Student Declaration

I declare (a) That the work presented for assessment is my own, that it has not previously
been presented for another assessment and that my debts (for words, data, arguments and
ideas) have been appropriately acknowledged (b) That the work conforms to the guidelines
for presentation and style set out in the relevant documentation. (c) The Plagiarism as taken
by Turntinis 5 %.

Date:

Abstract:
A well designed integrated control is expected to facilitate the efficiency and effectiveness of
operations in the business and also helps to safeguard the assets of the company. ICFR is a
procedure intended to give confirmation with respect to the preparation/arrangement of
statement of finance and dependency of financial reporting.
A well crafted and deployed management of working capital is forecasted to contribute
positively to enterprise to make esteem/value.
Working Capital is the amount invested in components of current assets that are
inventories, receivables, cash and cash equivalents, loans & advances to third parties and
marketable securities. Sufficient working capital must be assured by the management.
Insufficient working capital will bring about income issues like surpassing overdraft limit,
neglecting to pay the suppliers on time, and being unable to claim discounts for prompt
payment.
The financial prediction is necessary for operational planning to help the business to be
successful. Companys can be ready to face problems coming up in future for their business.
The study concentrates on integrated control imposed on operations of the business, main
components of working capital like inventory management, debtors management and
payables management and future prediction of profits of the company. The tool used in this
study includes ratio analysis and trend analysis.

Key words :
Working Capital Management, ICFR, Future Profit Prediction, Working Ratios, Return On
Investment.

Introduction:
Mindarika Pvt. Limited, is Indias largest automotive switch manufacturer. It is a supplier to
all original equipment manufacturer (OEMs) in 4 wheeler and commercial vehicles segment
with plants in Manesar, Pune and Chennai.
Under Internal Financial control, responsibility of directors states that under listed company
directors are required to put down IFC which is to be trailed by the organisations and that
such controls are sufficient and successfully working. Under ICFR , report of auditors
should state that their views regarding adequacy of IFC system in place and operating
efficiency. Under companies act 2013, ICFR is a procedure intended to give confirmation
with respect to the preparation/arrangement of statement of finance and dependency of
financial reporting for external purposes as indicated by the accounting principles for
generally acknowledged. A company's ICFR comprises those policies and procedures that
1. Are related with the maintenance of records in which details are accurately and
fairly shows the transactions of assets of the company;

2. provide affirmation reasonably that exchanges are recorded as important to permit

financial statements preparations as per the acknowledged accounting standards,
furthermore receipts and uses of the organization are being made just as indicated by
the administration and directors authorisations; and
3. provide affirmation reasonably regarding timely deductions of unapproved buy,
use, or arrangement of the organization's assets that could remarkably affect the
money related proclamations.
Regardless of how viable internal control are, can furnish only with a reasonable
confirmation and not total affirmation on accomplishing organizations operational and
monetary reporting targets. There are sure constraints, such as :

internal controls are not imposed at transactions of abnormal nature, for example, the
human blunder. Carelessness, misunderstanding of instructions and mistakes of
judgements are ought to arise.
There is a possibility to avoid internal controls through collaboration with workers or
with parties outside the association .
There is a possibility that the person can misuse that internal control for which he/she
is responsible, for example, a individual of administration taking an internal control as
most conspicuous than any other consideration.
Judgements required in the financial statements preparation are manipulated by
management.

Working Capital Management: Abundance of current resources over current liabilities is

known as working capital.
Working capital management is worried with the issues emerging while endeavouring to deal
with the current assets, the current liabilities and their relationship. The accounting strategy of
management focus is to maintain adequate levels of current assets and current liabilities.
Administration must ensure that a business ought to have adequate working capital. Deficient
working capital will prompt cash flow issues like surpassing overdraft limit, neglecting to pay
suppliers on time and etc. Over the long haul, with deficient working capital, firm won't have
the capacity to meet its current obligations and will be compelled to close down trading
regardless of the possibility that it stays profitable on sheets/papers. The administration of
working capital helps us to keep up the working capital at desired level by managing with the
current resources and current liabilities. Proper balance between risk, profitability and
liquidity of the firm can be maintained with the help of WC management as the current
liabilities are paid off in time which as a result helps in raw material availability reducing
delay in production process.
Liquidity Versus Profitability : A Risk Return Trade Off

The working capital policy keep up and provide adequate liquidity to the organisation. The
decision on the working capital amount to be maintained include a trade-off because
extensive working capital reduces the risk of liquidity of the firm and can negatively affect
the cash flows. The organisation should keep up adequate cash balances or other liquid assets
so that it never confronts liability payment problems. The risk - return- involved in the
administration of the organization's working capital is a trade-off between the organisations
liquidity and profitability. The organisation diminishes the chances of (i) production
shutdowns and lost sales from inventory shortages and (ii) the commitment to pay creditors
on time by keeping up a huge investment in current assets such as cash, stocks, etc. However,
as the organisation increases its investment in working capital, the organisation return on
investment reduces as the profits are unaltered.
The organization utilization of current liability versus long term debt likewise includes a risk
return exchange-off. The more prominent the organization depend on the short term debt or
current liabilities to fund its current assets, the more prominent the risk of low liquidity other
things being steady. On the other hand, it can be great utilising current liability as it is
adaptable method for financing and is less immoderate. An organization can decrease its risk
of low liquidity using long debts at the expense of return on investment. The risk return
exchange-off includes an increase risk of low liquidity and the profitability.
The effect of changing levels of current assets on risk - return- can be seen as follows:
If the level of current assets company is increased i.e. the fixed assets will reduce by the same
amount, the organization's liquidity position will increment and it will have the capacity to
meet its payment commitments . In the meantime profit diminishes as the level of fixed assets
has diminished. As such, when the level of current resources is increased, the organization's
liquidity increments, but there is always a cost connected with increased liquidity. More
funds will be obstructed in current resources which are less beneficial and in this way the
profitability of the business will endure .
Now, in order to increase profitability, the organisation diminishes the current assets and thus
increases the fixed assets. Thus, corporate profitability will increment, but liquidity will be
diminished and the organisation will confront more risk of insolvency. The Risk of Return
concept can be summarized as : When liquidity increment, the profitability is diminished and
the risk of insolvency is also diminished. However, when restricted liquidity is there,
profitability increment , the risk of insolvency also increment. Thus, it can be said that the
profitability and risk are highly correlated. The financial manager needs to keep up a balance
among risk and profitability as neither too much risk nor excess profitability is good for the
organisation.