Workng Capital on chittoor sugar factory

Chittoor Co-operative Sugars Limited

A STUDY ON

WORKING CAPITAL MANAGEMENTATCHITTOOR CO-OPERATIVE SUGARS LIMITEDA PROJECT REPORTSubmitted in partial fulfillment of the

requirement for the award of the degree of MASTER OF FINANCIAL MANAGEMENT By

Mr. K. VIJAY KUMAR(Reg.No:3560829030)

Under the valuable Guidance of

Mr. K.S. RAM

M.A. (Econ), M.Com., PGDEE, F.C.S, B.G.L.,

F.I.C.W.A, Dip.M.A (Gold Medalist)

Department of MFM

DEPARTMENT OF COMMERCE

SEICOM DEGREE & P.G. COLLEGESRI VENKATESWARA UNIVERSITYTIRUPATI -517 502

2007-2009

SEICOM DEGREE & P.G. COLLEGE

SRI VENKATESWARA UNIVERSITY

TIRUPATI 517 502

Certificate

This is to certify that the project entitled A PROJECT REPORT ON WORKING CAPITAL MANAGEMENT, AT CHITTOOR CO-OPERATIVE SUGAR FACTORY has been carried out by Mr. K. VIJAY KUMAR in partial fulfillment of the requirements of the award of MASTER OF FINANCIAL MANAGEMENT during the academic year 2007-2009 in the Department of Commerce, S.V. University, Tirupati 517 502 (A.P.)

(Co-ordinator (M.F.M))

Project Guide

T.SURENDRANATH REDDY

Mr. K.S. RAMDepartment of Commerce

Department of CommerceS.V. University

S.V. University

Tirupati 517 502 (A.P.)

Tirupati 517 502 (A.P.).

ACKNOWLEDGEMENT

I am thankful to my project guide Mr. K.S. Ram, Department of Commerce for his valuable guidance and patience for helping me bring this training report to its final form.

I am very much thankful to Mr.G.Babu M.Com, Project Guide of Chittoor co-operative Sugar Factory for their support and advice in all the stages of the project.

I acknowledge my heart full gratitude to my parents who are always behind me in every moment of my life.

Last but not least; I pay thanks to all my friends who are supporting, inspiring and motivating me. K. VIJAY KUMAR No: 3560829030DECLARATIONI here by declare that this project A STUDY ON WORKING CAPITAL MANAGEMENT at the Chittoor Co-operative Sugar Factory, Chittoor is doing done by me during February March 2009. The analysis & findings in this report are based on the information collected by me. I have not duplicated this from any earlier reports submitted previously by anybody, any where & this report has not been submitted for any by me.

K. VIJAY KUMAR No: 3560829030 ContentsChapter No.DescriptionPage No.

Chapter IIntroduction1 - 2

Industry profile3 - 5

Company profile6 - 8

Product Profile9 - 12

Chapter IIResearch Methodology 13 - 14

Need for the study

Objectives of the study

Sources of data

Scope & Limitations of the study

Chapter IIIData Analysis and Interpretation 15 - 55

Chapter IVFindings & Suggestions 56 - 57

Conclusion58

Annexure59 - 68

Bibliography69

INTRODUCTION

Financial Management is that managerial activity which is concerned with the planning and controlling of the firms finance. Finance is one of the foundations of all kinds of economic activities. Finance is the life-blood of a business. The financial management study deals with the process of procuring necessary financial resource and their judicious use with a view to maximizing the value of the firm and there by the value of the owners i.e. equity share holders in a company. Practicing managers are interest in this subject because among the most crucial decisions of the firm are those which relate to finance, and an understanding of the theory of financial management provides them with conceptual and analytical insights to make those decisions skillfully.

FINANCIAL MANAGEMENT

Financial Management emerged as a distinct field of study at the turn of this century many eminent persons defined it in the following ways.

DEFINITIONS: -

According the BONNEVILE AND DEWEY: Financing consists in the rising, providing and managing of all the money, capital or funds of any kind to be used in connection with the business.

According to Prof.EZRA SOLOMAN:Financial Management is concerned with the efficient use of any important economic resource, namely capital funds.

FINANCE FUNCTIONS: -

It may be difficult to separate the finance functions from production, marketing and other functions, but the functions themselves can be readily identified. The functions of raising funds investing them in assets and distributing returns earned from assets to shareholders are respectively known as.

1. Long term assets-mix (or) Investment Decision

2. Capital Mix (or) Financing Decision

3. Profit allocation (or) Dividend Decision

4. Short term asset Mix (or) Liquidity Decision

GOALS OF FINANCIAL MANAGEMENT

Maximize the value of the firm to its equity shareholders. Maximization of profit

Maximization of earnings per share.

Maximization of return on equity (defined as equity earnings/net worth)

Maintenance of liquid assets in the firm.

Ensuring maximum operational efficiency through planning directing and controlling of the utilization of the funds.

Building up of adequate reserves for financing growth and expansion.

INDUSTRY PROFILESugar cane is one of the important crops for the Indian farmer. Sugar and Jiggery are the main products that we get from Sugarcane. Other products such as Biogases for industrial use, Molasses for distillery, filter cake, Mud as an organic manure and green leaves with tops for cattle feed are also available as by products because of its multi uses Sugarcane has played crucial role in Indian economy with rs.20000 cores turnover and width 450 mills providing assistance to 45 million sugar cane farmers and 2 million Sugarcane farmers and 2 million workmen directly and indirectly.

In A.P. sugar industry is an important Agro-based industry, occupying the second position next to text tile industry. The annual cultivated area is about 1.99 lack hectares with a yield of 149.45 lacks of tones during 96-97. At present, there are 36 sugar factories in the state and 50% of them are in co-operative sector. The co-operative sugar units in the states have been suffering due to lack of adequate cane irrigation facilities, working capital, by-product utilization, excessive employment etc.,.

The sugar industries which provide direct employment to about 3 lacks persons of sugar cane followed by Brazil & Cuba. Sugar cane existed in India from 3000 B.C. The centre place of origin of sugar cane regarded as Northeastern Indian, from sugar cane seems to have been to China and other places by early travelers and no mans between 1800 and 1700 B.C. later. It was penetrated to Philippines, Jewa and other places. Actually the word sugar derived from a Sanskrit word shakra.

India was the worlds largest producer of sugar cane occupies a very pride place in the world. In India, the cultivation of sugar cane is 10,000 miles tones. The average yield, being 56 tones per acre of total cultivating land is occupied by sugar cane cultivation. Sugarcane is grown in almost all part of India, except in colder regions and extreme North Jammu Kashmir, Himachal Pradesh.

Area wise distribution of sugar industry in A.P.

S.NoSectorNo. of industriesCostal AreaRayalaseemaTelangana

1Co-operative181242

2Public sector7115

3Private sector11821

Total362178

The list of Co-operative Sugar factories in A.P.1. The Chittoor Co-operative sugars ltd, Chittoor.

