Kevin Project- Oushadhi

CONTENTS

1. INTRODUCTION 4-20

2. REVIEW OF LITERATURE 21-34

3. RESEARCH METHODOLOGY 35-39

4. DATA ANALYSIS AND INTERPRETATION 40-73

5. FINDINGS, RECOMMENDATIONS AND CONCLUSION 74-77

BIBLIOGRAPHY 78

APPENDIX 79-88

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LIST OF TABLES

Table No. Title Page No.

4.1 Trend Analysis of Current Assets for Five Years

4.2 Trend Analysis of Current Liabilities for Five Years

4.3 Trend Analysis of Working Capital

4.4 Trend Analysis of net sales

4.5 Trend Analysis of inventory

4.6 Current Ratio of Five Years

4.7 Quick Ratio of Five Years

4.8 Absolute Liquid Ratio of Five Years

4.9 Working Capital Turnover Ratio of Five Years

4.10 Inventory Turnover Ratio of Five Years

4.11 Debtors Turnover Ratio of Five Years

4.12 Creditors Turnover Ratio of Five years

4.13 Cost of Goods Sold Ratio of Five Years

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LIST OF CHARTS

Table No. Title Page No.

4.1 Trend Analysis of Current Assets for Five Years

4.2 Trend Analysis of Current Liabilities for Five Years

4.3 Trend Analysis of Working Capital

4.4 Trend Analysis of net sales

4.5 Trend Analysis of inventory

4.6 Current Ratio of Five Years

4.7 Current assets and current liabilities

4.8 Quick Ratio of Five Years

4.9 Quick assets and current liabilities

4.10 Absolute Liquid Ratio of Five Years

4.11 Absolute liquid assets and current liabilities

4.12 Working Capital Turnover Ratio of Five Years

4.13 Net sales and net working capital

4.14 Inventory Turnover Ratio of Five Years

4.15 Cost of goods sold and average stock

4.16 Debtors Turnover Ratio of Five Years

4.17 Net credit sales and sundry debtors

4.18 Creditors Turnover Ratio of Five years

4.19 Net credit purchase and sundry creditors

4.20 Cost of Goods Sold Ratio of Five Years

4.21 Cost of goods sold and net sales

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CHAPTER- 1

INTRODUCTION

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INTRODUCTION

ABOUT THE STUDY

In our present day economy, finance is defined as the provision of money at the time

when it is required. Every enterprise, whether big, medium or small, need finance to carry on its

operations and to achieve its target. In fact, finance is so indispensable today and it is right said

that it is lifeblood of an enterprise. Without adequate finance no enterprise can possibly

accomplish its objectives.

Finance may be defined as the provision of money at the time when it is required.

Finance reface to the management of flows of money through an organization. It concerns with

the applications of skills in the manipulation, use and control money.

Finance is the most important of all business functions. It remains a focus of all activities.

It is not possible to substitute or eliminate this, because the business will close down in the

absence of finance. The need of money is continuous. It starts with the setting up of an enterprise

and remains at all times. The development and expansion of business rather need more

commitment for funds.

FINANCE PLAN

A financial plan is a statement estimating the amount of capital and determining its

composition. The quantum of funds needed will depend upon the assets requirements of the

business. The time at which funds will be needed should be carefully decided so that finances are

raised at a time when these are needed. The next aspect of a financial plan is to determine the

pattern of financing. There are a number of ways for raising funds.

The selection of various securities should be done carefully. Issuing of capital and

debentures, raising of loans, etc may raise the funds. Which source of finance should be raised

and up to what amount these should be raised is very important. Once a Patten of financing is

selected then it become very difficult to modify it. A financial plan also spells out the policies to

be pursed for the flotation of various corporate securities, particularly regarding the time of their

flotation.

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SOURCES OF FINANCE

In our present day economy, finance is defined as the provision of money at the time

when it is required. Every enterprise, whether big, medium or small, need finance to carry on its

operations and to achieve its targets. Without adequate finance, no enterprise can possible

accomplish its objectives. Capital required for a business can be classified under two main

categories;

1. Fixed Capital

2. Working Capital.

Every business needs funds for two purposes for establishment and to carry out its day-

to-day operations. Long-term funds are required to create production facilities though purchase

of fixed asset such as plant, machinery, land, building, furniture, etc. Investment is these assets

represent that part of firm’s capital that is blocked on a permanent or fixed basis and is called

fixed capital.

Funds are also needed for short-term purpose for the purchase of raw materials, payment

of wages and other day-to-day expenses, etc. These funds are known as working capital. The

various source of raising long-term funds include issue of shares, debentures, plaguing back of

profits and loans from financial institutions, etc. The short-term requirements of funds can be

met from commercial bank, trade credit, installment credit, advances, factoring or receivable

credit, accrual, deferred incomes, and commercial paper, etc.

FINANCIAL MANAGEMENT

Financial management entails planning for the future of a person or a business enterprise to

ensure a positive cash flow. It includes the administration and maintenance of financial assets.

Besides, financial management covers the process of identifying and managing risks. The

primary concern of financial management is the assessment rather than the techniques of

financial quantification. A financial manager looks at the available data to judge the performance

of enterprises. Managerial finance is an interdisciplinary approach that borrows from both

managerial accounting and corporate finance. Some experts refer to financial management as the

science of money management. The primary usage of this term is in the world of financing

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business activities. However, financial management is important at all levels of human existence

because every entity needs to look after its finances

Levels of Financial Management

Broadly speaking, the process of financial management takes place at two levels. At the

individual level, financial management involves tailoring expenses according to the financial

resources of an individual. Individuals with surplus cash or access to funding invest their money

to make up for the impact of taxation and inflation. Else, they spend it on discretionary items.

They need to be able to take the financial decisions that are intended to benefit them in the long

run and help them achieve their financial goals.

From an organizational point of view, the process of financial management is associated with

financial planning and financial control. Financial planning seeks to quantify various financial

resources available and plan the size and timing of expenditures. Financial control refers to

monitoring cash flow. Inflow is the amount of money coming into a particular company, while

outflow is a record of the expenditure being made by the company. Managing this movement of

funds in relation to the budget is essential for a business. At the corporate level, the main aim of

the process of managing finances is to achieve the various goals a company sets at a given point

of time. Businesses also seek to generate substantial amounts of profits, following a particular set

of financial processes.

Financial managers aim to boost the levels of resources at their disposal. Besides, they control

the functioning on money put in by external investors. Providing investors with sufficient

amount of returns on their investments is one of the goals that every company tries to achieve.

Efficient financial management ensures that this becomes possible. Strong financial management

in the business arena requires managers to be able to:

1. Interpret financial reports including income statements, Profits and Loss or P&L, cash

flow statements and balance sheet statements

2. Improve the allocation of working capital within business operations

3. Review and fine tune financial budgeting, and revenue and cost forecasting

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4. Look at the funding options for business expansion, including both long and short term

financing

5. Review the financial health of the company or business unit using ratio analyses, such as

the gearing ratio, profit per employee and weighted cost of capital

6. Understand the various techniques using in project and asset valuations

7. Apply critical financial decision making techniques to assess whether to proceed with an

investment

8. Understand valuations frameworks for businesses, portfolios and intangible assets

In general financial management is the effective & efficient utilization of financial resources. It

means creating balance among financial planning, procurement of funds, profit administration &

sources of funds.

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INDUSTRY PROFILE

AYURVEDA

Ayurveda aims physical, psychological, spiritual and social welfare of living being.

Envisages the means of preservation of health, prevention and treatment of various ailments.

Eight fold structure of Ayurveda covers the faculties of General Medicine, Pediatrics, Psychiatry,

ENT & Ophthalmology, Surgery, Toxicology, Geriatrics, Science of Aphrodisiacs. According to

Ayurveda, the living body is composed of five basic elemental substances i.e. Panchabhouthika

Principles Viz. Prithvi, Thejas, Vayu, Akasam. These five physical elements constitute the three

essential components of the controller of body which are termed as ‘Thridosha’ viz. Vatha, Pitha

and Kapha. Vatha the controller of body is responsible for the physical activity or the motion in

the living being. The entire physico chemical phenomenon including the biochemical metabolic

and endocrine functions are attributed to Pitha. The gross structure of body (sold and liquid) is

constituted by Kapha.

Ayurveda defines disease as the state in which body and mind are subjected to pain and

misery. The equilibrium of the three humours i.e. “Thridoshas” results in health and their excited

and imbalanced condition causes disease. Approach of Ayurveda is field oriented holistic and

functional. Ayurveda utilizes wealth of nature for increasing the natural resistance of the body.

Treats man as whole and uses drug as a whole. Ayurveda views that successful medical

treatment depends upon four factors, the physician, drugs or diet, nurse, and patient. In principle

the Ayurvedic approach to the treatment of a disease consists of two major procedures.

SAMSODHANACHIKITSA- The radical treatment supposed to eradicate or eliminate the

vitiated humours, thus completely preventing or curing the disease.

SAMSAMANACHIKITSA- The conservative treatment by administration of appropriate or

temporarily subsiding a disease.

Upholds the law of similarity and diversity in therapeutics. Ayurveda favours administration of

natural raw drugs (Plant origin, Animal origin and Mineral origin) and their preparations.

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Generally Ayurvedic medicines cause no toxic or side effects, no question of tolerance,

resistance, and addiction.

