A SUMMER INTERNSHIP REPORT ON WORKING CAPITAL MANAGEMENT AT banko

Submitted to
INSTITUTE OF MANAGEMENT AFFILIATED WITH GUJARAT TECHNOLOGICAL UNIVERSITY IN PARTIAL FULFILLMENT OF THE REQUIREMENT OF THE AWARD FOR THE DEGREE OF MASTER OF BUSINESS ADMINISTRATION

Guided by (company):-

Guided by (college):-

MRS. MR. KRISHNA Gaud Agrawal sir VISHAL JAIN (faculty of IM) (Assistant general manager) (Sr.officer finance)

Presented by Akshay vyas

ENROLMENT NO-1070202023 MBA 2ND SEMESTER

INSTITUTE OF MANAGEMENT, MBA PROGRAMME, OPP. TOWNHALL, NR.GRID, bharuch JUNE - 2011

PREFACE
Being , An M.B.A. Student , it gives me great pleasure to prevent my report for industrial training. Focusing on the area of management such as FINANCIAL MANAGEMENT. Of industry I hope that my report will be able to satisfy the partial requirement of curriculum. GUJARAT TECHNOLOGICAL UNIVERSITY has given golden opportunity to be

those student who are interested in starting their own business and want to develop a leadership , quality in themselves, industrial training gives practical knowledge to each and every student of M.B.A. Programme industrial training is considered as a separate subject in M.B.A. course and it consist of equal weight age as other. The details presented in my report indicate the different aspects of industry like its history, location, establishment year, type of industry & structure of company, functioning of the top manager, products, equipment, technology & others.

ACKNOWLEDGEMENT
Any kind of theoretical knowledge can be use in the practical study or use. Theoretical guidance or knowledge can help for know about Performa of work but how it can be apply & to take react & response from it. So, as per my view the practical training is vital role in management study. I would like to express my sincere thanks to MR N.N.PATEL (principal & director) Anand institute of management. Faculty MISS KRISHNA GOR (incharge) in financial management subject from Anand institute of mgt. who can give me this opportunity to step in to the real world. I can express myself to extremely thankful MISS. SWATI BHAVSAR executive of H.R. who can give me permission for training & MRS.DEEPTI SHARMA (assistant general manager) finance department, MR. VISHAL JAIN (sr.officer finance dept) who can guide me about finance. I extremely thankful to my friends who can help me for taking interest me whenever needed lastly.

DECLARATION
I HIMA VYAS student of the two year MBA programme at Anand Institute of Management, hereby declare that the report on summer training and project work entitled working capital management is the result of our own work and my indebtedness to other work publications, if any, have been duly acknowledged.

Place: Anand Date:

HIMA VYAS

EXECUTIVE SUMMARY
The project report is about Working Capital Management of Banco Product (I) LTD. The project report is mainly divided in two parts, the first part is about basic information of company and the second part is primary study.

In the first part of the report the basic information about the company is mention. Its included the Banco profiles, the history, organizational structure. Apart from these the information about Human Resource department, production department, R&D Department is given. In the primary study, the purpose of study, the concept of working capital management, receivable management, cash management, inventory management and ratio analysis is included. In Annexure last three years balance sheet & profit & loss account is included.

TABLE OF CONTENTS
Preface Acknowledgement Declaration Executive summery I II III IV

Sr. No.

Particulars
Part 1 General Information 1 About the company 2 About the functional department

Page No.
1 10 16 18 19 20 30 36 38 40 42 44 46 48 49 V VI

Part 2 Working capital management 3 Introduction of finance Sources of finance 4 Working capital management Concept Operating cycle 5 Main function of working capital 6 Analysis Current ratio Quick ratio Debtors Turnover ratio Creditors Turnover ratio Inventory Turnover ratio Working capital Turnover ratio 7 Results & Findings 8 Conclusion Bibliography Annexure

LIST OF TABLES
Sr. No. 1 Certifications 2 Shifts Particular Table no. Table no. 1 Table no. 2 Page no. 5 7

