A STUDY ON

WORKING CAPITAL MANAGAMENT

With reference to
"UNIPARTS PVT.LTD"

A project Report submitted Jawaharlal Nehru Technology University, Kakinada,

in Partial Fulfillment for the Award of Degree of

MASTER OF BUSINESS ADMINISTRATION

Submitted by

ADARI VENU GOPAL

(Regd.No. 20HQ1E0001)

Under the Guidance of

Mr.U.RAMU MBA,PGDBM,(Ph.D)

Associate Professor&HOD

AVANTHIS RESEARCH AND TECHNOLOGICAL ACADEMY

(Approved by AICTE, Affiliated to JNTUK Kakinada)

Bhogapuram, Vizianagaram

(2021-2022)
 AVANTHIS RESEARCH AND TECHNOLOGICAL ACADEMY

DEPARTMENT OF MANAGEMENT STUDIES

CERTIFICATE

This is to certify that the Project Report is “A STUDY ON WORKING CAPITAL

MANAGEMENT ” with reference to “UNIPARTS PVT.LTD”, VISAKHAPATNAM, a bonafied work
done by ADARI VENU GOPAL (Reg No.20HQ1E0001) a part of M.B.A., 3rd semester curricular
activity of Jawaharlal Nehru Technological University Kakinada, under my supervision. The data
has been collected by the candidate from authentic sources and the analysis results will be used
for academic purpose only.

Mr.U.RAMU Mr.U.Ramu
Internal Project Guide Head of the department

EXTERNAL EXAMINER
 DECLARATION

I hereby declare that the Project Report entitled “A STUDY ON

WORKING CAPITAL MANAGEMENT ” with reference to “UNIPARTS PVT.LTD ” V IS
AKH AP AT NAM Submitted by me to the department of management Studies. AVANTHIS
RESEARCH AND TECHNOLOGICAL ACADEMY, Vizianagaram, affiliated to JNTU Kakinada in
partial fulfillment for the Award of the Degree of Master of Business Administrations,
entirely based on my own study and efforts. It has not been submitted to any other
university for the Award of any Degree or diploma

Station: Vizianagaram ADARI VENU GOPAL

Date: (Regd No:20HQ1E0001)

 ACKNOWLEDGEMENT

It is inevitable that thoughts and ideas of other people drift into the
subconscious when one feels to acknowledge the help derived from other.

I am grateful to Prof.GOVINDA RAO, Principal, AVANTHIS RESEARCH AND

TECHNOLOGICAL ACADEMY for giving me an opportunity to take up this project
work .Mr.UPPADA RAMU MBA,PGDBM (Ph.D) Head of the Department for
Management Studies, for their blessings and encouragement throughout my
course of study.

I take this opportunity to convey my sincere thanks to Sri Mr. Ashish Kumar Agarwal
, Nominee Director, “UNIPARTS PVT.LTD” VISAKHAPATNAM for giving me an
opportunity in their Organization.

I express my thanks to my parents for giving me moral support and

encouragement throughout my studies. I deeply appreciated one and all whose
guidance has been given at every step and without whom this work would not
be completed.

ADARI VENU GOPAL

(RegdNo:20HQ1E0001)
CHAPTER –I 6-13

 INTRODUCTION
 NEED FOR THE STUDY
 OBJECTIVES OF THE STUDY
 METHODOLOGY
 LIMITATIONS OF THE STUDY
 FRAME WORK OF THE STUDY

CHAPTER-II 14-42

 PROFILE OF FERTILIZER INDUSTRY

 PROFILE OF COROMANDEL INTERNATIONAL LIMITED

CHAPTER- III 43-56

 THEORETICAL FRAMEWORK OF WORKING CAPITAL

MANAGEMENT

CHAPTER –IV 57-84

 DATA ANALYSIS &INTERPRETATION

CHAPTER –V 85-88
 SUMMARY
 FINDINGS
 SUGGESTIONS

BIBILOGRAPY

6
CHAPTER –I
 Introduction to working capital management
 Need for the study
 Objectives of the study
 Methodology
 Limitations, and frame work of the study

7
 INTRODUCTION

Finance Management is one of the four important functional areas of the management.
The major objective of any business firms make to make a profit its owners by purchasing
goods or services for sale in the market. To reach this goal the firm purchases the output and
sell them the all process require funds.

Finance Management is that administrative area or set of administrative functions

which relates the arrangements of each and credit. So that the organization may have the
means to carry out its objectives as satisfactory as possible. The Central feature Of financial
management is the formulation of firm and in sales the most favorable sources of additional
funds that the firm will need in the forcible future. In the word of WESTON and
BROUGHAM “Financial management is an area of financial decision making harm noshing
individual motive and enterprise goals.

objective of financial management are considered usually at two levels, at micro

levels and macro level, If micro level the chief objective of financial management is to make
an intensive and economical use of capital resources. The objective of financial management
at micro level are considered at firm level since business firms are profit seeking organization
their objectives are frequently expressed in terms of money.

Working capital management is the functional area of finance that covers all the
current accounts of the firm. It is a discipline that’s seeks proper policies for managing
current assets and liabilities and practical techniques for maximizing the benefits from
managing working capital it is a life blood of business. There are two important objectives of
working capital i.e. profitability and liquidity a financial management to stick to only to either
of these objectives. These should be proper balance between the two so that one objective
may not suffer at cost of other with regard to the working capital management. There are two
major implications:

Firstly, decisions that affect the level of working capital too frequent and repetitive
such levels should be consistent with objectives and goals and frameworks ofUnambiguous
rules should be created for implementation of those decisions by lowering operating levels .

8
 Secondly , efficient management of one component of working capital cannot be
undertaken without simultaneous consideration of other components because of close
interaction among them keeping view those characteristics features of working capital
management.

The present study is undertaken on a study on working capital management with

reference to “UNIPARTS PVT LTD” at Visakhapatnam . Indian Fertilizers is one of the
efficient industries . The industry relies heavily on imports for the requirement of raw
material . The significance of fertilizer industry and its related policy in India arises from the
fact agriculture still contributes GDP.

The study of management of working capital in fertilizer industry of India essentially

under taken to evaluate the working capital industry in India.

On the whole present study reveals that management needs a lot of improvement for
the entire industry. Especially in the field of inventory and receivables are these constitute
major components of working capital. These require some attention so as to obtain from
effects associated with their imbalance, such as bad debts and inventory carrying costs.

9
 NEED FOR THE STUDY

1. Working capital analysis serves as a tool for the management performance of all above
financial functions and decisions . So the study made by me helps owners managers,
creditors , potential investors to get an ideal about the financial position of company.
2. Working capital is the life blood and nerve center of a business just as circulation of blood
in essential in the human body for maintaining life. Working capital is very essential to
maintain the smooth running of a business.
3. Adequate working capital helps on maintaining solvency of the business by
interrupted flow of production.
4. Sufficient working capital enables a business concern to make prompt payments and
hence helps in creating and maintaining goodwill.
5. A concern having adequate working capital solvency and good credit standing and others
on easy favorable terms.
6. Sufficient working capital ensures supply of raw materials and continues production.

