My Project On Working Capital

.
SUMMER TRAINING PROJECT
Working Capital Analysis And Management

.
LUCK IS NOT BY CHANCE, IT IS

BY TOIL…..
FORTUNES EXPENSIVE SMILE IS
EARNED…..
BY:
EMILY DICKSON

.
PROJECT REPORT
At
Jubilant Life sciences Ltd. Bharatiagram, Gajraula,
Distt. Amroha,
244223, Uttar Pradesh, India.
SUBMITTED IN PARTIAL FULFILLMENT OF THE REQUIREMENT

OF
Master of Business Administration (MBA)
TO
College Of Management Studies,
UTTARKAHND OPEN UNIVERSITY

HALDWANI, DIST-NANITAL
THEME OF SUMMER TRAINING

“Working Capital and Management”
Submitted By:
Training Supervisor:
BHOOPENDRA KUMAR
DEEPAK TOSHINIWAL
(C.A) MBA 4rd SEM
ENROLMENT-13038464
Roll no- 4472320202
.

.
ACKNOWLEDGEMENT
The words are all I have, a single way to say.

I hearty pray to god, to make all happy and gay.
Every success story is designed through the support of a number of people. All this
work is a gift for me from all those persons who supported me all the way. No thanking
words are enough to express regards to them.
God is all and all. I am head bowed before Him for supporting me with all the means and
providing me strength of achieving my motive.
I cannot set myself free for the debt of my Gurus and Guides who showed me light of
knowledge and lead me to the way of progress.
I am thankful to “Uttrakhand Open University” for providing me a chance to accomplish

my MBA Degree and necessary support in completion of this project.
I am highly obliged to the company JUBILANT LIFESCIENCES LTD for allowing me to

accomplish my summer training project at its site.
I pay my special thanks to Mr. S.K. Gupta (HOD), and entire team of JUBILANT LIFE
SCIENCE LTD., Gajraula for providing all the needed information and due aid.
I am thankful to my mentor Mr. Deepak Toshniwal (C.A) under who helped me at every
step to groom my knowledge and experienced and guided me to prepare a worthy report.
I want to express my love to My Friends who are always there with me to challenge
hardships.
“A special smile for all, A special love and grace,
Special all the aid, I can’t replace,
A special thanks from me to them,
For the special moments, I shared with them,,
BHOOPENDRAKUMAR
MBA 4rd SEM.
Bhoopendrakumar063@gmail.com

.
PREFACE
“DOING IS THE BEST WAY OF LEARNING”
A well said statement! Classrooms can teach the basic theory content but cannot replace the
importance of learning by doing. Undermining this thing, the university has included a 6-8
weeks summer training program in the regular course of the attainment of the degree, so that
future managers may learn how the things go on in a true sense.
About three decades ago, when competition was not intense, things were easy, the scope of
management was confined and little significance was attached to the analytical thinking in
managerial decision making and problem solving; but today scenario has been into a very
complicated form. The modern thinking in management accords a greater importance to
decision making and policy formulation. Managers are responsible for shaping the fortune of
the enterprise and are involved as a key to growth and development.
THEME OF THE REPORT:
“WORKING CAPITAL MANAGEMENT AND ITS ANALYSIS” the theme of the summer
training report, is a very crucial in financial management. The report discusses the theories,
concepts and mechanics underlying working capital management.
It begins with two discussions about the trainer firm’s history, product portfolio etc. with the
foundation one can easily get through the firm and the working capital management.
FOCUS OF THE REPORT:
This report is written with the objective of giving a thorough view of the industry and
analyzes the trainer firm in accordance with the research theme. Aim of the report is:
 To demonstrate the introduction of the firm under which summer training program is
perused.
 To provide a comprehension of the valuable learning which are gained during the
training period with the industry.
 To analyze the financial condition of the firm by viewing its financial statements.
 To know the basics of working capital and analyzing the state of working capital
management in the enterprise.

.
FEATURES OF THE REPORT:
This report contains a comprehensive treatment of topics on:
 Introduction of the company:
History, product portfolio, business policies, corporate sustainability.
 Financial statements:
Balance sheet, profit and loss account, cash flow statement, inter firm trend analysis,
comparative balance sheet.
 Weekly training module progress report.
 Working capital management:
Concepts, types of working capital, investment policies, dimensions etc.
 Ratio analysis:
Concept of ratios, types of ratios, 5 year trend analysis of liquidity ratio and efficiency
ratios of the firm.
 Supporting tables, charts, figures are included as needed.
BHOOPENDRAKUMAR
MBA 4rd SEM.

.
TABLE OF CONTENTS
Executive summary………………………
Acknowledgement………………….
Preface……………………………….
Table of contents…………………..
List of figures……………………….
List of tables………………………..
List of charts……………………….
List of equations…………………..
List of abbreviations……………..
PART 1: COMPANY PROFILE
a. Introduction
b. About jubilant
c. History
d. Vision and promise
e. Core values
f. Corporate governance
g. Jubilant world wide
h. Subsidiaries
i. Product portfolio
j. Major product revenue break up %
k. Corporate social responsibility
l. Environmental issues
m. Business excellence
n. Internal control system
o. Risk management
PART 2: TRAINING MODULE PROGRESS REPORT
a. Abstract
b. Objective
c. Week one
d. Week two
e. Week three
f. Week four
g. Week five
h. Week six

.
PART 3: FINANCIAL STRUCTURE AND ANALYSIS
a. Capital structure
b. Listing on stock exchange and stock codes
c. Market price data
d. Growth of equity share capital
e. Appreciation in share price
f. Consolidated balance sheet
g. Consolidated profit and loss account
h. Consolidated cash flow statement
i. Intra firm trend analysis
j. Comparative balance sheet 20013- 14
PART 4: WORKING CAPITAL MANAGEMENT
a. Significance
b. Managerial usefulness
c. Objective
d. Research methodology
e. Working capital management
f. Current assets
g. Current liabilities
h. Types of working capital
i. Balanced working capital
j. Factors determining working capital
k. Working capital investment policies
l. Operating cycle
m. Working capital dimensions
n. Ratios
PART 5: DATA ANALYSIS
a. Schedule of changes in working capital

b. Ratio analysis
i. Current ratio
ii. Quick ratio
iii. Cash ratio
iv. Net working capital ratio
v. Account receivable turnover ratio
vi. Inventory turnover ratio
vii. Account payable ratio
c. Operating cycle analysis
d. Investment policy ratio
e. Financing policy ratio
Findings and recommendations

Bibliography

.
Word of thanks

.
LIST OF FIGURES
Figure 1: Logo..........................................................................Error! Bookmark not defined.

Figure 2: vision..........................................................................................................................2
Figure 3: Promise.......................................................................................................................2
Figure 4: Inspire Confidence......................................................................................................2
Figure 5: Always Stretch............................................................................................................2
Figure 6: Sharing Knowledge....................................................................................................2
Figure 7: Excellent Quality........................................................................................................2
Figure 8: Jubilant World Wide...................................................................................................2
Figure 9: Product Segment Revenue..........................................................................................2
Figure 10: Product Segment Division........................................................................................2
Figure 11: Environmental Sustainability....................................................................................2
Figure 12: Business Excellence.................................................................................................2
Figure 13: Accounting Procedure...............................................................................................2
Figure 14: Organization Of Finance And Accounts Department...............................................2
Figure 15 : Performance of Equity shares in BSE Sensex.........................................................2
Figure 16: Trend Analysis..........................................................................................................2
Figure 17 : Working Capital.......................................................................................................2
Figure 18: Types of Working Capital.........................................................................................2
Figure 19: Length of Operating Cycle.......................................................................................2
Figure 20: Operating Cycle........................................................................................................2

.
LIST OF TABLES
Table 1: Share Capital..............................................................Error! Bookmark not defined.

Table 2: FCCB............................................................................................................................2
Table 3: Paid Up Capital............................................................................................................2
Table 4: LISTING ON STOCK EXCHANGE AND STOCK CODES.....................................2
Table 5: MARKET PRICE DATA.............................................................................................2
Table 6: Growth of Equity Share................................................................................................2
Table 7: Appreciation in Share Price..........................................................................................2
Table 8: Schedule of Changes In Working Capital 2013-14......................................................2
Table 9: Schedule of Changes In Working Capital 2013-14......................................................2
Table 10: Schedule of Changes In Working Capital 2013-14....................................................2
Table 11: Schedule of Changes In Working Capital 2013-14....................................................2
Table 12: Working Capital Trend...............................................................................................2
Table 13: CURRENT RATIO....................................................................................................2
Table 14: QUICK RATIO..........................................................................................................2
Table 15: Cash Ratio..................................................................................................................2
Table 16:NET WORKING CAPITAL RATIO...........................................................................2
Table 17: Account Receivable Turnover Ratio..........................................................................2
Table 18: inventory turnover Ratio............................................................................................2
Table 19: Account Payable Ratio...............................................................................................2
Table 20:operating Cycle...........................................................................................................2
Table 21: Investment Policy Ratio.............................................................................................2
Table 22: Financing Policy.........................................................................................................2

.
LIST OF CHARTS
Chart 1: Permanent And Temporary Working capital................................................................2

chart 2: Investment Policies.......................................................................................................2
chart 3: Hedging Approach........................................................................................................2
chart 4: Conservative Approach.................................................................................................2
chart 5: Aggressive Policy..........................................................................................................2
chart 6: Working Capital Trend..................................................................................................2
chart 7:CURRENT RATIO........................................................................................................2
chart 8:QUICK RATIO..............................................................................................................2
chart 9: Cash Ratio.....................................................................................................................2
chart 10: Net Working capital Ratio...........................................................................................2
chart 11:debtors turnover ratio...................................................................................................2
chart 12: inventory Conversion Period......................................................................................2
chart 13: Account Payable Ratio................................................................................................2
chart 14: Operating Cycle..........................................................................................................2
chart 15: Investment Policy Ratio..............................................................................................2
chart 16: Financial policy Ratio.................................................................................................2

.
LIST OF EQUATIONS
equation 1: Working capital.......................................................................................................2

equation 2: Gross Operating Cycle............................................................................................2
equation 3: Inventory Conversion Period..................................................................................2
equation 4: Raw Material Conversion Period............................................................................2
equation 5: Work in process Conversion Period........................................................................2
equation 6:Finished goods conversion period............................................................................2
equation 7: current Ratio............................................................................................................2
equation 8: Quick Ratio.............................................................................................................2
equation 9: Cash ratio.................................................................................................................2
equation 10: Net Working Capital Ratio....................................................................................2
equation 11:Inventory Turnover Ratio.......................................................................................2
equation 12: Days Of Inventory Holding...................................................................................2
equation 13: Raw material inventory turnover...........................................................................2
equation 14: Work in process inventory turnover......................................................................2
equation 15: Debtors turnover Ratio..........................................................................................2
equation 16: Aggressive Investment Policy...............................................................................2
equation 17: Aggressive Financing Policy.................................................................................2

.
COMPANY
PROFILE

.
INTRODUCTION
NAME: Jubilant Life sciences Ltd.
INDUSTRY: Pharmaceutical and Life Sciences.
LOGO:
CORPORATE OFFICE: 1A, Sector 16A, Noida 201 301, Uttar Pradesh, India
REGISTERED OFFICE: Bhartiagram, Gajraula, Distt Amroha 244

223, Uttar Pradesh, India
BOARD OF DIRECTORS:
 Chairman and managing director  Directors
Shyam S. Bharatia Mr. Shardul S Shroff

 Co-chairman and managing director Mr. Suresh Kumar
Hari S. Bharatia Dr. Inder Mohan Verma

 Executive director Mr. S. Sridhar
Shyamsundar Bang Mr. Abhay Havaldar

 Executive director- finance Mrs Sudha Pillai
R. Sankaraiah

.
ABOUT JUBILANT
The Jubilant Life Sciences Limited is an integrated Pharmaceutical & Life Sciences
company. As India’s largest Custom Research and Manufacturing Services (CRAMS) player
and a leading Drug Discovery and Development Solutions provider out of India.
Jubilant identified the increased globalization of Indian economy and its first
alignment with international economic trends, adapted these changes and spread its wings to
the outer world and moved away from being industry oriented for sharing knowledge.
Headquartered in India the group has built strong business in North America with significant
investments over the last decade. Through it various entities the group is engaged in business
in over 60 countries across the world.
It is constantly engaged in delivering value to its global customers through innovative

technologies, products and services. Jubilant through its various subsidiaries in India and
overseas is constantly endeavoring to contribute towards meeting the unmet medical needs
and bringing down the healthcare costs globally.
Jubilant symbolizes positivity, dynamism, triumph and joy, all of which guide and
shape the Group’s collective experiences and efforts. Jubilant will always care for human
needs, share its expertise to provide a better life and help upgrade the stakeholders’ standard
of living and sustainable growth by dynamiting the value chain within the Group.
Its vision is to be amongst the top 10 most admired companies to work for. Jubilant
wants to maintain its leadership position in its chosen area of business in India and to
establish it globally. It is endeavouring to create new opportunities for growth in our strategic
businesses which give a 10 points higher rate of return than the cost of capital.
Its values determine its business path. Combined with its Promise and Vision, these values
have determined what we have achieved and they continue to guide our future.
Jubilant is a leader in outsourcing. The growth strategy of our Company is anchored

by outsourcing. Its results this year have proven that it can successfully grow the outsourcing
model into a global success story. Jubilant has utilised the triple advantages of strong
customer relationships, scale of business and integrated operations to give its outsourcing
business a strong growth momentum.
Jubilant has strong culture of continuous improvement with identification of total

savings through Lean Six Sigma practices. Jubilant is financially very strong to meet

.
commitment to its partners for their future growth requirements. Jubilant gives emphasis on
quality of its operations through world class manufacturing, supply chain excellence,
employee engagement and integrated information system which provides high degree of
customer satisfaction. Jubilant’s Corporate Sustainability Program consisting of Environment,
Health, Safety and Economic and Corporate Social Responsibility has received many
accolades from our customers and international organizations.
HISTORY
1986 Incorporated as Vam Organic Chemicals Ltd.
1987 Initial Public Offering. Listing on leading exchanges of India.
1988 Commercial production of Vinyl Acetate Monomer (VAM).