Ayurvedic medicines are produced by several thousand companies in India, but quite of

them are small, including numerous neibourhood pharmacies that compound ingredients to make

their own remedies. It is estimated that the total value of the products from the entire Ayurvedic

production in India is on the order of one billion dollars (U.S.).The industry has been dominated

by less than a dozen major companies for decades, joined recently by a few others that have

followed their lead, so there are today 30 companies doing a million dollars or more per year in

business to meet the growing demand for Ayurvedic Medicine. The products of these companies

are included within the broad category of fast moving consumer goods (FMCG; which mainly

involves foods, beverages, toiletries, cigarettes etc.).Most of the larger Ayurvedic medicine

suppliers provide materials other than Ayurvedic internal medicines, particularly in the areas of

foods and toiletries (soap, toothpaste, shampoo, etc.), where there may be some overlap with

Ayurveda, such as having traditional herbal ingredients in the composition of toiletries.

STATUS OF AYURVEDA IN INDIA

The Indian government and non-government organizations have been collecting statistics on

the Ayurvedic system in India and these data about the manpower and institutional aspects of

Ayurveda have emerged:

Number of registered medical practitioners: 366,812

Number of dispensaries: 22,100

Number of hospitals: 2,189

Number of hospital beds: 33,145

Number of teaching institutions (undergraduate): 187

Number of upgraded postgraduate departments: 51

Number of specialties in postgraduate medical training: 16

Number of pharmacies manufacturing Ayurvedic medicines: 8,400

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In India, 60% of registered physicians are involved in non-allopathic systems of medicine.

In addition to the nearly 400,000 Ayurvedic practitioners, there are over 170,000 homeopathic

physicians; India has about 500,000 medical doctors (similar to the number in the U.S., but

serving nearly 4 times as many people). Reliance on Ayurvedic medicine is heavy in certain

regions of India, such as Kerala in the Southwest. Many ayurvedic practitioners in small villages

are not registered.

ORGANIZATION PROFILE

OUSHADHI

The Pharmaceutical Corporation (I.M) Kerala limited, Thrissur popularly known as

OUSHADHI is an Ayurvedic medicine manufacturing company fully owned by Government of

Kerala. Directly controlled by Health and Family Welfare Department of Kerala State

Government. Governed by a Board of Directors, appointed by the Government of Kerala.

Oushadhi is the largest producer of Ayurveda medicines in public sector in India. This is the one

among the few public sector companies, consistently making profit and paying dividend Govt.of

Kerala since 1999. Oushadhi supplies medicines to Govt. of Kerala for the distribution to

common man through ISM Depts, produces 450 Ayurvedic formulations-both classical and

proprietary. Oushadhi is the sole supplier of medicines to Govt. Ayurveda Hospitals and

Dispensaries in Kerala. And also this firm is the supplier of Ayurvedic Medicines to Govt.

Hospitals and Dispensaries of other states like Madhya Pradesh, Chattisgarh, Pondichery,

Rajasthan, Orissa, New Delhi etc. It caters to the need of public through a vast network of 610

agencies spread all over the nation.

Currently Oushadhi manufactures more than 450 Ayurvedic formulations as per ancient

classical texts, rare combinations of expert, experienced Keralite authorities and special

combinations developed in the Research wing. Oushadhi upholds ancient traditional methods of

manufacturing along with modern Machinery and technology under strict quality control

measures. The whole manufacturing activities are under the direct and expert supervision by

qualified Ayurvedic Physicians. Quality medicines are made available to the public at reasonable

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prices. It meets the entire medicine requirements of Government Ayurvedic Hospitals and

Dispensaries under the Department of Indian Systems of Medicines, Kerala.

Oushadhi Fulfils the demands from Directorate of I.S.M. Bhopal, Jaipur National

Institute of Ayurveda, Government Hospitals and Dispensaries under Central Government

Health Schemes ,Employees State Insurance Medical Services, Government Ayurveda Colleges,

Tribal Welfare Department, Govt. Ayurvedic Mental Hospital, Kottakkal, Government of Kerala

ICDS Cell programmes. It meets public demands through a network of 500 exclusive Oushadhi

Dealers and Agents. It undertakes the Implementation of health care projects from Local bodies.

Propagation of Ayurveda by establishing specific clinical practices all over India. It also

undertake medicinal plants cultivation programme linked with local bodies and entrepreneurs

under buy-back arrangement. Nursery development for the production of quality seedlings

VISION

A leading world class Ayurveda industry in the country by 2020.

OBJECTIVES OF THE ORGANISATION

Manufacturing and Marketing of high quality Ayurvedic medicines.

Research and Developmental studies on Ayurvedic formulations.

Maintenance of Medicinal plants' Herbarium .

Promotional activities on medicinal plants Cultivation.

Health Care through Panchakarma therapy and Clinical Research Programme.

Implementation of Govt. of Kerala Health Care Programmes.

Propagation of Ayurveda and connected systems all over the world.

Implementation of Community Development Programmes with special reference to

women and child development.

MILESTONES

1941: Commenced by His Highness, the Maharaja of Cochin as “Sree Kerala Varma

Ayurveda Pharmacy”.

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1959: Converted into Co-operative Society viz. Sree Kerala Varma Ayurveda Pharmacy

and Stores Ltd.

1975: Registered as a company under Indian Companies Act and renamed as “The

Pharmaceutical Corporation (Indian Medicines) Kerala Limited” Thrissur.

1991: Commissioned modern manufacturing unit at Kuttanellur and shifted the factory to

the new premises.

2004: Started a new Panchakarma Hospital and Research Institute at Thrissur.

2007: The entire office shifted to the Factory premises at Kuttanellur.

2008: Commenced full-fledged R&D Centre at Kuttanellur and regional distribution unit

at Kannur.

FUNCTIONAL DEPARTMENTS

Administration

Human Resources

Finance & Accounts

Purchase

Production

Marketing

Quality Control, Research & Development

Maintenance

ADMINISTRATION DEPARTMENT

The administration Department is responsible for the efficient execution of all

administrative works, general policies, legal matters, personal affairs, security, company campus,

purchase and distribution of stationery, future and initiating proper action on disciplinary

proceeding etc. the responsibilities to provide welfare facilities and other amentias to the workers

are particularly vested on the section. Actually this section is carrying out the company and

formulating company’s personal policies. The section maintaining proceedings for the

recruitment and administration of personal in accordance with the company’s policies. Personal

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records of all employees including confidential files are also maintained in the section. The

department ensures that the company’s personal policies are effectively carried out through out

the organization.

HUMAN RESOURCE DEPARTMENT

Human resource management is the planning, organizing, directing and controlling of the

procurement, development, compensation, integration, maintenance and reproduction of human

resources, to the end that individual, organizational and societal objectives are established.

TOTAL MANPOWER STRENGTH OF OUSHADHI

Category Permanent Others Total

Executives 11 Nil 11

Doctors 7 5 12

Middle Level Executives 10 11 21

Clerks & Other Office Staff 18 16 34

Drivers 9 4 13

Maintenance Staff 6 13 19

Production Supervisors 15 5 20

Security 5 12 17

Field Marketing Officer Nil 5 5

Hospital Workers Nil 8 8

Workers 34 373 407

Total 115 452 567

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FINANCE & ACCOUNTS DEPARTMENT

All day to day matters relating to routine working of the factory is carried out by the

department. The section is ultimately responsible for the financial properties of the various

transactions and for the avoidance of loss etc. The responsibilities of maintaining and supervising

all the accounts of the company including internal audit and costing is vested on the section. It is

responsibility of the finance department the negotiations and dealings with the banks, financial

institutions, government etc. and maintaining banking and accounting for all money received

including foreign currency, bill of exchange and petty cash book etc.

PURCHASE DEPARTMENT

Purchase department is an important department of every organization. There are

different types of purchasing through tender and direct purchase also. Purchase of raw material,

containers & packing materials are done through tender. Other than tender there are many raw

materials and containers & packing materials purchasing through direct purchase from the open

market. Purchases more than 600 varities of raw materials through open tender. In Oushadhi

there is a standardized procedure to verify the variety of raw materials. In those more than 60%

raw materials comes from the forest. Annual purchase of Oushadhi Pharmaceuticals is comes

around 7-9 crores. For all purchases the firm is maintaining a data base of raw materials.

PRODUCTION DEPARTMENT

This section deals with the overall production and management of the livestock. The

requirements of raw materials for the factory is maintain by the section. It is ensured by the

section the safety and health measures of the employees to achieve the daily targeted output and

to efficient utilization of manpower requirements. Up-to-date registers relating to production and

livestock and to co-ordinate the marketing wing is maintained in the section. The stock in

process, products, tools and accessories in production are also maintained.

MARKETING DEPARTMENT

Marketing deals with identifying and meeting human and social needs. Marketing is

defined in as marketing needs profitably. Marketing is formally defined by the American

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Marketing is formally defined by the American Marketing Association as follows, marketing is

an organizational function and a set of process of creating, communicating and delivering value

to customer and for managing customer relationship in ways that benefit the organization and its

stake holders. Coping with exchange processes calls for a considerable amount of work and skill.

Oushadhi has a marketing department to handle the marketing activities. The marketing section

ensures that proper inventory of finished products, prompt collection of sales proceeds, setting of

due etc.

QUALITY CONTROL AND RESEARCH & DEVELOPMENT

DEPARTMENT

Product Innovation

Process Innovation

Stage wise quality examination

Research on substitute raw drugs

Development of standards for drugs & products.

Training programmes for Ayurveda MD, B.Phams, BAMS, and Biotechnology students.

ACTIVITIES

Product development and related works like experimental and clinical trials.

Innovation practices in processes and products to present ancient pharmaceutical forms in

user friendly mode.

Preparation and implementation of various projects for standardization prototype

development, process trouble shoots etc.

Preparation of database for raw materials, process, and formulations.

Extension activities like awareness classes, seminars etc.

