A

Summer Training Report

on
“Working Capital”
at
“Vita Milk Plant”

Submitted in partial fulfillment for the award of degree

of
MASTER OF BUSINESS ADMINISTRATION

Submitted To: Submitted By:

Department of Business Priyanka
Administration BBA 5th
CDLU, Sirsa

Chaudhary Devi Lal University, Sirsa

Session 2018-2020
 ACKNOWLEDGEMENT
This is to acknowledge with sincere thanks for the assistance, guidance and support that I
have received during the Summer Training. I place on record my deep sense of gratitude
to “Working Capital of VITA MILK PLANT SIRSA.” for giving me an
opportunity
to pursue my Summer Training. My very special thanks to
(Mr. Soni sir) and Mr. Rakesh Sir head of the Finance
department and very thankful to Mr. Aggarwal head of marketing
department for his valuable guidance & leadership in completion of six
weeks training period “Working Capital of VITA MILK PLANT SIRSA..”
for his constant advice and support.

I am highly grateful to my project incharge Mrs. randeep kaur for providing

me every possible help in my first step into professionalism and propelling
me in the right direction for the success of my project.
We are also thankful to other officers and staff of personal department
for their cooperation.

Priyanka
 CONTENT

CHAPTER 1

introduction of topic

CHAPTER 2

Company profile

CHAPTER 3

industry profile

CHAPTER 4

Summer tranning work

CHAPTER 1

WORKING CAPITAL MANAGEMENT

Management and control of working capital is important for any kind and size of
an organization because working capital makes the long-term assets operative.
Number of instances is there, where many firms met with failure due to inefficient
management of working capital. Amount of working capital must be
in accordance with size of business. Excessive levels of current assets can result
in a firm realizing a substandard return on investment. However, firm with too few
current assets can result in difficulties in smooth operations. There are two
concepts of working capital:

1. Gross working capital.

2. Net working capital.

1. GROSS WORKING CAPITAL

Gross working capital is a financial concept. It refers to the firm’s investment in

current assets. Current assets are assets, which can be converted into
cash within an accounting year and include cash, debtors, bills receivables, loans
and advances, inventories, prepaid expenses etc. Current assets have short life
span and these are swiftly transformed into other assets form. Cash is used to
buy raw material, raw material is converted into finished goods, finished
goods are converted into receivables and finally, receivables are converted
into cash. Hence, working capital is also called circulating or revolving capital
and its cycle is shown as shown on the following page:
 Gross working capital of in F.Y.2018-2019

CURRENT ASSETS RS.LACS

Closing Stock 13224924.63

Stock in Trade 279136225.16

Debtors 3176553.58

Cash & Bank Balance 6618167.62

Loan & Advances 11533786.52

Deposits 1245016.00

Total 314,934,673.51
Gross Working Capital = Current Assets

Therefore, Gross working Capital of Vita = 314,934,673.51 Lacs

2. NET WORKING CAPITAL

It is an accounting concept. It is 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 include creditors, bills payable,
outstanding expenses, short term loans, bank overdraft, provisions etc.
 Net working capital of Vita Milk Plant in F.Y. 2018-2019 is

urrent Assets .LACS rrent Liabilities .LACS

osing Stock 224924.63 editors 741897.29

ock in Trade 9136225.16 curities 26477.48

btors 76553.58 ties&Taxes 50982.50

sh &Bank 18167.62 her Liabilities 551478.74

an Advances 533786.52

posits 45016.00

tal 4,934,673.51 tal ,470,836.01

currentas

current liabilities

Net working capital is = Current Assets - Current Liabilities

Therefore, Net Working Capital Of the Vita= 244,463,837.50Lacs
The need for current assets is felt constantly. But the magnitude of current assets
needed is not always same; it decreases and increases over time.
However, there is always a minimum level of current assets, which is
continuously required by a firm to carry on its business operations. The minimum
level of current assets is referred to as permanent or fixed working capital.
Depending upon changes in production and sales the need for working
capital, over and above permanent working capital, will fluctuate for example,
extra inventory of finished goods has to be maintained to support the peak
periods of sales. The extra working capital, needed to support the charging
production and sales activities is called variable or temporary working capital.
Both kinds of working capital permanent and temporary are necessary to
facilitate production and sale through the operating cycle, but temporary
working capital is created by the firm to meet liquidity requirement that will
lost temporarily.
 NEEDS OF WORKING CAPITAL

The need of working capital arises due to time gap between production and
realization of cash from sales. There is an operating cycle involved in the sales
and realization of cash. Thus it is needed for following purposes:

· For the purchase of raw materials, components and spares.

