“Working capital is nerve system of any business.

Without proper working capital management

company cannot achieve its objectives and not possible to maintain financial soundness. So in
this perspective present study is undertaken to study working capital management through ratio
analysis at Karnataka Power Corporation limited. From the present study it is found that
company financial position was seeing to be sound because the company tries to increase its
production and also net profit.“

INTRODUCTION

One of the most important areas in the day to day management of the firm is the management of
working capital. Working capital refers to the funds invested in the current assets i.e. investment
in stock, sundry debtors, cash and others current are essential to use fixed assets profitability for
e.g.: A machinery cannot be used without raw materials. The investments on the purchase of raw
material are identified as working capital. It is obvious that a certain amount of the fund is
always tied up in raw material inventories. Working capital may be regarded as lifeblood of a
business. Its effective provision can do much ensure the success of the business, while its
inefficient management can lead not only loss of the profits but also the ultimate downfall of
what otherwise might be considered as promising concern.

Every business whether big, medium or small, needs finance to carry on its operations and to
achieve its target. Infact, finance is so indispensable today that its rightly said to be the lifeblood
of an enterprise. Without adequate finance, no enterprise can possibly accomplish its objectives.
So this chapter deals with studying various aspects of working capital management that is
necessary to carry out the day-today operations. The term working capital refers to that part of
firm’s capital which is required for financing short term or current assets such as cash,
marketable securities, debtors and inventories funds invested in current assets keep revolving fast
and are being constantly converted in to cash and this cash flows out again in exchange for other
current assets. Hence it is known as revolving or circulating capital. On the whole, Working
Capital Management performs a key function and is of top priority for every finance manager.
All managers must, however, keep in mind that n their pursuit to liquidity, they should not lose
sight of there basic goal of profitability. They should be able to attain a judicious mix of liquidity
and profitability while managing their working capital.
In our present day economy, finance is defined as the provision of money at time when it is
required. Every business whether big, medium or small, needs finance to carry on its operations
and to achieve its target. Infact, finance is so indispensable today that its rightly said to be the
lifeblood of an enterprise. Without adequate finance, no enterprise can possibly accomplish its
objectives.

The importance of working capital in commercial under takings can never be over emphasized.
A concerned needs funds for its day to day running. A large amount of working capital would
mean that the co any has idle funds the various study is conducted by the bureau of public
enterprises have shown that one of the reasons for poor performance of the public sector
undertaking in our country has been the large amount of the funds locked up in working capital.
Since funds have a cost, the company has to pay huge amount as interest on funds. This results in
over the capitalization. Over the capitalization implies that company has too large funds for its
requirements, resulting in low rate of the return, a situation which implies a less than optimal use
of resources. A firm has therefore, to be very careful in estimating its working capital
requirements.

The goal of Working capital management is to ensure that the firm is able to continue its
operations and that it has sufficient money flow to satisfy both maturing short-term debt and
upcoming operational expenses.

DEFINITIONS

According to Raymond Chambers, “Financial Management comprises the forecasting, planning,

organizing, directing, coordinating and controlling of all activities relating to acquisition and
application of the Financial resources of an undertaking in keeping with its financial objective."

According to Richard A. Brealey,"Financial67 management is the process of putting the

available funds to the best advantage from the long term point of view of business objectives."

Another very elaborate definition given by Phillippatus is, “Financial Management is concerned
with the managerial decisions that result in the Acquisition and financing of short term and long
term credits for the firm.”
OBJECTIVES OF FINANCIAL MANAGEMENT:

The objectives of financial management are

1. Profit Maximization approach

2. Wealth Maximization approach

Profit Maximization approach:

According to this approach actions that increase profits should be undertaken and those that
decrease profits are to be avoided. In specific operational terms as applicable to Financial
Management the profit maximization criterion implies that the investment, financing and
dividend policy decisions of a firm should be oriented to the maximization of profits.

Wealth Maximization:

This is also known as value maximization or net present worth maximization. In current
academic literature value maximization is almost universally accepted an appropriate operational
criterion for Financial Management decisions as it removes the technical limitation which
chareizes the earlier profit maximization criterion. Its operational features satisfy all the three
requirements of suitable operational objective of financial courses of actions namely exactness,
quality of the benefits and the time value of money.

The financial statements just provide the financial ingredients of affirm. One should analyze to
identify where the strengths and weakness of the company are hiding. So, the study on ration
analysis has been taken by me in order to know efficiency and liquidity of a firm.

WORKING CAPITAL:

Working capital can be regarded as the circulatory system of any business. The success and
efficiency of business enterprise depends largely on its ability to manage its working capital.
Even in well- established business operation, needs careful attention for effective management of
working capital. Working capital is one of the important facts of a firm overall financial
management. Whatever be the size of a business, working capital is one of the important facts of
a firm overall financial management. Whatever be the size of a business, working capital is its
life-blood.

Working capital management is concerned with the problems that arise in attempting to manage
the current assets, current liabilities and the inter relationship that exist between them.

The current assets refer to those assets, which in ordinary course of business can be converted
into cash within one year without undergoing a diminution in value. Current liabilities are those
liabilities, which are intended at their inception, to be paid in ordinary course of business, within
a year out of current assets.

The basic objective of working capital management is to put current assets to optimum use for
overall profitability of business enterprise. If the firm cannot maintain a satisfactory level of
working capital it is likely to some insolvent and may even be forced to bankruptcy.

The effective management of working capital requires both medium term planning and
intermediate reactions to changes in forecast and conditions.

