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The Study of Working Capital Management of SLN POLYMERS LTD

CHAPTER-1 INTRODUCTION INTRODUCTION OF INDUSTRY:

A)

Polymers account for around 70% of petrochemicals and that is the reason that I- they are the most important constituent of the Indian chemical industry. Polymers are essentially used in the manufacture of various plastic products. In the consumption of the basis petrochemical, polymers form the bulk of demand with a share of around 55%. The share of polymers in the product mix in india for various crackers ranges form 60% to 90%. The segment of polymers have registered a growth of 18% while there have been an increase of 26% in the capacities CAGR. The by products of polymers are: o Polystyrene o PVC o Poly Propylene o LDPE / LLDPE o HDPE Polystyrene, a byproduct of polymers has Rs. 435 crore market size

1.

its market price was around Rs. 42.5 per kg in 1999. The major companies involved in the production of polystyrene are Rajasthan Polymers, Mc Dowell & Co., and Supreme Petrochem. PVC, a polymers byproduct, is in demand in the Indian market at 554,000 tons per annum.

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This segment has been growing at the rate of 15% yearly. Around 54% of PVC is used in the manufacturing of pipes and 14% is used in the production of cable sheathing. The cost of PVC was Rs. 44.95 per kg in 1999. The main companies involved in the production RIL. Polypropylene is a very light weight polymer and that is the main reason why it is used as a substitute for various other polymers. During 1997-1998, around 11,000 tons of poly propylene was imported. Over the last 3 years, the demand for this product has increased by 38% and now stands at 595000 tons. The price of polypropylene was Rs 47.50 per kg in 1999. It is mainly used in manufacture of injection molding, BOPP, ropes twines, and in India, low- density polyethylene (LDPE) and linear segment of polymers is growing at the rate of 12%per year. More than 50% of LDPE/ LDPE are used by the packing industry and they were priced at around Rs 54.25 per kg in 1999. The companies which make LDPE/LLDPE are Oswald, RIL and IPCL. The second most used polymer in India is HDPE, with a share of 22%. The value of its domestic consumption is Rs 2123 crore and it is growing at the rate of 15% per year. It cost around Rs. 50/- per kg in 1999. HDPE is used in the manufacturing of raffia, blow molding, injection molding, and in the paper industry as well. The companies involved in the production of HDPE are NOCIL, RIL and IPCL. Polymers form an important constituent of the Indian

petrochemical industry. So efforts must be taken by the industry and the government of India, so that the production and quality of polymers remain top class. Polymers are a manufacturing company making scientific instruments for monitoring production processes. We use company
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developed technology and expertise to design and construct instruments that are based on dielectric, optical, flurescence spectrosoppy ultrasonics and rheology concepts. Our instruments are designed to measure physical properties of materials in real-time as thy are processed, including: Dielectric properties Dielectric measurements Dielectric spectroscopy Dielectric relaxation Fluorescence spectroscopy Optical transmission
Fluorescence based temperature

Fluorescence based temperature profiles Ultrasonic velocity Viscosity Thermodynamic and equation of state properties Rheology Optical fiber sensor technology Industrial and R&D applications to polymer process monitoring, materials compounding and chemical mixing are special interests of T Bur Associates. Our newest instrument is the dielectric slit die, an on-line multi-functional system. The dielectric slit die is shown attached to a twin screw extruder during the compounding of nylon 6 with clay. With this instrument dielectric, optical and reheological properties of the processed
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resin can be obtained in real-time. The collection of data from several sensors yields a multi-faced picture of resin physical properties and process in

B) INTRODUCTION OF SUBJECT: WORKING CAPITAL MANAGEMENT-I


Definition:Working capital is the amount of funds necessary to cover the cost of operating the enterprises. -by Shubin.

Meaning of working capital:Capital required for a business can be classified under two main categories viz., i) ii) Fixed capital and Working capital Every business needs funds for two purposes for its establishment and to carry out its day-to-day operations. Long-term funds are required to create production facilities through purchase of fixed assets such as plant and machinery, land etc. Investments in these assets represent that part of firms capital which is blocked on a permanent or fixed basis is called fixed capital.

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Funds are also needed for short term purpose for the purchase of raw materials, payment of wages and other day-to-day 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 and inventories. Kinds of working capital: Working capital may be classified in two ways: a) b) On the basis of concept. On the basis of time.

Kinds of working capital

On the basis of concept

On the basis of time

Gross Working Capital

Net working capital

Permanent or fixed working Capital

Temporary or variable working capital

Regular

Reserve

Seasonal

Special
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working capital

working capital

working capital

working capital

a) i)

On the basis of concept: Gross working capital: It is the amount of funds invested in the various components of

current assets. It has the following advantages. a) Finance managers are mainly concerned with management of current assets.
b) It enables a firm to release the greatest returns on its investments.

c) It enables a firm to plan and control the funds at its disposal. d) It helps in the fixation of various areas of financial responsibility. ii) Net working capital : It is the difference between current assets and current liabilities. The concept of net working capital enables a firm to determine the exact amount available at its disposal for operational requirements. b) i) On the basis of time: Permanent or fixed working capital: It is the minimum amount of investment in all current assets which is regarded at all times to carry on minimum level of business activities. The operating cycle is a continuous process and therefore, the need for

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current assets. But the magnitude of current assets and decreases overtime. Features of permanent working capital: a) b) Amount of permanent working capital remains in the business in one form or another. There is a positive co-relation between the amount of permanent working capital and the size of the business ii) Temporary or variable working capital: It is also called as fluctuating working capital. It is the amount of working capital which is required to meet the seasonal and some special exigencies. Variable working capital can be further classified as seasonal working capital and special working capital. a) Seasonal working capital: The capital required to meet the seasonal needs of the enterprise is called seasonal working capital. b) Special working capital: It is that part of working capital which is required to meet special exigencies such as launching of extensive marketing campaigns for conducting research, etc. Problems associated with excess and inadequate working capital: Both the excessive and the inadequate working capital positions are dangerous from the firms point of view. Excess working capital results in idle funds, which do not earn any return for the firm. Shortage of
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working capital impairs firms profitability because of production interruptions.

Dangers of Excess Working Capital: 1) It results in unnecessary accumulation of inventories. Thus, the chances of inventory mishandling, waste, theft and loses increase. 2) It is an indication of defective credit policy and stack collection period. Consequently, higher incidence of bad debts adversely affects profits. 3) Excessive working capital makes management complacent, which degenerates into managerial inefficiency. 4) Tendencies of accumulating inventories to make speculative profits grow. Dangers of Inadequate Working Capital: a) It stagnates growth. It becomes difficult for the firm to undertake profitable projects due to non-availability of the working capital funds. b) It becomes difficult to implement operating plans and achieve the firms profit target. c) Operating inefficiencies creep in when it becomes difficult even to meet day-to-day commitments.

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d)

Fixed assets are not efficiently utilized for the lack of working capital funds. Thus, the rate of return on investment slumps. Therefore, every firm should aim at maintaining a right amount of

working capital on a continuous basis.

