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CONTENTS

CHAPTER NOs Chapter I TITLES INTRODUCTION


Need of the study Objective of the study Scope of the study Methodology of the study Period of the study Tools of analysis Limitation of the study 5 5 6 7 7 8

PAGE NOs
1-3 4

Chapter II Chapter III Chapter IV

CONCEPTUAL FRAME WORK OF WORKING CAPITAL COMPANY & INDUSTRY PROFILE DATA ANALYSIS & PRESENTATION
1. Presentation & Analysis 2. Interpretations

9-22 23-30 31-52

Chapter V Chapter VI Chapter VII

SUMMARY & CONCLUSIONS BIBLIOGRAPHY APPENDICES


Appendix- I Appendix II

53-54

LIST OF TABLES
TABLE S NO 1 2 3 4 5 6 7 8 NAME OF THE TABLES WORKING CAPITAL (2004-2008) STATEMENT OF WORKING CAPITAL (2004-2008) CASH TO TOTAL CURRENT ASSETS INVENTORY TO TOTAL CURRENT ASSETS CURRENT RATIO LIQUIDITY RATIO DEBTORS TURNOVER RATIO INVENTORY TURNOVER RATIO PAGE. NO 34 36-40 41 42 44 45 47 48

LIST OF GRAPHS
GRAPHS NO TITLES PAGE. NO

1 2 3 4 5 6

CASH TO NETWORKING CAPITAL RATIO INVENTORIES TO TOTAL CURRENT ASSETS CURRENT RATIO LIQUIDITY/QUICK RATIO DEBTOR TURNOVER RATIO INVENTORY TURNOVER RATION

41 43 44 46 47 49

INTRODUCTION
WORKING CAPITAL Working Capital represents finance needed by industrial for their dayto-day expenses. It stands for surplus of current assets over current liabilities. It mainly consists of investment in raw material, work-inprogress, finished goods and receivables, which are termed as chargeable current assets. Working Capital comes into business operation when actual operation takes place.
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Generally, the requirements of quantum of working

capital is

determined by the level of productions, which depends upon the managements attitude towards risk and the factor that influence the amount of cash, inventories, receivables and other current assets required to support a given volume of production, risk is understood in the sense of the probability of bearing unfavorable results on accounts of not maintaining sufficient current assets to meet all the financial obligations as they mature and to support the proper level of sales. With regards to working capital management Finance manager has to take three decisions, namely; 1. 2. 3. The level of current assets. The structure/composition of current assets. The financing of current assets.

Working Capital management is concerned with the problems that arise in attempting to manage the current assets and the current liabilities and the interrelationship between them, Current assets are those that can be converted into cash within a period of time without undergoing any change in its value or without affecting the operations of any firm. Current liabilities are those liabilities which are intended to be paid within a year out of the current assets or the firms earnings. The main aims of working capital management are to manage the current assets and current liabilities in such a way that a satisfactory level of working capital is maintained. Inefficient, it is likely to become insolvent or even may be forced to bankruptcy.

The current assets should be large enough to cover its current liabilities to ensure a reasonable margin of safety. DEFINITION OF WORKING CAPITAL: According to Mr Khan and P.K Jain Working capital refers to manage the firm current assets and current liabilities in such a way that a satisfactory level of working capital is maintained. According to the Shubin Working Capital is an amount of fund is necessary to cover the cost of operating the enterprise. Working capital management is concerned with the problem is that arise in attempting to manage the current assets and the current liabilities and their inter relationship they arise between them. Current assets refers to those assets which to the ordinary course of business can be or will be turned into cash within one year without undergoing a diminution in value and without disrupting the operations of the firm. The major current assets are cash marketable securities accounts receivable and their inception to be paid in the ordinary course of business within a year out of current Assets or earnings of the concern. The basic current Liabilities are Bills payables, Banks Overdrafts and Outstanding expenses.

The goal of working capital management is to manage the firms current assets and current Liabilities in such a way that a satisfactory level of working capital is maintained.

CONCEPTS OF WORKING CAPITAL: There are two concepts of working capital: (I) Gross Working Capital. (ii) Net Working Capital. In the broad sense the term working capital refers to the gross working capital and represents the amount of funds invested in current assets. Current assets are those assets, which in the ordinary course of business can be converted into cash within a short period of normally one accounting year. In a narrow sense the term working capital refers to the net working capital. Net working capital is the excess of current assets over current liabilities. Working Capital = Current Assets - Current Liabilities Net working capital may be positive or negative. When the current assets exceed the current liabilities the working capital is positive and the negative working capital results when the current liabilities are more than the current assets. Current liabilities are those liabilities which are intend to be paid in the ordinary course of business within a

short period or normally one accounting year out of the current assets or the income of the business. The gross working capital concept is financial or going concern concept whereas net working capital is an accounting concept of working capital. These two concepts of working capital are not exclusive rather both have their own merits. Gross concept is very suitable to the company form of organization where there is divorce between ownership management and control. The net concept of working capital may be suitable only for proprietary form of organizations such as sole-trader or partnership firms. However, it may be made clear that as per the general practice net working capital is referred to simply as working capital. NEED OF THE STUDY Working capital management is very significant aspect in the management of finance of any organization. By checking the level of working capital one can easily identify the liquidity and profitability position of the firm and the decisions regarding. 1. The level of working capital management which can be determined by the level of current assets and current liabilities. 2. The composition of current assets and current liabilities 3. Financing of current assets and current liabilities are of almost importance and significant in the financial management of the business because it not only shows the financial efficiency of business but also its credit worthiness which has gained importance

in these days of credit squeeze. This fact has been justified by many industries which have failed frequently due to the management of working capital especially with regard to effect of various suggestions and regulations. It is this view that a case study has been made on working capital management in Sujala Pipes Private Limited.

OBJECTIVES OF THE STUDY


1.

To study the various changes in working capital of Sujala Pipes Private Limited.

2. To study the working capital management with regards to cash Receivables and inventory of Sujala Pipes Private Limited. 3. To study the liquidity position of Sujala Pipes Private Limited. 4. To study the inventory management period of Sujala Pipes Private Limited.

