by Rs. 679.69 Lacs.




Inventories 12972.27 7156.11 5816.16

Sundry Debtors 5383.98 4138.59 1245.49


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ANALYSIS OF WORKING CAPITAL Loan & Advances 729.18 -375.71 1104.89



Inter Unit Balances -4435.34 -2960.25 -1475.09

TOTAL (A) 16166.97 8938.64








Provisions 134.58 633.08 498.8

TOTAL(B) 9370.42 6902.93



Total

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RATIO ANALYSIS

AND

INTERPRETATION

Ratio analysis helps in finding out the company’s position in the industry in which it is working. It also

helps in identifying the strengths and weakness of the organization when compared with other organization

of the same industry. So, for the financial analysts keeping record of the ratio and tracking them lighten their

way of taking decision. The Various ratios and there analysis for the “RSWM LTD. (RSWM LTD.)” for

the financial years 2006-07, 2007-08, 2008-09, 2009-10, 2010-11 i.e. for 5 years are calculated and

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ANALYSIS OF WORKING CAPITAL compared here under. Here the purpose of finding and analyzing ratio is to compare the activities of

company during different financial years and to know the efficiencies of finance department of the company

and its management. It also gives the knowledge how this ratio’s are helpful for decision making and to

know the strength and stability on a company not only for RSWM but for any company.

Working capital Ratio helps in meeting or indicating the ability of a business concern in meeting its current

obligation as well as its efficiency in managing the current assets for generation of sales. They are divided

into three categories which are as follows :-

Liquidity Ratio :- It consists of Current Ratio and Quick Ratio.

Efficiency Ratio :- It consists of Working Capital to Sales, Inventory Turnover Ratio, and Current

Assets Turnover Ratio.

Structural Ratio :- It consists of Current Assets to total net Assets, Composition of Current Assets,

Debtor Turnover Ratio, Debtors Collection period, Creditors Payment Period.

Ratio’s like Return on Investment, Return on Equity, Cash Ratio also plays vital role in decision making and

also indicates the strength of company financial wise and it also shows how efficient company is.

CURRENT RATIO :-

The current ratio is a measure of the firm’s short-terms solvency. It indicates the availability of current assets

in rupees for every one rupees of current liability. Current ratio is defined as a ratio of the current assets to

the current liabilities. Mathematically it is given as.

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Current Ratio = Current Assets Current Liabilities

Year 31/03/2008 31/03/2009 31/03/2010 31/03/2011 31/03/2012

A

Current Assets 9679.15 13577.83 8394.48 12641.53 16166.97

B

Current Liabilities 4651.1 5563.52 4078.93 5165.29 9370.42

Ratio (a/b)

2.08 2.44 2.06 2.45 1.73


As mentioned above, it shows the relationship between C.A. & C.L. according to measure the ideal ratio is

of 2:1 and min. required should be 1.33:1 for banks. Here we can see that ratio is fluctuating every year and

gone down below 2:1 in the year 2010-11 and the max. was 2.45:1 in 2009-10 financial year, up till 2010-11

analyses for last five years. Currently the ratio is of 1.73:1 and which has reduced from previous year and

has reached below min. level which is a matter of concern. Hence RSWM Ltd. has to keep close watch on

their current ratio and will have to try to maintain their efficiency in working capital management as well as

of company among its shareholders.

QUICK RATIO :-

Quick ratio establishes the relationship between quick assets and current liabilities. Generally it is used as a

measure of company’s ability to meet its current obligation. Mathematically it is given by

Quick Ratio = Current Assets – Inventories Current Liabilities

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Years 31/03/2007 31/03/2008 31/03/2009 31/03/2010 31/03/2011

A

Quick Assets 4809.61 9023.99 5219.73 6519.41 3183.79

BCurrent Liabilities 4651.1 5563.52 4078.93 5165.29 9370.42

Ratio (a/b)1.03 1.62 1.28 1.26 0.34


It can be seen that quick ratio is also fluctuating with year changing. The ideal ratio is considered of 1:1.

RSWM was inefficient in the year 2010-11 and doesn’t have sufficient fund to meet its current liability in

this year. The highest ratio of 1.62:1 in 2007-08 financial year in last five years. Currently the ratio is of

0.34:1 which is a matter of concern and in order to maintain it to above ideal ratio inventory should be

decreased or increased in a appropriate ratio.

DEBT TO EQUITY RATIO :-

It is the ratio which indicates the relationship between loan funds and net worth or share holder funds of the

company, which is known as ‘gearing’. This ratio helps in controlling debt, which is a part of working

capital management. This ratio also helps the stockholder in taking the decision of investment.