Determinants of working capital: A large number of factors influence working capital needs of a firm. The basic objective of working capital management is to manage the firms current assets and current liabilities in such a way that a satisfactory level of a working capital is maintained. The following factors determine the amount of working capital: 1) Nature of industry: The composition of current assets is a function of the size of a business and the industry to which it belongs. Small companies have smaller proportions of cash, receivables and inventory than large corporations. This difference becomes more marked in large corporations of public utility concern for examples, mostly employ fixed assets in its operations, needs for working capital are thus determined by the nature of an enterprise. 2) Size of business: The size of business has also an important impact on its working capital needs. Size may be measured in terms of a scale of operation. A

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firm with large-scale operation will need more working capital than a small firm. 3) Manufacturing cycle: Longer the manufacturing process, the higher will be the requirements of working capital and vice versa. This is because of the fact that highly capital-intensive industries require a large amount of working capital to run their sophisticated and long production process. 4) Production policy: The production policies pursued by the management have a significant effect on the requirements of working capital of the business. The production schedule has a great influence on the level of inventories; the decision of the management regarding automation etc. will also have its effects on working capital requirements. 5) Volume of sales: This is the most important factor affecting the size and components of working capital. A firm maintains current assets because they are needed to support the operational activities, which result in sales. The volume of sales and the working capital are directly related to each other. As the volume of sales increases, there is an increase in the investment of working capital. 6) Terms of purchases and sales: A firm, which allows liberal credits to its customers, may enjoy higher sales but will need more working capital as compared to firm enforcing strict credit terms. The working capital requirements are also affected by the credit facilities enjoyed by the firm. A firm enjoying

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liberal credit facilities from its suppliers requires lower amount of working capital as compared to a firm, which does not enjoy such liberal credit facilities. 7) Business cycle: Business expands during the period of prosperity and declines during the period of depression. Consequently, more working capital is required during the period of prosperity and less during the period of depression. Under boom, additional investment in fixed assets may be made by some firms to increase this productive capacity. This act of the firm will require further additions of working capital, to meet their requirement of funds for fixed assets and current assets under boom period the firms generally resort to substantial borrowings. 8) Fluctuations in the supply of raw materials: Certain companies have to obtain and maintain large reserves of raw materials due to their irregular sales and intermittent supply. This is particularly true in case of companies requiring special kind of raw materials available only from one or two sources. Thus in this case the working capital requirements in such industries would be large. 9) Price level changes: The increasing shifts in price levels make the functions of financial manager difficult. He should anticipate the effect of price level changes on working capital requirements of the firm. Generally rising price levels will require a firm to maintain higher amount of working capital. The same levels of current assets will need increased investment when prices are increasing.

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10)

Operating efficiency: The operating efficiency of the firm relates to the optimum

utilization of resources at minimum cost. The firm will be effectively contributing costs. Although it may not be possible for a firm to control the prices of materials or the wage of labour, it can certainly ensure efficient and effective use of its materials, labour and other resources.

11)

Profit Margin: Firms differ in their capacity to generate profit from business

operations. Some firm enjoy a dominant position, due to quality product or good marketing management or monopoly power in the market and earn a high profit margin, some other firms may have to operate in an environment of intense competition and may earn low margin of profits. 12) Profit Appropriation: Even if net profits are earned in cash at the end of the period, whole of it is not available for working capital purposes, the contribution towards working capital would be affected by the way in which profits are appropriated. The availability of cash generated from operations thus, depends upon taxation, dividend, retention policy and depreciation policy.

Principles of working capital management or policy: The following are the general principles of a sound working capital management Principles of working capital management
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Principles Principles of risk of cost of 1) variation Principles of risk variation: capital

Principles of equity position

Principles of maturity

Risk here refers to the inability of a firm to meet its obligations as and when they become due for payment. Larger investment in current assets with less dependence on short term borrowings increase liquidity, reduces dependence on short-term borrowings increase liquidity, reduces risk and thereby decreases the opportunity for gain or loss. 2) Principles of Cost of Capital: The various source of raising working capital have different cost of capital and the degree of risk involved. Generally, higher the risk lower is the cost and lower the risk higher the cost. A sound working capital management should always try to achieve the balance between these two sources. 3) Principles of Equity Position: It is concerned with planning the total investment in current assets. According to this principle, the amount of working capital invested in each component should be adequately justified by a firms equity portion. Every rupee invested in the current assets should contribute to the net worth of the firm. The finance manager may consider the relevant industrial averages. 4) Principles of Maturity of Payment:

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It is concerned with planning the sources of finance for working capital according to this principles, a firm should make effort to relate maturities of payment to its flow of internally generated funds. Maturity Pattern of various current obligations is an important factor in risk assumptions and risk assessments.

WORKING CAPITAL MANAGEMENT-II


(Cash, Receivables and Inventory Management) Management of Cash Introduction: Cash is one of the current assets of a business. It is needed at all times to keep the business going. A business concern should always keep sufficient cash for meeting it obligations. Any shortages of cash will hamper the operations of a concern and any excess of it will be unproductive. Cash is the most unproductive of all the assets. While fixed assets like machinery, plant etc. and current assets such as inventory will help the business in increasing its earning capacity

Motives for holding cash: The firms needs for cash may be attributed to the following needs:

Motive holding cash

Transaction Motive

Precautionary motive

Speculative motive
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Some people are of the view that are business requires cash only for the first two motives while other feel that speculative motive also remains. These motives are discussed as follows: 1) Transaction Motive: A firm needs cash for making transaction in the day-to day operations. The cash is needed to make purchases, pay expenses, taxes, dividend, etc. the cash needs arise due to the fact that this is no complete synchronization between cash receipts and payments sometimes, cash receipts exceed cash payments or vice-versa. The receipts in future may be also anticipated but the things do not happen as desired. If more cash is needed for payments than receipts, it may be raised through bank overdraft. On the other hand if there are more cash receipts than payments, it may be spent on marketable securities. 2) Precautionary motive: A firm is required to keep cash for meeting various contingencies. Though cash inflows and cash outflows are anticipated but these may be variations in this estimate. For example, a debtor who was to pay after 7 day may inform of his inability to pay. In these situations cash receipts will be less then expected and cash payment will be more, as purchases may have to be made for cash instead of credit. Such contingencies often arise in a business. A firm should keep certain cash for such a situations or contingencies. 3) Speculative Motive: It relates to holding of cash for investing in profitable opportunities as and when they arise. Such an opportunities do not come in a regular
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manner. These opportunities cannot be scientifically predicted but only conjectures can be made about their occurrence for example, the pieces of raw materials may fall temporarily and a firm may like to make purchases at these prices. Such opportunities can be availed of if a firm has cash balance with it. The primary motive of a firm is not to indulge in speculative transactions but such investments may be made at times. Goals of Cash Management: The primary aim or goal of cash management in a firm is to strike trade-off between liquidity and profitability in order to maximize longterm profit. It is possible only when the firm aims to optimizing the use of funds in the working capital pool. This overall objective can be translated into the following operational goals: i) ii) iii) iv) v) vi) vii) To satisfy day-to-day business requirements; To provide for scheduled major payments; To face unexpected cash drains; To seize potential investments; opportunities for profitable long-term

To meet requirements of banks relationship; To build image of creditworthiness; To earn on cash balance;

viii) To build reservoir for net cash inflows till the availability of better uses of funds by conscious planning; ix) x) To minimize the operating costs of cash management; To maintain minimum cash resources;
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xi) xii)

To determine criteria for investment of excess cash; To determine the safety level for cash;

xiii) To regulate the cash inflows and cash outflows. Receivables Management: Introduction: Receivables represent amounts owned to the firm as a result of sale of goods of services in the ordinary course of business. These are claims of the firm against its customers and form part of its current assets. Receivables are also known as account receivables, trade receivables, customer receivables or book debts. The receivables are carried for the customers. The period of credit and extent of receivable depends upon the credit policy followed by the firm. Factors influence the size of receivables: Besides sales a number of other factors also influence the size of receivables. The following factors directly and indirectly affect the size of receivables, 1) Size of credit sales: The volume of credit sales is the first factor, which increases or decreases the size of receivables. If a concern sells only on cash basis, as in the cash of Bata Shoe Company, then there will be no receivables. The higher the part of credit sales out of total sales, figures of receivables will also be more or vice versa. 2) Credit policies:

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A firm with consecutive credit policy will have a low size of receivables while a firm with liberal credit policy will be increasing this figure. If collections are prompt then even if credit is liberally extended the size of receivables. 3) Terms of Trade: The size of receivables also depends upon the terms of trade. The period of credit allowed and rates of discount given are linked with receivables. If credit period allowed is more than receivables will be also more. 4) Expansion plans: When a concern wants to expand its activities, it will have to enter new markets, to attract customers, it will give incentives in the form of credit facilities. In the early stages of expansion more credit becomes essential and size of receivables will be more. 5) Relation with profits: The credit policy is followed with a view to increase sales. When than the increase in revenues. It will be beneficial to increase sales beyond a point because it will be beneficial to increase sales beyond a point because it will be more profits.

