A PROJECT REPORT ON

STUDY OF WORKING CAPITAL MANAGEMENT DONE IN ITC-PARK SHERATON HOTELS & TOWERS
Submitted to the
SRM SCHOOL OF MANAGEMENT In partial fulfillment of the requirements
For the award of the degree Of Master Of Business Administration by

SIDDARTH.P 3511010680 Under the guidance of

MR.T.VELMURUGAN (MBA,M.Phil)

SRM SCHOOL OF MANAGEMENT SRM UNIVERSITY KATTANKULATHUR 603203 MAY 2012

BONAFIDE CERTIFICATE

It is certified that this project report titled STUDY OF WORKING CAPITAL MANAGEMENT IN ITC PARK SHERATON HOTELS is an original work done by SIDDARTH.P (3511010680) of 4th semester SRM School Of Management , SRM UNIVERSITY, Kattankulathur, during the academic year 2012, who carried out the research under my supervision . Certified further , that to the best of my knowledge the work reported here in does not form part of any other project report or dissertation on the basis of which a degree or award was conferred on an earlier occasion on this or any other certificate.

Submitted or viva voice to be held on

______________________

Mr.T.VELMURUGAN Project Guide

Dr.(Mrs.)JAYSHREE SURESH Head of the Department

Internal Examiner

External Examiner

DECLARATION

I, SIDDARTH.P, the bonafide student of SRM SCHOOL OF MANAGEMENT, hereby declare that the project entitled STUDY OF WORKING CAPITAL MANAGEMENT IN ITC PARK SHERATON HOTELS , submitted in partial fulfillment for the requirements of the MBA program, is my original work.

Place: Date:

SIDDARTH.P

ACKNOWLEDGEMENT

It is difficult to acknowledge a precious debt as that of learning ass it is the only debt that is difficult to repay except through gratitude.

First and foremost I wish to express my profound gratitude to the almighty, the merciful & compassionate with whose grace and gracing I have been able to complete this work.

It is my profound privilege to express my sincere thanks to the dean Dr JAYASHREE SURESH(School of management) ,for giving me an opportunity to work on the project and giving me full support in completing this project.

I am thankful to my guide Mr.T.Velmurugan (Professor in SRM UNIVERSITY, Kattankulathur) for his full support and guidance in completing this project work.

I am obliged to thanks the entire management of ADYAR GATE HOTELS .Ltd, for granting me permission and assisting me throughout the project.

Last but not the least, I would like to thanks my loving parents and my friend for their full cooperation and continuous support during the course of this assignment.

P.SIDDARTH

TABLE OF CONTENTS
S.NO 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. TOPIC EXECUTIVE SUMMARY INTRODUCTION Page no 5 7 9 18 23 34 43 45 50 71 80 84

CONCEPTS OF WORKING CAPITAL

INDUSTRIAL PROFILE COMPANY PROFILE REVIEW OF LITERATURE

OBJECTIVE OF THE STUDY

RESEARCH METHODLOGY DATA ANALYSIS& INTERPRETATION COMPARATIVE BALANCE SHEET ANALYSIS FINDINGS & SUGGESTION BIBLOGRAPHY

LIST OF TABLES

S.NO

TOPICS

PAGE NO

1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14.

CURRENT RATIO LIQUID RATIO PROPRIETARY RATIO FIXED ASSET TO NET WORTH CURRENT ASSETS TO FIXED ASSETS RATIO CASH TO CURRENT ASSETS RATIO CASH TO CURRENT LIABILITY RATIO FIXED ASSET TURNOVER NET PROFIT RATIO EARNING PER SHARE RETURN ON SHARE HOLDERS FUND COMPARATIVE BALANCE SHEET OF CPCL 2006-2007 COMPARATIVE BALANCE SHEET OF CPCL 2007-2008 COMPARATIVE BALANCE SHEET OF CPCL 2008-2009

54 56 58 60 63 64 65 66 67 69 70 73 74 75

LIST OF FIGURES S.NO TOPICS PAGE NO 1. 2. 3. 4. 5. 6. 7.

FINANCIAL STRUCTURE CURRENT RATIO

29 54 56 58 60 62 64

QUICK RATIO
PROPRIETARY RATIO

FIXED ASSET TO NET WORTH CURRENT ASSETS TO FIXED ASSETS RATIO CASH TO CURRENT ASSETS RATIO

EXECUTIVE SUMMARY

A well designed and implemented working capital management is expected to contribute positively to the creation of a firms value. The purpose of this paper is to examine working capital management and its impact on firms profitability. The working capital needs and profitability of firm is examined. The key variables used in the analysis are inventories days, accounts receivables days, accounts payable days and cash conversion cycle, current ratio, Liquid ratio. The dependent variable, return on total assets is used as a measure of profitability and the relation between working capital management and corporate profitability is investigated for ADYAR GATE HOTEL LTD using data for the period 2004-2005 to 2008-2009.The results show that there is a strong negative relationship between variables of the working capital management and profitability of the firm. It means that as the cash conversion cycle increases it will lead to decreasing profitability of the firm, and managers can create a positive value for the shareholders by reducing the cash conversion cycle to a possible minimum level.

CHAPTER 1 INTRODUCTION
I don't want to do business with those who don't make a profit, because they can't give the best service. - Lee Bristol FINANCE:
Finance is the backbone of any enterprise. It may be manufacturing, trading or servicing. Efficient management of every enterprise is the outcome of efficient management of its finance. Finance is one of the basic foundations of all kinds of economic activities.

WORKING CAPITAL INTRODUCTION:

The total capital employed in a business organization can be categorized as fixed capital and working capital. The fixed capital that part of the funds, which is invested in fixed assets, where as working capital is that portion of the funds which is invested in current assets. The investment in fixed assets is represented by land and buildings (for factory, office, go-down and stores), equipment such as machinery, furniture and fixtures, intangible assets in the form of patent and good will etc. To employ these fixed assets fully, again current assets are required. Current assets consist of raw materials, work-inprogress, finished goods, stores and spares accounts, receivables, cash in hand, cash at bank and marketable securities.

MEANING:
Working Capital is the fund available for managing day-to-day requirement of an enterprise. The initial investment of cash for the production or for any other function in an enterprise is also known as working capital. According to the Chartered Accountants of India, Working Capital means the fund available for dayto-day operations of an enterprise. Hence, it is necessary for any organization to run successfully its affairs to provide for adequate working capital and in excreting proper working capital.

FORMULA OF WORKING CAPITAL:

WORKING CAPITAL =CURRENT ASSETS - CURRENT LIABILTIES PRINCIPLES OF WORKING CAPITAL MANAGEMENT:
Working Capital Management is concerned with the problems that arise in attempting to manage the current assets, the current liabilities and the inter-relationship that exists between them. The term current assets refers to those assets which in the ordinary course of business can be, or will be, turned into cash usually within one year without undergoing a diminishing in the value and without disrupting the operations of the firms. The major current assets are marketable securities, accounts receivables and inventory. Current liabilities are those liabilities which are intended at their inception to be paid in the ordinary course of business, within a year, out of the current assets or earnings of the concern. The basic current liabilities are accounts payable, bills payable, bank over-draft and outstanding expenses. The goal of working capital management is to manage the firms current asset and current liabilities in such a way that a satisfactory level of working is maintained. The interaction between current assets and current liabilities is, therefore the main theme of the principles of Working Capital Management.

CONCEPTS OF WORKING CAPITAL:

To understand working capital better we should have basic knowledge about the various aspects of working capital. To start with, there are two concepts of working capital:

Gross Working Capital Net working Capital

1. GROSS WORKING CAPITAL:

Gross working capital, which is also simply known as working capital, refers to the firms investment in current assets: Another aspect of gross working capital points out the need of arranging funds to finance the current assets. The gross working capital concept focuses attention on two aspects of current assets management, firstly optimum investment in current assets and secondly in financing the current assets. These two aspects will help in remaining away from the two danger points of excessive or inadequate investment in current assets. Whenever a need of working capital funds arises due to increase in level of business activity or for any other reason the arrangement should be made quickly, and similarly if some surpluses are available, they should not be allowed to lie ideal but should be put to some effective use.

2. NET WORKING CAPITAL:

The term net working capital refers to the difference between the current assets and current liabilities. Net working capital can be positive as well as negative. Positive working capital refers to the situation where current assets exceed current liabilities and negative working capital refers to the situation where current

liabilities exceed current assets. The net working capital helps in comparing the liquidity of the same firm over time. For purposes of the working capital management, therefore Working Capital can be said to measure the liquidity of the firm. In other words, the goal of working capital management is to manage the current assets and liabilities in such a way that a acceptable level of net working capital is maintained.