1989 Research & Development centre gets recognition from Government of India.
1990 Introduces new products in performance chemicals segment: Poly vinyl
acetate emulsion for paint, textile, paper & packaging and wood working
industry.
1991 Launches its first branded product: Vamicol, an adhesive product.
1992 Commissions Pyridine & Picoline plant.
1993 Gets ISO 9001 certification.
1994 Commissions’ first Multi-purpose fine chemicals plant. Plant for food polymer
commissioned.
1995 Enters high value-added Pyridine derivates. Commissions Pyridine HBR and
Cyano Pyridine plants.
- Forms marketing subsidiary in the USA.
-Acquires acetyl plant in western India.
1996 Enters the Bio / chemo informatics arena by setting up Jubilant Biosys Ltd.
1997 New corporate identity: Jubilant Life science Ltd. reflecting changed corporate
and business profile.
1998 Acquires the Active Pharmaceutical Ingredients business
1999 Sets up a new state-of-the-art Research & Development Centre in Noida,

near New Delhi equipped with all latest scientific instruments.
2000 - Enters the medicinal chemistry arena by setting up Jubilant Chemsys.
- Set up a Contract Clinical Research Organization named Jubilant Clinsys to
2001 Conduct bioavailability, bioequivalence, pharmacokinetic and phase 1 studies.
2002 Sets up medicinal chemistry services business through wholly owned
subsidiary Jubilant Chemsys Ltd.
2003 Enters formulations and regulatory affairs businesses by acquiring
Pharmaceuticals Services Incorporated, N.V. and PSI Supply N.V., the
pharmaceutical companies in Europe.
2004 Acquired pharmaceutical company in USA involved in off patent drug

.
development and supply, and owns US FDA approved manufacturing

facility for solid dosage forms.
2005 Acquires full service Clinical Research Organization in USA involved in
providing clinical research services, data management, biostatistics and
contract staffing.
2006 Acquires Target Research Associates, Inc., renamed Clinsys Inc.; a US based
Clinical Research Organisation (CRO)
2007 Acquires Trinity Laboratories, Inc. and its wholly owned subsidiary, Trigen
Laboratories, Inc., renamed Jubilant Pharmaceuticals, Inc., a generic
pharmaceutical company in USA having a US FDA approved
formulations manufacturing facility
2008 Enters Clinsys Clinical Research Ltd. business by setting up wholly owned
subsidiary Jubilant Clinsys Ltd.
2009 Acquires Speciality Molecules Pvt. Ltd. engaged in the manufacturing of
Fine Chemicals used by Life Science Industry including pharma, agro &
cosmetic industry.
2010 Drug Discovery partnership with Amgen Inc, USA
2011
Jubilant Organosys and Lilly to Form Drug Development Joint
Venture, Indian J.V. expands companies drug discovery and
development collaboration
Jubilant Life Sciences acquires Speciality Molecules Pvt. Ltd.

Engaged in the manufacturing of Fine Chemicals used by Life
Science Industry including pharma, agro & cosmetic industry
2012 Jubilant Life Sciences demerges its Agri & Performance Polymers
business to Jubilant Industries Limited (JIL)
2013 Jubilant Organosys Limited changes to Jubilant Life Sciences Limited in 2010.
Jubilant Life Sciences strengthens global leadership position in vitamin B3
2014
Jubilant Life Sciences receives prestigious NDTV Profit Business Leadership
Award 2012 for Corporate ‘Social Responsibility’
2015
National Quality Award in 2015 from FICCI.

.
VISION AND PROMISE
This Code of Conduct highlights the standards of conduct expected from the Company’s
Directors and Senior Management so as to align these with the Company’s Vision, Promise
and Values.
Figure 1: vision
Jubilant Life science Ltd. (Jubilant) has a well formulated Vision which drives the business
and has the promise of ‘Caring, Sharing, Growing’ to all the stakeholders –
We will, with utmost care

for the environment,
continue to enhance value
for our customers by
providing innovative
products and economically
efficient solutions and for
our shareholders
through sales growth,
cost effectiveness
and wise investment of
resources.
CORE VALUES
Figure 2: Promise

.
• INSPIRE CONFIDENCE
We will carefully select, train and develop our people to be creative,

empower them to take decisions, so that they respond to all customers with
agility, confidence and teamwork.
Figure 3: Inspire Confidence
• ALWAYS STRETCH
We stretch ourselves to be cost effective and efficient in all aspects of our

operations and focus on flawless delivery to create and provide the best
value to our customers.
Figure 4: Always Stretch
• SHARING KNOWLEDGE
By sharing our knowledge and learning from each other and from the
markets we serve, we will continue to surprise our customers with
innovative solutions.
Figure 5: Sharing Knowledge
• EXCELLENT QUALITY
With utmost care for the environment and safety, we will always strive to excel in the quality
of our processes, our products and our services.
Figure 6: Excellent Quality

.
CODE OF CONDUCT
This Code has been drawn up in accordance with the Corporate Governance requirements as
per SEBI’s circular dated 29th October 2004.
The objectives of the Code are:
• To conduct the business of the Company with integrity, fairness and transparency.
• To meet the expectations of statutory and regulatory authorities, and progressively
enhance the scope of this Code to align the conduct with the expectations of
shareholders, other stakeholders and the society at large.
RESPECT FOR INDIVIDUAL

Jubilant has the vision to be among the top ten employers in India. This will be possible only
when the Directors and Senior Management respect the rights of those around and
• train and develop the people to be creative and empower them to take decisions.
• treat individual in all aspects of employment on the basis of ability irrespective of
nationality, race, caste, creed, religion or gender.
• Neither initiates nor tolerates racial, sexual or any other kind of discrimination or
harassment.
HONEST AND ETHICAL CONDUCT

 Compliance with the Law
The Directors and Senior Management must exhibit their total submission to the
limits of law in drawing up the business policies, including strict adherence to and
monitoring of legal compliances at all levels.
 Fair and Transparent Conduct

The Directors and Senior Management are expected to act in accordance with the
highest standards of personal and professional integrity, independence, honesty and
ethical conduct including use of utmost care and sound judgment in good faith in
business decision making.
Business must be done by lawful, ethical and fair means and must bring about a
reputation of ethical business dealings by the Company. There shall be no room for
discrimination, harassment, retaliation or any form 3 of corruption and/or conduct that
is likely to bring discredit to the Company.
CONFLICT OF INTEREST
If an individual’s personal interest interferes with the interests of the Company, a
‘conflict of interest’ arises. A conflict of interest has the effect of influencing or
distorting business decisions by reason of individual, family, financial or other
interests. In such a situation the Directors/Senior Management must promptly disclose
the details to the Board of Directors in case of a director and to the Chairman and
Managing Director / Co-Chairman and Managing Director in case of Senior
Management.
Monetary transactions between the Company and a Director and/or their related
parties shall be brought to the knowledge of the Board.
The Directors / Senior Management should not appropriate corporate business
opportunities for themselves or use Company information for personal gain.

.
CONCURRENT EMPLOYMENT
Senior Management shall not, without the prior approval of the Chairman &
Managing Director / Co-Chairman & Managing Director, accepts employment or a
position of responsibility (such as a consultant or a director) with any other company,
nor provide ‘freelance’ services to anyone.
The Directors shall avoid joining the Boards of competitors or taking up advisory or
consultative assignments, whether for remuneration or otherwise, in competing
organisations other than their existing directorships.
CONFIDENTIAL INFORMATION
The confidential and proprietary information of the Company is its valuable asset. It is
the duty of the Directors and Senior Management to protect confidentiality and to
introduce effective checks for this purpose. The Directors/Senior Management are
expected to handle confidential information discreetly. Such information should be
used only for the purpose of business of the Company. This obligation continues even
after leaving the directorship/employment of Jubilant. They are also expected to keep
similar confidential information received from third parties under conditions of
confidentiality. The Directors and Senior Management shall execute an Oath of
Secrecy in the prescribed format.
EXTERNAL COMMUNICATION WITH MEDIA AND INVESTORS

To maintain and retain Jubilant ’s reputation and to ensure that information to media /
investors is accurate and properly presented, only the Chairman and Managing
Director or Co-Chairman and Managing Director or the designated representatives
would give interviews or make statements to media / investors. Any other Director /
Senior Management receiving requests for information from media, investors
(analysts, fund managers, brokers) or any external agency, should refer to Corporate
Communications who would consult Chairman and Managing Director or Co-
Chairman and Managing Director before authorizing the Director / Senior
Management to reply to such requests. The Directors / Senior Management should
take the update from Corporate Communications before interaction with media /
investors / any other external agencies.
PROTECTION AND PROPER USE OF COMPANY ASSETS

The Directors and Senior Management should protect the Company’s assets and
ensure their efficient use. All company assets should be used only for legitimate
business purposes.
The responsibilities of the Directors/Senior Management extend to:
(a) The Fiduciary Responsibility

This includes, protecting the Company’s assets, maintaining and managing the
Company’s records, ensuring true, fair and accurate accounting of all transactions, fair
use of the Company’s funds, reducing waste/emissions, providing a safe environment
for the employees and safeguarding the intellectual property assets.
(b) Transparency

.
For good corporate governance ensure (i) Compliances with law (ii) Strict adherence
to Accounting policies, (iii) Integrity in communication (timely, accurate reporting)
and (iv) Providing the internal and statutory Auditors and the Audit Committee, full
access to all information and records of the Company.
CORPORATE GOVERNANCE
Jubilant is a professionally managed company stressing on ethical and transparent

governance. Company have a 9 directors & 12 executive directors (2 are owners of the
company)
The Corporate Governance principles of the company are:-
 Caring for the environment which includes caring for the society around us.
 Enhancement of stakeholders’ value through pursuit of excellence, efficiency of

operations, quest for growth and continuous innovation.
 Transparency, promptness and fairness in disclosures to an communication with all

stakeholders including shareholders, government authorities, customers, suppliers,
lenders, employees and the community at large.
 Comply with laws in letter as well as in spirit.
The highlights of Jubilant’s Corporate Governance Regime are:
 Broad based and well-represented Board with a fair representation of executive, non-
executive and independence directors with more than three-fourths of the board being
non-promoters.
 Constitution of several Committees such as Audit Committee, Remuneration

Committee, Investors Grievance committee etc. for more focused attention.
 Established Codes of Conduct for Directors and Senior Management as also for other
employees. Instituted Whistle-blower policy and Code of Conduct for Prevention of
Insider Trading.
 Focus on hiring, retaining and nurturing best talent and to promote a culture of
excellence across the organization. Exhaustive HRD Policies cover succession
planning, training and development, employees grievance handling.
 Organisation wise ‘Velocity” initiatives taken which include world-class improvement

mythologies such as Six Sigma, Lean and World Class manufacturing.

.
 Exhaustive and unique system of internal controls spanning over 1800 control points
mentioned through especially designed software. The Company has voluntarily
completed the documentation required as per SEBI Act.
 Robust Risk Management framework for identifying various risks, assessing their
probability as well as likely impact and finalizing risk minimization plans.
 Regular communication with shareholders including through mailing of quarterly

results along with Chairman’s message, e-mailing of quarterly results just after release
to Stock Exchange, obtaining regular and also online feedbacks from shareholders.
 Comprehensive Corporate Sustainability Management System focusing on triple

bottom-line reporting on economic, environment and social parameters as per Global
Reporting Initiative standards with a stated policy on Sustainability.
The Corporate Governance practices of the company are now being recognized by the
Society. Jubilant was selected as one of the top 25 companies for Institute of Company,
Secretaries of India National Award for Excellence in Corporate Governance, 2006. Similarly,
Institute of Directors selected the Company as Finalist in the Golden Peacock Award for
Excellence in Corporate Governance, 2006.

.
JUBILANT WORLD WIDE
Jubilant Life science has ten geographically diversified manufacturing facilities in

India and North America. These facilities are GMP and GLP complaint and have ISO 9001:
2000, ISO 14001 & ISO 18001 accreditations. The plants are also approved by the relevant
international authorities.
MANUFACTURING FACILITIES - INDIA - JUBILANT LIFE SCIENCE LTD.

 Noida, UP (Corporate office & R&D Centers) ;
 Roorkee Uttrakhand (US FDA, UK MHRA, ANVISA Brazil and PMDA Japan
approved
Facility for generics
 Gajraula, Uttar Pradesh (Largest integrated Pyridine &its derivative facility in the
world
 Samlaya, Gujarat (Animal Nutrition Products)
 Bharuch, Gujarat ( SEZ for vitamins and Life Science derivative)
 Ambarnath, Maharashtra (Exclusive Synthesis – Pyridine derivatives)
 Nira , Maharashtra (Life Sciences Chemicals)
 Bengaluru, Karnataka (State-of-art Discovery Centre)
 Nanjangud, Karnataka (US FDA, AFSSAPS France & PDMA Japan approved APIs
facility)

.
MANUFACTURING FACILITIES - NORTH AMERICA
 Kirkland, Quebec, canada (US FDA approved facility for contract manufacturing of
Ointments, Cream & Liquids (OCL) and Radiopharmaceuticals)
 Ottawa, Canada (DDDS Office)
 Spokane, Washington, USA (US FDA approved facility for contract manufacturing of sterile
Injectable and Allergy Therapy Products)
 Horsham, Pennsylvania, USA (Jubilant Cadista – Sales and Marketing Head Office)
 Malvern, Pennsylvania, USA (DDDS Office)
 Salisbury, Maryland, USA (US FDA approved facility for Generics [Tablets & Capsules])
 Raleigh North Carolina, USA (Clinical Research Center and Jubilant Life Science Marketing
Office
 Bedminster, New Jersey, USA (Clinical Research Center and Jubilant Life Science Marketing
Office)

.
JUBILANT LIFE SCIENCE LTD.