6)

Credit collection efforts:

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The collection of credit should be streamlined. The customers should be sent periodical remainders if they reduce to pay in time. If these efforts are slower than outstanding amounts will be more. 7) Habits of customers: The paying habits of customers also have a bearing on the size of Receivables. The concern should remain in Touch with such customers and should make them realize the urgency of Their needs. Cost of maintaining receivables: The allowing of credit to customers means giving of funds for the Customers use. The concern incurs the following costs on maintaining receivables: 1) Cost of financing receivables: When goods and services are provided on credit then concerns capital is allowed to be used by the customers. The receivables are financed from the funds supplied by shareholders for long term financing and through retained earnings. 2) Cost of collection: A proper collection of receivables is essential for receivables management. The customers who do not pay the money during a stipulated credit period are sent remainders for early payments. In some cases legal recourse may have to be taken for collecting receivables. 3) Bad debts:
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Some customers may fall to pay the amount due towards them. The amounts, which the customers fall to play, are known as bad debts. Though a concern may be able to reduce bad debts through efficient collection machinery but one cannot altogether rule out this cost. Inventory Management: Introduction Every enterprise needs inventory for smooth running of its activities. It serves as a link between production and distribution processes. There is generally, a time lag between the recognition of a need and its fulfillment, the greater the higher the requirements for inventory. The investment in inventories constitutes the most significant part of current assets/working capital in most of the under takings. Thus, it is very essential to have proper control and management of inventories.

Meaning: The word inventory is understood differently by various authors. In accounting language it may mean stock of finished goods only. In a manufacturing concern, it may include raw materials, work-in-progress and stores etc. The dictionary meaning of inventory is stock of goods or a list of goods.
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Risk and cost holding inventories: The holding of inventories involves blocking of a firms funds and incurrence of capital and other costs. It also exposes the firm to certain risks. The various costs and risks involved in holding inventories are as below: a) Capital costs: Maintaining of inventories results in blocking of the firms financial resources. The firms has, therefore, to average for additional funds to meet the cost of inventories. The funds may be arranged from own resources or from outsiders. But in both the cases, the firm incurs a cost. In the former case, there is an opportunity cost of investment while in the later case, the firms has to pay interest to the outsiders. b) Storage and handling costs: Holding of inventories also involves costs on storage as well as handling of materials. The storage costs include the rental of the god own, insurance charges etc.

c)

Risk of price decline: There is always a risk of reduction in the pieces of inventories by

the suppliers in holding inventories. This may be due to increased market supplies, competition or general depression in the market. d) Risk of obsolescence:

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The inventories may become obsolete due to improved technology changes in requirements, change in customers tastes etc. e) Risk deterioration in quality: The quality of the materials may also deteriorate while the inventories are kept in stores. Objectives of inventory management: The following are the objectives of inventory management: 1) 2) To avoid both over-stocking and under-stocking of inventory. To ensure continuous supply of materials spares and finished goods so that production should not suffer at any time and the customer demand should also be met. 3) To maintain investments in inventories at the optimum level of as required by the operational and sales activities. 4) To design proper organization for inventory management. A clearcut accountability should be actually lying in the stores. 5) To facilitate furnishing of data for short term planning and control of inventory.

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The Study of Working Capital Management of SLN POLYMERS LTD

CHAPTER-2
DESIGN OF THE STUDY Title of the study: A study of working capital management of SLN POLYMERS LTD. Introduction: Business finance is defined as the process of rising, providing and managing of all the money to be used in connection with business activities. Working capital refers to the difference between the inflows and outflows of funds. Types of working capital are: a) b) c) d) e) Permanent working capital. Temporary working capital. Gross working capital. Net working capital. Negative working capital.

Effective and efficient cash management calls for cash planning, evaluation of benefits and costs of policies, procedures and practices and synchronization of cash inflows and outflows.

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The objectives of cash management are: 1) 2) To make cash payment. To maintain minimum cash reserve.

Accounts receivable is a permanent investment and is an ever rolling account. Accounts receivable management is a decision making process, which takes into account the creation of debtors, debtors turnover and minimizing the cost of borrowing of working capital due to lacking of forms in accounts receivable. Factors influencing inventory management: 1) 2) 3) 4) 5) 6) 7) 8)
9)

Nature of business activity. Inventory turnover. Special circumstances. Nature of arrangements with suppliers of goods. Scope of business activity. Quantum of anticipated production. Business cycles. Management policy. Period of production cycle.

Objectives of the study: 1) To Study the Growth of the Business of SLN POLYMERS

(trends). 2) To know the formalities to became a finance manager of operating cycle.

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3)

To study the performance of working capital management practices of SLN POLYMERS (Ratio Analysis).

4)

To offer Summary of Findings and Suggestions.

Scope of the study: A research design is overall operations pattern of framework of the project that stipulates what information is to be collected by objective and economical procedures. Survey method was adopted for this study. Field work was carried out to collect the necessary data. Distributors and customers were asked questions according to a prepared questionnaire. Data Collection: Primary data was collected manually. Secondary data was collected from annual reports, magazines, internet etc. Data analysis: Simple statistical technique like percentage, average, bar charts and pie charts are used. Sampling technique: It is an in-depth analysis of a single case. Hence sampling technique was not adopted.

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Methodology of research: Case study method has been adopted for the purpose of doing research. Operational definitions of the concept: Current assets: It includes cash and those assets, which can be covered into cash within a year, such as marketable securities, debtors and stock. Prepaid expenses are also included in current assets. Current liabilities: All the obligations maturing within a year are included in the current liabilities. It includes creditors bills. Bill payable, accrued expenses, bank overdraft, income tax liability and long term debt are maturing in the current year. Current ratio: It is a measure of the firms short term solvency. It indicates the availability of current assets in rupees for every one rupee of current liability. A ratio of Greater than one means that the firm has more current assets than current claims against of the firm. It is also known as Working capital ratio. The current ratio is calculated by the following formula: Current assets Current ratio = ----------------------Current liability

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Liquid assets: An asset is liquid, if it can be covered into cash immediately or reasonably soon without a loss of value. Liquid assets are cash, debtors, bill receivable and marketing securities or temporary investments. Liquid liabilities: Liquid liabilities mean liabilities payable within a short period. The formula for calculating liquid liabilities. Current ratio Liabilities = -------------------- x Current assets Quick ratio Liquid ratio: It shows the ability of a business to meet its immediate financial commitments. It is a more severe test of liquidity of a company. It is also known as Acid test ratio or quick ratio. The formula for calculating liquid ratio is: Liquid assets Liquid ratio = ----------------------Liquid liability Working capital turnover ratio: This ratio indicates whether or not the working capital has been effectively utilized in making sales. This ratio is calculated as follows: Net sales Working capital turnover ratio = ---------------------------Working capital
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Turnover ratio: Turnover ratios are employed to evaluate the efficiency with which the firm manages and utilizes its assets. They indicate speeds with which the assets are being turnover into sales. They involve a relationship between the assets and various assets. Review of the previous literature: As the mark of the literature survey several visits were paid to different libraries in the city and the previous project reports were reviewed and it was noticed that no other research work on the same topic carried out. Hence this study is undertaken. Limitation: The study has certain limitations under which it was carried out. As these were unavoidable so it was decided to carry out the study in spite of all these limitations. These limitations are as follows: 1) 2) Due to lack of time detailed research work could not taken. Only few parameters were used for the purpose of evaluating the financial statements. 3) The analysis of the data has been made only by taking the published information. Chapter scheme: Chapter no.
1)

Contents It deals with introduction.

