Professional Documents
Culture Documents
Declaration
We hereby declare that the project report on Impact of Working Capital
Management on Profitability of GOKUL REFOILS AND SOLVENT LTD.
has been submitted in partial fulfillment as the requirement for the degree of
Master of Business Administration to K.S. School of Business Management.
This research project is our original work and not presented in any other university
or college for an award of degree or certificate.
Sign:
Place: Ahmedabad
Bijal B. Desai
Sweety J. Patel
Bhoomi H. Shah
Sign:
Place: Ahmedabad
Mr. Ismail Bootwala
Professor,
K. S. School of Business
Management,
Gujarat University,
Ahmedabad.
Acknowledgement
Every project big or small is successful largely due to the efforts of a number of
wonderful people who have always given their valuable advice or lent a helping
hand. We sincerely appreciate the inspiration; support and guidance of all those
people who have been instrumental in making this project a success.
We, (Bijal, Sweety, Bhoomi) the students of K. S. School of Business
Management, are extremely grateful to GOKUL REFOILS AND
SOLVENT LIMITED GRSL for the confidence bestowed in us.
With warm regards, we would like to thank Mr. Bipin Thakkar, Whole
time Director of GRSL, for allowing us to carry a research on Impact of
Working Capital Management on Profitability of GRST.
We are also thankful to Mr. Manish Kella, Chief Finance Officer of GRSL,
for spending his valuable time with us and sharing information about GRSL
openly.
We are thankful to Dr. Savita Gandhi, Director of K. S. School of Business
Management, who has given us such a wonderful opportunity to explore our
potential.
We express our gratitude to our Project Guide - Mr. Ismail Bootwala, for
providing us continuous guidance and inspiration throughout the Project.
We would also like to thank Mr. Maulik Desai, Ms. Hiral Parikh, Ms. Nili
Shah (Professors of K. S. School of Business Management) for their kind
help and support in our project work.
Last but not the least all the people, who directly or indirectly helped us, deserved
our sincere thanks for their co-operation and support.
Executive Summary
The main purpose of this Research is to empirically test the Impact of Working
Capital Management on Profitability of Gokul Refoils and Solvent Ltd
(GRSL).
Here, Return On Investment (ROI) is used as a measure of Profitability.
While, Raw Material Conversion Period (RMCP), Work-in-Progress
Conversion Period (WIPCP), Inventory Conversion period (ICP), Finished
Goods Conversion Period (FGCP), Debtors Collection Period (DCP),
Creditors Payment Period (CCP), Cash Conversion cycle (CCC) are used as
criteria for knowing about Working Capital Management.
To be familiar with current Working Capital Policy of GRSL, the interview
of its CFO has been taken. Pearsons Correlation method is used to
identify the Relationship between Working Capital criterion and ROI. A
model is developed to predict ROI by Working Capital criterion, Multiple
Regression method is used. For such analysis, last six years Annual
Reports of GRSL have been used.
The Research finds that in GRSL, the Debtors Collection period and Cash
Conversion Cycle are having a negative relationship with ROI, while
Inventory Conversion period and Creditors Payment Period are having a
positive relationship with ROI.
Based on our findings, it can be concluded that GRSL can increase its ROI by
reducing Debtors Collection period and increasing Creditors Payment Period. It
can also increase its ROI by maintaining a reasonable level of stock to avoid stock
out situation and by reducing Cash conversion cycle for optimum utilization of
resources. The model developed under this research can be helpful to GRSL while
framing its policy of Working Capital to achieved predetermined ROI.
Table of Content
Serial
Particular
no.
Page
No.
-
1.
Declaration
2.
Acknowledgement
3.
Executive Summary
4.
Abbreviation
5.
6.
7.
Chapter Three:
I.
10
11
Industry
II.
14
Gokul Foundation
Gujarat
Gokul
Power
Limited
(GGPL)
Gokul Overseas
Major Competitors
8.
Research Objectives
35
36
General Objectives
Specific Objectives
9.
ii.
Research Methodology
38
iii.
Scope of Research
39
40
Capital
10.
Chapter Six:
I.
Data collection
53
54
Personal Interview
Annual Reports of GRSL
II.
Data Analysis
Assumptions
Operating Cycle
Correlation
Multiple Regression
61
11.
Chapter Seven:
83
Findings
Suggestions
Limitations
12.
Bibliography / Webography
13.
Annexure
89
-
Abbreviation
GRSL:
ROI:
Return On Investment
RMCP:
WIPCP:
FGCP:
ICP:
DCP:
CPP:
CCC:
1|Pa g e
CHAPTER ONE:
Introduction to
Project
2|Pa g e
Introduction to Project
The research is on Impact of Working Capital Management on Profitability of
GOKUL REFOILS AND SOLVENT LTD. It aims to evaluate the relationship
between two variables:
A. Working Capital Management
B. Profitability.
Working capital management is the ability to control effectively and efficiently the
current assets and current liabilities in a manner that provides the firm maximum
Return on its Assets. Working capital is regarded as the result of the time lag
between the expenditure for the purchase of raw material and the collection for the
sale of the finished goods.
The way of managing working capital can have a significant impact on both
the liquidity and profitability of the company (Shin & Soenen, 1998).The main
purpose of any firm is to maximize profit. But, maintaining liquidity of the firm is
also an important objective. The problem is that increasing profits at the cost of
liquidity can bring serious problems to the firm. Thus, strategy of firm must
maintain a balance between these two objectives of the firms.
Working capital management is one of the most important functions of
financial management. All the individual components of working capital including
cash, stock, Account receivable, Account Payables play a vital role in the
performance of any firm. Referring to theory of risk and return, investment with
more risk will result to more return. Thus, firms with high liquidity of working
capital may have low risk and low profitability. Conversely, a firm that has low
liquidity of working capital faces high risk which results to high profitability.
3|Pa g e
For determining Working Capital Policy of Gokul Refoils and Solvent Ltd (GRSL)
Operating Cycle method is used in Project.
Correlation method has been used for identifying the Relationship between
Profitability (ROI) and Working Capital Policy.
For determining the impact on Dependent Variable due to Change in Independent
variables Multiple Regression method is used.
Independent Variables:
Raw Material Conversion
Period (RMCP)
Work-in-Progress Conversion
Period (WIPCP)
Finished Goods Conversion
Period (FGCP)
Debtors Collection Period
(DCP)
Creditors Payment Period
(CCP)
Dependent Variable:
Return On
Investment (ROI)
The main purpose of the project (Research Study) is to identify the ways
through which GRSL can increase its Profitability.
4|Pa g e
Chapter Two:
Literature Review
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REVIEW OF LITERATURE
Various studies have analyzed the relationship of Working Capital Management
(WCM) and Firms Profitability in various markets. The results are quite mixed,
but a majority of studies conclude a negative relationship between Working Capital
Management and Firms Profitability. The studies reviewed have used various
variables to analyze the relationship, with different methodology. This section
presents the chronology of major studies related to this study in order to assess and
identify the research gap.
study
found
NEGATIVE
RELATIONSHIP
between
the key findings from the study it had been concluded that the
management of a firm can create value for their shareholders by
reducing the number of days accounts receivable and by increasing
their inventories to a reasonable level. Firms can also take long to pay
their creditors in as far as they do not strain their relationships with
these creditors.