Mathematically it is given as

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Debt to Equity Ratio = Loan Funds Share holder fund

Year 31/03/2007 31/03/2008 31/03/2009 31/03/2010 31/03/2011

A Total Debt 14342.34 17736.35 15587.43 15521.05 16173.11

B Shareholder's Equity 5059.53 5576.26 3926.02 3231.25 2179.64

Ratio (a/b) 2.83 3.18 3.97 4.80 7.42


By seeing the above facts and figure it can be said that by time spend the ratio have jumped from 2.83 to

7.42 and it has shifted company from low gearing to high gearing and it can reap the benefit of trading on

equity. RSWM’s long-term solvency is more satisfactory. All the ratio of the respective year was very much

high in comparison to the accepted norm of 2:1 which shows company high dependency on debt which is

not good and to be taken care of in the coming years.

LONG-TERM DEBT TO EQUITY RATIO :-

It is ratio of long-term debt to the net worth. This ratio would be of more interest to the contributories of

long-term finance to the firm, as the ratio gives a factual idea of the assets available to meet long-term

liabilities. It gives the idea about long term debt like long-term loans, debenture, bonds etc. Mathematically

it is given by

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Long-term debt to Equity = Long-term Debt Net Worth

Year 31/03/2007 31/03/2008 31/03/2009 31/03/2010 31/03/2011

A Long Term Debt 10861.36 11186.22 11214.50 10434.02 9657.87

B Shareholder's Equity 5059.53 5576.26 3926.02 3231.25 2179.64

Ratio (a/b) 2.15 2.01 2.86 3.23 4.43


This ratio also has same trend as debt to equity ratio had. In earlier years the ratio was low and latter on it

increased sharply. Hence by seeing the above figures it can be said the RSWM is sound and secured along

with better position in terms of financial conditions. Though graph is showing fluctuation in ratio’s every

year as the current position is of 4.43 and it has increased from last year of 3.23.

TOTAL ASSETS TURNOVER RATIO :-

It shows the part of the total asset turnover ratio in single financial year. It focuses on the effectiveness and

efficiency of management in taking decision and using available resources. Mathematically it is given by

Total Asset Turnover Ratio = Net Sales Total Assets

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Year 31/03/2007 31/03/2008 31/03/2009 31/03/2010 31/03/2011

a Net Sales 36303.09 40427.91 35393.08 39792.51 55755.48

bTotal Assets

23114.76 22754.02 20096.44 21610.48 33306.58

Ratio (a/b) 1.57 1.78 1.76 1.84 1.67


From the years 2007-08 to 2009-10 it was over trading of total assets in RSWM and finance department

needs to control the same according to the ideal ratio but in the financial year it came to 1.67 from 1.84 in

the previous year. This shows the caliber and efficiency of Finance department of the company and there

concern for the needs working capital.

TIME INTEREST EARNED RATIO :-

The amount of interest paid by the company should be compared with the operating profit before interest,

depreciation and tax. It shows how many times interest charges are covered by funds that are available for

payment of interest. Mathematically it is given as

Time Interest Earned Ratio = PBI, Dep. & Tax. Interest

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Year 31/03/2007 31/03/2008 31/03/2009 31/03/2010 31/03/2011

a PBDIT 4637.56 4918.55 2218.24 5327.43 10419.26

B Interest 897.62 1077.86 1063.18 664.82 1393.13

Ratio (a/b) 5.17 4.56 2.09 8.01 7.48


By seeing the above figures it can be said that RSWM was conservative in using debt in 2006-07 and 2007-

08. But in 2008 – 09 it started to use debt and the ratio come down up to 2.09 but again it was conservative

using debt in further years due to recession year of 2008-09 when company suffered heavy losses. An

interest cover of more than 7 times is regarded as safe which was up till 2007-08 and then again in 2009-10

and 2010-11. Cover of 2 times is min for any company considered by financial institutions.

OPERATING EXPENSE RATIO :-

Operating profit is after deducting operating expenses from the gross profit. The operating profit ratio is

given by the between operating profit and net sales. It means amount of operating profit for sales worth one

rupee. It is calculated in average. Mathematically it is given as

Operating Expense Ratio = 100%- Net Profit Ratio

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ANALYSIS OF WORKING CAPITAL Year 31/03/2007 31/03/2008 31/03/2009 31/03/2010 31/03/2011

A Net Profit Ratio (in %) 7.47 6.16 -0.55 8.54 13.74

Ratio 92.53 93.84 100.55 91.46 86.26


RSWM has highest operating expense in the year 2008-09 i.e. 100.55% due to increase in price of fuel, raw

materials, and transportation for various materials and also low market demand. But the fiancé department

has showed the efficiency in controlling the expenses of the unit and dropping down the ratio to 86.26% in

the year 2010-11 which is at its lowest in the last five years and except the year 2008-09 the ratio for other

years was not more than 95% which is also good.