2. The Chodavaram Co-operative sugars ltd, Chodavaram.

3. The Anakapalle Co-operative sugars ltd, Anakapalle.

4. The Etikuppaka Co-operative agricultural of industrial society ltd, Ethikuppaka.

5. Sir Vijayarama Gajapathi Co-operative sugars ltd.

6. The Amadavalasa Co-operative agricultural industrial society ltd, Srikakulam.

7. The West Godavari Co-operative sugars ltd, Eluru.

8. Palakollu Co-operative agricultural & industrial society ltd, Palakollu.

9. The Thandara Co-operative sugars ltd, Visakapatnam.

10. Nizamabad Co-operative sugars ltd, Nizamabad.

11. Sir Venkateswara Cooperative sugars ltd, Renigunta.

12. The Cuddapah Co-operative sugars ltd, Chennur.

13. The Nandyal Co-operative sugars ltd, Ponnapuram.

14. The Kovur Co-operative sugars ltd, Nellore.

15. Nagarjuna Co-operative sugars mills ltd, Gurzala.

16. Nampaneni Venkata Rao Co-operative sugars ltd, Hanuman Junction.

17. Sri Hanuman Co-operative sugars ltd, Hanuman Junction.

18. Palair Co-operative sugars ltd, Ammagudem.

SUGAR INDUSTRY NATURE

SEASONALITY

The industry is seasonal with the season starting in Nov and continuing till April/May, sugar cane is available during these 6-7 months and crushing also takes place during these months.

LICENSING SYSTEM

To protect sugar producing units and ensure a sufficient quantity of raw material (sugar cane), licensing system was introduced. Under this system, each unit had a command area from where the sugar cane was produced. The licensing system presently in place is also trying to encourage the setting up of new units by providing them with sops and other benefits.

COMPANY PROFILE

THE CHITTOOR CO-OPERATIVE SUGARS LIMITED is the first agro based major industry in Rayalaseema area. It was first registered on 22.8.1955 under the APSCS Act. Its area of operation comprises of 192 villages in 21 mandals.factory is located along cudalore-karnool national high way NO18, 3 k.m. towards Karnool from Chittoor. It owns 85.96 Acers of land. It was first commissioned on 18.1.1963 with a licensed and installed capacity of 1000 tones cane crushing per a day presently factory is working at an average of 1800-2000 tones a day.

Constitution:

Election was stayed to this factoy during April 2000 From then on Wards:

The official Board nominated by The Government Consists of:

1. Chittoor collector as person-n charge.

2. Managing Director.

The Board of Chittoor Co-operative Sugar Factory Ltd., used

to meet frequently from time to time as and when required.

Annual general body meetings of the members of the society were held on 29-09-2000,29-09-2001,29-04-2002,08-09-2003 and 25-11-2003.

At present the strength of employees at various levels:

a) Permanent (non seasonal)

68

b) Seasonal permanent

94

c) Consolidate wagers (sessonal)

167

d) Daily wagers (NMR)

244

-----------------

Total no.of Employees

573

------------------

MANAGEMENT

At present the elected board has assumed a charge on 6-4-2000. The present

Board of directors as detailed below:-

President 1

Board of directors 14

Employee director 1

There are major departments:-

Administrative

Engineering

Manufacturing

Agriculture

Accounts &finance

PRODUCTS

SUGAR

MOLASSES

CAPITAL STRUCTURE

Original project cost was RS. 128.50 lakhs. It has been funded from following sources:

I) Share capital from RS. Lakhs

a)cane grower members 8.50

b)state government 25.00

----------------------

33.50

----------------------

II) Term loans

RS.Lakhs a)IFCI New Delhi

75.00

b)LICI Bombay

20.00

------------

128.50

------------III)Capital outlay Rs. Lakhs

Land 2.38

Buildings 5.90

Plant & machinery 109.34

Other assets 5.77

Per operative expences 4.00

Vehicles 0.96

-----------

128.35

-----------PRODUCT PROFILE

Sugar Cane Sugar cane cultivated by the growers or promising varieties in terms of sugar content and yield. Cultivation techniques maturity of (decided by the cane personnel) harvested and supplied to the factory in trucks fresh less tops and roots. Trucks are weighed with cane on Weigh Bridge and unloaded on the moving cane carrier. Mechanical un-loaders do unloading. Again empty truck is weighed to assertion in the weight of cane unloaded.

Millings

Provided with a tandem of four mills land each mill is provided with three rollers. On the cane carried for cane preparation cane knives driven by motor and followed by a Fibrizer driven steam turbine are provided to chop the cane into small pieces and fiber to make the milling move efficient and to extract maximum juice from the cane. To make this process more effective assured quantity of water is added to Mills. After extraction of juices the waste materials is called bagasse.

Boilers Provided with 2 nos. of boilers of each water evaporation capacity of 25 Mts. Per hour steam at 300 p sig (21 Kgs). Steam is used for driving the Fibrizer, mills by turbines and generator power, by steam turbine alternator. For boilers main fuel is bagasse. Surplus bagasse is sold to paper industries.

Clarification Juice extracted form sugar cane in mills is weighted in automatic weighing scale. It is preheated in juice heater to 50-750. Then it is limited and sulphieted simultaneously. Juices will be coagulated form and will not settle. To induce settings cheaply and abundantly available positive is to be added i.e. namely time in slurry form, also called milk of lime, by using addition of such alkaline

medium is again brought down to natural pH medium by bubo ling of sulphur dioxide gas. This gas is produced in sulphur burners and bubbled in preheated juices. By the aid of compressed air passing through sulphur burners. As such a juice is kept at slightly alkaline medium say 701 to 7.2. Then this treated juice is heated again in other row of juices heaters to 102 C and to send to graver. Graver is a big tank where settling is taking place. Continuously, such juices is sent and drawn from it with the detention time of juices of about 330 hours, in u tube principles.

Evaporation In graver juices will be well settled and will have a golden yellow color of 7.0pH (Neutral). This clear juice will contain more than 85% of water and the remaining soiled (Sugar Maximum + a little sugar). In evaporators about 75% of water is removed and made syrup. This consists of one vapor cell and is followed by four bodies. Boiling is done under vacuum using exhaust stream from turbines tubes emerging out through tube plates and above this calandria vapor space or shell. Steam circulated through calandreia and heating the outer point of huices is brought well below its origin boiling point. In the vapor cell alone exhaust steam is admitted into the calandria produced vapor to its subsequent body and soon. Vacuum is helping is drawing vapor from the preceding body and this boiling is called multi effect boiling and maximum fuel economy. Thus when juices is emerges out from last body it will be a syrup, losing about 75% of water.

Vacuum filter Mud settled in graver is taken in rotary filters to extract juices from it and waste is called filter cake sent out and used as manure. Extracted juices is again mixed juices from mills after weighment tank and takes the path of process along with mills juices in acyclic form.

Sulphitation and syrup The syrup from evaporator last body is again sulphited to beach to get white sugar and sent to pan supply tanks.

Pans Pan bodies are similar to evaporators in construction with different design. Materials are invidiously boiled in four numbers under vacuum. When the syrup is further boil in pans. When the super saturation point reaches crystals come out its is again boiled up by addition kept in pan and the rest 2 portions sent to receivers. Then again pan is boiled. This process will help growth or crystal as desired by us.

Three boiling are bone A, B, C. These are called massecuites. All these mass cuties (sugar + molasses) are purged in centrifugals respectively sugar and molasses are separated. Pans are boiler on vapor produced form vapor cell.

Centrifugals Such made massecuties are dropped in crystallizers (a storage tank with stirring mechanism). From crystallizes taken into centrifugal machines and sugar and molasses separator. Centrifugal machines contain a basket fitted with mesh and screen of small opening and will not allow sugar crystals to pass through but only molasses. When one machine changed with massecuities and spun at 150 RPM molasses gets out and collects in a tank. Sugar remains in basket washed and dried by steam. Then dropped on hopper (to and or) shaking medium sugar will get dry when flowing and galls on sugar grader (fitted with meshes) screened and bagged. Bags weighed on P.O scales of 100kgs. And sent to go down.

