Nazar S Project

A STUDY ON WORKING CAPITAL MANAGEMENT AT ANU SOLAR POWER PRIVATE LIMITED
CHAPTER-1
INTRODUCTION
The process of managing activities and processes related to working capital. This

level of management balances system to ensure that the amount of cash flowing into
the business is enough to sustain the company's operations. This is an ongoing process
that must be evaluated using the current level of assets and liabilities. Working capital
management may involve implementing short-term decisions that may or may not carry
over from one earnings period to the next.
Concept of Working Capital

There are two definitions of working capital
 Gross working capital

 Net working capital
Gross working capital refers to working capital as the total of current assets,
whereas the net working capital refers to working capital as excess of current assets over
current liabilities. In other words net working capital refers to current assets financed by
long term funds.
Accordingly,
Gross working capital = Total current assets
Net working capital = Current assets – Current liabilities
The net working capital position of the firm is an important consideration, as this
will determine the firm’s profitability and risk. Here the profitability refers to profits after
expenses and risk refers to the probability that a firm will become technically insolvent
where it will be unable to meet obligations when they become due for payment.
Page | 1
GANGA INSTITUTE OF TECHNOLOGY AND MANAGEMENT

A finance manager has to make an appropriate financing mix, which will limit the risk
and increase the profitability. Financing mix refers to the proportion of current assets
financed by current liabilities and long term funds.
There are two approaches which determine the financing mix
 Aggressive approach
 Conservative approach.
According to aggressive approach the long term funds are used to finance only the
core or fixed portion of current assets (e.g., minimum level of finished goods inventory,
raw material etc.) and the other portion i.e. temporary and seasonal requirements are
financed by short term funds. This is of high risk and high profit financing mix.
According to conservative approach the total current assets are financed from
long term sources and short term sources are used only in emergency situation i.e. when
there is an unexpected cash outflow. This is of low-risk and low-profit financing mix.
As we observed two methods of financing mix, one method is of high risk high
profit and other is of risk low profit. A finance manager has to trade off between these
two extremes.
Operating Cycle:
The objective of financial management is to maximize the shareholders wealth.

So it is needed to generate sufficient profits. The profits generated depend mainly on
sales volume. When the goods are being sold on credit as is the normal practice of
business firms today to cope with increased competition the sale of goods cannot be
converted into cash instantly because of time lag between sales and realization of cash.
As there is a time lag between sales and realization of receivables there is a need
for sufficient working capital to deal with the problem which arises due to lack of
immediate realization of cash against goods sold. The operating cycle is the length of
Page | 2

time required for conversion of non-cash assets into cash. This operating cycle refers to
the time taken for the conversion of cash into raw material, raw materials into work-in-
progress, work-in-progress into finished goods, finished into receivables into cash and
this cycle repeats.
The operating cycle length differs from firm to firm. If a firm has lengthy
production process or a firm has liberal credit policy the length of operating cycle will be
more. On the other hand, if a firm does not extend credit or the firm is not a
manufacturing concern i.e. where cash will be converted into inventory directly then the
length of operating cycle will be reduced to a greater extent.
The length of operating cycle can be calculated by calculating periods of raw

material storage, work in process, finished gods storage and debtors collection period.
Average stock of raw materials∧stores

1. Raw materials storage period = Average daily consumption of raw material amd stores
¿
¿
Average work∈ process inventory

2. Work in process period =
Average cost of production per day
Average finished goods inventory

3. Finished goods storage period =
Average cost of goods sold per day
Average book debts

4. Debtors collection period =
Average credit sales per day
Length of operating cycle = 1 + 2 + 3 + 4
Capital required for a business can be classified under two main categories via,
 Fixed Capital
 Working Capital
Page | 3

Every business needs funds for two purposes for its establishment and to carry out
its day- to-day operations. Long terms funds are required to create production facilities
through purchase of fixed assets such as p&m, land, building, furniture, etc. Investments
in these assets represent that part of firm’s capital which is blocked on permanent or fixed
basis and is called fixed capital. Funds are also needed for short-term purposes for the
purchase of raw material, payment of wages and other day – today expenses etc.
These funds are known as working capital. In simple words, working capital
refers to that part of the firm’s capital which is required for financing short- term or
current assets such as cash, marketable securities, debtors & inventories. Funds, thus,
invested in current assets keep revolving fast and are being constantly converted in to
cash and this cash flows out again in exchange for other current assets. Hence, it is also
known as revolving or circulating capital or short term capital.
Assets which can convert in to cash within a short period normally one accounting year.
CONSTITUENTS OF CURRENT ASSETS
1) Cash in hand and cash at bank

2) Bills receivables
3) Sundry debtors
4) Short term loans and advances.
5) Inventories of stock as:
a. Raw material
b. Work in process
c. Stores and spares
d. Finished goods
6) Temporary investment of surplus funds.
7) Prepaid expenses
8) Accrued incomes.
9) Marketable securities.
Page | 4

In a narrow sense, the term working capital refers to the net working. Net
working capital is the excess of current assets over current liability, or, say:
NET WORKING CAPITAL = CURRENT ASSETS – CURRENT LIABILITIES.
Net working capital can be positive or negative. When the current assets exceeds
the current liabilities are more than the current assets. Current liabilities are those
liabilities, which are intended to be paid in the ordinary course of business within a short
period of normally one accounting year out of the current assets or the income business.
CONSTITUENTS OF CURRENT LIABILITIES
1. Accrued or outstanding expenses.

2. Short term loans, advances and deposits.
3. Dividends payable.
4. Bank overdraft.
5. Provision for taxation, if it does not amt. to app. Of profit.
6. Bills payable.
7. Sundry creditors.
The gross working capital concept is financial or going concern concept whereas
net working capital is an accounting concept of working capital. Both the concepts have
their own merits.
The gross concept is sometimes preferred to the concept of working capital for the
following reasons:
1. It enables the enterprise to provide correct amount of working capital at correct

time.
2. Every management is more interested in total current assets with which it has to
operate then the source from where it is made available.
3. It take into consideration of the fact every increase in the funds of the enterprise
would increase its working capital.
Page | 5

4. This concept is also useful in determining the rate of return on investments in

working capital.
CLASSIFICATION OF WORKING CAPITAL
Working capital may be classified in two ways:
 On the basis of concept.

 On the basis of time.
On the basis of concept working capital can be classified as gross working capital
and net working capital. On the basis of time, working capital may be classified as:
 Permanent or fixed working capital.

 Temporary or variable working capital
PERMANENT OR FIXED WORKING CAPITAL
Permanent or fixed working capital is minimum amount which is required to ensure

effective utilization of fixed facilities and for maintaining the circulation of current
assets. Every firm has to maintain a minimum level of raw material, work- in-process,
finished goods and cash balance. This minimum level of current assts is called permanent
or fixed working capital as this part of working is permanently blocked in current assets.
As the business grow the requirements of working capital also increases due to increase
in current assets.
TEMPORARY OR VARIABLE WORKING CAPITAL
Temporary or variable working capital is the amount of working capital which is

required to meet the seasonal demands and some special exigencies. Variable working
capital can further be classified as seasonal working capital and special working capital.
The capital required to meet the seasonal need of the enterprise is called seasonal
working capital. Special working capital is that part of working capital which is required
Page | 6

to meet special exigencies such as launching of extensive marketing for conducting

research, etc.
Temporary working capital differs from permanent working capital in the sense
that is required for short periods and cannot be permanently employed gainfully in the
business.
IMPORTANCE OR ADVANTAGE OF ADEQUATE WORKING CAPITAL
 SOLVENCY OF THE BUSINESS: Adequate working capital helps in

maintaining the solvency of the business by providing uninterrupted of
production.
 Goodwill: Sufficient amount of working capital enables a firm to make prompt
payments and makes and maintain the goodwill.
 Easy loans: Adequate working capital leads to high solvency and credit standing
can arrange loans from banks and other on easy and favorable terms.
 Cash Discounts: Adequate working capital also enables a concern to avail cash
discounts on the purchases and hence reduces cost.
 Regular Supply of Raw Material: Sufficient working capital ensures regular
supply of raw material and continuous production.
 Regular Payment of Salaries, Wages And Other Day TO Day Commitments: It
leads to the satisfaction of the employees and raises the morale of its employees,
increases their efficiency, reduces wastage and costs and enhances production and
profits.
 Exploitation of Favorable Market Conditions: If a firm is having adequate
working capital then it can exploit the favorable market conditions such as
purchasing its requirements in bulk when the prices are lower and holdings its
inventories for higher prices.
 Ability to Face Crises: A concern can face the situation during the depression.
Page | 7

 Quick And Regular Return On Investments: Sufficient working capital enables a

concern to pay quick and regular of dividends to its investors and gains
confidence of the investors and can raise more funds in future.
 High Morale: Adequate working capital brings an environment of securities,
confidence, high morale which results in overall efficiency in a business.
EXCESS OR INADEQUATE WORKING CAPITAL
Every business concern should have adequate amount of working capital to run its
business operations. It should have neither redundant or excess working capital nor
inadequate nor shortages of working capital. Both excess as well as short working capital
positions are bad for any business. However, it is the inadequate working capital which is
more dangerous from the point of view of the firm.
DISADVANTAGES OF REDUNDANT OR EXCESSIVE WORKING CAPITAL
1. Excessive working capital means ideal funds which earn no profit for the firm
and business cannot earn the required rate of return on its investments.
2. Redundant working capital leads to unnecessary purchasing and accumulation of
inventories.
3. Excessive working capital implies excessive debtors and defective credit policy
which causes higher incidence of bad debts.
4. It may reduce the overall efficiency of the business.
5. If a firm is having excessive working capital then the relations with banks and
other financial institution may not be maintained.
6. Due to lower rate of return n investments, the values of shares may also fall.
7. The redundant working capital gives rise to speculative transactions
DISADVANTAGES OF INADEQUATE WORKING CAPITAL
Every business needs some amounts of working capital. The need for working
capital arises due to the time gap between production and realization of cash from sales.
Page | 8

There is an operating cycle involved in sales and realization of cash. There are time gaps
in purchase of raw material and production; production and sales; and realization of cash.
Thus working capital is needed for the following purposes:
 For the purpose of raw material, components and spares.