WORLD WIDE
Figure 7: Jubilant World Wide

.
SUBSIDIARIES
1. JUBILANT BIOSYS LIMITED –

This company provides Discovery Informatics products and services and
collaborative drug discovery services that include pre-clinical, in-vivo and invitro services. It
also provides discovery research services. Company currently holds 66.98% of the equity of
Jubilant Biosys. This Company has built new capabilities in area of Drug Metabolism Pharm
kinetics, Initial Validation Target Inhibition and high thru put screening. The addition of these
capabilities made it as full-fledged integrated player in early drug discovery phase. It has
entered into a first of its kind drug discovery collaboration in India with a major
pharmaceutical company in the US. In addition to the existing Eli Lilly order, it has signed
contracts with Forest Lab and also executed successfully integrated programme for
Millennium Pharma.
2. JUBILANT CHEMSYS LIMITED –

This wholly owned subsidiary of Company offers medicinal chemistry services to
drug discovery companies based out of US, Europe and Japan on Full Time Equivalent or
molecule basis. It also works closely with Jubilant Biosys in collaborative drug discovery
research services area. It successfully enhanced its operational capacity from 75 to 275
Fume hoods by creating new state-of-art facility. It also created Library synthesis and small
multi gram scale up capabilities during the year.
3. JUBILANT INFRASTRUCTURE LIMITED –

This wholly owned subsidiary of Company has set up Special Economic Zone (SEZ)
for Chemicals in Gujarat. About 107 hectares land has been taken on 99 years lease from
GIDC in Bharuch District, Gujarat and the Government of India has notified the SEZ in
February 2008.
4. CADISTA PHARMACEUTICALS INC. –

This Delaware, USA Corporation, is a wholly owned subsidiary of Cadista Holdings Inc. This
Company is a generic pharmaceutical company having US FDA approved manufacturing
facility in USA.
5. PSI SUPPLY N.V. –

Jubilant Pharma N.V. was holding 80% capital of this Belgian company. However, during the
year, it became wholly owned subsidiary of your Company through Jubilant Pharma N.V. It
Undertakes development and supply of generic dosage forms to European markets.
6. HOLLISTER-STIER LABORATORIES LLC –

.
This Delaware, USA based company, is a wholly owned subsidiary of HSL Holdings Inc. It is
engaged in contract manufacturing of sterile injectable, having a well-established and stable
Allergy immunotherapy business. It has strengthened your Company’s global CRAMS
business via entry into the high barrier sterile injectables segment.
7. JUBILANT FIRST TRUST HEALTHCARE LIMITED –

This Company is in the business of healthcare and became subsidiary of the Company
in May 2007. This Company runs hospital and healthcare centres managed by a team of
successful professional doctors in West Bengal. Your Company currently holds 88.17% of
equity capital of this Company. This Company holds 99.68% capital of Asia Healthcare
Development Private Limited.
8. ASIA HEALTHCARE DEVELOPMENT PRIVATE LIMITED –

This Company became subsidiary of the Company in March 2008 through Jubilant
First Trust Healthcare Limited. This Company runs a hospital in Behrampur managed by a
team of successful professional doctors in West Bengal.
9. CADISTA PHARMACEUTICALS (UK) LIMITED –

This Company, incorporated in England, is a wholly owned subsidiary of the
Company through Jubilant Pharma Pvt. Ltd. for marketing and selling generic dosage forms.

.
PRODUCT PORTFOLIO
The Jubilant Bhartia Group embarked on a journey to create leadership in its chosen
areas of business over two decades ago. The Group has a strong presence in Pharma, life
sciences and healthcare sector through its flagship company Jubilant Life science and has the
fastest growing Domino’s pizza chain in India through Jubilant Food Works. The group is a
leading Indian private sector player in oil and gas exploration and production business
through Jubilant Energy. Through a clutch of independent Companies the group has a
significant presence in Retail segment including Hypermarkets and Automobiles. The Group
also offers a wide range of marketing and technical services for international companies in
the area of aviation, oil & gas services and power and infrastructure services.
The four core segments of Jubilant Bhartia Group are:
PHARMACEUTICAL, LIFE SCIENCES AND HEALTHCARE

Jubilant Life science is an integrated pharmaceuticals and Life Sciences Company. It is the
largest Custom Research and Manufacturing Services player and one of the leading drug
discovery and development solution provider from India It is well positioned as an
outsourcing partner for the global pharma and life sciences companies. Jubilant continues to
report a very strong growth in Pharma and Life Science Business. There has been a very
good increase in EBIDTA margins of PLSPS. This is largely on account of CRAMS business
where the performance has been very encouraging. Jubilant continues to add to its contract
Position and to expand its client base here. Jubilant's PLSPS business is broadly divided into
the following sub-segments:
CRAMS:
CRAMS the most important business unit of PLSPS also presents excellent growth
opportunity for Jubilant. The five-year revenue CAGR are over 45% and five-year EBITDA
CAGR was at 41%.
Proprietary Products and Exclusive Synthesis:

The Company is targeting 20% increase in capacity of pyridines and Picolines through
process improvement and debottlenecking and is expected to be completed by June 2010. It
also has plans to introduce 8 advanced intermediates in next two years. Further, it is
negotiating for 3 new contracts with large innovator companies which will add to growth in
revenues and earnings.
Active Pharmaceutical business:

.
Jubilant is making new investments in manufacturing facility of APIs which will be operative
form Q2FY2011, full benefit of which will be realized in next two years. Further, new facility
for High-potency APIs including Oncology is expected to be commissioned in Jan 2011. It is
also undertaking a debottlenecking of existing three plants to increase capacity of existing
products.
CMO of Sterile & Non-Sterile:

Jubilant plans to increase capacity utilization from 60Mn vials to 120Mn vials which will be
fully operative from FY2011. It also has confirmed four new contracts supporting increased
Business for CMO of sterile injectable for FY2011. Growth in this year will be driven by
new clients at Spokane facility and expansion of existing client contracts in Montreal facility.
Drug Discovery and Development Services:

The company has already signed many new contracts with global pharma companies, full
benefits of which will be realized in FY2011 which includes Eli Lilly contract extension for
five years, Endo Oncology deal being expanded and AZ portfolio deal growing consistently.
Speciality Pharmaceuticals:
With the start of Canadian Nuclear Reactor, sales of all Radiopharmaceutical products
including Sestamibi is expected to boost also there is a strong pipeline of
radiopharmaceuticals such as RUBY-FILL and MOLY-FILL.
Generics:
The company has filed about 25 ANDAs and expects decent growth from new product
approvals for which filing has already made in US and EU markets. It is also entering into
new markets like Canada which will boost sales and operating profit in next two years.
Life science chemicals:

The Company is planning to improve capacity by more than 50% over next two years by
plant modification and debottlenecking to meet the growing demand from pharma and
agrochemical industry. It is also planning to set up new capacity at Nira plant (near Pune)
which is close to port in order to access cheaper feedstock which would benefit in expanding
its reach in international markets.
Nutrition ingredients:
Jubilant is looking for capacity increase of Niacin amide plant by 10,000 tonnes by backward
integration. They are also targeting an increase in Choline Chloride capacity by 30% to
process improvement and debottlenecking. It is also proposed to add new product, at least
two, in next year which will further fuel growth.
AGRI BUSINESS:
Jubilant expect to have higher capacity utilization of single super phosphate (SSP) which is

.
410,000 tons and which will be over 90% operational in the entire FY2011. Further, it is also
planning to collaborate with the major fertilizer company in order to increase market
Share in new areas.
PERFORMANCE POLYMERS:
Food polymers:
The company has plans to increase the capacity by 120% by June 2010 for which contracts
are already in place.
Latex:
The company is looking at an increase of 50% in the capacity to be fully operational for the
entire 2011.
CONSUMER PRODUCTS:
The company is targeting improved construction activity and introduction of 2-3 new
products under “Jivanjor” brand. It is also focusing to increase market share and distribution
reach through product influencers & channel partners oriented marketing activities.
APPLICATION POLYMERS:
The company is taking a product portfolio rationalization introduction of niche products for
application in packaging and electronic industry.
OIL AND GAS EXPLORATION AND PRODUCTION

Jubilant Energy is one of the leading companies in private sector engaged in Oil & Gas
exploration and production (E&P) in India and overseas. It has collaborations with leading
global companies and currently operates 12 blocks - 8 in India, 3 in Yemen and 1 in
Australia.
FOOD & RETAIL

Jubilant Food Works Limited holds the Master Franchise Rights for the Domino's Pizza, for
India, Nepal, Sri Lanka and Bangladesh. The company has been listed on the Indian Bourses
recently and is the fastest growing domino’s pizza country in the world with 300 stores in
India. The brand, Domino's Pizza, was founded in the US in 1960 by Thomas and James
Monaghan. Since then, it has grown into a global network of 9000 pizza stores in more than
60 countries around the world.
Jubilant is present in two formats in retail:

.
Hypermarkets (Total) and supermarkets. Jubilant Retail is a Bangalore-based retail chain

running state-of-the-art hypermarkets and malls. Its hypermarket branded as 'Total' is
designed on the lines of international shopping malls and is a single-point food store carrying
packaged, processed as well as fresh food and beverage items. It also stocks non-food items
like apparel, sports goods, bed and linen, furniture, etc.
JUBILANT MOTORWORKS
The Group through Jubilant Motors is engaged in sales and servicing of Audi Cars through
state of art showrooms in Bangalore and Chennai. Audi has been well recognised globally as
a manufacturer of high-quality and innovative luxury cars, it is one of the world's leading
premium brands which is among the most admired car brands across the world. Audi has a
presence in over 110 countries and it set up shop in India in 2004.
SERVICES
Jubilant Enpro, through its alliances with international companies, provides business,
marketing and technical support related to Oil & Gas services, Power & Infrastructure
services, and Aviation related services (sales/maintenance of aircrafts & helicopters).
A shared vision and a common set of values bind all diverse businesses of the Jubilant
Group. So far, Jubilant has created a strong global presence in the pharmaceutical and life
sciences sector and in the other areas the group is moving ahead steadfastly gaining
remarkable experience and growth. Over the years Jubilant has successfully established itself
as a partner of choice in an ever-changing environment that presents both opportunities and
challenges for its various businesses. The focus on servicing customers and building
partnerships to create value has generated significant stakeholder return and aptly reflects the
group's promise of Caring, Sharing and Growing.

.
CORPORATE SUSTAINABILITY
Jubilant ‘s rapid growth has been facilitated by a robust sustainability strategy that
aims at going beyond legislative requirements to developing a sustainable business model.
Jubilant focuses on the triple bottom line approach of addressing economic, environmental
and social performance while doing business. It also stresses on corporate governance which
is guiding pillar for the triple bottom line approach and follows a structured methodology for
risk identification and management.
ECONOMIC:
 Continue to enhance value by achieving average capital on invested capital 10 points
higher than the weighted average cost of capital.
 Provide innovative products and cost effective solutions to customers.
 Contribute to national exchequer in the form of taxes.
 Regular and timely payment to business partners.
 Maintain transparency in sharing information with shareholders.
 Improve employee wellbeing through increased benefits.
ENVIRONMENT:
 Maximize use of renewable raw materials and energy efficient processes.
 Conserve and reduce energy and other resources used including water.
 Reduce and recycle wastes.
 Integrate environment aspects at project conceptualization stage.
 Actively participate in mitigating global environmental concern.
SOCIAL:
 Contribute towards improving the quality of life of the neighbouring community
around its manufacturing location since jubilant consider them an important group of
stakeholders.
 Identify the areas of social intervention through need assessment studies.
 Provide basic health care including diagnosis and treatment of tuberculosis (TB) and
counselling and testing of HIV/ AIDS through and ICTC, supporting rural
government primary education system and running livelihood generation program.
These are the focus areas of the company’s intervention based on a need assessment
studies.

.
 Help to push the well-conceived government schemes in chosen areas through public,
private, people, partnership approach.
 Increase involvement of employees in social activities.
CORPORATE GOVERNANCE AND RISK MANAGEMENT:

 Maintain high level of transparency in governance.
 Comply with revised clause 49 of the securities and exchange board of India
(SEBI).on accuracy of the financial statements and adequacy of internal control and
risk management.
 Identify and implement a strong risk management framework that enables active
monitoring of business activities for assessment and mitigation of potential internal
and external risks.
 Communicate regularly with the stakeholders.
Jubilant ‘s sustainability program has been recognized by institutions like GRI, IFC and CII.
Jubilant is committed to continue its efforts to address the sustainability issues in the future
while striving to improve its performance in the triple bottom line.
The concept of Business Excellence extends to areas like customer and supplier relations,
employee engagement, environment and corporate social responsibility. This has resulted in
numerous awards and recognitions being conferred upon Jubilant, which is an
acknowledgement of the Company's business philosophy cantered on excellence. Your
Company, being committed to address environmental issues and discharge its corporate social
responsibility, is publishing for the seventh year in a row, Corporate Sustainability Report,
duly audited by Ernst & Young, and conforming to Global Reporting Initiative Guidelines

.
ENVIRONMENTAL ISSUES

.
Being a Chemicals and Pharmaceuticals Company, Jubilant is exposed to various

environment related regulatory and health issues. Some of our research and development and
manufacturing operations involve dangerous chemicals, processes, by-products and effluent
discharges. To manage these risks, substantial investments and resources are allocated on a
continuous basis to proactively adopt and implement manufacturing and effluent treatment
processes, which ensures adherence to environmental quality standards and regulatory
requirements. Stringent Environment Health and Safety (EHS) systems and procedures at all
manufacturing locations, including all R&D centres ensure strict compliance to international
standards and safety practices which helps in reducing environment related risks. Besides, an
independent assessment and verification of environment related hazard mitigation processes
is also done by Ernst & Young as our assurance partner to provide comfort to stakeholders. In
addition, we also maintain adequate property and public liability insurance covers at our
manufacturing facilities as per best industry practices.
Figure 8: Environmental Sustainability

.
BUSINESS EXCELLENCE
Jubilant‘s ambition of achieving leadership in various businesses is fuelled by the

company’s strategy of continuous improvement enabled through business excellence.
Jubilant’s business excellence model is created around three pillars of customer, process, and
people. This is achieved by focused process improvement efforts in function like supply
chain, manufacturing, sales and marketing.
Customer People Process

Project Employee Design Excellence
Management Engagement (Design for Six Sigma-
for New Product
System (Project Program (Gallup- Development & R&D)
Management Q12)
Methodlogy and EPM Supply Chain
Competency
Microsoft Server Based Excellence (supply
Version) Development Chain Operations
(Talent Development
Value And Retention)
Reference Model)
Transformation(Mr Manufacturing
Performance
aket Research, Market Excellence (Lean Six
Planning and Sales Management Sigma, Total
Forcasting) System (Goals Productivity
Dashboards & Identification and Maintenance)
Development through
Performance E- Balanced scorecards
Matrics (Customer and Hoshin Kanri)
dashboard, Business
dashboard, Plant
dashboard, using
business intelligence
tools)
Figure 9: Business Excellence

.
CUSTOMER EXCELLENCE:
Project management infrastructure created through Microsoft server based enterprise wide
project management tool:
All project managers and engineers are trained in PMI, globally recognized project
management institute methodology. This tool helps to manage the time and cost performance
for various capital and customer product development project undertaken.
Customer dashboard and forecasting:
The business excellence function has developed expertise in an array of business intelligence
tools Igrofax, quick view, excelious and forecast pro which are used in numerous projects,
creating analytical reports from ERP to enable better business decisions and statistical
forecasting of volumes and revenues.
PROCESS EXCELLENCE:
Supply chain excellence through SCOR:
Process reference model are used to integrate the well-known concepts of business process
re- engineering, bench marking and process measurement into a cross functional framework.
This has helped in creating a very cost efficient and agile supply chain.
Design excellence through DFSS (design for six sigma):
This methodology helps cut the product development / process development cycle time by a
stage gate process approach and using tools to optimise and right first time at each of the
stages, thus avoiding reworking the development. Investing larger time in planning than
execution ensures that the company has the right “time to market” for the product. Design for
experiments help cut down the effort and cost needed to arrive at the optimal solution.
Manufacturing excellence through lean sigma:
Lean at jubilant is focused on increase value for the customer by removing waste from the
processes so that the value can seamlessly get transformed in the process at the pull of the
customer. Very effectively used to cutting down the cycle time / reducing cost and improving
responsiveness to the customers. Six sigma is a way of life at jubilant to address any process
variation that increases cost and also impacts the customers’ requirements. Through six sigma
approach, the company strives to continuously work on process optimization. Variability
reduction and quality improvement to give the customers “what they need and when they
need”. TPM at jubilant has resulted in great motivation of grass root level employees to
improve effectiveness and utilization of assets and implement improvements which have
extended the life and utilization of equipment’s and plant.

