Professional Documents
Culture Documents
Summer Training Report
Summer Training Report
On
Degree of
in
Finance
of
Submitted to Submitted by
Mr.Lalit Kumar Bhardwaj Vikalp Rai Saxena
Faculty of MBA (Finance) B-70
11013514
Session 2010-2012
This is to certify that Miss. Vikalp Saxena, student of MBA has completed the summer training on the topic
Working Capital Management in a reputed company Crompton Greaves ltd., Mandideep. The summer
training project report is based on the work done by the candidate himself and fulfills the requirement of the
project necessary for partial fulfillment of the MBA degree. The work carried out by the candidate on the
above mentioned topic is up to the mark as supported by the certificate issued by the organization where the
candidate has undergone training for completion of the project work.
To the best of my knowledge and belief, the work has not been submitted anywhere else for award of any
degree or diploma. We wish him success in his life.
I also grateful to my training guide Mr.Lalit Kumar Bhardwaj (Finance) and training co-
ordinator Mr. Lokesh Jasrai(LSB) for permitting me to utilize all the necessary facalities of
the institution.
I also thankful to all the other faculty & staff members of my department for their kind co-
operation and help.
Lastly, I would like to express my deep appreciation towards my classmates and my parents
for providing me the moral support and encouragement.
PROJECT TITLE :-
Location
Crompton Greaves Limited
It is situated at 25 km from Bhopal. Transport facilities are available from each and every corner of Bhopal
and other nearby places.
smooth functioning of normal business operations of a company. The term adequate working capital is
The origins of CG can be traced back to the pioneering work of Colonel REB
Crompton, who, in 1878 founded a business at Chelmsford, Essex, England under the name of REB
Crompton & Co., to engage in the manufacture and contracting of electrical equipment.
In the 1960s CG took its initial steps to revolutionize its portfolio, which till
then comprised only motors and consumer products. It took a major leap in the electrical engineering
segment, through the acquisition of transformer technology from Westinghouse Electric Corporation of
USA, for manufacture of 400 kV transformers and aluminium wound transformers. This was followed by
further expansion in the switchgear, vacuum interrupter and allied businesses. By 2005, the Company had
emerged as one of the leading companies in the electrical engineering domain of India, in its three business
areas of Power Systems, Industrial Systems and Consumer Products; and a serious contender in the global
arena.
CG established its international manufacturing footprint in the year 2005
by acquisition of the Belgium based Pauwels Group, which gave CG additional manufacturing facilities for
Power and Distribution transformers at Belgium, Ireland, USA, Canada and Indonesia. This was followed
with a series of successful acquisitions - Ganz, Hungary in 2006; Microsol, Ireland in 2007; Sonomatra,
France; MSE, USA in 2008 and PTS, UK in 2010 in its quest to establish a technology edge, increase its
global market reach and enhance the product portfolio. The business domains of the new companies that
joined the CG family, has charted the way for CG becoming a "full solutions provider" which has carved out
for CG a position as a serious international player and a recognized transnational corporation.
Initially, CG`s foreign acquisitions operated their respective businesses
under their individual Brand names. To integrate these new entrants into the CG family, the first step was
integration of processes, systems and technologies across all the acquired companies worldwide. The next
step was to articulate the one single idea that provided a common thread through all the CG Group
companies. We discovered our shared philosophy as "our core strength is the value we place on
relationships, and the ability to provide solutions, which, in turn, strengthen these relationships". This
realisation and initiative gave birth to CG`s new Brand Identity which was launched on 15th October, 2009,
succinctly conveying this shared philosophy.
Whilst the Company`s name in India will continue to be Crompton Greaves,
the names of all the foreign companies in the CG family start with "CG", thus establishing their lineage and
uniting every company in the CG family with a common face to the internal as well as the external world,
globally.
Today, CG is a public listed company, amongst the "A" (premier)
category of listings on the Bombay and National Stock Exchanges of India and its GDRs are listed on the
London Stock Exchange, with over 70,000 shareholders.
