EXECUTIVE SUMMARY

Working capital management is the way a company manages the

relationship between assets and liabilities in the short term. Simply put, working
capital management is how a company manages it money for day to day
operations as well as any immediate debt obligations. When managing the
company has to manage accounts receivables, account payables, inventory and
cash. The goal of working capital management is to have adequate cash flow for
continued operations and have the most productive usage of resources.
The project work has been taken up with the following objectives –
 To study the structure of working capital in the Cira renewable energy
pvt.ltd.
 To study the changes in working capital in the company during the past
five years.
 To know how the working capital is being finances at Cira renewable
energy pvt ltd.
 To know the short-term liquidity of the company.
 To identify problems, if any, in the working capital management of the
firm and to make suggestions.
The methodology of the study comprised mainly secondary data which
are obtained from the company annual reports, records, manuals, bulletins,
business magazines, text books and web sources. Five years balance sheets from
2014 – 16 to 2018 – 19 have been analyzed for the purpose of the study.
The Indian energy economy in the world's 4th largest after the US China and
Brazil harvesting about 25 million tons of oil seeds against the world. Since
1995, Indian share in world production of oil seeds, per capita energy
consumptionin India is only 10.6 kg/annum which is low compared to 12.5
kg/annum in China, 20.8 kg/annum in Japan, 21.2 kg/annum in Brazil and 48.0
kg/annum in USA.

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 Energy consumption has increased following a rise in household income
demand. India imports half of its edible power requirements making it the
world's third largest importer of energy consumptionin. The country by energy
from Argentina and Brazil and power of Malaysia and Indonesia.Currently,
India accounts for 11.2% of vegetable power import and 9.2 % of edible energy
consumption.
Energy and fertilizers limited were incorporated on 10th date of May
1960. The main object of the company at the time of incorporation was set up
plant were recovery of power from energy bran. Its mission is safety and quality
are the winnings of our success and the philosophy of the organization is
“serving the society through company”.
It is found that the cira renewable energy pvt.ltd suffers from many
financial problems such as gradually increase in current liabilities, negative
working capital, lack of cash to meet day to day obligation, high burden of
production cost and so on.
It is suggested that the company is to improve current assets by raising
shareholder funds, improving accounts receivables, reducing collection period
and controlling production cost through automation, optimizing employee
performance and negotiating with the suppliers.

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 CHAPTER-I
INTRODUCTION
1.1 INTRODUCTION TO THE WORKING CAPITAL MANAGEMENT

Working capital management is the way a company manages the

relationship between assets and liabilities in the short term. Simply put, working
capital management is how a company manages its money for day to day
operations as well as any immediate debt obligations.When managingworking
capital, the company has to manage accounts receivable, accounts payable,
inventory, and cash. The goal of working capital management is to have
adequate cash flow for continued operations and have the most productive
usage of resources.There are a few calculations we have to discuss in regards to
working capital management. To calculate working capital, a company would
take current assets and subtract current liabilities.
The next calculation we need to understand is receivables turnover. This
is a calculation of how many times an account is created and collected during
the reporting period. Receivables turnover is calculated by dividing the total
revenue by average receivables. That was a long way to say how many times
orders are being created and invoiced during the reporting period.The last
calculation we need to understand for working capital management is
the inventory turnover ratio. The inventory turnover ratio is calculated by costs
of goods sold divided by the average inventory costs. If the results are less than
1.0 then the company is not moving enough inventory. 

WORKING CAPITAL MANEGENT:

The working capital is cash available for day-to-day operations of an
organization. The amount of available working capital is measure of a firm’s
ability to meet its short-terms obligations. One borrows cash to be able to buy
assets or to pay for obligation, also called current capital.

The capital required for a business is of two types. These are fixed capital
band Working capital. Fixed capital is the capital required for acquiring fixed
assets such as land, building, plant, machinery, fixtures; fittings etc. working
capital refers to the capital needed to meet day-to-day operations of the
business, like payment of raw materials, payment of wages and salaries,
payments of recurring overhead expenses and so no.

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 The need working capital in the form of current assets to deal with the
problems arising out of the lack of immediate realization of cash against goods
sold. Therefore sufficient working capital is necessary to sustain sales activity.
Technically, it is referred to as operating or cash cycle.

Working capital is calculated as current assets minus current liabilities. If

current assets are less than current liabilities, an entity has a working capital
deficiency, also called a working capital deficit. Working capital efficiency is
determined by calculating the working capital ratio. This ratio is a key indicator
in the company's financial health. The working capital efficiency is calculated
by taking current assets divided by current liabilities. If the result of the
calculation is less than 1.0, then it is taken as a sign that the company's having
financial issues. If the result of the calculation is greater than 1.0 but less than
2.0, then the company is in good financial health. If the calculation yields a
result greater than 2.0, then company may not be making an effective use of it’s
as.

IMPORTANCE OF WORKING CAPITAL:

Working capital may be regarded as lifeblood of the business without
sufficient working capital any business organization cannot Run smoothly are
successfully.

Management of working capital is concerned with the problems that arise

in attempting to manage the current assets and current liabilities and the
interrelationship that exist between them.

To meet the current requirements of a business enterprise such as the

purchase of raw materials services working capital is essential it is also pointed
out that working capital is nothing but one segment of the capital structure of
the business.

Financial Management is called upon to maintain always the right cash

balance so that flow of fund is maintained at a desirable speed not allowing
slow down.Thus, enterprise can have a balanced liquidity and profitability.
Therefore the management of working capital is essential in each and every
activity.

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COMPOSITION OF WORKING CAPITAL:
 Major current assets
 Cash in hand and bank balances.
 Bills receivables.
 Sundry debtors.
 Short – term loans and advances.
 Inventories.
 Prepaid expenses.

 Major current liabilities

 Bills payables.
 Sundry creditors.
 Dividends payables.
 Bank over draft.

CONCEPTS OF WORKING CAPITAL:

There are two concepts of Working Capital:
1. Gross Working Capital.
2. Net Working Capital.
GROSS WORKING CAPITAL:
 It is referred as total current assets.
 Gross working capital is the capital invested important in total
current assets of the Enterprise.
 Current assets are those assets which can be converted into cash
within a short period of normally one accounting year.
 Gross working capital concept focuses attention On to aspects of
current assets management.
Two consideration of the level of investment in the current assets should avoid
to danger points – excessive and inadequate investment in current assets.
Investment in current asset should be just adequate to the needs of the business

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firm. Excessive investment in current assets should be avoided because it
Empires the firm’s profitability, as idle investment else nothing.
On the other hand inadequate amount of working capital can threaten the
solvency of the firm because of its inability to meet its current obligations.

NET WORKING CAPITAL:

 Net working capital is qualitative concept.
 It indicates the liquidity position of the form and suggest the extent to
which the work working capital needs may be financed by permanent
sources of funds.
 It is the difference between current assets and current liabilities.
 It is the portion of current assets which is financed with long term funds.

Net working capital = Current Assets – Current liabilities

PLANNING OF WORKING CAPITAL:

Working capital is required to run day today business operations. Forms
differ in their requirements of working capital. Firm’s aim is to maximize the
wealth of shareholders and to earn sufficient return from its operations.
Working Capital Management is a significant facet of financial management its
importance stems from two reasons:
 Investment in current assets the presents a substantial portion of total
investment.
 Investment in current assets and level of current liability has to be grated
quickly to change in sales.
Business undertaking required funds for two purposes:
 To create productivity capacity through purchase of fixed assets
 To finance current affairs required for running of the business

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The extent to which Prophet can be earned is dependent upon the magnitude of
sales. Sales are necessary for adding profits. However, sales do not converted
into cash instantly; there is invariably a time lag between sales of goods and the
receipt of cash.
Working Capital Management affected the probability and liquidity of the
form which are inversely proportional to each other; hence proper balance
should be maintained between the two. To convert the sale of goods into cash,
there is need for working capital in the form of current assets to deal with the
problem arising out of immediate reservation of cash against good sold.
Sufficient Working capital is necessary to sustain sales activity. This is
referred to as a working capital cycle or operating cycle.

WORKING CAPITALCYCLE:

Fig. operating cycle

The working capital requirement of a firm depends to a great

extent upon the operating cycle of the firm. The duration of the
time required to complete the sequence of events right from the purchase of raw
materials for cash to the realization of the sales in cash is called the
operating cycle or working capital cycle.

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 The duration of the operating cycle for the purpose of estimating
working capital is equal to the sum of the durations allowed by the
suppliers.Working capital cycle can be explained as follows:
Working capital cycle = R+W+F+D-C.
 R = Raw material storage period.
 W = Work – in – process holding period.
 F = Finished goods storage period.
 D= Debtor collection.
 C= Credit period availed.
BALANCE WORKING CAPITAL LEVEL:
The form should maintain a sound working capital position. It
should have acquitted working capital to run its business operations.
Both excessive as well as inadequateworking capital position are
dangerous from the firm’s point of view.The dangers of excessive working
capital are as follows:
 It result in unnecessary accumulation of inventories .This changes of
inventory mishandling, waste, theft and losses increase.
 It is an indication of defective credit policy and slack in collection period.
Consequently, higher incidence of bad debts, which adversely affects
profits.
 Negligent excessive working capital makes Management negligent which
degenerate into managerial inefficiency.
 Tendencies of accumulating inventories tend to make speculative profit
grow. This may tend to make Dividend policy liberal and difficult to cope
up with in future when the firm is unable to make speculative profits.
Inadequate working capital is also bad and has the following dangers:
 It limits the growth. Becomes difficult for the form to undertake
profitable projects for non- availability of working capital funds.