3 Strength of employees 4 Raw material conversion period 5 Work in process conversion period 6 Finished goods conversion period 7 Debt collection period 8 Creditors deferral period 9 Operating cycle 10 Receivable management 11 Cash management 12 Inventories management 13 Statement of current ratio 14 Statement of Quick ratio 15 Statement of Debtors turnover ratio 16 Statement of Creditors turnover ratio 17 Statement of Inventory turnover ratio 18 Statement of Working capital turnover ratio

Table no. 3 Table no. 4 Table no. 5 Table no. 6 Table no. 7 Table no. 8 Table no. 9 Table no. 10 Table no. 11 Table no. 12 Table no. 13 Table no. 14 Table no. 15 Table no. 16 Table no. 17 Table no. 18

9 20 21 23 25 26 28 31 33 35 36 38 40 42 44 46

LIST OF GRAPHS
Sr. No. 2 Particular 1 Organizational structure Human resource department Chart no. Chart no. 1 Chart no. 2 Chart no. 3 Chart no. 4 Page no. 6 13 20 22

3 Raw material conversion period 4 Work-In-Process conversion period

5 Finished Goods conversion period 6 Debt collection period 7 Creditors collection period 8 Operating cycle 9 Current ratio 10 Quick ratio 11 Debtors turnover ratio 12 Creditors turnover ratio 13 Inventory turnover ratio 14 Working capital turnover ratio

Chart no. 5 Chart no. 6 Chart no. 7 Chart no. 8 Chart no. 9 Chart no. 10 Chart no. 11 Chart no. 12 Chart no. 13 Chart no. 14

24 25 27 28 37 39 41 43 45 47

GENERAL INFORMATION

HISTORY OF BANCO PRODUCTS (INDIA) LTD.

products (India)ltd. was grounded as privately owned company in 1967 ,as manufacturer of copper- brass heat exchangers ,but the company was started in 1962 with the goal of furnishing quality products and services. Its main goal was to satisfy his customer throughout the world firstly, it was known as gasket and oil seal pvt .ltd then after from1967 onwards it was replaced with Banco products (India) ltd.

In 1967, company pioneered in Indian market to develop engine cooling module for 30000 H.P. rated engines for Indian traction locomotives there after company diversified in to manufacturing of copper/brass radiators for off road equipments, agricultural tractors, commercial vehicles and passenger cars. The company was listed on Indian stock exchange in 1987 and around which time started second manufacturing site at Ankhi for supplying exclusively Indian OMEs as well as export to Western Europe. Expertise gained through 3 decades of manufacturing experience makes Banco one of the most preferred manufacturing facilities. Spread were there modern factories producing of over 10000 qualities. Indian auto industries during the year 2005-06 registered. Substantial in domestic and in export sales in numbers over that of last year and the growth. Appear to continue in the similar fashion for the year 2007-08 mean while substation in use of co-brass radiators continues as the same is being repaired by aluminum radiators in majority of the OEM applications. Gaskets & radiators helps Banco product one of the widest ranges for the alternative sector. The company has its technical collaboration with Exing Klinger of Germany and Japan metal. Gasket of Japan or fulfilling the needs of the Indian and international automobiles. Industries with product like Gaskets and Radiators.

EMPLOYEE SERVICES

Banco products (I) ltd has total employee strength of 2000

Table no. 3

Bhaili Unit (Plant-1)

1. Staff 266. 2. Worker 120.
3. Field staff 39.

Ankhi Unit (Plant-2)

1. staff 59 2. Worker 388.

HUMAN RESOURCE MANAGEMENT

Organization chart of human resource department CHART NO .2

HRD. & ADMN.

PERSONAL & ADMN.

HRD & TRAINING

ASSISTANT

Human resource department is concerned with the people dimension in management. Since every organization is made up of people acquiring their services, developing their skills, motivating them to high levels of performance and ensuring that they continue to maintain their commitment to the organization are essential to achieving organizational objectives. This is true regardless of the organization government, business, education, health, recreation or social acting. Getting and keeping good people is critical to the success of every organization, whether profit or nonprofit public or private.

