Working Capital Management of Ual Industries Ltd.

AT
UAL Industries Ltd, Dhenkanal (Orissa),
SUBMITTED AS A PARTIAL FULLMENT OF PGDM CORPORATE GUIDE MR. S.N. BHATTACHARYA

(ACCT. GENERAL MANAGER, COMMERCIAL)
ACADEMIC GUIDE DR. U.C. PATTNAIK

(DIRECTOR OF ISBM)
SUBMITED BY: SAUMENDRA NANDA ROLL NO-MB05017 ISBM (BHUBANESWAR)
DECLARATION
I do here by declare that this piece of project report entitled A Study on Working capital Management practices in UAL INDUSTRIES LTD. for partial fulfilment of the requirements for the award of the degree of POST GRADUATE DIPLOMA IN MANAGEMENT is a record of original work done by me under the supervision and guidance of DR. U.C PATTNAIK, ISBM .This project work is my own and has neither been submitted nor published elsewhere.
Place: Bhubaneswar DATE:
SAUMENDRA NANDA REG. NO.MB05017
ANY WORK EITHER SMALL OR BIG OWES A GREAT DEAL TO OTHERS OTHERS, MINE IS NO EXCEPTION TO IT
ACKNOWLEDGEMENT
Success is not destination, but a journey it is often said. I realized it even better during my summer internship program at UAL INDUSTRIES LTD. I may not have come this far without help, guidance and support of certain people who acted as guides, friends and torch bearers along the way. Training is an indispensable part of a person joining a company as an employee. It provides the students an opportunity to gain experience on the practical applications of their knowledge. My training at UAL INDUSTRIES has been very fruitful. I am sure that the hands of experience I have gained here will go a long way towards my rest of life.
I specially and most sincerely acknowledge with deep sense of gratitude to the companys managing director, Mr. Arun k Saraf, and the HR, Mr. Dasgupta for give me the chance to go to the Dhenkanel factory and learn, experience and gather the insights from the employees at the factory /floor level which helped me to understand the entire working capital management.
I am greatly indebted to my guides DR.U.C.PATTNAIK, faculty guide for Finance (summer internship), INTERNATIONAL SCHOOL OF BUSINESS MANAGEMENT & Mr.S.N.Bhattacharya, Asst. Manager (commercial) UAL INDUSTRIES LTD. DHENKANAL for their constant guidance, advice and help which enabled me to finish this project report properly in time. Last but not the least, I would like to forward my gratitude to my friends & other faculty members who always endured me and stood with me and without whom I could not have completed the project.
SAUMENDRA NANDA ISBM, BBSR
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PREFACE
To start any business, First of all we need finance and the success of that business entirely depends on the proper management of day-to-day finance and the management of this shortterm capital or finance of the business is called
Working capital Management.
Working Capital is the money used to pay for the everyday trading activities carried out by the business - stationery needs, staff salaries and wages, rent, energy bills, payments for supplies and so on. I have tried to put my best effort to complete this task on the basis of skill that I have achieved during the last one year study in the institute. I have tried to put my maximum effort to get the accurate statistical data. However I would appreciate if any mistakes are brought to my by the reader
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TABLE OF CONTENT CHAPTER-1

INTRODUCTION 1.1 objective of study 1.2 Scope of the study 1.3 Limitation of the study 1.4 Research methodology 1.5 Methods of data collection
PAGE NO. 1.1 1.1 1.1 1.1 1.2
CHAPTER-2
COMPANY PROFILE 2.1 HISTORY OF UAL INDUSTRIES LTD. 2.2 UNIT OF UAL INDUSTRIES LTD. 2.3 BORD OF DIRECTORS 2.4 ORGANISATION STRUCTURE OF UAL INDUSTRIES LTD. 2.5 VISION & MISSION OF UAL INDUSTRIES LTD. 2.6 MANAGEMENT INFORMATION SYTEM 2.7 CORPORATE SACIAL RESPONSIBILITIES 2.8 FACTS & MYTHS 2.9 PRODUCT OF UAL INDUSTRIES LTD. 2.10 INSTALLATION PROCEDURE & PROCEDURE OF MITRING 2.11 SERVISES 2.12 TRAINING 2.13 QUALITY POLICIES 2.14 ENVIRONMENT POLICIES 2.15 ENVIRONMENT AUDIT 2.16 AWARDS 2.17 CERTIFICATES 2.18 DISTRIBUTION NETWORK 2.1 2.2 2.3 2.4 2.5 2.5 2.6 2.7 2.9 2.12 2.13 2.14 2.15 2.16 2.16 2.17 2.18 2.19
CHAPTER-3
3.1 3.2 3.3 3.4 3.5 3.6 3.7 3.8 MEANING OF WORKING CAPITAL CONCEPT OF WORKING CAPITAL SIGNIFICANCE OF WORKING CAPITAL CIRCULATION OF WORKING CAPITAL CLASSIFICATION OF WORKING CAPITAL FACTORS INFLUENCING WORKING CAPITAL REQUIREMENT COMPONENTS OF WORKING CAPITAL FORECASTING OF WORKING CAPITAL 3.1 3.1 3.2 3.3 3.3 3.4 3.6 3.8
3.9 3.10 3.11 3.12 3.13 3.14 3.15 3.16 3.17 3.18 3.19 3.20 3.21
CONTROL OF WORKING CAPITAL SOURCES OF WORKING CAPITAL STRUCTURE OF WORKING CAPITAL OPERATING CYCLE DURATION OF WORKING CAPITAL INSTALLATION OF WORKING CAPITAL MANAGEMENT MEANING OF WORKING CAPITAL MSNAGEMENT CONCEPT OF WORKING CAPITAL MANAGEMENT IMPORTANT OF WORKING CAPITAL MANAGEMENT SIGNIFICANCE OF WORKING CAPITAL MANAGEMENT THEORY OF WORKING CAPITAL MANAGEMENT PRINCIPLES OF WORKING CAPITAL MANAGEMENT APPROACHES OF WORKING CAPITAL MANAGEMENT
3.8 3.9 3.9 3.11 3.12 3.13 3.13 3.13 3.14 3.15 3.16 3.16 3.17
CHAPTER-4
4.1 4.2 4.3 4.4 4.5 4.6 4.7 4.8 4.9
DATA ANALYSIS & INTERPRETATION DATA ANALYSIS & INTERPRETATION RATIO ANALYSIS (formula) STATEMENT SHOWING THE SCHEDULE OF CHANGING IN WORKING CAPITAL COMPAIRSATION SALES & WORKING CAPITAL MANAGEMENT OF WORKING CAPITAL(RATIO ANALYSIS) INVENTORY MANAGEMENT RECEIVABLE MANAGEMENT CASH MANAGEMENT OPERATING CYCLE 4.1 4.2 4.3 4.5 4.6 4.1 4.17 4.21 4.25
CHAPTER-5
FORECASTING
5.1 5.2 5.3 5.4
TIME SERIES ANALYSIS METHOD OF LEAST SQUARES FORECASTING FOR THE YEAR 2011-12 FORECASTING OF WORKING CAPITAL FOR THE YEAR 2011-12
5.1 5.1 5.1 5.7
CHAPTER-6
6.1 6.2 6.3 6.4
FINDING RECOMMENDATION CONCLUSION BIBLIOGRAPHY 6.1 6.1 6.3 6.4
ANNEXURE
ANNEXURE
OBJECTIVE OF THE STUDY
WORKING CAPITA MANAGEMENT OF UAL INDUSTRIES LTD.
2012
1.1 OBJECTIVE OF THE STUDY:

Study of the working capital management is important because unless the Working capital is managed effectively, monitored efficiently planed properly and reviewed periodically at regular intervals to remove bottlenecks if any the Company cannot earn profits and increase its turnover. With this primary Objective of the study, the following further objectives are framed for a depth Analysis. To study the working capital management of UAL INDUSTRIES LTD. To study the optimum level of current assets and current liabilities of the Company. To study the liquidity position through various working capital related Ratios. To study the working capital components such as receivables accounts, Cash management. To estimate the working capital requirement of UAL INDUSTRIES LTD. To study the operating and cash cycle of the company
1.2 SCOPE OF THE STUDY:

The scope of the study is identified after and during the study is conducted. The Study of working capital is based on tools like trend Analysis, Ratio Analysis, Working capital leverage, operating cycle etc.Further the study is based on last 5 years UAL INDUSTRIES LTD. And even factors like Competitors analysis, industry analysis were not considered while preparing this project.
1.3 LIMITATIONS OF THE STUDY:

Following limitations were encountered while preparing this project: 1.3.1 Limited data:This project has completed with annual reports; it just constitutes one part of Data collection i.e. Secondary. There were limitations for primary data Collection because of confidentiality. 1.3.2 Limited period:This project is based on five year annual reports. Conclusions and Recommendations are based on such limited data. The trend of last five-year May or may not reflect the real working capital position of the company 1.3.2 Limited area:Also it was difficult to collect the data regarding the competitors and their financial information. Industry figures were also difficult to get.
1.4 RESEARCH METHODOLOGY

INTRODUCTION: Research methodology is a way to systematically solve the research problem. It may be understood as a science of studying now research is done systematically. In that various steps, those are generally adopted by a researcher in studying his problem along with the logic behind them.
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WORKING CAPITA MANAGEMENT OF UAL INDUSTRIES LTD.
2012
It is important for research to know not only the research method but also know methodology. The procedures by which researchers go about their work of describing, explaining and predicting phenomenon are called methodology. Methods comprise the procedures used for generating, collecting and evaluating data. All this means that it is necessary for the researcher to design his methodology for his problem as the same may differ from problem to problem. Data collection is important step in any project and success of any project will be largely depend upon now much accurate you will be able to collect and how much time, money and effort will be required to collect that necessary data, this is also important step. Data collection plays an important role in research work. Without proper data available for analysis you cannot do the research work accurately.
1.5 METHODS OF DATA COLLECTION:

Primary data collection Secondary data collection 1.5.1 Primary Data:
There are two types of data collection methods available.
The primary data is that data which is collected fresh or first hand, and for first time which is original in nature. Primary data can collect through personal interview, questionnaire etc. to support the secondary data. 1.5.2 Secondary Data Collection Method: The secondary data are those which have already collected and stored. Secondary data easily get those secondary data from records, journals, annual reports of the company etc. It will save the time, money and efforts to collect the data. Secondary data also made available through trade magazines, balance sheets; books etc.This project is based on primary data collected through personal interview of head of account department, head of SQC department and other concerned staff member of finance department. But primary data collection had limitations such as matter confidential information thus project is based on secondary information collected through five years annual report of the company, supported by various books and internet sides. The data collection was aimed at study of working capital management of the company. Project is based on Annual report of UAL INDUSTRIES LTD 2011-10 Annual report of UAL INDUSTRIES LTD 2009-10 Annual report of UAL INDUSTRIES LTD 2008-09 Annual report of UAL INDUSTRIES LTD 2007-08 Annual report of UAL INDUSTRIES LTD 2006-07
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COMPANY PROFILE
WORKING CAPITAL MANAGEMENT OF UAL INDUSTRIES LTD.
2.1 HISTORY OF THE COMPANY
UAL Industries Ltd., formerly known as Utkal Asbestos Limited, is in the business of manufacturing Fibre Cement Corrugated sheets and accessories under the brand name Konark. The company has manufacturing units in 3 locations namely Dhenkanal (Orissa), Tungadhowa (Midnapore, West Bengal) and Baramanpur (Uttar Pradesh).
The mother Plant was set up at Dhenkanal, Orissa with the initial installed capacity of 30,000 MT per annum in the year 1980. To the day, in 2010, the production capacity of the company is 4.30 Lacs MT per annum. The companys products are sold and distributed under the brand name Konark which is synonymous with Orissa. The company maintains its leadership in Eastern India with the Konark brand established as a superior Brand based on quality, strength, and durability. The company received the ISO 9001:2008, ISO 14001:2004 and OSHAS 18001:2007 certifications from Bureau Veritas Quality International (BVQI) and TUV which exhibit the highest quality standards. UAL Industries Ltd. is a professionally managed company. Shri S M Shroff is the non executive Chairman and Shri A K Saraf is the Managing Director who manages overall functioning of the company along with Executive Director, Sri K N P Sinha and other professionally qualified Non-executive Directors, unit heads and a dedicated team of Officers and Executives. UAL Industries Limited is the largest Fibre Cement Sheet manufacturer and marketer in Eastern India with a 40% market share in East India. The National average is 10%. The company provides opportunity of direct employment to more than 700 personnel and indirectly to nearly 1500 persons.
It may be worthwhile to mention that after a lot of R & D the company has started using Fly Ash as a major Raw Material to the extent of 37% in the Raw Material Mix since 1992 and thereby helping in tackling the environment problem created by emission of fly ash. The Company is recipient of Environment Excellence Awards from Govt. of West Bengal, Orissa and TERI on various occasions.
A new green field Fibre Cement Sheet manufacturing facility is being set up in the State of Bihar in the district of Vaishali near Patna. The land has been acquired and project clearance from the Ministry of Environment & Forests, New Delhi is awaited. The Capital investment in initial phase of the project shall be of the order of Rs. 30 Corers. It is likely to be commissioned during the first quarter of next financial year 201112. With addition to this plant, the total production capacity would stand enhanced to 5.50 Lacs MT per annum.
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2.2 UNIT OF UAL INDUSTRIES LTD.
The mother factory was set up in the year 1980 and is located about 60 Km away from Cuttack on the National Highway No. 42 on Cuttack-Sambalpur Road. The plant operates with a production capacity of 30,000MT. ORISSA FACTORY At+Po - Korian P.Box No - 8 Dhenkanal - 759001 Orissa
As a measure of expansion, Utkal Asbestos Ltd. set up its second unit at village: Tungadhowa near Guptamani, District: Midnapore, West Bengal, under the name and style UAL- BENGAL" in the year 1999. The Midnapore unit at village Tungadhowa is located about 20 Km from the town of Kharagpur on the National Highway 6, on Kolkata - Mumbai Road. The production capacity of the Plant has gone up from 1, 40,000 TPA to 2, 50,000 TPA. UAL Bengal, Tungadhowa Works received ISO: 9001-2008, ISO: 14001-2004 and OHSAS:18001-2008 from BVQI, accredited by UKAS, London. UAL BENGAL FACTORY Konark Nagar Tungadhowa West Midnapore - 721513 West Bengal
The company set up its third works at Village Baramanpur, District: Jaunpur near Varanasi in U.P. for manufacturing. A new milestone is our UAL- U.P. set up in the year 2005 at Village Baramanpur District Jaunpur. The unit is about 30km away from Varanasi city. Production capacity of plant is 1, 20,000 T.P.A. UAL-UP works has started the process of certification of ISO 9001-2001, 14000 OHSAS: 18001-2007 U. P. FACTORY Vill - Baramanpur Teshil - Keraket Dist Jaunpur
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2.3 BORD OF DIRECTORS
SHRI S.M. SHROFF CHAIRMAN (Qualifications B.A. (Hons.)

Relevant Industry Expertise Mr. Shroff is a Gold Medallist in Philosophy from Presidency College located at Kolkata. He started his career after leaving college as a general trader. His sharp business acumen cultivated in him the craft of turning around sick units. An almost dying fertilizer unit in Orissa was converted into a most successful Cement plant within a period of five years. His major interest of business is Real Estate. The first and most fashioned Shopping Mall of Kolkata namely Forum and the first and most integrated green I. T. infrastructure building namely Technopolis goes to his credit and repute.
SHRI A.K. SARAF - MANAGING DIRECTOR ( Qualifications B. Com. (Hons.)

