15. Wcm on Bajaj Alianz.doc

SUBMITTED BY: RASHMITA MISHRA | ROLL NO: 11MBAS03070

A PROJECT REPORT

ON

“EVALUATION OF WORKING CAPITAL MANAGEMENT INBAJAJ ALLIANZ LIFE INSURANCE”

SUBMITTED IN PARTIAL FULLFILMENT OF THE REQUIREMENT FOR THE AWARD OF DEGREE OF

MASTER OF BUSINESS ADMINISTRATION

Submitted By

Rashmita MishraRoll No: 11MBAS03070

Under The Guidance Of

Santanu Kumar Sahu

Submitted To

DDCE, SAMBALPUR UNIVERSITY


ACKNOWLEDGEMENT

I owe a great many thanks to a great many people who helped and supported me during the

completion of project.

My deep sense of gratitude to Mr. Santanu Kumar Sahu (Branch Manager) for support and

guidance. Thanks and appreciation to the helpful people at Bajaj Allianz Life Insurance, for

their support.

I would like to take this opportunity as privilege to express my deep sense of gratitude to

Sanjay Samal, Director IMST, ANGUL, for their continuous encouragement, invaluable

guidance and help for completing the present research work. They have been a source of

inspiration to means I am indebted to them for initiating me in the field of research.

My deepest thanks to Srikant Chandra Pradhan, the faculty guide of the project for guiding

and correcting various documents of mine with attention and care. He has taken pain to go

through the project and make necessary correction as and when needed.

I would also thanks my institution and my faculty members without whom this project would

have been a distant reality. I also extend my heartfelt thanks to my family and well wishers.

Rashmita Mishra

Roll No : 011MBAS03070


CERTIFICATE OF APPROVAL

This is to certify that the Project Report entitled:“Evaluation Of Working Capital Management In Bajaj Allianz Life Insurance”

Submitted by Rashmita Mishra (Roll No. 011MBAS03070), Sambalpur University, Burla towards

partial fulfillment of the requirements for the award of the degree of Master of Business

Administration (MBA) is a bona fide record of the work carried out by him under the able

guidance of Srikant Chandra Pradhan, Faculty, IMST, ANGUL.

(Approval of the center director)

Center Director


DECLARATION

I Rashmita Mishra, here by declare that the project entitled “Evaluation Of

Working Capital Management In Bajaj Allianz Life Insurance”, has been

prepared and submitted to DDCE, Sambalpur University for the award of Master

In Business. The work has not been submitted to any other institution /

university before for award of any degree or diploma thereof.

I further declare that this project is the result of my own efforts.

Rashmita Mishra Roll No. : 011MBAS03070


CERTIFICATE

This is to certify that project report entitled “Evaluation Of Working Capital

Management In Bajaj Allianz Life Insurance” is a bonafide work done by

Rashmita Mishra with Roll. No: 11MBAS03070 under my guidance and

supervision. This project is submitted to DDCE, Sambalpur University in

fulfillment of the award of degree of Master of Business Administration.

Santanu Kumar Sahu(Branch Manager)


EXAMINER’S CERTIFICATE

This Project Report is submitted by Rashmita Mishra of MBA bearing the Roll

No. 11MBAS03070 under DDCE, Sambalpur University and forwarded for

evaluation.

Internal Examiner External Examiner


INDEX

Chapter No. Particulars

Executive Summary

1. Introduction

2. Profile of the organization

3. Research Methodology

4. Conceptual Background

5. Data presentation and interpretation

6. Finding, Suggestions and conclusion

7. Limitations

Bibliography

Appendix


EXECUTIVE SUMMARY


Executive Summary:

Working Capital is the required for maintenance of day to day business operations. The present

day competitive market environment calls for an efficient management of working capital. The

reason for this is attributed to the fact that an ineffective working capital management mat force

the form to stop its business operations, may even lead to bankruptcy. Hence the goal of

working capital management is not just concerned with the management of current assets and

current liabilities but also in maintaining a satisfactory level of working capital.

Holding current assets in substantial amount strengthens the liquidity position and reduces the

riskiness but only at the expense of profitability. Therefore achieving risk-return tradeoff is

significant in holding of current assets. While cash outflows are predictable it runs contrary in

case of case of cash inflows. Sales program of any business concern does not bring back cash

immediately. There is a time lag that exists between sale of goods of services and sales

realization. The capital requirement during this time lag is maintained by the operating cycle

concept.

This study gives in detail the working capital management practices in BALIC. Management of

each current asset, namely cash management, accounts receivable management is studied

permanent to BALIC. Similarly management of accounts payable, deposit are studied to

understand the managing of current liabilities. A part from this concept of operating cycle is

studied.

The research methodology adopted for this study is mainly from secondary source of data which

include annual reports of BALIC, and website of the company. The use of primary sources is

limited to interviews with few of the employees in credit department.

The study of working capital management has shown that BALIC has a strong working capital

position. The Company is also enjoying reasonable profits.

INTRODUCTION

The overall success of the company depends upon its working capital position. So it should

be handled properly because it shows the efficiency & financial strength of a company.

WCM is highly important in firms as it is used to generate further returns for the

stakeholders.

Working Capital Management is a very important fact of financialmanagement due to:

Investments in current assets represent a substantial portion of

total investment.

Investment in current assets & the level of current liabilities have tobe geared

quickly to change sales.

The working capital is the life blood & nerve center of a business firm. The importance of

working capital in any industry needs no special emphasis. No business can run effectively

without a sufficient quantity of working capital.

It is crucial to retain right level of working capital. WCM is one of the most important

functions of corporate management. A business enterprises with ample working capital is

always in a position to avail advantages of any favorable opportunity either to buy raw

material or to implement a special order or to wait for enhanced market status.

Working capital can be utilized for operating costs that are involved in the everyday life of

business. Even very successful business owners may need working capital funds when the

unexpected circumstances arise.

WCM is highly important in firms as it is used to generate further return for the

stakeholders. When working capital is managed improperly, allocating more than enough of

it will render management non-efficient & reduce the benefits of short term investments. On

the other hand, if working capital is too low, the company may miss a lot of profitable

investment opportunities or suffer short term liquidity crises, leading to degradation of

company credit, as it cannot respond effectively to temporary capital requirements.

Some the points to be studied under this topic are:

How much cash should a firm hold?

What should be the firm’s credit policy?

How to & when to pay the creditors of the firm?