● To pay wages and salaries.

● To incur day to day expense and overhead cost.

● To meet the selling costs.

● To provide credit facilities to customers.

● To maintain the inventories.

DETERMINANTS OF WORKING CAPITAL

1. Nature and size of business.

Working capital requirement of a firm are basically influenced by nature of its
business. Trading and financial firms have a very small investment in fixed
assets, but require a large sum of money to be invested in working capital. In
contrast, public utilities have a very limited need of working capital because they
provide services on cash basis. Hence no funds will be tied up in debtors and
stocks. Working capital needs of most manufacturing concerns fall between two
extremes. The size of business also has an important impact on its
working capital needs. Size may be measured in terms of scale of operations. A
big firm will need more working capital than a small firm will.
The size of the Vita is large.. It has undertaken expansion projects which call
for increase in requirements of working capital.

2. Manufacturing cycle

The manufacturing cycle comprises of purchase and use of raw materials and the
production of finished goods. Longer the manufacturing cycle, larger will be the
firm’s working capital requirements.

Since Vita is a fully integrated plant with using Milk raw material
and producing ghee,Butter, Lassi,Kheer,Dahi its manufacturing cycle is
Short.

3. Sales growth

The working capital need of a firm increases as the sale grows. It is difficult
to precisely determine the relationship between the volume of sales and
working capital needs. As sales grow, the firm needs to invest more in
inventories and debtors. These needs become very frequent and fast
when sales grow continuously.

The Plant sales are growing in the past few years which require increased
need of working capital. It has increase 8.74% in 2008-2009from
2007-2008i.e. Rs. 955624380.97 lacs from Rs. 872172299.27lacs.
 4. Price level change

Generally, rising prices will require a firm to maintain higher amount of

working capital. However, companies, which can immediately revise their product
prices with rising price levels, will not face a severe working capital problem.
Effect of rising prices will be different for different companies. Some will face no
working capital problem, while working capital problems of other may be
aggravated.

Average Increase in Cost of Milk is 13.01.

5. Operating efficiency and performance

The operating efficiency of a firm relates to the optimum utilization of resources at

minimum cost. Better utilization of resources improves profitability and thus helps
in releasing the pressure on working capital. Firms differ in their capacity
to generate profit from business operations. Some firms enjoy a dominant
position due to quality product or good marketing management or monopoly in
the market and earn a high profit margin and vice-versa can be there.
A high net profit margin contributes towards working capital pool.

Since Vita is operating at about 90% capacity utilization, it has been able to
reduce its unutilised capacity and thereby increasing its production which
reduces its operating cycle

6. Market condition

The degree of competition prevailing in the market place has an important bearing on
working capital needs. When competition is keen, a large inventory of finished
goods is required to promptly meet the needs of customers. Also lenient terms of
credit are to be given to attract the customers.
Since Vita sells its Products both cash basis & credit bases, the debtors
collection period is very minimal.

7. Production policy

In certain industries the demand is subject to wide fluctuations due to

seasonal variations. The requirements of working capital, in such cases, depend
upon the production policy. The production could be kept either steady by
accumulating inventories during slack periods with a view to meet high
demand during the peak season or the production could be curtailed during
the slack season and increased during peak season. If the policy is to keep
production steady by accumulating inventories it will require higher working
capital.

