CHAPTER - 1

1.1 INDUSTRY PROFILE INTRODUCTION Generally, India is today second largest cement Producing country after China. At present there are about 60 cement companies with 134 major plants and an instilled capacity of around 147 million tones. Besides there are 60 surviving tiny and mini cement plants with a capacity of 6.3 million tones. There companies have setup 130 major cement plants by investing over Rs30, 000 crores. Cement was produced for the first time in India in 1904 by south India industries ltd madras. The present production of cement is around 120 million tones per year. Cement of India has made brave plan for increasing cement production capacity for production of cement, India is divided into four zones namely: East, West, North, and South. A.P comes under south zone among 99 large cement plants, 200 plants in India out of them 18 major cement plants are in A.P. Cement industry is third highest contributor in term of excise duty of over 3,500/- crores to state government's royalties, octrai and other ceils and another 1,500/- crores. HISTORY OF CEMENT INDUSTRY The first ever reference of cement production in India is recorded in George Watt's directory of "Economic products of India" published in 1889 which stated. "Portland cement was being made in Calcutta from argillaceous KanKer". However the first organized attempt to manufacture the cement was made in 1904 by the madras based south Indian Industries Limited. But its venture failed It was in October 1914 that the cement corporation limited saw the light of the day. It had an installed capacity of 1000 tones per annum. The Romans found that mixing lime (Brent) with Pozolana (a rock like material which shows natural Hydraulic properties) produces cementing material, which shows hydraulic properties.

Pozzolonic material was also found in large areas of Italy, Greece, Germany, and Ireland. In a town called Portland, England, Raw materials for present day cement were naturally presented in the lime stone.

Growth of the Different Areas Roads & Building Plans Infrastructure is often cited as one of the main impediments to economic growth in India the provisions of efficient and affordable infrastructure are essential for industries growth. Promise of Housing Housing is another sector that can act as a Powerful drive to boost cement demand. The government has made bold Statements and taken initiations which benefit the cause. As per recent estimates, the country faces a shortage of over 20 million dwelling unitsunofficially the figure is placed at 40 million. Export Potential Even though India is second largest cement industry in the world with exports performance is not in line with the size. Exports accounts for less than 2% of production. India is strategically placed to be a major exporter of cement to SAARC countries. Other Growth Areas Agriculture continues to be and important sector in economy. The largest

economic survey agriculture improved at this to provide the efficient infrastructure facilities, storages, market yards, madding improving connectively villages all though roads the agriculture & irrigation sectors are main developing the canals, projects at this main products is cement at this to help the growth of economy.

Problems of Cement Indusrty Coal Coal is used both as an energy sources and raw material for cement Production. The per tone coal requirement for a dry process plant is approximately 250kgs and for a wet process plant 350kgs of total produced in India. The cement industry consumes nearly 5% coal which accounts for nearly 20% of the total production of cement industry there is no shortage of coal supply there are certain drawbacks in the coal supplied to cement plant. The quality of coal is poor which adversely affects the quality of cement. Excise Duty Excise duty of the total excise earned by the central govt. nearly 506% is

contributed both cement industry. The excise duty paid in 1998-1999 400/- per tone. The mini cement plants is only 250/- per tone use to 99,000 tones of dispatches. This type of high rate excise duty is payable to the cement industry. Power Shortage The cement industry consumes nearly 3-4% of the total power generation in the country for the production of 1 tone of cement 100 units of power is required. There exists a problem of execute power shortage in the states of Andhra Pradesh, Karnataka, Madhya Pradesh, Tamilnadu, Rajasthan. Most of companies getting our desalsels. Cement Package Cement main Problem is packaging is the cement properties need to be maintained from point products in this uses since, cement is mostly use dams, bridges and buildings. The distance of transport is long.

Current Status The Indian cement industry has grown remarkably decades to merge as second largest in the world after china. In terms of technology, Quality and Productivity parameter Indian cement industry is undeniably at the top. Today the Indian cement industry is passing through a phase of realignment and consolidation. Multi-nationals have made a strong entry in the cement market and are trying to increase their presences by acquisitions, joint venture and other arrangements. Role of Cement Industry in India In India it came to be established during the beginning of the 20lh century. In fact the cement era in India commenced with the establishment of a small cement factory at "Washermanpet" in Madras now called Chennai in 1904 by south India industry limited a company that dates back to 1879. The potential capacity of this plant was only 10,000 Metric tons per annum. India is ranked 4lh in the world after China, Japan and USA in cement production. Cement industry in India has a origin before 8 decades. This factory commenced its production in 1914 at the rate of 199 Metric tons per day. The company adopted "Dry process". This plant and easy access of lime stone quarries at porbandar. This initial attempt could cause the attempt of two more factories. One at Kathy (Madhya Pradesh) another at Lechery (Rajasthan) by Kathy Cement limited and Bundy Cement Portland Cement Limited respectively in January 1915 and December 1916. Outlook The per capita consumption of cement in India, which currently is very low at 99kg, has huge scope for growth, according to industry sources the initiative taken by the govt on the infrastructure. Particularly the north-south corridor, popularly known as the "golden Quadrilateral" the long term outlook for the cement industry is encouraging. The work group on cement industry constituted by the planning commission for the the five year plan has estimated the demand for cement to reach 165.56 million tones by 2006-2007.

1.2 COMPANY PROFILE Introduction A Penna cement industry Ltd was incorporated on October 24, 1991 to setup a cement plant at Tadipatri in Anantapur District of Andhra Pradesh. The plant commenced commercial production on August 10, 1994 as mini Cement plant with initial capacity of 0.30 million tone. The company in short period to getting profits. Later 1995 plant capacity was increased 0.4 million tone, which upgraded its states as major plant. Penna cement industries Ltd established by Mr.P.Prathap aged 44 began his entrepreneur career with civil engineering contracts by launching pioneer builders. Mr.Reddy has experience of two decades in cement industry. He was the executive director of priyadarshini cement right from its inception in 1984.In 1991 Mr.Pratap Reedy incorporated his own cement company located in between Talaricheruvu and Urichintala village. At present about 2720 tones of various grades of cement is being manufactured daily at the factory. Quarry Major raw material for cement industry. The quarry has a mining lease of 235.52 acres in Talaricheruvu village, 440.47 acres in Urichintala village and 629.75 acres in Korumanipalli village of Kurnool district. Salient Features of Penna Cement High strength and great durability A very perceptible saving in costs (up to 20% to 25%) due to low setting time Superior quality of the cement resulting in a better overall finish Stronger bonding with aggregates. Growth and Performance The company has enhanced its capacity from 600 TPD to 8000 TPD over the period of 10 years. The Existing cement plant was upgraded to 600 tones capacity per day. The profits for the year 1997-98 are Rs 792.77 Lakhs and sales of Rs 9467.20 Lakhs. The company holds the assets of Rs 6019.92 Lakhs. The annual capacity of the company 992800 tones.