Molasses got from a massecuites; sugar and molasses form B massescuties and sugar form c massecuites (final) are again boiled in pans in cyclic manner. Molasses got fro c massecuites called final molasses is a waste and sent to storage tanks (Raw material for alcohol industries). Sugar is graded in accordance and large i.e., S-29, S-30. As the demand in the market is for S-30 it is made in the fact.

RESEARCH METHODOLOGYNEED FOR THE STUDYIn carrying the study both primary and secondary data collected in aphased manner as follows:A. Initially preliminary discussions with G.M. sales manager and accounts officer carried on.

B. The information about profit and loss reports

C. The ratios are calculated by studying balance sheet and the necessary information required for the study was being obtained from fruitful interaction of the researched with the employees of the organization.

D. And some information gathered from secondary data and some of the financial books.

OBJECTIVE OF THE STUDY

This study is mainly focused to examine the short-time financial viability of chittor co-operative sugars as stated below: To study how best the working capital is utilized in the company.

To study the effectiveness of credit management of the company.

To study the short-term liquidity positions of company.

To understand working capital management of a company.

To study the changes in working capital position of the company.

To suggest necessary methods by which future improvement may be made in its management of working capital.SOURCES OF DATA ANALYSIS

The study required both primary and secondary data. PRIMARY DATA:-

Primary data has been collected by interviewing certain executives who were chosen on the basis of their in depth knowledge and experience in the company. The interviews in nature are under to gain as much information as possible. SECONDARY DATA:-

Secondary data was obtained from the past records file and reports of the organization also from other financial statements.

TOOLS FOR ANALYSIS OF WORKING CAPITAL:-The quantum of working capital as well as its financing pattern is subject to constant monitoring and reviews by the financial manager. There are different analytical tools which can help a financial manager in monitoring in viewing and controlling the working capital. The popularly used tools are:

1. Schedule of changes in working capital.

2. Working capital ratios.LIMITATION OF THE STUDY:-( It is based on the data supplied by the factory personnel.

( It is based on consultation, decisions of all concerned officials.

( Since only 5 years data is used for the analysis the out come may

Not be generalized.

( Due to limitations of time, it was unable to go far a depth study into

The subject.

INTRODUCTION TO WORKING CAPITAL

Working capital is often referred to as lifeblood of an organization of its the money required for carrying on day today activities of an organization. The management of current assets is similar to that of fixed assets in the sense that in both cases a firm analysis their effects on its return and risk.

The management of fixed and current assets, however, differs in three important ways: first, in managing fixed assets, time is very important factor; consequently, discounting and compounding techniques play a significant role in capital budgeting and a minor one in the management of current assets. Second, the large holding of current assets, especially cash, strengthens the firms liquidity position (and reduce risk ness), but also reduces the overall profitability. Thus, a risk-return trade off is involved in holding current assets. Third, levels of fixed as well as current assets depend upon expected sales fluctuations in the short run. Thus the firm has a greater degree of flexibility in managing current assets.

Working capital is probable the often used financial management concepts verbally and misused practically. Independent of the nature of an organization, its constitution and activity requires working capital. Many organizations have failed or become sick mainly due to the mismanagement of this working capital.

MEANING AND DEFINITION

Working capital management or administration of all aspects of working capital, which manage the firms current assets and current liabilities in such a way that a satisfactory level of working capital is maintained.

According to smith working capital management is concerned with the problem that arise in attempting to manage the current assets, current liabilities, and the inter-relationship that exists between them

TYPES OF WORKING CAPITAL:-There are two types of working capital. They are:

I) on the basis of concept

1) Gross working capital.

2) Net working capital.

1. Gross working capital:-Refers to the firms investment in current assets are the assets, which can be concerned into and with in an accounting year (or operating cycle) and include cash, short-term securities, debtors (accounts receivables or book debts) bills receivable and stock (inventory)

Gross working capitals points to the arranging of funds to finance current assets.2. Networking capital:-Refers to the difference between current assets and current liabilities. Currents liabilities are those claims of outsiders, which are expected to nature for payment within accounting years and include creditors (accounts payable). Bills Payable and outstanding expenses. Networking capital can be positive or negative. A positive networking capital will arise when current assets, exceed current liabilities and a negative working capital will arise when current liabilities are in excess of current assets.

II) On the basis of time

1) Permanent/fixed/fluctuating working capital

2) Temporary working capital

1) Permanent working capital:-The need for current assets arises because of the operating cycle. The operating cycle is a continuous process and therefore, the need for the current assets is felt constantly. But the magnitude of current assets needed is not always a minimum level of current assets, which is continuously required by the firm to carry on its business operations. This minimum level of current assets is referred to as permanent or fixed working capital.EXAMPLE: - Every firm has to maintain a minimum level of raw materials, work-in-progress, finished goods and cash balance. This minimum level of current assets is called permanent or fixed working capital as this part of capital is permanently blocked in current assets. As the business grows, the requirements of permanent working capital also increase due to the increase in current assets.

Temporary

Or

Fluctuating

Permanent

Time

2. Temporary working capital:-Depending upon the changes in production and sales, the need for working capital over and above permanent working capital, will have in be maintained to support the peak proceeds of sale and investment in receive may also increase during such periods. On the other hand, investment in raw material, working in progress and finished goods will fall if the market is slack.

The extra working capital needed to support the changing production and sales activities is called fluctuating, or variable or temporary working capital. The firm to meet liquidity measurement that will last only temporarily creates temporary working capital.

Temporary

Or

Fluctuating

Permanent

THE NEED OR OBJECTIVES OF WORKING CAPITAL

The need for working capital to run day -to -day business activities cannot be over emphasized, we will hardly find business firm, which doesnt require any amount if working capital indeed, and firms differ in their requirements of the working capital. We know that a firm should aim at maximizing the wealth of its share holders. In its endeavor to do so. A firm should earn sufficient return from its operations. Earning a study amount of profit required successfully sale activity. The firm has to invest enough funds in current assets for cash instantaneously. There is always an operation cycle involved in the conversion of sales in to cash.

VARIOUS NEEDS OF WORKING CAPITAL IS AS FOLLOWS:-1. To pay wages and salary.

2. It helps to the purchase of raw materials, components and spares.

3. It helps to incur day-to-day- expenses and overhead costs such as fuel, power, and office expenses etc.

4. It also to meet the selling cost as packing, advertising etc.

5. It provides credit facilities to the customer.

6. It helps to maintain the inventories of raw material, working progress, stores and spares and finished stock.

DETERMINATES OF WORKING CAPITAL OR FACTORS AFECTINGThe working capital requirement of a firm affected by a number of factors.

The various factors, which affect the working capital requirement of a concern, are as follows:

Internal factors External factors

Nature of business

Business

fluctuations

Product cycle Technological

Developments

Business cycle

Transport and

Credit policy Communication

Development

Scale of production Import Policy

Growth and Expansion of business Taxation policy

Operating efficiency

INTERNAL FACTORS1. NATURE OF BUSINESS:-

The working capital requirements of enterprises are basically related to the conduct of business. Public utilities have certain features which have a bearing on their working capital needs. They do not maintain big inventories arid have, therefore, probably the least requirement of working capital. On the other hand trading and manufacturing concern required large amount of working capital to maintain a sufficient amount of cash inventories and book debts.