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2) 3) POLYMERS). 4) 5)

It consists the design of the study. It deals with the profile of the company (SLN It consists of analysis and interpretation. It consists of summary of finding.

CHAPTER-3 THE COMPANY PROFILE

S.L.N. POLYMERS LTD. BANGALORE, is a private limited company incorporated in the year 2000 with a view to provide various administrative and facility management services to different corporate clients this company was promoted by a professional Sri. V. NARASHIMA MURTHY Managing Director of the company, who had a vast experience in various manufacturing companies in the personnel, Human resource and administrative functions. He saw for a demand and need for services providers, during the decade 1900-2000, and later there was a sprat of activity in Information Technology and other Manufacturing industries, which were looking for service providers to take up the noncore support services like housekeeping, canteen Management, Maintain functions transport of Employees and such other areas. This was from the angle of cost reduction efficiency of operatins, professional expertise the mentioned services and with a view to avoid unionism and expert skills development among the support staff. The company strives to work for the quality of the products. The company creates the granules which is very important elements of the
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plastic products. These products are very good and qualitative, they are eco-friendly.

Our Business Philosophy


Quality is important to a manufacturer. We emphasize quality throughout each step of our manufacturing process. We also strive to be as efficient as possible so we can offer a competitive price to our customers. Because the manufacturing of our instruments is overseen by the scientists who designed and developed them, quality is assured. Technical expertise carries over to the post delivery phase when customers can tap he extensive experience and knowledge of our principal.

Companys Suppliers
The company gets the raw materials in the form of plastics which is of course scrap. The scrap is recycled and molded in the form of Granules of different colors as and how it is needed by the different customers.

Its Suppliers are:


LML GLASS FIBER LIMITED, DENSO KIRLOSKAR LIMITED, BANGALORE CANBANK FIBRES BANGALORE.
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Employee Structure:
Initially the number of employees was just 40. These employess were well trained and well skilled who supported our mission and helped us to develop the products in accordance with customers. Subsequently, the firm expanded by providing services to various other government and non-government institutions. The company grew from employees strength of 40 in 1990 to around 80 employees in 2005.

Companys Turnover:
Initially the companys turnover was just 50 kgs of plastic granules. With the expansions of the company the production capacity has increase to 80 Kgs in 2005. Todays it is proud to tell that the companys production has increased to 1.5 tons per day. Now the company is aiming at producing around 2 tons per day.

Organogram:
MANAGING DIRECTOR

EXECUTIVE DIRECTOR

MANAGER-FINANCE

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MANAGER-FINANCE

MANAGER-FINANCE

MANAGER-FINANCE

The companys management is vested with the following person. The following individuals work for the management and are responsible for the improvement and success of the company MANAGING DIRECTOR EXECUTIVE DIRECTOR MANGER- FINANCE MANAGER-OPERATION EXECUTIVE-ADMN&OPTN FIELD OFFICERS NARASIMHA MURTHY VENKATESH. V MURTHY.V SURESH AHSRU SUDAKAR. RAO MANI AND BHASKAR

MISSION
Is to embrace a new paradigm of technological advancement that enable us: To become a Global player offering our products and services so clearly outstanding in innovation, quality and value that we are consistently the suppliers of choice. To identify potential customers and their requirements. To assess customer values.
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The Study of Working Capital Management of SLN POLYMERS LTD

To offer a wide range of products and services to our customers.

Vision 2020
To increase the production capacity from the present 1 tons per day to 3 tons per day. To increase the employability of the employees by providing them further incentives and good remuneration. Also to provide them perquisites which are in-comparably better than the other industry To install new and sophisticated machineries which promises good qualitative goods. To install new and sophisticated machineries which help to produce the next process from plastic granules to plastic products To export our products to outside Karnataka To expand the operations of the company from Peenya Industrial Estate to other parts of Bangalore as well as in other part of Karnataka To develop the products in an eco-friendly way To get the ISO certification.

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CHAPTER-4 ANALYSIS AND INTERPRETATION MASTER TABLE OF SLN POLYMERS


Growth and Performance of SLN POLYMERS: Table No.1 Table showing the Turnover for the year 2008-2011 (Rupees in lakhs) Particulars 2008 2009 2010 2011 Turnover Percentage Incremental value 350936 100% 1 411128 117% 17 722045 205% 88 1859832 529% 324

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The Study of Working Capital Management of SLN POLYMERS LTD

Graph No.1

Turnover
600% 500% 400% 300% 200% 100% 0% 2008 2009 2010 2011 Percenta e g

Analysis: From the above table and graph it is observed that there is a substantial increase in the turnover year after year. Interpretation: From the above table and graph further assume that the market share of SLN polymers ltd. may be growing considerably. Table No.2 Table showing the Consumption of Stores and Spares for the year 2008-2011 (Rupees in lakhs) Particulars 2008 2009 2010 2011 Consumption of stores 182019 and spares Percentage Incremental value 100% 1 217557 119% 19 Graph no.2 146430 80% 39 122392 67% 13

Consumtion of stores and spares

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The Study of Working Capital Management of SLN POLYMERS LTD

10 2% 10 0% 8% 0 6% 0 4% 0 2% 0 0 % 2 8 00 20 09 21 00 21 01 P ercen e tag

Analysis: From the above table it is observed that in the year 2008 growth is 100% and during the year 2009, 2010 and 2011 is 87%, 63%, and 68% respectively. There is a slight decrease and increase in the growth. Interpretation: From the graph it is inferred that the consumption of stores and spares is fluctuating in all years.

Table No.3 Table showing Trading Expenses for the year 2010-2011 2008 90335 100% 1 2009 78101 85% 15 Graph no.3 (Rupees in lakhs) 2010 2011 114990 127% -42 97672 108% 19

Particulars Trading expenses Percentage Incremental value

Trading expenses
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140% 120% 100% 80% 60% 40% 20% 0% 2008 2009 2010 2011 Percenta e g

Analysis: From the above table and graph it can be observed that there is considerable improvement in the incremental values of the proportions of trading expenses components. Interpretation: It is satisfactory however a care should be taken in order to reduce downward fluctuations. Table No.4 Table showing the basis of Net Profit for the year 2008-2011 (Rupees in lakhs) Particulars 2008 2009 2010 2011 Net profit Percentage 139049 100% 57034 41% -59
Net Profit

149924 107% 66

161948 116% 9

Incremental value 1 Graph no.4


150 100 50 0 2008

2009

2010

2011 37

Year Lal Bahadhur Shastri Government First Grade College

Percentage

The Study of Working Capital Management of SLN POLYMERS LTD

Analysis: From the above table and graph it is observed that there was a decline during the year 2009, however the same has been recovered the profit was multiplied in the years later. Interpretation: From the above table and graph it is observed that the net profit is substantially growing.