Current Operations Presently the company is manufacturing 43 grade, 53 grade, Ordinary portal cement Port land slag cement, soleplate Resistant with brand name of "PENNA". Penna suraksha - 53 Grade Penna power Penna super - 53 Grade - 43 Grade

Competitiveness of Cement Product Just five companies - Ultra tech, Andhra cement,' Grasim cement, Gujarat Ambuja cement and India cement Ltd. Technology Adoption and Innovation The company has obtained the basic engineering designs and other technical knowhow from M/S.ONADA ENGINEERING and consulting company limited Japan for the cement plant. The technical collaborates are continuously guiding the company for achieving improved productivity and benefits such as conservation of energy etc., besides trouble shooting a specific.

CHAPTER 2
REVIEW OF LITERATURE 2.1 MEANING OF THE STUDY INTRODUCTION TO WORKING CAPITAL MANAGEMENT Working capital management is concerned with the problem that arises in attempting to manage the current assets, the current liabilities and the interrelationship that arise between them. Current assets refer to those assets, which in the ordinary course of business can be or will be turned into cash within one year. The major current assets are cash, marketable securities, accounts receivables and Inventory. Current liabilities are those liabilities, which are intended, at their inception, to be paid in the ordinary course of business, with in a year. The basic current liabilities are Accounts payable, Bills payable, Bank Overdraft and Outstanding expenses. The goal of working capital management is to manage the firms Current Assets and Current Liabilities in such a way that a satisfactory level of working capital is maintained. Working capital, it ensures normal and smooth working of a business unit. It is required for the raw materials and stores, payments of wages and other regular expenses like electricity, water charges, taxes etc. Working capital is necessary when regular manufacturing activities are under taken and normal production activities are conducted. Such capital is required for a short period as it is recovered from the customers when the products are sold to them. Therefore interaction between current assets and current liabilities are in the main theme of working capital management. Profits are earned with the help of assts, which are partly fixed and partly current. Working capital some times referred to as CIRCULATING CAPITAL.

The management of fixed assets and current assets are differs in three ways: 7

In managing fixed assts, time is very important factor, consequently, discounting and compounding techniques play a significant role in capital budgeting and a minor one in the management of current assets.

The large holding of current assets especially cash, strengthens the firms liquidity position (and reduces risk ness), but also reduces that over all profitability. Thus, a risk-return trade off is involved in holding current assets.

The level of fixed as well as current assets depends upon expected sales, but it is only current assets, which can be adjusted with sales fluctuations in the short run. Thus, the firm has a greater degree of flexibility in managing current assets. In simple words working capital means that which is issued to carry out the day to

day operations of a business. Capital required for a business can be classified under two main categories. Fixed capital Working capital Every business needs funds for two purposes, for its establishment and to carry on its day to day operations. Long term funds are required to create production facilities through purchase of fixed assets such as plant and machinery, land, building, furniture etc. Investment in these assets represents that part of firm capital, which is blocked on a permanent or fixed basis called fixed capital. Funds are also needed for short term purposes i.e. for the purchase of raw material, payment of wages and other day to day operations of business. These funds are known as working capital. In other words, working capital refers to that firms capital which is required for short- term assets or current assets. Funds thus invested in current assets keep revolving last and being constantly converted into cash and this cash flow is again converted into other current assets. Hence it is known as circulating or short term capital.

WORKING CAPITAL is also called as CIRCULATING CAPITAL

DEFINITIONS: Working capital is the amount of funds necessary to cover the cost of operating the enterprise. Working capital means a sum of current assets only. Field, Backer & Malott Shubin

Working capital refers to managing the firms current assets & current liabilities in such a way that a satisfactory level of working capital is mainted. M Y Khan & P.K.Jain

Circulating capital means current assets of a company that are changed in the ordinary course of business from one from to another, as for example, from cash to inventories, inventories to receivables, receivables in to cash. Genesten berg

Working capital means that which is issued to carry out day to day operations of a business. The excess of current assets of a business (i.e. cash, accounts receivables, inventories) over current items owned to employees and others (such as salaries & wages payable, accounts payable, taxes owned to government). CONCEPT OF WORKING CAPITAL

Park & Gladson

There are two concepts of working capital: (A) Balance sheet concept. (B) Operating cycle or Circular flow concept.

A) Balance sheet Concept

There are two interpretations of working capital under the balance sheet concept: (I) Gross working capital. (II) Net working capital. I) Gross working capital The Gross working capital refers to the firm investment in current assets. The current Assets are Assets which can be converted into cash with in an accounting year and include cash, Short term securities like debtors, Bills Receivables and inventory. Gross working capital constituted current Assets i.e. 1. Inventory: which are further classified into a. Raw materials b. Working in progress c. Finished goods 2. Accounts Receivables: (a) Cash and bank balance. Any business firm needs to provide it with enough of these current Assets. So that it an carry on its business operation smoothly. These Assets are essential circulating in nature. That is to say that the business buys raw materials with cash Receivable as a result or cash sales. II) Net working capital It represents the difference between current assets and current liabilities, Net working capital may be positive or negative. Positive net working capital is that when current assets are more than current liabilities, but when current liabilities become more than current assets than it is negative working capital. In brief we can say that working capital is too much necessary for the smooth functioning and proper utilization of fixed assets. B) Operating Cycle Concept:

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Operating cycle is the time duration requires for converting sales into cash after the conversion of resources into inventories. First of all a firm purchase Raw Material, then after some processing it is converted into workinprogress and after this further processing is done to convert workinprogress in finished goods. After the raw material is converted into finished goods, sales are made. Sales are no always full cash sales; there are credit sales also. These credit sales after some period are converted into cash. So the whole process takes the time. This time taken is known as the length of operating cycle. So operating cycles includes:

1. Raw Material conversion period (RMCP) 2. Workin progress conversion period (WIPCP) 3. Finished goods conversion period (FCP) 4. Debtors Conversion period (DCP)

So operating cycle can be known as following:-

If the length of the operating cycle has short length period then less working capital is required. So working capital requirement is directly related with operating cycle. Operating cycle may be of two types Gross operating cycle

11

 Net operating cycle Gross Operating Cycle: Gross operating cycle is the total time period from the conversion of Raw Material into finished goods and finished goods into sales and the sales into cash. GOC = RMCP + WIPCP + FCP + DCP

Net Operating Cycle: As we provide period to debtors for the payments, our creditors also provide period to us for payment to them. So this reduces our requirement of working capital. This also affects the operating cycle. Operating cycles length reduces with so many days as provided by the creditors to us. The difference between gross operating cycle and period allowed by the creditors for payment is known as net operating cycle. TYPES OF WORKING CAPITAL
TYPES OF WORKING CAPITAL

ON THE BASIS OF CONCEPT

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(I) Gross working capital This thought says that total investment in current assets is the working capital of the company. This concept does not consider current liabilities at all. Reasons given for the concept: 1) When we consider fixed capital as the amount invested in fixed assets. Then the amount invested in current assets should be considered as working capital. 2) Current asset whatever my be the sources of acquisition, are used in activities related to day to day operations and their forms keep on changing. Therefore they should be considered as working capital. Gross Working capital = Total Current Assets (II) Net working capital It is narrow concept of working capital and according to this, current assets minus current liabilities forms working capital. The excess of current assets over current liabilities is called as working capital. This concept lays emphasis on qualitative aspect which indicates the liquidity position of the concern/enterprise Net Working Capital = Current assets Current Liabilities

ON THE BASIS OF TIME

I) Permanent Working Capital As the operating cycle is a continuous process so the need for working capital also arises continuously. But the magnitude of current assets needed is not always same; it increases and decreases over time. However there is always a minimum level of current assets. This level is known as permanent or fixed working capital.

