Project (IBM Nitu)

FUNDING AND WORKING CAPITAL MANAGEMENT
PROJECT REPORT
ON
Project Funding and Working Capital Management for The New Age Creation. Submitted By NITU KUMARI Roll No. - 92 Master of Business Administration Of BATCH: 2009-2011 Institute of Business Management, Bela, Darbhanga, Bihar
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PROJECT ON
Project Funding and Working Capital Management for The New Age Creation.
In Partial Fulfillment of the requirement of MBA Program of Institute of Business Management, Bela
TABLE OF CONTENTS
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S.No
1. 2. 3. CERTIFICATE CERTIFICATE
Particulars
ACKNOWLEDGEMENT
4. 5. 6. 7. 8. 9. 10. 11. 12. 13.
CHAPTER 1 INTRODUCTION CHAPTER 2 OBJECTIVE AND SCOPE CHAPTER 3 METHODOLOGY CHAPTER 4 DATA COLLECTION CHAPTER 5 DATA ANALYSIS CHAPTER 6 FINDINGS CHAPTER 7 CONCLUSIUONS CHAPTER 8 RECOMMENDATIONS APPENDICES AND ANNEXURES BIBLOGRAPHY
CERTIFICATE
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This is to certify that the project entitled Project Funding and Working Capital Management for The New Age Creation Is a bonafied work done by Nitu Kumari under my supervision towards partial fulfilment of the management program course (MBA) of Institute of Business Management, Bela, Darbhanga Bihar.
Place : Noida Date:
Mr. Santosh Kumar Jha Project Guide
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CERTIFICATE
I, Nitu Kumari, certify that the project report entitled Project Funding and Working Capital Management for The New Age Creation. Is an original one and has not been submitted earlier either to Institute of Business Management, Bela , Darbhanga or to any other institution for fulfilment of the management program course (MBA).
Place: Darbhanga Date:
Nitu Kumari Roll No. : 92
ACKNOWLEDGEMENT
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This study is an integral part of our MBA program and to do this project in a short period Was a heavy task. Intention, dedication, concentration and hard work are very much Essential to complete any task. But still it needs lot of support, guidance assistance, co- Operation of people to make it successful.
I bear to imprint of my people who have given me their precious ideas and times to Enable me to complete the research and the project report. I want to thank them for their Continuous support at my research and writing efforts.
First of all I would like to offer special thanks and gratitude to Mr. Santosh Kumar Jha ( Manager Finance/Accounts) for his meaningful instructions, guidance, encouragement and Supervision to complete this project.
I also offer my sincere thanks to all the respondents who spared their invaluable time for Survey and especially Mr. K.C.Agrawal (Author and Industrialist) Internal Guide, who gave me his invaluable Suggestion for preparing this report.
With Regards
(Nitu Kumari)
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CHAPTER 1 INTRODUCTION
CHAPTER 1 INTRODUCTION
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The Role of Apparels & Accessories in India GDP has been phenomenon. The Apparels & Accessories one of the fastest growing sectors in India. The increase in the demand for garments and their accessories, powered by the increase in the income is the primary growth driver of the Garments industry in India. The introduction of tailor made finance schemes, easy repayment schemes has also helped the growth of the this sector.
Clothing can serve as protection from the elements. Clothes can also enhance safety during hazardous activities such as hiking and cooking, by providing a barrier between the skin and the environment. Further, clothes can provide a hygienic barrier, keeping toxins away from the body and limiting the transmission of germs.
It can be said that there are four primary factors in clothing comfort, identifiable as the '4 Fs of Comfort' (1) fashion (2) feel (3) fit and (4) function. In hot climates, clothing provides protection from sunburn or wind damage, while in cold climates its thermal insulation properties are generally more important. Shelter usually reduces the functional need for clothing. For example, coats, hats, gloves, shoes, socks, and other superficial layers are normally removed when entering a warm home, particularly if one is residing or sleeping there. Similarly, clothing has seasonal and regional aspects, so that thinner materials and fewer layers of clothing are generally worn in warmer seasons and regions than in colder ones.
LAYOUT OF THE PROJECT REPORT

The Project repot has been presented in eight chapters as per the following details : CHAPTER 1: INTRODUCTION
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It introduces the subject of research and brief about the garments industry in india and historical background and milestones achieved by The New Age Creation. CHAPTER 2: OBJECTIVE AND SCOPE It gives the back drop, objectives of the research and lays down its scope, classification of working capital management. Also it gives the reason, why I have chosen this topic for research and why it is important for the company. CHAPTER 3: METHODOLOGY This chapter provides the methodology for conduct of the study, the research tools used, sampling details and means of collecting primary and secondary data. CHAPTER 4: DATA COLLECTION Records the empirical data obtained from the responces to the questionnaire and structured interviews. CHAPTER 5: DATA ANALYSIS This chapter analyses the collected data from various angles and other inputs to the project research to bring out logical deductions. CHAPTER 6: FINDINGS Records the finding arrived at after the analysis done in chapter 5. CHAPTER 7: CONCLUSION This concludes the project report and takes a stock of achievements with reference to the objectives of the project. CHAPTER 8: RECOMMENDATIONS Based on the findings obtained, this chapter recommends specific actions for improving the working capital management at The New Age Creation.
ORGANIZATIONAL PROFILE:
The New Age Creation
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1.1
Background
was incorporated in Sec- 58, Noida in May 2007 and company
The New Age Creation
commenced its manufacturing operations from a leased factory in Phase -2 , Noida in June 2007. Starting with a modest equity base of Rs.17.50 lacs, and a first year sales turnover of just Rs.50 lacs in 2008-09, the company grew at a healthy pace to the level of Rs.8 Crores at the close of year 2010, marking an average annual growth rate of 210%. During the first year, the main business consisted that of Engaged in offering a wide range of Design and Washing, which is widely demanded by our customers across the national market. Company range includes Jeans, Denim & Non- Denim, Complete Garment Processing Unit, Washing and Finishing, Spray and Damaging Scraping. These are at par with the defined industry norms and standards. Moreover, these are available with in a number of sizes, colours, designs and patterns to meet the specific requirements of the clients. By the year 20010, the unit at Noida, an ISO 9001 certified factory, reached saturation levels in terms of achieving almost full potential in the selected market segments as well as in terms of lack of factory space and production capacity to diversify into allied areas. At that time we were into the following product segments.
Jeans, Denims & Non-Denims Complete Garment Processing Unit Washing And Finishing P.P.Sprey Damaging Scraping Moulding Crincal jeans
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The New Age Creation vision is to passionately satisfy the Indian consumers needs in fashion, style and value, across wearing occasions, in apparels and accessories, by anticipating trends and creating markets with the ultimate purpose of delivering superior value to all stakeholders. The company aims to be the undisputed leader in the lifestyle industry, delivering continued value growth for all stakeholders by honouring:
Transparency and trust Human touch Empowered teams Promises always honoured Responsive to customer needs Ownership for partner success Merchandise and design leadership Simple and speedy processes that enable quick decisions Effective communication
Our values
Integrity Commitment Passion Seamlessness Speed
1.2
Purpose of the Study
The purpose of the study is to understand the benefits that The New Age Creation have achieved from different marketing channels in last two - three years, mainly to identify the fashion, style and value trends, to estimate the future potential of Funding and Working Capital Management.
1.2
Objectives of the Study

To understand the significance of Funding and Working Capital Management. To find out which are the major marketing channels for concern sector. To identify the emerging garments trends in different age group.
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To identify the garments adoption trend in different age group. To estimate the future potential of garments.
1.4

Scope of the Study

To evaluate the awareness about the services among business houses. To help Expert to decide about the pricing & the overall marketing campaign about for their product. The study will be confined to the Noida Branch of The New Age Creation..
1.5
Duration of the Study
The duration of the study is 8 Weeks. 1.6 Limitations of the Study Duration of the study is very small for in-depth study on this topic. Sampling error may be there Information related to Funding and Working Capital Management may not be complete or 100% correct as most of the companies provide approximate figure We need to collect information through telephonic interview as per the company policy, respondents either dont give enough time to collect information or disconnect the line without listening.
Company sales are growing at steady pace however margin are under pressure as customers are demanding cost cutting and inputs costs are increasing. In order to create value for our customers we are trying to improve profitability and reduce input cost. Major Input as raw material at present is chemicals which company is sourcing from market, now company has decided to manufacture chemicals in house by putting up a chemicals manufacturing unit.
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Current financials of The New Age Creation ::

FINANCIAL PARAMETERS 31/03/08 (A) Net Sales (net of VAT/tax) Non operating income EBITDA Depreciation Net Cash Accruals Interest paid(to Banks and NBFCs) PBT PAT Total Debt Service obligation (Interest and Principal paid for the year) Short Term Borrowings capital) (working 21.50 5 26 16 18.40 2.18 38.25 20 22.77 83 84 0.98 5.6 1.5 68.29 69.04 0.99 5.0 2.25 0.98 1.94 5.57 124.03 3.62 120 5.49 25.83 2.07 46.47 21 25.61 107.63 110.53 0.97 5.3 2.36 1.20 1.81 5.55 132 4.17 44.00 19.00 75.62 32 35.00 176.10 160.48 1.10 6.5 3.48 1.84 2.36 5.74 156 27.77 50 13 3.59 6 6 4 2 31/03/09 (A) 65 11 3.84 5 5.30 2 2 6.04 (INR in MM) 31/03/10 31/03/11 (A) 80 15 4.04 8 5.93 6 4 10.34 (P) 115 27 5.50 17 7.25 15 11 13.24
Term Debt (other than working capital) Total Debt Adjusted Tangible Net Worth(ATNW) Net Fixed Assets Current Assets Current Liabilities Current Ratio EBIDTA Margins DSCR Total Debt/ATNW Total Debt/EBIDTA TOL/ATNW Total holding days for stock + debtors Net Working Cycle(days)
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CHAPTER 2: OBJECTIVE AND SCOPE
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CHAPTER 2 OBJECTIVE AND SCOPE