Ebrati (2012)
(Department of Accounting, Tabriz branch, Islamic Azad University (IAU),
Tabriz, Iran) They study the relationship of working capital management on
performance of firms Listed in Tehran Stock Exchange (TSE). Average
Collection Period, Inventory Turnover in days, Average Payment Period,
Cash Conversion Cycle, and Net Trading Cycle were used to assess working
capital management, and Net Operating Profitability was used to assess
firms' performance.
The findings of studying 50 firms during the period between 2006 and
2009 by using an Ordinary Least Square Method (OLS) showed that
there would be a negative and significant relationship between the
variables of Average Collection Period, Inventory Turnover in day,
Average Payment Period, Net Trading Cycle and the performance of
firms Listed in Tehran Stock Exchange (TSE).
There were no evidences to prove the existence of a significant
relationship between Cash Conversion Cycle and the firm's
performance (NOP) for all years from 2006 to 2009.
The results showed that the increase in Collection Period, Payment
Period, and Net Trading will lead towards the reduction of
profitability in the firm. In other words, managers can increase the
profitability of their firms reasonably, by reducing Collection Period,
Inventory Turnover, and Payment Period.
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relationship between these two, the author collected secondary data from
Glaxo Smith Kline pharmaceutical company registered in Karachi stock
exchange for the period of 1996-2011.
For this purpose, they use variable of return on assets ratio to measure
the profitability of company and variables of account receivable
turnover, creditors turnover, inventory turnover and current ratio as
working capital management criteria.
The results of the research show that there is a significant impact of
the working capital management on profitability of company.
Therefore, managers may enhance the profitability of their firms by
minimizing the inventory turnover, account receivables ratio and by
decreasing creditors turnover ratios but there is no significant effect of
increasing or decreasing the current ratio on profitability. So, the
results indicate that through proper working capital management the
company can increase its profitability.
This study will benefit the Pharmaceutical companies in the
management of their working capital in such an efficient manner so
that they can multiply their profitability.
9|Pa g e
Chapter Three:
I.
II.
Gokul
Power
Limited
(GGPL)
Gokul Overseas
Major Competitors
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i. Brief Overview of
Indian Edible Oil Industry:
Edible oils constitute an important component of food expenditure in Indian
households. It has its own importance in a country like India where different
varieties of food are considered very special and edible oil of good quality adds the
flavour and authenticity to the food.
Historically, India has been a major importer of edible oils with almost 30-40% of
its requirements being imported till 1980s. In 1986, the Government of India
established the Technology Mission on Oilseeds and Pulses (TMOP) in order
to enhance the production of oilseeds in the country. The TMOP launched special
initiatives on several critical fronts such as
Improvement of oilseed production and processing technology;
Additional support to oilseed farmers and processors and
Enhanced customs duty on the import of edible oils.
Consequently, there was a significant increase in oilseeds area, production, and
yields until the late-1990s.
The share of branded oils segment has remained low over the years; it is poised for
growth in view of rising income levels, increase in population, uptrend in
urbanization and increasing quality consciousness of Indian consumers.
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Gokul Refoils and Solvent Limited (GRSL) is one of the leading FMCG
Companies of India with international presence, dealing in edible oils
such as,
Soya bean oil,
Cottonseed oil,
Palm oil (Palmolein),
Sunflower oil,
Mustard oil,
Groundnut oil,
Vanaspati
Industrial oils such as Castor Oil.
It is an ISO 22000:2005 certified company with a wide customer base
spread globally.
Today, GRSL stands as a Multinational conglomerate with its
subsidiaries located strategically at key world business centres.
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Mission:
To reach every kitchen of Indian family by delivering best quality
products with delicious taste.
To become a true Indian MNC with Pan India presence and
operations across the globe.
To develop most preferred and admired edible oil brands in India.
To create best value proposition to investors, vendors & society.
To uphold the principles of Corporate Governance.
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Leadership
Board of Directors
Mr. Balvantsinh Rajput
Mr. Kanubhai Thakkar
Mr. Bipinbhai Thakkar
Dr. Dipuda devada
Mr. Piyushchandra Vyas
Mr. Karansinhji Mahida
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HISTORY
1992
1994
1999
The Company set up a 200 TPD Seed processing & Solvent plant &
200 TPD Refinery.
2002
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2003
2005
2006
The Company setup four Wind mills of 1.25 MW each and cogeneration power plant of 750 KWH in Kutch
2007
2008
The Company got listed on the Indian stock exchange. IPO was 5.5
times oversubscribed
2009
The Company setup a 1,100 TPD Refinery and a 2.4 MW cogeneration plant at Haldia, West Bengal
2010
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Subsidiaries
In order to expand its scale of operations and have a global presence, GRSL set up
two wholly owned subsidiaries in Mauritius and Singapore.
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GRSL has two major brands in edible oil category and these brands
are available in different sizes and for nearly 2 decades. The two brands encompass
healthy cooking oil ranges full of flavour and quality. The two brands are:
1. Gokul:
2. Zaika:
Gokul Brand is a premium edible oil brand very well known for its purity,
freshness and its superior quality by the loyal customers.
The backdrop of the consumer preference and support has pushed the brand
to the top five positions in the country.
Vanaspati
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Products
Consumer Products:
Industrial Products:
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Distribution
The distribution chain of the GRSL is wide spread in the country with
international presence in many foreign countries. It has four operational
production units producing edible oils that are distributed to various parts of the
country and abroad.
In the domestic market in India GRSL has distribution network in
almost every state of India reaching to 20 states of India. The operations and
promotions of the products are achieved through the far spread C & F agents,
Company depots, Distributors, Brokers & Retailer. Company products have
presence over more than one lakh retail shops.
States covered are: J&K, Himachal Pradesh , Punjab, Haryana, Delhi,
Uttarakhand, Rajasthan, U.P., Gujarat, Maharastra, M.P., Bihar, Jharkhand,
Chhattisgarh, Orissa, West Bengal, Assam, Meghalaya, Arunachal, Nagaland,
Tripura, Manipur & Mizoram.
GRSL is an organized player and distribute its products through
various domestic and international destinations through well defined transportation
channels. It transports its products through Road ways, Railways and Sea Routes
as modes of transportation to distribute & sell its products.
Import of crude oils is done through sea routes. Presence of GRSL
plants at strategic locations of Kandla & Haldia helps in reducing import freight
cost and also ensures timely reach of the products.
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Distribution Channel:
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The journey of GRSL from the year 1992 to this stage has been appreciated
through various Awards awarded by recognized and reputed organizations.
Awards:
SEA Award in the year 2006-2007 & 2004-05 for Highest Exporter of
Rapeseed Extraction.
Oil Man of the year award from GLOBOIL India
in the Year
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The company has felt the requirement that it owes to the society
and has therefore contributed for its upliftment from time to time. The company set
up a social service foundation in the year 1999 with an effort to create social
awareness, well being and upliftment of the people.