MAINTENANCE DEPARTMENT

Oushadhi maintaining the maximum quality production at lower cost with optimum

safety. The firm is identifying and implementing cost reduction procedure and also providing

accurate equipment maintenance records/ information.

Procurement of plant & machinery

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Upkeep and maintenance of all plant and machinery

Construction of civil work

Power & water supply

Effluent treatment

Maintenance of campus

FUTURE PLANS

Modernization of existing unit to improve quality and to meet the market

requirement.

Establish branches in neighboring states to promote Oushadhi.

Establishment of export oriented production unit for selected high demand items.

Computerization of entire business.

Establishment of new processing and value addition units.

Strengthening of quality control and drug testing laboratory.

Development of new drugs in Neutraceutical, cosmetic and baby products

segments.

Promote medical plant cultivation and conservation.

Purchase of raw materials raised by farmers through Oushadhi agents spread all

over the state through an effective buy back arrangement to encourage medicinal

plant cultivation by farmers.

PRODUCTION

Oushadhi produces 450 different varieties of medicines. Qualified and experienced

doctors are appointed to supervise productions. Productions of medicines are done as per GMP

norms. Quality control measures have been set up to ensure quality of raw materials & finished

goods. Modern dosage forms like, Tablet, Ointment, Granules and Syrup were introduced by

Oushadhi.

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Formulations (433 Classic and 17 Patents)

Sl.No. Category Nos.

1 Asavams & Arishtams 38

2 Medicated Oils (Thylam) 112

3 Lehyams and Ghrithams 59

4 Gulika and Tablets 52

5 Liquid Kashayams 49

6 Kashayachoornam & Sooshmachoornam 112

7 Bhasma Sindooram 13

8 Patent and Proprietary 17

Total 450

PRODUCT RANGE

1) Important Classical Products

Sivagulika

Haridrakhandam

Gandhathylam

Aswagandhadi Lehyam

Amruthaprasam

Saraswatharishtam

Dasamoolarishtam

Kottanchukkathi

Agasthyarasayanam

Bhramikritham

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Thalispathrathi

Rasneradi

Rasneradi Liquor

2) Important Patent Products

Pramehoushadhi

Burncure Ointment

Rheumajith Ointment

Murivenna Ointment

Bliss Balm

Psorset Oil

Hair Tone

Oushadhi Chavanaprasam

Thenginpookkulamrutham

Oushadhi Toothpowder

Oushadhi Dahasamani

Diabetic Drinks

Ashtachoornam Syrup

Oushadhi Cough Syrup

Sudarsanamm Tab

Shaddharanam

Vigor Plus

SCOPE OF THE STUDY

The study will provide adequate information about the working capital position of the

company. This will help to know the solvency position and liquidity position of Oushadhi

Pharmaceuticals. So that they can make appropriate decisions to improve the working capital

position of the company.

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SCHEME OF THE STUDY

The study has been arranged in 7 chapters. The first chapter gives introduction, research

methodology and limitations of the study. The second chapter covers industry profile.

Organization profile is given in third chapter. Fourth chapter covers product profile. Fifth chapter

deals with analysis and interpretation of the data. Findings and suggestions are given in chapter

six and the last chapter gives conclusion of the study.

LIMITATIONS OF THE STUDY

1) This study is done mainly with the help of the financial statement which are subjected

to many limitations. So many of ratios are not able to calculate. Ratios are also subjected

to many limitations like financial biases.

2) In this study qualitative factors which may generally influence the conclusions derived

are ignored while computing ratio because for calculating ratios we will take only

quantitative factors.

3) The non availability of certain data in the limited time is also one of the major

limitations of study.

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CHAPTER- 2

REVIEW OF LITERATURE

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WORKING CAPITAL MANAGEMENT

In business point of view working capital is money or money value is used in business regardless

of the source of obtaining it. The term working means the circulation of capital in one from or

another during the day-to-day operations of business. Working capital is defined in the annual

survey of the industries to include stock of material, stores, fuel, semi-finished goods including

working progress and finished by products, cash in hand and algebraic sum of sundry creditors.

Every business needs funds for two purposes- for its establishment and to carry out its day- to-

day operations. Long- term funds are required to create production facilities through purchase of

fixed assets such as plant and machinery, land, building, furniture, etc. Funds are also needed for

short- term purposes for the purchase of raw materials, payment of wages and other day- to- day

expenses, etc. These funds are known as working capital. Working capital refers to that part of

the firm’s capital which is required for financing short term or current assets such as cash,

marketable securities, debtors and inventories.

DEFINITION

“Capital invested in the Working or current asset with in the business. It is called circulating

capital or revolving capital”.

Working capital stands for the part of the capital, which is required for the financial or Working

or current need of the company.

Generally the term working capital means funds required for the day today operations of the

enterprise. Working capital is defined as the funds required covering the cost of operating an

enterprise. There are two broad types of working capital, namely, permanent working capital

management and temporary working capital management.

a) Permanent Working Capital: - It represents the minimum amount of working capital

required to ensure effective utilization of fixed assets and support the normal operation of the

business. It is the minimum amount to be kept for maintaining a normal level of stock of raw

materials, work-in progress and finished goods and for regular payment of wages, salaries rent

etc. Permanent working capital classified into two.

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Initial working Capital

Regular Working capital

b) Temporary Working Capital: - It is the working capital which varies with volume of

business. It is the additional working capital to meet seasonal and special needs. It is required for

short periods. It is also called variable working capital. This can be again classified as

Seasonal Working Capital

Special Working Capital

CONCEPT OF WORKING CAPITAL

There are two concepts of working capital:

Gross working capital

Net working capital

The gross working capital is the capital invested in the total current assets of the enterprise. Net

working capital is the excess of current assets over current liabilities

Net working capital= current assetscurrent liabilities

The gross working capital concept is financial or going concern concept whereas net working

capital is an accounting concept of working capital. These two concepts of the working capital

are not exclusive; rather both have their own merits. Both, gross and net, concepts of the working

capital are important aspects of working capital management. The net concept of working capital

may be suitable only for proprietary form of organizations such as sole- trader or partnership

firms. But the gross concept is very suitable to the company form of organization where there is

a divorce between ownership, management and control. As per the general practice, net working

capital is referred to simply as working capital.

NEEDS OF ADEQUATE WORKING CAPITAL

Working capital is the life blood and nerve centre of a business. Just as circulation of blood is

essential in the human body for maintaining life, working capital is very essential to maintain the

smooth running of a business. No business can run successfully without an adequate amount of

working capital. The main advantages of maintaining adequate working capital are

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Solvency of the business : - Adequate working capital helps in maintaining solvency of

the business by providing uninterrupted flow of production.

Goodwill : - Sufficient working capital enables a business concern to make prompt

payments and hence helps in creating and maintaining goodwill.

Easy loans : - A concern having adequate working capital, high solvency and good credit

standing can arrange loans from banks and others on easy and favorable terms.

Cash discounts :-Adequate working capital also enables a concern to avail cash discounts

on the purchases. And hence it reduces costs.

Regular supply of the raw materials : - Sufficient working capital ensures regular supply

of raw materials and continuous production.

Regular payment of salaries, wages etc :- A company which has ample working capital

can make regular payment of salaries ,wages and other day-to-day commitments which

raises the morale of its employees, increases their efficiency, reduces wastages and costs

and enhances production and profits.

Exploitation of favorable market conditions : - Only concerns with adequate working

capital can exploit favorable market conditions such as purchasing its requirements in

bulk when the prices are lower and by holding its inventories for higher prices.

Ability to face crisis : - Adequate working capital enables concern to face business crisis

in emergencies such as depression because during such periods, generally there is much

pressure on working capital.

Quick and regular return on the investments : - Every investor wants quick and regular

return on his investments. Sufficiently of working capital enables a concern to pay

quickly much and regular dividends to its investors as there may not be much pressure to

plough back profits. This gains the confidence of its investors and creates a favorable

market to raise additional funds in future.

High morale : - Adequacy of working capital creates an environment of security,

confidence, and high morale and creates overall efficiency in a business.

IMPORTANCE OF WORKING CAPITAL MANAGEMENT

It is necessary for any organization to provide adequate working capital in order to run

successfully the major thrust of working capital management of current assets, as it is

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understandable, that current liabilities arise the context of current asset. If the size of such asset is

relatively large, the liquidity position will improve and profitability will be adversely affected, as

funds will remain idle.

Conversely if holding of such asset are small the overall profitability will no doubt

increase. But it will have an adverse effect on the liquidity position and make the firm more

risky. If the firm cannot maintain a satisfactory level of working capital it is likely to become

insolvent.

The area of working capital management intimately links the functioning of every

department in a business concern. The policy governing the working capital has got a snow-ball

effect on other department like personnel, production, marketing and so on. That it can be

deducted that working capital management has a crucial role to play in the survival of any

business unit and working capital management is an integral part of the overall corporate

management.

The importance of maintaining adequate amount of working capital is as follows:

1. Solvency of the business

2. Goodwill

3. Easy loans

4. Cash discounts

5. Regular supply of Raw-materials

6. Regular payment of salaries, wages and other day-to-day commitments

7. Exploitation of favorable market conditions

8. Ability to face crisis

9. Quick and regular return on investments

10. High morale

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OBJECTIVES OF WORKING CAPITAL

The need for working capital cannot be over emphasized. Every business need some

amount of working capital arises due to the time gap between production and realization of cash

from sales.

For the purchase of raw material, components’ and spares.

To pay wages and salaries.

To incur day-to-day expenses and overheads. Costs such a fuel, power and office

expenses etc.,

To meet the selling costs as packing, advertising, etc.,

To provide credit facilities to the customer.

