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CHAPTER-1 GENERAL INFORMATION

COMPANY PROFILE

Name of Organization Address

Gujarat Print Pack Publication Ltd. Gujarat Print Pack Publication Ltd. 308/9 GIDC, Phase 2, Dediyasan, Mehsana-384002 Phone: - (02762) 259714, 259614 Fax: - + 91-2762-254914 Email: -flexo@gujprintpack.com Website: -www.gujprintpack.com

Classification Class of Industry Establishment Exclusive in-charge

Private Limited Company Small Scale Industry Establish in 1983 Mr. O.P. Dhanpal

HISTORY
Gujarat Print Pack Publications (GP) located in Gujarat is Indias leading package design, printing, packaging and labeling company manufacturing broad range of labels, corrugated boxes, stickers, printed cartons and providing package design solutions with wide applications in food industry, beverages industry, cosmetic industry, and pharmaceutical industry. GP provides innovative package designing and printing solutions vital for corporate identity. Due to innovative techniques, state of the art manufacturing facility, research & development, and rigorous quality control measures we have developed an inherent ability to manufacture a wide range of corrugated box, offset box, printed cartons, duplex board cartons, multi-colored cartons, embossed cartons, foil stamped cartons, UV coated cartons, sticker labels, clear sticker labels, card board boxes, holographic labels, thermal pressure sensitive labels and package design and printing solutions. Gujarat Print Pack Publications is Indias first printing, packaging, labeling and designing company to receive ISO 9002 certification, which assure customers of highest quality products at par with international standards. GPs range of printing and packaging solutions is widely acclaimed for quality and consistency. We are committed to strive constantly and innovating the entire range of printing, packaging and labeling solutions to provide exciting and feasible solutions to customers. Today, we live in a world where millions of products brands compete with one another for consumer attention. Each product has its own Packaging, Printing & Labeling requirement, which is sometimes satisfied by standard solutions and at other times, demand innovations, customizes dissolutions.

GP3---Gujarat Print Pack Publications Limited the company that innovates to succeed.

OPINION

M.R.ASHISH PATEL (C.E.O)

Ashish Patel is the CEO of GP3. An innovative printing Technologist himself and an innovative entrepreneur, he steers the day-to-day operations of the company with his inspirational leadership and corporate acumen. A team of professional in Management, Printing, Packaging &Labeling technologies, Graphic Design, strategizing, conceptualizing, Marketing, etc. from the second line of command. They are backed by experienced, skilled workmen on the floor. Human Talent + Global Technology + Superlative Services = Positive Success Recipe GP3's expert action force creates micro-precise Packaging solutions for its clientele. These are value-added further by high-quality graphic design & exclusive, multifaceted Printing Services (offered as an additional, customized service, exclusively to GP3's Packaging solutions clients). Today, GP3 has total employee strength of 200, including 75 skilled Laborers. And a recruitment drive is on, to meet rising requirements and new technology induction. Over the years, the company has evolved a truly remarkable way of interactive functioning, based on a shared vision of entrepreneurial excellence.

MISSION
To offer our customers optimal printing & packaging solutions, comparable in

quantity to the best in the world. To identify & acquire the best technologies in the field, and to keep on par with

the changing global standards through continual technology & knowledge up gradation. To achieve and maintain a minimum annual growth rate of 25 to 30% To create & nurture a customer-centric corporate culture, where every business

activity is built around the core of customer satisfaction. To build one of the industrys most well-rounded and eminent talent pools, and

nurture it through select HRD methodologies and innovative employee empowerment practices. To continuously raise the bar. To excel, in thought & action, in sum &parts, in each & every aspect of the

company.

CHELLENGES
If the market place of the 21st century can be characterized by one word, it is: consumer-driven. Entertain the consumer. Enthuse the customer. Enthrall the consumer. Enliven the consumer. Empower the consumer. Brand will have to compete for the consumers attention and indulgence like never before. This places a heavy responsibility on the shoulders of printing and packaging service providers, because it is they who are the final link between the consumer & the brand. They shape the visual connectivity between the two. Competitive currents will soon turn printing & packaging into a UN usual blend of fine art and precision technology.

ORGANISATION STRUCTURE

Director Director

D D i i r r e e c c t t o o r r

CEO CEO Factory Factory Manager Manager

GM Mgmt. GM Mgmt.

Senior Manager Senior Manager

Coordinates Coordinates

H.O.D. H.O.D.

Collection in Collection in Charge Charge

Pre-Press Pre-Press Manager Manager

Production Production Manager Manager

Clarke Clarke

Designer Designer (Carton (Carton / / Corru.Box) Corru. Box)

Supervisor Supervisor

Cashier Cashier

Designer Designer (Lables) (Lables)

Workers Workers

Mgmt. Exe Mgmt. Exe

LIST OF CLIENTS

Vadilal Industries Ltd.

Havmor

Torrent Pharmaceuticals Ltd

Ajanta India Limited

Orpat Industries

Godrej (India)

Amlcon Parenterals (India) Limited

Pharma Dancia

Ranbaxy

Intas Pharmaceuticals Ltd

Cadila Pharmaceuticals Limited

Laborate Pharmaceuticals India Ltd.

Claris Lifesciences Limited

Lincoln Pharmaceuticals Ltd

Medicamen Biotech Ltd.

