Anoop t6 Main Project

A Study on Cash Management at JK Tyres Industries PVT LTD
A STUDY ON CASH MANAGEMENT AT JK TYRES INDUSTRIES

PVT LTD
PROJECT REPORT
Submitted By
ANOOP R KRISHNAN
( Reg No: MZC18MBA08)
Under the guidance of
Mr.VISHNU.P
(Assistant professor , MBA department)
In partial fulfilment of the requirements for the award of the Degree of
MASTER OF BUSINESS ADMINISTRATION
of
A P J Abdul Kalam Technological University, Trivandrum
SCHOOL OF BUSINESS MANAGEMENT
MOUNT ZION COLLEGE OF ENGINEERING KADAMMANITTA
JANUARY 2018-2020
MOUNT ZION SCHOOL OF BUSINESs MANAGEMENT,KADAMMANITTA 1

DECLARATION
I undersigned, hereby declare that the project titled “A STUDY ON CASH
MANAGEMENT AT JK TYRES INDUSTRIES PVT LTD submitted in partial fulfilment
for the award of Degree of Master of Business Administration of A P J Abdul Kalam
Technological University is a bonafide record of work done by me under the guidance of
VISHNU.P, Assistant Professor, Mount Zion School of Business Management,
Kadammanitta. This report has not previously formed the basis for the award of any degree,
diploma, or similar title of any University.
Date:
Place ANOOP R KRISHNAN

ACKNOWLEDGEMENT
Through this acknowledgement I express my sincere gratitude towards all those people who
helped me in this project, which has been a learning experience.
This space wouldn’t be enough to extend my warm gratitude towards VISHNU .P, Assistant
professor, Project Guide, School of Business Management, Mount Zion College of
Engineering, Kadammanitta for her efforts in coordinating with my work and guiding in right
direction.
I escalate a heartfelt regards to Prof. Dr. T.C Varghese, Director, School of Business
Management, Mount Zion College of Engineering, Kadammanitta for giving me the essential
hand in concluding this work.
It would be injustice to proceed without acknowledging those vital supports I received from
my beloved classmates and friends, without whom I would have been half done.
I also use this space to offer my sincere love to my parents and all others who had been there,
helping me walk through this work.
ANOOP R KRISHNAN

TABLE OF CONTENTS
Sl.No. Topics Page No
1 INTRODUCTION
1.1 Background of the Study 8
1.2 Need and Significance of the study 9
1.3 Statement of the problem 9
1.4 Objectives of the study 10
1.5 Scope of the study 10
1.6 Limitations of the study 10
1.7 Organization of the report 11
2 PROFILES
2.1 Industry Profile 13
2.2 Company Profile 18
3 LITERATURE REVIEW 23
4 THEORETICAL FRAMEWORK 27
5 RESEARCH METHODOLOGY 35
5.1 Research Design 36
5.2 Sources of Data 36
5.3 Tools used for the assessment 37
6 DATA ANALYSIS 43
6.1 Cash flow statement 44

6.2 Ratio analysis 52
6.3 Comparative balance sheet 63
7 FINDINGS 74
8 SUGGETIONS 77
9 CONCLUSION 79
REFERENCE 80

LIST OF TABLES
Table Description Page No.

no
6.1.1 Table Showing Cash flow statement from 2016 44
6.1.5 Table Showing The Current Ratio 52
6.1.6 Table Showing The Quick Ratio 54
6.1.7 Table Showing The Absolute Liquid Ratio 55
6.1.8 Table Showing The Gross Profit Ratio 56
6.1.9 Table Showing The Net Profit Ratio 57
6.1.10 Table Showing stock turnover Ratio 58
6.1.11 Table Showing fixed asset turnover ratio 59

6.1.12 Table Showing Capital Turnover Ratio 60
6.1.13 Table Showing The Working capital turnover Ratio 61
6.1.14 62
Table Showing The fixed asset propriters fund ratio
6.2 Table Showing The Comparative Balance Sheet Analysis Of 63,64
2015 & 2016
6.2.1 Table Showing The Comparative Balance Sheet Analysis Of 65,66
2016 & 2017
2017 & 2018

2018 & 2019
6.3 Table Showing Trend Analysis 71

LIST OF CHARTS
Chart No. Description Page No.
6.1.1 Chart Showing The Current Ratio 53
6.1.2 Chart Showing The Quick Ratio 54
6.1.3 Chart Showing The Absolute Liquid Ratio 55
6.1.4 Chart Showing The Gross Profit Ratio 56
6.1.5 Chart Showing The Net Profit Ratio 57
6.1.6 Chart Showing stock turnover Ratio 58
6.1.7 Chart Showing fixed asset turnover ratio 59
6.1.8 Chart Showing capital turnover Ratio 60
6.1.9 Chart able Showing The Working capital turnover 61

Ratio
6.1.10 Chart Showing The Fixed Assets to Proprietors 62

Fund Ratio
6.3.1 Chart Showing the trend analysis 72
1.1 BACKGROUND OF THE STUDY

Cash is the important current asset for the operations of the business. Cash is the basic input
needed to keep the business running on a continuous basis; it is also the ultimate output
expected to be realized by selling the service or product manufactured by the firm. The firm
should keep sufficient cash, neither more or less. Cash shortage will disrupt the firm’s
manufacturing operations while excessive cash will simply remain idle, without contributing
anything towards the firm’s profitability. Thus a major function of the financial manager is to
maintain a sound cash position.
Cash management is the efficient collection, disbursement and investment of cash in an

organization while maintaining the company’s liquidity. In other words, it is the way in which
a particular organization manages its financial operations such as investing cash in different
short-term projects, collection of revenues, payment of expenses and liabilities while ensuring
it has sufficient cash available for future use.
The project is entitled as A Study on Cash Management at JK Tyres Industries PVT LTD.
Which is a leading automotive tyre manufacturer in India. JK TYRES and industries is the
flagship company under the umbrella of JK organisation. The company mainly develops
manufactures markets and distributes automotive tyres, tubes, .and mud flap. The company
has manufacturing plants located in India and Mexico with world wide distribution
The project study was to understand and diagnose the information contained in cash
management with a view to judge the profitability and financial soundness of the firm and to
make forecast about the cash inflow and outflow of the firm. Cash management is the process
of identifying the relationship between profitability and liquidity of the firm. The three aims
in aspects of cash management are profitability, liquidity and solvency. It is their overall
responsibility to see that the resources of the firm are used most effectively and efficiently
that the firm’s cash management condition is in average position.
1.2 NEED AND SIGNIFIACANCE OF THE STUDY

1. Forecasting cash position: Forecasting the short-term and long-term cash position is
key for corporates. Having a plan for idle cash at an early stage and the need for safety
buffers compensating for forecast errors is crucial. Additionally, this helps a company to
make reliable projections on future funding requirements.
2. Maintaining less idle cash: Visibility in terms of cash balances becomes a key driver to
reduce idle cash. Leaving cash in a local account reduces return and does not make the
cash actively available to the group, curtailing optimal utilisation of available liquidity,
thereby increasing the utilisation of credit lines.
3. Concentration of collected funds: Consolidation of cash helps a company to have better
cash control and cash position visibility. The effect is that surplus liquidity is bundled
and required capital is internally financed to the maximum extent possible. This,
therefore, reduces the corporates’ external interest expense.
4. Efficient collection of cash inflows and outflows: Effective payment terms and
collection procedures, lower inventories, lower replenishment, and longer credit from
suppliers are prerequisites for corporates better cash inflow/outflow management.
1.3 STATEMENT OF THE PROBLEM
The study entitled “A study on cash management JK Tyres Industries PVT LTD is an
attempt to evaluate the cash management of the organization. The importance of Cash
management in any industrial concern cannot be overstressed. Under the present inflationary
condition, management of cash is perhaps more important than even management of profit
and this requires greatest attention and efforts of the finance manager. It needs vigilant
attention as each of its components require different types of treatment and it throws constant
attention on exercise of skill and judgement, awareness of economic trend etc due to urgency
and complicacy the vital importance of cash. The problem of managing cash has got the
recognition of separate entity, so its study and management is of major importance to both
internal and external analyst to judge the current position of the business concern.
1.4 OBJECTIVES OF THE STUDY

1. To forecast the cash position of the company for the future period of time.
2. To analyse the liquidity position of the company
3. To analyse the cash position and efficiency of the company
4. To analyse the relationship between cash and current assets & cash and inventory of the
company.
5. To determine the optimum cash balance of the company under uncertainty.
1.5 SCOPE OF THE STUDY

The study of cash management analysis is to identify and evaluate cash inflow and
outflow of organisation to ascertain the financial performance and its financial position.
Ensuring the organization has sufficient cash resource to function and grow. The organization
is able to achieve its goals by doing this. This effective fund management will lead to achieve
stability and long term nature. It consists broadly of that portion of assets of a business which
are used in or related to its current operation. The study allows me to analyse the strength,
weakness, opportunities and threats in the aspects of the organization. It avail them the first
hand information on the various levels in an organization and their structural formation.
1.6 LIMITATIONS OF THE STUDY

• Time available for the project work is limited to one month and it will affect the entire
study.
• Entire Study depends upon the secondary data like Annual Reports
• The study has taken into account only five years for analysis.
• It has always not been possible to get the full information.
1.7 ORGANISATION OF THE REPORT

CHAPTER 1: INTRODU TION

It presents the introduction which includes background of the study, need and
significance of the study, statement of the problem, objective of the study, scope of the study, and
limitation of the study
CHAPTER 2: PROFILE
It conceptualizes the profile. It includes industry and company profile.
CHAPTER 3: LITERATURE REVIEW

It presents literature review. It is a text of a scholarly paper which includes the current
knowledge including substantive finding relate to the topic.
CHAPTER 4: THEORETICAL RAMEWORK
It covers the "Theoretical Framework of the portfolio management of JK Tyres Which
explains the structure that can hold or support a theory of a research study. The theoretical
framework introduces and describes the theory that explains why the research problem under
study exists.
CHAPTER 5: RESEARCH METHODOLOGY
It discusses research methodology which is a way to systematically solve research
problem. It includes "research design, primary and secondary data, population, sample design,
sampling method, method of data collection, data analysis techniques."
CHAPTER 6: DATA ANALYSIS
It presents data analysis, which is a process of inspecting, cleansing, transforming, and
modeling data with the goal of discovering useful information and supporting decision making.
CHAPTER 7: FINDINGS
It highlights the findings derived from responds of the respondents.
CHAPTER 8: RECOMMENDATIONS
It presents recommendations based on the findings evolved from the research work.
CHAPTER 9: CONCLUSION
It recapitalizes conclusion of the study