Crompton Greaves Limited was established in 1937. It is a member of the Gautam Thapar led group
of companies, AVANTHA. Since its inception, the Company has assiduously endeavoured to bring about
meaningful & revolutionary changes in the lives of people, through its wide spectrum of products and
services.
The company’s origins go back to two entrepreneurial ventures in the 19th century. One of them was an
English firm by the name of R.E.B. Crompton & Company, which was founded in 1878 by Colonel Rookes
Evelyn Bell Crompton, a renowned electrical engineer. The other was James Greaves & Company (JGC), an
Indian firm that was established in 1858. JGC went into a partnership with George Cotton, an agent of the
East India Company, to set up a venture called Greaves Cotton & Company. In 1927, Crompton & Company
merged with F. A. Parkinson, pioneers in the field of large-scale industrial engineering to form a new
company, Crompton Parkinson. Crompton Parkinson, UK, set up a factory in Worli, Bombay, for the
manufacture of small electric motors and ceiling fans under the style Crompton Parkinson Works (India)
Ltd. A marketing organisation under the banner, Greaves Cotton and Crompton Parkinson (Pvt.) Ltd. was
established simultaneously with Greaves Cotton & Co., the selling agents of Crompton Parkinson Works
(India).
From the beginning, R.E.B. Crompton & Company had focused on generation of electricity, with lighting
making up a significant part of its activities. A Crompton dynamo powered the first electric-lit house in the
world at Colchester, Essex. The company set up arc lighting plants at Buckingham Palace, Holyrod Palace,
Crystal Palace and King’s Cross Station, London.
Today, Crompton Greaves has three strategic business units (SBUs) namely; Power Systems, Industrial
Systems and Consumer Products.
Power Systems
This group includes the Transformers, Switchgear and Engineering Projects businesses of Crompton
Greaves. It involves the manufacture of power and distribution transformers, switchgear, lightning arrestors,
circuit breakers, substation equipment and design, servicing, power solutions and execution of turnkey T&D
and substation projects. Its manufacturing facilities are located in different parts of India.
Crompton Greaves Ltd (CG) has become the first company in India to indigenously manufacture an 800 kV
class power transformer for NTPC’s Sipat Power Project, in Chattisgarh.
Industrial Systems
Consumer Products
This group is in the business of Fans, Light Sources and Luminaires, Pumps and Household Electrical
Appliances such as geysers, mixers, grinders, toasters and lanterns with plants based at a few locations in
India.
International Acquisitions
With the acquisition of the Pauwels Group of Belgium in May 2005 and Ganz Transelektro and its Associate
Company Transverticum in Hungary, in October 2006, the company has evolved into a leading and superior
Power Solutions provider.
Pauwels is one of the World’s leading manufacturers of three-phase Distribution and Power Transformers
and its products are renowned for their high performance and proven reliability. Pauwels is optimised to
meet customer specifications with respect to energy losses, noise levels, dimensions and weight. The group
operates ISO 9000:2001 certified manufacturing plants and subsidiary companies in three continents. These
plants produce more than 30,000 transformers each year.
Ganz Transelektro designs and manufacturers one and three phase, mineral oil immersed transformers for
outdoor or indoor operation, in the power range upto 600 MVA and the voltage range upto 750 kV. The
present family of products includes the metal enclosed, sulphur-hexafluoride gas insulated switchgear.
The acquisition of Microsol Holdings Limited, Ireland, in May 2007 is yet another major step forward for
the company in its journey of transforming itself into an end-to-end complete solutions’ provider in power
transmission and distribution. Microsol is engaged in providing automated solutions for medium voltage and
high voltage substations, and has a significant presence in the UK and the USA. This acquisition will
reinforce the power business’ ability to design, build and service world-class substations with state-of-the-art
automation.