SCOPE OF THE STUDY Financial management is that the managerial activity which is concerned with the planning and controlling of the firm's financial resources. Though it was a branch of economics till 1890 as a separate activity or discipline, it is of recent origin. Still it has no unique body of knowledge of its own and heavily on economics for its theoretical
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concepts even today. The subject of finance is of immense interest to both academician and practicing managers. It is of great interest of academicians because the subject is still developing and there are still certain areas where controlling exists for which no unanimous solutions have been reaches as yet. The present study aims at the following: Highlighting the necessity of current assets and current liabilities. Explain the principles of current asset, investment and financing. Focus on the proper mix of short term and long term financing for current assets. Emphasis the need and goal of establishing a sound credit policy. Suggest the need of monitoring the receivables. Highlight the need for and a nature of inventory. Explain the needs for holding cash. Focus on the management of cash collection and disbursement RESEARCH METHODOLOGY Research design In view of the objectives of the study listed above an exploratory research design has been adopted. Exploratory research is one which is largely interprets and already available information and it lays particular emphasis on analysis and interpretation of the existing and available information it makes use of secondary data and lays particular emphasis and interpretation of the existing and available information.

Sources of data
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The study is based on secondary data, discussions with personnel concerned. The secondary data consists the annual reports of Sujala pipes private limited ranging for the last five years. Various other reports like companys magazines, published books and web sites.

Period of the study


The present study of the working capital management in Sujala pipes Pvt. Ltd. covers five year 2003-2004 to 2007-2008. Tools of Analysis To analyze the data acquired from the secondary sources the following tools are used: Working capital Cash management Receivable management Inventory management Debtor turnover ratio Inventory turnover ratio Liquidity Ratio Current Ratio

The cash analysis is done by cash to net working capital ratio. The inventory analysis is done by percentage of inventory to total current assets. The liquidity analysis is done by current ratio and quick ratio. LIMITATIONS OF THE STUDY 1. It should be remembered that Working capital is not a substitute of an income statement or a balance sheet. It provides only some additional information as regards changes in working capital.
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2. It is not an original statement but simply a re-arrangement of data given in the financial statement. It is essentially historic in nature and projected working capital cant be prepared with much accuracy. Changes in cash are more important and relevant for financial management that the working capital.

IMPORTANCE OF WORKING CAPITAL


Working capital is the lifeblood and nerve centre of business. Just as circulation of blood is essential in the human body for maintaining life working capital is very essential to maintain the smooth running of a business. No business can run successfully without an adequate amount of working capital. The main advantages of maintaining adequate amount of working capital are as follows: 1. Solvency of the business: Adequate working capital helps in maintaining solvency of the business by providing uninterrupted flow of production.

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2.

Goodwill: sufficient working capital enables a business concern to make prompt payments and hence helps in creating and maintaining goodwill.

3.

Easy loans: A concern hacking adequate working capital, high solvency and good credit standing can arrange loans from banks and others on easy and favorable terms.

4. 5.

Cash Discounts: Adequate working capital also enables a concern to avail cash discounts on the purchases and hence it reduces costs. Regular payment of salaries, wages and other day-to-day commitments company which has ample working capital can make regular payment of salaries, wages and other day-to-day commitments which raises the morale of its employees.

6. 7. 8.

Increases their efficiency reduces wastage and costs and enhances production and profits. Regular supply of raw materials: Sufficient working capital ensures regular supply of raw materials and continuous production. Ability to face Crisis: Adequate working capital enables a concern to face business crisis in emergencies such as depression because during such periods, generally there is a pressure on working capital.

9.

Quick and Regular return on Investments: Every Investor wants a quick and regular return on investments. Sufficient of working capital enables a concern to pay quick and regular dividends to its investors as there may not be much pressure to plough back profits. This gains the

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confidence of its investors and creates a favorable market to raise additional funds in the future. 10. High morale: Adequacy of working capital creates an environment of security confidence and high morale and creates overall efficiency in a business.

WORKING CAPITAL MANAGEMENT

Management of working capital refers to the management of current assets. This is understandable because current liabilities arise in the context of current assets. Working capital management is a significant facet of financial management. Its importance steps from two reasons: Investment in current assets represents a substantial portion of total investment. Investment in current assets and the level of current liabilities have to be geared quickly to changes in sales. To be sure, fixed assets investment and long-term financing are also responsive to variation in sales.

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Operating Cycle

It is clear that working capital is required because of the time gap between the sales and their actual realization in cash. This time gap is technically termed as Operating Cycle of the business. In case of a manufacturing company; the operating cycle is the length of time necessary to complete the following cycle of events. 1). Conversion of cash into raw materials. 2). Conversion of Raw materials into work in process. 3). Conversion of Work in process into finished goods. 4). Conversion of Finished goods into accounts receivable and, 5). Conversion of Accounts receivable into cash. The operating cycle of manufacturing business can be shown as in following chart.

NATURE OF WORKING CAPITAL Working capital management in concerned with the problem that arises in attempting to manage the current assets current liabilities and the inter relationship the exist between them the term current assets refers

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to those assets which in ordinary course of business can be or will be turned into cash within one year without undergoing diminution in value and without undergoing in value and without disrupting the operations of the firm. The major current assets are cash marketable securities accounts receivable and inventory, current liabilities those liabilities, which are intended at their inception to be paid in the ordinary course of business with in a year current liabilities are amount payable, bills payable bank overdraft and outstanding .

DATA ANALYSIS OF WORKING CAPITAL Overall review The goal of working capital management is to manage the firm's current assets and current liabilities in such a way that a satisfactory level of working capital is maintained. This is so because if the firm cannot maintain a satisfactory level forced into bankruptcy. The current assets should be large enough to cover its current liabilities in order to ensure a reasonable margin of safety. Each of current assets must be managed efficiently in order to maintain the liquidity of the firm, while not keeping too high level of anyone of them. The interaction between assets and current liabilities is, therefore the main them of working management.
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Accessing working capital requirement "Working capital management is the life blood and controlling never center of a business". No business can successfully run without an adequate amount of working capital. To avoid the shortage of working capital at once, an estimate of working capital requirements should be made in advance so that arrangements can be made to procure adequate working capital. But estimation of working capital requirements is not an easy task and large number factors have to be taken into consideration while an estimate of working capital requirements: Total cost incurred on material, wages and overheads. The length of time for which raw material are to remain in stores before they are issued for production The length of production cycle or work-in-progress is, the time taken for conversion of raw material into finished goods. The length of sale cycle during which finished goods is to be kept waiting for sale. The average period of credit allowed to customers. The amount of cash required to pay day-to-day expense of the business. The average amount of each cash required making advance payment, if any The average credit period expected to be allowed by suppliers. Time lag in the payment of wages and other expenses.