Gokul Group of Companies have established educational complex for
hundreds of unprivileged children of backward classes for good education
with facility of hostel accommodation free of cost.
In addition, Scholarship are offered to ensure proper and continuous
education to all.
Moreover, old age homes are established as a social service initiative.
Gokul group of companies also maintain very well equipped hospital facility
near its plant locations serving around 25000-26000 people during a year.
Various awareness camps, health camps like Children Medical Camp, Eye Camp
and tournaments like inter village football championship are held to develop a
social atmosphere.
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Gokul Foundation
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Gokul Overseas
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Major Competitors
1. Ruchi Soya Industries Limited:
Ruchi Soya Industries Limited is one of the
major company in this field, it is a number
1 company in India based on turnover. It is
a part of Ruchi Group, headquartered in
Indore, Madhya Pradesh. The company is
mainly engaged in manufacturing and
selling of the edible oils.
The company offers a wide range of edible oil products under different brand
names such as Nutrela and Mahakosh where Nutrela is one of its famous
brand.The company is having different categories alomg with the brand they areRuchi Gold, Mandap, Nutrela Soyumm and Sunrich. It is one of Indias leading
edible oil brand supplier.
Adani Wilmar
Limited
(AWL)
is
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A refinery has been set up by AWL at Mundra, Gujarat which has been Indias
most sophisticated as well as largest oil refinery. In 2000, a brand name Fortune
for edible oils is being introduced. Apart from that it is a proud owner of brands
Kings, Raag, Bullet, Fryola, Jublee etc. The Company is also involved in the
manufacturing and selling of Specialty fats.
3. Marico:
Marico was founded in the year 1987
headquartered in Mumbai, Maharashtra. Its
product portfolio includes edible oil, hair
oils, skin care and other consumer products.
If we talk about edible oils it offers a famous
brand known as Saffola which is marketed
under the name New Saffola, Tasty and
Active.
The company also offers a wide range of Rice Bran oil, Kardi oil or Safflower oil,
Corn oil and Soya oil. It is one of Indias leading consumer product company.
Saffolalife is educating Indians about heart care. Saffola has built an ecosystem
which works for adopting healthier lifestyle.
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Chapter Four:
Research Overview
i. Research Objectives
General Objectives
Specific Objectives
ii. Research Methodology
iii. Scope Of Research
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i. Research Objectives
General Objectives:
1. To identify Working Capital Policy of Gokul Refoils and Solvent Ltd
(GRSL).
2. To examine the relationship between working capital Policy and
profitability (ROI) of GRSL.
Specific Objectives:
1. To examine whether there is a significant relationship between Inventory
Conversion Period (ICP) and Profitability (ROI) of the firm.
To identify the relationship between Raw Material conversion period
(RMCP) and Profitability (ROI) of the firm.
To identify the relationship between Work-in-Progress conversion
period (WIPCP) and Profitability (ROI) of the firm.
To identify the relationship between Finished Goods conversion
period (FGCP) and Profitability (ROI) of the firm.
2. To determine whether there is a significant relationship between Debtors
Collection Period (DCP) and Profitability (ROI) of the firm.
3. To examine whether there is a significant relationship between Creditors
Payment Period (CPP) and Profitability (ROI) of the firm.
4. To ascertain whether there is a significant relationship between Cash
Conversion Cycle (CCC) and Profitability (ROI) of the firm.
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5. The main Objective of the research is to establish a Model which can help
GRSL to predict impact on ROI (Return On Investment) due to change in
Working Capital Policy.
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Primary Sources:
Primary Data has been collected by interviewing Mr. Manish Kella, Chief
Finance Officer (CFO) of Gokul Refoils and Solvent Ltd (GRSL).
Secondary Sources:
We have collected Secondary Data from the Annual Reports (Financial
Statements) of GRSL.
A number of books were referred to understand the Theoretical Concepts
related to Project work.
o Financial Concepts.
o Correlation and Multiple Regression concepts.
For collecting Information related to company, website of the company has
been visited.
Website- www.gokulgroup.com
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Chapter Five:
Concepts of
Working Capital
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Working capital
Working Capital is the capital available for conducting day to day operations of the
business. It consists of current assets and current liabilities.
Working
capital
management:
Working
capital
management
is
the
Current assets
Current liabilities
Inventories
Trade payables
Trade receivables
Bank overdraft
Cash/Bank Balance
Value
Gross
Working
Capital
Time
Net
Working
Capital
Permanant
Temporary
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Receivables Management:
Given a choice, every business would prefer selling its produce on cash
basis. However, due to factors like trade policies, prevailing marketing
conditions, etc., businesses are compelled to sell their goods on credit. In
certain circumstances, a business may deliberately extend credit as a strategy
of increasing sales. Extending credit means creating a current asset in the
form of Debtors or Accounts Receivable. Investment in this type of
current assets needs proper and effective management as it gives rise to costs
such as:
Cost of carrying receivable (payment of interest etc.)
Cost of bad debt losses
Thus the objective of any management policy pertaining to accounts
receivables would be to ensure that the benefits arising due to the
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receivables are more than the cost incurred for receivables and the gap
between benefit and cost increases resulting in increased profits. An
effective control of receivables helps a great deal in properly managing it.
Cash Management:
Cash is the most liquid current asset. It is of vital importance to the daily
operations of business. While the proportion of assets held in the form of
cash is very small, its efficient management is crucial to the solvency of the
business. Therefore, planning cash and controlling its use are very important
tasks. Cash budgeting is a useful device for this purpose.
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2. Scale of Operations:
There is a direct link between the working capital and the scale of
operations. In other words, more working capital is required in case of big
organizations while less working capital is needed in case of small
organizations.
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3. Business Cycle:
The need for the working capital is affected by various stages of the business
cycle. During the boom period, the demand of a product increases and sales
also increase. Therefore, more working capital is needed. On the contrary,
during the period of depression, the demand declines and it affects both the
production and sales of goods. Therefore, in such a situation less working
capital is required.
4. Seasonal Factors:
Some goods are demanded throughout the year while others have seasonal
demand. Goods which have uniform demand the whole year their production
and sale are continuous. Consequently, such enterprises need little working
capital.
On the other hand, some goods have seasonal demand but the same are
produced almost the whole year so that their supply is available readily
when demanded. Such enterprises have to maintain large stocks of raw
material and finished products and so they need large amount of working
capital for this purpose. Example: Woolen mills.
5. Production Cycle:
Production cycle means the time involved in converting raw material into
finished product. The longer this period, the more will be the time for which
the capital remains blocked in raw material and semi-manufactured
products. Thus, more working capital will be needed.
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6. Credit Allowed:
Those enterprises which sell goods on cash payment basis need little
working capital but those who provide credit facilities to the customers need
more working capital.
7. Credit Availed:
If raw material and other inputs are easily available on credit, less working
capital is needed. On the contrary, if these things are not available on credit
then to make cash payment quickly large amount of working capital will be
needed.
8. Operating Efficiency:
Operating efficiency means efficiently completing the various business
operations. Operating efficiency of every organization happens to be
different.
Some such examples are: (i) converting raw material into finished goods at
the earliest, (ii) selling the finished goods quickly, and (iii) quickly getting
payments from the debtors. A company which has a better operating
efficiency has to invest less in stock and the debtors.