The current assets should be managed in such a way that it should cover its current liabilities in
order to ensure a reasonable margin of safety. Therefore, the interaction, between the current
assets and current liabilities is the man theme of the theory of working capital manages.
NEED FOR THE STUDY

Financial performance can be done from the point of view of various interest groups such as
owners, management, leaders, etc.; however, here it is an analysis to understand financial
performance by using the technique of the ratio analysis

If a company's current assets do not exceed its current liabilities, then it may run into trouble
paying back creditors in the short term. The worst-case scenario is bankruptcy.

A declining working capital ratio over a longer time period could also be a red flag that warrants
further analysis. For example, it could be that the company's sales volumes are decreasing and, as
a result, its accounts receivables number continues to get smaller and smaller.

Working capital also gives investors an idea of the company's underlying operational efficiency.
Money that is tied up in inventory or money that customers still owe to the company cannot be
used to pay off any of the company's obligations.

So, if a company is not operating in the most efficient manner (slow collection), it will show up
as an increase in the working capital. This can be seen by comparing the working capital from
one period to another; slow collection may signal an underlying problem in the company's
operations.
Scope of the Study

The scope of the study is identified after and during the study is conducted. The study of working
capital is based on tools like trend Analysis, Ratio Analysis, working capital leverage, operating
cycle etc. Further the study is based on last 5years Annual Reports of Coramandel Agro products
and Oils Ltd. and even factors like competitor’s analysis, industry analysis were not considered
while preparing this project.

 This study can not reflect the Overall Industry’s capital management system.

 The study confined to the funds management at “CAPOL” only.

 This study is to know increase or decrease of working capital of “CAPOL”.

 The study is continued to know the overall financial condition of a firm.

 This study is to know the sources, operation and application of funds of “CAPOL”.
OBJECTIVES OF THE STUDY

Study of the working capital management is important because unless the working capital is
managed effectively, monitored efficiently planed properly and reviewed periodically at regular
intervals to remove bottlenecks if any the company can not earn profits and increase its turnover.
With this primary objective of the study, the following further objectives are framed for a depth
analysis.

 To know about the current assets and current liabilities position of Coramandel Agro
products and Oils Ltd.
 To determine the ratios relating to the working capital.
 To find out the Gross Working Capital position of CAPOL
 To know about the net working capital position of CAPOL
 To study the working capital management of CAPOL
 To study the optimum level of current assets and current liabilities of the company.
 To study the liquidity position through various working capital related ratios.
 To study the working capital components such as receivables accounts,cash management,
Inventory position.
 To study the way and means of working capital finance of the CAPOL
 To Compare the working capital ratios with the profitability ratio (ROI).
RESEARCH METHODOLOGY

RESEARCH

Research is an academic activity and as such term should be used in a technical sense. According
to Clifford woody research comprises defining and redefining problems, formulating Hypothesis
or suggested solutions; collecting, organizing and evaluating data, making deductions and
reaching conclusions; and At last carefully testing the conclusions to determine whether they fit
the formulating the hypothesis.

DATA COLLECTION METHODS

PRIMARY DATA

Primary data refers to information which is generated to meet the specific requirements of the
investigation at hand it consist observation method; interview method; through schedules
methods.

SECONDARY DATA

The information that is collected for a purpose other than to solve the specific problem under
investigation is known as secondary data.

The data have been collected from primary as well as secondary sources. Primary data has been
collected through interaction with company managers.

Secondary data have been collected from books, publications, websites, and annual reports.
LIMITATIONS

 The analysis is made on the basis of secondary data.

 The availability of data is only pertaining to five years.

 The project duration, i.e. 45 days is also a constraint to give realistic interpretations.

 This analysis has made based on the information provided by the bank.

 The given information may not be accurate.

 This project is not a basis for further research.

 CHAPTER II

PROFILES OF INDUSTRY AND

COMPANY
Introduction:-

India’s total oilseed production in MY 2017/18 is forecast to increase seven percent to 38.6
MMT, derived from 40 million hectares. Out year oilseed supplies will achieve an all-time high
of 40.3 MMT. The forecast assumes a normal 2017 Southwest monsoon (June-September)
season, near-normal oilseed yields (per five-year average), and market prices above Minimum
Support Price (MSP). Over the last three years, an estimated two million hectares of traditional
oilseed area was lost to dry weather conditions or to competing crops.

Oil meal production will also rise by 10 percent to 17.2 MMT amid the increase in oilseed
supply and anticipated meal demand. Demand for animal proteins will continue to increase along
with India’s growing economy and socio-economic changes. However, the availability of
affordable feeds will continue to challenge India’s livestock sectors. Assuming normal market
conditions, Indian oil meal exports in the out year are forecast to recover modestly from 1.4
MMT to 2.7 MMT. Strong domestic feed demand, international competition, and the rapid
expansion of crushing in neighboring countries (former Indian meal markets) will limit Indian
meal exports.

Edible oil imports are forecast to rise by five percent to 16.8 MMT. Despite the forecast
production increase, domestic supplies will not be commensurate with India’s ever-increasing
demand for vegetable oil. India will continue to import vegetable oil to fill its 70-percent demand
gap and India will remain the world’s largest vegetable oil importer. India’s growing population,
rising disposable incomes, demand from an increasingly sophisticated consumer base (more
awareness of health, food safety, hygiene) and institutional buyers will drive vegetable oil
consumption.