2. PRODUCTION CYCLE:-The term production or manufacturing cycle refers to the span between the procurement of raw materials and completion of the manufacturing process leading to the production of finished goods. In other words, there is a some time gap before raw materials become finished goods. Therefore the longer the time span, the larger will be the working capital needed and vice versa.

3.BUSINESS CYCLE:-The business fluctuations influence the size of working capital mainly during updated phase when boom conditions prevail, the need for working capital is likely to cover the lag between increases sales and receipt of cash as well as invest in plant and machinery to meet the increased demand. The down swing an opposite effect on the level of working capital requirement.4.CREDIT POLICY:-The credit policy relating to sales and purchases also affects the working capital. The credit policy in influences the requirements of working capital in two ways:Though credit terms granted by the firm to its customers/buyers of goods credit terms available to the firm from its creditors. A firm, which more credit sales and cash purchase required high working capital than a firm having more credit purchase and cash sales.

5.SCALE OF PRODUCTION:-A concern carrying on activities on a small scale of needs less working capital. On the other hand a concern undertaking activities on large scale

Needs large amount of working capital.

6. GROWTH AND EXPANSION OF BUSINESS:-The growth and expansion of business also affect the working capital requirement. When there is growth and expansion in the business of a firm the working capital needs of the firm will also increase.

7.OPERTAING EFFICIENCY:-The operating efficiency of the management is also important determinant of the level of working capital. A firm enjoying operating efficiency can eliminate wastage and use its resources efficiently and thereby reduce its working capital needs considerably. EXTERNAL FACTORS1. BUSINESS FLUCTUATIONS:-

Business enterprises usually experiences fluctuations in demand for their products and services because of changes in economic conditions. In view of this, working capital requirements of these enterprises are affected. Thus, in the event of economic prosperity, general demand of the goods and services tends to shoot up. To cope with increased demand and consequently increased production, the firm will require additional working capital.

2. TECHNOLOGICAL DEVELOPMENTS:-

Technological developments in the area of production can have sharp effects on the need for working capital. If a firm switches over to new manufacturing process and installs new equipments with which it is able to cut period involved in converting raw materials into finished goods, permanent working capital requirements of the firm will decrease.

3. TRANSPORT AND COMMUNICATION DEVELOPMENTS:-

Where the means of transport and communication in a country are not well developed, industries may need additional funds to maintain big inventory of raw materials and other accessories which would otherwise not be needed where the transport and communications systems are highly developed.

4. IMPORT POLICY:-

Import policy of the government may also have its bearing on the levels of working capital of the enterprises since they have to arrange funds for importing goods at specified times.

5. TAXATION POLICY:-

Working capital needs of business enterprises are affected sharply by taxation policy of the government. In the event of regressive taxation policy of the government, as it exists today in India, imposing heavy tax burdens on business enterprises leaves very little profits for distribution and retention purposes.SOURCES OF WORKING CAPITAL:-Among the various sources available for financing working capital needs finance manager has to select the best suitable source depending on working capital need of company.

SOURCES OF WORKING CAPITAL

Long term sources Short term sources

Internal sources External sources

Bank

With drawing the

Depreciation fund Trade credit Using the renouncement Bills of

For taxation exchange

Postponement of payment Govt.

Accrued expenses assistance

Public deposits

The need of working capital is increased by raising prices of end products and relative inputs. On the other hand the government and monetary authorities play their own role to curd the malice in periods of inflation. The control measures often take the firm of dear money policy and restriction credit. Financing of additional working capital in such an amusement becomes a real problem to finance manager of a concerned unit. Commercial banks play the most significant role in providing working capital finance, particularly in Indians context. In view of mounting inflation, the R.B.I has taken up certain social measures to check the money supply in the economy. The balancing need has to be managed either by long-term borrowings or by issuing equity or by earning sufficient profits and retaining the same of coping with the additional working capital requirements. The first choice before a finance manager, where banks do not provide a part of additional working capital, is to take the long-term sources of fianc.

LONG TERM FINANCING:-

Loans from financial institution the option is normally rules out, because financial institutions do not provide finance for working capital requirements. Further this facility is not available to all companies this option is not practical.

FLOATING OF DEBENTURES:-The profitability of a successful floating of debentures seems to be rather merging. In Indian capital market, floating of debentures has still to gain popularly debentures issues of companies in private sector not associated with certain reputed groups generally failed to attract investors to invest their funds in companies. In this context the mode of raising funds by issuing convertible debenture/bonds is also gaining.

ACCEPTING PUBLIC DEPOSITS:-The issue of tapping deposits is directly to the image of the company seeking to invite public deposits.

ISSUE OF SHARES:-

With a view of financing additional capital needs, issue of additional equity share could be considered. Many Indian company have still to go ahead to command respect of investors in the context low profit margin as well as lack o knowledge about company make the success of a capital

Issue very dim.

RAISING FUNDS BY INTERNAL FINANCING:-Raising funds from operational profit poses problems for many companies, because price of their end products are controlled and do not permit companies to earn profit sufficient requirements to finance additional working assets, still a largely feasible solution lies in increase profitability through cost control and cost reduction measures managing the cash operating cycle, rationalizing inventory stock and so on.PROBLEMS ASSOCIATED WITH EXCESS & IN ADEQUATE WORKING CAPITAL:-DANGERS OF EXCESS WORKING CAPITAL:-1) It results in unnecessary accumulation of inventories. Thus the changes of inventory mishandling, the losses increase.

2) It is an indication of defective credit policy and stock collection period.

3) Excessive working capital makes management Compliment, which degenerates into managerial efficiency.

4) Tendencies of accumulating 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 speculation profits.

DANGERS INADEQUATE WORKING CAPITAL:-

1) It Strategies growth. It becomes difficult to undertake profitable project due to non-availability of the working capital funds.

2) It becomes difficult to implement t operating plans and achieve the firms profit target.

3) Operating inefficiencies creep in when it becomes difficult even to meet day-to-day commitments.

4) Fixed assets are not efficiently utilized for the working capital funds. Thus, the rate of return on, investment slumps.

5) Paucity of working capital funds renders the firm unable to avail of attractive credit opportunities etc.The firm losses it reputation when it is not in a position to turnover short-term obligation.METHODS FOR ESTIMATING WORKING CAPITAL REQUIRMENTS

Three widely used methods for determining working capital requirements of a firm are:

Percentage of sales method

Regression analysis method

Operating cycle method

1. PERCENTAGE OF SALES METHOD:-

In this method, level of working capital requirements is decided on the basis of past experience. The past relationship between sales and working capital is taken as a base for determining the size of working capital requirements for future. It is, however, presumed that the relationship between sales and working capital that has existed in the past has been stable. This may be explained with the help of the following illustration.

Percentage of sales method is a simple and easily understood method and practically used for ascertaining short-term changes in working capital in future. However this method lacks reliability inasmuch as its basic assumption of linear relationship between sales and working capital does not hold true in all the cases. As such, this method cannot be recommended for universal application.2. REGRESSION ANALYSIS METHOD:-

This is a statistical method of determining working capital requirements by establishing the average relationship between sales and working capital and its various components in the past years. In this regard the method of least squares is employed and the relationship between sales and working capital is expressed by the equation:

Y=a+bx

The values of a and b is obtained by the solution of simultaneous linear equations given as under:

Where a=fixed component

b=variable component

x=sales

y=inventory

n=number of observation

3. OPERATING CYCLE APPROACH:-Operating cycle refers to the length of time necessary to complete the following cycle of events.

Conversion of cash into inventory.

Conversion of inventory into receivable

Conversion of receivable into cash

If the operating cycle is length than the working capital requirement will be more on the other hands, if the operating cycle is shorter than the working capital requirement will be less.