10
 OBJECTIVES OF THE STUDY

1. To Study the fertilizer industry in general.

2. To know the profile of Coromandel International Limited.
3. To Study the theoretical description of working capital management.
4. To Study the working capital management practices in Coromandel International
Limited.
5. To evaluate the changes in working capital over a period of study.
6. To suggest correctives measures to improve working capital management
in UNIPARTA PVT limited Visakhapatnam.

11
 METHODOLOGY

Methodology is a systematic procedure of collecting information in order to analyze and

verify a phenomenon. The collection of information has been done by me through source.


Secondary Data
For my study of financial analysis in UNIPARTS, the data is collected as below.

SECONDARY DATA:
Secondary data is obtained from the published Annual Reports of UNIPARTS,
broachers, booklets, Journal, records and other printed materials supplied by the company, text
books published by different authors and from some useful websites. For the study of Financial
Analysis in UNIPARTS, I have used the method of secondary data for the collection of
information.

12
 LIMITATIONS
Every study is conducted under some limitations. Some of the limitations of my study
as follows:
1. The Scope of gathering data is very less this is due to the fact that we are vocational trainees.
2. Some of the information is not available due to confidential matters.
3. Some officials, executives and others were busy the study was primarily focused on
secondary data.
4. Comparison of Coromandel performance with other organizations was not possible since the
financial statements of other organizations were not possible.

13
 FRAMEWORK OF THE STUDY

CHAPTER-1
It deals with following

Introduction to working capital management

Need for the study

Objectives of the study

Methodology

Limitations, and frame work of the study

CHAPTER -2
It includes about Fertilizers industry in India and organizational profile of Coromandel
International limited.

CHAPTER -3
It depicts about theoretical aspects of working capital management

CHAPTER -4
It deals with practical aspects of working capital management under
Coromandel international limited

CHAPTER -5
It includes summary, findings and suggestions

14
CHAPTER –II

INDUSTRY PROFILE

COMPANY PROFILE
Auto Component Industry in India:

India is emerging as a global hub for auto component sourcing due to its close proximity to
key automotive markets such as the Middle East and Europe.

Total market size of India's auto components sector is expected to reach US$ 115 billion by
FY21 from US$ 40.6 billion in FY13. The domestic market is expected to account for 74 per
cent of total sales by 2021 with a total market size of US$ 85 billion.

India's exports of auto components increased at a compound annual growth rate (CAGR) of
19.6 per cent during FY08–13 to touch US$ 9.3 billion. Europe accounts for the largest
share of Indian auto components exports (35 per cent) followed by North America (26 per
cent) and Asia (25 per cent).

The growth of global original equipment manufacturer (OEM) sourcing from India and the
increased indigenisation of global OEMs is turning the country into a preferred designing and
manufacturing base. Several global Tier-I suppliers have also announced plans to increase
procurement from their Indian subsidiaries.

The Department of Heavy Industries and Public Enterprises has created a US$ 200 million
fund to modernise the auto components industry by providing an interest subsidy on loans
and investment in new plants and equipment. It has also provided export benefits to
intermediate suppliers of auto components against the Duty Free Replenishment Certificate
(DFRC). Under the Union Budget FY13–14, concessional excise duty of 6 per cent has been
extended up to March 31, 2015 for manufacturers of batteries supplying to producers of
electrically operated vehicles.

The Government of India has played a major role in the development of the Indian auto
component industry through its policy support in the form of Auto Policy 2002 and National
Automotive Mission Plan 2016. It has also set up National Automotive Testing and R&D
Infrastructure Project (NATRiPs) with an investment of US$ 388.5 million to enable the
industry to adopt and implement global performance standards.
Key Developments & Investments

 Denso International India is working on future components for improving fuel

emissions for Indian as well as global cars, two-wheelers and commercial vehicles
manufacturers. The company manufactures components such as air conditioning
systems, fuel pump, inter-coolers, power window motors, radiator, starter motor,
and engine cooling modules from its manufacturing plants in Jhajjar and Manesar
in Haryana, Bangalore, Haridwar and Greater Noida.
 Tata Opportunities Fund will purchase a significant minority stake in Aurangabad-
based auto component maker Varroc group for US$ 60 million.
 MRF launched main wheel tyres for the Indian Air Force (IAF)'s Sukhoi 30 MKI.
These tyres were designed by MRF's in house R&D facilities and have been tested
for ground speeds of up to 420 km an hour with loads in excess of 18 tonnes a
tyre.
 Tata Cummins, a joint venture (JV) between Cummins Inc and Tata Motors,
inaugurated its third manufacturing facility located at the Cummins Megasite in
Phaltan to manufacture diesel engines.

GOVERNTMENT INITIATES

The Government of India allows 100 per cent FDI in the automotive industry through
automatic route. With a special focus on exports of small cars, multi-utility vehicles (MUVs),
two and three wheelers and auto components, the automotive sector’s contribution to the
GDP is expected to double reaching a turnover worth US$ 145 billion in 2016, according to
the AMP 2006–2016.The Interim Budget 2014–15 added some incentives to the auto
industry. To give relief to the automobile industry the excise duty has been reduced till June
30, 2014 as follows:

 For small cars, motorcycle, scooters – the duty has been reduced from 12 per cent to 8 per cent.
 For commercial vehicles and SUVs – the duty has been reduced from 30 per cent to 24 per cent.
 For large and mid-segment cars – the duty has been reduced from 27/24 per cent to 24/20 per cent.

Road Ahead

The rapidly globalising world is opening new dimensions for the transportation industry,
generating need for more efficient, safe and reliable modes of transportation.
 Cars will become ‘smart devices on wheels’, so much so that the car will become an
extension of your Smartphone or vice versa. Today, several companies – including Google
and Apple – are working on connected vehicles. By 2020, the industry estimates that nearly
90 per cent of vehicles on the road will be wired, while the connected car market will hit US$
600 billion – making it the single largest market for connected devices and services. Experts
predict that in future most of the additions to a car will be digital features rather than
physical. Exchange Rate Used: INR 1 = US$ 0.01626 as on April 13, 2014

Uniparts is an Indian based global manufacturer of engineered systems and solutions.

The Group is a leading supplier of systems and components for the off highway market and
operate out of 8 locations in 3 countries with its products reaching over 25 countries
worldwide.

Uniparts has developed core competencies along the value chain like dual-shore
manufacturing, warehousing solutions and an unparalleled supply chain capability. With
strategic locations across the globe, Uniparts is able to service their OEM Customers in all
main markets like India, North and South America, Europe and Japan.

Uniparts Group is no longer single-mindedly focused on parts. The group has expanded beyond its original
auto parts business to become a leading provider of logistics services. Through Unipart Logistics, the company
provides services such as supply chain management and warehousing and distribution for companies in
industries such as aerospace, automotive, consumer products, and technology. Unipart Logistics maintains
facilities in Europe, the Americas, and the Asia/Pacific region; clients have included Airbus, Halfords, and
Vodafone. Other Unipart units manufacture automotive parts; distribute parts for boats, cars, railway equipment,
and recreational vehicles; and provide car repair services.