NEED FOR WORKING CAPITAL:

The need for working capital is to run day-to-day business activities. Firms aim at maximizing the wealth and to earn sufficient return from its operations. Earning a steady amount of profit requires successful sales activity. The firm has to invest enough funds in current assets for the success of sales activity. Current assets are needed because sales do not convert into cash instantly. There is always an Operating Cycle involved in conversion of sales into cash.

CLASSIFICATION OF WORKING CAPITAL

Working capital may be classified in to ways: On the basis of concept. On the basis of time.

On the basis of concept working capital can be classified as gross working capital and net working capital.

PERMANENT OR FIXED WORKING CAPITAL

Permanent or fixed working capital is minimum amount which is required to ensure effective utilization of fixed facilities and for maintaining the circulation of current assets. Every firm has to maintain a minimum level of raw material, work- inprocess, finished goods and cash balance. This minimum level of current assts is called permanent or fixed working capital.

TEMPORARY OR VARIABLE WORKING CAPITAL

Temporary or variable working capital is the amount of working capital which is required to meet the seasonal demands and some special exigencies. Variable working capital can further be classified as seasonal working capital and special working capital. The capital required to meet the seasonal need of the enterprise is called seasonal working capital. Special working capital is that part of working capital which is required to meet special exigencies such as launching of extensive marketing for conducting research, etc.

IMPORTANCE OF WORKING CAPITAL MANAGEMENT:

Management of working capital is very much important for the success of the business. It has been emphasized that a business should maintain sound working capital position and also that there should not be an excessive level of investment in the working capital components. As pointed out by Ralph Kennedy and Stewart MC Muller,

TYPES OF WORKING CAPITAL:

Working Capital is broadly classified into types. They are; 1. Permanent Working Capital 2. Temporary Working Capital

1. PERMANENT WORKING CAPITAL:

It refers to the minimum life of the current assets, which is continuously required by the firm to carry on its business operations. It grows with the size of the business. Permanent working capital is permanently needed for business and therefore, it should be financed out of long-term funds.

2. TEMPORARY WORKING CAPITAL:

It refers to the extra Working Capital needed to support the changing production and sales activities of a business. Temporary Working Capital is generally financed from short-term sources of finance such as bank credit.

COMPONENTS OF WORKING CAPITAL:

As per the statutory requirement, it is necessary to show separately the current assets and the current liabilities as per the Companies Act. The division is also following the same practice in presentation in the balance sheet. The current assets and current

liabilities comprise the following components of Working Capital.

HOW TO IMPROVE WORKING CAPITAL?

Working capital measures how much in liquid assets a company has available to build its business. The number can be positive or negative, depending on how much debt the company is carrying. In general, companies that have a lot of working capital will be more successful since they can expand and improve their operations without incurring debt. Companies with negative working capital may lack the funds necessary for growth. So, how do you increase your working capital? The following are 4 ways to accomplish an increase of working capital: 1.Increase net Profit 2. Owners add capital to the business 3. Sell unwanted assets 4. Increase long term debt (decrease or shift short term debt).

1 2

3 4 TEN COMMANDMENTS OF WORKING CAPITAL:

Here are the ten commandments of working capital management: 1. Find ways and means to shorten the operating cycle and cash cycle. 2. Match the maturity of the Sources of financing to those of assets. 3. Centralize cash management and invest surplus funds judiciously. 4. Establish Credit Policy sensibly.

5. Monitor closely the collection of receivables employ indigenous ways to collection. 6. Maintain a tight vigil over the inventories. 7. Employ MRP (materials requirement planning), JIT (just-in-time), and EDI ( electronic data interchange ) systems. 8. Take cash discounts if you have controllable liquidity. 9. Stretch Payables within reasonable bounds. 10. Build a long term relationship of trust with banker.

INDUSTRY PROFILE INDUSTRY PROFILE: 5 HISTORY OF HOTEL INDUSTRY:

The hotel industry in India is going through an interesting phase. One of the major reasons for the increase in demand for hotel rooms in the country is the boom in the overall economy and high growth in sectors like information technology, telecom, retail and real estate. Rising stock market and new business opportunities are also attracting hordes of foreign investors and international corporate travelers to look for business opportunities in the country. Hotel industry is also inextricably linked to the tourism industry and its growth has added fillip to the hotel industry. And with Conde Nast Traveler ranking India as the fourth most preferred travel destination and Lonely Planet selecting the country among the top five destinations from 167 countries, India has finally made its mark on the world travel map. The arrival of low cost airlines and the associated price wars have given domestic tourists a host of options. The opening up of the aviation industry in India has led the way for exciting opportunities for the hotel industry as it relies on airlines to transport 80% of international arrivals. Moreover, the governments decision to substantially upgrade 28 regional airports in smaller towns and privatization and expansion of Delhi and Mumbai airport will improve the business prospects of hotel industry in India. Substantial investment in tourism infrastructure is essential for Indian hotel industry to achieve its

potential. The upgrading of national highway connecting various parts of India has opened new avenues for the development of budget hotels here. The Government of Indias Incredible India destination campaign and the Atithi Devo Bhavah campaign have also helped the growth of domestic and international tourism and consequently the hotel industry.

In recent years the government has taken several steps to boost travel and tourism, which have benefited the hotel industry in the country. These include the abolishment of the inland air travel tax by 15%, reduction in excise duty on aviation turbine fuel to 8% and removal of a number of restrictions in excise on
outbound chartered flights including those relating to frequency and size of aircraft. The governments decision to treat convention centers as part of core infrastructure has also fuelled the demand for hotel rooms. There are some 1,980 hotels approved and classified by the Ministry of Tourism, Government of India, with a total capacity of about 110,000 hotel rooms. Revenues of the hotel and restaurant industry in India during the financial year 2006-07 was Rs 604.32 billion, a growth of 21.27% over the previous year, primarily driven by foreign tourist arrivals, which increased by 14.17%. The hospitality industry is poised to grow at a faster rate and is expected to reach Rs. 826.76 billion by 2010. The gap between demand and supply of hotel rooms is also growing. There is a shortage of 1, 50,000 rooms fuelling hotel room rates across India. According to industry estimates, demand is going to exceed supply by at least 100% over the next two years. Five-star hotels in metro cities allot same room, more than once a day to different guests, receiving almost 24-hour rates from both guests against 6-8 hours usage. With demandsupply disparity, hotel rates in India are likely to rise by 25% annually and occupancy by 80%, over the next two years. While the potential of hotel industry is great, there are several constraints for the industry to grow. High cost of land in the country often discourages an investor to put in money in construction of new hotels. Construction of hotels is highly capital intensive and it is estimated that to construct a single five-star room it costs around Rs 1.25 crore. As a result there is no incentive to construct new hotel properties and there is a mismatch between demand and supply leading to higher occupancy rates and increasing prices. In fact, average rate of hotel rooms in five-stars has gone up from Rs 4,000 five years ago to

Rs 16,000 now. Though this rate can be affordable for business travelers, it is very difficult for leisure travelers to pay such exorbitant rates. The diversity of experience in hotel management is greater than in any other profession. Hotel industry involves combination of various skills like management, food and beverage service, housekeeping, front office operation, sales and marketing, accounting. Today, the rise in corporate activity (leading to greater number of business trips) as well as the wish to travel on holiday has made the hotel industry a very competitive one. All these factors make this industry as one of the opted career option by most of the graduates.

The Hotel has a very central location and is close to some of the prominent
consultants, the Boat clubA posch residential area as well as the commercial and shoppingareaofthecity.

Distance from Airport -14kms Distance from Central Station-8kms. Distance from Main Shopping Area 4kms Distance from nearest Fire station -2kms Distance from nearest 24hrs Hospital 1kms PROPERTYDETAILS: PropertyAreabuiltuparea5.5Acres. ParkWing1,53.840sq.ft. TowersWing1,35,000sq.ft. CarParkingArea30,000

ADAYAR GATE HOTEL

COMPANY PROFILE
Sheraton Park Hotel& Towers is a property of the Welcomgroup, the hotel division of ITC Ltd which was formed in 1974. Sheraton Chola in Chennai was the first hotel formed by this group. In April 1994 Hotel division was renamed as ITC Hotels Limited, a subsidiary of ITC Ltd. July 2000 Hotels division was than rebranded and four distinct categories were formed. In August 2004 - ITC Hotels Ltd merged with ITC Ltd. May 2007 7 ITC Hotels upgraded to Luxury Collection. In the year 2008 September- ITC Hotel Park Sheraton was renamed as Sheraton Park hotel & Towers, Chennai.

