WORKING CAPITAL MANAGEMENT

INTRODUCTION:

This finance project entitled Working Capital Management deals in Plate

Industry. The term of study was kept limited to make the title true. The purpose of
the project is to get the in depth understanding of the process of working capital
management. With the growing Indian economy and the government policies for
infrastructure the demand for cotton is increasing and seeing this as an opportunity
is under taking many new projects for expansion of the production which are under
implementation for increasing the capacity of the plants. In this project, working
capital has been analyzed in two ways overall study of the working capital of
KINEMATIC TRADING & CO and secondly, plant-wise working capital of, since
the KINEMATIC TRADING & CO Company has seven plants in different region
and each plant has its own working capital.
OBJECTIVES OF THE STUDY

To find whether the company maintains minimum investment in inventory

organized the profitability.

To know whether the company maintain a large size of inventory for efficient
and smooth production and sales operations.

To know how the company maintains its credit policy.

To point out how well the company manage its cash.

To find whether there is proper match between current assets and current
liabilities.

To know the ways and means of financing working capital Management

Suggestions for the working capital management.

SCOPE OF THE STUDY

The scope of the present study on composes within its fold a theoretical frame
work of working capital management. In general, analysis of working capital trends,
relationship of working capital to sales, liquidity of working capital, analysis of
management of components of working capital and the management of working
capital finance in the select unit. The period covered by the study in five years from
2010 to 2015.
LIMITATIONS OF THE STUDY

The study conducted and done is analytical, subject to the following

limitations
The study is mainly carried out based on the secondary data provided in the
financial statements
This study is based on the historical data and information provided in the
annual reports therefore it may not be a future indicator
There may be some fractional differences in the calculated ratios
As the study was for short span of 3 weeks and due to lack of time other areas
could not be well focused
CHAPTER SCHEME

Chapter 1: Introduction

Chapter 2: Review Of Literature

Chapter 3: Research Methodology

Chapter 4: Data Analysis and Interpretations

Chapter 5: Findings, Suggestion, Conclusions

Chapter 6: Bibliography
 CHAPTER-II

REVIEW OF LITERATURE

Eljelly, (2004): elucidated that efficient liquidity management involves

planning and controlling current assets and current liabilities in such a manner that
eliminates the risk of inability to meet due short-term obligations and avoids
excessive investment in these assets. The relation between profitability and liquidity
was examined, as measured by current ratio and cash gap (cash conversion cycle)
on a sample of joint stock companies in Saudi Arabia using correlation and
regression analysis. The study found that the cash conversion cycle was of more
importance as a measure of liquidity than the current ratio that affects profitability.
The size variable was found to have significant effect on profitability at the industry
level. The results were stable and had important implications for liquidity
management in various Saudi companies. First, it was clear that there was a negative
relationship between profitability and liquidity indicators such as current ratio and
cash gap in the Saudi sample examined. Second, the study also revealed that there
was great variation among industries with respect to the significant measure of
liquidity.

Deloof,( 2003): discussed that most firms had a large amount of cash invested
in working capital. It can therefore be expected that the way in which working capital
is managed will have a significant impact on profitability of those firms. Using
correlation and regression tests he found a significant negative relationship between
gross operating income and the number of days accounts receivable, inventories and
accounts payable of Belgian firms.

On basis of these results he suggested that managers could create value for
their shareholders by reducing the number of days accounts receivable and
inventories to a reasonable minimum. The negative relationship between accounts
payable and profitability is consistent with the view that less profitable firms wait
longer to pay their bills.

Ghosh and Maji, (2003): in this paper made an attempt to examine the
efficiency of working capital management of the Indian cement companies during
1992 1993 to 2001 2002. For measuring the efficiency of working capital
management, performance, utilization, and overall efficiency indices were
calculated instead of using some common working capital management ratios.
Setting industry norms as target-efficiency levels of the individual firms, this paper
also tested the speed of achieving that target level of efficiency by an individual firm
during the period of study. Findings of the study indicated that the Indian Cement
Industry as a whole did not perform remarkably well during this period.

Shin and Soenen, (1998): highlighted that efficient Working Capital

Management was very important for creating value for the shareholders. The way
working capital was managed had a significant impact on both profitability and
liquidity. The relationship between the length of Net Trading Cycle, corporate
profitability and risk adjusted stock return was examined using correlation and
regression analysis, by industry and capital intensity. They found a strong negative
relationship between lengths of the firms net-trading Cycle and its profitability. In
addition, shorter net trade cycles were associated with higher risk adjusted stock
returns.

Smith and Begemann (1997): emphasized that those who promoted working
capital theory shared that profitability and liquidity comprised the salient goals of
working capital management. The problem arose because the maximization of the
firm's returns could seriously threaten its liquidity, and the pursuit of liquidity had a
tendency to dilute returns.
 This article evaluated the association between traditional and alternative
working capital measures and return on investment (ROI), specifically in industrial
firms listed on the Johannesburg Stock Exchange (JSE). The problem under
investigation was to establish whether the more recently developed alternative
working capital concepts showed improved association with return on investment to
that of traditional working capital ratios or not. Results indicated that there were no
significant differences amongst the years with respect to the independent variables.