“India reported continuous drought during the past two years resulted in lower oilseed
production and domestic edible oil output. Despite a record soybean output last year, domestic
crushers did not find parity due to low oil prices in the international markets. Consequently, huge
soybean stocks remained uncrushed so far this season. Thanks to the government’s decision to
raise import duty early August, both edible oilseeds and oils have become a little costlier,
making soybean crushing profitable. Still, around 1.5 million tonnes of the overall 11.7 million
tonnes of soybean output would be left uncrushed this season and would be available for
crushing only next year. Apart from that, oil manufacturers would see some parity in crushing
domestic seeds, resulting in higher oil availability from local sources,” said Govindbhai Patel,
managing partner, G G Patel & Nikhil Research Company.

The firm forecasts India’s kharif oilseed production at 14.43 million tonnes for the harvesting
season 2017-18, down over 12 per cent from the previous year’s level of 16.43 million tonnes.
Data compiled by the Union Ministry of Agriculture showed India’s soybean acreage lower by
around one million ha this year to 10.5 million ha as of September 14. Sowing area under
groundnut also posted a decline of 500,000 ha to 4.1 million ha.

HISTORY

The percapita income of India has risen substantially in the last decade. This was supported by
robust growth in the economy resulting in changes in food habits and people getting more
habituated to ready – to – eat foods. With the change in percapita income, the edible oil industry
in India has also undergone significant changes. For example, today the preference of packed oil
over loose has increased due to affordability and increased attention to health and hygiene. The
presence of many organized retail outlets has augmented this across the countries that sell packed
oil.

India in the mid-1990s has almost attained self-sufficiency in the production of oilseeds to
extract vegetable oil, essential in the Indian diet. Peanuts, grown mainly as a rain-fed crop on
part of the semiarid areas of western and southern India, account for the largest source of the
nation's production of vegetable oils. The second-ranking source of vegetable oils in the early
1990s was rapeseed. Cottonseed, an important by-product of cotton fiber and once mostly fed to
cattle, was another source of vegetable oils. Soybeans and sunflower seeds were relatively new
as significant oilseeds, but their production increased rapidly in the 1980s.
The production of oilseeds increased from 4.2 million tons in FY 1950 to 21.8 million tons in FY
1990. Specific information regarding area planted is not available for all oilseeds, but it increased
in the 1980s, as did the yields. The growth of production before the mid-1970s was not adequate
to meet the needs of the increasing population, and large quantities had to be imported from the
1970s to the mid-1980s, using scarce foreign exchange.

SWOT Analysis:-

Strengths: Weaknesses:
Round the year availability of raw High requirement of working capital
Low availability of new reliable and
materials.
better accuracy instruments and
Social acceptability of agro- equipments.
processing as important area and Inadequate automation with
support from the central respective to information
management.
government. Remuneration less attractive for
Vast network of manufacturing talent in comparison to
facilities all over the country. contemporary disciplines.
Inadequately developed linkages
Vast domestic market.
between R&D labs and industry.

Opportunities: Threats:
Large crop and material base in the
Competition from global players
country due to agro-ecological
variability offers vast potential for Loss of trained manpower to other
agro processing activities.
industries and other professions
Integration of developments in
contemporary technologies such due to better working conditions
as electronics, material science, prevailing there may lead to
computer, bio-technology etc. further shortage of manpower.
offer vast scope for rapid
improvement and progress. Rapid developments in
Opening of global markets may lead contemporary and requirements
to export of our developed of the industry may lead to fast
technologies and facilitate
obsolescence.
generation of additional income
and employment.
opportunities.
Current Status:-

India’s oilseed production in the out year is forecast to rise by seven percent to 38.6 MMT
pushing total oilseed supplies to an all-time high of 40.3 MMT. Over the last three years, an
estimated two million hectares of traditional oilseed area was lost to dry weather conditions or to
competing crops.

Since Indian fiscal year (IFY) 2014/15, the National Mission on Oilseeds and Palm (NMOOP)
have conducted three Mini Missions to address oilseed productivity issues and find ways to meet
India’s ever increasing oil demand.

The Government of India (GOI) also supplements state’s efforts to enhance oilseed production
and productivity. As agriculture is a state subject, the GOI introduced the Rashtriya Krishi Vikas
Yojana (RKVY) to incentivize states by providing additional subsidies as a means to bridge
agricultural shortcomings at the state level.

Total oilseed consumption in the out year will rise eight percent to 37.4 MMT. Total
consumption will increase due to anticipated rise in oilseed crushing (meal and oil), food use,
and feed waste. “Waste” broadly also includes seeds retained for sowing/re-sowing, feed, and
industrial use. Food use of oilseeds will increase by six percent to 2.9 MMT, driven by steady
growth in beverages (e.g., soy milk), textured soy nuggets, snacks, curries, and sauces made
from the spectrum of India’s oilseeds. Additionally, oilseed feed waste consumption is expected
to rise modestly to 4.4 MMT, driven by cottonseed and soybean waste, which are forecast at 3.2
and 1.3 MMT, respectively.

EXPORTS
India exports $1.4 billion worth of high value hand-picked-select (HPS) peanuts, soybean,
sesame, nigerseed, cottonseed, safflower seed, rapeseed, and mustard seed.

The Agricultural Produce and Export Development Authority (APEDA) issued guidelines for
export of peanut and peanut products, which
can be accessed through the link provided. Post expects that oilseed exports in the forecast year
will rise by two percent to 1.26 MMT, including 1.0 MMT of peanut, 200,000 MT of non-GM
soybeans and 60,000 MT of other oilseeds.

India’s annual peanut exports are valued at $700 million and consistent demand for its Hand
Picked Select (HPS) peanuts from Indonesia, Vietnam, Malaysia, Philippines, and Thailand will
keep Indian peanut exports viable. Lower but consistent demand from regional neighbors, as
well as Algeria, Iran, Ukraine, Russia and UAE will also support Indian peanut exports.