WORKING CAPITAL - Meaning of Working Capital Capital required for a business can be classified under two main categories via, 1) 2) Fixed Capital Working Capital
Every business needs funds for two purposes for its establishment and to carry out its day- today operations. Long terms funds are required to create production facilities through purchase of fixed assets such as p&m, land, building, furniture, etc. Investments in these assets represent that part of firms capital which is blocked on permanent or fixed basis and is called fixed capital. Funds are also needed for short-term purposes for the purchase of raw material, payment of wages and other day today expenses etc. These funds are known as working capital. In simple words, working capital refers to that part of the firms capital which is required for financing short- term or current assets such as cash, marketable securities, debtors & inventories. Funds, thus, invested in current assts keep revolving fast and are being constantly converted in to cash and this cash flows out again in exchange for other current assets. Hence, it is also known as revolving or circulating capital or short term capital. CONCEPT OF WORKING CAPITAL There are two concepts of working capital: 1. 2. Gross working capital Net working capital
The gross working capital is the capital invested in the total current assets of the enterprises current assets are those Assets which can convert in to cash within a short period normally one accounting year.
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CONSTITUENTS OF CURRENT ASSETS 1) 2) 3) 4) 5) Cash in hand and cash at bank Bills receivables Sundry debtors Short term loans and advances. Inventories of stock as: a. b. c. d. Raw material Work in process Stores and spares Finished goods
6. Temporary investment of surplus funds. 7. Prepaid expenses 8. Accrued incomes. 9. Marketable securities. In a narrow sense, the term working capital refers to the net working. Net working capital is the excess of current assets over current liability, or, say: NET WORKING CAPITAL = CURRENT ASSETS CURRENT LIABILITIES. Net working capital can be positive or negative. When the current assets exceeds the current liabilities are more than the current assets. Current liabilities are those liabilities, which are intended to be paid in the ordinary course of business within a short period of normally one accounting year out of the current assts or the income business. CONSTITUENTS OF CURRENT LIABILITIES 1. 2. 3. Accrued or outstanding expenses. Short term loans, advances and deposits. Dividends payable.
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4. 5. 6. 7.
Bank overdraft. Provision for taxation , if it does not amt. to app. Of profit. Bills payable. Sundry creditors.
The gross working capital concept is financial or going concern concept whereas net working capital is an accounting concept of working capital. Both the concepts have their own merits. The gross concept is sometimes preferred to the concept of working capital for the following reasons: 1. 2. 3. 4. It enables the enterprise to provide correct amount of working capital at correct time. Every management is more interested in total current assets with which it has to operate then the source from where it is made available. It take into consideration of the fact every increase in the funds of the enterprise would increase its working capital. This concept is also useful in determining the rate of return on investments in working capital. The net working capital concept, however, is also important for following reasons: It is qualitative concept, which indicates the firms ability to meet to its operating expenses and short-term liabilities. IT indicates the margin of protection available to the short term creditors. It is an indicator of the financial soundness of enterprises. It suggests the need of financing a part of working capital requirement out of the permanent sources of funds.
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CLASSIFICATION OF WORKING CAPITAL Working capital may be classified in to ways: o o On the basis of concept. On the basis of time.
On the basis of concept working capital can be classified as gross working capital and net working capital. On the basis of time, working capital may be classified as: Permanent or fixed working capital. Temporary or variable working capital
PERMANENT OR FIXED WORKING CAPITAL Permanent or fixed working capital is minimum amount which is required to ensure effective utilization of fixed facilities and for maintaining the circulation of current assets. Every firm has to maintain a minimum level of raw material, work- in-process, finished goods and cash balance. This minimum level of current assts is called permanent or fixed working capital as this part of working is permanently blocked in current assets. As the business grow the requirements of working capital also increases due to increase in current assets. TEMPORARY OR VARIABLE WORKING CAPITAL Temporary or variable working capital is the amount of working capital which is required to meet the seasonal demands and some special exigencies. Variable working capital can further be classified as seasonal working capital and special working capital. The capital required to meet the seasonal need of the enterprise is called seasonal working capital. Special working capital is that part of working capital which is required to meet special exigencies such as launching of extensive marketing for conducting research, etc.
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Temporary working capital differs from permanent working capital in the sense that is required for short periods and cannot be permanently employed gainfully in the business. IMPORTANCE OR ADVANTAGE OF ADEQUATE WORKING CAPITAL