The job opportunities enlisted in this section relate to India only; for opportunities in other parts of the world
visitors may wish to contact the respective local offices of Pauwels, Ganz etc
International Operations
CG is one of the largest suppliers from India in each segment of Transformers, Switchgear, Motors &
Generators, Pumps, Fans and Lighting equipment. Its manufacturing and marketing superiority is spread
over 140 sales offices worldwide. Apart from developed countries, CG also enjoys an export presence in the
The highest levels of Corporate Governance and seeks to achieve a healthy blend of performance
with conformance; creating the environment and the means through which corporate objectives are
attained.
The Company is committed to maintaining high standards of ethical behaviour and Corporate
Governance.
The Company is committed to serving its shareholders with honesty, fairness and integrity.
The 5 CG Values of Performance Excellence; Leading Edge Knowledge; Nurturance; Customer
Orientation and Intellectual Honesty are well entrenched in the performance culture of the Company
and permeates all actions of its employees.
The Company strives to achieve well-defined levels of Business Excellence by continuously
benchmarking itself against standards like the CII-Exim Bank Business Excellence Model and the
CII HR Excellence Model.
The Company has aggressively increased its initiatives in Community Development through
declaration of a formal ‘Statement of intent’ on Corporate Social Responsibility and has taken
concrete steps in fulfilling its plans.
Purpose
Transforming your needs into smart solutions for an enhanced quality of life.
Corporate Mission
To create value by providing integrated solutions and superior knowledge based products and services in the
domain of generation, transmission, distribution and utilisation of electrical energy.
To become the company of choice for utilities, industry and households in the global market, by leveraging
technology and productivity through a highly empowered and engaged team.
Power Systems
To become a world-class provider of integrated solutions to our global customers in the domain of
transmission and distribution of electrical energy, by offering reliable state-of-the-art products and services.
Industrial Systems
To become a world-class provider of integrated solutions in the area of power conversion and utilisation of
electrical energy, to consumers, industries and railways, by offering energy efficient, intelligent, e-enabled
products and services
Consumer Products
To enhance the quality of life of every consumer in the world at large - household and industrial, by
providing smart solutions offering world-class products and services.
POWER SYSTEMS
Transformers & Reactors : They are among the top 10 transformer manufacturers in the world, and one of
the very few companies worldwide that designs and manufactures a wide range of power & distribution
transformers and reactors.
The range of Power Transformers offered is from 25 kVA to 600 MVA, and 11 kV to 765 kV class,
and Reactors from 10 MVAr to 125 MVAr, and 33 kV to 765 kV class. These products are conforming to
IEC, ANSI, IS, BS and other international standards. It has recently made a foray in the manufacture of 765
kV transformers with the execution of its maiden order for Power Grid Corporation of India. We emerged as
a large supplier of a wide range of transformers and reactors for all critical applications. Our products are
used in industries such as power utilities, process industries, railways, mines, electricity boards, industrial
users,etc.in global markets.We have pioneered the technology for manufacture of compact, reliable SLIM®
transformers with high overload capacity in collaboration with Dupont’s Nomex® thermal insulating
technology, rendering it a world leader in wind farm installations, where these transformers have extensive
utility. Its Hungarian plant has over 125 years of experience in the production of power transformers.
Switchgear Products- MV / HV / EHV / UHV: CG manufactures the widest range of Medium to Ultra
High Voltage(UHV) switchgear products to meet the requirements of power generation and distribution
substations in utilities and industries. Our products are in service for several years in many countries. We
also export Low Voltage Panel Products from our India based export house.
Vacuum Circuit Breakers : We are the largest manufacturer of VCB in India and the
same has been accredited by renowned market research firms like Frost & Sullivan
Gas Circuit Breakers : The legendary CG GCB is a dead tank design that comes with
comprehensive safety interlocks.The product is highly reliable & rugged - sutaible
for alittude up to 2000m without any deration.
Disconnectors : CG has been a name to reckon with in the global electrical arena.
We bring all our products with State of the art technology which supplement the
existing CG range of switchgear products.
Surge Arresters : Our surge arresters incorporate ZE elements (Zn0 elements) with
superior non-linear voltage-current characteristics, high quality and reliability.
