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1. INDUSTRY PROFILE

Water is a key to social equity to environmental stability and to cultural diversity. Water is

also firmly linked with health. Pure and safe drinking water has always been a necessity. The

tradition and style of serving drinking water, in India, has however changed quite dramatically

during the last decade. Almost a decade ago, the introduction of bottled water or packaged

mineral water has changed the tradition of serving and consuming drinking water. This has

ushered in very strongly, the use of polymers or plastics as materials for water storage and

distribution.

The tradition of bottled water and mineral water is not very old. Even in western countries the

practice of bottled drinking water started only in 1950s. Since ancient time people have used

water from mineral springs, especially hot springs, for bathing due to its supposed therapeutic

value for rheumatism, arthritis, skin diseases, and various other ailments. Depending on the

temperature of the water, the location, the altitude, and the climate at the spring, it could be used

to cure different ailments.

This started the trend of using mineral water for drinking purposes in order to exploit its

therapeutic value. Since mid1970s large quantities of bottled water from mineral springs in

France and other European countries began to be exported. The concept of bottled water is

relatively successful in western countries due to greater health consciousness.

The categories of bottled water in India are Packaged Natural Mineral Water and Packaged

Drinking Water .Bottled water industry, colloquially called, the mineral water industry, is a

symbol of new life style emerging in India. The packaged drinking water in India, which is

estimated at Rs.850 Crores with over 200 brands floating in the market, most of which have

restricted territorial distribution. This is a growing market in India as quality consciousness

among the consumers is on the rise. The bottled water market is growing at a rapid rate of around

20%.At this growth rate, the Rs 7000million per year market is estimated to overtake the soft

drinks market soon. Multinationals, SAB MILLERS, SHAW WALLACE Coca-Cola, Pepsi,

Nestle and others are trying to grab a significant share of the market. There are more than 180

brands in the unorganized sector. The small players account for nearly 19% of the total market.

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The per capita consumption of bottled water in India is less than half a litre per year, compared

to 111 litres in France and 45 litres in the US.These points to the future potential beyond the high

growth.

Major Players with their brands include Parle Export which introduced Bisleri in India 25 years

ago, Parle Agro with Bailley, Godrej Foods with its Golden Valley, Coca-Cola with Kinley,

PepsiCo with Aquafina, Nestle India with Perrier, Mohan Meakins and SKN Breweries entered

the market with Golden Eagle and Penguin mineral water, respectively. Nonetheless, Bisleri and

Bailley, both of Parle Origin , enjoy about 50% market share and has become almost generic

with the product. The premium bottled water market in India has brands like Evian, San

Pelligrino, Perrier.

In the market for water purifiers, while Aquaguard from Eureka Forbes, remains the market

leader, several others have made it to the market place. Usha Shriram with its Brita water Purifier

already established, has launched Indias first digital water purifier-the water guard Digital in

collaboration with Brita GmbH of Germany. HLL has also forayed into the water business, with

its water purifier device called Pure.

Water Purifiers (residential segment) are growing at 22-25% annually. A high growth rate

indicates a good future potential in these sectors. It is a Rs 5 to 6 billion industry, withAquaguard cornering more than 50% of the market. The rest is divided among Kent RO, Pentair,

Ion Exchange and Others.

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2. COMPANY PROFILE

TEJKAMAL TRADE LINKS

Incorporated in 1998, based in Bangalore, One of the multifunctional organisation dealing with

various products likesoft drinks, packaged drinking waterall over the state. Tejkamal Trade

Links(TKTL) was initially into packaged drinking water business which was branded under

SHAW WALLACE. Brands being ROYALCHALLENGE KNOCK OUT FOSTERS etc TKTL

built highly equipped and most sophisticated plant of Reverse osmosis and de- mineralising

processplant in Tumkur Road for which the company was awarded with the JAWAHARLAL

NEHRU AWARD FOR EXCELLENCY IN 2004. Taking major market share in packaged

drinking water industry , the company then decided into first diversion as soft drinks (juicy cool,

jive, jeera soda).

TEJKAMAL TRADE LINKS ( Beverages)

Incorporated in 1998, based in Bangalore, One of the multifunctional organisation dealing with

various products like apparels, soft drinks, packaged drinking water and one of the largest

wholesale dealer of Samsung electronic products all over the state. Its one of Karnatakas

finest dealers and designer of garments for men, women and children and caters to the needs of

international fashion brands and retailers. Tejkamal Trade Links was initially into packaged

drinking water business which was branded under SHAW WALLACE. Brands being, ROYAL

CHALLENGE, KNOCK OUT, FOSTERS, BLUE, ROYAL BLUE etc. TKTL built highly

equipped and most sophisticated plant of Reverse osmosisand de- mineralising processplant

in Tumkur Road for which the company was awarded with the JAWAHARLAL NEHRU

AWARD FOR EXCELLENCY IN 2004. Taking major market share in packaged drinkingwater industry , the company then diced into . first diversion as soft drinks (juicy cool, jive,

jeera soda),

An ISO 9001:2000 Certified Company has a capacity to produce and sell and 2.5 million bottles

of water a week.

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The Group's products include packaged drinking water, distilled water, soda etc.

As the new soft drink introduced by TKTL is still in introduction stage the company is

conducting direct sales and aggressive salesmanship. The sales is expanding day by day. The

company is now thinking of incorporating an effective distribution system.

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2.2Vision, Mission & Quality policy

1.2.1Vision:

1 - Create commonality of interests.

2 - Reduce daily monotony.

3 - Provides opportunities & challenges

2.2.2Mission

We are committed to produce &deliver top quality product to our consumer. To be the

Worlds Premier Consumer products focused on convenient food and beverages. In every thing

we do we strive for honesty, fairness and integrity.

To achieve this every batch of incoming raw materials are checked for quality by ourQuality Assurance Department.

We use only high grade sugar Apart from this, on line & final product checks are carried out at regular intervals.

We purchase raw materials only from approved sources, approved by independentlaboratories of internal repute.

The entire range of equipments is made out of superior grade Stainless Steel Material. We give special attention to

o Personnel Hygiene & Sanitationo House Keepingo Good Manufacturing Processo Special attention is also given to keep the Factory Surroundings Clean & Green

by growing Lawn

The firm has one of the best distribution infrastructures in the business to provide timelyservices to all our vendors. Their product comes in a wide range of packages like 200ml,

250ml, 500 ml, 1ltr, 2 ltr, 5 liters, 20 liters & 600ml & 1.5 liters Soda.