Table No.5 Table showing the sift of Reserves and Surplus from the year 2008-2011 2008 100% 1 2009 943201 88% -12 (Rupees in lakhs) 2010 2011 1011280 94% 6 1097202 103% 9

Particulars Percentage Incremental value Graph no.5


105 100 95 90 85

Reserves & surplus 1065454

Reserves and Surplus

Percentage

Lal Bahadhur Shastri Government First Grade College 2008 2009 2010 2011
Year

80

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Analysis: From the above table it is observed that in the year 2008 growth is 100% and during the year 2009, 2010 & 2011 is 88, 94, and 103 respectively. There is a slight decrease and increase in the growth. Interpretation: From the graph it is inferred that the reserves and surplus is fluctuating in all years

Table No.6 Table showing the small detachment of current liabilities for the year 2008-2011 (Rupees in lakhs) 2008 2009 2010 2011 Particulars Current liabilities Trends Incremental value Graph no.6 1303623 100% 1 1162484 89% 11
Current liabilities
100, 21%

1215920 93% -4

2428251 186% -93

186, 40%

89, 19%

Lal Bahadhur Shastri Government First Grade College 93, 20% 2008 2009 2010 2011

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The Study of Working Capital Management of SLN POLYMERS LTD

Analysis: From the above table and graph it is observed that there is a substantial fluctuations in the current liabilities. Interpretation: The constitution of the current liabilities of the company under study seems to be varying without any control mechanisms.

Table No.7 Table showing the facts of companys inventories for the year 2008-2011 (Rupees in lakhs) 2008 2009 2010 2011 Particulars Inventories Percentage Incremental value
100 80 60 40 20 0 Lal Bahadhur2004 2005 2006 2007 Grade College Shastri Government First
Years

1000217 100% 1

873766 87%

639872 63%

689861 68% 5

Inventories -24 -13

Graph no.7

Percentage

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Analysis: From the above table and graph it is observed that there is a substantial fluctuation in the inventory levels. Interpretation: Though there is a fluctuation, the level of inventory might be satisfactory, if there is a proper match between demand and supply.

Table no.8 Table showing the deceive of sundry debtors for the year 2008-2011 Particulars Sundry debtors Percentage Incremental value Graph no.8 2008 297818 100% 1 2009 154189 51% -49 (Rupees in lakhs) 2010 2011 302072 101% 50 314190 105% 4

Sundry Debtors

120 100 80 60 40 Percentage 20 0 Lal Bahadhur2008 2009 2010 2011 Grade College Shastri Government First
Years

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Analysis: From the above table it is observed that in the year 2008 growth is 100% and during the year 2009, 2010 and 2011 is 51%, 101% & 105% respectively. There is a slight decrease and increase in the growth. Interpretation: If 105% more growth means care should be taken in the recovery of debtors and the aging of debtors.

Table no.9 Table showing the companys Cash and Bank Balance for the year 2008-2011 2008 327853 100% 1 (Rupees in lakhs) 2009 2010 2011 624797 190% 90 795692 243% 53 258133 78% -165

Particulars Cash & Bank Percentage Incremental value Graph no.9

Cash and bank balance


250 200 150 100 50 0

Lal Bahadhur Shastri Government First Grade College 2008 2009 2010 2011
Year

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Analysis: From the above table it is observed that in the year 2008 growth is 100% and during the year 2009, 2010 and 2011 is 190%, 243%, & 78% respectively. There is a slight increasing and decreasing in the growth. Interpretation: From the graph it is inferred that the Cash and Bank is fluctuating in all years.

Table No.10 Table showing the details of Fixed Assets for the year 2008-2011 Particulars Fixed Assets Percentage Incremental value Graph No.10
Fixed assets 140 120 100 80 60 40 20 0

2008 698840 100% 1

2009 704214 100% 0

(Rupees in lakhs) 2010 2011 743173 859181 106% 122% -6 -16

2008

2009

2010

2011 43

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Years

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Analysis: From the above table it is observed that in the year 2008 growth is 100% and during the year 2009, 2010 and 2011 is 100%, 106% and 122% respectively. There is a slight decrease and increase in the growth. Interpretation: From the graph it is inferred that the fixed assets is increasing years.

ANALYSIS OF WORKING CAPITAL MANAGEMENT A financial statement represents the snap shot of the organizational activities at the end of the particular period. At the time they portray the efficiency of management to what extent it has succeeded, what are their failures and to what it has justified its course of action during the period under review. Financial statement analysis means bringing out the meaning of such statements with the help of analysis. Ratio analysis: Ratio expresses the numerical relationship between two numbers. Ratio establishes relationship between related items.

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Financial ratio analysis is a study of ratios between various items in financial statements. Financial ratios have been classified in several ways. In this contest, we divide ratio into four board categories as follows. 1. 2. 3. 4. 1. Liquidity ratio. Leverage ratio. Turnover ratio. Profitability ratio.

Liquidity ratio: The word liquidity means conversion of assets into cash during

the normal course of business and have a regular uninterrupted flow of cash to meet outside current liabilities or obligations and when due and payable. Liquidity ratios refers to the ability of a firm to meet its obligation in shortest, usually one year. a) b) c) a) Current ratio Liquidity ratio Absolute liquid ratio Current ratio: Current ratio is very popularly called as liquidity ratio, 2:1 ratio, solvency ratio or working capital ratio. Current ratio is the indicator of the relationship between current assets and total of current liabilities. This ratio is applied to test solvency as well as determining short-term financial strength of the business. It is defined as: Current assets Current ratio = -----------------------------Current liabilities
45

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b)

Liquid ratio: Liquid ratio is also known as solvency ratio, liquid assets ratio, and

acid test ratio, near money ratio. Liquid ratio will be indicative of the ability of organization to meet its obligation. Liquid ratio is a more stringent test of firms statement ability to meet its current liabilities. Liquid ratio is considered as a more refined indicator of the current liquid position or status. Here inventory and prepaid expenses are excluded from the current assets in order to arrive at the amount of liquid assets. Liquid ratio is defined as: Current assets (inventory) = ------------------------------------------------Current liabilities c) Absolute ratio: Absolute ratio is defined as: Absolute liquid assets = ---------------------------------Current liabilities The ratio should be 1:2. This helps to measure the firms statement ability to pay its current liabilities. 2) Leverage ratio: Leverage ratios are calculated to know the long-term financial position of the firm. This ratio will indicate the proportion of debt and equity in the capital structure of the organization. These are called capital structure ratio and solvency ratio. The various leverage ratio are a) Debt equity ratio
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b) c) d)

Debt assets ratio Debt assets coverage ratio Fixed assets to net worth

3) Turnover ratio:

Turnover ratio indicates the effectiveness with which the assets are utilized in the firm. These are also called activity ratio. a) Inventory turnover ratio: Inventory turnover ratio is also called as stock turnover ratio, measures how fast the inventory is moving through the firm and generating sales. It is defined as: Cost of goods sold or sales = ---------------------------------------Average inventory b) Receivables turnover ratio: Receivables turnover ratio is also called as debtor turnover ratio or accounts turnover ratio. The ratio is an indicator of quickness in realization of sundry debtors. If it is found that the credit period allowed to customer is very long, management will have to devise ways and means to improve the collection. The ratio indicates the speed at which the debtors are converted into cash. It is defined as: Credit sales = -----------------------Average debtors