According to this approach, size of working capital requirements of a firm is determined by multiplying the duration of the operating cycle by cost of operations. The duration of the operating cycle may be found with the help of the following formula:

O=R + W + F + A P

Where, O=Duration of operating cycle

R=Duration of raw materials

W=Duration of work-in-process

F=Duration of finished goods

A=Duration of accounts receivable

P=Duration of accounts payable

Duration of raw materials:-

It reflects the number of days for which raw materials remain in inventory before they are issued for production. The following formula can be used to determine duration of raw materials.

Average stock of raw materials

R = ----------------------------------------------------

Per day consumption of raw materials

Duration of the work-in-process:-

It denotes the number of days required in the work-in-process stage. It may be ascertained with the help of the following formula:

Average work-in-process inventory

W = --------------------------------------------------

Average production per day

Duration of finished goods:-

It refers to the number of days for which finished goods remain in inventory before they are sold. This can be computed by the following formula:

Average finished goods inventory

F = ----------------------------------------------

Per day sale of goodsDuration of the accounts receivable:-

It represents the number of days required to collect the accounts receivable. This may be calculated as under:

Average book debts

A = --------------------------------------------- Average credit sales per day Duration of accounts payable:-

It refers to the number of days for which the suppliers of raw materials offer credit. This may be measured with the help of the following formula:

Average trade creditors

P = -----------------------------------------------

Average credit purchases per day

OPERATING CYCLES:-

TANDON COMMITTEE REPORT

Reserve Bank of India set up a committee under the chairmanship of shri P.L. Tandon in July 1974. The terms of reference of the committee were:

( To suggest guidelines for commercial banks to follow up and supervise credit from the point of view of ensuring proper end use of funds and keeping a watch on the safety of advances.

( To suggest the type of operational data and other information that may be obtained by banks periodically from the borrowers and by the reserve bank of India from the leading banks.

( To make suggestions for prescribing inventory norms for the different industries, both in the private and public sectors and indicate the broad criteria for deviating from these norms.

( To make recommendations regarding resources for financing the minimum working capital requirements.

( To suggest criteria regarding satisfactory capital structure and sound financial basis in relation to borrowings.

( To make recommendations as to whether the existing pattern of financing working capital requirements by cash credit/overdraft system etc., requires to be modified, if so, to suggest suitable modifications. CRETERIA FOR JUDGING THE EFFICIENCY OF WORKING CAPITAL MANAGEMENT:-

The efficiency of working capital management can be judged through accounting ratios. The important accounting ratios that could be used for judging the efficiency of working capital management are:

Current ratio

Quick ratio

Inventory turnover ratio Current assets turnover ratio

Cash position ratio Working capital turnover ratio.SCHEDULE OF CHANGES IN WORKING CAPITAL FOR THE YEAR 2002-03PARTICULARS20022003Effect of working capital

Increase Decrease

CURRENT ASSETS:

Cash on hand 42159.91 1283980.24 1241820.33-------------

Balances with bank 494953.16 4095239.26 3600286.10-------------

Interest Receivable 1826488.57 1826488.57------------------------

Closing stock 292692156.20 219662803.70------------ 73029352.50

Total current assets -A 295055757.80 226868511.70

LIABILITIES:

Out standing Interest 4429829.45 6094477.90------------ 1664648.45

Total current liabilities -B 4429829.45 6094477.90

Working Capital (A-B) 290625928.30 220774033.80

Net decrease in working Capital 69851894.5069851894.50

290625928.30 290625928.3074694000.95 74694000.95

INTERPRETATION:The net working capital requirement of the company during the year 2002 has been increased in 2003, and the net working capital of the company was recorded RS. 22,07,74,033.80 and it was been increased to Rs. 29,06, 25,928.30 in the year 2002.SCHEDULE OF CHANGES IN WORKING CAPITAL FOR THE YEAR 2003-04PARTICULARS20032004Effect of working capital

Increase Decrease

CURRENT ASSETS:

Cash on hand 1283980.24 22575.20------------ 1261405.04

Balances with bank 4095239.26 15881189.4811785950.22------------


Closing stock 219662803.70 96849740.27------------122813063.40

Total current assets -A 226868511.70114579993.50

LIABILITIES:




Net decrease in working Capital133384728.70133384728.70

220774033.80220774033.80145170678.90145170678.90

INTERPRETATION:The net working capital requirement of the company during the year 2003 has been increased in 2004, and the net working capital of the company was recorded RS. 8,73,89,305.10 and it was been increased to Rs. 22,07,74,033.80 in the year 2003.SCHEDULE OF CHANGES IN WORKING CAPITAL FOR THE YEAR 2004-05PARTICULARS20042005Effect of working capital

Increase Decrease

CURRENT ASSETS:

Cash on hand 22575.20 1878931.06 1856355.86-------------

Balances with bank 15881189.48 18140037.49 2258848.01-------------

Interest Receivable 1826488.57 1826488.57-------------------------

Closing stock 96849740.27 110043159.0013193418.73-------------


LIABILITIES:




Net Increase in working Capital 3973512.60 3973512.60

91362817.70 91362817.7017308622.60 17308622.60


Increase Decrease

CURRENT ASSETS:

Cash on hand 1878931.06 141218.80-------------- 1737712.20

Balances with bank 18140037.49 7254943.14-------------- 10885094.35

Interest Receivable 1826488.57 1826488.57----------------------------

Closing stock 110043159.00304641449.50194598290.50--------------

Total current assets -A 131888616.10313864100.00

LIABILITIES:

Out standing Interest 40525798.40 49024988.90-------------- 8499190.50


Working Capital (A-B) 91362817.70264839111.10

Net increase in working Capital 173476293.40 173476293.40

264839111.10264839111.10194598290.50194598290.50


Increase Decrease

CURRENT ASSETS:

Cash on hand 141218.80 95082.92------------ 46135.88

Balances with bank 7254943.14 17849583.4110594640.27------------


Closing stock 304641449.50 281582198.30------------ 23059251.20


LIABILITIES:

Out standing Interest 49024988.90 46928301.64 2096687.26------------



Net Decrease in working Capital 10414059.6010414059.60

264839111.10 264839111.1023105387.08 23105387.08

INTERPRETATION:The net working capital requirement of the company during the year 2006 has been increased in 2007, and the net working capital of the company was recorded RS. 25,44,25,051.50 and it was been increased to Rs. 26,48,39,111.10 in the year 2006.RATIO ANALYSIS

Over several years scientific tools have been evolved for determine optimum level of working capital online assessment of each of the components of current assets for selective application of management control. Undisputedly the ratio analysis occupies place of prime importance. Ratio are complied and studied for profitability assessment of financial position sufficiency of working capital strategies perused by the organization short term and long term solvency liquidity etc. I would deal with some of the predominant rations more relevantly applicable net working capital management studies.CURRENT RATIO Current ratio indicates ability of the company to meet the current obligation i.e., the current assets must be sufficient to pay as and when the latter matrices. The standard ratio is 2:1, the current ratio is calculated by using the formula:

Current assets

Current ratio = ----------------------

Current liabilities

YEARCURRENT ASSETSCURRENT LIABILITIESRATIO

2002-200323,33,30,395.1318,90,06,552.171.234

2003-200412,09,66,623.2114,22,10,762.180.850

2004-200514,13,26,040.4114,78,60,117.240.955

2005-200632,30,19,288.9920,38,85,067.191.584

2006-200731,32,95,829.1321,93,27,902.791.428

INTERPRETATION

The current ratio is below satisfactory level of 1:58 during the year 2002-2003 and the year 2003-2004 above the satisfactory level. However there is a decrease during the years 2004-2005 to 2006-2007 the decrease in the current ratio indicates bad trend of company.