SOLVENCY OF THE BUSINESS: Adequate working capital helps in maintaining the solvency of the business by providing uninterrupted of production. Goodwill: Sufficient amount of working capital enables a firm to make prompt payments and makes and maintain the goodwill. Easy loans: Adequate working capital leads to high solvency and credit standing can arrange loans from banks and other on easy and favorable terms. Cash Discounts: Adequate working capital also enables a concern to avail cash discounts on the purchases and hence reduces cost. Regular Supply of Raw Material: Sufficient working capital ensures regular supply of raw material and continuous production. Regular Payment Of Salaries, Wages And Other Day TO Day Commitments: It leads to the satisfaction of the employees and raises the morale of its employees, increases their efficiency, reduces wastage and costs and enhances production and profits. Exploitation Of Favorable Market Conditions: If a firm is having adequate working capital then it can exploit the favorable market conditions such as purchasing its requirements in bulk when the prices are lower and holdings its inventories for higher prices. Ability To Face Crises: A concern can face the situation during the depression. Quick And Regular Return On Investments: Sufficient working capital enables a concern to pay quick and regular of dividends to its investors and gains confidence of the investors and can raise more funds in future. High Morale: Adequate working capital brings an environment of securities, confidence, high morale which results in overall efficiency in a business.
EXCESS OR INADEQUATE WORKING CAPITAL Every business concern should have adequate amount of working capital to run its business operations. It should have neither redundant or excess working capital nor inadequate nor shortages of working capital. Both excess as well as short working capital positions are bad for any business. However, it is the inadequate working capital which is more dangerous from the point of view of the firm. DISADVANTAGES OF REDUNDANT OR EXCESSIVE WORKING CAPITAL 1. 2. Excessive working capital means ideal funds which earn no profit for the firm and business cannot earn the required rate of return on its investments. Redundant working capital leads to unnecessary purchasing and accumulation of inventories.
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3. 4. 5. 6. 7.
Excessive working capital implies excessive debtors and defective credit policy which causes higher incidence of bad debts. It may reduce the overall efficiency of the business. If a firm is having excessive working capital then the relations with banks and other financial institution may not be maintained. Due to lower rate of return n investments, the values of shares may also fall. The redundant working capital gives rise to speculative transactions
DISADVANTAGES OF INADEQUATE WORKING CAPITAL Every business needs some amounts of working capital. The need for working capital arises due to the time gap between production and realization of cash from sales. There is an operating cycle involved in sales and realization of cash. There are time gaps in purchase of raw material and production; production and sales; and realization of cash. Thus working capital is needed for the following purposes: For the purpose of raw material, components and spares. To pay wages and salaries To incur day-to-day expenses and overload costs such as office expenses. To meet the selling costs as packing, advertising, etc. To provide credit facilities to the customer. To maintain the inventories of the raw material, work-in-progress, stores and spares and finished stock.
For studying the need of working capital in a business, one has to study the business under varying circumstances such as a new concern requires a lot of funds to meet its initial requirements such as promotion and formation etc. These expenses are called preliminary expenses and are capitalized. The amount needed for working capital depends upon the size of the company and ambitions of its promoters. Greater the size of the business unit, generally larger will be the requirements of the working capital.
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The requirement of the working capital goes on increasing with the growth and expensing of the business till it gains maturity. At maturity the amount of working capital required is called normal working capital. There are others factors also influence the need of working capital in a business. FACTORS DETERMINING THE WORKING CAPITAL REQUIREMENTS 1. NATURE OF BUSINESS: The requirements of working is very limited in public utility undertakings such as electricity, water supply and railways because they offer cash sale only and supply services not products, and no funds are tied up in inventories and receivables. On the other hand the trading and financial firms requires less investment in fixed assets but have to invest large amt. of working capital along with fixed investments. 2. SIZE OF THE BUSINESS: Greater the size of the business, greater is the requirement of working capital. 3. PRODUCTION POLICY: If the policy is to keep production steady by accumulating inventories it will require higher working capital. 4. LENGTH OF PRODUCTION CYCLE: The longer the manufacturing time the raw material and other supplies have to be carried for a longer in the process with progressive increment of labor and service costs before the final product is obtained. So working capital is directly proportional to the length of the manufacturing process. 5. SEASONALS VARIATIONS: Generally, during the busy season, a firm requires larger working capital than in slack season. 6. WORKING CAPITAL CYCLE: The speed with which the working cycle completes one cycle determines the requirements of working capital. Longer the cycle larger is the requirement of working capital.
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DEBTORS CASH FINISHED GOODS
RAW MATERIAL WORK IN PROGRESS
7.
RATE OF STOCK TURNOVER: There is an inverse co-relationship between the question of working capital and the velocity or speed with which the sales are affected. A firm having a high rate of stock turnover wuill needs lower amt. of working capital as compared to a firm having a low rate of turnover.
8.
CREDIT POLICY: A concern that purchases its requirements on credit and sales its product / services on cash requires lesser amt. of working capital and vice-versa.
9.
BUSINESS CYCLE: In period of boom, when the business is prosperous, there is need for larger amt. of working capital due to rise in sales, rise in prices, optimistic expansion of business, etc. On the contrary in time of depression, the business contracts, sales decline, difficulties are faced in collection from debtor and the firm may have a large amt. of working capital.
10. RATE OF GROWTH OF BUSINESS: In faster growing concern, we shall require large amt. of working capital. 11. EARNING CAPACITY AND DIVIDEND POLICY: Some firms have more earning capacity than other due to quality of their products, monopoly conditions, etc. Such firms may generate cash profits from operations and contribute to their working capital. The dividend policy also affects the requirement of working capital. A firm maintaining a steady high rate of cash dividend irrespective of its profits needs working capital than the
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firm that retains larger part of its profits and does not pay so high rate of cash dividend. 12. PRICE LEVEL CHANGES: Changes in the price level also affect the working capital requirements. Generally rise in prices leads to increase in working capital. Others FACTORS: These are: Operating efficiency. Management ability. Irregularities of supply. Import policy. Asset structure. Importance of labor. Banking facilities, etc.
MANAGEMENT OF WORKING CAPITAL Management of working capital is concerned with the problem that arises in attempting to manage the current assets, current liabilities. The basic goal of working capital management is to manage the current assets and current liabilities of a firm in such a way that a satisfactory level of working capital is maintained, i.e. it is neither adequate nor excessive as both the situations are bad for any firm. There should be no shortage of funds and also no working capital should be ideal. WORKING CAPITAL MANAGEMENT POLICES of a firm has a great on its probability, liquidity and structural health of the organization. So working capital management is three dimensional in nature as 1. 2. 3. It concerned with the formulation of policies with regard to profitability, liquidity and risk. It is concerned with the decision about the composition and level of current assets. It is concerned with the decision about the composition and level of current liabilities.
WORKING CAPITAL ANALYSIS As we know working capital is the life blood and the centre of a business. Adequate amount of working capital is very much essential for the smooth running of the business. And the
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most important part is the efficient management of working capital in right time. The liquidity position of the firm is totally effected by the management of working capital. So, a study of changes in the uses and sources of working capital is necessary to evaluate the efficiency with which the working capital is employed in a business. This involves the need of working capital analysis. The analysis of working capital can be conducted through a number of devices, such as: 1. 2. 3. Ratio analysis. Fund flow analysis. Budgeting.
1.
RATIO ANALYSIS
A ratio is a simple arithmetical expression one number to another. The technique of ratio analysis can be employed for measuring short-term liquidity or working capital position of a firm. The following ratios can be calculated for these purposes: 1. Current ratio. 2. Quick ratio 3. Absolute liquid ratio 4. Inventory turnover. 5. Receivables turnover. 6. Payable turnover ratio. 7. Working capital turnover ratio. 8. Working capital leverage 9. Ratio of current liabilities to tangible net worth.
2.
FUND FLOW ANALYSIS
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Fund flow analysis is a technical device designated to the study the source from which additional funds were derived and the use to which these sources were put. The fund flow analysis consists of: a. b. Preparing schedule of changes of working capital Statement of sources and application of funds.
It is an effective management tool to study the changes in financial position (working capital) business enterprise between beginning and ending of the financial dates.
3.
WORKING CAPITAL BUDGET
A budget is a financial and / or quantitative expression of business plans and polices to be pursued in the future period time. Working capital budget as a part of the total budge ting process of a business is prepared estimating future long term and short term working capital needs and sources to finance them, and then comparing the budgeted figures with actual performance for calculating the variances, if any, so that corrective actions may be taken in future. He objective working capital budget is to ensure availability of funds as and needed, and to ensure effective utilization of these resources. The successful implementation of working capital budget involves the preparing of separate budget for each element of working capital, such as, cash, inventories and receivables etc.
ANALYSIS OF SHORT TERM FINANCIAL POSITION OR TEST OF LIQUIDITY The short term creditors of a company such as suppliers of goods of credit and commercial banks short-term loans are primarily interested to know the ability of a firm to meet its obligations in time. The short term obligations of a firm can be met in time only when it is having sufficient liquid assets. So to with the confidence of investors, creditors, the smooth functioning of the firm and the efficient use of fixed assets the liquid position of
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the firm must be strong. But a very high degree of liquidity of the firm being tied up in current assets. Therefore, it is important proper balance in regard to the liquidity of the firm. Two types of ratios can be calculated for measuring short-term financial position or short-term solvency position of the firm. 1. 2. Liquidity ratios. Current assets movements ratios.
A) LIQUIDITY RATIOS Liquidity refers to the ability of a firm to meet its current obligations as and when these become due. The short-term obligations are met by realizing amounts from current, floating or circulating assts. The current assets should either be liquid or near about liquidity. These should be convertible in cash for paying obligations of short-term nature. The sufficiency or insufficiency of current assets should be assessed by comparing them with short-term liabilities. If current assets can pay off the current liabilities then the liquidity position is satisfactory. On the other hand, if the current liabilities cannot be met out of the current assets then the liquidity position is bad. To measure the liquidity of a firm, the following ratios can be calculated: 1. 2. 3. CURRENT RATIO QUICK RATIO ABSOLUTE LIQUID RATIO 1. CURRENT RATIO Current Ratio, also known as working capital ratio is a measure of general liquidity and its most widely used to make the analysis of short-term financial position or liquidity of a firm. It is defined as the relation between current assets and current liabilities. Thus, CURRENT RATIO = CURRENT ASSETS
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CURRENT LIABILITES The two components of this ratio are: 1) 2) CURRENT ASSETS CURRENT LIABILITES
Current assets include cash, marketable securities, bill receivables, sundry debtors, inventories and work-in-progresses. Current liabilities include outstanding expenses, bill payable, dividend payable etc. A relatively high current ratio is an indication that the firm is liquid and has the ability to pay its current obligations in time. On the hand a low current ratio represents that the liquidity position of the firm is not good and the firm shall not be able to pay its current liabilities in time. A ratio equal or near to the rule of thumb of 2:1 i.e. current assets double the current liabilities is considered to be satisfactory. CALCULATION OF CURRENT RATIO (Rupees in crore) e.g. Year Current Assets Current Liabilities Current Ratio Interpretation:As we know that ideal current ratio for any firm is 2:1. If we see the current ratio of the company for last three years it has increased from 2006 to 2008. The current ratio of company is more than the ideal ratio. This depicts that companys liquidity position is sound. Its current assets are more than its current liabilities. 2. QUICK RATIO Quick ratio is a more rigorous test of liquidity than current ratio. Quick ratio may be 2008 1.5 1 1.5:1 2009 3 2 1.5:1 2010 5 3 1.66:1
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defined as the relationship between quick/liquid assets and current or liquid liabilities. An asset is said to be liquid if it can be converted into cash with a short period without loss of value. It measures the firms capacity to pay off current obligations immediately. QUICK RATIO = QUICK ASSETS CURRENT LIABILITES Where Quick Assets are: 1) 2) 3) Marketable Securities Cash in hand and Cash at bank. Debtors.
A high ratio is an indication that the firm is liquid and has the ability to meet its current liabilities in time and on the other hand a low quick ratio represents that the firms liquidity position is not good. As a rule of thumb ratio of 1:1 is considered satisfactory. It is generally thought that if quick assets are equal to the current liabilities then the concern may be able to meet its short-term obligations. However, a firm having high quick ratio may not have a satisfactory liquidity position if it has slow paying debtors. On the other hand, a firm having a low liquidity position if it has fast moving inventories. CALCULATION OF QUICK RATIO e.g. Crore) Year Quick Assets Current Liabilities Quick Ratio Interpretation : 2008 1.5 1 1.5:1 3 2 1.5:1 2009 5 3 1.66:1 (Rupees in 2010
A quick ratio is an indication that the firm is liquid and has the ability to meet its current liabilities in time. The ideal quick ratio is 1:1. Companys quick ratio is more than
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ideal ratio. This shows company has no liquidity problem. 3. ABSOLUTE LIQUID RATIO Although receivables, debtors and bills receivable are generally more liquid than inventories, yet there may be doubts regarding their realization into cash immediately or in time. So absolute liquid ratio should be calculated together with current ratio and acid test ratio so as to exclude even receivables from the current assets and find out the absolute liquid assets. Absolute Liquid Assets includes : ABSOLUTE LIQUID RATIO = ABSOLUTE LIQUID ASSETS CURRENT LIABILITES ABSOLUTE LIQUID ASSETS = CASH & BANK BALANCES. e.g. Year Absolute Liquid Assets Current Liabilities Absolute Liquid Ratio Interpretation : These ratio shows that company carries a small amount of cash. But there is nothing to be worried about the lack of cash because company has reserve, borrowing power & long term investment. In India, firms have credit limits sanctioned from banks and can easily draw cash. B) CURRENT ASSETS MOVEMENT RATIOS Funds are invested in various assets in business to make sales and earn profits. The efficiency with which assets are managed directly affects the volume of sales. The better the management of assets, large is the amount of sales and profits. Current assets movement ratios measure the efficiency with which a firm manages its resources. These ratios are called turnover ratios because they indicate the speed with which assets are 2008 20 100 .0.2 : 1 2009 10 200 0.05 : 1 (Rupees in Lakh) 2010 25 300 .0.0833 : 1
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converted or turned over into sales. Depending upon the purpose, a number of turnover ratios can be calculated. These are : 1. 2. 3. 4. Inventory Turnover Ratio Debtors Turnover Ratio Creditors Turnover Ratio Working Capital Turnover Ratio
The current ratio and quick ratio give misleading results if current assets include high amount of debtors due to slow credit collections and moreover if the assets include high amount of slow moving inventories. As both the ratios ignore the movement of current assets, it is important to calculate the turnover ratio. 1. INVENTORY TURNOVER OR STOCK TURNOVER RATIO : Every firm has to maintain a certain amount of inventory of finished goods so as to meet the requirements of the business. But the level of inventory should neither be too high nor too low. Because it is harmful to hold more inventory as some amount of capital is blocked in it and some cost is involved in it. It will therefore be advisable to dispose the inventory as soon as possible. INVENTORY TURNOVER RATIO = COST OF GOOD SOLD AVERAGE INVENTORY Inventory turnover ratio measures the speed with which the stock is converted into sales. Usually a high inventory ratio indicates an efficient management of inventory because more frequently the stocks are sold ; the lesser amount of money is required to finance the inventory. Where as low inventory turnover ratio indicates the inefficient management of inventory. A low inventory turnover implies over