NET PROFIT RATIO :-

Similar to gross profit ratio, the net profit ratio will show the amount of net profit for the sales worth amount

of 1 rupee. The net profit ratio shows the profitability of the organization. Mathematically it is given as

Net Profit Ratio = Net Profit after TaxesNet Sales

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Year 31/03/2007 31/03/2008 31/03/2009 31/03/2010 31/03/2011

A Net Profit after taxes 2711.72 2489.76 -195.80 3397.41 7663.31

BNet Sales

36303.09 40427.91 35393.08 39792.51 55755.48

Ratio (a/b*100) 7.47 6.16 -0.55 8.54 13.74


It can be analyzed from above chart that net profit had a decline trend till the year 2008-09 where it has been

at its lowest point of -0.55% which was due to hike in the prices of fuel and raw materials and recession era

in the global market. But the company then improved its performance and rose its profits up to 13.74% in

the year 2010-11 which was due to high demand of RSWM products in market and efficient management of

working capital requirements.

FIXED ASSETS TURNOVER RATIO :-

It shows the relationship between the fixed assets and the net sales. It gives the amount of net sales in rupee

of fixed assets. Mathematically it is given as

Fixed Assets Turnover Ratio = Net Sales Fixed Assets

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Year 31/03/2007 31/03/2008 31/03/2009 31/03/2010 31/03/2011

A Net Sales 36303.09 40427.91 35393.08 39792.51 55755.48

B Net Fixed Assets 13597.61 13280.13 12191.09 11179.52 12704.27

Ratio (a/b) 2.67 3.04 2.90 3.56 4.39


It can be seen from the figures that management of RSWM has tried to improve every year for the better

usage of fixed assets. It can be seen that the graph have shown upward sign only, no downfall have been

recorded in last five years except a small deflection in the year 2008-09. Hence it shows the efficiency of

finance department of RSWM. Currently the ratio is of 4.39:1 and in last five years graph is on up trend for

Banswara Unit.

CASH RETURN ON ASSETS RATIO :-

It is quite similar to the above ratio. The only change is that here the cash from the operating activities are

compared with the total assets of organization. The effectiveness is measurement of cash management

compares to the total assets of the company. Here cash from operating activities is net profit + deprecation.


Cash Return on Assets Ratio = Cash from Operating Activities

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Total Assets

Year 31/03/2007 31/03/2008 31/03/2009 31/03/2010 31/03/2011

aCash from operating

activities 36776.00 40516.72 35626.14 39946.01 56002.56

b Total Assets 23114.76 22754.02 20096.44 21610.48 33306.58

Ratio (a/b) 1.59 1.78 1.77 1.85 1.68


Graphs of Cash return on assets ratio of RSWM have steeply fallen down in the financial year 2008 – 09

and 2010-11. It can be seen that it has gone down from 1.85 to 1.68 and there is constant downfall no sign of

improvement is seen. It may due to inefficiency of growth business performance as per their investment. It

should be in increasing trend and for this total assets should be increased in proportion with cash from

operating activities.

RETURN ON EQUITY (%) :-

The return on equity shows the amount of net profit with respect to the net worth of the company. Here net

worth contains the total amount of share holder’s fund i.e. equity share capital + reserves and surplus. This

ratio helps in comparing the performance of the company for two or more financial year and also shows

strength of the company in returns to its share holder. Mathematically it is give as.

Return on Equity Ratio = Net PAT

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ANALYSIS OF WORKING CAPITAL Net Worth

Year 31/03/2007 31/03/2008 31/03/2009 31/03/2010 31/03/2011

ANet PAT

2711.72 2489.76 -195.80 3397.41 7663.31

BNet Worth

7771.25 8066.02 3730.22 6628.66 9842.95

Ratio (a/b*100) 34.89 30.87 -5.25 51.25 77.86


Well it can be seen that RSWM’s performance has fallen down in the period of 2006-07 to 2008-09. The

reasons are changes in government policies, increase in various cost of raw materials, transportation, fuel

cost etc. for various units. Even market conditions have affected the business of RSWM too, as growth

business requires heavy capital investments and then to they are not able to perform well due to economy

crisis. Though RSWM’s didn’t had good performance in those last three financial years but on the basis of

good support and faith of share holders and ability of stability to survive in worse to worse conditions with

the support of HEAD OFFICE the company managed well to increase the ratio from -5.25% to 77.86% in

the past five years which shows the efficiency of the departments.

RETURN ON INVESTMENTS (%) :-

The return on investment shows the amount of net profit earned by the company with respect to total amount

invested as assets. It shows the profitability of the company and measures effectiveness of decision making

of the finance manager and also shows stability of the company. It is also known as ROACE.