QUICK RATIO

Quick ratio are acid test ratio ignores less liquidity assets like inventory. This takes account readily available cash and other assets which are quickly converted into cash. The standard is ratio is1:1. The general principle of quick ratio is as follows:

Liquid Assets

Quick ratio = -------------------------------- Current liabilities

YEARQUICK ASSETSCURRENT LIABILITIESRATIO

2002-20031,36,67,591.8318,90,06,552.170.072

2003-20042,44,16,882.9414,22,10,762.180.169

2004-20052,83,90,812.0614,78,60,117.240.192

2005-20061,86,38,461.5720,38,85,067.190.091

2006-20073,39,59,496.9121,93,27,902.790.154

INTERPRETATION

The Quick ratio is below satisfactory level of 0:072 during the year 2002-2003 and the year 2003-2004 above the satisfactory level. However there is a increase during the years 2004-2005 this year position is 2005-2006to 2006-2007 the increase in the Quick ratio indicates satisfy trend of company.

INVENTORY TURNOVER RATIO

Turnover ratio is also known as stock velocity. This ratio is calculated to consider the adequacy of the quantum of capital and its institution for investing in inventory.

A firm must have reasonable stock in caparison to sales. It is the ratio of cost of sales and average inventory of. This ratio helps the financial managers to calculate inventory policy. This ratio reveals the number of times finished stock is turned over during a given accounting period. The ratio is used for measuring the profitability. These are the various ways in which stock turnover ratio may be calculated.

Net sales

Inventory turnover ratio = -------------------------------- Average Inventory

YEARNETSALESAVERAGE INVENTORYRATIO

2002-200320,14,86,573.3623,41,47,889.6100.860

2003-200413,05,17,436.9013,75,97,979.6100.948

2004-20059,66,54,360.908,31,65,010.4251.162

2005-200612,37,19,616.7510,30,03,384.8151.201

2006-200736,88,53,566.8918,47,71,625.0201.996

INTERPRETATIONThe inventories are decreased in 2002-2003,2003-2004 and 2004-2005, the ratio is increases 2005-2006 and if decreases in2006-2007.

CURRENT ASSETS TURNOVER RATIO

Current assets turnover ratio indicates the extent to which the investments in current assets contribute towards sales. It comported with a previous period. It indicates whether the investment is fixed assets has been judicious or not.

Net Sales

Current assets turnover ratio= ----------------------

Current Assets

YEARNET SALESCURRENT ASSETSRATIO

2002-200320,14,86,573.3623,37,61,514.160.861

2003-200413,05,17,436.8112,09,66,623.211.078

2004-20059,66,54,360.9014,13,26,040.410.683

2005-200612,37,19,616.7532,30,19,288.990.383

2006-200736,88,53,566.8931,32,95,829.131.177

INTERPRETATION The ratio is increasing continuously from 2002-2003 to 2003-2004 and after year2004-2005 to 2006-2007 it increased. It indicates that the current assets were used.

CASH POSITION RATIO

Cash in the most liquid asset, a financial analyst may examine the ration of cash and its equivalent to current liabilities. Trade investment or marketable securities are equivalent of cash, therefore, they may be included in the computation of cash position ratio.

Cash+ marketable securities

Cash Position Ratio= --------------------------------------------- Current liabilities

YEARCASH+MARKETA-BLE SECURITIESCURRENT LIABILITIESRATIO

2002-200353,79,219.5018,90,06,552.170.028

2003-20041,59,03,764.6814,22,10,762.180.111

2004-20052,00,18,991.5514,78,60,117.240.135

2005-200679,51,888.8620,38,85,067.190.039

2006-20074,56,44,654.9621,93,27,902.790.208

INTERPRETATION

The cash position ratio is inadequate as there are ups and downs during the year. The above ratio indicates that the company is unable to quickly realize its current liabilities it is not good enough.

WORKING CAPITAL TURNOVER RATIO

Working capital of a concern is directly related to sales. The current assets like debtors, bills receivable, cash, and stock etc., change with the increase or decrease in sales. The working capital is taken as:

Working capital =current assets-current liabilities

This ratio indicates the velocity of the utilization of net working capital. This ratio indicates the number of times the working capital is turned over in the course of a year. The ratio measures the efficiency with which the working capital is being used by a firm. A higher ratio indicates the efficient utilization of working capital and the low ratio indicates inefficient utilization of working capital.

SALES

WORKING CAPITAL TURNOVER RATIO = ------------------------------- NET WORKING

CAPITAL

YearNETSALESNET WORKING CAPITALRATIO

2002-200320,14,86,573.364,43,23,842.964.545

2003-200413,05,17,436.812,12,44,138.976.143

2004-20059,66,54,360.901,35,34,076.837.141

2005-200612,37,19,616.7511,91,34,221.801.038

2006-200736,88,53,566.899,39,67,926.343.925

INTERPRETATIONThis ratio indicates the number of times the net sales met with the working capital for the year. The turnover of the working capital has highly increasing from 2000-2001 to2005-2006.

TOTAL ASSET TURNOVER RATIOThis ratio indicates the sales generated per rupee of investment in total assets. Althought fixed assets are directly concerned with the generation of sales. But other assets also contribute to the production and sales activities of the firm. The firm must manage its total assets efficiency and should generate maximum sales through their proper utilization.

The total assets turnover is used know how many times the total assets are being converted into sales. If sales are not available cost of goods is to be considered. It shows in how many times the total sales are being concerted into total assets. The ratio is calculated by dividing the cost of goods sold as sales by total assets. The general principle for the calculation of this as follows

Sales

Total assets turnover ratio = ------------------

Total assets

YEARNETSALESTOTALASSETSRATIO

2002-200320,14,86,573.3623,33,30,395.130.863

2003-200413,05,17,436.8112,09,66,623.211.078

2004-20059,66,54,360.9014,13,26,040.410.683

2005-200612,37,19,616.7532,30,19,288.990.383

2006-200736,88,53,566.8931,32,95,829.131.177

INTERPRETATION The total asset turnover ratio increase in 2002-2003 and 2003-2004 after it decreased in 2004-2006 and after the increase turnover ratio 2006-2007.

FINDINGS In the over all evaluation of the Working Capital Management at each and every aspect, the following are the findings.

1. Working Capital ratio of the chittoor Co-operative Sugar Ltd is decreasing in all the years which indicate poor liquidity position of the company.

2. Inventory turn over ratio of the Chittoor Co-operative Sugar Ltd is good in all the 5 years of study, which indicates the efficient management of inventory.

3. Fixed Assets to Net worth Ratio of the Chittoor Co-operative Sugars Ltd is greater than 1% which indicates the Owners funds are sufficient to Finance Fixed Assets.

4. Fixed Assets Turn over Ratio of the Chittoor Co-operative Sugar Ltd is highest 2.4 in the year 2002-03, which the management is efficient in utilizing the Fixed Assets.

5. Current ratio of Chittoor Co-operative Sugars Ltd is highest 6.19 in the year 2002-03, which is the management of effective and efficient utilization

6. The company sales have been decreased in all the year.

7. The reserves and surplus is always accumulating every year. The company can capitalize the reserves and Surplus.

SUGGESTIONS The company should utilize the reserves and surplus by either capitalizing or invest the money some where as investment to get benefits. The company should maintain adequate working capital The company should maintain the high liquidity position The company is under loss zone, so it needs some subsidy by government to develop its position. By merging the company with other profitable company, the firm may Improve its performance.