OBJECTIVES

The objectives of project on evaluation of working capital are as follows:

1. To study concept of working capital & components of working capital.

2. To study change of working capital.

3. To analyze profitability, liquidity & working capital position of the company.

SCOPE

The management of working capital helps us to maintain the working capital at asatisfactory

level by managing the current assets and current liabilities. It also helps tomaintain proper

balance between profitability, risk and liquidity of the businesssignificantly.

By managing the working capital, current liabilities are paid in time. If the firm

makespayment to it creditors for raw material in time, it can have the availability of

rawmaterial regularly, which does not cause any obstacles in production process.

Adequateworking capital increases paying capacity of the business but the excess working

capitalcauses more inventory, increases the possibility of delay in realization of debts.On the

other hand, absence of adequate working capital leads to decrease in return oninvestment.

The goodwill of the firm is also adversely affected due to the inability to paycurrent

liabilities in time.

Hence, the management of working capital helps to manage all the factors affecting

theworking capital in the most profitable manner.

Limitation of the study:

The scope of the present study has been limited interns of period of study as well as sources

and nature of data. The period covered by the study extends over 5 years from F.Y 2008/9 to

2011/12. At the time of study, the data could be available up to 2011/12. The limitations of

this study are as follows:

1. The study is mainly on secondary data. It is cone mostly on the basis of and

published financial documents, like balance sheet, profit and loss account and other

related journals, magazines and books etc.

2. The study follows with specific tools financial ratio analysis.

3. The lack of sufficient time and resources is another limitation of the study. The study

is fully based on the student’s financial resources and is to be completed within

limited time. The report has taken only 5-years data for the study from year 2008/09

to 2012/13.

4. The study is limited from the point of view of submission on partial fulfillment of the

requirement for the Master degree in Business Administration(MBA).

BAJAJ ALLIANZ LIFE INSURANCE

Name and location of the Company:

Name: Bajaj Allianz Life Insurance Company

Address : GE Plaza, Airport Road, Yerawada, Pune 411006

Tel : +91 020 66026777

Fax : +91 020 66026789

E-mail : [email protected]

Introduction:

Bajaj Allianz Life Insurance is a union between Allianz SE, one of the largest Insurance

Company and Bajaj Finserv.

Allianz SE is a leading insurance conglomerate globally and one of the largest asset

managers in the world, managing assets worth over a Trillion (Over INR. 55,00,000Crores).

Allianz SE has over 119 years of financial experience and is present in over 70 countries

around the world.

At Bajaj Allianz Life Insurance, customer delight is our guiding principle. Our business

philosophy is to ensure excellent insurance and investment solutions by offering customized

products, supported by the best technology.

Vision:

To be the first choice insurer for customers

To be the preferred employer for staff in the insurance industry

To be the number one insurer for creating shareholder value

Mission:

As a responsible, customer focused market leader, we will strive to understand the insurance

needs of the consumers and translate it into affordable products that deliver value for money.

Our Achievements:

Bajaj Allianz has received IAAA rating, From ICRA Limited, an associate of Moody’s

Investors Service, for Claims Paying ability. This rating indicates highest claims paying

ability and a fundamentally strong position.

Awards:

Best Insurance Company in Private sector at the IPE Banking Financial Service and

Insurance (BFSI) 2013.

SKOCH Financial Inclusion-Organization of the year 2013.

Best Life Insurance Provider (Runner up) at the Outlook Money Award 2012.

Best Investor Education and Category Enhancement.

Best utilization of Information Technology.

SKOCH Financial Inclusion Award.

Member in Board of Director:

Chairman Rahul Bajaj

Directors

Niraj Bajaj

Sanjiv Bajaj

S.H Khan

Ranjit Gupta

Sanjay Asher

Suraj Mehta

Manu Tandon

FACTSHEET

1Date of Incorporation 12th March 2001

2Started Operation on 3rd August 2001

3Head office Pune, India

4WorldWide Web Address www.bajajallianz.com

5Toll free number 1800-209-5858

6Brand Statement JiyoBefikar

7Chairman Mr. Sanjiv Bajaj

8MD & CEO Mr.V.Philip

9Total assets under Management 38,003 crore*

10Solvency ratio 643.31%**

11Claim Settlement Ratio NOP 91.56%**

12Total no. of lives covered 1.56crore**

13Total no. of office 992*

14Latest Award Won 1.SKOCH Financial Inclusion Award

2013- Organization of the Year2.SKOCH Financial Inclusion Award for Micro Insurance initiatives in the following categories:

Micro Insurance Initiative – Securing the Unsecured

Setting the Claims at Nominee’s doorsteps

Insurance Awareness & Education

Micro Insurance Renewals & Persistency Management

15Sour product cater to all the financial needs like – Protection, Savings, Retirements, Investment & Health for Individuals and Groups

Note: *The value are as on 31st March 2013** The values are for FY 2012-13

Growing at a breakneck pace with a strong pan Indian presence Bajaj Allianz

has emerged as a strong player in India...

Bajaj Allianz Life Insurance Company Limited is a joint venture between two leading

conglomerates Allianz AG and Bajaj Auto Limited. Characterized by global presence with a

local focus and driven by customer orientation to establish high earnings potential and

financial strength, Bajaj Allianz Life Insurance Co. Ltd. was incorporated on 12th March

2001. The company received the Insurance Regulatory and Development Authority (IRDA)

certificate of Registration (R3) No 116 on 3rd August 2001 to conduct Life Insurance

business in India.

Product:

Life Insurance

Motor Insurance

Health Insurance

Travel Insurance

Home Insurance

Channel Partner:

1. Standard Chartered Bank

2. Dhanlaxmi Bank

3. Team Life Care Co. India Ltd.

The data in this project is enabling in secondary in nature. Financial reports,

company records were referred for data analysis. The study has been undertaken by

collecting relevant data from the balance sheet, profit and loss a/c, annul report & Audit

report of the BALIC the company is used financial tools for the analyzing and interpretation

data.

However primary data is also collected by observation discussing with company

officials. This primary data is used to fill in the gaps while preparing this report and to know

the latest procedures adopted by the company. This has helped to draw inferences and

conclusions.

Sources of data

This study is based on Secondary data:-

The secondary data are those, which have been collected by some other and

which have been processed. Generally speaking secondary data are information, which

have been previously collected by some organization to satisfy his own need. But the

department under reference for an entirely different reason is using it.

For this project secondary sources used are:

1. Annual reports of the company.

2. Company website

3. Books

4. Other company documents

SAMPLING DESIGN

Sampling unit : Financial Statements & Audit Reports

Sampling Size :Last four years financial statements

WORKING CAPITAL:

Introduction:

Financial management looks after two types of capital need: for fixed capital to invest it

tings such as buildings, plants &equipments and working capital principally to pay for stock

and to cover the amount of credit extended to customers. Fixed capital, as the name implies,

tends not vary in the short but to move up or down in jumps when major investment

decisions are made (or assets sold). Working capital on the other hand, is much more fluid

and fluctuates with level of business.