CHAPTER – 2
PROFILE
2.1 INDUSTRY PROFILE

Indian tyre industry has been reporting good growth figures over the past few years,
spurred by the growing passenger vehicle and two-wheeler market. It has emerged as one of
the most competitive markets in the world and with the emergence of new technology, ultra-
modern production facilities and availability of raw materials, the sector is poised to grow
further. Major technological changes have taken place in tyre design from conventional bias
or diagonal ply from the past to the current steel radial tyres, tubeless tyres, with low aspect
ratio tyres, puncture resistant tyres etc. Testing standards have also evolved accordingly to
ensure high performance, mileage, safety, reliability and longevity of the tyres. The Indian
tyre industry has been quick in adopting the latest technology trends through foreign
collaborations and tailoring these to Indian needs. The manufacturers are also investing in the
development of ‗green tyres‘ and in capacity expansion for radial tyres. Innovative
technologies like self-inflation and run flat tyres (RFT) are also gaining popularity in the
Indian market. The market for radial tyres in the commercial 64 vehicles segment has seen
rapid growth in recent times. As per ATMA, 2011-12 report, in the medium and heavy
commercial vehicle segment the current adoption levels of radial tyres is around 18 per cent.
In the light commercial vehicle segment, it is estimated to be 20 per cent. The passenger car
segment switched to radial tyres earlier, and within a short period of time, penetration levels
reached almost 98 per cent . This segment will surely be the focus for Indian tyre
manufactures as it is expected to grow at about 15 per cent over the next few years to Rs 393
billion by 2015.
GLOBAL SCENARIO
The global tire market was worth 3.1 Billion Units in 2019, growing at a CAGR of
4.3% during 2011-2018. A tire surrounds a wheel’s rim to transfer the vehicle’s load on the
surface and offers a strong grip between the road and the vehicle. It is a flexible and robust
structure that is manufactured using various materials such as wire, fabric, natural rubber,
carbon black and synthetic rubber. Tires are strong and flexible and help absorb vibrations.
Since they improve the overall performance of the vehicle, they are widely utilized in buses,
cars, trucks, bikes, bicycles, wheelchairs, lawn mowers, forklifts, shopping carts and
airplanes.Increasing sales of passenger and commercial vehicles in developing countries and
a strong demand for replacement tyres is providing significant opportunities for players in the

automotive tyre industry. It has emerged as one of the most competitive markets in the world
and with the emergence of new technology, ultra-modern production facilities and
availabilityof raw materials, the sector is poised to grow further. 43 The passenger car
segment is forecast to witness the highest growth over the next five years. Regionally, the
APAC region is anticipated a leading growth during the forecast period. It is expected to see
the strongest growth in rubber demand, reflecting the strength of the tyre market in China,
India, Thailand and Vietnam. The global automotive tyre market is highly consolidated and
consists of passenger car tyres, heavy truck tyres and other segments. North America
dominates this market with approximately 30 per cent of the total global demand for tyres.
Fuel efficiency and safety concerns are key factors influencing the purchase of tyres in
developed markets, which are transitioning into higher-performance tyres. Japan and Europe
have implemented stringent tyre performance criteria (covering rolling resistance related fuel
saving, wet grip-related braking distance and noise reduction). Europe anticipates a 20
million tonnes reduction in traffic-related carbon dioxide emissions per year due to enhanced
tyre performance The global tyre market size is estimated to reach $276 billion by 2017,
growing 7.9 percent annually. The rise in demand of tyres will be driven by the emerging
economies in the Asia-Pacific region, especially China and India. However, improved
economic conditions in the developed economies of North America and Western Europe will
also accelerate such demand. These developments are likely to take global tyre demand to 2.9
billion units by 2017, a growth of 4.3 percent every year. Motor vehicles capture the largest
proportion of tyre demand and are likely to form about 73 percent of the global tyre demand
by 2017.The Asia-Pacific region is likely to account for almost two-thirds of the global tyre
growth till 2017. China is the largest as well as the fastest growing tyre market globally.
Japan and India are also among the major tyre markets. It is expected that India will
outperform Japan in terms of market size, owing to the strong demand for tyres by the end of
2017. The North American / Western European regions are forecasted to grow at around 2
percent annually through 2017. An improved economic environment will provide thrust to
vehicle demand and, in turn, to tyre demand. However, the delayed replacement of personal
vehicles could limit such growth. With 13 percent of the global pie, the US is likely to
continue to 44 hold the second rank globally in terms of the tyre market in 2017. Transport
sector play a pivotal role in the development of an economy. The development role it
undertakes determines the pace of development of the economy.Hence the stability of tyre
industry is pivotal for the development of the service sector. The recent global financial crisis

has triggered fall of many economies, contributed by financial losses of various industries. It
implies that the economic development involves investment in the various sectors of
economy.
The tyre industry create the financial sourcesfrom the people and mobilize saving for
investment in the industrial projects of tyre industry. Tyre industry provides various types of
services to customers in return for payment on one form or another. They have been existence
in India for the past several decades. Historically, they were started and developed by the
industrialist/ businessmen in the metropolitan cities and port towns. Tyre industry was
therefore concentrated mainly in big cities. Within these big cities also, it was mainly the well
placed traders, businessmen and the industrialist who engaged small, medium and long term
business activities. Various factors such as rapid urbanization, changing lifestyles, mounting
income levels and rising population have led to an increase in the sales of both commercial
and passenger vehicles. Strong growth in the automotive industry is directly influencing the
sales of tires across the globe. Moreover, increasing investments in the construction sector,
the thriving tourism industry and rising vehicle motorization rates are positively impacting
the production of commercial vehicles, thereby boosting the growth of the market. Apart
from this, manufacturers are now engaging in the development of products such as ecological
tires, flat run tires and nitrogen-based tires that are environment-friendly. For instance, they
are employing orange peel extracts in the production to diminish petroleum usage.
INDIAN SCENARIO
The Indian Tyre Industry is an integral part of the Auto Sector – It contributes to ~3%
of the manufacturing GDP of India and ~0.5% of the total GDP directly. So, let’s understand
the dynamics of the Tyre Industry in India. Indian tyre industry has almost doubled from ~Rs
30,000 crores in 2010-11 to ~Rs 59,500 crores in 2017-18 of which 90-95% came from the
domestic markets. The top three companies – MRF, Apollo Tyres and JK Tyres have ~60%
of the market share in terms of revenue. In terms of segmentation tyres can be divided in two
ways – based on end market and based on product.
As per www.ffymag.com, (July, 2013) report, in 2011-12, the Indian tyre industry recorded a
turnover of Rs 43000 crore, producing 1254 lakh tyres , amounting to 15 million metric tons.
Moreover, it has recorded 958.35 lakh tube production (table- 68 3.3). Tyre export realization
by value is Rs. 4209 crore with steady CARG 15% . which accounts 79.2 lakh tyresin 2011 –
12.India has 39 listed tyre manufacturing companies (table-3.1), of which the top 10 account
for over96 per cent of the country‘s total tyre production (www.ffymag.com, July2013). They
are Apollo Tyres Ltd., MRF India Ltd., J K tyres and` Industries Ltd., Birla Tyres Ltd.
(Kesoram Group of Industries), CEAT Ltd., Balkrishna Tyre Ltd., Good-Year India Ltd.,
Falcon Tyres Ltd., TVS Srichakra Ltd., Bridgestone India Ltd. The tyre export market in
India is valued at Rs 3.6 billion. While the tyre industry is largely dominated by the organized
sector, the unorganized 69 sector dominates the bicycle tyre market. With the focus on
providing better products and services, Indian tyre manufacturers are setting up well
equipped in-house research and development (R&D) centres with emphasis on developing
cutting-edge technology for new compounds, new designs for different segments and new
reinforcement materials. Cost optimization for quality improvements and orientation towards
changing customer requirements are also areas of research. The concept of ‗green tyres‘ is
now emerging as a benchmark for the industry‘s competitiveness. Though the technology has
been around since the 1990s, due to higher manufacturing costs, it was put on a backburner
until recently. Green tyres provide numerous benefits over normal tyres, including lower fuel
consumption. Indian tyre industry has been reporting good growth figures over the past few
years, spurred by the growing passenger vehicle and two-wheeler market. It has emerged as
one of the most competitive markets in the world and with the emergence of new technology,
ultra-modern production facilities and availability of raw materials, the sector is poised to
grow further. Major technological changes have taken place in tyre design from conventional
bias or diagonal ply from the past to the current steel radial tyres, tubeless tyres, with low
aspect ratio tyres, puncture resistant tyres etc. Testing standards have also evolved
accordingly to ensure high performance, mileage, safety, reliability and longevity of the tyres.
The Indian tyre industry has been quick in adopting the latest technology trends through
foreign collaborations and tailoring these to Indian needs. The manufacturers are also
investing in the development of ‗green tyres‘ and in capacity expansion for radial tyres.
Innovative technologies like self-inflation and run flat tyres (RFT) are also gaining popularity
in the Indian market
STATE SCENARIO

The rubber industry in India dates back to 1921 when the first rubber goods
manufacturing plant was established in Kolkata and since then the rubber industry has been
growing and expanding. After 1947, that is, the year of India’s independence, the quantity
and range of rubber products increased and slowly the industry saw technological evolution
as well. Export front of the industry has seen tremendous growth in the last few years along
with covering all kinds of domestic demands. The factors responsible for the exponential
growth in 21st century are vast internal market, rapid industrialisation, on-going economic
reforms, and improved living standards of the masses. The tyre sector produces all types of
auto tyres, conventional & radial tyres and exports to foreign nations. The non-tyre sector
comprises of different sized units that produce hi-tech industrial items. The productivity of
rubber in Kerala is the highest in the world. According to Rubber Statistics 2006 published by
the Rubber Board of India, the mean annual productivity is 1726 kgs/ha, which is highest in
the world. For a long time now, domestic prices of rubber are much lower than international
prices. India has signed the ASEAN agreement. As per the industrial clauses of the project,
the Union Government will be compelled to take away the import duty of the rubber. As
Kerala contributes to the major chunk of the rubber production, Kerala will be compelled to
face competition from countries like Malaysia. Key tyre categories tariff to be brought down
to 5percent by 2016. Select raw materials of tyre industry eligible for Nil/Concessional
Customs duty from 2013 onwards. Indian 44 tyres have good acceptance in global market.
The Compound Average Growth Rate ( CAGR) of tyre exports in last one decade has been 8
percent. Export to highly quality conscious US market is 17 percent Tyre Industry is raw-
material intensive. Raw materials cost is 63% of industry turnover and 72% of production
cost. Obviously, the foremost among the raw materials is rubber of which 80% is natural
rubber and 20% is synthetic rubber. Thus, tyre and rubber market are totally inseparable.
Tyre Industry is not very price sensitive.

COMPANY PROFILE
HISTORY OF THE COMPANY
JK Organization owes its name to Respected Late Lala Juggilal Singhania, a

dynamic personality with a broad vision. Inspired by the cause of the Swadeshi movement of
Mahatma Gandhi, and driven by the zeal to set up an Indian enterprise, Lala Kamalpat
Singhania founded J.K. Organization in the 19th century ushering in a new industrial era in
India.
The process of industrialization and diversification was worthily and successfully carried on
by Lala Kamalpat three illustrious sons, Sir Padampat, Lala Kailashpat and Lala
Lakshmipat Singhania, aided in no small measure by the late Lala Gopal Krishna son of Sir
Padampat.
JK Tyre, a Division of JK Industries is the flagship company under the umbrella of JK

Organization. JK Industries (JKI) is under the able leadership of Shri. Hari Shankar
Singhania, is one of the leading automotive tyre manufacturers in India.
The advent of JK Organization on the industrial landscape of India almost synchronizes with
the beginning of an era of industrial awareness - an endeavor for self reliance and the setting
up of a dynamic Indian industry. This was way back in the middle of the 19th century. And
the rest that followed is history.
JK Organization has been a forerunner in the economic and social advancement of India. It
always aimed at creating job opportunities for a multitude of countrymen and to provide high
quality products. It has striven to make India self reliant by pioneering the production of a
number of industrial and consumer products, by adopting the latest technology as well as
developing its own know-how. It has also undertaken industrial ventures in several other
countries.