Some aspects of personnel

Recruitment & Selection
In BANCO, first of the entire concerned department and the approved vacancy to personal department. Once the receipt of approval vacancy is received from the

concerned department Personnel department share obtain, job mass specification as per recruitment. There are two sources of recruitment in BANCO, -

Advertisement Internet

Then the process of collecting application forms companys data bank trainees from training center, display internal and external. Selection is the second step in the process of procurement of people. The selection process begins with screening of applications and ends with hiring decision and placement. In BANCO, the process of screening of application is done by the concerned department. Then all the basis of the job description, qualification experience and criteria is to be followed as per job specification mentioned in the advertisement. When a candidate reports for the duty, a person is given an appointment letter and placed on probation for a period of 6 months after complication of joining formalities and induction training subject to clearing medical examiner.

TRAINING AND DEVELOPMENT

It is not possible for an industry to recruit the entire trained person for carrying out its productive. Training is not only for new entrants but also to teach new methods to the present employees.

There is training center, which will make plan for new employee/training that is what information is to be given to them about BANCO INDIA. History General Information Information about highlights Information about all department

EMPLOYEE EMPOWERMENT MOTIVATION

Employee is motivated through, Up gradation of existing workmans to staff cadre. Appreciation of outstanding employee. VE scheme (value engineering suggestion based on values).

Picnics.

INTRODUCTION OF FINANCE

Financial management is that managerial activity which is concerned

with the

planning and controlling of the firms financial resources. It was branch of economics till

1890 and as a separate discipline, it is of recent origin. Still, it has no unique body of knowledge of its own, & draw heavily, on economics for its theoretical concepts even today. The subject of financial management is of immense interest to both academicians & practicing managers. It is of great and there are still certain areas where controversies exist for which no unanimous solution has been reached as yet. Practicing managers are interested in this subject because among the most crucial decision of the firm are those which relate to finance, and an understanding the theory of financial management provides them with conceptual and analytical insights to make those decisions skillfully.

WHAT ARE THE FIRMS FINANCIAL ACTIVITIES?

Firm create manufacturing capacities for production of goods, some provides services to customers. They sell their goods or services to earn profit. They raise funds to acquire manufacturing & there facilities.

=>Two important tasks of the financial manager are:

Allocation of funds(likewise, investment decision) Generation of funds(likewise, financial decision)

The theory of finance makes two crucial assumptions to provide guidance to the financial manager in making these decisions.

First:The objective of the firm is to maximize the wealth of share Holders. It is argued that share holders are the ultimate owners of the firms & the role of the manager is that of an agent acting on their behalf. It is therefore imperative on the part of financial manager to make decision that will increase the value of share holders in the firm.

Second:Capital markets are efficient. An efficient capital market implies that investors have free access to the market with full knowledge, zero transaction cost and that individual investors are unable to influence prices. The efficient capital market enable investors to lend or borrow funds, this helps them to make choice between consumption & investment.

SOURCES
1. Long term financial need -Equity share or share capital

-Preference shares -Retained earnings -Debenture -Loans from financial institution -Venture capital funding

2. Medium term financial need

-Preference share -Debentures / bonds -Public deposits -Commercial banks -Financial institutions -State financial corporations.

3. Short term financial need -Trade credit

-Accrued expenses & deferred income -Fixed deposit for 1 year or less -Advance received from customers -Various short term provisions.

WORKING CAPITAL MANAGEMENT

WORKING CAPITAL MANAGEMENT

In this part issues relating to management of current assets will be discussed. The management of current assets is similar to that of fixed assets in the sense that in both cases a firm analyses their effects in its return and risk. The management of fixed & current assets, however differs in three important ways.

CONCEPTS OF WORKING CAPITAL

1.

GROSS WORKING CAPITAL,

2. NET WORKING CAPITAL. Gross working capital refers to the firms investment in current asset. Current assets are the assets which can be converted in to the cash within an accounting year and include cash, short term securities, debtors, bills receivable and stocks.

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

Current liabilities are those claims of outsiders which are expected to mature for payment within an accounting year and includes creditors, bills payable and outstanding expenses.