.
PEOPLE EXCELLENCE:
Performance management system through balanced scorecards and roshin kanri:
Performance management system is a key driver in the performance of any organization. The
company uses the balanced scorecard mechanism till the middle management level to ensure
that the goals of the people are drawn and aligned with the strategic objectives of the
organization and to prevent duplication of roles and responsibility the roshin way is used to
deploy these goals in the top down way. What’s or goals of the superior are drilled down in
terms of how and these how become what’s / goals of the next level.
Employee engagement through Gallup Q 12 philosophy:
Gallup has a very well researched philosophy of 12 questions around which employees
expectations in all organization can be measured. Jubilant has administered this assessment
across all business globally to understand the employees’ expectations and listen to their
suggestions to make the organization “a great place to work”. There has been drastic
improvements in the employee engagement scores seen over the past two cycles and highly
improved retention rate and productivity improvement through this initiative. The company is
committed to listen to the views of the employees and ensure actions to address their
expectations through the Q12 methodology.
Employing lean six sigma, kaizen, TPM (total productivity management), WCM (world
class manufacturing) and SCOR (Supply Chain Operation reference) and project
management has helped jubilant grow to new levels of the competency and efficiency.

.
STRATEGY AND BUSINESS MODEL

Jubilant, as an organization, have been able to successfully evolve into a company present
across the entire pharma and life sciences value chain, from advance intermediates and fine
chemicals to APIs, discovery services, clinical research, and finished dosage forms. Such a
comprehensive offerings profile, combined with strong product and process capabilities
acquired over the past 25 years, has enabled us to emerge as a composite pharmaceuticals
industry player. This in turn has laid a solid foundation for us to implement our growth
strategy.
Its strategy for continued rapid growth is three pronged, where we aim to:
 consolidate the position as the preferred partner for the outsourcing needs of the
worldwide pharma and life sciences industry,
 ensure that it steadfastly sustain its status as reliable partners, not competitors, to its
global customers, and
 Continuously move up the value chain through organic and inorganic initiatives.
OUTSOURCING PARTNERS OF CHOICE TO GLOBAL PHARMA AND LIFE

SCIENCES INDUSTRY
Leveraging the emerging outsourcing opportunities in global pharmaceuticals and life
sciences sector is at the core of Jubilant‘s strategy for future growth. The advantages it enjoy
as an India-based global player with formidable technological and manufacturing expertise,
reputation for high quality and an international customer profile that includes some of the
most quality-conscious companies, make it the outsourcing partners of choice for the global
pharma and life sciences industry.
ABSOLUTE COMMITMENT TO PARTNERSHIP AT EVERY STAGE

It offers products and services to customers across the pharma and life sciences value chain.
This has enabled it to become a one stop shop for products and services for global pharma
and agrochemical customers, who regard it as dependable and trustworthy partners. It is
therefore committed to maintain an unwavering focus on partnering with its customers at
every stage of the value chain without Competing with them in the market place. This
commitment distinguishes it as reliable and long-term partners for its customers.
CONTINUOUSLY MOVING UP THE VALUE CHAIN AND COMPETING IN THE

GLOBAL MARKETS
Its progress over the years has been driven by a series of strategic initiatives that have
enabled it to evolve today into a composite pharmaceuticals industry player. The key enablers
across all its past and ongoing initiatives have been its pioneering investments in result

.
oriented R&D and thrust on continuously moving up the value chain, led by its knowledge
base. Innovation, therefore, has been and continues to be the cornerstone of its growth
strategy.
Its sustained R&D efforts since inception have enabled to move up the value chain, to grow
and transform itself a composite pharmaceuticals industry player. Its solid R&D
establishment also allowed it to become more efficient and attain world class quality
standards for its products and services, which helped it expand its operations to the
international markets.
Today, Jubilant is a global player. It compete in the global market place and most of
its export revenues today come from discerning customers in highly quality conscious
markets such as Europe, the US, And Japan. In addition to driving innovation and growth
through its own internal efforts, it has also successfully reduced its learning time by the
acquisition of knowledge led companies in India and Europe. These acquisitions have
accelerated its ascent up the value chain, complemented our offerings portfolio, strengthened
its market presence and contributed to overall performance.
It continue to look for similar opportunities in markets such as the it to further enhance its
market presence and value proposition. Having defined a clear strategy, it has created a
business model that supports its stated objectives and makes it a unique player within the
sector. It derive its strengths from its robust capabilities on both aspects of operations –
manufacturing and services – and enjoy high levels of operating efficiencies that gives it
competitive advantage across all product categories.

.
COMPETITIVE STRENGTHS
It enjoy unique competitive advantages, owing to the multiple strengths that have either been
acquired over the years or resulted due to the way it manage its operations. As it move further
up the value chain, becoming a preferred outsourcing partner to the world's pharma and life
sciences industry, the ability to retain and attract customers is increasingly dependent on
creating trust in the quality of its products and making them available at costs that help its
customers enhance their own cost competitiveness – which ultimately lowers the cost of
healthcare and benefits the end-user.
RESEARCH AND DEVELOPMENT

Jubilant Life science is a knowledge-led organization. The drive to be innovative and to excel
in the quality of its products has been its core business value since the time it began
operations several years ago as a chemicals manufacturer. It believe that its rapid and
successful ascent up the value chain has been powered by its initial pioneering investments in
R&D activities.
MANUFACTURING AND SUPPLY CHAIN

Over the past 25 years, it has accumulated extensive learning’s, a well stabilized base
technology, process efficiencies, and global scales in all key products. While it’s global scale
makes it more efficient, its vertically integrated manufacturing facilities, located strategically
near raw material sources and customers, allow it to be cost competitive. The main feedstock
for it is a renewable resource, molasses, which hedges it against petrochemical cycles that
other players face and makes it operations more environment-friendly. In order to better meet
evolving market demand and needs, it has also established flexible multipurpose plants that
can manufacture multiple products based on market dynamics.
CUSTOMER PROFILE AND EXPORTS

Jubilant has built strong customer relationships in the global market, on the strength of its
quality and reliability as a partner. Resultantly, it has an outstanding track record of retaining
clients with Repeat, and often enhanced, orders it export its products to more than 150
customers in the life sciences industry in around 55 countries, assisted by two marketing
subsidiaries in the US and China And subsidiaries in Europe. While growing and
strengthening customer relationships, it has also ensured that sales in terms of customer

.
spread are diversified, which is evident from the fact that its top 20 customers contribute only
27.6% of sales.
WORLD-CLASS QUALITY
Jubilant’s partnership with customers and vendors alike is based upon a shared obsession
with quality. Its customers expect from its products and services that stand up to the best in
the world. It expect the same from vendors and suppliers. Internally, each member of its
strong workforce is committed to playing her or his role in an organization wide quality
movement, with the ultimate objective of consistently delivering high quality products and
services to customers.
Its strategy to capitalize on the outsourcing opportunities unfolding in the life sciences
industry hinges upon the ability to deliver high quality products and services in a reliable and
trusted manner.
VELOCITY – A SIX SIGMA INITIATIVE

It had initiated the organization- wide ‘Velocity’ initiative. The Velocity initiative is aimed at
bringing about a positive cultural change within the organization, with a sharp focus on
customer-centricity, speed, quality, and cost. This entails implementation of process
improvement methodologies and globally accepted best practices such as total quality
management, 5S, TPM, DMAIC, IFSS, BPMS throughout the value Chain. It made
significant progress on this initiative to next level by covering sales and Marketing, IT
Services and R & D functions also besides manufacturing which was taken up in first phase.
PROCESS QUALITY WITH RESPECT TO CUSTOMER SATISFACTION

Jubilant respect and care for its customers, working in partnership with them to satisfy their
needs and giving them the best possible value. Through Velocity initiative, it has been able to
achieve better defect prevention through predictable processes and improved customer
retention rates during the year under review.
CONTINUOUS IMPROVEMENT
Although the Velocity initiative was launched in FY 2004, quality itself is not a new
phenomenon at Jubilant. Over the years, it has focused on improving the quality of processes
and products, and this continues even today aided by the Velocity initiative. Jubilant
encourage people across the organization to develop themselves and find ways to improve
their performance. Such a continuous improvement process is helping them to meet the high
quality standards of discerning customers worldwide.
CROSS-FUNCTIONAL TEAM OF BLACK BELTS, YELLOW BELTS, AND WHITE

BELTS
Quality initiative at jubilant derives its ongoing success from the fact that every individual in
the organization is involved in it, and it has the active support and participation of the senior
management team and functional heads. Through in-house training, and lateral recruitment
wherever necessary, it now has 17 Six Sigma black belts and 220 yellow belts at the end of
year across all our operational functions manufacturing, human resource management, sales
& marketing, R&D, supply chain management, finance, and IT services.

.
During the year, its Velocity initiative undertook 90 projects of which 64 have been
completed. These initiatives are undertaken by involving the existing teams which would
result in sustained savings from such improvements. In the first wave of Velocity initiative
the focus was on improvement of manufacturing operations. In the second wave, it recently
expanded the Velocity initiative to cover the sales and marketing teams, which would ensure
better understanding of customers’ need by its teams. The concept is based on sharing the
ideas and developing best practices which could result in a win-win situation for both
customers and jubilant. Going forward, jubilant intend to continue leveraging technical,
operational, quality, marketing, and financial strengths to drive future growth by engaging
with international life sciences majors and participating in the global outsourcing opportunity.

.
INTERNAL CONTROL SYSTEMS AND RISK MANAGEMENT

It employ a set of sophisticated internal control systems and risk management mechanisms
designed to ensure adherence to established processes, guidelines, and regulations as well as
to identify the opportunities and risks inherent in its operations on an ongoing basis.
Internal control systems – ensuring adherence to best practices:

Its internal control systems are aimed at ensuring, among other things
 Resource optimization
 Reporting and accounting accuracy and transparency
 Regulatory compliance
Its integrated ERP system provides the wherewithal to have in place a high level of system-
based checks and controls, ensuring quick access to business information. This in turn
facilitates swift and proper decision-making based upon the latest MIS reports.
In addition to an internal audit department, staffed with experienced professionals and

assisted by external audit firms, it also have specific committees of the Board of Directors,
and also include other senior managers in some cases, that oversee all audit activities and
assess the effectiveness of internal control and risk management systems on a regular basis.
These committees are:
THE AUDIT COMMITTEE:

Which meets every quarter and monitors our audit, accounting, and financial reporting
procedures.
THE SUPPLY CHAIN COMMITTEE:

Which meets every week and initiates, reviews and approves operational effectiveness
measures.
THE PURCHASE COMMITTEE:

Which meets once every fortnight and ensures that we follow an efficient procurement
process.
THE CAPEX COMMITTEE:

Which meets at least twice every month and monitors all capital expenditure initiatives, so
that our investments deliver a rate of return that is in line with our goals.
The operations of each of its business segments are also actively reviewed once a month by
the business heads, CMDs, executive directors, and management team members. In addition
to that, it also monitor the performance of its functional activities such as manufacturing,
human resources, and finance on a quarterly basis. These review meetings provide direction

.
and inputs, as necessary, to the business and functional units and have been key drivers of its
business success.
RISK MANAGEMENT:
IDENTIFYING AND PROACTIVELY TAKING MITIGATING STEPS
Jubilant has put in place a strong risk management framework, where it actively monitor
operating environment, to identify and assess potential risks – internal or external – and take
appropriate steps to pre-empt or mitigate them. Jubilant’s risk management strategy rests on a
solid platform of processes, guidelines and instruments designed to insulate its business
operations from unforeseen threats. Its management team attempts to identify risks at an early
stage, evaluate their consequences and take appropriate de-risking measures on an ongoing
basis. Some of the key risks and its initiatives to address them are briefly listed
As under:
PRODUCT PORTFOLIO RISK:

As a composite pharmaceutical industry player, jubilant is aware that it need to continually
innovate and introduce new products in the market to sustain its competitive edge. Jubilant
believe that a strong product pipeline and entry into higher value areas like clinical research
and dosage forms, supported by a robust R&D base significantly reduces the risk of demand
or price pressures on any of its existing products.
RAW MATERIAL RISK:

Jubilant‘s integrated manufacturing process insulates its operations to a great extent from
significant variations in the cost or availability of key raw material. The output of its
industrial chemicals business is often the key ingredient for pharma and life sciences and
performance chemicals businesses. The basic raw material that it use is molasses, which
shields us from the cost cycles that other petrochemical based players are subject to. It has
also one of the world's largest storage facilities for alcohol and molasses and we always have
the option of importing it if molasses prices firm up in India.
CURRENT RISK:
As an outsourcing partner to companies across the globe, with a focus on maximizing pharma
and life sciences export revenues from the regulated markets, jubilant is exposed to risks
associated with foreign exchange fluctuations. Jubilant believe, it has a natural hedge against
such risks to the extent that it also has foreign currency loans. Additionally, it also use forex
risk management techniques to hedge exposures.
ENVIRONMENTAL RISK:
A strong commitment to the environment and the communities we operate in pervades entire
organisation at all levels. Effective waste management systems, stringent emission
benchmarks, and efficient use of natural resources form an integral part of its operating style.