MANAGEMENT OF WORKING CAPITAL

Working capital, in general practice, refers to the excess of current assets

over current liabilities. Management of working capital therefore, is concerned
with the problems that arise in attempting to manage the current assets,
the current liabilities and the inter relationship that exists between them. In
other words, it refers to all aspects of administration of both current assets and
current liabilities. The basic goal of working capital management is to manage the
current assets and current liabilities of a firm in such a way that a satisfactory
level of working capital is maintained, i.e., it is neither inadequate nor
excessive. This is so because both inadequate as well as excessive working
capital positions are bad for any business. Inadequacy of working capital may
lead a firm to insolvency and excessive working capital implies idle funds,
which earn no profits for the business. Working capital management policies of a
firm have a great effect on its profitability, liquidity and structural health of the
organization.
In this context, working capital management is three dimensional in nature:

● Dimension I is concerned with the formulation of the policies with regard to

profitability, risk and liquidity.

● Dimension II is concerned with the decisions regarding the

composition and level of current assets.

● Dimension III is concerned with the decisions about the composition and
level of current liabilities.

There is a definite inverse relationship between the degree of risk

and profitability. A conservative management prefers to minimize risk by
maintaining a higher level of current assets while a liberal management assumes
greater risk by reducing working capital. However, the goal of the management
should be to establish a suitable trade off between profitability and risk.

CLASSIFICATION OF WORKING
CAPITAL

1. Permanent or Fixed Working Capital.

2. Temporary or Variable Working Capital.

1- FIXED WORKING CAPITAL

Fixed working capital is the minimum amount, which is required to ensure

effective utilization of fixed facilities and for maintaining the circulation of current
assets. Every firm has to maintain a minimum level of raw
materials, work-in-progress, finished goods etc. This minimum level of
current assets is called fixed working capital. It can be regular and reserve.
Regular Working Capital:

It is the minimum amount of working capital required to ensure circulation

of current assets.

Reserve Working Capital:

It is the excess amount over the requirement for regular working capital, which
may be provided for contingencies that may arise at unstated periods such as
strikes, rise in price etc.

2- VARIABLE WORKING CAPITAL

It is the amount of working capital, which is required to meet the seasonal

demands and special exigencies.

Seasonal Working Capital:

It is the capital required to meet the seasonal needs of the enterprise.
.

Special Working Capital

It is required to meet special exigencies such as launching of

extensive marketing campaigns for conducting research etc.
CHAPTER 2

(1.1) Haryana Dairy Development Co-operative

Federation

Designation Name Phone Email

Smt
Chairperson Chandravat 0172-2585507 vitaindia@gmail.com
i
Sh
Managing 0172-2586826,258 vitaindia@gmail.com
Devender
Director 5159
Singh
Chief
Sh Pradeep 0172-2583050
Administrative
Kasni
Officer vitaindia@gmail.com

HARYANA is one of the

most progressive states of
Republic of India. In the
domain of dairy development it
is well known for its productive
milch cattle particularly the
'Murrah' Buffaloes and
Haryana Cows. The economy
of the state is predominantly
based on agriculture. People
rear and breed cattle as a
subsidiary occupation. Milk
production in the State was
estimated around
135.18 lacs litres per day
during
2008-2009.
 The essence of various
programmes launched in the State
has been to adopt the
Anand pattern of Milk Co-
operatives. Under this
system, all the functions of
dairying like milk procurement,
processing and marketing are
controlled by the Milk Producers
themselves. It has three tier
system comprising milk
Producers Societies at the
village lev

el, Milk Producers Co-

operative Union at the district
level and the state Milk
Federation as an apex body at
the State level.