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From the total amount blocked in current assets estimated on the basis of the first even items given above the total of current liabilities that is the last two items is deducted to find out the requirement of working capital. In order to provide for contingencies, some extra amount generally calculated as a fixed percentage of working capital can be aided as a margin of study. CASH MANAGEMENT Introduction Cash is the important current assets for the operations of the Business. Cash is the basic input needed to keep the business running on a continuous basis. It is also the ultimate output expected to be realized by selling the service of product manufactures by the Firm. The firm should keep sufficient cash, neither more nor less. Cash shortage will disrupt the firm's manufacturing operations while excessive cash will simply remain idle, with out contributing anything towards the firm's profitability. Thus major functions of the financial manager to maintain a sound cash position. Cash is the money which a firm can disburse immediately with out any restriction. The term cash includes coins currency and cheques held by the firm and balances in its bank accounts. Some times near cash items such as marketable securities or bank times deposits are also includes in cash. The basic characteristic of near cash assets is that they can readily be converted to cash. Generally when a firm has excess of near

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cash. It invests it in marketable securities. This kind of investment contributes some profit to the firm. Factors of Cash Management: Cash management is concerned with the managing of company 1) Cash flows into and out of the firm 2) Cash flows with in the firm 3) Cash balances held by the firm Sales generate cash, which has to be disbursed out. The surplus cash has to be invested while deficit has to be borrowed. Cash management seeks to accomplish this cycle at a minimum cost. At the same time, it also seeks to achieve liquidity and control. Cash management assumes more importance than other current assets because is the most significant and the least productive asset that a firm holds. It is significant because it is used to pay the firm's obligations. However cash is unproductive. Unlike fixed assets or inventories, it does not produce goods for sale. Therefore the aim of cash management is to maintain adequate control over cash position to keep the firm sufficiently liquid and to use excess cash in some profitable way. RECEIVABLES MANAGEMENT Introduction Account receivable or trade credit is the most prominent force of the modern business. It is considered as an essential marketable tool, acting as a bridge for the movement of goods through production and

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distribution stages to customers finally. A firm grants credit to production and distribution stages to customers finally .A firm grants credit to protect its sales from the competitor and to attract potential customers. Trade credit, thus credit receivable or book debts, which the firm is expected to collect in future. It also involves an element of risk as the cash payment has get to be received, hence they has to be carefully analyzed. Receivables constitute a substantial portion of current assets of several firms. They form about 1/3 part of current assets in India. As substantial amounts are tied up in trade debtors, it needs careful analysis and proper management, for proper management of receivable a concern must adopt an optimum credit policy.
Optimum Policy

The optimum investment in receivable will be at a level is a trade-off between cost and profitability. When the firm resorts to liberal credit policy the profitability of the firm increases on account of higher sales. However such a policy results in increased investment in receivables, increased changes of bad debts and more collection costs. The total investment in receivables increases and thus the problem of liquidity is credited. On the other hand a stringent credit policy reduces profitability but increases the liquidity of firm. Optimum credit policy therefore involves a trade off between the profit or sales that bring in receivable. On the one hand the cost of carrying bills receivables plus bad debts losses on the other. The optimum credit policy occurs at a

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point where there is " Trade-off between liquidity and profitability as shown in the chart below:

Profitability

Costs and benefits Liquidity

Tight Credit Policy Loose

Optimum Credit Policy Variables of Credit Policy A firm should establish receivables policies after carefully considering both benefit and cost different policies. These policies relate to: Credit standard Credit Standard The term credit standards represent the basic criteria for extension of credit to customers. The level of sales and receivables are likely to be Credit term Collection procedures

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high. If the credit standard is relatively loose, as compared to a situation when there are relatively tight. The firm's credit standards are generally determined by the five "C"s, character, capacity, capital, collateral and condition. Character denotes his ability to manage the business Capital denotes his financial soundness Collateral refers to assets which the customer can offer by way of security Condition refers to the impact of general economic trends on the firm, or to special development in certain areas of economy that may affect in customer's ability to meet his obligations. Credit Terms It refers to the terms under which a firm sells goods on credit to its customers. The two components of credit terms are a) Credit period b) Cash Discount a) Credit Period Extending the credit period stimulates sales but increases the cost on account of more typing up of funds in receivable. Similarly, shortening the credit period reduces the profit on account of reduced sales, but also reduces the cost of tying up of funds in receivable. Determining the optimum credit period therefore involves locating the period where the marginal profits on increased sales are exactly offset by the cost of carrying the higher amount of account receivable. b) Cash Discount

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The effect of allowing cash discount can also be analyzed in the same pattern as that of the credit period. Attractive cash discount terms reduce the average collection period resulting in reduced investment in account receivable. Thus there is a saving in capital cost. On the other hand cash discount itself is a loss to the firm optimum cash discount is allowed at the point where the cost and benefit are exactly offsetting. Debtors turnover ratio: It indicates the number of times debtors turnover each year. It indicates the efficiency of staff entrusted with collection of debts. The higher the ratio it is better since it would indicates the debtors are being collected more promptly. Debtors should be always being taken at gross value. No provision for bad and doubtful debts should be deducted from them.
Sales Debtors Turnover Ratio = --------------------------------------Debtors

INVENTORY MANAGEMENT Introduction: The preceding two chapters basic strategies and consideration in managing current assets namely cash and receivables are stocks of product a company is manufacturing for sale and components that make up a product. Inventories like receivables are also a significant portion of most firms assets and accordingly require substantial investment. To keep these investments from becoming unnecessarily large inventories must be managed efficiently. The various forms in which inventories exist in a manufacturing company .
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a) Raw Materials: Raw materials are those basic inputs that are converted into finished products through the manufacturing process. Raw material inventories are those units which have been purchased and stored for future productions. b) Work-in-progress: The work-in-progress is that stage of stock which is in between raw materials and finished goods. They are semi-finished products that need more work before they become finished products for sale. The quantum of work in progress depends on the time taken in the manufacturing process. The greater the time taken in manufacturing the more will be the amount of work-in-progress. c) Finished goods: Finished goods inventories are those completely manufactured products which are ready for sale. Stocks of raw material and work-in-process facilitate production while stock of finished goods is required for smooth marketing operations. The level of three kinds of inventories for a firm depends on the nature of its business. A manufacturing firm will have substantially high level of all three kinds of inventories. Inventory Turnover Ratio: Inventory turn over ratio indicates the efficiency of the firm in producing and selling its products. Sales Inventory turnover ratio = ----------------------------------23