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Return on Investment Ratio = PBIT * 100Total Assets

Year 31/03/2007 31/03/2008 31/03/2009 31/03/2010 31/03/2011

A PBIT 3951.89 3581.08 878.09 4062.23 9056.44

B Total Assets 23114.76 22754.02 20096.44 21610.48 33306.58

Ratio (a/b*100) 17.10 15.74 4.37 18.80 27.19


It is seen that profits of RSWM have decreased in the years 2007-08 and 2008-09. The reasons are highly

competitive market with high cost of materials, labor, transport etc. along with unfavorable government

policies, poor condition of market and economy has also played a vital role for such poor performance.

Reduction in profit margin of RSWM’s so that it can sale its product at more cheaper and competitive rate in

market from others to sustain its customers. But the condition now improved a lot and RSWM has managed

to bring up its profits by 122.94% from the previous year’s profit due to improved market condition, low

prices of raw material, efficiency to top management and all other coordinating departments etc.

WORKING CAPITAL TURNOVER RATIO :-

This ratio indicates the extent of working capital turned over in achieving sales of the firm. It also shows

how efficiently firm or finance manager of a company is using capital or resources effectively for meeting

the requirement of working capital.

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Working Capital Turnover Ratio = Net Sales Working Capital

Year 31/03/2007 31/03/2008 31/03/2009 31/03/2010 31/03/2011

A Net Sales 36303.09 40427.91 35393.08 39792.51 55755.48

B Net Working Capital 5028.05 8014.31 4315.54 7476.24 6796.55

Ratio (a/b) 7.22 5.04 8.20 5.32 8.20


From the above figures and graph it can be said that RSWM’s various units finance managers and their

departments have shown their efficiency and their work from time to time, though working capital turnover

ratio graph has shown fluctuating figures from year to year. It shows how much concern of finance

department has for working capital. They have managed things were effectively for every unit. RSWM has

used working capital as per their needs and almost accurate estimation and never blocked the fund

unnecessarily. They have never gone below 2:1 ratio up till date from last 5 years. Hence it shows their

strength and stability for usage and allocation of funds for its diversified business portfolio.

DEBTOR’S COLLECTION PERIOD :-

Debtor’s collection period indicates days required to collect amount of credit sales from debtors. This

represents the number of days; the funds are blocked in debtors for a firm sells goods for cash and credit.

Credit is used as a marketing tool by a number of companies. So a firm must manage its credit policy well.

Debtors Collection Period = Debtors * 365 Sales

Year 31/03/2007 31/03/2008 31/03/2009 31/03/2010 31/03/2011

A Average Debtors 2326.41 2534.46 2556.50 2593.86 4123.82

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B Sales 36303.09 40427.91 35393.08 39792.51 55755.48

Ratio (a/b*365) 23 23 26 24 27


RSWM’s has extended its collection period more in terms of days as per the need of market in recent trends.

From above it can be seen that as the year passed days also increased and RSWM’s needs of working capital

also increased due to blocking money for around 27 days from 23 days previously, then to they have very

low bad debts. Finance & Accounts department has worked very crucially on the extension of debtor’s

collection period along with marketing department. Hence the application of funds for working capital is

mainly done on this part along with inventories. The average collection period or UGAI period is of 30 days

given by RSWM’s various units to its premium and major customers.

(N ote : - As the figure of credit sales was not available, it has been assumed here that all the sales are credit

sales.)

CREDITOR’S DEFERRAL PERIOD :-

Creditor’s deferral period indicates the duration for which the suppliers provide credit facility. This duration

should be long enough so that company can convert the raw material into finished goods and sell it in the

market. Because the main source of revenue for any organization is its sales. Purchase is equal to Raw

Material Consumption + Closing Stock of Raw Material-Opening Stock of Raw Material. Hence the days

are:-

Creditors Collection Period = Creditors * 365 Purchase

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Year 31/03/2007 31/03/2008 31/03/2009 31/03/2010 31/03/2011

A Average Creditors 92.68 86.28 99.42 222.25 575.62B Purchase 22600.65 28482.94 21675.46 28680.39 44131.51 Ratio (a/b*365) 1 1 2 3 5


The average deferral period of creditors is 2.5 days which represents its strong liquidity position to pay its

obligations within 10 days for various units of RSWM. This ratio has gone down up till 3 days in 2008-09

year. In this year it is 5 days currently in 2010 - 11 which shows the creditability of RSWM’s in market and

its strong position financial wise. The fluctuation is due to changes in trends of market and creditor’s policy

for giving credit and per agreement dead. Such credit from creditor’s works as a use full source of working

capital for RSWM and it reduce burden for that year. It also reflects the reputation of RSWM’s various units

holds in market as creditors provide more service by lending more days of credit to make more healthy terms

and relation with RSWM’s units for having business.