Gas Insulated Switchgear : We offer latest technology GIS. They are now found
affordable in place of AIS. The Product comes with flexible SF6 gas insulated
modules of various equipment to suit different network configurations.
Instrument Transformers -MV / HV / EHV / UHV :CG range of instrument transformers includes
Current Transformers, Inductive Voltage Transformers and Capacitive Voltage Transformers. Our
Instrument transformers have significantly contributed to the electricity boards and utilities across the globe.
Several thousands of EHV Instrument Transformers have been put into service in various environments in
over 60 countries since 1984 and operating satisfactorily.
With the support of our global R & D, we have developed 1200 kV Capacitor Voltage Transformer ( CVT ),
which has been successfully type tested.
Our EHV range of instrument transformers uses (Oil Impregnated Paper) OIP as the main insulation system.
Napthene based mineral insulating oil (free from inhibitors) is used in the equipment manufactured. This oil
is highly stable against oxidation as well as chemical and electrical aging. The capacitor technology used in
capacitor voltage transformers and coupling capacitors is all paper or paper plus film (mixed dielectric).
We also offer Medium Voltage Dry Type Instrument Transformers, since 1995. More than 60,000 units of
Dry Type Polycrete® Outdoor Instrument Transformers are in operation globally.
Our Instrument Transformer manufacturing units in India also offer Condenser Bushings for power &
distribution transformers.
Description Rated Voltage StandardsDetails
SUMMER TRAINING REPORT 15
Current Transformers- HV 72.5 to 550 kV IEC,IS
Inductive Voltage Transformers- HV 72.5 to 420 kV IEC,IS
Capacitive Voltage Transformers- HV 72.5 to1200 kV IEC,IS
Current & Voltage Transformers - Dry Type MV 11 to 33 kV IEC,IS
Power Quality Solutions : CG offers customized solutions that ensure clean power, energy savings,
improved operational efficiency and reliability through a range of state-of-the art-products and services.
Power Quality solutions are based on a range of products and services. Products like Capacitor Switch,
LT/HT Automatic PF control Panel, Fixed and Automatic Harmonic Filters, Dynamic Reactive Power
Compensator – STATCOM, mechanically switched and thyristor switched capacitor panels when
implemented specific to the application, ensure clean and efficient use of energy.
Active Harmonic Filter (AHF) AHF Used for centralized harmonic suppression in a Power System
Capacitor Switch Line Current/Power Capacitor Switch for improving power factor
Factor Based
Automatic Power Factor Correction Used for centralized reactive power compensation at the point
APFC
System (APFC) of common coupling (PCC)
Medium Voltage Current and used for measuring voltage and current in electrical power
CTs & VTs
Voltage Transformers systems
VC / MVC /
Vacuum Contactor Capacitor / Reactor Switching
CS-VP
CG is a specialist in turnkey substation projects up to 765 kV. These projects are carried out for large
industrial customers as well as for major electricity utilities.We have built up an important reference list in
the turnkey construction of both AIS and GIS substations in many countries around the world. Beside
this we completed several rural electrification projects as well as HV transmission lines which came along
with some of the turnkey substation projects
Up to 765
AIS Substations Substations for industries & utilities -
kV
Up to 500
GIS Substations To fulfill all substation requirements -
kV
Procurement Procurement
Outdoor Type
Vacuum Interrupter Up to 52 kV Up to 20 kA
Industrial Systems :
CG’s Industrial Systems is engaged in the business of power conversion equipment a wider spectrum of
High and Low Voltage rotating machines (motors and alternators), stampings, as well as railway
transportation and signalling products. Industrial Systems is largely India focused with a very strong market
presence and market leadership position in many segments. It also caters to foreign markets through its
facilities in Hungary and exports. Its product portfolio includes motors and generators ranging from 100W to
100MW. CG enjoys a market leadership for AC Motors and the second position in AC Generators and DC
Motors in India. CG is the largest manufacturer of Low Tension motors in India offering a range of AC and
DC motors, ranging from 0.18kW to 450kW in various standard and customized configurations to respond
to the exacting demands of the industry. To ensure the highest levels of customer satisfaction, the latest
designs have been incorporated for its range of product offerings, to achieve better performance as well as
versatility in mechanical features. The products of this business have received many international
certifications including CSA, UL, CE and Flame Proof Gas Group IIA and IIB certifications. The customer
emphasis for this business group has been the textile, cement, sponge iron and large steel plants sectors,
which are growing segments
Consumer Products:
Fans :
Table Fan, Pedestal Fan, Wall Mounting Fan Special Purpose Fans
Appliances:
Dry / Steam Irons, Room Heaters Juicers, Mixers, Grinders, Hand Blenders
Water Heaters - Instant, Storage, Gas Induction Cook tops, Gas Stoves
Lighting :
Luminaries
Commercial Luminaries.