Operating cycle calculation

RAW MATERIAL CONVERSION PERIOD

 RM consumption per day = RM cons./365 RM inventory= Closing RM inventory RM holding day = RM inv./ RM Consumption per day

Statement for raw material conversion period Table no. 4

A 1 2 3 4 Raw material conversion period RM consumption RM consumption per day RM Inventory RM holding day 09-10 08-09 07-08

21231.86 16083.31 17403.11 58.17 44.06 48 5667.25 3679.10 2528.70 97d 84d 53d

CHART NO.3

RM convers p ion eriod

97 100 80 D ays 60 40 20 0 2007-2008 2008-2009 Y ear 2009-2010 53 84

Interpretation

In 2009-2010 there is high RM conversion period. Its take 97days to convert inventory in WIP, which is 13days more than 2008-2009.

The main variable is purchase of RM during the year. It is 5000 more than last year. And the consumption of RM l is also very slow. So its taken more time to convert RM in to WIP.

WORK IN PROCESS CONVERSION PERIOD

Cost of production=RM + direct labor + mfg exp + opening stock in process -

closing Stock in process Cost of production per day = Cost of production/365

Workin-process Inventory = closing workin-process Inventory workin-process holding day = workin-process Inventory / Cost of production

per day

Statement for work in process conversion period Table no. 5

B 1 2 3 4 Work in process conversion period Cost of production Cost of production per day Work in process Inv WIP inv holding day 09-10 26244.88 71.90 950.36 13d 08-09 20073.59 55 688.49 13d 08-07 21148.22 57.94 736.60 13d

CHART NO.4

Work In Process convertion Period

13 14 12 10 8 Da ys 6 4 2 0 13 13

2007-2008

2 008-2009 Y ear

2009-2010

Interpretation

RM consumption period is high in 2009-2010 still in all the year the WIP conversion period is same. The minored changes are there in conversion period.

The main reason is the cost of production which is increased by more than 6000rs. Because of that the cost of production per day is also increased so its reduced the WIP inventory holding day.

The main variable in cost of production is other manufacturing expenses. The labour charges are increased by 1000rs nearly.

So it is good for company to take less time in conversion of WIP to FG.

FINISHED GOODS CONVERSION PERIOD

Cost of goods sold = Cost of production +op. stock of F.G- cl. Stock of F.G Cost of goods sold per day = Cost of goods sold/365
Finished goods inventory = closing F.G. inv Finished goods inventory holding per day = finished goods inventory/Cost of

goods sold per day

Statement for Finished goods conversion period

Table no. 6

C 1 2 3 4

Finished goods conversion period Cost of goods sold Cost of goods sold per day finished goods inventory Finished goods inventory holding per day

09-10 08-09 07-08 26621.13 20011.15 20993.79 73 55 58 682.68 1058.93 996.49 9d 19d 17d

CHART NO.5

F hed g sconvers period inis ood ion

20 15 D ays 10 5 0 2007-2008 2008-200 9 Y ear 2009-2 010 9 17 19

Interpretation

There is huge change in F.G. conversion period. As compare to 2008-2009 there is 10days decreased in 2009-2010. So it is very beneficial for the company. Now its change the whole process of operating cycle.

The main variable is closing stock of F.G inventory. It is decreased in 2009-2010 so it is reduced the holding days of F.G. inventory.

Because of that the COGS is also affected.

DEBT COLLECTION PERIOD

Total sales/credit sales Sales per day = total sales/365 Debtors = trade debtors Debtors outstanding days = debtors/ sales per day

Statement for debt collection period Table no.7

D 1 2 3 4 Debt collection period Total sales/credit sales Sales per day Debtors Debtors outstanding days 09-10 08-09 07-08

40714.98 28791.44 29885.09 112 79 82 8789.93 6458.85 7356.17 78d 82d 90d

CHART NO.6

D C ebt ollectionP eriod

90 85 D ays 80 75 70 2007 -2008 2008-2009 year 2009-2010 90 82 78

Interpretation
The collection period is decreased by 4 days in 2009-2010 as compare to 20082009. But in 2008-2009 it was reduced by 8 days. The reason was the debtors were decreased in particular year and the sales was also reduced. In 2009-2010 is decreased so it is good for company to collect money on short period and to reduced the period to convert into cash.