Sheraton Park Hotel& Towers is a level of comfort and service consistent with the number one hotel in Chennai city. Offering a fusion of rich South Indian design cues and classic world class elegance, the Sheraton Park Hotel& Towers gives guests the best of both worlds - business and leisure. The preferred venue of Heads of State, Royalty, and the Who's Who of the Corporate World, this hotel is the only which offers class and services at its best. Today's guests at the hotel are as varied as the surroundings they find themselves in. The keynotes are friendliness, informality and flexibility - so families, couples or singles feel equally at home. A sense of unhurried calm pervades the hotel providing the perfect antidote to the pressures of a busy world. South Indias largest hotel, the Sheraton Park Hotel& Towers, nests in an exclusive residential enclave, in the heart of the city and close to the commercial centre. It has 283 guest rooms and suites.

Safety and Security is of utmost importance at ITC Hotel Park Sheraton & Towers. In terms of safety, all the rooms and public areas have Water Sprinklers, Smoke Detectors and alarm systems. The internal security of the hotel is available round the clock with an appropriate number of staff on duty at all times to ensure complete safety and security of all guests in the hotel. The frequent guest stay programmes - the Starwood Preferred Guest and WelcomAward seek to recognize & reward guests through value added services & benefits which are by far the best in the Industry.

ADAYARGATEHOTELSTheAdvent In 1981 the hotel started functioning as Holiday Inn Adayar

Gate with an initial room base of approximately 30 and a coffee shop (Brindavan). In the same year another 60 rooms were added with a bar & a swimming pool. By March of 1982, another 30 rooms were commissioned making it a total of 120 rooms leaving only the health club and restaurants to be completed. The holiday inn - Memphis collaboration was once again renewed in 1983 and the hotel was named Holiday Inn Adayar In February of 1985 the hotel was taken over by Mr. O.P. Goyal who bought the majority shareholding (92%) from the non resident Indians. Mr. O.P. Goyal signed an agreement with ITC in the year 1985 to manage the hotel. The hotel was renamed Welcomgroup Park Sheraton. In 1992 the towers block was made functional with an additional 142 rooms. The hotel came to be called the Welcomgroup Park Sheraton Hotel & Towers. From the 1st June 2000, the hotel was renamed to ITC Hotel Park Sheraton & Towers. From 1st September 2008, the hotel was renamed as Sheraton Park. Gate, later being renamed Holiday Inn Madras. Sheraton Park Hotel& Towers focuses mainly on its philosophy which says: Guest experience Guest experience with profits Guest experience with profits, growth & development. These are the three main guidelines that make the hotel deliver quality service and attain profitability through maximum customer satisfaction. The company aims at delivering and up keeping their slogan which says that Nobody Gives You India Like We Do. This proves that every guest looked upon with at most care in order to provide them with comfort and service, which indeed promotes are very on motherland. Sheraton Park Hotel& Towers is the recipient of various prestigious

awards. Some of them are as follows: Won the prestigious IHRA - green hotel award in the year 1997 for outstanding contributions to conserving the environment British safety council awards from the year 1994 for three years consecutively in recognition of services rendered in the cause safety. Recognized by the governor of tamilnadu and the St.Johns ambulance association for having trained the largest number of first aiders in the state Travel world nominated the hotel to be amongst the top 10 in Asia Dakshin restaurant is rated amongst the top 10 in India by jet wings for two consecutive years Hazard analysis critical control point(haccp) certified kitchen august 2006 The hotel has been acknowledged as the most "preferred hotel in Chennai" (source a&m marg).

InitiativesonEnvironmentHealth&Safety
The hotel Environment Committee, which is headed by the General Manager, takes various environment related issues like environment education, classes for staff and Managers. Managers and staff are encouraged to participate in various other environment related activities outside the hotel premises. Environment related messages are communicated to our members of staff through Green Notice Board and through information pamphlets. Greening supplier chain scheme is in place to educate vendors. Special Training Programme is conducted by Environmental Experts.

SERVICE PROFILE: Food & Beverage Outlets

The hotel offers a choice of five exclusive restaurants, each a brand on its own and having carved a niche for itself in the market. A brief profile of the restaurants is given below.

Dakshin: The hotels signature restaurant serves the celebrated cuisines from all the
four southern states - Karnataka, Kerala, Andhra Pradesh and Tamil Nadu in a regal ambience. Its a celebration of the rich diversity of South Indian cuisine offering the rare pleasures of authentic costal and regional specialties.

The Residency: Multi cuisine restaurant serving the Rolls Royce buffet for lunch
and dinner. An elegant multi-cuisine restaurant, offers a lavish spread of buffet for lunch and dinner.

Cappuccino: The Trendiest 24 Hour restaurant in town serving international cuisine.

A distinct Italian slant and also promises a truly international experience.

Dublin: Chennais No.1 Pub and entertainment hot spot, bringing to the city the
finest in International entertainment. The Irish pub cum night club which sets the pace for Chennais night life.

The Westminster: A gentleman's reserve having the widest range of spirits, liqueur
and cigarsin The Gentlemans reserve serving the worlds finest spirits and wines masterfully blended in a tasteful ambience.

On the Rock: The restaurant offers undiluted culinary experience grill restaurant
which offers the guest opinion of conventional grills and hot rocks.

The Khyber Grill: The popular pool side barbecue restaurant serving kebabs
reviving tales of roasting meat around a roaring fire.

Banquets: Banqueting facilities offer a wide range of venues for conferencing &
banqueting, catering for up to 1000 persons indoors in ornate halls with chandeliers & 3000 outdoors provides entire catering solutions for all occasions, be they board meetings, product launches or hosting Heads of State, or just pure entertainment.

FINANCIAL STRUCTURE OF ADAYAR GATE HOTEL

FINANCE CONSISTS OF: PAYABLES: Accounts bills of contractors & Suppliers. INCOME: Accounts for all income arising in hotel. F& B CONTROLS: Food & Beverages accounting of purchases & Coordinate with F& B Manager, Executive Chef, Purchase very closely. SYSTEMS: Maintains all computer Hardware & Software. GENERAL CASHIERS: Act as a banker for the Hotel. Reimburses your dues between 2 pm to 4 pm. COMPANY SECRETARY FUNCTIONS: Guides the company towards meeting the requirements of the companies Act, 1956 and various other statutes. WHAT DOES FINANCE DO? BOOK KEEPING MANAGEMENT INFORMATION SYSTEMS (MIS) TAX MATTERS AND RETURNS Preparation and filing of various Tax Returns and interaction with Tax authorities for assessment & orders. VALUE ADDED TAX ( VAT) LUXURY TAX SERVICE TAX TDS WORKS CONTRACT TAX BAKERY EXCISE PROVIDENT FUND (PF) EMPLOYEES STATE INSURANCE (ESI) OTHERS LEGAL MATTERS & SECRETARIAL MATTER

MAIN SOFTWARES USED IN OUR UNIT: CLS CENTRAL LODGING SYSTEM POS POINT OF SALE PROLOGIC ACCOUNTS PACKAGE

EXPLANATION:

CLS This software facilitates Reservation, Reception and cashiering in Front office. Night audit and accounts Receivables in finance and in addition to this it generates reports required for House Keeping, Sales & Marketing. CLS is password controlled.

POS - This software is meant for F& B outlets and is linked to CLS. This will give all reports and does all activities relating to F& B Outlets. POS is password controlled.

PRO-LOGIC: This software is used for recording transactions of accounts payable and generating all reports including profits & loss account and Balance sheet. TAXES

LUXURY TAX:

This tax is leviable by the state government. At Present the Luxury Tax is chargeable at 12.5% on the published tariff. This tax has been charged to the guest on daily basis to the tax authorities every month. Revision of tariffs will have to be informed to at least one week before such change.

