CHAPTER-1 INTRODUCTION BACKGROUND OF STUDY: Whatever may be the organization, working capital plays an important role, as the company

needs capital for its day to day expenditure. Thousands of companies fail each year due to poor working capital management practices. Entrepreneurs often don't account for short term disruptions to cash flow and are forced to close their operations. In simple term, working capital is an excess of current assets over the current liabilities. Good working capital management reveals higher returns of current assets than the current liabilities to maintain a steady liquidity position of a company. Otherwise, working capital is a requirement of funds to meet the day to day working expenses. So a proper way of management of working capital is highly essential to ensure a dynamic stability of the financial position of an organization. ACC CEMENTS is one of the largest cement manufacturer in the country, . Seeing the good opportunity to study financial systems and practices of ACC CEMENTS , it is relatively important take up internship assignment on WORKING CAPITAL MANAGEMENT IN ACC CEMENTS . During the project work, it is being analyzed the working capital position of this organization. Decisions relating to working capital and short term financing are referred to as working capital management. These involve managing the relationship between a firm's short-term assets and its short-term liabilities. The goal of Working capital management is to ensure that the firm is able to continue its operations and that it has sufficient money flow to satisfy both maturing short-term debt and upcoming operational expenses. Working capital management deals with maintaining the levels of working capital to optimum, because if a concern has inadequate opportunities and if the working capital is more than required then the concern will lose money in the form of interest on the blocked funds. Therefore working capital management plays a very important role in the profitability of a company. And also due to heavy competitions among different organizations it is now compulsory to look after working capital

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RELEVANCE OF STUDY At ACC CEMENTS a substantial part of the total assets are covered by current assets. Current assets form around 30%- 40% of the total assets. However this could be less profitable on the assumption that current assets generate lesser returns as compared to fixed assets. But in todays competition it becomes mandatory to keep large current assets in form of inventories so as to ensure smooth production an excellent management of these inventories has to be maintained to strike a balance between all the inventories required for the production. So, in order to manage all these inventories and determine the investments in each inventories, the system call for an excellent management of current assets which is really a tough job as the amount of inventories required are large in number. Here comes the need of working capital management or managing the investments in current assets. Thus in big companies like ACC CEMENTS it is not easy at all to implement a good working capital management as it demands individual attention on its different components. The study of working capital management is very helpful for the organisation to know its liquidity position. The study is relevant to the organization to know the day to day expenditure. This study is relevant to give an idea to utilise the current assets. This study is also relevant to the student as they can use it as a reference. This report will help in conducting further research. Other researcher can use this project as secondary data PROBLEM STATEMENT: Working capital management or simply the management of capital invested in current assets is the focus of study. So topic is to study working capital management of ACC CEMENTS . Working capital is the fund invested by a firm in current assets. Now in a cut throat competitive era where each firm competes with each other to increase their production and sales, holding of sufficient current assets have become mandatory as current assets
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include inventories and raw materials which are required for smooth production runs. Holding of sufficient current assets will ensure smooth and un interrupted production but at the same time, it will consume a lot of working capital. Here creeps the importance and need of efficient working capital management. Working capital management aims at managing capital assets at optimum level, the level at which it will aid smooth running of production and also it will involve investment of nominal working capital in capital assets. The problem generally explains that, less attention has been paid to the area of shortterm finance, in particular that of working capital management. Such neglect might be acceptable were working capital considerations of relatively little importance to the firm, but effective working capital management has a crucial role to play in enhancing the profitability and growth of the firm. Indeed, experience shows that inadequate planning and control of working capital is one of the more common causes of business failure. OBJECTIVE OF THE STUDY: Everything in life holds some kinds of objectives to be fulfilled. This study is not an exception to it. The following are a few straight forward goals which i have tried to fulfil in my project: 1) To study the various components of working capital. 2) To analyze the liquidity trend. 3) To analyze the working capital trend. 4) To appraise the utilization of current asset and current liabilities and find out shortcomings if any. 5) To suggest measure for effective management of working capital.

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LIMITATIONS OF THE STUDY:Following are the limitations of the study: 1) The topic working capital management is itself a very vast topic yet very important also. Due to time restraints it was not possible to study in depth in get knowledge what practices are followed at ACC CEMENTS . 2) Many facts and data are such that they are not to be disclosed because of the confidential nature of the same. 3) Since the financial matters are sensitive in nature the same could not acquired easily. 4) The study is restricted to only the Four Year data of ACC CEMENTS .

CHAPTERISATION: Following are the chapterisation of the study: Chapter-1 represents the background of the study, relevance of the study, problem statements, objectives as well as limitations of the study. Chapter-2 represents company profile of ACC CEMENTS . Chapter-3 represents review of literature. Chapter-4 represents research methodology of the study including sources of data collection, formulas and statistical tools used for data analysis. Chapter -5 represents results and findings. Chapter -6 represents conclusion and suggestion. Chapter -7 represents implication for future research.

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CHAPTER-2 COMPANY PROFILE

ACC (ACC Limited) is India's foremost manufacturer of cement and concrete. ACC's operations are spread throughout the country with 16 modern cement factories, more than 40 Ready mix concrete plants, 20 sales offices, and several zonal offices. It has a workforce of about 9,000 persons and a countrywide distribution network of over 9,000 dealers. Since inception in 1936, the company has been a trendsetter and important benchmark for the cement industry in many areas of cement and concrete technology. ACC has a unique track record of innovative research, product development and specialized consultancy services. The company's various manufacturing units are backed by a central technology support services centre - the only one of its kind in the Indian cement industry. ACC has rich experience in mining, being the largest user of limestone. As the largest cement producer in India, it is one of the biggest customers of the domestic coal industry, of Indian Railways, and a considerable user of the countrys road transport network services for inward and outward movement of materials and products. Among the first companies in India to include commitment to environmental protection as one of its corporate objectives, the company installed sophisticated pollution control equipment as far back as 1966, long before pollution control laws came into existence. Today each of its cement plants has state-of-the art pollution control equipment and devices. ACC plants, mines and townships visibly demonstrate successful endeavours in quarry rehabilitation, water management techniques and greening activities. The company actively promotes the use of alternative fuels and raw materials and offers total solutions for waste management including testing, suggestions for reuse, recycling and co-processing. ACC has taken purposeful steps in knowledge building. We run two institutes that offer professional technical courses for engineering graduates and diploma holders which are relevant to manufacturing sectors such as cement. The main beneficiaries are youth from remote and backward areas of the country. ACC has made significant contributions to the nation building process by way of quality products, services and sharing expertise. Its commitment to sustainable development, its high ethical standards in business dealings and its on-going efforts in community welfare programmes have won it acclaim as a responsible corporate citizen. ACCs brand name is synonymous with cement and enjoys a high level of equity in the Indian market. It is the only cement company that figures in the list of Consumer SuperBrands of India.
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HUMAN RESOURCES

ACC has a large workforce of about 9,000 people, comprising experts in various disciplines assisted by a dedicated workforce of skilled persons. ACC employees, referred to as the ACC Parivar, come from all parts of the country and belonging to a variety of ethnic, cultural and religious backgrounds. ACC employees display a strong sense of loyalty to the Company and their special stellar qualities as value-adding human capital are well known in the industry. ACC has clearly stated guidelines concerning recruitment, termination, career advancement, performance appraisal, professional and employee ethics and code of conduct. The Companys personnel policies and processes enshrine equal opportunities to all and non-discrimination with regard to gender, caste, creed, ideology or other opinion, whether social, political or religious. Also ensured is a due process for employee consultation and participation in organizational development and policy formulation.

IT INFRASTRUCTURE

ACC was among the first Indian companies to adopt automation of information technology. We started computerizing our systems as early as 1968 - a commitment to progress through the harnessing of relevant available technologies, a practice that continues even today. We have traveled a long way from our early days when we were using simple keypunching machines. Significant improvements have been made in application systems and infrastructure since then - from Batch processing to on-line systems, from IBM 1401 and Data General system to the latest Linux/UNIX and Windows 2003 based machines. We have made timely transitions determined by available technologies and business requirements. In February 2007 the company made a quantum jump from in-house developed systems using Oracle 9i and Developer 6i to an ERP (SAP) based solution. This decision was based solely on our strategic objectives and the business benefits that we expect to derive from implementing such a solution. With this move we also aligned people, business processes and technologies across the country. The Company has an Intranet Portal called Accelerate which is dedicated to employees. The portals content is based on Personal information relating to Human Resource matters, Performance Management, as well as other information of use to employees such as the latest news on company affairs, developments on sustainable development, house magazines and newsletters.
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Being a large organization with a countrywide network of manufacturing, marketing and R&D centers, we have invested in the creation of a comprehensive infrastructure that allows free flow of information across the organization. This enables almost instant communication between all levels in the organization. A hybrid WAN network connects each of our 275 plus locations. A judicious mix of VSAT and VPN links ensure adequate connectivity between these locations. Each manufacturing location has a well designed LAN to meet its needs. IT in ACC is well placed to master future expansions of our core businesses. FINANCIALS & INVESTOR RELATIONS: Key Performance Indicators Sales Volume & Growth Net Sales, Operating EBITDA & Operating EBITDA Margin Profit Before Tax & Profit After Tax Capital Employed & Return on Capital Employed Net Worth & Return on Net Worth Dividend Per Share Net Cash Generated from Operations Fixed Assets & Asset Turnover Ratio Employees & Turnover Per Employee Cement Production & Capacity Utilisation

ACC Media Release - Cement Production and Despatches in November 2010 Our cement production and despatch figures for the month of November 2010 are as follows: November 2010 Cement production Cement despatches November 2009 Cement production Cement despatches Cumulative 1.68 million tonnes 1.66 million tonnes 1.76 million tonnes 1.74 million tonnes

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January November 2010 Cement production Cement despatches January November 2009 Cement production Cement despatches 19.51 million tonnes 19.47 million tonnes 19.31 million tonnes 19.24 million tonnes

November 1, 2010 ACC Media Release - Cement Production and Despatches in October 2010 Our cement production and despatch figures for the month of October 2010 are as follows: October 2010 Cement production Cement despatches October 2009 Cement production Cement despatches Cumulative January October 2010 Cement production Cement despatches January October 2009 Cement production Cement despatches 17.83 million tonnes 17.81 million tonnes 17.55 million tonnes 17.51 million tonnes 1.71 million tonnes 1.69 million tonnes 1.98 million tonnes 1.92 million tonnes

October 2, 2010 ACC Media Release - Cement Production and Despatches in September 2010
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Our cement production and despatch figures for the month of September 2010 are as follows: September 2010 Cement production Cement despatches September 2009 Cement production Cement despatches Cumulative January September 2010 Cement production Cement despatches January September 2009 Cement production Cement despatches 16.12 million tonnes 16.12 million tonnes 15.57 million tonnes 15.59 million tonnes 1.64 million tonnes 1.63 million tonnes 1.52 million tonnes 1.58 million tonnes

September 1, 2010 ACC Media Release - Cement Production and Despatches in August 2010 Our cement production and despatch figures for the month of August 2010 are as follows: August 2010 Cement production Cement despatches August 2009 Cement production Cement despatches Cumulative January August 2010 1.63 million tonnes 1.65 million tonnes 1.56 million tonnes 1.57 million tonnes