II) Temporary Working Capital

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The extra working capital needed to support the changing production and sales activities, is called variable or functioning or temporary working capital. This can be shown in the following diagram:-

FACTORS INFLUENCING WORKING CAPITAL: 1) Nature of business The working capital of a firm basically depends upon nature of its business for e.g. public utility undertaking like electricity, water supply needs very less working capital because offer only cash sales whereas trading & financial firms have a very less investment in fixed assets but require a large sum of money invested in working capital. 2) Size of business The size of business also determines working capital requirement and it may be measured in terms of scale of operations greater the size of operation, larger will be requirement of working capital.

3) Manufacturing cycle

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The manufacturing cycle also creates the need of working capital. Manufacturing cycle starts with the purchase and use of raw material and completers with the production of finished goods. If the manufacturing cycle will be longer more working capital will be required or vice versa. 4) Seasonal variation In certain industries like raw material is not available throughout the year. They have to buy raw material in bulk during the season to ensure an uninterrupted flow and process them during the year. Generally, during the busy season, a firm requires large working capital than in the slack season. 5) Production policy Production policy also determines the working capital level of a firm. If the firm has steady production policy, it may require need of continuous working capital. But if the firms adopt a fluctuating production policy means to produce more during the lead demand season then the more working capital may require at the time but not in other period during a financial year. So the different production policy arises different type of need of working capital. 6) Firms credit policy The firms credit policy directly affects the working capital requirement. If the firm has liberal credit policy, hence the more credit period will be provided to the debtors so this will lead to more working capital requirement. With the liberal credit policy operating cycle length increases and vice versa.

7) Sales Growth Working capital requirement is directly related with sales growth. If the sales are growing, more working capital will be needed due to arises need of more raw material, finished goods and credit sales.

8) Business cycle

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Business cycle refers to alternate expansion and contraction in general business. In a period of boom, larger amount of working capital is required where as in a period of depression lesser amount of working capital is required.

9) Earning capacity & dividend policy If the firm has enough earnings and it is not paying dividend then it will not be in need of external borrowings. If firm wants to increase its earning power then more working capital will be required also to pay more dividend more profits are needed which give rise to more working capital.

10) Price level changes Changes in the price level also effects the working capital requirements. Generally, the rising prices will require the firm to maintain larger amount of working capital as more funds will be required to maintain the same current assets.

Dangers of Inadequate Working Capital

It stagnates growth because it is difficult to undertake profitable projects for non availability of working capital. It becomes difficult to implement operating plans and achieve the firms target profit. Operating inefficiencies creep in when it becomes difficult even to meet day to day commitments. It leads to inefficient utilization of fixed assets. It render the firm unable to avail attractive credit opportunities etc. Firm loses its reputation when it is not in a position to honour its short term obligations. Therefore firm should maintain the right amount of working capital on a continuous basis. The right amount of working capital influenced by several factors.

The Dangers of Excessive Working Capital

16

 It results in unnecessary accumulation of inventories, which lead to mishandling of inventories (waste, theft and losses in increase). It is indication of defective credit policy and slack collection period. This leads to higher bad debt losses that reduce profits. It makes management complacent which degenerates in to managerial inefficiency. Accumulation inventories tend to make speculative profits grow. This type of speculation makes the firm to follow liberal dividend policy and difficult to cope with in future is unable to make speculative profits.

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CASH MANAGEMENT Cash is the important current assets for the operations of the business. Cash is the basic input needed to keep the business running on a basis. The firm should keep sufficient cash, neither more nor less. The term cash includes coins, currency, and cheques held by the firm, and balances in its bank accounts. Sometimes near- cash items. Such as marketable securities (or) bank times deposits, are also included in cash. Generally, when a firm has excess cash, it invests it in marketable securities. This kind of investment contributes some profit to the firm.

CASH MANAGEMENT STRATEGIES: The cash management strategies are intended to minimize the operating cash balance requirement. The basic strategies payable with out and affective a credit of the firm. 1. Stretching account payable with out affecting the credit of the firm. 2. Efficient inventory management. 3. Speedy collection of accounts receivables. Thus the main objectives of cash management are to reconcile two mutually contradictory and conflicting tasks to meet the payment schedule and to minimize funds committed to cash.

USES OF CASH MANAGEMENT:

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1. It indicates companys future financial need especially for its working capital requirement. 2. To help in evaluating proposed capital projects. 3. It pinpoints the cash required to finance these projects as well as the cash to be generated by the company to support them. 4. It helps to improve corporate planning. 5. Cash forecasting helps to future and to formulate projects carefully. MOTIVE OF HOLDING CASH: The firms need to held cash to the following three motives. 1. Transaction Motive: This refers to holding cash to meet anticipated payments whose timing is not perfectly matched with cash receipt.

2. Precautionary Motive: The precautionary motive is the need to hold cash to meet contingencies in the future. Cash provides a cushion or buffer to withstand some unexpected emergency. Thus precautionary balance should be hold more in marketable securities and relatively less in cash. 3. Speculative Motive: The speculative motive relates to the holding of cash for investing in profit making opportunities as and when they arise. Thus the primary motives to cash and marketable securities are transaction and precautionary motives.

ACTS OF CASH MANAGEMENT:

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Managing the cash flows: The flow of cash should be properly managed. The inflows should be accelerated

while as far possible decelerating the cash outflows. Optimum cash level: The firm should decide about the appropriate level of cash balance. The cost of excess cash and danger of cash deficiency should be matched to determine the optimum level of cash balance.

Investing surplus cash: The surplus cash balance should be properly invested to earn profits. The firm

should decide about divisions of such cash balance between bank deposits. Marketable securities and inter corporate lending.

RECEIVABLES MANAGEMENT

20

The receivables represents as important component of the current asset of a firm. The term receivable are defined as debt owned to the firm by customers arising from sale of goods or services in the ordinary course of business. Receivables management is also called trade credit management. The maintenance of receivables involves direct and indirect costs. Direct cost includes the cost of investments allowance and concessions to customers and also losses on account of bad debts. Administrative costs connected with connection of receivable the recording or bills and preparing statements inflationary costs legal expenses are indirect costs. OBJECTIVES OF RECEIVABLES MANAGEMENT: The goals of receivables management are: 1. To maintain an optimum level of investment in receivables. 2. To keep down the average collection of sales. 3. To obtain the optimum volume of sales. 4. To control the cost of credit allowed and to keep it at the minimum possible level. The three crucial decision of receivables management are: Credit standards and analysis Credit terms Collection policy

CREDIT STANDARDS: 21

Credit standards represent the basic criteria for the extent ion of credit to creditors. The quantitative bases of establishing credit standards are factors such as credit financial ratio. Credit standards are divided into.