(Note : - As the figure of credit purchase was not available, it has been assumed here that total purchases are

credit purchase.)

INVENTORY TURNOVER RATIO :-

The Inventory Turnover ratio indicates the movement of average stock holding of each item of material in

relation of its consumption during accounting period. Average stock is equal to opening stock + closing

stock divided by 2 for that year. Calculated days are as follows :-

Inventory Turnover Ratio = Average Stock * 365 Cost of Material

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Year 31/03/2007 31/03/2008 31/03/2009 31/03/2010 31/03/2011

a Cost of Goods Sold 33098.83 38425.10 35386.40 36851.28 49385.46

b Average Stock 4489.56 2710.13 3640.49 3398.21 9055.08

Ratio (b/a*365) 50 26 38 34 67


It can be said that RSWM on an average has inventory turnover within 75 days. RSWM has high intensive

manufacturing units like synthetic yarn, cotton yarn, etc. which work 24 *7 for whole year. The raw material

required for various products are fetched from domestic market which require min.5 days after giving order

for procurement. They always try to minimize its days and always try to block its fund as less as it can be

possible and to minimize the application of funds for working capital. They work accordingly so that they

never get shortfall of materials and do not suffer loss by shutting down plants or various units due to such

reasons.

ESTIMATION FOR NEEDS91

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OF

WORKING CAPITAL

The most appropriate method of calculated the working capital needs of a firm is the concept of operating

cycle. However, a number of other methods may be used to determine working capital needs in practice. We

shall illustrate here all these approaches which have been successfully applied in practice.

Current assets holding period :-

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ANALYSIS OF WORKING CAPITAL To determine working capital requirements on the basis of average holding period of current assets and

related them to costs based on the company’s experience in the previous years. This method is essentially

based on the operating cycle concept.

Ratio or Percentage of sales :-

It is a traditional and simple method of determining the level of working capital and its components. In this

method working capital is determined on the basis of past experience. If over the years the relationship may

be taken as a base for determining the working capital for future.

Ratio of fixed investment :-

To estimate working capital requirements as a percentage of fixed investment.

Regression analysis method :-

It is useful statistical technique applied for forecasting working capital relationship between sales and

working capital and its various components in the past years. The method of least squares is used in this

regard.

Working Capital Operating Cycle

The WC Cycle starts with the purchase of raw materials and ends with the realization of cash from

the sale of finished products. It plays an important part in determining WC requirements: longer the period

of this cycle, larger is the requirement of WC.

Various phase involved in WC operating cycle are as follows:

1) Acquisition of resources: It companies of -

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ANALYSIS OF WORKING CAPITAL Purchase of raw materials: Payment of raw material to raw-material suppliers after the credit

period allowed by them.

2) Manufacture of the product:

Conversion of raw material to work in progress.

Conversion of work in progress to finished goods.

3) Sale of Finished goods.

4) Realization of cash from debtors after the credit period allowed to them.

Operating Cycle

1) Accounts Payable period :- This is the period from the day of acquisition of raw material to the

payment of raw materials. In other it is the credit period allowed to the organization by raw material

suppliers.

2) Cash Cycle :- The period from the day of payment for raw material purchased till the realization of

cash against sales.

Cash Cycle = WC Operating Cycle – Accounts Payable Period

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Cash

Receivables + Cost

Raw Material + Cost

Finished Goods + Cost

Stock in Process + Cost

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ANALYSIS OF WORKING CAPITAL 3) Inventory Period :- The period is beginning from the day of receipt of raw materials in the factory

till the day of dispatch of finished goods.

4) Accounts Receivable Period :- The period beginning from day of dispatch of finished goods to the

buyer and ending on the day of realization of cash against sales.

5) Operating Cycle :- The time that elapses between the purchase of raw materials and the collection

of cash for sales is referred to as operating cycle.

Operating Cycle = Inventory Period + Accounts Receivable Period.

OPERATING CYCLE CONCEPTS

There are two concepts of operating cycle :-

1) Gross operating cycle period

2) Net operating period.

GROSS OPERATING CYCLE PERIOD :-

The successive segments of the operating cycle are :-

1) Raw material storage period.

2) Conversion period.

3) Finished goods storage period.

4) Average Collection period.

The total duration of the entire segment mentioned above is known as gross operating period.

CASE - I

In case the company sells its products for cash then the segment of average collection period will

disappear from the gross operating cycle period and to that extent the total duration of the cycle gets

reduced.

CASE - II

In case advance payments are to be made for procuring materials, the operating cycle period

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ANALYSIS OF WORKING CAPITAL increases.

NET 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 net operating cycle period or simply operating

cycle.