Relevant Industry Expertise He has an experience of over 30 years in the industries engaged in manufacturing of cement and fibre cement roofing sheets and accessories. He plans, co-ordinates and directs all the facets of the management of the company. He acts as the brain of the organization and leads the company to success while achieving the companys vision and objectives.
SHRI K. N. P. SINHA - EXECUTIVE DIRECTOR (Qualifications B.E. (Chemical

Engineering) Relevant Industry Expertise He has a long experience of 35 years in Fibre Cement Sheet Industry. His expertise includes hands on knowledge of not only plant operations but strategic planning as well.
SHRI S.C. JAIN DIRECTOR
( Qualifications Master Degree in Personnel
Management and L.L.B.) Relevant Industry Expertise He is widely associated with various types of industries in his capacity as an Industrial Advisor in the matter of Personnel Management. He has a long experience in Industrial Relations and Labor Laws.
SHRI G. K. TULSYAN DIRECTOR (Qualifications B.Sc, F.C.A.) Relevant Industry Expertise He is a practicing Chartered Accountant and commands a wide knowledge on the subject of taxation and company law matters. He has a long experience and good command over his profession.
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2.5.1 VISION
To be the countrys largest and most trusted eco friendly low cost Fibre cement sheet manufacturer and marketer through customer satisfaction and sustainable growth.
2.5.2 MISSION
Achieve Market Leadership in FCC Sheets Drive long term profitable growth Delight customers by providing enhanced satisfaction Adopt state of art technology to further enhance the philosophy of Zero Waste Management and Zero Effluent Discharge from the plant. Research & Development activity is carried on a regular basis to innovate upgraded technology to optimize the raw material mix thereby increasing product efficiency at optimum cost. Make UAL Industries Limited a great place to work for all its employees.
2.6 MANAGEMENT INFORMATION SYSTAM

UAL Industries Ltd. runs Third Party Developed customized ERP (Enterprise Resource Planning) Application. The Modules run are: Financial Management Material Management Payroll & HR Management Sales & Dispatch Management All The Factories, Depot and H.O are interconnected with MPLS VPN for online data transfer and connectivity. In near future, Video Conferencing and tele-communication would be charted through WAN. Special policies have been adopted for the following: 2.6.1 DATA SECURITY Data Security has been given prime importance with introduction of Business Continuity Planning (BCP) and Disaster Recovery Planning (DRP) ensuring minimal downtime with data replication methodology. Automated Backing up of user documents has been regulated. 2.6.2 NETWORK SECURITY Internal Network of UAL Industries Ltd. has been made secured from outside threat through introduction of UTM at Internet Gateway Point to filter unwanted packets and installing Anti-Virus Software. The independent network structure is getting converted to centrally controlled network to facilitate better network government.
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2.7 CORPORATE SOCIAL RESPONSIBILITIES
Sl. No
1 2 3
Date
Donation Made to
Amount (Cash/Kind)
RS50,000.00 Rs. 84,000.00 Rs.2,40,000.00
26.06.2010 28.01.2010 NA
4 5 6
NA 31.07.2010 NA
Donated to the Rogikalyana Samiti Dhenkanal Main Hospital Incurred for repairing and painting of Blind and Deaf School, Dhenkanal Town Supply of 15 days ration to the Anathashrama, Hata Road Dhenkanal & Anathashram, Gobindapur, Dhenkanal. approx @ Rs.20, 000.00 per month Donated to Vaniram High School Kesheria, Dhenkanal for repairing of building Donated Fibre Cement Corrugated sheets to Gajamara School, Dhenkanal Donated to Maharshi Dayananda Service Mission Kathagara, Dhenkanal for accommodation of orphan Children and help less old persons Donated to Swadhinata Sangrami Mr. Braja Mohan Mohapatra.Kesharia, Dhenkana Donated Fibre cement sheets to Industrial Training Centre, Rengali Dam side Talcher. Plantation at Kapilash Girls High School Deogan, Deogan High School, Deogan U.P. School, Deogan Primary School, Soraciapada Sebashram, Deogan, Deogan Medical and back side of the plant adjacement to Railway line Donation to Dhenkanal Mohosthab Finance Assistanct to Saraswati Sishu Mandir for Sports Festival Trophy cost provided to Mayoor Sangeet Vidyalalya For Cultural Programme Provided Vehicle for Eye Camp as per direction of Collector & Dist. Magistrate
Rs. 30,000.00 Rs. 13,592.00 Rs. 60,550.00
7 8 9
NA NA NA
Rs. 32,000 .00 Rs 12,000.00 Rs.1,20, 000.00
10 11 12 13
27.09.2010 19.09.1020.09.10 01.10.2010 29.09 & 01.10
Rs. 50,000.00 Rs4,600.00 Rs. 3,000.00 Rs. 4,000.00
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FACTS & MYTHS 2.8.1 What is Asbestos?

Asbestos is a naturally occurring fibrous mineral commonly found in underground rock formations. For commercial purposes, it is recovered by mining and rock crushing. Fine particles, invisible to the eye, are present in the air and water, everywhere. All of us may be inhaling them and ingesting them through drinking water every day for our life without any adverse effect on health. Asbestos is commercially used since 1900 and is classified into 2 groups. One category is called "Chrysotile" (white) Asbestos and the other group is termed as Amphiboles consisting of Crocidolite (blue), Amosite (brown) etc. White asbestos (chrysotile) constitutes 98% of world production for its commercial use. Indian asbestos cement sheet and pipe manufacturers import all their requirements of chrysotile fibres from Canada, Brazil, Russia, Zimbabwe and Kazakistan for production of AC sheets and pipes. India imports only 20% of world production from above countries. Asbestos is also mined in India, but quantity and quality-wise it is of no relevance to our asbestos cement production. It is generally found in large concentrations in the natural bedrock of the earth crust. The Chemical composition of Crocidolite, Amosite and Chrysotile are different. Asbestos fibre, (composed mainly of magnesium and silica), is a great reinforcing agent. While its tensile strength is greater than steel, it has other rare and highly valued fire retardant, chemical resistant and heat insulating qualities. In fact it is a magic mineral and no other substitute can match its properties.
2.8.2 What are Asbestos Cement (AC) Products?

Because of its exceptional strength and ability to cover inside area as reinforcement only 8.9% of chrysotile fibres are adequate to combine with cement and other raw materials. Over 90% of asbestos fibre imports of India go into AC sheet and pipe production. AC Sheets have used in India for 70 years. Being weather proof and corrosion resistant, these sheets are practically ageless and maintenance free, whereas metal sheets corrode and deteriorate with age and exposure. AC Sheets have also proven to be the most cost effective, easy-to-install, strong and durable roofing material for warehouses, factories, low-cost housing, and practically, any structure needing a roof. Apart from India, Russia, China, Indonesia, Thailand and Brazil are some of the largest users of AC Sheets. AC Sheets and pipes, being corrosion and erosion-free, once properly laid and jointed, need no maintenance or replacement. They are also very cost effective. AC products, which consume low energy in manufacture and do not in any way deplete the natural resources, meet the needs of the country in its developing economy in the context of rapidly rising population and limited resources.
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AC products are manufactured under (ISI) license strictly conforming to the standards of Bureau of Indian Standards- IS 459/1992 for Corrugated Roofing Sheets, IS2098/ 1997 for Flat Sheets and IS 1626 (Part 111)/1994 for Roofing Accessories.
2.8.3 Explain the negative reports on asbestos:

The bias against the use of asbestos in few countries is due to the adverse Western media coverage relating to altogether different types and usages of asbestos in the past in those countries i.e. sprayed-on asbestos and friable low-density asbestos insulation used under uncontrolled conditions at that time due to lack of adequate scientific knowledge. For example usage of amphibole (blue) variety in such applications. Though these particular usages have since been discontinued in the West, the claims relating to the past keep appearing in the media resulting in general confusion. In India Asbestos Fibre was never used as sprayed insulation. But, once the scientific research into the risks of asbestos was set in motion, development and installation of pollution control systems took place, enabling the asbestos mining and asbestos cement industries to maintain safe and acceptable levels of dust pollution at the work places. Once the safety fears were defined, the Governments have stepped in and laid down pollution control regulations and the mechanisms to enforce their compliance. Compliance with these regulations and standards assured the workers in asbestos cement industries a risk free environment.
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PRODUCT 2.9.1 FC CORRUGATED SHEETS

Konark Roofing sheets are the product of the optimum composition of the best quality Portland cement and imported natural mineral fibre. The most stringent quality control has made Konark the much sought after roofing sheets in the market. The unique manufacturing process makes Konark the versatile roofing material. KONARK sheets are strong and durable. They gain strength with age and can withstand the vagaries of weather in India. KONARK sheets are non-combustible, non-corrosive, completely waterproof, and resistant to strong wind and a very good sound insulator.
In brief, it is the best roofing sheet available in India - giving its money's worth!
2.9.1.1 STANDARDS:
KONARK sheets are manufactured confirming to the following standards: IS: 459-1992 Specification for UN reinforced corrugated and semi-corrugated Asbestos Cement Sheets. Gutters & Gutter Fittings are manufactured as per IS: 1626(Part-II)-1980 Roofing Fittings are manufactured as per IS: 1626(Part-III)-1981
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2.9.2 PLAIN SHEET

APPLICATIONS Wall Claddings Partition Walls False Ceilings Paneling Shelves TABLE TOPS Ironing Boards Cupboards Internal Linings To Wardrobes Signboards SHOP AWNING Air Conditioning Duct Linings Doors Dadowork FIXING CENTRTE OF SUPPORTING
Thickness
IDEAL IN Multi Story Building Textile Mills Chemical Industries Kitchen & Bathroom Hotels, Hospitals, Departmental Stores UNIQUE FEATURES Easy Workability Dimensionally Stable Durable Light
Available in Sizes: 2.44 M X 1.22 M 1.83 M X 1.22 M 1.22 M X 1.22 M
4mm & 6 mm 4mm & 6 mm 4mm & 6 mm
4mm 6mm CENTRTE OF SUPPORTING

Thickness
Horizontal
1.20 M 1.20 M 0.30 M 0.30 M
Vertical
0.40 M 0.60 M 0.6 M 0.6 M
4mm 6mm EDGE CLEARENCE: 20mm
At Perimeter
At Intermediate Support
2.9.3 TECHNICAL SPECIFICATION
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2.9.4 GUTTER ACCESSERIES
2.9.5 ROOF ACCESSERIES
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2.10 INSTALLATION PROCEDURE
1. Do not stack more than 150 sheets, one over the other. If possible, do not expose to sunlight. 2. To lift hold the sheets only in the places marked 'L'. 3. Improper storage of sheets may result in to damage of the sheets. The damage will be noticed only after installation. 4. Always store sheets on three even level supports. Sheets of varying length should be stacked separately. 5. Always carry the sheets lengthwise, not width wise. If sheets have to be stored for long, keep indoors. 6. The distance between two purlins should not be more than 1.40 meters for roofing and 1.70 meters for side cladding. Clamp with a purlin at the end of each sheet. 7. Do not make holes in the sheet by punching, always drill holes. The drilled hole should be 3mm. Bigger than the bolt. Use a Bitumen washer to seal holes. 8. The hole should be drilled at least 2.95mm. away from the edge of the sheet. Initially tighten nut bolts with the hand only. After 13-14 sheets are installed then all the nut bolds should be tightened together. 9. Tighten the nut in such a way that the bitumen - washer can seal the space between the bolt and the hole. Do not tighten the bolt too much, otherwise the sheet will crack. Use a spanner to tighten nut finally. 10. For a secure fitting, wherever 4 sheets have to be joined the corners should be mitred. The cut corners should be 150mm. in length and 44mm. in breadth. Use a saw to cut corners. Do not use a cutter. 11. Put bolts only in crowns, not in valleys. 12. The bolt should pass through the second and the last sheet. 13. Use a cat ladder for working on the roof. 14. The outlet of the gutter line should not more than 15meters away. 15. The length of the free overhang should more than300mm.
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2.10.1 PROCEDURE OF MITRING:
For the bottom row A, the first sheet should be cut; DDG. -- Cut in the upper left corner. For the second and middle rows B cut the bottom right corner of the first sheet. E--upper left-hand corners and bottom right hand corners to be cut. H--cut only upper left corner of the last sheet. For the upper row cut bottom right corners of C, F and F. Fix I without any cut.
2.11 SERVISES
In an ambition to always focus on customer needs, we provide prompt pre and post sales support. We also provide technical support and training to our dealers and distributors for proper handling Fibre Cement Corrugated Sheets and accessories. Once an order is placed, it is executed within 48 hours and delivered at clients' place. We believe in quick delivery, efficient and best quality service to our customers and dealers. Our service as a whole is also directed towards the society in creating employment and providing high class products for creating solid housing and industrial infrastructure.
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2.12 TRAINING
UAL Industries Limited imparts training to the Masons/ Carpenters for proper fixation of Fibre Cement Sheets on the roof. For this purpose, the Company organises the Masons/ Carpenters Meet at various market places in rural areas where the training for proper fixation of Fibre Cement Sheets, estimation of different sizes of sheets for a required sizes of house, selection of accessories such as - Bitumen Washers, Nut Bolts, etc., minimum per line spacing required are highlighted to be taken care for longer life of the Fibre Cement Sheet Roof. As a welfare measure the Company arranges " Janata Personal Accident Insurance Policy " of Rs.25,000.00 for one year for all the Masons/ Carpenters attending the training program .
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2.13 QUALITY POLICIES
We, at UAL Industries Ltd., place an identification and satisfaction of customers needs in the field of Fibre Cement Sheets and accessories as our main goal. We shall try to achieve this by complying and reviewing Quality Management System for continual improvement, efficient utilization of resources and involvement of people for training and awareness. We aim to achieve the above, by implementing a quality management system conforming to ISO 9001: 2000 Standards.
Our major products, i.e., Fibre cement corrugated sheets with brand name "KONARK" are produced conforming to the BIS specification of IS 459:1992 with ISI Marking. Our other products are: Asbestos cement building boards produced conforming to IS 2098: 1997 and Fibre Cement Gutters & Roofing Accessories produced conforming to IS 1626(part 2): 1994 & IS 1626(part 3): 1994. Our manufacture is based on adopted Technology with best usage of computer- aided programming system and the best available raw materials, imported and indigenous, scientifically blended. The products undergo strict quality control procedure in every stage of the manufacturing process until the product is ready for delivery.
Latest Orientation Technology is applied to obtain optimum Orientation Factor for the fibres of our product matrix to make them functionally more stable. The Bureau of Indian Standards with their Scheme of Testing & Inspection periodically verifies our product quality for ISI marking.
Being an ISO 9001: 2008 Company, our quality system is also periodically audited and certified by BVQI (Bureau verities Quality International), London. All our processes and testing equipment are periodically calibrated by accredited external agencies. The products are weather resistant, maintenance free, permanent and their intrinsic properties being appreciated further with time. Prompt customer service is our priority and embedded in our quality system.
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2.14 ENVIRONMENT POLICIES

We at UAL Industries Ltd. undertake necessary measures to maintain an Eco-friendly environment. We follow an effective Environment Management System. The Thermal Power Plants emit millions of tons of fly ash annually, which are hazardous and cause a serious challenge to Ecosystem. It may be worthwhile to mention that after lot of R&D, we are using Fly Ash as a major raw material since 1992 for safeguarding the environment from pollution and stop health hazards. Manufacturing of AC Products consumes nearly 36 times less energy than its alternative metallic substitute thereby saving environment and atmosphere from addition of more toxins. Therefore our products are most cost effective and competitive. We have installed pollution control devices at the plant and all our pollution control equipment are interlocked with the plant operations. In case of failure of any pollution control devices, the process functioning will automatically stop. We have installed separate energy meters for each and every pollution control devices. The industry is running with the concept of "ZERO" effluent management. Processed waste water is recycled in the manufacturing process and domestic waste is discharged through septic tanks and soaks pits and reused in the green belt development. Ambient and stack air monitoring, work zone monitoring and health monitoring of all employees are being conducted periodically. The company has well planned solid waste management as all discards and rejects of sheet are pulverized and recycled back in the process. The company works on "ZERO" Waste Management Principle. It is relevant to mention that our products are Eco-friendly as the company is ISO 14001: 1996 certified by BVQI (Bureau verities Quality International), London for Environmental Management System under accreditation from UKAS, UK.
2.15 ENVIRONMENT AUDIT

Environmental Audit as per ISO 14001: 1996 schedule Internal Audit conducted by trained / certified officers of the company Results of environmental audit discussed in environmental management review meeting Appropriate action initiated.
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2.16 AWARDS
Shri Arun K Saraf, Managing Director, UAL Industries Ltd. receiving Environment Excellence Award 2005 from honourable Chief Minister of West Bengal Budhadev Bhattacharya (Centre).
Shri P S Ray, Vice President, UAL Industries Ltd. receiving TERI, Corporate Environmental Award-2007 in the presence of Nobel Laureate & Padma Vibhushan awardees Shri R K Pachori, Chairman, TERI (second from right) from honourable Finance Minister of India P Chidambaram (Third from right).
UAL BENGAL, Tungadhowa

Awards 1st prize of prestigious TERI, (Corporate Environmental Award-2007) Organization Receiving Year The Energy & Resource 2007 Institute, New Delhi headed by Nobel Laureate, R.k. Pachauri 1st prize of prestigious A collaborative effort of Indian 2005 Environment Excellence Award Chamber of Commerce and 2005 West Bengal Pollution Control Board
UAL ORISSA, Dhenkanal

Awards 3rd Position in Lowest Severity Rate of Accident 2nd Position in Lowest Frequency Rate of Accident 2nd Position in Longest Accident Free Period Pollution Control Excellence Award 2nd Position in Lowest Severity Rate of Accident Organization Government of Orissa Government of Orissa Government of Orissa Orissa Pollution Control Board Government of Orissa Receiving Year 2007 2006 2005 2004 2001
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2.17 CERTIFICATES
UAL ORISSA, DHENKANAL
Certification ISO 9001:2008 OHSAS-18001-2007 ISO 14001-2004 Organization TUV India Pvt. Ltd. TUV India Pvt. Ltd. TUV India Pvt. Ltd. Receiving Year 2008 2008 2004
UAL BENGAL, TUNGADHOWA

Certification ISO 9001:2008 & ISO 14001:2004 OHSAS-18001-2007 ISO 14001-2004-2008 ISO 9001:2000 Organization Bureau Veritas Receiving Year 2008
Bureau Veritas 2008 BVQI (Bureau Veritas Quality International) accredited 2008 by UKAS, London BVQI (Bureau Veritas Quality International) accredited 2004 by UKAS, London
CERTIFICATES FOR CORPORATE SOCIAL RESPONSIBILITY