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Cement production Cement despatches January August 2009 Cement production Cement despatches

14.05 million tonnes 14.00 million tonnes

14.48 million tonnes 14.49 million tonnes

August 2, 2010 ACC Media Release - Cement Production and Despatches in July 2010 Our cement production and despatch figures for the month of July 2010 are as follows: July 2010 Cement production Cement despatches July 2009 Cement production Cement despatches Cumulative January July 2010 Cement production Cement despatches January July 2009 Cement production Cement despatches 12.85 million tonnes 12.84 million tonnes 12.49 million tonnes 12.43 million tonnes 1.78 million tonnes 1.78 million tonnes 1.55 million tonnes 1.56 million tonnes

July 1, 2010 ACC Media Release - Cement Production and Despatches in June 2010 Our cement production and despatch figures for the month of June 2010 are as follows: June 2010 Cement production
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1.78 million tonnes

Cement despatches June 2009 Cement production Cement despatches Cumulative January June 2010 Cement production Cement despatches January June 2009 Cement production Cement despatches

1.78 million tonnes

1.82 million tonnes 1.81 million tonnes

10.94 million tonnes 10.88 million tonnes

11.07 million tonnes 11.06 million tonnes

June 9, 2010 ACC Media Release - Cement Production and Despatches in May 2010 Our cement production and despatch figures for the month of May 2010 are as follows: May 2010 Cement production Cement despatches May 2009 Cement production Cement despatches Cumulative January May 2010 Cement production Cement despatches January May 2009 Cement production 9.25 million tonnes 9.14 million tonnes 9.09 million tonnes 1.81 million tonnes 1.82 million tonnes 1.81 million tonnes 1.75 million tonnes

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Cement despatches May 4, 2010

9.25 million tonnes

ACC Media Release - Cement Production and Despatches in April 2010 Our cement production and despatch figures for the month of April 2010 are as follows: April 2010 Cement production Cement despatches April 2009 Cement production Cement despatches Cumulative January April 2010 Cement production Cement despatches January April 2009 Cement production Cement despatches 7.44 million tonnes 7.44 million tonnes 7.33 million tonnes 7.34 million tonnes 1.84 million tonnes 1.80 million tonnes 1.79 million tonnes 1.79 million tonnes

April 1, 2010 ACC Media Release - Cement Production and Despatches in March 2010 Our cement production and despatch figures for the month of March 2010 are as follows: March 2010 Cement production Cement despatches March 2009 Cement production 1.99 million tonnes 1.94 million tonnes 1.94 million tonnes

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Cement despatches Cumulative January March 2010 Cement production Cement despatches January March 2009 Cement production Cement despatches

2.01 million tonnes

5.54 million tonnes 5.55 million tonnes

5.60 million tonnes 5.64 million tonnes

March 2, 2010 ACC Media Release - Cement Production and Despatches in February 2010 Our cement production and despatch figures for the month of Ferbuary 2010 are as follows: February 2010 Cement production Cement despatches February 2009 Cement production Cement despatches Cumulative January February 2010 Cement production Cement despatches January February 2009 Cement production Cement despatches 3.61 million tonnes 3.63 million tonnes 3.60 million tonnes 3.62 million tonnes 1.74 million tonnes 1.75 million tonnes 1.72 million tonnes 1.71 million tonnes

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February 1, 2010 ACC Media Release - Cement Production and Despatches in January 2010 Our cement production and despatch figures for the month of January 2010 are as follows: January 2010 Cement production Cement despatches January 2009 Cement production Cement despatches 1.87 million tonnes 1.89 million tonnes 1.89 million tonnes 1.91 million tonnes

January 29, 2010 ACC Media Release - Encore Cements & Additives Pvt Limited We have acquired a 100% equity stake in Encore Cements & Additives Private Limited (ECAPL). Consequently this company now becomes a wholly owned subsidiary of ACC. ECAPL has a slag grinding unit in Vishakapatnam. This acquisition will help ACC build its presence in Andhra Pradesh. Business and Financial Metrics Second Quarter 2010 Results[9] During the second quarter of 2010, ACC Limited reported net sales of 216,688 Rs. lakhs compared to net sales of 218,821 Rs. lakhs in the second quarter of 2009. Net profit for the quarter was 34,947 Rs. lakhs compared to 47,098 Rs. lakhs in the year-ago period. Business Segments The Group operates in two major segments: Cement and Ready Mix Concrete. Cement The cement segment, the company's largest contributor towards net sales, includes sale of bagged as well as bulk cement. ACC produces three types of cement, Ordinary

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Portland Cement ,Portland Slag Cement, Portland Pozzolana Cement. This segment contributes 95.51% of ACC's revenue. Bulk Cement: Bulk Cement, an alternative to bagged cement, which is of particular advantage to large consumers of cement. Ready Mix Concrete ACC set up India's first commercial Ready Mix Concrete (RMX) plant in Mumbai in 1994. From January 2008 this business has been reorganized as a separate wholly owned subsidiary company called ACC Concrete Limited. It has 30 modern plants in major cities across India. Technological Changes Continuous technological upgrading and assimilation of the latest technology occurs constantly in the cement industry in India. Currently 93% of the total capacity in the industry is based on modern and environment-friendly dry process technology and only 7% of the capacity is based on old wet and semi-dry process technology. There is tremendous scope for waste heat recovery in cement plants which reduces emission levels. One project for co-generation of power utilizing waste heat in an Indian Cement plant is being implemented with Japanese assistance under the Green Aid Plan. The induction of advanced technology has helped the industry immensely to conserve energy and fuel and to save materials substantially. Pricing Cement prices are dependent mainly on cost of raw materials, gypsum fly ash, limestone, transportation, coal, power tariffs and local excise duties. The location of cement plants depends on their proximity to limestone deposits The lesser the distance, the lower the freight costs. Andhra Pradesh has the largest limestone deposits in India accounting for almost 32% of the total reserves. Lower Impact of rising fuel prices Approximately 90% of ACCs coal requirements are sourced domestically. Imported coal is primarily used at its 1mnte plant in Tamil Nadu. Of the total domestic coal consumed, 20-25% has to be sourced from open markets (due to shortage of domestic coal), where prices are ~25-30% higher than domestic rates. This exposes the company to significant variations in the coal cost depending on the share of coal purchased from open markets.

Market Outlook With a booming economy and a strong focus and demand for infrastructure, the Indian cement industry is all set to scale new heights. ACC, with a capacity of 19.9 million tons and increasing it to 27.5 million tonnes has posted healthy growth of 25 percent in
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sales. But with the global economic meltdown in 2008 leaving its effects on the Indian economy, there is a dearth of capital in the market, leading to a decline in housing and construction. Also, most of the infrastructure projects have been shelved or delayed. The housing sector, which accounts for around 55-60% of total cement demand, is likely to continue to be the leading force. The requirement of new dwelling units over a period of 25 years (1996-97 to 2020-21) will be around 140 million units requiring an investment of approximately INR 20,000 billion. Demand from infrastructure projects and industrial/commercial ventures account for 20% each. Competition The structure of the cement industry is fragmented, although the concentration at the top is increasing with around 54 companies operating with around 129 plants. The large players account for 93.3% of total capacity. Other large players in the cement industry in India are:

Ambuja Cements, the company with largest market capitalization and cement output, manufactures and markets cement for both domestic and export markets. Currently Holcim holds about 45% of shares in Ambuja Cements Limited. UltraTechCement, a Grasim subsidary, has an annual capacity of 18.2 million tons. It manufactures and markets Ordinary Portland Cement, Portland Blast Furnace Slag Cement and Portland Pozzalana Cement. It also manufactures ready mix concrete (RMC). Madras Cements is another major player based in South India.

An interesting fact to be noted here, Holcim has a controlling stake in Ambuja Cements, and Holcim also has bought controlling stake into ACC through Ambuja Cements. So the two largest cements players (by market capitalization) in the Indian market are actually controlled by a single entity, Holcim.

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Financial Comparison of Competitors Market Cap. (INR cr.) Sales Turnover Net Profit Total Assets ACC 8,905.50 6,878.00 5,704.84 5,509.22 3,044.25 2,011.88 1,724.78 1,438.59 1,971.10 1,007.61 637.54 408.28 393.57 4,459.12 4,991.67 4,437.49 5,132.59 2,589.49 1,232.47

Ambuja Cements 10,064.38 UltraTechCement 4,927.15 India Cements 2,871.69

Madras Cements 1,503.95 Birla Corp 1,062.29

Market Share ACC's market share has been dropping over the years. Currently it stands at 12.2% panIndia. ACC is market leader only in Karnataka & Punjab. The high quality cement that is manufactured and exported by ACC Ltd is produced in the ACC Ltd. Cement Plants. ACC Ltd is one of the front runners in the cement industry in India and produces some of the best quality cement in the country. It has a significant market share in the segments of housing, real estate, infrastructure and other development projects. With more and more developmental projects coming up, the profit and the market share of the company is expected to rise at a considerable rate. The cement plants of ACC Ltd The cement plants of ACC Ltd are located in various regions of the country in a number of states. The gadgets and equipments are of high standards and comply with the international standards. Presently, there are around 12 cement plants of ACC Ltd which cater to the different market segments of the country. The cement plants work in coordination with each other and also independently to increase the share in the market. All the ACC Ltd. Cement Plants use the cutting edge technologies and services which in turn produce high quality cement brands. Set up in the year 1936, ACC has always worked dedicatedly to produce some of the best brands of cement and its business

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strategy is based on providing the best of products to the changing consumer market in the country and the world.

The following table provides a general idea of the ACC Ltd. Cement Plants.

Acc Cement Plants In India

Name of the Company ACC Ltd. ACC Ltd. (G) ACC Ltd. ACC Ltd. ACC Ltd. ACC Ltd. ACC Ltd. ACC Ltd. ACC Ltd. ACC Ltd. - New ACC Ltd. ACC Ltd.

Location Gagal Tikaria Lakheri Kymore Chaibasa Sindri Jamul Chanda Wadi Wadi Macherial

State Himachal Pradesh Uttar Pradesh Rajasthan Madhya Pradesh Jharkhand Jharkhand Chhattisgarh Maharashtra Karnataka Karnataka Andhra Pradesh

Process Used Dry Grinding Unit Dry Dry Chaibasa Grinding Unit Dry and Semi-Dry Dry Dry Dry Grinding Unit Semi-Dry

Madukkarai Tamil Nadu

Features of ACC Ltd. Cement Plants All the cement plants of the company are equipped with advanced technological facilities which make them completely environment friendly. The plants use some of the sophisticated pollution control devices in various parts such as raw mills, power plants, cement kilns, coolers and other equipments. In addition, the mining technologies that
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have been implemented in the cement plants of ACC Ltd are also based on environment safeguard norms. In its endeavor towards greenery, the company has also started various types of afforestation, horticulture and tree planting programs near its cement plants. It not only reduces pollution but also helps conserve the mineral resources. The vacant spaces in the mines and the cement plans are being utilized for the purpose of planting of trees. In some of the ACC Ltd. Cement Plants in places like Chaibasa, Kymore, Jamul and Gagal, greenery has been added to around 40% of the total area which is around 10% more than the normal norms that has been set. The management of these plants has given stress on the green belt development programs. Due to the high production as well as the dedicated effort towards maintaining ecological balance and nature conservation, the company and its cement plans have been the recipient of a number of prestigious awards like:

Indo German Greentech Environment Excellence Award Vishwakarma Rashtriya Puraskar trophy for safety in mining National Award for outstanding performance in rural and agricultural development Indira Priyadarshini Vrikshamitra Award for extraordinary work in environment protection FICCI Award for pollution control

The ACC Ltd. Cement Plants consist of high quality Zero Water Discharge facilities which help in proper water management. The water that is used in the plant for the process of industrial cooling is recycled by the use of tanks, water ponds and cooling towers. Through this process, the company has successful in water harvesting.

