INTRODUCTION

INTRODUCTION OF WORKING CAPITAL:

Working capital is the life blood and nerve center of a business. Just as
circulation of blood is essential in the human body for maintaining life, working
capital is very essential to maintain the smooth running of a business. No
business can run successfully without an adequate amount of working capital.
Working capital management as usually concerned with administration of the
current assets as well as current liabilities. The area includes the requirement of
funds from various resources and to utilize them in all result-oriented manner. It
can be stated without exaggeration that effective working capital management is
the short requirement of long-term success.

Working capital is just like the heart of every business. A study of working capital
is of major importance to internal and external analysis because of its close
relationship with the current day to day operations of a business. As pointed out
by Ralph Kennedy and steward mc Muller, inadequacy or mismanagement is the
leading cause of risk in business. Capital required for a business can be classified
into two main categories Finance capital, working capital. Working capital refers
to that part of firm’s capital which is required for short-term financing current
asset, this keeps revolving fast and constantly converted to cash.

MEANING OF WORKING CAPTAIL MANAGEMENT:

Working capital management is concerned with the problems that arise in

attempting to manage the current assets, the current liabilities and the
interrelationship that exists between them. The management of current assets is
similar to that of fixed assets in the sense that in both cases a firm analyses their
effects on its return and risk.

Current assets: refer to those assets which in the ordinary course of business can
be, or will be, converted into cash within one year. The major current assets are
cash, marketable securities, accounts receivable and Inventory.
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Current liabilities: are those liabilities which are intended, at their inception, to
be paid in the ordinary course of business, within a year. The basic current
liabilities are accounts payable, bills payable, bank overdraft and outstanding
expenses.

Definitions:

“Working capital is the amount of funds necessary to cover the cost of operating
the enterprise. Working capital in a going concern is a revolving fund it consists
of cash receipts from sales which are used to cover the cost of current
operations".

“L.J. Guthman defined working capital as “the portion of a firm's current.

assets which are financed from long–term funds.” The excess of current assets
over current. liabilities are termed as 'Net working capital'. In this concept “Net
working capital” represents".

“Working capital, also known as net working capital (NWC), is the difference
between a company's current assets—such as cash, accounts
receivable/customers' unpaid bills, and inventories of raw materials and finished
goods—and its current liabilities, such as accounts payable and debts".

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Types of working capital

1. On the basis of Value

 Gross Working Capital: It denotes the company’s overall

investment in the current assets.

 Net Working Capital: It implies the surplus of current assets over

current liabilities. A positive net working capital shows the
company’s ability to cover short-term liabilities, whereas a
negative net working capital indicates the company’s inability in
fulfilling short-term obligations.

IMPORTANCE OF WORKING CAPITAL

Investment is fixed assets only is not sufficient to run the business. Therefore,
working capital or investment in current assets is a must for the purchase of raw
materials and for meeting the day-to-day expenditure on salaries, wages, rents
etc. The main advantages of adequate working capital are as follows:

 If proper cash balance is maintained a Company can avail the advantage

of cash discounts by paying cash for the purchase of raw materials in the
discount period, which results in reducing the cost of production.
 Adequate working capital creates a sense of security, confidence and
loyalty not only throughout the business itself but also its customers,
creditors and business associates.
 A firm can raise funds from the market, purchase of goods on credit and
borrow short-term funds from banks etc. If investors and borrowers are
confident that they will get their due interest and payment of principle in
time.
 Certain contingencies like financial crises due to heavy losses; business
oscillation etc. can be easily overcome, if the company maintains
adequate working capital.

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 Inventory Management is essential since it is responsible for proper
control over inventory from the raw material stage to the finished goods
stage.
 Inventory Management begins with inventory control and involves the timely
purchase, proper storage, and efficient utilization to maintain an even and
orderly flow of finished goods to meet timely commitment by the business
and, at the same time, avoid excess the choice of any of the above three
methods impacts the current assets reported by the business and,
consequently, the working capital of the business as inventory. Some of
the most popular inventory control techniques for effecting working capital
management are as follows:

 Min Max Plan:

The oldest and conventional method which revolves around determining the
maximum and minimum of each stock item be kept following the usage,
requirements, and margin of safety to ensure that the business doesn’t lose the
risk of stock-out and also to avoid the issue of overstocking as it adversely
impacts working capital.

 Order Cycling System:

Under this Inventory Management system, quantities of each stock item are
reviewed periodically, which is predetermined by the management based on
the production cycle. Order is placed based on stock level and probable
depletion rate before the next periodic review.