CREDITORS DEFERRAL PERIOD

Total credit purchase = TOTAL PURCHASE Credit purchase per day = Credit purchase/365

 Creditors = o/s against purchase

Creditors outstanding day = Creditors for purchase per day

Statement for creditors deferral period Table no. 8

E 1 2 3 4 Creditors deferral period Total credit purchase Credit purchase per day Creditors Creditors outstanding day 09-10 23220.01 64 382,1.94 60d 08-09 07-08

17233.71 17405.17 47 48 204,4.03 241,9.69 43d 50d

CHART NO.7

CreditorsD efferal period

60 50 40 D ys 30 a 20 10 0 60 50 43

2007-2008 2008-2009 2009-2010 Year

Interpretation

In 2009-2010 the credit purchase is high so the Creditors are also increased. Because of that the creditors outstanding days are also increased so now company can get more time for payment so it is good for company because it can hold money on hand more days.

OPERATING CYCLE Table no. 9 (Number of Days)

OPERATING CYCLE A B C D Raw material conversion period Work in process conversion period Finished goods conversion period Debt collection period Gross operating cycle (A+B+C+D) Creditors deferral period Net operating cycle (A+B+C+D-E) 09-10 97 13 9 78 198 60 137 08-09 84 13 19 82 198 43 155 07-08 53 13 17 90 173 50 123

CHART NO.8

OperatingC ycle
200 150 Days 100 50 0 2007-2008 2008-2009 Y ear 2009-2010 123 155 137

Operating cycle is highest in the year 2008-2009 because it has more debtors collection period. Operating cycle is lower in 2009-2010 because its debtors collection period is lower. In 2008-2009 the creditors payment is low so its affects the operating cycle. It is very significant change in the year 2009-2010 with regard to finished goods inventory. In 2009-2010 the Raw material conversion period is very high but finished goods conversion period covered it.

MAIN-FUNCTION OF WORKING CAPITAL MANAGEMENT

Receivable management, Cash management, Inventory management.

RECEIVABLE MANAGEMENT
Trade credit arises when a firm sells its products or services in credit and does not receive cash immediately. It is an essential making tool as a bridge for the movement of goods through production and distribution stages to customers. A firm grants trade for credit to protect its sales from the competitors and to attract the potential customers to buy its products as favorable terms.

Trade credit creates accounts receivable or trade debtors that the firm is expected to collect in near future. The customers from whom receivable or book debts have to be collected in the future are called trade debtors or simply as debtors and represents the firms claim or assets.

RECEIVABLE OF BANCO PRODUCTS (I) LTD

Table no. 10
(Rupees in lacs) PARTICULARS AS ON 31-3-10 Sundry debtors(unsecured) Outstanding for a period exceeding 6 month Other-debts considered good 8574.33 ------------TOTAL 8789.93 ======== 5995.87 -------------6458.85 7097.10 1.50 ------------7354.67 less:- provision for doubtful debts Considered goods Considered doubtful 215.60 462.98 254.16 4.91 AS ON 31-03-09 AS ON 31-03-08

======== ========

CASH MANAGEMENT

Cash, the most liquid asset, is of vital important to the daily operations of the business firm. While the proportion of corporate assets held often between 1 and 4 percent, its efficient management is crucial to the solvency of the business because in a very important sense in a business.

ASPECTS OF CASH MANAGEMENT

o Cash budgeting o Long term cash forecasting o Reports for control o Monitoring collections & receivable o Optimal cash balance o Investment of surplus funds.