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investment in inventories, dull business, poor quality of goods, stock accumulations and slow moving goods and low profits as compared to total investment. AVERAGE STOCK = OPENING STOCK + CLOSING STOCK/2 (Rupees in Lakh) Year Cost of Goods sold Average Stock Inventory Turnover Ratio Interpretation : These ratio shows how rapidly the inventory is turning into receivable through sales. In 2007 the company has high inventory turnover ratio but in 2008 it has reduced to 1.75 times. This shows that the companys inventory management technique is less efficient as compare to last year. 2. INVENTORY CONVERSION PERIOD: 2008 50 35 1.4 times 2009 150 70 2.14times 2010 225 125 1.8 times
INVENTORY CONVERSION PERIOD = 365 (net working days) INVENTORY TURNOVER RATIO e.g. Year Days Inventory Turnover Ratio Inventory Conversion Period Interpretation : Inventory conversion period shows that how many days inventories takes to convert from raw material to finished goods. In the company inventory conversion period is decreasing. This shows the efficiency of management to convert the inventory into cash. 3. DEBTORS TURNOVER RATIO : A concern may sell its goods on cash as well as on credit to increase its sales and a 2008 365 1.5 243 days 2009 365 2.8 130 days 2010 365 1.8 202 days
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liberal credit policy may result in tying up substantial funds of a firm in the form of trade debtors. Trade debtors are expected to be converted into cash within a short period and are included in current assets. So liquidity position of a concern also depends upon the quality of trade debtors. Two types of ratio can be calculated to evaluate the quality of debtors. a) b) Debtors Turnover Ratio Average Collection Period
DEBTORS TURNOVER RATIO = TOTAL SALES (CREDIT) AVERAGE DEBTORS Debtors velocity indicates the number of times the debtors are turned over during a year. Generally higher the value of debtors turnover ratio the more efficient is the management of debtors/sales or more liquid are the debtors. Whereas a low debtors turnover ratio indicates poor management of debtors/sales and less liquid debtors. This ratio should be compared with ratios of other firms doing the same business and a trend may be found to make a better interpretation of the ratio. AVERAGE DEBTORS= OPENING DEBTOR+CLOSING DEBTOR 2 e.g. Year Sales Average Debtors Debtor Turnover Ratio 2008 166.0 17.33 9.6 times 2009 151.5 18.19 8.3 times 2010 169.5 22.50 7.5 times
Interpretation : This ratio indicates the speed with which debtors are being converted or turnover into sales. The higher the values or turnover into sales. The higher the values of debtors turnover, the more efficient is the management of credit. But in the company the debtor turnover ratio is decreasing year to year. This shows that company is not utilizing its debtors efficiency. Now their credit policy become liberal as compare to previous year. 4. AVERAGE COLLECTION PERIOD : Average Collection Period = No. of Working Days
Debtors Turnover Ratio The average collection period ratio represents the average number of days for which a firm has to wait before its receivables are converted into cash. It measures the quality of
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debtors. Generally, shorter the average collection period the better is the quality of debtors as a short collection period implies quick payment by debtors and vice-versa. Average Collection Period = 365 (Net Working Days)
Debtors Turnover Ratio Year Days Debtor Turnover Ratio Average Collection Period 2008 365 9.6 38 days 2009 365 8.3 44 days 2010 365 7.5 49 days
Interpretation : The average collection period measures the quality of debtors and it helps in analyzing the efficiency of collection efforts. It also helps to analysis the credit policy adopted by company. In the firm average collection period increasing year to year. It shows that the firm has Liberal Credit policy. These changes in policy are due to competitors credit policy. 5. WORKING CAPITAL TURNOVER RATIO : Working capital turnover ratio indicates the velocity of utilization of net working capital. This ratio indicates the number of times the working capital is turned over in the course of the year. This ratio measures the efficiency with which the working capital is used by the firm. A higher ratio indicates efficient utilization of working capital and a low ratio indicates otherwise. But a very high working capital turnover is not a good situation for any firm. Working Capital Turnover Ratio = Cost of Sales Net Working Capital
Working Capital Turnover
Sales Networking Capital
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e.g
Year Sales Networking Capital Working Capital Turnover
2008 166.0 53.87 3.08
2009 151.5 62.52 2.4
2010 169.5 103.09 1.64
Interpretation : This ratio indicates low much net working capital requires for sales. In 2008, the reciprocal of this ratio (1/1.64 = .609) shows that for sales of Rs. 1 the company requires 60 paisa as working capital. Thus this ratio is helpful to forecast the working capital requirement on the basis of sale. INVENTORIES (Rs. in Lakh) Year Inventories Interpretation : Inventories is a major part of current assets. If any company wants to manage its working capital efficiency, it has to manage its inventories efficiently. The graph shows that inventory in 2005-2006 is 45%, in 2006-2007 is 43% and in 2007-2008 is 54% of their current assets. The company should try to reduce the inventory upto 10% or 20% of current assets. 2007-2008 57.15 2008-2009 95.69 2009-2010 125.01
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RESEARCH METHODOLOGY
The methodology, I have adopted for my study is the various tools, which basically analyze critically financial position of to the organization:
I. II. III. IV. V. VI.
COMMON-SIZE P/L A/C COMMON-SIZE BALANCE SHEET COMPARTIVE P/L A/C COMPARTIVE BALANCE SHEET TREND ANALYSIS RATIO ANALYSIS
The above parameters are used for critical analysis of financial position. With the evaluation of each component, the financial position from different angles is tried to be presented in well and systematic manner. By critical analysis with the help of different tools, it becomes clear how the financial manager handles the finance matters in profitable manner in the critical challenging atmosphere, the recommendation are made which would suggest the organization in formulation of a healthy and strong position financially with proper management system.
ANALYSIS OF FINANCIAL STATEMENTS FINANCIAL STATEMENTS:
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Financial statement is a collection of data organized according to logical and consistent accounting procedure to convey an under-standing of some financial aspects of a business firm. It may show position at a moment in time, as in the case of balance sheet or may reveal a series of activities over a given period of time, as in the case of an income statement. Thus, the term financial statements generally refers to the two statements (1) The position statement or Balance sheet. (2) The income statement or the profit and loss Account. OBJECTIVES OF FINANCIAL STATEMENTS: According to accounting Principal Board of America (APB) states The following objectives of financial statements: 1. To provide reliable financial information about economic resources and obligation of a business firm. 2. To provide other needed information about charges in such economic resources and obligation. 3. To provide reliable information about change in net resources (recourses less obligations) missing out of business activities. 4. To provide financial information that assets in estimating the learning potential of the business. LIMITATIONS OF FINANCIAL STATEMENTS: Though financial statements are relevant and useful for a concern, still they do not present a final picture a final picture of a concern. The utility of these statements is dependent upon a number of factors. The analysis and interpretation of these statements must be done carefully otherwise misleading conclusion may be drawn. Financial statements suffer from the following limitations: 1. Financial statements do not given a final picture of the concern. The data given in these statements is only approximate. The actual value can only be determined when the business is sold or liquidated.
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2. Financial statements have been prepared for different accounting periods, generally one year, during the life of a concern. The costs and incomes are apportioned to different periods with a view to determine profits etc. The allocation of expenses and income depends upon the personal judgment of the accountant. The existence of contingent assets and liabilities also make the statements imprecise. So financial statement are at the most interim reports rather than the final picture of the firm. 3. The financial statements are expressed in monetary value, so they appear to give final and accurate position. The value of fixed assets in the balance sheet neither represent the value for which fixed assets can be sold nor the amount which will be required to replace these assets. The balance sheet is prepared on the presumption of a going concern. The concern is expected to continue in future. So fixed assets are shown at cost less accumulated deprecation. Moreover, there are certain assets in the balance sheet which will realize nothing at the time of liquidation but they are shown in the balance sheets. 4. The financial statements are prepared on the basis of historical costs Or original costs. The value of assets decreases with the passage of time current price changes are not taken into account. The statement are not prepared with the keeping in view the economic conditions. the balance sheet loses the significance of being an index of current economics realities. Similarly, the profitability shown by the income statements may be represent the earning capacity of the concern. 5. There are certain factors which have a bearing on the financial position and operating result of the business but they do not become a part of these statements because they cannot be measured in monetary terms. The basic limitation of the traditional financial statements comprising the balance sheet, profit & loss A/c is that they do not give all the information regarding the financial operation of the firm. Nevertheless, they provide some extremely useful information to the extent the balance sheet mirrors the financial position on a particular data in lines of the structure of assets, liabilities
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etc. and the profit & loss A/c shows the result of operation during a certain period in terms revenue obtained and cost incurred during the year. Thus, the financial position and operation of the firm.
FINANCIAL STATEMENT ANALYSIS It is the process of identifying the financial strength and weakness of a firm from the available accounting data and financial statements. The analysis is done CALCULATIONS OF RATIOS Ratios are relationship expressed in mathematical terms between figures, which are connected with each other in some manner.
CLASSIFICATION OF RATIOS Ratios can be classified in to different categories depending upon the basis of classification The traditional classification has been on the basis of the financial statement to which the determination of ratios belongs. These are: Profit & Loss account ratios Balance Sheet ratios Composite ratios
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COST OF THE PROJECT The Cost of the proposed project is estimated at Rs.100.25 lacs as per details given here under: 1.
LAND The company purchased the open land measuring 2.265 acres at Dighot village in Noida district at a cost of Rs.40 lacs. The land purchased is need based considering the size and volume of operations proposed by the unit for future expansion. The location being connected to main highways and shall leverage best to connect with entire NCR area which is developing as centre for production of major garments and existing and future customers of the unit are located. BUILDING The company proposes to construct working shed measuring 1900 sq mtrs. using prefab structure technology for production of electric cables with inbuilt office area and canteens etc. Adequate provision for boundary wall, open area flooring, faced work, rain water harvesting etc has been kept in the project. The cost of building estimated at Rs 10 lacs. PLANT AND MACHINERY It is proposed to purchase latest technology, high performance and quality machines manufacturing of Garments & Chemicals as detailed in annexure. The plant & machinery proposed includes both imported as well as indigenous machines a .The detail of the plant and machinery is annexed herewith. The total cost of plant & machinery including utilities e.g. DG Sets, Compressors Lifts EOT cranes etc has been estimated @ Rs 50 lacs. The plant & machinery has been identified considering the proposed product range, precision and quality standards required and it is considered sufficient to undertake projects to targeted turnover and capacity.
2.
3.
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RS IN LACS DETAILS OF PROPOSED PLANT AND MACHINERY (INDIGENOUS)
S.NO.
PARTICULARS
SUPPLIER
QTY.
UNIT PRICE IN USD
CONVERSION FACTOR
UNIT PRICE
COST
EXISE DUTY
CST
OTHER EXP, IF ANY.
TOTAL COST
MULTI WIRE DRAWING INDIA SCOPE DOUBLE TWIST 630 MM, BUNCHER
NEIHOFF INDIA NEIHOFF INDIA
20.25
2.5
2.76
0.00
21.25
3 4
ARCH 630 R, PAY OFF STANDS WIRE DRAWING DIES
NEIHOFF INDIA WALSON WOODBUR N WIRE DIE PVT LTD SELF FABRICATE D NEWMAX ENGINEERS
SET 1 2.24 2.24 0.23 0.05 0.00 2.52
TOOLINGS FOR EXTRUDER & BUNCHING MACHINES BIG BUNCHER WITH PAY OFF STATION (SELF FAB) QC/QA LAB
2.25
0.00
0.00
0.00
0.00
0.00
1 1
5.50 2.00
5.50 2.00
0.55 0.00
0.12 0.00
0.00 0.00
6.17 2.00 15.00
ARUN INDUSTRIE S SVAMPOER PLANTS LTD OPEN MARKET
L.S.
DG SET 385 KVA
19.22
19.22
1.98
0.42
0.00
21.62
MAINTINANCE TOOL ROOM
10.00
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10 11 BATTER OPERATED FORK LIFT COMPRESSOR OPEN MARKET OPEN MARKET 1 1 5.00 8.00 5.00 8.00 0.50 0.80 0.11 0.18 0.00 0.00 5.61 8.98
1.04.54 installation commissioning TOTAL COST OF INGIGENOUS MACHINERY 1.38
218.91
105.92
DETAILS OF PROPOSED PLANT AND MACHINERY (IMPORTED) S.NO. PARTICULARS SUPPLIER QTY. UNIT PRICE IN USD/EURO CONVERSION FACTOR UNIT PRICE COST Freight, Packing & Forwarding CST/ CUSTOM DUTY EXCISE DUTY SPECIAL DUTY
1 2 3 4
MULTI-WIRE DRAWINGMACHINE EXTRUDERs 2 630 MM DIN STEEL SPOOL COLD PRESSURE WELDING MACHINE
NEIHOFF GERMAY WILSON, TAIWAN QUNYE,CHI NA AUGUST STRECKER Gmbh & Co
1 1 100 1
95000 338000 148 10128.2
60 47 47 60
57.00 158.86 0.07 6.08
57.00 158.86 6.96 6.08 0.00 0.00 0.00
4.28 11.91 0.52 0.46
6.31 14.07 0.62 0.54
2.70 7.39 0.32 0.28
installation commissioning
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TOTAL COST OF IMPORTED MACHINERY
105.92
TOTAL COST OF PROPOSED MACHINERY
SAY RS.
105.92
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4.
ELECTRICALS A provision of Rs 50 lacs has been made under this head meeting the cost of of transformer, cabling from DHVBN supply point to transformer, to Main Controls & Distribution Panels and there from to each machinery unit. Cost of CTPT, Machinery Control and monitoring panels, cost of earthling. Generator lines, Switch gears etc on turnkey basis. CONTINGENCIES A provision of 5 % of the cost of building and machinery has been kept to meet any cost escalation during project implementation period as entire cost is unconfirmed at present. MISC. FIXED ASSETS A provision of Rs 20.0 lacs has been estimated under this head towards the cost of furniture & Fixture, office equipment & firefighting equipment and transport and material handling equip. and vehicles. PRELIMINARY & PREOPERATIVE EXPENSES A provision of Rs 71.16 lacs has been kept in order to meet the cost of profession charges, loan processing fee, and interest during construction period and to meet the other startup expenses. MARGIN MONEY FOR WORKING CAPITAL Working capital requirements have been worked out for the entire operations including the new project and hence this has not been shown in the project cost. MEANS OF FINANCE The total cost of the proposed project estimated at Rs.3044.77 lacs will be financed as under: PARTICULARS AMOUNT (RS. IN LACS) Share Capital 42.00 Internal Accruals 38.89 Unsecured Loans 28.00 Term Loan Bank 50.00 Total 158.89 PRODUCTION FACTORS AND UTILITIES
5.
6.
7.
8.
SITE: The proposed site of the new project is situated in a strategic location and well connected with good road to NH2 where all the infrastructure facilities are available.
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RAW MATERIAL The major raw material required is Copper, PVC, etc. All the material is easily available in the NCR region and promoters have tie-ups with leading suppliers in the region. POWER The total power requirement has been estimated at 750 KW for running the plant and machinery and electrical load of the unit the same shall be met from DHVBN supply. however provision of stand by DG set of equivalent capacity has been kept in the project. WATER Water is required for human consumption and for sanitation purposes. The unit will meet its water requirements from underground sources. MANPOWER The concern proposed to generate employment of 50 persons for running the unit. People experience and skills are easily available in the region and company shall not face any problem of manpower. CONSUMABLE STORES The company shall require oil, lubricant, high speed diesel etc as consumables these are easily available in Delhi and NCR market. EFFLUENT The unit will not generate any health hazardous effluents.
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Banks have following concerns in funding the project and the company. High term loan repayment :Average term loan repayments come 1.8 crores for next 2-3 years while the company has existing EBITDA of 0.7 crores in FY11(Prov). So due repayment is dependant on expected cash flows out of the new factory. The new unit will take atleast 7-8 months and we have doubt that the projections given by customer will be achieved. Large amount of unsecured loans : The company has taken unsecured loans of over 0.5 crores from the market, In case the projections are not achieved the unit may face a risk of complete failures.The company is overleveraging itself.
a)
b)
c)
Low current ratio :The current ratio was less than 1 in FY09,FY10 suggesting use of short term fund for long term usage Low collateral : The collateral cover is less than 40% and constitute majorly industrial property valuing 2.50 crores for exposure of 6 crores proposed.
d) e)
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CHAPTER 3 METHODOLOGY
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CHAPTER 3 RESEARCH METHODOLOGY