.
It is one of the few Indian companies to initiate steps towards meeting three bottom lines
economic, environmental, and social and report performance across each of these in a public
report every year, in line with the globally accepted GRI standards.
In addition to the above, jubilant also maintain property and casualty insurance at its
manufacturing facilities in accordance with customary industry practices. Jubilant has a
competent management team that actively reviews its business strategy and takes the
measures necessary to enable it to prepare for and respond to changes in the business
environment that it operate in.

.
TRAINING MODULE
PROGRESS REPORT
ABSTRACT

.
Myself BHOOPENDRAKUMAR MBA 4rd SEM, gone through a summer training program as
prescribed under UOU norms. For summer training purpose I opted
JUBILANT LIFE SCIENCE LTD., GAJRAULA. I joined Jubilant as a management

trainee. Mr Deepak Toshniwal was appointed as my mentor.
Since the training was joined, a structured module was followed on weekly basis. Each week
a department was visited and attended sessions with the assigned person to learn the
knowhow and the functioning of that particular department so that I may go through the
organization of the entire firm. I learned the involvement of finance department in that
section. Entire training was done under an expert who guided the module.
Jubilant, Gajraula is a manufacturing unit with a huge set up in a very structured

manner, hence it require a conscious recording of all the purchases and other expenses. I
came to know that how demand indents are formed, orders are placed, bills are prepared, and
how payments are made.
This section discusses the gained learning and experiences at the plant and functioning of
finance department at jubilant.
BHOOPENDRAKUMAR
MBA 4rd sem.
OBJECTIVE

.
This six week training program was aimed at learning practical approach and application
of various theories. This program gave an insight to corporate culture and helped in
enhancing the managerial capabilities. By visiting the industry it was easy and more helpful
to know how several processes go on in the company administration. Basic objective related
to this module are as follows:
 To get an insight of the organization and understand the role of various department in
the firm.
 How all the departments are interconnected to each other and how they support the
working of each other in completion of various transactions?

 Finance department play its role at a very major level in the activities of the
organizations.
 And, ultimately to gain experience of working with a company.
WEEK ONE

.
ORIENTATION:
FINANCE AND ACCOUNTS DEPARTMENT:
Headed by Mr Suresh Gupta, this department deals with all the recording and analysis of
accounts. At the Gajraula unit, accounting procedure till trial preparation is accomplished.
Rest financial statements are prepared at the head office Noida in a consolidated form of all
the companies under jubilant for determination of overall financial position.
Trial Financial
Jouranl Ledger
Balance Statement
Jubilant (Gajraula Plant) Head Office (Noida)
Figure 10: Accounting Procedure
For ease of control, all the major segments included under jubilant are given separate
mnemonic codes and treated as separated company. These various segments are divided
among all the subsidiaries of the Jubilant. Several segments assigned to Gajraula plant are as
follows:
 500: Alcohol
 503: Advance Intermediate
 504: CRAMS acetyls
 505: Utilities and IDFO
 508: Spare Parts
 509: Power
 510: EOU
 507: MOLLASSES
 511: CRAMS 2

.
 512: EOU exclusive synthesis

 600: PCD
 602: CO2
 603: Solid PVA
 700: Wood Finish
 800: Agri Business Division
 852: R & D Gajraula
 915: Project
 918: Project EOU
 490: Bhartia Foundation

.
ORGANIZATION OF FINANCE DEPARTMENT:
Suresh Gupta ASSO
,AVP Head (F&A)
Neeraj Pandey
Deepak Toshniwal
Manager-tax
(C.A) Dy-Mgr
NAVEEN KUMAR Vinod Bhardwaj Sachin Agarwal

GUPTA Manager SENIOR
Manager A/C Officer A/C
Rahul Sharma
SR. EXECUTIVE
B.S.Tyagi H.C.Joshi
SR. Manager Manager
Rahul Goyal Bhoopendra Kumar
Asstt Officer Trainee A/c
PK Singh
Hansraj Gupta
Manager
project Deputy Manager
Figure 11: Organization Of Finance And Accounts Department

.
There are basically 4 major parts of financial transactions:
1. Income
2. Expenses
3. Assets
4. Liabilities
Various Plants of the Jubilant deal with expenses only and other three parts are viewed at
head office. Expenses are generated out of:
 Purchases;
1. Raw material
2. Spares
 Indirect and other expenses
JOURNAL ENTRIES:
For purchases:
1. Raw material A/C dr. XXX

CANVAT A/C dr. XXX
To PBR XXX
(Being material purchased, receipt note received and VAT deducted)
2. PBR A/C dr. XXX

To Supplier’s A/C XXX
(Being Bill matched and amount transferred to suppliers account)
3. Supplier’s A/C dr. XXX

To Bank A/C XXX
(Being Payment made)
For contractor payment:
1. Expenses A/C dr. XXX

STRA A/C dr. XXX
To PBR XXX
(For agreement finalized and service tax adjusted)
2. PBR A/C dr. XXX

To Party XXX
(For bill matched)
3. Party dr. XXX

To Bank A/C XXX
(Being Payment Made to contractor)
4. CANVAT A/C dr. XXX

To STRA A/C XXX

.
(Being amount of service tax transferred to CANVAT account)
BILL PROCESSING AND MATCHING:
 Bill matching of contractor

 Bill verification of contractor provide by the contractor or transporter
 Receiving bills in MY JUBILANT
 Payment procedure through NEFT and RTGS transaction and COD.
WEEK TWO
In week two, Mr. Deepak Toshniwal told me about the purchasing procedure and functions
of various department under supply chain which are described below:
SUPPLY CHAIN DEPARTMENT:

.
In Gajraula unit, jubilant Life science ltd, there is a team of fourteen people who supervise all
the activities from material procurement to output dispatch.
There is a list of 16000 items whose management is handled by procurement department
alone either costing a single rupee or value in millions.
 DEPARTMENT ORGANIZATION:
 FUNCTIONS:
 MATERIALS NEED IDENTIFICATION:`
 MATERIAL RECIEVING AND OUTPUT DISPATCH:

.
FINANCIAL
STRUCTURE
AND
ANALYSIS

.
BALANCE SHEET 2014 (Rs. In million) 2013-14

Note As at 31 March 2014 As at 31 March 2013
EQUITY AND
LIABILITIES
SHARE CAPITAL 3 154.46 159.3
RESERVES AND SURPULS 4 17173.08 18276.58
17327.54 18435.88
Non-current liabilities
Long -term borrowings 5 11,410.50 20512.53
Deferred tax liabilities (net) 6 1734.2 2601.6
Other long term liabilities 7 104.06 50.47
Long-term provisions 8 2,104.13 2273.5
15,352.89 25438.1
Current liabilities
Short-term borrowings 9 10,971.26 10426.9
Trade payable 10 5,992.45 5152.22
Other current liabilities 11 14,682.49 4652.98
Short-term provisions 12 2,146.01 810.82
33,792.21 21042.92
Total= 66472.64 64916.9
ASSETS
Non-current assets
Fixed assets
Tangible fixed assets 13 20458.89 20901.22
Intangible fixed assets 14 1052.47 953.62
Capital work-in-progress 15 211.62 257.6
Intangible assests under dev. 2207.82 1875.97
Non-current investments 20056.92 19785.06
Long term loans and advances 16 2989.76 3438.37
Other non-current assets 17 4.99 2.18
46982.47 47214.02
Current Assests
Current Investments 18 3.75 6124.8
Inventories 19 7335.18 3932.51
Trade receivables 20 5295.97 2558.85
Cash and bank balances 21 1787.1 4493.76
Short term loans and advances 22 5050.78 593.05
Other current assets 23 17.41
19490.19 17702.97
66472.66 64916.99

GROWTH OF EQUITY SHARE CAPITAL
CONSOLIDATED PROFIT AND LOSS ACCOUNT
FY FY FY FY FY
Particulars
2009 2008 2007 2006 2005
36405. 26287. 19434. 16242. 12737.
Gross Sales
4 7 4 9 0
Excise 1225.6 1398.9 1337.3 1189.4 1034.3
35179. 24888. 18097. 15053. 11702.
Net Sales
8 8 2 5 7
13408. 10948. 9779.2 9102.1 7501.0
Domestic Sales
8 8
21771. 13940. 8318.0 5951.4 4201.7
International Sales
3 0
Other Income 1015.7 1430.0 1234.6 196.9 166.4
36195. 26318. 19331. 15250. 11869.
Total Income
5 8 8 4 1
30526. 20381. 15561. 12883. 9626.1

Expenditure
9 7 3 0
PBIDTA 5668.6 5937.1 3770.5 2367.4 2243.0
Depreciation 1632.4 1039.1 622.9 513.4 381.4

PBIT 4036.2 4898.0 3147.6 1854.0 1861.6
Interest 1070.4 336.7 194.6 172.7 220.4
PBDT 2194.7 2022.6
PBT 2965.8 4561.3 2953.0 1681.3 1641.2
Tax 267.2 572.8 712.5 392.4 431.6
PAT 2698.6 3988.5 2240.6 1288.9 1209.6
Table 1: Growth of Equity Share

.
Share of Profit / (Loss) in 0.00 0.00

Associate
Minority Interest (133.2) (16.4) (39.4) 7.8 -17.7
PAT after share of profit / 2831.8 4004.9 2280.0 1296.7 1191.9
loss in associate and
minority interest
Table 8: Consolidated P/L Account
CONSOLIDATED CASH FLOW STATEMENT

Table 9: Consolidated Cash Flow Statement

.
Particulars FY 2009 FY 2008 FY 2007 FY 2006 FY 2005

Cash Flow Summary
Cash and Cash
Equivalents at Beginning 5237.7 8,749.1 1,389.6 375.7 227.5
of the year
Net Cash from Operating

4569.8 2,574.7 1906.4 141.8 1116.7
Activities
Net Cash Used in (11,393.5

(20307.3) (3,674.8) 4607.4 -2595.0
Investing Activities )
Net Cash Used in

12517.4 5,928.1 9,629.5 5438.3 1477.9
Financing Activities
Change in Foreign
Currency Translation 1341.7 (-622.0) (-501.3) - -
Reserve on Consolidation
Net Inc/(Dec) in Cash and

(1878.4) (3512.1) 7359.7 0.0 148.6
Cash Equivalent
Unrealized Exchange
Difference on Foreign
57.7 (0.5) (0.2) - -
Currency Cash and Cash
Equivalents
Cash and Cash

Equivalents on
399.7 1.9 - - -
Consolidation of new
subsidiaries
Cash and Cash

Equivalents at End of the 3758.9 5237.7 8749.1 1364.9 375.7
year
INTRA FIRM TREND ANALYSIS

.
FY FY FY FY FY
2009 2008 2007 2006 2005
Sales 100 70.7474 51.442 42.7902 33.2654
EBIT 100 121.352 77.9842 45.9343 46.1226
PAT 100 147.799 83.0282 47.7618 44.8232
Current Assets 100 88.4408 89.7442 45.492 26.934
Current Liabilities 100 55.9243 43.9425 32.1885 24.7239
Gross Fixed Assets 100 56.4269 34.452 27.1442 17.1104
Net Assets 100 69.0891 53.8574 33.1328 19.1482
Total Assets 100 66.5594 51.9522 32.9513 20.2196
Table 10: Trend Analysis (Annexure)
Trend Percentage
160
140
120
100
80
60
40
20
0
years
Sa l es EBIT PAT Current As s ets

Current Li a bi l i ties Gros s Fi xed As s ets Net As s ets Tota l As s ets
Figure 12: Trend Analysis
Interpretation:
From The above graph it is very much clear that jubilant is growing over the period of 2005-
2009. There is an increase at fast pace in total assets, net assets, fixed assets, sales and current
liability in 2007-09 but EBIT and Profit after tax faced a down fall where current assets are
almost stagnent during 2007-2009.

.
Table 11: Comparative Balance Sheet

.
WORKING
CAPITAL
MANAGEMENT
SIGNIFICANCE

.
The corporate finance literature has traditionally focused on the study of long-term
financial decisions, particularly investments, capital structure, dividends and company
valuation decisions. However, short-term assets and liabilities are important components of
total assets and needs to be carefully analyzed. Management of these short-term assets and
liabilities warrants a careful investigation since the working capital management plays an
important role for the firm’s profitability and risk as well as its value. The optimal level of
working capital is determined to a large extent by the methods adopted for the management
of current assets and liabilities. It requires continuous monitoring to maintain proper level in
various components of working capital i.e. cash receivables, inventory and payables etc.
Efficient management of working capital is a fundamental part of the overall corporate
strategy to create the shareholders’ value. Firms try to keep an optimal level of working
capital that maximizes their value.
In general, from the perspective of Chief Financial Officer (CFO), working capital
management is simple and a straightforward concept of ensuring the ability of the
organization to fund the difference between the short term assets and short term liabilities.
However, a “Total” approach should be followed which cover all the company’s activities
relating to vendor, customer and product. In practice, working capital management has
become one of the most important issues in the organizations where many financial
executives are struggling to identify the basic working capital drivers and the appropriate
level of working capital. Consequently, companies can minimize risk and improve the overall
performance by understanding the role and drivers of working capital.
The main objective of working capital management is to maintain an optimal balance

between each of the working capital components. Business success heavily depends on the
ability of financial executives to effectively manage receivables, inventory, and payables.
Firms can reduce their financing costs and/or increase the funds available for expansion
projects by minimizing the amount of investment tied up in current assets. Most of the
financial managers’ time and effort are allocated in bringing non-optimal levels of current
assets and liabilities back toward optimal levels. An optimal level of working capital would
be the one in which a balance is achieved between risk and efficiency. It requires continuous
monitoring to maintain proper level in various components of working capital i.e. cash
receivables, inventory and payables etc.