To maintain the inventories of raw material work –in-progress, stores and finished stock.

TYPES OF WORKING CAPITAL

Working capital can be divided in to two categories on the basis of time. They are as follows;

a) Permanent working capital.

b) Variable working capital.

PERMENENT WORKING CAPITAL

Permanent or regular working capital is the minimum amount which is required to ensure the

effective utilization of current asset. It represents the hard core of working capital. The amount

of permanent working capital increases with the increase in fixed assets over a long period.

The increase in fixed asset leads to increase in sales turn over which in turn leads to increase in

permanent working capital.

26

VARIABLE OR TEMPERORY WORKING CAPITAL

It is the amount of working capital which is required to meet the seasonal demand and some

special exigencies. These seasonal demands are subject to fluctuations.

Difference between permanent and Temporary Working Capital

The difference between the permanent or fixed working capital and temporary or variable

working capital is graphically or diagrammatically as represented below;

And;

27

Significance of Working Capital

These are the significance of working capital in a firm arises on account of the following

reasons;

a) Solvency of business

b) Goodwill of the firm

c) Easy loan

d) Cash discount

e) Regular supply of raw material

f) Regular payment of salaries, wages and other day to day expenses

g) Quick and regular return on investment

h) Ability to face crisis

i) High morale

28

FACTORS DETERMINING WORKING CAPITAL REQUIREMENTS

The working capital requirements of a concern depend on the following important factors;

a) Nature of Business: The quantum of working capital requirement in a concern basically

depends on the nature of its business. As the public utility concerns like Railway and

Electricity provide cash sales only, they need a very limited working capital. On the other

hand, trading and financial concerns require very less investments in fixed assets but have to

invest huge amount in current assets.

b) Size of Business: The working capital requirements of a concern are directly influenced by

the size of its business. The greater the size of the business unit, the larger will be the amount

of working capital.

c) Manufacturing Process: The level of working capital depends upon the time required to

manufacture goods. The longer the processing period of manufacture, the larger will be the

amount of working capital.

d) Volume of Sales: Volume of sales is a unique factor depends upon the time required to

manufacture goods. The volume of sales and size of the working capital are directly related

to each other. When the volume of sales increases, the investment of working capital also

increase.

e) Production Policy: In certain industries, the demand is subject to wide fluctuations due to

seasonal variation. In such a case, the requirement of working capital depends on the

production policy.

f) Credit Policy: A concern which buys raw material on credit and sells the product on cash

requires less amount of investment in inventory. Thus the working capital will be low.

g) Turnover of Working Capital: Turnover means the speed with which the working capital

converted in to cash by the sale of goods. The speedier the turnover, the smaller will be the

amount of working capital required.

h) Seasonal Variations: Since in certain industrial concerns, raw material is not available

throughout the year, they have to buy these materials during the season to ensure

uninterrupted flow of production. In such cases a large amount of working capital is required.

i) Production Cycle: it is the time required to convert raw materials in to finished goods. The

longer the operating cycle, the larger will be the amount of working capital requirements.

29

j) Business Cycle: more working capital is required during the periods of prosperity and less

during the period of depression.

k) Earning capacity and Dividend policy: The earning capacity and dividend policy of a concern

also influences the requirements of its working capital. Firms which have high earning

capacity may generate cash profits from operations and contribute to their working capital. A

firm that maintains a steady high rate of cash dividend irrespective of its generation of profit

requires a large sum as working capital.

l) Price Level Changes: The price level changes also influence the working capital

requirements of a concern. Usually, a firm will have to maintain the same current assets.

Adequacy of Working Capital

Working capital is an investment in current assets. Like other investment, its costs money. Thus,

the working capital position of a concern should be neither excess nor inadequate. In other

words, every concern should have adequate working capital to run its operations. The adequacy

of working capital arises on account of the following reasons:

a) It helps to enjoy the advantage of cash discounts.

b) It helps the company to It helps the company to pay all the current obligations in time.

c) It helps the company withstand the period of depression.

d) It helps the company to extend favorable credit terms to customers.

e) It enables the company to operate its business efficiently as there is no delay in obtaining

materials.

f) It protests the company from the unfavorable effects of shrinkage in the values of current

assets.

g) It helps the company to a larger extent to maintain its credit.

Dangers of Redundant Working Capital

A concern which has excess working capital should face the following problems:

a) Overtrading.

b) Improper rate of return on investment.

30

c) Big inventories.

d) Imbalance between liquidity and profitability.

e) Fall in value of shares.

f) Speculative transactions.

g) Overall inefficiency in the organization.

Dangers of Inadequate working capital

A concern which has inadequate working capital cannot:

a) Pay its short-term liabilities in time.

b) Exploit favorable market conditions and undertake profitable projects.

c) Buy its requirements in bulk.

d) Pay day to day expenses of its operations.

e) Utilize the fixed assets efficiently due to non- availability of liquid funds

f) Enjoy the advantage of cash discount facilities

MEASURES TO IMPROVE WORKING CAPITAL MANAGEMENT

i. The essence of effective working capital management is proper cash flow forecasting. This

should take into account the impact of unforeseen events, market cycles, loss of a prime

customers, and actions by competitors. The effect of unforeseen demands on working capital

should be factored in.

ii. It pays to have contingency plans to tide over unexpected events. While market leaders can

manage uncertainty better, other companies must have risk management procedures. These

must be based on an objective and realistic view of the role of working capital.

iii. Addressing the issue of working capital on a corporate wide basis has certain advantages.

Cash generated at one location can well be utilized at another. For this to happen,

information access, efficient banking channels, good linkage between production and billing,

internal system to move cash and treasury practices should be in place.

iv. An innovative approach, combining operational and financial skills and an all encompassing

view of the company’s operations will help in identifying and implementing strategies that

generate short term cash. This can be achieved by having the right set of executives who are

31

responsible for setting targets and performance levels. They are then held accountable for

delivering. They are also encouraged to be enterprising and to act as change agent.

v. Effective dispute management procedures in relation to customers will go along way in

freeing up cash otherwise locked in due to disputes. It will also improve customer service and

free up time for legitimate activities like sales, order entry, and cash collection. Overall,

efficiency will increase due to reduced operating costs.

vi. Collaborating with your customers instead of being focused only on your own operations

will also yield good result. If feasible, them to plan their inventory requirements

efficiently to match your productions with their consumptions will help reduce inventory

levels. This can be done with supplier also.

Working capital management is an important yardstick to measure a company’s operational and

financial efficiency. This aspect must from part of the company’s strategic and operational

thinking. Efforts should constantly be made to improve the working capital positions. This will

be yield greater efficiency and improve customer satisfactions.

INVENTORY MANAGEMENT

Inventories have an important role working capital management. Every enterprise need inventory

for smooth running of its activities. It serves between the link between production and

distribution process. There is generally, a time lag between recognition of need and its

fulfillment. The greater time lag the higher the requirement of the inventory. The unforeseen

fluctuation in demand and supply of goods also necessitate the need for inventory it also

provides cushion for future price fluctuations. The term inventory refers to the assets which will

be sold in the normal course of business operations. The term inventory includes raw materials,

work in progress and finished goods.

Purpose of Holding Inventory

Every business enterprise has to maintain a certain level of inventories to facilitate uninterrupted

production and smooth running of business. In the absence of inventories of a firm will have to

make purchase as soon as it receives orders. It will mean loss of time and delay in execution of

order, which some time may cause loss of customers and business. A firm also needed to

32

maintain inventories to reduce ordering cost and avail quantity discount, etc. generally, there are

main purpose or motives of holding inventories.

The transaction motive:- which facilitates continuous production and timely execution of

sales orders.

The production motive:- which necessitates the holding of inventories for meeting

unpredictable changes in demand and supply materials.

The speculative motive:- which includes keeping inventories for taking advantages of

price fluctuations, saving in recording costs and quantity discount etc.

Objectives of Inventory management

The main objectives of inventory management are operational and financial. The operational

objectives mean that materials should be available in sufficient quantity so that work is not

disrupted for a want of inventory. The following are the objectives of inventory management;

1. To ensure continuous supply of materials spares and finished goods so that the

production should not suffer any time and the customer demand should met.

2. To avoid both the over stocking and the under stocking of inventory.

3. To maintain investment in inventories at the optimum level by and operational and sales

activities.

4. To keep material cost under control so that they contribute in reducing cost.

Factors influencing inventory management

The main factors, which are influencing the inventory management, are as follows;

1. Lead Time

2. Cost of Holding Inventory

a) Material Costs

b) Ordering Costs

c) Carrying Costs

d) Cost of tying-up of Funds

33

e) Cost of Under stocking

f) Cost of Overstocking

3. Stock Levels

a. Reorder Level

b. Maximum Level

c. Minimum Level

d. Safety Level / Danger Level.

4. Variety Reduction

5. Materials Planning

6. Service Levels

7. Obsolete Inventory and Scrap

8. Quantity Discounts

34

CHAPTER- 3

RESEARCH METHODOLOGY

35

TITLE OF THE PROJECT

“An Exploratory Study on Working Capital Management At Oushadhi Pharmaceuticals

Corporation (IM) Kerala Ltd.”

OBJETIVES OF THE STUDY

The main objective of the study is to make an exploratory study in Working Capital

Management at Oushadhi Pharmaceuticals Corporation (IM) Kerala Ltd. The other objectives are

as follows.

To analyze the working capital management of the company.

To ascertain different sources and applications of working capital.

To analyze the solvency position of the company.

To study the liquidity position of the organization.