Statement for cash management

PARTICULAR AS AT 31-3-10 Cash on hand:With schedule bank:- In other current account - In margin deposit / short term deposit Fixed deposit with schedule 78.90 -----------TOTAL 550.38 ======= Statement for cash management Table no. 11 (Rs. In lacs) 910.96 -----------1055.72 ======= 0.00 -----------147.34 ======= bank(short term) 4.01 4.07 466.48 129.99 134.18 5.00 AS AT 31-3-09 10.76 AS AT 31-03-08 9.09

INVENTORY MANAGEMENT
There are three types of inventories. 1. Raw material:Raw material and components that are inputs in making the final products. 2. Work-in-process:It also called stock-in-process refers to goods in the intermediate stages of production. 3. Finished-goods:It consists of final products that are ready for sale. While manufacturing firms generally hold all the three types of inventories, distribution firms hold mostly finished goods.

INVENTORIES OF BANCO PRODUCTS (I) LIMITED STATEMENT FOR INVENTORY MANAGEMENT Table no. 12

(Rs In lacs)

AS AT PARTICULAR Inventories :Raw-materials(at cost) Work-in-process(at cost) Finished products(at cost ) Sundry debtors(at cost) TOTAL 31-03-10

AS AT 31-03-09

AS AT 31-03-08

5667.25 950.36 682.68 293.02 ---------7593.31 =======

3679.10 688.49 1058.93 95.78 ------------5522.30 =======

2528.70 736.60 996.49 34.25 ------------4296.04 ========

ANALYSIS
1. CURRENT RATIO (TIMES)
Function:The ratio measures the ability of a company to discharge its day-to-day bills of current liabilities, as and when they fall due, out of the cash or near, cash or current assets that it possesses. Computation:Current ratio= Current assets, loans & advances + short term investment ---------------------------------------------------------------------------Current liabilities + provisions + short term debt

STATEMENT OF CURRENT RATIO Table no. 13 (RS. IN Lacs) Current Assets 13,259.62 14,417.95 17956.78 Current liabilities 4219.16 4212.14 5951.14 Current Ratio 3.14:1 3.42:1 3.02:1

Year 07-08 08-09 09-10

CHART NO.9

CURRENTRATIO
3.5 3.4 3.3 3.2 3.14 RAT IO 3.1 3 2.9 2.8 2007-2008 3.42

3.02

2008-2009 YE AR

2009-2010

Interpretation: As per data of the company it was interpret that there was changes in current ratio. In 09-10 it was decrease, the main reason is cash and bank balances of Banco. The liabilities are also increase so it was also affect the ratio. So the margin of safety is also reduced so it is not good for the creditors. The main variable is the huge increased in micro small & medium enterprises.

2 .QUICK RATIO:Function:The ratio measures as to quick is the ability of a company to discharge its current liabilities net of working capital limits, as and when they fall due, out of cash, or current assets of inventories that is possesses. Inventory takes the longest of the current assets to convert into cash. Computation:Quick ratio = quick assets (quick) Quick liabilities
Years

Quick assets 896,3.58 889,5.65 10363.47

Quick Liabilities 2818.67 2607.25 3999.79

Quick Ratio 3.18:1 2.22:1 2.59:1

Statement for Quick ratio

Table no. 14 (Rs. In Lacs)

07-08 08-09 09-10

CHART NO.10

QUIC RAT K IO
3.5 3 2.5 2 R ATIO 1.5 1 0.5 0 3.18 2.22 2.59

2007-2008

2008-2009 Y EAR

2009-2010

Interpretation:

As per data the companys position is higher with current ratio as well as more realistic properties In 09-10 it was decrease, the main reason is cash and bank balances of Banco. The liabilities are also increase so it was also affect the ratio.

So it is good for the company. The main variable is the huge increased in micro small & medium enterprises.

The huge inventory is deducted so it is also affect the ratio.

3 .Debtors TURNOVER RATIO:Function:The ratio measures the credit period allowed to the customer on credit sales or how fast a company realize its outstanding dues. It is also known as days sales in receivable ratio. Computation:Debtors turnover ratio = Credit sales Average debtors

Statement of debtors turnover ratio

Table no. 15

(Rs.in Lacs)
Years Credit sales 07-08 08-09 09-10 2,988,5.03 2,879,1.44 4,071,4.98 735,4.67 645,8.85 878,9.93 Debtor Debtors Turnover Ratio 4.06 times 4.46 times 4.63times

CHART NO. 11

DEB TOR TUR OVERR S N ATIO

4.8 4.6 R ATIO 4.4 4.2 4 3.8 2007-2008 2 008-2009 Y EAR 2009-2010 4.08 4.43 4.63

Interpretation: As per above ratio it can known that in how many times taken by debtors can pay their debt. For the business it is require to pay in minimum times in a year so as per above in (09-10). It was constantly increase year by year. The main reason is increasing sales constantly. In 2009-2010 it is higher the value of debtors turnover, the more efficient is the management of credit.