XS Laboratories Pvt. Ltd

Cipla India Limited

Belco Pharma Limited

Core Healthcare Limited

Pioma Industries

Albatross Pharma

Jyoti Capsules

Bombay Tablet Mfg. Co. Ltd

Alembic Glass Industries Ltd.

BASF India Limited

Shashi Industries

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Shree Gannath Stores

Prince Care

Rewa

Hindustan Antibiotics Ltd

Softel Machines Ltd

Indo Gulf Corporation Ltd

Bajaj Sevashram ltd

Infar

Gracure Pharmaceuticals Ltd

Meghmani Organics Limited

Troikaa India limited

Parenteral Drugs (India) Limited

Northern Minerals Limited

Mat (India) Laboratories (P) Ltd

Pee- Medica

Rikon Quartz

March Parenterals (India) Ltd

Adico Spares Pvt. Ltd

Nirma Industries

Orgenon India Ltd.

United Phosphorous Ltd

Indkus Drugs & Pharma Pvt. Ltd

Entod

Umiya Agroes

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Alkem Ulticare

Pesticides India

H S Bhargava Pharmacy Pvt. Ltd

Sipra Remedies Pvt. Ltd

Cadbury's

Casper

Nivea

CHAPTER-2 RESEARCH METHODOLOGY


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INTRODUCTION Working Capital:The life blood of company, as is evident, signified funds required for day-to-day operations of the firm. The management of working capital assumes great importance because shortage of working capital funds is perhaps the biggest possible cause of failure of many units in recent times. There it is of great importance on the part of management to pay particular attention to the planning and control for working capital. An attempt has been made to make critical study of the various dimensions of the working capital management of Gujarat print pack publication Ltd., These involve managing the relationship between a firm's short-term assets and its shortterm liabilities. The goal of Working capital management is to ensure that the firm is able to continue its operations and that it has sufficient money flow to satisfy both maturing short-term debt and upcoming operational expenses. RESEARCH APPROACH Qualitative and quantitative approaches My report is a mixture of a quantitative and qualitative study. Quantitative research is

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Objective; qualitative research is subjective. DATA SOURCE The secondary data were collected from the Balance Sheet & P&L Account, GPPPL website, etc.

RESEARCH OBJECTIVE The main objectives of my research on management of working capital of Gujarat Print pack publication ltd.are:-

1) To study & evaluate the working capital management system of Gujarat Print
pack publication ltd.

2) To determine the adequate or optimum quantum of investment in working capital


of Gujarat Print pack publication ltd.

3) To determine the composition or structure of current assets. 4) To maintain a proper balance between liquidity & profitability. 5) To maintain a proper the policy or means of finance for current assets.
SCOPE OF WORK

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Study was done on the basis of data available on net. The scope of the research is to determine the Analysis of Gujarat Print Pack Publication Pvt. Ltd. STUDY BASED ON LITERATURE From available books, internet. Basic Concept Analysis Method.

CHAPTER-3 WORKING CAPITAL MANAGEMENT


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INTRODUCTION TO WORKING CAPITAL


Cash is the lifeline of a company. If this lifeline deteriorates, so does the company's ability to fund operations, reinvest and meet capital requirements and payments. Understanding a company's cash flow health is essential to making investment decisions. A good way to judge a company's cash flow prospects is to look at its working capital management (WCM).

WHAT IS WORKING CAPITAL?


Working capital refers to the cash 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 company's efficiency and financial strength. 16

MANAGEMENT OF WORKING CAPITAL

Working capital management is concerned with the problems that arise in attempting to manage the current assets, current liabilities and the inter relationships between them. Its operational goal is to manage the current assets and current liabilities in such a way that a satisfactory level of working capital is maintained. The term working capital refers to the net working capital i.e. current assets minus current liabilities with reference to the management of working capital, net working capital represents that part of the current assets which are financed with the long term funds.

The level of NWC has a bearing on the profitability as well as the risk in the sense of the inability of the firm to meet obligations as and when they become due. Therefore, the tradeoff between profitability and risk is an important element in the evaluation of the level of NWC of the firm. In general, the higher the NWC the lower the risk, as also the

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lower is the profitability and vice-versa. Thus, the NWC measures the degree of risk in the management of working capital. Apart from the profitability-risk trade-off, the determination of the finance mix is the second ingredient of the theory of working capital management. The financing mix refers to the proportion of current assets to be financed by current liabilities and long term sources. One approach to determine the financing mix is hedging approach, acc. to which long term funds should be used to finance the fixed portion of the current assets and the purely temporary requirements should be met out of short term funds. This approach is high profit, high risk financing mix. Acc. to the second approach, namely the conservative approach, the estimate requirements of the current assets should be financed from long term sources and the short term funds should be used only in emergency situation.

The conservative approach is a low-profit, low risk combination. Neither of the two is suitable for efficient working capital management. A trade off between these two extremes provides a financing plan between these two approaches, and therefore, an acceptable financing strategy from the view point of the management of working capital.

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CONCEPTS OF WORKING CAPITAL

There are two concepts of working capital gross and net.