The results of their stepwise regression corroborated that total current

liabilities divided by funds flow accounted for most of the variability in Return on
Investment (ROI). The statistical test results showed that a traditional working
capital leverage ratio, current liabilities divided by funds flow, displayed the greatest
associations with return on investment. Well- known liquidity concepts such as the
current and quick ratios registered insignificant associations whilst only one of the
never working capital concepts, the comprehensive liquidity index, indicated
significant associations with return on investment.
 CHAPTER-III

PROFILE OF THE COMPANY

COMPANY PROFILE

As a professional researcher and manufacturer of plastic pipe, fittings and

water storage tank, Kinematic trading Limited established in 1999. The company
Founder- K. Muthuraman, Managing Director M. Mukesh with Head Quarters
in Faridabad, Haryana and manufacturing facilities in Roorkee (Uttrakhand),
Gwalior (M.P.) & Bangalore (Karnataka) Starting from manual injection moulding
machines with a production capacity of 30 kilograms per day, today Fusion
Industries Limited has a production capacity of more than 10,000 metric tons
annually, produce with state of art plants. Fusion stands tall as the most trusted and
reputed brands for plastic pipes in India. Fusion is involved in manufacturing of
almost all kinds of popular plumbing pipes and fittings. Its comprehensive range
includes PPR piping, CPVC piping, PVC pressure plumbing, HDPE piping, SWR
(Soil Waste and Rain water) piping, water storage tank. All the products are made
as per various applicable Indian and world standards.

Fusion comes to you with the strength of:

State of art manufacturing plant in North India with Extrusion line of Kolsite Kabra
(Germany and DGP Windsor & Injection moulding machines of Battenfield, Nigatta
with High tech R&D Department.
Installed capacity of over 3000 metric tonne per annum.
An integrated network of 100 dealers across India.
 Global association with Lyondel Basell Germany, Hyosung Korea (Certified raw
material manufacturers from Bodycote Polymer, Sweden) and Samsung Chiel.
Quality certification from its product and manufacturing process such as
IS:15801:2008 for PPR, IS:4984:1995 for HDPE.

No wonder that Fusion is in the heart of many landmarks like Indian Habitat
Centre, JMD Gardens, Unitech Group, Jaypee Group, Ansal API, Ansal Buildwell,
TDI Infrastructure, BPTP, SPR Buildtech, Reliance Infrastructure, UP Rajkiya
Nirmaan Nigam, CPWD, AWHO, numerous buildings and millions of Indian
homes.

Many firsts on the journey to excellence:

Fusion has continue to set the standards for excellence and innovation in the
plastic pipe industry with many firsts.

FIRST to get ISI in PPR-C pipe

FIRST to introduce RRP-C Submersible pipes
FIRST to develop Mechanical coupling for higher diameter pipes
FIRST to develop PPR-C pipe upto 315mm(12)
FIRST to introduce Fusion ABS Air Line Special pipe in India
FIRST to develop 3 Layer Blow Moulding water storage tank in India

Products Range

o Fusion Water Tank

o Water Plus Water Tank
o Force Water Tank
o Water Max
o CPVC Pipe & Fittings
o PPR Pipe & Fittings
o PVC Pipe & Fittings
o ABS Pipe & Fittings
o Air Line Special
o Submersible Pipes
o Mechanical Coupling

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 Mechanical Joint Connection (for PPR-C & HDPE pipes)

MECHANICAL COUPLING

(Strong Plastic Housing with SS Teeth)

Fusion Mechanical Join HDPE / PPR

Simple, Fast, easy bolted connection.

Eliminates Butt Wedding.
Eliminate socket fusion welding.
Fast installation.
Economical- A Union at every joint, hence reduce the cost of flange assembly.
Easy to remove and rotate pipe for increase pipe life.
 No special tool required (Jack, Mirror, Electricity)
Pressure: 4 Kgf to 16 Kgf.

Fusion Industries Limited proud to introduce mechanical coupling system for

HDPE and PPR pipe jointing system.

Economy:

Fusion Mechanical Coupling design and developed to reduce the cost and
time for installation. It avoid flange assembly as itself is a union at every joint.

Housing:

Made of durable plastic for rugged service condition.

SS Teeth:

Integral gripping teeth made of stainless steel inserts and molded, provide
direct connection to the pipe.

Rubber Gasket:

Elastomer gasket with triple seal design provides a leak free seal.

1. EPDM : Recommended for hot water service

Temperature -30C to +85C

Temperature Rating -34C to +110C

2. Nitrile:
 Recommended for petroleum products, hydrocarbon, air with oil vapors,
vegetables and mineral oil.
Temperature -29C to +82C

Always check gasket supplied before application.

VISION

The department will be a centre of repute providing in-depth knowledge in

Industrial and Production engineering and imbibe professional ethics
through dedicated faculty, facilities and infrastructure.

MISSION

Equip students with enhanced abilities to apply knowledge with proven abilities to
theorize and develop emerging systems of learning coupled with value systems to
be able to manage and lead contemporary and emerging business globally with
specific excellence in the areas of manufacturing.

Strengthening and expanding collaborations and partnerships across a spectrum of

industries and Centers of Excellence for offering sustained and scalable world-class
training research and higher education.

Imbibing professional ethics and to encouraging entrepreneurship for inclusive

growth and global business.