 To pay wages and salaries
 To incur day-to-day expenses and overload costs such as office expenses.
 To meet the selling costs as packing, advertising, etc.
 To provide credit facilities to the customer.
 To maintain the inventories of the raw material, work-in-progress, stores and
spares and finished stock.
For studying the need of working capital in a business, one has to study the
business under varying circumstances such as a new concern requires a lot of funds to
meet its initial requirements such as promotion and formation etc. These expenses are
called preliminary expenses and are capitalized. The amount needed for working capital
depends upon the size of the company and ambitions of its promoters. Greater the size of
the business unit, generally larger will be the requirements of the working capital.
The requirement of the working capital goes on increasing with the growth and
expensing of the business till it gains maturity. At maturity the amount of working capital
required is called normal working capital.
There are others factors also influence the need of working capital in a business.
FACTORS DETERMINING THE WORKING CAPITAL REQUIREMENTS
1. NATURE OF BUSINESS: The requirements of working is very limited in public

utility undertakings such as electricity, water supply and railways because they
offer cash sale only and supply services not products, and no funds are tied up in
inventories and receivables. On the other hand the trading and financial firms
Page | 9

requires less investment in fixed assets but have to invest large amt. of working
capital along with fixed investments.
2. SIZE OF THE BUSINESS: Greater the size of the business, greater is the
requirement of working capital.
3. PRODUCTION POLICY: If the policy is to keep production steady by
accumulating inventories it will require higher working capital.
4. LENTH OF PRDUCTION CYCLE: The longer the manufacturing time the raw
material and other supplies have to be carried for a longer in the process with
progressive increment of labor and service costs before the final product is
obtained. So working capital is directly proportional to the length of the
manufacturing process.
5. SEASONALS VARIATIONS: Generally, during the busy season, a firm requires
larger working capital than in slack season.
6. WORKING CAPITAL CYCLE: The speed with which the working cycle
completes one cycle determines the requirements of working capital. Longer the
cycle larger is the requirement of working capital.
t o
eb
D rs
Fi n
ed
ish
o s
G a sh
C
rW o
P rkin
ges s ateR riaw ls
M
Page | 10

7. RATE OF STOCK TURNOVER: There is an inverse co-relationship between the

question of working capital and the velocity or speed with which the sales are
affected. A firm having a high rate of stock turnover wuill needs lower amt. of
working capital as compared to a firm having a low rate of turnover.
8. CREDIT POLICY: A concern that purchases its requirements on credit and sales
its product / services on cash requires lesser amt. of working capital
9. BUSINESS CYCLE: In period of boom, when the business is prosperous, there is
need for larger amt. of working capital due to rise in sales, rise in prices,
optimistic expansion of business, etc. On the contrary in time of depression, the
business contracts, sales decline, difficulties are faced in collection from debtor
and the firm may have a large amt. of working capital.
10. RATE OF GROWTH OF BUSINESS: In faster growing concern, we shall require
large amt. of working capital.
11. EARNING CAPACITY AND DIVIDEND POLICY: Some firms have more
earning capacity than other due to quality of their products, monopoly conditions,
etc. Such firms may generate cash profits from operations and contribute to their
working capital. The dividend policy also affects the requirement of working
capital. A firm maintaining a steady high rate of cash dividend irrespective of its
profits needs working capital than the firm that retains larger part of its profits and
does not pay so high rate of cash dividend.
12. PRICE LEVEL CHANGES: Changes in the price level also affect the working
capital requirements. Generally rise in prices leads to increase in working capital.
Others factors:
 Operating efficiency.
 Management ability.
 Irregularities of supply.
 Import policy.
 Asset structure.
 Importance of labor.
Page | 11

 Banking facilities, etc.
MANAGEMENT OF WORKING CAPITAL
Management of working capital is concerned with the problem that arises in

attempting to manage the current assets, current liabilities. The basic goal of working
capital management is to manage the current assets and current liabilities of a firm in
such a way that a satisfactory level of working capital is maintained, i.e. it is neither
adequate nor excessive as both the situations are bad for any firm. There should be no
shortage of funds and also no working capital should be ideal. Working capital
management polices of a firm has a great on its probability, liquidity and structural health
of the organization. So working capital management is three dimensional in nature as
1. It concerned with the formulation of policies with regard to profitability,

liquidity and risk.
2. It is concerned with the decision about the composition and level of current
assets.
3. It is concerned with the decision about the composition and level of current
liabilities.
WORKING CAPITAL ANALYSIS
As we know working capital is the life blood and the center of a business.
Adequate amount of working capital is very much essential for the smooth running of the
business. And the most important part is the efficient management of working capital in
right time. The liquidity position of the firm is totally effected by the management of
working capital. So, a study of changes in the uses and sources of working capital is
necessary to evaluate the efficiency with which the working capital is employed in a
business. This involves the need of working capital analysis.
The analysis of working capital can be conducted through a number of devices, such as:
1. Ratio analysis.
Page | 12

2. Fund flow analysis.

3. Budgeting.
RATIO ANALYSIS
A ratio is a simple arithmetical expression one number to another. The technique

of ratio analysis can be employed for measuring short-term liquidity or working capital
position of a firm. The following ratios can be calculated for these purposes:
1. Current ratio.
2. Quick ratio
3. Absolute liquid ratio
4. Inventory turnover.
5. Receivables turnover.
6. Payable turnover ratio.
7. Working capital turnover ratio.
8. Working capital leverage
9. Ratio of current liabilities to tangible net worth.
FUND FLOW ANALYSIS
Fund flow analysis is a technical device designated to the study the source from
which additional funds were derived and the use to which these sources were put. The
fund flow analysis consists of:
a. Preparing schedule of changes of working capital

b. Statement of sources and application of funds.
Page | 13

It is an effective management tool to study the changes in financial position

(working capital) business enterprise between beginning and ending of the financial
dates.
WORKING CAPITAL BUDGET
A budget is a financial and / or quantitative expression of business plans and

polices to be pursued in the future period time. Working capital budget as a part of the
total budge ting process of a business is prepared estimating future long term and short
term working capital needs and sources to finance them, and then comparing the
budgeted figures with actual performance for calculating the variances, if any, so that
corrective actions may be taken in future. He objective working capital budget is to
ensure availability of funds as and needed, and to ensure effective utilization of these
resources. The successful implementation of working capital budget involves the
preparing of separate budget for each element of working capital, such as, cash,
inventories and receivables etc.
ANALYSIS OF SHORT–TERM FINANCIAL POSITION OR TEST OF LIQUIDITY

The short –term creditors of a company such as suppliers of goods of credit and
commercial banks short-term loans are primarily interested to know the ability of a firm
to meet its obligations in time. The short term obligations of a firm can be met in time
only when it is having sufficient liquid assets. So to with the confidence of investors,
creditors, the smooth functioning of the firm and the efficient use of fixed assets the
liquid position of the firm must be strong. But a very high degree of liquidity of the firm
being tied – up in current assets. Therefore, it is important proper balance in regard to the
liquidity of the firm. Two types of ratios can be calculated for measuring short-term
financial position or short-term solvency position of the firm.
1. Liquidity ratios.
Page | 14

2. Current assets movements ‘ratios.
LIQUIDITY RATIOS
Liquidity refers to the ability of a firm to meet its current obligations as and when
these become due. The short-term obligations are met by realizing amounts from current,
floating or circulating assts. The current assets should either be liquid or near about
liquidity. These should be convertible in cash for paying obligations of short-term nature.
The sufficiency or insufficiency of current assets should be assessed by comparing them
with short-term liabilities. If current assets can pay off the current liabilities then the
liquidity position is satisfactory. On the other hand, if the current liabilities cannot be met
out of the current assets then the liquidity position is bad. To measure the liquidity of a
firm, the following ratios can be calculated:
1. CURRENT RATIO
2. QUICK RATIO
3. ABSOLUTE LIQUID RATIO
CURRENT RATIO
Current Ratio, also known as working capital ratio is a measure of general

liquidity and its most widely used to make the analysis of short-term financial position or
liquidity of a firm. It is defined as the relation between current assets and current
liabilities. Thus,
CURRENT ASSETS
CURRENT RATIO =
CURRENT LIABILITES
The two components of this ratio are:
1) CURRENT ASSETS
Page | 15

2) CURRENT LIABILITES
Current assets include cash, marketable securities, bill receivables, sundry

debtors, inventories and work-in-progresses. Current liabilities include outstanding
expenses, bill payable, dividend payable etc.
A relatively high current ratio is an indication that the firm is liquid and has the
ability to pay its current obligations in time. On the hand a low current ratio represents
that the liquidity position of the firm is not good and the firm shall not be able to pay its
current liabilities in time. A ratio equal or near to the rule of thumb of 2:1 i.e. current
assets double the current liabilities is considered to be satisfactory.
QUICK RATIO
Quick ratio is a more rigorous test of liquidity than current ratio. Quick ratio may
be defined as the relationship between quick/liquid assets and current or liquid liabilities.
An asset is said to be liquid if it can be converted into cash with a short period without
loss of value. It measures the firms’ capacity to pay off current obligations immediately.
QUICK ASSETS
QUICK RATIO =
CURRENT LIABILITES
Where Quick Assets are:
1) Marketable Securities
2) Cash in hand and Cash at bank.
3) Debtors.
A high ratio is an indication that the firm is liquid and has the ability to meet its
current liabilities in time and on the other hand a low quick ratio represents that the firms’
liquidity position is not good.
As a rule of thumb ratio of 1:1 is considered satisfactory. It is generally thought

that if quick assets are equal to the current liabilities then the concern may be able to
Page | 16

meet its short-term obligations. However, a firm having high quick ratio may not have a
satisfactory liquidity position if it has slow paying debtors. On the other hand, a firm
having a low liquidity position if it has fast moving inventories.
ABSOLUTE LIQUID RATIO

Although receivables, debtors and bills receivable are generally more liquid than
inventories, yet there may be doubts regarding their realization into cash immediately or
in time. So absolute liquid ratio should be calculated together with current ratio and acid
test ratio so as to exclude even receivables from the current assets and find out the
absolute liquid assets. Absolute Liquid Assets includes:
ABSOLUTE LIQUID ASSETS