With extensive experience in the industry, backed by state of the art manufacturing
technology and backward integrated manufacturing processes, Uniparts is able to support
their customers with global solutions to meet their future challenges.

VISION:
 Become a significant global business and supply partner of core systems to the off-highway market
with a significant market presence in agricultural and construction market.
 Grow markets with innovative solutions & products and create value for all stake holders by providing
high quality engineered solutions to our customers.
  Promote a culture where individual and team performance and good corporate governance are the
underlying platform to achieve our goals.

Strategy:

 Organic Growth through horizontal extension with existing customers by adding in new capabilities to
address size ranges of existing products higher than current capabilities.
 Organic Growth via addition of new customers for existing product range.
 Inorganic growth via acquisition of new technologies to create synergies and to provide global service
to customers.
 Enhance design and R&D competence to become an "engineered solution provider" for Global OEMs
with off shore engineering & testing capability
 Leverage multi-location synergies with the goal of a risk free global supply chain solution for
customers.

PROFILE OF UNIPARTS GROUP

HISTORY:

 Founded by the Soni's and became a supplier to the "After Market" in the US.

 Entered the European After Market.

 Entered the European OEM market as a Tier II supplier.

 Commenced sales to OEMs in India as a Tier I supplier.

 Commenced sales to OEMs in USA as a Tier I supplier.

 Commenced sales to OEMs in Japan as a Tier I supplier.
 Partnered with Olsen Eng. and launched Unilink (now Gripwel Fasteners).
 Supplies to US OEM from warehouse.

 Entered hydraulic space in Europe through a production facility in Netherlands

 Inauguration of own US warehouse in Augusta (GA).
 Acquisition of balance stake Olsen Eng.
 Tier I supplies from Uniparts Kavee BV to European OEM's.
 Groundbreaking Vishakhapatnam (VIZAG).

 Inauguration Uniparts India - Vizag Operation.

 Start-up of Uniparts India GmbH, Germany Operation.

 2016-Consolidated production of hydraulic cylinders in India

Global Presence
  Uniparts India

 Uniparts India GmbH

 Uniparts Olsen Inc.

UNIPARTS INDIA:

Uniparts India has its Registered Office in New Delhi and manufacturing locations
in Noida, Ludhiana & Vishakhapatnam. The total work strength is over 3000 people and
manufacturing space is over 45,000 Sq/M.

Uniparts India is a leading manufacturer and supplier of 3-point linkage solutions to the
Indian market. Uniparts India is a well-recognized exporter of agriculture and construction
equipment components to significant geographies such as US, Europe, Japan, and Latin
America and has consistently been recognized (along with its subsidiaries) as a leading
exporter in the category by EEPC. All the manufacturing units follow leading practices and
procedures and are ISO 9001 certified with 2 of the units also certified under ISO 14001.

UNIPARTS INDIA GMBH

Uniparts India GmbH is a warehousing cum customer service outfit in Germany

and has a dedicated team to provide world class services to its European customers with local
engineering and logistical support. The team acts as a single point of contact for its European
customers to get serviced from multiple centres of manufacturing.
Uniparts India GmbH is well located next to the motorway A3 and well connected by various
modes of transportation.

UNIPARTS OSLEN INC.

Established in 1972, Uniparts Olsen has a proud tradition of producing quality

parts for its customers in the construction, agriculture, and forestry industries. This tradition
has given us a solid reputation as a top-quality supplier of precision machined pins, bushings,
and structural bosses. With a fully integrated backend operation set up in India, Uniparts
Olsen can provide all its customers with the best quality products from a low cost country.
Olsen also has a warehousing set up for stocking India manufactured components for local
delivery to US clients.

Uniparts India

Uniparts India has its Registered Office in New Delhi and manufacturing locations
in Noida, Ludhiana & Vishakhapatnam. The total work strength is over 3000 people and
manufacturing space is over 45,000 Sq/M.

Uniparts India is a leading manufacturer and supplier of 3-point linkage solutions to the
Indian market. Uniparts India is a well-recognized exporter of agriculture and construction
equipment components to significant geographies such as US, Europe, Japan, and Latin
America and has consistently been recognized (along with its subsidiaries) as a leading
exporter in the category by EEPC. All the manufacturing units follow leading practices and
procedures and are ISO 9001 certified with 2 of the units also certified under ISO 14001.

Forging

The forging division of the Uniparts Group in India is equipped with state-of-the-art
equipment to ensure world-class standards. The Group has the capacity to forge 1000 tons per
month.

Equipment

 Hammer forging - 0.5 - 2 tonnes

 Upset forging
 Tool room and in house die creation
  Pro-E & CAM link for product and tools design

The forging facility is highly flexible, especially the fully integrated 3-D CAD & CAM
application for product and tool design. The facility is linked to the tool room and 3
machining centres for high speed cutting of dies. This provides the company the inherent
advantage to meet the varying needs of the clients and to optimize the whole cycle from
product design to product supply.

BUSINESS AREAS:

AGRICULTURE
 Uniparts Group is a leading Producer of 3-Point Linkage Systems for agricultural
machinery globally.
 Product Portfolio offered to the Agriculture segment includes 3-Point Linkage
System, Assemblies, Precision Machined Parts (PMP), Power take-off (PTO)
components, Forgings as well as Hydraulic Cylinder Solutions.
 The Group started supplying to International OEMs in 1996.
 It is validated by OEMs like John Deere, Mahindra & Mahindra, CNH, Kubota, &
Yammer.
 The group currently services its Agriculture clients with manufacturing bases in
India and US which are seamlessly complemented by its well established Global
Service Delivery model comprising of 3 warehousing locations / logistics hubs
across US and Europe.

CONSTRUCTION AND FORESTRY

 Uniparts Group is a major supplier for precision machined parts (PMP) and Hydraulic Cylinder
Solutions to the mobile equipment market and in particular to the construction market.
 The market is serviced with manufacturing capabilities in North America as well
as India and is well supported by Group's Global Service Delivery competency
comprised of 3 warehousing hubs/centers of logistical excellence across US and
Europe.
 Approved supplier by global OEMs like Bobcat, John Deere, GEHL, CNH.

 Uniparts Olsen Inc., located at Eldridge (Iowa), is servicing the market and has demonstrated more than
15 years excellent and so far unmatched track record in terms of delivery, quality and customer focus.
 Uniparts Olsen Inc. demonstrated and added significant value to our customer with the successful
integration of our India operations and had leveraged the cost advantages but also the significant wider
product range available from the Uniparts Group.
  Uniparts Group entered the hydraulic space in 2007 and has manufacturing capacity and expertise in
India.

After Market

 Leading supplier to the EU and US markets by volume and value

 Long years of relationships with leading After Market distributors in US and EU
 Manufacturing of products to service this business vertical is undertaken at manufacturing hubs at
Noida and Ludhiana.
 Our products' range from 3-point linkage parts and machined forgings and fabrications are used for
various agricultural applications.
 The service includes customized packaging and labeling.

Forging

The forging division of the Uniparts Group in India is equipped with state-of-the-art
equipment to ensure world-class standards. The Group has the capacity to forge 1000 tons per
month.