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The Study of Working Capital Management of SLN POLYMERS LTD

A high receivable turnover ratio indicates the efficient management of account receivables turnover ratio and low receivables turnover ratio indicates poor collection from debtors. c) Average collection period: Average collection period represents the number of days worth of credit sales that is locked in debtors. It is defined as: Days in a year = ----------------------Debtors turnover ratio d) Working capital turnover ratio: Working capital turnover ratio measures the efficiency with the working capital is being used by the firm. It indicates the number of times the working capital is turned over in the course of a year. It is defined as: Sales W.C.T.R = -----------------------------Networking capital A higher ratio indicates efficient utilization of working capital and a low ratio indicates otherwise. e) Current assets turnover ratio: Current assets turnover ratio is to ascertain the efficiency with the current assets have been turned over during assets particular period of assets year and so it shows the relationship between the current assets to sales. It is defined as: Sales =----------------------Current assets

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4)

Profitability ratio: Profitability reflects the final result of business operation. These

ratios show the relationship between profit and sales. The various profitability ratios are: a) Gross profit ratio: Gross profit ratio is defined as the difference between net sales and the cost of goods sold. Gross profit ratio is defined as: Gross profit =---------------------- x 100 Net sales b) Net profit ratio: Net profit ratio shows the earnings left for shareholders as assets percentage of net sales. It measures overall efficiency of production, administration, selling, financing, profit and tax management. It is also known as final net ratio profit to net sales ratio. It is defined as: Net profit =----------------- x 100 Net sales c) Return on equity: Return on equity capital is assets measure of great interest to equity shareholders, the return on equity is defined as: Net profit = ------------------Equity capital

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The Study of Working Capital Management of SLN POLYMERS LTD

d)

Capital turnover ratio: Capital turnover ratio shows the relationship between the cost of

goods sold and capital employed. This ratio is calculated to measure the efficiency or effectiveness with which assets firm utilizes its resources of the capital employed. It is defined as: Sales = -----------------------Capital employed As capital is invested in assets business to make sales and profits, this ratio is assets good indicator of overall profitability of assets concern.

RATIO ANALYSIS
Table 1 Current ratio = (Amount in lakhs) Year Current assets Current liabilities Current ratio Graph no.1
Current ratio
2 1.5 1 0.5 0 2004 2008 2009 2010

Current assets ---------------------Current liabilities 2008-2009 2167.20 1162.48 1.86 2009-2010 2319.58 1215.91 1.90 2010-2011 3499.34 2428.24 1.44

2007-2008 2367.84 1303.62 1.81

Lal Bahadhur Shastri Government First Grade College


Years

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Analysis: This ratio is applied to test solvency as well as determining short-term financial strength of the business. Current ratio for the SLN POLYMERS for the last four years is 1.81, 1.86, 1.90 and 1.44 respectively. Interpretation: The standard for current ratio is 2:1. Though current ratio in SLN POLYMERS has increasing trend for three years, company has the ratio almost near to the standard not more than the standard so the firms ability to honor the short-term obligations is not so efficient. Owing to increase in current liability the last year ratio has declined. Table 2 Current assets (inventory) Quick ratio = -------------------------------------------Current liabilities (Amount in lakhs) Year Liquid assets Current liabilities Liquid ratio 2007-2008 1367.63 1303.62 1.04 2008-2009 1293.44 1162.48 1.11 2009-2010 1679.71 1215.91 1.38 2010-2011 2809.48 2428.24 1.15

Graph no.2

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The Study of Working Capital Management of SLN POLYMERS LTD

1 .4 1 .2 1 0 .8 0 .6 0 .4 0 .2 0 20 08 20 09 21 00 21 01 3 Colum 1 -D n 3 Colum 2 -D n L uid ra iq tio

Analysis: Higher liquid ratio indicates the higher ability of the company to meet its short-term obligations. Liquid ratio of the SLN POLYMERS is higher, though it can meet its short term obligations. Interpretation: SLN POLYMERS has liquid ratio which is more than the standard 1:1. The liquid ratio of SLN POLYMERS is healthy.

Table 3 Net sales Current assets turnover ratio = ------------------------Current assets (Amount in lakhs) Year 2007-2008 Net sales 3509.36 Current assets 2367.84 2008-2009 4111.28 2167.20 2009-2010 7220.45 2319.58 2010-2011 18598.32 3499.34

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The Study of Working Capital Management of SLN POLYMERS LTD

Current assets 1.48 turnover ratio Graph no.3

1.89

3.11

5.31

Current assets turnover ratio


1.48

5.31

1.89

2008

2009

2010

3.11 2011

Analysis: Current turnover ratio is increasing for the last four years. There is a substantial increase in the turnover year after year. Interpretation: Ratios are increasing over a period. The increasing ratio indicates that the firm is effectively using its current assets. Further assume that the market share of SLN POLYMERS may be growing considerably. Table 4 Net sales Inventory / stock turnover ratio = ------------------------Inventory (Amount in lakhs) Year 2007-2008 Net sales 3509.36 Inventory 1000.21 2008-2009 4111.28 873.76 2009-2010 7220.45 639.87 2010-2011 18598.32 689.86

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The Study of Working Capital Management of SLN POLYMERS LTD

Inventory turnover ratio Graph no.4

3.50

4.70

11.28

26.95

Inventory turnover ratio


30 25 20 15 10 5 0

2008

2009 Years

2010

2011

Analysis:- A high inventory turnover ratio is indicative of good inventory management. In SLN POLYMERS ratio of SLN POLYMERS for the last four years are 3.5, 4.7, 11.28 and 26.95 respectively. Interpretation: - Inventory turnover ratio is increasing. SLN POLYMERS is very much successful in managing its inventory. Inventory turnover ratio is increasing for the last four years.

Table 5 Cost of goods sold / sales Working capital turnover ratio =--------------------------------------Net working capital (Amount in lakhs) Year 2007-2008 2008-2009 2009-2010 2010-2011

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The Study of Working Capital Management of SLN POLYMERS LTD

Current assets Current liabilities Net sales

2367.84 1303.62 3509.36

2167.20 1162.48 4111.28 1004.72 4.09

2319.58 1215.91 7220.45 1103.67 6.54

3499.34 2428.24 18598.32 1071.10 17.36

Net Working 1064.22 capital= CA CL Working capital 3.29 turnover ratio Graph no.5

Working capital turnover ratio


20 15 10 5

Analysis: A high working capital turnover ratio is preferred. In SLN 0 POLYMERS working capital turnover ratio is high. The ratios of Years company are 3.29, 4.09, 6.54 and 17.36 respectively. Interpretation: working capital turnover ratio of SLN POLYMERS is increasing over a period of study. This indicates the company sales are growing year after year.
2008 2009 2010 2011

Table 6 Net sales Fixed asset turnover ratio = ----------------------------Net fixed assets (Amount in lakhs) Year 2007-2008 Net sales 3509.36 Net fixed assets 698.84

2008-2009 4111.28 7042.21

2009-2010 7220.45 743.17

2010-2011 18598.32 859.18

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Fixed assets 5.02 turnover ratio

0.58

9.71

21.64

Fixed assets turnover ratio 5.02 0.58

21.64

9.71

2008

2009

2010

2011

z Analysis: A high fixed assets turnover ratio indicates efficient utilization of fixed assets in generating sales. In SLN POLYMERS fixed assets turnover ratio of last four years are 5.02, 0.58, 9.71 and 21.64 Interpretation: Though its fixed assets turnover ratio is fluctuating the company is utilizing its fixed assets efficiently. Table 7 Sales Capital employed turnover ratio = ---------------------------Capital employed (Amount in lakhs) Year Net sales Capital employed Capital employed turnover ratio 2007-2008 3125.64 1547.10 2.02 2008-2009 3509.36 1697.99 2.06 2009-2010 4111.28 1636.06 2.5
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Capital employed turnover ratio 60 50 40 30 20 10 0

2008

2009

2010

2011

Years

Analysis: Higher the capital ratio indicates effective utilization of capital for the purpose of making profit. The ratio for the past four years is increasing i.e. 11.45, 13.15, 22.87 and 57.93 respectively. Interpretation: Capital in SLN POLYMERS is increasing over the period of study. This shows that the company is effectively utilizing its capital in making profit.