.
MANAGERIAL USEFULNESS
In the context of financial statements and accounting analysis, the term "working
capital"
Refers to the difference between current assets and current liabilities. For accounting
Purposes, net working capital is calculated by taking the current assets shown on the left
Side of a firm's balance sheet (gross working capital) and subtracting the current liabilities
Shown on the right side of the balance sheet. The remainder is firm's net working capital.
Basically speaking, the calculation of working capital shows the net amount of capital
employed in the firm which is not invested in long-term assets, like plant and equipment,
But in various short-term items, like cash and inventories, required for the day-to-day
operations of the firm. Aside from cash and inventories, the major items which appear in the
calculations of working capital are generally accounts receivable and accounts
Payable.
Working capital management refers to all management decisions and actions that
ordinarily influence the size and effectiveness of the working capital. It is concerned with the
most effective choice of working capital sources and the determination of the appropriate
levels of the\current assets and their use. It focuses attention to the managing of the current
assets, current liability and their relationships that exist between them. In other words,
working capital management may be defined as the management of a firm’s liquid assets viz-
cash, marketable securities, accounts receivable\ and inventories.
In the present day context of rising capital cost and scarce funds, the importance of
working capital needs special emphasis. It has been widely accepted that the profitability of a
business concern likely depends upon the manner in which its working capital is managed.
The inefficient management of working capital not only reduces profitability but ultimately
may also lead a concern to financial crisis. On the other hand, proper management of working
capital leads to a material savings and ensures financial returns at the optimum level even on
the minimum level of capital employed. We also know that both excessive and inadequate
working capital is harmful for a firm. Excessive working capital leads to un-remunerative use
of scarce funds.
On the other hand inadequate working capital usually interrupts the normal operations
of a
Business and impairs profitability. There are many instances of business failure for
inadequate working capital. Further, working capital has to play a vital role to keep pace with
the scientific and technological developments that are taking place in the concerned area of
pharmaceutical industry. If new ideas, methods and techniques are not injected or brought
into practice for want of working capital, the concern will certainly not be able to face
competition and survive. In this context, working capital management has a special relevance

.
and a thorough investigation regarding working capital practice in the pharmaceutical

industry is of utmost importance.
OBJECTIVE
The management of current assets is similar to that of fixed assets in the sense that in both
cases a firm analysis their effects on its return and risk. The management of fixed assets,
however differs in three important ways:
 In managing fixed assets , time is a very important factor; consequently, discounting

and compounding techniques play a significant role in capital budgeting and a minor
one in management of current assets.
 The large holding of current assets, especially cash, strengthens the firm’s liquidity
position and reduces riskiness, but also reduces the overall profitability. Thus a risk
return trade off is involved in holding current assets.
 Levels of fixed as well as current assets depend upon expected sales, but it is only
current assets which can be adjusted with sales fluctuations in the short run. Thus the
firm has a greater degree of flexibility in managing current assets.
The objectives of the study are as follows:
 To analyze the working capital management of the company.

 To determine the operating cycle of the unit.
 To know the future need of working capital in the running organization.
 To render recommendations for the effective management of working capital.
SCOPE OF THE STUDY
The study is conducted at “JUBILANT - GAJRAULA” for 6 weeks duration. The study of
W.C. management is purely based on secondary data and all the information is available
within the company itself in the form of records. To get proper understanding of this concept,
I have done the study of the balance sheets, profit and loss a/c’s, cash accounts, trial balance,
cost sheets.
I have also conducted the interviews with employees of accounts and finance
department and stores department. So, scope of the study is limited up to the availability of
official records and information provided by the employees. The study is supposed to be
related to the period of last five years.

.
RESEARCH METHODOLOGY
To recognize the various type of information which are necessary for the study of
working capital management:
 Collection of data from various department of JUBILANT to analyze the working

Capital management of VTM.
 For understanding the various reports, personal interviews are conducted.
 With the help of various techniques like:
o Operating Cycle analysis
o Ratio Analysis
o Trend analysis
o Schedule of changes in working capital
o The overall position of JUBILANT is studied and analyzed
 Suggestions are given on the basis of findings for better understanding of working
capital management.
SOURCES OF INFORMATION
 Primary data – The personal interview with senior officials and various members of
finance and accounts department and also with other departments and collected the
data.
 Secondary Data – All the details necessary for the study was available within the
company itself.
LIMITATIONS OF THE STUDY
 As registered office purchase deal with the income, assets, liabilities and marketing
issues, So more detailed information cannot be received about these.
 Cash from debtors are collected by the registered office, So efforts for collection of
debtors cannot be clearly known from JUBILANT, Gajraula.

.
 Investment of funds are also made by Registered office, so it becomes difficult to

know that how much investment is made in different ways for continuous availability
of funds.
 All the data was in consolidated form of all the jubilant industries as a whole, so
intense information about Gajraula unit could not be received.
CONCEPTUAL DISCUSSION
WORKING CAPITAL
Firms need cash to pay for all their day-to-day activities. They have to pay wages, pay
for raw materials, pay bills and so on. The money available to them to do this is known as the
firms working capital. The main sources of working capital are the current assets as these are
the short-term assets that the firm can use to generate cash. However, the firm also has
current liabilities and so these have to be taken account of when working out how much
working capital a firm has at its disposal.
DEFINITION
Working capital, also known as "WC", is a financial metric which represents

operating liquidity available to a business. Along with fixed assets such as plant and
equipment, working capital is considered a part of operating capital. It is calculated as current
assets minus current liabilities. If current assets are less than current liabilities, an entity has a
working capital deficiency, also called a working capital deficit. Net working capital is
working capital minus cash (which is a current asset) and minus interest bearing liabilities
(i.e. Short term debt). It is a derivation of working capital, that is commonly used in valuation
techniques such as DCFs (Discounted cash flows).
Working capital is therefore:-
WORKING CAPITAL = Current Assets - Current liabilities

||
stock + debtors + cash
equation 1: Working capital

.
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.
Thus working capital is the same as net current assets, and is an important part of the top half
of the firm's balance sheet. It is vital to a business to have sufficient working capital to meet
all its requirements. Many businesses have gone under, not because they were unprofitable,
but because they suffered from shortages of working capital.
Figure 13 : Working Capital
WORKING CAPITAL MANAGEMENT IN – AN APRAISAL
Liquidity is a complex phenomenon. Management of liquidity is probably the most

important survival skill required in financial management. In the absence of adequate
liquidity firms become technically insolvent and the rest of the apparatus of financial analysis
becomes redundant. Inadequate and excess working capital are the two extreme of the
continuum of liquidity management. While inadequate working capital results in risk of
inability in meeting payments schedules, excess working capital adversely effects the
profitability. A sound and systematic approach to the working capital management should
ensure trade off between liquidity and profitability.
CURRENT ASSETS
A balance sheet item which equals the sum of cash and cash equivalents, accounts receivable,
inventory, marketable securities, prepaid expenses, and other assets that could be converted
to cash in less than one year. A company's creditors will often be interested in how much that
company has in current assets, since these assets can be easily liquidated in case the company
goes bankrupt. In addition, current assets are important to most companies as a source of
funds for day-to-day operations.

.
Functions of current assets

 Internal function – to secure uninterrupted circulation of assets and capital
 Liquidity function – to secure solvency
 Reserve function – some current assets are a reserve against different risks
 Security function – some assets can be collateral to be pledged when applying for
loans.
 External function – entering economical and financial relations with business
environment by means of current assets Current liability
These are the claims of outsiders which are expected to mature
for payment with in an accounting year and include creditors,
bills payable, and outstanding expenses.

.
CURRENT LIABILITY
These are the claims of outsiders which are expected to mature for payment with in an
accounting year and include creditors, bills payable, and outstanding expenses.
TYPES OF WORKING CAPITAL
working capital
Basis of Concept Basis of Time
Gross Net Permanent/ Temporary

Working Working Fixed Working /Veriable
Capital Capital Capiital Working Capital
1. Regular WC
1. seasonal WC
2. Resesrve WC
2. Special WC
Figure 14: Types of Working Capital
ON THE BASIS OF CONCEPT:
There are two concepts of working capital: gross and net.
1. Gross working capital:

It refers to the firms investment in current assets.
2. Net working capital:

It refers to the difference between current assets and current liabilities.

.
ON THE BASIS OF TIME:
There are two types of working capital on timely basis: permanent and temporary.
1. Permanent / Fixed working capital:
It is the minimum level of current assets which is continuously required by a firm to carry on
its business operations. Depending upon the changes in in production and sales the need for
working capital over and above working capital will fluctuate.
Amount of working capital
Temporary WC
Permanent WC
Time
Chart 1: Permanent And Temporary Working capital
2.Temporary working capital
Fluctuating or Variable or Temporary Working Capital is the extra working capital needed to
support the changing production and sales activities of the firm.
Both kinds of working capital are necessary to facilitate production and sale through the
operating cycle. But the firm to meet liquidity requirements that will last only temporarily
creates the temporary working capital. The above figure illustrates differences between
permanent and temporary working capital. It is shown that permanent working capital is
stable over time while temporary working capital is fluctuating- sometimes increasing and
sometimes decreasing.

.
FACTORS DETERMINING WORKING CAPITAL
1) Nature of the Industry

2) Demand of Industry
3) Cash requirements
4) Nature of the Business
5) Manufacturing time
6) Volume of Sales
7) Terms of Purchase and Sales
8) Inventory Turnover
9) Business Turnover
10) Business Cycle
11) Current Assets requirements
12) Production Cycle
13) Credit control
14) Inflation or Price level changes
15) Profit planning and control
16) Repayment ability
17) Cash reserves
18) Operation efficiency
19) Change in Technology
20) Firm’s finance and dividend policy
21) Attitude towards Risk

.
WORKING CAPITAL POLICIES

The important question in respect of working capital is how to raise it. Traditionally,
only short term sources are used to raise finance for working capital. But while analyzing the
question of working capital, it seems the question is of raising working capital either from
short-term sources or partly from long-term sources and partly from long-term sources.
Thus the question of financing working capital has two aspects:

(1) The sources of from which it can be raised.
(2) The short-term sources of working capital.
An important decision relating to working capital management is the sources from which
working capital is to be raised. Generally, it is believed that funds for acquiring fixed assets
should be raised from long-term sources and short-terms sources should be utilized for
raising working capital.
Total assets
Fluctuating current assets
permanent current assets
Fixed assets
o Time
chart 2: Investment Policies

.
There are different approaches for determining the proportion in which short-term and long-
term sources should be used to finance fixed assets and current assets. There are three such
approaches:
(1) Hedging Approach or Matching Approach

(2) Conservative Approach
(3) Aggressive Approach.
(1) HEDGING APPROACH:
The maturity of the source of funds is matched with the life of the asset. Funds for
acquiring an asset having an estimated life of 5 years should be raised by a 5 year loan from
the bank. If goods are expected to be sold within 30 days, then finance is obtained by a bill
payable for 30 days.
Under this approach, funds for acquiring fixed assets and permanent current assets
should be acquired with long-term funds like long-term loan or issue of debentures or equity
shares. In traditional language, it can be said that fixed assets and permanent current assets
should be financed by long-term funds and for temporary working capital short term funds
should be used.
The above figure shows that for financing fixed assets and permanent current assets,
long-term funds are used, while for variable current assets, short-term funds are utilized as
and when necessary.’ Short term borrowings would be paid off with surplus cash. For
expansion and development, when permanent financing is needed, it should be acquired from
long-term sources only.
Short term Capital
Fluctuating Current Assets

Long term Debt +Equity capital
Permanent current Assets
Fixed assets
time
chart 3: Hedging Approach

.

.
(2) CONSERVATIVE APPROACH:
This approach depends upon long-term funds to a great extent. It suggests that in addition to
fixed assets and permanent current assets, even a part of variable current assets should also be
financed from long-term sources. The short term sources are used only to meet the peak
seasonal requirements. During off season, the surplus fund is kept-invested in marketable
securities.
The figure shows the conservative approach indicating that for financing fixed assets,
permanent current assets and for a part of variable current assets, funds are raised from long-
term sources. Only for meeting peak period demand, short-term funds are raised. The element
of risk is the minimum in this policy, because the maturity of long-term liability is known
much in advance and provision can be made for its repayment. But the policy is expensive
and reduces profitability.
Short term Capital

Fixed assets
o time
chart 4: Conservative Approach
(3) AGGRESSIVE APPROACH:
This policy depends more on short-term funds. More short-tern funds are used particularly
for variable current assets and a part of even permanent current assets; the funds are raised
from short term sources.
Short term Capital

Fixed assets

Fixed assets
o time
chart 5: Aggressive Policy
OPERATING CYCLE
we know that a firm should aim at maximising the wealth of its shareholders. In its endeavour
to do so, a firm should earn sufficient returns from its operations. Earning a steady amount of
profit requires successful sales activity. The firm has to invest enough funds in current assets
for generating sales. Current assets are needed because sales do not convert in to cash
instantaneously. There is always an operating cycle involved in the conversion of sales into
cash.
There is a difference between current assets and fixed assets in terms of their liquidity. A firm
requires many years to recover the initial investment in fixed assets such as plant and
machinery or land and buildings. On the contrary, investment in current assets is turned over
many times in a year. Investment in current assets such as inventories and debtors (account
receivables) is realized during the firm’s operating cycle that is usually less than a year.
“Operating cycle is the time duration required to convert sales, after the conversion of
resources into inventories, into cash.”
The operating cycle of a manufacturing company involves three phases:
 Acquisition of resources:
Such as raw material, labour, and fuel etc.
 Manufacture of the product:
This includes conversion of raw material into work- in- progress into finished goods.
 Sales of the product:
Either for cash or on credit sales create account receivable for collection.
These phases affect cash flows, which most of the time, are neither synchronized nor certain.
They are not synchronized because cash outflow usually occur before cash inflows. Cash
inflows are not certain because sales and collections which give rise to cash inflows are
difficult to forecast accurately. Cash outflows, on the other hand, are relatively certain. The
firm is, therefore, required to invest in current assets for a smooth, uninterrupted functioning.
It needs to maintain liquidity to purchase raw material and pay expenses such as wage and
salaries, other manufacturing, administration and selling expenses and taxes as there is hardly