GROSS WORKING CAPITAL: It refers to the firms Investment in


current assets which can be converted into cash within an accounting year(or operating cycle) and include cash, short-term securities, debtors, (accounts receivable or book debts) bills receivable and stock (inventory)

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NET WORKING CAPITAL: It refers to the difference between Current


Assets & Current Liabilities. Current liabilities are those claims of outsiders which are expected to mature for payment within an Accounting year and include creditors (accounts payable) ,bills payable and outstanding expenses. Net working capital can be positive or negative. A positive net working capital will arise when Current Assets increase current liabilities. A negative net working capital will occur when Current Liabilities are in excess of Current Assets.

NATURE OF WORKING CAPITAL


EXCESSIVE AND INADEQUATE WORKING CAPITAL:
A business enterprise should maintain adequate working capital according to the needs of its business of its business operations. The amount of working capital should neither be excessive nor adequate. If the working capital is excess of its requirements it means idle funds adding to the cost of capital is short of its requirements, it will result in production interruptions and reduction of sales and, in turn, will affect the profitability of the business adversely.

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DEFECIENCIES OF EXCESSIVE WORKING CAPITAL

EXCESSIVE INVENTORY: Excessive working capital results in


unnecessary accumulation of large inventory. It increases the chances of misuse, waste, theft etc.

EXCESSIVE DEBTORS: Excessive working capital will result in liberal


credit policy which, in turn, will result in higher amount tied up in debtors and higher incidence of bad debts.

ADVERSE EFFECT ON PROFITABILITY: Excessive working capital


means idle funds in the business which adds to the cost of capital but earns no profits for the firm. Hence it has a bad effect on profitability of the firm.

INEFFECIENCY OF MANAGEMENT: Management becomes careless


due to excessive resources at their command. It results in laxity of control on expenses and cash resources.

DEFECIENCIES OF INADEQUATE WORKING CAPITAL

DIFFICULTY

IN

AVALIABILITY

OF

RAW-MATERIAL:

Inadequacy of working capital results in non-payment of creditors on time. As a result the credit purchase of goods on favorable terms becomes increasingly difficult. Also, the firm cannot avail the cash.

FULL UTILISATION OF FIXED ASSETS NOT POSSIBLE: Due to


the frequent interruption in supply of raw materials and paucity of stock, the firm cant make full utilization of its machines etc.

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DIFFICULTY IN THE MAINTAINENCE OF MACHINERY: Due to


the shortage of working capital, machines are not cared and maintained properly which results in the closure of production of on many occasions.

DECRAESE IN CREDIT RATING: Because of inadequacy of working


capital, firm is unable to pay its short term obligations on time. It decays the firms relation with its bankers and it becomes difficult for the firm to borrow in case of need.

ADVANTAGES OF ADEQUATE WORKING CAPITAL

AVAILIABILTY OF RAW MATERIAL REGULARLY: Adequacy of


working capital makes it possible for a firm to pay the suppliers of raw material in time. As a result it will continue to receive regular supplies of raw materials and thus there will be no disruption in production process.

FULL UTILISATION OF FIXED ASSETS: Adequacy of working capital


makes it possible for a firm to utilize its fixed assets fully and continuously. For eg. , if there is inadequate stock of raw material, the machines will not be utilized in full and their productivity will be reduced.

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CASH DICOUNT: A firm having the adequate working capital can avail the
cash discount by purchasing the goods for cash or by making the payment before the due date.

MEETING UNSEEN CONTINGENCIES: Adequacy of working capital


enables a company to meet the unseen contingencies successfully.

NEED OF WORKING CAPITAL


Along with the fixed capital almost every business requires working capital though the extents of working capital requirements differ in different businesses. Working capital is needed for running the day-to-day business activities. When a business is started, working capital is needed for purchasing raw material. The raw material is then converted into finished goods by incurring some additional costs on it. Now goods are sold. Sales do not convert into cash instantly because there is invariably some credit sales. Thus, there exists a time lag between sales of goods and receipt of cash. During this period, expenses are to be incurred for continuing the business operations. For this purpose working capital is needed. Therefore, sufficient working capital is needed which shall be involved from the purchase of raw material to the realization of cash. The time period 23

which is required to convert raw material into finished goods and then into cash is known as operating cycle or cash cycle. The need for working capital can also be explained with the help of operating cycle. Operating cycle of a manufacturing concern involves five phases:

(i) (ii) (iii) (iv) (v)

Conversion of cash into raw material. Conversion of raw material into work-in-progress. Conversion of work-in-progress into finished goods. Conversion of finished goods into debtors by credit sales. Conversion of debtors into cash by realizing cash from them.

Thus, the operating cycle starts from cash and then again restarts from cash. Need for working capital depends upon period of operating cycle. Greater the period more will be the need of working capital. Period of operating cycle in a manufacturing concern is greater than a period of operating cycle in a trading concern because in trading units cash is directly converted into finished goods.

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CASH
DEBTORS & BILLS RECEIVABLES

RAW MATERIAL

FINISHED GOODS

WORK-INPROGRESS

Operating cycle (nature of working capital)

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Because of the time involved in an operating cycle, there is a need of working capital in the form of current assets. Firms have to keep adequate stock of raw-material to avoid risk of non-availability of raw materials. Similarly, concerns must have adequate stock of finished goods to meet the demand in market on continuous basis and to avoid competition which necessitates the money tied up in debtors and bills receivables. In addition to al these, concerns have to necessarily keep cash to pay the manufacturing expenses etc. and to meet the contingencies.