METHODOLOGY:

1) Data Collection: - The data can be classified as

a) Primary Data- Primary data is the data which are directly collected through

personal contacts or face to face interaction.

b) Secondary Data- Secondary data is the data collected through reports, books,

journals, news paper etc. Secondary data has to be collected for this study. It is

collected through the annual reports, journals and books of accounts of the

company.

2) Tools for Analysis:-The tools/ techniques which are used for the analysis of the data

are

a) Ratio analysis

b) Working capital analysis

c) Trend analysis

d) Charts and tables

36

RESEARCH DESIGN

It is the arrangement of conditions for collection and analysis of data in a manner that

aims to combine relevance to the research purpose with economy in procedure. This study

follows the analytical research. In analytical research the available information or data are

analyzed and critical evaluations are made to solve the problems.

DIFFERENT VIEWS OF RESEARCHERS

Many researchers have studied working capital from different views and in different

environments. The following ones were very interesting for our research.

Debasish Sur, Joy Deep Biswas (2001):-

They attempted to study the association between liquidity and profitability of the Indian private

sector enterprises as a case study of aluminum producing industry, Hindalco and Indal were

selected as major aluminum producing units. They observed that there is very high degree of

positive correlation between profitability and liquidity of these companies. They also observed

that liquidity variables working capital ratio, acid test ratio, working capital to sales ,debtor

turnover ratio, inventory turnover ratio, current assets to total assets jointly influence

profitability.

Prasad (2001):-

Conducted a study on the working capital management in paper industry. His sample consisted

of 21 paper mills from large, medium and small scale for a period of 10 years. He reported that

the chief executives properly recognized the role of efficient use of working capital is liquidity

and profitability, but in practice they would not achieve it. The study also revealed that 50% of

the executives followed budgetary method in planning of working capital and working capital

management was inefficient due to sub optimum utilization of working capital.

Reddy and Patkar :-

They made an attempt to study the size composition of in factory companies, evaluate liquidity

management and the relationship between liquidity and profitability of factoring companies. SBI

factors and Can Bank factors Ltd. Were selected for the purpose of the study was based on

37

secondary data collected from annual reports, percentage method and Spearmen’s Rank

Correlation were used to analyze the data of the study was that sundry debtors amount due to

creditors were the major components of current assets and current liabilities liquidity and

profitability were found to be inversely related in factoring companies and the liquidity of Can

Bank factors was found strongly related to profitability than SBI factors.

Singh and Shishir Pandey: -

For the successful working of any business organization, fixed assets and current assets play vital

role. Working capital management is essential as it has a direct impact on profitability and

liquidity. An attempt has been made in this paper to study the working capital components and

the impact of working capital management on profitability of Hindalco Industries Limited. The

paper also makes an attempt to study the correlation between profitability, liquidity and profit

before tax of Hindalco. The study is based on the secondary data collected from annual reports of

Hindalco for the study period 1990 to 2007.A successful organization needs two types’ assets,

viz., fixed assets and current assets. Fixed assets include—land, building, plant, machinery,

furniture, etc. These are not only purchased for the purpose of sale, but also for the purpose of

earning profit for many years. Current assets include, raw materials, work-in-progress, finished

goods, sundry debtors, bills receivables, cash, bank balance, etc. These are purchased for the

purpose of production and sales, like raw material into semi finished products, semi finished

products into finished products, finished products into debtors and debtors transferred into cash

or bills receivables. The fixed assets are used in increasing production of an organization and the

current assets are used in using the fixed assets for day to day working. The management of this

working capital is known as working capital management. The term working capital refers to the

amount of capital which is readily available to an organization. Management of working capital

deals...

Rakesh Kumar Baral: -

To start any business, First of all we need finance and the success of that business entirely

depends on the proper management of day-to-day finance and the management of this short-term

capital or finance of the business is called Working Capital Management. Working Capital is the

money used to pay for the everyday trading activities carried out by the business - stationery

38

needs, staff salaries and wages, rent, energy bills, payments for supplies and so on. I have tried to

put my best effort to complete this task on the basis of skill that I have achieved during the last

one year study in the institute. I have tried to put my maximum effort to get the accurate

statistical data. However I would appreciate if any mistakes are brought to my by the reader.

Thomas M. Krueger: -

Firms are able to reduce financing costs and/or increase the funds available for expansion by

minimizing the amount of funds tied up in current assets. We provide insights into the

performance of surveyed firms across key components of working capital management by using

the CFO magazine’s annual Working Capital Management Survey. We discover that significant

differences exist between industries in working capital measures across time. In addition, we

discover that these measures for working capital change significantly within industries across

time. Sales are the importance of efficient working capital management (WCM) is indisputable.

Working capital is the difference between resources in cash or readily convertible into cash

(Current Assets) and organizational commitments for which cash will soon be required (Current

Liabilities). The objective of working capital management is to maintain the optimum balance of

each of the working capital components. Business viability relies on the ability to effectively

manage receivables, inventory, and payables. Firms are able to reduce financing costs and/or

increase the funds available for expansion by minimizing the amount of funds tied up in current

assets.

All the above studies provide a solid base and give idea regarding working capital management’s

and its components. They also give the results and conclusions of those researchers already

conducted on the same area in different companies and environments from different aspects. On

the basis of these studies the researchers have developed own methodology for the research

development.

39

CHAPTER- 4

DATA ANALYSIS AND INTERPRETATION

40

RATIO ANALYSIS

Ratio analysis is one of the most used techniques of financial analysis. It aims at making

use of quantitative information for decision making. A ratio is an expression of relationship

between two figures or two amounts. It is a yard stick which measures relationship between two

variables. Ratios are simply a means of highlighting in arithmetical terms the relationship

between figures drawn from various financial statements. A great number of ratios can be

computed from the basic financial statements- Balance Sheet and Profit and Loss Account.

Ratio analysis is an important method of financial analysis, because a meaningful analysis

of financial statements depends on the study of relationship among various items of the

statement, and the study of relationship among various items of the statement, and the

relationship of one item to another can easily be expressed as a ratio. These are widely used

because simple to calculate and easy to understand. Even a person, having a little knowledge of

accounting, can make use of ratios.

Main Classification of Ratios

According to Statement According to Function According to

Importance

Balance Sheet Ratios Liquidity Ratios Primary Ratio Income

Statement Ratios Leverage Ratios Secondary Ratios

Combined Ratios Activity Ratios

Profitability Ratios

Since the functional classification of ratios is more useful and purposive. For the analysis

of working capital management of Oushadhi, the best is to analyze the Functional Ratios.

41

Functional Ratios

Liquidity Ratios

Current Ratio

Quick Ratio

Leverage Ratios

Debt-Equity Ratio

Proprietary Ratio

Fixed Asset to Net worth Ratio

Activity Ratios

Inventory Turnover Ratio

Fixed Asset Turn Over Ratio

Working Capital Turnover Ratio

Profitability Ratios

Gross Profit Ratio

Net Profit Ratio

Return on Capital Employed

Earnings per share

42

Uses of ratio analysis

1. Ratios are helpful in judging financial performance of an enterprise over a

period of time.

2. Ratio facilitate inter firm comparison.

3. Ratio analysis simplifies the comprehension of financial statements.

4. Sometimes investment decisions are guided by certain ratios.

5. The ratios measure the efficiency of operation of enterprise.

6. It is possible to test the liquidity, solvency and profitability of the enterprise.

7. Ratio analysis communicates the financial strength or weakness of a firm in a

more easy and understand manner.

The following are the importance of ratio analysis:

Aid to measure the general efficiency.

Aid to measure financial solvency.

Aid in forecasting and planning.

Facilitate decision making.

Aid in corrective action.

Helps in evaluating the efficiency.

Limitation of Ratios

Ratio analysis has many limitations,

Limited use of a single ratio

Lack of adequate standards

Inherent limitations of accounting

Window dressing

Personal bias

Incomparable

Absolute figures may be distorted

Ratios are not substitutes

43

Steps involved in ratio analysis

Selection of relevant data from the financial statement depending upon the objective of

the analysis.

Calculation of appropriate ratios from the above data.

Comparison the calculated ratios with the ratios of the same firm in the past or ratios

developed from projected financial statements, the ratios of some other firm’s or the

comparison with ratios of the industry to which the firm belongs.

Interpretation of the ratios.

TREND ANALYSIS

Trends are usually defined as progressive changes in a particular phenomenon. If the

phenomenon can be characterized by one variable over time (such as the price of some item),

then a trend analysis is fairly simple. Phenomena are often characterized, however, by more than

one variable at particular discrete time intervals. In such cases a trend analysis becomes more

complex and ambiguous. If enough data are available, however, trends between two subsequent

times can be represented by so-called transition matrices.

Method of time series data (information in sequence over time) analysis involving comparison of

the same item (such as monthly sales revenue figures) over a significantly long period to

1. Detect general pattern of a relationship between associated factors or variables.

2. Project the future direction of this pattern.

While calculating trend percentages, the following precautions may be taken:

The base year selected should be truly representative of all years involved in the analysis

The financial statements used for the analysis must have been prepared applying

consistent accounting principles and practices

The figures of various accounting statements considered for the analysis should be

adjusted for any price level changes, as compared to base year, before computing trend

percentages.

44

Trend percentages should be studied along with the absolute figures on which they are

based. This will enable us to know whether the change is significant or not.

Features of Trend Analysis

1. Trend Analysis Proper

Allows to plot aggregated response data over time.

2. Market Basket Analysis

Insight into services and product purchasing trend patterns

3. Market Segmentation

Analyzes common characteristics of a consumer base

4. Customer Churn

Identifying those consumers who are most likely to discontinue that service or product

5. Direct and Interactive (web-based) Marketing

Predicting in advance the products or services a person is most likely to use based on past

and present trends.

