Name: - Divya Chauhan

Enrollment Number: - 17111410

Name of Project Guide: - Dr. Gagan Singh

Programme Code: - Mba-17(Finance Department)

Study Centre: - UOU Model Study Centre Haldwani

Study Centre: - U.O.U Model Study Centre Haldwani

Study Centre Code: - 16000

Regional Centre: - Haldwani

 MS-204
Title of the project:

WORKING CAPITAL MANAGEMENT

OF MANUFACTURING COMPANY: “A STUDY OF
SATHE SYNTHETICS”
INTRODUCTION:

Sathe Synthetics, A Delhi Based Company was started in 1995 as Production

capacity of 40 tons per month of p.p. multifilament yarn in various deniers of FDY
ranging from 210 deniers to 1200 deniers in all colors & naturals. The company is
the largest P.P. Yarn manufacturer in the country.

The company Sathe Synthetics (Prop. Rakesh fuel PVT. LTD) divided in two units,
situated in Ghaziabad and other one is in Sikandrabad.

HISTORY OF THE INDIAN TEXTILE INDUSTRY:

The human need is to eat well for to be alive and shelter to protect them from
discomforts of nature and a place to live in. Human beings also need something
to cover their body to protect from diverse climates and to add the appearance.
Earlier there was a time when the human being known nothing about the cloth to
wear. The human beings first use plant barks, leaves and animal skin to wrap
around them. Then as the development of brain took place, they started to
explore other possibilities and invent more in this area. There is constant search
for clothing and it led to the knowledge of sources from vegetation i.e. Cotton
and from animals i.e. wool, which could be knitted and woven to manufacture
clothes to wear.

The commercial development of man-made fiber began late in the 19th Century,
experienced much growth during the 1940’s, expanded rapidly after world War –
II and in the 1970’s was still the subject of extensive Research and Development.

The spinning and weaving both are very common and attached with each other in
all parts of the world. We talk of the ancient times, when maximum work like
weaving of the clothes was done manually, but all the things were being done for
the right perspectives. From time to time in this world development had taken
place, which has been found to be a continuous process. Similarly considering the
developments in the Spinning and Weaving lot of improvements has come-up.
Because earlier too was the Cotton crop was grown by the farmers, but its end
use was not done in an effective way, which seems good. So much thick fiber was
produced and accordingly its impact for the fabric preparation.
REVIEW OF LITERATURE

1- The research done by Pass C.L., Pike R.H., “An overview of working capital
management and corporate financing”, (1984) describes that over the past 40
years major theoretical developments have occurred in the areas of longer-
term investment and financial decision making. Many of these new concepts
and the related techniques are now being employed successfully in industrial
practice. By contrast, far less attention has been paid to the area of short-term
finance, in particular that of working capital management. Such neglect might
be acceptable were working capital considerations of relatively little
importance to the firm, but effective working capital management has a
crucial role to play in enhancing the profitability and growth of the firm.
Indeed, experience shows that inadequate planning and control of working
capital is one of the more common causes of business failure.

2- The research done by Herrfeldt B., “How to Understand Working Capital

Management” describes that “Cash is king”--so say the money managers who
share the responsibility of running this country's businesses. And with banks
demanding more from their prospective borrowers, greater emphasis has
been placed on those accountable for so-called working capital management.
Working capital management refers to the management of current or short-
term assets and short-term liabilities. In essence, the purpose of that function
is to make certain that the company has enough assets to operate its business.
Here are things you should know about working capital management.

3- The research done by, Samiloglu F. and Demirgunes K., “The Effect of Working
Capital Management on Firm Profitability: Evidence from Turkey” (2008)
describes that 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 1998-2007 has been analyzed 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.

4- The research done by, Appuhami, Ranjith BA, “The Impact of Firms' Capital
Expenditure on Working Capital Management: An Empirical Study across
Industries in Thailand”, International Management Review,(2008), The
purpose of this research is to investigate the impact of firms' capital
expenditure on their working capital management. The author used the data
collected 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.

5- The research done by, Hard castle J., “Working Capital Management”,(2007)
describes that Working capital, sometimes called gross working capital, simply
refers to the firm's total current assets (the short-term ones), cash, marketable
securities, accounts receivable, and inventory. While long-term financial
analysis primarily concerns strategic planning, working capital management
deals with day-to-day operations. By making sure that production lines do not
stop due to lack of raw materials, that inventories do not build up because
production continues unchanged when sales dip, that customers pay on time
and that enough cash is on hand to make payments when they are due.
Obviously without good working capital management, no firm can be efficient
and profitable.
OBJECTIVES OF THE STUDY

The objectives of the study will be:

 To analyze the working capital management of the company.

 To analyze the gross and net operating cycle of the company.
 To study the future need of working capital in the running organization.
 To suggest recommendations for the effective management of working
capital of the company.