ABOUT THE COMPANY
JK Tyre was founded in 1977. It built its first plant at Jaykaygram near Udaipur in
Rajasthan. This was set up in technical collaboration with General Tire International Co,
USA. Since then, the wheels of JK Tyre have moved only forward. It now has four plants at
Kankroli (near Udaipur), Banmore (near Gwalior) and two at Mysore. To create its mark on
the global highways, the company forged a technical partnership with Continental AG of
Germany, the fourth largest tyre maker in the world. To keep pace with the market demand
as well as technological leadership in Indian market JK Tyre took over ailing Vikrant Tyres
in 1997 and turned it around in ten months. The takeover brought the company to the
forefront of the bus and truck segment, giving it the largest presence with a 25.3% share.
J.K. Industries and Vikrant Tyres Limited are the only tyre companies in India to have
received all three ISO 9001, QS 9000 and ISO 14001 certificates. This indeed is a true
reflection of their commitment to stringent quality.
Also, JK Tyre is the largest exported tyre brand from India. It was awarded the CAPEXIL's
Highest Export Award for 1997-97 by FIEO. It enjoys preferred premium brand status in
Truck Bias market in USA and across many markets in Africa, Middle East and South East
Asia.
JK Tyre & Industries Ltd is a leading tyre manufacturer in India and amongst the top 25
manufacturers in the world with a wide range of products catering to diverse business
segments in the automobile industry. JK Tyre is the only tyre manufacturer in India to be
included in the list of Super brand in 2017, the sixth time the honor has been conferred upon
the company
JK Tyre has global presence in 100 countries across six continents, backed by production
support from 12 plants - 9 in India and 3 in Mexico. Currently, the capacity across all its
plants is about 35 million tyres per annum. In April 2016, JK Tyre acquired Cavendish India
Limited from Birla Tyres. While acquisition added three modern plants to its portfolio taking

the total count to 12, it helped the tyre major foray into the two/three wheeler segment as
well. In 2018, the company inaugurated its state-of-the-art Raghupati Singhania Centre of
Excellence (RPSCOE) at Mysore.
Pioneers of radial technology, JK Tyre produced the first radial tyre in 1977 and is currently
the market leader in Truck Bus Radial segment. With over three decades of technological
innovation, JK Tyre offers tyre for entire range of passenger and commercial vehicles,
starting from a 3 kg two-wheeler tyre to a 3.5 ton OTR tyre.
JK Tyre & Industries Ltd has a strong network of 4000 dealers and over 500
dedicated Brand shops called as Steel Wheels and Xpress Wheels providing complete
solutions to its customers.
COMPANY LOGO
PRODUCTS & SERVICES
JK Tyre has been at the forefront of the radial revolution in India. It is the first tyre
manufacturer in the country to introduce Radial Tyres. This has resulted in development of
many innovative products from the most modern, technologically advanced production
facilities, some of which are as follows:
• First manufacturer to launch "T" rated tyres in 1994-Ultima.

• First manufacturer to launch "H" rated tyres in 1996-97-Ultima 210 H.
• First manufacturer to launch Dual Contact High Traction Steel radials-
Aquasonic.
• First manufacturer to introduce India's first range of eco-friendly coloured
tyres.
•
JK Tyre is the preferred OEM supplier to India’s leading automobile manufacturers like
Maruti, Udyog Ltd., Telco, Mahindra & Mahindra, Hindustan Motors, Ashok Leyland,
Swaraj Mazda, Eicher, Escorts, Bajaj
Tempo, L & T, John Deere and New Holland, thus showcasing the high levels of quality
associated with its products and services.
JK Tyre has taken the lead in redefining tyre retailing in India. It has set up more than 100
exclusive ‘One Stop Tyre Sales and Service Center’ - J K Steel Wheels.
It is also credited with the launch of India’s first and unique ‘Dial-a-Tyre’ service wherein the
customers can get tyres delivered and fitted at their doorsteps.
J JK’s offering under passenger car segment (radial tyre) consists of ULTIMA, ULTIMA
XPS, ULTIMA-XS, ULTIMA-XP, ULTIMA ROYALE, ULTIMA 210S, TORNADO,
BRUTE, BRUTE 4X4, RALLY.
Car Bias consists of CAPTAIN, JET DRIVE, JET DRIVE XS, and JET DRIVE DX.
JK Tyres are also available for the entire range (various models and variants) of automobile
manufactured by the followning manufacturers namely: Maruti, Daewoo, Fiat, Premier
Padmini, Ford, Hindustan Motors, Mitsubishi, Honda Motors, Opel, Hyundai Motors, Skoda
Auto, Toyota Motors, Mahindra & Mahindra and Tata Motors in India under passenger car
segment.
VISION & MISSION
Vision
• To be amongst the most trusted companies with a global tyre brand
Mission
 Be a Customer Obsessed Company - Customer First 24x7
 Most profitable tyre company in india - deliver enhanced value to all stakeholders
 No. 1 tyre brand in india and amongst leading tyre brands globally
 Lead with premium products through technological edge

 Enhance global presence through acquisitions/JV/strategic partnerships
 Be a socially responsible corporate citizen
 Be a learning & innovative organisation with a motivated
CORE VALUES
Excellence comes not from mere words or procedures. It comes from an urge to strive and
deliver the best. A mindset that says, when it is good enough, improve it. It is a way of thinking
that comes only from a power within.
• Caring for people
• Integrity including intellectual honesty, openness, fairness and trust
• Commitment to excellence
MAJOR COMPETITORS
• Apollo
• Bridgestone
• Michelin
• MRF
• Goodyear
• Ceat

CHAPTER – 3
LITERATURE REVIEW

3.1 REVIEW OF LITERATURE

Literature Review is the documentation of a comprehensive review of the published and
unpublished work from secondary sources of data in the areas of specific interest to the
researcher. The main aim is to find out problems that are already investigated and those that need
further investigation It is an extensive survey of all available past studies relevant to the field of
investigation. It gives us knowledge about what others have found out in the related field of study
and how they have done so. A literature review is an evaluation report of information found in the
literature related to your selected area of study. The review should describes summaries, evaluate
and clarify this literature.
Zimmerer, 2008 in his article entitled to “Cash Management and Liquidity”.

Volume5 stated that cash management is the process of forecasting, collecting, disbursing,
investing, and planning for cash a company needs to operate smoothly. They further added
that cash management is a vital task because it is the most important yet least productive asset
that a small business owns. A business must have enough cash to meet its obligations or it
will be declared bankrupt. Creditors, employees and lenders expect to be paid on time and
cash is the required medium of exchange
Oliver Kim (2007) in his article entitled to “The Value Relevance of Earning and
Prediction of One Year- ahead Cash Flow” stated that tested the validity of using one
year ahead cash flow prediction as a substitute for the value relevance test of earning and
this study searched about cash flow prediction but not mentioned anything about accrual
accounting. Therefore, finder found the ability of earnings to predict one year-ahead cash
flow has increased over the recent decades, in contrast to the evidence that both factors
that the cash flow prediction test is a poor substitute for the value relevance test of
earning.
Hackel, Livant and Rai (1994) in their article entitled to “The Free Cash Flow/ Small-
Cap Anomaly”, Financial Analysts Journal, Vol. 50, no 5,pp.33-42
found out without free cash flow, it is difficult for a business to pursue for new
opportunities, acquire other business or pay dividends. Free cash flow analysis help
managers to identify the capital available for reinvestment in enhancing the company’s
growth, analyzing free cash flow can make the firms with a high ability to grow. In
addition to reinvestment, the company can distribute free cash flow to pay dividends to

shareholders. As a result, the free cash flow may be considered to assess the ability of
companies to pay dividends on common stock.
Larry N. Langemeier Danny Klinefelter and Dean Mccorkle (2007) in their article
entitled to “Cash Flow Projection for Operation Loan Determination “ state that
reported data for estimating of cash flow may come from historical records. Such as, tax
returns, and other applicable information you may have. A cash flow forecasting is made
periodically- monthly- bimonthly, quarterly or every year (yearly) and this type of cash
flow forecasting are used on a monthly basis. The annual forecasting columns have to fill
in first, and then only annual forecasting may be allocated to the various months.
Akinyomi Oladele John (2014) in his article entitled to “The effect of cash
management on firm profitability of Nigerian manufacturing firms”, the success of
any business venture is predicated on how the management has planned and
controlled its cash flows. Cash shortage will disrupts the firm's smooth operation and
can even lead to insolvency. Excessive cash will tie down unnecessarily long-term
capital with a result that the return on capital employed will be low. Thus, cash
management assumes more significance than other current assets because cash is the
most important asset that a firm holds. However, literature revealed that only limited
studies have investigated the relationship between cash management and profitability
in Nigeria. Therefore, this study examined the relationship between cash management
and profitability in the Nigerian manufacturing firms. Correlation and regression
analysis were carried out. The results reveal a positive and significant relationship
between CCC and ROE on one hand and a non significant negative relationship
between CCC and ROA. From the results of the study, it is recommended that future
researchers should expand the scope of their studies to include multiple sectors of the
economy.
Davidson et al, 1999, in their article entitled “cash management And corporate
profitability” article p252-258 stated that cash is any medium of exchange, which is
immediately negotiable. It must be free of restriction for any business purpose. Cash has to
meet the prime requirements of general acceptability and availability for instant use in
purchasing and payment of debt. Acceptability to a bank for deposit is a common test applied
to cash items.

This is a process of Planning, controlling, and accounting for cash transactions and cash
balances. It is channelling available cash into expenditures that enhance productivity, directly
or indirectly.
Cheung, Krishnan, and Min (1997) in their article entitled to “Accounting Horizons”
Vol.11, no,4, pp 1-15 is stated that investigated the incremental information of deferred
income tax; First, they tested the ability of deferred tax to predict future tax payment, and
predicted future operating cash flows. They examined the predictive ability by adding the
deferred tax variable into model. In their study, operating cash flows are an independent
variable, and were calculated by operating income before depreciation, minus interest
expense, current portion of income tax expense and increase in net working capital other
than cash and securities, net of short-term debt. This test showed that the addition of the
deferred tax variable improves the prediction of future cash flow. In particular, it is more
useful if companies have large amounts of deferred tax.
. Dechow (1994) ) in his article entitled to “Accounting earning and cash flow as
measure of firm performance: The role of accruals: journal of accounting and economics,
“ Vol. 18,no,1,pp. 3-42 recognized in the accrual accounting process, the timing of cash
flow recognition is ignored in recognizing earnings that is, accrual accounting recognizes
events in which related cash flows occur in previous or subsequent accounting periods.
Earning is measured by an excess of revenue over expenses in each period of recording.
Accrual accounting records the purchase of assets or resources used to operate a business
and the provision of goods and services made by a company during a period which does
not match the cash receipts and payments, by recognizing revenues and related increases
in assets and expenses and related increases in liabilities, for amounts expected to be
received or paid, usually in cash in the future.

CHAPTER 4
THEORETICAL FRAMEWORK

4.1 THEORETICAL FRAMEWORK
Cash is the one of the current assets of a business. It is needed at all times to keep the
business going. A business concern should always keep sufficient cash for meeting its
obligations. Any shortage of cash will hamper the operations of a concern and excess of it
will be unproductive. Cash is the most unproductive of all the assets. While fixed assets like
machinery, plant etc. and current assets such as inventory will help the business in increasing
its earning capacity, cash in hand will not add anything to the concern. It is in this context that
cash management has assumed much importance. Cash itself does not produce goods or
services. It is used as a medium to acquire other assets. It is the other assets which are used in
manufacturing goods or providing service. The idle cash can be deposited in bank to earn
interest. A business has to keep required cash for meeting various needs. The assets acquired
by cash again help the business in producing cash.
CASH MANAGEMENT
Cash management refers to a broad area of finance involving the collection, handling,
and usage of cash. It involves assessing market liquidity, cash flow, and investments.
In banking, cash management, or treasury management, is a marketing term for certain
services related to cash flow offered primarily to larger business customers. It may be used to
describe all bank accounts (such as checking accounts) provided to businesses of a certain
size, but it is more often used to describe specific services such as cash concentration, zero
balance accounting, and clearing house facilities. Sometimes, private banking customers are
given cash management services.
Financial instruments involved in cash management include money market funds,
treasury bills, and certificates of deposit.
Definition
Cash management refers to the collection, handling, control and investment of the
organisational cash and cash equivalent, to ensure optimum utilisation of the firm liquid
resources. Money is the lifeline of the business, and therefore it is essential to maintain a
sound cash flow position in the organisation.