Therefore, it requires less working capital, while the case is different in
respect of companies with less operating efficiency
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9. Level of Competition:
High level of competition increases the need for more working capital. In
order to face competition, more stock is required for quick delivery and
credit facility for a long period has to be made available.
10. Inflation:
Inflation means rise in prices. In such a situation more capital is required
than before in order to maintain the previous scale of production and sales.
Therefore, with the increasing rate of inflation, there is a corresponding
increase in the working capital.
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Liquidity and profitability are both the two different sides of same coin.
Optimum level of liquidity guarantees a firm to meet their short term debts and
the proper management of flow can be promised by a profitable business.
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Thus, strategy of firm must maintain a balance between these two objectives of
the firms. Dilemma in working capital management is to achieve desire tradeoff
between liquidity and profitability (Smith, 1980; Raheman & Nasr, 2007).
Referring to theory of risk and return, investment with more risk will result to
more return. Thus, firms with high liquidity of working capital may have low
risk and low profitability. Conversely, a firm that has low liquidity of working
capital faces high risk which results to high profitability.
The purpose of working capital management is to manage firms liquidity so as
to maintain efficient profitability. In most of the cases its been seen that there
is always a negative relationship between liquidity and profitability. Therefore,
one is complementary to each other. Sound profitability increases the profit of
the firm where liquidity helps maintaining the operation of the firm.
Firms can achieve optimal management of working capital by making the
trade-off between profitability and liquidity.
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Chapter Six:
I.
Data collection
Personal Interview
Annual Reports of GRSL
II.
Data Analysis
Assumptions
Operating Cycle
Correlation
Multiple Regression
53 | P a g e
I. Data collection
To analyze the Working Capital Policy of GRSL, the data has been gathered
through Interview and last SIX years Annual Reports of GRSL.
A. Personal Interview:
We
have
taken
Personal
Interview
of
Mr.
Manish
Kella,
CFO (Chief Finance Officer) of GRSL, on March 29, 2015. Firstly, we have told
them about our project research in brief. He was pleased by knowing about our
project research. After of that, he was ready to answer our questions. Following are
the questions which were raised by us and the answers were given by him openly.
GRSL is into edible oil industry. Its domestic Raw Material mainly includes Castor
seeds, Mustard seeds, Soya seeds, Crude soya oil and packing material.
For its refining activity, the company mainly imports Soya Degum Oil and
Crude Palm Oil.
While for its crushing activity, the company procures seeds from farmer,
APMCs, Mandis, Traders and commission agents spread over the soya belt
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The processing time involved in the activity is negligible. Till the oil is extracted
and refined, the stocks are treated as Raw Material. The company estimates 1 to 2
days for this activity.
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iii.
The company has established marketing network across India through C & F
agents, dealers etc. The company has to maintain sufficient quantity of Finished
Goods for uninterrupted supply to their dealers/retailers spread over 26 states in
India which require adequate holding of Finished Goods. Accordingly, a holding
level of about 1 month is assumed for Finished Goods.
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4. What could be the reasons behind huge loss in the year 2011-12?
Answer: Company incurred loss primarily due to
increase in Raw Material Cost,
Suppressed margins on account of competitive condition with entry of
unorganized sector,
Unhedged purchases and forex positions.
Post losses, company has become cautious and 100% forex exposure has been
hedged.
5. How could GRSL be converted from loss making company to profit making
company (year 2012-13)?
Answer: The Company was able to the improve profitability over the previous
financial year through better forex risk management (100% hedging of forex risk).
Cost control and higher sales of branded products (in terms of quantity), due to
increase in health awareness among the customers, had helped the company in
improving its margins.
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6. Why the Company could not achieved its estimated profitability in the
year 2012-13?
Answer: The Company could not achieved its estimated profitability mainly due
to
Lower crushing capacity utilization due to non availability of seeds,
Increase in imported crude edible oil prices due to rupee depreciation,
Wide price fluctuations in the international commodity markets etc.
7. Why the sales (amount wise) of the year 2013-14 have been reduced
compare to its previous year?
Answer: The sales have been reduced amount wise due to reduction in the prices
of edible oil. Actually, the no. of units sold has gone up.
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9. How can it be possible for GRSL that it can avail short term loans from
banks along with benefit of LC of 90 to 180 days?
Answer: The banks lend money to the company by keeping its fixed assets as
mortgaged.
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Operating Cycle:
The Operating Cycle measures the time between paying for goods supplied to
business and the final receipt of cash from its sale. It is desirable to keep the cycle
as short as possible as it increases the effectiveness of working capital.
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Explanation:
The chain starts with buying of Raw Materials on credit by the firm.
In due course this stock will be used in production, work will be carried out
on the stock, and it will become part of the firms Work-in-Progress (WIP).
Work will continue on the WIP until it eventually emerges as the Finished
Product.
As production progresses, Labour costs, Administration expenses, and other
overheads will need to be incurred.
At some stage Trade Creditors will need to be paid.
When the Finished Goods are sold on credit, Debtors are increased; they will
eventually pay, so that Cash will be returned into the firm.
63 | P a g e
64 | P a g e
WIPCP represents the time (no. of days) taken to convert WIP into
FG.
Formula:
65 | P a g e
Average Stock of RM
(Op+Cl/2)
17676
18485
17678
17522
17494
10587
RMCP (Days)
187323
194318
329681
503292
474893
425623
34
34
19
13
13
9
Cost of Production
WIPCP
(Days)
2008-09
2009-10
2010-11
2011-12
2012-13
150
219
362
903
2266
199848
207541
349697
526687
499727
0.27
0.38
0.37
0.62
2
2013-14
8526
440798
66 | P a g e
Average Stock of FG
(Op+Cl/2)
2008-09
2009-10
2010-11
2011-12
2012-13
2013-14
24185
27807
35899
31710
31011
22340
FGCP
(Days)
37
40
31
19
20
13
Interpretation:
From the above tables (RMCP+WIPCP+FGCP) it can be analyses that In GRSL
the number of days to convert RM stock into WIP stock and WIP stock into FG
Stock is decreases.
Overall Inventory Conversion Period (ICP= RMCP+WIPCP+FGCP) is also
decreases, which shows that company is taking less time period to convert its
Inventory into Sales.
The firm has to keep reasonable level of inventory to avoid stock-out situation.
Simultaneously it also has to consider that the firm has not kept overstock
otherwise it will lead to increase in the carrying cost of inventory.
Note: Refer Annexure G,H,I,J for knowing calculation of Raw material consumes,
Cost of Production, Cost of Goods Sold, Total expenses respectively.
67 | P a g e
Opening
Balance
Closing
Balance
Average
Credit
DCP(Days)
Debtors(Op+Cl/ Sales(70% of
2)
Total sales)
8517
8747
186509
17
2008-09
8977
2009-10
8517
18632
13575
195049
25
2010-11
18632
36984
27808
312518
32
2011-12
37318
41804
39561
448496
32
2012-13
41804
26906
34355
407077
30
2013-14
26906
42099
34503
435891
28
Interpretation:
From the table we can see that Debtors Collection Period is increases, which shows
that company is giving more credit Period to its customers. It is an indication of
Liberal Collection policy. On an Average GRSL is giving 1 month Credit to its
customers.