 ABC Analysis:

Under ABC analysis technique of inventory management, the different stock

items are ranked according to their monetary value. High-value items are
closely attended to, and low-value items are devoted to minimum expenses to
ensure proper control of inventories and efficient allocation.

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Cash and Bank Balances:
It is said that cash is the king and an essential component of current assets,
and cash involves not just cash only but all liquid securities that can be
readily converted into cash. Proper Cash Management goes a long way in
keeping the working capital cycle in order and enables the business to manage
its cycle. Also, business efficiency is determined by the amount of free cash
flow to the firm (FCFF) it generates. Also, proper utilization of cash ensures
business to garner trade discounts and improve the cash conversion cycle,
which is a critical yardstick for analysing the working capital cycle of any
business.
Trade Payables:

 Trade Payables forms a significant part of current liabilities. It also

includes the amount due to the bills of exchange payables. These are the
amounts the business has to pay for credit purchases made by it. A crafted
payables management policy goes a long way in ensuring timely payment
and cordial business relations with vendors and creditors.
 Each industry has a specific trade cycle, and businesses must keep their
trade payable cycle in line with the industry. Also, if a business has a
shortened trade payable cycle, it will have to keep more cash in hand,
resulting in longer trade cash conversion cycles and more interest costs.
 A more extended trade payable period will make businesses make
payments to their vendors after long periods. However, suppose the
business can keep a short trade receivable period. In that case, such a
scenario improves the business cash conversion cycle and results in less
working capital requirement, ultimately boosting profits.
 Further, the importance of trade payables is equally reinforced by most
analysts while evaluating a business check payables turnover ratio to
understand the working capital management efficiency and timely
payments to honour its obligation to its creditors

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 A high trade payables turnover ratio shows that creditors are being paid
promptly by the business enhancing creditworthiness of the business.

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 1.1 INDUSTRY PROFILE

India has the world's largest dairy herd with over 300 million bovines, producing
over 187 million tonnes of milk. India is first among all countries in both
production and consumption of milk. Most of the milk is domestically consumed,
though a small fraction is also exported. Indian cuisine, in particular North Indian
cuisine, features a number of dairy products like paneer, while South Indian
cuisine uses more yogurts and milk. Milk and dairy products play a part in Hindu
religious practice and legend.

Dairy production in the Indian subcontinent has historical roots that go back
8,000 years to the domestication of zebu cattle. Dairy products, especially milk,
were consumed on the subcontinent at least from the Vedic period. In the mid- to
late 20th century, Operation Flood transformed the Indian dairy industry into the
world's largest. Previously, milk production in India occurred mainly on
household farms.

The economic impact of the dairy industry in India is substantial. Most of the
milk produced comes from buffalo; cow milk is a close second, and goat milk a
distant third. A large variety of dairy products are produced in India. Dairy
imports into India are negligible and subject to tariffs. The domestic industry is
regulated by government agencies such as Ministry of Animal Husbandry,
Dairying and Fisheries; National Dairy Development Board; and Food Safety and
Standards Authority of India.

COMPANY PROFILE

In 2014, Lactalis acquired Tirumala, where it opened up enormous opportunities

in the biggest and most challenging dairy market in the world to position it as the
most preferred brand in India. The traditional and cultural experience of Tirumala
and international expertise of Lactalis provided a unique combination, leading to
a success story to be talked by generations to come. Lactalis is a family-owned

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dairy group based in Laval (Moyenne), in the west of France. In 1933, André
Besnier started up his cheese-making company. The group sells products in over
180 countries and has 229 production sites across the globe. Lactalis is the largest
dairy group in the world with turnover of over 17 billion Euros.

André Besnier started a small cheesemaking company in 1933 and launched

its President brand of Camembert in 1968. In 1990, it acquired Group Bridel
(2,300 employees, 10 factories, fourth-largest French dairy group) with a
presence in 60 countries. In 1992, it acquired United States cheese company
Sorrento. In 1999, la society Besnier became le Groupe Lactalis owned by
Belgian holding company BSA International SA. In 2006, they bought Italian
group Galvani, and in 2008, bought Swiss cheesemaker Baer. They bought Italian
group Parmalat in a 2011 2.5B € takeover after its bankruptcy and have since
sought to delist it. In 2013, the Sorrento and Precious brands in the US were
renamed Galvani, and the Sorrento Lactalis division was renamed Lactalis
American Group.