Trade in soybeans is smaller in volume terms, but future growth will be consistent. Per the latest
trade data from the Global Trade Atlas (GTA), soybean imports and exports in MY 2017/18
were valued at $28 million and $90 million, respectively. Soybean export potential is estimated
at $130 million. In recent years, India imported soybeans from Ethiopia, Benin, Ukraine, the
United States, Nigeria, and Djibouti. Imports were mostly for food use and as also partly for
seed. India also exported soybeans (non-GM) to the United States, Canada, Belgium, France, and
Spain. Annual sales in volume terms average about 190,000 MT.
Exports of Oilseeds (Source: Directorate of Economic & Statistics)(MT)

Export of Oilseeds 2016-17 2017-18

Soya Beans W/N Broken 15384 37945
Ground-Nuts In Shell,Not Roasted/Cooked 10518 11654
Shelled Groundnuts Whether Or Not Broken 423235 820963
Copra 18433 17619
Linseed Whether Or Not Broken 969 1332
Low Ervucacid Rape Or Colza Seeds 100 1363
Other Rape/Colza Seeds W/N Broken 3 42
Sunflower Seeds Whether Or Not Broken 4208 5183
Seasamum Seeds W/N Broken 398441 389154
Mustard Seeds W/N Broken 14253 35960
Othr Oil Seeds & Olegnus Fruits W/N Broken 25735 41405
Total 911279 1362620

Overview of Major Oil Seed Crops

Groundnut
Groundnut is most important oil seeds of India accounting for half of the major oilseeds
produced in the country. Groundnut is predominantly a Kharif crop but is also sown as a Rabi
crop. 90-95% of the total area is devoted to kharif crop. It is a legume which thrives best in
tropical climate and requires 20°C to 30°C temperature; 50-75 cm rainfall. The crop is highly
susceptible to frost, drought, continuous rain and stagnant water. It needs dry winder at the time
of ripening. Well drained light sandy loams, red, yellow and black soils are well suited for its
cultivation. In 2017-18, the top three states producing ground nut were Gujarat, Rajasthan and
Tamil Nadu.

Rapeseed / Mustard
Mustard is second most important oil seed crop of India after Groundnut. This planet belongs to
cabbage family (Brassica) and farmers in India mainly grow three species of Mustard as follows:
India Mustard (Rai / Mohr locally) (Botanical name – Brassica juncea) has small and reddish
brown seeds and accounts for around 70% of total mustard production in India.
Mustard or Peeli (Yellow) Sarson (Brassica campestric) has thicker pods and yellowish brown
seeds with thin seed coats.
Rape Seed or Toria (Brassica napus) has reddish seeds and is mainly grown in Punjab.
Mustard seeds have 25-45% oil content and its oil cake makes an important cattle feed and
manure. The plant thrives in north and west India, mainly Satluj-Ganga plain. Its generally
grown as a Rabi crop either purely or as mixed cropping with wheat or gram or barley. India has
largest area and highest production of mustard. Currently, Rajasthan is top Mustard producing
state of India, followed by Haryana and MP.

Sesamum (Til)
The Sesamum seed comprises of 45 to 50 per cent oil used for cooking purposes and for
manufacturing perfumery and medicines. India has the world’s largest area under Sesamum and
is also the largest producer of this crop accounting for one-third of the world production. Its
mainly a Rainfed crop in India.

Linseed:Linseed (Alsi in Hindi) has a unique drying property and is suitable for manufacturing
of paints, varnishes, printing ink etc. A small part is used as edible oil also.

Castor Seed
Castor seed comprises 50 per cent oil. It is mostly used in industries.

Palm Oil
India produces a very small fraction of palm oil but is one of the largest consumers. Most of
India’s palm oil requirement is met by imports from Indonesia and Malaysia.

CHALLENGES
The policy impetus to oilseed production in India came for the first time in 1986 when the
government launched Technology Mission on Oilseed. This was a golden period for oilseed
production in India when productivity jumped from 670 kg per hectare in the eighties to 835 kg
per hectare in the nineties. However, after that there has been a slow pace of growth. Today, the
major problem in oil seeds production is low productivity. India is way behind the developed
countries and neighbouring countries like China in its productivity of oil seeds per hectare. Since
the increase in production could not keep pace with increased demand, India became more and
more dependent on edible oil imports. One of the biggest constraints to raising oilseed output has
been that production is largely in rain-fed areas. Only one fourth of the oilseed producing area in
the country remains under the irrigation.

Measures to improve Oilseed Production

Key measures to improve oilseeds production include:
 Bringing additional oilseed areas under irrigation
 Promotion of modern crop technology and better dry farming
 Promoting oil palm cultivation.
 Strengthen the oilseed crop seed chain, particularly in groundnut to match the variety
specific demand for higher yield.
 Provide incentives to private sector participation in processing and value addition in
oilseed crops. Also, constraints for low capacity utilization should be addressed.
 Ensure availability of key physical (fertilizers, pesticides), financial (credit facilities, crop
insurance) and technical inputs (extension services) in major crop ecological zones for
oilseed crops.