Every month a Return has to be filed in Form II along with the details like name of the Guest, Room No, Date of stay, No. of .days, Room Tariff, applicable LT , applicable LT collected etc. The amount should tally with the amount collected. This tax is applicable even to the Hotel owner who gives the room on complimentary basis. VAT: This tax is chargeable on food & soft Beverage & Tobacco sale at 12.55 % in Hotels. VAT is applicable on Indian liquor procured in Tamil Nadu. This tax varies from product to product, like 73% for imported liquor, 58% for Indian wines procured from other states, chargeable to Guests and remitted to the government. No input tax credit is applicable on liquor. CREDIT POLICY:

Encourage Cash and credit card settlements. Discourage credit extension. Credit is extended only to a few approved companies (approx 150nos).If the credit extension is not stated/approved, it automatically means D.P. (i.e.) Direct Payment. However, for bill payment by companies on credit, the time factor for banquet bills is 7days and 15 days for stay bills, from date of receipt of the bills.

SEGMENTS IN ACCOUNTS RECIEVABLES:

1. Airlines 2. Corporates 3. Travel Agents 4. ETVP 5. EVTP Companies 6. Govt.Organisation /Clubs

CHAPTER2

REVIEW OF LITERATURE
REVIEW OF LITERATURE
INTRODUCTION: Review of literature is an integral part of any research studies which includes other researches points and findings .The main aim of including review of literature to any research process is which give suitable support and guidance to accomplish the new research process. Any review of literature includes objectives, research methodology & findings. Review of literature chapter of any studies is the collection of various studies done by various researcher in same topic or related topic in every studies each and every researchers are followed different method for accomplish his objectives. Each studies are giving more & suitable ideas for accomplish the new researchers objectives. In the study, the researcher using ten different studies in different researchers and it support to make a good inclusion to this study. Melody Y. Kiang and others (2005), the purpose of this study is to provide and empirically support rationales for reverse splits by classifying reverse splitting firms into two groups, those declaring bankruptcy within 2 years and those remaining solvent. The apparent rationales for engaging in reverse splits differ between the two groups, i.e., weak firms attempting to increase their stock price while solid firms seeking to reposition their stock in the market. It should be generate an understanding of corporate rationale for engaging in reverse splits and the relative success of Z-scores and artificial neural networks in forecasting the two groups.

Working Capital Management, Growth and Performance of New Public Companies---- by Beneda, Nancy, Zhang, Yilei.
The current study contributes to the literature by examining impact of working capital management on the operating performance and growth of new public companies. The study also sheds light on the relationship of working capital with debt level, firm risk, and industry. Using a sample of initial public offerings (IPO's), the study finds a significant positive association between higher levels of accounts receivable and operating performance. The study further finds that maintaining control (i.e. lower amounts) over levels of cash and securities, inventory, fixed assets, and accounts payables appears to be associated with higher operating performance, as well. We find that IPO firms which are experiencing unusually high growth tend not to perform as well as those with low to moderate growth. Further firms which are experiencing high growth tend to hold higher levels of cash and securities, inventory, fixed assets, and accounts payables. These findings tend to suggest that firms are willing to sacrifice performance (accept low or negative operating returns) to increase their growth levels. The higher level of growth is also associated with higher operating and financial risk. The findings of this study suggest that perhaps IPO firms should stay more focused on their operating performance than on maintaining high growth levels.

Working Capital Management and Profitability Case of Pakistani Firms by Abdul Raheman and Mohamed Nasr

Working Capital Management has its effect on liquidity as well on profitability of the firm. In this research, we have selected a sample of 94 Pakistani firms listed on Karachi Stock Exchange for a period of 6 years from 1999 2004, we have studied the effect of different variables ofworking capital management including the Average collection period,Inventory turnover in days, Average payment period, Cash conversioncycle and Current ratio on the Net operating profitability of Pakistani firms.Debt ratio, size of the firm (measured in terms of natural logarithm ofsales) and financial assets to total assets ratio have been used ascontrol variables. Pearsons correlation, and regression analysis (Pooled least square and general least square with cross section weight models)are used for analysis. The results show that there is a strong negative relationship between variables of the working capital management and profitability of

the firm. It means that as the cash conversion cycle increases it will lead to decreasing profitability of the firm, and managers can create a positive value for the shareholders by reducing the cash conversion cycle to a possible minimum level. We find that there is significant negative relationship between liquidity and profitability. We also find that there is a positive relationship between size of the firm and its profitability. There is also a significant negative relationship between debt used by the firm and its profitability.

Trends in Working Capital Management and its Impact on Firms Performance: An Analysis of Mauritian Small Manufacturing Firms Kesseven Padachi
A well designed and implemented working capital management is expected to contribute positively to the creation of a firms value The purpose of this paper is to examine the trends in working capital management and its impaction firms performance. The trend in working capital needs and profitability affirms are examined to identify the causes for any significant differences between the industries. The dependent variable, return on total assets is used as a measure of profitability and the relation between working capital management and corporate profitability is investigated for a sample of 58small manufacturing firms, using panel data analysis for the period 1998 2003. The regression results show that high investment in inventories and receivables is associated with lower profitability. The key variables used in the analysis are inventories days, accounts receivables days, accounts payable days and cash conversion cycle. A strong significant relationship between working capital management and profitability has been found in previous empirical work. An analysis of the liquidity, profitability and operational efficiency of the five industries shows significant changes and how best practices in the paper industry have contributed to performance. The findings also reveal an increasing trend in the short-term component of working capital financing.

5.1.1 5.1.2 WorkingCapitalManagement

Impact of Working Capital Management in the Profitability of Hindalco Industries Limited -J P Singh* and Shishir Pandey**

For the successful working of any business organization, fixed and current assets play a vital role. Management of working capital is essential as it has a direct impact on profitability and liquidity. An attempt has been made in this paper to study the working capital components and the impact of working capital management on profitability of Hindalco Industries Limited. The paper also makes an attempt to study the correlation between liquidity, profitability and Profit Before Tax (PBT) of Hindalco. The study is based on secondary data collected from annual reports of Hindalco for the study period 1990 to 2007. The ratio analysis, percentage method and coefficient of correlation have been used to analyze the data. Multiple regressions were used to check the significant impact on the profitability of Hindalco.

5.1.3 WorkingwithWorkingCapitalManagement MultiLineIndustry,ConglomeratesFamilyFirms InGCCCountries

An efficient Working Capital Management (WCM) has a significant effect toward the creation of a firms value. It is a fact that financial managers in the firms used to give concentration on managing long-term financial decisions, specially capital structure, investment decisions, company valuation & dividends decisions. Only little attention was given to managing the shortterm assets and liabilities, managers began to realize the importance of investigating those shortterm assets and liabilities since the working capital management has an important role for the firms profitability & risk and the overall value of the firm. ..

Finance analysis:
An Analysis of Working Capital Management Results Across Industries

Greg Filbeck, Schweser Study Program Thomas M. Krueger, University of Wisconsin-La Crosse

Firms are able to reduce financing costs and/or increase the funds available for expansion by minimizing the amount of funds tied up in current assets. We provide insights into the performance of surveyed firms across key components of working capital management by using the CFO magazines annual Working Capital Management Survey. We discover that significant differences exist between industries in working capital measures across time. In addition, we discover that these measures for working capital change significantly within industries across time. Sales are outstanding, resulting in an increased cash flow of approximately $2 million at Thibodaux Regional Medical Center. Furthermore, bad debts declined from $3.4 million to $600,000. However, Waxers (2003) study of multiple firms employing Six Sigma finds that it is really a get rich slow technique with a rate of return hovering in the 1.2 4.5 percent range. Even in a business using Six Sigma methodology, an optimal level of working capital management needs to be identified.

6 The Impact of Firms' Capital Expenditure on Working Capital Management: An Empirical Study across Industries in Thailand.
InternationalManagementReview,June2008byB.ARanjithAppuhami

The purpose of this research is to investigate the impact of firms' capital expenditure on their working capital management. The author used the data colleted from listed companies in the Thailand Stock Exchange. The study used Shulman and Cox's (1985) Net Liquidity Balance and Working Capital Requirement as a proxy for working capital measurement and developed multiple regression models. The empirical research found that firms' capital expenditure has a significant impact on working capital management. The study also found that the firms' operating cash flow, which was recognized as a control variable, has a significant relationship

with working capital management, which is consistent with findings of previous similar researches. The findings enhance the knowledge base of working capital management and will help companies manage working capital efficiently in growing situations associated with capital expenditure. ABSTRACT FROM AUTHOR Copyright of International Management Review is the property of American Scholars Press and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. 7

The Effect of Working Capital Management on Firm Profitability: Evidence from Turkey
F. Samiloglu and K. Demirgunes

The aim of this study is to analyze the effect of working capital management on firm profitability. In accordance with this aim, to consider statistically significant relationships between firm profitability and the components of cash conversion cycle at length, a sample consisting of Istanbul Stock Exchange (ISE) listed manufacturing firms for the period of 19982007 has been analysed under a multiple regression model. Empirical findings of the study show that accounts receivables period, inventory period and leverage affect firm profitability negatively; while growth (in sales) affects firm profitability positively.