It becomes obvious that the shorter the duration of operating cycle period, the faster will be the

transformation of current assets into cash.

The operating cycle approach is quite useful in :-

Managing

Controlling and

Forecasting working capital.

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EVENTS OF OPERATING CYCLE

The operating cycle (working capital cycle) consists of the following event, which continues

throughout the life of business.

1) Conversion of cash into raw materials.

2) Conversion of raw materials into work-in-progress.

3) Conversion of work-in-progress into finished stock.

4) Conversion of finished stocks into accounts receivables through sale and

5) Conversion of accounts receivables into cash.

The duration of the operating cycle for the purpose of estimating working capital is equal to the sum of the

duration of each of above said events, less the credit period allowed by the suppliers.

In the form of an equation, the operating cycle process can be expressed as follows :- Operating cycle = R + W + F + D – C Where,R = Raw material and stores storage period. W = Work-in-Progress period.F = Finished goods storage period.D = Debtors collection period C = Credit payment period.

The various components of operating cycle may be calculated as :-

(1.) Raw Material = Average stock of raw material Average cost of production per day

(2.) Work-in Progress holding period = Average W-I-P inventory Average cost of production per day

(3.) Finished goods storage period = Average stock of finished goods Average cost of goods sold per day

(4.) Debtors collection period = Average book debts Average sales per day

(5.) Credit payment period = Average trade creditors Average purchase per day

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OPERATIONG CYCLE ANALYSIS OF RSWM BANSWARA

S. No. Particulars 2006-07 2007-08 2008-09 2009-10 2010-111 Raw Material & Stores Storage Period (R)

Opening Balance of Raw Material 2984.56 3510.24 2899.00 1798.01 4241.42Closing Balance of Raw Material 3510.24 2899.00 1798.01 4241.42 9937.42Average Stock of Raw Material (a) 3247.4 3204.62 2348.51 3019.72 7089.42Raw Material Consumed p.a. 20290.06 22281 21796 24310.8 34031.3Average Raw Material Consumed/day (b)

55.59 61.04 59.72 66.60 93.24

R= a/b (Days) 58 52 39 45 76

S. No. Particulars 2006-07 2007-08 2008-09 2009-10 2010-112 Work – in – Progress Holding Period (W)

Opening Balance of W – I – P 418.12 529.44 655.82 541.17 660.62Closing Balance of W – I – P 529.44 655.82 541.17 660.62 1020.33Average W –I –P Inventory (a) 473.78 592.63 598.495 600.895 840.475Cost of Production 27482.66 29895.2 29980 33194 44169.3Average Cost of Production/day (b) 75.29 81.90 82.14 90.94 121.01

W= a/b (Days) 6 7 7 7 7

S. No. Particulars 2006-07 2007-08 2008-09 2009-10 2010-113 Finished Goods Storage Period (F)

Opening Balance of Finished Goods 922.04 581.4 720.5 634.78 659.76Closing Balance of Finished Goods 581.4 720.5 634.78 659.76 1526.71Average Stock of Finished Goods (a) 751.72 650.95 677.64 647.27 1093.24Cost of Sales/ Goods 30383.92 34065.93 32847.25 35647.47 49046.58

Average Cost of Goods Sales/day (b) 83.24 93.33 89.99 97.66 134.37F= a/b (Days) 9 7 8 7 8

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S. No. Particulars 2006-07 2007-08 2008-09 2009-10 2010-114 Debtors Collection Period (D)

Opening Debtors 2372.83 2279.98 2788.93 2324.07 2863.65Closing Debtors 2279.98 2788.93 2324.07 2863.65 5383.98Average Debtors (a) 2326.405 2534.46 2556.5 2593.86 4123.82Sales 36303.09 40427.91 35393.08 39792.51 55755.48

Average Sales/day (b) 99.46 110.76 96.97 109.02 152.75D= a/b (Days) 23 23 26 24 27

S. No. Particulars 2006-07 2007-08 2008-09 2009-10 2010-115 Creditors Payment Period (C)

Opening Creditors 64.32 121.03 51.53 147.3 297.2Closing Creditors 121.03 51.53 147.3 297.2 854.03Average Creditors (a) 92.68 86.28 99.42 222.25 575.62Total Purchases 22600.65 24972.70 21675.46 26882.38 44131.51

Average Credit Purchases /day (b) 61.92 68.42 59.38 73.65 120.91C= a/b (Days) 1 1 2 3 5

S. No. Particulars 2006-07 2007-08 2008-09 2009-10 2010-11* Operating Cycle Analysis

Raw Material & Stores Storage Period (R)

58 52 39 45 76

Work – in – Progress Holding Period (W)