Trend Analysis of Current Assets for Five Years

Table no: 4.1

Year Current Assets (In Rs.) % Changes

2006-2006 101703382.00 100

2006-2007 124921150.00 122.82

2007-2008 163833168.00 131.15

2008-2009 181251875.00 110.63

2009-2010 200578287.00 110.66

45

Figure no: 4.1

2005-06 2006-07 2007-08 2008-09 2009-100

20

40

60

80

100

120

140

Trend Value

Trend Value

Interpretation

Current Ratio is changing differently over the years. In the year 2007-2008 the current

ratio Change is 31.5%, it is the highest ratio when compared to the following years and the

liquidity position is acceptable. But during the years 2008-2009 the ratio is decreased. It

indicates that the company’s solvency position is not satisfactory and also indicates inadequate

working capital. In 2009-2010 there is a slight increase in the ratio position.

Trend Analysis of Current Liabilities for Five Years

Table no: 4.2

Year Current Liabilities (In Rs.) % Changes

2005-2006 57621110.00 100

2006-2007 68591183.00 119.04

2007-2008 97456151.00 142.08

2008-2009 114314595.00 117.30

2009-2010 119125363.00 104.20

46

Figure no: 4.2

2005-06 2006-07 2--7-08 2008-09 2009-100

20

40

60

80

100

120

140

160

Trend Value

Trend Value

Interpretation

The current liabilities have shown a decreasing trend from 2007-2008 to 2009-2010.

During the year 2007-2008 the companies trend was is highest position5. It is highly satisfactory

that company could reduce their liability to a lowest one in year 2009-2010.

Trend Analysis of Working Capital

Working Capital = Current Assets –Current Liabilities

47

Table no: 4.3

YearCurrent Assets

(In Rs.)

Current Liability(In Rs.)

Working Capital (In Rs.)

% Changes

2005-2006 101703382.00 57621110.00 44082272.00 0

2006-2007 124921150.00 68591183.00 56329967.00 27.78

2007-2008 163833168.00 97456151.00 66377017.00 17.84

2008-2009 181251875.00 114314595.00 66937280.00 0.84

2009-2010 200578287.00 119125363.00 81452924.00 21.69

Figure no: 4.3

2005-06 2006-07 2007-08 2008-09 2009-100

5

10

15

20

25

30

Trend Value

Trend Value

Interpretation

48

The working capital of the company is showing a increasing and decreasing trend. The

decreasing trend is due to the decrease in current assets. In 2007 the portion of current assets was

at very low level, but in the year 2008 company has net working capital of 8.14 (in crores). It is

due to the initiative ness taken by the company in a good manner.

Trend Analysis of net sales

Table no: 4.4

Year Net Sales

(In Rs.)Trend value

2005-2006 128251486.00 100

2006-2007 139729485.00 108.94

2007-2008 190257950.00 148.33

2008-2009 215729769.00 168.19

2009-2010 254799626.00 198.65

Figure no: 4.4

49

2005-06 2006-07 2007-08 2008-09 2009-100

50

100

150

200

250

Net sales

Interpretation

The trend analysis of net sales shows an upward moving trend in the last five years. During

2005-06 to 2009-10 the net sales of the firm is continuously increasing in a constant rate

approximately which indicates a good sales performance of the company.

Trend Analysis of inventory

Table no: 4.5

Year Inventory Trend value

2005-2006 8048334.00 100

2006-2007 10139293.50 125.98

2007-2008 13935625.50 173.15

2008-2009 16809355.00 208.85

2009-2010 28991555.00 360.21

Figure no: 4.5

50

2005-06 2006-07 2007-08 2008-09 2009-100

50

100

150

200

250

300

350

400

Trend value

Trend value

Interpretation

The trend of inventories is an increasing trend during the last five years. There is a steady

increment in inventories. In 2008-09, the trend value was 208.85 and in the very next year it

increased in to its highest of 360.21.

RATIO ANLYSIS

1) Current Ratio

Current ratio is the ratio of current assets to current liabilities. It is calculated by dividing

current assets by current liabilities. Current Assets are those, which can be realized within a

period of one year. It includes Cash in hand, Cash in bank, Bills receivable, Sundry debtors,

Stock, Prepaid expenses, short term investment etc... Current liabilities are those amounts which

are payable within a period of one year. In ideal situation Current ratio is 2:1.

CURRENT RATIO = CURRENT ASSETS / CURRENT LIABILITIES

Current Ratio of Five Years

51

Table: 4.6

Year Current Assets (In Rs.) Current Liability (In Rs.) Current Ratio

2005-2006101703382.00 57621110.00 1.76

2006-2007124921150.00 68591183.00 1.82

2007-2008163833168.00 97456151.00 1.68

2008-2009181251875.00 114314595.00 1.58

2009-2010200578287.00 119125363.00 1.68

Figure: 4.6

2005-06 2006-07 2007-08 2008-09 2009-101.45

1.5

1.55

1.6

1.65

1.7

1.75

1.8

1.85

Current Ratio

Current Ratio

Current assets and current liabilities

52

Figure: 4.7

2005-06 2006-07 2007-08 2008-09 2009-100

50000000

100000000

150000000

200000000

250000000

current assetscurrent liabilities

Interpretation

The current ratio of the company for the last five years is presented in Table. Since the

ideal current ratio is 2:1,the ratio were less than 2 in all the five years, so it can be understood

that the organization do not have adequate amount of current assets. The current ratio of the

company increased in the year 2006-07 to 1.82%. But in the subsequent years it was seen

decreasing. Again in 2009-10 the ratio showed an increase.

2) Quick Ratio

It is also called Acid Test Ratio or Liquidity Ratio. It is determined by dividing Quick

Assets by Current liabilities. The term Quick asset refers to Current assets, which can be

converted into cash immediately. It comprises all Current assets except stock and prepaid

expenses. An Acid Test ratio of 1:1 is considered satisfactory as a firm can easily meet all its

current liabilities. If the ratio is less than 1:1, then the financial position of the concern shall be

deemed to be unsound.

QUICK RATIO = QUICK ASSETS / CURRENT LIABILITIES

Quick Ratio of Five Years

53

Table: 4.7

Year Quick Assets (In Rs.) Current Liability (In Rs.) Quick Ratio

2005-200684464345.00 57621110.00 1.46

2006-2007104503904.00 68591183.00 1.52

2007-2008135340379.00 97456151.00 1.38

2008-2009152928752.00 114314595.00 1.33

2009-2010165041277.00 119125363.00 1.38

Figure: 4.8

2005-06 2006-07 2007-08 2008-09 2009-101.2

1.25

1.3

1.35

1.4

1.45

1.5

1.55

Quick Ratio

Quick assets and current liabilities

54

Figure: 4.9

2005-06 2006-07 2007-08 2008-09 2009-100

20000000

40000000

60000000

80000000

100000000

120000000

140000000

160000000

180000000

quick assetscurrent liabilities

Interpretation

The quick ratio has shown a decreasing trend from 2006-07 to 2008-09. During the year

20078-09 the liquidity position is satisfactory because it is near to 1. Even though it was

decreasing it was above the standard ratio i.e. 1:1. From the above graph company’s liquidity

position is satisfactory

3) Absolute Liquid Ratio

This ratio shows the relationship between absolute liquid asset and current liabilities.

Absolute liquid assets are obtained by subtracting both the debtors, prepaid expenses and

inventory from the current assets. The ideal absolute liquid ratio is 0.5:1.

ABSOLUTE LIQUDITY RATIO = ABSOLUTE LIQUID ASSETS / CURRENT ASSETS

Absolute Liquid Ratio of Five Years

55

Table: 4.8

YearAbsolute

Liquid Assets(In Rs.)

Current

Liabilities(In Rs.)

Absolute

Liquid Ratio

2005-2006 59599325.00 57621110.00 1.03

2006-2007 72310162.00 68591183.00 1.05

2007-2008 75383774.00 97456151.00 0.77

2008-2009 98326119.00 114314595.00 0.86

2009-2010 131741894.00 119125363.00 1.10

Figure: 4.10

2005-06 2006-07 2007-08 2008-090

0.2

0.4

0.6

0.8

1

1.2

Absolute Liquidity Ratio

Absolute Liquidity Ratio

Absolute liquid assets and current liabilities

56

Figure: 4.11

2005-06 2006-07 2007-08 2008-09 2009-100

20000000

40000000

60000000

80000000

100000000

120000000

140000000

absolute liquid assetscurrent liabilities

Interpretation

In the year 2006-07 the cash position was nearer to ideal ratio of 0.5: 1. During the

subsequent period the ratios were far away from ideal ratio. So the company should keep enough

cash to meet day – to - day expenses. Hence the liquidity or cash position of the company is not

satisfactory.

4) Working Capital Turnover Ratio

This ratio is computed to test the efficiency with which the net working capital is utilized.

In other words the ratio indicates whether working capital is effectively utilized in making sales.

It is calculated as follows.

WORKING CAPITAL TURNOVER RATIO = NET SALES / NET WORKING CAPITAL

Working Capital Turnover Ratio of Five Years

57

Table: 4.9

Year Net Sales

(In Rs.)

Net Working

Capital (In Rs.)

