Working Capital Management With Reference To Thirumala Milk Products PVT - LTD

A Study on
WORKING CAPITAL MANAGEMENT WITH REFERENCE TO THIRUMALA

MILK PRODUCTS PVT.LTD.
is submitted in partial fulfillment of the requirement for the award of the Degree of master
of business administration
to
JAWAHARLAL NEHRU TECHNOLOGICAL UNIVERSITY,

ANANTHAPURAMU
By
KONKALA RAVALI
19711E0047
Under the Guidance of

Dr.T.Sudheer, MBA.UGC-NET, AP-SET, MA (Econ), Phd.
Designation
Department of MBA
NARAYANA ENGINEERING COLLEGE::NELLORE
(2019-2021)
i
DECLARATION
I KONKALA RAVALI a student of Master of Business Administration of Narayana
Engineering College, Nellore hereby declare that the project titled WORKING CAPITAL
MANAGEMENT with reference to THIRUMALA MILK PRODUCTS PVT LTDis an
original work done by me under the guidance and supervision of Dr.T.SUDHEER,
MBA.UGC-NET,AP-
SET,MA(Econ),PhD.PROFESSOR&ADMINSTRATIVEHOD,NARAYANA
ENGNEERING COLLEGE,NELLORE.
Further, I declare that this project work is the result of my own effort and has not been
submitted earlier to any institution or university for the award of any degree or
diploma.
KONKALA. RAVALI
19711E0047
ii
Department of MBA
CERTIFICATE
“
This is to certify that the project report entitled WORKING CAPITAL
MANAGEMENT being ”
submittedbyKONKALA.RAVALI,19711E0047inpartialfulfillmentfortheawardoftheDegre
eofMaster of Business Administration to the Jawaharlal Nehru Technological University
Ananthapuramu is a record of bonafied work carried out by him/her under my guidance
and supervision .
The results embodied in this project report have not been submitted to any
other University or Institute for the award of any Degree or Diploma.
Dr.T.SUDHEER,MBA, UGC-NET,AP-SET,MA(Econ)PhD
Dr.R.Vani,M.Com,MBA,PGDFM,P
h/d Professor administrative HOD HEAD &Professor
DepartmentofMBA Department ofMBA
EXTERNAL EXAMINER
iii
Date: 25/05/2021
To
TheHeadOfTheDepartment
Narayana Engineering College,
UGCAtonomous
Nellore.
PROJECT COMPLETION CERTIFICATE
This is to certify that Ms. KONKALA RAVALLI, Reg.No: 19711E0047 final year
student from Narayana Engineering College- UGC Autonomous, NELLORE. She has successfully
completed her project entitled “WORKING CAPITAL MANAGEMENT" “in our organization
from the period 45 DAYS, with reference to the partial fulfillment of the requirement for the award of
Master of BusinessAdministration,
J.N.T. UNIVERSITY, Anantapur.
During the period we found that she is Very Sincere and Hard Working.
vThirumala Milk Products Private Limited,
iv
ACKNOWLEDGEMENT
We are extremely grateful to Dr.P. NARAYANA, Ph.D.Founder, Narayana
Educational Institutions, Andhra Pradesh for the kind blessings. We are extremely thankful
to Mr R Sambasiva Rao B.Tech, Registrar Narayana Engineering College, Nellore.
We are much obliged to Dr. A.V.S Prasad, Ph.D. Director, Narayana Engineering
&PharmacyColleges,forthecontinuousencouragementandsupport.Weoweindebtedness
toourPrincipalDr.G.SrinivasuluReddy,M.Tech.,Ph.D.,NarayanaEngineeringCollege,
Nellore for providing us the requiredfacilities.
We express our deep sense of gratitude and sincere thanks to
Dr.GangineniDhananjhay, B.Tech,MBA,Ph.D,FDP(IIM-A), NSE Certified Market
Professional (Level 5), Professor & DEAN, Department of MBA, Narayana
Engineering College, Nellore for providing the necessary facilities and
encouragement towards the project work.
We express our deep sense of gratitude and sincere thanks to Dr.
R.Vani.M.Com,MBA.PGDFM.Ph.D, Professor & HOD, Department of MBA,
Narayana Engineering College, Nellore for providing the necessary facilities and
encouragement towards the project work.
We express our deep sense of gratitude and sincere thanks to Dr. T. Sudheer,
MBA, Ph. D, MA(Eco), UGC-NET, APSET, Admin HOD & Assoc. Professor,
Department of MBA, Narayana Engineering College, Nellore for encouragement
towards the project work.
We thank our project guide, Dr.T.Sudheer, professor&adminstative HOD, deptfor
his/her guidance, valuable suggestions and support in the completion of the project.
Wegratefullyacknowledgeandexpressourthankstoteachingandnon-
teachingstaff
ofMBADepartment.Wewouldliketoexpressourloveandaffectiontoourparentsfortheir
encouragement throughout thisproject.
v
KONKALA.RAVALI
19711E0047
vi
vii
viii
CONTENTS
Chapter Particulars Page No
Chapter – I 1.1 Introduction
1.2 IndustryProfile
1.3 CompanyProfile
Chapter – II Theoretical Frame work
Chapter – III Research Methodology
3.1 Need of thestudy
3.2 Scope of thestudy
3.3 Objectives of thestudy
3.4 SampleDesign
3.5 Limitations of thestudy
Chapter – IV Data Analysis &
Interpretation
Chapter – V 5.1 Findings

5.2 Suggestions
5.3 Conclusion
Annexure
Bibliography
ix
LIST OF TABLES
Table No Table Name Page No
4.1 Schedules of changes in 63
Working Capital of Of
Tirumala Milk Products
Pvt Ltd For The Year
15-16
4.2 Schedules of changes 64
in Working Capital of
Tirumala Milk
Products Pvt Ltd For
The Year 16-17
Tirumala Milk
The Year 17-18
Tirumala Milk
The Year 18-19
Tirumala Milk
The Year 18-19
x
LIST OF Graphs/ Chart
Graph No Graph Name Page No
4.1 Current Ratio 69
4.2 Quick ratio 71
4.3 Cash ratio 73
4.4 Debtors Turnover 75
Ratio
4.5 Inventory turnover 77

ratio
4.6 Working capital 80
turnover ratio
xi
CONTENTS
S. NO TITLE PAGE NO
CHAPTER – I INTRODUCTION
INDUSTRY PROFILE 1-35
COMPANY PROFILE
CHAPTER – II OBJECTIVES OFTHE STUDY

NEED FOR THE STUDY
36-41
SCOPE OF THE STUDY
RESEARCH METHODOLOGY
LIMITATIONS OF THE STUDY
CHAPTER – III REVIEW OF LITERATURE 42-59
DATA ANALYSIS & 60-79

CHAPTER - IV INTERPRETATIONS
CHAPTER – V FINDINGS 80-81
SUGGESTIONS 82
CONCLUSION 83
ANNEXURE 84-89
BIBLIOGRAPHY 90-91
xii
CHAPTER-1
INTRODUCTION
INDUSTRY PROFILE
COMPANY PROFILE
xiii
INTRODUCTION
Financial Management is that managerial activity which is concerned with

planning and controlling of the firm’s financial resources. The subject of financial
management is of immense interest to both academicians and practicing managers.
Financial management provides them with conceptual and analytical insights to make those
decisions skillfully.
Meaning of Financial Management:-

From the various definitions of the term business Finance given above, it can be
concluded that the term business finance mainly involves, rising of funds, and their
effective utilization keeping in view the over all objectives of the firm.
Definition:-
According to “Financial Management is concerned with efficient use of
important economic resources namely capital funds”.
“SOLOMAN”
According to him, “Financial Management is concerned with managerial
decision that results in the acquisition and financing of long term, short term credits of the
firm.
As such it deals with the situation that requires selection of specific assets, the
selection of specific liability as well as the problem of size and growth of an enterprise.
The analysis of these decisions is based on the expected inflows and outflows of funds and
their effects up on managerialobjectives”
1
Objectives of financial management:-
a). To Reduce the Misuse ofFunds:-

It is the objective of financial management to reduce the misuse of funds. If I
deposited it in bank, I can earn interest on saving account on daily basis. Like me,
company also misuses his funds in bad projects. We should learn from objective of
financial management and reduce the misuse of even one rupee.
b). To Maximize the Profit in Long Run:-
If a businessman invests his money and wants to earn high profit, it means, it is
taking high risk according to risk theory of financial management. This is not objective
of financial management, but to maximize the profit in long run is real aim of financial
management.
c)To Maximize the Wealth of Company:-
An investor only purchases shares, if he hopes that he will earn high profit on it,
otherwise, he can deposit his money in saving account of bank. So, it is the objective of
financial management to maximize the value of share. It can be possible by following
way.
To Increase Dividend per share To
Increase earning per share
To Analyze the value of share in market
2
Introduction to working capital:-
Working capital is the lifeblood and nerve center of a business. Just as circulation
of blood is essential in the human body for maintaining life, working capital is very
essential to maintain the smooth running of a business. No business can run successfully
without an adequate amount of working capital.
Meaning of working capital:-

Working capital refers to the funds invested in current assets i.e. investment in
stocks, sundry debtors, cash and other current assets. Current assets are essential to use
fixed assets profitably.
For example a machine cannot be used without raw material. Thus it is obvious
that certain amount of funds is always tied up in raw materials, work in progress and
finished goods. However, the business also enjoys credit facilities from its suppliers who
may supply raw materials on credit and the firm may not pay all the expenses immediately.
Therefore, certain amount of funds is automatically available to finance the
current assets requirements. However the requirements for current assets are usually
greater than the amount of funds payable through current liabilities. In other words, current
assets are to be kept at a higher level than the current liabilities.
Definition:-
According to Ralph Kennedy and Steward Mc Muller “a study of working capital