Equipment

 Hammer forging - 0.5 - 2 tonnes

 Upset forging
 Tool room and in house die creation
 Pro-E & CAM link for product and tools design
 CNC & conventional machining

The forging facility is highly flexible, especially the fully integrated 3-D CAD & CAM
application for product and tool design. The facility is linked to the tool room and 3
machining centres for high speed cutting of dies. This provides the company the inherent
advantage to meet the varying needs of the clients and to optimize the whole cycle from
product design to product supply.

Machining

The Uniparts Group is equipped with a wide variety of CNC & Conventional Machining
equipment present in all of its locations. The state-of-the-art machinery for all processes
includes:
  CNC Turning, Milling, Tapping, Drilling
 Thread Rolling up to 65 ton capacity
 Centre less, cylindrical and inner grinding
 Broaching, Hobbling, Spline Milling
 SPMs for high productivity and special purpose applications

In 2008 the group invested US$ 17.5m not including the cost of land in the new VIZAG
(India) operation. This investment expresses the commitment of the Group and its Employees
to provide the most sophisticated and unbeatable service to all its groups The Group is
certified and works completely on ISO quality systems. Its well trained and experienced
Employees provide complete assurance on operations and compliment the technology the
Group uses.

WELDING

Uniparts Group over the years has developed significant expertise in welding process. All of its
manufacturing locations are equipped with in house welding capabilities by which the group is able to offer state
of the art welding solutions to its customers. The key welding capabilities include:

 MIG Welding
 Robotic Welding
 Butt Welding

Heat Treatment

Heat treatment is a key process and the Uniparts group has a large variety of in-house heat
treatment processes available.

Processes

 Normalizing
 Induction and furnace based annealing
 Induction hardening
 Case carburizing
 Through hardening

Equipment / Capacity

 600 tonne/month Seal Quench Furnace

 450 tone/month pit type furnaces
 30,000 pieces/month induction hardening (single and multi spindle units)
The equipment is operated by experienced workforce and backed up by laboratories and
material experts to conduct all required tests. The assessment & validation of our suppliers
for raw material is an integral process to ensure that material and product specifications are
met.

Surface Finish

The Uniparts Group is a predominant supplier to the OEM manufactures of

agricultural and construction equipment. In the last few years, the Group has added
significant value to their customers by investing into various surface finishing technologies,
matching up with international environmental protection standards. The group has built
considerable expertise in the surface finish department and has built redundancies by having
similar processes established at multiple locations.

 Phosphate and pre treatment processes

 CED coating
 Wet primer of various shades and grades
 Wet finish top coat of various shades
 Powder Coating of various shades
 Galvanizing - trivalent acid and alkaline based plating

Logistics

Global network with local strength is the focus of its logistics services.

Uniparts Group has established logistical hubs in all main markets around the world. It has
the potential for direct supplies to the dealers. The group has specially designed modular
systems for storage and movement of semi-finished and finished parts for efficient logistical
control. Local stocking facility is available to cater to the needs of the clients at anytime.
Returnable crates ensure convenient and economic dispatch of the products to the clients.
Amicable after sales services ensure long term relationships with the clients. It has also
enabled the company to work as.

Uniparts group also has the competence of labelling and customized packaging and to supply
sub assembled assemblies by integrating 3rd party components into an assembly.
Quality & Testing

The highest level of quality standards is maintained in all of the processes and
procedures. Utmost importance is given on maintaining the optimum level of quality at all
levels from raw material testing, patrol and stage inspection to final inspection. The latest
machineries are used in all of the processes. In-house facilities have enabled it to maintain
quality standards in all the processes. Total quality is achieved through implementation of
Quality Management Systems. State of the art testing and measuring equipments ensure
perfect quality of all the products. All components are first stimulated on computers to ensure
accuracy. Technologies like microscopes, image analyzer, hardness tester, surface roughness
tester are used for ensuring the perfection and precision of our products.

Design & Validation

The Uniparts Group is equipped with modern equipment for product and tool
design. The most up to date software’s are used to complement the equipment. Its APQP
process has led to the development of a wide range of innovative products catering to the
diverse needs of the clients. The Group designs the products after critically analyzing the
requirements of the clients. The specifications are developed as per customer's demands &
are supported with analyzing techniques like finite elements. The group offers design and
process solutions fully utilizing the potential of local cost advantages and is able to provide
best cost solutions.

BOARD OF DIRECTORS

 Paramjit soni - Vice chairman - Uniparts India Limited & President – Uniparts
USA
 Gurdeep soni - Managing director - Uniparts India Limited
 Herbert coenen - Director – Business Development
 Ashish Kumar - Nominee Director of Pine Bridge Investment
 Sharat Mathur - Independent Director
 Madhukar Umarji - Independent Director

PRODUCTS

 Precision Machined Parts

 3-Point Linkage
 Fabrication & Assemblies
 Hydraulic cylinders & Systems
CHAPTER III
 THEORETICAL FRAMEWORK
45
 THEORETICAL FRAMEWORK OF WORKING
CAPITAL MANAGEMENT

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 current day to day operations of business .

MEANING
Working Capital refers to the funds invested in Current Assets i.e., Investment
in Stock , Sundry Debtors , Cash and Other essential to use fixed assets profitably. For
example a machine cannot by used without raw material. Thus it is bio us that certain
amount of funds is always tied up in raw material. Work - in -progress and finished
goods.However the business also enjoys credit faUNIPARTSities 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.
Concepts of working capital
1.Gross Working Capital Concept
2.Net Working Capital Concept
1.Gross Working Capital Concept
Gross Working capital simply called as Working capital refers to the firm’s
investment in current assets. Current assets are the assets which in ordinary course of
business can be converted into cash within an accounting year. Examples of the current
assets include cash and bank balances, short-term loans and advances, bills receivables,
sundry debtors, inventory, prepaid expenses, accrued incomes, money receivables in
12months. The gross Working capital concept focuses attention of the current assets
management i.e. optimum investment in current assets and financing current assets.
2. Net Working Capital Concept
Net working capital refers to the excess of the current assets over the current
liabilities. Current liabilities are those claims of outsiders which are accepted, to mature for
payment with an accounting year and include creditors, bills payable and outstanding
expenses. Net working capital can be positive or negative. A positive net working capital
will arise when current assets exceeds current liabilities.

46
 A business firm must maintain an adequate level of working capital in order to
run its business smoothly. It is worthy to note that both excessive earned inadequate working
capital positions are harmful. Out of two, inadequacy of working capital is more dangerous
for a firm. Excessive working capital results in idle funds on which no profits are earned.
Similarly insufficiency of working capital results in interruption of production. This will
lead to inefficiencies, increased in costs and reduction in profits. Working capital is just like
lifeblood of business. If it becomes weak, the business can hardly prosper and survive. No
business can run successfully without an adequate amount of working capital.