Certification Shabujtama Silpa Pratisthan Shabujtama Silpa Pratisthan Organization West Bengal Govt. (Aranya Saptaha) West Bengal Govt. (Aranya Saptaha) Receiving Year 2010 2010
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2.18 DISTRIBUTION NETWORK

ODISHA
SALES DEPOTS BALASORE Near Assam Oil Petrol Pump Nh-5, Vill- Biruan Gaon P.O- Sergarh, Dist- Balasore Pin-756060, ODISHA SAMBALPUR Joshi Garden Cuttack Road P.O-Dhanupalli Sambalpur - 768005 SALES OFFICE DHENKANAL At+Po - Korian P.Box No - 8 Dhenkanal - 759001 ODISHA BHUBANESWAR 165 Cuttack Road Bomikhal Bhubaneswar-751006 Siwan - 841226 Bihar PATNA 3 Sf -A, 5/6, Hig Bhoot Nath Road Bahadurpur Housing Colony Patna - 801505 Bihar MOTIHARI Devraha Baba Chowk Koluharawa, Motihari East Champaran - 845401 Bihar CHATTISGARH CHATTISGARH Aman Nagar Mowa, Raipur Chattisgarh-490023 JHARKHAND BOKARO Ranchi Ramghar Road Near- Durga Mandir, Balidih Bokaro Steel City -14 Bokaro Jharkhand RANCHI Nh-33, Bargawa, Namkum Ranchi, Jharkhand TATA Nh-33 Pardih Kumrum P.O- Kapali, Jamshedpur Dist- Singhbhum (East) Jharkhand MADHYA PRADESH MADHYAPRADESH Katni Madhya Pradesh UTTAR PRADESH VARANASI 11/4 Kuber Complex D/58/2, Rathajatra KOLKATA BURDWAN C/O. M/S. Nazrul Saw Mill Sadar Ghat Road P.O- Sri Pally Burdwan BARRACKPORE UAL-Bengal Prop. UAL Industries Ltd. Vill. Konkapore P.O. NIlgunj Bazar, P.S. Barasat, Dist. 24 Pgs., Kolkata-700121 RAIGANJ BARODUARI, SAHARAI, NH34 (Opp- Ibp Petrol Pump) Raigunj Madhpur-733134 Uttardinajpur BARUIPUR Ramnagar, Shanibattala Canning Road,24 Pgs(S) Baruipur,Kolkata-700144
ASSAM
SALES DEPOTS GUWAHATI NH: 37, Gorchuk Near Tirupati Weigh Bridge Guwahati Assam 781035
BIHAR
SALES DEPOTS SIWAN Chap Tola, Teghra, Chhapra Road
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WORKING CAPITAL MANAGEMENT
WORKING CAPITAL
3.1 MEANING OF WORKING CAPITAL
Working capital (abbreviated WC) is a financial metric which represents operating liquidity available to a business, organization or other entity, including governmental entity. Along with fixed assets such as plant and equipment, working capital is considered a part of operating capital. Net working capital is calculated as current assets minus current liabilities. It is a derivation of working capital that is commonly used in valuation techniques such as DCFs (Discounted cash flows). If current assets are less than current liabilities, an entity has a working capital deficiency, also called a working capital deficit. A company can be endowed with assets and profitability but short of liquidity if its assets cannot readily be converted into cash. Positive working capital is required to ensure that a firm is able to continue its operations and that it has sufficient funds to satisfy both maturing short-term debt and upcoming operational expenses. The management of working capital involves managing inventories, accounts receivable and payable, and cash. There are two concepts of working capital, namely Gross concept and Net concept.
3.2 CONCEPTS OF WORKING CAPITAL
Gross Working Capital According to this concept; working capital refers to the firms investment in current assets. The amount of current liabilities is not deducted from the total of current assets. This concept views Working Capital and aggregate of Current Assets as two inter-changeable terms. This concept is also referred to as `Current Capital' or `Circulating Capital'. The proponents of the gross working capital concept advocate this for the following reasons: I. II. Profits are earned with the help of assets, which are partly fixed and partly current. To a certain degree, similarity can be observed in fixed and current assets so far as both are partly financed by borrowed funds, and are expected to yield earnings over and above the interest costs. Logic then demands that the aggregate of current assets should be taken to mean the working capital. Management is more concerned with the total current assets as they constitute the total funds available for operating purposes than with the sources from which the funds come. An increase in the overall investment in the enterprise also brings about an increase in the working capital.
The net working capital refers to the difference between current assets and current liabilities. Current liabilities are those claims of outsiders, which are expected to mature for payment within an accounting year and include creditors dues, bills payable, bank Net Working Capital
III.
overdraft and outstanding expenses. Net working capital can be positive or negative. A negative net working capital occurs when current liabilities are in excess of current assets.
"Whenever working capital is mentioned it brings to mind current assets and current liabilities with a general understanding that working capital is the difference between the two". Current assets should be sufficiently in excess of current liabilities to constitute a margin or buffer for obligations maturing within the ordinary operating cycle of a business. A weak liquidity position poses a threat to the solvency of the company and makes it unsafe. 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 correct the imbalance in the liquidity position of the firm.
Net working capital is a qualitative concept, which indicates the liquidity position of the firm and the extent to which working capital needs may be financed by permanent sources of finds. This needs some explanation.
The net working capital concept also covers the question of a judicious mix of longterm and short-term funds for financing current assets. Every firm has a minimum amount of net working capital, which is permanent. Therefore, this portion of the working capital should be financed with permanent sources of funds such as owners' capital, debentures, long-term debt, preference capital and retained earnings: Management must decide the extent to which current assets should be financed with equity capital and/or borrowed capital. Several economists uphold the net working capital concept. In support of their stand, they state that:
It may be stated that gross and net concepts of working capital are two important facets of working capital management. Both the concepts have operational significance for the management and therefore neither can be ignored. While the net concept of working capital emphasizes the qualitative aspect, the gross concept underscores the quantitative aspect. You will hardly find a running business firm, which does not require some amount of working capital. Even a fully equipped manufacturing firm is sure to collapse without (a) An adequate supply of raw materials to process, (b) Cash to meet the wage bill,
In the long run what matters is the surplus of current assets over current liabilities. It is this concept which helps creditors and investors to judge the financial soundness of the enterprise. It is the excess of current assets over current liabilities, which can be relied upon to meet contingencies since this amount is not liable to be returned. It helps to ascertain the correct comparative financial position of companies having the same amount of current assets.
3.3 SIGNIFICANCE OF WORKING CAPITAL
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(c) The capacity to wait for the market for its finished products, and (d) The ability to grant credit to its customers. Similarly, a commercial enterprise is virtually good for nothing without merchandise to sell. Working capital, thus, is the life-blood of a business. As a matter of fact, any organisation, whether profit-oriented or otherwise, will not be able to carry on day-today activities without adequate working capital. At one given time both the current assets and current liabilities exist in the business. The current assets and current liabilities are flowing round in a business like an electric current. However, The working capital plays the same role in the business as the role of heart in human body. Working capital funds are generated and these funds are circulated in the business. As and when this circulation stops, the business becomes lifeless. It is because of this reason that he working capital is known as the circulating capital as it circulates in the business just like blood in the human body. The chart depicting Working Capital Cycle makes it clear that the amount of cash is obtained mainly from issue of shares, borrowing and operations. Cash funds are used to purchase fixed assets, raw materials and used to pay to creditors. The raw materials are processed; wages and overhead expenses are paid which in result produce finished goods for sale.
3.4 Circulation of Working Capital
The sale of goods may be for cash or credit. In the former case, cash is directly received while in later case cash is collected from debtors. Funds are also generated from operation and sale of fixed assets. A portion of profit is used for payment of interest, tax and dividends while remaining is retained in the business. This cycle continues throughout the life of the business firm. The quantitative concept of Working Capital is known as gross working capital while that under qualitative concept is known as net working capital. Working capital can be classified in various ways. The important classifications are as given below:
3.5 Classification of Working Capital
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Conceptual classification There are two concept of working capital viz., quantitative and qualitative. The quantitative concept takes into account as the current assets while the qualitative concept takes into account the excess of current assets over current liabilities. Deficit of working capital exists where the amount of current liabilities exceeds the amount of current assets. The above can be summarised as follows: (i) Gross Working Capital = Total Current Assets (ii) Net Working Capital = Excess of Current Assets over Current Liabilities (iii) Working Capital Deficit = Excess of Current Liabilities over Current Assets. Classification on the basis of financial reports The information of working capital can be collected from Balance Sheet or Profit and Loss Account; as such the working capital may be classified as follows: (i) Cash Working Capital This is calculated from the information contained in profit and loss account. This concept of working capital has assumed a great significance in recent years as it shows the adequacy of cash flow in business. It is based on Operating Cycle Concepts which is explained later in this chapter. (ii) Balance Sheet Working Capital The data for Balance Sheet Working Capital is collected from the balance sheet. On this basis the Working Capital can also be divided in three more types, viz., gross Working Capital, net Working Capital and Working Capital deficit. Classification on the Basis of Variability Gross Working Capital can be divided in two categories viz., (i) permanent or fixed working capital, and (ii) Temporary, Seasonal or variable working capital. Such type of classification is very important for hedging decisions. (i) Temporary Working Capital Temporary Working Capital is also called as fluctuating or seasonal working capital. This represents additional investment needed during prosperity and favourable seasons. It increases with the growth of the business. Temporary working capital is the additional assets required to meet the variations in sales above the permanent level. This can be calculated as follows: Temporary Working Capital = Total Current Assets permanent Current Assets (ii) Permanent Working Capital It is a part of total current assets which is not changed due to variation in sales. There is always a minimum level of cash, inventories, and accounts receivables which is always maintained in the business even if sales are reduced to a minimum. Amount of such investment is called as permanent working capital. Permanent Working Capital is the amount of working capital that persists over time regardless of fluctuations in sales.This is also called as regular working capital.
Numerous factors can influence the size and need of working capital in a concern. So no set rule or formula can be framed. It is rightly observed that, There is no precise way to determine the exact amount of gross or net working capital for every enterprise. The data and problem of each company should be analysed to determine the amount of working capital. Briefly, the optimum level of current assets depends upon following determinants. Nature of business--Trading and industrial concerns require more funds for working capital. Concerns engaged in public utility services need less working capital. For example, if a concern is engaged in electric supply, it will need less current assets, firstly due to cash nature of the transactions and secondly due to sale of services. However, it will invest more in fixed assets.
3.6 Factors Influencing Working Capital Requirement
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In addition to it, the investment varies concern to concern, depending upon the size of business, the nature of the product, and the production technique. Conditions of supply-- If the supply of inventory is prompt and adequate, less funds will be needed. But, if the supply is seasonal or unpredictable, more funds will be invested in inventory. Investment in working capital will fluctuate in case of seasonal nature of supply of raw materials, spare parts and stores. Production policy-- In case of seasonal fluctuations in sales, production will fluctuate accordingly and ultimately requirement of working capital will also fluctuate. However, sales department may follow a policy of off-season discount, so that sales and production can be distributed smoothly throughout the year and sharp, variations in working capital requirement are avoided. Seasonal Operations-- It is not always possible to shift the burden of production and sale to slack period. For example, in case of sugar mill more working capital will be needed at the time of crop and manufacturing. Credit Availability- If credit facility is available from banks and suppliers on favourable terms and conditions, less working capital will be needed. If such facilities are not available more working capital will be needed to avoid risk. Credit policy of enterprises-- In some enterprises most of the sale is at cash and even it is received in advance while, in other sales is at credit and payments are received only after a month or two. In former case less working capital is needed than the later. The credit terms depend largely on norms of industry but enterprise some flexibility and discretion. In order to ensure that unnecessary funds are not tied up in book debts, the enterprise should follow a rationalized credit policy based on the credit standing of the customers and other relevant factors. Growth and expansion-- The need of working capital is increasing with the growth and expansion of an enterprise. It is difficult to precisely determine the relationship between volume of sales and the working capital needs. The critical fact, however, is that the need for increased working capital funds does not follow growth in business activities but precedes it. It is clear that advance planning is essential for a growing concern. Price level change With the increase in price level more and more working capital will be needed for the same magnitude of current assets. The effect of rising prices will be different for different enterprises. Circulation of working capital Less working capital will be needed with the increase in circulation of working capital and vice-versa. Circulation means time required to complete one cycle i.e. from cash to material, from material to work-inprogress, form work-in-progress to finished goods, from finished goods to accounts receivable and from accounts receivable to cash. Volume of sale-- This is directly indicated with working capital requirement, with the increase in sales more working capital is needed for finished goods and debtors, its vice versa is also true. Liquidity and profitability-- There is a negative relationship between liquidity and profitability. When working capital in relation to sales is increased it will reduce risk and profitability on one side and will increase liquidity on the other side. Management ability Proper co-ordination in production and distribution of goods may reduce the requirement of working capital, as minimum funds will be invested in absolute inventory, non-recoverable debts, etc. External Environment With development of financial institutions, means of communication, transport facility, etc., needs of working capital is reduced because it can be available as and when needed.
You have already noted that working capital has two components: Current assets and Current liabilities. Current assets comprise several items. The typical items are:
3.7 COMPONENTS OF WORKING CAPITAL