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PERMANENT AND TEMPORARY WORKING CAPITAL


Working capital in a business is needed because of operating cycle. But the need for working capital does not come to an end after the cycle is completed. Since the operating cycle is continuous process, there remains a need for continuous supply of working capital. However, the amount of working capital required is not constant throughout the year, but keeps fluctuating. On the basis of this concept, working capital is classified into two types:

(a)

Permanent working capital: the need for working capital or current assets
fluctuates from time to time. However, to carry on day-to-day operations of the business without any obstacles, a certain minimum level of raw materials, work-in-progress, finished goods and cash must be maintained on a continuous basis. The amount needed to maintain current assets on this minimum level is called permanent working capital or regular working capital. The amount involved as permanent working capital has to be met from long term sources of finance, e.g. Capital, debentures, long term loans etc.

(b)

Temporary

working

capital:

any

amount

over

and

above

the permanent level of working capital is called is called temporary, fluctuating or variable working capital. Due to seasonal changes level of business activity is higher than normal during some months of the year and therefore, additional working capital will be required along with the permanent working capital it is so because during peak season demand rises and more stock is to be maintained to meet the demand. Similarly, the amount of debtors increases due to excessive sales. Additional working capital thus needed is known as temporary working capital because once the season is

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over; the additional demand will be no more. Need for temporary working capital should be met from short term of finance, e.g. Short term loans etc. so that it can be refunded when it is not required.

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FACTORS AFFECTING WORKING CAPITAL


OR DETERMINANTS OF WORKING CAPITAL

A firm should have neither too much nor too little working capital. The working capital requirements are determined by a large number of factors but, in general, the following factors influence the need of working capital needs of an enterprise:

1) NATURE OF THE BUSINESS: working capital requirements of an enterprise


are largely influenced by the nature of the business. For e.g. Public utilities such as railways, transport, water and electricity etc. have very limited need of working capital because they have to invest fairly large amount in fixed assets. Their working capital need is minimal because they get immediate payment for their services and do not have to maintain big inventories. On the other extreme are the trading and financial enterprises which have to invest less amount in fixed assets and a large amount in working capital. This is so because the nature of the business is such that they have to maintain a sufficient amount of cash, inventories and debtors. Working capital needs of most of the manufacturing enterprise fall between these two extremes that is between public utilities and trading concerns.

2) SIZE OF THE BUSINESS: larger the size of business enterprise, greater would
be the need for working capital. The size of a business may be measured in terms of scale of its business operation.

3) GROWTH AND EXPANSION: as business enterprise grows, it is logical


to expect that a larger amount of working capital will be required. Growing Industries require more working capital than those that are static.

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4)

PRODUCTION CYCLE: production cycle means the time span between


The purchase of raw material and its conversion into finished goods. The longer the production cycle the larger will be the need of working capital because the funds will be tied up for longer period in work in progress.

5)

BUSINESS FLUCTUATIONS: business fluctuations may be in the


direction of boom and depression. During boom period the firm will have to operate at full capacity to meet the increased demand which in turn, leads to increase in level of inventories and book debts. Hence, the need for working capital in boom conditions is bound to increase. The depression phase of business fluctuations has exactly an opposite effect on the level of working capital requirement.

6) CREDIT POLICY RELATING TO SALES: if a firm adopts liberal


credit policy in respect of sales, the amount tied up in debtors will also be higher. Obviously, higher book debts mean more working capital. On the other hand, if the firms follow tight credit policy, the magnitude of working capital decrease. will

7) CREDIT POLICY RELATING TO PURCHASE: if a firm purchases


more goods on credit, the requirement for working capital will be less. In other words, if liberal credit terms are available from the suppliers of goods, the requirement for working capital will be reduced and vice-versa.

8) AVAILABILITY OF RAW-MATERIAL: If the raw material required


by the firm is available easily on a continuous basis, there will be no need to keep a large inventory of such materials and hence the requirement of working capital will be less. On the other hand, if the supply of raw material is irregular, the firm will be compelled to keep an excessive inventory of such material

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which will result in high level of working capital.

9) AVAILABILITY OF CREDIT FROM BANKS: if the firm can get bank


credit facility in case of need, it will operate with less working capital. On the other hand, if such facility is not available, it will have to keep large amount of working capital.

10)VOLUME OF PROFIT: The net profit is a source of working capital to the


extent it has been earned in cash. Higher net profit would generate more internal funds thereby contributing the working capital pool.

11) LEVEL OF TAXES: full amount of cash profit is not available for working
capital purposes. Taxes have to be paid out of profits. Higher the amount of taxes less will be the profits available for working capital.

12) DIVIDEND POLICY: dividend policy is a significant element in


determining the level of working capital in an enterprise. The payment of dividend reduces the cash and thereby, affects the working capital to that extent. On the contrary, if the company does not pay dividend but retains the profit, more would be the contribution of profits towards the working capital pool.

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13) DEPRICIATION POLICY: although depreciation does not result in outflow


of cash, it affects the working capital indirectly. In the first place, since the depreciation is allowable expenditure in calculating net profits, it affects the taxliability. In the second place, higher depreciation also means lower disposable profits and, in turn, a lower dividend payment. Thus, outgo of cash is restricted to that extent.