List of Current Assets and Current Liabilities

CURRENT ASSETS CURRENT LIABILITIES

Cash in hand Bills payable
Cash at bank Sundry Creditors
Bills Receivables Accrued Expenses
Sundry debtors Short term loans
Stock Dividend payable
Prepaid expenses Bank overdrafts
Accrued income Provision for taxes

Classification of Working capital

Working Capital Maybe Classified into two ways
a) On the basis of the Concept

Gross Working Capital
 Net Working Capital

b) On the basis of time

 Permanent or fixed Working Capital
 Regular Working Capital
 Temporary Or Variable Working Capital
 Seasonal Working Capital
 Special Working Capital

47
 MEASURING OF WORKING CAPITAL
Working Capital is very essential to maintain the smooth of running of business . No
business can run successfully without adequate amount of working capital. However is
must also be noted that working capital is a mean to run the business smoothly and
profitable and not in end in itself. Thus concept of working capital can be conducted
through a number of services such as :-

1. Ratio Analysis
2. Funds Flow Analysis
3. Budgeting
1. Ratio Analysis
Ratio analysis is a powerful tool of analysis. A ratio is defined as "The
indicated quotient of two mathematical expressions" and as "the relationship between
two or more things". In financial analysis, ration is used as an index or yardstick for
evaluating the financial position and performance of a firm. A ratio helps the analyst to
make qualitative judgment about the firm's financial position and performance. Several
Ratios like Current Ratio, Inventory Turnover Ratio, Receivable Turnover Ratio,
Working Capital Turnover, Cash Position ratio.
2. Funds Flow Analysis
Funds Flow Analysis is a technical device designed to study the sources from
which additional tools are derived and the use to which these sources are put. It is an
effective management tool to study changes in the financial position of business
enterprise between beginning and ending financial statement The funds flow analysis
consists of :-
a) Preparing schedule of changes in working capital .
b) Statement of Sources and Application of funds.
3. Working Capital Budget
Working Capital budget, as a part of total budgeting process of a business , is
prepared estimating future long term and short term working capital needs and sources
of finance them, and then comparing the budgeting figures with the actual performance
for calculating variances, if any , so that corrective actions may be taken in the future.
It main objective is to ensure availability of funds as and when needed and to ensure
effective utilization of resources.

48
Objectives or Need of Working Capital

The basic objectives or Need of working capital management are as follows:

1) By optimizing the investment in current assets and by reducing the level of

current liabilities.
2) The company can reduce the locking-up of funds in working capital there
by, it can improve the return on capital employed in the business.
3) The another important objective of working capital management is that the
company should always be in a position to meet its current obligations
which should properly be supported by the current assets available with the
firm. But maintaining excess funds in working capital means locking of
funds without return.
4) The firm should manage its current assets in such a way that the marginal
return on investment in the assets is not less than the cost of capital
employed to finance the current assets.
5) The firm should maintain proper balance between current assets and
current liabilities to enable the firm to meet its day to day obligations.
6) To provide credit faUNIPARTSities to the customers traders and
other persons.

Importance of Working Capital

Working capital is just like the heart of the business. If it becomes weak the
business can hardly propose and survivor. It is an index solvency of a concern. It is
proper circulation provides to the business the right amount of cash to maintain the
business. In every organization, where funds are involved, sound financial
management is necessary. It helps in monitoring the effective development of funds in
fixed assets and in working capital. As Collins Brooks has remarked “Bad production
management and bad sales management have slain in hundreds, but faulty financial
management has slain in thousands”.

49
Advantages of Adequate Working Capital
Working Capital is the life blood of 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 working capital are as follows

 Good solvency position in the business
 Goodwill, it is easy to get loans
 Cash discounts
 Regular supply of raw materials
 Regular payments of salaries, wages and other day to day commitments
 Exploitation of favorable market conditions
 Ability to face crisis
 Quick and regular return on investment
 High morale

Every business concern should have adequate working capital to runs its business
operations. It should not have either redundant /excess or shortage of working capital.

Disadvantages of Inadequate Working Capital

A concern which has inadequate working capital cannot pay its short-term
liabilities in time. Thus it will lose its reputation and shall not be able to get good
credit faUNIPARTSities.
 It cannot buy its requirement in bulk and cannot avail of discounts etc.

 It becomes difficult for the firm to exploit favorable market conditions

and undertake profitable projects due to lock of working capital.
 The firm cannot pay day-to-day expenses of its operations and it creates
inefficiencies, increases costs and reduces the profits of the business.
 It becomes impossible to utilize efficiently the fixed assets due to non-
availability of liquid funds.
 The rate of return on investments also falls with the shortage of
working capital.

50
FACTORS DETERMINING THE WORKING CAPITAL
REQUIREMENTS
In order to determine the proper amount of working capital of a concern, the
following factors should be considered carefully.

1. Nature and Size of Business

The working capital requirements of an enterprise are basically related to

conduct of business. Enterprises can categorize into three types on the basis of nature
of the business. They are public utilities, trading and financial enterprises and
manufacturing enterprises. Public utilities generally require less working capital due to
the reasons that they do cash sales and sell services rather than the commodities.
Trading and financial enterprises fall between these two categories.

2. Production Cycle

The term production of manufacturing refiners to the involved in the

manufacture of goods. It covers the time span between the procurement of the raw
materials and the production of finished goods. The longer the time span i.e., the larger
will be the requirement of working capital. The shorter the Good s are purchased,
second option is to flow steady production policy throughout the year. In the former
case, less working capital is requirement and in the later case, more working capital is
required.

3. Credit Policy

The credit sales will result in higher book debts more working capital on the
other hand, if the liberal credit terms are available from the suppliers of goods the need
for working

4. Manufacturing cycle

Time span required for conversion of raw material into finished goods is a
block period. This period, in reality, extends a little before and after the WIP. This
cycle determines the need of working capital.

51
5. Growth and Expansion

As company grows larger amount working capital will be required.

Financial manager or the credit manager may administer the credit policy of the
firm. It should, however, be appreciated that the credit policy has important
implications for the firm’s production marketing and finance functions.

52
 OPERATING CYCLE
The operating cycle, the net operating cycle represents ‘cash conversion cycle’.
The length of operating cycle is the indicator of efficiency in management of short-
term funds and working capital.

Changes in government policies like taxation, import restrictions, credit policy

of central bank etc. will have impact on the length of operating cycle. It is the task of
financial manager to manage the operating cycle effectively and efficiently.

There are four major components of the operating cycle of a manufacturing company

Costs to be defrayed on materials, wages and overheads.

Length of which time during raw materials are to remain in stock before they
are put to production

Length of sale cycle denoting the period of time finished goods have to stay in
the warehouse before sale Period of credit availed of from creditors

Time- lag involved in the payment of wages and overhead expenses

53
 DIAGRAM OF OPERATING CYCLE

Debtors Cash

Raw
Sales
materials

Finished Work in
Goods Process

The length of time involved in the conversion of cash into raw materials, raw
materials into work- in-progress, work –in-progress into finished goods, finished goods
into debtors ,debtors into cash again the operating cycle or working capital cycle. The
length of operating cycle or working capital cycle may differ from one firm to another,
depending upon the nature of the business.