OBJECTIVE OF THE STUDY:

The main objective of the study is to analyze the working capital of ADYAR GATE

HOTEL LIMITED for the last six years from 2004-2005 to 2008-2009.
To study the changes in the working capital position. To study the efficiency of the companys working capital management. To analyze the changes made by the company to improve its working capital. To analyze the various components of working capital management. To offer suitable suggestions for improvement in the field of working capital management.

IMPORTANCE OF THE STUDY:

Working Capital is the lifeblood and new center of business. No Business can be run successfully with adequate amount of working capital.

LIMITATIONS:
The data related to study is only for six years. The conclusion may be relevant for this period. The Research has been taken only for working capital. Therefore, the conclusions and findings may not reflect the overall financial viability or profitability of the company. Detailed analysis could not be carried for the project work because of the limited time span. The findings and recommendation are applicable only to ADYAR GATE HOTEL LTD and is not related to other companies.

CONCEPTUAL REVIEW OF WORKING CAPITAL:

Working capital Management which is concerned with decisions relating to current assets and current liabilities. The key difference between long term financial Management and short term Financial Management is in terms of the timing of cash. While Long term financial decisions like buying capital equipment or issuing debentures involve cash flows within a year or within the operating cycle of the firm. Working Capital generally stands for excess of current assets over current liabilities. Therefore refers to all aspects of the administration of both current assets and current liabilities. In Other words, working capital management in concerned with problem that arise in attempting to manage the current assets. The current liabilities and the inter relationships that exist between them.

The basic objective of working capital management is to the management of the firms current assets and current liabilities in such a way that a satisfactory level of working capital is maintained a reasonable safety margin moreover, different compounds of working capital are to be properly balanced in the absence of such a situation, the financial position in respect of the firms liquidity may not be Satisfaction current ratio and liability ratio.

CHAPTER 3 RESEARCH OBJECTIVES AND METHODOLOGY

RESEARCH METHODOLOGY
METHODOLOGY:
In the view of the objectives of the analysis listed above, an Exploratory Research (which narrates the all available facts) design has been adopted. Exploratory research design largely interprets the already available information; it makes use of secondary data & lays emphasis on analysis & interpretation of the existing and available information. The major sources of data were Secondary data, published annual reports, financial reports and discussion with the officials of the company.

RESEARCH:
Research in simple terms refers to search for knowledge. It is a scientific and

systematic search for information on a particular topic or issue. It is also known as the art of scientific investigation. According to Clifford Woody (Kothari,1988), research comprises defining and redefining problems, formulating hypotheses or suggested solutions, collecting, organizing and evaluating data; making deductions and reaching conclusions; and finally, carefully testing the conclusions to determine whether fit the hypotheses

RESEARCH METHODOLOGY
A research cannot be conducted abruptly. Researcher has to proceed systematically in the already planned direction with the help of a number of steps in sequence. To make the research systemized the researcher has to adopt certain methods. The method adopted by the researcher for completing the project is called Research Methodology. Data becomes information only when a proper methodology is adopted. Thus we can say Methodology is a tool which processes the data to reliable information. The research methods used in educational psychology tend to be drawn from psychology and other social sciences. There is also a history of significant methodological innovation by educational psychologists, and psychologists investigating educational problems. Research methods address problems in both research design and data analysis. Research design informs the planning of experiments and observational studies to ensure that their results have internal, external and ecological validity. Data analysis encompasses methods for processing both quantitive (numerical) and qualitative (non-numerical) research data. Although, historically, the use of quantitative methods was often considered an essential mark of scholarship, modern educational psychology research uses both quantitative and qualitative methods.

RESEARCH DESIGN
A research design is an arrangement of conditions for collection and analysis of data in a manner that aims to combine relevance to the research purpose. A research design is purely and simply the framework and plan for the study that guides the collection and analysis of data. In the view of the objectives of the analysis listed above, an Descriptive form of Research (which narrates the all available facts) design has been adopted. Descriptive research design largely interprets the already available information; it makes use of secondary data & lays emphasis on analysis & interpretation of the existing and available information. The major sources of data were Secondary data, published annual reports, financial reports and discussion with the officials of the company.

IMPORTANCE OF REASEARCH DESIGN:

The need for a research design arises out of the fact that it facilitates the smooth conduct of the various stages of research. It contributes to making research as efficient as possible, thus yielding the maximum information with minimum effort, time and expenditure. The Research Design should be prepared with utmost care, so as to avoid any error that may disturb the entire project. Thus; research design plays a crucial role in attaining the reliability of the results obtained, which forms the strong foundation of the entire process of the research work.

CHARACTERSTICS OF A GOOD RESEARCH DESIGN:

A good research design often possesses the qualities of being flexible, suitable, efficient and economical and so on. A research design Design which minimizes bias and maximizes the reliability of the data collected and analyzed is considered a good design. A research Design which does not allow even the smallest experimental error is said to be the best design for investigation.

NATURE OF DATA:
The study is based on Primary as well as secondary data. Importance source of information for this study includes secondary data from annual reports and contents gathered from websites. Primary data has been gathered through discussions with personnel of the company.

DATA COLLECTION METHOD:

The financial information from annual Reports. Data relating to company profile where collected from the websites.

RESEARCH TOOLS:
Research tools are statistical techniques used for data analysis and to arrive certain conclusions.

TOOLS APPLIED IN THE STUDY:

Comparative balance sheet Ratio analysis Common size balance sheet analysis

ABOUT THE STUDY: PROBLEM OF THE STATEMENT:

The study has been undertaken with a view to evaluate the working capital Position of the organization and to identify the areas, where there is scope, possibilities and feasibilities for improvement.

SCOPE OF WORKING CAPITAL MANAGEMENT: Maintain an adequate level of working capital, always, to meet the rising turnover. Sufficient liquidity to meet short term obligations as and when they arise. To avail market opportunities like purchase of raw materials etc...at low prices.

CHAPTER 4 DATA ANALYSIS AND INTERPRETATION

ANALYSIS & INTERPRETATION: INTRODUCTION:
Analysis and interpretation of financial statements with the help of ratios is termed as ratio analysis. Ratio Analysis involves the process of computing determining and presenting the relationship of items or groups of items of financial statements. Ratio Analysis was pioneered by Alexander wall who presented a system of ratio analysis in the year 1909. Alexanders contention was that interpretation of financial statements can be made easier by establishing quantitative relationships between various items of financial statements.

MEANING OF RATIO:
A ratio is a mathematical relationship between two items expressed in a quantitative form. Ratio can be defined as Relationship expressed in quantitative terms, between figures which have cause and effect relationships or which are connected with each other. Arithmetically ratio is a comparison of the numerator with denominator. Ratio Analysis is an age old technique financial analysis. The information provided by the financial statements in absolute form is historical and static, conveying very little meaning to the users. Accounting ratio s are designed to show how one number is related to another and the meaning of such relationships. The ratio analysis is one of the most powerful tools of financial analysis. It is the process of establishing and interpreting various ratios. A financial ratio is the relationship between two accounting figures expressed mathematically. Ratios provide clues to the financial position of a concern. These are the pointers and indicators of financial strength, soundness, position or weakness of an enterprise. One can draw conclusions about the exact financial positions of a concern with the help of ratios.

Ratio analysis is a process of comparison of one figure against another, which make a ratio, and the appraisal of the ratios to make proper analysis about the strengths and weaknesses of the companys operations. Ratio analysis is extremely helpful in providing valuable insight into a companys financial picture.

ADVANTAGES OF RATIO ANALYSIS: When rightly used offers the following Advantages:
1. It facilitates the comprehension of financial statements and evaluation of several aspects such as financial health, profitability and operational efficiency of the under taking. 2. It provides inter- firm comparison to measure efficiency and helps the management to take remedial measures. 3. It is also helpful in forewarning corporate sickness and helps the management to take corrective action. 4. Tend Analysis with the uses of ratios help in planning and forecasting. 5. It helps in investment decisions in the case of investors and lending decisions in the case of bankers and financial institutions.