The Haryana Dairy Development Co-operative Federation Ltd.

registered under Haryana Co-operative Societies Act
came into existence on April 1,1977. Its authorized share capital
is Rs.2000 lacs. It was established with the primary aim to
promote economic interests of the milk producers of Haryana
particularly those belonging to weaker sections of the village
community by procuring and processing milk into milk products
and marketing thereof by itself or through its unions. In
furtherance of the above objects, the Federation undertakes a
number of activities such as establishment of milk plants,
marketing of VITA BRAND milk products of the Milk Unions.
Its turnover during 2008-09 was to the tune of Rs.395.00 crores. It
also extends technical guidance to the Unions in all spheres of
personnel, technical, marketing and financial management as well as
makes them quality conscious, through use of modern methods of
laboratory testing of various products.
Quality - VITA the Hallmark of Quality

As part of stringent quality measures, milk required for

processing VITA products is procured from Dairy Cooperative
Societies only. It is ensured that the milk is transported to chilling
centres and plants in clean and sterilized milk cans as quickly as
possible. Al quality measures as per Standard of Bureau of
Indian Standards/Agmark are being applied before the products
are marketed. Well-equipped laboratories are functioning in the
chilling centres and milk plants to maintain ideal quality standards.
VITA is the endorsement of quality, a commendation we are Proud

(1.2) DISTRICT MILK PRODUCERS CO-

OPERATIVE

UNIONS
The Primary Milk Societies (PMS)
functioning at the village level join
to form a Milk Union for
carrying out such activities
which are conducive and
essential for the socio-economic
development of milk producers,
by procuring and processing of
milk and marketing of milk
products. The Board of
Directors comprising 9 members
elected out of the Chairmen
of affiliated Primary Milk
Societies run the day-to-day
administration through Chief
Executive Officer.

These Unions either process

milk at their own level or
pass the same to the milk
plants of other milk unions for
processing. They
 also organize new Primary Milk
Societies at the village level.

A brief matrix of the Milk Unions is as follows:

Sr. Name of the Union Date of Registration

No.
1. Ambala 10.03.1973
2. Rohtak 12.07.1991
3. Jind 10.07.1991
4. Kurukshetra 05.07.1991
5. Sirsa 10.01.1978

The Primary Milk Society is the

foundation of the
Cooperative structure. The
efficiency of the movement
solely lies in the strength
of these Societies. Primary
Milk Societies are organised
at the rate of one society per
village. The purpose of such a
society is to promote the
economic interests of its members
by improving quality, and
increasing quantity of
milk production per buffalo or cow
and to provide necessary
guidance and assistance to its
members and supply milk to the
Milk Unions. These societies also
supply cattle feed etc. to their
members with a view to
enhaning milk production. The
Managing Committee of the
Society comprises members
elected by those members
 who are eligible to participate and
vote in the General Body Meeting.

(1.3) GROWTH AT A GLANCE

Y 98- 99- 0 0 0 0 0 0 0 0 08
e
Functio 99 00 0- 1- 2- 3- 4- 5- 6- 7 -
nal 0 0 0 0 0 0 0 - 09
ar 152
Societie 1 2 3 4 5 6 7 0 42
s
No 172024272829338 0
0 3 9 0 1 8 6 3
5
(Avg) 5
s. 9 7 9 7 6
141 0 0
5 6
1

SWEETENED FLAVOURED DOUBLE

MANGO DRINK TONED MILK
 NAMKEEN LASSI MITHI LASSI

T
ABLE BUTTER GHEE (AGMARK)

DAHI MILK CAKE

MILK PANEER
 JALJEERA

New Products

COW MILK GHEE KHEER

PIZZA CHEESE PROCESSED CHEESE

MILK CAKE BURFI

 DELHI
1. Sales Office Delhi, (91)-011-
C-55 New Moti Nagar. 2546
Milan Cinema Road, New Delhi. INDIA 5025
(91)-011-
2546
7681
2. CALCUTTA
Sales Office Calcutta,
(91)-
E-1 Chiterlekha Apartment
033-
15- Baluganj Park Road, Calcutta, 2240
INDIA 1678
3. CHANDIGARH (91)-
Sales Depot, Chandigarh Amar 033-229
Building Sector 17-A, Chandigarh, 9138
INDIA

(91)-0172-270 3427

4. HIMACHAL PRADESH Sales

Depot Parwanoo, Sector 2, Kasauli
Road, Parwanoo, (91)-017292-232 654
Himachal Pradesh, INDIA
5. HARYANA