is of major importance to internal and external analysis because of its close relationship
with the current day to day operations ofbusiness”.
3
The need for working capital:-
Every business needs some amount of working capital. The need for working
capital arises due to the time gap between production and realization of cash from sales.
The following are the needs of working capital:
• For the purpose of rawmaterial
• To pay wages andsalaries
• To incur day-to-day expenses andover-heads
• To meet the sellingcosts
• To provide credit facilities to thecustomers
• To maintain inventories of raw materials. Work-in-progress, stores, spares
and finishedstock.
4
Importance of adequacy of working capital:-
essential to maintain the smooth running of a business.
No business can run successfully without an adequate amount of working capital.
The main advantages of maintaining adequate amount of working capital are as follows.
➢ Solvency of theBusiness:-
Adequate working capital helps on maintaining solvency of the business by
providing uninterrupted flow of production.
➢ Goodwill:-
Sufficient working capital enables a business concern to make prompt payments
and hence helps in creating and maintaining good will.
➢ EasyLoans:-
A concern having adequate working capital high solvency and good credit
standing can arrange loans from banks and others on easy favorable terms.
➢ Cashdiscounts:-
Adequate working capital also enables a firm to avail cash discounts on the
purchases and hence it reduces costs.
➢ Regular Supply of rawmaterials:-
Sufficient working capital ensures regular supply of raw materials and continuous
production.
➢ Regular payment of salaries, wages and other day-to-daycommitments:-
A company which has enable working capital can make regular payments of
salaries, wages and other day-to-day commitments which raises the moral of its employees,
increases their efficiency reduces wastage and costs and enhances production and profits.
5
Significance:-
The importance of working capital is reflected in the fact that financial manager
spend a great deal of time in managing activities relating to current assets and current
liabilities as follows.
✓ Arranging short termfinancing.
✓ Negotiating favorable creditterms.
✓ Controlling the movements ofcash.
✓ Administering accountsreceivable.
✓ Monitoring investment ininventories.
6
INDUSTRY PROFILE
DAIRY INDUSTRY IN INDIA:
Being, second most populous country in the world. India as a development nation
has a great problem of providing adequate food both in terms of quality and quantity to
every one in the country. Milk and its products as the most important source of
nourishment, next only each and every as the most important source of nourishment, next
only each and every one in the country. Thus dairying promises to be vitally significant
pre-occupation of the farmers. Besides organized dairying also creates substantial
employment opportunities. In addition to providing employment, dairy industry reduces
the dependence of people on agriculture. Taking into consideration the dependence of
people on agriculture. Taking into consideration the importance of dairying is necessary to
develop the daily to overcome the problem of employment income and nutrition in India.
EVALUCATION OF ANAND TYPE DAIRY:
AMUL THE ANAND MILK UNION LIMITED: is the name of the kaira district
co-operative milk producers union limited, started with setting of two milk cooperatives,
one each at Gopalapur and madgar in December 1946. The initiative for creating the milk
producers co-operative had come from villagers of kaira district whose milk until then was
being bought by traders who sent it to Bombay through milk contractors, prominent of
which was Poison. Later the state government entered into agreement with Poison to supply
mild on regular basis to the Bombay milk sceam Together Tribhuvan Das Patel and
varghese kureing steered the farmers of kaira through series of crises to become a world
wide model of a co-operative. The Kaira District producer's initiative of farmers continued
to develop with government financialassistance.
THE CO-OPERATIVES:
7
The anand model of co-operative structure builds on a vertically integrated single
industry. Co-operative that links rural producers with instrument by including enhancive
milk production System and improved technology for processing and marketing.
The anand model of co- operative structure was 3 tired. The structure is as
follows:
• The village milk producers co-operativesociety

• The district mild producers co-operativeunion.
• Various district unions which together form a co-operative milkmarketing
federation.
ESTABLISHMENT OF ANAND TYPE CO-OPERATIVE IN

INDIA
In 1964, the Prime Minister 'Lalbahadur Sastri' visited Gujarat. During this visit
he was impressed with the village mild co-operative societies and required Mr. Varghese
Kurien, the General manager of Anand milk Union (Amul) to extent the Anand type Milk
co-operative to set up other parts of the country. The prime minister wrote letters to the
chief ministers of all state government advising to talk the initiative to set up Anand type
mild products co-operate societies in their to set up Anand type mild products co-operative
societies in their respective states. The initiative led to the creation of National Dairy
Development Corporation (IDC) 'in 1970, with the intention of implementing operation
flood, which is essentially aimed at setting up of Anand type operation fold-1 was the extent
ion of Anand pattern Milk co-operatives in the hinterlands.
8
The National Dairy Development Board and the Indian Dairy co-operative drew
up plans under operation flood-1 was initiated in 1970 and covered eighteen mild sheds
which comprised the rural hinter lands of the metropolitan cities.
Financial assistance from the word bank helped NDDB and IDC to establish dairy
industry in the state of Karnataka, Madhya Pradesh, Rajastan Having successfully achieved
the major objectives of operation fold-1, the scheme has been extended to cover 155 milk
shed under operation flood-2.
OPERATION FLOOD
Aimed setting up a modern dairy to meet Indians rapidly increasing need for
milk and its products , the projects operation flood was conceived and formulated by the
NDDB during 4th plan period. The project was initialed in 1970. The project initially
scheduled for a period of 5 years, was subsequently extended to 11 years. The project
operation flood was terminated in 1981. based on the operation validity of the Anand
pattern NDDB has conceived& formulated the project.
The main aim of the project was to create a flood of rurally produced milk,
assuring the farmers of remunerative price and ready market and the urban consumer of
whole some milk at stable and reasonable prices by linked the main milk producing areas
to main consuming centers in urban areas.
NATIONAL MILK GRID:
National milk grid has been setup to transport liquid milk from surplus to
deficit area with the help of 976 road and rail mild tankers having a capacity rural producers
in 59 milk shed to 126 urban centers providing them a national grid, which aims to ever
out seasonal fluctuations in production and price.
DAIRY INDUSTRY IN ANDHRA PRADESH
The programme of dairy industry was initially maintained with commendable
help of the united nations international children's emergency fund
9
and freedom from hunter campaign of U.K. These organizations contributed a lot in the
establishment of dairy units in Andhra Pradesh during the period 1967- 1969.
The milk producers have been faced with a lot of problems in the process
of production and marketing of milk namely improper transport facilities poor technology,
absence of organized system of processing marketing and pricing. As a results the APDDC
came into existence on 2nd April1974.
CO-OPERATION FEDERATION:
To implement operation flood-2 programme through active involvement of
producers in organizing milk production milk production, procurement processing and
marketing on 'three-tier' co-operative structure as per the national and marketing policy of
government of India. Andhra Pradesh Dairy Development co-operative federation was
constituted in oct-1981.
With the implementation of operation flood-2 programme in Andhra Pradesh,
Dairy development has gained moments providing a trust to eradicate the pro very,
unemployment in rural areas, and brought awakening and confidence amount producers to
manage their own affairs through dairy co-operative of AnandPattern.
The operation flood launched in 1970 could raise the per capacity mild
consumption from 112 grams in 1970-71 to 235 grams in 1998-99 the world average being
285 grams. But a large population in the country still doesn't get the required of milk (500
grams in the per day). In the rural areas, it is.only 121 grams a day.
The major milk producing states are Uttar Pradesh (18.3 percent)Punjab(10.2
percent), Rajasthan(7.8 percent), MadhyaPradesh(7.6 percent) Maharashtra (7.4 present),
Gujarat(7 percent), AndhraPradesh (6.3 percent) and Haryana(5.3 percent).
10
Of the total milk production 46 percent is consumed as liquid milk 28 percent
as ghee, 8 percent as curd, 7 percent as butter, 7 percent as cheese/ khova, and 4 percent as
milk powder, ice cream , and other products. These are presently more than 70000 villages
dairy cooperative federation into 170 districts milk union , which in turn are affiliated to
22 states cooperative dairy federations. Most of the villages co-operative are viable . Of
course, the cooperatives deserve tax incentives. Our country possesses one sixth of cattle
population and one fifth of buffalo population in the world . buffaloes contribute more than
60% of its total milkproduction.
The dairy sector has high employment potential, particularly for small and
marginal farmers and land less agricultural laboureres. India exports milk and milk
products mainly to Bangladesh, Netherlands, Philippines, the UAE , and Srilanka.
The diary sector was delicensed in 1991. It is being regularized by milk and
milk products order (MMPO) introduced in 1992, giving priority to co- operatives. And
leaving the private sector in the lurch. India imported about 2675 tones of skimmed milk
powder at lower price than the domestic price is a major problem. Unrestricted import of
skimmed milk powder depress the domestic price ofmilk.
MILESTONES IN THE HISTORY OF DAIRY

➢ 23-2-1977:Emrgence of dairy under 1964 cooperative act as Nellore dist milk
producers cooperativeunion
➢ 30-8-1977:Inorganation of fedder balancing dairy by the chief minister
J.Vengalarao
➢ 1-8-1978Management transport from APDDC to the cooperativeunion
➢ 21-2-1981: Visit of doctor V.karion president of national dairy
development board
➢ 9-4-1986:Visit of the chief ministerN.T.Ramarao.
11
➢ l-2-1997:Co-operative dairy shifted to 1995 moreact.
➢ 24-2-1997:Honored excellence award and Vudyog Ratnaaward.
➢ 27-8-1998:Honored by Gold star award and Excellenceaward
➢ 16-11-1998:Awarded by M.Viswanath reddyaward
➢ 2-3-2000;established mineral waterplant
➢ 12-2-2002;higher procurement per day (3,11,841kg)
➢ 2001-2002:highest milk procurement (762lakh)
➢ 14-2-2003 :awarded with ISO9001 -2002Certificate
➢ 8-3-2003: Visit of state Governor SurjithsinghBarnala
➢ 10-3-2003 :HonoredHACCPCertificate
The popular adage “nothing succeeds like success” is applicable to the dairy
development in India. If the country witnessed the “green revolution” leading to self-
reliance in food grains in the sixties and the seventies, the decades of the eighties and the
nineties witnessed the “white revolution”. Indian total milk production is ranked first in the
world followed by the United States. Initially dairying was largely an unorganized activity.
By and large land holding farmers kept cattle mainly for bullock production. Milk was
essentially a byproduct. The surplus after domestic consumption was either converted into
conventional products mainly ghee and sold to middle men who cater to the needs of the
market.
As India enters an era of economic reforms, agriculture, particularly the livestock
sector, is positioned to be a major growth area. The fact that dairying could play a more
constructive role in promoting rural welfare and reducing poverty is increasingly being
recognized. For example, milk production alone involves more than 70 million producers,
each raising one or two cows/buffaloes. Cow dung is an important input as organic fertilizer
for crop production and is also widely used as fuel inn rural areas. Cattle also serve as an
insurance cover for the poor households, being sold during times ofdistress
12
There was an increasing demand fo r milk from the urban areas. There arose a
need for the farmers to increase the production of milk. Since the demand in the urban
scenario is rapidly increasing so do the farmers generate the supply? Further the new dairy
plant capacity approved under the Milk and Milk products order (MMPO) has exceeded
100 million l/p/d. The new capacity would surpass the projected rural marketable surplus
of milk by about 40 percent by 2005.
History:
The origin of dairy farms under public management dates back to 1886
when the department of Defense established a few dairy farms in that year to supply milk
and milk products to the British troops. The next step was initiated during the First World
War.
In 1914, the Department of Defense on the advice of the Board of Agriculture advised
the Government in 1916, to appoint imperial dairy expert. The next important step was the
decision to conduct a census of livestock. The Board of Agriculture carried out the livestock
census in 1919 as a preparatory action for planned dairy development. In 1920, the imperial
expert recommended to the Government for the establishment of a training center to meet
the manpower requirements for managing the Defiance Dairy Farms. By this time there
were three dairy farms and until 1923 the British Government’s approach towards dairying
was confined to milk requirements of the military only. After 1923, diploma course in dairy
were started atBangalore.
Dr. N.C. Wright, Director, Dairy Research institute, Scotland who was invited to
India in 1936 for reviewing the progress of dairying in the country has made two
recommendations: -
1. Industry needs have to be solved by developing own technology and technologists in

thecountry.
13
2. India is country of villages, of which most inhabitants are small, marginal farmers and
landless laborers. Development should be promoted only on co- operativelines.
In 1937, the Lucknow Milk producer’s co-operative Unionlimited wasestablished
paving the way for the organization of such union in districts and state.
In 1945, the Famine enquiry commission in its report emphasized the need for
developing fodder supply for increasing milk production and recommended the adoption
of mixed farming with a place for fodder and crop rotation. As a sequel to this, under the
Greater Bombay Milk Scheme, milk was procured from kaira district, Gujarat by the
private dairy. That gave way to the idea of creating an institutional structure for dairying
on co-operativelines.
Developments of industry:
NATIONAL DAIRY DEVELOPMENT BOARD (NDDB):
The Government of India had established the National Dairy Development Board
(NDDB), an autonomous body headquartered at Anand’s Co-operative in India. In order to
develop dairy in India, NDDB drew plans for ‘operation flood’. OPERATION
FLOOD:
In the late sixties, the board drew up a project called Operation Flood (OF)
– meant to crate a flood of milk in India’s villages with funds mobilized from foreign
donations. Producer’s co-operatives, which sought to link dairy development with milk
marketing, were central plank of this project. The Operation Flood, which started in 1970,
concludes its third phase in 1996 and has to its credit these significant results:
1. The enormous urban market stimulus has led tosustained