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Their packaged drinking water is bottled in fully automatic plant with reverse osmosis,

organization & ultra filtration process. Along with latest pesticides removal system through

activated carbon filtration process as per EU norms.

They process water with the most modern, high tech equipment sodium filtration

resulting in not only healthy but also sweeter packaged drinking water. Their packaged drinking

water is manufactured under a very strict in house quality control system, ensuring that what we

drink is what nature intended.

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Company Name: Tejkamal Trade Links Pvt. Ltd.,

Country/Territory: India

Address:#726, Belmar industrial estate, near swathi petro; bunk,8thmile, jalahalli, Bangalore -79

E-mail :vipbobtktl@yahoo.com

Products/Services We Offer:Royal challenge, Blue, Fosters, Knock out, Royal Blue

packaged drinking water, soda and Jive fruit drink

Business Type: Manufacturer / Supplier

Industry Type: FMCG, Foods & Beverages

Geographic Markets: India

No. of Employees: 150 People

Annual Sales Range (USD): US$1 Million - US$2.5 Million

Year Established: 1998

M.D. Mr.Vipin kumar

Legal Representative/CEO: Mr. Sheshadri. K

mailto:vipbobtktl@yahoo.commailto:vipbobtktl@yahoo.commailto:vipbobtktl@yahoo.commailto:vipbobtktl@yahoo.com

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Product Quantity available

Natural Spring Water 200ml, 500ml, 1ltr

Packaged Drinking Water 200ml, 500ml,1ltr, 2ltrs, 5ltrs, 20ltrs

Soda 300ml, 600ml & 2ltrs

Jive fruit juice 300ml, 600ml & 2ltrs Soda

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Resident Director (CEO)

GM

(Plant)

Manager

(Finance)

Manager

(HR)

Manager(Sales & Marketing

&/ TDM)

Assistant

Manager (A/c)

Executive

HR

Executive

Administrator

Executive

General

SeniorExecutive

Accountant

Executive

Accountant

Assistant Clerk Security

Shipping

(Executive)

Store

(Executive)

Manager

(Production)

Manager(Quality

control)

Manager(Quality

control)

Executive

(Production)

Executive(Quality

Control)

Chemist

CE/ Executive

Marketing

Area Sales

Manager

ORGANIZATIONAL CHART

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2.2.3Achievements

Commands a 29% market share in the country.6 bottles of Royal challenge are sold every second in India. Won Jawaharlal Nehru award for quality and excellence in 2003Won excellence award from KASSIAThe only plant in India with a capacity to produce 4-5 different brands under one roofNamed by BIS as World class highly systematized plant area

2.2.4MARKETING MIX OF THE FIRM

Industry typeFMCG / Food & Beverages

There are many areas of marketing to work in like Design, Advertising, Promotions,

Consumer awareness; Product awareness etc. and these all area are originated through the

MARKETING MIX which consists of 4 Ps i.e.

2.2.5PRODUCT-under this decision taken are:

The product itself (design, quality, packaging etc) The diversification of the existing Product

2.2.6PRICE- under this decisions taken are :

Setting Prices Discounts Credit rules

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2.2.6PLACE- under this decisions taken are :

The best way to sell the products to the customers (Channels of Distribution) The transport system

2.2.7PROMOTION- under this decisions taken are:

Advertising Sales Promotion Public Relations

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2.3COMPETITORS IN INDIA

The bottled water industry effectively competes with both the water-purifiers as well as the soft

drinks industry. The water purifier industry (primarily the Aqua Guard brand of the Eureka

Forbes) is credited to have done the spadework for creating the safety and health consciousness

in water consumption, and is a serious competitor in the household and institutional consumption

market, whereas the soft drinks industry is a strong competitor in the retail consumption market.

COCA COLA

The company had entered the business in May 2000 through its extending its soda water brand,

Kinley. The company has tied up with Kothari Beverages, of Yes brand of mineral water, for

manufacturing Kinley bottled water at Yes' facilities. The brand is available in pack sizes of 500

ml, 1-litre, 1.5-litre, 2-litre, 5-litre, 20-litre and 25-litre. With the growing market, Coca-Cola is

planning to scale up its bottling capacity, up from the 15 existing plants. Coca Cola has identified

10 to 15 sites for additional plants for setting up a combination of company-owned plants,

franchisee operations and contract packers.

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PEPSI CO.

The company entered the bottled water business in September 1999 under the Aquafina brand.

The company began by targeting its product towards the youth with a 750-ml pack. It now retails

in conventional retail pack sizes of 500-ml and 1-litre bottles. The brand has the strong backing

of a distribution channel of 60,000 outlet and the refrigerators at Pepsis retail Outlets, which

stock its cold drinks. Though the company is present only in selected market as of now, it has

plans of increasing share in the market by expanding its SKUs portfolio as well as its distribution

reach. Sources say PepsiCo India has been investing in additional capacity at its plants in

Bangalore and Chennai for the bulk water foray.

BAILLEY

The brand is a product of Parle Agro, the company that launched Frooti (mango drink in tetra

packs). Bailley is credited with creating a new segment of 330ml SKU (the right quantity to

quench the thirst of an adult!) in the market.

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NESTLE

Multinational Nestle has already started making forays into the bottled water industry with its

brand Pure Life. Nestle is a big player in the mineral water market internationally, with brands

like Perrier and San Pellegrino in its stable.

Nestle has set-up two bottling plants in Mumbai and New Delhi, to service the markets in these

regions. It plans initially to tap only the huge market for bottled water in large cities and towns.

OXYRICH

Dhariwal Industries Ltd - Food & Beverages division has one of the most modern and

comprehensive packaged drinking water facilities spread across India. The facilities are fully

integrated with in house facilities for manufacturing of Performs, Closures/Caps and Bottle

Blowing. The labels and cartons are also made in the group companies to ensure total control on

quality and processes. Oxyrich (300% more oxygen) is clear, smooth, pure water with a

refreshing boost of extra Oxygen.

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BISLERI

Mineral Water under the name 'Bisleri' was first introduced in Mumbai in glass bottles in two

varieties - bubbly & still in 1965 by Bisleri Ltd., a company of Italian origin. This company was

started by Signor Felice Bisleri who first brought the idea of selling bottled water in India.