5 Sales Depot, Ambala

a. C/o Milk Plant, Ambala, Haryana, (91)-0171-254 0622
INDIA
5 Sales Depot, Ballabgarh
(91)-
b. C/o Milk Plant, Ballabgarh, Haryana,
0129-224
INDIA
2376
5 Sales Depot, Jind
(91)-
c. C/o Milk Plant, Jind, Haryana,
0129-224
INDIA
7820
5 Sales Depot, Rohtak
d. C/o Milk Plant, Rohtak, Haryana,
INDIA (91)-
5 Sales Depot, Gurgaon
e. Opposite Civil Hospital,Gurgaon
01681-
Haryana, INDIA
5f Sales Depot, Sirsa
. C/o Milk Plant, Sirsa 226 310
Haryana, INDIA
(91)-

01262-

277 360

(91)-0124-222 2284

(91)-01666-245 059

(1.4) Chilling Centers

There are four cities where chilling have been placed, that are Rohtak, Jind,
Ambala, Kurukshetra.
 CHAPTER
3
(2.1) HARYANA DAIRY DEVELOPMENT FEDERATION

CORPORATION INTRODUCTION:-

Haryana Dairy Development federation Corporation

(HDDFC) has been established under Haryana Society Act on 1 st April 1977.
Its authorized financial part capital 2000 lakhs. The main aim of HDDFC is
to develop the economic position of milk productor. Its associate’s societies
purchase the milk by payment of good cost of milk. Milk and milk products
are sold in Vita brand packets. During 2008-09 there is turnover of Rupees
395.45 crores of milk & milk made products. Dairy federations give
the technical suggestion to its association & guide them to able produce
the quality.
PROCESS:
-

Milk societies are working in three phases

(A) At village level, village societies.
(B) At District level, District dairy federation.
(C) At State level, Haryana society federation.

In Haryana there are six Dairy Development Federation

Corporation, Hissar – Jind , Rohtak , Bhalabgarh , Kurukshetra – Karnal ,
Ambala and Sirsa. And every Federation is linked with village dairy
development societie

Every Dairy Federation and Dairy Societies is a unit itself. This

is having its own Directorate. The divisional Directorate elects its President.
The village level society collects the milk from milk producer and sale it to
Dairy Federation.
 WOMEN DAIRY FEDERATION:-

In all over state there are constituted 438 women milk

societies. These societies are purely managed by the women/ladies.

MILK PLANT:-

At present there are five milk plants in Haryana

Corporation. The milk processing capability of which are 4.70
lakhs everyday.

Year of plant Products Everyday handling

cap-
Establishment ability in thousand
lt.

Jind 1970- 71 liquid milk, powder, ghee, cheese, 100.0

Jaljeera, mango drink, curd

Ambala 1973 -74 liquid milk, cheese, curd, lassi, 70.0

Milk cake, SFM (sweet milk)
Rohtak 1976-77 powder, ghee, liquid milk, curd, 100.0
Table butter

Bhalabgarh 1979-80 liquid milk, curd, ghee, cheese 100.0

Sirsa 1996-97 liquid milk, ghee, powder, cheese, 100.0

Milk cake,curd,lassi
(2.2) OTHER FACILITIES TO MILK PRODUCTOR:-

Milk productor are being given cattle feed Vita mineral

mixture, good seeds of forage, medicine for animals on minimum rates.
Beside this Artificial Insemination Center are also being run by
Seeman bank, so that good variety of milk producer animals can be
predicted. Seeman Bank is also giving technical knowledge to peoples
those having animals.

IMPROVEMENT IN QUALITY:-

It is necessary to have good quality milk to produce

good quality product, so that milk is being purchase by the corporation
societies directly from the milk productor and the corporation societies sent
the milk to chilling center and at milk plants to minimum time, so that quality
of milk be maintain. Neat and clean milk canes are being used. The products
are made of as per instruction of Berue of Indian Standard and Aggmark and
then sale in markets. To maintain the quality there established a laboratory at
chilling center and plants. So that the quality of product being maintain at
No.1. Milk plants, Rohtak, Bhalabgarh and Ambala have I.S.O 9002
and I.S15000 certificates.

