A Project Report On

Working Capital Management

Submitted in partial fulfillment of the requirement for award of degree of Master Of Management Studies (MMS) under University of Mumbai. Submitted By Mr. Manish H Gurao Roll No. 3009 Batch 2010-2012 Under the guidance of Dr. N. Mahesh

A.C. Patil College Of Management Studies and Research Sector 4, Plot 17 Kharghar, Navi Mumbai 410210 Contact No: 022-2774 5722 / 27863644 Fax: 91-22-2774 5732 E-mail: principal@acpce.org Web Site: http://www.acpce.org

GUIDE CERTIFICATE

This is to certify that Mr. Manish H Gurao (Roll No.3009) student of Master of Management Studies has undergone his Working Capital Management project under my guidance and prepared a project report titled Working Capital Management at Phils Heavy Engineering Pvt. Ltd. as a partial fulfillment of requirements for award of degree of Masters Of Management Studies from the Mumbai University, academic year 2010-2012.

Place Date

Dr. N. Mahesh Prof & Head

COLLEGE CERTIFICATE

This is to certify that Mr. Manish H Gurao (Roll No. 3009) student of first year of Master of Management Studies has undergone and completed his project in Working Capital Management having topic Working Capital Management with Phils Heavy Engineering Pvt. Ltd. as a partial fulfillment of requirements for award of degree of Masters Of Management Studies from the Mumbai University, academic year 2010-2012.

Dr. N. Mahesh Prof and Head

Dr. D.G. Borse Director

DECLARATION
I hereby declare that this project report entitled Working Capital Management with Phils Heavy Engineering Pvt. Ltd. is a record of worth carried of by me under the guidance of Masters Of Management Studies. I also hereby declare that this project report is a result of my own efforts and not being submitted at any time to any other university or institute for the award of my degree or diploma. Dr .N. Mahesh Prof & Head as a partial fulfillment of requirements for award of degree of

Place Date Manish H Gurao

ACKNOWLEDGEMENT
Successful completion of any work would be incomplete unless we mention the name of person who made it possible, whose guidance and encouragement served as a beckon of light and crowned my efforts success. I take this opportunity to thank Mr Ajay Philip Director for giving me an opportunity to carry out a project in Phils Heavy Engineering Pvt Ltd. Mr Nitin More HR & Admin for making the arrangements to carry out the project successfully. I would like to give sincere thanks to Mr Renjith Finance Executive for his continuous guidance and support during the course of the project and also to the staff of Phils Heavy Engineering Pvt Ltd who have helped me directly or indirectly during the project report. I will even thank Dr. D. G. Borse Director for his support for this project and also my guide for the project Dr. N. Mahesh Prof. and Head Of Department for guiding me throughout the project and bringing out the best in me. And last but not least my friends and relatives for their continuous support and the confidence they show in me.

Manish H Gurao

Executive Summary
This project is a sincere effort to study and analyse the Working Capital Management of Phils Heavy Engineering Pvt Ltd. The project focused on making an financial overview of the company by conducting a working capital analysis. The project has been a very good experience. Every organization faces the problem of Working Capital Management in their day-to-day processes. An organizations costs are reduced and profits are increased only if it able to manage its Working Capital efficiently. The project undertaken is on Working Capital Management of Phils Heavy Engineering.. It describes about how the company manages its working capital and the various steps that are required in the management of working capital. Cash is the lifeline of a company. If this lifeline deteriorates, so does the companys ability to fund operations, reinvest and meet capital requirements and payments. Understanding a companys cash flow health is essential to making investment decisions. A good way to judge a companys cash flow prospects is to look at its Working Capital Management (WCM).Working capital refers to the cash of a business requires for day-to-day operations or, more specifically, for financing the conversion of raw materials into finished goods, which the company sells for payment. Among the most important items of working capital are levels of inventory, accounts receivable, and accounts payable. Analysts look at these items for signs of a companys efficiency and financial strength. The working capital is an important yardstick to measure the companys operational and financial efficiency. Any company should have a right amount of cash and lines of credit for its business needs at all times. This project describes how the management of working capital takes place at Phils Heavy Engineering. There are numerous instances in the history of business world where inadequacy of working capital has led to business failures when a firm finds it difficult to meetings day to day affairs. Operating expenses essential out lays may have to be postponed for want of funds, operating plans will go out of gear & enterprise objectives on investment slumps the suppliers & creditors of the firm may have to wait longer to raise their dues & will hesitate to extend further credit to the firm. Thus efficient management of working capital in an important prerequisite for successful working of a business concern it reduces the chances of business failure generates a felling of security and confidence in the minds of personnel in the organization it assurance solvency of steady of the organization. The project analyses the companys position with respect to the sundry creditors and debtors. The inventory management is also considered as it forms a substantial portion of the working capital of the company. In Accounting , Working Capital is the difference between the inflow and outflow of funds . In other words , it is the net cash inflow. It is defined as the excess of current assets over current liabilities and provisions . In other words , it is net current assets or net working capital A study of Working Capital is of major importance to internal and external analysis because of its close relationship with the day - to -day operations of a business . Working Capital is the portion of the assets of a business which are used on or related to current operations , and represented at any time one time by the operating cycle of such items as against receivables, inventories of raw materials, stores, work in progress and finished goods, merchandise, notes or bill receivables and cash

Working Capital compromises current assets which are distinct from other assets. In the first instance, current assets consists of these assets which are of short duration. For example, cash is held idle for a week or so, accounts receivables may not have a life span of more than three months and inventories may be held for one to three months. Working capital may be regarded as the life blood of business. Its effective provision can do much to ensure the success of a business while its inefficient management can lead not only to loss of profits but also to the ultimate downfall of what otherwise might be considered as a promising concern. Working Capital is rightly an adjuct of fixed capital investment. It is a financial lubricant which keeps business operations going. In fact working capital management is concerned with handling problems arising in course of managing interrelationships between current assets and current liabilities. Those who are to pay off current liabilities. Those who are to pay off current liabilities and the quantum of funds which will be required by the firm to fund the excess portion of current assets, will find the net concepts significantly useful.

INDEX

SR No. 1

TOPIC INTRODUCTION 1.1 INTRODUCTION TO WORKING CAPITAL 1.2 ABOUT WORKING CAPITAL 1.3 CLASSIFICATION OF WOKRING CAPITAL 1.4 IMPORTANCE OF WORKING CAPITAL 1.5 OBJECTIVE OF STUDY 1.6 LIMITATIONS OF STUDY 1.7 NATURE AND SCOPE OF STUDY 1.8 HYPOTHESIS

PAGE NO 1 3 8 11 13 14 15 16 17 24 29 31 31 34 37 39 56

2 3 4 5

REVIEW OF LITERATURE COMPANY PROFILE RESEARCH METHODOLOGY ANALYSIS OF DATA 5.1 PERFORMANCE OF COMPANY 5.2 ANALYSIS OF DEBTORS 5.3 ANALYSIS OF CREDITORS 5.4 ANALYSIS OF INVENTORY 5.5 FINDING AND CONCLUSION

7 8

REFERENCES ANNEXURES