Parle bought over Bisleri (India) Ltd. In 1969 & started bottling Mineral water in glass bottles

under the brand name 'Bisleri'. Later Parle switched over to PVC non-returnable bottles & finally

advanced to PET containers.

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LOCAL PLAYERS IN MARKET

Kate aqua Sumeru Saiganga Real aqua Kelvino Oxygen Oxyblue Aviva Sagar

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3. MCKINSEY-MODEL 7 S Framework

3.1SHARED VALUE

Company Vision To be thebest and leading provider of natural mineral water in India, and by

continuously challenging present conventions and always staying a step ahead of the

competition.TKTL has a vision to exploit most of the Indian market in packaged

drinking water section.

For achieving this vision how other factors are useful like structure, style, staff, skill etc

3.2ORGANISATIONAL STRUCTUREThe firm has tear-down and restructured an organizational hierarchy which has evolved on a

need to basis, erect one that is strategically structured to enable the organization to best carry

out its Tactical and Operational Level operations in accordance with the Strategic objectives of

the firm. This structure helps the firm in continuous uninterrupted production in all seasons. The

structure enhances the flow of information through the line.

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Resident Director (CEO)

GM

(Plant)

Manager

(Finance)

Manager

(HR)

Manager(Sales & Marketing

&/ TDM)

Assistant

Manager (A/c)

Executive

HR

Executive

Administrator

Executive

General

SeniorExecutive

Accountant

Executive

Accountant

Assistant Clerk Security

Shipping

(Executive)

Store

(Executive)

Manager

(Production)

Manager(Quality

control)

Manager(Quality

control)

Executive

(Production)

Executive(Quality

Control)

Chemist

CE/ Executive

Marketing

Area Sales

Manager

ORGANIZATIONAL CHART

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3.3Leadership style

The elements of Culture and Leadership Style of this organisation stand to be of primeimportance in the success of the organization intended Strategy and consequently is one

of the primary deciding factors in whether or not the actual implementation of the

Intended Strategy . The company has democratic leadership style. Encouraging the viws

of every management staff in taking major decisions.

3.4STAFF

The Human Resource Team will be responsible for using the most modern techniques todevise the most appropriate Incentive plan, to mobilize motivation throughout the ranks

of the Manpower force because incentive and management systems are among the most

important sources of influence available to the management to mobilize motivation and

push the force towards the achievement of strategy. TKTL has skill and need based

hiring system.

3.5SKILL

If Innovation was to get a distinct and newer description, the credit would must go toTejkamal trade links.It is the first and the only Indian Finalist and Winner of the Silver

Award at the Bottled Water World Awards, held recently in Mexico. Aesthetics and

functionality played a crucial role in our effort at zeroing in for the perfect design for the

Royal blue bottled water

3.6SYSTEM

The Bottle Water plant is the first of its kind in india. It is a fully automatic, washable, airconditioned, hygienic plant. The plant even adheres to pharmaceuticals standards, and

use the Clean Room technology within the automatic filling, capping and sealing

systems so that original mineral composition as well as the purity of the air and water is

maintained at all times. The bottled water is untouched by human hands at all points

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3.7STRATEGY

Mission To develop, implement and improve the Integrated water Safety and Quality

Management Systems in a culture of continual improvement

For that company is targeting to the health conscious people and they believe in itsproduct

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4. SWOT ANALYSIS

4.1Strength:

Brands image Financially sound Distribution channel/coverage Technology advancement Quality Price competitive Personnel aspect Market expertise International component High promotional activities

3.2Weakness:

Less brand equity Boundary limited only in India

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3.3 Opportunities:

Capture the market New areas Market potential Brand awareness Increase in investment

3.4 Threats:

Higher availability of competitors Direct competitors are about to enter in Pakistani market. Technological environment New in market

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5. Financial analysis of Tejkamal Trade LinksBalance sheet of Tejkamal trade Links as on 31.3.2010

Schedule

No.

As at 31.3.2010

Amount in Rs.

As at 31.3.2009

Amount in Rs.

Sources of Funds

Share Capital

01 5000000.00 5000000.00

TotalA 5000000.00 5000000.00

Reserves and Surplus: 4028955.52 2774872.15

Loan fund :

Secured loans

Un-secured loans

02

03

18994771.41

1956982.00

23155568.28

6136969.00

Total -B 20951753.41 28292537.28

Total A+B 29980708.92 37067409.43

Application of Funds

Fixed assets

Gross Block

Depreciation

05

37907215.44

20259782.22

32892326.44

16980898.33

Net blockTotal A 17647433.22 15911428.11

Investments 06 10435540.00 5435540.00

Total -B 10435540.00 5435540.00

Current assets loans and advances

Inventories

Sundry debtors

Cash and bank balance

07

07 a

07 b

07 c

10117530.00

1724837.62

3477640.85

8403335.00

1004509.45

194963.81

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Loans and advances 08 4561066.34 16534504.78

19881074.81 26127313.04

Less : current liabilities and provisions

Current liabilities and provisions

Current liabilities

Provisions

04

4 a

4 b

16363208.00

1975060.11

8962061.72

1664271.00

Total 18338268.11 10626332.72

Net current assets( total-c ) 1542806.70 15500980.32

Misc expenses to the extent not written off

Preliminary expenses 9100.00 13600.00

Total - D 9100.00 13600.00

Deferred tax asset 345829.00 205861.00

Total - E 345829.00 205861.00

Total (A:E) 29980708.92 37067409.43

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Loans and advances 08 16925115.73 4561066.34

36311990.94 19881074.81

Less : current liabilities and provisions

Current liabilities and provisions

Current liabilities

Provisions

04

4 a

4 b

12540509.00

1349972.0016363208.00

1975060.11

Total 13890481.00 18338268.11

Net current assets( total-c ) 22421509.94 1542806.70

Misc expenses to the extent not written off

Preliminary expenses 4600.00 9100.00

Total - D 4600.00 9100.00

Deferred tax asset 680907.00 345829.00

Total - E 680907.00 345829.00

Total (A:E) 51682799.94 29980708.92

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Balance Sheet as at 31stMarch, 2012

Note

No.

As at 31.3.2012

Amount in Rs.

As at 31.3.2011

Amount in Rs.