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Future of the Cement Industry: Government policies have affected the growth of cement plants in India in various stages. The control on cement for a long time and then partial decontrol and then total decontrol has contributed to the gradual opening up of the market for cement producers. The consumption of cement is determined by factors influencing the level of housing and industrial construction, irrigation projects, and roads and laying of water supply and drainage pipes etc. The level and growth of GDP and its sectoral composition, capital formation, development expenditure, growth in population, level of urbanization, etc, in turn, determine these factors. But the domestic demand for cement is mainly from the housing activities and infrastructure development.

The government paved the way for the entry of the private sector in road projects. It has amended the National Highway Act to allow private toll collection and identified projects, bridges, expressways and big passes for private construction. The budget gave substantial incentives to private sector construction companies. Ongoing liberalization will lead to an increase in industrial activities and infrastructure development. So it is hoped that Indian cement industry shall boom again in near future.

SWOT ANALYSIS OF ACC LIMITED

STRENGTHS. 1. 2. 3. 4. It is having a good image and brand loyalty among consumers. Service is good Dhalai karne ke liye people ask for ACC They have same price prevailing for wholesale at dealers/stockiest retailers end.

WEAKNESS. 1. The competitors are doing much promotional activity rather than ACC Limited thats why it facing more problems in selling of product in the market. 2. Lack of awareness program for consumers. OPPORTUNITY. 1. Rapid growth is taking place in Bihar and Madhya Pradesh. 2. People are opting for more stable structures and intensive use of cement is taking place, even government is spending heavily on infrastructure projects. Thus, this is the right time to fully tap these markets. 3. As Indian core industry is also growing at rate of nearly 10% per annum,it is having a good future.

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4. Foreign direct investment in infrastructure sector going to increase in coming years, which will increase the demand of cement. 5. Roads are undergoing through the transformation process through which the traditional method of road building will be replaced by modern concrete roads. THREATS: 1. Large number of players in cement industry makes it more competitive for ACC to carefully price its product and at the same time satisfy its dealers and customers. 2. Players such as Jaypee Cement, Prism Cement, and Birla Samrat are eating up considerable market share. 3. Due to Indias exponential growth many new international cement companies are expected in coming years which will bring a tide of change and can start price war. 4. The emergence of small players in this market may increase the competition and start the malpractices, and heavy discounts to retailers. They can also influence many retailers by giving better profit margin, and other Benefits.

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CHAPTER-3: REVIEW OF LITERATURE The purpose of this chapter is to present a review of literature relating to the working capital management. The following are the literature review by different authors and different research scholars. Pass C.L., Pike R.H1 (1984), studied that over the past 40 years major theoretical developments have occurred in the areas of longer-term investment and financial decision making. Many of these new concepts and the related techniques are now being employed successfully in industrial practice. By contrast, far less attention has been paid to the area of short-term finance, in particular that of working capital management. Such neglect might be acceptable were working capital considerations of relatively little importance to the firm, but effective working capital management has a crucial role to play in enhancing the profitability and growth of the firm. Indeed, experience shows that inadequate planning and control of working capital is one of the more common causes of business failure. Herzfeld B2 (1990), studied that Cash is king--so say the money managers who share the responsibility of running this country's businesses. And with banks demanding more from their prospective borrowers, greater emphasis has been placed on those accountable for so-called working capital management. Working capital management refers to the management of current or short-term assets and short-term liabilities. In essence, the purpose of that function is to make certain that the company has enough assets to operate its business. Here are things you should know about working capital management. Samiloglu F.and Demirgunes K3 (2008), studied that the effect of working capital management on firm profitability. In accordance with this aim, to consider statistically significant relationships between firm profitability and the components of cash conversion cycle at length, a sample consisting of Istanbul Stock Exchange (ISE) listed

1 2 3

Pass C.L., Pike R.H: An overview of working capital management and corporate financing (1984). Herzfeld B; How to Understand Working Capital Management (1990). Samiloglu F. and Demirgunes K., The Effect of Working Capital Management on Firm

Profitability: Evidence from Turkey (2008)

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Appuhami, Ranjith B4 (2008), studied impact of firms' capital expenditure on their working capital management. The author used the data collected from listed companies in the Thailand Stock Exchange. The study used Schulman and Cox's (1985) Net Liquidity Balance and Working Capital Requirement as a proxy for working capital measurement and developed multiple regression models. The empirical research found that firms' capital expenditure has a significant impact on working capital management. The study also found that the firms' operating cash flow, which was recognized as a control variable, has a significant relationship with working capital management. Hardcastle J5 (2009)., studied that Working capital, sometimes called gross working capital, simply refers to the firm's total current assets (the short-term ones), cash, marketable securities, accounts receivable, and inventory. While long-term financial analysis primarily concerns strategic planning, working capital management deals with day-to-day operations. By making sure that production lines do not stop due to lack of raw materials, that inventories do not build up because production continues unchanged when sales dip, that customers pay on time and that enough cash is on hand to make payments when they are due. Obviously without good working capital management, no firm can be efficient and profitable. Thachappilly G6 (2009)., Working Capital Management Manages Flow of Funds,(2009) describes that Working capital is the cash needed to carry on operations during the cash conversion cycle, i.e. the days from paying for raw materials to collecting cash from customers. Raw materials and operating supplies must be bought and stored to ensure uninterrupted production. Wages, salaries, utility charges and other incidentals must be paid for converting the materials into finished products. Customers must be allowed a credit period that is standard in the business. Only at the end of this cycle does cash flow in again

Appuhami, Ranjith B A; The Impact of Firms' Capital Expenditure on Working Capital Hardcastle; Working Capital Management,(2009). Thachappilly G. Working Capital Management Manages Flow of Funds,(2009)

Management: An Empirical Study across Industries in Thailand, (2008)

5 6

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Beneda, Nancy; Zhang, Yilei7 (2008), studied impact of working capital management on the operating performance and growth of new public companies. The study also sheds light on the relationship of working capital with debt level, firm risk, and industry. Using a sample of initial public offerings (IPO's), the study finds a significant positive association between higher levels of accounts receivable and operating performance. The study further finds that maintaining control (i.e. lower amounts) over levels of cash and securities, inventory, fixed assets, and accounts.

Dubey R8 (2008)., studied The working capital in a firm generally arises out of four basic factors like sales volume, technological changes, seasonal , cyclical changes and policies of the firm. The strength of the firm is dependent on the working capital as discussed earlier but this working capital is itself dependent on the level of sales volume of the firm. The firm requires current assets to support and maintain operational or functional activities. By current assets we mean the assets which can be converted readily into cash say within a year such as receivables, inventories and liquid cash. If the level of sales is stable and towards growth the level of cash, receivables and stock will also be on the high. McClure B9 (2007)., Working Capital Works describes that Cash is the lifeline of a company. If this lifeline deteriorates, so does the company's ability to fund operations, reinvest and meet capital requirements and payments. Understanding a company's cash flow health is essential to making investment decisions. A good way to judge a company's cash flow prospects is to look at its working capital management (WCM). Cash is king, especially at a time when fund raising is harder than ever. Letting it slip away is an oversight that investors should not forgive. Analyzing a company's working capital can provide excellent insight into how well a company handles its cash, and whether it is likely to have any on hand to fund growth and contribute to shareholder value.

Beneda, Nancy; Zhang, Yilei, Working Capital Management, Growth and Performance of New

Public Companies, Credit & Financial Management Review, (2008)

8 9

Dubey R, Working Capital Management-an Effective Tool for Organisational Success (2008) McClure B, Working Capital Works (2007)

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Gass D10 (2006)., studied "Cash is the lifeblood of business" is an often repeated maxim amongst financial managers. Working capital management refers to the management of current or short-term assets and short-term liabilities. Components of short-term assets include inventories, loans and advances, debtors, investments and cash and bank balances. Short-term liabilities include creditors, trade advances, borrowings and provisions. The major emphasis is, however, on short-term assets, since short-term liabilities arise in the context of short-term assets. It is important that companies minimize risk by prudent working capital management.

Maynard E. Refuse11 (1996), Argued that attempts to improve working capital by delaying payment to creditors is counter-productive to individuals and to the economy as a whole. Claims that altering debtor and creditor levels for individual tiers within a value system will rarely produce any net benefit. Proposes that stock reduction generates system-wide financial improvements and other important benefits. Urges those organizations seeking concentrated working capital reduction strategies to focus on stock management strategies based on lean supply-chain techniques.

Thomas M. Krueger12 (2005), studied distinct levels of WCM measures for different industries, which tend to be stable over time. Many factors help to explain this discovery. The improving economy during the period of the study may have resulted in improved turnover in some industries, while slowing turnover may have been a signal of troubles ahead. Our results should be interpreted cautiously. Our study takes places over a short time frame during a generally improving market. In addition, the survey suffers from survivorship bias only the top firms within each industry are ranked each year and the composition of those firms within the industry can change annually.

10 11

Gass D, How To Improve Working Capital Management (2006) Maynard E. Rafuse, Working capital management: an urgent need to refocus Management Thomas M. Krueger, An Analysis of Working Capital Management Results Across Industries

Decision, (1996)
12

American Journal of Business, (2005)

[25]

Eljelly13 (2002) empirically examined the relationship between profitability and liquidity, as measured by current ratio and cash gap (cash conversion cycle) on a sample of 929 joint stock companies in Saudi Arabia. Using correlation and regression analysis, Eljelly [9]found significant negative relationship between the firm's profitability and its liquidity level, as measured by current ratio. This relationship is more pronounced for firms with high current ratios and long cash conversion cycles. At the industry level, however,he found that the cash conversion cycle or the cash gap is of more importance as a measure of liquidity than current ratio thataffects profitability. The firm size variable was also found to have significant effect on profitability at the industry level. Lazaridis and Tryfonidis
14

(2004), conducted a cross sectional study by using a

sample of 131 firms listed on the Athens Stock Exchange for the period of 2001 - 2004 and found statistically significant relationship between profitability, measured through gross operating profit, and the cash conversion cycle and its components (accounts receivables, accounts payables, and inventory). Based on the results analysis of annual data by using correlation and regression tests, they suggest that managers can create profits for their companies by correctly handling the cash conversion cycle and by keeping each component of the conversion cycle (accounts receivables, accounts payables, and inventory) at an optimal level. Raheman and Nasr15 (2004), studied the effect of different variables of working capital management including average collection period, inventory turnover in days, average payment period, cash conversion cycle, and current ratio on the net operating profitability of Pakistani firms. They selected a sample of 94 Pakistani firms listed on Karachi Stock Exchange for a period of six years from 1999 - 2004 and found a strong negative relationship between variables of working capital management and profitability of the firm. They found that as the cash conversion cycle increases, it leads to decreasing profitability of the firm and managers can create positive value for the shareholders by reducing the cash conversion cycle to a possible minimum level.