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  It becomes difficult to implement operating plans and achieve the
firm’s profit target.
 Operating instructions creep in when it becomes difficult even to meet
day today commitments.
 Fixed assets are not efficiently utilized for the lack of working capital
funds. This, the firm’s profitability would deteriorate.
 Paucity of working capital funds render the form unable to avail
attractive credit opportunities etc.
FACTORS DETERMINING WORKING CAPITAL:

1. Nature of Business:
Working capital requirements of a Farm are basically influenced by
the nature of business. Trading and financial firm have a very small
investment in fixed assets but require a large sum of money to be
invested in working capital.
2. Market and Demand Conditions:
The working capital needs of a firm are related to its sales.
However, it is difficult to preciously determine the relationship between
volume of sales and working capital needs. In practice, current assets will
have to be employed before growth takes place. It is therefore, necessary to
make advance planning of working capital for growing form on a continuous
basis.
2. Technologyand Manufacturing Policy:
The manufacturing or the inventory convention cycle comprises of the
Purchase and use of raw materials and the production of finished goods. A
Strategy of Level or study production may be maintained in order to resolve
the working capital problems in arising due to seasonal changes in the
demand for the firm’s product.
4. Credit Policy:
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 The credit policy of the firm affects the working capital by
influencing the level of debtors. The credit terms to be granted to
customers may depend upon the norms of the industry to which the
firm belongs.
5. Availability of Credit from Suppliers:
The working capital requirements of a firm are also affected by
credit terms granted by its suppliers. A firm will need less working capital if
liberal credit terms are available to eat from the suppliers. Supplier’s credit
finances the firm’sinventories and reduces the cash conversion cycle.
6. Operating Efficiency:
The operating efficiency of the firm relates to the optimum utilization of
all its resources at minimum costs. The efficiency in controlling the operating
costs and utilizing fixed and current assets leads to operating efficiency.
7. Price Level Changes:
The increasing shifts in price level make the function of the financial
manager difficult. Financial manager should anticipate the effect of price
level changes of working capital requirements of the firm.
TYPES OF WORKING CAPITAL:
Working capital can be divided into two categories on the basis of
time. They are
 Permanent working capital
 Temporary working capital
PERMANENT WORKING CAPITAL:
The minimum level of current assets is referred to as permanent or
fixed or long- term working capital.
TEMPORARY WORKING CAPITAL:

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 The extra working capital, needed to support the changing production and
sales activities is called the temporary working capital or short term working
capital. It is variable i.e., sometimes increasing and sometimes decreasing.
CASH MANAGEMENT:
Cash management refers to the management of cash balance and the
bank balance including the short-term deposits. For cash management purposes,
the term is used in this broader sense; there is it cover cash, cash equivalents
and those which h are immediately convertible into cash.
Cash management is concerned with the managing of:
1. cash flow into and out of the firm,
2. Cash flows within the firm, and cash balances held by the firm at point
of time by financing deficit or investing surplus cash.
CASH MANAGEMENT MODELS:
Cash management models analyze methods which provide certain
framework as to how the cash management is conducted in the firm. Cash
management models are the development of the theoretical concepts into
analytical approaches with the mathematical applications. There are three cash
management models which are very popular in the field of finance.
1. Baumol Model:
The basic objective of the Baumol model is to determine the
minimum cost amount of cash conversion and the lost opportunity cost. It is
a model the demand for cash can be predicated with certainty and
determines the that provides for cost efficient transactional balances and
assumes that optimal conversion size. Total conversion cost per period can
be calculated with the help of the following formula:
t=TbC
2. Miller-Orr Model:

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This model was suggested by Miller Orr. This model is to determine the
optimum cash balance level which minimizes the cost of management of cash.
Miller-Orr Model can be calculated with the help of the following formula;

C =bE (N)t+ iE (M)

2. Orgler’s Model:
Orgler model provides for integration of cash management with
production and other aspects of the business concern. Multiple linear
programming is used to determine the optimal cash management. Orgler’s
model is formulated, based on the set of objectives of the firm and specifying
the set of constrains of the firm.

RECEIVABLE MANAGEMENT:
The term receivable is defined as debt owed to the concern by customers arising
from sale of goods or services in the ordinary course of business. Receivables
are also one of them major parts of the current assets of the business concerns. It
arises only due to credit sales to customers, hence, it is also known as Account
Receivables or Bills Receivables. Management of account receivable is defined
as the process of making decision resulting to the investment of funds in these
assets which will result in maximizing the overall return on the investment of
the firm.
The objective of receivable management is to promote sales and profit until that
point is reached where the return on investment in further funding receivables is
less than the cost of funds raised to finance that additional credit. The costs
associated with the extension of credit and accounts receivables are identified as
follows:

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A. Collection Cost
B. Capital Cost
C. Administrative Cost
D. Default Cost.
PAYABLES MANAGEMENT:
When a business controls its payables, it can better control its cash flow.
By improving the overall efficiency of the payables process, a business can
reduce costs and keep more cash working in the business. Payables management
solutions, such as electronic payment processing, direct payroll deposit, and
controlled disbursement can streamline and automate the payable functions.
Most of the receivables and payables management functions can be
automated using business banking solutions. The digital age has opened up
opportunities for smaller businesses to access the same large-scale cash
management technologies used by bigger companies. The cost savings
generated from more efficient cash management techniques easily offsets the
costs. More importantly, management will be able to reallocate precious
resources to growing the business.
INVENTORY MANAGEMENT:
Inventory management means, management of raw materials and related items.
Inventory management considers what to purchase, how to purchase, how much
to purchase, from where to purchase, where to store and when to use for
production etc.
KINDS OF INVENTORIES:
Inventories can be classified into five major categories.
A. Raw Material:
It is basic and important part of inventories. These are goods which have not
yet been committed to production in a manufacturing business concern.
B. Work in Progress:

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 These include those materials which have been committed to production
process but have not yet been completed.
C. Consumables:
These are the materials which are needed to smooth running of the
manufacturing process.
D. Finished Goods:
These are the final output of the production process of the business concern.
Itis ready for consumers.
E. Spares:
It is also a part of inventories, which includes small spares and parts.

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1.2 OBJECTIVES OF THE STUDY

The present study has been undertaken with the following objectives:
 To study the structure of working capital in the Cira renewable energy
pvt.ltd.
 To study the changes in working capital in the company during the past
five years.
 To know how the working capital is being finances at Cira renewable
energy pvt ltd.
 To know the short-term liquidity of the company.
 To identify problems, if any, in the working capital management of the
firm and to make suggestions.

15
 1.2 METHODOLOGY OF THE STUDY

The information for the study has been obtained from two sources namely
primary and secondary data.

Primary Data:5
Primary data have been corrected from personal interaction with the
company officials with respect to Working Capital Management of the
company.
Secondary data:

The secondary data has have been collected from the annual reports
internal records of the company and from the test books.

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 1.4 FRAMEWORK OF THE STUDY

The project report entitled “WORKING CAPITAL MANAGEMENT” in

energy renewable pvt Limited, Tadepalligudem, is organized in five chapters.

1. The first chapter gives the introduction to the working capital management
contains objectives, methodology, framework and limitations of the study.

2. The second chapter comprises the review of literature related to working

capital management.

3.. Thethird chapter deals with the profile of Cira renewable energy pvt ltd.

4. The fourth chapter carries the working capital management of the company.

5. The last and fifth chapter contains the findings of the study and some
suggestions for better performance.

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 1.5 LIMITATIONS OF THE STUDY

The study suffers from the following limitations:

 One serious limitations of the study is that some financial data have not
been revealed by the company as a policy matter.
 An exhaustive study could not be made due to the Limited period of
project that was Limited 8 weeks.

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 CHAPTER-II
2.1 NSIC PROFIL

National small industries corporation (NSIC), an ISO 9001: 2008

certified company and a govt. of India enterprise has been working to fulfill its
mission of promoting, aiding and fostering the growth of micro, small &
medium enterprises in the country. Over a period of five decades of transition,
growth and development, NSIC has proved its strength within the country and
abroad by promoting modernization, up gradation of technology, quality
consciousness, strengthening linking with large and medium enterprises and
enhancing exports-projects from small industries.
NSIC operation through country wide network of 122 offices and
technical centre’s in the country. In addition, NSIC has 48 training cum
incubation centers & with a large professional manpower; NSIC provides a
package of services as per the needs of MSME sectors. To manage operations in
African countries, NSIC operates from its office in Johannesburg, South Africa.
In stepping up its efforts to markets the products MSMEs, NSIC has set
up a specialized marketing intelligence cell to collect and disseminate both
domestic and international marketing intelligence in coordination with other
relevant department / agencies. This cell provides a single point contact to
collect database relating to bulk buyers in government, public and private
sectors, the detail of exporters, international buyers and technology suppliers.
Besides, the information on trade leads and products wise buyers and sellers as
well as database relating to DGS & D suppliers with prices of their products,
shall also be provided by this NSIC marketing intelligence cell to help MSMEs
in getting appropriate information at one place and at the right time which will
enable MSMEs in enhancing their ability to gauge and be at par with the global
demand.