Working Capital Turnover

Ratio(In Times)

2005-2006 128251486.00 44082272.00 2.90

2006-2007 139729485.00 56329967.00 2.48

2007-2008 190257950.00 66377017.00 2.86

2008-2009 215729769.00 66937280.00 3.22

2009-2010 254799626.00 81452924.00 3.12

Figure: 4.12

2005-06 2006-07 2007-08 2008-09 2009-100

0.5

1

1.5

2

2.5

3

3.5



Net sales and net working capital

58

Figure: 4.13

2005-06 2006-07 2007-08 2008-09 2009-100

50000000

100000000

150000000

200000000

250000000

300000000

net salesnet working capital

Interpretation

The working capital turnover ratio indicates an increasing trend from 2006-07 to 2008-09

except in 2010, the higher the ratio the better because it means the company is generating more

sales from its working capital. But here over the first 4 years the company’s working capital

turnover ratio was low and it indicates that the company has not been efficiently generating sales

from its working capital. In 2010 it is 3.12 which has shown a small downfall.

5) Inventory Turnover Ratio

Inventory turnover ratio also known as stock turnover ratio establishes the relationship

between costs of goods sold and average inventory. Besides helps in determining the liquidity of

a business concern, this ratio indicates how many times during the period the firm has turned its

inventory. In other words, it shoes the rate at which inventories are converted into sales and then

into cash. It is computed as follows.

INVENTORY TURNOVER RATIO = COST OF GOODS SOLD / AVERAGE STOCK

Inventory Turnover Ratio of Five Years

59

Table: 4.10

Year

Cost of Goods Sold

(In Rs.)

Average Stock (In

Rs.)

Inventory Turnover

Ratio( In Times)

2005-2006 68306456.00 8048334.00 8.48

2006-2007 73516313.00 10139293.50 7.25

2007-2008 97165036.00 13935625.50 6.97

2008-2009 106229389.00 16809355.00 6.31

2009-2010 133104937.00 28991555.00 4.59

Figure: 4.14

2005-06 2006-07 2007-08 2008-09 2009-100

1

2

3

4

5

6

7

8

9



Cost of goods sold and average stock

Figure: 4.15

60

2005-06 2006-07 2007-08 2008-09 2009-100

20000000

40000000

60000000

80000000

100000000

120000000

140000000

cost of goods soldaverage stok

Interpretation

The inventory turnover ratio was decreasing over the years. In 2005-06 the ratio was at

maximum level. High inventory ratio was an indication of good inventory management.

Inventory holding period was shorter in the year 2005-06 and longer in the year 2010. Shorter

holding period is favorable to the company. But company should take necessary actions to

reduce the holding period in 2011.

6) Debtors Turnover Ratio

Debtors turnover ratio is also called receivables turnover ratio. It relates net credit sales to

sundry debtors. It measures how fast debts are collected. It is calculated as follows. The term

debtors in this ratio are the amount of debtors plus bills receivables at the end of the accounting

period.

DEBTORS TURNOVER RATIO = NET CREDIT SALES / DEBTORS INCLUDING BILLS

RECEIVABLE

Debtors Turnover Ratio of Five Years

Table: 4.11

61

YearNet Credit

Sales (In Rs.)

Sundry Debtors

including Bills

Receivable (In Rs.)

Debtors Turnover

Ratio ( In Times)

2005-2006 128251486.00 24865020.00 5.15

2006-2007 139729485.00 32193742.00 4.34

2007-2008 190257950.00 59956605.00 3.17

2008-2009 215729769.00 54602633.00 3.95

2009-2010 254799616.00 33299383.00 7.65

Figure: 4.16

2005-06 2006-07 2007-08 2008-09 2009-100

1

2

3

4

5

6

7

8

Debtors Turnover Ratio

Debtors Turnover Ratio

Net credit sales and sundry debtors

Figure: 4.17

62

2005-06 2006-07 2007-08 2008-09 2009-100

50000000

100000000

150000000

200000000

250000000

300000000

net credit salessundry debtors

Interpretation

The debtor’s turnover ratio was fluctuating over the study period. The ratio was higher

during the year 2009-2010. This was an indication of efficiency of management of receivables. A

high or increasing Debtors Turnover Ratio is usually a positive sign - showing the company is

successfully executing its credit policies and quickly turning its Accounts Receivables/Debtors

into cash. The ratio was very low during the year 2007-08. It was because sales were decreased

and the credit policy was liberal.

7) Creditors Turnover Ratio

Creditors turnover ratio is the ratio between net credit purchase and the amount of sundry

creditors. It implies the credit period enjoyed by the firm in paying creditors. It is computed by

using the following formula. The creditors turnover ratio may also be expressed in days. Then it

is known as creditors payment period or creditors velocity.

CREDITORS TURNOVER RATIO = NET CREDIT PURCHASE / SUNDRY CREDITORS

Creditors Turnover Ratio of Five years

Table: 4.12

63

Year

Net Credit

Purchases (In

Rs.)

Sundry Creditors including

Bills Payable(In Rs.)

Creditors Turnover

Ratio

( In Times)

2005-2006 69645734.00 22515907.00 3.09

2006-2007 76358954.00 27586162.00 2.76

2007-2008 101915059.00 43498386.00 2.34

2008-2009 107226825.00 40216377.00 2.66

2009-2010 139163828.00 45012676.00 3.09

Figure: 4.18

2005=-6 2006-07 2007-08 2008-09 2009-100

0.5

1

1.5

2

2.5

3

3.5

Creditors Turnover Ratio

Creditors Turnover Ratio

Net credit purchase and sundry creditors

Figure: 4.19

64

2005-06 2006-07 2007-08 2008-09 2009-100

20000000

40000000

60000000

80000000

100000000

120000000

net creditsundry creditors

Interpretation

The creditor’s turnover ratio has indicated that there were more differences over the

years. In 2009-10 the ratio was 3.09 which was highest compared to other years. This indicates

delayed payment to suppliers which is not a very good policy as it may affect the reputation of

the business. The lower ratio indicates that company enjoys a greater credit period to repay the

liability. In 2007-08 creditor’s turnover ratio is the lowest with 2.34. A high ratio implies the

company should re-assess its credit policies in order to ensure the timely collection of imparted

credit that is not earning interest for the firm.

8) Cost of Goods Sold Ratio

Cost of goods sold ratio is the ratio of relationship between the cost of goods sold and the

sales of an organization. For the cost of goods sold ratio the smaller the ratio the better it is. Try

to reduce the cost of goods sold and increase the net profit. Cost of goods sold ratio is calculated

by using the following formula.

COST OF GOODS SOLD = COST OF GOODS SOLD / NET SALES *100

Cost of Goods Sold Ratio of Five Years

65

Table: 4.13

Year

Cost of Goods

Sold (In Rs.) Net Sales (In Rs.)

Cost of Goods

Sold Ratio (In %)

2005-2006 68306456.00 128251486.00 53.25

2006-2007 73516313.00 139729485.00 52.61

2007-2008 97165036.00 190257950.00 51.07

2008-2009 106229389.00 215729769.00 49.24

2009-2010 133104937.00 254799616.00 52.23

Figure: 4.20

2005-06 2006-07 2007-08 2008-09 2009-1047

48

49

50

51

52

53

54

Cost of Goods Sold Ratio

Cost of Goods Sold Ratio

Cost of goods sold and net sales

Figure: 4.21

66

2005-06 2006-07 2007-08 2008-09 2009-100

50000000

100000000

150000000

200000000

250000000

300000000

cost of goods soldnet sales

Interpretation

The cost of goods sold ratio in 2005-06 is 53.25.During the five years if this study that

was the highest ratio. After that it comes reducing in the following years up to 2008.In 2009-10

again cost of selling increased

STATEMENT SHOWING CHANGES IN WORKING CAPITAL

67

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

manage the current assets, current liabilities and the inter relationship that existing between

them. The goal of working capital management is to manage the firm’s current assets and

current liabilities in such way that the satisfactory level of working capital is mentioned. The

current assets should be large enough to cover its current liabilities in order to ensure a

reasonable margin of the safety. For this purpose researchers are preparing the statement of

changes in working capital in order to understand how much is difference between the

previous year amount and the current year amount.

Statement showing changes in working capital is an important tool to study the changes in

working capital of the concern and can also throw light on cause for these changes. Working

capital means the excess of current asset over current liabilities. All current assets and current

liabilities are individually listed in this statement, and against each account, the figure pertaining

to that account at the beginning and at the end of the accounting period is shown. The net

change in its position is also added up to equal net change in working capital.

As, Working Capital= Current Assets - Current Liabilities. So,

1. An increase in Current Assets increases Working Capital.

2. A decrease in current assets decreases, working capital.

3. An increase in current liabilities decreases working capital, and

4. A decrease in current liabilities increases working capital.

In case a current asset in the current period is more than in the previous period, the effect

is an increase in working capital and it is recorded in the increase column. But if a current

liability in the current period is more than in the previous period, the effect is decrease in

working capital and it is recorded in the decrease column or vice versa.

Statement of Changes in Working Capital as on 2005-2006

68

Changes (In Rs.)

Particulars31st

March200531st March2006 Increase Decrease

A) Current Assets

Inventories 14439911 17239037 2799126 --------------

Sundry Debtors 31959809 24865020 -------------- 7094789

Cash & Bank Balances 40927691 49684946 8757255 --------------

Other Current Assets 10251534 8799225 -------------- 1452309

Loans & Advances 838757 1115154 276397 ---------------

B) Current Liabilities

Sundry Creditors 21237233 22515907 -------------- 1278674

Other Liabilities 26117826 26990490 -------------- 872664

Provisions 8972005 8114713 857292 ---------------

Total 12690070 10698436

Increase in Working Capital=1991634

Interpretation

There is an increase in working capital in the year 2005 to 2006 by 19.91 lakhs which

was due to the increase in inventory by 27.99 lakhs and increase in cash and bank balance by

87.57 lakhs. Increase in working capital is contributed to the sources of funds.