2. Production increases, raising per capita availability of milk to early 200grams
Perday.
3. The dependence on commercial imports of milk solids are alone awaywith.
14
4. Modernization and expansion of the dairy industry and itsinfrastructure,
Activating milkgrid.
5. Marketing expanded to supply hygienic and fair priced milk to some300
Million consumers in 550 cities andtowns.
6. A nationwide network of multi-tier producer’s co-operative, democratic in structure
and professionally managed, has come into existence. Millions of small producers
participate in an economic enterprise and improve the quality of their life andenvironment.
7. Dairy equipment manufacture has expanded to meet most of the industry’s needs.
Three phases of development:
The scheme sought to establish milk produces co-operatives in the villages and
make modern technology available to them. The broad objectives are to increase milk
productions (“a flood of milk”) augment rural incomes and transfer to milk producers the
profits of milk producers the profits of milk, marketing which are enjoyed bywell-to-do-
middlemen.
PHASE1:
Phase 1 of Operation Flood was financed by the sale within India of skimmed
milk powder and butter oil gifted by the EC countries via the world food program. As
founder-chairman of the National Dairy Development Board (NDDB) of India Dr.Kurien
finalized the plans and negotiated the details of EEC assistance. He looked after the
administration of the scheme as found-chairman of the erstwhile Indian Dairy Co-
operation, the project authority for Operation Flood. During its first phase, the project
aimed at linking India’s 18 best milk sheds with the milk markets of the four metropolitan
cities of Delhi, Mumbai, Calcutta and Madras.
PHASE2:
Phase 2 of the project, implemented during 1981-85 raised this to some 136 milk
sheds linked to over 290 urban markets. The seed capital rose fromthe
15
sale of WFP/EEC gift products and World Bank loan had created, by end 1985, a self-
sustaining system of 43,000 village’s co-operatives covering 4.25 million milk producers.
Milk powder production went up from 22,000 tons in the pre project year to 1, 40,000 tons
in 1989, thanks to dairies set up und Operation Flood. The EEV gifts thus helped to promote
self-reliance. Direct marketing of milk by producer’s co-operatives resulting inn the
transfer of profits from milk contracts increased by several million liters perday.
PHASE3:
Phase 3 of Operation Flood (1985-1996) enabled dairy co-operatives to rapidly
build to the basic up the basic infrastructure required to procure andmarket more and more
milk daily. Facilities were created by the co-operatives to provide better veterinary first-
aid health care services to their producer’s members. Development of dairy in nineties:
The momentum gained in the dairy through co-operatives during the last 20 years
will now take India into nineties as major dairying country of the world. The country’s
milk production in the early sixties which was about 20 million tons has touched a record
of 56 million tons. It is likely to reach about 80 million tons by 2000 AD. India which one
time was dependant on other countries for products such as milk powder, butter and cheese
has now become self sufficient. It has even started exporting some of them in small
quantities simultaneously efforts are made to expand milk procurement, processing and
marketing to meet the growing demand for milkproducts.
16
MILK SHEDS/UNIONS:
Operation flood programmer has been identified into milk sheds/unions.
NO MILK SHEDS/UIONS DISTRICTS

1 Visakha Srikakulam, Vijayanagaram, Vizag
2 Godavari East and West Godavari
3 Krishna Krishna
4 Nellore-Prakasam Nellore-Prakasam
5 Chittoor Chittoor
6 Kadapa Kadapa
7 Kurnool Kurnool
8 Nalgonda-Ranga reddy Nalgonda-rang reddy
9 Medak-Nizamabad Medak-Nizamabad
Growth of the industry:

Before the independence of India, in the first half of the 20th century dairying in
the country was largely unorganized. Fluid milk and its products were generally not easily
marketable commodities and there was no transport of these products to far distances.
Organized dairying, as well understood in thewest started in a small way when military
dairy farms and creameries were established towards the end of the 10th century to meet
the demands of the armed forces and their hospitals. Some private dairies, such as Kaveters
and poisons' with encouraged making pasteurized butter, primarily for the use of the British
army. As a result the imperial institute of animal Husbandry and dairying was established
in 1923 at Bangalore. There has been another major effort in the early 1940's where milk
produced in rural areas of kaira district was collected in bulk Pasteurized and transported
by distributing in Bombay by " the Bombay milk scheme" operated by the Bombay
municipality. When India become independent in 1947, one of the major milk schemes to
be included the country was "the Greater Bombay milk scheme(GBMS)".
17
COMPANY PROFILE
Vision
“To produce and supply superior quality products with exceptional customer service to
eventually grow as market leader in diary industry.”
Mission
Tirumala Milk Products Pvt Ltd Products (P) LTD. will constantly strive to market quality
products at competitive prices, provide value to our business partners, all the while
delivering exceptional customer service with the highest regard for business ethics.
HISTORY:
Tirumala Milk Products Pvt Ltd Products Private Limited is a professionally managed
company engaged in the manufacture of a wide range of Dairy Products which include
Milk in Sachets, Sweets, Flavored Milk, Curd in Cups and Sachets, Milk Powder, Butter,
Ghee and Butter Oil both in bulk as well as in consumer packs..
Established in 13-November 1998, Tirumala Milk Products Pvt Ltd Products (P) Ltd. is
one of the fastest growing Private Sector Enterprises in India with a team of dedicated
professionals. The company has one of the most modern and versatile plants in the Indian
Dairy Industry with state-of-the-art technology. Tirumala Milk Products Pvt Ltd Products
(P) Ltd. products meet stringent quality control tests and cater to the premium segment of
the market for Dairy Products. Tirumala Milk Products Pvt Ltd Products (P) Ltd. is
presently implementing an expansion programme and proposes to launch new products in
the nearfuture.
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Presently our market presence is in Andhra Pradesh, Karnataka and Tamil Nadu. We
handle 7 Lakh liters of milk per day in our packing stations and dairy plant.
Which is the single largest plant in the state of Andhra Pradesh. Our Registered Office
is located at Kadivedu Vill., Chellapuru Mandal, Nellore Dist and Corporate Office is
located at Ameerpet, Hyderabad.
Tirumala Milk Products Pvt Ltd Products (P) Ltd. sells a rich, varied offering of nutritious,
tasty and healthy food products under well-known brand. Taste, health, convenience,
reliability and vitality for consumers are key characteristics.
Our milk comes from cattle herd that receive the best care along with healthy and nutritious
diet in the form of quality feed to ensure that they produce wholesome, high-quality milk.
The major contributors to the success of Tirumala Milk Products Pvt Ltd Products
(P) Ltd. are: -
➢ Milk ProcurementNetwork
➢ Superior sales and marketingprowess
➢ Strategic technological & infrastructural advantage
➢ Efficient humaninvestments
We have the advantage of
• Procurement of Quality Buffalo and Cow milk through a strong network of chilling
centers spread across states of Andhra Pradesh, Tamil Nadu and Karnataka.
• Strong roots in local markets and first-hand knowledge of the localculture.
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• Business intelligence and technical expertise that is applied to serveour consumers.
• Strong managementfocus
BOARD OF DIRECTORS :
Tirumala Milk Products Pvt Ltd Products (P) Ltd. has a seasoned Board of Directors with
a collective blend of visionary leadership, consumer marketing expertise and technological
prowess.
Our Board of Directors Are:
B.Brahma Naidu, Managing Director,
He is the Managing Director of Tirumala Milk Products Pvt Ltd Products Pvt. Ltd.,
headquartered at Kadivedu Vill., Chellapuru Mandal, Nellore District, Andhra
Pradesh,India.
Mr. Naidu hails from a farming family and started his career at a young age of 18 year with
a transport business, In 1992, when the Government of Andhra Pradesh issued a G.O
regarding establishment of dairies in private sector, he opened a Milk Chilling unit in
partnership with Mr.B.Nageswara Rao and Mr. Danda Brahmandam who was working in
co-operative dairy at Nellore and had very good knowledge of procurement and technical
knowledge in dairy field. Later based on
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the market research and demand heplanned to sell milk in packet under the brand name of
"THIRUMALA". Subsequently, a packing plant was established in the year 1995 at
Vellalcheruvu Village, Santhamagulur Mandal, Prakasam District.
Mr. Naidu scrutinizes every aspect of our day-to-day operations and develops strategies
for continuous improvement of quality and efficiency.
D.Brahmanandam, Joint Managing Director,
He is the Joint Managing Director of Tirumala Milk Products Pvt Ltd Products Pvt. Ltd.,
and he is based at Anna NagarChennai.
Hailing from an agricultural family, Mr.Brahmanadam started his career at the age of 21
Years.After completion of his education at Kadivedu Vill., Chellapuru Mandal, worked in
Procurement Team of ‘The Nellore District Milk Producers Co-operative’. He went on to
show his leadership and foresight by co-founding Tirumala Milk Products Pvt Ltd Products
Pvt. Ltd. along with Mr. Bolla Brahma Naidu and Mr. B.NageswaraRao.
Mr. Brahmanadam's attention to excellence is shown by his dedication in making Tirumala