INTRODUCTION The present chapter describes the research methodology which was applied for conducting this research. The various aspects of the research methodology were described into the various specified sections which are; design of the research, data collection, data analysis, and validity and reliability. RESEARCH DESIGN Research methodology details the procedures necessary for obtaining the information needed to structure and/or solve research problems. Although a broad approach to the problem had already been developed, the research design specified the details the nuts and bolts of implementing that approach. The design of research was determined by the nature of the problem that has to be explored and the research question that is formulated. The statement regarding the nature of the problem identified concepts that had to be explored and that would have influenced the data collection methods, the subsequent data analysis and reporting. According to the philosophy of research design, research can be exploratory or conclusive. Exploratory research- The primary objective of exploratory research was to provide insights into, and an understanding of, the problem. Exploratory research is used in cases when one must define the problem more precisely, identify relevant courses of action, or gain additional insights before an approach can be developed. Conclusive research- Conclusive research is typically more formal and structured than exploratory research. It is based on large, representative samples, and the data obtained are subjected to quantitative analysis. The findings from this research are considered to be conclusive in nature in that they are used as input into managerial decision-making . So far as the present research was concerned, the research was exploratory in nature as it had been conducted on the basis of a problem confronted. This problem was identified as Project Funding and
Working Capital Management for The New Age Creation.
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Banks use credit rating to analyze the credit worthiness of any proposed customers (borrower). And then based up on the credit rating and the risk appraisal the bank decides up on the rate on interest or the charge to be levied up on a particular finance. Thus, it is an issue of key concern for any organization to understand the norms based up on which the banks frame this credit rating policy. Credit Rating agencies both internal as well as external, pay keen interest and base to certain macro as well micro environmental elements, this is basically because of the fact that not just the financials but also the economic and non economic environmental factors determine the over all credit worthiness of any financial organization, a few of these most crucial elements are: Management Institutional Arrangement Capital Adequacy and Asset Quality Resources Operational Effectiveness Scalability and Sustainability Transparency & disclosure
Value Creation and distribution Banking organizations also look in to various risk and credit policies before framing their policies. The main concern of any bank before framing the credit ratings is to analyze and achieve a perfect customer (borrower) whose credit worthiness would be sound enough to avoid the NPA or risk coherence of the lending. Credit Ratings most of give ranks or grades to institutions and organizations based up on their financial and economic feasibility, thus for any organization it is an issue of keen consideration to understand the credit rating policy of any banking organization. Other than this key issues considered while framing a credit rating policy for any banking organization.
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CHAPTER 4 DATA COLLECTION
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CHAPTER 4 DATA COLLECTION