69

Changes (In Rs.)

Particulars31st

March2006

31st

March2007Increase Decrease

A) Current Assets

Inventories 17239037 20417246 3178209 ---------------

Sundry Debtors 24865020 32193742 7328722 ---------------

Cash & Bank Balances 49684946 58703536 9018590 ---------------

Other Current Assets 8799225 12471133 3671908 ---------------

Loans & Advances 1115154 1135494 20340 ---------------


Sundry Creditors 22515907 27586162 --------------- 5070255

Other Liabilities 26990490 31162911 --------------- 4172421

Provisions 8114713 9842110 --------------- 1727397

Total 23217769 10970073


Interpretation

There is an increase in working capital in the year 2006 to 2007 by 1.22crores which was

due to the increase in inventory by 31.78 lakhs and increase in cash and bank balance by 90.18

lakhs. Increase in working capital is contributed to the sources of funds.


70

Changes (In Rs.)

Particulars31st

March2007

31st


A) Current Assets

Inventories 20417246 28492789 8075543 ---------------

Sundry Debtors 32193742 59956605 27762863 ---------------

Cash & Bank Balances 58703536 58137332 --------------- 566204


Loans & Advances 1135494 1729534 594040 ---------------




Provisions 9842110 17375687 --------------- 7533577

Total 39478221 29431172


Interpretation

There is an increase in working capital in the year 2007 to 2008 by 1.004crores which

was due to the increase in inventory by 80.75 lakhs and decrease in cash and bank balance by

56.62 lakhs. Increase in working capital is contributed to the sources of funds.


71

Changes (In Rs.)

Particulars31st

March2008

31st


A) Current Assets

Inventories 28492789 28323123 --------------- 169666

Sundry Debtors 59956605 54602633 --------------- 5353972



Loans & Advances 1729534 1743414 13880 ---------------


Sundry Creditors 43498386 40216377 3282009 ---------------


Provisions 17375687 14990283 2385404 ---------------

Total 28609758 28049495


Interpretation

There is an increase in working capital in the year 2008 to 2009 by 5.60lakhs which was

due to the decrease in inventory by 1.69 lakhs and increase in cash and bank balance by 78.56



72

Changes (In Rs.)

Particulars31st

March2009

31st


A) Current Assets

Inventories 28323123 35537010 7213887 ---------------

Sundry Debtors 54602633 33299383 --------------- 21303250



Loans & Advances 1743414 1533842 --------------- 209572




Provisions 14990283 13821755 1168528 ---------------

Total 42007763 27492118


Interpretation

There is an increase in working capital in the year 2009 to 2010 by 1.45 crores which was

due to the increase in inventory by 72.13 lakhs and increase in cash and bank balance by 33.60


73

CHAPTER- 5

FINDINGS, RECOMMENDATIONS AND

CONCLUSION

FINDINGS

74

Current ratio is fluctuating over the years; in 2006 – 2007 the current ratio is satisfactory,

because the current ratio is near than the standard ratio 2:1. During the year 2007 – 09

the ratio shows a declining tendency this is an indication of firm’s inability to pay off its

current liabilities fully.

The quick ratio of the company is not satisfactory because it shows a declining trend over

the years and is less than the standard ratio (1:1). It is very low of 1.33 in the year 2009.

Absolute liquid ratio is almost same in all years from 2006 to 2010.But in 2008 and 2009

we can see in a low level as 0.77 and 0.86.

Working capital turnover ratios are in a good level. It shows in increasing level.

The inventory turnover ratio shows a decreasing trend over the years. In the last year

(20010) it is in the lowest level 4.59.

Debtor’s turnover ratio started with a good range and continuing with declining form up to

2009. In 20010 it is in the highest level 7.65.

Creditors turnover ratio standing in the same position in 2006 and 20010.But in between

years it is fluctuating.

Cost of goods sold ratio is going in decreasing range up to 2009. Again in 20010 it

increased.

The liquidity position of the company is weak. Because current assets and current liabilities

are increasing in all the years. Hence it shows the inefficiency of the organization.

SUGGESTIONS

Even in 2010 current assets have increased, organization should take necessary steps to

keep and increase the ratio of current assets.

75

Even the liquidity position is satisfactory level company should concentrate on that point.

As per the absolute liquid ratio of this study cash position of the company is not

satisfactory. Hence company should take necessary steps.

Organization should try to take adequate steps for increasing the working capital.

Company should take adequate actions to reduce the inventory holding period.

Organization should take measures to reduce the cost for selling the goods, which in turn

increases the profit.

The company has to give more importance in the utilization of all assets effectively.

The company should adopt suitable policies and measure to self the scrap and by

products obtained during the production process. So that it will generate an additional

source of revenue.

The operating expenses should be reduced as much as possible by adopting cost reducing

policy in relation to office and administrative overheads and selling and distribution

expenses etc.

The firm must ensure that the assets of units it utilized at its maximum either by reducing

idle capacity assets on by avoiding excessive investment in fixed assets.

It would be advisable if the concern could maintain liquid cash in case to meet any

sudden expenses.

The company can plan of investing more amounts on research and development in order

to develop innovative products.

The company is showing a fluctuating trend, it is not advisable to be like this. So the

company should concentrate more in a constant rate of growth.

CONCLUSION

The financial position of the company was analyzed and interpreted. The analysis and

interpretation of data relating to working capital management of Oushadhi Pharmaceuticals

Corporation helped me to reach a conclusion that working capital efficiency of Oushadhi

76

Pharmaceuticals Corporation is not much better. Since the working capital amount shows an

increasing trend reveals that the company is in a good position to meet its day to day obligations.

The management of the company should look in to the reason for loss and put extra

efforts taken for the operations of the company to obtain better financial results.

BIBLIOGRAPHY

Books

Jain S.P and Narang K.L Advanced Accountancy – 14th Revised Edition, 2004.

77

Maheshwari S.N, Financial Management – 5th Revised and Enlarged Edition, 1997.

R. M Srivastava, Financial Management and Policy, Mumbai, Himalaya Publishing

House.

Journals

Annual Reports of Oushadhi Pharmaceuticals Corporation (IM) Kerala Ltd. from

2005-2006 to 2009-2010.

Oushadhi Corporate Profile

Review of Literature- a) Debasish Sur and Joydeep Biswas

b) Prasad

c) V.V.Reddy and S.B.Patkar

d) J.P.Singh and Shishir Pandey

e) Rakesh Kumar Baral

f) Thomas.M.Krueger

Websites

www.oushadhi.org

APPENDIX

OUSHADHI PHARMACEUTICALS CORPORATION (IM) KERALA LTD.

Balance Sheet as on 31 st March 2006

78

As on 31st March 2006(Rs.)

As on 31st March 2005(Rs.)

SOURCES OF FUNDS

Share Holders Fund

Share Capital 41759720 35093720

Advance towards Share capital 1000000 6666000

Reserves & Surplus 27827721 70587441 24707577 66467297

Deferred Tax Liability 814883 814883

Total 71402324 67282180

APPLICATION OF FUNDS

Fixed Assets

Gross Block 59960333 50567498

Less: Depreciation 32670281 29570050

Net Block 27290052 20997448

Capital Work-in Progress 0 4140094

Current Assets, Loans & Advances

Inventories 17239037 14439911

Sundry Debtors 24865020 31959809

Cash & Bank Balances 49684946 40927691

Other Current Assets 8799225 10251534

Loans & Advances 1115154 838757

101703382 98417702

Less: Current Liabilities & Provisions

Sundry Creditors 22515907 21237233

Other liabilities 26990490 26117826

Provisions 8114713 8972005

57621110 56327064

79

Net Current Assets 44082272 42090638

Miscellaneous Expenditure to the Extent Not Written off or Adjusted

30000

54000

Total 71402324 67282180



As on 31st march 2007(Rs.)

As on 31st march 2006(Rs.)

80

SOURCES OF FUNDS

Share Holders Fund

Share Capital 45159720 41759720




Total 83388153 71402324


Fixed Assets

Gross Block 62923036 59960333


Net Block 26929976 27290052



Inventories 20417246 17239037





124921151 101703382




Provisions 9842110 8114713

68591183 57621110


81

Miscellaneous Expenditure to the

Extent Not Written off or Adjusted

15000

30000

Total 83388153 71402324



As on 31st march 2008(Rs.) As on 31st march 2007(Rs.)

82

SOURCES OF FUNDS

Share Holders Fund

Share Capital 48359720 45159720




Total 106088066 83388153


Fixed Assets

Gross Block 70398024 62923036


Net Block 30615139 26929976



Inventories 28492789 20417246





163833168 124921151




Provisions 17375687 9842110

97456151 68591183


83


0 15000

Total 106088066 83388153



As on 31st march As on 31st march 2008(Rs.)

84

2009(Rs.)

SOURCES OF FUNDS

Share Holders Fund

Share Capital 48359720 48359720




Total 124318794 106088066


Fixed Assets

Gross Block 84078454 70398024


Net Block 38833430 30615139



Inventories 28323123 28492789





181251875 163833168




Provisions 14990283 17375687

114314595 97456151

85



0 0

Total 124318794 106088066



86

As on 31st march 2010(Rs.) As on 31st march 2009(Rs.)

SOURCES OF FUNDS

Share Holders Fund

Share Capital 61159720 48359720




Total 143457048 124318794


Fixed Assets

Gross Block 90108893 84078454


Net Block 38282536 38833430



Inventories 35537010 28323123





200578287 181251875




Provisions 13821755 14990283

119125363 114314595

87



120000 0

Total 143457048 124318794

88

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