In 2007, the French Instituted National des Appellations origin, which

administers AOC (Appellation origin control) designations for French food
products, refused to permit Lactalis and the dairy cooperative, Signy-Sainte-
Mere, to sell pasteurized Camembert as "true Camembert". As of 2007, these two
companies represented between 80 and 90% of Normandy Camembert sales. In
2018, the INAO announced it would relax restrictions and create a new
designation to include pasteurized Camembert in 2021

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 The development of the Lactalis Group, a major player in the French, European and
global dairy sector, has always been carried out with utmost respect of people,
particularly milk producers whose future is secured through the growth of the Group. The
constant investment made by the Lactalis Group in terms of innovation, brand
development and international activities create value and enhance milk promotion.

Today, Lactalis is a global leader within the dairy industry and is present across
all the categories of this market. The Group is the number one cheese
manufacturer in the world, and the European leader within the milk consumption,
butter and cream markets. It is also a major player in the chilled dairy and dairy
ingredients categories, as well as the foodservice industry, and a growing player
within clinical and infant nutrition markets. Owing to a global presence, the
Lactalis Group has always been able to anticipate new market trends and adapt to
production and consumption modes, whilst appreciating the local and cultural
specificities of each country.

Tirumala Milk Products Private Limited is an unlisted private company

incorporated on 13 November, 1998. It is classified as a private limited company
and is located in Tiruvallur, Tamil Nadu. Its authorized share capital is INR 45.51
cr and the total paid-up capital is INR 35.26 cr. Tirumala Milk Products’
operating revenues range is Over INR 500 cr for the financial year ending on 31
March, 2021. It's EBITDA has increased by 139.43 % over the previous year. At
the same time, it's book net worth has decreased by -16.15 %. Other performance
and liquidity ratios reveille.

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Established in 1998, Tirumala Milk Products (P) Ltd. is one of the fastest growing
Private Sector Enterprises in India with a team of dedicated professionals. The company
has one of the most modern and versatile plants in the Indian Dairy Industry with
state-of-the-art technology. Tirumala Milk Products (P) Ltd. products meet stringent
quality control tests and cater to the premium segment of the market for Dairy
Products. Tirumala Milk Products Ltd.

Presently our market presence is in Andhra Pradesh, Karnataka and Tamil

Nadu. We handle 7 Lakh litters of milk per day in our packing stations and
dairy plant, which is the single largest plant in the state of Andhra Pradesh.
Our Registered Office is located at Narasaraopet Pet, Guntur Dist. and
Corporate Office is located at Ameerpet, Hyderabad. Tirumala Milk
Products (P) Ltd. sells a rich, varied offering of nutritious, tasty and healthy
food products under well-known brand. Our milk comes from cattle herd
that receive the best care along with healthy and nutritious diet in the form
of quality feed to ensure that they produce wholesome, high-quality milk.
The Corporate Identification Number (Can) Of Tirumala Milk Products Private
Limited Is U15209tn1998ptc102741. The Registered Office of Tirumala Milk
Products Private Limited Is At N.No.75/8, O.No.1418/2b, 200 Feet Ring Road,
Thirumalai Nagar Extn, Ponniamman Medu, Chennai, Tiruvallur, Tamil Nadu.

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MISSION POLICY:

We aim to lead the market through reputation and result adhering to international
standards with emphasis in hasty service, excellent employee quality and flexible
hiring options. We believe in continued growth and increasing the value of our
company and service.

VISION POLICY:

To become the largest provider of international human resources to facilitate

growth and prosperity of business in India. To be the most preferred Manpower
Supply & Recruitment Agency by rendering excellent services to both clients and
candidates.

Awards / Recognition:

 In recognition of its efforts and achievements in the dairy foods industry,

and in acknowledgment of all the challenges surmounted, Tirumala Milk
Products (P) Ltd. has won many awards and certificates.
 More enduring than any public recognition for our contributions is the
satisfaction we enjoy by creating a superior product and giving back to
our communities.
 Tirumala Milk Products (P) Ltd. is an ISO 9001:2000 and an ISO 22000:
2005 Certified company. The dairy is following Quality Management
System and Food Safety Standards.
 Apart from ISO certification, we have Certificate from SGS on SMP
Analysis too. Tirumala Milk Products (P) Ltd.

FOOD SAFETY GUARANTEE:

We believe in the Philosophy of “Consumer First”. As a part of our Corporate

Responsibility, we ensure that food safety is on our top priority. All nine of our
plants have ISO 22000 Certifications and FSSAI Licenses certifying a
commitment towards food safety and dependability.

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CONSUMER PREFERENCE:

Tirumala has a strong focus on its consumers and therefore goes the extra mile to
provide them consistent quality products which is relevant to their organoleptic
palate. Not only is this about giving consumers the best, but also understanding
what they would need through robust customer-connect programs.