ABSOLUTE LIQUID RATIO =
CURRENT LIABILITIES
ABSOLUTE LIQUID ASSETS = CASH & BANK BALANCES.
CURRENT ASSETS MOVEMENT RATIOS

Funds are invested in various assets in business to make sales and earn profits.
The efficiency with which assets are managed directly affects the volume of sales. The
better the management of assets, large is the amount of sales and profits. Current assets
movement ratios measure the efficiency with which a firm manages its resources. These
ratios are called turnover ratios because they indicate the speed with which assets are
converted or turned over into sales. Depending upon the purpose, a number of turnover
ratios can be calculated. These are:
1. Inventory Turnover Ratio

2. Debtors Turnover Ratio
3. Creditors Turnover Ratio
4. Working Capital Turnover Ratio
The current ratio and quick ratio give misleading results if current assets include
high amount of debtors due to slow credit collections and moreover if the assets include
Page | 17

high amount of slow moving inventories. As both the ratios ignore the movement of
current assets, it is important to calculate the turnover ratio.
INVENTORY TURNOVER OR STOCK TURNOVER RATIO:
Every firm has to maintain a certain amount of inventory of finished goods so as

to meet the requirements of the business. But the level of inventory should neither be too
high nor too low. Because it is harmful to hold more inventory as some amount of capital
is blocked in it and some cost is involved in it. It will therefore be advisable to dispose
the inventory as soon as possible.
COST OF GOOD SOLD

INVENTORY TURNOVER RATIO =
AVERAGE INVENTORY
Inventory turnover ratio measures the speed with which the stock is converted
into sales. Usually a high inventory ratio indicates an efficient management of inventory
because more frequently the stocks are sold; the lesser amount of money is required to
finance the inventory. Whereas low inventory turnover ratio indicates the inefficient
management of inventory. A low inventory turnover implies over investment in
inventories, dull business, poor quality of goods, stock accumulations and slow moving
goods and low profits as compared to total investment.
OPENING STOCK +CLOSING STOCK

AVERAGE STOCK =
2
INVENTORY CONVERSION PERIOD:
INVENTORY CONVERSION PERIOD = 365 ¿ ¿
DEBTORS TURNOVER RATIO :

A concern may sell its goods on cash as well as on credit to increase its sales and
Page | 18

a liberal credit policy may result in tying up substantial funds of a firm in the form of
trade debtors. Trade debtors are expected to be converted into cash within a short period
and are included in current assets. So liquidity position of a concern also depends upon
the quality of trade debtors. Two types of ratio can be calculated to evaluate the quality of
debtors.
a) Debtors Turnover Ratio

b) Average Collection Period
TOTAL SALES (CREDIT )

DEBTORS TURNOVER RATIO =
AVERAGE DEBTORS
Debtor’s velocity indicates the number of times the debtors are turned over during
a year. Generally higher the value of debtor’s turnover ratio the more efficient is the
management of debtors/sales or more liquid are the debtors. Whereas a low debtors
turnover ratio indicates poor management of debtors/sales and less liquid debtors. This
ratio should be compared with ratios of other firms doing the same business and a trend
may be found to make a better interpretation of the ratio.
OPENING DEBTOR+cLOSING dEBTOR

AVERAGE DEBTORS =
2

AVERAGE COLLECTION PERIOD:
NO .OF WORKING DAYS

Average Collection Period =
DEBTOR TURNOVER RATIO
The average collection period ratio represents the average number of days for
which a firm has to wait before its receivables are converted into cash. It measures the
quality of debtors. Generally, shorter the average collection period the better is the
Page | 19

quality of debtors as a short collection period implies quick payment by debtors and vice-
versa.
WORKING CAPITAL TURNOVER RATIO:
Working capital turnover ratio indicates the velocity of utilization of net working
capital. This ratio indicates the number of times the working capital is turned over in the
course of the year. This ratio measures the efficiency with which the working capital is
used by the firm. A higher ratio indicates efficient utilization of working capital and a
low ratio indicates otherwise. But a very high working capital turnover is not a good
situation for any firm.
Cost of Sales
Working Capital Turnover Ratio =
Net Working Capital
SALES
Working Capital Turnover =
NETWORKING CAPITAL

CAHPTER - 2
RESEARCH DESIGN
TITLE OF THE STUDY:
“A study on Working capital management at Anu Solar Power Pvt Ltd”
OBJECTIVES OF THE STUDY

Page | 20

Study of the working capital management is important because unless the

working capital is managed effectively, monitored efficiently planed properly and
reviewed periodically at regular intervals to remove bottlenecks if any the company
cannot earn profits and increase its turnover. With this primary objective of the study, the
following further objectives are framed for a depth analysis.
 To study the working capital management of Anu Solar Power Pvt Ltd.
 To study the optimum level of current assets and current liabilities of the
company.
 To study the liquidity position through various working capital related ratios.
 To study the working capital components such as receivables accounts, cash
management, Inventory position
 To study the way and means of working capital finance of the Anu Solar Power
Pvt Ltd
 To estimate the working capital requirement of Anu Solar Power Pvt Ltd
 To study the operating and cash cycle of the company.
Scope of the study
The scope of the study is identified after and during the study is conducted. The
study of working capital is based on tools like trend Analysis, Ratio Analysis, working
capital leverage, operating cycle etc. Further the study is based on last 5 years Annual
Reports of Anu Solar Power Pvt Ltd. And even factors like competitor’s analysis,
industry analysis were not considered while preparing this project.
Limitations of the study
Following limitations were encountered while preparing this project:
Page | 21

1) Limited data: This project has completed with annual reports; it just
constitutes one part of data collection i.e. secondary. There were
limitations for primary data collection because of confidentiality.
2) Limited period: This project is based on five year annual reports.
Conclusions and recommendations are based on such limited data. The
trend of last five year may or may not reflect the real working capital
position of the company
3) Limited area: Also it was difficult to collect the data regarding the
competitors and their financial information. Industry figures were also
difficult to get
Research Methodology
Types of data collection

There are two types of data collection methods available.
1. Primary data collection

2. Secondary data collection
 Primary data:
The primary data is that data which is collected fresh or first hand, and for
first time which is original in nature. Primary data can collect through personal
interview, questionnaire etc. to support the secondary data.
 Secondary data collection method: The secondary data are those which have
already collected and stored. Secondary data easily get those secondary data from
records, journals, annual reports of the company etc. It will save the time, money
and efforts to collect the data. Secondary data also made available through trade
magazines, balance sheets, books etc. This project is based on primary data
collected through personal interview of head of account department, head of SQC
department and other concerned staff member of finance department. But primary
data collection had limitations such as matter confidential information thus project
Page | 22

is based on secondary information collected through five years annual report of

the company, supported by various books and internet sides. The data collection
was aimed at study of working capital management of the company Project is
based on Annual Reports of the company
Page | 23

CHAPTER-3
COMPANY PROFILE
Company Overview
If you are looking for a renewable energy company with as illustrious a

past as Anu Solar Power, you will find none. With roots that hark back to the
entrepreneurial, yet nationalistic idealism of the mid-seventies, Anu Solar Power was set
up with a vision to make India an energy sufficient country. The founding fathers of this
growing organization had a dream to see India’s economy built on environmentally
friendly and sustainable renewable energy, and it is this dream that propels Anu Solar on.
Anu Solar Power is a pioneer on numerous fronts and has a blazing trail of
first’s to its credit. Our founders pioneered the introduction of bio-mass gasifiers for the
first time in India, we launched ‘Swosthe’ – smokeless chula for household cooking,
introduced the first of its kind solar water heaters with mild steel collectors, developed
the first indigenous fully automatic LPG baking oven- a leader in its space even today,
and established the first and only dedicated NBFC, Nagarjuna Credits and Capital Ltd in
the country to finance renewable energy products!
With a strong and sturdy stamp of domain expertise and associations at

multiple – government and industrial – levels, we have shape the direction of the solar
energy sector in India. Today, Anu Solar Power stands head and shoulders about
competition for world class products that are indigenously developed for the Indian
masses.
Headquartered in Bangalore, few companies engaged in the solar energy

sector can boast of our size, spread of products and services or delivery of support. Our
seamlessly integrated products are backed by extensive and intensive research, and
perfected on par with international standards.
Page | 24

Our large and constantly growing R&D team is driven by a deep

commitment to innovation, and our products are developed keeping in mind niche needs
of both domestic and commercial customers.
We constantly raise the bar on performance, and thus, are early adopters of
evacuated tube collector systems in the country. We are also one of the first to offer
modular systems to commercial and industrial users. We now aggressively move towards
adopting glass reinforced polymer (GRP) tanks, which ensure high product durability to
our customers. The hallmark of Anu Solar Power products is quality and perfection, it’s
what leads us to assemble our LED lights in-house rather than have them imported, and
distributed. Our high quality inverters are developed in-house too.
Our full-fledged solar water heating system and solar photovoltaic system

manufacturing unit conforms to ISI and BIS standards, and is UNDP approved under the
United Nations Program for India. Our factory manufactures and sells over 15,000 solar
units a year and has thus far facilitated installation of over 2 lakh units. A significant
move towards reducing greenhouse gas and carbon emissions, most would agree.
Anu Solar’s installation and post-sale support is managed by trained

personnel, who spend time understanding customer needs and deliver highly customized
solutions cost effectively. With wide industry knowledge and exposure, our support
personnel are trained to anticipate customer needs and deliver services surpassing their
expectation.
Our motto is not just to develop exceptional solar energy products and deliver
them with a smile, but to ensure happy customers. These core values suffuse all our
activities and propel us as one of the most respected solar energy product companies in
the country.
Page | 25

Vision
To pioneer the renewable energy sector with products that are indigenously
developed qualitatively superior and affordable to adopt
Mission
 To be the preferred choice of customers desiring

 to adopt renewable energy and energy efficient products and services
 To provide world class products and services which are value driven and
help reduce
dependence on non-renewable energy sources
 To facilitate pro-environment choices that allow people to reduce their
carbon footprint and protect the environment for a better tomorrow.
Values:
 Customer Delight
 Respect for Employees
 Product Innovation
 Flourishing Environment
We are a service oriented company that likes to WOW our customers every time.
We innovate, deliver world class products and support our customers as they make
decisions of foresight. We put our customers first and their contentment is our true
reward.
We believe our employees are our indispensable strength. They power us on to

greater heights of achievement and excellence. We have a tremendous respect for their
service and put employee interests above all other aspects of business.
Page | 26