RESEARCH METHODOLOGY

The term research refers to the systematic method consisting of enunciating the
problem , formulating a hypothesis collecting the data , analyzing the facts and
reaching the certain conclusions either in the form of solution towards the
concern problem or in certain generalization for some theoretical formulation .

Research Methodology is a way to solve systematically the research problem .It

may be understood as a science of studying how research is done scientifically.

Research Design:

Descriptive research procedure is used for describing the recent situations in the
organization and analytical research to analyze the results by using research tools.

Descriptive Research:

Descriptive research, also known as statistical research, describes data and

characteristics about the population or phenomenon being studied. Descriptive
research answers the questions who, what, where, when and how...
Although the data description is factual, accurate and systematic, the research
cannot describe what caused a situation. Thus, Descriptive research cannot be
used to create a causal relationship, where one variable affects another. In other
words, descriptive research can be said to have a low requirement for internal
validity.
In short descriptive research deals with everything that can be counted and
studied. But there are always restrictions to that. Your research must have an
impact to the lives of the people around you.

Data Source & Collection Methods:

There are two types for collecting data

1. Primary data
2. Secondary data

Secondary Data:

Secondary data are those which have already been collected by someone
else and which have already been passed through the statistical process. The
Secondary data consist of reality available compendices already complied
statistical statements. Secondary data consists of not only published records and
reports but also unpublished records.

The analysis will be done on the basis of secondary data, which include-

 Balance sheet of company

 Profit and loss A/C of Sathe Synthetics
 Cost sheets And Trail balance of five years

Tools used:

Different statistical and accounting tool will be used to analyze the working
capital management of Sathe Synthetics -

 Analysis through Working capital ratios.

 Analysis through Schedule change in working capital.
 Analysis through Gross operating cycle & Net operating cycle.
 Analysis through Various components of working capital.
 SCOPE OF THE STUDY
The study will be conducted at “SATHE SYNTHETICS, Ghaziabad” f. The
study of W.C. management will be purely based on secondary data and all
the information is available within the company itself in the form of
records. The interviews will also be conducted with employees of accounts
and finance department and stores department. The study will be
supposed to be related to the period of last five years.

DELIMITS OF THE STUDY

 The present study will be restricted to study the working capital

management of Sathe Synthetics Ghaziabad only.
 The present study will be conducted to study the working capital
management of Sathe Synthetics Ghaziabad for last five years only.

PROPOSED CONTENTS

Chapter 1 INTRODUCTION
Chapter 2 REVIEW OF LITERATURE
Chapter 3 RESEARCH METHODOLOGY
Chapter 4 ANALYSIS AND INTERPRETATION
Chapter 5 SUGGESSATIONS & CONCLUSIONS
 BIBLIOGRAPHY
BIBLIOGRAPHY

BOOKS AND JOURNALS

 Anand, M. 2001. “Working Capital performance of corporate India: An

empirical survey”, Management & Accounting Research, Vol. 4(4), pp. 35-
65

 Berryman, J. 1983. “Small Business Failure and Bankruptcy: A survey of the

Literature”, European Small Business Journal, 1(4), pp47-59

 Bhattacharya, H. 2001. Working Capital Management: Strategies and

Techniques, Prentice Hall, New Delhi.

 Grablowsky, B. J. 1976. “Mismanagement of Accounts Receivable by Small

Business”, Journal of Small Business, 14, pp.23-28

 Grablowsky, B. J. 1984. “Financial Management of Inventory”, Journal of

Small Business Management, July, pp. 59-65

 Shields, Patricia and Hassan Tajalli. 2006. Intermediate Theory: The

Successful Student Scholarship. Journal of Public Affairs Education. Vol. 12,
No. 3. Pp. 313-334.

 C.L.Pass, R.H.Pike (1984) “An Overview Of Working Capital Management

And Corporate Financing”, Managerial Finance, Vol.10 Issue:3 pp. 1-11

 Hardcastle J. (2007)”Working Capital Management” Article Base – P-22

 Appuhami, Ranjith BA, “The Impact of Firms' Capital Expenditure on

Working Capital Management: An Empirical Study across Industries in
 Thailand”, International Management Review, Vol-4, No.1 (2008) pp-8-21

 Samiloglu F. and Demirgunes K.(2008), “The Effect of Working Capital

Management on Firm Profitability: Evidence from Turkey” Volume-2 Isssue
Pp-44-50

WEBSITES:-

 Lazaridis, Ioannis and Tryfonidis, Dimitrios, Relationship between Working

Capital Management and Profitability of Listed Companies in the Athens
Stock Exchange. Journal of Financial Management and Analysis, Vol. 19, No.
1, January-June 2006. Available at SSRN:
http://ssrn.com/abstract=931591

 http://papers.ssrn.com/sol3/papers.cfm?abstract_id=931591&re
c=1&srcabs=966188

 http://www.emeraldinsight.com/Insight/ViewContentServlet?contentType
=Article&S.Sename=/published/emeraldfulltextarticle/pdf/2910030202.pdf