14) PRICE LEVEL CHANGES: A change in price level also affects the working
capital requirements. If the price level is rising, more funds will be required to maintain the existing level of production

15)

EFFECIENCY OF MANAGEMENT: efficiency of management is also a


significant factor to determine the level of working capital. Management can reduce the need for working capital by the efficient utilization of resources. It can accelerate the pace of cash cycle and thereby use the same amount working capital again and again very quickly

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CHAPTER-4 DATA ANALYSIS & INTERPRETATION

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OPERATING CYCLE
The operating cycle is the average time between purchasing or acquiring inventory and receiving cash proceeds form the sale of finished products. In the other words, it is the time period, which elapses between the points at which cash is spent on the production of a product, and the collection of cash from the customer. The time lag between the purchase of raw materials and the sales of finished goods is known as the inventory period. The operating cycle of a manufacturing company involves five phases. 1. Conversion of raw material. 2. Conversion of raw material in to work-in-progress. 3. Conversion of work in process in to finished goods. 4. Conversion of finished good in to receivable. 5. Conversion of receivable in to cash. Operating Cycle: R = (Raw Materials Conversion Period) + W = (Work-in-progress Conversion Period) + F = (Finished Good Conversion Period) + D = (Debtors Conversion Period) - C = (Creditors Deferral Period)

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Statement Showing Operating Cycle Current assets:

(i)

Raw material Conversion Period:


*360

= Raw material inventory Raw material consumption

Year

31st march 2008 = 1865650*360 85107155

31st march 2009 = 16135184 *360 99306895 = 58.49

31st march 2010 = 14365971 *360 113010444 = 45.76

Days

= 78.92

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INTERPRETATION:
As above, the conversion period of raw material is lower in 2010 as

compared to 2008 and 2009, this is beneficial for the company. Because the raw material of receiving and sending time is proper for the company.

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(ii) Work in progress Conversion Period:


= work in process Cost of production *360

Year

31st march 2008 = -109490 *360 115853537

31st march 2009 = 6550340 *360 131203255 = 17.97

31st march 2010 = -3424096 *360 161889683 = -7.61

Days = -0.34

INTERPRETATION:
As above, work in progress conversion period is higher in 2009 as compared to 2008 & 2010. So, the receiving for the production and dispatch of time is proper compare to 2009 to 2010.it is better situation for the company.

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(iii) Finished goods Conversion period:


= finished good inventory *360 cost of good sold year 31st march 2008 = 19473946 *360 115853537 Days = 60.51 31st march 2009 = 23502970 *360 131203255 = 64.49 31st march 2010 = 18309661 *360 161889683 = 40.72

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INTERPRETATION:
As above, the stock of finished good is lower in 2010 as compared to 2008 and 2009. So, it is difficult situation for the company. Because this company not proper storage of the goods.

(iv) Debtors Collection period:


= debtors Credit sales Year 31st march 2008 31st march 2009 = 58091527 *360 = 50214960 *360 128968650 Days = 162.16 144081782 = 125.47 31st march 2010 = 61490396 *360 174791548 = 126.65 *360

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INTERPRETATION:
As above, the debtors collection period is lower in 2009 as compared to

2008 & 2010. This situation is less risky in 2009 & 2010. So, the try to decrease Debtors collection period because the collection from the out side immediately And invest to other side for the company.

Current liabilities:

(i) Creditors payment period:


= creditor *360 Credit purchase Year 31st march 2008 = 57176879*360 91188740 Days = 225.73 31st march 2009 = 46615657 *360 96785579 = 173.39 31st march 2010 = 57654172 *360 111241231 = 186.58

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INTERPRETATION:
As above, the creditors payment period is lower in 2009 as compared to 2008 and 2010. So, that try to increase creditors payment period because this situation risky for future investment planning for the company.

WORKING CAPITAL =CURRENT ASSETS CURRENT LIABILITIES


Year Particular a) Current asset Stock of R.M Work in process Stock of F.G Debtors Total current asset (a) b) Current liabilities Trade creditors 31st march 2008 78.92 -3.40 60.51 162.16 298.19 225.73 31st march 2009 58.49 17.97 64.49 125.47 266.42 173.39 31st march 2010 45.76 -5.58 29.84 126.65 196.67 186.58

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Total current liabilities (b) 225.73 Work in capital 72.46 management (a)-(b)

173.39 93.03

186.58 10.09

Year Days

Operating Cycle Of The Company :


31st 2008 72.46 march 31st 2009 93.03 march 31st 2010 10.09 march

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INTERPRETATION:
As above, working capital mgt lower in 2010 as compared to 2008 and 2009. Their is decrease in all the operating cycle except other receivable which are higher in 2008 and 2009. Sound working capital management involves matching the sources and uses of cash so that obligation comes due as assets mature into cash. In this conversion cycle is respectively decrease. This indicates that conversion of raw material into cash is good.

CASH MANAGEMENT
Cash management refers to the practices and techniques designed to accelerate and control collections, ensure promote deposits of receipts, improve control over disbursement methods, and eliminate idle cash balances. The objective of cash

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management is to keep the investment in cash as low as possible while still operating the firms activities efficiently and effectively.