By selling molasses to other plant the company can earn additional profit.

By using the sugar can scrap the firm can generate its electrically supply.

By selling the scrap to bio-plants it can generate funds.

CONCLUSIONFrom the analysis on the working capital management at Chittoor Co-operative Sugar Ltd, conclude in spite of all suggestions, the company has to reduce its production cost to increase profit.

The inventory turn over is good in all the five years. The company should try to increase their sales. It should maintain the high liquidity position. Hence, the suggestions given are realistic which will lead to increase in the profitability of the company. The company should try to tap the market and set in brand value and do the best.

THE CHITTOOR CO-OPERATIVE SUGARS LIMITED:: CHITTOOR

TRADING ACCOUNT FOR THE YEAR 2003PARTICULARSAMOUNT

Rs. Ps.PARTICULARSAMOUNT

Rs. Ps.

1.OPENING STOCK:

a) Sugar

b) Molasses

2. PURCHASES:

a) Fertilisers &

pesticides

3. Expenditure debitable to trading a/c

4. Cost of production

Transferred from

Manufacturing a/c 26,11,39,024.38

82,52,332.24

15,120.00

1,75,86,673.28

16,82,44,220.70

---------------------

45,52,37,370.60

---------------------

1. OPENING STOCK:

a) Sugar

b) Molasses

2. sales

3. Misc. income

Creditable to

Trading a/c

4. Gross loss19,19,96,947.80

69,07,474.80

20,14,86,573.36

1,72,00,316.54

3,76,45,558.10

----------------------

45,52,37,370.60

----------------------

THE CHITTOOR CO-OPERATIVE SUGARS LIMITED :: CHITTOOR

BALANCE SHEET AS ON 2003

LIABILITIESRs.ASSETSRs.

1. Share capital

2.DEPOSITS &

BORROWINGS:

a) Deposits

b) Borrowings

3. Out standing

Interest payable

4. Adjusting heads

Due by

5. Reserves

6. U.D.P

7. Audit fund

8. Reserve fund yet

To be invested

9. Vysya bank balance

10. Bank of India

11. Canara bank

12. Indian bank

13. Indian overseas

Bank

14. S.V. Grameena

Bank

15. State bank of

India

16. Union bank of

India

17. CDCC bank,

Chittoor

18. Corporation bank

LESS:

Difference between

Assets & liabilites

Total 14,09,58,700.00

2,88,36,536.05

23,56,16,210.28

60,94,477.90

18,29,12,074.27

21,93,57,187.86

64,226.88

9,695.57

24,702.69

- - -

- - -

- - -

- - -

- - -

- - -

- - -

- - -

- - -

- - -

-----------------------

81,38,73,811.50

29,92,13,003.98

-----------------------

51,46,60,807.52

-----------------------1. Cash on hand

2. BALANCE WITH

BANKS:

a) current account

b) savings account

3. Shares in other

Co-op. institutions

4. Deposits with

Various agencies

5. F.Ds with banks

6. Loans & advances

To members

7. Loans to other

Co-op. sugar

Factories

8. ADJ. heads

due to

9. Interest receivable

10. Value of assets

11. Rvaluation of

Assets

12. VALUE OF

CLOSING STOCK:

a) Stores stocks

b) Packing material

c) Stationary

d) Sugar

e) Sugar in process

f) Molasses

g) Molasses in

process

h) FMP raw

material & feed

13. Deficits

Total12,83,980.24

17,15,099.27

23,80,139.99

2,28,550.00

12,54,825.77

2,50,000.00

64,61,883.31

30,00,000.00

5,44,12,361.15

18,26,488.57

12,62,06,460.22

9,59,30,271.73

2,02,69,708.93

1,78,240.45

26,375.50

19,19,96,947.80

2,54,382.07

69,07,474.80

9,290.00

20,474.20

47,943.52

----------------------

51,46,60,807.52

----------------------




Rs. Ps.

1.OPENING STOCK:

a) Sugar

b) Molasses



Transferred from


69,07,474.80

1,18,46,077.46

3,26,16,707.00

---------------------

24,33,67,207.06

----------------------

1. OPENING STOCK:

a) Sugar

b) Molasses

2. sales

3. Misc. income

Creditable to

Trading a/c

4. Gross loss7,60,05,445.10

2,86,092.00

13,05,17,436.81

1,15,01,190.42

2,50,57,642.73

----------------------

24,33,67,207.06

-----------------------




1. Share capital

2.DEPOSITS &

BORROWINGS:

a) Deposits

b) Borrowings

3. Out standing

Interest payable

4. Adjusting heads

Due by

5. Reserves

6. U.D.P

7. Audit fund

8. Reserve fund yet

To be invested

LESS:

Difference between

Assets & liabilites

Total 14,09,60,300.00

2,88,12,456.68

22,38,22,462.57

2,71,90,688.40

11,50,20,073.78

22,87,27,884.01

64,226.88

9,695.57

24,702.69

-----------------------

76,46,32,490.58

36,18,46,708.05

-----------------------

40,27,85,782.53

-----------------------

1. Cash on hand

2. BALANCE WITH

BANKS:

a) current account

b) savings account

3. Shares in other

Co-op. institutions

4. Deposits with

Various agencies

5. F.Ds with banks

6. Loans & advances

To members

7. Loans to other

Co-op. sugar

Factories

8. ADJ. heads

due to


10. Value of assets

11. Rvaluation of

Assets

12. VALUE OF

CLOSING STOCK:

a) Stores stocks

b) Packing material

c) Stationary

d) Sugar

e) Sugar in process

f) Molasses

g) Molasses in

process

h) FMP raw

material & feed

13. Deficits

Total22,575.20

13,49,421.74

1,45,31,767.74

2,28,550.00

12,61,225.77

22,50,000.00

63,86,629.69

10,00,000.00

5,48,94,708.08

18,26,488.57

12,62,06,460.22

9,59,30,271.73

2,01,00,264.62

1,78,240.45

18,671.00

7,60,05,445.10

2,34,802.90

2,86,092.00

5,750.00

20,474.20

47,943.52

----------------------

40,27,85,782.53

----------------------




Rs. Ps.