68 | P a g e
3. Creditors Payment Period (CPP): It represents the time taken to pay the
firms suppliers. The longer the time period, the more advantageous for the
firm so that funds can be put to other uses. It can be calculated by dividing
Average Creditors by Credit Purchases and multiplying the results by 360
days.
Formula:
Trade Creditors
YEAR
2008-09
2009-10
2010-11
2011-12
2012-13
2013-14
Opening
Balance
10482
10728
14178
28741
132573
101089
closing
Balance
10728
14178
28741
132573
101089
107618
Average Creditors
(Op+Cl/2)
10605
12453
21460
80657
116831
104354
Credit Purchases
(90% of Total
purchases)
239798
179204
283449
457808
413624
368212
CPP
(Days)
16
25
27
63
102
102
Interpretation:
A longer credit period of CPP shows that GRSL is getting more Credit Period from
its Suppliers. As 60-70% Raw material is imported from other countries, GRSL
has Most of the suppliers from overseas. The company is using Letter of Credit
(LC) to pay to its suppliers so it is able to take benefit of Longer Credit Period.
Longer Creditors Payment period also shows Credit worthiness of the company.
69 | P a g e
ICP (Days)
DCP (Days)
71
74
50
33
35
29
CPP (Days)
17
25
32
32
30
28
16
25
27
63
102
102
CCC (Days)
72
74
55
2
-37
-45
Interpretation:
Longer cash conversion cycle signifies greater investment in current assets and
therefore shows the greater need of financing of current assets, as during that time
period companys fund is blocked. Shorter cash conversion cycle signifies that
company is taking less time to convert Cash into Cash.
In GRSL CCC is negative in last two years because company is getting longer
Credit period from its suppliers and by using Letter of Credit (LC) it is taking the
advantage of longer credit period.
70 | P a g e
Correlation
Pearsons correlation coefficient is a number between -1 and +1, which measures
the strength of a linear relationship between two variables. The absolute value of
the coefficient measures how closely the variables are related. If the coefficient is
closer to +1 or -1 i.e. over +0.8 or -0.8, then it can be said that the relationship
between two variables is strong. If the coefficient is closer to zero, then it indicates
the weak relationship between them.
The sign of correlation coefficient represents the trend in the relationship.
The positive coefficient means that one variable increases, when the other
increases and vice a versa. Both variables would move in same direction.
The negative coefficient indicates that one variable increases, when the other
decreases and vice a versa. Both variables would move in opposite direction.
71 | P a g e
ROI
(%)
13.03
12.73
15.15
-20.5
26.53
17.55
RMCP
(Days)
34
34
19
13
13
9
WIPCP
(Days)
0.27
0.38
0.37
0.62
2
7
FGCP
(Days)
37
40
31
19
20
13
ICP
(Days)
71
74
50
33
35
29
DCP
(Days)
17
25
32
32
30
28
CPP
(Days)
16
25
27
63
102
102
CCC
(Days)
72
74
55
2
-37
-45
ROI(%)
13.03
12.73
15.15
-20.5
26.53
17.55
RMCP
(DAYS)
34
34
19
13
13
9
Output:
Column 1
Column 2
Column 1
Column 2
0.099524
72 | P a g e
YEAR
2008-09
2009-10
2010-11
2011-12
2012-13
2013-14
ROI(%)
13.03
12.73
15.15
-20.5
26.53
17.55
WIPCP
(DAYS)
0.27
0.38
0.37
0.62
2
7
Output:
Column 1
Column 2
Column 1
Column 2
0.294919
13.03
12.73
15.15
-20.5
26.53
17.55
FGCP
(DAYS)
37
40
31
19
20
13
Output:
Column 1
Column 2
Column 1
Column 2
0.125777
ROI (%)
13.03
12.73
15.15
-20.5
26.53
17.55
ICP (DAYS)
71
74
50
33
35
29
Output:
Column 1
Column 2
Column 1
Column 2
0.162231
73 | P a g e
YEAR
2008-09
Output:
13.03
17
2009-10
12.73
25
2010-11
15.15
32
2011-12
-20.5
32
2012-13
26.53
30
2013-14
17.55
28
Column 1
Column 2
Column 1
Column 2
-0.23189
ROI (%)
13.03
12.73
15.15
-20.5
26.53
17.55
CPP (DAYS)
16
25
27
63
102
102
Output:
Column 1
Column 2
Column 1
Column 2
0.17077
ROI (%)
CCC (DAYS)
13.03
72
2009-10
12.73
74
2010-11
15.15
55
2011-12
-20.5
2012-13
26.53
-37
2013-14
17.55
-45
Output:
Column 1
Column 2
Column 1
Column 2
-0.08782
74 | P a g e
SUMMARY OF OUTPUT:
CORRELATION
ROI
RMCP
WIPCP
FGCP
ICP
DCP
CPP
CCC
0.10
0.29
0.13
0.16
-0.23
0.17
-0.09
ANALYSIS:
PART A:
From the table we can conclude that Return On Investment (ROI) is
negatively (weak) related to Debtors Collection Period (DCP) and Cash
Conversion Cycle (CCC).
Firm can increase ROI by reducing DCP because the less the time taken by
customers to pay their bills, the more cash is available to replenish the
inventory hence it leads to more sales which results to an increase in
profitability.
But simultaneously it has to consider relationship with its customer
i.e. may reduce sales.
75 | P a g e
76 | P a g e
77 | P a g e
Multiple Regression
To take the analysis a step further Multiple Regression Analysis technique has
been used. This technique can be used when More than one independent variable have impact on Dependent
variable and
To predict Dependent variable by Independent variables.
78 | P a g e
YEAR
ROI
(%)
RMCP
(Days)
WIPCP
(Days)
FGCP
(Days)
DCP
(Days)
CPP
(Days)
2008-09
2009-10
2010-11
2011-12
2012-13
2013-14
13.03
12.73
15.15
-20.5
26.53
17.55
34
34
19
13
13
9
0.27
0.38
0.37
0.62
2
7
37
40
31
19
20
13
17
25
32
32
30
28
16
25
27
63
102
102
Output:
Intercept
X Variable 1
X Variable 2
X Variable 3
X Variable 4
X Variable 5
1
2
3
4
5
Coefficients
-5.45
-7.14
2.93
8.62
-4.07
0.67
79 | P a g e
ROI =
(-5.45) + (-7.14) RMCP + (2.93) WIPCP + (8.62) FGCP + (-4.07) DCP +
(0.67) CPP
This model can be used by Gokul Refoils and Solvent Ltd. (GRSL) to predict
impact on its Profitability (ROI) due to change in Raw Material Conversion Period
(RMCP), Work-in-Progress Conversion Period (WIPCP), Finished Goods
Conversion Period (FGCP), Debtors Collection Period (DCP) and Creditors
Payment Period (CPP).
Note: DATA ANALYSIS TOOLS - REGRESSION from Microsoft Excel is
used to develop above model.