19
 In the current era of globalization, MSMEs need marketing information
about the changing patterns of fashions /tastes in the domestic and international
market besides information about the trends in exports and potential for exports.
These are vital inputs for making MSMEs aware about their marketing strategy.
MSMEs need to be provided with market related information, new avenues for
their products, new business practices, both domestically as well as overseas.
MSMEs are handicapped because of non availability of information pertaining
to central government / state government policies and programs, the support
schemes and services of central /state PSUs availability of new technologies,
international and national tenders, opportunities available in various countries
for products and project exports. The NSIC marketing intelligence cell will
integrate the available information at one strengthen their efforts in focused
manner.
Schemes of NSIC:
The national small industries corporation limited an ISO 9001: 2008
certified company established in 1955, has been working to fulfill its mission of
promoting, aiding and fostering the growth of micro and small enterprises in the
country.
NSIC carries forward its mission to assist micro and small enterprises
with a set of specially tailored schemes designed to put them in a competitive
and advantageous position. The scheme comprises of facilitating marketing
support, credit support, technology support and other support services.
Marketing is a strategic tool for business development and survival of
the enterprises in today’s Competitive era. NSIC acts as a facilitator to promote
micro and small enterprises products and has devised a number of schemes to
support in their marketing efforts both in the outside the country. Some of the
schemes are briefly described an under:

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1. Government Purchase Program or Single Point Registration:
Government is the largest buyer of product from micro and small
enterprises. In order to meet its requirement of purchase, NSIC operation a
single point registration scheme under the government purchase programme,
where in NSIC issue registration to eligible micro and small enterprises for the
purpose of suppliers to the government departments. The registration is par with
DGS & D; the unit registration under this gets the following facilities:
 Issue of tender sets free of cost.
 Exemption from payment of earnest money.
 Waiver of security deposit up to the money limit for which the unit
is registered.
 Issue of competency certificate in case the value of an order
exceeds the monetary
 limit, after due verification.

2. Informediary Services:
Information plays a vital role in the success of any business. Keeping in
mind the information needs to micro and small enterprises. NSIC has launched
its infomediary services. A one stop, one window bouquet for aids that will
provide information on business, technology, finance and also exhibit the core
competence of Indian micro and small enterprises in terms of price and quality
internationally as well as domestically.

Some important services provided are:

 Tender information in your e-mail box and web based browsing.
 Accesses to wide range of technologies from India and abroad.
 Joint venture opportunities and information on of trade and events.
 Comprehensive information on government policies rules, regulations,
schemes and incentives.
21
  Access to industrial database and member directory.
 Availability of wide range of escort services, example product design,
credit and support rating, development catalogues and product literature,
energy and environment audit, introduction of information (IT)solution in
business operations.
 Skill up gradation training, monitoring, common facility at NSIC
technical services center(s), banners display on websites and market
studies.
 Banner display on NSIC’s website.

Raw material assistance:

NSIC extends short term financial assistance to micro and small
enterprises for procurement of raw material on need basis.
The salient features are:
 Financial assistance for procurement of raw material up to 90
days.
 MOU with NALCO, HCL, SAIL, RINL FOR supply of bulk
materials.
 Easy and quick disbursement.
 Flexibility of repayment.
Tender marketing:
The corporation participates in bulk global tender enquiries and local
tenders of central & state government and public sector enterprises on behalf of
micro and small enterprises.
It is aimed to assist micro and small enterprises with ability to
manufacture quality products with brand equity & credibility or have limited
financial capabilities.

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Benefits:
NSIC will provide all financial support depending upon the unit’s
individual requirements like purchase of raw materials and financing of sale
bill.
Enhance business volume helps micro and small enterprises to achieve
maximum capability utilization. Micro and small enterprises exemption from
depositing earnest money. Ensures fair margin to micro and small enterprises
for their production.

3. Consortia Marketing:
Micro and small enterprises in their individual capability face problems to
procure, execute bulk orders, which inhibit and restrict their growth. NSIC,
accordingly adopts consortia approach and forms consortia of units
manufacturing the same products, thereby easing out marketing problems of
Micro and small enterprises, the corporation explores the market and secures
order for bulk supply. These orders are then distributes to micro and small
enterprises in tune with their production capacity.

Performance and credit rating scheme for micro and small enterprises:
To ensure micro and small enterprises to ascertain the strength and
weakness of their existing operation and to take corrective measures to enhance
their organization strength, NSIC is operating performance and credit rating
scheme through empanelled agencies like ICRA; ONICRA, DUN & BRAD
STREET, CRISIL, FITCH, CARE and SNERA. Micro and small enterprises
has the liberty to choose among any of the rating agencies empanelled with
NSIC. The rating agencies will charge the credit rating fee according to their
policies.

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The benefits to small enterprises are as follows:
 An in dependent trusted third party opinion on capabilities and credit-
worthiness of micro and small enterprises
 Availability of credit at attractive interest
 Recognition in global trade
 Prompt sanctions of credit from banks financial institutions
 Subsidized rating fee structure for micro and small enterprises
 Facilitate vendors/buyers in capacity assessment to micro and small
enterprises
 Enable micro and small enterprises to ascertain the strength and
weakness of their existing operation and corrective measures.

Facilitation of credit support through banks:

Any kind of financial assistance i.e., terms loan, working capital loan,
bill discounting facility and export finance can be arrange through united bank
of India, UCO bank, oriental bank of commerce, central bank of India, bank of
Maharashtra, YES bank and HSDC at the most competitive interest rates. The
terms and condition of finance shall be of individual bank.

2.2 PROFILE OF CIRA RENEWABLES ENERGY (P) LTD.

CIRA Renewable Energy Private Limited has been formed as a company
on 04 January 2012. It is registered as the registrar of companies in Hyderabad
and is listed as a non-government company. Its share capital approved is Rs.
10,000,000 and its capital paid up is Rs. 10,000,000. This is built into electricity
generation, storage and distribution. Last Annual General meeting (AGM) of
CIRA Renewable Energy private limited took place on 29 th September 2018 and
its balance sheet was last tabled on 21st March 2018, according to documents
from the Ministry of Corporate Affairs (MCA).
The large selection of goods and facilities in solar PV (photovoltaic)
systems is offered by CIRA Renewable Energy Private Limited. The
24
organization has formed a group of qualified experts who have records of Rs:
20 cr in fiscal 2012-14 in relevant areas such as Solar PV Manufacturing, Power
Electronics and Marketing. In many states and of different capacities across the
world, the Organization has commissioned 2.5 MW solar power plants from the
ON Grid and OFF Grid.

WHY SOLAR?
Solar power will heat and cool your house, but it will almost never impact
the atmosphere around the planet. Through way of contrast, electricity from
power plants produces carbon dioxide pollution that experts believe face
significant environmental risks.
COMPANY PROJECTS
For enterprises, public facilities and educational institutions of all sizes,
Cira Renewable Energy supplies world class solar power systems. Under the
JNN Solar project under MNRE, New Delhi, we have deployed 2MWp base of
Solar OFF grid systems in India, our amount of research speaks for itself.
Our systems are planned to go beyond rigid commercial building codes
for decades and our market leading full solar infrastructure ensures that our
solar power ventures are implemented on a timely and budgetary bases.
Guarantee and maintenance services ensure the full productivity of your
investment long after deployment. We use the latest technologies and solar
high-performance materials to produce solar systems with superior
characteristis

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2.2.1 COMPANY CHALLENGING PROJECTS
Assam Rifles, shilling of system capacity 100KW installed on ground.
Installed a 50KWatt plant on a very inclined roof top in Airport Authority of
India, Guwahati, Assam.
It was challenging task to built in such a roof top area of System Capacity
50KWatt

2.2.2 COMPANY PROJECTS IN RURAL AREAS

Assam Rifles, Manipur of System Capacity 100KW installed on ground.
100KWatt plant installed on ground.
COMPANY VISION
Companies dream is to reduce fossil fuels reliance, reduce pollution of
carbon and reduce energy prices for the country. Cira works on supporting our
world and its cultures to build a sustainable healthy future. We see specific
potential in their research to change the thought and actions of the person
towards energy conservation through the usage of safe, efficient through green
energy-generating and consuming technologies.

COMPANY MISSION
Cira is dedicated to delivering developed solar energy systems that
implement state-of-the-art technologies at very affordable rates, retaining high
quality standards and thus leading to growing the installed capacity of solar
power plants in the world.

26
COMPANY LOGO

2.2 COMPANY SERVICES

27
2.2.1SOLAR ARRAY DESIGN AND ENGINEERING

An effective Solar Power System is built with several components. Built

onexcellent architecture, strong quality research and innovative materials, Cira
renewable energy supplies power generation systems with high performance. To
maximize the customer’s savings, Cira Renewable Energy uses superior
products and new designs.

Some companies are slave to other labels and sell only the most
comfortable design alternative, offering customers restricted preference. Cira
Renewable Energy offers a many design options to match different budgets and
additional features. Our professional solar designers will develop innovative
designs for the solar energy initiative, from conventional rooftop systems to
land mountings and rooftops, depending on the client specifications and
objectives. Company keeps up to date with the new technology and prices to
insure that customers get the most out of the pocket.

2.2.2 SOLAR INSTALLATIONS

CIRA Renewable Energy is the respected brand in solar storage with the
expertise of completion of hundreds of solar storage jobs for company,
industrial and utility customers. They professionally qualified construction
teams collaborate with on-site contractors in record-time to build solar racking
systems. Company knows just how critical it is for implementation to reach the
project deadline, and they are accountable from the original concept to the full
deployment of solar modules for the entire project.