13 14 15

Eljelly; cash conversion cycle year (2002.) Lazaridis and Tryfonidis, cash conversion cycle year (2004) Raheman and Nasr; variables of working capital management year ( 2004).

[26]

Garcia-Teruel and Martinez-Solano16(1996) collected a panel of 8,872 small to medium-sized enterprises (SMEs) from Spain covering the period 1996 - 2002. They tested the effects of working capital management on SME profitability using the panel data methodology. The results, which are robust to the presence of endogeneity, demonstrated that managers could create value by reducing their inventories and the number of days for which their accounts are outstanding. Moreover, shortening the cash conversion cycle also improves the firm's profitability. Falope and Ajilore17 (2003), used a sample of 50 Nigerian quoted non-financial firms for the period 1996 -2005. Their study utilized panel data econometrics in a pooled regression, where time-series and cross-sectional observations were combined and estimated. They found a significant negative relationship between net operating profitability and the average collection period, inventory turnover in days, average payment period and cash conversion cycle for a sample of fifty Nigerian firms listed on the Nigerian Stock Exchange. Furthermore, they found no significant variations in the effects of working capital management between large and small firms. Kouma Guy18, (2001) in a study on, Working capital management in healthcare, Working capital is the required to finance the day to day operations of an organization. Working capital may be require to bridge the gap between buying of stocked items to eventual payment for goods sold on account. Working capital also has to fund the gap when products are on hand but being held in stock. Products in stock are at full cost, effectively they are company cash resources which are out of circulation therefore additional working capital is required to meet this gap which can only be reclaimed when the stocks are sold (and only if these stocks are not replaced) and payment for them is received. Working capital requirements have to do with profitability and much more to do with cash flow.

16 17

Garcia-Teruel and Martinez-Solano; working capital management of SMEs year 1996. Falope and Ajilore: utilisation of resources year 2003

18

) Kouma Guy, (2001)Working capital management in healthcare www.@akdesniz.edu.tr Volume 5; page No 76-89

[27]

Mehmet SEN, Eda ORUC (2005)19 in the study Relationship between the efficiency of working capital management and company size, As it is known, one of the reasons which cause change in working capital from one period to another is the change in management efficiency. The change in management efficiency will affect the change in working capital in a way as increaser or reducer from on period to another. In this study, the effect of change in management efficiency in working capital management in to the change in working capital is compared by company size and sectors. The data of this study covers sixty periods as the total of quarterly financial statement of 55 manufacturing companies which were in operation in Istanbul Stock exchange (ISE) between the years 1993 and 2007. In every period we studied, for inventories short term commercial receivables and short term commercial liabilities, and calculated the effect of change in management efficiency on to the effect of working capital change. In all sectors considered, in the change in working capital, and observed the effect of reducing of efficiency in inventory management. It is also observed that efficiency change in the management of the short term commercial receivables and the short term commercial liabilities by the company sizes and sectors make a positive effect in to the change in working capital Brealey, R., (1997)20 in a study on, Working Capital management concepts work sheet university of phoenix. Concept application of concept in the Simulation reference to concept in reading cash conversion cycle cash conversions is the process of managing a companys cash inflows and outflows. In the simulation, the finance manager was responsible for balancing sales with collections or accounts receivables (cash inflows) and purchases with payments or accounts payables (cash outflows). This delicate balance maintains the companys balance sheet keeping the cash and loans in a situation of financial stability and keeping the money from being tied up. Principles of corporate finance. Working capital management. New York: McGraw-Hill.

19

Mehmet SEN, Eda ORUC (2005) Relationship between the efficiency of working capital management and company size, www.@akdesniz.edu.tr Volume 2; Pages No 32-42
20

Brealey, R., (1997) Working capital management Working Capital management concepts work sheet university of phoenix. Volume 1; Pages No 123-128

[28]

CHAPTER-4 RESEARCH METHODOLOGY Research methodology is a systematic approach in management research to achieve pre-defined objectives. It helps a researcher to guide during the course of research work. Rules and techniques stated in research methodology save time and labour of the researcher as researcher know how to proceed to conduct the study as per the objective. SELECTION OF TOPIC: The selection of topic is a crucial factor in any research study. There should be newness and it should give maximum scope to explore the ideas from different angles. In present day due to increase in competition, working capital is becoming necessary for the organisation. It is that part of capital which is necessary to undertake day to day expenditure of the business organization. Whatever may be the organization, working capital plays an important role, as the company needs capital for its day to day expenditure. Thousands of companies fail each year due to poor working capital management practices. Entrepreneurs often don't account for short term disruptions to cash flow and are forced to close their operations. Working capital is the fund invested by a firm in current assets. Now in a cut throat competitive era where each firm competes with each other to increase their production and sales, holding of sufficient current assets have become mandatory as current assets include inventories and raw materials which are required for smooth production runs. Holding of sufficient current assets will ensure smooth and un interrupted production but at the same time, it will consume a lot of working capital. Here creeps the importance and need of efficient working capital management. After due to consultation with the external guide /internal guide, the topic was finalized and titled as-A STUDY ON WORKING CAPITAL MANAGEMENT IN ACC CEMENTS , BBSR SELECTION OF LOCATION FOR THE STUDY: The location for study was selected as the Marketing office of ACC CEMENTS , secundrabad RESEARCH DESIGN: A Research design is the arrangement of conditions for collection and analysis of data in a manner that aims to combine relevance to the research purpose with economy in procedure The research design followed to study the

[29]

working capital management in ACC CEMENTS is Descriptive and Analytical Research Design. SOURCES OF DATA COLLECTION: 1. Secondary data collection

Secondary data collection:

The secondary data are those which have already collected and stored. Secondary data easily get those secondary data from records, journals, annual reports of the company etc. It will save the time, money and efforts to collect the data. Secondary data also made available through trade magazines, annual reports, books etc.

This project is based secondary data collected through annual reports of the organization. The data collection was aimed at study of working capital management of the company.

Project is based on

1. Annual report of ACC CEMENTS . 2008-2009 2. Annual report of ACC CEMENTS . 2009-2010 3. Annual report of ACC CEMENTS 2010-2011 4. Annual report of ACC CEMENTS . 2011-2012 5. Annual report of ACC CEMENTS . 2012-2013

FORMULAS OF RATIO ANALYSIS & DEFINITION RATIO: Ratio analysis is the powerful tool of financial statements analysis. A ratio is define as the indicated quotient of two mathematical expressions and as the relationship between two or more things. The absolute figures reported in the financial statement do not provide meaningful understanding of the performance and financial position of the firm. Ratio helps to summaries large quantities of financial data and to make qualitative judgment of the firms financial performance.

[30]

ROLE OF RATIO ANALYSIS Ratio analysis helps to appraise the firms in the term of there profitability and efficiency of performance, either individually or in relation to other firms in same industry. Ratio analysis is one of the best possible techniques available to management to impart the basic functions like planning and control. As future is closely related to the immediately past, ratio calculated on the basis historical financial data may be of good assistance to predict the future. E.g. On the basis of inventory turnover ratio or debtors turnover ratio in the past, the level of inventory and debtors can be easily ascertained for any given amount of sales. Similarly, the ratio analysis may be able to locate the point out the various arias which need the management attention in order to improve the situation. E.g. Current ratio which shows a constant decline trend may be indicate the need for further introduction of long term finance in order to increase the liquidity position. As the ratio analysis is concerned with all the aspect of the firms financial analysis liquidity, solvency, activity, profitability and overall performance, it enables the interested persons to know the financial and operational characteristics of an organization and take suitable decisions. LIQUDITY RATIO: Liquidity refers to ability of a concern to meet its current obligations as and when these become due. The short-term obligations are met by realising amounts from current, floating or circulating asset. The current asset either be liquid or near liquidity. These should be convertible into cash for paying obligation of short-term nature. To measure the liquidity of a firm, following ratios can be calculated: A) CURRENT RATIO: Current assets include cash and those assets which can be converted in to cash within a year, such marketable securities, debtors and inventories. All obligations within a year are include in current liabilities. Current liabilities include creditors, bills payable accrued expenses, short term bank loan income tax liabilities and long term debt maturing in the current year. Current ratio indicates the availability of current assets in rupees for every rupee of current liability.

[31]

CURRENT RATIO

CURRENT ASSET/ CURRENT LIABILITIES

B) QUICK RATIO OR ACID TEST: Quick ratios establish the relationship between quick or liquid assets and liabilities. An asset is liquid if it can be converting in to cash immediately or reasonably soon without a loss of value. Cash is the most liquid asset .other assets which are consider to be relatively liquid and include in quick assets are debtors and bills receivable and marketable securities. Inventories are considered as less liquid. Inventory normally required some time for realizing into cash. Their value also be tendency to fluctuate. The quick ratio is found out by dividing quick assets by current liabilities. QUICK RATIO

total liquid asset/ total current liabilities

C) ABSOLUTE LIQUID ASSET: Even though debtors and bills receivables are considered as more liquid then inventories, it cannot be converted in to cash immediately or in time. Therefore while calculation of absolute liquid ratio only the absolute liquid assets as like cash in hand cash at bank, short term marketable securities are taken in to consideration to measure the ability of the company in meeting short term financial obligation. It calculates by absolute assets dividing by current liabilities. ABSOLUTE LIQUID RATIO=absolute liquid asset/ total current liabilities EFFICIENCY RATIO: Funds are invested in various assets in business to make sales and earn profits. The efficiency with which assets are managed directly affects the volume of sale. Activity ratios measure the efficiency and effectiveness with which a firm manages its resources or assets. These ratios are also called turnover ratios. A) DEBTORS TURNOVER RATIO: Receivable turnover ratio provides relationship between credit sales and receivables of a firm. It indicates how quickly receivables are converted into sales. DEBTORS TURNOVER RATIO= SALES/ AVERAGE ACCOUNT RECEIVABLES. AVERAGE A/C RECEIVABLES= opening trade debtor+ Closing trade debtor/2 AVERAGE COLLECTION PERIOD= (365/DTR) days
[32]

Or RECEIVABLES * 365/ sale B) WORKING CAPITAL TURNOVER RATIO: It signifies that for an amount of sales, a relative amount of working capital is needed. If any increase in sales contemplated working capital should be adequate and thus this ratio helps management to maintain the adequate level of working capital. The ratio measures the efficiency with which the working capital is being used by a firm. It may thus compute net working capital turnover by dividing sales by net working capital. WORKING CAPITALTURNOVER RATIO=cost of sales/ net working capital

CURRENT ASSET TURNOVER RATIO: CURRENT ASSET TURNOVER RATIO= sales / current asset

STATISTICAL TOOLS USED FOR DATA ANAYLSIS:

The various statistical tools used for data analysis is as follows: a) Tables: b) Bar-chart c) Graphs d) Correlation

ANALYTICAL TOOLS USED: The analytical tools used for data analysis is as follows: a) Ratio analysis b) Schedule of change in working capital c) Cash flow statements

[33]

CHAPTER-5

ANALYSIS AND INTERPRETATION

we have used the ratio analysis in this project in order to substantiate the managing of working capital. For this, we used some of the ratios to get the required output. The present study ascertained with the help of following ratios: 1. Current Ratio 2. Quick Ratio 3. Inventory Turnover Ratio 4. Debtors Turnover Ratio 5. Creditors Turnover Ratio 6. Working Capital Turnover Ratio 7. Current Assets Turnover Ratio 8. Working Capital to Sales Ratio

Current Ratio:
The current ratio of a unit measures firms short-term solvency, that is, its ability to meet short-term obligations. It is the ratio of total current assets to total current liabilities. The current ratio measures the ability of the firm to meet its current liabilitiescurrent assets get converted into cash in the operating cycle of the firm and provide the funds needed to pay current liabilities.
[34]

It is calculated by dividing total current assets by total current liabilities:

Current Ratio = Current Assets Current Liabilities

Current Assets include Closing Stock, Deposits (asset), Loans & Advances, Sundry Debtors, Cash-in-hand, and Bank Accounts.