Creativity and innovation are the sacred tenets of our existence. With or without
Government support we are committed to innovating in the field of alternate, renewable
energy, so that our consumers can access high quality products at affordable rates.
We are deeply committed to change, and an environment that is safe and healthy.
We will do all in our power to give consumers environmentally friendly choices, and
develop products that a qualitatively superior and less burdensome on the environment.
Management
MEET OUR TEAM
(Managing Director)
Mr. T J Joseph has played a stellar role in the renewable

energy sector in India. His foresight guided him to established Anu
Solar Power Pvt Ltd with an aim to develop and offer high value
renewable energy products and services. Mr Joseph’s pioneering spirit has deeply
impacted the growth of Anu Solar Power Pvt Ltd. Whose mission is to reduce the
nation’s dependency on fossil fuels while accessing reliable and better renewable energy.
Mr Joseph has played a thought leadership role in launching I-Hot, the first pay per use
solar powered water facility in the world.
Mr. T J Joseph has been conferred the CMO Asia Award in 2010 for excellence in
promoting solar water heaters in India and is the motivating force steering Anu Solar
towards a one lakh strong employee base.
Mr. Joseph is a science graduate and a member of the Institute of Chartered

Accountants of India with over 28 years of experience in the renewable energy sector.
(Technical Director)
Page | 27

Mr Jomy Joseph is an engineer by profession. He has been the most recent

addition to the Anu Solar Management. He holds a Bachelor’s Degree in Electrical &
Electronics and has done his Masters in Global Production Engineering from the
Technical University Of Berlin, Germany, with his specialization being in the field of
solar technology.
He had successfully interned at SEI AG, Germany and was actively involved in
the technology transfer between SEI AG and Anu Solar for the solar power generators. In
his current capacity as Technical Director, he is actively involved with the engineering
team at Anu to innovate and explore newer technologies in the field of renewable energy.
He is actively involved in the introduction of Anu Smart Solar Power Generators to the
Indian Market.
JIBIN JOSEPH
Finance Director
Mr Jibin Joseph currently serves as the Finance Director of

Anu Solar Power Pvt Limited. He is a Business Graduate and is responsible for financial
accounting and reporting, Payroll preparation and administration, Budget preparation and
office administration. A young and energetic leader he has put systems in place for
smooth functioning of the organization.
(Director)
Erich, a qualified engineer with specialization in hydraulic
engineering and hydrology, founded his first Company in 1980.
Since then, he has increasingly overseen international projects and
has been working together with numerous international
organizations and development.
Page | 28

From 1987 to 1994 Mr. Hauck has held the post of technical expert for the
Thermie-Program, division hydropower, for DG XVII Energy of the European Union in
Brussels.. He has played at numerous international conferences as chairman and
participated in a number of published articles. He is also a member of several national
and international organizations. Erich Hauck is the Managing Director of Smart Power
Systems International GmbH, which has emerged as one of the founding companies in
SEI AG.
Since the year 2000, Smart battery generators which is developed by him and
patented are distributed worldwide. Realizing the huge potential of Solar Power
Generators in India and also the reduced manufacturing cost, in April of 2012, SEI AG
signed a JV with Anu Solar for in-house manufacturing of Solar Power Generators in
India.. With his vast experience in numerous related fields and urge to innovate
new technologies in the solar generator series, his vision is to take this industry to new
horizons.
Milestones
1987: Pioneered the introduction of Bio-mass gasifiers for the first time in India.
1989: Launched ‘Swosthe’ – smokeless chula for household cooking.
1991: Introduced first of its kind solar water heaters with mild steel collectors.
1996: Developed first indigenous fully automatic LPG baking oven- a leader in this
space even today.
2001: Established first and only dedicated NBFC, Nagarjuna Credits and Capital Ltd in
the country to finance renewable energy products.
2002: ISO certification received; early adaptors to quality.
2004: Company rechristened Anu Solar Power Pvt. Ltd with a renewed vision to stay
focused on solar energy.
Page | 29

2008: First to develop and introduce modular type system in evacuated tube collector
(ETC) for the Indian Market.
2008: Conceptualized India’s first clean development mechanism (CDM) project in solar
water heaters.
2009: Established India’s first renewable energy service company (ESCO).
2010: Introduced indigenously developed solar inverters in Indian market.
2011: Indigenously developed LED bulbs / street lights for Indian market.
2011: Accredited as Channel Partner for Ministry of New & Renewable Energy
(MNRE).
2012: Developed glass reinforced polymer (GRP) tanks – a permanent solution against
corrosion in solar water heaters for domestic and industrial applications.
2012: JV Partnership for Anu Smart Generators between Anu Solar Power Pvt Ltd and
Smart Energy systems International (SEI)
2014: Introduction of Portable Home Lighting Systems and a Wide Range of LED
Lumanries Introduced
2015: Moved to the New Manufacturing Facility In Peenya , Bangalore. State of the art
facility with a built area of over 140000 sqft making it one of the largest solar
manufacturing plant in the country. MNRE Channel Partner for Rooftop Solar Program
2016: Introduction of Solar Roof Tiles and its first successful Installation at a residence
in Thrissur for the first time ever in India.
2017: Own Store concept introduced in Karnataka with already 10 shops operational
Facilities
Page | 30

With extensive domain expertise in renewable energy, a culture that goes back to
the nationalistic entrepreneurial spirit of the seventies, and a modern state-of-the-art
research and development unit, Anu Solar Power Pvt. Ltd. Prides itself for offering solar
energy solutions that are indigenous and commercially viable.
Our foresight and tremendous grit have powered us forward and besides
numerous victories, we are today one of the largest evacuated tube collector based solar
water heating system manufacturer in India.
Manufacturing Facility:
We have a swank multi storied building with approximately

50,000 sq. ft. of floor space per floor. A state-of-the-art
facility, we have over 200 highly skilled and trained
personnel engaged in our manufacturing unit in Bangalore.
We also have a host of quality certifications from BIS, ISO
and Ministry of Natural and Renewable Energy that ensure the quality of our products is
on par with international standards.
Research and Development Unit:
Our research and development unit is constantly

incubating and engineering new ideas that can enhance
efficiency of solar water heaters and LED lights. Our
constant entrali is to develop renewable energy products
that affordable to the large masses of India, especially those
in rural areas where conventional sources of energy are infrequent. Our R&D facility is
engaged in reverse engineering and indigenously developing world class products.
Operational Excellence:
At our manufacturing unit you can expect only quality,

knowledge based, process driven operations that are
Page | 31

integrated through a SAP ERP. We thrive on automation and control over our
manufacturing, so that our customers access only the best products.
Trained Employee:
Besides the conventional training that our employees come

with, our 600+ manufacturing, support, sales and
administrative staff are also trained internally so they
understand the finer nuances and superiority of our product.
They are also trained to anticipate customer needs and
deliver solutions with a personalized touch and service oriented attitude.
Management Experts:
Our management and consultants are a host of experienced,

highly respected industry specialists. They come with
extensive exposure to the alternate and renewable energy
sector, and
imbibe our ethos
in the way Anu Solar is
managed from our head
office in Bangalore.
Certification:
Page | 32

Bureau of Indian Standards
Page | 33

Green Audit Solutions
Solar energy is the most abundant, easy and cost effective renewable energy to
harvest. It’s not just a sense of responsibility towards the environment, but legislative
compliance too that should propel you to explore and leverage renewable energy like that
from the sun. Solar voltaic panels can be non-obtrusively placed on the roof of your
building or home, it can help you reduce your demand for expensive polluting energy
generated from fossil fuel, and considerable reduce your monthly energy bill.
Important to remember is that while the initial investment may be high, the
renewable energy system be it a solar water heater or solar powered LED lights can last
for up to 15 or 20 years. The maintenance on this infrastructure is low and soon, the solar
energy harvesting system begins to pay for itself.
Are you wondering if your home, housing colony or company could be used to
harvest the energy of the sun?
Anu Solar Power has 27 years of deep domain expertise in developing world class
solar energy products, from solar water heaters to solar powered LED lights. Call us to
conduct a Green Audit of your location.
Our Green Audit Solution Involves:
 Extensive understanding of current situation
 Analysis of data gathered to locate areas of improvement
 Detail report on areas for improvement and optimization. Our report includes
budgets so you understand your total cost of ownership and investment
commitment
Since we research, develop, and manufacture an array of world class solar energy
products, Anu Solar Power can help you take your green audit to the next level and
implement it too.
Page | 34

 We can provide your home, housing colony, company or institution energy-saving

products
 Improve distribution routes and systems to reduce CO2 emissions
 Train your staff to manage the installation
 Put in place processes to monitor and maintain the infrastructure
Green Building Consulting from Anu Solar:
Interested in making a commitment to the environment and reducing your carbon

footprint, green building is the way to go. One need not think ‘green’ only when putting
up a new home, housing colony or commercial establishment, if you already have a
building and want to go green, you could still do so through a few, simple, cost effective
methods.
Prominent ways to reduce the impact of your building on the environment and
also make a statement that is pro-environment is to adopt solar water heaters and solar
powered LED lights.
With over 27 years of deep domain expertise and extensive knowledge of auditing
and implementing green solutions across a host of geographies and constructed areas, our
Page | 35

green building consultancy is process driven. At Anu Solar Power we offer you holistic
Solutions that can be easily and quickly implemented without burning a hole in
your pocket. We are sensitive to esthetics and offer solutions you would be proud to
implement.
At Anu Solar Power we have trained consultants who

work keeping in mind standards. We spend time
understanding your needs and deliver options that can
be implemented. Sourcing green materials can be time
consuming and exhaustive work, we help you run
through this process while accessing materials that suit
Page | 36

your budget. We also train your staff to get them on board with your green initiatives and
to continue infrastructure maintenance.
As a company engaged with research, development and manufacture of

indigenous world class solar water heaters and solar powered LED lights, we offer you
affordable options that are designed to last and are low on maintenance.
INDUSTRY PROFILE
Power is one of the most critical components of infrastructure crucial for the economic
growth and welfare of nations. The existence and development of adequate infrastructure
is essential for sustained growth of the Indian economy.
India’s power sector is one of the most diversified in the world. Sources of power
generation range from conventional sources such as coal, lignite, natural gas, oil, hydro
and nuclear power to viable non-conventional sources such as wind, solar, and
agricultural and domestic waste. Electricity demand in the country has increased rapidly
and is expected to rise further in the years to come. In order to meet the increasing
demand for electricity in the country, massive addition to the installed generating
capacity is required.
India ranks third among 40 countries in EY’s Renewable Energy Country Attractiveness
Index, on back of strong focus by the government on promoting renewable energy and
implementation of projects in a time bound manner.
India has moved up 73 spots to rank 26th in the World Bank's list of electricity
accessibility in 2017, according to Mr Piyush Goyal, Minister of State (Independent
Charge) for Power, Coal, Renewable Energy and Mines, Government of India.
In September 2017, the Government of India launched the Saubhagya scheme to provide
electricity connections to over 40 million families in rural and urban areas by December
2018 at a cost of US$ 2.5 billion.
Market Size
Page | 37