Apart from this, other measures would include market reforms and policies, such as contract
farming and public-private partnership in production and processing, to ensure a competitive
market for oilseeds and edible oil along with adequate protective measures to avoid unfair
competition from the international markets.
Production of Oilseeds (Source: Directorate of Economic & Statistics)

(Lakh Tonnes)
2012- 2013- 2014- 2016-
  2011-12 13 14 15 2015-16 17 2017-18

Groundnut 64.1 91.82 71.68 54.29 82.65 69.33 87.14

Cottonseed 4.2 7.57 6.4 4.88 8.93 8.21 7.58

Nigerseed 1.1 1.1 1.17 1 1.08 1 0.87

Rapeseed
Mustard 41.9 58.34 72.01 66.08 81.79 67.76 81.93

Linseed 2 1.63 1.69 1.54 1.47 1.41 2.76

Safflower 2 2.25 1.89 1.79 1.5 1.21 2.79

Sunflower 6.5 14.63 11.58 8.51 6.51 4.99 11.61

Soyabean 52.8 109.68 99.05 99.65 127.36 122.82 126.19

Total 174.6 287.02 264.47 238.74 311.29 276.73 320.87

Imports (Source: Directorate of Economic & Statistics)

Net Proportion
availability Import of Total of imported
Import bill
of edible oils edible oil availability/ oil in total
Year (in Rs.
from all (Lakh consumption consumption
crore)
oilseeds MT) (Lakh MT) in
(Lakh MT) percentage
2011-12 83.16 44.17 127.33 34.69 8961
2012-13 73.7 47.15 120.85 39.02 9540
2013-14 86.54 56.08 142.62 39.32 10301
2014-15 84.56 81.83 166.39 49.18 15837
2015-16 79.46 79.56 159.02 50.03 26484
2016-17 97.82 68.94 166.76 41.34 29442
2017-18 90.21 83.87 174.08 48.10 45940
Balance Sheet of edible oil- India (Source: Directorate of Economic & Statistics)

Balance sheet of Indian Edible Oil % Change

2015-16 2016-17 2017-18

Beginning Stock 0.67 0.52 1.29 147.47

Production 7.98 8.04 8.34 3.77

Imports 8.37 9.98 9.90 -0.80

Total Supply 17.02 18.54 19.53 4.34

Total Demand(Consumption) 16.50 17.25 18.10 4.93

Ending Stock 0.52 1.29 1.43 10.88

Major Oilseeds World Supply and Distribution (in million MT)
(Source: Directorate of Economic & Statistics)
Year 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18
Production
United States 89.2 98.9 100.38 92.35 92.71 92.71
Brazil 60.31 71.42 79.03 70.2 84.22 86.22
Argentina 34.51 57.94 54.22 44.75 58.82 57.82
China 58.12 57.84 58.1 59.07 56.58 57.28
India 33.4 32.37 34.95 34.67 34.38 34.38
Other 120.17 124.66 129.04 139.36 137.1 137.47
Total 396.7 444.13 454.72 441.39 464.8 466.87
Imports
China 44.14 52.54 53.66 62.29 64.16 64.31
EU-27 18.03 14.9 16.31 16.75 14.52 14.72
Mexico 4.72 4.2 4.36 4.21 4.09 4.09
Japan 4.74 4.91 4.47 4.35 4.99 4.01
Taiwan 2.22 2.47 2.46 2.29 2.31 2.41
Indonesia 1.63 1.9 2.19 2.22 2.31 2.31
Thailand 1.56 1.73 2.2 1.98 2.02 2.02
Turkey 1.75 2.59 2.34 2.03 1.96 2.01
Egypt 1.6 1.68 1.71 1.87 1.77 1.77
Korea South 1.3 1.35 1.4 1.32 1.33 1.34
Other 11.26 10.45 11.08 10.27 9.75 9.7
Total 93.95 101.72 104.17 111.57 112.19 112.67
Exports
Brazil 30.14 28.65 30.07 36.46 38.49 38.49
United States 34.69 41.69 41.83 37.69 37.55 37.72
Argentina 6.31 13.82 10.03 8.17 11.88 11.78
Canada 10 9.47 10.2 11.66 10.84 10.84
Paraguay 2.33 4.69 4.19 3.25 4.14 4.14
Ukraine 3.68 2.41 2.85 2.83 3.25 3.3
Australia 1.21 1.37 2.2 3.31 2.66 2.66
Other 4.91 4.29 4.43 6.21 4.45 4.74
Total 94.27 107.38 107.78 109.57 114.26 114.67

COMPANY PROFILE
Introduction:-
Started in 1976, CAPOL extracts and refines cotton seed oil. Today it is a multiproduct company
with equipment to process all kinds of oil seeds. The plant has a storage capacity of 2,100 tonnes
for different types of oil.
Extreme care is taken to ensure that at every stage in the process of production, right from
selection of the raw material to packaging the products, only the best is passed. This is ensured
by using some of the latest equipment, minimum human intervention and rigorous application of
quality control processes to ensure that the final product conforms to all appropriate standards.
The By-Products of the process in the form of Linters, Hulls and De-oiled cakes are in high
demand in many parts of the world.

Cotton Linters are used in manufacture of Nitro Cellulose, Cellulose Acetate, high grade bond,
currency, low grammage tissues and filter paper and can also be useful for surgical use as well as
Felt making.

These Cotton Linters are having good demand in European and East Asian Countries. CAPOL
produces 4,000 MT per annum.

Cottonseed Hulls are used as Roughage in Cattle Feed, in manufacture of Furfural alcohol as it
contains 12.5% to 13% of Furfural and also used in Petroleum Drilling operations for drilled
holes to avoid caving in.

CAPOL produces 20,000 MT of Hulls per annum. Cottonseed De-oiled Cake contains Protein as
high as 38 to 40% and this protein is best utilized by the Cattle since Cottonseed Protein by-
passes through Cattle rumen (first part of the stomach) and later in the subsequent parts of the
stomach resulting the utmost digestion to the Cattle and hence Cottonseed De-oiled Cake is
called best protein diet. Cottonseed Extractions is recognized all over the World as better Cattle
Feed. It can also be used as Fish Feed, Poultry Feed.