4.2 OBJECTIVES OF CASH MANAGEMENT
1. To making payments according to payments schedule:
Firm need cash to meet its routine expenses including wages, salary, taxes etc.
Following are the main advantage of adequate cash-
• • To prevent firm from being insolvent.
• • The relation of firm with bank does not deteriorate.
• • Contingencies can be met easily
• It helps firm to maintain good relations with suppliers.
2. To minimize cash balance:

The second objective of cash management is to minimize cash balance. Excessive amount of cash
balance helps in quicker payments, but excessive cash may remain un used & reduces
profitability of business. Contrarily, when cash available with firm is less, firm is unable to
pay its liabilities in time. Therefore optimum level of cash should be maintain.
3.Cash mobilization
Get the cash in as fast as you can.
4. Controlled Disbursement
Release the cash at the last possible moment.
4.3 IMPORTANCE OF CASH MANAGEMENT

The cash that a company generates from its operations is tied to its core business activity and
provide the best opportunities for cash flow management. As well, it is important not to have
too much cash tied up in inventories, but to have on hand just enough inventories for the
immediate needs of the business.
1. Cash management ensure that the firm has sufficient cash during peak time for purchase and
for other purpose.
2. Cash management helps to meet obligatory cash out flows when they fall due.
3. Cash management assists in planning capital expenditure projects.

4. Cash management helps to arrange for outside financing at favourable terms and conditions, if
necessary.
5. Cash management helps to allow the firm to take advantage of discount, special purchases and
business opportunities.
6. Cash management helps to invest surplus cash for short or long-term periods to keep the idle
funds fully employed.
4.4 FEATURES OF CASH MANAGEMENT

1. Cash planning (estimate cash surplus/deficit through cash budget).
2. Cash flow management (cash inflow and cash outflow).
3. Determining of optimum cash balance (cost of excess cash and danger deficiency will match).
4. Investment of surplus cash (properly invested I marketable securities, to earn profits).
4.5 CONCEPT OF CASH MANAGEMENT

Cash management is concerned with the managing of (1) Cash flows into and out of
the firm, (2) Cash flows within the firm, and (3) Cash balances held by the firm at aa point of
time by financing deficit or investing surplus cash. Sales generated cash, which has to be
disbursed out. The surplus cash has to he invested while deficit has to he borrowed. Cash
management seeks accomplish this cycle at aa minimum cost. At the same time it also seek to
achieved liquidity and control. Cash management assumes more importance then other
current assets because cash is the most significant and the least productive asset that a firm
holds. It is significant because it is used to pay the firm’s obligations. However cash is
unproductive. Unlike fixed assets or inventories, it does not produce goods for sale.
Therefore, the aim of cash management is to maintain adequate control over cash position to
keep the firm sufficiently liquid and to use excess cash is some profitable way.
The management of cash is also important because it is difficult to predict cash flows
accurately, particularly the inflows, and there is no perfect coincidence between the inflows
and outflows of cash. During some periods, cash outflows will exceed cash inflows, because
payments for taxes, dividends, or seasonal inventory build up. At other times, cash inflow
will be more than cash payments because there may be large cash sales and debtors may he
realized in large sums promptly. Cash management is also important because cash constitutes

the smallest portion of the total current assets, yet management’s considerable time is devoted
in managing it. In recent past, a number of innovations have been done in cash management
techniques. An obvious aim of the firm now a days is to manage its cash affairs in such a way
as to keep cash balances at a minimum level and to invest the surplus cash in profitable
investment opportunities.
4.6 FUNCTIONS OF CASH MANAGEMENT

In an ideal scenario, an organization should be able to match its cash inflows to its
cash outflows. Cash inflows majorly include account receivables and cash outflows majorly
include account payables. Practically, while cash outflows like payment to suppliers,
operational expenses, payment to regulators are more or less certain, cash inflows can be
tricky. So the functions of cash management can be explained as follows :
1. Inventory management
Higher stock in hand means trapped sales and trapped sales means less liquidity.
Hence, an organization must aim at faster stock out to ensure movement of cash.
2 Receivables Management
An organization raises invoices for its sales. In these cases, the credit period for receiving the
cash can range between 30 – 90 days. Here, the organization has recorded the sales but has
not yet received cash for the transactions.
So the cash management function will ensure faster recovery of receivables to avoid a cash
crunch. If the average time for recovery is shorter, the organization will have enough cash in
hand to make its payments. Timely payments ensure lesser costs (interests, penalties) to the
organization.
Receivables management also includes a robust mechanism for follow-ups. This will ensure
faster recovery and it will also assist the business to predict bad debts and unforeseen
situations.
3. Payables Management
While receivables management is one of the primary areas in the cash management
function, payables management is also important. Payables arise when the organization has
made purchases on credit and needs to make payments for the same within a fixed time.

An organization can take short-term credit from banks and financial institutions.
However, these credit facilities come at a cost and therefore, an organization must ensure
that they maintain a good liquidity position; this will help in timely repayments of debts
4. Forecasting
While planning investments, the managers need to be very careful as they need to plan for
future contingencies and also ensure profitability. For this, they must use efficient forecasting and
management tools. When the cash inflows and outflows are efficiently managed it gives the firm good
liquidity.
5 .Short-term investments
Avoiding cash crunch, insolvency and ensuring financial stability are the main criteria‟s of
cash management. But it is equally important to invest the surplus cash in hand wisely. Despite being
a liquid asset, idle cash does not generate any returns. While investing in short-term investments an
organization must ensure liquidity and optimum returns. Therefore, this decision needs to be taken
with prudence. Here, the quantum/amount of investment needs to be calculated and decided carefully.
This caution is necessary because an organization cannot invest all the available funds. Businesses
need to reserve cash for contingencies (cash in hand) too.
Other functions
Cash management also includes monitoring the bank accounts, managing electronic banking,
pooling and netting of assets, etc. So the cash management for treasury can also be a core function.
Although for large corporates this function is managed by software , small businesses have to monitor
it manually and ensure liquidity at all times. To add, large businesses have access to credit facilities at
competitive rates. For small businesses that access is not available. Therefore cash management is
vital for them. However, even large corporations need to monitor their systems time and again to
avoid a situation of bankruptcy.
4.7 Cash Management – ADVANTAGES & IMPORTANCE
 Effectively using cash management with trade finance products brings tangible benefits to
both corporate and financial institutions.
 It ensures liquidity and optimal use of cash resources by:
 Having enough cash on hand at the right time in order to fund core business operations and
improve working capital position
 Visibility into expected cash needs and forecasted cash receipts
 Ability to analyze enterprise-wide cash requirements and currency exposures
 Daily cash position and projected cash forecasts to minimize idle cash

 Real time cash positioning for preventing bank balance overdrafts and effectively managing
liquidity
 Bank statement reconciliation protecting unauthorized use, maintain accurate cash balances,
identify and resolve bank errors
4.8 LIMITATIONS OF CASH MANAGEMENT
 1. It may offer a solution of compensation which is not justified on the basis of a concentrate
notation, particular when the business economy in an uncertain word.
 2. It considers economic recession as the main sources of uncertainty but ignores

technological developments, shifts in consumer preference, political changes, etc.; moreover,
recessions are not the sources of economic unhappiness.
 3. The cost of holding cash is the profit that could have been earned had the funds been put to
another use.
 4. Financial distress usually is a matter of degree, while the declaration of the bank raptly is
an indication of this distress in an extreme form. Middle firms of financial distress occur
when a firms cash flow fall below expectations.
4.9 CASH FLOW ANALYSIS
The cash flow analysis is done with the help of cash flow statement. A cash flow
statement is a statement is a statement depicting changes in cash position from one period to
another. It is an important planning tool. Cash flow statement gives a clear picture of the sources
of cash, the uses of cash and the net changes in cash. The primary purpose of cash flow statement
is to show that as to where from the cash to be acquired and where to use them.
4.1.1 IMPORTANCE OF CASH FLOW ANALYSIS

A Cash flow analysis is an important financial tool for the management. Its chief advantages
are as follows.
 Helps in efficient cash management

Cash flow analysis helps in evaluating financial policies and cash position. Cash is the basis for
all operation and hence a projected cash flow statement will enable the management to plan co-
ordinate the financial operations properly. The management can know how much cash is needed from
which source it will be derived, how much can be generated, how much can be utilized.
 Helps in internal financial management

Cash flow analysis information about funds, which will be available from operations. This will
helps the management in repayment of long-term debt, dividend policies etc.
 Discloses the movements of cash

Cash flow statement discloses the complete picture of cash movement. The increase in and
decrease of cash and the reasons therefore can be known. It discloses the reasons for low cash balance
in spite of heavy operation profits on for heavy cash balance in spite of low profits.
 Discloses success or failure of cash planning

The extent of success or failure of cash planning will be known by comparing the projected cash
flow statement with the actual cash flow statement and necessary remedial measures can be taken.

CHAPTER 5
RESEARCH METHODOLOGY

5.1 RESEARCH METHODOLOGY

Research is a systematic and scientific search for pertinent information on a specific
topic. It can be termed as an art of scientific investigation too. It includes testing,
verification, definition, Classification, Organization and orientation which include
prediction and application.
The advanced learners dictionary of current English and defines research as “a careful
investigation of inquiry especially through search for new facts in any branch of
knowledge”. Research, according to the perception of Redmen and Mary is a
“systematized effort to gain new knowledge.” In short research is a hunt for knowledge
with the additional effort of exploring into unexplored.
5.1.1 RESEARCH DESIGN

The research designed for the study in analytical research design. The research design is an
arrangement of conditions for collection and analysis of data in a manner that aims to combine
relevance to the research purpose with economy in procedure. It constitutes the blue print for the
collection, measurement and analysis of data. The analytical research is diagnostic investigation
and synthesis of evidence in order to establish fact draw conclusion concerning the past.
5.2 SOURCES OF DATA

The sources of data are very important for analyzing the data. There are two types
of data:
• Primary Data
• Secondary Data
5.3 SECONDARY DATA

Secondary Data: For this study, data was obtained from the annual reports of the
company, books of accounts, company websites, journals and periodicals published by the
company. The secondary data was collected from the annual report of the company from 2013 to
2017.

5.4 DATA ANALYSIS TECHNIQUES
• Cashflow statement
• Ratio Analysis
• Comparative Statement
• Trend Analysis
(i) Cashflow statement

In financial accounting, a cash flow statement, also known as statement of cash flows, is a
financial statement that shows how changes in balance sheet accounts and income affect cash
and cash equivalents, and breaks the analysis down to operating, investing, and financing
activities. Essentially, the cash flow statement is concerned with the flow of cash in and out
of the business. The statement captures both the current operating results and the
accompanying changes in the balance sheet. As an analytical tool, the statement of cash flows
is useful in determining the short-term viability of a company, particularly its ability to pay
bills. International Accounting Standard 7 (IAS 7), is the International Accounting Standard
that deals with cash flow statements.
People and groups interested in cash flow statements include:

 Accounting personnel, who need to know whether the organization will be able to
cover payroll and other immediate expenses
 Potential lenders or creditors, who want a clear picture of a company's ability to repay
 Potential investors, who need to judge whether the company is financially sound
 Potential employees or contractors, who need to know whether the company will be
able to afford compensation
 Shareholders of the business.