Equity and liabilities

ShareholdersFunds

a) Share capitalb) Reserves and Surplus

Sub total A

9000050

14451277

23451327

9000000

22164131

31164131

Noncurrent liabilities:

a) Long term borrowingsb) Deferred tax liabilities-(net)

Sub total - B

6183273

-

6183273

6565387

-

656387

Current Liabilities:

a) Short term borrowingsb) Trade payablesc) Other current liabilitiesd) Short term provisions

Sub totalC

Total

17241604

726177

4543067

-

22510848

52145448

13953282

4166009

9265808

458644

27843763

65573281

Non- current assets:

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a)Fixed assets:

(i) Tangible

(ii) Intangible

(iii)Capital work in progress

b)Non-current investment:

c)Deferred tax asset- (net)

d)Long term loans & advances

Subtotal- a

5690572

-

-

10400000

695676

22310400

39096648

17740243

-

-

10400000

680907

20336455

49157605

Current assets:

a)Inventories

b)Trade receivables

c)Cash and bank balances

d)Short term loans and advances

subtotal- b

Total

9288724

2362743

1016833

380499

13048799

52145448

11683475

1565379

1427207

1739616

16415676

65573281

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5.2 Financial analysis of the company with respect to 2011 and 2012:-

1. CURRENT RATIO: -Current Ratio= Current Asset /Current Liability

YEAR 2012 2011

Current Asset

(Rs.) 13048799 16415676

Current Liability

(Rs.)

22510848 27843763

Current Ratio ( in

Times)0.58: 1 0.59: 1

Interpretation: -The standard current ratio is 2:1. It implies that for every one rupee of current

liabilities, current assets of 2 rupee are available to meet them. In other words, the current assets

are 2 times the current liabilities. Liquidity position, as measured by the current ratio, is much

more in the year 2011 as compared to that of 2012. More the current ratio it implies more the

ability of the company to meet its obligations in full. Increase in current liability is reason for

decrease in ratio in 2012.

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2. QUICK RATIO: -Quick Ratio=Quick Asset/Current Liability

Quick Asset= Current asset- Inventories

YEAR 2012 2011

Quick Asset (Rs.) 3760075 4732201

Current Liability

(Rs.)

22510848 27843763

Quick Ratio ( in

Times)0.17: 1 0.17: 1

Interpretation: - The standard quick ratio is 1:1. Quick Ratio is a rigorous measure of

companys ability to service short-term liabilities.. Quick ratio has been same over two years.

This implies that the funds has not been unnecessarily accumulated and are being profitably

utilized. Quick ratio has no difference mainly due to current liabilities over the years.

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3. NET WORKING CAPITAL: -Net Working Capital=Current Assets-Current Liability

Current Assets= Inventories +sundry Debtor + Cash and bank balance + Loans and advances

Current Liability= Sundry creditors + share applications + Book overdrafts + advance

YEAR 2012 2011

Current Assets (Rs.) 13048799 16415676

Current Liability (Rs.) 22510848 27843763

Net Working Capital (Rs.) (9462049) ( 11428087)

Interpretation: -Net working capital has decreased from year 2011 to year 2012; it shows that

the ability of the company to meet its current obligations has reduced. In the year 2011net

working capital shows that the company has no sufficient current assets to meet the obligations

and in the year 2012 current liability is more than current assets which doesnt result in

companys disability to meet its obligations as company has longer-term contracts which result

in negative working capital in both years because of high Deferred Revenue balances.

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4. PROPRIETARY RATIO: -Proprietary Ratio=Equity/Total assets

Total Asset= Fixed asset + Net current Assets + Investments

Equity=Share Capital+ reserves and surplus

YEAR 2012 2011

Equity (Rs.) 23451327 31164131

Total Asset (Rs.) 52145448 65573281

Proprietary Ratio

(in Times)0.50: 1 0.48: 1

Interpretation: - This ratio measures the productivity of the capital employed in the business, it

shows the proportion of the total assets financed by the proprietors. In the year 2011 the

proprietary ratio was higher indicating stronger financial position of the Company. But the ratio

is less in 2012 indicating decrease in strength of financial position. The ratio has decreased

because of difference in equity compared to that of total asset.

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Learning Experience

6.1 INTRODUCTION: WATER INDUSTRY

The tradition of bottled water and mineral water is not very old. Even in western countries the

practice of bottled drinking water started only in 1950s. Since ancient time people have used

water from mineral springs, especially hot springs, for bathing due to its supposed therapeutic

value for rheumatism, arthritis, skin diseases, and various other ailments. Depending on the

temperature of the water, the location, the altitude, and the climate at the spring, it could be used

to cure different ailments.

This started the trend of using mineral water for drinking purposes in order to exploit its

therapeutic value. Since mid1970s large quantities of bottled water from mineral springs in

France and other European countries began to be exported. The concept of bottled water is

relatively successful in western countries due to greater health consciousness.

The international standards regarding bottled water are so stringent that for a particular brand of

water to be certified as bottled water, in most countries, multiple levels of approvals are required.

For example, in the United States, the EPA (Environment Protection Agency) regulates public

water systems. The FDA of US has also set standards for bottled water.

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World Bottled Water Market

Annually consumption 189billion liter Estimated sales $ 200 billion Consumption growth 7 % per year

Growth of Bottled Water industry in the world

Government Parameters for Water Industry

The government has laid certain parameters for the water industry. They are as follows,

1) There should be a good water table in the plant area, where extraction will be done.2) The processed water should be recycled through, water harvesting techniques.

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3) The processes are reviewed by government agencies from time to time and issuedcertification thereafter.

Growth in Demand in India

6.2 HISTORY OF MINERAL WATER

POPULARITY OF MINERAL WATER:The tradition of bottled water and mineral water is not very old. Even in western countries the

practice of bottled drinking water started in 1950s. The trend of having mineral water gained

grounds in the market.

Since ancient time people have used water from mineral springs, especially hot springs, for

bathing due to its supposed therapeutic value for rheumatism, arthritis, skin diseases, and various

other ailments. Depending on the temperature of the water, the location, the altitude, and the

climate at the spring, it can be used to cure different ailments. This started the trend of using

mineral water for drinking purpose to exploit the therapeutic value of the water. This trend

started gaining momentum in mid 1970s and since then large quantities of bottled water from

mineral springs in France and other European countries are exported every year.