Industrial Luminaires
Streetlight Luminaries’
Specialty Luminaire
CG Fael Luce
CG Lemins-LED Luminaires
Lamps
Incandescent / Halogen
FTL / CFL
Consumer Fixture
Home Automation:
Wiring Accessories:
Enclosures
Explosion Proof
Working capital management is concerned with the problems arise in attempting to manage the current
assets, the current liabilities and the inter relationship that exist between them. The term current assets refers
to those assets which in ordinary course of business can be, or, will be, turned in to cash within one year
without undergoing a diminution in value and without disrupting the operation of the firm. The major
current assets are cash, marketable securities, account receivable and inventory. Current liabilities ware
those liabilities which intended at there inception to be paid in ordinary course of business, within a year, out
of the current assets or earnings of the concern. The basic current liabilities are account payable, bill
payable, bank over-draft, and outstanding expenses. The goal of working capital management is to manage
the firm s current assets and current liabilities in such way that the satisfactory level of working capital is
mentioned. The current should be large enough to cover its current liabilities in order to ensure a reasonable
margin of the safety.
1. Cash and equivalents: - This most liquid form of working capital requires constant supervision. A good
cash budgeting and forecasting system provides answers to key questions such as: Is the cash level adequate
to meet current expenses as they come due? What is the timing relationship between cash inflow and
outflow? When will peak cash needs occur? When and how much bank borrowing will be needed to meet
any cash shortfalls? When will repayment be expected and will the cash flow cover it?
2. Accounts receivable: - Many businesses extend credit to their customers. If you do, is the amount of
accounts receivable reasonable relative to sales? How rapidly are receivables being collected? Which
customers are slow to pay and what should be done about them?
4. Accounts payable:- Financing by suppliers is common in small business; it is one of the major sources of
funds for entrepreneurs. Is the amount of money owed suppliers reasonable relative to what you purchase?
What is your firm's payment policy doing to enhance or detract from your credit rating?
5. Accrued expenses and taxes payable: - These are obligations of your company at any given time and
represent a future outflow of cash.
Balance sheet or Traditional concept:- It shows the position of the firm at certain point of time. It is calculated
in the basis of balance sheet prepared at a specific date. In this method there are two type of working capital:-
Gross working capital: - It refers to the firm’s investment in current assets. The sum of the current assets is the
working capital of the business. The sum of the current assets is a quantitative aspect of working capital. Which
emphasizes more on quantity than its quality, but it fails to reveal the true financial position of the firm because
every increase in current liabilities will decrease the gross working capital.
Net working capital: - It is the difference between current assets and current liabilities or the excess of total
current assets over total current liabilities.
Operating cycle concept: - The duration or time required to complete the sequence of events right from
purchase of raw material for cash to the realization of sales in cash is called the operating cycle or working
capital cycle.
SEASONAL
WORKING
CAPITAL
SPECIFIC
WORKING
CAPITAL
PAYMENT
TO
SUPPLIERS
INCREASE
IN FIX
ASSETS
Ratio analysis can be used by financial executives to check upon the efficiency with which working capital
is being used in the enterprise. The following are the important ratios to measure the efficiency of working
capital. The following, easily calculated, ratios are important measures of working capital utilization.