The two most common data that are collected for exploratory research are primary and secondary data. Primary data is original data using an accepted research methodology and secondary data is already available data as it is collected for other research purposes. In research projects where original primary data is collected, secondary data establish what work has been undertaken in a particular area before is a necessary precursor to research design . In accordance with the above academic establishments, the present research included both primary and secondary data, where the purpose of collecting primary data was to generate new data regarding the research problem, and purpose of collecting secondary data was to compare and contrast the new data with the previous one. Secondary Data Secondary data is the data that has been gathered previously for a project other than the particular one. The most important advantage of secondary data is that it can be collected from various sources rather quickly and cheaply than the primary data. However, the most significant limitation of secondary sources lies in the fact that someone else collected the data for his/her own purposes. Therefore, as the information may meet specific needs, definitions or units of measure may be different and may not be appropriate for evaluation in another project. Moreover, it is difficult to evaluate the accuracy of any information provided because little is known about the research design used or any other condition under which the research took place. Finally, it is doubtful that data collected long time ago would be relevant presently. Despite all these reasons, secondary data may be useful as a reference base to compare research findings. Thus, even for a relatively unique research situation scanning the secondary data would possibly offer much useful insight. In order to collect secondary data, various libraries, and websites (online library) were visited. The secondary data in this research is presented in form of literature review. The main purpose of critically reviewing the literature was to explore the data and findings and subsequently related them to the existing literature on the subject matter concerned. Thus, a critical review of the literature regarding service quality helped achieve the same. According to Saunders et al (2000) this approach is known as inductive approach.
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Primary Data Besides the below information which was taken from the company for assessment of financials like: Last 3 years audited financial statements along with
Tax Audit report/3CB-3CD Directors report Notes to accounts All schedules attached Break up of unsecured loans Break up of investments Break up loans and advances appearing in liability and assets. Nature of contingent liability if any.
Provisional financials of current year. Last 2 years ITRs of all promoters and company. Advance tax challans for the latest years to ensure sales. Group company audited financials Sanction letter for all major existing working capital facilities availed by the company. Statements of all banks for last six months. Debtors & Creditor list for current year. Order in hands/copy of all agreements. Copy of pollution license/Vintage proof. Details of all immovable property which are offered as collateral. For obtaining the primary data for my project, I propose to use self questionnaire method on directors and promoters of the company. A standardized interview will be conducted to gather information on setting up a backward integration unit for manufacturing of cables and other means of finance. Interview will include related and unrelated expenses and future outlook of the company. The Questionnaire - Questionnaires are an inexpensive way to gather data from a potentially large number of respondents. Often they are the only feasible way to reach a number of reviewers large enough to allow statistical analysis of the results. A well-designed questionnaire that is used effectively
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can gather information on both the overall performance of the test system as well as information on specific components of the system. If the questionnaire includes demographic questions on the participants, they can be used to correlate performance and satisfaction with the test system among different groups of users. It is important to remember that a questionnaire should be viewed as a multi-stage process beginning with definition of the aspects to be examined and ending with interpretation of the results. Every step needs to be designed carefully because the final results are only as good as the weakest link in the questionnaire process. Although questionnaires may be cheap to administer compared to other data collection methods, they are every bit as expensive in terms of design time and interpretation. The questionnaire in this research consisted 22questions (close-ended). Types of Question- There are basically two types of question open and closed. The closed question restricts the answers to a small set of responses and requires the questionnaire designer to have a fair knowledge of the range of options the subjects might have in this area. It does however generate precise answers, while open-ended question have the merit of not imposing restrictions as to the possible answer but are harder to aggregate and computerize. It has the merit of offering richer and deeper responses. The present study limited the use of only close-ended questions in the questionnaire. The questionnaire consisted of 22 close-ended questions. Sampling -In the words of Clark et al. (2003), a sample is a sub-set of a larger grouping, a population. Samples are frequently studied in order to learn something of the characteristics of the larger groups of which they are a part of. Such samples, if selected in certain ways can be used as a legitimate basis for drawing inferences about the populations from which they were drawn from in essence, within certain boundaries. The sample in this research consisted promoters of The New Age Creation. These are director and Managers of the company. The response rate was also 100 percent. The above-mentioned persons were chosen because they were known and it was easy to arrange interviews in the respective office. The employees were approached directly with the help of the manager staff. The employees were selected conveniently.
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Data selection procedure- The data was collected from the CAs and accounts manager of the company. Respondents were initially led to engage in a general conversation and thereafter the questionnaires were asked to be filled. Interestingly, all the questionnaires that distributed were positively responded.
CHAPTER 5 DATA ANALYSIS
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CHAPTER 5 DATA ANALYSIS