DIFFERENT FOUNDATION OPTIONS

 Lower amount of posts than conventional racking.
 Designed to minimize the work needed to mount fields.

28
  Support for design and engineering at every step of the way
 Support for every PV module type flexibility.
 Different choices for the base.
 The post-driving tools.
 Program administrators on-site.

2.4 COMPANY SERVICES

2.4.1 SOLAR POWER PLANT
The solar power station uses either directly photovoltaic energy (PV) or
indirectly concentrated solar electrical power (CSP) to transform the sun into
electricity. Concentrated solar power technology utilizes lenses or mirrors to
concentrate a wide spectrum of sunlight on a narrow beam and tracking devices.
Using photoelectric effect, photovoltaic’s transforms light into electric current
2.4.1 ON-GRID-SYSTEM

“On Grid” or “Grid-based” systems are the systems which are linked by a
special inverter to the power grid. Such devices are more prevalent in

29
applications with “feed-in-tariff”. These devices may be either installed on the
roof top or on a free field basis depending on their size and ability

2.4.2 OFF-GRID SYSTEM

“Off grid” or “Stand Alone” devices are structures that are built independently
and powered by the power supply. These devices are installed primarily in rural
areas with little or no stable electricity.

2.4.3 SOLAR PV MODULES

The solar panel of simple photovoltaic offers the ideal solution for
producing energy from sunlight in an effective and environmentally friendly
30
way. Such solar power modules provides the strongest security in the area of
high energy, high-damage resistant and fully reflective glass plates against
environmental hazards including heat, hail and snow, ice and tempests. High
quality solar panels are simple to build and need limited maintenance.

2.4.4 SOLAR STREET LIGHTING SYSTEM

Solar Powered Street Lamps offer environmentally sustainable, economical

lighting solutions. Solar Powered Street Lights in India are low-cost, energy-
efficient and low maintenance. Solar Street Lighting utilizes low solar energy
sources to preserve quality levels for optimum output with superior content
generated in the appropriate size pressure die casting Aluminum coating, which
avoids overheating of the solar power. The temperature of the case is less than
55 D Centigrade. It’s up to 50,000 working hours for the LED lighting period,
the LED light offers more than 110 Lumens/Watt. Company provides
personalized LED Street light according to their requirements to various
industries. Solar lights offer a 2-5 year’s warranty.

FEATURES

 Electronic circuitry with high quality, environmentally sustainable – no

harmful content, for example – mercury.
 Extremely electricity efficient, very low self – consumption.
 Robust to thermal shocks and vibration, No infrared or UV output.

31
  Automatic operation dusk to dawn
 More light speed, low cost, good durability and long service life.
2.5 SOLAR WATER HEATING SYSTEM

The solar water heating device is a solar generator, an enclosed glass

collection tank, cold water delivery tank and enclosed pipeline. The rays of the
sun penetrate the glass, and fall on the absorber. The heat of the sun rays will
thus increase the temperature by the cold water inside the absorber. The warm
water is stored via the thermosyphon or the forced flow device in the enclosed
storage tank.
2.5.1 SOLAR HOME LIGHTING SYSTEM

32
2.6 OFFICE LOCATION
Cira Renewable Energy is located in Ayodhya Nagar, No. A-2, House, Plot No.
1-19-79/A, Kapra, of Hyderabad State in Telangana Districts

2.7 COMPANY’S BOARD OF DIRECTOR’S

DIRECTOR’S NAME DESIGNATION
GHANA KANTA CHUTIA Wholetime Director
NIHAR PANDA Wholetime Director
VENKAT TRIBHUVAN VADDI Managing Director
ANAND KUMAR SONIKAMBLE Whole Director

33
 CHAPTER-III
3.1 THEORETICAL PERSPECTIVE OF WORKING CAPITAL
MANAGEMENT
The term Working Capital commonly used for the capital required for
day-to-day working in a business concern. Such as for purchasing raw material,
for meeting day to day is on salaries, wages, rents and advertising etc. it is
necessary for any organization to run successfully its activities to provide
adequate working capital.
Current assets means which can be converted into cash within an
accounting year and includes cash, Short term Securities, debtors. Bills
receivables, stock etc. following definition will substantiate the concepts.
1. "WORKING CAPITAL MEANS CURRENT ASSETS CURRENT
LIABILITIES.
2. Any acquisitions of Funds which increase the current assets increase working
capital for they are one and the same.
The working capital refers to the difference between Current Assets and
Current Liabilities, it is excess of current assets over current liabilities.Current
liabilities refer to the claims of outsiders which are expected to nature for
payment with in an accounting year and include creditors for goods bills
payable, overdraft etc.Sufficient amount of working capital enables a company
to pay quick and regular dividends so its investors as there may not be much
pressure to plunge back the project.

3.2 DETERMINANTS OF WORKING CAPITAL:

A wide variety of factors influence the total investment in working capital
in an enterprise. Significant among them are:

34
PROMOTIONAL AND FORMATIVE PHASE:
The start up of a new project its initial years form the most crucial phase
for planning of working capital funds. By neglecting this, many run into
financial difficulties in their early operating years. The rather casual approach to
assessment of tures capital needs during the periods when industry and business
functioned in a sellers marketing could be understood as the bankers was
willing too absorb all shocks of Nuctuations in project operating by providing
ready funds to meet emergency needs. The position has undergone radical
change, the banker can no longer be taken for granted, and in the absence of
proper estimation of working capital needs, the project may have to face serious
financial problems.

POSITION OF BUSINESS CYCLE:

Movement of the business cycle brings about shifts in working capital
position. The upward swing is association with spurt in sales and increase in
levels of inventories and book debts. There could be a cash shortage and
borrowings may become necessary. On the other hand, when there is a
downswing, the levels of inventories and books debts may fall, but revenues
also fall, while categories of costs remain fixed and cash shortage might, still be
felt.
3.3 NATURE OF BUSINESS:

The nature of business has an important bearing on its working capital

needs. Some venture like retail stores, construction companies etc. require an
abundance of working capital. In other case, such as power generating and
supply the current assets play a minor and secondary role.

3.4 THE MANUFACTURING CYCLE:

A long manufacturing cycle between the raw material purchase and the
completion of the manufacturing process will obviously mean a larger tie-up of

35
funds to meet increase working capital needs. In such cases, management
should try to increase the rate of production and reduce the cycle time and thus
cut down working capital requirement. This can also be achieved through
process changes or through effective organization at all levels of enterprise
activity. Frequent changes in set ups, waiting for materials, tools or instructions
and accumulations work-in-progress result in extending the time cycle and
booking more funds. Organized negotiations with suppliers for attractive credit
terms and retention of their continued confidence by the settlement of bills on
agreed dates can also help reduce working capital requirements.
CREDIT TERMS TO CUSTOMERS:
The credit terms to customers influence the working capital level by
determine the level of investment in books debts. Management has to decide on
suitable credit policy relevant to each customer base on the merits of his case.
Unduly liberal credit policies and permissive attitude in the matter of collection
of outstanding can lock up funds that would otherwise be available for
operating.
VERITIES SUPPLY OF RAW MATERIALS:
The sources of certain raw materials are few and irregular and pose
problems in the matter of procurement and holding, suing up more funds.
Materials that are available only in certain seasons have to be obtained and
stored, in advance. The working capital requirements, in such instances, will
show seasonal fluctuations
SHIFT IN DEMAND FOR PRODUCTS:
Some manufactured products are subject top seasonal fluctuations in
sales. In order to utilize the capacity to the maximum possible extent, steady
production may have to be maintaining, though the demand for finished
products may vary from time to time. Finished goods inventories will therefore
accumulate during off-season, requiring increased amounts of working capital
to support higher levels of inventory. Financial planning will have to provide
36
for these funds requirements associated with steady production and seasonal
sales.

GROWTH AND EXPANSION PROGRAMS:

As business grows, additional working has to be found. Infarct, the need
for increased working capital does not follow the growth in business activities,
but proceeds it. Advance planning of working capital is thus a containing
necessary for a growing concern. Or else, the company may have substantial
earning but little cash with fact growth they may be under constant financial
pressure for external funds to reinforce internal generation. Forward planning
and continuous review there of are absolutely necessary for such companies.
COMPETITIVE CONDITIONS:
In a competitive market, winning and maintaining customer's goodwill
will involve additional costs and present a variety of working capital problems.
To offer the customer the benefits of choice, a variety of products will have to
be manufactured and stocked. This would mean higher levels of inventories in
all stages and therefore, additional working capital funds.
3.6 PROFIT LEVELS:
By the very nature of things, some enterprise generates high margins
compared to others. The product category and the firm's position in the market
may have given this advantage. Others have to struggle in a highly competitive
environment. But, profit cannot be considered as available cash at the end of
period. Even as the company operations are in progress, cash is used up for
augmenting stocks, book debts and fixed assets. Elaborate planning and
projection of expected activities and cash flows at short will have to be
identified to meet anticipated deficits, sources of funds will have to be identified
and where surpluses are expected, suitable applications will have to be planned.