Table 8
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Net sales Total assets turnover ratio = ----------------------Total assets

(Amount in lakhs) Year 2007-2008 Net sales 3509.36 Total assets = 3066.68 FA + CA Total assets 1.14 turnover ratio

2008-2009 4111.28 2871.41 1.43

2009-2010 7220.45 3062.75 2.35

2010-2011 18598.32 4358.52 4.26

Total assets turnover ratio


5 4 3 2 1 0 2008 2009 2010 2011

Years

Analysis: Total assets turnover ratio of SLN POLYMERS for the past four years is substantially increasing. Higher total assets turnover ratio indicates efficient utilization of fixed assets and current assets for the purpose of sales. Interpretation: Though total assets turnover ratio in SLN POLYMERS has increasing trend, the assets of the firm is utilizing efficiently

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The Study of Working Capital Management of SLN POLYMERS LTD

Table 9 Sales current period sales last period Sales growth rate ratio = ------------------------------------------------------Sales last period (Amount in lakhs) Year Sales of current period Sales of last period 2007-2008 2008-2009 2009-2010 2010-2011 3509.36 3125.64 4111.28 3509.36 601.92 0.17 7220.45 4111.28 3109.17 0.75 18598.32 7220.45 11377.87 1.57

Sales current period 320.36 -sales last period Sales growth ratio 0.11
Sales Growth ratio

0.11

0.17

1.57

0.75

2008

2009

2010

2011

Analysis: The sales growth ratio of SLN POLYMER is 0.10, 0.17, 0.75 and 1.57 respectively. It indicates how the sale of the firm is increasing over the years. Interpretation: From the above table and graph assume that the market share of SLN POLYMERS may be growing considerably.

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Table No.10 Schedule of Changes in Working Capital during the year 2009 compared to 2008
(Rupees in Lacs)

Particulars Current assets 1.Inventories 2.Sundry debtors 3.Cash and bank balance 4.Loans and advances T.C.A Current liabilities 1.Liabilities 2.Provisions T.C.L W.C = T.C.A T.C.L Net decrease in working capital Total

2008

2009

Changes in working capital Increase Decrease 126.45 143.63 296.94 227.50 135.40 5.74 59.50 497.58 497.58

1000.21 297.81 327.85 741.97 2367.84 1288.51 15.11 1303.62 1064.22 1064.22

873.76 154.18 624.79 514.47 2167.20 1153.11 9.37 1162.48 1004.72 59.50 1064.22

Table No.11 Schedule of Changes in Working Capital during the year 2010 compared to 2009
(Rupees in Lacs)

Particulars

2009

2010 639.87 302.07 795.69

Changes in working capital Increase Decrease 233.89 147.89 170.90


60

Current assets a) Inventories 873.76 b) Sundry debtors 154.18 c) Cash & Bank balance 624.79

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The Study of Working Capital Management of SLN POLYMERS LTD

d) Loans & advances T.C.A Current Liabilities a) Liabilities b) Provisions T.C.L W.C = T.C.A T.C.L Net increase in working capital Total

514.47 581.95 2167.20 2319.58 1153.11 9.37 1162.48 1004.72 98.95 1103.67 1103.67 1154.66 61.25 1215.91 1103.67

67.48 1.55 51.88

386.27

98.95 386.27

Table No.12 Schedule of Changes in Working Capital during the year 2011compared to 2010
(Rupees in Lacs)

Particulars Current assets a) Inventories b) Sundry debtors c) Cash & Bank balance d) Loans & advances T.C.A Current Liabilities a) Liabilities b) Provisions T.C.L W.C = T.C.A T.C.L Net decrease in working capital Total

2010 639.87 302.07 795.69 581.95 2319.58 1154.66 61.25 1215.91 1103.67 1103.67

2011 689.86 314.19 258.13 2237.16 3499.34 2402.27 25.97 2428.24 1071.10 32.57 1103.67

Changes in working capital Increase Decrease 49.99 12.12 537.56 1655.21 1247.61 35.28 32.57 1785.17 1785.17

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Analysis and interpretation of Table no.10,11 &12 2005(working capital of current year) Working Capital = ---------------------------------------------------2004(working capital of previous year) 1004.72 = -------------- X 100 1064.22 = 94.41 2006(working capital of current year) Working Capital= ---------------------------------------------------2005(working capital of previous year) 1103.67 = ---------------- x 100 1004.72 = 109.85

2007(working capital of current year) Working Capital = ---------------------------------------------------2006(working capital of previous year) 1071.10 = ---------------- x 100 1103.67 = 97.05

An analysis of table 10,11 & 12 and a comparisons of above ratios reveals that there is 5.69% decrease in working capital during the year 2005 when compared to its preceding year(2004).

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However there was a growth of 9.85% during 2006 over its earlier years and there was considerable decline 2.95% in the working capital. This trend can be attributed to the behavior of inventories which were maintained in all these years. Further current ratios and liquid ratios which are exhibited in table 10, 11 & 12shows that the ratios are healthy.

CHAPTER-5
SUMMARY OF FINDINGS Surplus money is being invested efficiently to make profit over a period of time.

Company sales are growing for the last four years. The fixed assets of SLN P have increasing trend over the study period of time i.e. in 2004, 2005, 2006 and 2007.

The company is making continuous profit over a study period of study.

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Cash and bank balance has increasing trend in the year 2004, 2005 and 2006.

Sundry debtor has increasing trend in the year 2005, 2006 and 2007.

The inventory of the company is stable and are valued at cost by adopting First-in-First Out method.

CHAPTER-6

SUGGESTION & CONCLUSION The company can make good plans to utilize the funds in better manner. The expense of the company can be reduced by introducing high level technology.
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The company can compete with maintaining all the ratio and financial statement so that the company performance will be good.

The company should concentrate to maintain liquidity.

CONCLUSIONS
The overall performance of working capital management of SLN POLYMERS is efficient. But there are some areas where company has to forces to increase its efficiency. Company could achieve efficient working capital management with the equal contribution of all the related departments. Working capital management efficiency of SLN

POLYMERS is higher. Since, there is increasing orders for the units of products and services, the need for efficient working capital management in future also will be high.

ANNEXURE-1
Statement of share capital as on 31-03-2011
Sl No . Particulars Issued capital Subscribed & paid up Un-subscribed capital capital Equity shares No. Value 1,35,000 1,35,00,000 62,230 1,30,670 62,23,000 12,380,575 Equity shares No. Value 22,500 22,50,000 72,770 26,830 72,77,000 26,83,000

1 2 3

Govt. Karnataka Govt. of 1,35,000 India (NSC) Seed 1,57,000

Equity shares No. Value of 1,57,500 1,57,50,000 1,35,00,000 1,57,50,000

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The Study of Working Capital Management of SLN POLYMERS LTD Growers Total

4,50,000

4,50,00,000

3,27,900

3,21,03,575

1,22,100

1,22,10,000

12,500 Preference Shares of GOK & 23,012 Preference shares of GOI has been converted into equity shares as approved in the 164th & 178th board meeting held on 30-07-1997 & 19-02-1999 respectively.