Current Liabilities include GRANTS, O.S.L, Other Liabilities, Salary Recoveres, Security

Deposit A/C, Unpaid Salary/ Wages A/C, Duties & Taxes, Sundry Creditors. Table:-01 The Table Showing Current Ratio Year 2008-09 2009-10 2010-11 2011-12 2012-13 Current Assets 6,07,17,987 7,11,81,059 6,36,58,413 9,25,79,781 7,21,28,952.41 Current Liabilities 3,26,52,240 4,35,76,692 3,59,78,861 5,15,95,821 5,07,41,016.54 Current Ratio 1.85 1.63 1.76 1.79 1.42

[35]

Chart:-1 The Chart Showing Current Ratio

Current Ratio
2 1.8 1.6 1.4 1.2 1 0.8 0.6 0.4 0.2 0 3,26,52,240 6,07,17,987 2008-09 4,35,76,692 7,11,81,059 2009-10 3,59,78,861 6,36,58,413 2010-11 5,15,95,821 5,07,41,016.54 9,25,79,781 7,21,28,952.41 2011-12 2012-13

Current Ratio

Interpretation: The Table 1 revels that the Liquidity position of ACC Cements is Satisfactory even though the ratio of all five years less than the conventional norm i.e 2.because the ACC Cements is a Public Utility firm, as for the conventional rule concerned the Public Utility firms liquidity position is satisfactory even though the current ratio is less than the conventional norm. There for the liquidity position of ACC Cements is Satisfactory.

Quick Ratio / Liquidity Ratio:

This ratio is also termed as Acid-test ratio. A Quick ratio is concerned with, the relationship between quick assets and current liabilities.

[36]

It is a measure of liquidity calculated dividing current assets minus inventory and prepaid expenses by current liabilities. The Quick Ratio is the ratio between quick current assets and current liabilities. It is calculated by dividing the Quick Current Assets by the Current Liabilities.

Quick Ratio = Quick Current Assets Current Liabilities

Quick Current Assets = Current Assets Inventory

Table:-02
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The Table Showing Quick Ratio Year 2008-09 2009-10 2010-11 2011-12 2012-13 Quick Assets 3,09,21,237 4,94,41,661 3,94,99,292 6,24,35,658 48710020.15 Current Liabilities 3,26,52,240 4,35,76,692 3,59,78,861 5,15,95,821 50741016.64 Quick Ratio 0.95 1.13 1.09 1.21 0.96

Chart:-02 The Chart Showing Quick Ratio

60000000 50000000 40000000 Quick Assets 30000000 20000000 10000000 0 00.95 0 2008-09 2009-10 2010-11 2011-12 2012-13 0 01.13 0 01.09 0 01.21 0.96 Current Liabilities Quick Ratio 50741016.64 48710020.15

[38]

Interpretation: It may be inferred from Table 2 the liquidity ratio of ACC Cements is good in the three years i.e. 2009-10, 2010-11& 2011-12 respectively but in the years 2003-04, 2008-09 & 2012-13 the liquidity ratio is less than standard norm i.e 0.71, 0.95& 0.96 respectively. It indicates that liquidity ratio of ACC is not good. But in 2009-10 to 2011-12 the liquidity ratio is more than the standard norm. There for it indicates that company is able to pay its current liabilities with quick assets. The ACC is able to utilize its current assets properly & the Inventory movement is quicker and debt payment is also faster.

Inventory Turnover Ratio:

Every firm has to maintain certain level of Inventory of finished goods, so as to be meeting the requirements of the business. The Inventory Turnover reflects the efficiency of inventory management. The higher the ratio reflects the more efficient the management of inventories & vice versa.
[39]

This ratio establishes relationship between cost of goods sold during a given period of time and average amount of inventory held during that period.

It can be ascertained by following formula:

Inventory Turnover Ratio = Cost of Goods Sold Average Inventory

Cost of Goods Sold = Sales Gross Profit

Average Inventory = Opening Stock + Closing Stock / 2

[40]

Table:-03 The Table Showing Inventory Turnover Ratio Year 2008-09 2009-10 2010-11 2011-12 2012-13 Cost of Goods Sold 346684070 446321775 397561561 440936818 49,5708694.15 Average Inventory 57588517 51536148 45898519 54303244 26788827.39 Ratio 6.02 8.66 8.66 8.11 18.51

Chart:-03 The Chart Showing Inventory Turnover Ratio

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600000000 495,708,694.15 446321775 397561561 346684070 Cost of Goods Sold 300000000 Average Inventory Ratio 200000000 440936818

500000000

400000000

100000000

57588517

51536148

45898519

54303244 26788827.39 2011-12 2012-13

0 2008-09 2009-10 2010-11

Interpretation: It may be found from Table 3 the Inventory turnover of ACC Cements is increasing & decreasing trend. The ACC is increases its efficiency of selling the products. In 2008-09 decreases its inventory turnover i.e 7.19 to 6.02.But in 2009-10 to 2012-13 years the firm performance is better to selling its products. The ACC is maintain this way he sells the Inventory very fast & the efficiency of the firm in selling its product is better.

[42]

Inventory Conversion Period:

Inventory period is the time lag between the purchase of raw materials & sale of finished goods. It includes: Raw Materials Conversion Period W-I-P Conversion Period Finished Goods Conversion Period

The Inventory Conversion Period can be ascertained by following formula:

Inventory Conversion Period = No. of Days in a Year Inventory Turnover Ratio

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No. of Days in a Year 365 days

Table:-04 The Table Showing Inventory Conversion Period Year 2008-09 2009-10 2010-11 2011-12 2012-13 No. of Days in a Year 365 365 365 365 365 I.T.R 6.02 8.66 8.66 8.11 18.51 I.C.P 61 42 42 45 20

Chart:-04 The Chart Showing Inventory Conversion Period

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400 350 300 250 200 150 100 50 0

365

365

365

365

365

No. of Days in a Year I.T.R I.C.P 61 6.02 2008-09 42 8.66 2009-10 42 8.66 2010-11 45 8.11 2011-12 20 18.51 2012-13

Interpretation: The Table 4 depicts that the ACC Cements is taking how many days to convert the Raw Materials into finished products. In last five years the company is improved its conversion period yearly. In the year 2003-04 & 2008-09 the ACC has taken more days to convert inventory. But in 2009-10 to 2012-13 the ACC is taken less days to convert inventory. It indicates that fast to conversion of inventory & sells the goods fast. There for the ACC is maintain better Inventory conversion period.

Debtors Turnover Ratio:

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Debtors Turnover Ratio is an important part of current assets; it is determined by dividing the net credit sales by average debtors outstanding during the year. The analysis of the debtors turnover ratio supplements the information regarding the liquidity of one item of current assets of the firm. The ratio measures how rapidly receivables are collected. A high ratio is indicative of shorter time-lag between credit sales and cash collection. A low ratio shows that debts are not being collected rapidly.

It can be ascertained by following formula:

Debtors Turnover Ratio = Total Sales Debtors

[46]

Table:-05 The Table Showing Debtors Turnover Ratio Year 2008-09 2009-10 2010-11 2011-12 2012-13 Total Sales 39,05,65,568 48,90,14,708 46,82,83,461 51,18,17,364 573720167.78 Debtors 1,25,55,600 1,85,99,457 1,09,67,229 2,05,58,529 Ratio 31.10 26.29 42.69 24.89

21607761.25 26.55

Chart:-05 The Chart Showing Debtors Turnover Ratio

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600000000 500000000 400000000

573720167.8

Total Sales 300000000 200000000 100000000 0 0 31.1 0 2008-09 2009-10 2010-11 2011-12 2012-13 0 0 26.29 0 0 42.69 0 0 24.89 Debtors Ratio

21607761.25 26.55

Interpretation:

The Table 5 shows that the in last five years Debtors turnover ratio of ACC Cements . In 2003-04 to 2009-10 the debts are not collected rapidly. But in the year 2010-11 the debts are collected rapidly i.e 42.69. In 2011-12 again the debts turnover ratio is decreases 42.69 to 24.89.in 2012-13 the debts turnover Ratio is in increases 24.89 to 26.55. There for the ACC is maintaining better sales but managing its debts collection is not efficiently.

Debtors Collection Period:

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Debtors Collection Period is the time required to collect the outstanding amount from the customers. It means the quality of debtors, since it indicates the speed of their collection.

It can be ascertained by following formula:

Debtors Collection Period = No. of Days in a Year Debtors Turnover Ratio

[49]

Table:-06 The Table Showing Debtors Collection Period Year 2008-09 2009-10 2010-11 2011-12 2012-13 No. of Days in a Year 365 365 365 365 365 D.T.R 31.10 26.29 42.69 24.89 26.55 D.C.P 12 14 9 15 14

Chart:-06 The Chart Showing Debtors Collection Period

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400 350 300 250

365

365

365

365

365

No. of Days in a Year 200 150 100 50 0 2008-09 2009-10 2010-11 2011-12 2012-13 31.1 12 26.29 14 42.69 9 24.89 15 26.55 14 D.T.R D.C.P

Interpretation: The Table 1 revels that the debts collection period of ACC Cements . In 2003-04 to 2009-10 the debts collection period increasing trend. It indicates that the customers are not made payment promptly. but in the year 2010-11 the debts collection period

decreased to 9 days. It indicates that the customers had made the payment in time in the year. But in the year 2011-12 again the collection period is increasing 9 to 15 days.but in the year 2012-13 the debts collection period decreased 15 days to 13 days. This continues it is effects to liquidity position of the company.

[51]

Creditors Turnover Ratio:

This ratio shows the velocity of debt payment by the firm. It expresses the relationship between creditors and purchase.

A low turnover ratio reflects liberal credit terms granted by suppliers, while a high ratio shows that accounts are to be settled rapidly. The creditors turnover ratio is an important tool of analysis as a firm can reduce its requirement of current assets by relying of suppliers credit.

It is ratio between net credit purchase & the average amount of creditors outstanding during the year.