1.OPENING STOCK:

a) Sugar

b) Molasses

2. PURCHASES:

a) Fertilisers &

pesticides



Transferred from


2,86,092.00

5,04,000.00

69,45,366.83

11,52,46,375.14

---------------------

19,89,87,279.07

---------------------

1. OPENING STOCK:

a) Sugar

b) Molasses

c) Pesticides

2. sales

3. Misc. income

Creditable to

Trading a/c

4. Gross loss7,88,16,404.20

1,06,60,683.35

3,62,250.00

9,69,20,394.30

69,04,064.85

5323482.37

----------------------

19,89,87,279.07

----------------------




1. Share capital

2.DEPOSITS &

BORROWINGS:

a) Deposits

b) Borrowings

3. Out standing

Interest payable

4. Adjusting heads

Due by

5. Reserves

6. U.D.P

7. Audit fund

8. Reserve fund yet

To be invested

LESS:

Difference between

Assets & liabilites

Total 14,09,61,400.00

2,91,54,179.61

26,60,73,587.95

4,05,25,798.40

10,81,07,592.19

24,80,88,004.02

64,226.88

9,695.57

24,702.69

-----------------------

83,30,09,187.31

39,71,03,323.03

-----------------------

43,59,05,864.28

-----------------------

1. Cash on hand

2. BALANCE WITH

BANKS:

a) current account

b) savings account

3. Shares in other

Co-op. institutions

4. Deposits with

Various agencies

5. F.Ds with banks

6. Loans & advances

To members

7. Loans to other

Co-op. sugar

Factories

8. ADJ. heads

due to


10. Value of assets

11. Rvaluation of

Assets

12. VALUE OF

CLOSING STOCK:

a) Stores stocks

b) Packing material

c) Stationary

d) Sugar

e) Sugar in process

f) Molasses

g) Molasses in

process

h) Pesticides

h) FMP raw

material & feed

13. Deficits

Total18,78,931.06

91,72,861.36

89,67,176.13

2,28,550.00

12,71,225.77

27,50,000.00

90,85,235.94

10,00,000.00

6,70,56,511.94

18,26,488.57

12,66,47,509.22

9,59,30,271.73

2,00,46,520.64

93,100.00

43,726.65

7,88,16,404.20

--------

1,06,60,683.35

---------

3,62,250.00

20,474.20

47,943.52

----------------------

43,59,05,864.28

----------------------




Rs. Ps.

1.OPENING STOCK:

a) Sugar

b) Molasses

c) Pesticides

2. PURCHASES:

a) Fertilisers &

pesticides



Transferred from

Manufacturing a/c

5. Gross Profit 7,88,16,404.20

1,06,60,688.85

3,62,250.00

11,20,000.00

1,14,74,796.84

25,75,46,899.47

5,17,51,887.40

-----------------------41,17,32,920.70

-----------------------

1. OPENING STOCK:

a) Sugar

b) Molasses

c) Pesticides

2. sales

3. Misc. income

Creditable to

Trading a/c

26,74,59,792.80

75,14,240.77

1,16,480.00

12,46,29,656.78

1,20,12,750.35

----------------------

41,17,32,920.

----------------------




1. Share capital

2.DEPOSITS &

BORROWINGS:

a) Deposits

b) Borrowings

3. Out standing

Interest payable

4. Adjusting heads

Due by

5. Reserves

6. U.D.P

7. Audit fund

8. Reserve fund yet

To be invested

LESS:

Difference between

Assets & liabilites

Total 14,11,40,700.00

3,10,24,046.10

40,43,40,806.12

4,90,24,988.90

14,09,80,325.36

26,43,09,028.13

64,226.88

9,695.57

24,702.69

-----------------------1,03,09,18,519.75

40,53,03,194.91-----------------------

62,56,15,324.84

-----------------------

1. Cash on hand

2. BALANCE WITH

BANKS:

a) current account

b) savings account

3. Shares in other

Co-op. institutions

4. Deposits with

Various agencies

5. F.Ds with banks

6. Loans & advances

To members

7. Loans to other

Co-op. sugar

Factories

8. ADJ. heads

due to


10. Value of assets

11. Rvaluation of

Assets

12. VALUE OF

CLOSING STOCK:

a) Stores stocks

b) Packing material

c) Stationary

d) Sugar

e) Sugar in process

f) Molasses

g) Molasses in

process

h) Pesticides

h) FMP raw

material & feed

13. Deficits

Total1,41,218.80

1,66,827.11

70,83,116.03

2,28,550.90

12,67,225.77

2,50,000.00

1,06,24,987.20

10,00,000.00

7,32,09,660.39

18,26,488.57

12,91,97,586.22

9,59,30,271.73

2,06,58,101.84

5,87,128.50

28,089.00

26,74,59,792.80

78,41,426.47

75,14,240.11

4,15,715.92

1,16,480.00

20,474.20

47,943.52

----------------------

62,56,15,324.84

----------------------




Rs. Ps.

1.OPENING STOCK:

a) Sugar

b) Molasses

c) Pesticides


3.. Cost of production

Transferred from

Manufacturing a/c

4. Pesticides Purchase 26,74,59,792.80

75,14,240.77

1,16,480.00

2,66,76,030.20

38,10,97,458.30

33,07,360.00

----------------------

68,61,71,362.07

----------------------1. OPENING STOCK:

a) Sugar

b) Molasses

2. sales

3. Misc. income

Creditable to

Trading a/c

4. Gross loss24,67,11,289.11

66,19,002.89

2,05,940.00

2,60,98,795.50

3,76,82,757.68

----------------------

68,61,71,362.07

----------------------




1. Share capital

2.DEPOSITS &

BORROWINGS:

a) Deposits

b) Borrowings

3. Out standing

Interest payable

4. Adjusting heads

Due by

5. Reserves

6. U.D.P

7. Audit fund

8. Reserve fund yet

To be invested

LESS:

Difference between

Assets & liabilites

Total 14,25,53,600.00

3,52,01,887.01

40,57,02,422.76

4,69,28,301.64

22,91,72,904.82

26,80,06,835.01

64,226.88

9,695.57

24,702.69

11,27,66,45,76.38

49,89,41,043.06

------------------------

62,87,23,533.32

------------------------

1. Cash on hand

2. BALANCE WITH

BANKS:

a) current account

b) savings account

3. Shares in other

Co-op. institutions

4. Deposits with

Various agencies

5. F.Ds with banks

6. Loans & advances

To members

7. Loans to other

Co-op. sugar

Factories

8. ADJ. heads

due to


10. Value of assets

11. Rvaluation of

Assets

12. VALUE OF

CLOSING STOCK:

a) Stores stocks

b) Packing material

c) Stationary

d) Sugar

e) Sugar in process

f) Molasses

g) Molasses in

process

h) Pesticides

h) FMP raw

material & feed

13. Deficits

Total95,082.98

33,80,265.98

14,46,93,17.43

2,28,550.00

12,70,225.77

2,50,000.00

18,17,48,73.00

10,00,000.00

7,55,41,003.33

18,26,488.57

13,99,27,312.64

9,59,30,271.73

1,94,14,206.14

14,70,696.50

40,532.00

24,67,11,289.11

62,98,460.92

66,19,002.89

8,01,596.61

2,05,940.00

20,474.20

47,943.52

----------------------

62,87,23,533.32

----------------------

BIBLOGRAPHY THE following books have reffered during the prepararion of this project:-

I.M.pandey - Financial management- Vikas publishing house PVT LTD, New Delhi-110014, 2003.

Prasanna Chandra- Financial management-Tata MCGrawhill-hill publications company ltd, New Delhi, 2002.

R.K.Sharma and Shashi K.Gupta -Management accounting Kalyani publishers, NewDelhi-2003.

Advanced financial management - Publishes by director of studies- ICWAI. KOLKATA 70016.

INTRODUCTION

RESEARCH METHODOLOGY

DATA ANALYSIS

FINISHED GOODS

MANUFACTURER

CASH

DEBTORS

RAWMATERIALS

WORK IN PROGRESS

TRADER

CASH

DEBTORS

FINISHING GOODS

FINANCIAL INSTITUTIONS

CASH

DEBTORS

YEARS

RATIOS

YEARS

RATIOS

YEARS

RATIOS

YEARS

RATIOS

YEARS

RATIOS

YEARS

RATIOS

EMBED MSGraph.Chart.8 \s

RATIOS

YEARS

FINDINGS

&

SUGGESTIONS

CONCLUSION

ANNEXURE

BIBLIOGRAPHY

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Workng Capital on chittoor sugar factory

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