80 | P a g e
Let us take some hypothetical situations and estimate the ROI using the above
Multiple Regression Model:
Situation A:
IMPACT ON ROI
DUE TO CHANGE IN DEBTORS COLLECTION PERIOD
ROI
RMCP 2
WIPCP 3
FGCP 4
DCP 5
CPP
30 2.93
2 8.62
30 -4.07
19 0.67
90
30 2.93
2 8.62
30 -4.07
20 0.67
90
30 2.93
2 8.62
30 -4.07
21 0.67
90
When RMCP = 30 days, WIPCP = 2 days, FGCP = 30 days, DCP = 20 days and
CCP = 90 days, the estimated ROI = 23.89%.
If GRSL will liberalize its Debtors Collection Policy i.e. DCP is increased
from 20 days to 21 days, ROI will be reduced to 19.82% (estimated).
And if it will collect payment from its Debtors faster, then it will help in
increasing its ROI. DCP is reduced from 20 days to 19 days; ROI will be
increased to 27.96% (estimated).
81 | P a g e
Situation B:
IMPACT ON ROI
DUE TO CHANGE IN CREDITORS PAYMENT PERIOD
ROI
RMCP 2
WIPCP 3
FGCP 4
DCP 5
CPP
30 2.93
2 8.62
30 -4.07
20 0.67
85
30 2.93
2 8.62
30 -4.07
20 0.67
90
30 2.93
2 8.62
30 -4.07
20 0.67
95
When RMCP = 30 days, WIPCP = 2 days, FGCP = 30 days, DCP = 20 days and
CCP = 90 days, the estimated ROI = 23.89%.
If GRSL will get more credit from its Trade Creditors i.e. CPP is increased
from 90 days to 95 days, ROI will approximately go up by 3.36%.
And if it has to make early payments to its Trade Creditors i.e. within 85
days, then it will have negative impact on its profitability ROI would be
approximately 20.53%.
Same way, GRSL can use this Multiple Regression Model to judge expected
ROI with respect to change in RMCP, WIPCP, FGCP, DCP, CCP.
82 | P a g e
Chapter Seven:
Findings
Suggestions
Limitations
83 | P a g e
Findings
Based on calculation of Operating Cycle of GRSL, it is found that In GRSL, Cash Conversion Cycle is negative during last two years, which
indicates that GRSL is having more availability of cash. This could be due to
the benefit of 90 - 180 days LC received by GRSL.
Another observation is that the RMCP (Raw Material Conversion Period),
WIPCP (Work-in-Progress Conversion Period), FGCP (Finished Goods
Conversion Period), DCP (Debtors Collection Period), CPP (Creditors
Payment Period) of last year i.e. 2013-14 do not match with the policy stated
by the CFO of GRSL in interview. This variation could be due to the
limitation of operating cycle method i.e. Simple Average of Opening
balance and closing balance are used for calculating Average stock of Raw
Material, Average stock Work-in-Progress, Average stock Finished Goods ,
Average Trade Debtors and Average Trade Creditors.
Based on Correlation Analysis of GRSL, it is found that The Debtors Collection period and Cash Conversion Cycle are having a
NEGATIVE RELATIONSHIP with ROI, while Inventory Conversion
period and Creditors
having a
POSITIVE
84 | P a g e
85 | P a g e
Suggestions
Suggestions to GRSL are as follows:
86 | P a g e
Based on the Multiple Regression model developed under this study can be used
by GRSL to predict the impact on ROI by changing Working Capital Policy. For
Example,
If DCP is reduces from 20 days to 19 days; estimated ROI will be
increases to 27.96% from 23.89%.
If CCP is decreases from 90 days to 85 days then ROI will be decreases
from 23.89% to 20.53%. Same way, GRSL can determine what should be
RMCP, WIPCP, FGCP, DCP and CPP to achieve a specific Rate of
return.
As GRSL does not have liquidity problems, it can increase its profitability through
efficient Working Capital Management.
87 | P a g e
Limitations
Due to lack of availability of all required information, the research has been
carried out using only last six years financial data of GRSL.
During Research we have found that, the Data which has been taken for
Analysis having some macro fluctuations.
Due to lack of availability of all required information of leader of this Edible
Oil Industry, inter-firm comparison has not been carried out.
While judging profitability, the impact on Sales Growth due to change in
Working Capital policy has not been taken into consideration.
The outcome of the study has been derived based on our Research with the
assumptions made and limitations prevail.
Despite of all the above Limitations of Project, based on our Research we have
successfully established a model which can help GRSL in predict its profitability
by changing its working capital policy.
88 | P a g e
Websites:
www.gokulgroup.com
www.ruchisoya.com
www.adaniwilmar.com
www.acornlive.com
www.ku.ac.ke
http://agrioutlookindia.ncaer.org/events/india-edible-oil-sector-mar.pdf
www.investopedia.com
89 | P a g e
Annexure A
BALANCE SHEET AS AT 31 MARCH, 2009
Particulars
SOURCES OF FUNDS
1.
SHARE HOLDERS FUNDS
(a) Share Capital
(b) Reserves and Surplus
2.
3.
LOAN FUNDS
(a) Secured Loans
(b) Unsecured Loans
Schedule
1
2
3
4
APPLICATION OF FUNDS
1.
FIXED ASSETS
(a) Gross Block
Less : Depreciation and amortisation
(b) Capital Work In Progress
Total Assets
INVESTMENTS
CURRENT ASSETS, LOANS AND ADVANCES
(a) Inventories
(b) Sundry Debtors
(c) Cash and Bank Balances
(d) Loans and Advances
Less : CURRENT LIABILITIES AND PROVISIONS
(a) Current Liabilities
(b) Provisions
6
7
8
9
10
11
12
(Rs. in Lacs)
As at
31st March,2008
Rs.
Rs.
2,637.90
31,605.94
1,922.06
17,329.82
34,243.84
19,251.88
18,716.98
2,250.00
20,286.01
5,750.65
20,966.98
26,036.66
1,670.15
1,627.49
56,880.97
46,916.03
22,982.63
5,321.81
20,310.43
3,559.56
17,660.82
16,750.88
Net Block
2.
3.
As at
31st March,2009
9,654.90
141.96
27,315.72
16,892.83
2,104.47
1,326.80
31,242.70
8,517.36
7,918.30
11,781.03
40,189.87
8,976.77
6,628.35
4,573.84
59,459.39
60,368.83
31,534.74
463.88
31,230.09
442.34
31,998.62
31,672.43
27,460.78
28,696.40
56,880.97
46,916.03
20
Schedule
Year ended
31st March,2009
Year ended
31st March,2008
INCOME
Sales and operating Income
13
273172.31
205,229.93
Other Income
14
582.26
381.69
273754.57
205,611.63
TOTAL
EXPENDITURE
Material Consumed
15
247464.94
175,178.48
16
829.06
559.68
17
15829.12
16,281.87
18
4079.84
4,172.55
1775.90
1,222.18
269978.86
197,414.76
3775.70
8,196.87
1207.66
2,804.95
2568.04
5,391.90
219.50
(104.04)
13880.11
8,387.34
3.17
TOTAL
Profit before Tax
Less : Provision for Taxation
19
16228.64
13776.07
500.00
Proposed Dividend
395.69
56.03
951.72
15276.92
13,776.07
10.16
28.96
25280726
18,616,405
20
Annexure - B
BALANCE SHEET AS AT 31 MARCH, 2010
(Rs. in Lacs)
Particulars
SOURCES OF FUNDS
1.