(a) (b)

Tight or restrictive Liberal or Non restrictive

The trade off with reference to credit standards covers: (a) (b) (c) (d) The collection costs. The average collection period. Level of bad debts losses and Level of sales

CREDIT TERMS: The stipulations under which goods are sold on credit to customers are called credit terms. These stipulations: 1. 2. Credit period. Cash discount.

COLLECTION POLICY: It determines the actual collection period. The lower the collection period, the lower investment in accounts receivables and vice-versa.

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INVENTORY MANAGEMENT Inventories are stock of the product of a company is manufacturing of sale and components that make up then product. The various forms in which inventories exists in a manufacturing company are raw materials, work in progress and finished goods. The level of three kinds of inventories for a firm depends on the nature of its business. RAW MATERIALS: Raw materials are those basic inputs that are converted into finished product through the manufacturing process. Raw materials inventories are those units, which have been purchased and stored for future production. WORK-IN-PROGRESS: Inventories are semi manufactured products. They represent products that need more work before they become finished products for sale. FINISHED GOODS: Finished goods inventories are those completed

manufactured products, which they are ready for sale. Stock of raw materials and work-in-progress facilitate production, while stock of finished goods is required for smooth marketing operations.

OBJECTIVES OF INVENTORY MANAGEMENT 1. To maintain sufficient stocks of raw material in the periods of short supply and anticipate price changes. 2. To ensure a continuous supply of raw material to facilitate uninterrupted production. 3. To maintain sufficient finished goods inventory for smooth sales operations and efficient customer service. 4. To minimize the carrying costs and time. 5. To control investment in inventories and keep it at an optimum level.

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INVENTORY MANAGEMENT TECHNIQUES

The form should determine the optimum level of inventory. Efficiently controlled inventories make the firm flexible. Determining an optimum level involves two types of costs. (a) (b) Ordering costs. Carrying costs.

(a) Ordering costs: The term ordering costs is used in cases of raw materials and includes the entering costs of acquiring raw materials. Ordering costs are involved in1. Preparing purchase or requisition form. 2. Receiving inspecting and records the goods receiving to ensure both quantity and quality. The cost of acquiring materials consists of clerical costs of stationery. (b) Carrying costs: Carrying costs are involved in maintaining or carrying inventory may be divided into four categories. 1. Storage cost i.e. tax, depreciation, insurance, and maintain acre of building, utilities and services. 2. Insurance of inventory against fire and theft. 3. Depreciation in inventory because of pilferage fire, technical Obsolescence, style obsolescence and price declines. 4. Serving cost such as labour for holding inventory, clerical and accounting costs.

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III.1 NEED FOR THE STUDY

In order to maintain flows of revenue from operations every firm need certain amount of current assets. For example cash is required to pay for expenses or to meet obligations for service received etc by a firm. On the identical plan inventories are required to provide the between production and sales. Similarly accounts receivables generate when good are sold on credit. Needless to maintain cash, bank, debtors, bills receivables, closing stock (including raw material, work in progress and finished goods) prepayments and certain other deposits and investments which are temporary in nature represents current assets of a firm.

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III.2 SCOPE OF THE STUDY

First, the study of working capital management is confined only to the Penna Cement Industries Ltd. Second, the concepts of working capital i.e. gross and Net is used in measuring the liquidity and profitability performance and also to arrive at various objectives of the study. Thirdly, the study is based on the annual reports of the company for a period of five years from 2005-2010. Due to time constraint the study period is restricted. The purpose of the project is to analyze the past and present performance of the company on various financial areas like Cash management Inventory management Receivables management

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III.3 OBJECTIVES OF THE STUDY

To identify various sources of financing in the working capital and find out the respective proportion. To identify and analyze the relationship between working capital and sales, fixed assets and sales etc., To suggest measures to improve the working capital practices.

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III.4 SOURCES OF DATA

Data collection: The study is dependant on primary and secondary data from various sources. Primary data: First hand information was collected from the experts, i.e., Finance Manager & other persons in the finance department. Secondary data: The secondary data was collected from the annual reports, schedule, budgets and other statements provided by the finance department of Penna Cement Industries Ltd., Books and internet.

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III.5 LIMITATIONS OF THE STUDY

The information used is primarily from historical annual reports to the public and the same does not indicate the current situation of the firm. Detailed analysis could not be carried for the project work because of the limited time span. Since financial matters are sensitive in nature the same could not be acquired easily. The ratio analysis is applied to the extent of data analysis. The interpretation from the analysis of financial statements is based on quantitative information only. Qualitative factors are not considered for the analysis.

Table IV.1 STATEMENT SHOWING THE CHANGES IN WORKING CAPITAL 29

(Rs. in lakhs)

Particulars
I. Current Assets Inventory Sundry Debtors Cash & Bank balances Loans & Advances

2006-07

2007-08

2008-09

2009-10

2010-11

728.28 1295.22 134.02 2443.39 4600.91

888.69 1123.63 124.33 2817.27 4953.9 2

1152.03 1785.50 727.33 5986.82 9651.3 8

1615.83 2656.86 410.06 5981.54 10664. 29

2189.56 3709.00 1121.52 6282.94 13303.0 3

Gross Working Capital

II. Current Liabilities Current liabilities Total current liabilities NET WORKING CAPITAL(A-B) 2390.87 2390.87 2210.04 2349.02 2349.0 2 2604.9 0 4238.38 4238.3 8 5412.9 9 3170.13 3170.1 3 7494.1 7 7605.70 7605.70 5697.33

CHART IV.1 GROSS WORKING CAPITAL AND NET WORKING CAPITAL

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Rupees in Lakhs

14000 12000 10000 8000 6000 4000 2000 0

2006

2007

2008

2009

2010

YEARS
Gross Working capital Net Working capital

INTERPRETATION: The networking capital during the year is low compare to the rest of the years. Initially the networking capital is minimum and after this year the net working capital is goes on increasing except in the year 2007-08 the net working capital is decreased.

Table IV.2 STATEMENT SHOWING THE CHANGES IN WORKING CAPITAL DURING THE YEAR 2006-2007

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(Rs.in lakhs) Effect on Working Capital Increase Decrease

Particulars A. Current Assets Inventory Sundry Debtors Cash & Bank Balances Loans and Advances Total Current Assets: (A) B. Current Liabilities Current Liabilities Total Current Liabilities: (B) Net Working Capital (A-B) Net Decrease in working Capital TOTAL INTERPRETATION:

2006

2007

1353.93 1552.36 258.45 2499.59 5664.33

728.2 8 1295. 22 134.0 2 2443. 39 4600. 91 2390. 87 2390. 87 2210. 04 1132. 67

625.65 257.14 124.43 56.20

2321.62 2321.62 3342.71

69.25

1132.67 1132.67 1132.67

The above table shows statement of changes in working capital during year 2006-07 there was a decrease in working capital Rs. 1132.67.