6 7 7 7 7

Finished Goods Storage Period (F) 9 7 8 7 8Debtors Collection Period (D) 23 23 26 24 27Creditors Payment Period (C) 1 1 2 3 5

Operating Cycle Period (R+W+F+D-C) in Days

99 91 82 85 123

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ESTIMATION OF WORKING CAPITAL REQUIREMENT AT RSWM

LTD. BANSWARA UNIT

Working capital requirement estimation is dealt with proper care and cautions. Working capital requirement

fixation is done with respect RSWM various units like Banswara unit, Bhilwara unit, etc. Some important

aspects of working capital like sales and debtors are considered here as these matters are to be taken care of

by RSWM BANSWARA office itself. BANSWARA UNIT sends its working capital estimation to RSWM’s

office situated in Kharigram (Bhilwara) on quarterly basis. Then RSWM’s office collects working capital

estimations of its every unit and merges them and then provides funds to individual units. The main aspect of

working capital in BANSWARA UNIT is its raw materials used in production of Grey Yarn like Synthetic

Yarn and Cotton Yarn, etc. While estimating its working capital needs, the main aspect to be focused on is

the funds blocked in raw materials. Working capital blocked in raw materials is estimated on the basis of the

production budget for the year. From production budget it comes to know what quantity of raw materials

will be needed to meet production targets. Then the lead time for every raw material is decided. Thus the

unit comes to know for how many days they will have to hold inventory of raw materials. The minimum

quantity needed is then multiplied to its rates and thus the unit arrives at its working capital requirement for

its production. Then the firm deducts the funds of creditors for raw materials.

The other current assets and current liabilities are taken from its monthly balance sheet and are shown with

10% variation for next quarter’s estimations. Hence it can be said that RSWM uses percentage or ratio of

Sales method generally for estimation of working capital for its various units.

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CALCULTION OF PERCENTAGE OR RATIO OF SALES METHOD

FOR RSWM LTD, BANSWARA

(All the Figures in Lakhs)

Particulars

% of Sales

Based on

2010-11

Actual Sales 2010-

11Estimation at 5% Growth

Estimation at 10% Growth

Estimation at 15% Growth

Sales 100 %55755.48 58543.25 61331.03 64118.80

Current Assets

Inventories 23 %12972.27 13620.88 14269.50 14918.11

Sundry Debtors 10 %5383.98 5653.18 5922.38 6191.58

Cash & Bank Balance and

Other Current Assets1%

569.18 597.64 626.10 654.56Loan & Advances and

Export Incentive Receivable3 %

1676.88 1760.72 1844.57 1928.41Inter Unit Balances -8%

-4435.34 -4657.11 -4878.87 -5100.64Total CA (A) 29 %

16166.97 16975.32 17783.67 18592.02Current Liab

& Provisions

Liabilities 4.8%2720.60 2856.63 2992.66 3128.69

Provisions 0.2%134.58 141.31 148.04 154.77

Total CL (B) 5%2855.18 2997.94 3140.70 3283.46

W/C (A-B) 24 %13311.79 13977.38 14642.97 15308.56

Hence when sales are of Rs. 64118.80 Lakhs the estimated requirement of working capital will increase by

Rs. 1996.77 Lakhs in upcoming year for RSWM Ltd. Banswara

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ANALYSIS OF WORKING CAPITAL All the departments or various section of RSWM LTD. are inter linked with each other and the single entry

passed at one place can be seen at various places and has its effect on whole account nor on that particular

section. Suppose entry passed by Banswara depot or center will have effect on main units account as it is

linked to it and not on Banswara’s account only. ERP plays vital role in today’s high tech world. It saves

time and wastage of various stationary. Top management can view the data easily and at any point. It can be

said that Single access to ERP enables information to be drilled down across the cost centers as well as

viewed across the business segments. The single database permits information to be extracted for any cost

centre or profit centre while enabling easy solution for management review and actions.

It was a great pleasure and very value able learning asset which I got from this training was to work in ERP

environment. I learnt and operated ERP and also made various report by taking help of it. This ERP system

really has an edge on TALLY and it is really faster than TALLY. I also used TALLY and found the

difference in both. ERP has more advanced features and operating options which deal with the day to day

needs, it is friendly user and at a time multiple users can post entries and data in it from various or different

locations and ERP clubs and generate the accurate and perfect data presentation required by operator.

Learning of ERP in this training has added advantage for my initial stage of career as it will provide me

upper hand from other candidates for having experience and knowledge of working in ERP.

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CONCLUSION

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ANALYSIS OF WORKING CAPITAL From the above report, I can conclude that at present peoples and connected companies are 99% satisfied

with RSWM Ltd. They are well known in market for their business like Grey Yarn, Cotton Yarn, Dyed

Yarn, Graphite Electrodes, etc.