(ii) Ratio Analysis
A financial ratio (or accounting ratio) is a relative magnitude of two selected numerical
values taken from an enterprise's financial statement. Often used in accounting, there are many
standard ratios used to try to evaluating the overall financial condition of a corporation or other
organization. Financial ratios may be used by managers within a firm, by current and potential
shareholders (owners) of a firm, and by a firm's creditors. Financial analysts use financial ratios
to compare the strengths and weaknesses in various companies. If share in a company are traded
in a financial market, the market price of shares used in certain financial ratios. In the analysis of
financial statements it is better to have a complete understanding of different types of ratios, there
calculation and interpretation. Financial ratios can be classified as follows:
LIQUIDITY RATIOS
(i) Current Ratio
(ii) Quick Ratio
ACTIVITY RATIOS
(i) Fixed Assets Turnover Ratio
(ii) Capital Turnover Ratio
(iii)Net Working Capital Turnover Ratio
PROFITABILITY RATIOS
(i) Gross Profit Ratio
(ii) Net profit Ratio
LIQUIDITY RATIOS
1. CURRENT RATIO
Current ratio is one of the most common ratios for measuring liquidity. It represents the ratio of
current assets to current liabilities. It is also called working capital ratio. It is calculated by
dividing current assets by current liabilities. The current ratio of firm measures its short term

solvency, i.e, and its ability to meet short term obligations. In a sound business a current ratio of
2:1 is considered as an ideal one.
Current Ratio = Current Assets / Current liabilities
2. QUICK RATIO
This ratio is sometimes known as “Acid Test Ratio” or “Liquidity Ratio”. It is the relation between
quick assets to current liabilities. It is determined by dividing “quick assets” by current liabilities. The
term „quick assets‟ refers to current assets which can be converted into cash immediately. It
comprises all current assets except stock and prepaid expenses. An Acid test ratio of 1:1 is considered
satisfactory as a firm can easily meet all its current liabilities.
Absolute Liquid Ratio = Quick or liquid assets / Current liabilities
LEVERAGE RATIOS
1. DEBT-EQUITY RATIOS
The relationship between borrowed funds and owners capital is a popular measure of the long term
financial solvency of a firm. This relationship is shown by the debt-equity ratio. This ratio indicates
the relative proportion of debt and equity in financing the assets of a firm. This ratio is computed by
dividing the total debt of the firm by its net worth.
Debt-equity ratio = Debt / Equity OR Outsiders fund / Shareholders fund
The term „debt‟ refers to the total outside liabilities. It includes all current liabilities and other
liabilities like loan, debenture, etc.
ACTIVITY RATIOS
1. FIXED ASSETS TURNOVER RATIO

Fixed Assets to Proprietor's Fund Ratio defines that this term will establishes the relationship between
fixed assets and shareholder’s funds. The purpose of Fixed Assets to Proprietor's Fund Ratio is to
indicate the percentage of the owner's funds invested in fixed assets.
Fixed-asset turnover is the ratio of sales (on the profit and loss account) to the value of fixed assets
(on the balance sheet). It indicates how well the business is using its fixed assets to generate sales
Fixed Assets Turnover Ratio = Net Sales / Net Fixed Assets
2. CAPITAL TURNOVER RATIO
Capital turnover compares the annual sales of a business to the total amount of its stockholders'
equity. The intent is to measure the proportion of revenue that a company can generate with a given
amount of equity. It is also a general measure of the level of capital investment needed in a specific
industry in order to generate sales
Capital Turnover Ratio = Net sales / Capital

3. WORKING CAPITAL TURNOVER RATIO

This ratio reflects the turnover of the firm’s net working capital in the course of the year. It is a good
measure of over-trading and under-trading. This ratio is calculated as follows
Working capital turnover ratio = Net Sales / Net working capital
1. GROSS PROFIT RATIO

The gross profit ratio plays an important role in two management areas. In the area of financial
management, the ratio serves as a valuable indicator of the firm’s ability to utilize effectively outside
sources of fund. Secondly, this ratio also serves as important tool in shaping the pricing policy of the
firm. This ratio expresses the relationship between gross profit and sales. This ratio is calculated by
dividing gross profit by net sales
Gross profit ratio = Gross profit x 100
Net sales
2. NET PROFIT RATIO
The net profit percentage is the ratio of after-tax profits to net sales. It reveals the remaining profit
after all costs of production, administration, and financing have been deducted from sales, and income
taxes recognized.
Net Profit Ratio = Net Profit / Net Sales * 100
(iii) COMPARATIVE STATEMENTS

The comparative financial statements are statements of the financial position at different
periods; of time. Comparative study of financial statement is the comparison of the financial statement
of the business with the previous year’s financial statement and with the performance of other
comparative enterprises so that weaknesses may be identified and remedial measures applied. The
elements of financial position are shown in a comparative form so as to give an idea of financial
position at two or more periods. Any statement prepared in a comparative form will be covered in
comparative statements. Not only the comparison of the figures of two periods but also be relationship
between balance sheet and income statement enables an in depth study of financial position and
operative results. From practical point of View, generally, two financial statements (balance sheet and
income statement) are prepared in comparative form for financial analysis purposes. The comparative
profit and loss account will present a review of operating activities of the business. The comparative
balance sheet shows the effect of operations on the assets and liabilities that change in the financial
position during the period under consideration. The comparative statement lines up a section of the

income statement, balance sheet or cash flow statement with its corresponding section from a previous
period. It can also be used to compare financial data from different companies over time, thus
revealing the trend in the financials.
 The comparative statement may show:
 Absolute figures (rupee amounts).
 Changes in absolute figures i.e., increase or decrease in absolute figures.
 Absolute data in terms of percentages.
 Increase or decrease in terms of percentages.
The comparative balance sheet analysis is the study of the trend of the same items or group of items
and computed items in two or more balance sheet of the same business enterprise on different dates.
The changes in periodic balance sheet items reflect the conduct of a business. The changes can be
observed by comparison of the balance sheet at the beginning and at the end of a period and these
changes can help in forming an opinion about the progress of an enterprise. The comparative balance
sheet has two columns for the data of original balance sheet. A third column is used to sow increase in
figures. The fourth column may be added for giving percentages of increase or decrease.
While interpreting comparative balance sheet, the interpreter is expected to consider the following
points.
1. Current financial position: For studying the current financial position, one should see the working
capital for both the year. A study of increase or decrease in current assets and current liabilities enable
to see the current financial position.
2. Long term financial position: The long term financial position of the concern can be analysed by
studying the ' changes in fixed assets, long term liabilities & capital. An increase in fixed assets
should be compared to the increase in long term loans and capitals.
3. Profitability of the concern: The study of increase or decrease in retained earnings will enable the
interpreters to see cheater the profitability has improved or not.
(iv) TREND ANALYSIS

Trend analysis is the process of collecting information and attempting to spot a pattern, or
trend, in the information. In some fields of study, the term “TREND ANALYASIS” has more
formally defined meaning. Although trend analysis is often used to predict future events, it could
be used to estimate uncertain events in the past, such as how many ancient kings probably ruled

Between two dates, based on data such as the average years which other known kings reigned.
Trend signifies tendency. Therefore review and appraisal of tendency in accounting variables is
simply called trend analysis. Procedure for calculation of trends analysis
 One year is taken as the base year. Usually, the first year is taken as the base year.
 If the figure in a year is less than the base tear figure the trend percentage will be less than 100
and if the figure is more than base year figure the trend percentage will be more than 100
Trend percentage = current year amount/base year amount*100

CHAPTER 6
DATA ANALYSIS

6 DATA ANALYSIS
6.1 CASH FLOW STATEMENT ANALYSIS

CASH FLOW STATEMENT FOR THE YEAR 2014-15 to 2015-16
In rupees
2015-16 2014-15
A. CASH FLOW FROM OPERATIVE ACTIVITIES
Net profit/ loss before tax and extra ordinary items 590.23 377.11
Adjustment for:
172.30 139.14
Add: depreciation and amortization expenses
Finance cost 229.03 240.80
Profit/Loss on sales of assets 0.08 0.36
Profit on sale of investment 0.69 0.20
Unrealistic foreign exchange fluctuation 7.71 2.78
Interest/dividend received 14.19 14.55
Provision for doubtful debt 1.58 0.75
Operating profit before working capital changes 962.92 739.91
Adjustment for:
Trade variables 2.04 129.07
Inventories 1.94 24.08
Trade and other payables 30.49 39.12
Cash generated from operating activities 933.39 674.04
Direct tax (net) 124.25 87.24
Net cash from operating activities 815.08 586.80
B. CASH FLOW FROM INVESTING ACTIVITIES
Purchase of fixed assets 519.95 686.36
Sale of fixed assets 12.69 10.68

Purchase of investment 1.55 1.00
Sale of investment 3.37 10.29
Deposited account with bank 20.64 27.04
Interest received 14.01 14.42

Dividend received 0.19 0.18
474.20 673.46
Net cash used in investing activities

C. CASH FLOW FROM FINANCING

ACTIVITIES ---
Money received against share warrants 37.11
Proceed from borrowings 300.70

519.11
383.71
Repayment of borrowings 299.51
234.19
Finance cost paid 250.71
40.95
Dividend paid 24.02
358.15
Net Cash used for financing Activities 18.02
17.27
Net increase/ decrease in cash 104.68
72.45
Cash and cash equivalents (opening balance) 177.13
Cash and cash equivalents (closing balance) 55.18
72.45
INTERPRETATION
From the cash flow statement it can be interpreted that the net cash from operating
activities was Rs.586.80 lakhs in the year 2014-15 which increased to Rs.815.08
in lakhs in 2015-16.The net cash from investing activities was Rs(673.46) lakhs in
2014-15 which decreased to Rs(474.20)lakhs in 2015-16. The net cash generated from financing
activities was Rs (18.02)lakhs in 2014-15 which increased to Rs(358.15) in 2015-16.

2016-17 2015-16
A. CASH FLOW FROM OPERATIVE
ACTIVITIES
Net profit/ loss before tax and extra 459.70 590.23
ordinary items
Adjustment for:
Add: depreciation and amortization expenses 183.58 172.30
108.05 0.08
Profit/Loss on sales of assets
36.16 0.69
Profit on sale of investment
4.58 7.71
Unrealized foreign exchange fluctuation
17.30 14.19
Interest/dividend received
0.80 1.58
Provision for doubtful debt
738.31 962.92
Operating profit before working capital
changes
Adjustment for: 2.04
303.76
Trade variables
191.10 1.94
Inventories
8.95 30.49
Trade and other payables
Cash generated from operating activities 252.40 933.39

163.87 815.08
Net cash from operating activities
B. CASH FLOW FROM INVESTING

ACTIVITIES
236.06 519.95
Purchase of fixed assets
Sale of fixed assets 2.66 12.69

4.03 20.64
Deposited account with bank
16.19 14.01
Interest received

Net cash used in investing activities 663.09 474.20
C. CASH FLOW FROM

FINANCING ACTIVITIES
---
Money received against share warrants
Proceed from borrowings 1004.51 300.70
Repayment of borrowings 174.55 383.71
Finance cost paid 262.29 234.19
Dividend paid 68.25 40.95
Net Cash used financing Activities 499.75 358.15
Net increase/ decrease in cash 0.53 17.27
Cash and cash equivalents (opening 55.18 72.45

balance)
Cash and cash equivalents (closing 55.71 55.18
balance)
INTERPRETATION
activities was Rs.815.08 lakhs in the year 2015-16 which decreased to Rs.163.87
2015-16 which increased to Rs(663.09)lakhs in 2016-17. The net cash generated from financing

2017-18 2016-17
ACTIVITIES
ordinary items
Adjustment for:
Profit on sale of investment -- 36.16

3.07 4.58
27.64 17.30
1.51 0.80
479.09 738.31
changes
Adjustment for:
135.24 303.76
Trade variables
95.23 191.10
Inventories
8.95
Trade and other payables 4.75
Cash generated from operating activities 252.40

523.85
495.15 163.87

ACTIVITIES
369.78 236.06
Purchase of fixed assets
95.60 2.66
Sale of fixed assets

22.41 16.19
Interest received

C. CASH FLOW FROM

Proceed from borrowings 447.60

343.95 1004.51
68.25
Dividend paid 68.25
4.09
Net increase/ decrease in cash 0.53
Cash and cash equivalents (opening 55.71

55.18
balance)
Cash and cash equivalents (closing 59.80 55.71
balance)
INTERPRETATION
activities was Rs.163.87 lakhs in the year 2016-17 which increased to Rs.495.15
activities was Rs (499.75)lakhs in 2016-17 which decreased to Rs(236.08) in 2017-18.