Working capital is a furnish investment in short term assets. Working capital is the firm’s

investment in short term assets cash, short term securities. Account receivables and

inventories.

Working capital management is the important branch of the financial management which

gives answers the questions such as:

1. How much should we invest in each category of current assets?

2. How should we finance this investment in current assets i.e. appropriate mix of short

and long term sources to finance?

In most business, funds are deployed in assets which are in the form of cash or bank deposits

or will be turned into cash in a relatively short period as part of normal business activities. In

short the working capital is the sources of financing current assets and it includes short as

well as long term financing.

The management of the funds of business can be described as financial management.

Financial management is mainly concerned with two aspects. Firstly, Fixed assets and fixed

liabilities, in other words, long term investment and sources of funds. Secondly, current

assets and current liabilities. Both of these types of funds play a vital role in business

finance.

Management of working capital usually involves management or administration of current

assets, namely cash, marketable securities, account receivables and inventories and also the

administration of current liabilities such as creditors, account payable, notes and bills

payables, bank overdraft, outstanding expenses, temporary loans and provisions. A firm

should always maintain the right cash balance so that flow of funds is maintained at a

desirable speed not allowing slowdowns or stoppage. Thus, the enterprises can have a

balance between liquidity and profitability.

The term working capital is often used to refer the firm’s current assets like primarily cash,

marketable securities, account receivables and inventories. Working capital refers to the fact

that most of its components have their impact over weeks and month rather than years. For

this reason, working capital management is often referred to as short-term finance. The term

working capital is closely related to the term funds and has two common meaning. It is used

to mean current assets of current assets means current liabilities.

Working capital management is concerned with the problems that arise in attempting to

manage the current assets. The term current assets refers to those assets which is ordinary

course of business can be or will be turned into cash within one year without undergoing a

diminution in value and with our disrupting the operations of the firm. The major current

assets are cash, marketable securities, account receivables and inventory.

Current liabilities are those liabilities, which are intended at their inception to be paid in the

ordinary course of business within a year, out of the current assets of earnings of the

concern. The basis current liabilities are accounts payable, bank overdraft and outstanding

expenses. The goal of working capital management is to management the firm’s current

assets and current liabilities in such a way that a satisfactory level of working capital is

maintained.

This is so because if the firm cannot maintainto satisfactory level of working capital, it is

likely to become insolvent and may be forced into bankruptcy. The current assets should be

large enough to cover its current liabilities in order to ensure a reasonable margin of safety.

Each of the current assets must manage efficiently in order to maintain the liquidity of the

firm while not keeping too high level of any of them. Each of the short-team sources of

financing must be continuously managed to ensure that they are abstained and used in the

best possible way. The interaction between current assets and current liabilities is, therefore,

the main theme of the theory of working capital management.

Working capital may be defined more particularly as the assets held for current use within a

business less the amount due to those who await settlement in short term in whatever form.

Working capital is an important aspect manufacturing compares that have so far developed

country. Among all available options proper management of working capital is the only best

possible option to improve their operational viability. Working capital is the financial

management practice in manufacturing enterprises. Working capital represents portion that

circulates from one form to another in the ordinary conduct of business. This idea embraces

recurring transaction from cash to inventories to receivable to cash that forms the

conventional chain of business operations.

Fund deployed for short term are mainly for working capital or operational purpose.

Towards the day-to-day operation, a firm will have to provide money towards the purchase

of raw materials, payment of wage and salaries to extend credit to buyers of goods as well as

to meet other day to day operations.

By analyzing about the working capital, we concluded that, all the corporations. Weather

public or private, manufacturing or non-manufacturing have just adequate working capital to

serve in competitive market. It is because excessive or inadequate working capital is

dangerous from the firm’s point of view. Excessive investment on working capital affects a

firms’ profitability just idle investment, yields nothing. In the same way, inadequate

investment on working capital affects the liquidity position of the company and leads to

financial embarrassment and failure of the company.

It is therefore, recognized fact that any mistake made in management of working capital can

lead to adverse effects in business and reduced the liquidity, turnover, profitability and

increases the cost of financing of the enterprises.

DEFINITIONS OF WORKING CAPITAL:

The following are the most important definitions of Working capital:

1) Working capital is the difference between the inflow and outflow of funds. In other words

it is the net cash inflow.

2) Working capital represents the total of all current assets. In other words it is the Gross

working capital, it is also known as Circulating capital or Current capital for current assets

are rotating in their nature.

3) Working capital is defined as The excess of current assets over current liabilities and

provisions. In other words it is the Net Current Assets or Net Working Capital

CONCEPTS OF WORKING CAPITAL:

There are two concepts of working capital:- gross & net. Gross working capital, simply

called working capital, refers to the firm’s investment in current assets. Current assets are

the assets which can be converted into cash within an accounting period (or operating

cycle)and cash, short-term securities, receivables, debtors and stock (inventory) are included

in current assets. Net working capital refers to the difference between current assets and

current liabilities. Current liabilities are those claims of outsiders, which are expected to

mature for payment within an accounting periodand include creditors, bills payableand

outstanding expenses.

1) Gross working capital:

According to this concept, total current assets are working capital which presents both

owned capital as well as loan capital used for financing current assets. It includes cash,

short-term securities and receivables inventories. These assets can be converted into cash

within a year. Generally, when it comes to current assets, cash is the most valuable element

because it is immediately available to settle bills and debtors are more value than stock

which is nearer to being turned into cash. The gross concept of working capital refers to the

amount funds invested in short-term assets that are employed in the enterprise. Gross

working capital is the firm’s total current asset and net working capital is current assets

minus current liabilities.

Another name of gross working capital is circulating capital. Circulating capital means

circular flow of cash. This is also called operating cycle in case of manufacturing firm. This

cycle starts with which is used to pay for raw materials. Raw materials are converted into

work-in progress which is again converted into finished goods. When it is ready for sale, it is

a circular cash-flow from cash into inventories to receivables and back to cash, this cycle

will be repeat again for the whole life of the firm.

The value represented by current assets circulates from one working capital to another

working capital from purchase accounts to goods manufacturing accounts. From inventory

accounts to sales accounts, from sales accounts to cash accounts, this is described as

circulating nature of current assets of in other work working capital has circulating nature.