4. CREDITORS TURN OVER RATIO

Function:The ratio measures the average credit period available by a company from its supplier on credit purchases pr how much leverages it possesses or how much leverage it possesses to settle its outstanding payables. Also known as days purchases in payable ratio. Computation:Creditors turnover ratio = Credit Purchase Average Creditors

Statement of Creditors turnover ratio Table no. 16

(Rs. In Lacs)
Year s Credit Purchase A/c Payable Credit Turn over Ratio 7.34 times 8.43 times 6.08times

07-08 1,775,4.79 241,9.69 08-09 1,723,3.71 204,4.03 09-10 2,322,0.01 382,1.94

CHART NO.12

CR EDITOR TUR OVER R S N ATIO

10 8 R ATIO 6 4 2 0 2007-2008 2008-2009 Y EAR 2009-2010 7.34 8.43 6.08

Interpretation:

Creditors turnover ratio means how many times period we take to pay debt to creditors. Here the ratio is not constant. In 09-10 there is huge decrease as compare to other years. It was happened because of purchase. It was huge credit purchase in this year. And the creditors also more than 08-09.

So it is not good for the company. Company cannot get sufficient time for payment.

5. INVENTORY TURNOVER RATIO

Function:The ratio measures the period of the inventory build up or the number of days that cash is blocked in inventory or how fast a company is able to convert its inventory into cash or near cash. Computation:Inventory turnover = Net sales Inventory

Statement of Inventory turnover ratio Table no. 17 (Rs. In Lacs) Years Net Sales 07-08 2,988,5.03 08-09 2,879,1.44 09-10 4,071,4.98 4,226.04 5,522.30 7,593.31 Inventory Inventory Turn over Ratio 6.96 times 5.21 times 5.36times

CHART NO.13
INV ENTOR TUR OV R Y N ER ATIO 8 7 6 R ATIO 5 4 3 2 1 0 2007-2008 2008-2009 Y EAR 200 9-2010

6.96 5.21 5.36

Interpretation: Higher the ratios of inventory can idea about higher capacity of business to convert into cash up to (07-08). Banco continuous increases its convertibles capabilities. So, in that situation company have more W.C. but in (08-09) its decrease & in 09-10 it is increase. The sale of the Banco is increased constantly. In 09-10 the inventory is increased very much as compare to past years. It was increased nearly 2000.

6. WORKING CAPITAL TURN OVER RATIO

Function:This ratio measures the times taken in consideration compare with working capital with net sales. In net ales what proportion of working capital required & how it affect to the business. Computation:Working capital turnover ratio= Sale Working capital

Statement of Working capital turnover ratio Table no. 18 (Rs. In lacs) Years Net Sales Working Capital Working Capital Turn over Ratio 3.31 times 2.82 times 3.39times

07-08 29885.03 08-09 28792.00 09-10 40714.98

9040.46 10205.81 12005.64

CHART NO.14

W K G CAPITALTUR OVERR OR IN N ATIO

4 3.5 3 2.5 R ATIO 2 1.5 1 0.5 0 3.93 3.31 2.8 2

2007-2008

20 08-2009 Y AER

2009-2010

Interpretation: The working capital compare with its net sales, in portion of net sales. How much net current assets considered. Up to (07-08). Banco can continuous increase its ratio so, that time its capabilities goes high but at (08-09) its decrease but in 0910 it is again increased. The main reason is increased in sales in 2009-2010. The working capital is also increased but not more than sales. Because the liabilities are increased more.