Any change in working capital will have an effect on business’s cash flows. A positive change in working

capital indicates that the business has paid out cash for e.g. in purchasing or converting inventory, paying

creditors etc. Hence an increase in working capital will have a negative effect on the business’s cash holding.

However a negative change in working capital indicates lower funds to pay off short term liabilities (current

liabilities) which may have bad repercussions to the future of the company.

Managing Working Capital is one of the pioneer’s and role-playing part of the company. RSWM Ltd.

manages its working capital very efficiently for its business. Each & every component of working capital is

dealt with expertise and experience of the finance & accounting department. The procedure is very simple

for estimating working capital requirement. Predetermined norms are applied wherever they are applicable.

Mainly working capital management is the function of finance department but many other departments like

production, purchase & marketing are involved in this procedure indirectly. Thus the effort from all the

departments of various units helps company to manage its working capital in a systematic manner. Being the

part and unit of LNJ GROUP also follows the main company norms and terms for calculation for

accounting of its working capital.

Hence this training helped me a lot to know the importance and function of working capital and its

component. Here I was able to relate what I had read in the books and learnt in class rooms. It is essential for

a person to know about the sources, application and needs of working capital for business in real life if one

will going to specialize in the field of finance and going to work for a company or as entrepreneur. I also got

a big opportunity to work in ERP environment. I also got value able tips and guidance about how to use ERP

for increasing one’s performance, accuracy and speed towards work.

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BIBLIOGRAPHY

Text References :-105

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ANALYSIS OF WORKING CAPITAL Financial Management I.M. Pandey

Financial Management Ravi .M. Kishor

Management Accounting and Financial Analysis

Board of Studies, The Institute of Charted Accountants of India

Journals :-

Annual Reports of RSWM Ltd. for the years:

RSWM: 2006 – 07, 2007 – 08, 2008 – 09, 2009 – 10, 2010 – 11

Revised Marketing Policy

Web References :-

www.rswm.in

www.scribd.in

www.lnjbhilwara.com

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http://www.lnjbhilwara.com/

http://www.scribd.in/

http://www.rswm.in/

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ANNEXURE

(All figures are in Rs. Lakhs)Particulars 05-06 06-07 07-08 08-09 09-10 10-11

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ANALYSIS OF WORKING CAPITAL Inventories

Finished Goods 922.04 581.4 720.5 634.78 659.76 1526.71

Stores & Spares 256.74 238.59 187.15 178.45 500.42 475.84

Raw Materials 2984.56 3510.24 2899 1798.01 4241.42 9937.42

Work – in – progress 418.12 529.44 655.82 541.17 660.62 1020.33

Waste / Scrap 24.16 9.15 24.95 6.75 51.92 11.97

TOTAL 4605.62 4868.82 4487.42 3159.16 6114.14 12972.27

Sundry Debtors

Due for period not exceeding

six months

2371.98 2273.55 2788.93 2324.07 2863.65 5383.98

Others 0.85 6.43 0 0 0 0

Total 2372.83 2279.98 2788.93 2324.07 2863.65 5383.98

Cash & Bank Balances

Cash in Hand 4.18 5.62 10.18 3.9 6.05 7.7

With Scheduled banks in

Savings Accounts

0.23 0.24 0.04 0.36 0.02 0.02

With Scheduled banks in

Current Accounts, Margin

Money depot

1.17 1.06 1.23 2.98 6.46 0.76

Drafts in Hand/Collection and

Remit

Fixed Deposits others 70.4 7.12 5.8 5.8 5.8 7.19

Dividend Accounts 0 0 0 0 0 0

TOTAL 75.98 14.04 17.25 13.04 18.33 15.67

Loans & Advances

i) Loans and Advances

recoverable in Cash for value to

be received or pending

70.92 29.18 41.58 178.07 46.84 61.22

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ANALYSIS OF WORKING CAPITAL ii) Advances against Supply 208.26 355.87 237.68 1093.19 263.56 667.96

Less: Provision for Doubtful

Advance

0 0 0 0 0 0

TOTAL 279.18 385.05 279.26 1271.26 310.4 729.18

Provision

Proposed Dividend on Equity

Shares

0 0 0 0 0 0

Provision for Dividend on

Preference Shares

0 0 0 0 0 0

Tax on Dividend 0 0 0 0 0 0

Retirement Benefits 72.72 0 76.22 103.59 74.13 134.58

Provision for Tax 0 0 0 0 0 0

TOTAL 72.72 0 76.22 103.59 74.13 134.58

Source on www.lnjbhilwara.com & www.rswm.in OR

All figures from RSWM Ltd. Annual reports and balance sheets.

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http://www.rswm.in/

Analysis of Working Capital Management Sakshi Agarwal

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