Indian power sector is undergoing a significant change that has redefined the
industry outlook. Sustained economic growth continues to drive electricity demand in
India. The Government of India’s focus on attaining ‘Power for all’ has accelerated
capacity addition in the country. At the same time, the competitive intensity is increasing
at both the market and supply sides (fuel, logistics, finances, and manpower).
Total installed capacity of power stations in India stood at 330,860.58 Megawatt (MW)
as on December, 2017.
The Ministry of Power has set a target of 1,229.4 billion units (BU) of electricity
to be generated in the financial year 2017-18, which is 50 BU’s higher than the target for
2016-17. The annual growth rate in renewable energy generation has been estimated to be
27 per cent and 18 per cent for conventional energy.
The Indian solar industry has installed a total of 2,247 megawatts (MW) in the
third quarter of 2017, from 1,947 MW in the second quarter of 2017. The cumulative
installed capacity reached 7,149 MW in the first nine months of 2017, covering more
than one-third of total new power capacity addition in 2017.
Two under-construction hydro projects of NHPC in Himachal Pradesh and
Jammu & Kashmir (J&K), expected to be commissioned in 2018, will produce 4,458.69
million units of additional power, according to the Ministry of Power, Government of
India.
The total estimated potential of tidal energy in India is about 8,000 megawatt
(MW), of which 7,000 MW is in the Gulf of Kambhat, 1,200 MW is in the Gulf of Kutch
and 100 MW in the Gangetic Delta.
The number of small hydro power projects set up in India stood at 1,085 with total
installed capacity of 4,399.355 megawatt (MW) as of November 30, 2017.
Investment Scenario
Around 293 global and domestic companies have committed to generate 266 GW
of solar, wind, mini-hydel and biomass-based power in India over the next 5–10 years.
The initiative would entail an investment of about US$ 310–350 billion.
Page | 38

Between April 2000 and September 2017, the industry attracted US$ 12.3 billion in
Foreign Direct Investment (FDI), accounting for 3.44 per cent of total FDI inflows in
India.
Some major investments and developments in the Indian power sector are as follows:
 Energy Efficiency Services Ltd (EESL) has raised US$ 454 million from Global
Environment Facility (GEF) for its energy-efficiency projects in an attempt to
boost India's move towards becoming a low carbon economy.
 IL&FS Financial Services Ltd has partnered with Jammu and Kashmir (J&K)
Bank Ltd to finance nine hydropower projects in J&K with a total capacity of
2,000 MW, which require financing of around Rs 20,000 crore (US$ 3.12 billion).
 Sterlite Power has won one of the largest 1,800 km power transmission project
worth US$ 800 million in Brazil, the company's third project in Brazil and the
largest ever project won by an Indian company in Latin America.
 With the aim of giving a boost to renewable energy, the State Bank of India (SBI)
and the World Bank have decided to sanction credit worth Rs 2,317 crore (US$
356.82 million) to seven corporates towards solar rooftop projects to generate a
total of 575 megawatt (MW) of solar energy.
 India added 467 MW of grid interactive wind power capacity between January-
November 2017, while wind power projects with cumulative capacity of 9,500
MW are expected to be bid out by March 2018, according to Mr R K Singh,
Minister of State (Independent Charge) for Power and New & Renewable Energy,
Government of India.
 A total of 26.3 million households which are below poverty line (BPL) have been
electrified under the Rural Electrification component of Deen Dayal Upadhyay
Gram Jyoti Yojana (DDUGJY), according to the Ministry of Power, Government
of India.
Government Initiatives
Page | 39

The Government of India has identified power sector as a key sector of focus so
as to promote sustained industrial growth. Some initiatives by the Government of India to
boost the Indian power sector:
 "Saubhagya Yojana" programme was launched by Mr Raghubar Das, Chief

Minister, and Jharkhand to provide electricity to all 29,376 villages.
 The companies within the solar power industry in India, specifically the ones
involved in the operation and maintenance (O&M) of solar power plants have
welcomed the Government of India's move to introduce regulations for operating
drones by February 2017.
 Over 280 million LED bulbs were distributed to consumers in India by Energy
Efficiency Services Limited (EESL) under Unnati Jyoti by Affordable LEDs for
All (UJALA) as on December 19, 2017 and 524.3 million LED bulbs were sold
by private players till October 2017.
 In order to lower India's crude oil imports, the Government of India is going to
promote coal gasification to convert high ash coal into methanol that can be used
as cooking gas and transportation fuels^, according to Mr V K Saraswat, Member
of NITI Aayog.
 Initiatives taken by the Energy Efficiency Services (EESL) have resulted in
energy savings of 37 billion kWh and reduction in greenhouse gas (GHG)
emissions by 30 million tonnes.
 The Union and state governments have agreed to implement the Direct Benefit
Transfer (DBT) scheme in the electricity sector for better targeting of subsidies,
according to Mr Raj Kumar Singh, Minister of State for Power (Independent
Charge).
 All the states and union territories of India are on board to fulfil the Government
of India's vision of ensuring 24x7 affordable and quality power for all by March
2019, stated Mr Raj Kumar Singh, Union Minister of State (IC) for Power and
New & Renewable Energy, Government of India.
Page | 40

 Uttar Pradesh Electricity Regulatory Commission, regulator of power sector in

Uttar Pradesh, has approved several steps to strengthen the financial position of
state utilities and increase opportunities for companies in the transmission and
distribution (T&D) EPC business.
 The Department of Economic Affairs, Government of India, signed a guarantee
agreement for IBRD/CTF loan worth US$ 98 million and grant agreement for
US$ 2 million with the World Bank for 'shared infrastructure for solar parks
project'.
The Road Ahead

The Government of India has released its roadmap to achieve 175 GW capacity in
renewable energy by 2022, which includes 100 GW of solar power and 60 GW of wind
power.The Union Government of India is preparing a 'rent a roof' policy for supporting
its target of generating 40 gigawatts (GW) of power through solar rooftop projects by
2022.
Coal-based power generation capacity in India, which currently stands at 192 GW
is expected to reach 330-441 GW by 2040##.
The 2026 forecast for India's non-hydro renewable energy capacity has been increased to
155 GW from 130 GW on the back of more than expected solar installation rates and
successful wind energy auctions.
India could become the world's first country to use LEDs for all lighting needs by
2019, thereby saving Rs 40,000 crore (US$ 6.23 billion) on an annual basis.
India’s installed solar power capacity reached 14,771.69 as of September 2017.
The government’s immediate goal is to generate two trillion units (kilowatt hours) of
energy by 2019. This means doubling the current production capacity to provide
24x7electricity for residential, industrial, commercial and agriculture use. A total of
16,064 villages out of 18,452 un-electrified villages in India have been electrified up to
December 2017 as part of the target to electrify all villages by May 1, 2018.
The Government of India is taking a number of steps and initiatives like 10-year tax
exemption for solar energy projects, etc., in order to achieve India's ambitious renewable
Page | 41

energy targets of adding 175 GW of renewable energy, including addition of 100 GW of

solar power, by the year 2022. The government has also sought to restart the stalled
hydro power projects and increase the wind energy production target to 60 GW by 2022
from the current 20 GW.
CHAPTER-3
DATA ANALYSIS AND INTERPRETATION
Table : 1
Table showing working capital requirement
(Amount in ‘000)
PARTICULARS 2016-17 2015-16 2014-15 2013-14 2012-13
CURRENT ASSETS,
LOANS AND
ADVANCES
(A) Current Assets :
Page | 42

(I) Stock of Stores, Loose 1,461.36 1,272.71 1,185.70 760.21 577.14

Tools, Dies Mechanical,
Electrical and Electronic
Spares (as taken, valued
and certified by the
Management) at lower of
cost or net realizable
value
(II) Stock-in-Trade (as

taken, valued and
Certified by the
Management)
(i) Raw Materials (at 14,317.94 10,226.30 6,784.72 6,784.72 4,732.51

lower of cost or net
realisable value)
(ii) Semi-Finished Goods 21,378.85 12,282.45 8,136.52 5,980.13 5,152.96

(at lower of cost or net
realisable value)
(iii) Finished Goods (at 2,758.11 1,304.87 740.80 1,926.75 994.98

realisable value)
Page | 43

(iv) Goods-in-Transit (at 158.40 174.04 48.00 1,080.36 537.96

Cost)
(v) Land as Stock in ---------- --------- --------- ----------- ---------

Trade (For Wind Mill)
(III) Sundry Debtors

(Unsecured, Considered
Good)
(i) Outstanding for a 11,959.53 13,965.12 6,312.86 3,714.84 3,162.09

period Exceeding six
month
(ii) Others 35,214.05 35,266.49 32,485.74 17,702.75 8,234.66
(IV) Cash and Bank

Balances
(a) Cash on Hand 5.40 7.48 7.19 7.30 7.83
(b) Balance with

Scheduled Banks:
(1) In Current Account 745.24 468.52 532.18 563.10 544.17
(2) Bank Deposit 5,322.64 255.68 717.00 1,890.00 285.59
Page | 44