Classifications of ratios
1. 2. 3. 4. 5.
7.1.1 1.FINANCIAL RATIOS (OR) SOLVENCY RATIOS:

Short term solvency ratio Long-term solvency ratio Turnover Ratio Profitability ratio Working capital groups ratio

Solvency or financial ratios include all ratios which express financial position of the concern. Financial ratios are calculated on the basis of items of the balance sheet therefore they are also called balance sheet ratios. Financial Position may mean differently to different person interested in the business concern. Creditors , banks , management, investors and auditors have different views about financial position. The term financial position generally refers to short term

and long term. Solvency of the business concern, indicating safety of different interested parties. Financial ratios are
FORMULA:

CURRENT RATIO = Current ratio / Current Liabilities

The term current assets includes debtors, stock, bills receivable, bank and cash balances, prepaid expenses ,income due and short term invest. The term current liabilities includes creditors , bank overdraft, bills payable , outstanding expenses , income received in advance etc.
SIGNIFICANCE:

This ratio is used to assess the short term financial position of the business concern. In other words, it is an indicator of the firms short term solvency. Since,it shows their extent of the working capital which is the amount by which the current assrts exceeds the current liabilities. The higher the ratio, the better it is.

IDEAL RATIO = 2:1

CURRENT RATIO CALCULATION

CURRENT RATIO = Current Assets / Current Liabilities TABLE 1

YEAR 2004-2005 2005-2006 2006-2007 2007-2008 2008-2009

CURRENT ASSET 89,157,782 104,101,923 99,511,775 95,553,136 99,075,639

CURRENT LIABILITIES 128,382,020 169,866,660 158,254,165 114,847,768 132,474,028

CA/CL 0.694472489 0.61284494 0.628809833 0.831998198 0.747887268

CHART 1

0.9 0.8 0.7 0.6 0.5 0.4 0.3 0.2 0.1 0 200405 200506 200607 200708 200809

INTERPRETATION:-

Current ratio is an indicator of the firms commitment to meet its short term liabilities. From the above table we can observe that the current asset level of the company was sound enough to meet the firms current liabilities. In the year 2004-05 the current ratio was 0.69 from then it has shown a positive trend and now in 2008-09 the ratio is 0.74 which is nearing the ideal ratio. firm is considered to be good.
2. LIQUIDITY RATIO: This ratio is called quick or Acid test Ratio. It is calculated by comparing the quick assets with current liabilities. FORMULA:

Thus the liquidity position of the

LIQUID RATIO = Quick assets or liquid assets / Current liabilities

Quick or liquid assets refer to asserts which are quickly convertible into cash . Current assets other than stock and prepaid expenses are considered as quick assets. Comparison of quick ratio with current ratio indicates the inventory holds ups.
SIGNIFICANCE:

The ratio indicated the short term solvency of the company, quick ratio also indicates the inventory holds ups. Through this ratio the liquidity position of the company can be identified.

QUICK RATIO CALCULATION

QUICK RATIO = Current ratio / Current Liabilities TABLE 2 YEAR 2004-2005 2005-2006 2006-2007 2007-2008 2008-2009 QUICK ASSET 43,345,201 63,597,205 71,126,339 80,426,566 83,044,642 CURRENT LIABILITIES 128,382,020 169,866,660 158,254,165 114,847,768 132,474,028 CA/CL 0.337626725 0.374394863 0.449443709 0.700288454 0.626874892

CHART 2

0.7 0.6 0.5 0.4 0.3 0.2 0.1 0 2004 2005 2006 2007 2008 05 06 07 08 09

INTERPRETATION:

This ratio is the indicator of short-term solvency of the company. From the above table it indicates that the solvency position of the company has been keep on increasing. The ideal ratio in this case is 1. Since the companys quick ratio is nearing its ideal ratio the company is on upward trend. It is suggestible if the company reaches ideal ratio 1.
3) PROPRIETORY RATIO:

A high proprietary ratio is indicative of strong financial position of the business. It is a variant of debt equity ratio. It establishes relationship between the proprietors or shareholders funds and the total tangible assets. It may be expressed as:

PROPRIETORY RATIO = Shareholders Funds/ Total Tangible Assets

PROPRIETORY RATIO CALCULATION

PROPRIETORY RATIO = Shareholders Funds/ Total Tangible Assets

TABLE 3 SHARE HOLDERS FUND

114,008,580 114,008,580 114,008,580 114,008,580 114,008,580

YEAR
2004-2005 2005-2006 2006-2007 2007-2008 2008-2009

TOTAL ASSETS
1,198,847,314 1,802,509,770 1,894,224,995 1,893,232,184 1,888,567,707

PROPRIETORY RATIO
0.095 0.063 0.060 0.060 0.060

CHART 3

0.1 PROPRIETORY RATIO

0.09 0.08 0.07 0.06 0.05 0.04 0.03 0.02 0.01 0 2004-2005 2005-2006 2006-2007 2007-2008 2008-2009

INTERPRETATION:
The ratio focuses on the attention of the general financial strength of the business enterprise, a high proprietary ratio indicate relatively little dangerous to the creditors. A ratio below 50% may be alarming to the creditors .Low proprietary ratio indicates greater risk to creditors. The proprietary ratio was at its highest in the year 2004-2005 (9.5) and in the following years there is

a gradual decrease in the prop ratio, finally in the year 2008-2009 they have maintained the ratio of 0.06, this indicates that the company has efficiently tried to maintain a major portion of the share holders of the total assets employed in the business. 4) Fixed assets to net worth ratio :

Fixed assets to net worth ratio = Fixed Assets/ total Shareholders Fund

FIXED ASSETS TO NET WORTH RATIO CALCULATION Fixed assets to net worth ratio = Fixed Assets/ total Shareholders Fund

TABLE 4

YEAR

FIXED ASSETS

SHARE HOLDERS FUND

RATIO

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

1,192,898,779 1,887,350,757 1,875,135,600 1,888,567,707 1,875,135,600

114,008,580 114,008,580 114,008,580 114,008,580 114,008,580

10.46 16.55 16.44 15.56 16.91

CHART 4:
Fixed Assets to Net Worth Ratio 18 16 14 12 10 8 6 4 2 0 2004-2005 2005-2006 2006-2007 2007-2008 2008-2009

Interpretation:
From the above table it indicates that there has been a increase in the shareholders financial ability. In the year , 2004-2005 the fixed assets to net worth ratio was only 10.46 whereas in the due course , in the year 2008-2009 it has risen to 16.91. Thus it indicates the financial stability of the company which is in negative trend and it implies that owners fund are not sufficient to finance the fixed assets and the firm has to depend upon outsiders to finance the fixed assets.

5) CURRENT ASSETS RATIO TO FIXED ASSETS:

Current assets Ratio to Fixed assets = Current Assets /Fixed assets * 100

CURRENT ASSETS TO FIXED ASSETS RATIO CALCULATION

Current assets Ratio to Fixed assets = Current Assets /Fixed assets TABLE 5 *100

TABLE: 5
YEAR 2004-2005 2005-2006 2006-2007 2007-2008 2008-2009 CURRENT ASSET 89,157,781 104,101,923 99,511,775 95,553,136 99075639 FIXED ASSET 1,192,898,779 1,887,350,757 1,875,135,600 1,814,090,582 1,888,567,707 % OF CA 7.474044116 5.515769796 5.306910871 5.267274796 5.246072962

CHART : 5
Current Assets to Fixed Assets 8 7 6 5 4
% OF CA

3 2 1 0 2004-2005 2005-2006 2006-2007 2007-2008 2008-2009

Interpretation:
A higher CA to FA ratio indicates a conservative current asset policy of the firm. A low ratio indicates aggressive current policy. From the above we can conclude that all are following the conservative current policy till 2005, but from the 2007-2008 there is a decreasing in the ratio which shows the aggressive policy of the firm, but in the year 2009 the companys CA ratio is decreasing due to financial crises .