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Table IV.3 STATEMENT SHOWING THE CHANGES IN WORKING CAPITAL DURING THE YEAR 2007-2008 (Rs.in lakhs) Effect on Working Capital Increase Decrease

Particulars A. Current Assets Inventory Sundry Debtors Cash & Bank Balances Loans and Advances Total Current Assets: (A) B. Current Liabilities Current Liabilities Total Current Liabilities: (B) Net Working Capital (A-B) Net Increase in working Capital TOTAL

2007

2008

728.28 1295.22 134.02 2443.39 4600.91

888.6 9 1123. 63 124.3 3 2817. 27 4953. 92 2349. 02 2349. 02 2604. 90

160.41 171.59 9.69 373.88

2390.87 2390.87 2210.04 394.86

41.85

394.86 576.14 576.14

INTERPRETATION: The above table statement of changes in working capital during the year 2007-08 which as a networking capital is increased Rs. 394.86.

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Table IV.4 STATEMENT SHOWING THE CHANGES IN WORKING CAPITAL DURING THE YEAR 2008-2009 (Rs.in lakhs) Effect on Working Capital Increase Decrease

Particulars A. Current Assets Inventory Sundry Debtors Cash & Bank Balances Loans and Advances Total Current Assets: (A) B. Current Liabilities Current Liabilities Total Current Liabilities: (B) Net Working Capital (A-B) Net Increase in working Capital TOTAL

2008

2009

888.69 1123.63 124.33 2817.27 4953.92

1152. 03 1785. 50 727.3 3 5986. 82 9651. 38 4238. 38 4238. 38 5413. 00

263.34 661.87 603.00 3169.25

2349.02 2349.02 2604.90

1889.36

2808.10 4697.4 6 4697.46

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INTERPRETATION: The above table statement of changes in working capital during the year 2008-09 which as a networking capital is increased Rs. 2808.10.

Table IV.5 STATEMENT SHOWING THE CHANGES IN WORKING CAPITAL DURING THE YEAR 2009-2010 (Rs.in lakhs) Effect on Working Capital Increase Decrease

Particulars A. Current Assets Inventory Sundry Debtors Cash & Bank Balances Loans and Advances Total Current Assets: (A) B. Current Liabilities Current Liabilities Total Current Liabilities: (B) Net Working Capital (A-B)

2009

2010

1152.03 1785.50 727.33 5986.82 9651.38

1615.8 3 2656.8 6 410.06 5981.5 4 10664 .29 3170.1 3 3170. 13 7494.

463.80 871.36

4238.38 4238.38 5413.00

1068.25

35

16
Net Increase in working Capital TOTAL

2081.16 2403.4 1 2403.41

INTERPRETATION: The above table statement of changes in working capital during the year 2009-10 which as a networking capital is increased Rs. 2081.16.

Table IV.6 STATEMENT SHOWING THE CHANGES IN WORKING CAPITAL DURING THE YEAR 2010-2011 (Rs.in lakhs) Effect on Working Capital Increase Decrease

Particulars A. Current Assets Inventory Sundry Debtors Cash & Bank Balances Loans and Advances Total Current Assets: (A)

2010

2011

1615.83 2656.86 410.06 5981.54 10664.2

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2189.5 6 3709.0 0 1121.5 2 6282.9 4 13303

573.73 1052.15 711.46 301.40

1615.83 2656.86 410.06 5981.54 10664.29

9
B. Current Liabilities Current Liabilities Total Current Liabilities: (B) Net Working Capital (A-B) Net Decrease in working Capital TOTAL

.03 7605.7 0 7605.7 0 5697. 33 1798.8 3 4435.5 7 4435.57

3170.13 3170.13 7494.17

4435.57

INTERPRETATION: The above table statement of changes in working capital during the year 2010-2011 which as a networking capital is decreased Rs. 1798

RATIOS
Ratio analysis is a powerful tool of financial 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, a ratio is used as a benchmark for evaluating the financial position and performance of a firm. The absolute accounting figures reported in the financial statements do not provide a meaningful understanding of the performance and financial position of a firm. An accounting figure conveys meaning when it is related to some other relevant information. The relationships between two figures expressed mathematically is called ratio.

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It is a numerically relationship between two numbers which are related in same manner. Ratios may be classified into the four important categories. Liquidity Ratio Activity Ratio Profitability Ratio Leverage Ratio Ratio Analysis Involve Three Steps Calculation of appropriate ratios. Comparison of the ratios with standards. Interpretation of ratios.

CURRENT RATIO

This is the most widely used ratio. It is the ratio of current assets and current liabilities. It shows a firms ability to cover its current liabilities with its current assets. Generally 2:1 is considered ideal for a concern i.e., current assets should be twice of the current liabilities. If the current assets are two times of the current liabilities, there will be no adverse effect on business operations when the payment of current liabilities is made. If the ratio is less than 2 difficulties may be experienced in the payment of current liabilities and day- to- day operation of the business. Current Assets Current ratio = ----------------------------------38

Current liabilities Current assets include cash and those assets which can be converted in to cash within a year, such marketable securities, debtors and inventories. All obligations within a year are include in current liabilities. Current liabilities include creditors, bills payable accrued expenses, short term bank loan income tax liabilities and long term debt maturing in the current year. Current ratio indicates the availability of current assets in rupees for every rupee of current liability.

Table IV.7

Current Ratio during the years 2006-2011 (Rs.in lakhs) Year 2006-2007 2007-2008 2008-2009 2009-2010 2010-2011 Current Assets 4600.91 4953.92 9651.38 10664.29 13303.02 Current Liabilities 2390.87 2349.02 4238.38 3170.13 7605.69 Ratio 1.92 2.11 2.28 3.36 1.75

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CHART IV.2

CURRENT RATIO

40

3.5 3
RATIO VALUE

3.36 2.28 1.75 Ratio

2.5 2 1.5 1 0.5 0 1.92

2.11

2005-06 2006-07 2007-08 2008-09 2009-10

YEAR

INTERPRETATION: The standard current ratios is 2:1 that means each Rs.2/- of current assets the company should have Rs.1/- of current liabilities. After a brief study of current ratio of a company for 5 years the following inclusions will be drawn. The current ratio has been increased from 2006-07 to 2009-10 and it was suddenly decreased in the year 2010-2011. The current ratio especially in 2009-2010, is very high i.e. (3.36:1) So the company is maintaining high cash reserves than standards.

QUICK RATIO (OR) ACID TEST RATIO

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Quick ratio establishes a relationship between quick, or liquid, assets and current liabilities. An asset is liquid if it can be converted into cash immediately or reasonably soon without a loss of value. Cash is the most liquid asset, other assets which are considered to be relatively liquid asset, other assets which are considered to be relatively liquid and included in quick assets are debtors and bills receivables and marketable securities (temporary quoted investments). Inventories are considered to be less liquid. Inventories normally require some time for realizing into cash; their value also has a tendency to fluctuate. The quick ratio is found out by dividing quick assets by current liabilities. Current Assets-Inventories Quick ratio = ---------------------------------------------Current liabilities Generally a quick ratio of 1:1 is considered to penetrating test of liquidity than the current ratio, yet it should be used cautiously. A company with a high value of quick ratio can suffer from the shortage of funds if it has slow-paying, doubtful and long duration outstanding debtors. A low quick ratio may really be prospering and paying its current obligation in time.