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The concept of bottled has been quite prevalent in western countries due to greater health

consciousness and higher awareness about health and hygiene. The international standards

regarding bottled water are so stringent that for a particular brand of water to be certified as

bottled water it has to get approvals on four levels: federal, state, trade association and individual

company levels.

In United States, the bottled water industry is regulated on four levels: federal (by the U.S. Food

and Drug Administration as a food product), state, industry association, and individual company.

EPA (Environment Protection Agency) regulates public water systems. FDA regulates bottled

water that crosses state lines.

SOME OF THE STANDARDS GOVERNING THE BOTTLED WATER INDUSTRY

ARE:

Water is classified as bottled water or drinking water, if it meets all applicable federal andstate standards, is sealed in a sanitary container and is sold for human consumption.

Bottled water cannot contain sweeteners or chemical additives (other than flavours,extracts or essences) and must be calorie-free and sugar-free.

Flavours, extracts and essences -- derived from spice or fruit -- can be added to bottledwater, but these additions must comprise less than one percent by weight of the final

product.

Beverages containing more than the one-percent-by-weight flavour limit are classified assoft drinks, not bottled water.

Bottled water may be sodium-free or contain "very low" amounts of sodium. Tap water uses Chlorine as disinfectant bottled water uses Ozone as a disinfectant. Bottled water should not contain chlorine.

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6.3 HOW IS BOTTLED WATER DIFFERENT FROM TAP WATER?

Consistent quality and taste are two of the principal differences between bottled water

and tap water. While bottled water originates from protected sources - largely from underground

aquifers and springs - tap water comes mostly from rivers and lakes.

Another factor to consider is the distance tap water must travel and what it goes through before it

reaches the tap. In compliance with international regulations, bottled water is sealed and

packaged in sanitary containers. If a bottled water product is found to be substandard, it can be

recalled. This can't happen in case of tap water.

According to regulations in the US, when bottled water is source from a community water

system the product label must state so clearly. However, if the water is subject to distillation,

deionization or reverse osmosis, it can be categorized that way, and does not have to state on its

label that it is from a community water system or from a municipal source.

Processing methods such as reverse osmosis remove most chemical and microbiological

contaminants.

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6.4 TYPES OF BOTTLE DRINKING WATER

1. Mineral Water:Bottled water containing not less than 250 parts per million total dissolved solids may be labeled

as mineral water. Mineral water is distinguished from other types of bottled water by its constant

level and relative proportions of mineral and trace elements at the point of emergence from the

source. No minerals can be added to this product.

2. Purified waterWater that has been produced by distillation, de-ionization, reverse osmosis or other suitable

processes.

3. Spring water:Bottled water derived from an underground formation from which water flows naturally to the

surface of the earth. Spring water must be collected only at the spring or through a boreholetapping the underground formation finding the spring.

4. Artesian Water/ Artesian Well WaterAn artesian aquifer is a confined aquifer containing groundwater that will flow upwards out of a

well without the need for pumping. An aquifer provides the water for an artesian well. An

aquifer is a layer of soft rock, like limestone or sandstone that absorbs water from an inlet path.

Porous stone is crushed between impermeable rocks or clay. This keeps the pressure high, sowhen the water finds a hole, it overcomes gravity and goes up instead of down.

5. Distilled Water

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Purified water is water from any source that is physically processed to remove impurities.

Distilled water and deionized water have been the most common forms of purified water, but

water can also be purified by other processes including reverse osmosis, carbon filtration, micro

porous filtration, ultra filtration, ultraviolet oxidation, or electro dialysis. In recent decades, a

combination of the above processes have come into use to produce water of such high purity that

its trace contaminants are measured in parts per billion or parts per trillion. Purified water has

many uses, including in science and engineering laboratories and industries, and is produced in a

range of purities.

6. Sparkling WaterA sparkling water is plain water into which carbon dioxide gas has been dissolved, and is the

major and defining component of most "soft drinks". The process of dissolving carbon dioxide

gas is called carbonation. It results in the formation of carbonic acid (which has the chemical

formula H2CO3).

7. Well WaterWater well is an artificial excavation or structure put down by any method such as digging,

driving, boring, or drilling for the purposes of withdrawing water from underground aquifers

Well water may be drawn via an electric submersible pump or a mechanical pump, from a source

below the surface of the earth. Alternatively, it could be drawn up using containers, such as

buckets that are raised mechanically, or by hand. Although not essential, usually a storage tank

with a pressure of 40-60 psi is also added to the system, so the pump does not need to operate

constantly. Wells can vary greatly in depth, water volume and water quality. Well water

typically contains more minerals in solution than surface water and may require treatment to

soften the water by removing minerals such as arsenic, iron and manganese.

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6.5 MANUFACTURING PROCESS

Purification Process

Purity and safety are two major factors taken care in sourcing and processing of Packaged

drinking water water. Underground spring is carefully selected based on its portability and

pathogen free water. Great care goes in tapping this source. Only water below 25 meters is

tapped. This is to avoid any surface contamination to percolate and mix with underground water

source. Area surrounding the water collection tube at the surface is protected and kept clean.

Processing and Quality Assurance

The casing tube itself is protected with stainless steel mesh to give a preliminary filtration to the

water. Ultra filtration gives water reduction in turbidity and adds sparkle activated carbon

purifier to remove color and odour in water

Reverse osmosis membrane has porosity of less than 0.01 micron the process renders water free

o microorganisms and also reduces dissolved solids

To ensure packaged drinking water is held safe free from contaminations, ultraviolet treatment

and ozonisation process is carried out. Ozone is unstable trivalent oxygen, a very powerful

bactericide with no side effect, as it disintegrates into oxygen within couple of hours.

Sterilization effect of ozonised water continues even after water is packaged, thereby ensuring

safety of up to its final packing. To ensure high quality of packing materials, components like

caps and bottles are manufactured in-house from resins of quality suppliers.

Good Manufacturing Practices are stringently followed at all times. Processing is religiously

monitored at every stage. Testing source water, processing parameters, microbial quality,

packaging material integrity and finally, shelf life studies, forms an integral part of quality and

safety assurance plan.

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Quality checking: Quality is checked by sampling method as a batched test at every stage of beer

manufacturing even quality of bottle is also checked before actually using.