The speed of circulating of working capital of the turnover of current assets is an indicator of

degree of efficiency of the management. The faster the turnover shows the higher degree of

efficiency.

The working capital cycle can be presented in the diagram as:

COLLECTION PAYMENTS

DEBTORS

SALES

PRODUCTION

VALUE ADDED CONVERSION

Figure: 4.1 The working capital cycle of manufacturing firms.

If the business is profitable the firm’s assets at the end of each cycle will be greater than the original

investment. In this manner, each cycle will produce a gross profit, and the amount of net

earnings for the year will depend. In part, on number of times the cycle occurs or how

measured by the ratio of sales to current assets. The higher the ratio, the more efficiency the

operations, fewer current assets are needed to support each dollar of sales.

CREDITORSCASH

RAW MATERIALS

FINISHED GOODS

WORK-IN-

PROGRESS

The flow of working capital does not always proceeds as it is pre- planned when it moves

through different stage of cash cycle, for example, sales may decline due to can in consumer

taste, slow economy and receivable become more difficult to collect the working capital

cycle will be interrupted. This leads to decline in profitability and firm could suffer

bankruptcy if this adverse situation prevails for sometimes.

There is also a much shorter cycle of activity where in goods and materials are held for

manufacture and sale, and credit is advanced to customers for rapid conversion into cash to

provide the funds with which to continue in business and to make a profit distribution

possible.

The working capital cycle shown in figure 4.1 is theoperating cycle for non- manufacturing

firm where, cash is required to purchase raw materials which are needed to convert into

work-in- progress, which is again converted into finished goods. Are sold for cash and

credit and ultimately debtors will be realized.

The non manufacturing firms such as wholesalers and retailers do not manufacture goods. So, they

have the direct conversion of cash into stock of finished goods into debtors and then into cash.

This can be shown graphically as:

CASH

DEBTORS

Figure: 4.2 Operation cycle of non-manufacturing firms.

Sometimes service and financial concerns may not have any inventory. In this case the

operations cycle will be shortest as follows:

CASH

Figure: 4.3 Operating cycle of service and financial firms.

The gross capital working capital focuses on two aspects of current assets

management:

a) Optimum investment in current assets: As state earlier, both excessive and

inadequate investment is harmful for the business. This aspectsthus, emphasis on the

optimum adequate level of current assets, working capital depends upon the business

activated. It also changes with the change in business activities. This may cause

excess or shortage of working capital frequently. The management should be active

and alert to correct the imbalance.

b) Financing of current assets: This aspect focus on the need of arranging funds to

finance current assets when more working capital is required due to the increase in

business activities. Then the arrangement should be made quickly. Similarly, when

surplus funds arise, then they should be invested in short term securities.

2) Net working capital:

Net working capital comprises short term net assets: stock, debtors and cash less

creditors. Working capital management then is to do with management of all aspects of

both current assets and current liabilities, so as to minimize the risk of insolvency while

maximizing return on assets.

STOCK OF FINISHED GOODS

DEBTORS

Net working capital represents the excess of total current assets over total current

liabilities. It is a qualitative concept which shows the financial soundness of current

financial position. Net working capital may be positive or negative according to the size

of current assets and current liabilities. Current assets should be sufficiently in excess of

current liabilities for the positive working capital. This concept lives idea about the case

and cost of raising working capital to the management.

Not only for the management, is it also a major importance to investors and lenders.

They always like a company to maintain current assets should be two fold of current

liabilities and these concepts is measured by the current ratio via current assets ÷current

liabilities. Which should be 4:1. A large ratio indicates greater solvency and makes it

unsafe and unsound. A negative working capital denotes negative liquidity which is also

dangerous for the company.

Management should always be alert to improve the imbalance in the liquidity position of

the firm. Mathematically, it is presented as:

Net working capital ˭ Current assets – Current liabilities

An alternatives definition of net working capital is that portion of a firm’s current assets

financed with long term funds.

For every firm today, minimum portion of working capital is financed with the

permanent sources of funds such as owners’ capital, debentures, long-term debt, and

preference capital or retained earnings; this portion of working capital which is financed

with long term funds is called permanent working capital. Management must therefore,

decide the extent to which current assets should be financed with equity capital or/ and

borrowed capital.

Both the concepts of working capital, gross and net, are not mutually exclusive,

however. They are equally important from the management point of view in the gross

concept points out two important aspects of current assets: (i) Optimum investment in

each of the component of current assets and (ii)Financing of these current assets; while

the net concept indicates (i) The liquidity position and (ii) The extent to which working

capital may be financed by permanent sources of funds. Both the concepts have their

own advantages and disadvantages, which concept to choose depend upon the purpose of

the firm. The concept of gross capital is a financial concept where as that of net concept

is an accounting concept. Management is interested in current assets to operate the

business with efficiency. To evaluate the efficiency, gross concept is appropriate. On the

other hand interest of investors and lenders is in concept of net working capital because

it helps in the judgment if liquidity position of the enterprise.

4.3) Objective of Working capital:

Even profitability companies fail if they have inadequate cash flow. Liabilities dare

settled with cash and net profits. The primary objective of working capital management

is to ensure that sufficient cash is available to:

Meet day to day cash flow needs;

Pay wages and salaries when they fall due;

Pay creditors to ensure continued suppliers of goods and services;

Pay government taxation and providers of cash dividends; and

Ensure the long term survival of the business entity.

4.4) IMPORTANCE OF WORKING CAPITAL

Working capital may be regarded as the lifeblood of the business. Without insufficient

working capital, any business organization cannot run smoothly or successfully.

In the business the Working capital is comparable to the blood of the human body. Therefore

the study of working capital is of major importance to the internal and external analysis

because of its close relationship with the current day to day operations of a business. The

inadequacy or

mismanagement of working capital is the leading cause of business failures.

To meet the current requirements of a business enterprise such as the purchases of services,

raw materials etc. working capital is essential. It is also pointed out that workings.

Growth and Expansion Activities

As a company grows, logically, larger amount of working capital will be needed, though it is

difficult to state any firm rules regarding the relationship between growth in the volume of a

firm's business and its working capital needs. The fact to recognize is that the need for

increased working capital funds may precede the growth in business activities, rather than

following it. The shift in composition of working capital in a company may be observed

with changes in economic circumstances and corporate practices. Growing industries require

more working capital than those that are static.

Operating Efficiency

Operating efficiency means optimum utilization of resources. The firm can minimize its

need for working capital by efficiently controlling its operating costs. With in-creased

operating efficiency the use of working capital is improved and pace of cash cycle is

accelerated. Better utilization of resources improves profitability and helps in relieving the

pressure on working capital.