37
RESERVES POLICY:
One of the cherished goals of enterprise, management has to build up adequate
reserves out of profits. The urge to retain profits may act as a major constraint
on the dividend policy, the funds position being given higher priority over
dividend policy.
DEPRECIATION POLICY:
Depreciation policy determines the amount to be provided as depreciation
on the various categories of fixed assets. The depreciation charges do not
involve any cash outflow. Enhanced rates of depreciation have the effect of
reducing profits correspondingly, which in turn can help in holding back
distribution of dividends. By this process cash is a conserved Depreciation
policy, thus, exert influence on the status of working capital in the enterprise
from time to time.
PRICE LEVEL CHANGES:
Rapidly rising prices create the need for more funds for maintaining the
present volume of activity. For same levels of inventories, higher cash outlays
are needed. In an inflationary set up, even operating expenses will grow for
given levels of activity some companies may be able to compensate part of
these cost increases through increases in prices for their products. The
implications of changing price levels on working capital position will vary from
company to company depending on the nature of its operation and its standing
in the market With a large variety of factors exerting influence on working
capital requirements, the management has to be continuously aware of the
developments, internal, external and environmental, and has to plan and review
constantly its working capital needs and strategy.
1. “Working capital means current assets”.
2. Any acquisition of funds which increase the current assets increase working
capital for that they are the one and the same. The working capital refers to the

38
difference between current assets and the current liabilities. It is excess of
current assets over current liabilities.

3.7 NEED FOR WORKING CAPITAL:

The need for working capital arises from business “very objective i.e.
wealth maximization”. It is possible only when the corporation earns sufficient
profits. These profits depend on the magnitude of receivables. These receivables
do not convert into cash immediately. There is always item gap between
receivable and receipts of cash. Therefore, working is needed for this period in
order to sustain the business activity. In case adequate working capital is not
available for this period, the corporation will not be in a position to sustain the
activity.

Thus working capital needed for the following purposes:

 For purchase of Raw-material components and spares.
 To pay wages and salaries.
 To increase day-to-day expenses and overhead cost such as fuel, power,
office expenses etc.
 To next the selling costs, such as packaging advertising etc.
 To maintain the inventories of Raw-material work-in-progress.
 Stores and spares and finished stock.

ADVANTAGES:
The advantage of working capital as adequate working capital may be
enumerated as follows:
 It creates a feeling of Security and confidence adequate working capital
creates a sense of security, confidence and loyalty, not only throughout
business itself, but also among its customers, creditors and business
associates.
39
  Easy loans from the Bank an adequate Working capital i.e. excess of
Current Assets over Current Liabilities the Company to borrow
unsecured loans from the bank because the excess provide a good
security to the unsecured loans.
 Adequate working capital can be meant for meeting unforeseen
contingencies, e.g. financial crises due to heavy losses etc.
 It increases Fixed Assets Efficiency Adequate working capital increase
the Efficient of the Fixed Assets of the Business because of its proper
maintenance.
There are two concepts of working capital

a) Gross concept

b) Net concept

3.8 GROSS WORKING CAPITAL:

It is the total of all current assets which include inventorick, sundry
Debtors, cash in hand, advances, investments, short term deposits etc.,
Gross working capital means total current assets.
3.9 NET WORKING CAPITAL:
Net working capital is the excess of current assets over current liabilities.
NETWORKING CAPITAL = CURRENT ASSETS -CURRENT
LIABILITIES
When the current assets exceed the current liabilities the working capital
is positive and the negative working capital results when current liabilities are
more than the current assets.
Working capital may be enumerated as below
Cash Discount:
If proper cash balance is maintained, the business can avail the advantage
of cash discount by paying cash for the purchase of raw materials and
merchandise. It will result in reducing the cost of production.

40
It create a feeling of Security and Confidence:
The proprietor or offices or management of a concern are quite carefree,
if they have proper working capital arrangement because they need not worry
for the payment of business expenditure or creditors. Adequate Working capital
creates a sense of security, confidence and loyalty not only throughout the
business itself, but also among its customers, creditors and business associates.

3.9.1 'Must’ for maintaining Solvency and continuing Production amount

of funds be available
In order to maintain the solvency of the business, it is essential that
sufficient to make all payment in time as and when they are due.
Sound Goodwill and Debt Capacity:
It is common experience of all prudent business that promptness of
payment in business creates goodwill and increase the debt capacity of the
business. A firm can raise funds from the market, purchase goods on credit and
borrow short term funds from banks etc..
3.10 WORKING CAPITAL OPERATING CYCLE:
In a manufacturing concern the working capital operating cycle starts
with the punhase of raw materials and ends with realization of cash from the
sale of finished products. This cycle involves purchase of raw materials and
stores, it conversion into stock of finished goods through work-in-progress with
progressive increment of labors and service costs, conversion of finished stock
into sales, debtors and receivables and ultimately realization of cash and this
cycle continues again from cash to purchase of raw material and so on.
OPERATING CYCLES:
Let us see wl the ca we need has to do with the normal operating time
often called the process cycle time. Some types of businesses may have a longer
operating cycle and this could be well more than a year or even a decade as in
the case of distilleries. Other businesses may have a short operating cycle as a
41
fast food store.Working capital could be either in terms of gross or net value.
Whereas Gross working capital is the total of current assets, Net working capital
is the total of current assets minus current liabilities. As a rule of thumb the best
possible practice is to see that there is sufficient liquidity to pay back current
liabilities without blocking too much funds. The trade off between profitability
and risk is the key to working capital management. Anyone working with a
lixed training budget would find this casy to understand. Too little working
capital increases profit but reduces liquidity, as current assets are more
expensive than fixed assets. For instance if a management feels that worker
training is a cost they will apportion less funds for it. If on the other hand a
management sees it as an investment in manpower, the funds allocated would
increase substantially.
SOURCES OF WORKING CAPITAL:
The working capital requirement should be met from three types of sources of
funds, which are mentioned below, They are:
1) Long term financial sources
2) Short term financial sources
3)Spontaneous financial sources

Long-term financial sources of working capital includes.

LONG-TERM SOURCES:
 issue of shares
 issue of debentures
 retained profits
 sale of fixed assets
 Term loans etc.
Short term financial sources are used to finance day-to-day business.

42
3.11 PERMANENT AND VARIABLE WORKING CAPITAL:
The operation cycle is a continuous process and therefore, the need for
current assets is felt constantly. But the magnitude of current assets needed is
not always the same, it increases and decreases overtime.However, there is
always a minimum level of current assets which is continuously required by the
firm to carry on its business operations. The minimum level of current assets is
referred to as permanent or fixed working capital. For example, extra inventory
of finished goods will have to be maintained to support the peak periods. On the
other hand, investment in the raw materials, work-inprogress and finished goods
will fall if the market is slack.The extra working capital needed to support the
changing production and sales activitiesare called fluctuating or variable or
temporary working capital.

3.12 CHANGES IN WORKING CAPITAL:

The changes in the level of working capital occur for basic reasons.
Policy Changes:
The major cause for changes in working capital is because of policy
changes initiated by the management. Policy changes can also be known as
currents assets policy. It may be defined as the relationship between current
assets and sales volume.
3.12.1 GROWTH AND EXPANSION OF BUSINESS:
As a corporation grows, it is logical to expect that a larger amount of
working capital will be required. It is difficult to determine precisely the
relationships between the growths in the volume of business of a corporation
and the increase in its working capital. The composition of a working capital in
a going corporation also shifts with a economic circumstances and corporate
practice. Growth industry requires more working capital than those that of
static, other things being equal.

43
Ability of credit:
The working capital requirement of a firm affected by credit terms
granted by its creditors. A firm will need a less working capital of a liberal
credit from banks also influences the working capital needs of the firm. A firm,
which can get Bank credit casily on favorable conditions, will operate with less
working than a firm without such a facility,
WORKING CAPITAL MANAGEMENT:
In this chapter attempt is made to evaluate the performance of working
capital management in JERSEY MILK more especially this chapter covers the
following aspects.
 Theoretical framework on Working Capital Management.
 Objectives, policies and planning of working capital management
 Trends in working capital
 Turn over of working capital
Working capital refers to the amount of funds, which a corporation may have to
finance to its day-to-day operations. These funds are used for carrying out the
routine and regular business operations consisting of purchase of Raw-material
payments of direct and indirect expenses to invest in stock and stores to
maintain certain amount of cash balances. Thus working capital is the portion of
corporation total capital which is employed in short term operations.

The following are characteristics of working capital in Cooperative Banks:

1. The components of current assets are short in life and do not exceed one
accounting year.
2. Each component of current assets is transferred into its other forms
devoting a circuit flow chart, inventory, receivables back to cash. This
particular feature has two implications are.