Average Inventory Discuses the Liquidity position of Sujala Pipes Private Limited. Introduction: The liquidity position of Sujala Pipes Private Limited is analyzed by calculating Current ratio, Quick Ratio. Current Ratio Current ratio to measure the firm's short-term solvency of indicates the availability of current assets in rupees for every one of current liability. A ratio greater then is means that the firm has more current assets than current liabilities. Current Ratio = Curent Assettes ---------------------------Current Liabilities

Liquidity Ratio Liquid ratio indicates that a relationship between quick (or) liquid assets and current liabilities. An asset is liquid if it can be converted in to cash immediately (or) reasonable soon with out a loss of value. Liquidity Ratio = Quick (or) Liquid assets --------------------------------------Quick (or) Current liabilities

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INDUSTRY PROFILE
INTROUDUCTION: In ancient days people faced lot of problems due to lack of supply of sufficient water in a proper way. Now a days people are very much satisfied due to the introduction of many kinds of pipe. Among these pipe poly vinyl chloride pipes are of the best quality. In India most of the people depend on agriculture a traditional tools are ineffective for irrigation. But today poly vinyl chloride pipes have come to lead for the transportation of water in the fields. So that it has provided a great thrust in the market for the poly vinyl chloride pipes.
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The pipes are of different sizes and different shapes. Dues to this specialty. It is possible to locate easily different pipes for different usage. The increase in demand for the pipes had made the various companies to enter into the market. This resulted in a great competition for various brands of pipes they were unable to with stand the tough competition form poly vinyl chloride pipes. But the only pipes that withstood the competition are none other than poly vinyl chloride pipes.Poly vinyl chloride pipes with its good brand image have captured a large market. The customers are preferably using this brand of pipes and they hesitate to go for other pipes. They are not even marketing a trial of the brand of pipes. They are fully satisfied with these pipes in all extremes such as that they hesitate to go for other brands. It is preferably used by most of the pipes saying that these pipes are more magnificent than any other brand of pipes. Poly vinyl chloride pipes have captured most the market because of it brand image and effectiveness. Poly vinyl chloride PIPES IN INDIA Poly vinyl chloride pipes have found wide acceptance in INDIA and abroad. Poly vinyl chloride is one of the most versatile plastic. It can be extruded molded calendared or thermoformed into a multitude of furnished products. The Poly vinyl chloride resin can be formulated to give a wide range of properties ranging form hard, tough materials for products as diverse as wire and cable insulation and sheeting and flooring.
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The other external applications are in the field of irrigation, potable water supplies and public water supplies. Apart from individual sources like wells, tube wells bore wells, major irrigation sector small project will have canals and lift irrigating schemes act will have pipe lines. Poly EXPORT OF PLASTIC GOOD Plastic have excellent potentialities. Our country is equipped with all kind of processing machinery and skilled Labour and undoable, and extra to boost export, finished plastic products will yield rich divided. Today India exports plastic products to a many as 80 countries all over the world. The experts, who were stagnant at around rest assume 60-70 cores per annum double to 129 craters. The Plastic industry has taken up the challenge of achieving an export target of Rs.17 cores. Major export markets for plastic products and linoleum are Australia, Bangladesh, Canada, Egypt, Hong Kong, Italy, Kuwait, Federal Republic of Germany, Sri Lanka, Sweden, Taiwan, U.K, U.S.A, and Russia. With view to boosting the export the plastics and linoleums export promotion council has urged the government to reduce import duty of plastic raw material supply indigenous raw materials at international prices fix duty, draw backs on weighted average basis and charge freight rate on plastic products on weights basis instead of volume basis. ROLE OF PLASTICS IN THE NATIONAL ECONIMY

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Plastics are got perceived as just simple colorful household products in the mind so common man. A dominant part of the plastics of the percent and future find their utilization in the areas. Agriculture and water-management. Automobile and transportation. Electronics and telecommunications buildings construction . Food processing and packaging. Power and gas distributor. IMPORATANCE OF PIPES INDUSTRY We shall look at the basic data about plastics and particularly those properties which are so fuse in practical working with plastics. Plastics are man-made materials. The oldest raw materials. The oldest material for producing plastics is carbonaceous material obtained from coal tar (benzene, phenol). Today the majority of raw materials are obtained from petrol chemical source and they can be economically produced in the large quantities. Plastics have changed our world and day-by-day they are becoming important. They own their success to whole series of advantage, which they have over conventional materials such as. Lightweight Excellent mould ability Attractive colors Low energy requirements for convention Low maintenance & High strength weight
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Low labour of manufacture COMPANY PROFILE Sujala pipes private limited Nandyal was incorporated in the year 1988 it is located in the industrial estate Nandyal. The company has Rani Plastic Pipes Industry as its sister concern in the manufacture of poly vinyl chloride pipes. This company is promoted by the Managing Director Sri S.P.Y.Reddy, B.E (Mech) who has decades of experience in the manufacturing industry. The company has three main poly vinyl chloride pipes brands. They have NANDI, SUJALA AND RANI brands But the flagship brand is NANDI PIPES. The name NANDI derives forms the historical aspects of this town Nandyal. The brand name NANDI PIPES as taken from the pilgrimage place called MAHANANDI which is 15 km from Nandyal. The company has diversified in to various fields in the recent past. Apart from manufacture of mineral water under the brand name Name mineral water dairy products Nandi dairy this supplies regular milk to the people of Nandyal and villages in and around Nandyal. The main objective in starting this industry was to cater to the needs of farmers to facilitate water flow in this area which lakhs rainfall and to use the water resources productively. This helps the farmers in lifting the ground water to the surface as well as free flow of the water as an and when necessary.Initially the industry was producing polythene pipes and poly vinyl chloride pipes were introduced under the same

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brand name later in 1984-85 the growth of poly vinyl chloride industry in Rayalaseema area of A.P. has seen rapid growth. The company also produce poly vinyl chloride fittings. In short it can be concluded that the company enjoys 95% of south Indian company does is free offer of transportation to the door steps of the customers when he purchases 100 or more pipes. The company also provides free medical facilities to the employees. Sujala pipes private limited also involved in social activities by providing free water supply to the needy people. Company organize free medical camps to the poor people. It also gives loans to unemployed youth in fulfilling their career objective. Financially the company markets sounds very good. It gives a credit of 21 days to its customers. It has a wide distribution network both in A.P. as well as neighbour states in the south India. Industrial accidents are also nil in the company. The company markets products through telephone orders. It has a wide network of distributors all over south India.