54
DETERMINATION OF THE LENGTH OF OPERATING CYCLE

The length of the operating cycle of manufacturing firm is the sum of

a) Inventory Conversion period

b) Book debts Conversion period

Gross Operating Cycle (GOC)

The length of the operating cycle can be determined as Inventory
Conversion period (ICP) Plus debtors Conversion (DCP)

Gross operating Cycle = RMCP + WIPCP + FGCP +RCP

Where,

RMCP = Raw Material Conversion Period

WIPCP = Work in Progress Conversion Period

FGCP = Finished Goods Conversion Period

RCP = Receivables Conversion Period

Inventory Conversion Period
The Inventory Conversion Period (RMCP) is the average time
period Taken to convert material into Work-in-progress conversion
period (WIPCP) and finished goods conversion period (FGCP).
ICP= RMCP+WIPCP+FGCP

a) Raw material Conversion Period (RMCP)

The raw material conversion period (RMCP) is the average time
period taken to convert material into work-in –progress. It depends on

I. Raw material consumption per day

II. Raw material inventory
Raw material Inventory
Raw material conversion period = ----------------------------------- x 365
( Raw material consumption )

55
b) Work – in – Progress Conversion Period (WIPCP)
Working-in-progress conversion period (WIPCP) is the average time
taken to complete the semi-finished or work-in-progress. It is given by the following
formula:
Work-in-progress inventory
Work-in-progress conversion period =------------------------------------------365
(Cost of production)
c) Finished Goods Conversion Period (FGCP)
Finished goods conversion period (FGC) is the average time taken to
Finished goods FGCP is given by the following formula:

Finished goods inventory

Finished Good conversion Period = --------------------------------------- x 365

(Cost of goods sold)
2) Debtors (Receivables) Conversion Period (DCP)
Debtors conversion period (DCP) is the average time taken to
convert debtors into cash. DCP represents the average collection period. It is
calculated as follows:
Debtors
Debtors conversion period (DCP) = --------------------------------- x 365
Credit sales
3) Creditors (Payables) Deferral Period (CDP)
Creditors (Payables) Deferral period (CDP) is the average time taken by
the firm in paying its suppliers (creditors). CDP is given as follows:
Creditors
Creditors Deferral period (CDP) =------------------------------365
Creditor’s purchases 3

56
Key Areas of Working Capital

Generally in the working capital management there are three important

areas which are very important. Those are

 Cash management
 Receivables management
 Inventory management

57
CHAPTER –IV

DATA ANALYSIS &INTERPRETATION
58
 WORKING CAPITAL MANAGEMENT OF COROMANDEL
INTERNATIONAL LIMITED

In the first objective of the study of this chapter position of UNIPARTS

“during the period under study that is 2012-18

The working capital is amount of funds, which a company must have to finance
its day to day operation. It can also be regarded as that proportion of the company’s total
capital which is employed in short term operation. It can take from of cash near cash and
other assets of stock raw material and supplies needed for manufacturing, stock of
finished awaiting sale semi-process items or components that will soon emerges as final
products sundry debtors spending collection against credit sales and short term
investment.

59
 STATEMENT OF CHANGES IN WORKING CAPITAL

ST
FOR THE YEAR ENDED 31 MARCH 2012-2013
PARTICULARS 2012 2013 EFFECT ON WORKING
CAPITAL
A.CURRENT ASSETS INCREASE DECREASE

a. Inventories 19103.89 39530.77 20420.88

b. Sundry debtors 9999.95 10675.01 675.06

c. Cash & Bank 3283.94 2433.08 850.86

balances
d. Loans & 22026.67 44344.78 22318.11
advances
TOTAL CURRENT 54420.45 96983.64
ASSETS

B.CURRENT LIABILITIES

a. Liabilities 27161.51 49825.62 22664.11

b. Provisions 4490.73 5764.84 1274.11

TOTAL CURRENT 31652.24 55590.46

LIABILITIES
Working Capital (A-B) 22768.21 41393.18

Net decrease in Working 18624.97 18624.97

capital

TOTAL 41393.18 41393.18 43414.05 43414.05

60
INTERPRETATION
 The comparison of assets and liabilities for the Year 2012-2013 shows that
Current Assets have been increased to 96983.64 due to increase in Inventories
and Sundry debtors Cash and Bank balance.
 The Current liabilities have also been increased to 414393.18 due to Increase in
liabilities and provisions.

But there is a decreased in working capital this shows current assets is more
than current liabilities.
 It also shows that efficient performance of the company.

61
 STATEMENT OF CHANGES IN WORKING CAPITAL

ST
FOR THE YEAR ENDED 31 MARCH 2013-2014

PARTICULARS 2013 2014 EFFECT ON WORKING

CAPITAL
A.CURRENT ASSETS INCREASE DECREASE
a. Inventories 39530.77 40472.65 941.88

b. Sundry debtors 10675.01 16051.59 5376.58

c. Cash & Bank 2433.08 16949.16 14516.08

balances
d. Loans & 44344.78 43893.33 451.45
advances
TOTAL CURRENT 96983.64 117366.73
ASSETS
B.CURRENT
LIABILITIES
a. Liabilities 49825.62 53598.84 3773.22

b. Provisions 5764.84 6150.76 385.92

TOTAL CURRENT 55590.46 59749.60

LIABILITIES
Working Capital (A-B) 41393.18 57617.13

Net decrease in Working 16223.95 16223.95

capital

TOTAL 57613.13 57613.13 20834.54 20834.54

62
INTERPRETATION


The comparison of assets and liabilities for the Year 2013-2014 Shows that
Current assets have been increased to 117366.73 due to increase in Inventories
Sundry creditors cash and bank balance.
 The Current Liabilities have also been increased to 3773.82 due to increase
in liabilities.

But there is decrease in working capital.
 This Show that current assets are more than current liabilities.
 It also shows that overall management of working capital of the company.

63
 STATEMENT OF CHANGES IN WORKING CAPITAL

ST
FOR THE YEAR ENDED 31 MARCH 2014-2015

PARTICULARS 2014 2015 EFFECT ON WORKING

CAPITAL
A.CURRENT ASSETS INCREASE DECREASE
a. Inventories 40472.65 16714.0 23758.65

b. Sundry debtors 16051.59 12941.4 3110.19

c. Cash & Bank 16949.16 45703 28753.84

balances
d. Loans & 43893.33 15860.5 28032.83
advances
TOTAL CURRENT 117366.73 91218.9
ASSETS
B.CURRENT LIABILITIES

a. Liabilities 49825.62 45488 8110.84

b. Provisions 5764.84 17459 11308.24

TOTAL CURRENT 55590.46 62947

LIABILITIES
Working capital (A-B) 57617.13 28271.9

Net decrease in Working 29345.23 29345.23

capital

TOTAL 57621.38 57621.38 66217.16 66217.16

64
INTERPRETATION

 The comparison of Current assets and Current liabilities for the year 2014-15
Shows that Current assets have been increased by 91218.9.
 But there is decrease in Inventory by 23758 and Sundry debtors by 3110
And increase in loans and advances.
 The Current liabilities have also been increased by 62947.
 This Show that Current assets are more than Current liabilities,
 It also shows the Good performance of the company.