I. II. III.
A part of the need for funds to finance the current assets may be met from supply of. Goods on credit, and deferment, on account of custom, usage or arrangement, of payment for expenses. The remaining part of the need for working capital may be met from short-term borrowing from financiers like banks. These items are collectively called current liabilities. Typical items of current liabilities are: III. IV. I. II. Goods purchased on credit Expenses incurred in the course of the business of the organisation (e.g., wages or salaries, rent, electricity bills, interest etc.) which are not yet paid for. Temporary or short term borrowings from banks, financial institutions or other parties Advances received from parties against goods to be sold or delivered, or as short term deposits. Other current liabilities such as tax and dividends payable. Some of the major components of current assets are explained here in brief:
Cash to meet expenses as and when they occur. Accounts Receivables or sundry trade debtors Inventory of: a) Raw materials, stores, supplies and spares, b) Work-in-process, and c) Finished goods d) Advance payments towards expenses or purchases, and other short-term advances which are recoverable. e) Temporary investment of surplus funds which could be converted into cash whenever needed.
Cash: All of us know that the basic input to start any business is cash. Cash is initially required for acquiring fixed assets like plants and machinery which enables a firm to produce products and generate cash by selling them. Cash is also required and invested in working capital. An investment in working capital is required, as firms have to store certain quantity of raw materials and finished goods and also for providing credit terms to the customers. A minimum level of cash helps in the conduct of everyday ordinary business such as making of purchases and sales as well as for meeting the unexpected payments, developments and other contingencies. As discussed earlier cash invested at the beginning of-the operating cycle gets released at the end of the cycle to fund fresh investments. However, additional cash is required by the firm when it needs to buy more fixed assets, increase the level of operations or for bringing out change in working capital cycle such as extending credit period to the customers.
V.
The demand for cash is affected by several factors, some of them are within the control of the managers and some are outside their control. It is not possible to operate the business without holding cash but at the same time holding it without a purpose also costs a firm either directly in the form of interest or loss of income that could be earned out of the cash.
In the context of working capital management, cash management refers to optimizing the benefit and cost associated with holding cash. The objective of cash management is best achieved by speeding up the working capital cycle, particularly the collection process and investing surplus cash in short term assets in most profitable avenues. We will be subsequently discussing certain issues like the management of cash flows and determination of optimal cash balance, etc.
Accounts Receivable: Firms rather prefer to sell for cash than on credit, but competitive pressures force most firms to offer credit. Today the use of credit in the purchase f goods and services is so common that it is taken for granted. Selling goods or providing services on credit basis leads to accounts receivable. When consumers expect credit, business units in turn expect credit from their suppliers to match their investment in credit extended to consumers. The granting of credit from one business firm to another for purchase of goods and services is popularly known as trade credit. Though commercial banks provide a significant part of requirements for working capital, trade credit continues to be a major source of funds for firms and accounts receivable that result from granting trade credit are major investment for the firm. Both direct and indirect costs are associated with carrying receivables, but it has an important benefit for increasing sales. Excessive levels of accounts receivables result in decline of cash flows and much result in bad debts which in turn may reduce the profit of the firm. Therefore, it is very important to monitor and manage receivables carefully and regularly. We would be dealing with this topic in MS-41: Working Capital Management. Inventory: Three things will come to your mind when you think of a manufacturing unit - machines, men and materials. Men using machines and tools convert the materials into finished goods. The success of any business unit depends on the extent to which these are efficiently managed. Inventory is an asset to the organisation like other components of current assets. Inventory holding is desirable because it meets several objectives and needs but an excessive inventory is undesirable because it costs a lot to firms. Inventory constitutes a very significant part of working capital or current assets in manufacturing organisation. It is essential to control inventories (physical/quantity control and value control) as these are significant elements in the costing process constituting sometimes more than 60% of the current assets. Inventory which consists of raw material components and other consumables, work in process and finished goods, is an important component of `current assets'. There are several factors like nature of industry, availability of material, technology, business practices, price fluctuation, etc. that determines the amount of inventory holding. Holding inventory ensures smooth production process, price stability and immediate delivery to customers. Since inventory is like any other form of assets, holding inventory has a cost. The cost includes opportunity cost of funds blocked in inventory, storage cost, stock out cost, etc. The benefits that come from holding inventory should exceed the cost to justify a particular level of inventory.
Marketable Securities: Cash and marketable securities are normally treated as one item in any analysis of current assets although these are not the same as cash they can be converted to cash at a very short notice. Holding cash in excess of immediate
requirement means the firm is missing out an opportunity income. Excess cash is normally invested in marketable securities, which serves two purposes namely, provide liquidity and, also earn a return. To forecast the working capital requirement for the next year the following formula may be used:
3.8 Forecasting of Working Capital
(Estimated cost of goods sold x Operating Cycle) + Desired Cash Balance
Working capital requirement depends upon the level of operation and the length of operating cycle. Monitoring the duration of the operating cycle is an important ingredient of working capital control. In this context, the following points should borne in mind:
3.9 Control of Working Capital
1.
The duration of the raw material stage depends on regularity of supply, transportation time, price fluctuations and economy of bulk purchase. For imported materials it takes a longer time.
2. 3. 4.
It is helpful to monitor the behaviour of overall operating cycle and its individual components. For this purpose time series analysis and cross section analysis may be done. In time series analysis the duration of the operating cycle and its individual components is compared over a period of time for same firm. In cross section analysis the duration of the operating cycle and its individual components is compared with that of other firms of a comparable nature. Adequacy of Working Capital
The duration of the work-in-process depends on the length of manufacturing cycle, consistency in capacities at different stages, and efficient coordination of various inputs. The duration of the finished goods depends on the pattern of production and sales. If production is fairly uniform throughout the year but sales are highly seasonal or vice versa. The duration of finished goods tends to be long. The duration at the debtors stage depends on the credit period granted, discounts offered for prompt payment, and efficiency and rigour of collection efforts.
2,00,00,000 x 73/365 + 5,00,000 = Rs. 45,00,000
The expected working capital requirement would be,
Example X Ltd. expects its cost of goods sold for the forthcoming year to be Rs. 2 crore. The present operating cycle of the firm is 78 days. The firm plans to reduce its operating cycle to 73 days and desired cash balance is Rs. 5 lakh.
The importance of adequacy of working capital can hardly be over-emphasized. John L. O. Donnell and Milton S. Gladberg observe Many a times business failure takes place due to lack of working capital. Hence, working capital is considered as the life blood and the controlling nerve centre of a business. Inadequate working capital is business ailment. Therefore, a firm has to maintain a sound working capital. It should be adequate foe the following reasons: (1) It protects a business form the adverse effects of shrinkage in the values of current assets. Powered by:-SAUMENDRA NANDA 3.8
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(2) It is possible to pay all the current obligations promptly and to take advantage of cash discounts. (3) It ensures, to a greater extent, the maintenance of a companys credit standing and provides for such emergencies as strikes, floods, fires etc. (5)` It enables a company to extend favourable credit terms to its customers. (7) It enables a business to withstand periods of depression smoothly. (8) There may be operating losses or decreased retained earnings. (11) There may be an unwise dividend policy (12) Current funds may be invested in non-current assets (9) There may be excessive non-operating or extraordinary losses. (4) It permits the carrying of inventories at a level that would enable a business to serve satisfactorily the needs of its customers.
(6) It enables a company to operate its business more efficiently because there is no delay in obtaining materials, etc., because of credit difficulties. (10) The management may fail to obtain funds from other sources for purposes of expansion. (14) Increasing price may necessitate bigger investments in inventories and fixed asset.
(13) The management may fail to accumulate funds necessary for meeting debentures on maturity.
Conventional generalizations relating to financing of working capital suggest that an amount equal to the basic minimum of current assets should be financed from longterm source and that only seasonal needs of working capital should be financed from short-term sources. It is obvious that such an arrangement helps to keep the cost of working capital finance to the minimum for an enterprise and gives a rise to its rate of return on the total funds employed. Viewed thus, the sources of working finance can be classified into permanent and the current sources of working capital finance.
3.10 Source of Working Capital
The study of structure of working capital is another name for the study of working capital cycle. In other words, it can be said that the study of structure of working capital is the study of the elements of current assets viz. inventory, receivable, cash and bank balances and other liquid resources like short-term or temporary investments. Current liabilities usually comprise bank borrowings, trade credits, assessed tax and unpaid dividends or any other such things. The following points mention relating to various elements of working capital deserves:
3.11 Structure of Working Capital
Inventory Inventory is major item of current assets. The management of inventories raw material, goods-in-process and finished goods is an important factor in the short-run liquidity positions and long-term profitability of the company. Raw material inventories Uncertainties about the future demand for finished goods, together with the cost of adjusting production to change in demand will cause a financial manager to desire some level of raw material inventory. In the absence of such
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inventory, the company could respond to increased demand for finished goods only by incurring explicit clerical and other transactions costs of ordinary raw material for processing into finished goods to meet that demand. If changes in demand are frequent, these order costs may become relatively large. Moreover, attempts to purchases hastily the needed raw material may necessitate payment of premium purchases prices to obtain quick delivery and, thus, raises cost of production. Finally, unavoidable delays in acquiring raw material may cause the production process to shut down and then restart again raising cost of production. Under these conditions the company cannot respond promptly to changes in demand without sustaining high costs. Hence, some level of raw materials inventory has to be held to reduce such costs. Determining its proper level requires an assessment of costs of buying and holding inventories and a comparison with the costs of maintaining insufficient level of inventories. Work-in-process inventory This inventory is built up due to production cycle. Production cycle is the time-span between introduction of raw material into production and emergence of finished product at the completion of production cycle. Till the production cycle is completed, the stock of work-in-process has to be maintained. Finished goods inventory Finished goods are required for reasons similar to those causing the company to hold raw materials inventories. Customers demand for finished goods is uncertain and variable. If a company carries no finished goods inventory, unanticipated increases in customer demand would require sudden increases in the rate of production to meet the demand. Such rapid increase in the rate of production may be very expensive to accomplish. Rather than loss of sales, because the additional finished goods are not immediately available or sustain high costs of rapid additional production, it may be cheaper to hold a finished goods inventory. The flexibility afforded by such an inventory allows a company to meet unanticipated customer demands at relatively lower costs than if such an inventory is not held. Thus, to develop successfully optimum inventory policies, the management needs to know about the functions of inventory, the cost of carrying inventory, economic order quantity and safety stock. Industrial machinery is usually very costly and it is highly uneconomical to allow it to lie idle. Skilled labour also cannot be hired and fired at will. Modern requirements are also urgent. Since requirements cannot wait and since the cost of keeping machine and men idle is higher, than the cost of storing the material, it is economical to hold inventories to the required extent. The objectives of inventory management are: (1) To minimize idle cost of men and machines causes by shortage of raw materials, stores and spare parts. (2) To keep down: (a) Inventory ordering cost. (b) Inventory carrying cost, (d) Obsolescence losses (c) Capital investment in inventories.
Receivables Many firms make credit sales and as a result thereof carry receivable as a current asset. The practice of carrying receivables has several advantages viz., (i) reduction of collection costs over cash collection, (ii) Reduction in the variability of sales, and (iii) increase in the level of near-term sales. While immediate
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collection of cash appears to be in the interest of shareholders, the cost of that policy may be very high relative to costs associated with delaying the receipt of cash by extension of credit. Imagine, for example, an electric supply company employing a person at every house constantly reading electricity meter and collecting cash from him every minute as electricity is consumed. It is far cheaper for accumulating electricity usage and bill once a month. This of course, is a decision to carry receivables on the part of the company. It may also be true that the extension of credit by the firm to its customers may reduce the variability of sales over time. Customers confined to cash purchases may tend to purchase goods when cash is available to them. Erratic and perhaps cyclical purchasing patterns may then result unless credit can be obtained elsewhere. Even if customers do obtain credit elsewhere, they must incur additional cost of search in arranging for a loan costs that can be estimated when credit is given by a supplier. Therefore, extension of credit to customers may well smooth out of the pattern of sales and cash inflows to the firm over time since customers need not wait for some inflows of cash to make a purchase. To the extent that sales are smoothed, cost of adjusting production to changes in the level of sales should be reduced. Finally, the extension of credit by firms may act to increase near-term sales. Customers need not wait to accumulate necessary cash to purchase an item but can acquire it immediately on credit. This behaviour has the effect of shifting future sales close to the present time. Therefore, the extension of credit by a firm and the resulting investment in receivables occurs because it pays a firm to do so. Costs of collecting revenues and adapting to fluctuating customer demands may make it desirable to offer the convenience associated with credit to firms customers. To the extents that near sales are also increased, extension of credit is made even more attractive for the firm. Cash and interest-bearing liquid assets Cash is one of the most important tools of day-to-day operation, because it is a form of liquid capital which is available for assignment to any use. Cash is often the primary factor which decides the course of business destiny. The decision to expand a business may be determined by the availability of cash and the borrowing of funds will frequently be dictated by cash position. Cash-in-hand, however, is a non-earning asset. This leads to the question as to what is the optimum level of this idle resource. This optimum depends on various factors such as the manufacturing cycle, the sale and collection cycle, age of the bills and on the maturing of debt. It also depends upon the liquidity of other current assets and the matter of expansion. While a liberal maintenance of cash provides a sense of security, a lack of sufficiency of cash hampers day-to-day operations. Prudence, therefore, requires that no more cash should be kept on hand than the optimum required for handling miscellaneous transactions over the counter and petty disbursements etc. It has not become a practice with business enterprises to avoid too much redundant cash by investing a portion of their earnings in assets which are susceptible to easy conversion into cash. Such assets may include government securities, bonds, debentures and shares that are known to be readily marketable and that may be liquidated at a moments notice when cash is needed.
The time between purchase of inventory items (raw material or merchandise) and their conversion into cash is known as operating cycle or working capital cycle. The
3.12 OPERATING CYCLE
3.11 1
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successive events which are typically involved in an operating cycle. A perusal of the operating cycle would reveal that the funds invested in operations are re-cycled back into cash. The cycle, of course, takes some time to complete. The longer the period of this conversion the longer is the operating cycle. A standard operating cycle may be for any time period but does not generally exceed a financial year. Obviously, the shorter the operating cycle, the larger will be the turnover of funds invested for various purposes. The channels of the investment are called current assets. Sometimes the available funds may be in excess of the needs for investment in these assets, e.g., inventory, receivables and minimum essential cash balance. Any surplus may be invested in government securities rather than being retained as idle cash balance.
The duration of the operating cycle is equal to the sum of the duration of each of these stages less the credit period allowed by the suppliers of the firm. In symbols, O=R+W+F+DC Where, O = duration of operating cycle.
3.13 Duration of the Operating Cycle
R = raw material storage period. W= work-in-process period. C = creditors payment period.
F= finished goods storage period. D=debtors collection period, and
The components of the operating cycle may be calculated as follows: R= Average stock of raw materials and stores Average raw material and stores consumption per day W= Average work-in-process inventory Average cost of production per day
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F= Average finished goods inventory Average cost of goods sold per day per day D= Average book debts Average credit sales per day C= Average trade creditors Average credit purchase per day

3.14 Introduction of Working Capital Management
Working capital management is the device of finance. It is related to manage of current assets and current liabilities. After learning working capital management, commerce students can use this tool for fund flow analysis. Working capital is very significant for paying day to day expenses and long term liabilities.
The management of current assets, current liabilities and inter-relationship between them is termed as working capital management. Working capital management is concerned with problems that arise in attempting to manage the current assets, the current liabilities and the inter-relationship that exist between them. In practice, There is usually a distinction made between the investment decisions concerning current assets and the financing of working capital.
3.15 Meaning of Working Capital Management
From the above, the following two aspects of working capital management emerge:
There are two concepts of working capital viz. quantitative and qualitative. Some people also define the two concepts as gross concept and net concept. According to quantitative concept, the amount of working capital refers to total of current assets. What we call current assets? Smith called, circulating capital. Current assets are considered to be gross working capital in this concept.
3.16 Concept of Working Capital Management
(1) To determine the magnitude of current assets or level of working capital and (2) To determine the mode of financing or hedging decisions.
The qualitative concept gives an idea regarding source of financing capital. According to qualitative concept the amount of working capital refers to excess of current assets over current liabilities. L.J. Guthmann defined working capital as the portion of a firms current assets which are financed from longterm funds.
The excess of current assets over current liabilities is termed as Net working capital. In this concept Net working capital represents the amount of current assets which would remain if all current liabilities were paid. Both the concepts of working capital have their own points of importance. If the objectives is to measure the size and extent to which current assets are being used, Gross concept is useful; whereas in evaluating the liquidity position of an undertaking Net concept becomes pertinent and preferable.
It is necessary to understand the meaning of current assets and current liabilities for learning the meaning of working capital, which is explained below.
Current assets It is rightly observed that Current assets have a short life span. These types of assets are engaged in current operation of a business and normally used for short term operations of the firm during an accounting period i.e. within twelve months. The two important characteristics of such assets are, (i) short life span, and (ii) swift transformation into other form of assets. Cash balance may be held idle for a week or two, account receivable may have a life span of 30 to 60 days, and inventories may be held for 30 to 100 days. Fitzgerald defined current assets as, cash and other assets which are expected to be converted in to cash in the ordinary course of business within one year or within such longer period as constitutes the normal operating cycle of a business. Current liabilities The firm creates a Current Liability towards creditors (sellers) from whom it has purchased raw materials on credit. This liability is also known as accounts payable and shown in the balance sheet till the payment has been made to the creditors.
The claims or obligations which are normally expected to mature for payment within an accounting cycle are known as current liabilities. These can be defined as those liabilities where liquidation is reasonably expected to require the use of existing resources properly classifiable as current assets, or the creation of other current assets, or the creation of other current liabilities.
Circulating capital working capital is also known as circulating capital or current capital. The use of the term circulating capital instead of working capital indicates that its flow is circular in nature.
For smooth running an enterprise, adequate amount of working capital is very essential. Efficiency in this area can help, to utilize fixed assets gainfully, to assure the firms longterm success and to achieve the overall goal of maximization of the shareholders, fund. Shortage or bad management of cash may result in loss of cash discount and loss of reputation due to non-payment of obligation on due dates. Insufficient inventories may be the main cause of production held up and it may compel the enterprises to purchase raw materials at unfavourable rates. Like-wise facility of credit sale is also very essential for sales promotions. It is rightly observed that many a times business failure takes place due to lack of working capital. Adequate working capital provides a cushion for bad days, as a concern can pass its period of depression without much difficulty.
3.17 Importance of Working Capital Management
O Donnel et al. correctly explained the significance of adequate working capital and mentioned that to avoid interruption in the production schedule and maintain sales, a concern requires funds to finance inventories and receivables. The dangers of excessive working capital are as follows:
3.14
The adequacy of cash and current assets together with their efficient handling virtually determines the survival or demise of a concern. An enterprise should maintain adequate working capital for its smooth functioning. Both, excessive working capital and inadequate working capital will impair the profitability and general health of a concern.
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Heavy investment in fixed assets A concern may invest heavily in their fixed asset which is not justified by actual sales. This may create situation of over capitalisation. Reckless purchase of materials- Inventory is purchased recklessly which results in dormant slow moving and obsolete inventory. At the same time it may increase the cost due to mishandling, waste, theft, etc. Speculative tendencies - Speculative tendencies may increase and if profit is increased dividend distribution will also increase. This will hamper the image of a concern in future when speculative loss may start. Liberal credit - Due to liberal credit, size of accounts receivables will also increase. Liberal credit facility can increase bad debts and wrong practices will start, regarding delay in payments. Carelessness - Excessive working capital will lead to carelessness about costs which will adversely affect the profitability. Paucity of working capital is also bad and has the following dangers:
Funds are needed in every business for carrying on day-to-day operations. Working capital funds are regarded as the life blood of a business firm. A firm can exist and survive without making profit but cannot survive without working capital funds. If a firm is not earning profit it may be termed as sick, but, not having working capital may cause its bankruptcy working capital in order to survive. The alternatives are not pleasant. Bankruptcy is one alternative. Being acquired on unfavourable term as another. Thus, each firm must decide how to balance the amount of working capital it holds, against the risk of failure. Working capital has acquired a great significance and sound position in the recent past for the twin objects of profitability and liquidity. In period of rising capital costs and scare funds, the working capital is one of the most important areas requiring management review. It is rightly observed that, Constant management review is required to maintain appropriate levels in the various working capital accounts. Mainly the success of a concern depends upon proper management of working capital so working capital management has been looked upon as the driving seat of financial manager.
3.18 Significance of Working Capital Management
1. Implementation of operating plans becomes difficult and a concern may not achieve its profit target. 2. It is difficult to pay dividend due to lack of funds. 3. Bargaining capacity is reduced in credit purchases and cash discount could not be availed. 4. An enterprise loses its reputation when it becomes difficult even to meet dayto- day commitments. 5. Operating inefficiencies may creep in when a concern cannot meet it financial promises. 6. Stagnates growth as the funds are not available for new projects. 7. A concern will have to borrow funds at an exorbitant rate of interest in case of need. 8. Sometimes, a concern may be bound to sale its product at a much reduced rates to collect funds which may harm its image.
3.15
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It consumes a great deal of time to increase profitability as well as to maintain proper liquidity at minimum risk. There are many aspects of working capital management which make it an important function of the finance manager. In fact we need to know when to look for working capital funds, how to use them and how measure, plan and control them. A study of working capital management is very important foe internal and external experts. Sales expansion, dividend declaration, plants expansion, new product line, increase in salaries and wages, rising price level, etc., put added strain on working capital maintenance. Failure of any enterprise is undoubtedly due to poor management and absence of management skill. Importance of working capital management stems from two reasons, viz., (i) A substantial portion of total investment is invested in current assets, and (ii) level of current assets and current liabilities will change quickly with the variation in sales. Though fixed assets investment and long-term borrowing will also response to the changes in sales, but its response will be weak. The interaction between current assets and current liabilities is, therefore, the main theme of the theory of working capital management. Working capital management is concerned with the problem that arises in attempting to manage the current assets, the current liabilities and the inter-relationship that exist between them. The goal of working capital management is to manage a firms current assets and current liabilities in such a way that a satisfactory level of working capital is maintained.
3.19 Theory of Working Capital Management
The following are the principles of working capital management:
3.20 Principles of Working Capital Management
Principles of the risk variation Risk here refers to the inability of firm to maintain sufficient current assets to pay its obligations. If working capital is varied relative to sales, the amount of risk that a firm assumes is also varied and the opportunity for gain or loss is increased. In other words, there is a definite relationship between the degree of risk and the rate of return. As a firm assumes more risk, the opportunity for gain or loss increases. As the level of working capital relative to sales decreases, the degree of risk increases. When the degree of risk increases, the opportunity for gain and loss also increases. Thus, if the level of working capital goes up, amount of risk goes down, and vice-versa, the opportunity for gain is like-wise adversely affected. Principle of equity position According to this principle, the amount of working capital invested in each component should be adequately justified by a firms equity position. Every rupee invested in the working capital should contribute to the net worth of the firm. Principle of cost of capital This principle emphasizes that different sources of finance have different cost of capital. It should be remembered that the cost of capital moves inversely with risk. Thus, additional risk capital results in decline in the cost of capital. Principle of maturity of payment A company should make every effort to relate maturity of payments to its flow of internally generated funds. There should be the least
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disparity between the maturities of a firms short-term debt instruments and its flow of internally generated funds, because a greater risk is generated with greater disparity. A margin of safety should, however, be provided for any short-term debt payment.
3.21 APPROACHES TO MANAGING WORKING CAPITAL
Two approaches are generally followed for the management of working capital: (i) the conventional approach, and (ii) the operating cycle approach. The Conventional Approach
This approach implies managing the individual components of working capital (i.e. inventory, receivables, payables, etc) efficiently and economically so that there are neither idle neither funds nor paucity of funds. Techniques have been evolved for the management of each of these components. In India, more emphasis is given to the management of debtors because they generally constitute the largest share of the investment in working capital. On the other hand, inventory control has not yet been practised on a wide scale perhaps due to scarcity of goods (or commodities) and ever rising prices. The Operating Cycle Approach
This approach views working capital as a function of the volume of operating expenses. Under this approach the working capital is determined by the duration of the operating cycle and the operating expenses needed for completing the cycle. The duration of the operating cycle is the number of day involved in the various stages, commencing with acquisition of raw materials to the realisation of proceeds from debtors. The credit period allowed by creditors will have to be set off in the process. The optimum level of working capital will be the requirement of operating expenses for an operating cycle, calculated on the basis of operating expenses required for a year. In India, most of the organisations use to follow the conventional approach earlier, but now the practice is shifting in favour of the operating cycle approach. The banks usually apply this approach while granting credit facilities to their clients.
3.17 ISBM
DATA ANALYSIS & INTERPRETATION
WORKING CAPITAL MANAGEMENT OF ÙAL INDUSTRIES LTD.
4.1 DATA ANALYSIS AND INTERPRETATION
DATA ANALYSIS AND INTERPRETATION
WORKING CAPITAL
INVENTORY MANAGEMENT