Production Capacity
Production capacity of 22200 metric tones per annum. ESTEEMED CUSTOMERS Nandi Pipes are proud to present list of customers, which includes big water pipe line projects, dot projects panchyathi raj and industrial development corporation, etc. Satya Sai water schemes
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Lorhen projects NABARD Water schemes Karnataka land army department GROWTH Sujala pipes private limited. It is commissioned with the objectives of catering to the agriculture need of the region. In earlier day tool used for water flow were very ineffective with high percentage of seepage losses. To count this draw back poly vinyl chloride pipe Private limited . The major irritants in agriculture practices like of rainfall, ground water lifting. Water transport with in the fields has provided magnificent thrust to poly vinyl chloride market. These factors helped Sujala Pipes Private limited. to record an excellent growth since 1977 onwards.

VARIETY Product variety has been given moderate prominence and a nominal differentiation is maintained among its five varieties of products line length. NADNIGOLD NANDI JALA RANI BLUE THREAD
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QUALITY Quality is the dominating factor in the growth of sales. Well-equipped and quality Laboratory and quality control office looks after the quality. BRAND NAME Out of life varieties of products offered by the organization, Nandyal Nandi pipes has got excellent local popularity as it symbolizes the region and the scared bull. The remaining live got their impact in other states. CHANNELS OF DISTRIBUTION: Sujala Pipes private limited has got zero level and single level channel Distribution.
MANUFACTURER CONSUMER

MANUFACTURER

DEALER

CONSUMER

Sujala Pipes Private limited has an extensive network of 350 dealers in Andhra Pradesh and who are directly serviced by company sales force and 620 dealers in South India. COVERAGE:- At present Andhra Pradesh, part of Southern States of Karnataka, Tamilnandu and Kerala are in ambit of Sujala Pipes private limited .

TRANSPORT: - Transportation vehicles of Sujala Pipes private limited. Outnumber the fleet of the competitors vehicle. This unique strength of the organization enables the delivery system to be efficient. This event helps the dealers to reduce inventory levels to the minimum. Thus dealers are also supplemented with benefit of the lower paid up capital in the form of inventory.

FINANCIAL DEPARTMENT Though initially the company approached the external sources financial aid. Now the financial status of the company is very sound and is being run only with self-finance excepting for loans taken on hypothecation of machinery and stock from SBI Nandyal. The financial department is headed with financial manager with the help of forecourt and other clerks of the department. The company follows cash is paid and financial departments with the help of marketing departments look after these transaction.

WORKING CAPITAL MANAGEMENT IN SUJALA PIPES PRIVATE LIMITED


The working capital in Sujala Pipes comprises nearly 60% of total capital employed. Hence working capital becomes an importance portion in the Sujala Pipes.

Factors influencing working capital requirements in Sujala Pipes Private Limited.

1. Production

program

Its production programmer and those of suppliers, and customer affect the working capital requirement of Sujala Pipes. Thus the size of the working capital requirement is determined on the basis of the production programmed and size of the order by the customer in a year.

2. Sales budget
As Sujala Pipes manufactures against customer order and most of the working capital requirements are met out of the realization of sales, the estimated sales have considerable influence on the working requirement of Sujala Pipes. 3. Finance Availability of finance that is, the cash and bank credit affects the working capital requirements of Sujala Pipes private limited to considerable extent. 4. Manufacturing process In Sujala Pipes private limited length of manufacturing process varies from one production division to another depending in the products springs and capacitors and the technological know how used. As the manufacturing process it has its influence on Sujala Pipe's working capital requirements. 5. Period of Credit

The period of credit allowed by the suppliers on purchases and the period of credit allowed to customers on sale also have their own influence on working capital requirement of Sujala Pipes. Sources of finance for working capital The working capital requirement is estimated through the preparation of capital and revenue budgets. The main source from which Sujala Pipes finances is working capital needs are Realization cash Cash credit from banks

Cash credit from financial institutions and

Trade credit Components of Working Capital in Sujala Pipes Private Limited. The working capital in Sujala Pipes consists of different components like inventory, Sundry debtors, cash and bank balance, current liabilities etc. which are shown in the following table along with amount invested in each for the period of five years. The structure of working capitals is presented in the table for the purpose of effective analysis of current assets. Current liabilities and net working capital have been calculated. Each component of current assets and current liabilities and expressed as a proposition to total assets total liabilities.

CASH MANAGEMENT IN SUJALA PIPES PRIVATE LIMITED

Sources of Cash: The main sources through which Sujala pipes private limited gets the cash from debtors, advances on sales and other sources, Payment of cash. The company's main item of expenditure is wages, salaries, bonus, expenditure salaries, bonus, and expenditure on development, sales tax, income tax, excise duty, payment to creditors, and interest on borrowings. All the payment to creditors is made through cheque and cash even expenses are paid. Wages, salaries excise duty is paid monthly.

Showing the components of working capital and % for 5 years of Sujala Pipes Private Limited.

2004-05 Particulars (Amount in Rs.) CURRENT ASSETS Inventories Sunday Debtors Cash and Bank Loans and Advances Total Current Assets 109819965 11337421

% 100

2005-06 (Amount in Rs.)

% 100

2006-07 (Amount in Rs.)

% 100

2007-08 (Amount in Rs.)