Table IV.8

Quick ratio during the years 2006-2011 (Rs.in lakhs)

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Year 2006-2007 2007-2008 2008-2009 2009-2010 2010-2011

Quick Assets 3872.63 4065.23 8499.35 9048.46 11113.46

Current Liabilities 2390.87 2349.02 4238.38 3170.13 7605.69

Ratio 1.62 1.73 2.01 2.85 1.46

CHART IV.3 QUICK RATIO

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3 2.5
RATIO VALUE

2.85 2.01 1.46 Ratio

2 1.5 1 0.5 0

1.62

1.73

2005-06 2006-07 2007-08 2008-09 2009-10

YEAR

INTERPRETATION: Quick ratio establishes relationship between quick assets and current liabilities. Quick assets can be calculated by subtracting the inventories from current assets. We can say in other words the quick assets are shows the relation between the inventories and current assets. By observing the above table quick ratio is being high during the year 2009-10.

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ABSOLUTE LIQUID RATIO Since cash is most liquid asset a financial analysis may examine the ratio of cash and its equivalent to current liabilities. Trade investment on marketable securities are equivalent to cash therefore may be including in computation of its ratio. Absolute liquid assets Absolute Liquid Ratio = ---------------------------------Current liabilities Absolute liquid ratio market cash in hand and at bank and marketable securities or temporary investment. The acceptable norm of the ratio is 0.5:1.

Table IV.9

Absolute liquid ratio during the years 2006-2011 (Rs.in lakhs) Year 2006-2007 2007-2008 2008-2009 2009-2010 2010-2011 Absolute liquid assets 134.02 124.33 727.33 410.06 1121.52 2390.87 2349.02 4238.38 3170.13 7605.69 0.06 0.05 0.17 0.13 0.14 Current Liabilities Ratio

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CHART IV.4 ABSOLUTE LIQUID RATIO

0.18 0.16 0.14 0.12 0.1 0.08 0.06 0.04 0.02 0

0.17 0.13 0.14

RATIO VALUE

0.06

0.05

Ratio

2005-06 2006-07 2007-08 2008-09 2009-10

YEAR

INTERPRETATION: In all the years the firm calculated cash ratio is below than the acceptable standard ratio (0.5:1) which indicates the firm has not been maintaining sufficient level of cash to meet its day to day obligations.

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WORKING CAPITAL TURNOVER RATIO

The working capital turnover shows the velocity or utilization or using position of the particular company. The working capital of the company can utilized efficiently the company position is good otherwise do not. The working capital is an indicator of over trading or under trading. SALES W.C TURNOVER RATIO = -------------------------------------------------NET WORKING CAPITAL

Table IV.10 Working capital turnover ratio during the Years 2006-2011 (Rs.in lakhs) Year 2006-2007 2007-2008 2008-2009 2009-2010 2010-2011 Sales 20716.06 21963.78 38552.00 45226.01 56932.30 Net Working Capital 2210.04 2604.90 5412.99 7494.17 5697.33 Ratio 9.37 8.43 7.12 6.03 9.99

47

CHART IV.5

WORKING CAPITAL TURNOVER RATIO

10
RATIO VALUE

9.37

9.99 8.43 7.12 6.03 Ratio

8 6 4 2 0

2005-06 2006-07 2007-08 2008-09 2009-10

YEAR

INTERPRETATION: Working capital turnover ratio is high in the year 2010-2011 i.e., 9.99 than compare to the rest of the other years.

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CURRENT ASSETS TURNOVER RATIO:

This ratio can be calculated for purposes of finding relationships between the current assets and with sales. This ratio is calculated by using the following formulae, Total Sales Current Assets Turnover Ratio = --------------------------Current Assets

Table IV.11

Current Assets Turnover Ratio during the Years 2006-2011 (Rs.in lakhs) Year 2006-2007 2007-2008 2008-2009 2009-2010 2010-2011 Total Sales 20716.06 21963.78 38552.00 45226.01 56932.30 Current Assets 4600.91 4953.92 9651.38 10664.29 13303.02 Ratio 4.50 4.43 3.99 4.24 4.28

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CHART IV.6

CURRENT ASSETS TURNOVER RATIO

4.5 4.4 4.3 4.2 4.1 4 3.9 3.8 3.7

4.5

4.43 4.24 4.28

Ratio Value

3.99

Ratio

2005-06 2006-07 2007-08 2008-09 2009-10 Year

INTERPRETATION: The current assets turnover ratio was high in the year 2006-07 than the rest of the years.

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RAW MATERIAL CONVERSION PERIOD:

Raw material inventory RMCP = ------------------------------------- X 365 Raw material consumed

Table IV.12 Raw Material Conversion Period Ratio during the Years 2006-2011 (Rs.in lakhs) Year 2006-2007 2007-2008 2008-2009 2009-2010 2010-2011 RMI RMC Ratio

80.26 84.94 180.69 514.01 616.90

1133.85 1493.39 2661.04 3463.04 5148.48

25.84 20.76 24.78 54.17 43.73

51

CHART IV.7

RAW MATERIAL CONVERSION PERIOD RATIO

60 50 Ratio Value 40 30 20 10 0 25.84 20.76 24.78

54.17 43.73

Ratio

2005-06 2006-07 2007-08 2008-09 2009-10 Year

INTERPRETATION: The above table shows that company raw material to compare the total inventory. The year 2006-07 is 25.84, 2007-08 is 20.78, 2008-09 is 24.78, 2009-10 is 54.17 and 20102011 is 43.73. The study period raw material is increasing year to year. It is indicated that conversion process is very slow.

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WORK IN PROCESS CONVERSION PERIOD:

Work in process inventory WICP = ------------------------------------- X 365 Cost of production

Table IV.13 Work in Process Conversion Period Ratio during the Years 2006-2011 (Rs.in lakhs) Year 2006-2007 2007-2008 2008-2009 2009-2010 2010-2011 WIPI COP Ratio

239.46 117.68 152.16 141.49 235.67

8324.14 9598.44 16575.51 20574.22 25706.87

12.87 4.48 3.35 2.51 3.35

CHART IV.8

53

WORK IN PROCESS CONVERSION PERIOD RATIO

14 12 Ratio Value 10 8 6 4 2 0

12.87

4.48

3.35

2.51

3.35

Ratio

2005-06 2006-07 2007-08 2008-09 2009-10 Year

INTERPRETATION: The above table and chart shows the company work-in-process to compare the total inventory. In the year 2006-07 is 12.87, 2007-08 is 4.48, 2008-09 is 3.35, 2009-10 is 2.51 and 2010-2011 is 3.35.