SHARE HOLDERS FUNDS
(a) Share Capital
(b)
Reserves and Surplus
2.
3.
LOAN FUNDS
(a) Secured Loans
(b) Unsecured Loans
Schedule
As at
As at
31st March, 2010 31st March, 2009
1
2
2,637.90
35,439.53
38,077.43
2,637.90
31,605.94
34,243.84
3
4
31,871.81
31,871.81
2,943.02
72,892.26
18,716.98
2,250.00
20,966.98
1,670.15
56,880.97
40,261.25
7,814.54
32,446.71
22,982.63
5,321.81
17,660.82
1,040.13
9,654.90
33,486.84
27,315.72
1,640.11
2,104.47
APPLICATION OF FUNDS
1.
FIXED ASSETS
(a) Gross Block
Less : Depreciation and amortisation
Net Block
INVESTMENTS
3.
7
8
9
10
56,616.95
18,631.57
692.86
15,011.39
90,952.77
31,242.70
8,517.36
7,918.30
11,781.03
59,459.39
Less
CURRENT LIABILITIES AND PROVISIONS
(a) Current Liabilities
(b) Provisions
11
12
52,702.35
485.11
53,187.46
37,765.31
31,534.74
463.88
31,998.62
27,460.78
72,892.26
56,880.97
20
Schedule
INCOME
Sales and operating Income
Other Income
13
14
TOTAL
EXPENDITURE
Material Consumed
Payment to and Provisions for Employees
Manufacturing and other Expenses
Interest and financial Cost (Net)
Depreciation and amortisation
15
16
17
18
5
TOTAL
Profit before Tax
Less : Provision for Taxation
19
As at
As at
31st March, 2010 31st March,2009
281,628.40
408.80
273,162.65
582.26
282,037.20
273,744.92
251,381.49
1,166.38
17,465.79
3,253.95
2,508.64
247,444.66
829.06
15,839.75
4,079.84
1,775.90
275,776.25
269,969.20
6,260.95
3,775.70
2,005.77
1,207.66
4,255.18
2,568.04
(39.82)
219.50
15,276.92
13,880.11
19,571.92
16,228.65
500.00
500.00
Proposed Dividend
395.69
395.69
65.72
56.04
961.40
951.72
18,610.51
15,276.92
3.23
131,895,000
2.03
126,403,630
Earning per share- Basic & Diluted (Face value of Rs. 2 each) Rs.
Weighted Average No of Shares (Refer note No. 23 of schedule 20)
Notes forming part of accounts
20
Annexure - C
Balance Sheet as at 31st March, 2011
(Rs. in lacs)
Particulars
Schedule
No.
As at
st
31 March, 2011
As at
st
31 March, 2010
Sources of Funds
1. Share Holders Funds
a.
Share Capital
2,637.90
2,637.90
b.
41,146.55
35,439.53
43,784.45
38,077.43
31,871.81
2. Loan Funds
a.
Secured Loans
28,496.46
b.
Unsecured Loans
10,011.51
38,507.97
31,871.81
3,215.00
2,943.02
85,507.42
72,892.25
Gross Block
44,274.41
40,261.25
10,765.05
7,814.54
Net Block
33,509.36
32,446.71
1,228.41
1,040.13
Total
Application of Funds
1. Fixed Assets
a.
b.
2. Investments
34,737.77
33,486.84
5,037.65
1,640.11
Inventories
47,544.57
56,616.95
b.
Sundry Debtors
36,983.62
18,631.57
c.
1,299.42
692.86
d.
10
19,513.79
15,011.39
105,341.39
90,952.76
Less :
Current Liabilities and Provisions
a.
Current Liabilities
11
58,683.49
52,702.35
b.
Provisions
12
925.91
485.11
59,609.41
53,187.47
45,732.00
37,765.31
85,507.42
72,892.25
20
Particulars
Schedule
No.
As at
st
31 March, 2011
As at
st
31 March, 2010
13
453,404.75
281,628.40
Other Income
14
Income
Total
473.51
408.80
453,878.27
282,037.21
404,450.00
251,381.49
Expenditure
Material Consumed
15
16
1,864.10
1,166.38
17
30,951.57
17,465.79
18
4,594.91
3,253.95
3,018.65
2,508.64
444,879.21
275,776.25
8,999.04
6,260.94
2,854.61
2,005.77
6,144.44
4,255.18
(53.64)
(39.82)
18,610.51
15,276.92
24,808.59
19,571.92
500.00
500.00
153.81
Proposed Dividend
290.17
395.69
47.07
65.72
991.05
961.40
23,817.53
18,610.52
4.66
3.23
131,895,000
131,895,000
Total
Profit before Tax
Less : Provision for Taxation
19
20
Annexure - d
Balance Sheet as at 31st March 2012
(` in Lacs)
Particulars
I.
Note
No.
As at
As at
st
March 2012 31 March 2011
Shareholders funds
(a) Share capital
(b) Reserves and surplus
Non-current liabilities
(a) Long-term borrowings
(b) Deferred tax liabilities (Net)
(c) Other Long term liabilities
(d) Long-term provisions
Current liabilities
(a) Short-term borrowings
(b) Trade payables
(c) Other current liabilities
(d) Short-term provisions
3
4
2,637.90
30,437.93
2,637.90
41,146.55
5
6
7
5,027.80
67.85
8,225.00
3,215.00
42.35
8
9
10
11
166,367.48
132,573.10
6,128.95
3,221.54
45,238.29
44,983.60
5,799.11
1,248.42
346,462.55
152,536.22
12
33,408.85
165.20
2,782.16
33,361.15
148.21
1,228.41
13
14
1,469.29
1,467.95
-
1,214.89
466.85
-
15
16
17
18
19
20
20,829.65
58,182.75
41,804.36
159,498.93
21,594.61
5,258.79
3,822.76
47,544.57
37,317.64
8,565.42
15,623.16
3,243.16
346,462.55
152,536.22
TOTAL
II.
st
31
ASSETS
Non-current assets
1
(a) Fixed assets
(i)
Tangible assets
(ii) Intangible assets
(iii) Capital work-in-progress
(iv) Intangible assets under development
(b) Non-current investments
(c) Long-term loans and advances
(d) Other non-current assets
2
Current assets
(a) Current investments
(b) Inventories
(c) Trade receivables
(d) Cash and bank balances
(e) Short-term loans and advances
(f) Other current assets
TOTAL
Note
No.
st
31
For the
For the
year ended
year ended
st
March 2012 31 March 2011
I.
21
648,717.16
453,631.55
II.