(3) Unpaid Dividend 32.59 20.56 19.53 10.29 9 .59

Bank Account
(B) Loans and Advances

(Unsecured Considered
Good)
(1) Loans to Staff 11.47 17.08 15.73 14.86 8.82
(2) Advances recoverable 4,503.31 3,671.86 3117.02 2255.11 2014.95

in Cash or in Kind or for
value to be received
(3) Balance with 1,938.34 1,834.06 830.88 792.41 516.81

Collector of Custom, Port
Trust, Excise etc.
(4) Advance Payment of 1,038.67 196.48 ------------ ------------ ------------

Income Tax (Net of -- --
Provision)
TOTAL (A) 100,845.9 80,963.70 60,871.21 43,341.26 36,780.06
CURRENT
LIABILITIES
Page | 45

AND PROVISIONS
(A) Current
Liabilities
(1) Sundry Creditors 28,167.81 27,526.23 20,395.53 15,281.09 10,369.10
(2) Advance from 12,569.49 5,185.15 4,544.00 5,874.94 4,951.02

Customer
(3) Dividend Warrants 32.59 20.56 19.53 11.56 9.59

issued but not encashed
(Unpaid)
(4) Interest accrued but 97.16 162.85 57.19 55.27 62.15

not due
(B) Provisions
(1)Provision for Gratuity 680.58 479.20 ----------- 98.06 287.61
(2)Proposed Dividend 1,392.92 1,392.92 4 63.86 306.52 141.19
(3)Tax on Proposed 236.73 236.73 78.83 42.99 19.80

Dividend
TOTAL (B) 43,177.28 35,003.64 25,558.94 21,670.43 15,840.46
Page | 46

W.C required (A-B) 57,668.62 45,960.06 35,312.27 21,670.83 10939.60
Analysis
Working capital is the funding that a company needs to support its accounts
receivable and inventory, and is offset by the amount of funding it obtains from its
suppliers through accounts payable.
Working capital can have a much greater impact on a company’s cash flows than
the results of its operations. One of the best ways to positively impact the amount of cash
flow that a company spins off is to take tight control of its working capital and eliminate
much of the investment in this area.
After analysis the 5 year data we can conclude that the Working Capital
requirement is increasing year by year. We are looking increasing pattern in working
capital.
The company is managing working capital very precisely as we know that Anu
Solar is high working capital oriented organization. The sale is increasing year by year
which results into increase in working capital requirement. Anu Solar is getting new
order at regular interval as it gives importance to quality.
Investment in the current asset is also increasing with increase in the span. On the
other hand there is also increase in the current liabilities. From the above statement we
can say that current assets and current liabilities go hand in hand.
Graph 1
Graph showing the working capital requirement
Page | 47

(Amount in ‘000)
W.C required (A-B)

70,000.00
60,000.00 57,668.62
50,000.00 45,960.06
40,000.00 35,312.27
Amount
30,000.00
21,670.83
20,000.00
10,939.60
10,000.00
0.00
2016-17 2015-16 2014-15 2013-14 2012-13
years
Interpretation
The above graph depicts that the working capital requirement of the company has
been increased year by year. The net difference in the working capital requirement,
between the first year i.e., 2012 and the final year i.e., 2016-17 has been 46729020. The
increase in the working capital requirement is due to enlargement of the scale of
operations of the company.
Page | 48

Table: 2
Table Showing the Sales
(Amount in ‘000)
PARTICULARS 2017 2016 2015 2014 2013
MHE 37,490.13 30812.56 35102.13 15743.86 5810.2
Gear (Transmission
Equipments) 36,132.05 35,873.70 28423.36 21017.08 18893.6
WTG & Electricity

Generation 605.24 1,960.53 123.31 665 635.54
Export Sales 4,064.98 3,703.30 2430.7 2190.08 1629.17
Miscellaneous Sales 668.92 717.49 567.04 261.57 133.52
TOTAL SALES 78,961.32 73,067.58 66646.54 39877.59 27102.1
Page | 49

Graph: 1
Graph showing the sales
TOTAL SALES
90,000.00
80,000.00
70,000.00
60,000.00
50,000.00
40,000.00
30,000.00
20,000.00
10,000.00
0.00
2017 2016 2015 2014 2013
TOTAL SALES
Interpretation :
Here we have the sales figure of last 5 years. From the available data we can say
that the sale is increasing with increasing span. There should Sales increasing by 47, 67,
9, and 8 % in each every consecutive year. By this growth we can say that the company is
growing very rapidly in engineering sector. With increasing sales the company is trying
to make a great presence in the market. Anu Solar is also entering in new business which
results into increase in sales revenue.
Graph : 2
Graph showing the Material Handling Equipment Sales Industry wise

Page | 50

MHE SALES INDUSTRYWISE

1.72% 2.72% 4.3
4.7
6% 1%
9.86%
Wind Mill
Otheres
Mining
Port
Cement
55.83% Steel
Power
20.80%
Interpretation :
The sales of Material handling equipment from different industries, the highest
sales in the Power sector (55.83%), Steel (20.80%) and the lowest sales in wind mill
(1.72%) industries.
Graph : 3
Graph showing the solar power product sales industry wise
Page | 51

GEAR SALES INDUSTRYWISE

3% 4%
3% Mining
23% 6% Chemical & Fertilizers
7% Marine
Lift Gears
Sponge Iron
Plastic & Rubbers
Cement
9%
Sugar
15% Others
Steel Conversion
10% Material Handling / Power
11% 9%
Interpretation :
The sales in Solar Power Products with different industries, the highest sales in
the material handling equipment (23%), Steel Conversion (15%), Sugar (10%), and the
lowest sales in the Chemical & Fertilizers industry (3%), mining industry (3%).
Table : 3
Table showing the Inventories
PARTICULARS 2017 2016 2015 2014 2013
(i) Raw Materials 14,317.94 10,226.30 6,784.72 6,784.72 4,732.51

(at lower of
Page | 52

cost or net
realizable value)
(ii) Semi- 21,378.85 12,282.45 8,136.52 5,980.13 5,152.96

Finished Goods
(at lower of cost
or net realizable
value)
(iii) Finished 2,758.11 1,304.87 740.80 1,926.75 994.98

Goods (at lower
of cost or net
realizable value)
(iv) Goods-in- 158.40 174.04 48.00 1,080.36 537.96

Transit (at Cost)
Total 38,613.29 23,987.66 15,710.40 15,627.39 11,418.41
Interpretation :
In the first category, raw materials, an inventory increase can be caused by over
purchasing by a company, the elimination of a finished good that used to require specific
raw materials, or deliberate over purchasing by a company because of a very low level of
inventory accuracy that requires a company to keep excessive stocks on hand in order to
avoid stock-out problems.
Page | 53

By analyzing 5 year data we can about inventories we can say that the levels of
inventories are increasing year by year. There is an increasing trend in the inventory
level. As compare d to last year the level of inventory has been increased by 60 % which
indicates the growth of the company in Solar power sector. It is fact that the company
uses more inventories when there is demand in the market and Anu Solar is having in
great demand when quality comes first than other things. From other point of view we
can say that the liquidity of the firm is blocked in inventories but proper inventory on
other side is good due to uncertainty of availability of raw material in time.
Page | 54

Table : 4
Table showing the current assets
PARTICULARS 2017 2016 2015 2014 2013
(I) Stock of Stores, Loose

Tools, Dies
Mechanical, Electrical
and Electronic
1,461.36 1,272.71 1,185.70 760.21 577.14
and certified
by the Management) at
realizable value

taken, valued and
Certified by the
Management)
(i) Raw Materials (at

lower of
14,317.94 10,226.30 6,784.72 6,784.72 4,732.51
Page | 55


value)
(ii) Semi-Finished Goods

(at lower of
21,378.85 12,282.45 8,136.52 5,980.13 5,152.96

value)
(iii) Finished Goods (at

lower of
2,758.11 1,304.87 740.80 1,926.75 994.98

value)

Cost)

(Unsecured,
Considered Good) :
Page | 56


period
Exceeding six month
(ii) Others 35,214.05 35,266.49 32,485.74 17,702.75 8,234.66
(IV) Cash and Bank

Balances
(a) Cash on Hand 5.40 7.48 7.19 7.30 7.83
(b) Balance with

Scheduled Banks:
(1)In Current Account 745.24 468.52 532.18 563.10 544.17
(2) Bank Deposit 5,322.64 255.68 717.00 1,890.00 285.59
Page | 57

(3) Unpaid Dividend 32.59 20.56 19.53 10.29 9 .59

Bank Account
Total 93,354.11 75,244.22 56970.24 40,279.88 24,239.48
Interpretation :
Current assets are important to businesses because they are the assets that are used
to fund day-to-day operations and pay ongoing expenses and depending on the nature of
the business.
From the above table of 5 year current assets we can say that there is increasing
trend in current assets as the business is of such nature there is increase in blockage of
money in current assets more as compared to fixed assets. The level of current assets has
been increased by 24% as compared to last year which is a good symptom of growth.
Page | 58

Table : 5
Table showing the sundary debtors
PARTICULARS 2017 2016 2015 2014 2013
(I) Outstanding for a 11,959.53 13,965.12 6,312.86 3,714.84 3,162.09

period
Exceeding six month
(ii) Others 35,214.05 35,266.49 32,485.74 17,702.75 8,234.66
Total 47,173.58 49,229.61 38,798.60 21,417.59 11,396.75
Interpretation :
In the above table five years debtors’ information is given I which we can see that
there is increase in debtors except last year. The change might be occurred due to change
in collection policy, credit policy and others.
A simple logic is that debtors increases only when sales increases. More and more
debtors higher the chances of bad debts. When sales are increases the profit also
Page | 59

increases. If company decreases the debtors they can use the spare money in many
investment plans.
Table : 6
Table showing the loans and advances
PARTICULARS 2017 2016 2015 2014 2013
(1) Loans to Staff 11.47 17.08 15.73 14.86 8.82

in Cash or in
Kind or for value
to be received
(3) Balance with Collector 1,938.34 1,834.06 830.88 792.41 516.81

of Custom,
Port Trust, Excise etc.
(4) Advance Payment of 1,038.67 196.48 ----------- ------------- -------------