44
(a) Decision assessing the level of working capital is frequent and respective.
(b) The close interaction among the componenty of working capital calls for
the simultaneous consideration to determine the level and composition of
total working capital

COMPOSITION OF WORKING CAPITAL:

for the proper understanding of working capital in close at the individual
item of working capital in necessary. When working capital it includes the study
of both content and current liabilities.
3.13 THEORY OF WORKING CAPITAL RATION:
Working onpital ratios indicate the ability of a business concern in
meeting it obligations as well as eficiency in managing the current assets for
generation of sales, These are applied to evaluate the efficiency with which the
firm managers and utilizes
Liquidity Ratios:

1) CURRENT RATIO:
It is relationship between current assets and current liabilities. This ratio
is widely used as a measure of the pool of funds available to pay short-term
obligation. It is a general and quick measure of liquidity of a firm. The standard
of current ratio is 2:1
Formula : Current ratio =Current Assets/ Current Liabilities
CURRENT ASSETS:- Inventories, Sundry debtors (per moth), Bills receivable
Cash in hand, out standing expenses, Cash at company.
CURRENT LIABILITIES:- Sundry creditors, Bills payable, Company
overdraft Debt outstanding expenses, Income received in advance, Current
provision for taxation etc

45
2) QUICK RATIO:
Quick ratio is more rigorous test of liquidity than the current ratio. Quick
assets Comprise cash and receivables. The most liquid items on the balance
sheet, cash is inmediately available to pay the bills and receivables will be
collected in the next 60 days Or so. The standard of quick ratio is 1:1
Formula: QUICK RATIO = Quick Assets Current Liabilities
Quick assets = current assets – (stock + prepaid expenses)
3.14 TURNOVER RATIOS:
Working capital turnover ratio:
This ratio measures the relation ship between working capital and sales.
The ratio Shows the number of times the working capital results, in a sales.
Working capital as Usual is the excess of current assets over the current
liabilities, The following is used to measure this ratio. A higher ratio indicates
efficient utilization of working capital and allows ratio indicates otherwise.
Formula Working capital Turnover ratio= Turnover/working capital.
Total assets turnover ratio:
This ratio indicates whether the capital employed has been effectively
used or not. This is also the test of managerial efficiency and business
performance. Higher total capital turnover ratio is always required in the interest
of the company. The ratio is measured on the basis of the following formula
Formula: Total assets turnover ratio =Net sales / Total assets

46
 CHAPTER – 4
TABLE 4.1
STATEMENT OF CHANGES IN WORKING CAPITAL FOR
THE YEARS 2014-2015
PARTICULARS 2014 2015 INCREASE DECREASE
CURRENT
ASSETS
Current investments 26258258 - - 26258258
Inventories 1204020791 1882522052 678502261
Trade receivables 200064788 220427551 - 69627227
Cash and bank
balances 1279087640 256022428 - 1022065202
Short term loans
and advances 546622202 722226508 185702206 -
Other current assets 5001888 12068849 7066961 -
Gross Working
Capital 2271166667 2112278298
CURRENT
LIABILITIES
Short -term
Borrowings 661128990 262107286 298021604 -
Trade payables 296495726 422682559 - 126186822
Other current
liabilities 85581445 87782659 - 2202214
Short-term
Provisions 2265097752 2527120492 - 262022740
Total current
liabilities 2208202424 2410694097

47
Net working
capital 62862742 (297215899) 260178442
CHANGES IN
WC 260178442
(297215899
TOTAL ) (297215899) 1529472574 1529472574

INTERPRETATION:
The table 4.1 reveals the changes in working capital in the years 2014 and 2015.
Under current assets category, there is no current investment in 2014.
Inventories, short team loans & advances and other current assets increased in
the year 2015. But the trade receivables and cash & bank balances decreased in
the year 2012. Under current liabilities category, trade payables other current
liabilities and short team provisions increased than in the previous year. But
short-term borrowings decreased in the year 2014. Ultimately, the current
liabilities are more than the current assets in both the years 2014 and 2015. The
total change in net working capital in the years was 260178442. The net
working capital decreased by 260178442 in the year 2014 – 15.

48
TABLE 4.2

PARTICULARS 2015 2016 INCREASE DECREASE

CURRENT
ASSETS
Current investments - 52747124 52747124 -
Inventories 1882522052 2962822291 1080200229 -
Trade receivables 220427551 611689128 281261577 -
Cash and bank
balances 256022428 252265072 - 2657265
Short term loans and
advances 722226508 742299627 10962129 -
Other current assets 12068849 47418125 25249276 -
Gross working
Capital 2112278298 4671242288
CURRENT
LIABILITIES
Short -term
borrowings 262107286 891627999 - 52850612
Trade payables 422682559 255299220 - 1025818727
Other current
liabilities 87782659 549819042 - 117126484
Short-term
provisions 2527120492 142794202 - 56010544
TOTALCURRENT
LIABILITIES 2410694097 512818475

Net working capital (297215899) (466828087) 169522288

49
CHANGES IN WC 169522188

TOTAL (466828087) (466828087) 1720142742 1720142742

 STATEMENT OF CHANGES IN WORKING CAPITAL FOR
THE YEARS 2015 –2016

INTERPRETATION:
The table 4.2 shows the changes in the working capital in the years 2015 and
2016. Under investments, trade receivables, other current assets and short-term
loans & advances increased. But cash and bank balances decreased by2657265/-
intheyear 2015. Under the head of current liabilities, all elements short term
borrowing, trade payables, other current liabilities and short-term provisions
were increased in the year 2016. The company hasmore current liabilities than
the current assets in both the years 2015 and 2016. The change in net working
capital was 169522288. The net working capital deceased by 169522288/- in the
year 2015 – 16.

TABLE 4.2
STATEMENT OF CHANGES IN WORKING CAPITAL FOR
THE YEARS 2016 – 2017

PARTICULARS 2016 2017 INCREASE DECREASE

50
CURRENT
ASSETS
Current investments 52747124 - - 52747124
Inventories 2962822291 2974428220 11604929 -
Trade receivables 611689128 812078710 201289582 -
Cash and bank
balances 252265072 179274129 - 72990924
Short term loans
and advances 742299627 848896228 105596691 -
Other current assets 47418125 61226040 12907915 -
Gross Working
Capital 4671242288 4877102427
CURRENT
LIABILITIES
Short -term
borrowings 891627999 1272245078 - 480717079
Trade payables 255299220 2262424444 190504786 -
Other current
liabilities 549819042 6581058802 - 108286759
Short-term
provisions 142794202 97899687 45894516 -
Total current
liabilities 512818475 5490785011
Net Working
Capital (466828087) (612681574) 146842487
CHANGES IN
WC 146842487

TOTAL (612681574) (612681574) 715741906 715741906

INTERPRETATION:
The table 4.2 shows the changes in the working capital in the years 2016 and
2017. Under current assets category,inventories, trade receivables, other current
assets and short term loans & advances increased but the cash and bank

51
balances decreased by 72990924/- in the year 2016. In the year 2016, there is no
current investment in company current assets. Under current liabilities category,
short term bowings and other current liabilities increased but trade payables and
short term provisions decreased in the year 2017. The value of current liabilities
is more than the value of current assets in both years 2016 and 2017. The total
change in net working capital was 146842487/- in 2016. The net working
capital decreased by 146842487/- in the year 2016.

TABLE 4.4
STATEMENT OF CHANGES IN WORKING CAPITAL FOR
THE YEARS 2017 – 2018

52
 PARTICULARS 2017 2018 INCREASE DECREASE
CURRENTASSET
S
Current investments - - - -
Inventories 2974428220 2097022207 122595087 -
Trade receivables 812078710 926096921 122018221 -
Cash and bank 179274129 287418965 108044826 -
balances
Short term loans and 848896228 980922466 122026128 -
advances
Other current assets 61226040 20425206 - 20900724

Gross Working 4877102427 5221896975

Capital
CURRENT
LIABILITIES
Short term 1272245078 1829772259 467428281
barrowings
Trade payables 2262424444 2522405104 - 169970660
Other current 6581058802 541656254 116449548 -
liabilities
Short-term 97899687 85252462 12646224 -
provisions
Total current 5490785011 5999088180
liabilities
Net working capital (612681574) (667191205) 52509621
CHANGES IN WC 52509621
TOTAL (667191205) (667191205) 668299675 668299675

INTERPRETATION:
The table 4.4 shows the changes in the working capital in the year 2018 and
2018. In current assets category, inventories, trade receivables, cash and cash

53
equivalents and short term loans & advances increased but other current assets
decreased in the year 2016. In current liabilities, short-term borrowings and
trade payables increased but other current liabilities and short-term provisions
decreased. In both the years 2017 and 2018, the net working capital was
negative because the current liabilities value is more than the current assets
value. The total net working capital was 52509621/- in the year 2016. The net
working capital decreased by 52509621/- in the year 2018.

PARTICULARS 2018 2018 INCREASE DECREASE

54
CURRENT
ASSETS
Current investments   - 472001411 472001411 -

Inventories 2097022207 2822256245   - 272666962

trade receivables 926096921 928825859   - 7271072
cash and bank
balances 287418965 255210806   - 22208159
short term loans and
advances 980922466 1249116867 268184271   -
other current assets 20425206 60646862 20221556   -
Gross working
capital 5221896975 5890158120
CURRENT
LIABILITIES
Short -term
borrowings 1829772259 5122282298 - 2292509029
Trade payables 2522405104 294005479 2228299625 -
Other current
liabilities 541656254 642777220 - 102121066
Short-term
provisions 85252462 71201825 14051628 -
Total current
liabilities 5999088180 6141267022
(667191205
Net working capital ) (251108912) 416082292
CHANGES IN WC 416082292
(251108912
TOTAL ) (251108912)  4122858591  4122858591
TABLE 4.5
55
 STATEMENT OF CHANGES IN WORKING CAPITAL FOR
THE YEAR 2018 – 2019
INTERPRETATION:
The table 4.5 shows the changes in the working capital in the years 2018 and
2019. Under head of current assets, there is no current investment in 2018but in
2019, the company has the current investments value of 472001411/-. The
investments, trade receivables and short term loans & advances decreased but
cash & cash equivalents and current assets increased in the year 2018. Under
head of current liabilities, short-term borrowings and other current liabilities
increased but trade payables and short-term provisions decreased in the year
2019. In both years 2018 and 2019, the net working capital value was negative
because the current assets value is lower than the current liabilities. The total
value of net working capital was 416082292/- in the year 2018. The net working
capital increased by 416082292/- in the year 2019.
TABLE 4.6
CURRENT RATIO:
If the actual current ratio than the standard ratio of 2:1 the logical
conclusion is that the firm does not enjoy sufficient liquidity and there is
shortage of working capital. On the other hand if the actual current ratio is 2:1 it
can be treated as the sign of liquidity or solvency of the firm. Howe ever the
management had adequate arrangement with its bankers for meeting its working
capital requirement at short notice then, even current ratio of 1.5:1 is considered
adequate.
Computation Formula = Current Assets
Current liabilities