(2.3) NEW OPPORTUNITIES:-

To achieve the aim the training is being given to all

level. Whether he is worker, society secretary Board member of society &
federation or milk productor itself. This training is given at good institutes
like N.D.D.B, Irma, Hipa etc.The training to the Societies made by ladies is
being given by Seeman Bank of Federation.
INCREASE IN THE COST OF MILK:-

YEAR AVERAGE INCREASE IN PERCENTAGE

COST OF MILK /lt (Rs) OF INCREASE

2003-2004 10.70 5.94

2004-2005 10.96 2.43

2005-2006 10.55 ----

2006-2007 11.09 5.12

2007-2008 13.05 17.67

2008-2009 13.01 6.03

(up to sep)

WEB SITE FACILITY:-

Haryana Dairy Development has started a web site to

benefit the peoples, the code of which is “http/w.w/vtindia.com. Under
which we are receiving international letter.
(2.4) WORKING RESULT (2008-2009 TO 2018-19)

Particular 1.4.04- 1.4.05- 1.4.06- 1.4.07- 1.4.08-

31.3.05 31.3.06 31.3.07 31.3.08 31.3.09

Milk Federations 5 5 5 5 5

Milk plants 5 5 5 5 5

Chilling Center 13 17 23 25 25

Co. societies 2607 2710 2885 3166 3350

Milk collection 918.28 1009.35 1237.09 1355.62 1209.15

(Lakh liter)

Pick milk collection 4.42 5.26 6.23 6.35 5.85

(Lakh liter)

Average milk collect- 2.52 2.77 3.39 3.71 3.30

ion in a day (lakh lt)

No. of putting milk 66747 71885 94632 94672 87688

Average cost of milk 10.7 10.96 10.55 11.09 13.05

Per liter in rupee
 (2.5) ORGANISATION
CHART
Of vita Milk
Plant Sirsa

S.S kohli
C.E.O

Executive assistance Sales manager

Mr. Bansal

H R manager Production manager

Mr. Jaswant

Accounts manager Marketing manager

Mr. Aggarwal

Workers Workers Workers

 CHAPTER
RESEARCH 4
METHODOLOGY

OBJECTIVES

(1)TO provide an analytical overview of Working Capital

Management at the Vita Milk Plant.

(2)TO study & analysis various financial data over a period

Of 2 years

(3) To give suggestion and comments to improve specific .

areas of weakness

DATA COLLECTION

Data is collected by secondary method.

Techniques Used For Analysis

1. RATIO ANALYSIS:

The ratios calculated & analyzed have been broadly divided under four
a) Ratio to analyze the liquidity position.

b) Profitability ratios.

c) Ratio to calculate the efficiency of working capital management.

d) Ratios to analyze the structural health of the divisions’ working

capital structure.
2. FINANCING OF WORKING CAPITAL:

To study the financing of working capital, its components and other short term
sources of financing.

The figure shows that fixed working capital is stable or fixed over time while the
variable working capital fluctuates.
 In Vita permanent working capital is fixed while the variable or
seasonal working capital is applicable.

I OPERATING CYCLE

Operating cycle is the time duration required to convert sales, after

the conversion of resources, into cash. Cash inflows are not certain because
sales & collection which give rise to cash inflows are difficult to forecast
accurately. Cash outflows, on other hand are relatively certain. The firm is,
therefore, required to invest in current assets for smooth, uninterrupted
functioning. It needs to maintain liquidity to purchase raw materials & pay
expenses such as wages & taxes as there is hardly a matching between cash
inflows and cash outflows.

Cash is hold to meet any future exigencies. Stocks of raw material and
work-in-progress are kept to ensure smooth production and to guard against
non-availability of raw material and other components. The firm holds stock of
finished goods to meet the demand of customers on continuous basis
and sudden demand from some customers. Thus, a firm makes adequate
investment in inventories, for smooth, uninterrupted production and sale.