Income Tax - - -
Page | 60

(Net of Provision)
Total 7,491.79 5,719.48 3963.63 3,062.38 2,540.58
Interpretation :
If we analyze the above table we can say that there is increase in loans and
advances in more or less percentage.
The company is providing loans to staff which is good symptoms. Most of the
advances are given to the government for the purpose of taxes and other duties. From the
above table we can say that company is sincere in paying taxes and duties. The advances
recoverable are high which is good for the company. In the year 2016-17 the loans and
advances are increased by 30 % as compared to previous year which contribute highly to
the current assets.
Table : 7
Table showing the current laibilities
PARTICULARS 2017 2016 2015 2014 2013
(1)Sundry Creditors 28,167.81 27,526.23 20,395.53 15,281.09 10,369.10
Page | 61

(2)Advance from 12,569.49 5,185.15 4,544.00 5,874.94 4,951.02

Customer

issued
but not encashed

(Unpaid)

not due
TOTAL 40,867.05 32,894.79 25,016.25 21,222.86 15391.86
Interpretation :
The obligations are such as deferred dividend, trade credit, and unpaid taxes,
arising in the normal course of a business and due for payment within a year.
If we analyze the above table we can say that each and every item in the current
liabilities reveals uneven trend. But at aggregate level it shows an increasing trend Anu
Solar is charging 50 % of advance from the customer which increases the current
liabilities of the company. In 2016-17 current liabilities has been increased by 24% the
Page | 62

main reason behind that is increase in advances from the customer. It indicates change in
sales policy .While in 2015-16 current liabilities has been increased because of increase
in other liabilities by 32%. The company having minimum liability has good prestige in
the market.
Page | 63

Table : 8
Table showing the provisions
PARTICULARS 2017 2016 2015 2014 2013
(3)Tax on Proposed 236.73 236.73 78.83 42.99 19.80

Dividend
TOTAL 2,310.23 2,108.85 542.69 447.57 448.60
Interpretation :
Above table indicates that company is making provision of only 3 things i.e.
gratuity, dividend and dividend tax. Company is continuously paying dividend to its
shareholders each and every year. Company is also providing more emphasis on paying
gratuity to their employees it shows company‘s awareness.
Page | 64

The provisions increases with increases in time span. The provisions are increased
by 10% in 2016-17 while it increased by nearly 300% which indicates the company’s
presence in the market by providing regular dividend.
WORKING CAPITAL ANALYSIS
Table : 9
Table showing the calculation of current ratio
(Rupees in lacs)
YEAR 2017 2016 2015 2014 2013
CURRENT 100,845.90 80,963.70 60,871.21 43,341.26 36,780.06

ASSETS
CURRENT 43,177.28 35,003.64 25,558.94 21,670.43 15,840.46

LIABILITIE
S
CURRENT 2.33 2.31 2.38 2.00 2.32

RATIO
Page | 65

Graph : 4
Graph showing the Current ratio
Current Ratio
2.4
2.3
2.2
Current Ratio
2.38
2.1 2.33 2.32
2.31
2
1.9
1.8
2017 2016 2015 2014 2013
Interpretation:-
A conventional rule is that a current ratio of 2:1 or more is considered

satisfactory. The current ratio of Anu Solar is more than 2:1 So it is sufficient and good
for Anu Solar. It has more current asset then current claim so unit is able to meet current
obligation in full and it can be said that its liquidity position is sound.
QUICK RATIO
Table : 10
Page | 66

Table showing the calculation of quick ratio
(Rupees in lacs)
YEAR 2017 2016 2015 2014 2013
QUICK 60929.64 57055.93 45239.32 27738.15 15365.24

ASSETS
CURRENT 43,177.28 35,003.64 25,558.94 21,670.43 15,840.46

LIABILITIE
S
QUICK 1.41 1.63 1.77 1.28 0.97

RATIO
Graph : 5
Graph showing the quick ratio
Page | 67

Quick ratio
1.8
1.6
1.4
1.2
Quick ratio
1
0.8
0.6
0.4
0.2
0
2017 2016 2015 2014 2013
Interpretation:
Generally quick – ratio of 1:1 is considered to represent a satisfactory to current

financial condition and this ratio is sufficient. Anu Solar has ability to pay its current
claim quickly. So, Anu Solar has sufficient current assets which convert in the cash
immediately.
ABSOLUTE LIQUID RATIO
Table : 11
Table showing the comparison of all ratios
YEAR 2017 2016 2015 2014 2013
Page | 68

ABSOLUTE 137150.42 100394.99 74262.88 52009.51 45975.075

LIQUID
ASSETS
CURRENT 100,845.90 80,963.70 60,871.21 43,341.26 36,780.06

LIABILITIE
S
ABSOLUTE 1.36 1.24 1.22 1.20 1.25

LIQUID
RATIO
Graph : 6
Graph showing the liquid ratio
Page | 69

Liquid Ratio
1.4
1.35
1.3
Liquid Ratio
1.25
1.2
1.15
1.1
2017 2016 2015 2014 2013
Page | 70

CURRENT ASSETS MOVEMENT RATIOS
Table : 12
Table showing the average stock inventory
(Rupees in lacs)
YEAR 2017 2016 2015 2014 2013
COGS 6397.72 5543.69 4903.67 2393.83 1763.28
AVERAGE 1367.035 1229.20 972.95 668.67 532.715

INVENTOR
Y
INVENTOR 4.68 Times 4.51 Times 5.04 Times 3.58 Times 3.31 Times
Y
TURNOVER
RATIO
Page | 71

Graph : 7
Graph showing the Inventory turnover ratio
Inventory Turnover Ratio
Inventory Turnover Ratio
2017 2016 2015 2014 2013
Interpretation:
This ratio shows how rapidly the inventory is turning into receivable through sales.
In 2010 the company has high inventory turnover ratio but in 2016 and 2017 it has
reduced. This shows that the company’s inventory management technique is less efficient
as compare to last year.
INVENTORY CONVERSION PERIOD:
Table : 13
Page | 72

Table showing the Inventory turnover and conversion period
YEAR 2017 2016 2015 2014 2013
DAYS 365 365 365 365 365
INVENTORY 4.68 4.51 5.04 3.58 3.31

TURNOVER
RATIO
INVENTORY 78 Days 81 Days 72 Days 102 Days 110 Days

CONVERSION
PERIOD

Graph : 8
Graph showing the inventory conversion period
Page | 73

Inventory Conversion Period (Days)

120
100
80
inventory conversion period
(Days)
60
40
20
0
2017 2016 2015 2014 2013
Interpretation:
Inventory conversion period shows that how many days inventories takes to
convert from raw material to finished goods. In the company inventory conversion period
is decreasing. This shows the efficiency of management to convert the inventory into
cash.
DEBTORS TURNOVER RATIO:
Table : 14
Table showing the Debtor turnover ratio
YEAR 2017 2016 2015 2014 2013
Page | 74

SALES 283913.25 252646.67 136690.75 84496.92 47530.35
AVERAGE 48202.59 44015.10 30108.095 16407.17 11316.75

DEBTORS
DEBTORS 5.89 Times 5.74 Times 4.54 5.15 4.20

TURNOVER Times Times Times
RATIO
Graph : 9
Graph showing the debtors turnover ratio
Page | 75

Debtors Turnover Ratio

6
4
Debtors Turnover Ratio
3
0
2017 2016 2015 2014 2013
Interpretation:
This ratio indicates the speed with which debtors are being converted or turnover
into sales the higher the values or turnover into sales. The higher the values of debtors
turnover, the more efficient is the management of credit. But in the company the debtor
turnover ratio is decreasing year to year. This shows that company is not utilizing its
debtor’s efficiency. Now their credit policy becomes liberal as compare to previous years.
AVERAGE COLLECTION PERIOD :
Table : 15
Table showing the average collection period
Page | 76

YEAR 2017 2016 2015 2014 2013
DAYS 365 365 365 365 365
DEBTORS 5.89 5.74 4.54 5.15 4.20

TURNOVER
RATIO
AVERAGE 62 Days 64 Days 80 Days 71 Days 87 Days

COLLECTION
PERIOD
Graph : 10
Graph showing the average collection period
Page | 77

Average Collection Period (Days)

90
80
70
60
Average Collection Period
50 (Days)
40
30
20
10
0
2017 2016 2015 2014 2013
Interpretation:
The average collection period measures the quality of debtors and it helps in
analyzing the efficiency of collection efforts. It also helps to analysis the credit policy
adopted by company. In the firm the average collection period is increasing year to year.
It shows that the firm has Liberal Credit policy. These changes in policy are due to
competitor’s credit policy.
CREDITOR TURNOVER RATIO:
Table : 16
Table showing the credit turnover ratio
YEAR 2017 2016 2015 2014 2013
COST OF 73747.68 59906.12 49862.03 31281.65 18481.65
Page | 78

SALES
CREDITORS 28167.81 27526.23 20395.53 15281.09 10369.10
CREDITORS 2.62 2.18 2.44 2.05 1.78

TURNOVER
RATIO
Graph : 11
Graph showing the credit turnover ratio
Page | 79

Credit Turnover Ratio

3
2.5
2
Credit Turnover Ratio
1.5
0.5
0
2017 2016 2015 2014 2013
Interpretation:
It signifies the credit period enjoyed by the firm in paying creditors. Accounts
payable include both sundry creditors and bills payable. Higher the payable period lower
the working capital requirement, but on the other hand it may affect the prestige of the
firm so the company has to frame creditor’s policy in such manner. The creditors’ ratio is
improving as compare to the last years. This situation enhances the credit worthiness of
the company.
WORKING CAPITAL TURNOVER RATIO:
Table : 17
Table showing the Working capital turnover ratio
Page | 80

YEAR 2017 2016 2015 2014 2013
SALES 177619.34 110304.14 57912.12 34239.91 16846.98
NET 57,668.62 45,960.06 35,312.27 21,670.83 10939.60

WORKING
CAPITAL
WORKING 3.08 2.4 1.64 1.58 1.54

CAPITAL
TURNOVER
RATIO
Page | 81

Graph : 12
Graph showing the working capital turnover ratio
Working Capital Turnover Ratio