BIBLIOGRAPHY
For, the preparing report and include some topics and some theoretical of financial mgt., working capital mgt. so, I refer following books,

=> FINANCIAL MANAGEMENT :BY I. M. PANDAY. Ninth edition Vikas publication house pvt ltd. Ch no.25 Financial statement analysis page no. 518-521 Ch no.27 Principles of working capital page no. 579-583 Ch no.28 Receivables management and factoring page no. 601-615 Ch no.29 Inventory Management page no. 624-635 Ch no.30 Cash Management page no. 640-646 Ch no.31 Working capital finance page no. 658-665 => ANNUAL REPORT :47th ANNUAL REPORT 2007-2008

48th 49th

ANNUAL REPORT

2008-2009 2009-2010

ANNUAL REPORT -

ANNEXURE

BALANCE SHEET OF BANCO (Rs. In Lacs)

PARTICULARS SOURCES OF FUNDS 1. SHAREHOLDERSFUNDS: (A) Capital (B) Reserves &Surplus 2. LOAN FUNDS (A) Secured Loans (B) Unsecured Loans SCH AS AT 31-03-2010 AS AT 31-03-2009 AS AT 31-03-2008

1 2 3 4

1430.37 21676.29 23106.66 1878.15 7760.23 9638.38 33644.77

1430.37 15504.88 16935.25 903.70 28.50 932.20 18730.10

1420.00 12157.81 13577.81 2127.58 37.22 2164.78 16409.26

TOTAL APPLICATION OF FUNDS 1.fixed assets A) Gross block B) Less depri C) Net block D) Capital WIP including capital advances 2.Investment

13761.40 5662.41 8098.99 489.49 8588.48 13050.65

12732.78 4785.08 7947.70 248.64 8196.34 547.32

10550.29 4010.61 6539.68 0000 6539.68 829.12

3.CURRENT ASSETS, LOANS& ADVANCES 1.Inventories 2.Sundry debtors 3.Cash & ban balance 4.Loan & advances Less:current liabilities & provisions:1.Liabilities 2.provisions Net current assets

7 8 9 10 11

7593.31 8789.93 550.38 1023.16 17956.78 3999.79 1951.35 5951.14 1200577 33644..64

5522.30 6458.85 1055.72 1161.71 14198.58 2706.25 1505.89 4212.14 9986.44 18730.10

4296.04 7354.67 147.34 1461.57 13259.62 2818.87 1400.29 4219.16 9040.46 16409.26

Total

PROFIT & LOSS ACCOUNT OF BANCO

(Rs. In Lacs)
PARTICULARS SCH AS AT 31-032010 43178.26 2463.28 40714.98 1016.31 (114.36) 41616.91 21231.86 1658.09 AS AT 31-032009 31451.98 2660.54 28791.44 679.54 14.33 29485.31 16083.31 1494.45 AS AT 31-032008 33362.64 3477.61 29885.03 728.97 224.90 30838.90 17403.17 1295.03

INCOME Gross sales Less: Excise duty on sales Net sales Other income Increased/decreased in stock Total EXPENDITURE Material consumed Payment to and provision for employees

12 13

14 15

Research and development Manufacturing exp Adm. & general exp. Selling & distribution exp Interest & finance charges Depreciation Less: charges to revolution reserve Total PBT Provision for current tax Mat credit entitlements Provision for fringe benefit tax Provision for deferred tax PAT BALANCE AVAILABLE FOR APPR. APPROPRIATION Total Earnings per share face value of Rs2 Notes forming part of account

16 17 18 19 20

288.16 4319.87 466.25 2655.99 215.20 955.05 1.39 953.66 31789.08 9827.83 1950.00 37.08 1987.08 15131.23 15131.23 10.96

256.01 3063.58 486.06 2173.18 261.31 878.56 1.51 877.05 24694.95 4790.36 550.26 (117.00) 15.00 195.99 644.25 9195.58 9195.58 5.80

164.61 3080.97 456.09 2172.53 402.75 734.55 2.18 732.37 25707.52 5131.38 720 000 13.15 68.31 801.46 6606.08 6606.08 6.10

21