56
COMPUTATION OF CURRENT RATIO OF 2F LTD:
CURRENT CURRENT CURRENT
YEAR
ASSETS LIABILITIES RATIO
2014-2015 2112278298 2410694097 0.912
2015-2016 4671242288 5128180475 0.909
2016-2017 4877102427 5490785011 0.888
2017-2018 5221896975 5999088180 0.888
2018-2019 5890158120 6141267022 0.959

INTERPRETATION:
The table 4.6 shows the current ratio of the company from the year 2014-15 to
2015-16.The ratio is found to be decreasing in the first three years of the study
i.e. from 2014-15 to 2015-16, due to an increase in the current liabilities. In the
next year i.e. in 2016-17, it maintained the same ratio of 0.888 as in the year
2016-17 because the proportionate increase in current assets and current
liabilities are similar to previous years. In the year 2017-18, it increased to
0.959 because of a proportionate increase in current assets than the
proportionate increase in current liabilities.

57
 GRAPH 4.6

CURRENT RATIO
0.98

0.96

0.94

0.92 CURRENT RATIO

0.9

0.88

0.86

0.84
2014-2015 2015-2016 2016-2017 2017-2018 2018-2019

TABLE 4.7
QUICK RATIO:
58
 Quick ratio or liquid ratio or acid test ratio is the ratio, which express the
relation between quick ratio and current liabilities.
Quick assets refer to that which can be converted in to cash quickly that is
within a very short period without much loss. They include all current assets
expect inventories or stock and prepaid expenses. Quick liabilities refer to all
those liabilities, which should be paid during financial year.
Computation Formula = Quick Assets (current assets- inventory)
Current Liabilities
COMPUTATION OF QUICK RATIO OF (CREP) LTD:
QUICK CURRENT QUICK
YEAR
ASSETS LIABILITIES RATIO
2014-2015 1220855246 2410694097 0.260
2015-2016 1708519097 5128180475 0.222
2016-2017 1902675217 5490785011 0.246
2017-2018 2224872668 5999088180 0.272
2018-2019 2066801775 6141267022 0.499

INTERPRETATION:
The table 4.7 reveals the quick ratio of the company for the past five years. The
quick assets of the company can be obtained by deducting inventories from the
current assets. The quick assets increased in the past five years and current
liabilities also increased gradually in the past five years and current liabilities
also increased gradually in all the five years. The quick ratio decreased by 0.028
in the year 2014-15. But later, it increased continually in remaining years from
2016-17 to 2018-19.

GRAPH 4.7

59
 QUICK RATIO
0.6

0.5

0.4
QUICK RATIO
0.3

0.2

0.1

0
2014-2015 2015-2016 2016-2017 2017-2018 2018-2019

TABLE 4.8
CASH RATIO:

60
 Cash ratio is the ratio of cash and cash equivalents of a company to its
current liabilities. It is an extreme liquidity ratio since only cash and cash
equivalents are compared with the current liabilities. It measures the ability of a
business to repay its current liabilities by only using its cash and cash
equivalents and nothing else.
Computation Formula = Cash+ marketable Securities
Current Liabilities
COMPUTATION OF CASH RATIO OF (CREP) LTD:
YEAR CASH CURRENT CASH RATIO
LIABILITIES
2014-2015 256022428 2410694097 0.075
2015-2016 252265072 5128180475 0.049
2016-2017 179274129 5490785011 0.022
2017-2018 287418965 5999088180 0.047
2018-2019 255210806 6141267022 0.041

INTERPRETATION:
The table 4.8 reveals the cash ratio of the company for the past five years. The
ratio is found to be decreasing from 2014-15 to 2015-16 due to an increase in
current liabilities. In the next year i.e. 2016-17, it increased to 0.047 because of
the proportionate increase in cash is more than the proportionate increase in
current liabilities. In the year 2018-19, it decreased to 0.041 because of a
decrease in cash.
.

GRAPH 4.8:

61
 CASH RATIO
0.08

0.07

0.06

0.05
CASH RATIO
0.04

0.03

0.02

0.01

0
2014-2015 2015-2016 2016-2017 2017-2018 2018-2019

TABLE 4.9

62
NET WORKING CAPITAL RATIO:
Working capital, also known as net working capital, is the difference
between a company’s current assets, like cash, accounts receivable (customers’
unpaid bills) and inventories of raw materials and finished goods, and current
liabilities, like accounts payable.
Computation Formula = Net Working Capital
Net Assets
COMPUTATION OF NET WORKING CAPITAL RATIO OF
(CREP) LTD:
NETWORKING
NETWORKING
YEAR NET ASSETS CAPITAL
CAPITAL
RATIO
2014-2015 -297215699 2925852995 -0.101
2015-2016 -466828087 2161822096 -0.147
2016-2017 -612681574 2518227225 -0.174
2017-2018 -667191205 2565691896 -0.187
2018-2019 -251108912 2201872076 -0.076

INTERPRETATION:
The table 4.9 shows the net working capital ratio of company for the past five
years, i.e., from 2014-15 to 2016-17. Here, the ratio is found to be declining
year by year and that too are in negative values which is due to the negative
working capital. The net working capital is found to be decreasing year by year
and the net assets are found to be increasing except in the year 2017-18. The net
working capital in 2017-18,has increased slightly so the ratio also increased
from -0.187 in 2019 to-0.076 in the year.

GRAPH 4.9
63
 CAPITAL RATIO
0
2014-2015 2015-2016 2016-2017 2017-2018 2018-2019
-0.02
-0.04
-0.06
-0.08 CAPITAL RATIO
-0.1
-0.12
-0.14
-0.16
-0.18
-0.2

TABLE 4.10
64
DEBTORS TURNOVER RATIO:
Ratio of net credit sales to average trade debtors is called debtors turnover
ratio. It is also known as receivables turnover ratio. This ratio is expressed in
times.
Computation Formula = Sales
Debtors
COMPUTATION OF TOTAL DEBTORS TURNOVER
RATIO OF (CREP) LTD:
YEAR SALES DEBTORS RATIO
2014-2015 9001121208 220427551 29.062
2015-2016 11221269202 611689128 18.261
2016-2017 15210958858 812078710 18.707
2017-2018 15466597221 926096921 16.522
2018-2019 16720722062 928825859 18.012

INTERPRETATION:
The table 4.10 gives the debtors turnover ratio of Cira renewable energy pvt ltd
company for the past five years, i.e. from 2014-15 to 2018-19. The ratio is
found to be 29.062 in the year 2014-15 which is highest among the study period
due to low numbers of debtors when changed lo sales. In the remaining years
i.e., in 2014-15, 2015-16 and 2016-17 it fell down to 18.26, 18.70 and 18.01
respectively which is very nearer to each other as debtors have increased
proportionately with an increases in sales. But in 2017-18, the ratio was low at
16.52 as the debtors have increased more than the proportionate increase in
sales.

65
GRAPH 4.10

DEBTORS TURNOVER RATIO

45

40

35

30

25 DEBTORS TURNOVER RATIO

20

15

10

0
2014-2015 2015-2016 2016-2017 2017-2018 2018-2019

TABLE 4.11

66
WORKING CAPITAL TURNOVER RATIO:
Working capital turnover is a ratio which measures how efficiently a
company is using its working capital to support a given level of sales. Also
referred to as net sales to working capital, it shows the relationship between the
funds used to finance a company's operations and the revenues a company
generates as a result.
Computation Formula = Sales
Networking Capital
COMPUTATION OF WORKING CAPITAL TURNOVER
RATIO OF (CREP) LTD:

WORKING
NET WORKING
YEAR SALES CAPITAL
CAPITAL
RATIO
2014-2015 9001121208 -297215699 -20.274
2015-2016 11221269202 -466828087 -24.058
2016-2017 15210958858 -612681574 -24.780
2017-2018 15466597221 -667191205 -22.181
2018-2019 16720722062 -251108912 -66.627

INTERPRETATION:
The table 4.11 shows the working capital turnover ratio of Cira renewable
energy pvt ltd company for the past five years. The sales of the company have
increased continuously in every year. But the net working capital was negative
due to excess current liabilities than current assets. The working capital turnover
ratio was also negative in all five years. The ratio has decreased continuously in
all the five years except in the year 2017 – 18.In 2017-18 year, the ratio
increased slightly by 1.599, but it decreased to 66.627 in the year 2018-19.
GRAPH 4.11
67
 CAPITAL TURNOVER
0
2014-2015 2015-2016 2016-2017 2017-2018 2014-2019
-10

-20

-30 CAPITAL TURNOVER

-40

-50

-60

-70

TABLE 4.12
68
INVENTORY TURNOVER RATIO:
Inventory turnover is a ratio showing how many times a company has
sold and replaced inventory during a period. The company can then divide the
days in the period by the inventory turnover formula to calculate the days it
takes to sell the inventory on hand. It is calculated as sales divided by average
inventory.
Computation Formula = SALES
INVENTORY

COMPUTATION OF INVENTORY TURNOVER RATIO OF

(CREP) LTD:
YEAR SALES INVENTORY RATIO
2014-2015 9001121208 1882522052 4.781
2015-2016 11221269202 2962822291 2.790
2016-2017 15210958858 2974428220 5.112
2017-2018 15466597221 2097022207 4.994
2018-2019 16720722062 2822256245 5.925

INTERPRETATION:
The table 4.12 shows the inventory turnover ratio of the Cira renewable
energy pvt ltd company for the past five years. The sales increased in the past
five years, but the inventory increased only up to 2018 –19. Later it decreased in
2018 – 19. The inventory turnover ratio fluctuated in every year. The turnover
ratio decreased to 2.790 in the year 2014 – 15. But in the year 2015 – 16, it
increased to 5.112 and it decreased to 4.994 in the year 2017 – 18. Later, it
again increased to 5.925 in the year 2018 – 19.