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FINISHED GOODS CONVERSION PERIOD:

<

Finished goods investment RMCP = ----------------------------------------- X 365 Cost of goods sold

Table IV.14

Finished Goods Conversion Period Ratio during the Years 2006-2011 (Rs.in lakhs) Year 2006-2007 2007-2008 2008-2009 2009-2010 2010-2011 FGI COGS Ratio

149.84 158.01 240.90 1510.00 1559.14

8340.48 9566.18 16737.96 20590.57 25680.69

6.56 6.03 5.25 26.77 22.16

55

CHART IV.9

FINISHED GOODS CONVERSION PERIOD RATIO

30 25 Ratio Value 20 15 10 5 0

26.77 22.16

Ratio 6.56 6.03 5.25

2005-06 2006-07 2007-08 2008-09 2009-10 Year

INTERPRETATION: The finished conversion period was higher in the year 2009-10 than the rest of the years.

INVENTORY CONVERSION PERIOD:

ICP

RMCP + WICP + FGCP

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Table IV.15 Inventory Conversion Period Ratio during the Years 2006-2011 (Rs.in lakhs) Year 2006-2007 2007-2008 2008-2009 2009-2010 2010-2011 RMCP WICP FGCP Ratio

25.84 20.76 24.78 54.17 43.73

12.87 4.48 3.35 2.51 3.35

6.56 6.03 5.25 26.77 22.16

45.27 31.27 33.38 83.45 69.24

CHART IV.10

INVENTORY CONVERSION PERIOD RATIO

57

90 80 70 60 50 40 30 20 10 0

83.45 69.24 45.27 31.27 33.38 Ratio

Ratio Value

2005-06 2006-07 2007-08 2008-09 2009-10 Year

INTERPRETATION: The inventory conversion period is high during the year 2010-11 and very less in the year 2007-08.

DEBTORS CONVERSION PERIOD:

Table IV.16

58

Debtors Goods Conversion Period Ratio during the Years 2006-2011 (Rs.in lakhs) Year 2006-2007 2007-2008 2008-2009 2009-2010 2010-2011 Debtors Credit Sales Ratio

1295.22 1123.63 1785.50 2656.86 3709.00

20716.06 21963.78 38552.00 45226.01 56932.30

22.82 18.67 16.90 21.44 23.78

INTERPRETATION: The debtors conversion period during the year 2010-2011 and 2006-07 are closely each other.

CHART IV.11

DEBTORS CONVERSION PERIOD RATIO

59

25 20 Ratio Value 15 10 5 0

22.82 18.67 16.9

23.78 21.44

Ratio

2005-06 2006-07 2007-08 2008-09 2009-10 Year

GROSS OPERATING CYCLE:

Inventory Conversion Period GOC = ----------------------------------------------Debtors Conversion Period

Table IV.17

Gross Operating Cycle Ratio during the Years 2006-2011

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(Rs.in lakhs) Year 2006-2007 2007-2008 2008-2009 2009-2010 2010-2011 ICP 45.27 31.27 33.38 83.45 69.24 DCP 22.82 18.67 16.90 21.44 23.78 Ratio 68.09 49.94 50.28 104.89 93.02

CHART IV.12

GROSS OPERATING CYCLE RATIO

61

120 100 Ratio Value 80 60 40 20 0 68.09 49.94 50.28

104.89 93.02

Ratio

2005-06 2006-07 2007-08 2008-09 2009-10 Year

INTERPRETATION: The gross operating cycle during the year 2009-10 is very high with compare to the rest of the years. It denotes the total length of the operating cycle.

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FINDINGS 1. The current ratio is higher in the year 2009-10 than the rest of the years. 2. The quick ratio is higher in the year 2009-10 than the rest of the years. 3. The networking capital cycle has increased year by year except in 2009when NWC has decreased. 4. The raw material conversion period is high during the year 2009-10 than the rest of the years. 5. In the year 2006-07 the work-in-process conversion period is higher than the rest of the years. 6. The debtors turnover ratio is low in the year 2006-07. 7. In the year 2009-10 the finished goods conversion period is higher than the rest of the years.

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SUGGESTIONS 1. The company may attempts to bring down the Gross operating cycle so as to minimize investment in current assets. 2. The current ratio of the company has fallen below the 2:1 mark and so it has to make attempts to improve the current ratio. 3. 4. The company can utilize the reserves and surplus by either capitalization or can It is obvious that the working capital which is expressed to very much liquidity. invest the money somewhere as investments to get profits. Thus the business has been made venerably to technical insolvency a grievance problem before the management. 5. The company has to spend little bit more on public awareness to get orders from outside also.

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CONCLUSION Working Capital is lifeblood of any organization. It should be always in satisfactory stage. Thus, it can be concluded by drawing an inference on overall bares that the PCIL. has better efficiencies in managing working capital of the concern. According to the data and interpretations, a slight ups and down in working capital is observed over few years. The liquidity position of the company is favorable, activity ratios are also satisfactory, this indicates the profitability and overall performance of the company is satisfactory.

Balance sheet as on 31-03-2007 of PCIL Particulars 1.Sources of fund: 2007 2006

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Owner's fund Equity share capital Share application money Preference share capital Reserves & surplus Loan funds Secured loans Unsecured loans Total Uses of funds Fixed assets Gross block Less : revaluation reserve Less : accumulated depreciation Net block Capital work-in-progress Investments Net current assets Current assets, loans & advances Less : current liabilities & provisions Total net current assets Miscellaneous expenses not written Total 781.95 1,142.44 -360.49 2,490.10 739.28 384.35 355.23 3360.80 4,605.38 2,068.21 2,537.17 141.03 172.39 4275.84 1547.94 5823.78 238.09 283.71 1,221.93 229.90 2,490.10 1245.01 390.63 1635.64 124.40 0.09 913.78 124.40 0.51 950.54 1075.45

Balance sheet as on 31-03-2008 of PCIL Particulars 1.Sources of fund: Owner's fund Equity share capital Share application money Preference share capital 66 124.49 124.40 0.09 2008 2007

Reserves & surplus Loan funds Secured loans Unsecured loans Total Uses of funds Fixed assets Gross block Less : revaluation reserve Less : accumulated depreciation Net block Capital work-in-progress Investments Net current assets Current assets, loans & advances Less : current liabilities & provisions Total net current assets Miscellaneous expenses not written Total

1,639.29 1,151.25 427.38 3,342.41

913.78 1,221.93 229.90 2,490.10

4,784.70 2,267.42 2,517.28 696.95 483.45 972.13 1,327.40 -355.27 3,342.41

4,605.38 2,068.21 2,537.17 141.03 172.39 781.95 1,142.44 -360.49 2,490.10

Balance sheet as on 31-03-2009 of PCIL Particulars 1.Sources of fund: Owner's fund Equity share capital Share application money Preference share capital Reserves & surplus Loan funds Secured loans Unsecured loans 982.66 757.84 1,151.25 427.38 124.49 0.77 2,571.73 124.49 1,639.29 2009 2008