2018-19 2017-18
ACTIVITIES
ordinary items
Adjustment for:
Profit on sale of investment 0.29 --
12.54 3.07
27.79 27.64
1.51 1.51
747.04 479.09
changes
Adjustment for:
306.62 135.24
Trade variables
110.11 95.23
Inventories
Trade and other payables 4.26 4.75
Cash generated from operating activities 326.05

523.85
64.36 28.70
Direct tax (net)
261.69 495.15

ACTIVITIES
Purchase of fixed assets 132.50 369.78

95.60
Sale of fixed assets 303.07
Purchase of investment -- 70.37
1.06 0.12
Sale of investment
22.91 22.41
Interest received

C. CASH FLOW FROM

Proceed from borrowings 901.00 447.60

343.95
68.25
Dividend paid 41.01

16.04 4.09
Net increase/ decrease in cash
59.80 55.71
Cash and cash equivalents (opening
balance)
Cash and cash equivalents (closing 59.80
75.84
balance)
INTERPRETATION
activities was Rs.495.15 lakhs in the year 2017-18 which decreased to Rs.261.69

6.2 RATIO ANALYSIS
LIQUIDITY RATIOS
6.2.1 Current Ratio
Current Ratio = Current Asset / Current Liabilities
YEAR CURRENT ASSET CURRENT CURRENT RATIO

LIABILITIES
2014-2015 2477.47 2713.32 0.91
2015-2016 2576.72 2684.36 0.95
2016-2017 3000.45 3059.64 0.98
2017-2018 2801.82 3370.03 0.83
2018-2019 3240.63 3106.11 1.04
Table 6.1.5

1.2
CURRENT RATIO
1.04
1 0.98
0.95
0.91
0.83
0.8
0.6
0.4
0.2
0
2014-2015 2015-2016 2016-2017 2017-2018 2018-2019
Chart no: 6.1.1: Current ratio of JK Tyres from 2014-2019
INTERPRETATION
From the above table and figure, it can be interpreted that the current ratio is 0.91 in 2014-
15, 0.95 in 2015-16, 0.98 in 2016-17, 0.83 in 2017-2018 and 1.01 in 2018-19. The ratio shows both
upward and downward trend. The most favourable year concerning the liquidity position is 2018-
2019.
6.1.2 Quick Ratio

Quick Ratio = Quick Asset/Current Liability
Quick ratio of TATA Motors from 2013-2014 to 2017-2018
YEAR QUICK ASSET CURRENT CURRENT RATIO

LIABILITIES
2014-2015 1736.47 2713.32 0.63
2015-2016 1837.72 2684.36 0.68
2016-2017 2069.67 3059.64 0.67
2017-2018 1775.81 3370.03 0.52
2018-2019 2104.51 3106.11 0.67
Chart 6.1.2
quick ratio
0.8
0.7 0.68 0.67 0.67
0.63
0.6 0.52
0.5
0.4
0.3
0.2
0.1
0
2014-2015 2015-2016 2016-2017 2017-2018 2018-2019
INTERPRETATION
From the above table and figure, it can be interpreted that the quick ratio is 0.63 in 2014-
15, 0.68 in 2015-16, 0.67 in 2016-17, 0.52 in 2017-2018 and 0.67 in 2018-19.
6.2.2 Absolute Liquid Ratio

Absolute Liquid Ratio = Absolute Liquid Assets / Current Liabilities
Absolute Liquid Ratio of JK TYRES from 2014-2015 to 2018-2019
YEAR ABSOLUTE CURRENT ABSOLUTE

LIQUID ASSETS LIABILITIES LIQUID RATIO
2014-2015 100.23 2713.32 0.0392
2015-2016 62.44 2684.36 0.0232
2016-2017 67.32 3059.64 0.0220
2017-2018 72.29 3370.03 0.0214
2018-2019 100.30 3106.11 0.0322
Chart 6.1.3
absolute liquid ratio

0.05
0.04
0.04
0.04 0.03
0.03
0.03 0.02 0.02 0.02
0.02
0.02
0.01
0.01
0
2014-2015 2015-2016 2016-2017 2017-2018 2018-2019
INTERPRETATION
From the above table and figure, it can be interpreted that the Absolute Liquid ratio is
0.0392 in 2014-15, 0.0232 in 2015-16, 0.0220 in 2016-17, 0.0214 in 2017-2018 and 0.0322 in
2018-19. The highest absolute liquidity ratio in the period of 2014-2015, but it is not a
acceptable norm. The company was not successful in achieving the same

6.1.4 Gross Profit Ratio

Gross Profit Ratio = Gross Profit / Net Sales * 100
Gross Profit Ratio of JK tyres from 2014-2015 to 2018- 2019
YEAR Gross Profit(cr.) Net Sales Gross Profit Ratio

2014-2015 377.11 6125.23 6.156
2015-2016 590.23 5812.90 10.153
2016-2017 459.70 5910.52 7.777
2017-2018 63.85 6390.30 0.999
2018-2019 304.68 7512.12 4.055
Table no: 6.1.4
12
gross profit ratio
10.15
10
8 7.78
6.16
6
4.05
4
2
1
0
2014-2015 2015-2016 2016-2017 2017-2018 2018-2019
Chart no: 6.1.4 Gross Profit Ratio of JK tyres from 2014-2015 to 2018-2019
INTERPRETATION:
From the above table and figure, it can be interpreted that the Gross Profit ratio is -6.16
in 2014-15, 10.153 in 2015-16, 7.777 in 2016-17, 0.99 in 2017-2018 and 4.05 in 2018-19.
6.1.5 Net Profit Ratio

Net Profit Ratio = Net Profit / Net Sales * 100
Table no: 6.1.5: Net Profit Ratio of JK Tyres from 2014-2015 to 2018-2019
YEAR Net Profit Net Sales Gross Profit Ratio

2014-2015 253.30 6125.23 4.135
2015-2016 400.96 5812.90 6.897
2016-2017 332.13 5910.52 5.619
2017-2018 43.09 6390.30 0.674
2018-2019 204.40 7512.12 2.720
Table no: 6.1.5
net profit ratio

8
6.9
7
6 5.62
5
4.13
4
3 2.72
1 0.67
0
2014-2015 2015-2016 2016-2017 2017-2018 2018-2019
chart no: 6.1.5: Net Profit Ratio of JK Tyres from 2014-2015 to 2018-2019
INTERPRETATION:
From the above table and figure, it can be interpreted that the Net Profit ratio is 4.135
in 2014-15, 6.89 in 2015-16, 5.61 in 2016-17, 0.67 in 2017-2018 and 2.72 in 2018-19.

ACTIVITY RATIOS
6.1.6 Stock Turnover Ratio

Stock Turnover Ratio = Cost of Goods Sold / Average Inventory
Stock Turnover Ratio of JK TYRES from 2014-2015 to 2018- 2019
YEAR COST OF GOODS AVERAGE STOCK STOCK TURNOVER

SOLD RATIO
2014-2015 6362.24 741.62 8.53
2015-2016 5907.16 739.68 7.98
2016-2017 6079.21 930.78 6.53
2017-2018 6451.6 1026.01 6.28
2018-2019 7207.44 1136.12 6.34
Table no: 6.1.6:
stock turnover ratio

9 8.53
7.98
8
7 6.53 6.28 6.34
6
5
4
3
2
1
0
2014-2015 2015-2016 2016-2017 2017-2018 2018-2019
Chart no: 6.1.6 Stock Turnover Ratio of JK TYRES from 2014-2015 to 2018-2019
INTERPRETATION
From the above table and figure, it can be interpreted that the Stock Turnover ratio is
8.54 in 2014-15, 7.89 in 2015-16, 6.53 in 2016-17, 6.28 in 2017-2018 and 6.34 in 2018-19.

6.1.7 Fixed Asset Turnover Ratio

Fixed Assets Turnover Ratio = Net Sales / Net Fixed Assets
Fixed Asset Turnover ratio of JK TYRES from 2014-2015 to 2018-2019
YEAR NET SALES FIXED ASSET FIXED ASSET

TURNOVER RATIO
2014-2015 6125.23 3051.50 2.007
2015-2016 5812.90 3416.32 1.701
2016-2017 5910.52 3435.76 1.720
2017-2018 6390.30 3661.23 1.745
2018-2019 7512.12 3404.12 2.206
Table no: 6.1.7
fixed asset turnover ratio

2.5
2.21
2.01
2 1.74
1.7 1.72
1.5
0.5
0
2014-2015 2015-2016 2016-2017 2017-2018 2018-2019
Chart no: 6.1.6: Fixed Asset Turnover ratio of JK TYRES from 2013-2014 to 2017-2018
INTERPRETATION:
From the above table and figure, it can be interpreted that the Fixed Asset Turnover
ratio is 2.00 in 2014-15, 1.70 in 2015-16, 1.72 in 2016-17, 1.74 in 2017-2018 and 2.202 in
2018-19.

6.1.8 Capital Turnover Ratio
Capital Turnover Ratio = Net sales / Capital Employed
Capital Turnover ratio of JK TYRES from 2014-2015 to 2018-2019
YEAR NET SALES Capital Employed Capital

TURNOVER RATIO
2014-2015 6125.23 1091.48 5.611
2015-2016 5812.90 1416.67 4.103
2016-2017 5910.52 1637.95 3.608
2017-2018 6390.30 1644.29 3.886
2018-2019 7512.12 1995.12 3.765
Table no: 6.1.8
6 5.61
5
4.1 3.89
4 3.61 3.77
0
2014-2015 2015-2016 2016-2017 2017-2018 2018-2019
Chart no: 6.1.8: Capital Turnover ratio of JK TYRES from 2014-2015 to 2018-2019
INTERPRETATION:
From the above table and figure, it can be interpreted that the Capital Turnover ratio is
5.611 in 2014-15, 4.103 in 2015-16, 3.608 in 2016-17, 3.88 in 2017-2018 and 3.76 in 2018-19.

6.1.9 Net Working Capital Turnover Ratio
Net Working Capital Turnover Ratio = Net sales / Working Capital
Net Working Capital Turnover Ratio of JK TYRES from 2014-2015 to 2018-2019
YEAR NET SALES Net working capital Working Capital

TURNOVER RATIO
2014-2015 6125.23 136.6 49.33
2015-2016 5812.90 -107.56 -60.39
2016-2017 5910.52 -59.19 -110.47
2017-2018 6390.30 -568.21 -11.46
2018-2019 7512.12 134.52 55.46
Table no: 6.1.9
net working capital turnover ratio

80
60 49.33 55.46
40
20
0
-20 2014-2015 2015-2016 2016-2017 2017-2018
-11.46 2018-2019
-40
-60
-60.39
-80
-100
-120 -110.47
Chart no: 6.1.9: Net Working Capital Turnover Ratio of TATA MOTORS from 2014-2015 to 2018-2019
INTERPRETATION:
From the above table and figure, it can be interpreted that the Working Capital Turnover
ratio is 49.33 in 2014-15, -60.39 in 2015-16, -110.47 in 2016-17, -11.46 in 2017-2018 and
55.46 in 2018-19.

6.1.10 Fixed Assets to Proprietors Fund Ratio
Fixed Assets to Proprietors Fund Ratio = Fixed Assets / Shareholders Fund
: Fixed Assets to Proprietors Fund Ratio of JK TYRES from 2013-2014 to 2017-18
YEAR FIXED ASSET Share holders fund FIXED ASSETS TO

PROPRIETORS
FUND RATIO
2014-2015 3051.50 1098.48 2.79

2015-2016 3416.32 1416.67 2.41
2016-2017 3435.76 1673.95 2.05
2017-2018 3661.23 1644.29 2.22
2018-2019 3404.12 1995.12 1.70
Table no: 6.1.10
fixed asset to propriters fund ratio

3 2.79
2.5 2.41
2.22
2.05
2 1.7
1.5
1
0.5
0
2014-2015 2015-2016 2016-2017 2017-2018 2018-2019
Chart no: 6.1.10: Fixed asset to proprietor’s fund Ratio of TATA MOTORS from 2014- 2015 to 2018-
2019
INTERPRETATION:
From the above table and figure, it can be interpreted that the Fixed Assets to
Proprietors Fund ratio is 2.79 in 2014-15, 2.41 in 2015-16 and 2.05 in 2016-2017 and 2.22 in
2017-18 and 1.71 in 2018-19.