2008-09 % 100 in Rs.) ( Amount


% 100

10. 32 42. 15 0.5 8 46. 9

1274835

1.1 9 41. 83 2.9 2 54. 05

34344658

26. 37 16. 83 207 7 54. 03

16300356

11. 94 23. 84 1.6 6 62. 57

39720613

17.98 35.29 1.39 34.91

46298356 638870

44874766 3131009

21914840 3601359

32555255 2263321

77967182 3083413

51545318

57985698

70366808 13022766 6

85445883 13656481 5

77123590

107266308

220894798

TOTAL CURRENT LIABILITIES Sunday Creditors Payable Expenses Total current Liabilities Net working Capital 64385730 2503600 66889330 42930635 96 4 59989566 3684600 63674166 43592142 94 6 66672316 6319846 72992162 57235503 91 9 9251085 7841303 17092388 11972427 54 46 84686762 7195922 91882684 12901211 4

92 8

Analysis The inventories are 10.32% of total current assets during 2004-2005 and 1.19% in 2005-2006 and 26.37% in 2006-2007 and 11.94% in 2007-2008. It shows the levels of inventory gradually increased in 2008-2009 17.98 %.

The Sundry debtors are 42.15% of total current assets during 20042005, 41.83% in 2005-2006 and 16.83% in 2006-2007 and 23.84% in 2007-2008 and 35.29% in 2008 - 2009. It shows that the amount of Sundry debtors has been increased during the period 2008-2009. The cash and bank balances are 0.58% of total current assets in 20042005 and 2.92% in 2005-2006 and 2.77% in 2006-2007 and 1.66% in 2007-2008 and 1.39% in 2008 - 2009. It shows decrease in 2008-2009. In loans and advances there is 46.9% of total current assets in 20042005 and 54.05% in 2005-2006 and 54.03% in 2006-2007, 62.57% in 2007-2008 and 34.91% in 2008-2009. Here we can say that company was taking more loans and advances in the year 2007-2008 but less in 2008-2009.The Sundry creditors are 96% of the total liabilities in 20042005 and 94% in 2005-2006 and 91% in 2006-2007, 54% in 2007-2008 and 92% in 2008-2009. It shows a gradual decrease in creditors up to 2007-2008 except in 2005-2006. Again 2008-2009 Creditors increase.

STATEMENT SHOWING CHANGE IN WORKING CAPITAL FOR THE YEAR 2004-05


particular Current Assets Inventories Sundry debtors 31141292 15543968 11337421 46298356 3075388 19803871 2004 Amount in RS 2005 Amount in RS Increase Decrease

Cash and bank Loan and advance Total Current liabilities Sundry liabilities Expenses payable Auditor fee Total Net increase in working capital

480196 44068784 91234240 52129639 2256726 54386365 36847875

638870 51545318 109819965 64385730 2493600 10000 66889330 42930635

158674 7476534

12256091 236874 10000

6082760

Analysis: Above table show statement of changing working capital during 2004-05 which has a net decrease in working capital Rs. 6082760.

STATEMENT SHOWING CHANGE IN WORKING CAPITAL FOR THE YEAR 2005-06


particular
Current Assets Inventories Sundry debtors 11337421 46298356 1274835 44874766 10062586 1423590

2005 Amount in RS

2006 Amount in RS

Increase

Decrease

Cash and bank Loan and advance Total Current liabilities Sundry liabilities Expenses payable Total Net increase in working capital

638870 51545318 109819965 64385730 2503600

3131009 57985698 107266308 59989566 3684600

2492139 6440380

4396164 1181000

66889330 42930635

63674166 43592142 661507

Analysis: Above table show statement of changing working capital during 2005-06 which has a net increase in working capital Rs 661507

STATEMENT SHOWING CHANGE IN WORKING CAPITAL FOR THE YEAR 2006-07


particular 2006Amount in RS 2007 Amount in RS Increase Decrease

Current Assets Inventories Sundry debtors Cash and bank Loan and advance Total Current liabilities Sundry liabilities Expenses payable Total Net increase in working capital 43592412 57235504 13643362 59989566 3684660 63674226 66672316 6319846 72992162 6682750 2635186 1274835 44874766 3131009 57985698 107266308 34344658 21914840 3601359 70366808 130227666 470350 12381110 33069823 22959926

Analysis: Above table show statement of changing working capital during 2006-07, which has a net increase in working capital Rs1364336

STATEMENT SHOWING CHANGE IN WORKING CAPITAL FOR THE YEAR 2007-08


particular 2007 Amount in RS 2008 Amount in RS Increase Decrease

Current Assets Inventories Sundry debtors Cash and bank Loan and advance Total Current liabilities Sundry liabilities Expenses payable Total Net increase in working capital 57235504 119472427 62236923 66672316 6319846 72992162 9151085 7841303 17092388 57421231 1521457 34344658 21914840 3601359 70366808 130227666 16300356 32555255 2263321 85445883 136564815 15079075 10640415 1338038 18044302

Analysis: Above table show statement of changing working capital during 2007-08 which has a net increase in working capital Rs. 62236923.

STATEMENT SHOWING CHANGE IN WORKING CAPITAL FOR THE YEAR 2008-09


particular 2008 Amount in RS 2009 Amount in RS Increase Decrease

Current Assets Inventories Sundry debtors Cash and bank Loan and advance Total Current liabilities Sundry liabilities Expenses payable Total Net increase in working capital 119472427 129012114 9539687 9151085 7841303 17092388 84686762 7195922 91882684 645381 17092388 75435677 16300356 32555255 2263321 85445883 136564815 39720613 77967182 3083413 77123590 220894798 23420257 45411927 820092 8322293

Analysis: Above table show statement of changing working capital during 2008-09 increase RS 9539687

CASH TO NET WORKING CAPITAL RATIO


Showing Cash to Net Working Capital of Sujala Pipes Private Limited
YEARS CASH & BANK BALANCE NET WORKING CAPITAL CASH TO NWC RATIO