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Total Uses of funds Fixed assets Gross block Less : revaluation reserve Less : accumulated depreciation Net block Capital work-in-progress Investments Net current assets Current assets, loans & advances Less : current liabilities & provisions Total net current assets Miscellaneous expenses not written Total

4,437.49

3,342.41

4,972.60 2,472.14 2,500.46 2,283.15 170.90 1,317.49 1,834.51 -517.02 4,437.49

4,784.70 2,267.42 2,517.28 696.95 483.45 972.13 1,327.40 -355.27 3,342.41

Balance sheet as on 31-03-2010 of PCIL Particulars 1.Sources of fund: Owner's fund Equity share capital Share application money Preference share capital Reserves & surplus Loan funds Secured loans Unsecured loans Total Uses of funds Fixed assets Gross block 7,401.02 4,972.60 1,175.80 965.83 5,743.73 982.66 757.84 4,437.49 124.49 1.68 3,475.93 124.49 0.77 2,571.73 2010 2009

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Less : revaluation reserve Less : accumulated depreciation Net block Capital work-in-progress Investments Net current assets Current assets, loans & advances Less : current liabilities & provisions Total net current assets Miscellaneous expenses not written Total

2,765.33 4,635.69 677.28 1,034.80 1,378.35 1,982.39 -604.04 5,743.73

2,472.14 2,500.46 2,283.15 170.90 1,317.49 1,834.51 -517.02 4,437.49

Balance sheet as on 31-03-2011 of PCIL Particulars 1.Sources of fund: Owner's fund Equity share capital Share application money Preference share capital Reserves & surplus Loan funds Secured loans Unsecured loans Total Uses of funds Fixed assets Gross block Less : revaluation reserve Less : accumulated depreciation Net block 8,078.14 3,136.46 4,941.68 7,401.02 2,765.33 4,635.69 854.19 750.33 6,213.17 1,175.80 965.83 5,743.73 124.49 1.99 4,482.17 124.49 1.68 3,475.93 2011 2010

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Capital work-in-progress Investments Net current assets Current assets, loans & advances Less : current liabilities & provisions Total net current assets Miscellaneous expenses not written Total

259.37 1,669.55 1,496.18 2,153.61 -657.43 6,213.17

677.28 1,034.80 1,378.35 1,982.39 -604.04 5,743.73

Profit and loss account of PCIL as on 31-03-08 Particulars INCOME: Operating income Expenses Material consumed Manufacturing expenses Personnel expenses Selling expenses Adminstrative expenses Expenses capitalised Cost of sales Operating profit Other recurring income Adjusted PBDIT Financial expenses Depreciation Other write offs Adjusted PBT Tax charges Adjusted PAT Non recurring items Other non cash adjustments Reported net profit Earnigs before appropriation Equity dividend Preference dividend Dividend tax Retained earnings 2008 4,909.05 902.06 1,194.54 117.22 1,137.66 133.93 3,485.41 1,423.64 57.65 1,481.29 92.61 226.25 1,162.43 383.91 778.52 3.76 782.28 962.85 49.79 6.98 906.08 2007 3,299.45 733.72 958.30 92.26 843.99 109.57 2,737.84 561.61 23.11 584.72 96.99 216.03 271.70 55.83 215.87 1.48 12.41 229.76 239.87 21.79 3.06 215.02

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Profit and loss account of PCIL as on 31-03-09 Particulars INCOME: Operating income Expenses Material consumed Manufacturing expenses Personnel expenses Selling expenses Adminstrative expenses Expenses capitalised Cost of sales Operating profit Other recurring income Adjusted PBDIT Financial expenses Depreciation Other write offs Adjusted PBT Tax charges Adjusted PAT Non recurring items Other non cash adjustments Reported net profit Earnigs before appropriation Equity dividend Preference dividend Dividend tax Retained earnings 2009 5,512.43 1,008.92 1,314.78 171.55 1,143.02 160.03 -13.37 3,784.93 1,727.50 87.31 1,814.81 81.93 237.23 1,495.65 499.40 996.25 11.36 1,007.61 1,782.77 62.24 10.58 1,709.95 2008 4,909.05 902.06 1,194.54 117.22 1,137.66 133.93 3,485.41 1,423.64 57.65 1,481.29 92.61 226.25 1,162.43 383.91 778.52 3.76 782.28 962.85 49.79 6.98 906.08

Profit and loss account of PCIL as on 31-03-2010 Particulars INCOME: Operating income Expenses Material consumed Manufacturing expenses Personnel expenses Selling expenses Adminstrative expenses Expenses capitalised Cost of sales 2010 6,385.50 1,193.97 1,805.56 216.76 1,256.46 177.93 -8.38 4,642.30 2009 5,512.43 1,008.92 1,314.78 171.55 1,143.02 160.03 -13.37 3,784.93

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Operating profit Other recurring income Adjusted PBDIT Financial expenses Depreciation Other write offs Adjusted PBT Tax charges Adjusted PAT Non recurring items Other non cash adjustments Reported net profit Earnigs before appropriation Equity dividend Preference dividend Dividend tax Retained earnings

1,743.20 99.29 1,842.49 134.09 323.00 1,385.40 384.44 1,000.96 -23.94 977.02 2,575.14 62.24 10.58 2,502.32

1,727.50 87.31 1,814.81 81.93 237.23 1,495.65 499.40 996.25 11.36 1,007.61 1,782.77 62.24 10.58 1,709.95

Profit and loss account of PCIL as on 31-03-2011 Particulars INCOME: Operating income Expenses Material consumed Manufacturing expenses Personnel expenses Selling expenses Adminstrative expenses Expenses capitalised Cost of sales Operating profit Other recurring income Adjusted PBDIT Financial expenses Depreciation Other write offs Adjusted PBT Tax charges Adjusted PAT Non recurring items Other non cash adjustments Reported net profit Earnigs before 2011 7,042.82 1,588.44 1,528.33 250.28 1,477.88 224.27 -4.02 5,065.18 1,977.64 101.71 2,079.35 124.11 388.08 1,567.16 494.92 1,072.24 21.00 1,093.24 3,531.64 72 2010 6,385.50 1,193.97 1,805.56 216.76 1,256.46 177.93 -8.38 4,642.30 1,743.20 99.29 1,842.49 134.09 323.00 1,385.40 384.44 1,000.96 -23.94 977.02 2,575.14

appropriation Equity dividend Preference dividend Dividend tax Retained earnings

74.69 12.41 3,444.54 BIBLIOGRAPHY

62.24 10.58 2,502.32

I.M. PANDEY (2002), "Financial Management", 8Th Edition, Vikas Publishing House Pvt. Ltd., New Delhi. PRASANNA CHANDRA, 2002, "Financial Management", 5th Edition, Tata-Mc Graw hill publishing Company Ltd., New Delhi. S.P. JAIN, K.L. NARANG, 2003, "Advanced Accountancy", 10Th Edition, Kalyani Publishers, Ludhiyana. ANNUAL REPORTS: Companys Annual Reports of 2006 2011.

WEBSITE: www.pennacement.in

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