6) CASH TO CURRENT ASSETS RATIO: CASH TO CURRENTASSETS RATIO CALCULATION

YEAR CURRENT ASSET CASH & BANK BALANCES 2004-2005 2005-2006 2006-2007 2007-2008 2008-2009 89,157,781 104,101,923 99,511,775 95,553,136 99,075,639 18,643,243 31,580,725 33,622,072 45,702,252 42,930,401 % OF CASH TO CA 4.782310727 3.296375336

T ABL E: 6

2.959715718

C
2.090775222 2.307820022

ash to curre nt

Assets Ratio Current Assets /Cash & Bank Balances*100 CHART:6

5 4.5 4 3.5 3 2.5 2 1.5 1 0.5 0 200405 200506 200607 200708 200809

INTERPRETATION:
From the above we can see that cash played a very small role in all the years. But in the year 2004-2005 it occupies a major place in current assets. The high level of cash and bank balance in the year may be due to substantial collection from debtors/bills discounting during the 2005 financial year. Then onwards the companys cash position has been showing a downward trend. Thus, the firm should take steps to improve its cash position

7) FIXED ASSETS TURNOVER RATIO:

Fixed and turnover ratio =

Sales / Net fixed assets

FIXED ASSETS TURNOVER RATIO CALCULATION: Fixed and turnover ratio = Sales / Net fixed assets

TABLE:7
YEAR 2004-2005 2005-2006 2006-2007 2007-2008 SALES 753,969,820 970,508,524 1,202,494,168 1,327,494,696 NET FIXED ASSETS 1,192,898,779 1,887,350,757 1,875,135,600 1,814,090,582 RATIO 0.63 0.51 0.64 0.73

2008-2009

1,262,716,001

1,888,567,707

0.67

CHART:7

0.8 0.7 0.6 0.5 0.4 0.3 0.2 0.1 0 200405 200506 200607 200708 200809

INTERPRETATION:
Fixed assets turnover Ratio. This is basically because the investments towards fixed assets were not efficient enough to contribute towards sales. Thus, the firm has to improve its investment towards fixed assets. This ratio indicates the extend to which the investment in fixed assets contribute towards sales. If compared with the previous period it indicates whether the investment in fixed assets has been judicious or not.From the above table it indicates that there has been fluctuations in the firms

8) NET PROFIT RATIO: Formula:

Net profit ratio = Net Profit /Sales *100

NET PROFIT RATIO CALCULATION: Net profit ratio= Net Profit after tax /Net Sales *100 Table: 8

YEAR 2004-2005 2005-2006 2006-2007 2007-2008 2008-2009

NET PROFIT 98,037,305 164,117,644 230,788,600 294,648,979 2,81,956,065

NET SALES 753,969,820 970,508,524 1,202,494,168 1,327,494,696 1,262,716,001

RATIO 13.00 16.91 19.19 22.19 22.32

CHART:8

25 20 15 10 5 0 200405 200506 200607 200708 200809

INTERPRETATION:
The above table and chart shows the Net profit ratio of the company for the period of 2004-2009. There is a good profitability by over all measure. This ratio indicates net margin earned on sale of Rs.100.This ratio helps in determining the efficiency with which affairs of the business are been managed. An increase in the ratio over the previous period indicates improvement in the operational efficiency of the business provided the gross profit ratio is constant. So based on this, the company has also been showing improvement in its operational efficiency over the previous periods. During the year 2004-2005 it was 13 % and now 2008-2009 it has turned out to be 22.32%.

9) EARNING S PER SHARE: Earnings per share = Net profit /Number of equity shares

EARNINGS PER SHARE CALCULATION: Earnings per share = Net profit /Number of equity shares 7.1.2 7.1.3 7.1.4 TABLE: 9

YEAR 2004-2005 2005-2006 2006-2007 2007-2008 2008-2009

NET PROFIT 98,037,305 164,117,644 230,788,600 294,648,979 2,81,956,065

NO OF EQUITY SHARES 11,400,858 11,400,858 11,400,858 11,400,858 11,400,858

RATIO 8.59 14.39 20.24 25.84 24.73

CHART: 9
30 25 20 15 10 5 0 200405 200506 200607 200708 200809

7.1.5 INTERPRETATION:
7.1.6 The Earnings per share helps in determine the market price of the equity shares of the company. A comparison of earning per share of the company with another will also help in deciding whether the equity share capital is being effectively used or not. In this case the companys market price of its equity shares were sound enough to pay dividend to its shareholders. Thus the earnings per share of the company are satisfactory in nature.

7.1.7 10)RETURNONSHAREHOLDERSFUND: 7.1.8 7.1.9 Return on share holders fund = Net profit after tax / Share holders funds *100

7.1.10

TABLE: 10

YEAR 2004-2005 2005-2006 2006-2007 2007-2008 2008-2009

NET PROFIT 98,037,305 164,117,644 230,788,600 294,648,979 2,81,956,065

SHARE HOLDERS FUND 114,008,580 114,008,580 114,008,580 114,008,580 114,008,580

RATIO 85.99 143.95 202.43 258.44 247.311

CHART:10
300 250 200 150 100 50 0 200405 200506 200607 200708 200809

INTERPRETATION:
This ratio indicates the percentage of return on the capital employed in the business. In this case it is desirable to work out the profitability of the company from the shareholders point of view. The amount of profitability will be judged after taking into account the amount of dividend payable to the preference shareholders. In this case the firm s profitability level has kept on improving (i.e) 2004-2005 was 85.99 and now in 20082009 it is 247.311.

COMPARATIVE BALANCE SHEET ANALYSIS

The comparative balance sheet analysis is the study of the trend of the same items, group of items and computed items in two or more balance sheets of the same business enterprise on different dates. The changes in periodic balance sheet items reflect the conduct of a business. The changes can be observed by comparison of the balance sheet at the beginning and at the end of a period and these changes can help in forming an opinion about the progress of an enterprise. Balance sheets as on two or more different dates are used for comparing the assets, liabilities and the net worth of the company. Comparative balance sheet analysis is useful for studying the trends of an undertaking.

Advantages

Comparative statements help the analyst to evaluate the performance of the company. Comparative statements can also be used to compare the performance of the firm with The average performance of the industry between different years. It helps in identification of the weaknesses of the firm and remedial measures can be taken accordingly.

PurposesofpreparingComparativestatementsareasfollows
The Comparative statements are prepared to know the strengths and weakness as in various areas of business. The Comparative statements help us to know the changes: these changes become the basics of forecasting future actions. A continuous comparison of any one element of the financial statements leads to develop the trend


Particulars 2006 SOURCES OF FUNDS: share holder funds Share capital Reserves &Surplus Total (X) Loan Funds: Secured Unsecured Deferred tax and liabilities Total (Y) Application of funds Net fixed assets Investments Capital work in progress Total (A) Current Assets Inventories Debtors Cash and Bank Interest accrued on deposits Loans and Advances Total Current assets (B) Miscellaneous Expenditure TOTAL ASSETS(A+B+C) CURRENT LIABILITIES AND PROVISIONS Current liabilities: Sundry creditors Interest accrued but not due Provisions Total(Z) TOTAL LIABILITY

COMPARATIVEBALANCESHEETFORTHEYEAR2006&2007

2007

Absolute changes

Percentage changes

114,008,580 513,934,134 627,942,714 312,729,095 78,191,114 179,984,391 570,904,600 1,116,682,865 71,223,585 4,992,329 1,192,898,779

114,008,580 600,052,808 714,061,388 797,411,230 76,738,588 214,298,564 1,088,448,382 1,816,091,172 71,259,585 0 1,887,350,757

0 86,118,674 86,118,674 484,682,135 -1,452,526 34,314,173 517,543,782 699,408,307 36,000 -4,992,329 694,451,978

0.00% 16.76% 13.71% 154.98% -1.86% 19.07% 90.65% 62.63% 0.05% -100.00% 58.22%

45,812,580 24,351,649 18,643,243 350,309 67,097,139 156,254,920 1,350,447 1,350,504,146

40,476,056 31,594,914 31,580,725 421,566 112,694,707 216,767,968 517,439 2,104,636,164

-5,336,524 7,243,265 12,937,482 71,257 45,597,568 60,513,048 -833,008 754,132,018

-11.65% 29.74% 69.40% 20.34% 67.96% 38.73% -61.68% 55.84%

126,828,596 1,553,424 23,274,812 151,656,832 1,350,504,146

224,852,057 98,023,461 4,575,598 3,022,174 72,698,739 49,423,927 302,126,394 150,469,562 2,104,636,164 754,132,018

77.29% 194.55% 212.35% 99.22% 55.84%

COMPARATIVE BALANCE SHEET FOR THE YEAR 2007 & 2008

Q

Particulars 2007 SOURCES OF FUNDS: share holder funds Share capital Reserves &Surplus Total (X) Loan Funds: Secured Unsecured Deferred tax and liabilities Total (Y) Application of funds Net fixed assets Investments Total (A) Current Assets Inventories Debtors Cash and Bank Interest accrued on deposits Loans and Advances Total Current assets (B) Miscellaneous Expenditure TOTAL ASSETS(A+B+C) CURRENT LIABILITIES AND PROVISIONS Current liabilities: Sundry creditors Interest accrued but not due Provisions Total(Z) TOTAL LIABILITY(X+Y+Z)