OPERATING CYCLE ANALYSIS

In order to understand the length of time which reports are committed to

various components of working capital, operating cycle analysis has been
done. The operating cycle of a firm begins with the acquisition of raw material
and ends with the collection of receivable. There are four aspects of
operating cycle, which involves commitment of resources, a material stage,
and accounts finished stage.
ANALYSIS OF WORKING CAPITAL FROM DIFFERENT
ASPECTS:

1. COMMON SIZE STATEMENT OF THE UNIT

Particulars 2016-17 %age 2017-18 %age

Current Assets

Closing stock 13224924.63 4.20 14449720.70 5.43

Stock in trade 279136225.16 88.64 219806352.35 82.72

Debtors 3176553.58 1.00 13252051.64 4.98

Cash&Bankbalance 6618167.62 2.10 11341653.11 4.26

Loans&Advances 11533786.52 3.66 5600506.98 2.17

Deposite 1245016.00 .40 1245016.00 0.46

Total 314,934,673.51 100 265,695,300.78 100

Liabilities

Creditors 48741897.29 69.16 46620231.98 77.22

Securities 6926477.48 9.82 6924949.39 11.47

Duties&Taxes 3250982.50 4.61 2245584.13 3.71

Other Liabilities 11551478.74 16.39 4577969.90 7.58

Total 70,470,836.01 100 60,368,735.40 100

2. SCHEDULE OF CHANGES IN WORKING CAPITAL

(Rs. Lacs

Particulars 2016-17 2017-18 Icrease/Decrease

Current Assets

Closing stock 13224924.63 14449720.70 (1224796.07)

Stock in trade 279136225.16 219806352.35 59329872.81

Debtors 3176553.58 13252051.64 (10075498.06)

Cash&Bankbalance 6618167.62 11341653.11 (4723485.49)

Loans&Advances 11533786.52 5600506.98 5433279.54

Deposite 1245016.00 1245016.00 0

Total 314,934,673.51 265,695,300.78 49239372.73

Liabilities

Creditors 48741897.29 46620231.98 44081665.31

Securities 6926477.48 6924949.39 1528.09

Duties&Taxes 3250982.50 2245584.13 1005398.37

Other Liabilities 11551478.74 4577969.90 6973508.84

Total 70,470,836.01 60,368,735.40 10102100.61

3. WORKING CAPITAL

It is clear from the above graph that net working capital of Vita is increasing in
year 2009 is comparison to the year 2008.

II RATIO ANALYSIS

A ratio is an arithmetical relationship between two figures. Financial ratio analysis

is a study of ratios between various items or group of items in financial
statement, turnover ratios have been used for analysis. Ratio analysis is
the powerful tool of financial analysis of accounting data. The relationship
of the figures should be meaningful. Financial analysis & ratio is used as
an index or yardstick for measuring performance of the firm.
 Working capital is that part of total capital which is important in current assets,
to get better insights about the working capital position of the Vita, it is
better to utilize ratio analysis. To analyze the working capital position
I shall here interpret the following ratios of Vita for two consecutive
financial years 2008-09 and 2007-08.

1. Liquidity Ratio

a) Current ratio
b) Quick ratio

2. Activity Ratios
a) Current asset turnover ratio
b) Working capital turnover ratio

1. LIQUIDITY RATIOS: The liquidity aspect is

essential for both the creditors
as well as management of a business enterprise. These ratios are used to judge
a firm’s ability to meet short term obligations. From them much insight can be
obtained to present cash solvency of the firm and its ability to remain solvent in
the event of adversities. We wish to compare short-term obligations with
the short-term sources available to meet these obligations.
 2.

a) Current ratio: - The current ratio is very popular financial ratio measure
as the ability of the firm to meet current liabilities. Current assets are converted
into cash for the payment of current liabilities. Apparently higher the current ratio
the greater the short term solvency, Current ratio of Vita can be shown as under:
-