Growers paid-up-capital No Value


Fully paid- 1,19,630 up-capital Partly paid- 11,040 up shares Calls in- arrears Total 1,30,670 1,19,63,000.00 4,17,574.68 6,86,425.32 1,30,67,000.00

Government paid-up-capital No Value


Equity share capital 62,23,000 1,35,00,000

62,23,000

1,35,00,000

Authorized capital Issued capital Subscribed & paid up capital Un-subscribed capital Calls in arrears

- Rs.500.00 lakhs. - Rs.450.00 lakhs. - Rs.321.04 lakhs. - Rs.122.10 lakhs + 6.86 lakhs

ANNEXURE-2
District wise share holders as on 31-03-2011 Sl NO. 1 2 3 4 5 6 Districts BANGALORE ( U&R) TUMKUR KOLAR MYSORE C.R.NAGAR MANDYA No. of holders 123 501 1081 412 77 81 share No of shares 1570 5165 18315 5445 985 945
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7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23

HASSAN SHIMOGA DAVANAGERE CHITRADURGA BELLARY RAICHUR KOPPAL U.KANNADA CHIKKAMANGALORE DHARWAR HAVERI GADAG BELGUM BIJAPUR BAGALKOTE GULBARGA BIDAR Total :-

39 59 1150 380 786 317 758 02 15 412 1075 1305 182 69 460 222 79 9585

535 685 15760 4075 9080 3815 7860 20 305 4605 13645 15050 1840 855 5120 3120 835 119630

ANNEXURE-3
Location of seeds processing units, its capacity vs. utilization (2010-2011) Sl Location No. 1 2 3 C.B.PUR KOLAR TUMKUR Installed Actual capacity in production Qtls. Per Annum 7500 3633 7500 5264 7500 11191 % of capacity utilization 48.44 70.18 149.21
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The Study of Working Capital Management of SLN POLYMERS LTD

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MYSORE K.R.NAGAR MANDYA C.R.PATNA DAVANGERE SHIMOGA DHARWAR GADAG HAVERI BELLARY SINDHANUR RAICHUR KOPPAL GULBARGA BHALKI B.R.GUDI BAGALKOTE Total

20000 15000 7500 7500 20000 15000 7500 15000 15000 20000 7500 7500 7500 7500 7500 15000 7500 225000

13626 15741 5550 6072 21949 23812 10231 7510 4473 19523 6456 6094 10321 3390 4293 2831 3449 185409

68.13 104.94 74.00 80.96 109.75 158.75 136.41 50.07 29.82 97.62 86.08 81.25 137.61 45.20 57.24 18.87 45.99 82.40

STORAGE CAPACITY: The corporation has 35 operation centers, 20 seed processing units and 37 sale points. The cumulative seed storage capacity of the corporation is 12715 M.Ts. out of which 17 godowns are owned by SLN POLYMERS, with a storage capacity of 9010 M.Ts. and balance storage capacity is hired from different sources.

ANNEXURE-4 Sales Turnover & Net Profit for the year from 1983 to2012
Year 1983-84 1984-85 1985-86 1986-87 1987-88 1988-89 Quantity procured 27182 44276 58526 61039 84759 73442 Sales quantity 24725 38401 58470 45623 90895 73520 Sales turnover 167.36 185.60 268.45 290.55 600.73 625.99 Profit 17.84 12.52 9.68 9.72 0.43 5.23 Remarks

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The Study of Working Capital Management of SLN POLYMERS LTD

1989-90 106723 73283 805.60 7012 1990-91 58202 86794 842.85 8.45 1991-92 90023 87889 886.09 12.47 1992-93 62268 61870 860.27 16.86 1993-94 63961 71067 1137.68 5.07 1994-95 70399 68998 1268.95 44081 1995-96 67819 80327 1336.33 35.41 1996-97 91704 79935 1670.63 68.71 1997-98 114642 94296 1545.99 39.07 1998-99 128408 129970 2036.17 11.72 1999-00 132341 126803 2571.37 85.96 2000-01 135411 142941 2767.82 61.40 2001-02 162363 159100 3073.16 214.72 2002-03 146683 148021 3252.62 39.78 2003-04 149462 141499 3265.26 42.93 2004-05 172269 175615 3392.13 49.52 2005-06 173005 141734 2972.31 32.89 2006-07 173635 164375 3125.64 108.01 2007-08 160547 180676 3729.35 139.05 2008-09 218226 215400 4111.28 57.04 2009-10 234499 237971 7220.46 149.92 2010-11 472825 485971 18598.32 161.95 2011-12 225774 232937 5411.08 144.23(p) (budgeted) Note:1.SLN POLYMERS under went financial restructuring during the year 1997-98. 2.2002-03 sales quantity excluded disposal of 32,524 qtls unfit seed. 3. Operations of SLN POLYMERS during the year 2002-03 have reported loss due to continuous drought condition prevailed in the state.

ANNEXURE-5
Crop / Varieties of seeds of different crops produced and marketed by S.L.N.POLYMERS as on 31-3-2007 Sl No
1 2 3

CROP CEREALS
HY.JOWAR IMP.JOWAR HY.MAIZE

VARIETIES
CSH-14, CSH-16 M-35-2, Phuleyashoda RMH-32, RMH-222, RMH-333, RMH-555,

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The Study of Working Capital Management of SLN POLYMERS LTD RMH-999 South African Tall ICTP-8203 Indaf-7, Indaf-9, MR-2, PR-202, GPU-28, GPU-26, GPU-45, GPU-48 KRH-2 Jaya, Tellahamsa, Rasi, BPT-5204, IR-64, Intan, IET-7191, IET-13901 Jyothi, Bahamas IR-30864, CTH-1, JGL-1798, Thanu, MTU1010, Uma, MO-4, DWR-162, DWR-195, Lok-1 C-152 China Moong (C.M), TAU-1, T-9 TTB-7, ICPL-8863, WRP-1, BSMR-736, BRG-1, ICPL-87119, JS-1 A-1, Vijaya, JG-11 TMV-2, GPBD-4, JL-24 KBSH-1, KBSH-41,KBSH-44 Morden, JS-335 A-2 DCH-32,Varalaxmi, NHH-44, DHH-11 Sunhemp / Diancha Arka Komal Arka Anamika PKM-1

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IMP.MAIZE IMP.BAJRA RAGI HY.PADDY PADDY

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WHEAT

PULSES
COWPEA GRRENGRAM BLACKGRAM REDGRAM BENGALGRAM

OILSEEDS
GROUNDNUT HY.SUNFLOWER SUNFLOWER SOYBEAN SAFFLOWER FIBRE CROPS HY.COTTON GREEN MANURE

VEGETABLE SEEDS
BEANS BHENDI TOMATO

BIBLIOGRAPHY

Financial Management :Dr.P.N.Reddy,

Appannaiah

and

Satyaprasad, Himalaya Publishing House, edition 2003.


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Working capital management : V.K.Bhalla Essentials of business finance : Reddy, Appannaiah &

Srivastava.
Newspaper: Kannada Praba Booklet: Old Projects.

Internet: 1) www.google.com
2) www.SLN Polymers.com

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