Milk Products Pvt Ltd a household name in Chennai and surrounding areas. Under his able
leadership and operational excellence, Tirumala started the SMP & Products plant at
Gudur, Nellore District and commenced export of SMP &Butter.
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B.Nageswara Rao, Director,
Mr. B. Nageswara Rao Director hails from Kadivedu Vill., Chellapuru Mandal area
of Nellore Dist, A.P and is the co-promoter of Tirumala Milk Products Pvt Ltd
Products Pvt. Ltd.
Mr. B. Nageswa Rao's career spans several decades in logistics. The entire logistical
strategy and operations is handled by him at Tirumala Milk Products Pvt Ltd Products Pvt.
Ltd. Since joining the company, Mr. Nageswara Rao has held various roles overseeing the
logistical strategies for new business opportunities and responsibility for the company’s
logisticalinfrastructure.
Mr. Nageswara Rao is now based out of Gudur in Nellore District and manages the day-
to-day operation of the company's largest unit and composite milk and products plantthere.
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Dr. N.Venkata Rao, Director,
A graduate in Veterinary Sciences from College of Veterinary Sciences, Tirupati, and Post
Graduate Diploma holder in Rural Management from IRMA, Anand, Dr.Venkata Rao has
over 20 years of experience in this industry. He was associated with the Nellore Dist, Milk
producer’s co-operative union at Sangam in milk procurement and milk
processingdepartments.
Dr. Venkata Rao is responsible for setting the strategic objectives of the company and the
policy framework in terms of planning and implementation of milk procurement strategies.
Dr.Venkata Rao is now based out of Palamaneru, Chittoor Dist and oversees the operations
in Karnataka and Chittoor district of A.P. He is also responsible for monitoring the
performance of the Tirumala Curd, Milk and other dairy products in Bangalore and nearby
markets.
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E.N.Rao, Executive Director,
A graduate in Veterinary Sciences from College of Veterinary Sciences, Tirupati, and

obtained Post Graduation in Management from I.I.M., Ahmadabad, Mr. E.N. Rao has the
appropriate range of proficiency, experience and skills to handle all areas of operation.
He started off as an Executive Trainee in the Godrej Group and has 19 years of rich
experience. His vast experience in the dairy industry makes him a skilled hand in ensuring
that all appropriate policies and practices of the company will achieve the business
objectives. Mr. Rao has worked as a President at Heritage Foods (I) Ltd, Hyderabad for 6
years and Director at Creamline Dairy Products, Hyderabad for 5 years. He later joined the
TMPPL board in Nov 2007 as Executive Director based at corporate office,Hyderabad.
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OUR COMMITMENTS:
Tirumala Milk Products Pvt Ltd Products (P) LTD. is committed:
1) To serve our customers with better products and higher quality services than is
available from any other dairy company atpresent.
2) To continue the tradition as a trusted dairy by managing sustainable, profitable,
and environmental practices both within our company and ourcommunity.
3) To achieve longevity by adapting to our customers’ changing needs and market
trends.
4) To invest in the abilities, opportunities, and teamwork of our employees thus
igniting passion, commitment, andsuccess.
5) To produce products of international quality with acceptance from

overseasclientele.
AREA OF OPERATION :
Tirumala distributes milk to various parts of Tamil Nadu, Andhra Pradesh, and Karnataka.
Gudur is the main source for delivering milk and milk products to Chennai and other major
parts of Tamil Nadu. The procurement and processing section located at Pasupattur village
of Chitoor district in Andhra Pradesh is the source of milk, curd and products which are
supplied in Bangalore and Mysore Markets.
The packing station located at Vellacheruvu, 20 KM away from our Registered Office and
plant at Singavaram West Godavari District and Wadiyaram in Medak District supplie milk
curd and other products to major markets of Andhara Pradesh which includes Hyderabad,
Vijayawada, Nellore, Rajamandry, Kakinada, and Karim Nagar.
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Skim Milk Powder, Butter and Butter oil produced at Gudur plant are supplied to major
Industrial and Institutional customers located across India and Overseas.
CERTIFICATES AND AWARDS:
In recognition of its efforts and achievements in the dairy foods industry, and in
acknowledgment of all the challenges surmounted, Tirumala Milk Products Pvt Ltd
Products (P) Ltd. has won many awards andcertificates.
More enduring than any public recognition for our contributions is the satisfaction we enjoy
by creating a superior product and giving back to our communities.
Tirumala Milk Products Pvt Ltd Products (P) Ltd. is an ISO 9001:2000 and an ISO 22000:
2005 Certified company. The dairy is following Quality Management System and Food
Safety Standards.
Apart from ISO certification, we have Certificate from SGS on SMP Analysis too.
Tirumala Milk Products Pvt Ltd Products (P) Ltd. has ISI Licence, Agmark Licence and
adhere to all other Statutory standards as per requirements.
FINANCIAL INFORMATION:
Tirumala Milk Products Pvt Ltd Products (P) Ltd. has always reiterated that our added
value businesses would continue to demonstrate attractive growth.Our business strategy
continues to make encouraging progress and is a key driver of the operatingprofit.
Our strategy will continue to focus on growing our brands and added value businesses. The
strength of our competitive position gives confidence that we will
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deliver attractive earnings growth and provides the opportunity for a greater appreciation
in Tirumala Dairy's value.
Before November 2007, both Tirumala Dairy Pvt Ltd and Tirumala Milk Products Pvt Ltd
Products Pvt Ltd were separate entities. After that they became one single entity called
Tirumala Milk Products Pvt Ltd Products (P) Ltd.
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Legend
TMPPL: Tirumala Milk Products Pvt Ltd Products Private Ltd
TDPL: Tirumala Dairy Private Ltd
PRODUCTCS:
Tirumala Milk Products Pvt Ltd Products (P) Ltd. covers the entire spectrum of dairy
products sold in markets. The complete range of Tirumala Milk Products Pvt Ltd Products
(P) Ltd. are highly nutritious, healthy and bring you a world of goodness.
Tirumala Milk Products Pvt Ltd Products (P) Ltd. pasteurizes and packages all fresh dairy
products in technologically superior and hygienic conditions to ensure pure natural
freshness.
Tirumala Milk Products Pvt Ltd Products (P) Ltd., Handles 6.5 Lakhs Liters of Milk per
day in all their packing Stations and main dairy plant which is the highest in the state of
Andhra Pradesh.
Tirumala Milk Products Pvt Ltd Products (P) Ltd. handles milk in the following locations:-
Placing Locations Handling Capacity per day
Gudur ( Main Plant ) 4.0 Lakh litres per day
Vellala Cheruvu 1.0 Lakh litres
Bhimadolu 1.0 Lakh litres
Palamaner 1.5 Lakh litres
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Procurement of Milk
Tirumala Milk Products Pvt Ltd Products (P) Ltd. established 25 Chilling centers in Andhra
Pradesh and 8 chilling centers in Tamil nadu to procure both Cow & Buffalo milk. Best
quality milk is procured and chilled at chilling centers, to retain freshness of milk. The
strength of the Tirumala Milk Products Pvt Ltd Products
(P) Ltd. is to procure more than 6.0 lakh liters of milk directly from agents/farmers using
state-of-the-art machinery and professionally trainedstaff.
Production
❖ Tirumala Milk Products Pvt Ltd Products (P) Ltd. has its main dairy plant at
Kadivedu with handling capacity of 4.0 lakhs lts of milk per day from various
chilling centers and localunits.
❖ Main plant processes 3.0 Lakhs Lts of milk per day in automatic sachet filling
machines for supply and distribution to Chennai, Tirupati, Nellore, etc… in
insulatedpuffs.
❖ There is continuous growth in sale of milk from 50000 ltrs to 350000 ltr with
in a span ofone-decade.
❖ Tirumala Milk Products Pvt Ltd Products (P) Ltd. has its own supply chain
management, which is the key to timelydistribution.
❖ At our Palamaner unit processes and supplies 1.00 lakh liters of milk and 20000
liters of curd to Bangolorecity.
❖ Our Vellalacheruvu & Bhimadolu packing stations processes and supplies 2.0
lakh liters of milk to Hyderabad, Warangal, Vijayawada. Elure, Nellore
andRajahmundry.
❖ Our Wadiyaram plant has capacity of 50000 Liters milk to cater to the markets
of Medak, Nizambad, Adilabad and Karim Nagar Districts of A.P
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Products
❖ The Main Plant has modern equipments to manufacture milk products like
Buttter, Ghee and MilkPowder.
❖ Butter is made from pure cow & buffalow fat under hygienically processed
through continues butter making machine with a capacity of 8 tones perday.
❖ Ghee is made from pure cow & buffalow butter under supervision of 30 years
experienced dairy technologists to retain granulation, color and aroma of ghee
with a capacity of 8 tones perday.
❖ Milk powder is made from fresh cow & buffalow milk and the plant is capable
of producing all type of milk powders with a capacity of 15 tones perday.
❖ By-Products like Sterilized Flavoured Milk, Lassi, Khova, Milk Cake, Mysore
pak,Panner.
❖ Icecreams
FOOD SAFETY:
Ensuring the safety of dairy foods is a responsibility of the dairy industry, dairy farmers
and dairy processors. Milk and other dairy products are among the safest and most highly
regulated foods in the world.
We have established a rigorous and far-reaching food safety program that ensures that the
milk and dairy products you and your family enjoy remain pure and wholesome.
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We have well maintained laboratories in all plants. Technically qualified staff tests the milk
and milk products. Quality assurance programmes are implemented at every stage to ensure
quality of milk and milk products.
CAREERS:
Tirumala Milk Products Pvt Ltd Products (P) Ltd. is one of the leading dairy in India. It is
primarily known for its quality products and outstanding variety. We are equipped with
exceptional technology and skilled manpower. Our success factor in the region is total
customer satisfaction andmodernization.
Attractive workplace
At Tirumala Milk Products Pvt Ltd Products (P) Ltd. our employees are an important
resource and we want to be among the top-attractive workplaces. Our key tool is a close
dialogue between our owners, our management and our employees to ensure that both the
company’s and our employees’ requirements are covered in the best possible way.
High ambitions
It is no secret that we have high ambitions. Our objective is to be the leader at all dairy
product stages from product development, through production and sales. For that we need
top-motivated and engaged employees.
Excellent career opportunities
At Tirumala Milk Products Pvt Ltd Products (P) Ltd. we have created an environment with
almost unlimited career opportunities.
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Responsible and committed employees
When recruiting employees we look for both personal as well as professional

qualifications. Our future colleagues must be able to identify themselves with our normal
run of the company and our development, and they must be committed to take
responsibility for making a difference. Equally important is their ability to communicate
and cooperate crisscross departments and frontiers. Therefore, Tirumala Milk Products Pvt
Ltd Products (P) Ltd.’ employees are characterized by their pursue of lifelong learning and
development.
Tirumala Milk Products Pvt Ltd Products (P) Ltd. is one of the preferred
companies to work with because we believe in:
• The power of Open DoorCommunication

• Providing fairtreatment
• Giving Equal Opportunity toeveryone
• Providing diversity through nature of work andpeople
• Opposing any form ofharassment
• Encouraging a performance drivenenterprise
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MILK PACKETS:
THIRUMALA FCMMILKPACKET THIRUMALA GOLD MILKPACKET
THIRUMALA MILK WITH OUT CREAM THIRUMALA TONNED MILK
THIRUMALA GOLD WITH CREAM
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MILK PRODUCTS
FLAVOUREDMILK THIRUMALAGHEE THIRUMALASWEETS
THIRUMALA BASUNDITHIRUMALABUTTER GHEEEPACKETS
THIRUMALA PANNER THIRUMALA MILK POWER THIRUMALABUTTER
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PLANTS:
Plant:Vellalacheruvu Plant :Gudur
Plant : Bhimadolu
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CHAPTER – II
OBJECTIVES OF THE STUDY

NEED OF THE STUDY
SCOPE OF THE STUDY
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OBJECTIVES OF THE STUDY
❖ To understand the working capital position of the Tirumala Milk Products PvtLtd.
❖ To know the companies financialPosition.
❖ To examine the solvency position of Tirumala Milk Products
PvtLtd.
❖ The aim is to study the functionality of working capital management in Tirumala
Milk Products PvtLtd.
❖ The objective is to find the relevance of liquidity of current assets in thecompany.
❖ To analyses the efficiency of working capital at Tirumala Milk Products PvtLtd.
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NEED FOR THE STUDY
In order to maintain flow of revenue from operations, every firm need to