2004-2005

638870

42930635

1.48

2005-2006 2006-2007 2007-2008 2008-2009

3131009 3601359 2263321 3083413

43592142 57235503 119472427 129012114

7.18 6.29 1.9 2.4

TABLE:1

Analysis: Table 1 portrays the size of cash and bank balances in Sujala pipes from 2004-2005 to 2008-2009 as a percentage of net working capital. The cash and bank balances were 1.5% of net working capital during 2004-2005, 7.02% during 2005-2006, 6.3% during 2006-2007, 1.9% during 2007-2008 and 2.4% during the year 2008-2009. Interpretation:The net working capital ratio indicates the proposition of cash and bank balances maintained by Sujala Pipes private limited. It is assumed amount importance as the level of cash balances decides the liquidity profitability aspects of the company. The lower the cash to net working

capital the greater may be the profitability of the concern and viceversa. If any company holds too low cash and bank balances in relation to net working capital, it implies inability of firm to meet day-to-day requirements of cash in the present. Study cash to current ratio of Sujala Pipes reveals it was 1.5% in 2004-2005, and increased to 7.2% in 2005-2006 and decreased to 6.3% in 2006-2007 and again decreased to 1.9% in the year 2007-2008 and the 2008-2009 also decreased 2.4% again. INVENTORIES TO TOTAL CURRENT ASSETS Showing percentage of Inventories to Total Current Assets of Sujala pipes Private Limited.
Total current year 2004-2005 2005-2006 2006-2007 2007-2008 2008-2009 Inventories 11337421 1274835 34344658 16300356 39720613 assets 109819965 107266308 130227666 136564815 220894798 % Of Inventory to total current assets 10.30% 1.20% 26.40% 11.90% 17.90%

TABLE:-2

Analysis:The table 2 shows inventory to total current assets as a percentage of the total current assets in the year 2004-2005 is 10.3%, in the year 2005-2006 is 1.2%, in the year 2006-2007 is 26.4%, in the year 20072008 is 11.9% and in the year 2008 - 2009 is 17.9%. Interpretation:The total inventory as a percentage of the total current has 10.3% in the year 2004-2005, it has gone down to 1.2% in the year 2005-2006 and again increase to 26.4% in the year 2006-2007 and decreased to 11.9% in the year 2007-2008 and the year 2008-2009 again increase 17.9%. The percentage of inventories to current assets indicates that the inefficiency of inventory management in Sujala Pipes has gone from 2004-2009. Since there is decrease in the percentage indicates the inefficiency of inventory management has decreased.

Current ratio
Showing of Current Ratio of Sujala pipes Private Limited.
year
2004-2005 2005-2006 2006-2007 2007-2008 2008-2009

current assets
109819965 107266308 130227666 136564815 220894798

current liabilities
66889330 63674166 72992162 17092388 91882684

current ratio
1.64 1.68 1.78 7.98 2.4

TABLE:-3

The calculated current ratio indicates the proportion of current assets to current liabilities in all years is below than the standard ratio (2: 1).

Analysis

The calculated current ratios are 1.64% in 2004-2005, 1.68% in 20052006, 1.78% in 2006-2007, 7.98% in 2007-2008 and 2.40% in 20082009. Since the ratio is less than its standard in all the years the shortterm financial position of the company is not satisfactory. Interpretation:Current ratio is the relationship between current assets and current liability from the year 2004-2005, 2005-2006, 2006-2007 . The company has maintained stable current ratio but in 2007-2008. It has increase to 7.28 the proportions change in current assets. In less than the proportions change in current liability 2008-2009.It has reached 2.4. When compeering with idle ratio 2:1. LIQUIDITY/QUICK RATIO:Showing of Liquidity ratio of Sujala pipes Private Limited.
year
2004-2005 2005-2006 2006-2007 2007-2008 2008-2009

quick assets
98482545 105991473 95883008 120264459 181174185

current liabilities
66889330 63674166 72992162 17092388 91882684

quick ratio
1.47 1.66 1.31 7.03 1.97

TABLE:-4

Analysis:The calculated liquid ratio is 1.47% in 2004-2005, 0.99% in 20052006. 1.66% in 2006-2007. 1.31% in 2007-2008 and 7.03% in 20082009. The increase from 2006-2007 and it continued to 2008-2009 is 1.9%. Interpretation:Quick ratio is the relationship between quick assets and quick liability from the year 2004-2005, 2005-2006, 2006-2007 . The company has maintained stable quick ratio but in 2007-2008. It has increase to 7.03 the proportions change in quick assets. In less than the proportions change in quick liability 2008-2009.It has reached 1.97. When compeering with idle ratio 1:1.

DEBTORS TURNOVER RATIO Showing of debtor turnover ratio of Sujala pipes Private Limited.
YEAR 2004-2005 2005-2006 2006-2007 2007-2008 2008-2009 SALE 722171487 452109722 722957732 991439168 1089453933 SUNDRY DEBTORS 46298356 44874766 21914840 32555255 77967182 DEBTOR TURNOVER RATIO 15.59 10.07 32.98 30.45 13.97

Table 5 Analysis :The calculated Debtors Turnover Ratio has 15.59 in 20042005 decreased to 10.7 in 2005-2006 and increased to 32.98 in 20062007 and decreased by 30.98 in 2007-2008 and decreased to 13.97 during the year 2008-2009.

Interpretation: There is no rule of thumb, which may be used, as a norm to interpret the ratio as it may be different from firm to firm. Depending upon the nature of the business. This ratio should be compared with the ratio of other firms doing similar business and a trend may also be found to make better interpretation of the ratio. INVENTORY TURNOVER RATIO Inventory turnover ratio indicates the efficiency of the firm in producing and selling its products. Showing of inventory turnover ratio of Sujala pipes Private Limited.
YEAR 2004-2005 2005-2006 2006-2007 2007-2008 2008-2009 SALE 722171487 452109722 722957732 991439168 1089453933 AVERAGE INVENTORY 31141342 6306128 17809747 25322507 56020969 INVENTORY TURNOVER RATIO 23.19 71.69 40.51 39.15 19.44

TABLE 6 Analysis: shows calculated Inventory Turnover Ratio, it has 23.19% in the year 2004-2005, in the year 2005-2006 71.69%, in the year 20062007, 40.59%, in the year 2007-2008 39.15 % and 2008-2009 is 35.46%. Interpretation : Inventory turnover ratio measures the velocity and to measure the efficiency of the company selling its products. In the year 2004-2005 it was 23.19, and 71.69 in the year 2005-2006, and 40.59 decreased it in the year 2006-2007 and it was decreased to 39.15 in the year 20072008and it was decreased to 19.44 in 2008-2009. The firm has to maintain efficient management of inventory.

FINDINGS The following are the finding of Sujala pipes private limited with regards to working capital management from 2004 to 2009.

In the year 2005-2006 the cash in hand is 638870 it has increased in 2005-2006 3.9 times because the main reason is that in 20052006. The sundry debtors are repaid money and the company has taken some more secured loans with these points the cash and bank balance has increased.