It is calculated by following formula:

Creditors Turnover Ratio = Net Purchase Average Creditors

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Table:-07 The Table Showing Creditors Turnover Ratio Year 2008-09 2009-10 2010-11 2011-12 2012-13 Net Purchase 30,37,70,823 37,12,88,997 34,09,07,386 38,39,44,340 422383354.32 Average Creditors 84,52,411 1,19,87,131 1,25,74,396 87,28,998 5624981.38 Ratio 35.93 30.97 27.11 43.98 75.09

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Chart:-07 The Chart Showing Creditors Turnover Ratio

450000000 400000000 350000000 300000000 250000000 200000000 150000000 100000000 50000000 0

422383354.3

Net Purchase Average Creditors Ratio 0 35.93 0 0 30.97 0 00 27.11 0 0 43.985624981.38 75.09 2008-09 2009-10 2010-11 2011-12 2012-13

Interpretation:

It may be inferred from Table 7 there is ups & downs in the ratio of credit turnover. The ratio is low in 2003-04 it indicates that the ACC Cements credit payment is not good i.e 22.19. It is not good to point of liquidity position but in 2011-12 & 2012-13 the credit payment of ACC is increasing i.e 43.98 & 75.09 respectively. it indicates that ACC has paying credit properly.

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Creditors Payment Period:

The Creditors Payment Period Ratio represents the average number of days taken by the firm to pay the creditors.

It is calculated by following formula:

Creditors Payment Period = No. of Days in a Year Creditors Turnover Ratio

[55]

Table:-08 The Table Showing Creditors Payment Period Year 2008-09 2009-10 2010-11 2011-12 2012-13 No. of Days in a Year 365 365 365 365 365 C.T.R 35.93 30.97 27.11 43.98 75.09 C.P.P 10 12 13 8 5

Chart:-08

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The Chart Showing Creditors Payment Period

400 350 300 250 No. of Days in a Year 200 150 100 50 0 2008-09 2009-10 2010-11 2011-12 2012-13 35.93 10 30.97 12 27.11 13 43.98 8 5 75.09 C.T.R C.P.P

365

365

365

365

365

Interpretation:

It may be found from Table 8 there is ups & downs in a credit payment period of ACC Cements . In the year 2003-04 the credit payment period of ACC is high i.e 16 days. It indicates the company is not maintaining credit payment properly. But in the year 2011-12 & 2012-13 the credit payment period is low ie 8 days & 5 days. It indicates that the ACC has taken less credit facility & paying the credit in time. It is good sign of company to utilizing the credit facility properly.

[57]

Working Capital Turnover Ratio:

This ratio indicates whether the working capital has been properly utilized in making sales or not. This ratio measures the efficiency with the working capital.

It is taken as one of the primary indicators of the short-term solvency of the business. It establishes the relationship with the net sales. This ratio represents the number of times the working capital is turned over in course of a year i.e. it measures the efficiency with which the working capital is being used by the firm.

It is calculated by following formula:

Working Capital Turnover Ratio = Cost of Goods Sold Net Working Capital

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Cost of Goods Sold = Sales Gross Profit

Net Working Capital = Current Assets Current Liabilities

Table:-09 The Table Showing Working Capital Turnover Ratio Year 2008-09 2009-10 2010-11 2011-12 2012-13 Cost of Goods Sold 34,66,84,070 44,63,21,775 39,75,61,561 44,09,36,818 495708694.15 Net Working Capital 2,80,65,747 2,76,04,367 2,76,79,552 4,09,83,960 21387935.87 Ratio 12.35 16.16 14.36 10.75 23.18

Chart:-09

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The Chart Showing Working Capital Turnover Ratio

495708694.2 500000000 450000000 400000000 350000000 300000000 250000000 200000000 150000000 100000000 50000000 0 2008-09 2009-10 2010-11 2011-12 2012-13 0 0 12.35 0 0 16.16 0 0 14.36 21387935.87 0 0 10.75 23.18 Cost of Goods Sold Net Working Capital Ratio

Interpretatio The Table 9 depicts of Working capital turnover ratio is decreasing trend. In the year 2003-04 & 2009-10 the ratio is high i.e 18.38 & 16.16 it shows the ACC is properly utilized the working capital for making the sales. It reflects the working capital management is efficient. But in the year 2011-12 the working capital turnover ratio is low compared the first four years i.e 10.75. It indicates the ACC is not properly utilized the working capital. It is not good to company; it affects the sales of the company.but in the year 2012-13 again increased i.e 23.18.

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Current Assets Turnover Ratio:

This ratio reveals the relationship between cost of goods sold and current assets. The higher ratio, the better is the condition of a firm in utilizing its current assets.

The higher the ratio, the better is the firm in utilizing its current assets. The lower the ratio indicates that investment in current assets has not brought commensurate gain to the firm.

It is calculated by following formula:

Current Assets Turnover Ratio = Total Sales Current Assets

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Table:-10 The Table Showing Current Assets Turnover Ratio Year 2008-09 2009-10 2010-11 2011-12 2012-13 Total Sales 39,05,65,568 48,90,14,708 46,82,83,461 51,18,17,364 573720167.78 Current Assets 6,07,17,987 7,11,81,059 6,36,58,413 9,25,79,781 72128952.41 Ratio 6.43 6.87 7.36 5.53 7.95

Chart:-10 The Chart Showing Current Assets Turnover Ratio

600000000 500000000 400000000 300000000 200000000 100000000 0 00 6.43 0 0 6.87 2008-09 2009-10 00 7.36 2010-11

573720167.8

Total Sales Current Assets Ratio 72128952.41 0 05.53 7.95 2011-12 2012-13

Interpretation:

The Table 10 shows that how the ACC Cements is utilized its Current Assets. In the year 2003-04 to 2010-11 the ratio is increasing 6.05 to 7.36 it indicates that ACC is utilizing its current assets more efficiently. It reflects the good current assets management. But in
[62]

the year 2011-12 the ratio is decreases 7.36 to 5.53. it indicates that the ACC is decreasing its current assets utilization. There for the ACC is inefficiently manage its current assets. But in the year 2012-13 the ratio is increases 5.53 to 7.95. it reflects the good current assets management.

Gross Operating Cycle:

The time lag between the Purchase of Raw Materials & Collection of cash for sale is Gross Operating Cycle. It refers to the sum of inventory period and debtors collection period.

It is calculated by following formula:

Gross Operating Cycle = Inventory Conversion Period + Debtors Collection Period

[63]

Table:-11 The Table Showing Gross Operating Cycle

[64]

Year 2008-09 2009-10 2010-11 2011-12 2012-13

I.C.P 61 42 42 45 19.72

D.C.P 12 14 9 15 13.75

G.O.C 73 56 51 60 33

Chart:-11 The Chart Showing Gross Operating Cycle

80 70 61 60 50 40 30 20 10 0 2008-09 2009-10 2010-11 2011-12 2012-13 12 14 9 15 19.72 13.75 42 56 51 42 45 I.C.P 33 D.C.P G.O.C 60

73

Interpretation:
[65]

The Table 11 revels that the ACC Cements is taking more days in 2008-09 i.e 73 days comparing to five years to convert the raw materials into finished products & the collection of debts. In 2010-11 the ACC has taken less days i.e 51 days to inventory conversion & debts collection. For seeing last five years the gross operating cycle of ACC is not good because it takes more time to conversion of inventory & also not effective in collection of debts. There for the ACC is not maintaining the efficient gross operating cycle.in 2012-13 the ACC has taken less days I,e 33.47 days to inventory conversion and debt collection.

Net Operating Cycle:

Net Operating Cycle is the time length between the payment for Raw Material purchases & the Collection of cash for sale. It is difference between Gross operating cycle & Creditors conversion period.

It is calculated by following formula:

Net Operating Cycle = Gross Operating Cycle Creditors Payment Period

[66]

[67]

Table:-12 The Table Showing Net Operating Cycle Year 2008-09 2009-10 2010-11 2011-12 2012-13 G.O.C 73 56 51 60 33.47 C.P.P 10 12 13 8 4.86 N.O.C 63 44 38 52 29

Chart:-12 The Chart Showing Net Operating Cycle

80 70 60 50 40 30 20 10 10 0 2008-09 2009-10 2010-11 2011-12 2012-13 12 13 8 4.86

73 63 56 51 44 38 33.47 29 60 52 G.O.C C.P.P N.O.C

[68]

Interpretation:

It may be inferred from Table 12 the Net operating cycle of the ACC Cements . there is ups & downs in the working capital period. In 2008-09 & 2011-12 the ACC is taking more days to complete the working capital operating cycle i.e 63 & 52 days comparing last five years. But in the remaining three years it takes lesser days to complete the working capital.

[69]

STATEMENT OF CHANGES IN WORKING CAPITAL

Particulars

As At 31st March 2007

As At 31st 2008

Effect on W.C March Increase Decrease

Current Assets: Closing Stock Deposits (Assets) Loans & Advances (Assets) Sundry Debtors Cash-in-hand Bank Accounts TOTAL 2,77,91,767 53,12,844 45,55,448 97,48,574 4,74,436 85,60,907 5,64,43,976 2,97,96,750 51,16,181 61,98,910 1,25,55,600 12,76,078 57,74,468 6,07,17,987 16,43,462 28,07,026 8,01,642 27,86,439 20,04,983 1,96,663

Current Liabilities GRANTS O.S.L Other Liabilities Salary Recoveries Security Deposit A/C Unpaid Salary/ Wages A/C 26,74,867 91,22,834 82,20,464 17,30,010 54,95,509 9,64,236 23,67,917 46,87,203 85,02,899 15,59,726 64,64,176 2,69,471 6,94,765 1,70,284 9,65,667 3,06,950 44,35,631 2,82,435

[70]

Duties & Taxes Sundry Creditors TOTAL

(-)5,57,980 1,22,75,102

3,48,437 84,52,411 38,22,691

9,06,418

Net Working Capital(CACL) Increase in Working Capital 1,15,46,812

3,99,25,041

3,26,52,240

1,65,18,935 1,15,46,812 2,80,65,747

2,80,65,747

2,80,65,747

1,66,87,434

1,66,87,434

Interpretation: In the above statement shows that changes in working capital in the year 2006-07 & 2008-09. It revels how the current assets & current liabilities are changes in the two years. The difference between current assets & current liabilities i.e. Net working capital of the two years is 2003-04 & 2008-09, Rs 1,65,18,935 & Rs 2,80,65,747 respectively. It shows the working capital increase Rs 1, 15, 46,812 in the year 2008-09 compare to 2006-07. In the current assets a) The closing stock increase Rs 20, 04,983 it indicates working capital is increased. b) The ACC is reducing its Deposits Rs 1, 96,663 in the year 2008-09. c) The loans & advances are increasing Rs 16, 43,462.
[71]

d) The Sundry debtors increasing Rs 28, 07,026. e) Cash-in-hand increasing Rs 8, 01,642. f) Bank Accounts are reduces Rs 27, 86,439.

In the current liabilities a) The ACC is reducing GRANTS Rs 3, 06,950. b) O.S.L reduces Rs 44, 35,631. c) Other liabilities increase Rs 2, 82,435. d) Salary Recoveries decreases Rs 1, 70,284. e) The security deposit A/C increases Rs 9, 65,667. f) The Unpaid salary A/C decreases Rs 6, 94,765. g) Duties & taxes increase Rs 9, 06,418. h) Sundry creditors decrease Rs 38, 22,691.