Maintain certain amount of current assets. For example, cash required to pay
Expenses or to meet current obligations for services received or goods purchased etc.
On the identical plane inventory are required to provide the link between production
And sales. Similarly account receivables generates when goods are sold on credit.
This study gives the analysis in decision making. It the information about growth
Of the organization.
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SCOPE OF THE STUDY
The scope of the study is identify after and during the study is conducted.
The study of working capital is based on tools like ratio analysis, working capital
Operating cycle etc., further the study is based on 5 financial reports of the company.
The study is mainly conducted to know the working capital management of the firm.
The main object of the study was to put into practical the theoretical aspect of the study
Into real life experience.
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Introduction:-
Research methodology is a way to solve the problem. The study
Is in various types adopted by the researcher to solve the problem. There are two
Techniques to help the researcher.
➢ Primary data.
➢ Secondary data.
The study has been conducted in the Tirumala Milk Products Pvt Ltd. To
examine ratio analysis in order to enquire into the issues like liquidity, timelines and
material management. The study has been undertaken in the Accounting& Finance
departments of the Tirumala Milk Products Pvt Ltd.
Primary Data:-
The primary data is collected by discussions with the functional managers, officers,
officers, staff and other members of the Tirumala Milk Products Pvt Ltd.
Secondary Data:-
The secondary data is obtained from the annual report and financial statements
that is balance sheet and Profit and Loss account, Annual reports, Journals, and other
informational publications of the Tirumala Milk Products Pvt Ltd. And from the text books
of financial management.
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The study is subject to somelimitations:
• Every study will have its own limitation's the present study is alsocarriers out
with the followinglimitations.
• The study is limited a set universe comprising of the five yearssamples.
• The controllable constraints are overlooked.
• The study is purely based on the secondary data records available in the company
like balance sheets, profit and loss accounts and annual reports.
• All above captioned limitations of ratio analysis of Tirumala Milk Products
PvtLtd.
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CHAPTER - III
REVIEW OF LITERATURE
42
REVIEW OF LITERATURE
Introduction:-
Every business needs funds for two purposes for its establishment and to carry
out its day to day operations. 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 and inventories. Working capital is the amount of funds to cover the cost of
operating the enterprise.
The goal of working capital management is to manage the current assets and
current liabilities of the firm in such a way that a satisfactory level of working capital is
maintained. Working capital is the difference between the inflow and outflow of funds.
Working capital is also known as revolving or circulating or short term capital.
Meaning of working capital:-

Working capital refers to the funds invested in current assets i.e. investment in
stocks, sundry debtors, cash and other current assets. Current assets are essential to use
fixed assets profitably.
For example a machine cannot be used without raw material. Thus it is obvious
that certain amount of funds is always tied up in raw materials, work in progress and
finished goods. However, the business also enjoys credit facilities from its suppliers who
may supply raw materials on credit and the firm may not pay all the expenses immediately.
Therefore, certain amount of funds is automatically available to finance the current assets
requirements.
However the requirements for current assets are usually greater than the amount
of funds payable through current liabilities. In other words, current assets are to be kept at
a higher level than the current liabilities.
Definition:-
According to Ralph Kennedy and Steward Mc Muller “a study of working capital

is of major importance to internal and external analysis because of its close relationship
with the current day to day operations of business”.
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List of current assets and current liabilities:-
CurrentAssets CurrentLiabilities
➢ Cash in hand Bills payable
➢ Cashatbank Sundrycreditors
➢ Billsreceivables Accruedexpenses
➢ Sundrydebtors Short termloans
➢ Stock Dividendpayable
➢ Prepaidexpenses Bankoverdraft
➢ Accruedincome Provision fortaxes
➢ Short terminvestments
Significance:-
The importance of working capital is reflected in the fact that financial manager
spend a great deal of time in managing activities relating to current assets and current
liabilities as follows.
✓ Arranging short termfinancing.
✓ Negotiating favorable creditterms.
✓ Controlling the movements ofcash.
✓ Administering accountsreceivable.
✓ Monitoring investment ininventories.
Factors influencing working capital requirements:-

The working capital needs of the firm are influenced by numerous factors. The
important factors are:
➢ Nature ofBusiness:-
Generally trading in financial companies needs to carry large amounts of working
capital where as public utilities need small amount. Manufacturing concerns stand a
between these two categories.
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➢ ManufacturingProcess:-
The longer production cycle time, the larger inventory in form of semi-finished
goods. Hence higher working capital is needed.
➢ Terms of purchasing andsales:-

An organization making purchase on credit basis and sales on cash basis will
require relatively less working capital.
➢ Transportation bottle necks/conditions ofsupply:-

The inventory of raw material stores and spares depend on the condition of
supply. If the supply is prompt and adequate, the firm can manage with small inventory.
However, if supply were unpredictable and scantly, then the firm to ensure continuity of
production would have to acquire stocks as and when they are available and carry large
inventory on an average.
➢ Profitlevels:-
A company carrying huge amount of profit can add to the working capital pool a
large quantum of funds. However, such companies should guard against the temptation of
expanding beyond necessity and increase in overhead. Generally it is seen that companies
with high profit level become easy in management of funds and usually mismanagement
by blocking funds excessively in stocks ordebtors.
➢ Tax levels andPlanning:-

Income Tax Laws provide for payment of advance tax in installments excise and
sales tax are payable at time of dispatch of goods from the factory premises and the point
of sales respectively. Any working capital management must make adequate and finely
provision for the same as all of them involve cashoutlays
.
➢ Dividend policy and RetainedEarnings:-
Dividend policy and retained earnings aredirectlyrelated. There has to be
properbalancebetweentheneedtopreservecashresourcesandtheobligationtosatisfy
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shareholders become the short-term liability, which has to be paid for in cash and thus
impact, should be recognized in the working capital budget.
➢ DepreciationPolicy:-
The extent to which the depreciation provision in made during the course of
making financial statement has direct bearing on the dividend policy and retained earnings.
This so because higher quantum of depreciation would leave lesser profits resulting in
reduced retained earning and dividend.
➢ Price level changes in raw material and finishedgoods:-

Information has got a direct bearing on the working capital. It depends to a large
extent on the company’s ability to read to just its own prices to cover the increase in thecost.
➢ Operating Efficiency ofCompany:-

Operating efficiency of a company plays a major role in working capital
management. An efficient company will have a shorter manufacturing period, long credit
terms available from suppliers and minimum customers credit outstanding. If this is
achieved then the quantum of working capital required will be naturally reduced.
Nature and size of the Business:-

➢ Manufacturingcycle
➢ Sales growth
➢ Demandcondition
➢ Productionpolicies
➢ Price levelchanges
➢ Firms creditpolicies
➢ Availability ofcredit
➢ Business fluctuations, growth and expansionactivities.
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Classification of working capital:-
Working capital may be classified into two ways.
➢ On the basis ofConcept
➢ On basis ofTime
Working capital may be classified in two ways.
(a) On the basis ofconcept:-

1. Gross WorkingCapital
2. Net WorkingCapital
(b) On the basis oftime:-

1. Permanent or Fixed WorkingCapital
2. Regular WorkingCapital
3. Reserve WorkingCapital
4. Temporary or Variable WorkingCapital
5. Seasonal WorkingCapital
6. Special WorkingCapital
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Classification of Working Capital
WORKING CAPITAL
BASIS OF BASIS OF
CONCEPT TIME
Permanent / Temporary /
Gross Net
Fixed Variable
Working Working
Working Working
Capital Capital
cApital Capital
Regular Reserve Special

Working Working Seasonal Working
capital capital Working Capital
capital
(a) On the basis of concept:-

Gross WorkingCapital:-
Gross working capital simply called as working capital refers to the firm’s
investments in current assets. Current assets are the assets which can be converted into cash
within an accounting year (or operating cycle) include cash, short – term securities, debtors,
bills receivables and inventories Gross working capital concepts focus attention on two
aspects of current assets management.
❖ Optimum investment in current assetsand
❖ Financing of currentassets.
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Net Working Capital:-
Net concept is also called as net working capital. It refers to the difference
between current assets and current liabilities.
Current assets are the assets which can be converted into cash within an
accounting year (or operating cycle) include cash, short – term securities, debtors, bills
receivables and inventories.
Current liabilities are those claims of outsiders that are expected to mature for the
payment within an accounting year. Net working capital being the difference between
current assets and current liabilities is a quantitative concept.
Gross working capital concept is financial or going concern concept. Where as
net working capital is accounting concept of capital. These two concepts of working capital
are not exclusive rather both have their own merits.
Net working capital concepts however are also important for the following
reasons.
❖ It is a qualitative concept, which indicates the firm ability to meet is
operation expenses and short termliabilities.
❖ It is an indicator of financial soundness ofenterprises.
It may be said that both gross and net concepts of working capital are important
aspects of the working capital management. The net concept of working capital may be
suitable only for proprietary from of organization, such as sole trader or partnership firm.
But gross concept is very suitable to the company form of organization.
(b) On the basis oftime:-
Permanent (or) Fixed working Capital:

Business activity does not an end after the realization of cash from customer for
a company, the process is continuous and hence the need for a regular supply of working
capital. To carry on business, certain minimum level of working capital is necessary on a
continuous and uninterrupted basis for all practical purpose, this requirement has to be met
permanently as with other fixed assets. This requirement is referred as a “permanent of
fixed working capital”.
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Temporary (or) Variable working capital:
Any amount over and above the permanent level of working capital is known as
temporary, fluctuations or variable working capital. This type of working capital is needed
to meet fluctuations is demand upon changes in production and sales as result of
seasonalchanges.
Temporary
Working
Capital
Permanent
Time
Variable working capital may be sub-divided into seasonal working capital and
special working capital. Seasonal working capital is required to meet the seasonal demands
of busy periods securing at started inventories on the other hand special working capital is
required to meet extraordinary need forcontingencies.
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Importance of adequacy of working capital:-
essential to maintain the smooth running of a business.
No business can run successfully without an adequate amount of working capital.
The main advantages of maintaining adequate amount of working capital are as follows.
➢ Solvency of theBusiness:-
Adequate working capital helps on maintaining solvency of the business by
providing uninterrupted flow of production.
➢ Goodwill:-
Sufficient working capital enables a business concern to make prompt payments
and hence helps in creating and maintaining good will.
➢ EasyLoans:-
A concern having adequate working capital high solvency and good credit
standing can arrange loans from banks and others on easy favorable terms.
➢ Cashdiscounts:-
Adequate working capital also enables a firm to avail cash discounts on the
purchases and hence it reduces costs.
➢ Regular Supply of rawmaterials:-
Sufficient working capital ensures regular supply of raw materials and continuous
production.
➢ Regular payment of salaries, wages and other day-to-daycommitments:-
A company which has enable working capital can make regular payments of
salaries, wages and other day-to-day commitments which raises the moral of its employees,
increases their efficiency reduces wastage and costs and enhances production and profits.
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➢ Quick and regular return oninvestment:-
Every investor wants a quick and regular return on his investments. Sufficient
working capital enables a concern to pay quick and regular dividends to its investors, as
they may not be much pressure to plough back profits.
The Need for Working Capital:-