2008

Absolute changes

Percentage changes

114,008,580 600,052,808 714,061,388 797,439,892 136,299,583 214,298,564 1,148,038,039 1,816,091,172 71,259,585 1,887,350,757 40,476,056 31,594,914 31,609,387 421,566 112,694,707 216,796,630 517,439 2,104,664,826

114,008,580 772,342,180 886,350,760 696,282,798 97,738,971 213,852,466 1,007,874,235 1,796,257,298 78,878,302 1,875,135,600 28,385,436 36,756,234 33,622,072 748,033 200,262,891 299,774,666 0 2,174,910,266

0 172,289,372 172,289,372 -101,157,094 -38,560,612 -446,098 -140,163,804 -19,833,874 7,618,717 -12,215,157 -12,090,620 5,161,320 2,012,685 326,467 87,568,184 82,978,036 -517,439 70,245,440

0.00% 28.71% 24.13% -12.69% -28.29% -0.21% -12.21% -1.09% 10.69% -0.65% -29.87% 16.34% 6.37% 77.44% 77.70% 38.27% -100.00% 3.34%

165,291,062 4,575,598 72,698,738 242,565,398 2,104,664,825

154,407,591 3,846,574 122,431,106 280,685,271 2,174,910,266

-10,883,471 -729,024 49,732,368 38,119,873 70,245,441

-6.58% -15.93% 68.41% 15.72% 3.34%

COMPARATIVE BALANCE SHEET FOR THE YEAR 2008 & 2009

Particulars 2008 SOURCES OF FUNDS: share holder funds Share capital Reserves &Surplus Total (X) Loan Funds: Secured Unsecured Deferred tax and liabilities Total (Y) Application of funds Net fixed assets Investments Total (A) Current Assets Inventories Debtors Cash and Bank Interest accrued on deposits Loans and Advances Total Current assets (B) Miscellaneous Expenditure TOTAL ASSETS(A+B+C) CURRENT LIABILITIES AND PROVISIONS Current liabilities: Sundry creditors Interest accrued but not due Provisions Total (Z) TOTAL LIABILITY(X+Y+Z) 114,008,580 772,342,180 886,350,760 696,282,798 97,738,971 213,852,466 1,007,874,235 1,796,257,298 78,878,302 1,875,135,600 28,385,436 36,756,234 33,622,072 748,033 200,262,891 299,774,666 0 2,174,910,266 154,407,591 3,846,574 122,431,106 280,685,271 2,174,910,266 111,951,649 2,896,119 174,891,272 289,739,040 2,182,971,224 15,126,570 33,950,125 45,702,252 774,189 273,327,506 368,880,642 0 2,182,971,224 42,455,942 950,455 52,460,166 9,053,769 8,060,958 1,734,953,009 79,137,573 1,814,090,582 13,258,866 2,806,109 12,080,180 26,156 73,064,615 69,105,976 0 8,060,958 27.50% 24.71% 42.85% 3.23% 0.37% 518,462,421 99,535,084 215,534,525 833,532,030 61,304,289 259,271 61,045,018 46.71% 7.63% 35.93% 3.50% 36.48% 23.05% 0.00% 0.37% 114,008,580 945,691,574 1,059,700,154 177,820,377 1,796,113 1,682,059 174,342,205 3.41% 0.33% 3.26% 2009 Absolute changes 0 173,349,394 173,349,394 25.54% 1.84% 0.79% 17.30% Percentage changes 0.00% 22.44% 19.56%

INFERENCES FOR COMPARATIVE BALANCE SHEETS OF ITC SHERATON PARK HOTEL AND TOWERS FROM THE YEAR 2006-2007 TO 2008-2009
INFERENCE (1) (2006-2007)

Under this financial year (2006-2007) the

Net current assets increased to 38.73% Fixed assets increased to58.2 % Current liability and provisions increased to 99% Share capital and reserves and surplus increased to 13.71% Loans and advances increased to 67.90%

INFERENCE (2) (2007-2008)

Under this financial year (2007-2008) the Net current assets increased to 38.27% Fixed assets decreased to 0.65% Current liability and provisions increased to 15.72% Share capital and reserves and surplus increased to 24.13% Loans and advances increased to 77.70% INFERENCE (3) (2008-2009) Under this financial year (2008-2009) the Net current assets increased to 23.05% Fixed assets decreased to 3.26% Current liability and provisions increased to 15.72% Share capital and reserves and surplus increased to 3.23% Loans and advances increased to 36.48%

TREND ANALYSIS

THIS IS ALL ABOUT THE TREND ANALYSIS OF THE FINANCIAL STATEMENT AND BALANCE SHEET

With the above FINANCIAL STATEMENT trend analysis the following is revealed, The Sales of the analysis from the year 2004-2005 to 2007-2008 reveals that the sales has been in increasing trend. EBIT of the analysis from the year 2004-2005 to 2007-2008 reveals it has been in increasing trend. PAT of the analysis from the year 2004-2005 to 2007-2008 reveals it has been in increasing trend. The Current assets of the analysis from the year 2004-2005 to 2007-2008 reveals it has been in increasing trend. The Current liabilities of the analysis from the year 2004-2005 to 20072008 reveals that third year it has been decreased slightly and again it has been increased trend The Gross fixed assets of this analysis from the year 2004-2005 to 20072008 reveals that the total sources of funds has been in increasing trend. The Total assets of this analysis from the year 2004-2005 to 2008-2009 reveals that the total assets has been in increasing trend. Inventories of the analysis from the year 2004-2005 to 2007-2008 reveals that second and third and forth year it has been decreased .

SWOT
Strengths Diversity Demand-Supply gap Government Support Market Share Opportunities Open Sky Rising Income

Threats Fluctuation Increasing Competition

FUTURE POTENTIAL AND GROWTH World Tourism Organization (WTO) - International tourist inflow in India by 2020 would be 10 m

Tourist influx to grow at a CAGR of 6.5% for the next 14 yrs

Expected share of world tourism: 1.5% by 2010

Untapped domestic tourist potential

Commonwealth Games in New Delhi in 2010

Medical Tourism

Rural Tourism

Wildlife Tourism

CHAPTER 5 FINDINGS & SUGGESTIONS

The Current assets of the analysis from the year 2004-2005 to 2007-2008 reveals it has been in increasing trend. Inventories of the analysis from the year 2004-2005 to 2007-2008 reveals that second , third and fourth year it has been decreased . The Current liabilities of the analysis from the year 2004-2005 to 20072008 reveals that third year it has been decreased slightly and again it has been increased trend. The Total assets of this analysis from the year 2004-2005 to 2008-2009 reveals that the total assets has been in increasing trend.

The Sales of the analysis from the year 2004-2005 to 2007-2008 reveals that the sales has been in increasing trend. EBIT of the analysis from the year 2004-2005 to 2007-2008 reveals it has been in increasing trend. PAT of the analysis from the year 2004-2005 to 2007-2008 reveals it has been in increasing trend.

 The Gross fixed assets of this analysis from the year 2004-2005 to 20072008 reveals that the total sources of funds has been in increasing trend The study highlights the FINANCIAL STRENGTH AND WEAKNESS of the ITC SHERATON PARK HOTEL AND TOWER FINANCIAL POSITION AND CAPITAL STRUCTURE. ITC SHERATON PARK HOTEL AND TOWER is one of the best STAR HOTEL in Chennai its provide excellent service to the guests. After analyzing FINANCIAL POSITION (FP) of ITC SHERATON PARK HOTEL AND TOWER from the year 2004-2005 to 2007-2008 it is clear that the net worth of ITC SHERATON PARK HOTEL AND TOWER during the study period has been in upward trend. The study of financial performance reveals the comparative balance sheets, common size balance sheets, trend analysis, and ratio analysis by using financial statements of. ITC SHERATON PARK HOTEL AND TOWER. by analyzing

BIBLOGRAPHY: Financial Management --- I M Pandey 9th edition Vikas publications year of 2008 Financial Accounting --- Eugene F. Brigham 12th edition Brigham

Houston Publications year of 2007 EDP Centre --- Adyar Gate Hotel

http:/Wikipedia.com/working-capital-management.html
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