Working (Inventory + As % A high percentage means that working capital needs are high
Capital Ratio Receivables - Sales relative to your sales.
Payables)/
Sales
Current Liabilities
C.L. 1446.6 1187.67 258.93
Provisions 153.57 140.66 12.91
Total ( B ) 1600.17 1328.33
( Rs.in lacs)
31- 31-03-
INVESTMENTS 03-2010 2009
CURRENT ASSETS, LOANS AND
ADVANCES:
Inventories 303.53 281.32
Sundry debtors 1212.79 1012.26
Cash and bank balances 548.5 472.51
Loans and advances 155.37 132.54
2220.19 1898.63
Less: CURRENT LIABILITIES AND
PROVISIONS:
Current liabilities 1446.6 1187.67
Provisions 153.57 140.66
1600.17 1328.33
INVENTORY ANALYSIS
Inventory is total amount of goods and materials content in a store of factory at any given time. Inventory
means stock of three things:-
1. Raw materials
2. Semi finished goods.
3. Finished goods.
31.03.10 31.03.09
YEAR (in crore) (in crore) (in crore) (in crore)
303.53 281.32
INTERPRETATION:
By analyzing the 2 years data we see that the inventories are increased year by year. We are looking
increasing pattern in inventories. We can see that inventories are grown by 8% in 09-10 from previous year.
By this growth we can say that the company is growing in manufacturing sector. The company uses
inventory when they have demand in market and CG is having a great demand in manufacturing sector. That
is biggest reason for increase in inventories.
Debtors or an account receivable is an important component of working capital and fall under current assets.
Debtors will arise only when credit sales are made.
(Unsecured)
Debts outstanding for a period exceeding 112.58 143.85
six months 61.03 36.28
Considered good 173.61 180.13
Considered doubtful
1200
1150
1100
Column1
1050
1000
950
900
31-03-2010 31-03-2009
INTERPRETATION
In the table we see that there is rise in the debtors of Crompton greaves Limited in the successive years. A
simple logic is that debtors increase only when sales increase and if sales increases it is good sign for
growth. We can see 26% in 09-10 from previous years. We can say that it is a good sign as well as negative
also. Company policy of debtors is very good but a risk of bad debts is always present in high debtors. When
sales are increasing with a great speed the profit also increases. If company decreases the debtors they can
use the money in many investment plans.
Cash is called the most liquid asset and vital current assets; it is an important component of working capital.
In a narrow sense, cash includes notes, bank draft, cheque etc while in a broader sense it includes near cash
assets such as marketable securities and time deposits with bank.
548.50 472.51
540
520
500
Column1
480
460
440
420
31-03-2010 31-03-2009
Interpretation
We have analyzed that the cash and bank balance position of the company is increasing this year from
previous year which means company is not fully utilizing its cash or investing its cash in some better
projects. It is recommended for the company to invest its excess cash to some better projects.
Loans and Advances here refers to any to amount given to different parties, company, employees for a
specific period of time and in return they will be liable to make timely repayment of that amount in addition
to interest on that loan.
245
240
235
Column1
230
225
220
31-03-2010 31-03-2009
INTERPRETATION
If we analyze the table we can see that it follows an increasing trend which is a good sign for the company.
We can see that from the year 2009 to 2010 it increases. We can see that the increase of 8-9% from previous
year.
The increasing pattern shows that company is giving advances for the expansion of plants and machinery
which is good sign for better production of cement and other goods. Although company’s cash is blocked
but this is good that company is doing modernization of plants in time to compete with other competitors in
market.
Current liabilities are any liabilities that are incurred by the firm on a short term basis or current liabilities
that has to be paid by the firm within one year.
Acceptances
123.29 156.52
Due to customers
726.28 729.04
Advances from customers
1.54 1.25
Unclaimed dividend
0.13 0.17
Unclaimed matured fixed
deposits
1.67 1.42
INTERPRETATION
If we analyze the above table then we can see that current liability increases. The important component of
current liabilities is sundry creditors and other liabilities. In 2009-2010 it increases by 5% from the previous
year. This is liability for company so this should be less. When company has minimum liabilities it creates a
better goodwill in market.