Every business needs some amount of working capital. The need for working
capital arises due to the time gap between production and realization of cash from sales.
The following are the needs of working capital:
• For the purpose of rawmaterial
• To pay wages andsalaries
• To incur day-to-day expenses andover-heads
• To meet the sellingcosts
• To provide credit facilities to thecustomers
• To maintain inventories of raw materials. Work-in-progress, stores, spares
and finishedstock.
Operating Cycle:-
Alternatively known as ‘working Capital Cycle’ of the working capital. Every
time sales do not convert into cash instantly there is invariably a time lag between the sale
of goods and the receipt of cash therefore, sufficient working capital is necessary sustain
salesactivity.
This concept is based upon continuity of flow through business operations. This
flow of value is caused by different operational activities during a given period of time.
These operational activities of an organizational may comprise of.
The operating cycle (working capital cycle) consists of the following event
which continues throughout the life of business.
52
• Conversion of cash intoraw-materials;
• Conversion of raw-materials intowork-in-progress;
• Conversion of work-in-progress into finishedstock;
• Conversion of finished stock into accounts receivables through sales;and
• Conversion of account receivables intocash.
The duration of the operating cycle for the purpose of estimating working capital
is equal to the sum of the durations of each of the above said events, less the credit period
allowed by the suppliers.
DEBTORS
SALES
CASH
OPERATING
FINISHED CYCLE RAW
GOODS MATERIALS
WORK-IN-PROGRESS
53
Statement of changes in working capital:-
Working capital means the excess of current assets over current liabilities.
Statement of changes in working capital is prepared to show the changes in the working
capital between the two balance sheet dates. This statement is prepared with the help of
current assets and current liabilities derived from the two balance sheets.
As, working capital= current assets- current liabilities
So
✓ An Increase in current assets increased workingcapital.
✓ An decrease in current assets decreases workingcapital.
✓ An Increase in current liabilities decreased workingcapital.
✓ A decrease in current liabilities increased workingcapital.
The changes in the amount of any current assets or current liabilities in the current
balance sheet as compared to that of the previous balance sheet either results in increase or
decrease in working capital. The difference is recorded for each individual current assets
and current liabilities. Incase a current asset in the current period is more than in the
previous period, the effect is an increase in working capital and it is recorded in the increase
column.
But if a current liability in the current period is more than in the previous period,
the effects is decrease in working capital and it is recorded in the decrease column or vice
versa. The total increase and the total decrease are compared and the difference shows the
net increase or net decrease in working capital. It is worth nothing that schedule of changes
in working capital is prepared only from current assets and current liabilities and the other
information is not of any use for preparing this statement.
54
Advantages of adequate Working Capital:-
Working capital is the life blood of the business. Just as circulation of blood is
essential in the human body for maintaining life, working capital is very essential to
maintain the business.
The main advantages of maintaining adequate amount of working capital are as
follows:
➢ Good solvency position in thebusiness

➢ Goodwill, it is easy to getloans
➢ Cashdiscounts
➢ Regular supply of rawmaterials
➢ Regular payment of salaries, wages and other day to daycommitments
➢ Exploitation of favorable marketconditions
➢ Ability to facecrisis
➢ Quick and regular return oninvestment
➢ Highmorale
➢ Every business concern should have adequate working capital to run its business
operations. It should not have either redundant/ excess or shortage of working
capital.
Disadvantages of excessive Working Capital:-
Excessive working capital means idle funds which earn no profit for the
business and hence the business cannot earn a proper rate of return on itsinvestment.
➢ Where there is a redundant working capital, it may lead to unnecessary

purchasing and accumulation of inventories causing more chances of theft,
wastage andlosses.
55
➢ Excessive working capital implies excessive debtors and defective credit
policy which may cause higher incidence of baddebts.
➢ It may result in overall inefficiency in theorganization.
➢ When there is excessive working capital, relations with banks and other
financial institutions may not bemaintained.
➢ Due to low rate of return on investments the value of shares may alsofall.
➢ The redundant working capital gives rise to speculativetransactions.
Theoretical frame work of Ratio Analysis:-

Ratio analysis is the process of determining and interpreting numerical
relationship based on financial statements. A ratio is a statistical yard stick that provides a
measure of the relationship can be expressed as a percentage on as quotient.
Ratio analysis is a powerful tool of financial analysis. In finance analysis ratio is
as a bench mark of a firm as well as its historical of ratio analysis lies in the fact that it
marks related information comparable.
A single figure by it self has no meaning but when expressed in terms of related
figure. It yields significant inferences.
Meaning:-
Ratio is a simple mathematical expression. It is a number expressed in terms of
another number expressed in terms of another number of expressing the quantitative
relationship between the two. Ratio analysis is the techniques of interpretation of financial
statement with the help of various meaningfulratios.
Definition:-
A ratio is a simple arithmetical expression of the relationship of one number of
another. It may be defined as the indicated quotient of two mathematical expressions.
According to Accountants hand book by Waxen, Kell and Bedford “A ratio is an expression
of the quantitative relationship between two numbers”.
56
Advantages of Ratio Analysis:-
The various advantages associated with ratio analysis are
➢ Ratio analysis helps to measure the profitability of the business by calculating
the various profitabilityratios.
➢ Ratio analysis provides to workout thesolvency.
➢ Ratio analysis help the outsiders just like creditors, share holders, bankers, to
know about the profitability and ability of thecompany.
➢ With the help of ratio analysis a company may have comparative study of its
performance to the previousyears.
➢ Ratio analysis is very useful as they briefly summarize the result of detailed
and complicatedcomputations.
➢ Ratio analysis helps to workout the operating efficiency of thecompany.
➢ Ratio analysis helps to workout the short-term financial position of the
company with the help of liquidityratios.
➢ Ratio analysis helpful for forecastingpurposes.
Limitations of Ratio Analysis:-

The following are the main limitations of accounting ratios.
➢ Limitedcomparability
➢ False results
➢ Effect of price levelchanges
➢ Qualitative factors areignored.
➢ Costlytechnique
➢ Misleadingresults
➢ Absence of standard university AcceptedTerminology.
57
Types of Ratios:-
Accounting ratios can be grouped into the following categories.
A) LiquidityRatio
B) ActivityRatios
C) SolvencyRatios
D) ProfitabilityRatios
E) Leverage Ratios
A) Liquidity Ratio:-
The term liquidity refers to the ability of the company to meet its current
liabilities. Liquidity ratios assess capacity of the firm to repay its short term liabilities.
Thus liquidity ratios measure the firm’s ability to fulfill short term commitments out of
its liquid assets.
The important liquidity ratiosare:
I. Currentratio
II. Quickratio
B) Activity Ratios:-
Activity ratios measure the efficiency or effectiveness with which a firm
manages its resources. These ratios are also called turnover ratios because they indicate
the speed at which assets are converted or turned cover in sales. These ratios are
expressed as ‘times’ and should always be more than one.
Types: Some of the important activity ratios are:
I. Stock Turnover Ratio
II. Debtors TurnoverRatio
III. Creditors Turnover Ratio
IV. Working Capital TurnoverRatio
58
C) Solvency Ratios:-
The term ‘solvency’ refers to the ability of a concern to meet its long term
obligations. The long-term liability of a firm is towards debenture holders, financial
institutions providing medium and long term loans and other creditors selling goods on
credit. These ratios indicate firm’s ability to meet the fixed interest and its costs and
repayment schedules associated with its long term borrowings.
Types: The various types of solvency ratios are:
I. Debt-EquityRatio
II. ProprietaryRatio
D) Profitability Ratios:-
The main aim of an enterprise is to earn profit which is necessary for the survival
and growth of the business enterprise. It is earned with the help of amount invested in
business. It is necessary to know how mush profit has been earned with the help of the
amount invested in the business. This is possible through profitability ratio. These ratios
examine the current operating performance and efficiency of the business concern. These
ratios are helpful for the management to take remedial measures if there is a decliningtrend.
Types: The various important profitability ratios are:
I. Gross ProfitRatio
II. Net ProfitRatio
III. Operating ProfitRatio
IV. Return on investmentRatio
E) LeverageRatios:-
Leverage ratios are otherwise known as capital structure ratio. The term capital
structure refers to the relationship between various long terms forms of financing such as
debentures (long-term), preference share capital and equity share capital including reserves
andsurpluses.
59
CHAPTER – IV
DATA ANALYSIS
&INTERPRETATI
ON
60
DATA ANALYSIS AND INTERPRETATION
ANALYSIS OF DATA: The analysis of past performance of the company in terms
of operational efficiency and financial soundness is carried out with the help of the
following tools of analysis.
• Working capitalratios.
• Statements showing changes in workingcapital.
61
Table-4.1
Schedules of changes in Working Capital of
Of Tirumala Milk Products Pvt Ltd For The Year 15-16
Particulars 31-3-2015 31-3-2016 Increase in Decrease in
working Working
Capital capital
A Current Assets
Inventories 17,22,56,321 18,79,34,012 1,56,77,691 -
Sundry debtors 2,49,37,024 2,68,60,540 19,23,516 -
Cash &bank 3,34,65,753 60,59,037 - 2,74,06,716

Other current assets 2,86,56,816 4,86,79,846 2,00,23,030 -
Loans &Advances 1,49,28,012 1,17,23,019 - 32,04,993
Total Current Assets 274243926 281256454 - -
B Current Liabilities
Current Liabilities 31232753
&provisions 108391431 139624184 4762033
7256927 12018960
Total Current Liabilities 115648358 151643144 - -

A- Working Capital 158595568 129613310 - -
B
Decrease in Working capital 28982258 28982258
158595568 158595568 66606495 66606495
Interpretation:
The schedule of change in working capital of the company in the year 2015-2016 is
decreased inWorking capital with the amountof Rs. 2,89,82,258.
62
Table-4.2
Tirumala Milk Products Pvt Ltd For The Year 16-17

Working Working
capital capital
A Current Assets
Inventories 18,79,34,012 23,98,80,075 5,19,46,063 -
Sundry debtors 2,68,60,540 3,59,92,686 91,32,146 -
Cash &bank 60,59,037 71,50,276 10,91,239 -

Loans &Advances 1,17,23,019 1,25,29,745 8,06,726 -
Total Current Assets 28,12,56,454 36,51,93,725
Current Liabilities & 13,96,24,184 20,24,49,314 6,28,25,130
Provisions 1,20,18,960 90,73,986 29,44,974
Total Current Liabilities 15,16,43,144 21,15,23,300
A- Working Capital 12,96,13,310 15,36,70,425 - -
B
Increase in Working 2,40,57,115 - - 24,05,71,15
Capital
15,36,79,425 15,36,70,425 8,68,82,245 8,68,82,245
Interpretation:
The schedule of change in working capital Of the company in the year 2016- 2017 is
increase in Working capital with the amountof Rs. 2,40,57,115.
63
Table-4.3
Particulars 31-3-2017 31-3-2018 Increase in Decrease

Working in Working
Capital capital
A Current Assets
Inventories 23,98,80,075 23,69,75,732 - 29,04,343
Sundry debtors 35992686 3,62,58,591 2,65,905 -
Cash &bank 71,50,276 1,39,98,934 68,48,658
Loans &Advances 1,25,29,745 1,08,64,119 - 16,65,626

Total Current Assets 365193725 391784508
Current Liabilities & 202449314 15,84,52,146 4,39,97,168
Provisions 9073986 2,15,80,520 1,25,06,534
A- Working Capital 15,36,70,425 21,17,51,842
B
Increase in Working capital 5,80,81,417 - - 5,80,81,417
21,17,51,842 21,17,51,842 7,51,57,920 7,51,57,920
Interpretation:-
The schedules of change in working capital of the company in the year 2017-2018
is increased in the working capital with the amountof Rs.5,80,81,417.
64
Table-4.4