RECEIVABLES MANAGEMENT
OPERATING CYCLE
CASH MANAGEMEN T
4.1
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4.2 RATIO ANALYSIS (formula)

Working capital ratio:Liquid ratio:Current ratio = current asset / current liability Quick ratio = quick asset / current liability
Working capital Turnover ratio = sales/working capital
Profitability ratio:Gross profit turnover ratio = sales / gross profit Net profit turnover ratio = sales / net profit
Inventory management:Inventory turnover ratio = sales / average inventory Inventory holding period = 360/ inventory turnover ratio Finished goods turnover ratio = sales / average finished goods Finished goods holding period = 360 / Finished goods turnover ratio Receivables management:Debtor turnover ratio = sales / average Debtor Debtor collection period = 360/ Debtor turnover ratio Creditor turnover ratio =sales /average debtor Creditor collection period = 360/ creditor turnover ratio
Cash management:Cash ratio = cash & bank balance / current liabilities Cash turnover ratio = sales / average cash & bank balance
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4.3.1 STATEMENT SHOWING THE SCHEDULE OF CHANGING IN WORKING CAPITAL

FROM THE YEAR 2006-2007
PARTICULAR CURRENT ASSET INVENTORY 31,86,55,121.00 10,70,20,652.00 58,09,91,030.00 27,30,68,001.00 34,27,42,046.00 2006 56,60,52,636 15,26,87,328 11,13,73,797 91,27,22,526 34,61,54,317 43,98,86,063 2007(RS) INCREASE(RS) 24,73,97,515 7,23,64,214 3,63,81,654 53,32,075 DECREASE(RS)
CURRENT LIABILITIES
CURRENT LIABILITIES WORKING CAPITAL TOTAL(B)
LOANS & ADVANCES PROVISION TOTAL(A)
SUNDRY DEBTOR CASH & BANK BALANCE
8,03,23,114.00 7,49,92,143.00 6,96,74,045.00
8,26,08,765 9,37,31,746
2,44,11,887 3,92,85,57,365
23,82,48,984.00
47,28,36,463
23,45,87,479
(SOURCES: ANNUAL REPORT OF COMPANY)
INFERENCE: The above table show that there has been increase in the working capital to the extent of RS 23, 45, 87,479 for the year 2006 to 2007. This increase of working capital happens due to huge increase in the inventory. If we analyze the working capital statement we can see that the requirement of current asset increase but the company has unable to arrange adequate current liabilities for which extra finance required for in terms of working capital.
PARTICULAR CURRENT ASSET INVENTORY SUNDRY DEBTOR CASH & BANK BALANCE LOANS & ADVANCES TOTAL(A) CURRENT LIABILITIES CURRENT LIABILITIES PROVISION TOTAL(B) WORKING CAPITAL 2007(RS) 56,60,52,636 15,26,87,328 8,26,08,765 11,13,73,797 91,27,22,526 34,61,54,317 9,37,31,746 43,98,86,063 47,28,36,463 2008(RS) 53,31,52,143 19,83,44,469 14,85,08,377 11,82,50,593 99,82,55,582 4,56,57,141 6,58,99,612 68,76,796 INCREASE(RS) DECREASE(RS) 3,29,00,493
34,79,11,682
8,83,99,671 43,63,11,353 56,19,44,229 53,32,075 8,91,07,766
3,92,85,57,365
(SOURCES: ANNUAL REPORT OF COMPANY) INFERENCE: The above table show that there has been increase in the working capital to the extent of RS 8, 91, 07,766 for the year 2007 to 2008. Powered by:-SAUMENDRA NANDA 4.3 3 ISBM
This increase of working capital happens due to increase in the cash & bank balance. If we analyze the working capital statement we can see that the requirement of current asset increase but the company has unable to arrange adequate current liabilities for which extra finance required for in terms of working capital.
PARTICULAR FROM THE YEAR 2008-2009 2008(RS) 2009(RS) INCREASE(RS) 53,31,52,143 19,83,44,469 14,85,08,377 11,82,50,593 99,82,55,582 62,75,00,570 15,24,25,778 17,31,35,051 16,94,00,894 1,12,24,62,293 9,43,48,427 4,59,18,691 2,46,26,674 5,11,50,301 DECREASE(RS)
CURRENT ASSET INVENTORY SUNDRY DEBTOR CASH & BANK BALANCE LOANS & ADVANCES TOTAL(A) CURRENT LIABILITIES CURRENT LIABILITIES PROVISION TOTAL(B) WORKING CAPITAL
34,79,11,682 47,90,72,324 8,83,99,671 13,84,83,286 53,32,075 43,63,11,353 61,75,55,610 56,19,44,229 50,49,06,683 (SOURCES: ANNUAL REPORT OF COMPANY)
3,79,56,39,358
5,70,37,546
INFERENCE: The above table show that there has been decrease in need for working capital to the extent of RS 5,70,37,546 for the year 2008 to 2009.
This decrease of working capital happens due to huge increase in the current asset and also decreases the sundry debtor. If we analyze the working capital statement we can see that the requirement of current liabilities increase but the company has unable to arrange adequate current asset for which extra finance required for in terms of working capital.
FROM THE YEAR 2009-2010 2009(RS) 2010(RS) 62,75,00,570 15,24,25,778 17,31,35,051 16,94,00,894 112,24,62,293 66,95,89,474 21,58,93,923 22,07,02,239 34,55,86,666 145,17,72,302
PARTICULAR CURRENT ASSET INVENTORY SUNDRY DEBTOR CASH & BANK BALANCE LOANS & ADVANCES TOTAL(A) CURRENT LIABILITIES CURRENT LIABILITIES PROVISION TOTAL(B) WORKING CAPITAL
INCREASE(RS) 4,20,88,904 6,34,68,145 4,75,67,188 17,61,85,772
DECREASE(RS)
47,90,72,324 58,86,76,161 13,84,83,286 25,70,96,141 61,75,55,610 84,57,72,302 50,49,06,683 60,60,00,000 10,10,93,317 (SOURCES: ANNUAL REPORT OF COMPANY)
10,96,03,837 11,86,12,855
INFERENCE: The above table show that there has been decrease in the working capital to the extent of RS 10,10,93,317 for the year 2009 to 2010. 4.4
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This increase of working capital happens due to huge increase in the loans & advances. If we analyze the working capital statement we can see that the requirement of current asset increase but the company has unable to arrange adequate current liabilities for which extra finance required for in terms of working capital.
INFERENCE: The above table show that there has been decrease in the working capital to the extent of RS 31, 40, 90,722 for the year 2010 to 2011.
PARTICULAR CURRENT ASSET INVENTORY SUNDRY DEBTOR CASH & BANK BALANCE LOANS & ADVANCES TOTAL(A) CURRENT LIABILITIES CURRENT LIABILITIES PROVISION TOTAL(B) WORKING CAPITAL
2010(RS) 66,95,89,474 21,58,93,923 22,07,02,239 34,55,86,666 1,45,17,72,302 58,86,76,161 25,70,96,141 84,57,72,302 60,60,00,000
2011(RS) 95,08,82,403 27,99,01,246 16,96,17,108 60,35,40,463 2,00,39,41,220 67,28,43,615 41,10,06,883 1,08,38,50,498 92,00,90,722
INCREASE(RS) 28,12,92,929 6,40,07,323
DECREASE(RS)
5,10,85,131 25,79,53,797
8,41,67,454 15,39,10,742 31,40,90,722
This increase of working capital happens due to huge increase in the inventory & loans & adv. If we analyze the working capital statement we can see that the requirement of current asset increase but the company has unable to arrange adequate current liabilities for which extra finance required for in terms of working capital.
4.4 Compairsation sales & working capital

YEAR 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 SALE Rs. 1,24,82,28,524.00 Rs. 1,70,13,45,767.00 Rs. 1,94,05,65,639.00 Rs. 2,56,83,89,739.00 Rs. 3,28,78,95,291.00 Rs. 3,69,11,42,341.00 NET WORKING CAPITAL Rs. 23,82,48,984.00 Rs. 47,28,36,463.00 Rs. 56,19,44,229.00 Rs. 50,49,06,687.00 Rs. 60,59,98,320.00 Rs. 92,00,90,722.00
Rs. 4,00,00,00,000.00 Rs. 3,50,00,00,000.00 Rs. 3,00,00,00,000.00 Rs. 2,50,00,00,000.00 Rs. 2,00,00,00,000.00 Rs. 1,50,00,00,000.00 Rs. 1,00,00,00,000.00 Rs. 50,00,00,000.00 Rs. 0.00
SALE
NET WORKING CAPITAL 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11
4.5
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INFERENCE: Sales of the UAL INDUSTRIES LTD. Increase year to year but working of the The above diagram shows that efficient of management because sales are
increase but working capital is not increase according to this. organisation was not increasing simantanessaly.
4.5 MANAGEMENT OF WORKING CAPITAL(RATIO ANALYSIS)

i -TO STUDY OVERALL EFFECIENCY OF WORKING CAPITAL 1. NET WORKING CAPITAL
YEAR 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11
Rs. 1,00,00,00,000.00 Rs. 80,00,00,000.00 Rs. 60,00,00,000.00 Rs. 40,00,00,000.00 Rs. 20,00,00,000.00 Rs. 0.00 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11
CURRENT ASSET Rs. 58,09,91,030.00 Rs. 91,27,22,526.00 Rs. 99,82,55,582.00 Rs. 1,12,24,62,297.00 Rs. 1,45,17,72,302.00 Rs. 2,00,39,41,220.00
CURRENT LIABILITIES Rs. 34,27,42,046.00 Rs. 43,98,86,063.00 Rs. 43,63,11,353.00 Rs. 61,75,55,610.00 Rs. 84,57,73,982.00 Rs. 1,08,38,50,498.00
NET WORKING CAPITAL Rs. 23,82,48,984.00 Rs. 47,28,36,463.00 Rs. 56,19,44,229.00 Rs. 50,49,06,687.00 Rs. 60,59,98,320.00 Rs. 92,00,90,722.00
WORKING CAPITAL
INTERPRETATION: Net working capital of UAL INDUSTRIES LTD is increasing in trend. In the year 2005-06 net working capital is very low. In the year 2010-11 net working capital is very high. In the year 2008-09 net working capital of the company just full down Due to market slowed down in India.
2 -WORKING CAPITAL TURNOVER RATIO

YEAR 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 SALE Rs. 1,24,82,28,524.00 Rs. 1,70,13,45,767.00 Rs. 1,94,05,65,639.00 Rs. 2,56,83,89,739.00 Rs. 3,28,78,95,291.00 Rs. 3,69,11,42,341.00 NET WORKING CAPITAL W.C TURN OVER RATIO Rs. 23,82,48,984.00 5.239 Rs. 47,28,36,463.00 3.598 Rs. 56,19,44,229.00 3.453 Rs. 50,49,06,687.00 5.087 Rs. 60,59,98,320.00 5.426 Rs. 92,00,90,722.00 4.012 4.6 ISBM
5.195
W.C TURN OVER RATIO

5.087 3.598 3.453
5.426 4.012
2005-06
2006-07
2007-08
2008-09
2009-10
2010-11
INTERPRETATION

ii-TO STUDY THE STUCTURE OF WORKING CAPITAL
Working capital turnover ratio of UAL INDUSTRIES LTD. Is not maintaining stability. The working capitals turn over shows a decreasing in trend from the year 2005-06. It is remain compareteably stable from the year 2007-08 & again increase in the year 200809. In the year 2009-10 this ratio of UAL INDUSTRIES LTD. Is in peak position. But once again 2010-11 working capital turnover ratio of UAL INDUSTRIES LTD. Start to decry. CURRENT ASSET (RS) 58,09,91,030 91,27,22,526 99,82,55,582 1,12,24,62,297 1,45,17,72,302 2,00,39,41,220 TOTAL ASSET (RS) 94,73,44,311 1,47,85,80,585 1,57,59,42,474 1,82,37,15,021 2,21,72,60,338 2,86,82,50,923 CA/TA 0.613 0.617 0.633 0.615 0.655 0.699
0.699
3 CURRENT ASSET TO TOTAL ASSET:YEAR 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11
0.700 0.680 0.660 0.640 0.620 0.600 0.580 0.560 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 0.613 0.617 0.633 0.615 0.655
INTERPRETATION Current asset to total asset ratio UAL INDUSTRIES LTD. Is increasing in trend. From the year 2005-06 to 2007-08 it is increasing but in year 2008-09 this ratio slightly decreases. In the year 2009-10 UAL INDUSTRIES LTD. Successfully recover this ratio.
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4- CURRENT LIABILITIES TO TOTAL LIABILITIES