STATEMENT OF CHANGES IN WORKING CAPITAL

[72]

Particulars

As At 31st March 2008

As At 31st March 2009

Effect on W.C Increase Decrease

Current Assets: Closing Stock Deposits (Assets) Loans & Advances (Assets) Sundry Debtors Cash-in-hand Bank Accounts TOTAL 2,97,96,750 51,16,181 61,98,910 1,25,55,600 12,76,078 57,74,468 6,07,17,987 2,17,39,398 54,56,195 97,43,275 1,85,99,457 6,70,180 1,49,72,554 7,11,81,059 91,98,086 3,40,014 35,44,365 60,43,857 6,05,898 80,57,352

Current Liabilities GRANTS O.S.L Other Liabilities Salary Recoveries Security Deposit A/C Unpaid Salary/ Wages A/C Duties & Taxes Sundry Creditors 23,67,917 46,87,203 85,02,899 15,59,726 64,64,176 2,69,471 3,48,437 84,52,411 3,26,52,240 23,86,249 83,69,902 1,17,72,513 13,45,535 71,40,721 3,15,862 2,58,779 1,19,87,131 4,35,76,692 89,658 35,34,720 2,14,191 6,76,545 46,391 18,332 36,82,699 32,69,614

[73]

TOTAL 2,80,65,747 Net Working Capital(CACL) Decrease in Working Capital 2,80,65,747 2,76,04,367 4,61,380 2,80,65,747 4,61,380 1,98,91,551 1,98,91,551

Interpretation: In the above statement shows that changes in working capital in the year 2008-09 & 2009-10. It revels how the current assets & current liabilities are changes in the two years. The difference between current assets & current liabilities i.e. Net working capital of the two years is 2008-09 & 2009-10, Rs 2,80,65,747 & Rs 2,76,04,367 respectively. It shows the working capital decreases Rs 4, 61,380 in the year 2009-10 compare to 2008-09. In the current assets g) The closing stock decrease Rs 80, 57,352 it indicates working capital is decreased. h) The ACC is increasing its Deposits Rs 3, 40,014 in the year 2009-10. i) j) The loans & advances are increasing Rs 35, 44,365. The Sundry debtors increasing Rs 60, 43,857.

k) Cash-in-hand decreasing Rs 6, 05,898. l) Bank Accounts are increases Rs 91, 98,086.

In the current liabilities i) j) The ACC is increasing GRANTS Rs 18,332. O.S.L increasing Rs 36, 82,699.
[74]

k) Other liabilities increases Rs 32, 69, 614, l) Salary Recoveries decreases Rs 2, 14,191.

m) The security deposit A/C increases Rs 6, 76,545. n) The Unpaid salary A/C increases Rs 46,391. o) Duties & taxes decrease Rs 89,658. p) Sundry creditors increase Rs 35, 34,720.

STATEMENT OF CHANGES IN WORKING CAPITAL

Particulars

As At 31st March 2009

As At 31st March 2010

Effect on W.C Increase Decrease

[75]

Current Assets: Closing Stock Deposits (Assets) Loans & Advances (Assets) Sundry Debtors Cash-in-hand Bank Accounts TOTAL 2,17,39,398 54,56,195 97,43,275 1,85,99,457 6,70,180 1,49,72,554 7,11,81,059 2,41,59,121 53,43,330 83,61,565 1,09,67,229 14,18,252 1,34,08,917 6,36,58,413 7,48,072 15,63,637 24,19,723 1,12,865 13,81,710 76,32,228

Current Liabilities GRANTS O.S.L Other Liabilities Salary Recoveries Security Deposit A/C Unpaid Salary/ Wages A/C Duties & Taxes Sundry Creditors TOTAL 23,86,249 83,69,902 1,17,72,513 13,45,535 71,40,721 3,15,862 2,58,779 1,19,87,131 4,35,76,692 12,10,017 42,35,110 63,85,085 15,28,296 74,84,996 20,40,450 5,20,510 1,25,74,396 3,59,78,861 11,76,232 41,34,792 53,87,428 1,82,761 3,44,275 17,24,588 2,61,731 5,87,265

[76]

Net Working Capital(CACL) Increase in Working Capital

2,76,04,367 75,185

2,76,79,552

75,185

2,76,79,552

2,76,79,552

1,38,66,247

1,38,66,247

Interpretation:

In the above statement shows that changes in working capital in the year 2009-10 & 2010-11. It revels how the current assets & current liabilities are changes in the two years. The difference between current assets & current liabilities i.e. Net working capital of the two years is 2009-10 & 2010-11, Rs 2,76,04,367 & Rs 2,76,79,552 respectively. It shows the working capital increases Rs 75,185 in the year 2010-11 compare to 2009-10. In the current assets m) The closing stock increase Rs 24, 19,723 it indicates working capital is increased. n) The ACC is decreasing its Deposits Rs 1, 12,865 in the year 2010-11. o) The loans & advances are decreasing Rs 13, 81,710. p) The Sundry debtors decreasing Rs 76, 32,228. q) Cash-in-hand increases Rs 7, 48,072. r) Bank Accounts are decreases Rs 15, 63,637.

In the current liabilities

[77]

q) The ACC is decreasing GRANTS Rs 11, 76,232. r) O.S.L decreasing Rs 41, 34,792. s) Other liabilities decreases Rs 53, 87, 428,. t) Salary Recoveries increases Rs 1, 82,761. u) The security deposit A/C increases Rs 3, 44,275. v) The Unpaid salary A/C increases Rs 17, 24,588. w) Duties & taxes increase Rs 2, 61,731. x) Sundry creditors increase Rs 5, 87,265.

STATEMENT OF CHANGES IN WORKING CAPITAL

Particulars

As At 31st March 2010

As At 31st March 2011

Effect on W.C Increase Decrease

[78]

Current Assets: Closing Stock Deposits (Assets) Loans & Advances (Assets) Sundry Debtors Cash-in-hand Bank Accounts TOTAL 2,41,59,121 53,43,330 83,61,565 1,09,67,229 14,18,252 1,34,08,917 6,36,58,413 3,01,44,123 54,70,306 1,23,61,237 2,05,58,529 6,14,520 2,34,31,066 9,25,79,781 1,00,22,149 59,85,002 1,26,976 39,99,672 95,91,300 8,03,732

Current Liabilities GRANTS O.S.L Other Liabilities Salary Recoveries Security Deposit A/C Unpaid Salary/ Wages A/C Duties & Taxes Sundry Creditors TOTAL 12,10,017 42,35,110 63,85,085 15,28,296 74,84,996 20,40,450 5,20,510 1,25,74,396 3,59,78,861 50,65,378 50,26,959 2,30,58,959 8,40,850 87,75,717 21,535 77,426 87,28,998 5,15,95,821 20,18,915 4,43,084 38,45,398 6,87,446 12,90,721 38,55,361 7,91,849 1,66,73,874

[79]

Net Working Capital(CACL) Increase in Working Capital

2,76,79,552 1,33,04,408

4,09,83,960 1,33.04,408

4,09,83,960

4,09,83,960

3,67,19,942

3,67,19,942

Interpretation:

In the above statement shows that changes in working capital in the year 2010-11 & 2011-12. It revels how the current assets & current liabilities are changes in the two years. The difference between current assets & current liabilities i.e. Net working capital of the two years is 2010-11 & 2011-12, Rs 2,76,79,552 & Rs 4,09,83,960 respectively. It shows the working capital increases Rs 1, 33, 04,408 in the year 2011-12 compare to 2010-11. In the current assets s) The closing stock increase Rs 59, 85,002 it indicates working capital is increased. t) The ACC is increasing its Deposits Rs 1, 26,976 in the year 2011-12. u) The loans & advances are increasing Rs 39, 99,672. v) The Sundry debtors increasing Rs 95, 91,300. w) Cash-in-hand decreases Rs 8, 03,732. x) Bank Accounts are increases Rs 1, 00, 22,149.

In the current liabilities y) The ACC is increasing GRANTS Rs 38, 55,361.

[80]

z) O.S.L increasing Rs 7, 91,849. aa) Other liabilities increases Rs 1, 66, 73, 874,. bb) Salary Recoveries decreases Rs 6, 87,446. cc) The security deposit A/C increases Rs 12, 90,721. dd) The Unpaid salary A/C decreases Rs 20, 18,915. ee) Duties & taxes decrease Rs 4, 43,084. ff) Sundry creditors decrease Rs 38, 45,398.

[81]

STATEMENT OF CHANGES IN WORKING CAPITAL

Particulars

As At 31st March 2011

As At 31st March 2012

Effect on W.C Increase Decrease

Current Assets: Closing Stock Deposits (Assets) Loans & Advances (Assets) Sundry Debtors Cash-in-hand Bank Accounts TOTAL 3,01,44,123 54,70,306 1,23,61,237 2,05,58,529 6,14,520 2,34,31,066 9,25,79,781 23418932 5004655 11526293 21607761 717927 9853383 72128951 1049232 103407 13577683 6725191 465651 834944

Current Liabilities GRANTS O.S.L Other Liabilities Salary Recoveries 50,65,378 50,26,959 2,30,58,959 8,40,850 16226812 516000 12969587 158137 4510959 10089372 682713 11161434

[82]

Security Deposit A/C Unpaid Salary/ Wages A/C Duties & Taxes Sundry Creditors TOTAL

87,75,717 21,535 77,426 87,28,998

9496918 16021 224466 5624981 3104017 5514

721201

147040

Net Working Capital(CACL) 5,15,95,821 Increase in Working Capital 45232922 14087931

40983960

26896029 14087931

40983960

40983960

33633144

33633144

Interpretation:

In the above statement shows that changes in working capital in the year 2011-12 & 2012-13. It revels how the current assets & current liabilities are changes in the two years. The difference between current assets & current liabilities i.e. Net working capital of the two years is 2011-12 & 2012-13, Rs 40983960& Rs 26896029 respectively. It shows the working capital increases Rs 14087931 in the year 2012-13 compare to 2011-12. In the current assets

[83]

The closing stock decrease Rs 6725191 it indicates working capital is decreased. The ACC is decreasing its Deposits Rs 465651 in the year 2012-13. The loans & advances are decreasing Rs . 834944 The Sundry debtors increasing Rs 1049232. Cash-in-hand decreases Rs103407 Bank Accounts are decreases Rs 13577683.

In the current liabilities gg) The ACC is decreasing GRANTS Rs11161434. hh) O.S.L increasing Rs 4510959. ii) Other liabilities increases Rs 10089372,. jj) Salary Recoveries increases Rs 682713. kk) The security deposit A/C decreases Rs 721201. ll) The Unpaid salary A/C increases Rs 5514. mm) Duties & taxes decrease Rs 147040. nn) Sundry creditors increase Rs 3104017.

FINDINGS

1) In the Current Ratio shows that in the year 2012-13 the Liquidity position of the ACC Cements is less i.e 1.47 compare to all five years.