In 2007-2008 the company has issued some more shares worth 1500000 and even in 2005-2006, 2006-2007, 2007-2008, 20082009 also the amount paid by the sundry debtors.

In the year 2004-2005 the company was maintained good inventory level but in 2005-2006. It has decreased due to increasing prices of row materials and decrease in the selling of goods from 2006-2007, 2007-2008, and 2008-2009. And also the inventory was increase due to the new customers was joined and sales was increasing due to the company was maintains good quality and quantity inventory levels.

As marketing techniques the credit sale was increase the sale turnover the company maintains good sundry debtors in the year 2004-2005 and 2005-2006. Sundry debtors was decrease because they are paid the money in 2006-2007 and also it was heavenly decreased from 2007-2008, 2008-2009. It was suddenly increased due to increase credit sales.

In the year 2004-2005 the company has maintained current assets but it was increase and increasing the year from 2004-2005, 2005-2006, 2006-2007 inventory cash and bank balance was increase due to repaid money from debtors. And the company has issued once more shares worth RS 1500000 with it is the current assets are increase. From the year 2003-2004 and 2004-2005. It was decrease the company was paid the money paid to them from the year 20042005 and 2005-2006. It was increase in this case it was clear that the company has purchased row material on credit period but in 2006-2007 it was heavenly decreased due to Payment them than it was increased in 2007-2008 to 84686762 from 9251085. In the year 2004-2005 it was only 2503600 but it was increased from 2005-2006, 2006-2007, and 2007-2008. Due to increase in payable income tax and excise due in these years. And they suppose to pay the interest on secured and the secured loans. The company day to day projections are increasing in order to meet those projections the company has to increase working capital for the company working capital increase.

Cash to net working capital ratio is the relation between the cash and bank and net working capital . The net working capital ratio indicates the proposition of cash and bank balance maintained by the Sujala pipes private limited

In the year 2005-2006 the capital net working capital 0.89 decrease why because the company paying the borrow or loans to

the debtors. In the year 2006-2007 the company net working capital 4.39 decrease why because the company purchase the some fixed assets and pay the loans. In the year 2007-2008 the capital net working capital 0.5 increase why because the company profit account also increasing and as well as the company pay current liability for the future period . The company net working capital also increase.

Current ratio is the relationship between current assets and current liability from the year 2003-2004, 2004-2005, 2005-2006 . The company has maintained stable current ratio but in 20062007. It has increase to 7.28 the proportions change in current assets. In less than the proportions change in current liability 2007-2008. It has reached 2.4. When compeering with idle ratio 2:1.

Quick ratio is the relationship between quick assets and quick liability from the year 2003-2004, 2004-2005, and 2005-2006. The company has maintained stable quick ratio but in 2006-2007. It has increase to 7.03 the proportions change in quick assets. In less than the proportions change in quick liability 2007-2008.It has reached 1.97. When compeering with idle ratio 1:1.

SUGGESTIONS

The company fully utilized the ideal working capital.

The company reducing the operating cycle to a minimum level.

The company should have invested money on fixed assets. The company makes investments in inventories. The company should have maintained new technology. It will useful in future.

CONCLUSION I feel that Sujala Pipes private limited has very good reputation in the market. It is financially very strong. Further professionalization of management in handing the financial statements may be encouraged. The company's over all position is very much satisfactory. I have realized that I have undergone good experience in the project period.

ANNUAL REPORT

PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31ST MARCH 2005TO 31ST MARCH 2009
Particulars Income Sales and other receipts Other Income Increase in inventory H Total Expenditure Materials Consumable stores Employee remuneration and Benefits Manufacturing and other expenses Administrative Exp. Depreciation 724555007 451634035 739834793 992121504 1095767358 722171488 2632169 (-)248650 45109722 2862144 (-)3337830 722957732 2918465 13958536 991439168 3165734 (-)12483398 1089453932 2945178 3368248 Sche dule 31st March 2005 (Amount in Rs.) 31st March 2006 (Amount in Rs.) 31st March 2007 (Amount in Rs.) 31st March 2008 (Amount in Rs.) 31st March 2009 (Amount in Rs.)

511061884 43432774 5364250 I 50967793 90734710 21737907

297881300 21340684 9098308 24036950 76427751 20699674

496602692 8722580 11395594 77173885 122568761 20816011

690996504 8640932 13497858 55898421 191857232 24883180

807902560 9108323 14047769 57327343 174535028 24329058

TOTAL

II

723296318

449484667

737239523

985774127

1087250081

Profit for the year Add: Balance Brought forward from previous year Add: Transfer of central subsidy Add: Additional income offered Less: Transfer of income tax advance

1258689 20396947

2149368 21655636

2555270 23805004

6347376 26360274

8517277 35707650 601950

3000000 5212794

Profit carried to Balance sheet

21655636

23805004

26360274

35707650

39614083

BALANCE SHEET AS AT 31ST MARCH 2005TO 31ST MARCH 2009 31st March Sche 2005 Particulars dule (Amount in Rs.)
SOURCE OF FUNDS: Share Holders Funds Share Capital Reserves & Surplus Profit & Loss A/c Central subsidy Loans funds Secured Loans Unsecured Loans A 21655636 601950 23805005 601950 26360274 601950 35707650 601950 39614084 5000000 5000000 5000000 20000000 20000000

31st March 2006 (Amount in Rs.)

31st March 2007 (Amount in Rs.)

31st March 2008 (Amount in Rs.)

31st March 2009 (Amount in Rs.)

102501883 28912384

95074239 23395036

120660225 23151850

178857677 22946135

177040117 22858914

TOTAL
APPLICATION OF FUNDS

15871854

147876230

175774299

258113413

259513115

Fixed Assets
Gross Block Less: Depreciation Net Block Investments Current Assets Loans and Advances Less :Current Liabilities and Provisions Net Current Assets Miscellaneous expenditure TOTAL D 109819965 66889329 42930636 E 158671853 107266308 63674166 43592142 147876228 130227665 72992162 57235503 136564815 17092387 119472428 220894797 91882683 129012114 259513116 C 195126294 81165076 113961218 204368838 101864750 102504088 239439556 122680761 116758795 284424926 147563941 136860985 300029971 171308970 128721001

1780000

1780000

1780000

1780000

1780000

17577499 258113411

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