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6.6 SUSTAINABLE ADVANTAGE

Three major sustainable advantages give a competitive edge as the firm operate in the huge

marketplace:

1.Big, muscular brands;2.Proven ability to innovate and create differentiated products; and3.Powerful go-to-market systems.

Making it all work are the firms extraordinarily talented and dedicated people.

When they take these competitive advantages and invest in them with dollars generated from

top-line growth and cost-saving initiatives, they sustain a value cycle for our shareholders.

In essence, investing in innovation fuels the building of their brands.

This in turn drives top-line growth.

Dollars from that top-line growth are strategically reinvested back into new products and other

innovation, along with cost-savings projects. Thus, the cycle continues.

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1. INTRODUCTION TO THE STUDY

Working capital in general refers to excess of current assets over current liabilities and the inter

relationship that exists between them. The basic goal of working capital management is to

manage the current assets and current liabilities of a firm in a way that a satisfactory level of

working capital is maintained. It is so because both inadequate as well as excessive working

capital implies fund, which earn no profit for the business. Efficient management of working

capital is a necessary for a business organization. There are several techniques of control as

regards working capital management. Some of the important techniques are ratio analysis,

operating cycle, etc.,

1.1 KINDS OF WORKING CAPITAL

There are two kinds of working capital, they are

Permanent working capital Temporary or variable working capital

Permanent or fixed working capital is the minimum level of current assets. It ispermanent in the same way, as the firms fixed assets are depending upon the changes in

production and sales, the need for working capital, over and above permanent working

capital, will fluctuate. For example, extra inventory of finished goods will have to be

maintained to support the peak periods of sale, and investment during such periods. On

the other hand, investment in raw material, work in process and finished goods will fall if

the market is slack.

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Temporary or variable working capital is the extra working capital needed to supportthe changing production and sales activities of the firm. Both kinds of working capital are

necessary to the organization.

CONCEPT OF WORKING CAPITAL

There are two concepts of working capital

GROSS WORKING CAPITAL refers to the firm investment in current assets whichcan be converted into cash within an accounting year and include cash, short term

securities, debtors, bills receivables and stock.

NET WORKING CAPITALrefers to the difference between current assets and currentliabilities. Current liabilities are those claims of outsiders, which are expected to mature

for payment with in an accounting year and include creditors, bills payable and

outstanding expenses. A positive net working capital will arise when current assets

exceed current liabilities. A negative net working capital occurs when current liabilities

are in excess of current assets.

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1.1 Statement of the problem:

Tejkamal trade links pvt ltd. was into a downward trend. The analysis of financial aspects

commuting to the performance of the firm was duly needed. The study on net working capital

helps in finding areas which is needed to be concentrated to improve financial position of the

firm

A STUDY ON THE NET WORKING CAPITAL OF TEJKAMAL TRADE LINKS

1.2 SCOPE OF THE STUDY:

The study covers the TEJKAMAL TRADE LINKS only. This is about their changes in NetWorking Capital.

The data covers a period of six years i.e., 2009- 10 to 20112012.

Based on the data, interpretation is drawn and suggestions are given to increase the efficiency ofthe firm.

1.3 OBJECTIVES OF THE STUDY:

The study of changes in net working capital of TEJKAMAL TRADE LINKS had been

undertaken with following objectives in view

To assess the liquidity position of the firm. To assess the efficiency of the firm with reference to operating cycle. To analyze whether the increase or decrease in working capital have impact on the net

profit.

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1.4 RESEARCH METHODOLOGY

Research methodology is a way to systematically solve the research problem. It may be

understood as a science of studying how research is done scientifically. So, the research

methodology not only talks about the research methods but also considers the logic behind the

methods used in the context of the research study.

1.5 PERIOD OF STUDY

The period of study is from the year 2009-10 to 2011-12.

1.6RESEARCH DESIGN

The researcher had the fact and information already available through financial statements of

earlier years and analyzed these to make critical evaluation of the available material. Hence

Analytical research has been used for this study.

1.7 DATA COLLECTION

The required data for the study are basically secondary in nature and the data are collected from

the annual reports of the company from the year 2009-10 to 2011-12.

1.8 ANALYTICAL TOOLS APPLIED

The study employs the following analytical tools:

1. Common size statement for current assets and liabilities.

2. Schedule of changes in working capital.

3. Operating / Cash Cycle

4. Ratio analysis related to working capital and net profit.

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2. ANALYSIS AND INTERPRETATION

2.1COMMON SIZE STATEMENTIt facilitates the comparison of two or more business entities with a common base. In case of

balance sheet, Total assets or liabilities or capital can be taken as a common base. These

statements are called Common Measurement or Component Percentage.

TABLE NO: 1

COMMON SIZE STATEMENTS OF CURRENT ASSETS AND CURRENT

LIABILITIES FOR THE YEAR 2009-10 TO 2011-12

Particulars 2009- 10 2010- 11 2011- 12

Current assets % % %

Inventories 50.89 8.68 71.18

Sundry debtors 8.68 17.5 18.1

Cash and bank balance 17.5 22.94 7.79

loans and advances 22.94 46.61 2.91

Total 100 100 100

Current liabilities and provisions

Current liabilities 89.23 90.28 76.59

Other Current liabilities nil nil 20.18

Provisions 10.77 9.72 3.22

Total 100 100 100

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Graph no:1

Current assets chart

Inventories

Inference:

The hare of inventories in current assets is high in 2012

0

10

20

30

40

50

60

70

80

2010 2011 2012

Inventories

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Graph no-2

Sundry debtors chart

Inference:

The share of sundry debtors in current assets in the year 2010 is higher.

0

0.5

1

1.5

2

2.5

3

3.5

4

4.5

5

2010 2011 2013

sundry debtors chart

Series 1

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Graph no-3

Cash and Bank balances chart

Inference:

The share of cash and bank balances is higher in the year 2010 in forming total current assets

0

0.5

1

1.5

2

2.5

3

3.5

4

4.5

5

2010 2011 2012

cash and bank balances

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Graph no-4

Short term Loans and advances

Inference:

The share of loans and advances in total current assets is more in the year 2011

0

5

10

15

20

25

30

35

40

45

50

2010 2011 2012

loans and advancess

loas and advancess

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Graph no-5

Current liabilities

\

65

70

75

80

85

90

95

2010 2011 2012

current liabilities

current liabilities

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Graph no-6

Provisions

0

2

4

6

8

10

12

2010 2011 2012

Provisions

Provisions

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Graph no-7

Other current liabilities

0

5

10

15

20

25

2010 2011 2012

other current liabilities

other current liabilities

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Table no-3

2.3Schedule of changes in working capital of the year 2010 and 2011

PARTICULARS 2010 2011 INCREASE DECREASE

CURRENT ASSET Rs. Rs. Rs. Rs.