[84]

2) Quick ratio of the ACC Cements is increasing in the year 2012-13 to 0.96 compare with 2008-09 (0.95.). 3) The Inventory Turnover Ratio of the ACC Cements is decreased by 6.02 in the year 2008-09 compare to 2012-13 ratio i.e 18.51. & in 2011-12 again decreasing i.e 8.11 compared 2009-10 & 2010-11 i.e 8.66. 4) The ACC Cements has taken more days to convert the raw materials into finished products i.e 61 days in the year 2008-09. 5) Debtors turnover ratio of ACC is decreases i.e 26.55 in the year 2012-13 compared to 2010-11 i.e 42.69 & 2008-09 i,e. 31.10 6) The Debtors collection period of ACC Cements is increasing i.e 14 days in the year 2012-13 compare to the year 2008-09 i.e 12 days. 7) The Creditors Turnover Ratio of the ACC Cements is increasing to 75.09. in the year 2011-12 compare to 2008-09 ratio i.e 35.93. 8) Credit Payment Period of ACC Cements is also decreasing to 5 days in the recent year compare to 2008-09 i.e 10 days. 9) Working Capital Turnover Ratio of the ACC Cements is increasing in the recent year i.e 23.18 compare to 2008-09 the ratio is 12.35. 10) The Current Assets Turnover Ratio of ACC Cements is high in the recent year i.e 7.95 compare to last four years.

11) The ACC Cements has taken more days to complete the Net Operating Cycle i.e 63 days in the year 2008-09. . 12) In the statement of changes in Working capital for the year 2008-09 & 2009-10. The working capital decreasing Rs 4, 61,380 in the year 2009-10. 13) In the statement of changes in Working capital for the year 2009-10 & 2010-11. The working capital is increasing Rs 75,185 in the year 2010-11. 14) In the statement of changes in Working capital for the year 2010-11 & 2011-12. The working capital is increasing Rs 1, 33, 04,408 in the year 2011-12. 15) In the statement of changes in Working capital for the year 2011-12 & 2012-13. The working capital is increasing Rs 1, 40,87,931 in the year 2012-13.

[85]

16) The study is shows that the ACC Cements has not using latest technology & also there is excess work force on some departments than required.

17) The ACC Cements is not having any Freedom in Marketing & Promotional activities, because most of the decisions are taken

SUGGESTION

1) It is suggested that the ACC has to reduce Inventory and increases investment in the form of quick assets, so that it can maintain good liquidity position. 2) In the recent years, the debt turnover ratio of ACC is decreases so, it is suggested to increases the debt turnover it help to maintain the debt collection. 3) In the recent years, the debts collection period of ACC is increasing, So it is advised to ACC to reduce the collection period, so that it can maintain sufficient liquid working capital. 4) The study of Inventory utilization ratio of ACC not properly utilized their inventory. It is advised to adopt scientific inventory management to improve working capital. 5) The working capital turnover ratio in decreasing trend in the recent year, it is suggested to ACC to increase working capital turnover ratio, so that it can maintain a sufficient working capital. 6) It is suggested that ACC reduce its operating cycle, so that it can maintain sufficient working capital in the liquid form. 7) The current assets turnover ratio is in the recent year, it is suggested to ACC increase current assets turnover, so that it can generate more revenue by investing in the current assets. 8) It is suggested that ACC should reduce the time length of Net operating cycle by taking appropriate measures.

[86]

9) ACC should have to appoint skilled and qualified employees and also new technology in machineries. It increases efficiency and quality of the firm. 10) ACC should have to computerize all the departments in order to increase efficiency and productivity of employees. 11) ACC should have take sales promotion measures like free home delivery to urban consumers. This help to increase the market share through increase sales.

CONCLUSION

The study of Working Capital Management in the ACC is satisfactory. I got more information on working capital management of the ACC, it is more helpful to my study. The study of last five years liquidity position of the company is better. In last five years company is facing several problems in finance & Marketing promotional activities. ACC has suffered losses due to financial problems & less quantity of cement supply in the previous years but in the recent year it is better position. It shows that ACC is improving its financial conditions & also utilizing its assets & resources properly. If ACC continues the same performance as in the current financial year, it can earn more profits.

[87]

BIBLIOGRAPHY

I.M. Pandey Financial Management. Vikas Publishing House Pvt. Ltd. M.Y. Khan and P. K. Jain Financial Management. Tata Mcgraw Hill publishing company Ltd. New Delhi. Prasanna Chandra Fundamentals of Financial Management. Tata Mcgraw Hill Publishing Company Ltd. New Delhi.

[88]

BALANCESHEET FOR THE YEAR ENDING (2008-09)

Liabilities

Amount

Amount

Assets

Amount

Amount

[89]

Capital Accounts Reserves & Surplus Share Capital-A Class Share Capital-B Class Share Suspense 4,90,07,356 1,41,82,384 2,00,00,000 3,18,240

8,35,07,980

Fixed Assets FIXED ASSETS 9,05,71,545

9,05,71,545

Investments INVESTMENTS 73,10,520

73,10,520

Loans (Liability) Secured Loans 11,27,19,511

11,27,19,511

Current Assets Closing Stock Deposits (Asset) 297,96,750 51,16,181 61,98,910

6,07,17,987

Current Liabilities GRANTS O.S.L Other Liabilities Salary Recoveries Security Deposit A/C Unpaid A/C Duties & Taxes Sundry Creditors 3,48,437 84,52,411 Salary/Wages 23,67,917 46,87,203 85,02,899 15,59,726 64,64,176 2,69,471

3,26,52,240

Loans & Advances ( Asset) Sundry Debtors Cash-in-hand Bank Accounts

1,25,55,600 12,76,079 57,74,468

Profit & Loss A/C Opening Balance Current Period Less: Transferred 7,80,49,726 (-)76,24,062 1,45,985

7,02,79,678

22,88,79,731

22,88,79,731

[90]

BALANCESHEET FOR THE YEAR ENDING (2009-10)

Liabilities

Amount

Amount

Assets

Amount

Amount

[91]

Capital Accounts Reserves & Surplus Share Capital-A Class Share Capital-B Class Share Suspense 4,90,26,583 1,71,70,800 2,00,00,000 2,76,153

8,64,73,536

Fixed Assets FIXED ASSETS 8,88,54,612

8,88,54,612

Investments INVESTMENTS 44,24,600

44,24,600

Loans (Liability) Secured Loans 10,60,42,793

10,60,42,793

Current Assets Closing Stock Deposits (Asset) 2,17,39,398 54,56,195 97,43,275

7,11,81,059

Current Liabilities GRANTS O.S.L Other Liabilities Salary Recoveries Security Deposit A/C Unpaid A/C Duties & Taxes Sundry Creditors 2,58,779 1,19,87,131 Salary/Wages 23,86,249 83,69,902 1,17,72,513 13,45,535 71,40,721 3,15,862

4,35,76,692

Loans & Advances ( Asset) Sundry Debtors Cash-in-hand Bank Accounts

1,85,99,457 6,70,179.72 1,49,72,554

Profit & Loss A/C Opening Balance Current Period 7,02,79,678 13,53,072

7,16,32,750

23,60,93,021

23,60,93,021

[92]

BALANCESHEET FOR THE YEAR ENDING (2010-11)

Liabilities

Amount

Amount

Assets

Amount

Amount

[93]

Capital Accounts Reserves & Surplus Share Capital-A Class Share Capital-B Class Share Suspense 45,89,82,280 1,98,53,156 2,00,00,000 2,76,153

9,91,11,588

Fixed Assets FIXED ASSETS 9,51,47,041

9,51,47,041

Investments INVESTMENTS 45,08,600

45,08,600

Loans (Liability) Secured Loans 9,83,44,158

9,83,44,158

Current Assets Closing Stock Deposits (Asset) 2,41,59,121 54,43,330 83,61,565

6,36,58,413

Current Liabilities GRANTS O.S.L Other Liabilities Salary Recoveries Security Deposit A/C Unpaid A/C Duties & Taxes Sundry Creditors 5,20,510 1,25,74,396 Salary/Wages 12,10,017 42,35,110 63,85,085 15,28,296 74,84,996 20,40,450

3,59,78,861

Loans & Advances ( Asset) Sundry Debtors Cash-in-hand Bank Accounts

1,09,67,229 14,18,252 1,34,08,917

Profit & Loss A/C Opening Balance Current Period 7,16,32,750 (-)15,12,197

7,01,20,553

23,34,34,608

23,34,34,608

[94]

BALANCESHEET FOR THE YEAR ENDING (2011-12)

Liabilities

Amount

Amount

Assets

Amount

Amount

Capital Accounts Reserves & Surplus Share Capital-A Class Share Capital-B Class Share Suspense

5,86,28,480 1,98,53,156 2,00,00,000 27,76,181

10,12,62,817

Fixed Assets FIXED ASSETS 9,45,61,804.12

9,45,61,804

Investments INVESTMENTS 45,35,600

45,35,600

Loans (Liability) Secured Loans 8,87,10,194

8,87,10,194

Current Assets Closing Stock Deposits (Asset) 3,01,44,123 54,70,306 1,23,61,237

9,25,79,781

Current Liabilities GRANTS O.S.L Other Liabilities Salary Recoveries Security Deposit A/C Unpaid Salary/Wages 50,65,378 50,26,959 2,30,58,959 8,40,850 87,75,717 21,535

5,15,95,821

Loans & Advances ( Asset) Sundry Debtors Cash-in-hand Bank Accounts

2,05,58,529 6,14,520 2,34,31,066

Profit & Loss A/C

4,98,91,648

[95]

A/C Duties & Taxes Sundry Creditors 77,426 87,28,998

Opening Balance Current Period

7,01,20,553 (-)2,02,28,905

24,15,68,833

24,15,68,833

[96]

BALANCESHEET FOR THE YEAR ENDING (2012-13)

Liabilities

Amount

Amount

Assets

Amount

Amount

Capital Accounts Reserves & Surplus GOVT LOAN Share Capital-A Class Share Capital-B Class Share Suspense 3,98,37,180.33 9,60,480,00 2,23,59,800.00 2,00,00,000.00 29,05,700.00

8,60,63,160.54

Fixed Assets FIXED ASSETS 10,12,78,755.23

10,12,78,755.23

Investments INVESTMENTS 2,20,57,600.00

2,20,57,600.00

Current Assets Loans (Liability) Secured Loans 8,23,63,231.00 8,23,63,231.00 Closing Stock Deposits (Asset) Loans & Advances Current Liabilities GRANTS O.S.L Other Liabilities Salary Recoveries Security Deposit A/C Unpaid Salary/Wages A/C 1,62,26,812.26 5,16,000.00 1,29,69,587.32 1,58,137.58 94,96,918.12 Profit & Loss A/C Opening Balance 16,021.00 Current Period 4,97,39,737.83 5,07,41,016.54 ( Asset) Sundry Debtors Cash-in-hand Bank Accounts 2,16,07,761.25 7,17,926.95 98,53,383.67 2,34,18,932.26 50,04655.50 1,15,26,292.78

7,21,28,952.41

2,37,02,100.44

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Duties & Taxes Sundry Creditors Amrut yojane AYDCS contribution NDDB loan suspence 2,24,465.88 56,24,981.88 -6,27,746.00 63,15,409.00 -1,79,570.00

Less;transferred

-70,14,282.39 1,90,23,355.00

21,91,67,408.08

21,91,67,408.08

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