Working Working
capital capital
A Current Assets
Inventories 23,69,75,732 32,74,12,543 9,0436,811 -
Sundry debtors 3,62,58,591 2,23,61,498 - 13897093
Cash &bank 1,39,98,934 7,38,91,461 5,98,92,527 -
Loans &Advances 1,08,64,119 1,39,66,691 31,02,572 -
Current Liabilities & 15,84,52,146 14,33,60,960 1,50,91,186
Provisions 2,15,80,520 9,08,60,140 - 69279620
Total Current Liabilities 180032666 23,42,21,100
B
Increase in Working capital 14,32,27,958 - - 14,32,27,958
35,49,79,800 35,49,79,800 22,64,04,671 22,64,04,671
Interpretations:
Theschedules of change in working capital of the company in the year 2018-2019 is

Increased in working capital with the amount of Rs.14,32,27,958.
65
Table-4.5
Working Working
capital capital
A Current Assets
Inventories 32,74,12,543 34,19,06,868 1,44,94,325 -
Sundry debtors 2,23,61,498 8,30,13,168 6,06,51,670 -
Cash &bank 7,3891,461 15,60,07,572 8,21,16,111 -
Loans &Advances 1,39,66,691 1,62,18,264 22,51,573 -
Current Liabilities 14,33,60,960 12,59,82,205 17,37,8755 -
&
9,08,60,140 12,78,93,051 - 3,70,32,911
Provisions
B
Increase in Working 20,81,46,417 - - 20,81,46,417
capital
56,31,26,217 56,31,26,217 24,51,79,328 24,51,79,328
Interpretation:-
Theschedules of change in working capital of the company in the year 2019-2020 is

increased with the amount of Rs. 20,81,46,417.
66
RATIO:
Current Ratio:-
The current ratio is calculated by current assets by current liabilities. Current

Assets include cash and those assets/ which are can be converted into, cash within a year
such as marketable securities, debtors and inventories.
Current liabilities are those liabilities which are expected to be paid with in a year.
It includes Bills payable, Sundry Creditors, and Outstanding Expenses. The standard ratio
of the current ratio is 2:1.
Formula: Current Assets

Current Ratio=
Current Liabilities
Table-
4.6Current
Ratio
Year Current Assets Current Liabilities Ratio
2015-2016 27,42,43,926 11,56,48,358 2.37
2016-2017 28,12,56,454 15,16,43,144 1.85
2017-2018 36,51,93,725 21,15,23,300 1.73
2018-2019 39,17,84,538 18,00,32,666 2.18
2019-2020 58,92,00,900 23,42,21,100 2.52
67
Chart-4.1
Current ratio
Ratios
3
2.52
2.37
2.5 2.18
2 1.85 1.73
1.5
Ratios
1
0.5
0
2015-2016 2016-2017 2017-2018 2018-2019 2019-2020
Interpretation:-
the standard ratio of the current ratio is 2.1. In the year2015-2016 is 2.37 ,
2018-2019 is 2.18,and 2019-2020 is 2.52 are satisfied the 2:1 ratio.In the year 2016-2017
Is1.85,2017-2018 is1.73 these ratios are not satisfied.
68
Quick asset ratio (or) Acid test ratio:-
Quick ratio is also known as Acid test or Liquid ratio. It is another ratio to test the
liability of the concern. This ratio establishes a relationship between quick assets and
current liabilities. The main purpose of this ratio is to measure the ability of the firm to pay
its currents liabilities. For the purpose of this ratio of calculating this ratio, stock and
prepaid expenses are not taken into account as these may not be converted into cash in a
very shortperiod. The standard ratio is 1:1
Formula:
Quick Assets
Quick ratio=
Current Liability
Quick Assets=Current Assets-(Stock + prepaid expenses)

Current Liabilities (or) Quick Liabilities=Current Liabilities-Bank Overdraft
Table-4.7
Quick assetratio
Year Liquid Assets Current Liabilities Ratio

2015-2016 9,33,22,442 15,16,43,144 0.62
2016-2017 12,53,13,650 21,15,23,300 0.59
2017-2018 15,48,08,776 18,00,32,666 0.88
2018-2019 26,17,88,357 23,42,21,100 1.12
2019-2020 47,5094,955 25,38,75,256 1.87
69
Chart4.2
Quick ratio
ratios
2
1.87
1.8
1.6
1.4
1.2 1.12
1 0.88
ratios
0.8
0.62 0.59
0.6
0.4
0.2
0
2015-2016 2016-2017 2017-2018 2018-209 2019-2020
Interpretation:-
The standard ratio of the quick ratio is 1:1. In the year 2015-2016 is 0.62, in
2016-2017 is 0.59, in2017-2018 is 0.88 these ratios are not satisfied. In the year 2018-2019
Is 1.12,in 2019-2020 is 1.87 these ratios are satisfied.
70
Absolute Cash Ratio:-
Cash Ratio is calculated by dividing Cash and marketable securitiesby
CurrentLiabilities.Trade Investment or marketable securities are equivalent of cash
therefore they may be including in computation of cash ratio. The cash ratio is.0.5:1
Formula:
Absolute Assets
Cash ratio=
Current liabilities
Absolute Assets=Cash in hand+ Bank balance+ Marketable secure
Table-4.8
CashRatio
Year Absolute Assets Current Liabilities Ratios

2015-2016 60,59,037 15,16,43,144 0.04
2016-2017 71,50,276 21,15,23,300 0.03
2017-2018 1,39,98,934 18,00,32,666 0.07
2018-2019 7,38,91,461 23,42,21,100 0.32
2019-2020 15,60,07,572 25,38,75,256 0.61
71
Chart-4.3
Cash ratio
ratios
0.45
0.61
0.4
0.35 0.32
0.3
0.25
0.2 ratios
0.15
0.1 0.07
0.05 0.04 0.03
0
2015-2016 2016-2017 2017-2018 2018-2019 2019-2020
Interpretation:-
The standard ratio of the cash ratio is 0.5:1. In the 2015-2016 is0.04,
2016-2017 is 0.03, 2017-2018 is 0.07, 2018-2019 is 0.32,these Ratios are not satisfied,
In 2019-2020 is 0.61 this is satisfied the cash ratio.
72
Debtor’s turnover ratio:
This ratio establishes a relationship between net credit sales and average
account Receivables i.e. average trade debtor and bills receivables. The objective of
computing this ratio is to determine the efficiency with which the trade debtors are
managed.
Formula:
Net credit sales
Debtors turnover ratio=
Average Debtors
Where
Net Credit Sales=Total sales-cash sales
Average Debtors= Opening Debtors+ Closing Debtors
2
TABLE-4.9
Debtors Turnover Ratio
Years Net credit sales Average Trade Debtors Ratio
2015-2016 9,66,95,127 2,58,98,785 3.73
2016-2017 25,57,62,587 3,14,26,613 8.14
2017-2018 25,79,93,866 3,61,25,638 7.14
2018-2019 28,06,78,564 2,93,10,044 9.58
2019-2020 58,86,55,944 5,26,87,333 11.17
73
Chart-4.4
Debtors Turnover Ratio
ratios
12 11.17
10 9.58
8.14
8 7.14
6
ratios
4 3.37
0
2015-2016 2016-2017 2017-2018 2018-2019 2019-2020
Interpretation:-
From the above table we observe that the debtors turnover ratio in the year
2015-2016 is 3.37, In 2016-2017 is 8.14, in 2017-2018 is 7.14, in 2018-2019 is 9.58,
in 2019-2020 is 11.17.
74
Inventory Turnover Ratio:
Turnover ratio is also known as stock velocity. This ratio

Is calculated to consider the adequacy of the quantum of capital and its institution for
Investing in inventory a firm must have reasonable stock in caparison to sale it is the
ratio of cost of sales and average inventory.This ratio helps the financial Manager to
calculate inventory policy.
Formula:
Net sales
Inventory turnover ratio =
Average Inventory
Table 4.10
Inventory turnover ratio
Year Net sales Average inventory Ratios

2015-2016 9,66,95,127 18,00,95,166 0.53
2016-2017 25,57,62,587 21,39,07,043 1.19
2017-2018 25,79,93,866 23,84,27,903 1.08
2018-2019 28,06,78,564 28,21,94,137 0.99
2019-2020 58,86,55,944 33,46,59,705 1.75
75
Chart-4.5
Inventory turnover ratio
ratios
2
1.8 1.75
1.6
1.4
1.19 1.08
1.2
0.99
1
ratios
0.8
0.6 0.53
0.4
0.2
0
2015-2016 2016-2017 2017-2018 2018-2019 2019-2020
Interpretation:
From the above table we observe that the inventory turn over ratio in the year
2015-2016 is 0.53,in 2016-2017 is 1.19, in 2017-2018 is 1.08,in 2018-2019 is 0.99,
In 2019-2020is 1.75.
76
WORKING CAPITAL TURNOVER RATIO:
Working capital of a concern is directly related
To sales. The current assets like debtors, bills receivable, cash and stock etc. change with the
Increase or decrease in sales. The working capital is taken as:
This ratio indicates the velocity of the utilization of net working capital. This
Ratio indicates the number of times the working capital is turnover in the course of a year
The ratio measures the efficiency with which the working capital is being used by a firm
A higher ratio indicates the efficient utilization of working capital and the low ratio
Indicates inefficient utilization of working capital.
Formula:
Net sales
Working capital turnover ratio=
Net working capital
Table 4.11
Working capital turnover ratio
Year Net sale Net working capital Ratios

2015-2016 9,66,95,127 2,89,82,258 3.33
2016-2017 25,57,62,587 2,40,57,115 10.63
2017-2018 25,79,93,866 5,80,81,417 4.44
2018-2019 28,06,78,564 14,32,27,958 1.95
2019-2020 58,86,55,944 20,81,46,767 2.82
77
Chart 4.6
Working capital turnover ratio
ratios
12
10.63
10
6
4.44 ratios
4 3.33
2.82
1.95
2
0
2015-2016 2016-2017 2017-2018 2018-2019 2019-2020
Interpretation:
From the above table we observe that the working capital turnover ratio
In the year 2015-2016 is3.33, in 2016-2017 is 10.63,in 2017-18 is 4.44in 2018-2019 is 1.95
In 2019-2020is 2.82.
78
CHAPTER-V
FINDINGS
SUGGESTIONS
CONCLUSION
79
200
FINDINGS
➢ The statement of change in working capital of the Thirumala milk pvt ltd for the
Year 2015-2016 is decreased in working capital with the amount of ₹ 2,89,82,258.
Year 2016-2017 is increase in working capital with the amount of ₹ 2,40,57,115.
➢ The statement of change in working capital of the thirumala milk pvt ltd for the
➢ The standard ratio of the current ratio is 2:1 In the year 2015-2016 is 2.37, in2018-2019
Is 2.18, in 2019-2020 is 2.52 is satisfied. In 2016-2017 is 1.85,in 2017-2018
Is 1.73 is not satisfied.
➢ The standard ratio of the quick ratio is 1:1. In the year 2015-2016 is 0.62, in2016-2017
Is 0.52, in 2017-2018 is 0.88 these ratios are not satisfied. In 2018-2019 is 1.12, in 2019-
2020 is 1.87 these ratios are satisfied.
➢ The standard ratio of the cash ratio is 0.5:1 in the year 2015-2016 is 0.04,in 2016-2017
Is 0.03, in 2017-2018 is 0.07. in 2018-2019 is 0.32 these ratios
Are not satisfied. In 2019-2020 is 0.61 is satisfied.
➢ The debtor turnover ratio in the year 2015-2016 is 3.37,in2016-2017 is 8.14, in 2017-
2018 is 7.14, in 2018-2019 is 9.58, in 2019-2020 is 11.17.
➢ The inventory turnover ratio in the year 2015-2016 is 0.53, in2016-2017 is 1.19, in 2017-
2018 is 1.08, in 2018-2019 is 0.99, in 2019-2020 is 1.75.
➢ The working capital turnover ratio in 2015-2016 is 3.33 , in2016-2017 is 10.63