3.5
2.5
2 Working Capital Turnover Ratio
1.5
0.5
0
2017 2016 2015 2014 2013
Interpretation:
This ratio indicates low much net working capital requires for sales. In 2016, the
reciprocal of this ratio (1/1.64 = .609) shows that for sales of Rs. 1 the company requires
60 paisa as working capital. Thus this ratio is helpful to forecast the working capital
requirement on the basis of sales.
SUMMARY OF FINDINGS AND CONCLUSION

Page | 82

FINDINGS
Anu Solar is the fastest growing company in Solar Power products world. I have
taken a summer internship program for my project at Anu Solar Ltd. I have prepared a
project on Working Capital Management of Anu Solar. Following are some findings of
my research work:
1. Company’s main strength is its employees and company is properly taking care of
that by providing safety working conditions, canteen facilities etc
2. Anu Solar is investing more and more money in subsidiary companies for its
faster growth.
3. Working capital of the Anu Solar Power Pvt Ltd. is increasing and showing
positive working capital per year
4. Company’s working capital is enough to maintain company’s sales and other

operations easily. Due to high goodwill the company is not getting any problem in
getting short term finance.
5. Company gives 75% of dividend since last two years, instead of giving 75%
dividend the company should give 60 to 65% and reinvest the balance amount in
financing the working capital.
6. Company is targeting to increase foreign exchange transactions and also trying to

avoid hedging risk.
7. Company should try to utilize cheap source of finance for financing working
capital requirements.
Page | 83

8. The current ratio is maintained by the company is 2:1; the company exceed
minimum current ratio at all the years statement
9. The quick asset ratio minimally maintained by the company are 1:1 , the company
was satisfy this position
10. The company has been maintaining sufficient amount of working capital in all the
years
CONCLUSION
The mission of Anu Solar is providing best quality to customers. It is financially

very sound organization. The performance of Anu Solar has been reasonably good. Due
to constant work on the quality, better concentration on the material usage and proper
prices the Anu Solar could improve maximum its performance. If Anu Solar gives
emphasis on human, it will useful in increasing production.
Anu Solar is continuously trying to maximize the wealth of share holders. As per
my knowledge Anu Solar is running successfully and in Karnataka it is on number one
position in Solar Power.
At last I wish bright future of Anu Solar, and may got first rank in all over world
The overall performance of Anu Solar Company Limited is going on good track. The
turnover has been increased by 15.57% while the profit is increased by 14.19%. With the
increase in capacity on account of the expansion projects being undertaken by the
company.
The recent boom in the Solar Power Engineering and technology sector has
coupled with continuous thrust of government on infrastructure projects is expected to
sustain healthy growth of engineering products demand. Almost all major players have
Page | 84

announced substantial increase in capacity which results into increase in sales of Anu
Solar.
An increase in tax rates, transportation charges, railway freight, and cost of coal
can add worries for the company.
SUGGESTION AND RECOMMENDATIONS
1) It is suggested that the company should follow the present working capital.
2) The company spends reasonable amount on inventory so that it should be

followed.
3) The current ratio is maintained at a satisfied level. So that company peruses this
much of current assets to meet the objective of the firm.
Page | 85

4) Company is maintaining high quick assets to overcome current liabilities for

better results.
5) For better results company has to maintain cash inflows to overcome current
liabilities of the firm.
6) To gain good profits company has to improve the sales through inventory
management.
7) The company b should try to reduce external liabilities, having pay high EPS &
DPS.
8) The company should make arrangement of receivables and cash.
ANNEXURE
STATEMENT SHOWING WORKING CAPITAL REQUIREMENT
PARTICULARS 2017 2016 2015 2014 2013
CURRENT ASSETS,
LOANS AND
ADVANCES
Page | 86

(A) Current Assets :
(I) Stock of Stores, Loose 1,461.36 1,272.71 1,185.70 760.21 577.14

Tools, Dies Mechanical,
Electrical and Electronic
and certified by the
Management) at lower of
value

taken, valued and
Certified by the
Management)
(i) Raw Materials (at 14,317.94 10,226.30 6,784.72 6,784.72 4,732.51

realisable value)
(ii) Semi-Finished Goods 21,378.85 12,282.45 8,136.52 5,980.13 5,152.96

(at lower of cost or net
realisable value)
(iii) Finished Goods (at 2,758.11 1,304.87 740.80 1,926.75 994.98

realisable value)
Page | 87


Cost)
(v) Land as Stock in ---------- --------- --------- ----------- ---------

Trade (For Wind Mill)

(Unsecured, Considered
Good)

period Exceeding six
month
(ii) Others 35,214.05 35,266.49 32,485.74 17,702.75 8,234.66
(IV) Cash and Bank

Balances
(a) Cash on Hand 5.40 7.48 7.19 7.30 7.83
(b) Balance with

Scheduled Banks:
(1) In Current Account 745.24 468.52 532.18 563.10 544.17
(2) Bank Deposit 5,322.64 255.68 717.00 1,890.00 285.59
Page | 88

(3) Unpaid Dividend 32.59 20.56 19.53 10.29 9 .59

Bank Account
(B) Loans and Advances

(Unsecured Considered
Good)
(1) Loans to Staff 11.47 17.08 15.73 14.86 8.82

in Cash or in Kind or for
value to be received
(3) Balance with 1,938.34 1,834.06 830.88 792.41 516.81

Collector of Custom, Port
Trust, Excise etc.
(4) Advance Payment of 1,038.67 196.48 ------------ ------------ ------------

Income Tax (Net of -- --
Provision)
TOTAL (A) 100,845.9 80,963.70 60,871.21 43,341.26 36,780.06
CURRENT
LIABILITIES
AND PROVISIONS
Page | 89

(B) Current
Liabilities
(3) Sundry Creditors 28,167.81 27,526.23 20,395.53 15,281.09 10,369.10
(4) Advance from 12,569.49 5,185.15 4,544.00 5,874.94 4,951.02

Customer

issued but not encashed
(Unpaid)

not due
(B) Provisions
(3)Tax on Proposed 236.73 236.73 78.83 42.99 19.80

Dividend
TOTAL (B) 43,177.28 35,003.64 25,558.94 21,670.43 15,840.46
W.C required (A-B) 57,668.62 45,960.06 35,312.27 21,670.83 10939.60
Page | 90

Page | 91

BIBILOGRAPY
Books Referred :
Name of the Book Author
Financial Management I.M.Pandey
Financial Management Prasanna Chandra
Financial Statement Analysis Dr. Anjan Bhattacharya
Annual Reports of Anu Solar Company Ltd

of last 5 years
Websites Referred :
 www.anusolar.com
 www.netmba.com
 www.bizmove.com
Page | 92

Nazar S Project

Uploaded by

Document Information

Original Description:

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Nazar S Project

Uploaded by

Copyright:

Available Formats

A STUDY ON WORKING CAPITAL MANAGEMENT AT ANU SOLAR POWER PRIVATE LIMITED

The process of managing activities and processes related to working capital. This

Concept of Working Capital

 Gross working capital

Gross working capital = Total current assets

Net working capital = Current assets – Current liabilities

GANGA INSTITUTE OF TECHNOLOGY AND MANAGEMENT

There are two approaches which determine the financing mix

The objective of financial management is to maximize the shareholders wealth.

GANGA INSTITUTE OF TECHNOLOGY AND MANAGEMENT

The length of operating cycle can be calculated by calculating periods of raw

Average stock of raw materials∧stores

Average work∈ process inventory

Average finished goods inventory

Average book debts

Length of operating cycle = 1 + 2 + 3 + 4

GANGA INSTITUTE OF TECHNOLOGY AND MANAGEMENT

CONSTITUENTS OF CURRENT ASSETS

1) Cash in hand and cash at bank

GANGA INSTITUTE OF TECHNOLOGY AND MANAGEMENT

NET WORKING CAPITAL = CURRENT ASSETS – CURRENT LIABILITIES.

CONSTITUENTS OF CURRENT LIABILITIES

1. Accrued or outstanding expenses.

1. It enables the enterprise to provide correct amount of working capital at correct

GANGA INSTITUTE OF TECHNOLOGY AND MANAGEMENT

4. This concept is also useful in determining the rate of return on investments in

CLASSIFICATION OF WORKING CAPITAL

Working capital may be classified in two ways:

 On the basis of concept.

 Permanent or fixed working capital.

PERMANENT OR FIXED WORKING CAPITAL

Permanent or fixed working capital is minimum amount which is required to ensure

TEMPORARY OR VARIABLE WORKING CAPITAL

Temporary or variable working capital is the amount of working capital which is

GANGA INSTITUTE OF TECHNOLOGY AND MANAGEMENT

to meet special exigencies such as launching of extensive marketing for conducting

IMPORTANCE OR ADVANTAGE OF ADEQUATE WORKING CAPITAL

 SOLVENCY OF THE BUSINESS: Adequate working capital helps in

GANGA INSTITUTE OF TECHNOLOGY AND MANAGEMENT

 Quick And Regular Return On Investments: Sufficient working capital enables a

EXCESS OR INADEQUATE WORKING CAPITAL

DISADVANTAGES OF REDUNDANT OR EXCESSIVE WORKING CAPITAL

DISADVANTAGES OF INADEQUATE WORKING CAPITAL

GANGA INSTITUTE OF TECHNOLOGY AND MANAGEMENT

Thus working capital is needed for the following purposes:

 For the purpose of raw material, components and spares.

FACTORS DETERMINING THE WORKING CAPITAL REQUIREMENTS

1. NATURE OF BUSINESS: The requirements of working is very limited in public

GANGA INSTITUTE OF TECHNOLOGY AND MANAGEMENT

GANGA INSTITUTE OF TECHNOLOGY AND MANAGEMENT

7. RATE OF STOCK TURNOVER: There is an inverse co-relationship between the

GANGA INSTITUTE OF TECHNOLOGY AND MANAGEMENT

 Banking facilities, etc.

MANAGEMENT OF WORKING CAPITAL

Management of working capital is concerned with the problem that arises in

1. It concerned with the formulation of policies with regard to profitability,

WORKING CAPITAL ANALYSIS

GANGA INSTITUTE OF TECHNOLOGY AND MANAGEMENT

2. Fund flow analysis.

A ratio is a simple arithmetical expression one number to another. The technique

FUND FLOW ANALYSIS

a. Preparing schedule of changes of working capital