65
 STATEMENT OF CHANGES IN WORKING CAPITAL
ST
FOR THE YEAR ENDED 31 MARCH 2015-16

PARTICULARS 2015 2016 EFFECT ON WORKING

CAPITAL
A.CURRENT ASSETS INCREASE DECREASE
a. Inventories 16714.0 225235 208521
b. Sundry debtors 12941.4 143668 130726.6

c. Cash & Bank 45703 29616 16087

balances
d. Loans & 15860.5 248779 232918.5
advances
TOTAL CURRENT 91218.9 647298
ASSETS
B.CURRENT LIABILITIES
a. Liabilities 45488 62389 16901

b. Provisions 17459 10606 6865

TOTAL CURRENT 62947 72995

LIABILITIES

Working Capital (A-B) 28217.19 574303

Net Increase in Working 546031.1 546031.1

Capital

TOTAL 574303 574303 579019.1 579019.1

66
INTERPRETATION

 The comparison of Current assets and Current liabilities for the

year 2015-16 shows that Current assets have been increased by
647298.
 There is also increase in loans and advances and inventories.
 The Current liabilities have also been increased by 16901.
 This shows that Current assets are more than Current liabilities.
 It also shows that total working capital management of a company.

67
 STATEMENT OF CHANGES IN WORKING CAPITAL

ST
FOR THE YEAR ENDED 31 MARCH 2016-17

PARTICULARS 2016 2017 EFFECT ON WORKING

CAPITAL
A.CURRENT ASSETS INCREASE DECREASE
a. Inventories 225235 234576 9341

b. Sundry debtors 143668 180459 36791

c. Cash & Bank 29616 18260 11356

Balances
d. Loans & 248779 268435 19656
advances
TOTAL CURRENT ASSETS 647298 701730

B.CURRENT LIABILITIES

a. Liabilities 62389 38356 24033

b. Provisions 10606 18680 8074

TOTAL CURRENT 72995 57036

LIABILITIES
Working Capital (A-B) 574303 644694

Net Decrease in Working 70391

Capital
TOTAL 644694 644694 89821 89821

68
INTERPRETATION

 The comparison of total Current assets and Current liabilities for the
year 2016-17 shows that Current assets have been increased by 701730.
 But there is a increase in loans and advances 19656 and there is a increase
in Inventories and Sundry debtors
 The Current liabilities have also been increased to 644694 due to
decrease in liabilities 24033.
 It shows Current assets is more than Current liabilities
 It also shows Total Working capital management of the company.

69
 STATEMENT OF CHANGES IN WORKING CAPITAL
FOR THE YEAR ENDED 2017-18

PARTICULARS 2017 2018 EFFECT ON WORKING

CAPITAL
A.CURRENT ASSETS INCREASE DECREASE
a. Inventories 234576 172461 62115

b. Sundry debtors 180459 216550 36091

c. Cash & Bank 18260 20451 2191

Balances
d. Loans & 268435 241591 26844
advances
TOTAL CURRENT 701730 651053
ASSETS
B.CURRENT LIABILITIES

a. Liabilities 38356 30684 7708

b. Provisions 18680 24284 5604

TOTAL CURRENT 57036 54968

LIABILITIES

Working Capital (A-B) 644694 596805

Net Decrease in Working 48609 48609

Capital
TOTAL 596085 596085 70730 70730

70
INTERPRETATION
 The comparison of assets and liabilities for the year 2017-18 there is a
decrease in current assets 651053.
 But there is increase in sundry debtors and cash and bank balance.
 The current liabilities have been decreased by 54968

 There is a decrease in working capital. This shows that current assets is more
than the current liabilities
 This shows total efficient performance of the company

71
 STATEMENT OF WORKING CAPITAL FOR THE YEAR (2013-2018)

PARTICULARS 2018 2017 2016 2015 2014 2013

A.CURRENT
ASSETS
a. Inventories 172461 234576 225235 16714.0 40472.65 39530.77

b. Sundry 216550 180459 143668 12941.4 16051.59 10675.01

debtors
c. Cash & 20451 18260 29616 45703 16949.16 2433.08
Bank
balances
d. Loans & 241591 268435 248779 15860.5 43893.33 44344.78
advances
TOTAL 651053 701730 647298 91218.9 117366.73 96983.64
CURRENT
ASSETS
B.CURRENT
LIABILITIES
a. Liabilities 30684 38356 62389 45488 49825.62 49825.62

b. Provisions 24284 18680 10606 17459 5764.84 5764.84

TOTAL 54968 57036 72995 62947 55590.46 55590.46

CURRENT
LIABILITIES
Working Capital 596805 644694 574303 28217.19 57617.13 41393.18
(A-B)

72
STATEMENT OF CHANGES IN NET WORKING CAPITAL FROM
2013-2018

YEAR CURRENT ASSETS CURRENT WORKING

LIABILITIES CAPITAL
2013 96983.64 55590.46 41393.18

2014 117366.73 59749.60 57624.38

2015 91218.9 62947 28271.8

2016 647298 72995 574303

2017 701730 57036 644694

2018 650153 54968 596085

73
CURRENT RATIO
Current ratio maybe defined as the relationship between current assets
and current liabilities. This ratio is also known as working capital ratio

Curent Assents
Curent Ratio = ---------------------------
Curent Labilités

Calculation of Curent Ratio of UNIPARTS During the period

2013-2018

Years Current assets Current liabilities Ratio

2013 96988.4 55590.46 1.74
2014 117366.76 59749.60 1.96

2015 91218.9 62947 1.44

2016 647298 72995 8.86

2017 707130 57036 12.30

2018 651053 54968 11.09

74
 14
12
10
8
6 CURRENT RATIO

4
2
0
2013 2014 2015 2016 2017 2018

INTERPRETATION
From the above table is clear that ratio is decreased in the year 2018 by 1.09 %
This is due to decrease in current assets from 1.74% to 11.09% as per 2013-2018 .The
Decrease is due to decrease of Current assets by 11.09% and decrease of Current
liabilities by 1.02%.This shows how firm maintains margin of safety

75
QUICK RATIO

Quick ratio is also known as liquid ratio or acid test ratio. The term liquidity
reforms to the ability of firm to pay its short term obligation as and when they become
due quick ratio maybe defined as the relationship between quick liquid assets and
current or liquid liabilities.

Quick assets = Current assets – (Inventory + Prepaid expenses)

Quick assets
Quick ratio = ----------------------
Current Liabilities

Calculation of Quick Ratio of UNIPARTS During the period

2013-2018
Year Quick assets Current liabilities Ratio

2013 13108.09 55590.46 0.23

2014 33000.75 59749.60 0.55
2015 43982.8 62947 0.60
173284 72995 2.3
2016

2017 198719 57036 3.48

2018 218590 54968 0.36

76
 4

3.5

2.5

2
Quick Ratio
1.5

0.5

0
2013 2014 2015 2016 2017 2018

INTERPRETATION

From the above table it is clear that ratio is decreased in the year 2018 0.36%.This is
due to decrease in quick assets and increase in current liabilities. Due to decrease in
quick ratio is not satisfactory.