In 2017-2018 is 4.44, in2018-2019 is 1.95, in2019-2020 is 2.82.
80
SUGGESTIONS
➢ The holding of raw material takes long period by the firm. so it is suggestible to
bring the raw material from nearby places, so that the firm can deliver the order to
the buyer within a shortperiod.
➢ By adopting the new technology for introducing the new products with high quality
the company to preserve the old customers and also attract the new customers.
➢ Adopting the new managerial policies for increase the growth.
➢ Working capital is more important to the day-to-day transactions to maintain

Proper reserves it helps the company.
➢ To maintain good relationship with the milk dealers and customers and others
For increasing the sales.
➢ The Company has to focus on reduction in manufacturing cost. Since the cost
structure of the company is more of fixed cost it is suggestedto perform a cost-
benefit analysis in order to save itscost.
➢ The financial manager has to control current liabilities.
81
CONCLUSION
The overall performance of Tirumala Milk Products Pvt Ltd from last decade
is outstanding. By observing net working capital ratio, it shows that the liquid position of
the company is strong. By comparing the working capital turnover ratio, the conversion of
the working capital into sales is good. So, the efficiency in the management of the working
capital is good.
It suggested that the company has to maintain more number of assets and
should maintain the bank balances and suggested that the company has to convert the
working capital into sales very quickly which improves the efficiency of the management
of W.C. the company is that it should maintain current standards of performance and
continue its efforts to the growth and development of Indian tobacco Industry, which
ultimately benefits its employees, formers, Government and others who are linked with this
corporate gianttoday.
82
ANNEXURE
83
ANNEXURE
Table-4.1
Balance Sheet of Tirumala Milk Products Pvt Ltd For The Year 2015-16
Particulars 2015 2016
Sources of Funds
→ Share capital 1,30,00,000 1,30,00,000
Reserves &Surplus 13,51,67,525 13,02,70,036

→Loan funds
Secured loans 46,52,13,017 39,03,64,244
Unsecured loans 17,55,51,214 19,92,39,493
→Deferred tax liability 55,23,622 57,69,209
79,44,55,378 73,86,69,982
Application Funds
IV. Fixed Assets
Gross 70,33,48,927 71,15,51,528
(Depreciation) 7,12,09,082 10,54,78,021
Net block 63,21,39,845 60,60,73,507
V.Investments 37,19,965 29,83,165
VI. Current Assets, Loans& Advances
Inventories 17,22,56,321 18,79,34,012
Sundry Debtors 2,49,37,024 2,68,60,540
Cash &Bank balances 3,34,65,753 60,59,037
Other current assets 2,86,56,816 4,86,79,846
Loans & Advances 1,49,28,012 1,17,23,019
27,42,43,926 28,12,56,454
(-)Current Liabilities & 1,08,39,431 13,96,24,184
Provisions 72,56,927 12,08,960
11,56,48,358 15,16,43,144
Net current assets 15,85,95,568 12,96,13,310
Total 79,44,55,378 73,86,69,982
84
Table-4.2
Sources of Funds
→ Share capital 1,30,00,000 1,30,00,000
→Loan funds
Secured loans 39,03,64,244 37,94,75,270
Unsecured loans 19,92,39,493 19,30,40,880
73,86,69,982 74,29,00,638
Application Funds
IV Fixed Assets
Gross 71,15,51,528 72,61,14,635
(Depreciation) 10,54,78,021 14,50,33,137
Net block 60,60,73,507 58,10,81,498
Capital Work-in-progress 59,399 51,65,550
V Investments 29,83,165 29,83,165
VICurrentAssets,Loans&Advances
Inventories 18,79,34,012 23,98,80,075
Sundry Debtors 2,68,60,540 3,59,92,686
Cash &Bank balances 60,59,037 71,50,276
Loans & Advances 1,17,23,019 1,25,29,745
28,125,56,454 36,51,93,725
Provisions 1,20,18,960 90,73,986
15,16,43,144 21,15,23,300
Total 73,86,69,982 74,29,00,638
85
Table-4.3
Sources of Funds
→ Share capital 1,30,00,000 1,30,00,000
→Loan funds
Secured loans 37,94,75,270 47,86,82,475
Unsecured loans 19,30,40,880 8,15,95,729
74,29,00,638 77,30,02,348
Application Funds
IV Fixed Assets
Gross 72,61,14,635 73,89,03,208
(Depreciation) 14,50,33,137 18,24,91,726
Net block 58,10,81,498 55,54,11,482
Capital Work-in-progress 51,65,550 18,55,829
V Investments 29,83,165 29,83,165
Inventories 23,98,80,075 23,69,75,732
Sundry Debtors 3,59,92,686 3,62,58,591
Cash &Bank balances 71,50,276 1,39,98,934
Loans & Advances 1,25,29,745 1,08,64,119
36,51,93,725 39,17,84,508
Provisions 90,73,986 2,15,80,520
21,15,23,300 18,00,32,666
Total 74,29,00,638 77,30,02,348
86
Table-4.4
Balance Sheet of Tirumala Milk Products Pvt Ltd For The Year2018-19
Sources of Funds
→ Share capital 1,30,00,000 1,30,00,000
→Loan funds
Secured loans 47,86,82,475 42,91,26,132
Unsecured loans 8,15,95,729 8,33,86,203
→Deferred tax liability 55,23,988 4,21,51,888
77,30,02,348 91,35,65,294
Application Funds
IV Fixed Assets
Gross 73,89,03,208 77,25,53,600
(Depreciation) 18,24,91,726 21,85,01,632
Net block 55,54,11,482 55,40,51,968
Capital Work-in-progress 18,55,829 15,50,361
V Investments 29,83,165 29,83,165
Inventories 23,69,75,732 32,74,12,543
Sundry Debtors 3,62,58,591 2,23,61,498
Cash &Bank balances 1,39,98,934 7,38,91,461
Loans & Advances 1,08,64,119 1,39,66,691
39,17,84,538 58,92,00,900
Provisions 2,15,80,520 9,08,60,140
18,00,32,666 23,42,21,100
Total 77,30,02,348 91,35,65,294
87
Table-4.5
Sources of Funds
→ Share capital 1,30,00,000 1,30,00,000
→Loan funds
Secured loans 42,91,26,132 60,06,91,795
Unsecured loans 8,33,86,203 5,17,37,891
→Deferred tax liability 4,21,51,888 4,69,84,472
91,35,65,294 1,13,70,13,461
Application Funds
IV Fixed Assets
Gross 77,25,53,600 82,77,17,465
(Depreciation) 21,85,01,632 25,68,13,736
Net block 55,40,51,968 57,09,03,729
Capital Work-in-progress 15,50,361 -
V Investments 29,83,165 29,83,165
Inventories 32,74,12,543 34,19,06,868
Sundry Debtors 2,23,61,498 8,30,13,168
Cash &Bank balances 7,38,91,461 15,60,07,572
Loans & Advances 1,39,66,691 1,62,18,264
58,92,00,900 81,70,01,473
Provisions 9,08,60,140 12,78,93,051
23,42,21,100 25,38,75,256
Total 91,35,65,294 1,13,70,13,461
88
BIBLIOGRAPHY
89
BIBLIOGRAPHY
I.M.PANDEY FINANCIALMANAGEMENT
Himalaya Publications Eighth
edition
M.Y.KHAN&P.K.JAIN FINANCIALMANAGEMENT
Tata McGraw-hill Publication
Company Third Edition
R.K.SHARMA &SHASIK.GUPTHA FINANACIALMANAGEMENT

Kalyani Publishers Third
Edition
WEBSITE:
www.India Economy Watch.Com
www.Google.Comwww.wikipedia.com
www.tirumalamilk.com
90

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A Study on

WORKING CAPITAL MANAGEMENT WITH REFERENCE TO THIRUMALA

JAWAHARLAL NEHRU TECHNOLOGICAL UNIVERSITY,

Under the Guidance of

NARAYANA ENGINEERING COLLEGE::NELLORE

PROJECT COMPLETION CERTIFICATE

vThirumala Milk Products Private Limited,

Chapter – V 5.1 Findings

4.5 Inventory turnover 77

CHAPTER – II OBJECTIVES OFTHE STUDY

CHAPTER – III REVIEW OF LITERATURE 42-59

DATA ANALYSIS & 60-79

CHAPTER – V FINDINGS 80-81

Financial Management is that managerial activity which is concerned with

Meaning of Financial Management:-

a). To Reduce the Misuse ofFunds:-

b). To Maximize the Profit in Long Run:-

c)To Maximize the Wealth of Company:-

Meaning of working capital:-

According to Ralph Kennedy and Steward Mc Muller “a study of working capital

• The village milk producers co-operativesociety

ESTABLISHMENT OF ANAND TYPE CO-OPERATIVE IN

came into existence on 2nd April1974.

MILESTONES IN THE HISTORY OF DAIRY

1. Industry needs have to be solved by developing own technology and technologists in

1. The enormous urban market stimulus has led tosustained

NO MILK SHEDS/UIONS DISTRICTS

Growth of the industry:

We have the advantage of

Our Board of Directors Are:

B.Brahma Naidu, Managing Director,

D.Brahmanandam, Joint Managing Director,

Mr. Brahmanadam's attention to excellence is shown by his dedication in making Tirumala

A graduate in Veterinary Sciences from College of Veterinary Sciences, Tirupati, and

Tirumala Milk Products Pvt Ltd Products (P) LTD. is committed:

5) To produce products of international quality with acceptance from

CERTIFICATES AND AWARDS:

TDPL: Tirumala Dairy Private Ltd

Placing Locations Handling Capacity per day

Gudur ( Main Plant ) 4.0 Lakh litres per day

Vellala Cheruvu 1.0 Lakh litres

Bhimadolu 1.0 Lakh litres

Palamaner 1.5 Lakh litres

Excellent career opportunities

When recruiting employees we look for both personal as well as professional

• The power of Open DoorCommunication

THIRUMALA FCMMILKPACKET THIRUMALA GOLD MILKPACKET

THIRUMALA MILK WITH OUT CREAM THIRUMALA TONNED MILK

THIRUMALA GOLD WITH CREAM

FLAVOUREDMILK THIRUMALAGHEE THIRUMALASWEETS

THIRUMALA BASUNDITHIRUMALABUTTER GHEEEPACKETS

THIRUMALA PANNER THIRUMALA MILK POWER THIRUMALABUTTER

Plant:Vellalacheruvu Plant :Gudur

OBJECTIVES OF THE STUDY

In order to maintain flow of revenue from operations, every firm need to

Meaning of working capital:-

According to Ralph Kennedy and Steward Mc Muller “a study of working capital