YEAR 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11
0.400 0.300 0.200 0.100 0.000 2005-06 2006-07 2007-08 0.315
In the year 2005-06 this ratio is very low & in year 2010-11 this ratio is in highest.
CURRENT LIABILITIES(RS) 34,27,42,046 43,98,86,063 43,63,11,353 61,75,55,610 84,57,73,982 1,08,38,50,498 TOTAL LIABILITIES(RS) 1,08,91,69,278 1,47,91,56,585 1,57,81,73,302 1,82,37,15,017 2,21,72,60,338 2,86,82,50,923
0.339 0.276 0.381 0.378
CL/TL 0.315 0.297 0.276 0.339 0.381 0.378
0.297
2008-09
2009-10
2010-11
INTERPRETATION
CURRENT LIABILITIES TO TOTAL LIABILITIES of UAL INDUSTRIES LTD. Is decreasing from 2005-06 In the year 2008-09 it capable recovers this ratio. But once again in the year 2010-11 this ratio decrease. In the year 2007-08 this ratio is very low & in the year 2009-10 this ratio is highest position within six year.
iii-LIQUIDITY RATIO 5-CURRENT RATIO

YEAR 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11
1.695
CURRENT ASSET (RS) 58,09,91,030 91,27,22,526 99,82,55,582 1,12,24,62,297 1,45,17,72,302 2,00,39,41,220

2.075 2.288
CURRENT LIABILITIES (RS) 34,27,42,046 43,98,86,063 43,63,11,353 61,75,55,610 84,57,73,982 1,08,38,50,498

1.818 1.717 1.849
CURRENT RATIO 1.695 2.075 2.288 1.818 1.717 1.849
2005-06
2006-07
2007-08
2008-09
2009-10
2010-11
INTERPRETATION
4.8
ISBM
6-LIQUID RATIO
YEAR 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11
Current ratio of UAL INDUSTRIES LTD. Increase from 2005-06 to 2007-08 But in the year 2008-09 current ratio start to decrease. Once again in year 2010-11 UAL INDUSTRIES LTD start to recovery this ratio. QUICK ASSET 50,06,67,916 76,00,35,198 79,99,11,113 97,00,36,519 1,23,58,78,379 1,72,40,39,974
1.461
CURRENT LIABILITIES LIQUID RATIO 34,27,42,046 1.461 43,98,86,063 1.728 43,63,11,353 1.833 61,75,55,610 1.571 84,57,73,982 1.461 1,08,38,50,498 1.591
1.833 1.571 1.461 1.591
2.000 1.500 1.000 0.500 -
1.728
2005-06
2006-07
2007-08
2008-09
2009-10
2010-11
INTERPRETATION Liquid ratio of the UAL INDUSTRIES LTD. Is increasing from 2005-06 to2007-08. But in the year 2008-09 & 2009-10 liquid ratio decreasing. In the year 2010-11 this ratio of UAL INDUSTRIES LTD. capable to recover. In the year 2005-06 & 2008-09 liquid ratios is lowest & in the year 2007-08 liquid ratio is highest.
iii-PROFITABILITY RATIO 7-GROSS PROFIT

YEAR 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11
40.000 20.000 0.000 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11
SALE 1,24,82,28,524 1,70,13,45,767 1,94,05,65,639 2,56,83,89,739 3,28,78,95,291 3,69,11,42,341

36.956 37.398
GROSS PROFIT GROSS PROFIT RATIO 461292943 636277411 605670241 779282185 1217955223 1312462619
31.211 30.341 37.044 35.557
36.956 37.398 31.211 30.341 37.044 35.557
INTERPRETATION: Gross profit turnover ratio of UAL INDUSTRIES LTD. decreasing from the year 2006-07 to 2008-09 Powered by:-SAUMENDRA NANDA 4.9
ISBM
In the year 2009-19 UAL INDUSTRIES LTD. Capable to recovery the ratio but once again in the year 2010-11 ratio full down. In the year 2008-09 gross profit ratio of UAL INDUSTRIES LTD. Is lowest & in the year 200607 ratio is highest. SALE (RS) 1,24,82,28,524 1,70,13,45,767 1,94,05,65,639 2,56,83,89,739 3,28,78,95,291 3,69,11,42,341 NET PROFIT NET PROFIT RATIO 56258553 98747825 31778233 66107115 261029576 295959438
7.939 4.507 5.804 2.574 8.018
8-NET PROFIT RATIO

YEAR 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11
10.000 8.000 6.000 4.000 2.000 0.000 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11
4.507 5.804 1.638 2.574 7.939 8.018
1.638
INTERPRETATION: Net profit ratio of the UAL INDUSTRIES LTD. Is not maintaining stability. In the year 2007-08 net profit ratio is low. In the year 2009-10 UAL INDUSTRIES LTD. Recover its net profit unimaginary. In the year 2010-11 net profit ratio touch the highest position.
4.6 INVENTORY MANAGEMENT

4.6.1 DEFINATION
Inventory management is primarily about specifying the size and placement of stocked goods. Inventory management is required at different locations within a facility or within multiple locations of a supply network to protect the regular and planned course of production against the random disturbance of running out of materials or goods. The scope of inventory management also concerns the fine lines between replenishment lead time, carrying costs of inventory, asset management, inventory forecasting, inventory valuation, inventory visibility, future inventory price forecasting, physical inventory, available physical space for inventory, quality management, replenishment, returns and defective goods and demand forecasting. 4.6.2 KINDS OF INVENTOREIES Raw material Working in process Finished good
4.6.3 The Techniques We Used In Store Inventory Control.
Store / Inventory control technique is the important tool in the hands of the modern management. It is indispensable for each and every manufacturing concern. The following are the important techniques of store control. Powered by:-SAUMENDRA NANDA 4.10
ISBM
Fixation of various stock levels: Under this method various stock levels are fixed scientifically to avoid over stocking and under stocking of materials. Over stocking of materials leads to unnecessary blockage of materials and investment and under stocking of material leads to disputation in production. These are the following stock levels which help for planning of materials. Economic ordering quantity: Economic ordering quantity is that quantity of material which is to be ordered in one time in order to minimize ordering cost, carrying cost as well as cost of holding stock. Perpetual inventory system: Perpetual inventory system is defined as "a system of records maintained by the controlling department which reflects the physical movement of stocks and their current balances." Bin card and store ledger constitute the bedrock of perpetual inventory system. It is a method of recording store after every receipt & every issue and their current balances to avoid closing down the firm for stock taking. To ensure accuracy the physical verification may be made which must have to agree with the balance of Bin Card & store ledger. If there is any discrepancy between the two, it may be adjusted by preparing debit note and credit note. A.B.C. Analysis: A. B. C. analysis is always a better control system. Under this method inventory items are classified in to three categories such as A. B. C. basing upon its value and cost significance. The number of items and the value of each class is expressed as percentage of the total and categorize as under. Items of high value and small in numbers termed as 'A' Items of moderate value and moderate in number is termed as 'B' Items of small in value and large in number is termed as 'C' V.E.D. Analysis: This method is used for control of spare parts. VED is the symbol of Vital spare parts: Are those spares whose cost of stock out is very high. Essential spare parts: Are those spares which are essential for the production to continue. Desirable spare parts: Are those spares which are needed but their absence even a week or more will not lead to stoppage of production. Inventory turnover ratio: Inventory turnover ratio is one of the methods of store control. it indicates how quickly the stocks are converted in to sale. Low inventory turnover ratio indicates the inefficient management in inventory & high inventory turnover ratio is always implies favourable situation. What is Purchase Requisition? Purchase requisition is a form used as a formal requisite by the store keeper to the purchasing department to purchase requisite quantity of materials. When store reaches at ordering level the store keeper initiates purchase requisition to the purchasing department for fresh supply of materials. The purchase department may not purchase materials according to his own accord. When purchase officer receives purchase requisition. He arranges for purchase of materials.
4.11
ISBM
RATIO ANALYSIS
1-INVENTORY PROPORTION:RAW MATERIAL 14,85,81,529 26,61,82,720 14,33,17,924 21,69,01,396 19,24,48,417 3,05,73,777 RAW MATERIAL IN TRANSIT FINISHED GOODS
YEAR 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11
OTHERS 1,16,46,886 5,31,42,817 1,86,49,904 1,87,78,059 2,17,77,883 2,19,49,412
INVENTORIES 31,86,55,121 56,60,52,636 53,31,52,143 62,75,00,570 66,95,89,474 95,08,82,403
3,43,52,120 12,40,74,586 2,73,52,979 21,93,74,120 10,37,14,094 25,97,71,599 18,10,53,374 17,17,78,678 26,74,70,221 13,20,49,516 27,43,09,800 32,65,80,536
INVENTORY PROPORTION
1,00,00,00,000 90,00,00,000 80,00,00,000 70,00,00,000 60,00,00,000 50,00,00,000 40,00,00,000 30,00,00,000 20,00,00,000 10,00,00,000 2009-10 2008-09 2007-08 2006-07 2005-06
2010-11
INTERPRETATION: Raw materials consume changes year to year. It is not maintain a stability .There is a rapid Change in the year 2010-11 to consume raw material. F.G increasing from 2005-06 to 2007-08 but in the year 2008-09 F.G fall down. In the year 2009-10 once again F.G increase. Total inventory increasing from year to year. There is a rapid change in the year 2010-11. Powered by:-SAUMENDRA NANDA 4.12 ISBM
2-COMPONENTS OF INVENTORY
COMPONENTS OF INVENTORY
1,00,00,00,000 90,00,00,000 80,00,00,000 70,00,00,000 60,00,00,000 50,00,00,000 40,00,00,000 30,00,00,000 20,00,00,000 10,00,00,000 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11
RAW MATERIAL
RAW MATERIAL IN TRANSIT FINISHED GOODS
OTHERS
INVENTO RIES
INTERPRETATION: In year 2005-06 raw material is the major part of total inventory. In year 2006-07 raw material is the major part of total inventory. In year 2007-08 finished goods is the major part of total inventory. In year 2008-09 raw material in transit is the major part of total inventory. In year 2009-10 finished goods is the major part of total inventory. In year 2010-11 raw material is the major part of total inventory.
2.1-INVENTORY TURNOVER RATIO

2005-06 2006-07 2007-08 2008-09 2009-10 2010-11
6.000 5.000 4.000 3.000 2.000 1.000 0.000 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11
YEAR
1,24,82,28,524 1,70,13,45,767 1,94,05,65,639 2,56,83,89,739 3,28,78,95,291 3,69,11,42,341
SALE AVG INVENTORIES 31,86,55,121 44,23,53,879 54,96,02,390 58,03,26,357 64,85,45,022 81,02,35,939
ITR 3.917 3.846 3.531 4.426 5.070 4.556
4.13
ISBM
INTERPRETATION: Inventory turnover ratio UAL INDUSTRIES LTD. Decreasing from the year 2005-06 to 2007-08 In the year 2008-09 & 2009-10 once again start to increase but in 2010-11 start to full again. In the year 2007-08 inventory turnover ratio is low & in 2009-10 ratio is high.
2.2-INVENTORY HOLDING PERIOD

YEAR 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11
120 100 80 60 40 20 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11
DAYS 360 360 360 360 360 360
INVENTORY TURNOVER RATIO 3.917 3.846 3.531 4.426 5.07 4.556

102 81
INVENTORY HOLDING PERIOD 92 94 102 81 71 79
92
94
71
79
INTERPRETATION: Inventory holding period of UAL INDUSTRIES LTD. Is slightly high. In the year 2007-08 inventory holding period is highest. In the year 2009-10 inventory period is lower. 3.1-RAW MATERIAL TURNOVER RATIO:YEAR 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11
20.00 15.00 10.00 5.00 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 8.40 8.20 9.48
SALE 1,24,82,28,524 1,70,13,45,767 1,94,05,65,639 2,56,83,89,739 3,28,78,95,291 3,69,11,42,341
RAW MATERIAL 14,85,81,529 20,73,82,125 20,47,50,322 18,01,09,660 20,46,74,907 31,15,11,097
RAW MATERIAL RATIO 8.40 8.20 9.48 14.26 16.06 11.85

16.06 11.85
14.26
4.14
ISBM
INTERPRETATION: Raw material turnover ratio of UAL INDUSTRIES LTD. is increasing in trend. It starts to decrease in the year 2010-11. In the year 2009-10 it is highest & in the year 2006-07 ratio is lowest.
3.2- RAW MATERIAL HOLDING PERIOD

YEAR 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 DAYS 360 360 360 360 360 360 RAW MATERIAL RATIO 8.4 8.2 9.48 14.26 16.06 11.85 RAW MATERIAL HOLDING PERIOD 43 44 38 25 22 30
50 40 30 20 10 0
43
44
38 25 30 22
2005-06
2006-07
2007-08
2008-09
2009-10
2010-11
INTERPRETATION: Raw material holding period UAL INDUSTRIES LTD. Is shows decreasing in trend. In year 2006-07 raw material holding period is highest & in the year 2009-10 ratio is lowest.
4.1-FINISHED GOODS TURNOVER RATIO:YEAR 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11
20.000 15.000 10.000 5.000 0.000 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 10.060 9.907 7.972
SALE FINISHED GOODS FINISHED GOODS TURNOVER RATIO 1,24,82,28,524 12,40,74,586 10.060 1,70,13,45,767 17,17,24,353 9.907 1,94,05,65,639 24,34,22,171 7.972 2,56,83,89,739 19,97,59,869 12.857 3,28,78,95,291 20,31,79,658 16.182 3,69,11,42,341 30,04,45,168 12.286
16.182 12.857 12.286
INTERPRETATION: Finished goods turnover ratio of UAL INDUSTRIES LTD. Is not maintaining a stable. Finished goods turnover ratio decrease from 2005-06 to 2007-08 then it start to increase Powered by:-SAUMENDRA NANDA 4.15
ISBM
2008-09 &2009-10, but once again in the year 2010-11 ratio start to decrease. In the year 2009-10 FTR is highest & in the year 2007-08 FTR is lowest. DAYS FTR FINISH GOOD HOLDING PERIOD
4.2-FINISHED GOOD HOLDING PERIOD

YEAR 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 360 360 360 360 360 360 10.06 9.907 7.972 12.857 16.182 12.286 36 36 45 28 22 29
50 40 30 20 10 0 2005-06 2006-07 36 36
45 29 22
28
2007-08
2008-09
2009-10
2010-11
INTERPRETATION: F.G holding period of UAL INDUSTRIES LTD. Is in good position except 2007-08. In the year 2007-08 F.G holding period is highest & in the year 2009-10 ratio is lowest. 5-INVENTORIES TO CURRENT ASSET RATIO:YEAR INVENTORIES CURRENT ASSET INV TO CA RATIO 2005-06 31,86,55,121 58,09,91,030 0.548 2006-07 56,60,52,636 91,27,22,526 0.620 2007-08 53,31,52,143 99,82,55,582 0.534 2008-09 62,75,00,570 1,12,24,62,297 0.559 2009-10 66,95,89,474 1,45,17,72,302 0.461 2010-11 95,08,82,403 2,00,39,41,220 0.475
0.800 0.600 0.400 0.200 0.000 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11
0.548
0.620
0.534
0.559
0.461
0.475
INTERPRETATION: Inventories are the major part of the current asset in UAL INDUSTRIES LTD. In the year 2006-07 inventories is 62% of current asset, it is highest position. In the year 2009-10 inventories is 46% of current asset, it is lowest position. Powered by:-SAUMENDRA NANDA 4.16 6
ISBM
4.7-RECEIVABLE MANAGEMENT
INTRODUCTION:The receivables represent an important component of the current assets of the firm. The amount of investment in accounts receivable for most firms. The amount of investment in accounts receivable for most firms also represents a very substantial portion of current assets. According to I.M.Pandey:Trade credit is the most prominent force of the modern business. It is considered as an essential marketing tool, acting as a bridge for the movement of goods from production and distribution stages to customers finally. The interval period between the date of sale and the date of receipt of payment has to be financed out of working capital funds. Thus, trade debtors represent investment. As substantial amount are tied-up in trade debtors or receivables, it needs careful analysis and proper management.
4.7.1-MEANING OF RECEIVABLES:Emerson as has defined the term `receivables when goods or services are sold under an arrangement permitting the customers to pay for them at a letter date; the amount due from the customer is recorded receivable. This is an asset account, representing claim to future payment of cash from the customer.
4.7.2-OBJECTIVES OF RECEIVABLES MANAGEMENT:The basic objective of receivables management is to maximize the value of the firm by achieving a trade off between liquidity and profitability. In fact, the firm should manage its credit in such a way that sales are expanded to an extent to which risk remains within an acceptable limit. Thus, to achieve the objective to maximizing the vale, the firm should manage its credit: To obtain optimum volume of sales. To control the cost of credit and keep it at minimum. To maintain investment in debtors at optimum level. The purpose of credit management is not sales maximization. But efficient and effective credit management does help to expand sales and can prove to be an effective credit management does help to expand sales and can improve to be an effective tool of marketing, thus, the objective of receivables management is to promote sales and profits until that pint is reached where the return on investment in further funding of receivables is less than the cost of funds raised to finance that additional credit 4.7.3-SIZE OF RECEIVABLES:The size of receivables is closely linked with a firms trade terms, which includes the period of credit, the rate of discount and collection policies etc. But the most important factor in determining the volume of receivables is the level of a firms credit sale. With an increase in the size of sales, it may decide to bring about a proportionate increase in the magnitude of receivables.
4.17
ISBM
RATIO ANALYSIS
i-TO ANALYZE EFFICIENCY
1-ACCOUNT RECEIVABLE TURNOVER RATIO