CUSTOMER SATISFACTION:

Our customer satisfaction not only comes from the consistent quality products,
we provide customer care services who are readily available to provide any
product related information, and address any queries or concerns.

SUPPLIER ASSURANCE:

We always strive for ensuring consistent quality products with conforming purity
of the product available in the market, which is made possible through the help of
our own Tirumala Distribution Centres (TDC), Agents and Retailers. We ensure
on-time deliveries to our Retailers so that our products are made available for our
consumers 24/7.

QUALITY AT THE BEST PRICE:

Being in a commodity & dairy market, we ensure our products are not only the
healthiest and tastiest but also affordable for one and all. Quality is not something
we strive for, it’s something we guarantee with consistency.

FOOD SAFETY GUARANTEE:

We believe in the Philosophy of “Consumer First”. As a part of our Corporate

Responsibility, we ensure that food safety is on our top priority. All nine of our
plants have ISO 22000 Certifications and FSSAI Licenses certifying a
commitment towards food safety and dependability.

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CUSTOMER SATISFACTION:

Our customer satisfaction not only comes from the consistent quality products,
we provide customer care services who are readily available to provide any
product related information, and address any queries or concerns.

SUPPLIER ASSURANCE:

We always strive for ensuring consistent quality products with conforming purity
of the product available in the market, which is made possible through the help of
our own Tirumala Distribution Centres (TDC), Agents and Retailers. We ensure
on-time deliveries to our Retailers so that our products are made available for our
consumers 24/7.

QUALITY AT THE BEST PRICE:

Being in a commodity & dairy market, we ensure our products are not only the
healthiest and tastiest but also affordable for one and all. Quality is not something
we strive for, it’s something we guarantee with consistency.

PRODUCTS:

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MILK:

Tirumala ensures the finest quality of milk, which not only provides great taste
but also maintains the highest standards of quality. It guarantees pure freshness
and goodness at every stage, from farms to the family, by collecting farm-fresh
milk every day from farmers with an efficient supply chain under hygienic
quality standards and modern technology. Offering a rich source of calcium,
protein and fortified vitamins, Tirumala milk helps you stay active and fit
throughout the day.

CURD:

Tirumala has a long-standing expertise and passion for producing the best dairy
products. Made from highest quality milk under stringent and hygienic quality
standards, Tirumala curd delivers the best thick and tasty curd to its consumers. It
is a great source of protein and calcium, which makes it super beneficial for your
health.

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FLAVOURED MILK:

Nothing soothes your soul better than a bottle of Tirumala flavoured milk,
whether it is chocolate, strawberry, badam or pista. Our flavoured milk range
contains superior ingredients and milk freshly procured directly from farms. With
our high- quality toned milk and added flavours, Tirumala Flavoured Milk gives
you the smooth texture, perfect aroma, and above all, your heart’s content!

LASSI:

Tirumala Lassi and Buttermilk are ready-to-drink delicious and healthy

beverages. A zesty concoction of spices and our fresh milk, we provide you with
the most refreshing and healthy buttermilk out there. Hygienically prepared,
nutritious and easy to digest, our Lassi sets standards on quality and taste for
those looking for a revitalizing natural drink to stay healthy and active.

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BUTTERMILK:

Tirumala Buttermilk is an ideal coolant made from curd and spices. Not only is
this delicious drink refreshing but it also completes every meal, making its way
into every Indian household. Tirumala buttermilk makes an excellent digestive
aid, controls your acidity level, and makes it great for health.
Competitors of Tirumala milk dairy products:

 Akshayakalpa
 Milky Mist
 Dodla Dairy
 Parag Milk Foods

Akshayakalpa:

Akshayakalpa Organic is to influence the way we approach nutrition by bringing

to you produce that is naturally healthy and full of flavour. We are the pioneers of
organic food. We are part of an on-going journey to create sustainable farms
which are a perfect amalgamation of our goal to nurture nature, preserve heritage
practices and our scientific expertise – while meeting the growing need for
complete and convenient nutrition.

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Milky Mist Dairy:

Milky Mist Dairy, Milky Mist Dairy Food Private Limited (MMD), one of India's largest
manufacturers of dairy products, is located at Perineuria, 20 km (12 mi) from the Erode
district in Tamil Nadu. Formed in 1997 by T. Sathish Kumar, Milky Mist is engaged in milk
procurement, processing, and manufacturing of other dairy products.