Price Level Changes

Generally, rising price level requires a higher investment in working capital. With increasing

prices the same levels of current assets need enhanced investment. However, firms which

can immediately revise prices of their products upwards may not face a severe working

capital problem in periods of rising levels. The effects of increasing price level may,

however, be felt differently by different firms due to variations in individual prices. It is

possible that some companies may not be affected by the rising prices, whereas others may

be badly hit by it.

Other Factors

There are some other factors, which affect the determination of the need for working capital.

A high net profit margin contributes towards the working capital pool. The net profit is a

source of working capital to the extent it has been earned in cash. The cash inflow can be

calculated by adjusting non-cash items such as depreciation, out-standing expenses, losses

written off, etc, from the net profit, (as discussed in Unit 6).

The firm's appropriation policy, that is, the policy to retain or distribute profits also has a

bearing on working capital. Payment of dividend consumes cash resources and thus reduces

the firm ',s working capital to that extent. If the profits are retained in the business, the firm 's

working capital position will be strengthened.

In general, working capital needs also depend upon the means of transport and

communication. If they are not well developed, the industries will have to keep huge stocks

of raw materials, spares, finished goods, etc. at places of production, as well as at

distribution outlets.

4.5) Determinants of working capital:

There are no hard and fast rules or certain formulae to determine the working capital

requirement of the firm. The importance of efficient working capital management is an

aspect of overall financial management. Thus a firm plans its operations with adequate

working capital requirement or it should have neither too excess nor too inadequate working

capital. A number of factors affect the working capital. Generally, the following factors

affect the working capital requirement of the firm.

i)Nature and size of business:

The working capital requirement of a firm is basically related size and nature of the

business. If the size of the firm is bigger, then or requires more working capital whereas

small firm needs less working capital relatively to public utilities.

ii) Manufacturing Cycle:

Working capital requirement of an enterprise are also influenced by the manufacturing or

production cycle. It refers to the time involved to make finished goods from the raw

materials. During the process of manufacturing cycle funds are tied up longer the

manufacturing cycle, the larger will be working capital requirement and vice-versa.

iii) Production Policy:

Working capital requirement is also determined by its production policy. If a firm produces

seasonal foods, the its production and sales volume fluctuate with different seasons. This

type of fluctuating policy affects the working capital policy of the firm.

iv) Credit Policy:

Credit policy affects the working capital of a firm. Working capital requirement depends on

terms of sales. Different term may be followed by different customers according to their

credit worthiness. If the firm follows the liberal credit policy, then it requires more working

capital. Conversely, if a firm follows the stringent policy, it requires less working capital.

v) Availability of Credit:

Availability of credit facility is another factor that affects the working capital requirement. If

the creditors avail a liberal credit terms then the firm will need less working capital and vice-

versa. In other works, the firm can get credit facility easily on favorable conditions. Thus, it

requires less working capital to run the firm otherwise more working capital is required to

operate the firm smoothly.

vi) Growth and Expansion:

Growth and expansion also affects the working capital requirement of firm. However, it is

difficult to precise; determine the relationship between the growth and expansion of the firm

and working capital needs, however, the other things being the same growing firms needs

more working capital than those static ones.

vii) Price level Change:

Price level change also affects the working capital requirement of a firm. Generally, a firm

requires maintaining the higher amount of working capital, if the price level rises. Because

the same level of current assets needs more due to the increasing price. In conclusion, the

implications of changing price level of working capital position will vary from firm to firm

depending on the nature and another relevant consideration of the operation of the conserned

firm.

viii) Operating Efficiency:

Operating efficiency is also an important factor, which influences the working capital

requirements of the firm. It refers to the efficient utilization of available resources at

minimum cost. Thus, financial manager can contribute to strong working capital position

through operating efficiency. If a firm has strong operation efficiency then it needs lesser

amount of working capital and vice-versa.

ix) Profit Margin:

The level of profit margin differs from firm to firm. It depends upon the nature and quality

of product has a sound marketing management and enjoy the monopoly power in the market

then it earns quite high profit and vice-versa. Profit is sources of working capital because it

contributes towards the working capital as a pol by generating more internal funds.

x) Level of Taxes

The level of taxes also influences working capital requirement of firm. The amount of taxes

to be paid in advances is determined by the prevailing tax regulations. But the firm’s profit

is not constant, or can note be predetermined. Tax liability in asense of short-term liquidity

is payable in cash. Therefore, the provision for tax amount is one of the important aspects of

working capital planning. If tax liability increase, it needs to increase the working capital

and vice-versa.

4.6) Financing of Working Capital:

The firm’s working capital assets policy is never set in a vacuum; it is always established in

conjunction with the firm’s working capital policy. Every manufacturing concern of industry

requires additional assets whether they are instable or growing conditions. The most

important function of financial manager is to determine the level of working capital and to

decide how it is to financed. Financial of any assets is concerned with two major factors-

cost and risk. Therefore, the financial manager must determine an appropriate financing mix,

or decide how current liabilities should be used to finance current assets. However, a number

of financing mixes are available to the financial manager. He can resort generally there kinds

of financing.

i) Long-term financing:

Long-term financing has high liquidity and low profitability, Ordinary share, Debenture,

Preference share; retained earnings and long-term debt of financial institution are major

sources of long-term finance.

ii) Short-term financing:

A firm must arrange its short-term credit in advance. The sources of short-term financing

of working capital are trade credit and bank borrowing.

Bank credit: Bank credit is the primary institutional sources for working capital

financing for the purpose of bank credit, amount of working capital requirement has to

be estimated by the borrowers and banks areapproached with the necessary supporting

data.

After availability of this data, bank determines the maximum credit based on the margin

requirements of the security. The types of loan provided by commercial banks are loan

arrangement, overdraft arrangement, commercial paper etc.

4.7) APPROACHES TO MANAGING WORKING CAPITAL

Two approaches are generally followed for the management of working capital: (i) the

conventional approach, and (ii) the operating cycle approach.

The Conventional Approach

This approach implies managing the individual components of working capital (i.e.

inventory, receivables, payables, etc.) efficiently and economically so that there are neither

idle funds nor paucity of funds. Techniques have been evolved for the management of each

of these components. In India, more emphasis is given to the management of debtors

because they generally constitute the largest share of the investment in working capital. On

the other hand, inventory control has not yet been practised on a wide scale perhaps due to

scarcity of goods (or commodities) and ever rising prices.

The Operating Cycle Approach

This approach views working capital as a function of the volume of operating expenses.