77
CASH RATIO

Cash ratio is calculated by considering cash and marketable securities

and current liabilities here cash means cash marketable securities. Current liabilities
consist of account payable current matures of long term debt, accrued income taxes
and other information.

Cash
Cash Ratio = ----------------
Current liabilities

Calculation of Cash Ratio of UNIPARTS During the

period
2013-2018
Years Cash and Bank Curent labilités Cash
balances Ratio

2013 13341.71 55590.46 0.24

57359.61 59749.60 0.96

2014

2015 37232.44 62947 0.52

2016 29616 72995 0.40

2017 18260 57036 0.32

2018 20451 54968 0.37

78
 Cash Ratio
1
0.9
0.8
0.7
0.6
0.5 Cash Ratio
0.4
0.3
0.2
0.1
0
2013 2014 2015 2016 2017 2018

INTERPRETATION
From the above table it is clear that the cash ratio is increased in the year 2018
0.37% this is due to increase in cash and bank balances where as the year 2017-18 the
ratio was increased .

79
Net Working Capital Ratio
Net working capital is the aggregate amount of all current assets and current
liabilities. It is used to measure the short-term liquidity of a business, and can also be
used to obtain a general impression of the ability of company management to utilize
assets in an efficient manner.
Working capital
Net Working capital = --------------------------------
Total assets

Calculation of Net Working capital Ratio of UNIPARTS During the

period 2013-2018

Years Working capital Total assets Net Working Capital

2013 41393.18 86325.79 0.48

2014 57617.13 106698.38 0.54

2015 28271.9 94239.66 0.30

2016 574303 830856 0.69

2017 644694 884252 0.72

2018 596085 990362 0.60

80
 Net Working Capital
0.8

0.7

0.6

0.5

0.4
Net Working Capital
0.3

0.2

0.1

0
2013 2014 2015 2016 2017 2018

INTERPRETATION
From the table clear that the ratio is decreased in the year 2013-2018 by 0.60%
Due to the decrease in current assets in the year 2017-18 the ratio is decreased by
0.12%.

81
WORKING CAPITAL TURN OVER RATIO

Working capital turnover ratio indicated the velocity of the utilization of net
Working capital ratio indicates the number of items the working capital is term over in the
course measures the efficiency with which the working capital being using by a firm.

Cost of goods sold

Working Capital Turnover Ratio = ---------------------------------

Net working capital

Calculation of Total Working Capital turnover ratio of

UNIPARTS During the period 2013-18

Years Net Sales Net Working capital Ratio

2013 43462.83 41393.18 1.05

2014 65107.35 57617.13 1.13

2015 38449.78 28271.9 1.36

2016 1122647 574303 1.95

2017 1143828 644694 1.77

2018 1029445 596085 1.72

82
 Working Capital Turnover Ratio
2
1.8
1.6
1.4
1.2
Working Capital Turnover
1
Ratio
0.8
0.6
0.4
0.2
0
2013 2014 2015 2016 2017 2018

INTERPRETATION
From the above table cleared it is that the ratio is decreased from 2013-18 by 1.72%
This is due to less efficient of working capital. In the year 2017-18 the ratio is decreased by
1.07%

83
DEBTORS TURN OVER RATIO
It is also known as receivables turnover ratio. It indicates the relationship
between credit sales and average debtors
Credit Sales
DTR = -------------------------
Average debtors

Calculation of Total Debtors turnover ratio of UNIPARTS During

the period 2013-18

Years Net Credit sales Average debtors Ratio

2013 43462.83 10337.48 4.20

2014 65107.35 13363.3 4.87

2015 38449.78 14496.49 2.65

2016 112264.7 78304.7 14.33

2017 11438.28 162063.5 7.05

2018 115266 198504.5 5.81

84
 Debtors Turnover Ratio
16

14

12

10

8
Debtors Turnover Ratio
6

0
2013 2014 2015 2016 2017 2018

INTERPRETATION
From the above table it is cleared that ratio decreased in the 2018 by 1.24%
this is due to increase credit sales. In 2017-18 decreased in sales.

85
CHAPTER –V
 SUMMARY
 FINDINGS
 SUGGESTIONS

86
 SUMMARY

Financial management is important because it has an impact on all the activities

of a firm. Its primary responsibility is to discharge the finance function successfully. It
touches on all the other business functions. Financial performance is a managerial
activity, which is concerned with the panning and controlling the financial sources of
firm.

Financial sources are of the life blood of the business organizations. We cannot
imagine a business without finance because it is the central point of all business
activities because of all decisions are financial implications. It is essential for any type
of business big or small government, semi-government and non-government. The
finance function of the management is equally important for profit and non-profit
organizations.

The performance of UNIPARTS is appreciable for the entire period of study .

In all aspects it is showing favorable quantities, which are right way from, the
standards prescribed for the comparisons among various quantities aspects.

But, it is an important aspect to mention here before arriving at a conclusion

that the UNIPARTS , is one of leading private concern in the field of fertilizer industry
and also recorded a positive growth through the period of study. The following are the
findings in the financial analysis on UNIPARTS, through my study and suggestions
there on:

87
 FINDINGS

 In 2013-14 there is a decrease in working capital. Due to increase in

loans and advances
 In 2013-14 there is a decrease in working capital. The current
liabilities have increased to 3773.82
 In 2014-15 there is a decrease in Inventory and sundry debtors by 3110
 There is increase in working capital due to decrease in provision
of 6865
 In 2017-18 there is a decrease in working capital.
 In 2013-18 there is a decrease in current assets from 1.74% to 11.09%.
 In Quick ration there is a decrease in the year 2018-18 0.36%.
 In cash ration there is randomly increase from 0.24% to 0.37%.
 In net working capital ratio there is a decrease in 0.60%.

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 SUGGESTIONS


It is suggested to introduce cost control system and this is possible by
purchasing bulk material from suppliers.

The company should try to reduce its finished goods conversion period. This is
possible if there is co-ordination between chains of operating cycle.

The Debtors credit period has to be reduced in order to reduce your working
capital requirement there by reducing the working capital cost. The company
credit period is 45-65 days. If it reduces the period the credit period will be
reduced.

The UNIPARTS should concentrate to maintain adequate funds to meet their
working capital requirements otherwise it may face too many operational
problems.

UNIPARTS should decrease investing more in current assets and taking
liabilities to maintain adequate working capital.

Since the company has a very good brand name and it has wide infrastructure
importing raw materials, it should Ancash their strengths in doing more trading
activities.

The overall performance of the company is in a better position. The company
should maintain this level to stand in competition by efficient managerial
performance.

89
BIBILOGRAPY
 BIBLIOGRAPHY

Text Books:

FINANCIAL MANAGEMENT : I. M. PANDEY

FINANCIAL MANAGEMENT : SUDHINDRA BHAT

FINANCIAL MANAGEMENT : R.P. RUSTAGI

FINANCIAL MANAGEMENT : MAHESWARI S .N

COST ACCOUTING : JAIN & NARANG

STUDIES IN COST ACCOUNTIG : BAS GUPTA .P

Other Sources

Annual reports, Records of UNIPARTS

Other Business Journals and New papers

WWW.UNIPARTS.COM