Data was analyzed systematically. Findings from data were related to aspects of the methodology wherever appropriate, and effects arising from the choice of methods were recognized and commented upon. Wherever the research was an extended literature review or a theoretical critique of existing research, competing and complementary positions in the debate concerned were clearly explained, compared and contrasted, and an assessment of the relative merits of these positions were given together with a clear statement of their implications for the topic under scrutiny. Such an approach of content analyzing of qualitative data is suggested by Hamel (1993). Keeping in mind of these norms, the collected data was analyzed in accordance with the objectives of the research. VALIDITY AND RELIABILITY To ensure validity, questionnaire were pre-tested and debugged before widespread distribution. The format of the questionnaire, the wording and sequence of questions, affects the validity of the responses and in the case of mail questionnaires, the number of responses received. For ensuring validity, the wording and sequencing of questions was done sensitively. Further, the questionnaire was also pretested. Reliability refers to the consistency with which the technique measures what it does measure. This consistency was maintained to greatest possible extent.
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DATA ANALYSIS INTRODUCTION This chapter includes the analysis of data collected from the sample size of promoters. Questionnaire was prepared to collect the primary data, which included a total of 22 questions. Questionnaire was divided into Eight sections:
1.
View on garment segment and its future. Quality Perceptions Self belief and promoters commitments towards business Customer Loyalty and relationship Any future to brought P.E.(Private equity) investor. Banking and relationships with other financials institutions. Views About Yourself Demographics
2. 3.
4.
5. 6. 7. 8.
PROJECTED CASH FLOW STATEMENT AND BALANCE SHEET The detailed cash flow statement projections and balance sheet are annexed herewith along with .The company will generate sufficient cash accruals to pay off its debts and meet its working capital cycle.
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PROJECTIONS OF PERFORMANCE, COST OF PRODUCTION AND PROFITABILITY (RS. IN LACS) 20102011 2011-2012 20122013 2013-2014 2014-2015 2015-2016 2016-2017 2017-2018 2018-2019
SALES SALES 5. 6. 7. 8. B. 9. LESS EXCISE NET SALES OTHER INCOME TOTAL INCOME COST OF PRODUCTION RAW MATERIAL CONSUMED
385.98 385.98 0.00 385.98 79.72 465.70
437.39 437.39 47.02 450.37 89.81 540.18
547.09 547.09 57.31 589.78 99.86 689.64
768.79 768.79 73.69 895.10 118.27 1013.37
13747.81 13747.81 2098.53 11649.28 143.80 11793.08
16077.67 16077.67 0.00 16077.67 145.69 16223.36
18823.13 18823.13 0.00 18823.13 176.77 18999.91
22061.28 22061.28 0.00 22061.28 214.31 22275.59
25883.88 25883.88 0.00 25883.88 259.61 26143.49
3106.35
4336.66
6080.61
7469.17
8784.88
10342.35
12187.38
14374.60
16969.23
10. 11. 12. 13. 14.
CONSUMABLE STORES POWER AND FUEL WAGES AND SALARIES REPAIRS AND MAINTENANCE FACTORY OVERHEADS/ OTHER MANUFACTURING EXPENSES
54.36 18.63 369.98 11.85 93.67
59.27 65.68 425.02 12.68 111.81
69.65 110.39 440.59 13.57 135.99
83.62 137.75 532.27 14.92 165.81
100.78 151.52 647.78 16.41 199.03
121.43 166.68 787.58 18.06 238.90
146.27 183.34 956.66 19.86 286.74
176.14 201.68 1161.07 21.85 344.17
212.07 221.84 1408.07 24.03 413.09
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C. TOTAL (B9 TO B15) LESS: CLOSING W.I.P. 3654.84 100.13 3554.71 ADD: OPENING W.I.P. 15. NET COST OF PRODUCTION 47.72 3602.43 5011.12 126.55 4884.56 100.13 4984.70 26.42 6850.80 163.21 6687.58 126.55 6814.13 36.66 8403.55 198.70 8204.84 163.21 8368.06 35.49 9900.41 235.96 9664.45 198.70 9863.16 37.25 11674.98 280.37 11394.61 235.96 11630.57 13780.26 333.34 13446.92 280.37 13727.29 16279.51 396.55 15882.96 333.34 16216.30 19248.32 471.99 18776.34 396.55 19172.88
PROJECTIONS OF PERFORMANCE, COST OF PRODUCTION AND PROFITABILITY (RS. IN LACS) 20102011 2011-2012 20122013 2013-2014 2014-2015 2015-2016 2016-2017 2017-2018 2018-2019
16. 17. 18. 19. 20.
ADMINISTRATIVE EXPENSES SELLING AND PACKAGING EXPENSES RENT, RATES AND TAXES PRELIMINARY EXPENSES WRITTEN OFF REMUNERATION TO DIRECTORS
134.17 40.66 1.44 0.00 127.40
156.26 63.85 2.70 0.00 151.40
178.90 100.17 2.97 0.00 166.54
212.98 123.63 3.27 0.00 183.19
257.62 144.24 3.60 0.00 201.51
311.43 168.49 3.96 0.00 221.66
376.27 197.03 4.35 0.00 243.83
454.39 230.66 4.79 0.00 268.21
548.47 270.33 5.27 0.00 295.04
D.
TOTAL LESS: CLOSING FINISHED GOODS
3906.09 195.30 3710.79
5385.32 232.19 5153.14
7299.38 281.59 7017.79
8926.62 339.01 8587.61
10507.38 405.14 10102.25
12336.11 484.34 11851.77
14548.77 579.20 13969.57
17174.36 692.83 16481.53
20291.99 828.96 19463.04
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ADD: OPENING FINISHED GOODS 71.58 195.30 232.19 281.59 339.01 405.14 484.34 579.20 692.83
E. F.
TOTAL PROFIT/(LOSS) BEFORE INTEREST AND DEPRECIATION INTEREST ON TERM LOAN ON WORKING CAPITAL ON UNSECURED LOANS & OTHERS DEPRECIATION PROFIT/(LOSS) BEFORE TAXATION PROVISION FOR TAXES NET PROFIT NET CASH ACCRUALS
3782.37 283.33
5348.44 718.15
7249.97 976.33
8869.21 1179.66
10441.25 1389.08
12256.90 1645.07
14453.91 1948.76
17060.73 2309.22
20155.87 2737.23
G. a) b) c) H. I. J. K. L.
17.65 36.39 0.00 57.97 171.32 42.83 128.49 186.46 0.03 665.57
53.75 127.01 0.00 157.81 379.58 58.28 321.30 479.11 0.05
72.08 169.01 0.00 137.46 597.77 149.44 448.33 585.79 0.05
54.23 169.01 0.00 119.83 836.58 209.14 627.43 747.27 0.05
40.87 169.01 0.00 104.55 1074.65 268.66 805.98 910.53 0.06
29.60 169.01 0.00 91.29 1355.17 338.79 1016.38 1107.66 0.06
18.32 169.01 0.00 79.77 1681.65 420.41 1261.24 1341.01 10.26 6.64
7.05 169.01 0.00 69.77 2063.39 515.85 1547.54 1617.31 10.37 6.95
0.00 169.01 0.00 61.07 2507.14 626.79 1880.36 1941.43 10.47 7.19
CASH FLOW STATEMENT (RS. IN LACS)
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20102011 A. 1. SOURCES OF FUNDS PROFIT BEFORE INTEREST, DEPRECIATION AND TAXES INCREASE IN CAPITAL INCREASE IN LONG TERM LOANS DEBENTURES INCREASE IN BANK BORROWINGS FOR WORKING CAPITAL INCREASE IN CREDITORS INCREASE IN UNSECURED LOANS TOTAL SOURCES (A) DISPOSITION OF FUNDS PRELIMINARY & PREOPERATIVE EXP. INCREASE IN CAPITAL EXPENDITURE INCREASE IN CURRENT ASSETS ADVANCES, INVESTMENTS & OTHER ASSETS OTHERS DECREASE IN LONG TERM LOANS/ DEBENTURES INTEREST 283.33 718.15 976.33 1179.66 1389.08 1645.07 1948.76 2309.22 2737.23 2011-2012 20122013 2013-2014 2014-2015 2015-2016 2016-2017 2017-2018 2018-2019
2. 3.
100.00 346.25
0.00 390.00
0.00 0.00
0.00 0.00
0.00 0.00
0.00 0.00
0.00 0.00
0.00 0.00
0.00 0.00
4.
342.65
728.45
369.92
0.00
0.00
0.00
0.00
0.00
0.00
5. 6.
14.99 170.00 1257.23
-247.12 105.00 1694.48
-127.90 0.00 1218.35
0.00 0.00 1179.66
0.00 0.00 1389.08
0.00 0.00 1645.07
0.00 0.00 1948.76
0.00 0.00 2309.22
0.00 0.00 2737.23
B. 1. 2. 3. a) b) 4.
17.79 537.00
53.37 532.17
0.00 25.00
0.00 0.00
0.00 0.00
0.00 0.00
0.00 0.00
0.00 0.00
0.00 0.00
0.00 542.89 48.37
0.00 721.62 93.75
0.00 410.65 194.39
0.00 0.00 153.72
0.00 0.00 103.94
0.00 0.00 102.50
0.00 0.00 102.50
0.00 0.00 102.50
0.00 0.00 0.00
5.
54.04
180.76
241.09
223.25
209.89
198.61
187.34
176.06
169.01
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6. 7. 8. TAXATION DECREASE IN UNSECURED LOANS DIVIDENDS TOTAL DISPOSITION (B) C. D. E. OPENING BALANCE NET SURPLUS (A-B) CLOSING BALANCE 42.83 24.80 0.00 1267.72 21.36 -10.49 10.87 58.28 24.80 0.00 1664.76 10.87 29.72 40.59 149.44 0.00 0.00 1020.58 40.59 197.77 238.36 209.14 0.00 0.00 586.11 238.36 593.55 831.91 268.66 0.00 0.00 582.49 831.91 806.59 1638.50 338.79 0.00 0.00 639.90 1638.50 1005.16 2643.66 420.41 0.00 0.00 710.25 2643.66 1238.51 3882.18 515.85 0.00 0.00 794.41 3882.18 1514.81 5396.99 626.79 0.00 0.00 795.80 5396.99 1941.43 7338.41
PROJECTED BALANCE SHEET (RS. IN LACS) 2015-2016
PARTICULARS
20102011
2011-2012
20122013
2013-2014
2014-2015
2016-2017
2017-2018
2018-2019
A. 1. 2. 3. 4. 5. 6.
LIABILITIES SHARE CAPITAL RESERVE & SURPLUS /P & L ACCOUNT TERM LOANS UNSECURED LOANS BANK BORROWINGS FOR W.CAPITAL OTHER CURRENT LIABILITIES TOTAL 140.01 341.27 318.57 194.80 551.31 862.03 2408.00 140.01 662.57 614.82 275.00 1279.76 614.91 3587.07 140.01 1110.90 420.44 275.00 1649.68 487.01 4083.04 140.01 1738.34 266.72 275.00 1649.68 487.01 4556.76 140.01 2544.32 162.78 275.00 1649.68 487.01 5258.80 140.01 3560.70 60.28 275.00 1649.68 487.01 6172.68 140.01 4821.94 -42.22 275.00 1649.68 487.01 7331.42 140.01 6369.48 -144.72 275.00 1649.68 487.01 8776.46 140.01 8249.84 -144.72 275.00 1649.68 487.01 10656.82
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B. 1. 2. 3. 4. 5. 6. 7. ASSETS GROSS BLOCK DEPRECIATION NET BLOCK NON CURRENT ASSETS CURRENT ASSETS CASH AND BANK BALANCE ADVANCES & OTHER CURRENT ASSETS TOTAL CURRENT RATIO TOL/TNW 965.79 230.64 735.15 37.56 1597.81 10.87 26.62 2408.01 1.12 2.71 1497.96 388.45 1109.51 90.93 2307.43 40.59 38.62 3587.08 1.20 2.54 1522.96 525.92 997.04 90.93 2715.08 238.36 41.62 4083.04 1.28 1.78 1522.96 645.75 877.21 90.93 2715.08 831.91 41.62 4556.76 1.57 1.17 1522.96 750.30 772.66 90.93 2715.08 1638.50 41.62 5258.80 1.96 0.80 1522.96 841.59 681.38 90.93 2715.08 2643.66 41.62 6172.68 2.41 0.57 1522.96 921.36 601.61 90.93 2715.08 3882.18 41.62 7331.42 2.96 0.41 1522.96 991.13 531.84 90.93 2715.08 5396.99 41.62 8776.46 3.64 0.30 1522.96 1052.20 470.77 90.93 2715.08 7338.41 41.62 10656.82 4.72 0.23
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CHAPTER 6 FINDINGS
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CHAPTER 6 FINDINGS
All throughout this project, there were several learning experiences, both on floor and off floor, based up on those learning experiences, certain findings and suggestions have been laid. It is not possible to list all those valuable information and knowledge gained from the project, but some of the corporeal knowledge acquired is listed below: Findings: 1. To finance their major working capital requirements, organizations prefer banking solutions to other options as they are more economic and easily available. 2. Thus know how of various lending policies, credit policies and risk structures of various banks are extremely essential. 3. For assessment of the working capital requirements companies follow aspecific regime of process, ranging from collection of information to planning to budget to preparing financials for the required funds
Findings from data were related to aspects of the methodology wherever appropriate, and effects arising from the choice of methods were recognized and commented upon. Wherever the research was an extended literature review or a theoretical critique of existing research, competing and complementary positions in the debate concerned were clearly explained, compared and contrasted, and an assessment of the company for lending. Methods of lending: Like many other activities of the banks, method and quantum of short-term finance that can be granted to a corporate was mandated by the Reserve Bank of India till 1994. This control was exercised on the lines suggested by the recommendations of a study group headed by Shri Prakash Tandon. The study group headed by Shri Prakash Tandon, the then Chairman of Punjab National Bank, was constituted by the RBI in July 1974 with eminent personalities drawn from leading banks, financial institutions and a wide cross-section of the Industry with a view to study the entire gamut of Bank's finance for working capital and suggest ways for optimum utilisation of Bank credit. This was the first elaborate attempt by the central bank to organise the Bank credit. The
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report of this group is widely known as Tandon Committee report. Most banks in India even today continue to look at the needs of the corporates in the light of methodology recommended by the Group. As per the recommendations of Tandon Committee, the corporates should be discouraged from accumulating too much of stocks of current assets and should move towards very lean inventories and receivable levels. The committee even suggested the maximum levels of Raw Material, Stock-in-process and Finished Goods which a corporate operating in an industry should be allowed to accumulate These levels were termed as inventory and receivable norms. Depending on the size of credit required, the funding of these current assets (working capital needs) of the corporates could be met by one of the following methods: First Method of Lending: Banks can work out the working capital gap, i.e. total current
assets less current liabilities other than bank borrowings (called Maximum Permissible Bank Finance or MPBF) and finance a maximum of 75 per cent of the gap; the balance to come out of long-term funds, i.e., owned funds and term borrowings. This approach was considered suitable only for very small borrowers i.e. where the requirements of credit were less than Rs.10 lacs As can be seen above, the basic foundation of all banks' appraisal of the needs of creditors is the level of current assets. The classification of assets and balance sheet analysis, therefore, assumes a lot of importance. RBI has mandated a certain way of analysing the balance sheets. The requirements of this break-up of assets and liabilities differs slightly from that mandated by the Company Law Board (CLB). The analysis of balance sheet in CMA data is said to give a more detailed and accurate picture of the affairs of a corporate. The corporates are required by all banks to analyse their balance sheet in this specific format called CMA data format and submit to banks. While most qualified accountants working with the firms are aware of the method of classification in this format, professional help is also available in the form of Chartered Accountants, Financial
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Analysts for this analysis.
ASSESSMENT OF WORKING CAPITAL REQUIREMENTS
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(RS. IN LACS) 2012-13
NO. OF DAYS REQUIRED 1. i) ii) iii) iv) v) vi) CURRENT ASSETS RAW MATERIAL OTHER CONSUMABLE SPARES STOCK-IN-PROCESS FINISHED GOODS RECEIVABLES OTHER CURRENT ASSETS TOTAL CURRENT ASSETS (I) NO. OF DAYS REQUIRED II. i) CURRENT LIABILITIES CREDITORS FOR PURCHASE OF RAW MATERIAL, STORES AND CONSUMABLE SPARES OTHER CURRENT LIABILITIES TOTAL CURRENT LIABILITIES (II) III IV WORKING CAPITAL GAP (I-II) MARGIN ON WORKING CAPITAL
2010-11
2011-12
282.40 13.40 110.75 195.30 995.95 0.00 1597.81 2010-11
344.36 16.59 175.44 272.25 1498.79 12.00 2319.43 2011-12
373.95 18.16 198.72 302.60 1821.65 15.00 2730.08 2012-13
762.03
489.91
352.01
ii)
100.00 862.03 735.77 184.46
125.00 614.91 1704.52 424.76
135.00 487.01 2243.07 593.39
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V BANK BORROWINGS (III-IV) 551.31 1279.76 1649.68
CALCULATION OF BREAK EVEN POINT AT CAPACITY UTILISATION = S.NO. PARTICULARS Rs. IN LACS 9547.09 90
A.
SALES RECEIPTS VARIABLE COSTS:RAW MATERIAL CONSUMABLE STORES/SPARES POWER & FUEL INTT. ON WORKING CAPITAL BORROWINGS DIRECT WAGES SALES EXPENSES MISC. FACTORY EXPENSES TOTAL OF VARIABLE COSTS SURPLUS (A-B) FIXED COSTS:REPAIR & MAINTENANCE INDIRECT SALARIES (MANAG. & SUPERVISORY) DIRECTOR'S SALARY/REMUNERATION INTT. ON TERM LOAN INTT. ON LONG TERM (LTL) DEPRECIATION ADMINISTRATIVE EXPENSES
(a) (b) (c) (d) (e) (f) (h) B. C.
6080.61 69.65 110.39 169.01 440.59 100.17 135.99 7106.41 2440.68
(a) (b) (c) (d) (e) (f) (g)
113.73 166.54 166.54 72.08 0.00 137.46 178.90
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D. (a) TOTAL OF FIXED COSTS BREAK EVEN POINT AT UTILISED CAPACITY (D/C % 100) BREAK EVEN POINT AT INSTALLED CAPACITY 835.25 34.22 %
(b)
30.80
CAPACITY
DRAWING CAPACITY BUNCHING CAPACITY
NO OF DRAWING MACHINE
1.00
NO OF MACHINE
3.00
NO OF HRS PER DAY
24.00
NO OF HRS PER DAY
24.00
NO OF DAY PER ANNUM
300.00
NO OF DAY PER ANNUM
300.00
NO OF MACHINE HRS
7200.00
NO OF MACHINE HRS
21600.00
LOADING FACTOR(OEE)
0.80
LOADING FACTOR(OEE)
0.80
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MACHINE RUNNING HOURS
5760.00
MACHINE RUNNING HOURS
17280.00
EFFECTIVE DRAWING HOURS
5760.00
EFFECTIVE RUNNING HOURS
17280.00
PROCESSING CAPACITY
186.00
KG/HR
PROCESSING CAPACITY
65.00
INSTALLED CAPACITY
1071.36
INSTALLED CAPACITY
1123.20
UTILISED CAPACITY YR I @ 60%
642.82
UTILISED CAPACITY YR I @ 60 %
673.92
UTILISED CAPACITY YR II @ 70%
749.95
UTILISED CAPACITY YR II @ 70 %
786.24
OPTIMUM UTILIZATION YR III 90 %
964.22
OPTIMUM UTILIZATION YR III 90 %
1010.88
SALES AT INSTALLED CAPACITY
PARTICULARS
LENGTH/ANNUM
SALE RATE
SALE VALUE
AV CLASS AVF & AVSF AVSS,FLRY
21988.05 24717.00 84048.30 130753.35
9258.00 2450.00 3050.00
2035.65 605.57 2563.47 5204.69
CU PVC
1071.36 619.92
340000.00 60000.00
3642.62 371.95 4014.58
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CHAPTER 7 CONCLUSION
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CHAPTER 7 CONCLUSION
To conclude this project on Project analysis and working capital seems to be a new beginning, towards analyzing the fund management done by corporate, constituting of analyzing fund requirements, identifying the probable sources of funds, performing credit appraisal for procurement of funds and finally delegatingand acquiring the funds. After the LPG(Liberalization - Privatization -Globalization) trade activities in India increased rapidly. Assessment of working capital requirement and procuring funds as working capital is a very regulated and standardized objective of both the lender and the borrower, with involvement of several committees, ranging from the Tandon Committee to the latest Basel II norms set by the Basel Committee, guidelines for working capital assessment have been specified there in. Still several issues lay within the authority of the bank and the borrower, in this situation the borrower tries to avail maximum benefit with maximum flexibility to achieve a safe capital basis, where he can easily balance his current assets and current liabilities. To conclude it can be said, that for proper assessment of working capital requirements know how of budgeting, forecasting, market conditions, sources of funds, assessment policies, credit policies and risk structures of banks and RBI, as well as a personal rapport with the lenders is extremely essential, a mix of this can result in to easy assessment and procurement of funds. The selection and evaluation of financial institutions are important issues (even for financial institutions/Banks themselves, who need to know the methods and procedures of selection and evaluation used by their clients in order, for example, to adopt an appropriate funding strategy, so the company whom they are funding may not be over funded or underfunded). Although selection and evaluation are often treated separately in the financial management literature, they are in fact difficult to separate. Evaluation is a dynamic, relational process, which takes place throughout the duration of banking provision. Within this overall process, choice, selection and evaluation are linked. A common consequence of these different aspects, particularly intangibility, has been difficult in defining the output of services and therefore in measuring this output. One of the characteristics of funding, and particularly of a bank, is that the financial provision/guideline is only considered as output from the moment at which it is sold. Until this moment, it is only a potential output. Changes in banking/financial partners may affects organizational or human systems are generally difficult to identify, measure and describe. Numerous variables affect or are likely to affect these systems, and it is relatively difficult, and sometimes almost impossible, to isolate the specific effects of the process with the aid of just one measuring instrument. Moreover, even if this was possible, there remains the problem that the effects of funding are not always observable and therefore immediately measurable. Many effects, such as
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organizational changes and enhanced performance, are often diffused and diluted within the organization, and are only observable in the medium to long term. In the present study most variables were put to the respondents in order to measure the assessment criteria in banks. The findings concluded that out of the all assessment variables, MPBF(maximum permissible banks finance) calculation appear prime considerations of the banks and are also in lieu with RBI policies..
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CHAPTER 8 RECOMMENDATION
CHAPTER 8 RECOMMENDATION The study findings further reveal that customers prefer to bargain and look for discounts in interest rates rather than services. Therefore such incentives should be in the priority of banks. Furthermore and in
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contradiction to above, customers also prefer to get the very best or perfect choice of services and even search for best overall quality. Customers are most commonly experienced and informed and they love to recommend the bank that succeeds in satisfying their standard and expectations. More and more firms are searching for new ways to achieve, retain, upgrade and leverage competitive advantages, given the fact that customers are becoming more demanding, competition is getting more intense and technology is changing more rapidly. As some researchers have concluded, creating superior customer value is a major goal for market-driven firms. In fact, delivering superior customer value is inevitably becoming one of the most important success factors for any firm now and in the future because of its significant impact on behavior intentions of customers. As a result, many firms are transforming their focus from looking internally within the organization for improvement by way of quality management, downsizing, business process reengineering or lean production and agile manufacturing to pursue superior customer value delivery. Therefore, learning about customer value and knowledge concerned, which can provide sufficient customer voice to guide managers in how to respond, is playing a more and more important role in a firms increasingly competitive environments. Future studies need to be conducted regarding the customer relationship of banks in the new environment of knowledge and information. Professional relationship rests on the service providers ability to show competence, whereas social relationship is grounded into the efficacy of the service providers social interaction with the customer. Relationship quality signifies a buyers trust in a sales person and satisfaction in the relationship. Thus, relationship quality can be looked upon as a bivariate construct encompassing trust and satisfaction. So, quality of high relationship signifies that the customer can depend on the service providers integrity and has confidence in the service providers future performance since the level of past performance has been quite satisfactory. Moreover, research conducted brings into focus that customer salesperson relationship quality is a significant prerequisite for a successful long-term relationship.
Appendices and Annexure