Under this approach the working capital is determined by the duration of the operating cycle

and the operating expenses needed for completing the cycle. The duration of the operating

cycle is the number of day involved in the various stages, commencing with acquisition of

raw materials to the realization of proceeds from debtors. The credit period allowed by

creditors will have to be set off in the process. The optimum level of working capital will be

the requirement of operating expenses for an operating cycle, calculated on the basis of

operating expenses required for a year.

In India, most of the organizations use to follow the conventional approach earlier, but now

the practice is shifting in favour of the operating cycle approach. The banks usually apply

this approach while granting credit facilities to their clients.

ADEQUACY OF WORKING CAPITAL

The firm should maintain a sound working capital position. It should haveadequate working

capital to run its business operations. Both excessive aswell as inadequate working capital

positions are dangerous from the firms point of view. Excessive working capital not only

impairs the firmsprofitability but also result in production interruptions and inefficiencies.

The dangers of excessive working capital are as follows:

It results in unnecessary accumulation of inventories. Thus, chances of

inventory mishandling, waste, theft and losses increase.

It is an indication of defective credit policy slack collections period.

Consequently, higher incidence of bad debts results, which adversely

affects profits.

Excessive working capital makes management complacent which

degenerates into managerial inefficiency.

Tendencies of accumulating inventories tend to make speculative

profits grow. This may tend to make dividend policy liberal and difficult

to cope with in future when the firm is unable to make speculative

profits.

Inadequate working capital is also bad and has the following dangers:

It stagnates growth. It becomes difficult for the firm to undertake

profitable projects for non- availability of working capital funds.

It becomes difficult to implement operating plans and achieve the firm s

profit target.

Operating inefficiencies creep in when it becomes difficult even to meet

day commitments.

Fixed assets are not efficiently utilized for the lack of working capital

funds. Thus, the firm s profitability would deteriorate.

Paucity of working capital funds render the firm unable to avail

attractive credit opportunities etc.

The firm loses its reputation when it is not in a position to honor its

short-term obligations.

An enlightened management should, therefore, maintain the right amount of working capital

on a continuous basis. Only then a proper functioning of business operations will be ensured.

Sound financial and statistical techniques, supported by judgment, should be used to predict

the quantum of working capital needed at different time periods.

A firm s net working capital position is not only important as an index of liquidity but it is

also used as a measure of the firm’s risk.

Risk in this regard means chances of the firm being unable to meet its obligations on due

date. The lender considers a positive net working as a measure of safety. All other things

being equal, the more the net working capital a firm has, the less likely that it will default in

meeting its current financial obligations. Lenders such as commercial banks insist that the

firmshould maintain a minimum net working capital position.

In this study four years data ( 2008 to 2012 have been presented and analyzed. It covers to analyze the ratio as well trend and composition of working capital, which means current assets, current liabilities, liquidity, turnover, leverage and profitability of BALIC.

5.1) Components of current assets:

For the day to day business operation different types of current assets are required. Current assets refer those assets that are cash or can be converted into cash within a year. The composition of current assets or the main components of current assets at BALIC are cash and bank balance, loan and advances and government securities. Miscellaneous current assets are also a component of current assets. Prepaid expenses, outstanding income like interest receivable and other current assets are also included in miscellaneous current assets. The following table shows the amount of cash and bank balance, money at call or short notice, loan and advanced government securities and other current assets of Bajaj Allianz Life Insurance Company Pvt. Ltd.

Table 1 :

Current Assets

Fiscal Year Sundry Debtors

Cash and Bank balance

Loan and advance

Other C.A Total

2008/09 639,948 3,515,993 76,970 1,148,475 5,381,386

2009/10 1,089,070 2,186,908 130,275 2,022,560 5,298,538

2010/11 1,341,359 4,285,098 147,078 2,344,020 8,217,555

2011/12 1,223,706 4,520,165 170,660 3,832,457 9,746,988

Source:- Annual Report of BALIC From 2008/09 to 2012/13

Assets of Company was amounted to Rs. 5,460,356 which included Rs. 3,552963 of cash and bank balance, Rs. 76,970 of loan and advance, Rs. 1,828,423 of miscellaneous current assets. Current assets of the company increase in all four years.

INTERPRETATION 1 :

As stated in above figure the current assets of BALIC increases all the four year from FY 2008/09 t0 2011/12. In the cash of FY 2009/10, the increasing trend is low from FY 2008/09. But the overall increasing trend of current assets is higher.

5.2) Component of Current Liabilities:

Current liabilities is a short-term obligation which is payable within a year. The composition of current liabilities or the main components of current liabilities. Tax provision, staff bonus, proposed dividend payable and other liabilities are included in other current liabilities. The following table shows the amount of deposit and other accounts, short term loan, bills payable and other current liabilities of BALIC.

Table 2 :

Current Liabilities

Fiscal Year Creditors Deposit Bills Payable Other C.L Total

2008/09 2,249,357 3,318,900 87,607 2,396,492 8,052,356

2009/10 3,701,079 4,129,900 196,168 2,491,564 10,518711

2010/11 3,281,079 4,430,900 98,372 1,690,564 9,500,915

2011/12 4,246,449 4,142,491 97,087 2,368,827 10,654,854

In the above table, the component of current liabilities which consists deposits.Source annual report of company.

INTERPRETATION 2 :

In the above figure shows that the current liabilities of the company is increasing In fiscal year 2008/09 the total amount of current liabilities Rs. 8,052,356 for the increasing impact of deposits and other current liabilities. In all four year deposits and other current liabilities are increased.

5.3) Working capital of BALIC:

Working capital is required to run business smoothly and efficiently in the context of set objectives. It is no doubt that no organization can achieve its goal without proper use of working capital. It means money invested on working capital should be neither more nor less because both the position of working capital affects not only liquidity but also profitability of the organization. The investment decision should be made on any type of current assets by considering their role in company and determining which one is more beneficial to the company and which is not. The following table shows the amount of working capital of BALIC of the study period.

Table 3 :

Working capital of Company

Fiscal Year Total C.A Total C.L WC= CA-CL

2008/09 5,381,386 8,052,356 4,470,970

2009/10 5,298,538 9,500,915 4,202,377

2010/11 8,217,555 10,518,711 2,301,156

2011/12 9,746,988 10,654,854 907,866

Sources: Annual Report of company.

INTERPRETATION3:

In the above figure we clearly show the current assets, current liabilities and working capital condition of BALIC from fiscal year 2008/09 to 2011/12. Working capital condition of the company is at satisfactory level. All the year of the study period the working capital of the company is negative.