6.3 COMPARATIVE ANALYSIS
COMPARATIVE BALANCE SHEET ANALYSIS OF 2015-2016
JK TYRES AND INDUSTRIES LTD
BALANCE SHEET FROM 2014-15 to 2019-19

Particulars Year ending 31st March Increase / Decrease
2015 2016 Absolute Percentage

Change Change
Equity & Liability
Share Holders Fund

(a)Share Capital 45.36 45.36 00 00
(b)Reserve & surplus 1046.12 1371.31 325.19 31.08
Noncurrent Liabilities
(a)Long term borrowings 1415.90 1503.19 87.29 6.16

(b)Deferred tax liability 319.82 428.11 108.29 33.85
(c)Other long term liabilities 330.11 306.54 -23.57 -7.14
(d)long term provisions 13.33 14.63 1.3 9.75
Total noncurrent liabilities 2079.16 2252.47 173.31 8.33
Current Liabilities
(a)Short term borrowings 964.48 874.78 -89.7 -9.30

(b)Trade Payables 902.64 830.41 -72.23 -8.00
(c)Other Current Liability 640.19 616.62 -23.57 -3.68
(d)Short term Provisions 206.01 362.49 156.48 75.95
Total current liabilities 2713.32 2684.30 -29.02 -1.06
469.48 7.97
Total liabilities and capital 5883.96 6353.44
(B) Assets
1 Noncurrent Assets
(I) Tangible assets 2354.40 3327.40 973 41.32

(ii) Intangible assets 00 00 00 00
Capital work in progress -608.18 -0.87
697.10 88.92
(a)Fixed Assets 3051.50 3416.32 364.82 11.95
non-current investments -7.04 -8.42
83.61 76.57
Long Term Loans and 21.52 11.53
Advances 186.52 208.04
Other non-current assets
-9.07 -10.68
84.86 75.79

Total non current asset

370.23 10.86
3406.49 3776.72
Current Assets
Current investment 9.01 15.02 6.01 66.70
Inventories
741.62 739.68 -1.92 -0.25
Trade Receivables 1256.19 1210.48 -45.71 -3.63
Cash and Cash Equivalents 100.20 62.44 -37.76 -37.68
Short term Loans and 177.42 49.07
Advances 361.52 538.94
Other Current Assets 8.93 10.16 1.23 13.77
Total CA 2477.47 2576.72 99.25 4.00
469.48 7.94
Total 5883.96 6353.44
INTERPRETATION
By doing comparative balance sheet in the year 2015-16, it shows a 7.97% increase in total
liability from the last year, While comparing current liability in 2 years there is a -1.06 %
decrease than last year. The comparative balance sheet of the year 2015-16 shows a
7.97%increased in the total asset from the last year

2016 2017 Absolute Percentage

Change Change
Equity & Liability
Share Holders Fund


(a)Share Capital 45.36 45.36 00 00


(b)Deferred tax liability 428.11 369.04 -59.07 -13.79
(c)Other long term liabilities 306.54 300.96 -5.58 -1.82
Total noncurrent liabilities 2252.47 2326.14 73.67 3.27
Current Liabilities
(a)Short term borrowings 874.78 1494.54 619.76 70.84

(b)Trade Payables 830.41 910.96 80.55 9.70
(c)Other Current Liability 616.62 647.63 31.01 5.02
(d)Short term Provisions 362.49 6.51 -355.98 -98.20
Total current liabilities 2684.30 3059.64 375.34 13.98
706.29 11.11
(B) Assets
1 Noncurrent Assets
(I) Tangible assets 3327.40 3294.08 -33.32 -1.00

(ii) Intangible assets 00 00 00 00
Capital work in progress 44.32 49.84
88.92 131.24
(a)Fixed Assets 3416.32 3435.76 19.44 0.56
non-current investments 413.6 540.15
76.57 490.17
Long Term Loans and Advances
-165.72 -79.65
208.04 42.32
Other non-current assets 15.24 20.10
75.79 91.03
Total non current asset 282.56 7.48
3776.72 4059.28
Current Assets
Current investment 15.02 00 -15.02 -100
Inventories 739.68 930.78 191.1 25.83
Trade Receivables 1210.48 1469.60 259.12 21.40
Cash and Cash Equivalents 62.44 67.32 4.88 7.81
Short term Loans and Advances -468.94 -87.01
538.94 70.00
Other Current Assets 10.16 462.75 457.59 4503.83
Total CA 2576.72 3000.45 423.73 16.44
6353.44 7059.73 706.29 11.11
Total

INTERPRETATION
By doing comparative balance sheet in the year 2016-17, it shows a 11.11% increase in
total liability from the last year, while comparing total current assets there is an increase of
16.44

2016-2017 2017-2018 Absolute Percentage

Change Change
Equity & Liability
Share Holders Fund
(a)Share Capital 45.36 45.36 00 00

(b)Reserve & surplus 1628.59 1598.93 -29.66 1.39
(a)Long term borrowings 1637.28 1457.75 -147.53 -9.01

(b)Deferred tax liability
369.04 373.84 4.81 1.30
(c)Other long term liabilities 300.96 308.35 7.38 2.45
Total noncurrent liabilities 2326.14 2164.09 -162.05 -6.97

Current Liabilities
(a)Short term borrowings 1494.54 1522.38 27.84 1.86

(b)Trade Payables 910.96 961 50.04 5.49
(c)Other Current Liability 647.63 880 232.37 35.88
(d)Short term Provisions 6.51 6.13 -0.38 -5.83
Total current liabilities 3059.64 3370.03 310.99 10.16
118.68 1.68
(B) Assets
1 Noncurrent Assets
(I) Tangible assets 3294.08 3566.82 272.74 8.27

(ii) Intangible assets 00 5.06 5.06
Capital work in progress -47.93 -36.52
131.24 83.31
(a)Fixed Assets 3435.76 3661.23 225.47 6.56
non-current investments 54.7 11.15
490.17 544.87
Advances 42.32 45.94
Other non-current assets 33.22 36.49
91.03 124.55
Total non current asset 317.31 7.81
4059.28 4376.59
Current Assets
Current investment 00 00 00 00
Inventories 930.78 1206.01 275.22 29.56
Trade Receivables 1469.60 1289.72 -190.88 -12.98
Cash and Cash Equivalents 67.32 72.29 4.97 7.38
Short term Loans and 00 00
Advances 70.00 00
Other Current Assets 462.75 413.80
Total CA 3000.45 2801.82 -198.63 -6.62
7059.73 7178.41 118.68 1.68
Total
INTERPRETATION
By doing comparative balance sheet in the year 2017-18, it shows a 1.68% increase in
total liability from the last year, while comparing current assets from last year shows a decrease
of 6.62%


Particulars
2017-2018 2018-2019
Equity & Liability
Share Holders Fund
(a)Share Capital 45.36 49.24 3.88 8.55


(b)Deferred tax liability
373.84 404.91 31.07 8.32
(c)Other long term 6.01 1.94
liabilities 308.35 314.36
Total noncurrent 140.06 6.47
liabilities 2164.09 2304.15
Current Liabilities
(a)Short term borrowings 1522.38 1451.85 -70.53 -4.63

(b)Trade Payables 961 979.10 18.1 1.88
(c)Other Current Liability 880 667.47 -212.53 -24.15
(d)Short term Provisions 6.13 7.69
Total current liabilities 3370.03 3106.11 -264.52 -7.84
Total liabilities and 226.97 3.16
capital 7178.41 7405.38

(B) Assets
1 Noncurrent Assets
(I) Tangible assets 3566.82 3320.46 -246.36 -6.90

(ii) Intangible assets 5.06 3.93 -1.13 -22.33
Capital work in -9.51 -11.41
progress
83.31 73.80
(a)Fixed Assets 3661.23 3404.12 -257.11 -7.02
non-current 51.13 9.38
investments
544.87 596.61
Advances 45.94 47.99
Other non-current -8.52 -6.84
assets 124.55 116.03
Total non current -211.84 4.84
asset 4376.59 4164.75
Current Assets
Current investment 00 0 00 00
Inventories 1206.01 1136.12 -69.89 -5.79
Trade Receivables 1289.72 1632.45 342.73 26.57
Cash and Cash 28.01 38.74
Equivalents 72.29 100.30
Short term Loans and 00 00
Advances 00 00
Other Current Assets 413.80 371.76 -42.04 -10.15
Total CA 2801.82 3240.63 438.81 -15.66
226.97 3.16
Total 7178.41 7405.38
INTERPRETATION
By doing comparative balance sheet in the year 2018-19, it shows a 3.16 increase in total
liability from the last year, while comparing current assets from last year shows a decrease of
-15.66

6.3 TREND ANALYSIS

A trend analysis is an aspect of technical analysis that tries to predict the future
movement of a stock based on past data. Trend analysis is based on the idea that what has
happened in the past gives traders an idea of what will happen in he future.
Y= a+bx
Where,
a= Ʃy/n
b= Ʃxy/Ʃx2
Table No:5.2.1
TREND ANALYSIS OF CASH
(Rs in lakhs)
YEAR cash x X2 xy
2014-2015 100.20 -2 4 -200.4
2015-2016 62.44 -1 1 -62.44
2016-2017 67.32 0 0 0
2017-2018 72.29 1 1 72.29
2018-2019 100.39 2 4 200.6
total 10 10.5
Table no: 6.1.15
a = 402.55/5
= 80.51
b= 105/10

= 1.05
FUTURE TREND VALUE OF CASH/CASH EQUALANTS
YEAR X TREND VALUE

2020 3 83.66
2021 4 84.71
2022 5 85.76
2023 6 86.81
2024 7 87.86
Table no: 6.1.16
trend value
100
80
60
40
20
0
2020 2021 2022 2023 2024
INTERPRETATION
The projection of trend on inventory shows the upward trend. It shows that the company
can forecast their performance in an profitable manner. It also increases the efficiency of the firm.

CHAPTER - 7
FINDINGS

FINDINGS
Cashflow statement
 From the analysis of the cash flow statement 2015-16 it can be understood that the
firm is generating cash from the operating activities as well as the investing activities.
So there is a positive cash flow from financing activities during the year.
 From the analysis of cash flow statement 2016-17 it can be understood that the firm
can generate cash inflow from the operating activities is less than the previous year
but in the cae of investing activities the firm is able to gain from the amount spend on
investment. There is positive cash inflow from financing activities during this year.
 From the analysis of cash flow statement 2017-18 it can be understood that the firm
can generate cash inflows from the operating activities, the net cash used in the
investing activities is less than as compared to the previous year. and there is a
appositive cash flow during the year
 From the analysis of the cash flow statement 2018-19 it can be understood that the
firm is able to generate cash from the operating activities as well as the investing
activities. So there is a positive cash flow from financing activities during the year
Ratio analysis
 The current ratio of the JK tyres for the last 5 years is less than 2:1 and it consistently
fluctuating .
 The Quick ratio is lower than the standard of 1:1 throughout the year, which reveals that
the firm’s liquidity position is not good.
 Absolute liquidity ratio is higher the year of 2014-2015, but decline other years.