QUESTIONNAIRE
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FUNDING AND WORKING CAPITAL MANAGEMENT This questionnaire has been designed to study Project Funding and Working Capital Management for The New Age Creation.. Your valuable information will assist the academic analysis and study. The contents of this form are absolutely confidential and are used for academic study only.
Section One - View on Garments segment and its future

1. What is the view of promoters/management on garments segment and its future in India.
____________________________________________________ As India contributes a lot in garment industry of the world and how do you rate your products, are they world class. ______________________________________________________
Company has latest equipments/machinery. a) b) c) d) Are the physical facilities are visually appealing Companys employees are well dressed and appear neat Quality of products are of world class and enough competent
7. 6 .. 5 4 3 2 .. . . . 7 . 7 . 7 .
6 .. 5 4 3 2 1 .. . . . . 6 .. 5 4 3 2 1 .. . . . . 6 .. 5 4 3 2 1 .. . . . .
Section Two- Quality Perceptions The following set of statements relate to your feelings about product quality. For each statement, please show the extent to which you believe your Main Bank has a feature described by the statement. Do this by picking one of the seven numbers next to each statement. If you strongly agree that your main bank has this feature, then circle the number 7. If you strongly disagree that your main bank does not possess this feature then circle number 1. If your feelings are not strong, then circle one of the numbers in the middle. There are no right or wrong answers. All I am interested in is a number that best shows your perceptions about your Main Bank.
2. The following statements assess your perception towards the quality of product and branding your product. Strongly Agree ...................
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Strongly Disagree a) b) c) d) e) When you promises to do deliver something by a certain time, do you often keep quality intact. When I have problems, with my employees or machinery am I sympathetic and reassuring My quality/products are dependable My quality provides along with after sales services at the time it promises to do so My company keeps its records accurately 7 . 7 . 7 . 7 . 7 . 6 .. 5 .. . 6 .. 5 .. . 6 .. 5 .. . 6 .. 5 .. . 6 .. 5 .. . 4 . 4 . 4 . 4 . 4 . 3 . 3 . 3 . 3 . 3 . 2 . 2 . 2 . 2 . 2 . 1 1 1 1 1
3. How do you rate the quality of your competitors and their view on same industry ____________________________________________________
Section three: Self belief and promoters commitments towards business 4. The following statements assess your perception towards employees relations with promoters. Strongly Agree ................... .Strongly Disagree a) b) c) d) I can trust my employees I feel safe in my transactions with my employees Employees of my company are polite Employees get adequate support from management to do their jobs well 7 . 7 . 7 . 7 . 6... . 6... . 6... . 6... . 5 . 5 . 5 . 5 . 4 . 4 . 4 . 4 . 3 . 3 . 3 . 3 . 2 . 2 . 2 . 2 . 1 1 1 1
5. The following statements assess your perception towards the personnel attention and care provided. Strongly Agree ................... .Strongly Disagree a) Promoters educational background and expertise is in line 7 6 .. 5 4 3 2 1
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with business b) c) d) e) Promoters can also have other business interests. Promoters do not know what are the needs of employees Promoters needs to pool in more capital in business rather than taking loan My main Bank does not have operating hours convenient to all their customers
. 7 . 7 . 7 . 7 .
..
. 4 . 4 . 4 . 4 .
. 3 . 3 . 3 . 3 .
. 2 . 2 . 2 . 2 . 1 1 1 1
6 .. 5 .. . 6 .. 5 .. . 6 .. 5 .. . 6 .. 5 .. .
6. Would you mortgage your personal assets for getting the finance from any financial institution along with personal guarantee of yours _______________________________________________________
Section Three-Self Concept
7. Think about banking at your MAIN BANK and the kind of person who typically uses the Main Bank. Now while imagining that person in their mind, circle and indicate how strongly you agree or disagree with each of the following statements. Strongly Agree................................Strongly Disagree a) b) c) d) Banking with my Main Bank is consistent with how I see myself most of the time People similar to me bank with my Main Bank most of the time Banking with Main Bank most of the time reflects who I am Banking with Main Bank is a mirror image of me most of the time 7 7 7 7 6 5 6 5 6 5 6 5 4 4 4 4 3 3 3 3 2 2 2 2 1 1 1 1
Section Four- Customer Loyalty and relationship
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11. The following statements assess your perceptions of your loyalty towards your Customers. Strongly Agree .............................Strongly Disagree a) b) c) d) I consider myself to be loyal to my customers My customers would be my first choice for my discussions on future projects I think I am committed to my customers I really like doing business with my customers 7 7 7 7 6... . 6... . 6... . 6... . 5 5 5 5 4 4 4 4 3 3 3 3 2 1
2 .. 1 . 2 .. 1 . 2 1
Section Five- Any future to brought P.E.(Private equity) investor.
12. Are promoters are in view of bringing the private equity in near future and how much stakes are they thinking for dilution...........................................................................................
13. Promoters are in touch with other big companies or giants for expansion and dilution in shares.................................................................................................................... 14. What is the valuation of your company in terms of future performance and will you want to exit this business at any given point of time......................................................................................................................................................... .............
Section Six - Banking and relationships with other financials institutions. 8. Which is your main/existing bank? (The bank which you use for your existing banking needs) _______________________________________
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9. How long have you banked with your main bank? (please tick only one) a) Less than a year b) Between 1 year 5 years c) Over 5 years
10. Please indicate how strongly do you agree or disagree with each of the following statements by ticking the appropriate box below. Strongly Agree ................... Strongly Disagree A B C D E F G H I J K L M Profitability reasons (Low interest rates). Advice from relatives. Advice from friends. Banks location. Banks reputation and image. Adequate banking hours. A person that I know and trust very well works in the bank. Low service charges of the bank. The confidentiality offered by the bank. Provision of fast and efficient service by the bank. Bank effectiveness in completing transactions. Wide range of facilities offered by the bank. Quality of advice offered by the bank personnel. 7 . 7 . 7 . 7 . 7 . 7 . 7 . 7 . 7 . 7 . 7 . 7 . 7 6 .. 5 .. . 6 .. 5 .. . 6 .. 5 .. . 6 .. 5 .. . 6 .. 5 .. . 6 .. 5 .. . 6 .. 5 .. . 6 .. 5 .. . 6 .. 5 .. . 6 .. 5 .. . 6 .. 5 .. . 6 .. 5 .. . 6... 5 4 . 4 . 4 . 4 . 4 . 4 . 4 . 4 . 4 . 4 . 4 . 4 . 4 3 . 3 . 3 . 3 . 3 . 3 . 3 . 3 . 3 . 3 . 3 . 3 . 3 2 2 . 2 . 2 . 2 2 . 2 . 2 . 2 2 . 2 . 2 . 2 1 1 1 1 1 1 1 1 1 1 1 1 1
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. N O Confidence in banks management. Social and friendly features of banks personnel. 7 . 7 .
. 4 . 4 .
. 3 . 3 . 2 . 2 . 1 1
6 .. 5 .. . 6 .. 5 .. .
Section Seven- Views about Yourself 15. The following statements assess your perceptions of yourself as a supplier in general. e) a) f) For the most parts, I am keen to have my involvement Strongly Agree ...................Strongly 7 6... 4 3 2 1 Disagree 5 . 7 6.. 5 4 3 2 1 7 6... 5 4 3 2 1 .. . 7 6.. 5 4 3 2 1 7 6... 5 4 3 2 1 .. . 7 6.. 5... 4 3 2 1 .. 7 6.. .. 5... 4 3 2 1
When it comes to products, I try to deliver the very best I or perfect choice discounts when I deliver products on enjoy looking for time or before time b) In general I usually try to deliver the best overall quality g) I enjoy hunting for bargains when I deliver as per the expectation of buyer c) I make special effort to deliver the very best quality products d) My standards and expectations for the products are high
16. The following statements assess your knowledge, familiarity and ability to carry out banking transactions on a regular basis. Please circle the number which best summarises your view. a) I know a lot about banking b) I am experienced c) I am informed d) I am an expert 7 7 7 7 6 6 . 6 . 6 . 5 . 5 . 5 . 5 . 4 . 4 . 4 . 4 . 3 . 3 . 3 . 3 . 2 . 2 . 2 . 2 . 1 . 1 . 1 . 1 . I know very little about banking I am inexperienced I am uninformed I am not an expert
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Section Eight-Demographics of promoters 17. Gender
a). Male
b). Female
18. Age
a). 18-24
b). 25-34
c). 35-44
d). 45-54
e). Over 55
19. Marital status
a). Single
b). Married
20. Education level
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a). Primary
b). Secondary
c). College
d). University
e). Others
21. Other Occupation
a). Businessman
b). Education/medical services
d). Professional/senior management
f). Investor
h). Others (please specify).
22. Which of the following describes your monthly Income from the business?
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a). Rs.10000-Rs.50000
b). Rs.50000-Rs.100000
e). Rs.100000-Rs.200000
f). Rs.200000-Rs.500000
g). Above 500000
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BIBLIOGRAPHY

Khan M.Y., Jain P.K., Financial Management TATA McGraw-Hill Publishing, New Delhi. Christopher Lovelock, Financial Services Marketing Pearson Publication Rustagi R.P., Financial Management Galgotia Publication WEBSITES www.google.com www.economictimes.com www.vccircle.com www.moneycontrol.com www.wikipedia.com www.realmarket.com
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FUNDING AND WORKING CAPITAL MANAGEMENT

FUNDING AND WORKING CAPITAL MANAGEMENT

FUNDING AND WORKING CAPITAL MANAGEMENT

4. 5. 6. 7. 8. 9. 10. 11. 12. 13.

FUNDING AND WORKING CAPITAL MANAGEMENT

Place : Noida Date:

Mr. Santosh Kumar Jha Project Guide

FUNDING AND WORKING CAPITAL MANAGEMENT

Place: Darbhanga Date:

Nitu Kumari Roll No. : 92

FUNDING AND WORKING CAPITAL MANAGEMENT

FUNDING AND WORKING CAPITAL MANAGEMENT

FUNDING AND WORKING CAPITAL MANAGEMENT

LAYOUT OF THE PROJECT REPORT

FUNDING AND WORKING CAPITAL MANAGEMENT

The New Age Creation

FUNDING AND WORKING CAPITAL MANAGEMENT

The New Age Creation

FUNDING AND WORKING CAPITAL MANAGEMENT

Purpose of the Study

Objectives of the Study

FUNDING AND WORKING CAPITAL MANAGEMENT

Scope of the Study

Duration of the Study

FUNDING AND WORKING CAPITAL MANAGEMENT

Current financials of The New Age Creation ::

FUNDING AND WORKING CAPITAL MANAGEMENT

CHAPTER 2: OBJECTIVE AND SCOPE

FUNDING AND WORKING CAPITAL MANAGEMENT

CHAPTER 2 OBJECTIVE AND SCOPE

FUNDING AND WORKING CAPITAL MANAGEMENT

FUNDING AND WORKING CAPITAL MANAGEMENT

FUNDING AND WORKING CAPITAL MANAGEMENT

FUNDING AND WORKING CAPITAL MANAGEMENT

FUNDING AND WORKING CAPITAL MANAGEMENT

FUNDING AND WORKING CAPITAL MANAGEMENT

FUNDING AND WORKING CAPITAL MANAGEMENT

DEBTORS CASH FINISHED GOODS

RAW MATERIAL WORK IN PROGRESS

FUNDING AND WORKING CAPITAL MANAGEMENT

FUNDING AND WORKING CAPITAL MANAGEMENT

FUND FLOW ANALYSIS

FUNDING AND WORKING CAPITAL MANAGEMENT

WORKING CAPITAL BUDGET

FUNDING AND WORKING CAPITAL MANAGEMENT

FUNDING AND WORKING CAPITAL MANAGEMENT

FUNDING AND WORKING CAPITAL MANAGEMENT

FUNDING AND WORKING CAPITAL MANAGEMENT

FUNDING AND WORKING CAPITAL MANAGEMENT

FUNDING AND WORKING CAPITAL MANAGEMENT

FUNDING AND WORKING CAPITAL MANAGEMENT

FUNDING AND WORKING CAPITAL MANAGEMENT

Working Capital Turnover

Sales Networking Capital

FUNDING AND WORKING CAPITAL MANAGEMENT

Year Sales Networking Capital Working Capital Turnover

2008 166.0 53.87 3.08

2009 151.5 62.52 2.4

2010 169.5 103.09 1.64

FUNDING AND WORKING CAPITAL MANAGEMENT

I. II. III. IV. V. VI.

ANALYSIS OF FINANCIAL STATEMENTS FINANCIAL STATEMENTS:

FUNDING AND WORKING CAPITAL MANAGEMENT