PROVISIONS ANALYSIS
PROVISIONS
31-03-2010 31-03-2009
(Net of advance tax Rs. 271.43 crore; previous year Rs. 219.71 crore)
(Net of advance tax Rs. nil; previous year Rs. 5.03 crore)
360.25 373.87
370
365
PROVISIONS ANALYSIS
360
355
350
31-03-2010 31-03-2009
Interpretation
In 2009 company pays more tax than 2010 which means company earns more profit in 2009 i.e. company’s
PAT is more in 2009 as compared to 2010. Company pays 5% less tax in 2010.
FORMULA
DEBTORS
RECEIVABLE RATIO = ---------------- * 365
SALES
84
83
82
RECEIVABLE RATIO
81
80
79
78
31-03-2010 31-03-2009
INTERPRETATION
Generally a low debtor’s turnover ratio implies that it considered congenial for the business as it implies
better cash flow. The ratio indicates the time at which the debts are collected on an average during the
year. Needless to say that a high Debtors Turnover Ratio implies a shorter collection period which indicates
prompt payment made by the customer.
Now if we analyze the two year data we can say that company doesn’t hold a good position while receiving
its money from its debtors. The ratios are in an increasing trend, which implies that recovery position is not
so good and company should work on it to lessen number of days of receivable.
FORMULA
1.4
1.38
1.36
1.34
1.3
1.28
1.26
1.24
31-03-2010 31-03-2009
INTERPRETATION
This ratio reflects the financial stability of the enterprise. The standard of the normal ratio is 2:1 but in most
of companies standard is taken according to Tandon Committee which is taken as 1.33:1.
Now if we analyze the two years data it can be predicted that it holds a stable position all throughout period
but it is seen that it holds a low position than the standard one and the company is required to improve its
position.
FORMULA
Quick ratio
1.42
1.37
1.32
1.27
Quick Ratio
1.22
1.17
1.12
1.07
31-03-2010 31-03-2009
INTERPRETATION
It is the ratio between quick liquid assets and quick liabilities. The normal value for such ratio is taken to be
1:1. It is used as an assessment tool for testing the liquidity position of the firm. It indicates the relationship
between strictly liquid assets whose realizable value is almost certain on one hand and strictly liquid
liabilities on the other hand. Liquid assets comprise all current assets minus stock.
By analyzing the two years data it can be said that quick ratio of company is good in both the years as it is
near standard value.
Mar 10 Mar 09
Particulars
(in crores) (in crores)
Conclusion
The overall performance of Crompton Greaves Limited is getting on a good track. Profit before tax in 2010
is 870.26 crores which is much more than 612.27 crores in 2009. The cash earning of the company improved
substantially to Rs. 548.50 crores as against Rs.472.51 crores in the last financial year. With the increase in
capacity on account of expansion projects being undertaken by the company, it is expected that the company
would be in a position to maintain the growth in future years.
Company has parked its surplus fund in the various debt schemes of mutual fund. There is an increase of
107% in investment from the previous year. Company is cash rich but as there are expansion and
diversification plans under the consumer products, company is not utilizing these funds. For meeting the
working capital needs and capacity expansion needs it has borrowed from banks.
(amt. in crores)
CGL has shown that it is very strong competitor in consumer goods sector of India.
Overall all ratios of the company are good and company need to work with more efficiency.
Position of the stock is increasing per year that is good sign to face the competition coming ahead.
Pandey,I.M. (2010), Financial Management, 10th Ed. Noida: vikas Publishing house pvt Ltd., pp. 648-660.
Jain,N.K. (2004), Working Capital Management, 4th Ed. NewDelhi: A.P.H Publishing corpotation., pp.77-109.
Chandra Prasanna (2007), Financial Management theory and practices, 7th Ed. New Delhi: Tata McGraw
Hill Publishing Company Ltd., pp. 755-667.
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