 Gross profit ratio shows that the profitability of the concern. Here 2015-2016 shows the
highest profitability.
 Net profit ratio is fluctuating each year, which represents the not reasonable profitability
position
 Inventory turnover ratio is higher in the period of 2014-2015
 Fixed assets turnover ratio is almost same throughout the year
 The capital turnover ratio of the company is higher in period of 2014-2015,but its
declined the following years
 Working capital turnover ratio is higher in the period of 2013-14, but it decline
continuous years
 The average of fixed assets to proprietors fund ratio is 0.25 and it is less than the standard
ratio 2:1. It shows that the proprietors fund cannot be acquired from fixed assets.
COMPARATIVE BALANCESHEET STATEMENTS

1. From the comparative balance sheet analysis of 2015-2016, it can be understood that the
total assets as well as the total liabilities have been increased by 7.97% than the previous
year.
year.
year.
total assets as well as the total liabilities have been decreased by 3.16% than the previous
year.
Trend analysis
 Trend value of cash balance level is upward. It also determine that the company’s
financial performance is not weak.

CHAPTER - 8
RECOMENDATIONS

RECOMENDATIONS
 The corporation should take necessary steps to reduce unnecessary unproductive

expenses at various level.
 The company should reduce expenses for achieving better profitability
 The firm should try to more improvements in cash and bank balances
 Cost control techniques and methods should be introduced in production and it helps
to minimize the cost of production.
 For meeting working capital requirements the company should strengthen its
management for better collection of cash from debtors and better inventory policy
should be adopted.
 The company should determine the optimum cash balance in uncertainty, it will help
the company to take right measures during emergency situations.
 Excess cash available must be utilized in new investment opportunities.
 In order to improve the liquidity position of the concern the firm should invest more
amount to current assets.

CHAPTER- 9
CONCLUSION

CONCLUSION
The Cash Management Analysis done on the financial position of the company has provided a
clear view on the activities of the company. The use of the ratio analysis, trend analysis and other
accounting and financial management tools helped in this study to find out the financial soundness of
the company.
Cash Management is a broad area having to do with the collection, concentration, and
disbursement of cash including measuring the level of liquidity, managing the cash balance and short-
term investments. If at any time, because of a lack of cash, a corporation fails to pay an obligation
when it is due, the corporation is insolvent. Insolvency is the primary reason firms go bankrupts. The
efficient cash management means more than just preventing bankruptcy. It improves the profitability
and reduces the risk. The liquidity position of the company is improving when compared to previous
years. Company must try to maintain and improve the cash position and efficiency. The company
should counter check the situation and gives more importance to liquidity and solvency position of the
company.
The study reveals that the company has more scope for development, if the company ready
to introduce new production technology. It will help the expansion of the company in the years to
come and help to tap the potentials of a growing market in the domestic and international markets.

REFERENCES
BOOKS
• Khan M Y, Jain P K (2012) Management Accounting, 3 rd edition TATA McGraw Hill
Publishing company limited, New Delhi.
• Kothari C. R (2005), Research Methodology and Techniques, 2 nd edition, wishwapreksha, New

Delhi.
• Murthy A, Guruswamy s (2009) Management Accounting, second edition, TATA McGraw Hill
Publishing Company limited, New Delhi.
• Paneerselvam R (2011), Research Methodology, PH1 learning Pvt. Ltd . New Delhi.
• Periyaswamy P (2013), Working Capital Theory and Practice, 2 nd edition, Himalaya Publishing
House, New Delhi.
JOURNALS
 Zimmerer (2008) in their article entitled “Cash Management and Liquidity”.
Volume 5. International Journal of Economics and Financial Issues. p 198-205
 Oliver Kim , September 11, (2007). The Value Relevance of Earning and Prediction of
One Year- ahead Cash Flow.
 Hackel, K. S, Livant, J and Rai (1994) The Free Cash Flow/ Small-Cap Anomaly,
Financial Analysts Journal, Vol. 50, no 5,pp.33-42
 Larry N. Langemeier- Danny Klinefelter and Dean Mccorkle. (2007) Cash Flow
Projection for Operation Loan Determination
 AkinyomiOladele John (2014) in his article entitled “A study of international cash

management practices of Nigeria-based companies”, Volume 14. Journal of Business
Research. p 358-367

 Davidson et al, 1999, in their article entitled entitled cash management And corporate
profitability p252-258
 Chaung, J. K, Krishnan, G.V. and Min. C (1997), Does Inter Period Income Tax
Allocation Enhance Prediction of Cash Flows? Accounting Horizons, Vol. 11, no,4, pp 1-
15
 Dechow, P.M. (1994). Accounting earning and cash flow as measure of firm
performance: The role of accruals: journal of accounting and economics, Vol. 18,no,1,pp.
3-42
WEBSITES
• https://www.Jktyre.com
• https://indiamart.com
• http://www.moneycontrol.com

APPENDIX


Particulars 2014-2015 2015-2016 2016-2017 2017-2018 2018-2019
Equity & Liability
Share Holders Fund

(a)Share Capital 45.36 45.36 45.36 45.36 49.24
(b)Reserve & surplus 1046.12 1371.31 1628.59 1598.93 1945.88
(a)Long term borrowings 1415.90 1503.19 1637.28 1457.75 1558.22

(b)Deferred tax liability 319.82 428.11 369.04 373.84 404.91
(c)Other long term liabilities 330.11 306.54 300.96 308.35 314.36
(d)long term provisions 13.33 14.63 18.86 24.15 26.66
Total noncurrent liabilities 2079.16 2252.47 2326.14 2164.09 2304.15
Current Liabilities
(a)Short term borrowings 964.48 874.78 1494.54 1522.38 1451.85

(b)Trade Payables 902.64 830.41 910.96 961 979.10
(c)Other Current Liability 640.19 616.62 647.63 880 667.47
(d)Short term Provisions 206.01 362.49 6.51 6.13 7.69
Total current liabilities 2713.32 2684.30 3059.64 3370.03 3106.11
Total liabilities and capital 5883.96 6353.44 7059.73 7178.41 7405.38
(B) Assets
1 Noncurrent Assets
(I) Tangible assets 2354.40 3327.40 3294.08 3566.82 3320.46

(ii) Intangible assets 00 00 00 5.06 3.93
Capital work in progress
697.10 88.92 131.24 83.31 73.80
(a)Fixed Assets 3051.50 3416.32 3435.76 3661.23 3404.12
non-current investments
83.61 76.57 490.17 544.87 596.61
Long Term Loans and
Advances 186.52 208.04 42.32 45.94 47.99

Other non-current assets

84.86 75.79 91.03 124.55 116.03
Total non current asset
3406.49 3776.72 4059.28 4376.59 4164.75
Current Assets
Current investment 9.01 15.02 00 00 0
Inventories 741.62 739.68 930.78 1206.01 1136.12
Trade Receivables 1256.19 1210.48 1469.60 1289.72 1632.45
Cash and Cash Equivalents 100.20 62.44 67.32 72.29 100.30
Short term Loans and
Advances 361.52 538.94 70.00 00 00
Other Current Assets 8.93 10.16 462.75 413.80 371.76
Total CA 2477.47 2576.72 3000.45 2801.82 3240.63
Total 5883.96 6353.44 7059.73 7178.41 7405.38

PROFIT AND LOSS ACCOUNT FROM 2013-14 to 2017-18

Particulars 2014-2015 2015-2016 2016-2017 2017-2018 2018-2019
Revenue from
operations
Revenue (net) 6080.21 5880.43 5910.52 6390.30 7512.12
Other operating
revenue 68.60 63.05 101.23
Other income 14.75 14.98 59.66 32.45 76.32
total revenue 6139.98 5895.41 6038.78 6485.80 7689.67
expenses
cost of material
3861.62 3311.92 3200.17 3748.74 4071.30
consumed
Changes in
inventories of
finished goods work 47.60 14.06 -68.74 -69.80 -180.24
in progress and stock
in trade
employee benefit
459.48 534.05 534.90 523.60 560.36
expenses
finance cost 240.80 229.03 267.58 274.12 316.28
Depreciation and
139.14 172.30 183.58 175.13 188.36
amortization
other expenses 964.38 996.931 1001.30 1095.51 1157.49
total expenses 5753.44 5290.99 5684.32 6415.26 7386.79
profit before tax

386.54 604.42 354.46 70.54 302.88
Provision for current
tax 76.08 132.87 103.97 15.96 63.69
Less: MAT credit
Entitment
23.05 55.87 67.09 18.44 21.15
Provision for deferred

tax
70.78 112.27 90.69 23.24 57.74
Profit/Loss After tax 253.30 400.96 332.13 43.09 204.40)

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A Study on Cash Management at JK Tyres Industries PVT LTD

A STUDY ON CASH MANAGEMENT AT JK TYRES INDUSTRIES

( Reg No: MZC18MBA08)

Under the guidance of

(Assistant professor , MBA department)

In partial fulﬁlment of the requirements for the award of the Degree of

MASTER OF BUSINESS ADMINISTRATION

A P J Abdul Kalam Technological University, Trivandrum

SCHOOL OF BUSINESS MANAGEMENT

MOUNT ZION COLLEGE OF ENGINEERING KADAMMANITTA

MOUNT ZION SCHOOL OF BUSINESs MANAGEMENT,KADAMMANITTA 1

Place ANOOP R KRISHNAN

MOUNT ZION SCHOOL OF BUSINESs MANAGEMENT,KADAMMANITTA 2

MOUNT ZION SCHOOL OF BUSINESs MANAGEMENT,KADAMMANITTA 3

1.1 Background of the Study 8

1.2 Need and Significance of the study 9

1.3 Statement of the problem 9

1.4 Objectives of the study 10

1.5 Scope of the study 10

1.6 Limitations of the study 10

1.7 Organization of the report 11

2.1 Industry Profile 13

2.2 Company Profile 18

5.1 Research Design 36

5.2 Sources of Data 36

5.3 Tools used for the assessment 37

6.1 Cash flow statement 44

MOUNT ZION SCHOOL OF BUSINESs MANAGEMENT,KADAMMANITTA 4

6.2 Ratio analysis 52

6.3 Comparative balance sheet 63

MOUNT ZION SCHOOL OF BUSINESs MANAGEMENT,KADAMMANITTA 5

Table Description Page No.

6.1.11 Table Showing fixed asset turnover ratio 59

6.2.4 Table Showing The Comparative Balance Sheet Analysis Of 69,70

6.3 Table Showing Trend Analysis 71

MOUNT ZION SCHOOL OF BUSINESs MANAGEMENT,KADAMMANITTA 6

Chart No. Description Page No.

6.1.1 Chart Showing The Current Ratio 53

6.1.2 Chart Showing The Quick Ratio 54

6.1.3 Chart Showing The Absolute Liquid Ratio 55

6.1.4 Chart Showing The Gross Profit Ratio 56

6.1.5 Chart Showing The Net Profit Ratio 57

6.1.6 Chart Showing stock turnover Ratio 58

6.1.7 Chart Showing fixed asset turnover ratio 59

6.1.8 Chart Showing capital turnover Ratio 60

6.1.9 Chart able Showing The Working capital turnover 61

6.1.10 Chart Showing The Fixed Assets to Proprietors 62

6.3.1 Chart Showing the trend analysis 72

1.1 BACKGROUND OF THE STUDY

MOUNT ZION SCHOOL OF BUSINESs MANAGEMENT,KADAMMANITTA 7

Cash management is the efficient collection, disbursement and investment of cash in an

1.2 NEED AND SIGNIFIACANCE OF THE STUDY

1.3 STATEMENT OF THE PROBLEM

1.4 OBJECTIVES OF THE STUDY

MOUNT ZION SCHOOL OF BUSINESs MANAGEMENT,KADAMMANITTA 9

1.5 SCOPE OF THE STUDY

1.6 LIMITATIONS OF THE STUDY

• It has always not been possible to get the full information.

1.7 ORGANISATION OF THE REPORT

MOUNT ZION SCHOOL OF BUSINESs MANAGEMENT,KADAMMANITTA 10

CHAPTER 1: INTRODU TION

CHAPTER 3: LITERATURE REVIEW