Current Assets_ _
Current Liabilities

Table showing the Current Ratio

(Rs Lacs)

rticulars 2016-17 2018-19 rrent

assets 314,934,673.51 265,695,300.78 rrent

Liabilities 70,470,836.01 60,368,735.40 rrent

ratio 4.46 4.40

A current ratio of 2:1 is generally considered satisfactory. The current ratio of the unit
is much above the recommended and it ensures the payment of dues in time.
 b) Quick ratio: - Although current ratio is a valuable indicator of liquidity yet it
may lead to misleading conclusion, in case of inventories forms a major
component of current assets, the quick ratio is a fairly stringent measure
of liquidity. It is based on those current assets which are the highly liquid or which
are easily converted into cash. Inventories and prepaid expenses are excluded
from this category, because these are the best liquid component of and has the
ability to pay its current liabilities in time when these are due, the ratio may be
expressed as:-
Quick assets

Current liabilities

Table showing the Quick ratio

(Rs. Lacs)

rticulars 2016-17 2018-19

ick assets 301,709,748.88 251,245,580.08

rrent Liabilities 70,470,836.01 60,368,735.40

ick ratio 4.28 4.16

The standard for quick ratio is 1:1. The ratio of the company is more than standards
considerably.

1. ACTIVITY RATIOS: The funds of creditors and owner are invested

in various kinds of assets to generate sales and profits. Activity ratios measure
how efficiently the firm employs the assets. These ratios arebased on the
relationship between the level of activity, represented by sales and level of
various assets. The important turnover ratios are:
 a) Current assets turnover ratio: The idea of the current assets turnover is
to ascertain the contribution of the current assets to sales. The relationship
indicates efficiency or otherwise of the utilization of current assets to attain the
maximum sales. It is a relative measure as it is compared with previous year.
Lower ratio tells us that the company is employing more current assets for
a given level of sales and vice-versa, the ratio may be expressed as:-

NET Sales

Current Assets

Table showing current assets turnover ratio

(Rs. Lacs)

rticulars 2016-17 2018-19

Sales 955,624,380.97 872,172,299.27

Current assets 14,934,673.51 265,695,300.78

rnover ratio 3.03 3.28

Thus current assets are contributing 3.03 times to sales in 2008-09 as compared to
3.28 in 2007-08.,

Working capital turnover ratio: Net working capital turnover ratio indicates the
velocity of the utilization of working capital. A higher ratio indicates the effective
utilization of working capital and a low ratio indicates otherwise, the ratio may be
expressed as:-
 NET Sales

Net Working Capital

In the JSL, working capital turnover ratio can be made through following table: -

Table showing working capital

(Rs. Lacs)

rticulars 2016-17 2018-19

les 955,624,380.97 872,172,299.27

t working capital 244,463,837.50 205,326,565.38

orking capital turnover ratio 3.90 4.24

The above table shows that the net working capital turnover ratio of the unit
is decreasing which means no better utilization of funds by the company this year
than the previous year.
 2. FINANCING OF WORKING CAPITAL

After a firm has decided upon the level of working capital to be maintained it has
to decide the mode of financing. Financing of working capital:

The sources of finance and form of credit.

a) Sale Realisation
b) Bank credit
c) Trade credit
d) Current provision of non bank short term borrowings
e) Long term sources comprising equity capital and long term borrowings

Source of financé of Vita is Secured Loan.

 CONCLUSION

VITA has opted for a moderate overall working capital policy. This suggests that it
is risk averse. It wants a reasonable profit with a reasonable amount of risk. If it
goes in for an aggressive policy the profits generated could be high but
accompanied with the high level of profits will come high level of risk, which they
feel is not appropriate. Since with this policy the profits being generated
are substantially high a change in the working capital policy is not called for.

Since VITA produces only on orders therefore the inventory requirements for the
following months can be accurately forecasted. Since, the raw material, it should
be stored for following months by analyzing the benefit of storing it, the storage
cost associated with it, scrap prices, its availability and also further requirements
of the company as per its orders. Every month if forecast is made accordingly
and order is placed, it would help in bringing down the time required in the raw
material storage period.

Company doing well by efficiently employing funding of creditors.

 BIBLIOGRAPHY

Investopedia.com

www.vitaindia.com

Study finance.com

Google.com

Vita milk plant sirsa.