Other income
22
6,621.21
1,079.04
655,338.37
454,710.59
23
513,447.84
338,825.45
Purchases of Stock-in-Trade
24
86,358.75
67,569.14
25
1,035.99
(1,840.08)
26
2,509.74
2,077.04
Finance Cost
27
14,962.90
7,582.82
12
3,289.67
3,018.65
Other expenses
28
47,777.98
28,478.53
669,382.86
445,711.55
Total expenses
V.
(14,044.49)
8,999.04
2,758.28
175.66
(3,215.00)
(120.87)
2,582.62
271.99
53.64
(10,708.62)
(8.12)
(8.12)
6,198.07
4.70
4.70
Annexure - E
Annexure - F
Balance Sheet as at 31st March 2014
(` in Lacs)
Particulars
I.
Note
No.
As at
st
31 March 2013
Shareholders funds
(a) Share capital
(b) Reserves and surplus
3
4
2,637.90
32,039.25
2,637.90
31,730.43
Non-current liabilities
(a) Long-term borrowings
(b) Deferred tax liabilities (Net)
(c) Long-term provisions
5
6
7
5,100.00
109.37
47.24
2,312.77
40.03
8
9
10
11
58,204.55
107,617.95
5,321.19
2,048.65
110,056.54
101,088.71
4,751.40
1,936.64
213,126.10
254,554.42
13
6
14
32,989.14
116.71
695.70
1,469.29
371.26
33,651.15
131.35
1,259.64
1,469.29
362.51
1,383.03
15
16
17
18
19
20
11,871.90
40,197.86
42,099.09
47,170.90
25,170.22
10,974.01
18,134.07
50,066.14
26,905.95
86,726.30
20,845.22
13,619.77
213,126.10
254,554.42
Current liabilities
(a) Short-term borrowings
(b) Trade payables
(c) Other current liabilities
(d) Short-term provisions
TOTAL
II.
As at
st
31 March 2014
ASSETS
1
Non-current assets
(a) Fixed assets
(i) Tangible assets
(ii) Intangible assets
(iii) Capital work-in-progress
(b) Non-current investments
(c) Deferred tax assets (net)
(d) Long-term loans and advances
Current assets
(a) Current investments
(b) Inventories
(c) Trade receivables
(d) Cash and bank balances
(e) Short-term loans and advances
(f) Other current assets
TOTAL
12
Statement of Profit and Loss for the year ended 31st March
2014
(Amount ` in Lacs)
Particulars
Note
No.
For the
For the
year ended
year ended
st
st
31 March 2014 31 March 2013
I.
21
631,052.28
571,847.09
II.
Other Income
22
9,929.67
16,189.20
III.
Total Revenue
640,981.95
588,036.29
IV. Expenses:
Cost Of Materials Consumed
23
436,471.49
486,904.06
Purchases Of Stock-In-Trade
24
142,356.81
50,876.29
25
7,185.22
-2,364.35
26
2,769.52
2,238.22
Finance Cost
27
9,025.37
19,292.18
11
3,743.21
3,654.56
Other Expenses
28
38,447.70
26,505.34
639,999.32
587,106.30
982.63
929.99
471.88
-362.51
Total Expenses
V.
201.93
308.82
1,292.50
Basic In Rupees
0.23
0.98
(2)
Diluted In Rupees
0.23
0.98
Annexure G
Particulars
2008-09
2009-10
2010-11
2011-12
2012-13
2013-14
Opening Stock
Closing Stock
21739
13612
13612
23357
23357
11998
11998
23045
23045
11942
11942
9232
Average Stock(Op+Cl/2)
17676
18485
17678
17522
17494
10587
Opening Stock
Add: Purchases
Add: Purchases expenses
Less: Closing stock
21739
174912
4284
13612
13612
199115
4948
23357
23357
314943
3379
11998
11998
508675
5664
23045
23045
459582
4208
11942
11942
409124
13789
9232
187323
194318
329681
503292
474893
425623
34
34
19
13
13
Raw-Material Conversion
Period=
Annexure H
Calculation of Cost of Production
(Amnt in Lacs)
Particulars
2008-09
2009-10
2010-11
2011-12
2012-13
2013-14
Opening Stock
179
121
316
407
1398
3134
Closing Stock
121
316
407
1398
3134
13918
Average Stock(Op+Cl/2)
150
219
362
903
2266
8526
179
121
316
407
1398
3134
192801
199717
338826
513448
486927
436471
6989
8019
10962
14231
14536
15110
121
316
407
1398
3134
13918
199848
207541
349697
526687
499727
440798
0.27
0.38
0.37
0.62
Cost Of production:
Opening Stock of WIP
Add: Cost of material consumed
Add: Total expenses
Less: Closing Stock pf WIP
Cost Of production
Annexure I
Calculation of Cost of Goods sold
(Amnt in Lacs)
Particulars
2008-09
2009-10
2010-11
2011-12
2012-13
2013-14
Opening Stock
Closing Stock
17396
30974
16539
39074
39074
32723
32723
30696
30696
31325
31325
13355
Average Stock(Op+Cl/2)
24185
27807
35899
31710
31011
22340
17396
199848
48560
0
30974
16539
207541
68195
0
39074
39074
349697
67569
0
32723
32723
526687
86359
0
30696
30696
499727
50876
0
31325
31325
440798
142357
0
13355
234830
253201
423617
615073
549974
601125
37
40
31
19
20
13
FG Conversion period=
2009-10
2010-11
2011-12
2012-13
2013-14
Opening Stock of FG
Add: Opening Stock in Trade
Total Opening Stock of FG
15864
1532
17396
14153
2386
16539
25523
5451
30974
32477
246
32723
26044
4652
30696
28342
2983
31325
Closing Stock of FG
Add: Closing Stock in Trade
Total closing Stock of FG
14154
2386
30974
25523
5451
30974
32477
246
32723
26044
4652
30696
28342
2983
31325
13153
202
13355
Annexure J
Calculation of Total expenses
(Amnt in Lacs)
Total Expenses
Total expenses
Employee Benefit expenses
Add Other Expenses
Consumption of Stores,Spares and Tools
Power and Fuel
Rent, Rates and Taxes
Add Repairs and Maintainance
Building
Plant & Machinery
Others
Add Insurance
Auditors Remuneration
Directors Sitting fees
Other Expenses
Direct Labour expenses
Other Manufacturing Expenses
Total expenses
200809
200910
201011
201112
201213
201314
829
1166
1864
2510
2239
2770
110
3040
142
134
3512
80
427
5201
138
681
6926
280
869
7049
169
791
7125
117
3
158
29
213
11
168
923
1273
90
13
224
27
372
12
190
811
1405
72
23
233
82
441
16
213
1092
1201
30
39
353
135
516
16
1
1089
1652
32
15
464
196
682
18
0
986
1824
25
35
388
127
512
19
1
1087
2113
25
6989
8019
10962
14231
14536
15110
Annexure K
Calculation of Capital Employed
(Amnt in Lacs)
Capital employed
Particulars
Share Capital
2008-09
2009-10
2010-11
2011-12
2012-13
2013-14
2638
2638
2638
2638
2638
2638
Add
Reserves
31606
35440
41147
30437
31730
32039
Add
22637
34814
41721
5096
2353
5257
Capital Employed
56881
72892
85507
38171
36721
39934