Dodla Dairy:

Dodla Dairy Limited is a public limited company having its registered and corporate
office at Hyderabad City of Telangana State in India. The company was incorporated in
the year 1995 and production commenced in 1998. Currently, our procurement is
cantered in 5 states and our products are available for purchase in 11 states. We have 110
milk chilling centres. Some of our plants are ISO 22000:2005 Certified while two are
ISO 50001:2011 (Enums) Certified.

Parag Milk Foods:

Parag Milk Foods is an Indian company that manufactures, markets and

sells milk and milk products. The company is India's second largest producer
of cheese under its brand Go and the country's largest producer of cow ghee
under its brand Govardhan. In 2015, the company began producing whey protein
powder and since then has launched branded protein powder products as well. As
of 2017, the company's daily procurement of milk was 1.2 million litres.

Founders And Board of Directors of Tirumala Milk:

 Battini Nageswara Rao, Co-Founder, is a founder of 1 company and on

the board of 1 company.

 Bolla Brahma Naidu, Co-Founder, is a founder of 1 company and on the

board of 1 company.

 Bolla Srinivasa Rao, Co-Founder, is a founder of 1 company and on the

board of 1 company.

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 Danda Brahmanandam, Co-Founder, is a founder of 1 company and on
the board of 1 company.

 Martial Jacques Elian Sekely, Director, is on the board of 2 companies.

 Michel Francois Jacques Auguste Peslier, Director, is on the board of 2

companies.

 Olivier Christophe Savary, Director, is on the board of 2 companies

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RESEARCH METHODOLOGY
Research design is a conceptual structure within which research is conducted. It constitutes the

blueprint for the collection, measurement and analysis of data. Research design is needed because

it facilitates the smooth sailing of the various research operations, thereby making research as

efficient as possible yielding maximum information with minimum effort, time and money.

Research design stands for advance planning of methods to be used for collecting the relevant

data and the techniques to be used in their analyses. Preparation of research design should be

done with great care as any error may upset the entire project. Therefore it is imperative that an

efficient design must be prepared before starting research operations. The design helps the

researcher to organize his ideas in a form whereby it will be possible for him to look for flaws

and inadequacies.

Once the problem is identified, the next step is the research design. Research design is the

basic framework of rest of the study. A research design specifies the methods and

procedures for conducting particular study.

2.1 NEED OF THE STUDY:

Today financial soundness of business enterprises largely depends upon the

working capital management by the firm. If there is shortage of working capital it
affects the day-to-day operations of the business firm, if there is excess of
working capital, fund become idle it also affects the financial soundness of the
firm. In this perspective there is need to manage the working capital effectively in
any business. The question which strikes the mind during reviewing various
literatures that how THIRUMALA MILK PRODUCTS managing its working
capital being public sector undertaking hence study is undertaken.
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2.2 PROBLEM DEFINITION:

To study the working capital management on Tirumala milk products

limited at kadivedu, Nellore.
2.3 SCOPE OF THE STUDY:

The present study is restricted to a single unit Tirumala milk products limited at
kadivedu. Frist, the study of working capital management is confined only to the
Tirumala milk products limited at kadivedu.

thirdly, the study is based on the annual reports of the company

for a period of five years from 2018 to 2023. Due to time constraint the study
period is restricted. The purpose of the project is to analyse the past and present
performance the company.

2.4 OBJECTIVES OF THE STUDY:

 To analyse the working capital position of the firm.
 To analyse the net worth, position of working capital in the company.
 To assess the future trend of working capital of the firm.

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2.5 SOURCE OF DATA:

Primary data:

To achieve a foreside objectives data is gathered from secondary sources, like

annual reports, journals, and related other research papers.

Secondary data:

The secondary data, on the other hand, are those which have already been
collected by someone else and which have already been passed though the
statistical study is generally based on the secondary data. Which was obtained
from the published sauces i.e., annual reports of. Tirumala products limited. A
period of 2018 to 2023.

2.7 Limitations of the study:

1. The information provided in the company balance sheet is only the data
source Available.
2. Some required secondary data which is not provided by company.
3. The information available in the balance sheets has taken from the published
annual Reports, so it has only limitations.
4. Since financial matters are sensitive in nature the same could not be
acquired easily.

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 BIBLIOGRAPHY

BOOKS: AUTHORS:

 Financial management M. Pandey (2015)

 Financial management accounting S.N. Maheswari (2006)
 Research methodology and techniques C.R. Kohari
 Statistical methods S.P Gupta

WEBSITES:

 www.google.com
 www.tirumalamilk.com
 www.wikipedia.com
 www.moneycontrol.com