YEAR 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11
20.000 15.000 10.000 5.000 0.000 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11
SALE
1,24,82,28,524 1,70,13,45,767 1,94,05,65,639 2,56,83,89,739 3,28,78,95,291 3,69,11,42,341
AVG DEBTORS 8,03,23,114 15,26,87,328 19,83,44,469 15,24,25,778 21,58,93,923 27,99,01,246
RECEIVABLE TURNOVER RATIO 15.540 11.143 9.784 16.850 15.229 13.187
INTERPRETATION: Receivable ratio of UAL INDUSTRIES LTD. Is fluctuation in nature. From 2005-06 to 2007-08 ratio decrease year by year In the year 2008-09 UAL INDUSTRIES LTD. Capable to recover but once again ratio starts to decrease. 1.2-DEBTORS COLLECTION PERIOD:YEAR 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11
40 30 20 10 0 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11
DAYS
360 360 360 360 360 360
RTR
15.54 11.14 9.78 16.85 15.23 13.19
DEBTOR COLLECTION PERIOD
23 32 37 21 24 27
INTERPRETATION: Debtor collection period of UAL INDUSTRIES LTD. Is very efficient. Debtor collection period is high in the year 2007-08 but UAL INDUSTRIES LTD. Soon recover this period. 4.18 Powered by:-SAUMENDRA NANDA ISBM
2-AVERAGE INVESTMENT IN RECEIVABLES:YEAR 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 SALE PER DAY DEBTOR COLLECTION PERIOD AVG INVESTMENT IN RECEIVABLES 34,67,301 23 79747933 46,61,221 32 149159081 53,16,618 37 196714873 70,36,684 21 147770369 90,07,932 24 216190375 1,01,12,719 27 273043406
300000000 250000000 200000000 150000000 100000000 50000000 0 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11
INTERPRETATION: Average investment in receivables of UAL INDUSTRIES LTD. Is increasing from 2005-06 to 2007-08 In the year 2008-09 investment in receivables decreases but once again it starts to increase. Investment in receivable is lowest in the year 2005-06 & highest in 2010-11.
3.1-CREADOTER TURNOVER RATIO:YEAR 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11

6.00 4.00 2.00 0.00 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11
PURCHASE 74,62,29,092 98,71,62,397 1,03,30,52,381 1,58,77,17,713 1,68,83,77,119 2,11,15,04,467
AVG CREDITOR 20,91,43,089 22,99,47,084 24,51,84,216 28,62,51,454 33,78,59,103 36,52,09,123
CTR
3.57 4.29 4.21 5.55 5.00 5.78
INTERPRETATION: Creditor turnover ratio of UAL INDUSTRIES LTD. Is increasing in trend. In the year 2005-06 ratio is lowest & in the year 2010-11 ratio is highest.
4.19
ISBM
3.2-CREDITOR COLLECTION PERIOD:YEAR

120 100 80 60 40 20 0 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11
DAYS
CTR
CCP
2005-06 360 3.57 101 2006-07 360 4.29 84 2007-08 360 4.21 86 2008-09 360 5.55 65 2009-10 360 5 72 2010-11 360 5.78 62 INTERPRETATION: Credit collection period of UAL INDUSTRIES LTD. Is decreasing in trend. In the year 2005-06 credit collection periods is highest & in the year 2010-11 credit collection period is lower.
ii-TO ANALYZE THE STUCTURE 1-RECEVIABLES TO CURRENT ASSET:YEAR 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11
0.20 0.15 0.10 0.05 0.00 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11
RECEIVABLE
8,03,23,114 15,26,87,328 19,83,44,469 15,24,25,778 21,58,93,923 27,99,01,246
CURRENT ASSET RECEIVABLE TO C.A 58,09,91,030 0.14 91,27,22,526 0.17 99,82,55,582 0.20 1,12,24,62,297 0.14 1,45,17,72,302 0.15 2,00,39,41,220 0.14
INTERPRETATION: In the year 2005-06, 2008-09 & 2010-11 receivable is 14% of current asset. So very efficient work done by UAL INDUSTRIES LTD. In the year 2007-08 receivable is 20% of current asset. Powered by:-SAUMENDRA NANDA 4.20 ISBM
4.8-CASH MANAGEMENT
4.8.1-Introduction:Cash is an important component of current assets and is most essential for business operations. Cash is the basic input needed to keep the business running on a continuous basis. It is also the ultimate output expected to be realized by selling the service and product manufactured by the firm. Cash is both the beginning and the end of the working capital cycle i.e. cash, inventories, receivables and cash. While the management of all the firms should strive hard to secure larger cash at the management of all the firms should strive hard to secure larger cash at the end of the working capital cycle than what had been invested into; it at its beginning, they must also make it a best possible minimum. This is required to optimally utilize the cash and to avoid the situation of idea cash balances. Its effective management is the key determinant of sufficient working capital. In the key determinant of sufficient working capital. In the words of `P.V.Kulkarni Cash in the business enterprise may be compared to the blood of the human body; blood gives life and strength profits and solvency to the business organization. Hence, every enterprise has to hold to hold necessary cash for is existence. In a business firm, ultimately, a transaction results in either an inflow or outflow of cash. In an efficient managed business, static cash balance situation generally does not exist. A firm should keep sufficient cash, neither more nor less. Cash shortage will disrupt the firms manufacturing operation; while excessive cash will simply main idle. Therefore, for its smooth running and maximum in a business is of paramount importance. 4.8.2-Motive for Holding Cash: J.M.Keynes a prominent economist pointed out three primary motives for holding cash (i) The transaction motive (ii) The precautionary motive; and (iii) The speculative motive; these motive are explained as under(i) The Transaction Motive:The transaction motive requires a firm to hold cash to conduct its business in the ordinary course. The firm needs cash primarily to make payment for purchases, wages, operating expenses, taxes etc. A firm needs a pool of cash because its receipts and payment are not perfectly synchronized. A pool of cash is also known as transaction balance. (ii) The Precautionary Motive:The precaution motive is to hold cash to meet any contingencies in future. It provides a cushion or buffer to withstand some unexpected emergency. The precautionary amount of cash depends upon the predictability of cash flows. If cash flows can be predicted with accuracy, less cash will be maintained against an emergency. On other hand, unpredicted the cash flows, the larger the need for such balances. (iii) The Speculative Motive:The financial manager would like to take advantage of unexploited opportunities. Some reserve of money is always essential to enable the firm to take advantage of cash when such opportunities arise. Powered by:-SAUMENDRA NANDA 4.21 ISBM
4.8.3- FUNCTIONS OF CASH MANAGEMENT:Efficient cash management receipts and disbursement, and an efficient control and review mechanism. The firm should evolve strategies the following four function of cash management:a) Cash Planning:Cash planning can help anticipate future cash flows and needs of firm and reduces the possibility of idle cash balances and cash deficits. Cash planning may be done on daily, weekly or monthly basis. b) Managing the Cash Flows:The twin objective sin managing the cash flows are: cash flows and cash outflows. The inflow of cash should be accelerated while, as far as possible, the out flows of the cash should be decelerated. c) Determining the Optimum Cash Balance:One of the primary responsibilities of the financial manager is to maintain a sound liquidity position of the firm so that dues may be settled in time. The test of liquidity is really the availability of cash to meet the firms obligations when they become due. d) Investing Idle Cash:The idle cash or precautionary cash should be properly and profitably invested. The firm should decide about the division of cash balances between marketable securities and securities and bank deposits.
RATIO ANALSIS
i-TO ANALIZE OVERALL EFFECIENCY 1-CASH TURNOVER RATIO:YEAR 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11
20.00 15.00 10.00 5.00 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11
SALE 1,24,82,28,524 1,70,13,45,767 1,94,05,65,639 2,56,83,89,739 3,28,78,95,291 3,69,11,42,341
AVG CASH BALANCE CASH TURNOVER RATIO 10,70,20,652 11.66 9,48,14,709 17.94 11,55,58,571 16.79 16,08,21,714 15.97 19,69,18,645 16.70 19,51,59,674 18.91
INTERPRETATION: Cash turnover ratio of UAL INDUSTRIES LTD. Is maintaining stability except the year 200506. Very effective work done by UAL INDUSTRIES LTD. So that cash turnover ratio is maintaining stability. Powered by:-SAUMENDRA NANDA 4.22 ISBM
1.2-CASH HOLDING PERIOD:YEAR 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11

40 30 20 10 0 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11
DAYS CTR CHP 360 11.66 31 360 17.94 20 360 16.79 21 360 15.97 23 360 16.7 22 360 18.91 19
INTERPRETATION: Cash holding period of UAL INDUSTRIES LTD. Is very good. Except 2005-06 UAL INDUSTRIES LTD. Maintain stability. In the year 2005-06 cash holding period is 31 days.
ii-TO ANALZE LIQUIDITY 1-CASH RATIO:YEAR 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11
0.400 0.300 0.200 0.100 0.000 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11
CASH(RS)
107020652 82608765 148508377 173135051 220702239 169617108
CURRENT LIABILITIES(RS) CASH RATIO 34,27,42,046 43,98,86,063 43,63,11,353 61,75,55,610 84,57,73,982 1,08,38,50,498
0.340 0.280 0.261 0.156
0.312 0.188 0.340 0.280 0.261 0.156
0.312 0.188
INTERPRETATION: Cash availability decrease year to year of UAL INDUSTRIES LTD. In the year 2007-08 cash availability is highest & in the year 2010-11 cash availability is lower. Powered by:-SAUMENDRA NANDA 4.23 ISBM
iii-TO ANALYZE STRUCTURE 1-CASH TO CURRENT ASSET RATIO:YEAR 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11
0.200 0.150 0.100 0.050 0.000 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11
CASH
10,70,20,652 8,26,08,765 14,85,08,377 17,31,35,051 22,07,02,239 16,96,17,108
CURRENT ASSET CASH TO CA RATIO 58,09,91,030 0.184 91,27,22,526 0.091 99,82,55,582 0.149 1,12,24,62,297 0.154 1,45,17,72,302 0.152 2,00,39,41,220 0.085
INTERPRETATION: Cash is not a major portion of total current asset of UAL INDUSTRIES LTD. In the year 2010-11 cash is only 8% of current asset. In the year 2005-06 cash is 20% out of total current asset.
4.24
ISBM
4.9 OPERATING CYCLE:Operating cycle = raw material holding period + F.G holding period + debit collection period credit Collection period
OPERATING CYCLE
RAW MATERIAL HOLDING PERIOD DEBTOR CREDIT F.G HOLDING COLLECTION COLLECTION OPERATING PERIOD PERIOD PERIOD CYCLE 36 23 101 1 36 32 84 28 45 37 86 34 28 21 65 9 22 24 72 -4 29 27 62 24
34 28 24
YEAR 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11

40 35 30 25 20 15 10 5 0 -5 -10
43 44 38 25 22 30
9 1 2005-06 2006-07 2007-08 2008-09 -4 2009-10 2010-11
INTERPRETATION: Operating cycle of UAL INDUSTRIES LTD. Is fluctuating in nature. There is rapidly change in operating cycle. In the year 2009-10 it is very low one i.e. -4. It is best one.
4.25
ISBM
FORECASTING
WOKING CAPITAL MANAGEMENT OF ÙAL INDUSTRIES LTD.
5.1TIME SERIES ANALYSIS
Time series refers to a series in which one variable is time. A time series is an arrangement of statistical data in accordance to the time of occurrence or in a chronological analysis is done primarily for the purpose of making forecasts for future and also for the purpose of evaluating past performances.
5.2 METHOD OF LEAST SQUARES:-Where a= y / n
Let us assume ye= a + b*x b=xy/(x*x)
Here we are taking for 5 years that is 2005-06 to 2009-10 So the value of `n= number of year So n = 5 So the value of `x is = zero for 2008-09
The base year I am considering for forecasting purpose is 2008-09. Here I am forecasting the values for the year 2011-12.
5.3 FORECASTING FOR THE YEAR 2011-12 i-ESTIMATION SALE PERFOMANCE

YEAR 200607 200708 200809 200910 201011 TOTAL 201112 SALE(Y) 1,70,13,45,767 1,94,05,65,639 2,56,83,89,739 3,28,78,95,291 3,69,11,42,341 13,18,93,38,77 7 X -2 -1 0 1 2 0 3 5.1 x* x 4 1 0 1 4 10 Xy -3402691534 -1940565639 0 3287895291 7382284682 5,32,69,22,80 0 a b Ye=a+bx 2,63,78,67,75 1,57,24,83,19 5 53,26,92,280 5 2,63,78,67,75 2,10,51,75,47 5 53,26,92,280 5 2,63,78,67,75 2,63,78,67,75 5 53,26,92,280 5 2,63,78,67,75 3,17,05,60,03 5 53,26,92,280 5 2,63,78,67,75 3,70,32,52,31 5 53,26,92,280 5 2,63,78,67,75 5 4,23,59,44,59 5 ISBM
53,26,92,280
WOKING CAPITAL MANAGEMENT OF ÙAL INDUSTRIES LTD. 4,50,00,00,000 4,00,00,00,000 3,50,00,00,000 3,00,00,00,000 2,50,00,00,000 2,00,00,00,000 1,50,00,00,000 1,00,00,00,000 50,00,00,000 0 y=a+bx SALE(Y)
INFERENCE:
2006-07
2007-08
2008-09
2009-10
2010-11
2011-12
The estimated value of the sales for the year 2011-12 is Rs 4,23,59,44,595. The above chart shows the accuracy of forecasting. Accuracy of forecasting is very good The chart shows that sales will increase in the year 2011-12. The chart shows that sales increase year to year, so it is very good sign for the company. The chart signified that it is an upward slope.
ii- FORECASTING OF CURRENT ASSET 1-INVENTORY

a=Y/n b=xY/x*x YEAR INVENTORIES(Y) x x*x xY ye=a+bx 56,60,52,636 -2 4 -1,13,21,05,272 2006-07 66,94,35,446 9,06,09,687 48,82,16,073 53,31,52,143 -1 1 2007-08 -53,31,52,143 66,94,35,446 9,06,09,687 57,88,25,760 62,75,00,574 2008-09 0 0 66,94,35,446 9,06,09,687 66,94,35,446 66,95,89,474 2009-10 1 1 66,95,89,474 66,94,35,446 9,06,09,687 76,00,45,133 95,08,82,403 2010-11 2 4 1,90,17,64,806 66,94,35,446 9,06,09,687 85,06,54,819 TOTAL 3,34,71,77,230 0 10 90,60,96,865 2011-12 3 66,94,35,446 9,06,09,687 94,12,64,506
1,00,00,00,000 90,00,00,000 80,00,00,000 70,00,00,000 60,00,00,000 50,00,00,000 40,00,00,000 30,00,00,000 20,00,00,000 10,00,00,000 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 ye=a+b x INVENT ORIES
5.2
ISBM
INFERENCE:
2-CASH
a=Y/n b=xY/x*x YEAR CASH x x*x xY ye=a+bx 8,26,08,765 -2 4 2006-07 -16,52,17,530 15,89,14,308 2,46,21,055 10,96,72,198 14,85,08,377 -1 1 2007-08 -14,85,08,377 15,89,14,308 2,46,21,055 13,42,93,253 17,31,35,051 2008-09 0 0 15,89,14,308 2,46,21,055 15,89,14,308 22,07,02,239 2009-10 1 1 22,07,02,239 15,89,14,308 2,46,21,055 18,35,35,363 16,96,17,108 2010-11 2 4 33,92,34,216 15,89,14,308 2,46,21,055 20,81,56,418 TOTAL 79,45,71,540 0 10 24,62,10,548 2011-12 3 15,89,14,308 2,46,21,055 23,27,77,472
25,00,00,000
The estimation value of inventories for the year 2011-12 is Rs 94, 12, 64, 506. The above chart shows the accuracy of forecasting. Accuracy of forecasting is very good. The chart shows that it is upward slope. Inventories of the UAL INDUSTRIES LTD. decrease year to year. It is good sign for UAL INDUSTRIES LTD. Because inventory increase year to year. It is happen due to more investment in inventory of inventories.
25,00,00,000 20,00,00,000 15,00,00,000 10,00,00,000 5,00,00,000 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 ye=a+ bx CASH
20,00,00,000 15,00,00,000 10,00,00,000 5,00,00,000 -
INFERENCE:
3-SUNDRY DEBTORS:YEAR 2006-07 2007-08 2008-09 2009-10 2010-11 TOTAL 2011-12
The estimated value of cash for the year 2011-12 is Rs 23, 27, 77,472. The above chart shows the accuracy of forecasting. The accuracy of forecasting is very good. The chart shows that it is upward slope curb. It is good sign for organisation. Because cash is life blood of every organisation. So increasing of cash is a good sign. SD x x*x xY A b Ye=a+bx 15,26,87,328 2 4 -305374656 19,98,50,549 2,71,97,729 14,54,55,091 19,83,44,469 1 1 -198344469 19,98,50,549 2,71,97,729 17,26,52,820 15,24,25,778 0 0 0 19,98,50,549 2,71,97,729 19,98,50,549 21,58,93,923 1 1 215893923 19,98,50,549 2,71,97,729 22,70,48,278 27,99,01,246 2 4 559802492 19,98,50,549 2,71,97,729 25,42,46,007 99,92,52,744 0 10 27,19,77,290 3 19,98,50,549 2,71,97,729 28,14,43,736 5.3
ISBM
INFERENCE:
4-LOANS & ADVANCES:-YEAR 200607 200708 200809 200910 201011 TOTAL 201112
Estimation value of sundry debtor for the year 2011-12 is Rs 28, 14, 43,736. The above chart shows that the accuracy of forecasting. In the year 2008-09 accuracy of forecasting is less. The chart shows that it is upward trend. It is good sign for the UAL INDUSTRIES LTD. Because increase of sundry debtor directly affect to the sale & current asset. LOANS & x x*x xY a b Ye=a+bx ADV(Y) 11,13,73,797 -2 4 -222747594 26,96,30,483 12,11,66,941 2,72,96,602 11,82,50,593 16,94,00,894 34,55,86,666 60,35,40,463 1,34,81,52,413 -1 0 1 2 0 3 1 0 1 4 -118250593 0 345586666 1207080926 26,96,30,483 26,96,30,483 26,96,30,483 26,96,30,483 12,11,66,941 12,11,66,941 12,11,66,941 12,11,66,941 14,84,63,542 26,96,30,483 39,07,97,424 51,19,64,365
10 1,21,16,69,405 26,96,30,483 12,11,66,941 63,31,31,306
5.4
ISBM
WOKING CAPITAL MANAGEMENT OF ÙAL INDUSTRIES LTD. 70,00,00,000 60,00,00,000 50,00,00,000 40,00,00,000 30,00,00,000 20,00,00,000 10,00,00,000 0 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 LOANS & ADV
ye=a+bx
INFERENCE:--
The estimated value of loans & advances is Rs 63, 31, 31,306. The above chart shows that it is upward slope. Accuracy of forecasting is less in the year 2008-09 & accuracy of forecasting is high in the year 2010-11. It very good sign for UAL INDUSTRIES LTD. Because loans & advance is a part of current asset, so increase of current asset is good for organisation.
iii-FORECASTING OF CURRENT LIABILITIES