CAPOL (Coromandel Agro Products and Oils Limited) is an oil producing Company at
Jandrapet near Chirala. It has acquired much importance at Prakasam District in A.P. This is
because of extensive cultivation of cotton by the farmers. Cottonseed is separated from the
cotton Kappas in Cotton Ginning Mills and it would be sold to the Manufacturing Industries/Oil
Companies for manufacturing of various by products like cottonseed hulls, soap stock, animal
feed, lint etc. Further, the products of CAPOL like de-oiled cake are also exported to Japan,
Thailand, Malaysia, West Germany, Switzerland etc., Therefore the study on marketing mix of
the CAPOL has assumed a greater significance in recent times.

The success of any organization depends mainly of three functions of the management namely
production, finance and marketing. Selling has predominant importance in marketing procedure.

Cottonseed crushing industry is one of the Agro based industries. Cottonseed is used in the
manufacturing of edible oils, cakes, liner, hulls and oil. India is the third largest edible oil based
economy in the world after united States and China. India accounts 9.7% to the global oil seed
production. The main production of this industry is edible oil.
Most of the people habituate to use groundnut oil for cooking purpose. To meet the competition
CAPOL is manufacturing cottonseed oil at a lower price than groundnut oil. Thus it underlines
the importance of marketing activities of CAPOL, Chirala.

CAPOL has been located in Jandrapet village at Chirala and are measuring across 23.68 acres.
The plot has acquired from the Government of A.P on the basis of 9 years lease. The sight is
favorably located in respect of all facilities.

This is registered in 12th Dec, 1975 and Commencement of business was started from 5 th Jan,
1976. This CAPOL has made a joint venture with APIDC and signed on 1 st Feb, 1976 CAPOL
got the license in 13th Aug, 1975 and it is transferred to 13th Feb, 1976.
BOARD OF DIRECTORS

Sri Maddi Lakshmaiah, is Director of the company. He is aged about 82 years, Mechanical
Engineering graduate of 1952 batch from Engineers College, Guindy, Madras. After completion
of his education, in the year 1953 he joined his brother’s firm M/s Maddi Venkataratnam & Co.
as a managing partner. He continued his association with the time firm till 30.9.1970. He was the
key person in developing that company from a total turnover of Rs. 20 Lacs to Rs.300 Lacs. In
the year 1970, he has floated his own company M/s Maddi Lakshmaiah and Company Pvt. Ltd.
He had travelled all over the world and developed good contacts with the overseas buyers,
reputed business houses engaged in tobacco trading and cigarette manufacturing. He also looks
after overall administration of the company.

Sri Maddi Venkateswara Rao, S/o Sri Maddi Lakshmaiah aged about 54 years is a postgraduate
in Business Administration from Marshall University, West Virginia, USA. Upon completion of
his education, he joined the family businesses. By virtue of his personal contacts with the
overseas customers, he had acquired extensive knowledge of their requirements as well as
managing the operations of both tobacco and oil seeds. He has been in the business since 1980.
He had visited many international tobacco markets in the world. He is looking after marketing
division of the company.

Sri Maddi Ramesh, S/o Sri Maddi Lakshmaiah aged about 44 years
is a commerce graduate. Upon completion of his education, he
joined the family business as director in all the group companies. He
is looking after the general administration of the group companies.

Objectives:-
The objectives of the company divided into primary and ancillary objectives.
Primary Objectives:
To acquire, promote, establish and carry on business of manufactures oils from cottonseeds.
Castor linseed, sunflower, Rice bran and other type of edible and non crushing solvent
extraction, chemical or any other process and to utilize, sell the oils and cakes to be produced or
acquired for edible purpose of in any type or processing i.e., ordinary crushing solvent
extraction, chemical or any other and to utilize sell the oils cakes to be produced or acquired for
edible purpose or in any industry in the manufactured of nutrition tools, soaps, cattle fed,
manure, fatty acids, perfumes, chemical or any other and to utilize sell the oils cakes to be
produced or acquired for edible purpose or in any industry in the manufactured of nutrition tools,
soaps, cattle fed, manure, fatty acids, perfumes, chemical and other products in which such oils,
cakes are utilized.

To erect, take on lease or otherwise acquire establish plantation and other lands, or free hold,
leasehold, or the other tenure and in particular lands producing or likely to produce, cotton seeds
and other seeds and also grants concession claims, licenses and authorities of any description
over any such lands.

To carry on in India or every where in any part of the world the business of spinning weaving of
manufacturing or dealing in cotton or other fibrous substances, the preparations, dyeing or
coloring of any of substances, the preparations, the pressing of sand otherwise dealing with
cotton seed and extraction of oil and other such products. There fourth refining and treating of
such products and subjects them to further processor of manufacture.

To act as stockiest, a commission agent, representatives or agents, selling and purchasing agents,
distracters, brokers of edible oils. since neither organizational requirements nor individual
attitude and abilities are ever constant. Individual employee careers must be of concern to
organizations and mangers in order that humal1 resources may be developed to meet constantly
changing environmental conditions.

A career is a sequence of separate but related work activities that provides continuity, order, and
meaning to a person's life. It is shaped by a myriad of factors including heredity, culture, parents,
schooling, age level, family circle, and actual experiences in one or more organizations. An
effective career development program provides complete information concerning career
opportunities within the organization. The major ingredient is that of aligning individual careers
with career opportunities through a continuing program of training, education, transfer, and
advancement.