CASH CONVERSION CYCLE


Receivable collection period + Inventory conversion period payment period Receivable collection period = Receivable Sales YEAR 2008 2009 2010 RECEIVABLE SALES 58091527 50214960 61490396 128968650 144081782 174791548 RECEIVABLE COLLECTION PERIOD 162.16 125.47 126.65 x 360

Inventory Conversion Period = Inventory Cost of Good Sold YEAR 2008 2009 2010 INVENTORY 19473946 23502970 18309661 COST OF INVENTORY CONVERSION PERIOD 60.51 64.49 40.72 x 360

GOOD SOLD 115853537 131203255 161889683

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Payment Period = Account Payable Cost of Good Sold ACCOUNT PAYABLE 57176879 46615657 57654172 COST OF GOOD SOLD 115853537 131203255 161889683 PAYMENT PERIOD 177.67 127.91 128.21 x 360

YEAR 2008 2009 2010

Cash Conversion Cycle:-

INVENTORY YEAR PERIOD (1) 2008 2009 2010 60.51 64.49 40.72

RECEIVABLE PERIOD (2) 162.16 125.47 126.65

CASH PAYMENT PERIOD (3) 177.67 127.91 128.21 CONVERSION CYCLE (1) + (2) - (3) = 45 62.05 39.16

CONVERSION COLLECTION

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Interpretation:The major objective of cash management is to shorten cash conversion cycle and it should be accomplished without increasing cost or depressing sales. This condition is good. Cash conversion cycle is decrease but not a respectively. Last year cycle is lower then previous year. This indicates that company should try to increase conversion cycle by selling good more quickly, speeding up collection & slowing down the payment.

INVENTORY MANAGEMENT
For many business firms, inventory is one of the visible and tangible of doing business. Raw materials, work in process and finished goods all represent various form of inventory. In simple words, inventory refers to stocks of good necessary to do business. In fact, for a business firm, inventory is both an assets and a liability. Too much inventory consumes physical space, causes of financial burden, and increasing the possibility of damage, spoilage and loss. On the other hand, too little inventory disrupts manufacturing operations, engenders chaos on the shop floor, poor customer service. Inventory Turnover Ratio

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Inventory turnover ratio indicates that efficiency of firm in producing and selling its product. This ratio is percentage of inventory to the total sales. Inventory Turnover Ratio Total Sales Inventory Investment Holding Days of Inventory:360 days Inventory Turnover Ratio INVENTORY INVENTORY TURNOVER 19473946 23502970 18309661 RATIO 6.62 6.13 9.55

YEAR 2008 2009 2010

TOTAL SALES 128968650 144081782 174791548

HOLDING DAYS OF INVENTORY 54.38 58.73 37.70

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Interpretation:High turnover ratio & low holding days of inventory indicate good efficiency of company in turnover his inventory. Inventory turnover ratio is increase & holding days of inventory decrease from last year this indicate company has good efficiency of manage the inventory.

MANAGEMENT OF RECEIVABLES
The accounts receivables are generated which are collected at a future date only when the firm grants credit against an ordinary sale of goods or services without receiving cash. Credit sale is an essential part of the present competitive economic system. It is granted in order to increase the volume of sales. As such receivables which are created out of credit sales are considered as a marketing tool for increasing sales. But extension of credit involves cost of risk. Therefore, management should weigh the benefits against cost. As such, the objective of receivables management is to promote sales and profit until optimum point is reached.

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CREDIT POLICY A firms investment in accounts receivable depends on the volume of credit sales and the collection period. There is one way in which the financial manager can affect the volume of credit sales and collection period and consequently, investment in account receivables. That is through the changes in credit policy. The term credit policy is used to refer to the combination of three decision variables: (I)) Credit Standards, (ii) Credit Terms, and (iii) Collection efforts, on which the financial manager has influence. Credit Standards are criteria to decide the types of customers to whom goods could be sold on credit. If a firm has more slow-paying customers, its investment in accounts receivables will increase. The firm will also be exposed to higher risk of default. Credit Terms specify duration of credit and terms of payment by customers. Investment in account receivables will be high if customers are allowed extended time period for making payments. Collection Efforts determine the actual collection period. The lower the collection period, the lower the investment in accounts receivable and vice versa. DEBTOR COLLECTION PERIOD It refers to the debtors converted into receivables. Debtor turnover ratio indicates the number of times debtors turnover each year. Generally, the higher the value of debtors turnover, the more efficient is the management of credit. Total Sales Debtors Turnover Ratio = Debtors

360 days Collection Period =

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Debtors Turnover Ratio

YEAR

SALES

DEBTOR S

DEBTORS TURNOV ER RATIO


2.22

COLLECTION PERIOD
162.16

2008

128968650

58091527

2009 2010

144081782 174791548

50214960 61490396

2.86 2.84

125.87 126.76

DEBTOR TURNOVER RATIO

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COLLECTION PERIOD

PROFITIBILITY ANALYSIS RATIO Gross Profit Ratio


= Gross Profit *100 Net Sales

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Year

31st march 2008 = 13115113 *100 127964889

31st march 2009 = 12878527 *100 141975604 = 9.07

31st march 2010 = 12901865 *100 170769972 = 7.56

Ratio (%)

= 10.25

INTERPRETATION :
This ratio shows whether the profit obtained on the cost of production is sufficient or not If must be enough to cover operating expenses. In this company gross profit ratio is not satisfactory. Though the turnover increases year after year but COGS increases more in comparison to it. If this ratio is higher the companys performance would be better.