Liquidity Ratio:Liquidity ratios measures ability of the firms to meet its short-term obligations. Liquidity of any business organization is directly related with working capital or current assets and current liabilities of that organization. In other words, one of the main objectives of working capital management is keeping sound liquidity position. Company is a different organization which is engaged in Mobilization of funds. So, without sound liquidity position of ability to meet its short-term obligation various liquidity ratios are calculated and to know the trend of liquidity are trend analysis of major liquidity ratios have been considered.

5.4) Current Ratio:This ratio indicates the short-term solvency position of bank. In other words current ratio indicates better liquidity position. It is calculated as follows:

Current assets (CA)

Current liabilities (CL)

The following table shows the current ratio to compare the following capital management of BALIC.

Table 4 :

Current ratio

Fiscal Year Total CA Total CL Current ratio

2008/09 5,381,386 8,052,356 0.67

2009/10 5,298,538 10,518,711 0.50

2010/11 8,217,555 9,500,915 0.86

2011/12 9,746,988 10,654,854 0.91Average=0.74

Sources: Annual Report of BALIC from 2008/09 to 2012.

Current Ratio of BALIC

INTERPRETATION4 :

The above table shows the CA, CL and current ratio of the BALIC. The current ratio of the BALIC is fluctuating over the year. The highest current ratio is in fiscal year 2011/12 0.91. And in all year it is increasing. The average ratio is 0.74.

5.6) Cash and bank balance to Current Assets:

The cash and bank balance is almost liquids from the current assets, this ratio shows the percentage of readily available fund within the banks. It can be calculated by dividing cash and bank balance by current assets, which is given below.

Cash and bank balance

Current assets

This ratio shows that the percentage of current assets cover cash and bank balance. The following table and figure shows the cash and bank balance to current assets ratio of BALIC over the study period.

Table 5 :

Cash and Bank to Current Assets Ratio of BALIC

Fiscal Year Cash& Bank Balance

Current Assets Ratio (%)

2008/09 3,552,963 5,381,386 0.67

2009/10 2,186,908 5,298,538 0.41

2010/11 4,385,098 8,217,555 0.53

2011/12 4,382.396 9,746,988 0.44

Sources: Annual Report of Company

INTERPRETATION5 :

Cash and Bank balance to current assets ratio of the company is in 2009/10 decreased and in 2010/11 it increased and again in 2011/12 is decreased.

5.7) Cash and Bank Balance to Total deposit:

The ratio shows the ability of bank immediate funds to cover their deposits. It can be calculated by dividing cash and bank balance by deposits. The ratio can be expressed as:

The following table and figure shows the cash and bank balance to total deposits ratio of the BALIC over the study period.

Table 6 :

Cash and Bank balance to total Deposit Ratio of BALIC

Fiscal Year Cash & bank Total deposit Ratio

2008/09 3,552,963 2,318,900 1.53

2009/10 2,186,908 2,123,900 1.03

2010/11 4,385,098 2,899,500 1.51

2011/12 4,382.396 3,857,000 1.14

Sources: Annual report of Company

INTERPRETATION6 :

The above figure depicts that the cash and bank balance to total deposit of BALIC has been slightly decreasing in FY 2009/10, 2010/11, 2011/12.

5.8) Net Profit to Total Assets:

This ratio is very much crucial for measuring the profitability of funds invested in the bank assets. It measures the return on assets it computed by using the following formula.

Net profit after tax

Total assets

Table 7

Net Profit to Total assets Ratio of BALIC

Fiscal Year Net Profit Total assets Ratio(%)

2008/09 5,605,846 5,336,042 1.05

2009/10 6,182,978 5,298,538 1.17

2010/11 10,387,412 8,217,555 1.26

2011/12 23,499,431 9,746,988 2.41

Sources: Annual Report of company

INTERPRETATION7:

Net Profit to total asset ratio in 2008/09 1.05 and it increasing slightly in financial year 2009/10, 2010/11 and 2011/12.

5.9) Debtors Turnover Ratio:

Concept: -

Debtors are expected to be converted into cash over a short period of time

and therefore are included in current assets. It shows how many times debtors are converted

into cash in a year.

Debtors Turnover Ratio = Net credit sales

Average Debtors

Table 8 :

Debtors Turnover Ratio

Year Credit sales Average Debtors Ratio2008/09 102,199,181 19,080,194 5.35

2009/10 132,858,985 27,192,101 4.88

2010/11 171,671,451 36,302,837 4.72

2011/12 221,246,824 42,584,634 5.19

Diagram:-

INTERPRETATION8 :

The debtor’s turnover ratio was very less in the year 2010/11 at 4.72 times,

but them it has increased to 5.19, 5.66 times in the year 2011/12 and 2008-09. This shows

that the company is making all the offers to speed up the collection process.

5.9) Creditors Turnover Ratio:

Concept: -

Creditors’ turnover ratio establishes relationship between not credit purchases

and average trade creditors and accounts payable. The ratio indicates the velocity with which

the creditors are turned over in relation to purchases.

Creditors Turnover Ratio = Net Credit Purchases

Average creditors

Table 9 :

Creditors Turnover Ratio

Year Credit Purchases Average Creditors Ratio

2008/09 96,724,469 82,074,994 1.17

2009/10 127,553,879 112,554,635 1.13

2010/11 165,680,148 146,617,013 1.13

2011/12 213,323,185 189,501,666 1.12

INTERPRETATION9 :

The creditors turnover ratio was 1.17 times in the year 2008/09& it decreased to 1.13 times in the year 2009-2010 but creditor turnover will be remain same two year 2009/10 and 2011/12.

5.10)Working Capital Turnover Ratio:-

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. It

measures the efficiency with which the working capital is being used by the firm.

WORKING CAPITAL TURNOVER RATIO = Net Sales

Net Working Capital

Table 10 :

Year Net Sales Net Working Capital Ratio

2008/09 102,199,181 20,229,751 5.05

2009/10 132,858,985 23,244,807 5.72

2010/11 171,671,451 36,879,727 4.65

2011/12 221,246,824 32,265,850 6.86

Source: Annual report of BALIC

INTERPRETATION10 :

In The year 2008/09 working capital t/o ratio was5.05 time ,5.72 time in the year 2009/10. In the year 2009/10 the working capital has increases. And in financial year 2010/11 it decreased and again in financial year 2011/12 it increased.