Ancillary Objectives:
To manufacture and deal in all kinds of plant machinery apparatus tools utensils, materials and
things necessary or convenient for carrying on any of the main objects of the company.

To buy, sell, manufacture, plant, prepare, treat, alter, exchange, hire, let on hire, import, export
dispose and or deal in all kinds of articles and things which may be required for the purpose of
any of the business which the company is expressly or by implication authorized by this
memorandum at carry on.

To establish, appoint, regulate and discontinue offices, agents, representatives, distributors or

retailers in all such places as the company may from time to time determine for carrying out all
or any of the company’s objects and to acts agents for the other.

Competitors:-
The following cotton seeds processors are the major competitors to CAPOL
 The Andhra Sugars ltd, pericherla.
 G.P. Industries ltd, Timmapuram.
 Dhanalakshmi cotton & Rice Mills Ltd, Dokiparru.
 Kallern Agro Products & Oils Ltd., Kokiparru.
 Sri Srinivasa Cotton & Oils Ltd., Pedanandipadu.
 BGIT Oils Industries – Pericherla (Bharat General Textiles Industries)

Apart from the above said competitors there are some other oil processors in Andhra Pradesh.
 ATR Oils Industries Ltd., -Adoni.
 Sri Venkata Narasimha Solvent Oils Ltd., -Warangal.
 Srba Agro Industries - Raningavaram.
 Om-Oil Agro Industries – Tadepalli.
Through the company is facing competition from the above set
competitors, it has good market for its finished products in the
market the competitor is depending upon the quality and
availability of goods, said the competition through around the
millers.

Progress:-
The success of any organization depends mainly of three functions of the management namely
production, finance and marketing. Selling has predominant importance in marketing procedure.

Cottonseed crushing industry is one of the Agro based industries. Cottonseed is used in the
manufacturing of edible oils, cakes, liner, hulls and oil. India is the third largest edible oil based
economy in the world after UNITED States and China. India accounts 9.7% to the global oil
seed production. The main production of this industry is edible oil.

Most of the people use groundnut oil for cooking purpose. To meet the competition CAPOL is
manufacturing cottonseed oil at a lower price than groundnut oil. This itself underlines the
importance of marketing activities of CAPOL, Chirala.

CAPOL has been located in Jandrapet village at Chirala and are measuring across 23.68 acres.
The plot has acquired from the Government of A.P on the basis of 9 years lease. The sight is
favorably located in respect of all facilities.

This is registered in 12th Dec, 1975 and Commencement of business was started from 5 th Jan,
1976. This CAPOL has made a joint venture with APIDC and signed on 1 st Feb, 1976 CAPOL
got the license in 13th Aug, 1975 and it is transferred to 13th Feb, 1976.

Awards:-
CAPOL was awarded prized for best stalls in 1978. CAPOL received prose as “Best Exporter in
India” in 1979 in CDs extractions and cakes from Union Minister, Government of India. Among
oils mills CAPOL stood first in safety competition and received prize from chief inspector of
factors, Andhra Pradesh.

For the year 2017-18, “Council for Industrial Trader and Development India” selected company
for its quality and productivity and also received “Gold Udyog Patra” awarded through
sri.Pranab Mukarjee, honorable union Minister and deputy chairman for planning commissions.
On this occasion M.D. facilitated at Rashtrapathi Bhavan by Honorable President of India, Dr.
Shankar Dayal Sarma.

The company also received awards from all cottonseed crushers association for being the 3rd
highest exporter and 2nd domestic seller of cottonseed for the year 2016-2017. The company has
received an award from All India Cottonseed Crusher’s Association for being the highest
exporter and highest domestic seller of cottonseed extractions for the year 2013-14.

As in the past, the industrial relations remained cardinal during the year under reviews the
directors also wish to informed that the company has been awarded “MAY DAY COMMAN
DATION CERTIFICATE” by Government of Andhra Pradesh for its continuous hormones
relation with its employers. In addition to this, Workers Trade Union of the company is also
awarded “Best Trade Union” by the Government of AP for this best relation with their best
relations with the management for the year 2011.

PRODUCTS
COTTON LINTERS

Even after employing the most efficient ginning process for recovery of lint from seed cotton, a
certain amount of fuzz (very short fibers unsuitable for spinning) remains on the cottonseeds.
This fuzz is known as “Cotton Linters”. The linters can be recovered by a special machine called
“DELINTER”. If it is recovered in defibrators, another type of machine, it is known as “HULL
FIBRES”. Delinters can remove the fuzz in a single passage or in two or three passages. The
linters removed in a single passage are designated as “MILL RUNS” and if properly recovered,
are usually composed of short and long fibres (2.5 to 12 mm long). If they are recovered in two
passages, the first passage linters are known as 1st Cut Linters – usually 6 to 12 mm fibre length
and the second passage linters are known as 2nd Cut Linters, usually having fibre length less
than 5 to 6 mms. Some times the seeds are subjected to third passage and are known as 3rd Cut
Linters having fibre length ranging between 2 to 3 1/2 mm. Recovery of linters from Cottonseed
is about 4 per cent.

USES:
The Linters are used in the manufacture of paper, low grade absorbant cotton and in the mattress
industry. Pure 1st Cut Linters are prized raw material for high grade bond, currency, low
grammage tissues and filter paper. Bleached Cotton Linters are being used by our Ordinance
Factories for production of propellants used for gun ammunition & also various missiles. For
production of propellants, one of the basic explosive is Nitrocellulose(NC). Basic raw material
for production of Nitrocellulose(NC) is Bleached Cotton Linters(BCL) which is produced out of
raw cotton linters after processing. Further, bleached cotton can also be useful for surgical use as
well as Felt making, Paper making and Cellulose Acetate, which is used in Rayan Fiber and
Photographic Films etc.

