“WORKING CAPITAL MANAGEMENT

OF

BAJAJ AUTO, NEW DELHI

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 CHAPTERIZATION

Chapter -1 Objectives

Chapter -2 Introduction

Chapter -3 About the company

Chapter -4 Research & Methodology
Chapter -5 Importance of W.C
Chapter -6 W.C Calculator
Chapter -7 Importance & need of investing in C.A
Chapter -8 Difference between C.A & F.A
Chapter -9 Factors determining the W.A
Chapter -10 Financing W.C
Chapter -11 Significance of W.C of Bajaj Auto
Chapter -12 Findings
Chapter -13 Suggestion And Recommendation
Chapter -14 Bibliography

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 INTRODUCTION

Every business needs investment to procure fixed assets, which remain in use for a longer period.
Money invested in these assets is called ‘Long term Funds’ or ‘Fixed Capital’. Business also
needs funds for short-term purposes to finance current operations. Investment in short term assets
like cash, inventories, debtors etc., is called ‘Short-term Funds’ or ‘Working Capital’. The
‘Working Capital’ can be categorised, as funds needed for carrying out day-to-day operations of
the business smoothly. The management of the working capital is equally important
as the management of long-term financial investment. Every running business needs working
capital. Even a business which is fully equipped with all types of fixed assets required is bound
to collapse without (i) adequate supply of raw materials for processing; (ii) cash to pay
for wages, power and other costs; (iii) creating a stock of finished goods to feed the market
demand regularly; and, (iv) the ability to grant credit to its customers. All these require working
capital. Working capital is thus like the lifeblood of a business. The business will not be able to
carry on day-to-day activities without the availability of adequate working capital. The diagram
shown on the next page clarifies it: Working capital cycle involves conversions and rotation of
various constituents/ components of the working capital. Initially ‘cash’ is converted into raw
materials. Subsequently, with the usage of fixed assets resulting in value additions, the raw
materials get converted into work in process and then into finished goods. When sold on credit,
the finished goods assume the form of debtors who give the business cash on due date. Thus
‘cash’ assumes its original form again at the end of one such working capital cycle but in the
course it passes through various other forms of current assets too. This is how various
components of current assets keep on changing their forms due to value addition. As a result
they rotate and business operations continue. Thus, the working capital cycle involves rotation of
various constituents of the working capital. While managing the working capital, two
characteristics of current assets should be kept in mind viz. (i) short life span, and (ii) swift
transformation into other form of current asset. Each constituent of current asset has
comparatively very short life span. Investment remains in a particular form of current asset for a
short period. The life span of current assets depends upon the1 time required in the activities of
procurement; production, sales and collection and degree of synchronisation among them. A very
short life span of current assets results into swift transformation into other form of current assets
for a running business.

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 COMPANY PROFILE
The automobile industry in India is the ninth largest in the world with an annual production of
over 2.3 million units in 2008. In 2009, India emerged as Asia's fourth largest exporter of
automobiles, behind Japan, South Korea and Thailand.
Following economic liberalization in India in 1991, the Indian automotive industry has
demonstrated sustained growth as a result of increased competitiveness and relaxed restrictions.
Several Indian automobile manufacturers such as Tata Motors, Maruti Suzuki and Mahindra and
Mahindra, expanded their domestic and international operations. India's robust economic
growth led to the further expansion of its domestic automobile market which attracted significant
India-specific investment by multinational automobile manufacturers. In February 2009, monthly
sales of passenger cars in India exceeded 100,000 units.
bryonic automotive industry emerged in India in the 1940s. Following the independence, in
1947, theGovernment of India and the private sector launched efforts to create an automotive
component manufacturing industry to supply to the automobile industry. However, the growth
was relatively slow in the 1950s and 1960s due to nationalisation and the license raj which
hampered the Indian private sector. After 1970, the automotive industry started to grow, but the
growth was mainly driven by tractors, commercial vehicles and scooters. Cars were still a major
luxury. Japanese manufacturers entered the Indian market ultimately leading to the establishment
of Maruti Udyog. A number of foreign firms initiated joint ventures with Indian companies.
In the 1980s, a number of Japanese manufacturers launched joint-ventures for building
motorcycles and light commercial-vehicles. It was at this time that the Indian government
chose Suzuki for its joint-venture to manufacture small cars. Following the economic
liberalisation in 1991 and the gradual weakening of the license raj, a number of Indian and multi-
national car companies launched operations. Since then, automotive component and automobile
manufacturing growth has accelerated to meet domestic and export demands.

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 OBJECTIVES

• To study the implication on company’s long-term profitability

• To identify the necessity of Working Capital Management (WCM) and to under

-stand the WCM of Bajaj Auto

• To understand the need and importance of investing in current assets and its

approaches.

• To evaluate and determine the working capital requirement of Bajaj Auto Ltd.

using different profitability.

• To know what is the need and importance of current assets and its implications

on company’s long-term plan.

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 RESEARCH & METHODOLOGY

COLLECTION OF DATA:

• Primary Data:

• Data collected from financial statements of the company;

• Profit & Loss A/c,

• Balance Sheet,

• Annual Report, etc.

• Secondary Data:

• Discussions with managers

• Referring books, journals and magazines

• Information collected from Internet.

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 BIBLIOGRAPHY
Sl.No Title
Books Working capital management by I.M.PANDEY

Working capital principles by I.M. Pandey

Newspapers The Times of India

The Economic Times

Internet www.bseindia.com

www.economictimestimes.com

www.nseindia. Com

www.google.com

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