69
GRAPH 4.12

INVENTORY TURNOVER
7

4 INVENTORY TURNOVER

0
2014-2015 2015-2016 2016-2017 2017-2018 2018-2019

70
TABLE 4.13
PERCENTAGE OF INVENTORY TO CURRENT ASSETS:
CURRENT
YEAR INVENTORY RATIO
ASSETS
2014-2015 1882522052 2112278298 60.405
2015-2016 2962822291 4671242288 62.425
2016-2017 2974428220 4877102427 60.987
2017-2018 2097022207 5221896975 58.084
2018-2019 2822256245 5890158120 47.922

INTERPRETATION:
The table 4.12 reveals the percentage of inventory to current assets of Cira
renewable energy pvt ltd company for the past five years. Inventory increased
from 2014 – 15 to 2016-17, but in 2017 – 18, it decreased. Current assets of the
company increased gradually in every year. The percentage of inventory to
current assets ratio decreased to 62.425 in the year 2015 – 16 and thereafter it
followed a decreasing trend in 2 remaining years from 2016-17 to 2018 – 19.

71
GRAPH 4.13

INVENTORY RATIO
70

60

50

40 INVENTORY RATIO

30

20

10

0
2014-2015 2015-2016 2016-2017 2017-2018 2018-2019

72
TABLE 4.14
PERCENTAGE OF RECEIVABLES TO CURRENT ASSETS:
CURRENT
YEAR RECEIVABLES RATIO
ASSETS
2014-2015 256022428 2112278298 8.222
2015-2016 611689128 4671242288 12.094
2016-2017 812078710 4877102427 16.671
2017-2018 926096921 5221896975 17.556
2018-2019 928825859 5890158120 15.769

INTERPRETATION:
The table 4.14 shows the percentage of receivables to current assets of the
company for the past five years. Receivables of company increased
continuously in the first 4 years. But later, it decreased in the year 2018 – 19.
Current assets of the company continuously increased in all the years. The
percentage of receivables to current assets ratio increased from 2014– 15 to
2016 – 17. But later, it decreased to 15.769 in the year 2018 – 19.

73
GRAPH 4.14

RECEIVABLES
20
18
16
14
12
RECEIVABLES
10
8
6
4
2
0
2014-2015 2015-2016 2016-2017 2017-2018 2018-2019

74
TABLE 4.15
PERCENTAGE OF CASH TO CURRENT ASSETS:
CURRENT
YEAR CASH RATIO
ASSETS
2014-2015 256022428 2112278298 8.222
2015-2016 252265075 4671242288 5.422
2016-2017 179274129 4877102427 2.677
2017-2018 287418965 5221896975 5.290
2018-2019 255210805 5890158120 4.222

INTERPRETATION:
The table 4.15 reveals the percentage of cash to current assets of company for
the past five years. The cash amount decreased in first 2years from 2014 – 15 to
2015 – 16. In 2016-17, it increased but later it decreased in the year 2016 – 17.
Current assets of the company continuously increased in every year. The
percentage of cash to current assets ratio decreased to 2.677 from 2014 – 15 to
2017 – 18. Then in the next year 2015 – 16, it increased to 5.290 and it again
decreased to 4.222 in 2018 – 19.

75
GRAPH 4.15

PERCENTAGE OF CASH TO CURRENT ASSETS

9

6
PERCENTAGE OF CASH TO
5 CURRENT ASSETS
4

0
2014-2015 2015-2016 2016-2017 2017-2018 2018-2019

76
TABLE 4.16
DAYS OF INVENTORY HOLDING:
Formula:

Days inventory holding =265/Inventory turnover ratio

YEAR ITR 265/ITR(Days)

2014-2015 4.781 76.242
2015-2016 2.790 96.206
2016-2017 4.911 74.222
2017-2018 4.994 72.087
2018-2019 5.925 61.602

INTERPRETATION:
The table 4.16 shows the days of inventory holding for the period 2014 – 15 to
2018 – 19 Cira renewable energy pvt ltd. In 2015 – 16, the number of inventory
holding days increased by 20 days and in the next year it fell down by 25 days.
Again in 2016 – 17, it just went up by 2.2 days and finally decreased by 12 days
and reached 61.6 days in 2018 – 19. This shows that the company is quickly
converting inventory into sales which is a good sign.

77
GRAPH 4.16

DAYS OF INVENTORY HOLDING

120

100

80
DAYS OF INVENTORY HOLDING
60

40

20

0
2014-2015 2015-2016 2016-2017 2017-2018 2018-2019

78
TABLE 4.17
AVERAGE COLLECTION PERIOD:
Formula:

Average collection period = 265/DTR

DEBTORS
DEBTORS
COLLECTION
YEAR TURNOVER
PERIOD RATIO IN
RATIO
DAYS
2014-2015 29.062 9.244
2015-2016 18.261 19.87
2016-2017 18.707 19.511
2017-2018 16.522 22.091
2018-2019 18.012 20.264

INTERPRETATION:
The table 4.17 shows the average collection period ratio in days of Cira
renewable energy pvt ltd for the past five years, i.e., from 2014 – 15 to 2015 –
16. The ratio average collection period is found to be 9.244 days in the year
79
2016 – 17, but in the remaining four years it has very high collection period
days. In the year 2018 – 19, the proportionate increase in debtors is more than
the proportionate increase in sales which resulted in more number of days for
debtors collection.

GRAPH 4.17

AVERAGE COLLECTION PERIOD

25

20

15
AVERAGE COLLECTION PERIOD

10

0
2014-2015 2015-2016 2016-2017 2017-2018 2018-2019

80
 CHAPTER – 5
FINDINGS
Following are the findings of the study:
 In the year 2012 – 12, there is a decrease in the net working capital as the
proportionate increase in current liabilities are more than the current
assets, it is also found out the current assets decreased from 2012 to 2012.
 During the first four years of the study period that is from 2012 – 2012 to
2015 – 16, the net working capital is found to be decreasing due to excess
of current liabilities over current assets.
 In the year 2016 – 2017, there is a positive net working capital and it
increased when compared to 2015 – 16 as the proportionate increase in
current assets is more than proportionate increase in current liabilities.
 Current ratio for the first four years of the study is found to be decreasing
due toan increasing in current assets over current liabilities in the last year
that is 2016 – 17; the current ratio has increased by 0.71.
 Quick ratio is found to be lowest in the year 2012 – 14 and thereafter it
increases and reaches 0.499 in the year 2016 – 17.
 Cash ratio is found to be showing a decreasing trend due to decrease in
cash balance but where current liabilities went on increasing.

81
 Net working capital ratio showing negative values during all the years of
the study period due toa negative net working capital.
 Debtors turnover ratio is almost maintain at constant rate has debtors
increase in proportionate to increase an sales.
 Receivables are found to be increasing from 2012 – 12 to 2015 – 16 and
thereafter in 2016 – 17 it decrease to 15.77.
 The inventory turnover ratio is found to be decreasing which shows that
the company is quickly converts its inventory to sales.
 Debtors collection period ratio is found to be increasing in the company
as well as proportionate increasing debtors is more than the proportionate
increasing in sales which is not a favorable sign.

82
 SUGGESTIONS
The following suggestions are made to increase the overall performance of the
company.
 It is suggested for the company to increase its current assets and also
decreased itscurrent liabilities to improve its net working capital.
 The company has to follow a stringent receivables management in order
to improve collection period and to overcome risk of debtors.
 The company needs to improve its sales for better revenue in cash.
 It is better for the company to reduce the holding period of inventory
and convert into sales as par as possible.
 It is better to improve sales promotion activities.
 The firm has to maintain adequate working capital for solving the day to
day obligations.

83
 CONCLUSION

This study analyzed the financial state of affairs of the Cira renewable
private Limited Company in the past five years i.e., from the year 2012 –
12to2016 – 17. It has been analyzed that thecompany statements to know its
working capital performancethrough calculating various ratios and comparative
statements.After studying thefinancial performance, it is found that the
company needs to improve its performance in few aspects such as its current
ratio, cash in hand, reducing operating expenses and managing its working
capital components in effective way.
Finally, the company earns the profits but its net working capital is in
negative trend. So, the company needs to improve its net working capital
performance.

84
 REFERENCES

 Financial Management – IM PANDEY

 Financial Management,Test&Problems – M.Y.KHAN&PK
JAIN
 Financial Management –S.N.MAHESWARI
 5years annual reports of CIRA RENEWABLE ENERGY
P.LTD

Websites:
www.fff.co.in
www.Wikipedia.com

85