Net Profit Ratio = Net Profit *100

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Net sales

Year

31st march 2008 = 1003761 *100 127964889

31st march 2009 = 2106178 *100 141975604 =1.48

31st march 2010 = 4021576 *100 170769972 =2.35

Ratio (%)

=0.78

INTERPRETATION :
This ratio shows the overall profit of business. It indicates the portion of

revenue left to proprietors after all operating expenses were met. Net profit ratio increase in year 2009, which indicates the strength of the company. It shows the profitable position of the company.

Return on Equity Fund Ratio = Net Profit *100

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Equity Shareholders fund Year 31st march 2008 = 1003761 *100 27024425 Ratio (%) = 3.71 31st march 2009 = 2106178 *100 29897103 = 7.04 31st march 2010 = 4021576 *100 32286295 = 12.46

INTERPRETATION :
This ratio indicates the level of profitability to the real owners of business it also judges the efficiency of the firm in terms of its operations & investments the higher the ratio the greater are the returns to the equity share holders for bearing the risk of business. In this company there is no preference capital so profit is available for only equity holders. Return on equity ratio increase in 2010 compared to 2008 and 2009 which indicates the improved financial condition of the company and its shareholders.

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CHAPTER-5 TREND ANALYSIS

Trend Analysis
For carrying out the trend analysis, I have selected as the base year. All the financial data of the year 2006-07 have been arbitrarily assigned the value of 100.The

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values of other financial data is expressed in terms of these data as reference data. This analysis is carried out in two phases as balance sheet analysis and profit and loss account analysis.

Particular
31 march 2008 Net sales Income Expenditures Profit before tax Profit after tax Sources of fund a) shareholders fund b) loan fund Application fund a) fixed assets b) current assets, 100 100 100 100 100
st

Year (%)
31 march 2009 111.71 116.93 117.53 92.11 209.83
st

31st march 2010 121.31 114.34 112.86 191.77 190.94

100 100 100 loan 100

110.63 101.06 103.56 91.14 84.36 105.45

107.99 96.32 97.04 114.33 126.22 94.28

&advance current liabilities & provisions 100 Net current assets 100 1) Net

sales

Year (%)

31st march 2008 100

31st march 2009 111.71

31st march 2010 121.31

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INTERPRETATION:
In above diagram Net Sales is increase continuously. Net Sales is

higher in 2010 as compared to 2008 & 2009. The change in Net Sales is profitable for the Company. Because the net sales are related to sales of goods.

2) Level of Income
Year (%) 31st march 31st march 31st 2008 100 2009 116.93 2010 114.34 march

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INTERPRETATION:

In the above diagram, the level of Income is highest in 2009. As compared to 2009 the level of Income is lower in 2010. So its a very good effort for the company. Because the level of income is mostly depend on the sales of goods.

3) Expenditures

Year

31st march 31st 2008 2009

march 31st 2010

march

58

(%)

100

117.53

112.86

INTERPRETATION:
As above, expenditures are lower in 2008 as compared to 2009 and 2010. Situation in 2008 is more profitable because low expenditure increases the profit. So, that try to decrease the level of expenditures because mostly effect on the sales of goods.

4) Profit before Tax

Year

31st march 31st 2008 2009

march 31st 2010

march

59

(%)

100

92.11

191.77

INTERPRETATION:

As above, profit before tax in the trend analysis is lower in 2009 as compared to 2008 and 2010.profit before tax is more in 2010 this is beneficial for the company. Because the profit is rise also depend on the sales of goods. So it is good sign for the company.

5) Profit after Tax


Year ( %) 31st 2008 100 march 31st march 31st 2009 209.83 2010 190.94 march

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INTERPRETATION:
As above, profit after tax in the trend analysis lower in 2008 as

compared to 2009 and 2010. The situation in 2009 is better even after paying tax. So, we can say that the taxes of government are less in 2009. This level of profit also depends on the taxes. So, it is profitable for the company.

SOURCES OF FUND 6) Share holders Fund


Year 31st march 31st march 31st march

61

(% )

2008 100

2009 110.63

2010 107.99

INTERPRETATION:
As above, share holders fund in the trend analysis is lower in 2008 as

compared to 2009 and 2010. The situation in 2009 is more beneficial for the company. Because the good image is also depend on the selling of product in the market. This situation very affected by the investors in this company

7) Loan Fund
Year ( %) 31st march 31st 2008 100 march 31st 2010 96.32 march

2009 101.06

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INTERPRETATION:
As above, loan fund in the trend analysis lower in 2010 as compared

to 2008 and 2009. Because in this graph decrease the loan fund for the better opportunities in future planning investment so, it is profitable for the company.

APPLICATION OF FUND
8) Fixed Assets
Year (%) 31st 2008 100 march 31st march 31st 2010 97.04 march

2009 103.56

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INTERPRETATION:
As above, fixed assets in the trend analysis is lower in 2010 as

compared to 2008 and 2009. So this situation is mostly affected by maximum use of sources of fund and requirement of the company. Because this situation right side affected by the company.

9) Current Assets, Loan & advance


Year (%) 31st 2008 100 march 31st 2009 91.14 march 31st march 2010 114.33

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INTERPRETATION:
As above, current assets, loan & advance in the trend analysis lower in 2009 as compared to 2008 and 2010.In this situation maintain ratio. so it is very good efforts by the company.