.
a matching between cash inflows and outflows. Cash is also held to meet any future
exigencies. Stocks of raw material and work-in-process are kept to ensure smooth production
and to guard against non-availability of raw material and other components. The firm holds
stock of finished goods to meet the demand of customers on continuous basis and sudden
demand from some customers. Debtors are credited because goods are sold on credit for
marketing and competitive reasons. Thus, a firm makes adequate investment in inventories
and debtors, for smooth, uninterrupted production and sale.
LENGTH OF THE OPERATING CYCLE:
PURCHASES PAYMENT CREDIT COLLECTION
RMCP+ WIPCP+ FGCP
INVENTORY CONVERSION RECEIVABLES CONVERSION
PERIOD PRICE
AADF
GROSS OPERATING CYCLE
Data analysis
PAYABLE NET OPERATING CYCLE
Figure 15: Length of Operating Cycle
The length of the operating cycle of a

manufacturing firm is the sum of Inventory
conversion period (ICP) The inventory conversion
period is the total time needed for producing and
selling the product. Typically, it includes:
 Raw material conversion period (RMCP)

 Work- in- progress conversion period
(WIPCP)
 Finished goods conversion period (FGCP)
 Debtors conversion period (DCP)

.
The debtors conversion period is the time required to collect the outstanding amount from the
customers.
The total of inventory conversion period and debtors conversion period is referred to as Gross
Operating Cycle. In practice, a firm may acquire resources on credit and temporarily
postpone payment of certain expenses.
Payables, which the firm can defer, are spontaneous sources of capital to finance investment
in current assets. The creditors deferral period is the length of time the firm is able to defer
payment on various resources purchases. The difference between gross operating cycle and
payable deferral period is the net operating cycle.
GROSS OPERATING CYCLE:
The firm’s gross operating cycle can be determined as inventory conversion period plus
debtors conversion period. Thus, GOC is given as Figure 16: Operating Cycle
follows:
Gross operating cycle = inventory conversion period + debtors conversion period
GOC = ICP + DCP
equation 2: Gross Operating Cycle
Inventory conversion period:
The inventory conversion period is the sum of raw material conversion period, work – in –
progress conversion period and finished goods conversion period.
ICP = RMCP + WIPCP + FGCP
equation 3: Inventory Conversion Period
Raw material conversion period:
The raw material conversion period is the average time period taken to convert material in to
work in progress. RMCP depends upon : (a) raw material consumption per day, (b) raw
material inventory. Raw material consumption per day is given by the total raw material
consumption divided by the number of days in the year. The raw material consumption is
obtained when raw material inventory is divided by raw material consumption per day.
Similar calculations can be made for other inventories, debtors and creditors. The following
formula can be used:
Raw material conversion period = raw material inventory / raw material consumption / 360
RMCP = RMI / RMC/360

equation 4: Raw Material Conversion Period

.
Work- in- progress conversion period:
Work- in- progress conversion period is the average time taken to complete the semi- finished
or work- in- progress. It is given by the formula:
Work- in- conversion period = work in process inventory / cost of production / 360
WIPCP = WIPI / COP / 360

equation 5: Work in process Conversion Period
Finished goods conversion period:
Finished goods conversion period is the average time taken to sell the finished goods. FGCP
can be calculated as follows:
Finished goods conversion period = finished goods inventory / cost of goods sold / 360
FGCP = FGI / CGI / 360

equation 6:Finished goods conversion period
Debtors conversion period:
Debtors conversion period is the average time taken to convert debtors into cash. DCP
represents the average collection period. It is calculated as follows:
Debtors conversion period = debtors * 360 / credit sales
Creditors deferral period:
Creditors deferral period is the time taken by the firm in paying its suppliers. CDP is given as
follows:
Creditors deferral period = creditors * 360 / credit purchase
NET OPERATING CYCLE:

.
Net operating cycle is the difference between gross operating cycle and payables deferral
period. Net operating cycle is also referred to as cash conversion cycle.
Net operating cycle = gross operating cycle – creditors deferral period
NOC = GOC – CDP
WORKING CAPITAL DIMENSIONS:

This Section in fact, deals with the theoretical aspects of different Working Capital Policy.
As usual, we have gone through four main dimensions of Working Capital Management:
Cash Management, Management of Accounts Receivables, Management of Inventory and
Management of Accounts Payables.
CASH MANAGEMENT
The most important of all the liquidity responsibilities of the financial manager is the
managing of cash, both flows and balances. Cash is the benchmark of liquidity. This
underscores the fact that the most important test of a financial manager is to maintain an
adequate reserve of cash for all times so as to absorb the shocks of sporadic receipts and
payments and meet the needs of emergency situation, otherwise paucity of cash even on a
temporary phase may be cause a trouble. Almost all of the companies manage liquidity to
provide a smooth production process and to reduce the cost of inefficient management. One of
the imperative aspects of Cash Management is Cash Collection Mechanism. Float is
considered to be one of the important aspects of Collection Mechanism. most of the
companies that sales goods on credit collect cash through marketing agent that means the
Billing & Mail float for these firms are zero.
Concentration banking:
It refers to a system of centralizing corporate cash with a goal of controlling the movement of
funds and minimizing idle cash balances.
Cash forecasts:
A firm should forecast cash to anticipate cash surplus and shortage, estimate timing of
borrowing and lending of funds and have better control over funds.
Hedging Strategies:
Hedging is important to protect the uncertainty associated with obtaining cash balances in
time. One common strategy for hedging is funding the firm’s expected financing needs by the
establishment of a reserve credit line with a bank or group of banks.
Models of Cash Management:

There are different models that address the issue like proper management of temporary cash
surplus and shortage. These models provide optimum strategies for a given time pattern of
future cash flows. These Models are the Baumol Mode, the Beranek Model, the Miller-Orr
Model, and the Stone Model.

.
RECEIVABLE MANAGEMENT:
Receivables occupy the second place, in order of investment, among the various
components of working capital in manufacturing concerns. The manipulation of receivables
is to push up sales and ultimately profits by allowing certain credit to the potential customers
who otherwise may find it difficult to make cash purchases. Moreover, receivables are being
near cash item improved the liquidity position of an enterprise. The financial significance of
credit transaction is evidenced by statistics reporting that 20 to 25 percent of the typical
manufacturer's total asset is receivables. As we know, the emergence of receivables in
business operation cerates revenue and cost. Hence, the volume, composition and movements
of receivables are required to be so designed and maintained that these ultimately helps
maximization of the value of a firm which is the long standing and accepted principle of
financial management.
Credit Granting Decision:

One of the major aspects of Accounts Receivables is Credit Granting Decision. If the
firm fails to identify the appropriate customers, it faces severe problem to sustain in the long
run. There are different approaches to Credit Granting Decisions. The traditional method is 5
C’s (Capital, Character, Collateral, Capacity and Condition), which is very popular method
for quick credit granting measuring creditworthiness of applicant. An alternative to this
traditional approach is Judgmental Scoring approach. There are two basic versions of these
systems. One is Checklist System and the other one is Weighted Scoring System.
Terms of Sale decision:

A firm should determine the appropriate terms of sale based on the buyer’s financial
conditions and firms expected cash flow.
Factoring:
In advanced countries Factoring is gaining more and more popularity. In factoring the firm
sells its’ receivable asset to the financial intermediary (the factor) and obtain financing.
Default in Accounts Receivable:

The important policy implication from firm’s point of view is that when the buyer defaults,
future cash flows to the seller are delayed, and their amount may be reduced relative to
payment in non-default. Thus default to payment may lead a firm to financial crisis.
Controlling & Monitoring Accounts Receivables:

In monitoring the collection (turnover) of accounts receivable, management wants to use a
methodology that measures the relationship between the firm’s receivables and their sales,
regardless of fluctuations in sales level. Ideally, the methodology meets at least three criteria;
it should not signal a deviation from expectations in the payments behaviour of the firms
customers when none has occurred. It should signal a deviation when one has occurred. It
should be simple to implement and to understand.
INVENTORY MANAGEMENT
Inventory represents an investment and must, therefore, compete with other
investment of the

.
firm's. As a consequence, total investment in inventories must be related to some optimum

investment level that contributes to the overall wealth maximization object of the
shareholders. Since the proper management of inventory has a significant influence on
profitability and liquidity, to a large extent, the success and failure of a business depends
upon its inventory management performances.

.
Composition of Inventory:
In most of the case, a firm maintains raw material, Working-in-process and Finished goods as
inventory. Depending on the nature of Business, proportion of inventory held by the firm
varies. Even the composition of inventory also varies. In our survey it has been observed that
almost all firms hold a huge proportion of Inventory in Current Assets.
Procurement of Inventory:
Procurement of inventory is another important aspect of Inventory Management. For
Pharmaceutical industry the proportion of Import to Local procurement varies within the
range of 60% to 40%, 75% to 25%, 80% to 20%.
Costing Policy of Inventory:

There are costs involved in maintaining Inventory. The main two costs are: Carrying cost and
Ordering Costs. Carrying costs are directly proportional to the level of inventory carried by
the firm and include the opportunity cost of inventory investment, insurance on the inventory,
storage costs of inventory investment, and so forth. Order costs are directly proportional to
the number of orders and incurs in placing & checking an order. Costs of this sort include set-
up costs on machines to produce inventory, costs of generating a purchase order for the
inventory. In addition to these there are Obsolesces costs and Stock out costs.
Lead Time for Inventory:

The lead-time for inventory, in four out of five cases, it was found that it takes 1 to 4 months
to import raw material through ship, while in case of procurement the raw material from local
market usually it takes 15 days on an average for most of the firms
Static versus Dynamic Problem:

Static Inventory Problem is defined as a situation where the goods have a one period life
meaning that they cannot be carried over in the next period. The opposite is the case with
Dynamic inventory situation where the firm can use the inventory for more than one period.
In our survey we found that the life cycle or the expiration of the inventory.
Replenishment Rate for Inventory:

An infinite replenishment defined as a situation where the order quantity is obtained at once.
In opposite, finite replenishment is defined as gradual pilling up of inventory.
Safety Stock Determination:

Although all the firms maintains the huge level of safety stock to avoid stock out situations,
these firms do not follow any structured or any other policy in determining the safety stock
level. Past experience of the manager and their subjective judgments are the main to
parameters considered.
Stock out Situation:

Since these firms maintain a large safety stock, they have yet to face any major stock out
situation.

.

.
Inventory Controlling Mechanism:

If the firm fails to control the flow of inventory, it will definitely incur some cost in operation
process. There are different methods available for inventory controlling. Physical control and
Stock verification are the two most popular methods. A few firms are also using budgetary
control. All the companies use “First in First out” or FIFO method for valuation inventory.
MANAGEMENT OF ACCRUALS AND PAYABLE
Accounts Payable:
A firm can utilize this fund for financing purpose since it is termed as cost free source of
fund. Proper Management of Accruals, in fact, can reduce the dependency on Bank loan. The
trade credit is one of the main tools for financing working capital. There are three typical
policies for the payment of invoices. The First policy of payment is made on the latest date
will allow the buyer to take the cash discount offered in the sellers terms of sale. The Second
way of generating additional short –term financing form trade creditors is to delay payment to
trade creditors beyond the discount date. The Third policy is to pay the suppliers beyond the
due date. This strategy is called stretching accounts payable.
Accruals:
However, firms also incur other types of liabilities for which immediate payments are not
required, like the labour of executive and hourly employees, accumulate interest expense on
borrowed funds etc. Any such accrual involves a delay in payment and thus it is a potential
source of financing. Our survey result indicates that in case of accruals payment companies
usually pay on due date.

.
RATIO ANALYSIS
Ratio analysis is the powerful tool of financial analysis. A ratio is defined as “ the indicated
quotient of two mathematical expressions” and as “ the relationship between two of more
things”. Several ratios are calculated from accounting data and can de grouped into various
categories:
 Liquidity ratios
 Leverage ratios
 Activity ratios
 Profitability ratios
Liquidity ratios measures the firm’s ability to meet its current obligations; leverage ratios
shows the proportion of debt and equity in financing the firm’s assets; activity ratios reflect
the firm’s efficiency in utilising its assets; and profitability ratios measure overall
performance and effectiveness of the firm. we will focus on basic ratio analysis . These ratios
were specially selected to evaluate working capital policy of the firms.
LIQUIDITY DIMENSION:
Liquidity ratio like current ratio, quick ratio and cash ratio, measures the ability of the firm to
meet its short-term obligations. These ratios establish relation between cash and other current
asset and current liabilities. Creditors are using these ratios to evaluate the creditworthiness of
a firm. These ratios also provide revels management’s policy in managing liquidity position
of the firm. Most common ratios under this category are described below:
CURRENT RATIO:
The current ratio is the measure of the firm’s short term solvency. It indicates the availability
of current assets in rupees for every one rupee of current liability. A ratio of greater than one
means that the firm has more current assets than current claims against them.
Current ratio is calculated by dividing current assets by current liabilities. As a conventional
rule, a current ratio of 2 to 1 is considered satisfactory.
Current ratio = current assets / current liability
equation 7: current Ratio
QUICK RATIO:
Quick ratio, also called acid test ratio, establishes the relationship between liquid assets and
current liabilities. An asset is liquid if it can be converted into cash immediately or reasonably
soon without a loss of value. Cash is the most liquid assets. Other assets that are considered

.
to be relatively liquid and included in quick assets are debtors and bills receivables and
marketable securities. Inventories are considered to be less liquid. Generally a quick ratio of
1 to 1 is considered to be satisfactory current financial condition. The quick ratio is found out
by dividing quick assets by current liabilities.
Quick ratio = [current assets – inventories] / current liabilities
equation 8: Quick Ratio
CASH RATIO:
Since cash is the most liquid asset, a financial analyst may examine cash ratio and its
equivalent to current liabilities. Trade investment or marketable securities are equivalent of
cash; therefore, they may be included in computation of cash ratio:
Cash ratio = [cash + marketable securities] / current liabilities
equation 9: Cash ratio
NET WORKING CAPITAL RATIO:

The difference between current assets and current liabilities excluding short term bank
borrowings is called net working capital(NWC) or net current assets(NCA). NWC is
sometimes used as a measure of firm’s liquidity. It is considered that, between two firms, the
one having the larger NWC has the greater ability to meet its current obligations. This is not
necessarily so; the measure of liquidity is a relationship, rather than the difference between
current assets and current liabilities. NWC, however, measures the firm’s potential reservoir
funds. It can be related to net assets or capital employed:
NWC ratio = Net Working capital / Net Assets
equation 10: Net Working Capital Ratio
EFFICIENCY DIMENSION:
Efficiency or Activity ratios are used to evaluate the efficiency, with which the firm manages
and utilizes its asset. These ratios also called the turnover ratios because they indicate the
speed with which the assets are converted or turnover into sales. Several ratios covered under
this category are as follows:
INVENTORY TURNOVER RATIO:

Inventory turnover indicates the efficiency of the firm in producing and selling its product. It
is calculated by dividing the cost of goods sold by average inventory:
Inventory turnover = cost of goods sold / average inventory
equation 11:Inventory Turnover Ratio

.
Average inventory = [opening inventory + closing inventory] / 2
The reciprocal of the inventory turnover gives average inventory holding in percentage term.
When the numbers of days in a year are divided by inventory turnover, we obtain days of
inventory holding(DIH):
DIH = average inventory * 360 / cost of goods sold
equation 12: Days Of Inventory Holding
If the figure of cost of goods sold is not available then inventory turnover can be computed as
sales divided by the average inventory or the year- end inventory.
Inventory turnover = Sales / Inventory
DIH = Inventory * 360 / sales
The manufacturing firms inventory consist of two more components:

 Raw materials; and
 Work in progress
To examine the efficiency with which the firm converts raw materials into work in process
and work in process into finished goods:
Raw material inventory turnover = Material Consumed / average raw material Inventory
equation 13: Raw material inventory turnover
Work in process inventory turnover = cost of production / average work in process inventory
equation 14: Work in process inventory turnover
DEBTORS TURNOVER RATIO:

Firm sells goods for cash and credit. Credit is used as a marketing tool by a number of
companies. When the firm extends credits to its customers, debtors, and created in the firm’s
accounts. Debtors are convertible into cash over a short period and, therefore, are included in
current assets. The liquidity position of the firm depends on the quality of debtors to a great
extent. Debtors turnover is found out by dividing credit sales by average debtors.
Debtors Turnover Ratio = credit sales / average debtors
equation 15: Debtors turnover Ratio
Debtors turnover indicates the number of times debtors turnover each year. Generally the
higher the value of debtors turnover, the more efficient is the management of credit.

.
If the information about credit sales and opening and closing debtors is not available then
debtors turnover can be calculated by dividing total sales by the year- end balance of debtors.
Debtors Turnover = sales / Debtors
INVESTMENT AND FINANCING POLICY RATIO
AGGRESSIVE INVESTMENT POLICY (AIP)
It results in minimal level of investment in current assets versus fixed assets. In contrast, a
conservative investment policy places a greater proportion of capital in liquid assets with the
opportunity cost of lesser profitability. In order to measure the degree of aggressiveness,
following ratio will be used:
AIP = Total Current Assets (TCA) / Total Assets (TA)
: Where a lower ratio means a relatively aggressive policy.
equation 16: Aggressive Investment Policy
AGGRESSIVE FINANCING POLICY (AFP)

It utilizes higher levels of current liabilities and less long-term debt. In contrast, a
conservative financing policy uses more long-term debt and capital. The degree of
aggressiveness of a financing policy adopted by a firm will be measured by:
AFP = Total Current Liabilities (TCL) / Total Assets (TA)
: Where a higher ratio means a relatively aggressive policy
equation 17: Aggressive Financing Policy

.
DATA
ANALYSIS

.
ANALYSIS AND INTERPRETATION
Financial management is that managerial activity which is concerned with the

planning and controlling the firm’s financial resources. The functions of raising funds,
investing them in assets and distributing returns earned from assets to the share holders are
respectively known as financing, investment and dividend decisions. A firm attempts to
balance cash inflows and outflows, while performing these functions, this is called liquidity
decisions and we add it in the list of important finance functions. Finance decisions or
functions include investment or long term assets mix decisions.
Finance functions call for skillful planning control and execution of firm’s activities.
Financier’s decision is second important function to be performed by Finance Manager. He
must decide when and how to acquire funds and meets the major financial decision. Current
assets management or working capital management is another important finance function.
ANALYSIS
 Ratio analysis is used to analyze the current financial position as well as the nature
and efficiency of working capital management of the company. Ratios related to
working capital are used for analysis.
 Schedule of changes in working capital, which shows changes in working capital, is
also used.
 Operating cycle implies the continuing flow from cash to suppliers, to inventory to
account receivables and back into cash.

.
SCHEDULE OF CHANGE IN WORKING CAPITAL
2013-14
particulars FY 2004 FY 2005 increase decrease

Current Assets, Loans & Advances
Inventories 1,314.28 1937.5 623.22 -
Sundry Debtors 1,421.00 1765.3 344.3 -
Cash & Bank Balances 227.45 375.7 148.25 -
Loans & Advances 768.7 1219.9 451.2 -
Total Current Assets, Loans & Advances (a) 3,731.43 5298.4 1566.97 0
Less Current Liabilities & Provisions
Liabilities 1386.18 2222.8 836.62 -
Provisions 228.5 730 501.5 -
Total liabilities & provisions (b) 1614.68 2952.8 1338.12 0
working capital (a - b) 2,116.75 2,345.60 2905.09 0.00
Increase in working capital. 2,905.09
Total 2905.09 2,905.09
Table 2: Schedule of Changes In Working Capital 2013-14
2013-14

Inventories 1937.5 3116.9 1179.4 -
Sundry Debtors 1765.3 2479.2 713.9 -
Loans & Advances 1219.9 1963.4 743.5
Total Current Assets, Loans & Advances (a) 5298.4 8949.1 3650.7 0
Liabilities 2222.8 2692.6 469.8 -
Provisions 730 1151.7 421.7 -
working capital (a - b) 2,345.60 5,104.80 4542.2 0.00
Total 4542.2 4,542.20

.
2013-14

Inventories 3116.9 3532.4 415.5 -
Sundry Debtors 2479.2 2948.1 468.9 -
Loans & Advances 1963.4 2424.7 461.3
8949.1 17,654.3
Total Current Assets, Loans & Advances (a) 0 8705.2 0
Liabilities 2692.6 2917.8 225.2 -
Provisions 1151.7 2330.3 1178.6 -
working capital (a - b) 5,104.80 12,406.20 10109 0.00
Total 10109 10,109.00
2013-14

Inventories 3532.4 4349.7 817.3 -
Sundry Debtors 2948.1 4257.8 1309.7 -
Cash & Bank Balances 8749.1 5237.7 3511.4
Loans & Advances 2424.7 3552.7 1128
17,654.30 17,397.9
Total Current Assets, Loans & Advances (a) 0 3255 3511.4
Liabilities 2917.8 3717.8 800 -
Provisions 2330.3 2961.3 631 -
Total liabilities & provisions (b) 5248.1 6679.1 1431 0
working capital (a - b) 12,406.20 10,718.80 4686 3,511.40
Total 4686 4,686.00

.
WORKING CAPITAL TREND
Year 2005 2006 2007 2008 2009

Total current assets 5298.4 8949.1 17654.3 17397.9 19671.8
Total current liabilities 2952.8 3844.3 5248.1 6679.1 11943.1
Working capital 2345.6 5104.8 12406.2 10718.8 7728.7
2905.0
Increase or decrease 9 4542.2 10109 1174.6 7537.9
Table 6: Working Capital Trend
25000
20000
15000 total current assets

total current liabilities
working capital
10000
increase or decrease
5000
0
2005 2006 2007 2008 2009
chart 6: Working Capital Trend

.
FINDINGS AND RECOMMENDATIONS

The primary goal of working capital management in a firm is to manage short-term funds
required for day to day business activities of a firm. The company is required effective
working capital management policy for a smooth, uninterrupted production and sales
activities.
Working capital position of JUBILANT is satisfactory, it can meet its short-term obligations
and through ratio analysis it is found that the company’s financial position is good. The
current ratio of the company is satisfactory. So short term solvency position is good. The
profitability of the company decreased over the year due to increase in manufacturing and
operating expenses, even though the profitability of the company is satisfactory. The
operating cycle increased compared to previous two years. It is due to increase in inventory
level.
CONCLUSION
It is clear that working capital plays an important role in the successful operations of a
company. If they manage current assets and current liabilities accordingly and efficiently they
can maintain adequate liquidity and profitability and thus they can prove ways for the success
of entire organization.
Working capital is considered to lifeblood and controlling nerve centre of business. So this
must be given the most importance. The efficiency of a firm to meet its current obligations
reflects how the company manages its working capital. The company’s working capital
position is good and it managing working capital effectively and efficiently. There is an
growth opportunity in the industry, through increasing its operational and overall efficiency it
can grab those opportunities effectively.

.
ANNEXTURES:
TREND ANALYSIS
FY FY FY FY FY
2009 2008 2007 2006 2005
Sales 35179.8 24888.8 18097.2 15053.5 11702.7
EBIT 4036.2 4898 3147.6 1854 1861.6
PAT 2698.6 3988.5 2240.6 1288.9 1209.6
Current Assets
19,671.80 17,397.90 17,654.30 8949.1 5298.4
Current
Liabilities 11943.1 6679.1 5248.1 3844.3 2952.8
Gross Fixed
Assets 42481.7 23,971.10 14,635.80 11531.3 7268.8
Net Assets 50,210.40 34,689.90 27,042.00 16,636.10 9,614.40
Total Assets 62,153.50 41,369.00 32,290.10 20,480.40 12,567.20

.
BIBLIOGRAPHY
A list of the written sources of information on a subject.

Bibliographies generally appear as a list at the end of a book or
article. They may show what works the author used in writing
the article or book, or they may list works that a reader might
find useful.
For the magazines.
 Annual report of the jubilant life science ltd of 2013-2014.

 Share and balance sheet is expressed fully.
 “Financial Management “ By Deepak Toshniwal (C.A)
 Capital working report review
For the web links.

 www.jubilant.com
 www.jubl.com
 investors@jubl.com

.
 http://www.jubl.com/uploads/downloads/79down_annualreport-
fy2014.pdf
WORD OF THANKS
I am indebted to my lovely parents, Mr. Jait Ram Singh and Mrs. Tara Devi without
whom I would not have been what I am today they always cooperate me and supported me
whenever I need them. I cannot set myself free for the debt of my Gurus and Guides who
showed me light of knowledge and lead me to the way of progress.
I am thankful to “UTTRAKHAND OPEN UNIVERSITY” for providing me a chance to
accomplish my MBA Degree and necessary support in completion of this project.
I am highly obliged to the company JUBILANT LIFESCIENCES LTD for allowing me to
accomplish my summer training project at its site.
I pay my special thanks to Mr. S.K. Gupta (HOD), and entire team of JUBILANT LIFE
SCIENCE LTD., Gajraula for providing all the needed information and due aid.

.
I am thankful to my mentor Mr. Deepak Toshniwal (C.A) under who helped me at every
step to groom my knowledge and experienced and give me proper guidance so that I can
make this worthy report.
I want to express my love to My Friends who are always there with me to challenge
hardships and help me to complete my project.

My Project On Working Capital

Загружено:

Сведения о документе

Оригинальное название

Авторское право

Доступные форматы

Поделиться этим документом

Поделиться или встроить документ

Параметры публикации

Этот документ был вам полезен?

Это неприемлемый материал?

Авторское право:

Доступные форматы

My Project On Working Capital

Загружено:

Авторское право:

Доступные форматы

.

SUMMER TRAINING PROJECT

Working Capital Analysis And Management

LUCK IS NOT BY CHANCE, IT IS

Working Capital Analysis And Management

SUBMITTED IN PARTIAL FULFILLMENT OF THE REQUIREMENT

UTTARKAHND OPEN UNIVERSITY

THEME OF SUMMER TRAINING

Working Capital Analysis And Management

The words are all I have, a single way to say.

I am thankful to “Uttrakhand Open University” for providing me a chance to accomplish

I am highly obliged to the company JUBILANT LIFESCIENCES LTD for allowing me to

“A special smile for all, A special love and grace,

Special all the aid, I can’t replace,

A special thanks from me to them,

For the special moments, I shared with them,,

Working Capital Analysis And Management

“DOING IS THE BEST WAY OF LEARNING”

THEME OF THE REPORT:

FOCUS OF THE REPORT:

Working Capital Analysis And Management

FEATURES OF THE REPORT:

This report contains a comprehensive treatment of topics on:

 Introduction of the company:

History, product portfolio, business policies, corporate sustainability.

 Weekly training module progress report.

 Working capital management:

Concepts, types of working capital, investment policies, dimensions etc.

 Supporting tables, charts, figures are included as needed.

Working Capital Analysis And Management

PART 1: COMPANY PROFILE

PART 2: TRAINING MODULE PROGRESS REPORT

Working Capital Analysis And Management

PART 3: FINANCIAL STRUCTURE AND ANALYSIS

PART 4: WORKING CAPITAL MANAGEMENT

PART 5: DATA ANALYSIS

a. Schedule of changes in working capital

Findings and recommendations

Working Capital Analysis And Management

Working Capital Analysis And Management

Figure 1: Logo..........................................................................Error! Bookmark not defined.

Working Capital Analysis And Management

Table 1: Share Capital..............................................................Error! Bookmark not defined.

Working Capital Analysis And Management

Chart 1: Permanent And Temporary Working capital................................................................2

Working Capital Analysis And Management

equation 1: Working capital.......................................................................................................2

Working Capital Analysis And Management

Working Capital Analysis And Management

NAME: Jubilant Life sciences Ltd.

INDUSTRY: Pharmaceutical and Life Sciences.

REGISTERED OFFICE: Bhartiagram, Gajraula, Distt Amroha 244

 Chairman and managing director  Directors

Shyam S. Bharatia Mr. Shardul S Shroff

Hari S. Bharatia Dr. Inder Mohan Verma

Shyamsundar Bang Mr. Abhay Havaldar

Working Capital Analysis And Management

It is constantly engaged in delivering value to its global customers through innovative

Jubilant is a leader in outsourcing. The growth strategy of our Company is anchored

Jubilant has strong culture of continuous improvement with identification of total

Working Capital Analysis And Management

1986 Incorporated as Vam Organic Chemicals Ltd.

1987 Initial Public Offering. Listing on leading exchanges of India.