Inventory 10117530 11683474.9 1565944.88

Sundry debtors 17248370.62 6276193.43 10972177.19

Cash and bank

balance 3477640.85 1427306.9 2050333.95

Other current assets

Loans and advances 4561066.34 16925115.7 12364049.4

TOTAL current

assets(A) 35404607.81 36312090.9

Current Liabilities

Current Liabilities 16363208 12540509 3822699

Provisions 19750602.11 1349972 18400630.1

TOTAL Current

liabilities(B) 36113810.11 13890481 36153323.4 13022511.14

A-B -709202.3 22421609.9 36153323 13022511

Decrease in working

capital (23130812) (23130812)

Interpretation:

Observing the above table we can imply that there was a considerable decrease in working

capital in the year 2011 compared to 2010. The reason behind the decrease is increase in current

liabilities and decrease in cash and bank balances. There is also a decrease in Sundry debtors

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Table no-4

2.3Schedule of changes in working capital of the year 2011 and 2012

PARTICULARS 2011 2012 INCREASE DECREASE

CURRENT ASSET Rs. Rs. Rs. Rs.

Inventoty 11683474.88 9288724 2394750.88

Sundry debtors 6276193.43 2362743 3913450.43

Cash and bank

balance 1427306.9 1016833 410473.9

Other current assets

Loans and advances 16925115.73 380499 16544616.73

TOTAL current

assets(A) 36312090.94 13048799

Current Liabilities

Current Liabilities 12540509 22510848 9970339

Provisions 1349972 1349972

TOTAL currentliabilities(B) 13890481 22510848 1349972 33233630.94

A-B 22421609.94 -9462049 1349972 33233631

Increase in working

capital 31883659 31883659

Interpretation:

There is a considerable increase in working capital in the year 2012 compared to 2011. There is

increase in all current assets and a decrease in current liabilities. This is leading to a favourable

working capital status.

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RATIO ANALYSIS RELATED TO WORKING CAPITAL AND

NET PROFIT

2.4LIQUIDITY RATIO

Quick Ratio=Quick Asset/Current Liability

Quick Asset= Current asset- Inventories

Table no-5

YEAR 2012 20112010

Quick Asset

(Rs.)3760075 4732201

9763544

Current

Liability (Rs.)

22510848 27843763 18338268

Quick Ratio (

in Times)0.17: 1 0.17: 1

0.53: 1

Analysis: In the year 2010 the quick ratio was 0.53 and 0.17 for 2011 and 2012.

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Interpretation: - The standard quick ratio is 1:1. Quick Ratio is a rigorous measure of

companys ability to service short-term liabilities.. Quick ratio has been same over two years.

This implies that the funds has not been unnecessarily accumulated and are being profitably

utilized. Quick ratio has no difference mainly due to current liabilities over the years.

Graph no-7

2.5 Gross profit ratio

0

0.1

0.2

0.3

0.4

0.5

0.6

2010 2011 2012

Quick ratio

Quick ratio

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Gross profit ratio measures the relationship of gross profit to net sales and is usually

represented as a percentage. Thus, it is calculated by dividing the gross profit by sales:

Formula

Gross Profit

Gross profit Ratio = -------------------------- X 100

Net Sales

Gross profit ratio is one of the very important ratios for measuring profitability of a firm. A

high ratio of gross profits to sales is a sign of good management as it implies that the cost of

production of the firm is relatively low. It may also be indicative of a higher sales price without a

corresponding increase in the cost of goods sold.

Table no-6

Year Gross profit Net sales Ratio %

2010 6768475 41152556 16.44

2011 4524035 44397833 10.18

2012 nil 13342655 0

Analysis: The gross profit ratio in the year 2010 is 16.44%, 10.18 in the year 2011 and nil in the

year 2012.

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Interpretation:

Looking at the above table we can imply that there is lesser gross profit ratio. A high ratio of

gross profits to sales is a sign of good management as it implies that the cost of production of the

firm is relatively low. It may also be indicative of a higher sales price without a corresponding

increase in the cost of goods sold.

Graph no-8

0

2

4

6

8

10

12

14

16

18

2010 2011 2012

Gross profit ratio

Gross profit ratio

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2.6 CASH RATIO OR ABSOLUTE RATIO

This ratio indicates the relationship between cash and bank balance to current liability for

the study period. It is calculated for comparing the cash with current liability. The higher

proportion denotes idleness of cash, which affects the profitability position of the firm, and a low

proportion of cash means shortage of cash poor liquidity.

Formula

Cash and Bank Balances

Cash Ratio = ---------------------------------------

Current Liability

Table no-7

YearCash and Bank

Balances (Rs.)

Current Liabilities

(Rs.)Ratio

2010 3477640 16363208 0.21

2011 1427206 12450509 0.11

2012 1016833 22510848 0.04

Analysis:

In the year 2010 is 2010, 0.11in the year 2011 and 0.04 in the year 2012.

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Interpretation:

Observing the above table we can imply that the absolute ratio is less in 3 years. This implies

that the firm has low profitability. It is a known fact that if the proportion of cash ratio is less

than 0.5 it means less profitability. The firm does not have an optimal profitability.

Graph no-9

0

0.05

0.1

0.15

0.2

0.25

2010 2011 2012

Absolute ratio

Absolute ratio

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2.7 NET PROFIT RATIO

Net profit ratio measures the relationship of net profit to net sales and is usually represented as a

percentage. Thus, it is calculated by dividing the net profit by sales:

Formula

Net Profit (after taxes)

Net profit Ratio = ---------------------------------------- X 100

Net Sales

Net profit ratio is one of the very important ratios for measuring profitability of a firm.

Table no-7

YearNet Profit before

Depreciation/AmortizationNet Sales (Rs.) Ratio

2010 6768475 41152556 16.44

2011 4524035 44397833 10.18

2012 nil 13342655 Nil

Analysis:

The net profit ratio in the year 2010 is 16.44, 10.18 in the year 2011 and nil in the year 2012

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Interpretation:

Net profit ratio indicates the level of profit gained by the company at a certain sales figure.