10) Current Liabilities & Provision


Year (%) 31st 2008 100 march 31st 2009 84.36 march 31st march 2010 126.22

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INTERPRETATION:
As above, Current Liabilities & Provision is continuous rise of the company. So, that the company is expanding its operations on a continuous basis. However on the other hand a similar rise in the current assent is also required.

11) Net Current Assets


Year (%) 31st 2008 100 march 31st march 31st 2010 94.28 march

2009 105.45

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INTERPRETATION:

As above, net current assets in the trend analysis lower in 2010as compared to 2008 and 2009. This is very less beneficial for the company. net current assets are also affected by the production and sales of goods.

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CHAPTER-6 FINDING

Company having good management system in cash conversion cycle. In this respectively.

company

situation condition is good. Cash conversion cycle is decrease but not a

Inventory turn over ratio of companies is continuously improving from 2008, 2009, 2010 .they have taken many steps so, they can control the inventory. Which means inventory is used in better way so it is good for the company.

Debtors of the company were high, they were increasing year , so more funds were blocked in debtors, but now recovery is becoming faster. 68

In the gross profit ratio the data show that in 2008 it is at 10.25% and after it is decrease this ratio is dissatisfaction for the company.

In the net profit ratio the data show that in 2008 it is at 0.78% and after it is increased it show good performance of the management

In the return on equity ratio the data show that in 2008 it is at 3.71% but after it is increase this ratio is favorable for the company.

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CHAPTER-7 SUGGESTION

The financial position of the company is normal but it is required to be improved from the point of view of profitability.

Company should stretch the credit period given by the suppliers. Company should not rely on long term debts. Inventory turnover ratio is increasing so; its not good for company. I.e. it is suggested to company that it has to maintain the condition of inventory.

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Company should try to increase volume based sales so as to stand in the competition.

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CHAPTER-8 CONCLUSION

I have studied and analyzed the Balance sheet of the company. For a period of three years viz; 2008, 2009, 2010, working capital is most important part for finance department of the company from the accounting data of the GPPPL. I can say a company is most concern about the working capital. To identify and locate the idle assets of the firm and dispose off the same at competitive price in order to meet the present working capital needs of the company. Value goodwill of the company and a certain percentage of the same may be sold off at competitive price and it can be utilized to finance the working capital requirement.

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To make periodic review of business strategy, against the behavior of the competitors and rivals, adopted by the management and take up corrective measure on going process as per the demand of the situations To introduce the philosophy of responsibility accounting and each responsibility of the respon centre head should be made accountable for cost control and profitability of the responsibility centre concerned.

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CHAPTER-9 ANNEXURE

ANNEXURE A: PROFIT & LOSS A/C


(Amounts in 000 Particulars INCOME Income From Operations Other Income Increase in Inventories EXPENDITURE Raw-materials & 2008 128968650 1279 -109490 128860439 other 85107155 7098015 18385496 2009 144081782 38127 6550340 15670249 99306895 10662132 21226823 2010 174791548 912594 -3424096 172280046 113010444 13766085 23875360

Consumption Personal Related Expenses Manufacturing & other exps

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Interest and Finance charges Depreciation Profit Before Tax Less: Provision for Income tax deferred Tax LiabilitiesF.B.T Add: MAT Credit NET PROFIT FOR THE YEAR Add: Opening Balance B/F Prior period adjustment- net PROFIT AVAILABLE

9858227 5346685 125795578 3064861 315000 1551100 195000 0 1003761 11144176 -655643 11492294

11228306 5422915 14847071 2823178 275000 567000 150000 275000 2106178 11492294 16500 13614972

10403913 5810332 166866134 5413912 812087 580249 0 0 4021576 13614972 -390709 17245839

FOR APPROPRIATION Balance Carried to

BALANCESHEET

11492294

13614972

15504164

ANNEXURE : BALANCE SHEET


(Amounts in 000) Particulars SOURCES OF FUNDS 1. Shareholder Fund Share Capital Reserve & Surplus Total 2. Loan Funds Secured Loan 2008 14950000 12074425 27024425 43085168 2009 14950000 14947103 29897103 34278325 39042586 10857400 114075414 2010 14950000 17336295 32286295 27835846 38315202 11437649 109874992

Unsecured Loan 32478114 Deferred Tax liability 10290400 Total 112878107 APPLICATION OF FUNDS 1. Fixed Assets Gross Block Less : Depreciation Net Block

104009745 22548255 81461490

112334547 27971170 84363377

115579061 33715625 81863436

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Capital

Work

in

progress 3. Current Assets, Loan & Advances Inventories Sundry Debtors Cash & Bank Balance Loan & Advances Total Current Assets, Loan & Advances Less : Current Liabilities provisions Net Current Assets Total Assets

3240489

19473946 58091527 951548 9076964 87593985 59417857 28176128 112878107

23502970 50214960 769027 5348924 79835881 50123844 29712037 114075414

18309661 61490396 919749 10559649 91279455 63267899 28011556 109874992

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CHAPTER-10 BIBLIOGRAPHY

77

During the development of project we use following BOOKS and WEB SITES for the references:

BOOKS:
I. M Pandey. Financial mgt, Ninth edition. By VIkas publication house pvt ltd. Working Capital Management - By Dhiraj Sharma

WEBSITES:

www.gujprintpack.com

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