1-CURRENT LIABILITIES:-a=Y/n b=xY/x*x YEAR C.L x x*x xY ye=a+bx 34,61,54,317 -2 4 2006-07 -69,23,08,634 48,69,39,156 8,94,10,876 30,81,17,405 34,79,47,682 -1 1 2007-08 -34,79,47,682 48,69,39,156 8,94,10,876 39,75,28,280 47,90,72,324 2008-09 0 0 48,69,39,156 8,94,10,876 48,69,39,156 58,86,77,841 2009-10 1 1 58,86,77,841 48,69,39,156 8,94,10,876 57,63,50,031 67,28,43,615 2010-11 2 4 1,34,56,87,230 48,69,39,156 8,94,10,876 66,57,60,907 TOTAL 2,43,46,95,779 0 10 89,41,08,755 2011-12 3 48,69,39,156 8,94,10,876 75,51,71,782
80,00,00,000 70,00,00,000 60,00,00,000 50,00,00,000 40,00,00,000 30,00,00,000 20,00,00,000 10,00,00,000 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 ye=a +bx C.L
5.5 5
ISBM
INFERENCE:-
2-PROVISION:-
YEAR PROVISION x x*x xY a b ye=a+bx 2006-07 9,37,31,746 -2 4 -187463492 19,77,36,345 8,03,28,274 3,70,79,797 2007-08 8,83,63,671 -1 1 -88363671 19,77,36,345 8,03,28,274 11,74,08,071 2008-09 13,84,83,286 0 0 0 19,77,36,345 8,03,28,274 19,77,36,345 2009-10 25,70,96,141 1 1 257096141 19,77,36,345 8,03,28,274 27,80,64,620 2010-11 41,10,06,883 2 4 822013766 19,77,36,345 8,03,28,274 35,83,92,894 TOTAL 98,86,81,727 0 10 80,32,82,744 8,03,28,274 2011-12 3 19,77,36,345 8,03,28,274 43,87,21,169
50,00,00,000 45,00,00,000 40,00,00,000 35,00,00,000 30,00,00,000 25,00,00,000 20,00,00,000 15,00,00,000 10,00,00,000 5,00,00,000 0 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 ye=a+ bx PROVI SION
The estimated value of current liabilities for the year 2011-12 Rs 75, 51, 71, 782. The accuracy of forecasting is excellent. The chart shows that forecasting curb is upward slope. According forecasting curb it is not a good sign for UAL INDUSTRIES LTD. Because current liabilities decrease year to year.
INFERENCE:-
The estimation value of provision for the year 2011-12 is Rs 43, 87, 21, 169. The above chart shows the accuracy of forecasting. The accuracy of forecasting is good. The forecasting curb shows the upward slope. Provision of UAL INDUSTRIES LTD. Is increasing year to year, so it is good sign for the organisation. Provision is create for avoid the future expectation lose & help to growth of business. So it is very good sign for UAL INDUSTRIES LTD.
5.6
ISBM
5.4 FORECASTING OF WORKING CAPITAL FOR THE YEAR 2011-12

PARTICULARS CURRENT ASSETS, LOANS & ADVANCES inventories sundry debtors cash & bank balances loans & advances TOTAL CURRENT LIABILITIES & PROVISIONS WORKING CAPITAL 2011 2012 INCREASE DECREASE
b d c
95,08,82,403 27,99,01,246 16,96,17,108 60,35,40,463
94,12,64,506 28,14,43,736 15,42,490
96,17,897
23,27,77,472 63,31,31,306
6,31,60,364 2,95,90,843
2,00,39,41,220 2,08,86,17,020 1,08,38,50,498 1,19,38,92,951 89,47,24,069
11,00,42,453 2,53,66,653
INFERENCE:
In the year 2012 inventory will be decrease Rs 96,17,897. In the year 2012 sundry debtor will increase Rs 15,42,490. In the year 2012 loans & advances will increase Rs 2,95,90,843. In the year 2012 cash & bank balances will increase Rs 6,31,60,364. In the year 2012 current liabilities & provision increase Rs 11,00,42,453. The above table show that there has been decrease in need for working capital to the extent of RS 2,53,66,653 for the year 2011 to 2012. This decrease of working capital happens due to huge increase in the current asset and also decreases the sundry debtor. If we analyze the working capital statement we can see that the requirement of current liabilities increase but the company will unable to arrange adequate current asset for which extra finance required for in terms of working capital.
92,00,90,722
5.7
ISBM
6.1-FINDING
The profitability of any organisation depends upon the efficient utilization of resources. From the present study various aspect of the utilisation of fund in particular working capital management has revel. The regular increases in the working capital indicate a healthy growth of business. Current ratio of UAL INDUSTRIES LTD. We can see that the year 2005-06 & 2009-10is well below the standard but in other year the current ratio is quite satisfactory. (According to the thumb rule) The current ratio of the company is very good & quick ratio of the company is also in good position. So that company has no liquidity problems. Gross profit ratio of UAL INDUSTRIES LTD. Shows that a healthy figure which is 30% to 35%. Net profit ratio of UAL INDUSTRIES LTD. Shows very major able figure from 1.638% to 8.078%. The fact & figures of the financial statement of company revels that majority of its resources (60%) has been utilised in the current asset. In the year 2005-06,2006-07, 2008-09 & 2010-11 raw material is the major part of total inventory & in the year 2007-08 & 2009-10 finish goods is the major part of total inventory. The inventory holding period of UAL INDUSTRIES LTD. Ranges from 70 to 100 days. It indicates situated of overtrading. From the figures it is observed that the raw material holding period is higher. This results raw material constitution as a major portion (60%) of current asset. Debtor turnover ratio & debtor collection period is satisfactory. The credit turnover period is low. Receivable forms a small portion of total current asset (14% to 20%). So it shows the effective management of receivable management. The cash & bank component of current asset is very high.
6.2-RECOMMENDATION
More effort should be made for proper management of the growing working capital. As huge gap in gross profit & net profit referee should be made to reduce the operating expenses.
Effort should be made to minimise the holding the period of raw-material & finished good. This can be done by give more effort on sales promotional activity, and by following the requisite strategy in terms of operation and production management. Company should follow the strict credit policy so that debtor collection period will decrease. Company should apply the different credit payment policy. So that company should increase the credit payment period. 6.1
ISBM
Inventory is an important portion of every organisation. So that inventory management should be done efficiently. Company should maintain this trend of receivable. High cash balance is not desirable for any organisation. Company should invest it surplus cash in short term investment. So that company will get more return rather than holding of ideal cash.
6.2
ISBM
WORKING CAPITAL MANAGEMENT OF UAL INDUSTRIES LTD
Cash is the life-blood of any business, no matter how large or small. If a business has no cash & no way of getting any cash, it will have to close down. Cash flows in a cycle into, around & out of a business. It is the businesss primary task is to help keep it flowing & to use the cash flow to generate profit. If a business is operating profitably, then it should, in theory, generate cash surpluses. If it doesnt generate surpluses, the business will eventually run out of cash & expire. Cash is king, especially at a time when fund raising is harder than even. Letting it slip away is an oversight that investors should not forgive. Analyzing a companys working capital can provide excellent insight into how well a company handles its cash, & whether it is likely to have any on hand to fund growth & contribute to shareholder value. Working capital of a business reflects the short-term use of funds these are cash short-term securities, amount receivable and inventories of raw materials &finished goods. It is also referred as to the funds required for operations of the business. It follows a cycle process of conversion of cash into inventory, inventory to receivable & receivable into cash. The determination of working capital are nature of business manufacturing cycle, credit policies, availability of raw material, availability of credits, growth & expansion activities & other factors. The working in an organisation mainly depends on the analysis of the management of receivable, cash & inventories & finally the organisation profit & loss account, balance sheet highlights the working capital status whether it is healthy or not.
6.3-CONCLUSION
6.3
ISBM
6.4-BIBLIOGRAPHY REFERENCE BOOKS

Management accounting S.P.JAIN & K.L.NARANG FINANCIAL MANAGEMENT R.P.RUSTAGI FINANCIAL MANAGEMENT DR.S.N.MAHESHWARI FINANCIAL MANAGEMENT I.M.PANDAY
REPORTS WEBSITES
ANNUAL REPORT OF UAL INDUSTRIES LTD.
WWW.google.com www.ual industries.com www.investmentworld.com www.icai.com
6.4
ISBM
ANNEXURE
PARTICULAR 2011 SOURCES OF FUNDS SHARE HOLDERS' SHARE a CAPITAL 4,43,50,000 RESERVE & b SURPLUS 1,15,53,08,730 TOTAL(A) 1,19,96,58,730 LOAN FUNDS secured a Loans 48,33,35,731 unsecured b loans 8,30,15,000 TOTAL(B) 56,63,50,731 DEFERRED TAX LIABILITY 1,83,90,964 2010 2009 2008 2007 2006
78,03,82,592 82,38,32,592 52,24,49,826 52,66,13,500
4,34,50,000
47,83,83,265 52,04,83,265 60,22,72,511 66,47,92,511
4,21,00,000
37,48,52,616 41,51,52,616 64,62,88,758 71,30,09,400
4,03,00,000
34,30,74,383 38,33,74,383 58,15,07,550 64,13,82,192
4,03,00,000
25,32,04,534 29,35,04,534 41,42,80,030 44,22,55,953 74,64,27,232 49,52,26,880 50,74,58,248 31,86,55,121 10,70,20,652 58,09,91,030 34,27,42,046
4,03,00,000
TOTAL SOURCES OF FUNDS 1,78,44,00,425 1,37,14,86,356 1,20,61,59,411 1,14,18,61,949 1,03,92,70,522 APPLICATION OF FUNDS a fixed asset 80,04,94,919 71,37,90,576 66,15,25,233 53,38,13,495 53,72,86,495 b investment 6,38,14,784 5,16,97,460 3,97,27,491 4,38,73,397 2,85,71,564 TOTAL 86,43,09,703 76,54,88,036 70,12,52,724 57,76,86,892 56,58,58,059 CURRENT ASSETS, LOANS a inventories 95,08,82,403 66,95,89,474 62,75,00,574 53,31,52,143 56,60,52,636 sundry b debtors 27,99,01,246 21,58,93,923 15,24,25,778 19,83,44,469 15,26,87,328 cash & bank c balances 16,96,17,108 22,07,02,239 17,31,35,051 14,85,08,377 8,26,08,765 loans & d advances 60,35,40,463 34,55,86,666 16,94,00,894 11,82,50,593 11,13,73,797 TOTAL(D) 2,00,39,41,220 1,45,17,72,302 1,12,24,62,297 99,82,55,582 91,27,22,526 less CURRENT LIABILITIES & PROVISIONS 1,08,38,50,498 84,57,73,982 61,75,55,610 43,63,11,353 43,98,86,063 LESS DEFERRED REVENUE EXP TOTAL APPLICATION OF FUNDS TOTAL
92,00,90,722 60,59,98,320 50,49,06,687 56,19,44,229 22,30,828
2,10,40,264
41,63,674
6,25,20,000 2,08,83,635
6,67,20,642 1,36,99,933
5,98,74,642 1,45,13,947
2,79,75,923 1,06,66,745
1,22,31,368
8,03,23,114 7,49,92,143
47,28,36,463 5,76,000
23,82,48,984 7,20,000
1,78,44,00,425 1,37,14,86,356
1,20,61,59,411 1,14,18,61,949 1,03,92,70,522
74,64,27,232
ISBM

Working Capital Management of Ual Industries Ltd.

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UAL Industries Ltd, Dhenkanal (Orissa),

SUBMITTED AS A PARTIAL FULLMENT OF PGDM CORPORATE GUIDE MR. S.N. BHATTACHARYA

ACADEMIC GUIDE DR. U.C. PATTNAIK

SUBMITED BY: SAUMENDRA NANDA ROLL NO-MB05017 ISBM (BHUBANESWAR)

Place: Bhubaneswar DATE:

SAUMENDRA NANDA REG. NO.MB05017

SAUMENDRA NANDA ISBM, BBSR

Working capital Management.

TABLE OF CONTENT CHAPTER-1

PAGE NO. 1.1 1.1 1.1 1.1 1.2

5.1 5.2 5.3 5.4

5.1 5.1 5.1 5.7

OBJECTIVE OF THE STUDY

WORKING CAPITA MANAGEMENT OF UAL INDUSTRIES LTD.

1.1 OBJECTIVE OF THE STUDY:

1.2 SCOPE OF THE STUDY:

1.3 LIMITATIONS OF THE STUDY:

1.4 RESEARCH METHODOLOGY

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WORKING CAPITA MANAGEMENT OF UAL INDUSTRIES LTD.

1.5 METHODS OF DATA COLLECTION:

There are two types of data collection methods available.

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WORKING CAPITAL MANAGEMENT OF UAL INDUSTRIES LTD.

2.1 HISTORY OF THE COMPANY

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2.2 UNIT OF UAL INDUSTRIES LTD.

WORKING CAPITAL MANAGEMENT OF UAL INDUSTRIES LTD.

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2.3 BORD OF DIRECTORS

WORKING CAPITAL MANAGEMENT OF UAL INDUSTRIES LTD.

SHRI S.M. SHROFF CHAIRMAN (Qualifications B.A. (Hons.)

SHRI A.K. SARAF - MANAGING DIRECTOR ( Qualifications B. Com. (Hons.)

SHRI K. N. P. SINHA - EXECUTIVE DIRECTOR (Qualifications B.E. (Chemical

SHRI S.C. JAIN DIRECTOR

( Qualifications Master Degree in Personnel

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WORKING CAPITAL MANAGEMENT OF UAL INDUSTRIES LTD.

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WORKING CAPITAL MANAGEMENT OF UAL INDUSTRIES LTD.

2.6 MANAGEMENT INFORMATION SYSTAM

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2.7 CORPORATE SOCIAL RESPONSIBILITIES

WORKING CAPITAL MANAGEMENT OF UAL INDUSTRIES LTD.

Rs. 30,000.00 Rs. 13,592.00 Rs. 60,550.00

Rs. 32,000 .00 Rs 12,000.00 Rs.1,20, 000.00

27.09.2010 19.09.1020.09.10 01.10.2010 29.09 & 01.10

Rs. 50,000.00 Rs4,600.00 Rs. 3,000.00 Rs. 4,000.00

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WORKING CAPITAL MANAGEMENT OF UAL INDUSTRIES LTD.

FACTS & MYTHS 2.8.1 What is Asbestos?

2.8.2 What are Asbestos Cement (AC) Products?

WORKING CAPITAL MANAGEMENT OF UAL INDUSTRIES LTD.

2.8.3 Explain the negative reports on asbestos:

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PRODUCT 2.9.1 FC CORRUGATED SHEETS

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WORKING CAPITAL MANAGEMENT OF UAL INDUSTRIES LTD.

2.9.2 PLAIN SHEET

Available in Sizes: 2.44 M X 1.22 M 1.83 M X 1.22 M 1.22 M X 1.22 M

4mm & 6 mm 4mm & 6 mm 4mm & 6 mm