Table 11 :

Statement of changes in working Capital for the year 2009/10

Particulars 31-3-2009 31-3-2010 Increase Decrease

Current assets

Sundry debtors 639,948 1,089,070 449,122

Cash& bank balance 3,515,993 2,186,908 1,366,055

Loan& advance 76,970 130,275 53,310

Other C.A 1,148,475 2,022,560 834,085

Total 5,381,386 5,298,538 1,336,517 1,366,055

Current Liabilities

Sundry creditors 2,249,357 3,701,079 1,451,722 -

Deposit 3,318,900 4,129,900 811,000 -

Bills payable 87,607 196,168 108,561 -

Other C.L 2,396,492 2,491,564 95,072 -

Total 8,052,356 10,518,711 2,466,355

INTERPRETATION 11 :

Current assets for the year 2009/10 is increases and it is good condition for the company and current liabilities of the company is increased by 2,466,355.and by putting formula (W.C= C.A- C.L)working capital of the company for year 2009/10 is 4,470,970. Here working capital of company is increasing that means profitability of company also increasing.

Table 12 :

Statement of changes in working Capital for the year 2m,010/11


Current assets

Sundry debtors 1,089,070 1,341,359 298,850

Cash& bank balance 2,186,908 4,285,098 2,198,190

Loan& advance 130,275 147,078 16,803

Other C.A 2,022,560 2,344,020 468,538

Total 5,298,538 8,217,555 2,982,381

Current Liabilities

Sundry creditors 3,701,079 3,281,079 420,000

Deposit 4,129,900 4,430,900 301,000

Bills Payable 196,168 98,372 97,796

Other C.L 2,491,564 1,690,564 801,000

Total 10,518,711 9,500,915 301,000 1,318,796

INTERPRETATION12 :

Current assets for the year 2009/10 is increases and it is good condition for the company and current liabilities of the company is decreased by 1,017,796 that’s shows the working capital of the company is increased. Here debtors increased means cash balance of company decreased.

Table 13 :

Statement of changes in working Capital for the year 2011/12


Current assets

Sundry debtors 1,341,359 1,223,706 117,653

Cash& bank balance 4,285,098 4,520,165 235,067

Loan& advance 147,078 170,660 23,582

Other C.A 2,344,020 3,832,457 1,488,437

Total 8,217,555 9,746,988 1,747,086 117,653

Current liabilities

Sundry creditors 3,281,079 4,246,449 765,370

Deposit 4,430,900 4,142,491 - 288,409

Bills payable 98,372 97,087 1,285

Other C.L 1,690,564 2,368,827 678,263

Total 9,500,915 10,654,854 1,443,633 289,694

INTERPRETATION13 :

Current assets for the year 2009/10 is increases and it is good condition for the company and current liabilities of the company is increased by 1,153,939 that’s shows working capital of company decreased. Here debtors decreased that’s good for company it shows cash of company increased.

FINDINGS1. Current assets for the year 2009/10 is decreases and its application for the company

and current liabilities of the company is increased by 2,466,355.and by putting formula (W.C= C.A- C.L)working capital of the company for year 2009/10 is 4,470,970.

2. Current assets for the year 2009/10 is increases and it is good condition for the company and current liabilities of the company is decreased by 1,017,796 that’s shows the working capital of the company is increased. Here debtors increased means cash balance of company decreased.

3. Current assets for the year 2009/10 is increases and it is good condition for the company and current liabilities of the company is increased by 1,153,939 that’s

shows working capital of company decreased. Here debtors decreased that’s good for company it shows cash of company increased.

4. Current ratio (C.R) of fiscal year 2008/09 to 2011/12 showed slightly increase i.e. 0.67 to 0.91. But in fiscal year 2009/10 C.R decreased comparatively in deposits and in fiscal year 2010/11 C.R is again increase 0.86 due to increase in factors which influence it.

5. Cash and Bank balance to current assets ratio of the company is in 2009/10 decreased and in 2010/11 it increased and again in 2011/12 is decreased.

6. The above figure depicts that the cash and bank balance to total deposit of BALIC has been slightly decreasing in FY 2009/10, 2010/11, 2011/12.

7. Net profit to total asset ratio in 2008/09 1.05 and it increasing slightly in financial year 2009/10, 2010/11 and 2011/12.

8. The debtor’s turnover ratio was very less in the year 2010/11 at 4.72 times, but them

it has increased to 5.19, 5.66 times in the year 2011/12 and 2008-09. This shows that

the company is making all the offers to speed up the collection process.

9. The creditors turnover ratio was 1.17 times in the year 2008/09& decreased to 1.13 times in the year 2009-2010 but creditor turnover will be remain same two year 2009/10 and 2011/12.

10. In The year 2008/09 working capital t/o ratio was5.05 time ,5.72 time in the year 2009/10. In the year 2009/10 the working capital has increases. And in financial year 2010/11 decreased and again in financial year 2011/12 increased.

SUGGESTIONOn the basis of the analysis and observation an attempt made to present some suggestions.

1. In the year 2009-2010 the current assets of the company has declined and current

liability of the company has increases therefore the net working capital declined.

There for the current ratio has declined. The net working capital of the company has

increased remaining year.

2. The company has able to repay the liability of the creditors because the profit of the

company has increased every year.

3. Because of the current assets has declined in the year 2010-2011 but profit of the

company has increased in the year 2008-2009. There for the return on current assets

is high.

4. Company has able to full fill the standard level of current ratio i.e. 2:1 .There for the

company has able to repay the liability and loan of company.

CONCLUSIONAt the end it is stated that the working capital management is a part of money invested in the

business.Working capital may be regarded as lifeblood of a business. Its effective provision

can do much to ensure the success of a business.

The Working Capital Management contributes much in the over all management of the

organization affairs, efficiency of organization operations depend on how it manages its

short term business dealings. Working Capital management contributes for the firm

efficiency as well as the finance manager is proper utilizing the available wealth and

maintaining the required liquidity.

Working capital is considered to be an important tool for progress. Working capital

management techniques are playing significant role in assisting the management for decision

making. The study of working capital management at Bajaj Allianz Life Insurance Pvt.

Ltd.Is found to be very effective. The working capital contains the management of Cash,

Debtors, and creditors. The Bajaj Allianz Life Insurance Pvt. Ltd has profit oriented

company .The profit of the company will be increases every year .The company has able to

the repay the amount of the creditor. The company has more working capital and also sale

has increases year to year.

LIMITATIONS1. The analysis is limited to three years of data study (for the year 2008/09 to 2011/12 )

for financial analysis.

2. The estimation and expectation made in the financial statements may differ from actual

performance due to various economic conditions, government policies and other

related factors.

3. All the data accumulated and presented in this project is procured from secondary

sources which may have been subject to stealthy biased nature.

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