2010 and 2011 had a considerable profit where as there were no profits in the year 2012.

Graph no-11

0

2

4

6

8

10

12

14

16

18

2010 2011 2012

net profit ratio

net profit ratio

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2.7 OPERATING RATIO

Operating ratio establishes the relationship between cost of goods sold and other operating

expenses on the one hand and the sales on the other..

Formula

Operating Cost

Operating Ratio = ---------------------------- X 100

Net Sales

A higher operating ratio is unfavorable since it will leave a small amount of operating

income to meet interest, dividends etc. The operating ratio is a yardstick of the operating

efficiency, but it should be used cautiously. It is affected by a number of factors. Such as external

uncontrollable factors, internal factors, employee and managerial efficiency or inefficiency all of

which are difficult to analyze.

Table no-8

Year

Cost of Sales +

Operating Expenses

(Rs.)

Net Sales (Rs.) Ratio (%)

2010 34912357 41152556 84.8

2011 40767509 44397833 91.8

2012 24536808 13342655 183.8

Analysis:

In the year 2010 the operating ratio was 84.8, 91.8 in the year 2011 and 183.8 in the year 2012.

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Interpretation:

A higher operating ratio is unfavourable since it will leave a small amount of operating income

to meet interest, dividends etc. The operating ratio is a yardstick of the operating efficiency, but

it should be used cautiously. It is affected by a number of factors. Such as external uncontrollable

factors, internal factors, employee and managerial efficiency or inefficiency all of which are

difficult to analyze.

0

20

40

60

80

100

120

140

160

180

200

2010 2011 2012

Operating ratio

Operating ratio

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2.8 CURRENT RATIO

The current ratio of firm measures its short-term solvency that is its ability to meet sort

term obligations. Current ratio may be defined as the relationship between current liabilities.

This ratio is also known as working capital ratio.

Formula

Current assets

Current Ratio =

Current Liabilities

TABLE NO-9

YEAR 2012 2011 2010

Current

Asset (Rs.) 13048799 16415676 19881074

Current

Liability (Rs.)

22510848 27843763 18338268

Current

Ratio ( in

Times)

0.58: 1 0.59: 1

1.08: 1

Analysis:

In the year 20210 the current ratio was 1.08, 0.59 in the year 2011 and 0.58 in the year 2012

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Interpretation: -The standard current ratio is 2:1. It implies that for every one rupee of current

liabilities, current assets of 2 rupee are available to meet them. In other words, the current assets

are 2 times the current liabilities. Liquidity position, as measured by the current ratio, is much

more in the year 2011 as compared to that of 2012. More the current ratio it implies more the

ability of the company to meet its obligations in full. Increase in current liability is reason for

decrease in ratio in 2012.

0

0.2

0.4

0.6

0.8

1

1.2

2010 2012 2013

c

u

r

r

e

n

t

r

a

t

i

o

Years

Current ratio

Current ratio

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3.FINDINGS

3.1 This study is carried out with the objective of evaluating the Net Working Capital and

its impact on Net Profit for the growth of the company. This chapter attempts to highlight the

findings of the study.1. The common size statement of current assets and current liabilities shows that the

inventory percentage is low in the year 2011 because of high sales.

2. The sundry debtor in the common size statement of current assets and liabilities, due tothe less credit sales the debtors have increased 18.1% in 2012.

3. The cash and bank balance in the common size statement shows the lesser in the year2012 due to purchase of raw materials and losses

4. The other current assets in the common size statement were initially very high because ofdeposit in the government & public bodies, etc.

5. The current liabilities in the common size statement are high in the year 2010 due to highcredit purchase made by the firm.

6. The schedule of changes in the net working capital of the company shows an increasingtrend of the year 2009-10 due to the increase in inventories, proper repayment by the

sundry debtors and high deposit over the cash/bank balances.

7. There is a considerable decrease in working capital in the year 2011.8. The current ratio was least in the year 2010 and 2011 with 0.58 and 0.59 respectively is

due to the reason that the required amount was invested only in inventories and

receivables.

9. In the year , the quick ratio was 0.53, due to the increase in sundry debtors because ofcredit purchase.

10. The cash or absolute ratio was 0.04 in the year 2012 due to lack of the better utilizationof funds in depositing in current accounts.

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11. The net profit ratio was nil in the year 2012, due to less sales, price competition andeconomic condition and losses.

12. The operating ratio was above 183 in the year 2012; this is due to high operatingexpenses i.e. materials, power and fuels, conversion charges, etc.

13. The gross profit shows a fluctuating trend because of unfavorable purchasing policies,lower selling prices, stiff competition, etc.

14. The correlation between the net working capital and the net profit shows that they arepositively correlated i.e. 0.65.

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3.2 SUGGESTIONS

The following are the Suggestions made to Tejkamal trade links pertaining to the topic of the

study:

Due to lack of co-ordination among the purchases, production, marketing and financedepartments, inventory and receivables are high in the company. To ensure it they have to

co-ordinate with each other to solve this problem.

To bring down the inventory, fixed norms should be followed for stocking various rawmaterial items.

The proportion of debtors should be reduced; making changes in the collection policies i.e.giving cash discounts to the customers who make payment in short duration.

Cash management in the organization has to be streamlined by proper planning and control.So that optimum cash/bank balance can be maintained.

The management had all along been concerned with the liquidity aspect of working capitaland had not paid due attention to the profitability aspect. It is very important for the

management to consider both the aspects of working capital as equally significant.

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4. CONCLUSION

Finance is the lifeblood of every business. Working capital is a vital element in it. A company

should maintain balanced working capital because excess working capital will result in

unnecessary accumulation of inventories, defective credit policy, etc. Inadequate working capital

will affect the growth and the net profit of the organization. Tejkamal Trade Links, Salem has

got fair working capital in last three years except 2011. The study reveals that the company must

maintain certain level of working capital to increase the net profit. And the organization can

minimize the absenteeism to increase the production and it can take measures to reduce the stress

of the employees. Thus the working capital concepts are very important and have to consider for

efficient functioning.

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Annexure

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Bibliography

Websites

Investingschool.com Managementparadise.com Markettipsandtools.com Tejkamaltradelinks.com Manageelevator.com

Books

Marketing management text book by Khan and Jain Advanced Financial Management by Kothari