In U.S.A. the tissue papers prepared out of linters are reported in demand, especially by ladies
for removal of make-up since it is not considered sensitive to the skin and is of organic origin.
Market for such tissue papers can be developed in India also.

CAPOL produces around 2,500 MT per annum of Cotton Linters, which are being exported to
European Countries and East Asian Countries.

COTTON HULLS

Cotton Hulls are outer covering of Cottonseeds. If the seed is delinted properly, black hulls are
produced. Partially delinted semi-black seed yields “Semi Black Hulls”. The undelinted seed
from fuzzy variety of seed produces “White Hulls”.
Recovery of linters from Cottonseed is about 4 per cent.

USES:
Roughage in cattlefeed, for diluting high protein cakes and extraction in the manufacture of
compound cattlefeed, for reducing decorticated cottonseed meal/extraction with high protein
content (48-50%) to the normal standard quality meal (40 to 42% protein), and also used in
Petroleum drilling operations for filling the drilled holes to avoid caving in. Furfural alcohol can
be manufactured from Cottonseed Hulls, as they possess as high as 12.5% to 13% of Furfural.
Furfural is used in Paints and Plastics, Lignin used as a Soil Conditioner, Plastic filler and a
source of Vanilla.

CAPOL produces around 15,000 MT of Hulls every year, which can be increased as per the
requirement of the customer.

COTTONSEED WASHED OIL

This type of Cottonseed De-oiled Cake is obtained when cottonseed is processed through
scientific method i.e. delinting, decortications, separation of hull, expelling and solvent
extraction of oil from meal. Such cake contains almost negligible oil and has very high by-pass
type protein content 38 to 40%.

USES:
The Cottonseed meal/extraction contains protein as high as about 38 to 40% as compared to
about 20 to 22% in traditionally prepared cottonseed cake. The protein content in the cattle feed
is best utilized by the cattle if it by-passes its rumen (first part of the stomach) and is digested in
the subsequent parts of the stomach. Such phenomena is known as “By-pass Protein”. It has been
established that the protein content in Cottonseed Extractions is of “By-pass Protein” type.
Decorticated Cottonseed Extraction is recognized all over the world as better cattle feed. In fact,
undelinted undecorticated cottonseed cake is virtually an unknown product in the developed
Countries.
Cottonseed Extraction has also two other uses viz. fish feed and poultry feed. Based on the
experience abroad, there is good scope for export of Cottonseed Extraction as poultry feed also.

CAPOL has a vast capacity to supply De-oiled Cottonseed Cake and is scientifically proved to
be the best feed for Cattle, which by-passes the digestion system. CAPOL produces around
25,000 MT per annum of its Animal Feed Plant, if so required by any business Associate.
COTTONSEED WASHED OIL
CAPOL manufactures only Cottonseed Washed Oil, which is used as raw material for
Vanaspathi Manufacturing and Refinery processing so as to produce either Vanaspathi or
Refined Oil. Cottonseed Refined Oil contains about 50% essential polyunsaturated fatty acid
against about 30% in traditional oil which prevents coronary arteries from hardening. It is one of
the few oils in American Heart Association’s list of “O.K. Food”.

USES:
Cottonseed Oil has high level of natural antioxidants that contribute to its long fry life and long
shelf life. Studies have shown that the natural antioxidants in Cottonseed Oil are retained at high
level in fried products.

Organizational Structure:
 The CAPOL is organized by a board of Directors. Under the board of directors there is a
chairman. The chairman controls the Managing Directors. There are General Manager
and Production Manager under the control of the Managing directors.
 The General Manager organizes the overall activities of the company. He has under his
direct control of Finance Department and responsibilities of the company secretary.
Besides he has also under him a Commercial Department. Under him maintenance
engineer, material procurement officer, packing section in charge, personnel officer and
security officer, In Finance Department there are two responsible persons. They are
Assistant Finance Manager Accounts Officer cum Administrative Officer.
 Under the Production Manager the Plant Engineers, In-Charges of C.S.P.Plant, Oil Mill,
Solvent Extraction Plant, Refinery and Laboratory are working. Plant Engineers
functions are to rectify mechanical defects to make machinery run smoothly and maintain
co-operation of the production activities.
 The Personnel Officers is responsible for recruitments of personnel in organization,
functions and ensure the disciplined working of the employees. The security officer is in-
charge of watch and time keeping departments. He is responsible for security of factory
assets and equipment.
Chart
Organization Chart

Board of Directors

Managing Directors

General Manager

Production Marketing Finance Manager

Manager Manager

Administrative Account Officer Assistant In charge

Officer Exports

Clerks Clerks
 CHAPTER III

REVIEW OF LITERATURE
Working capital may be regarded as the lifeblood of a business. Its effective provisions can do
much to ensure the success of business, which its inefficient management can lead not only to
loss of projects but also the ultimate downfall of what otherwise, might be considered as
promising concern. Thus, its management is considered as one of the most important aspects of
firm's Financial Management.

The term working capital stands for that part of the capital which is required for the financial
working of the company in simple words, we can say that working capital is the investment
needed for carrying out day to day operations of the business smoothly.

Working capital refers to a firm's investment in short term assets, viz. cash short term securities,
Accounts receivable (debtors) and inventories of raw materials, work in progress and finished
goods.

It can be regarded as that portion of the firm's total capital, which is, employed in short-term
operations. Funds thus invested in current assets keep revolving false and are being constantly
concerted in to cash and this cash flow out again in exchange for other current assets. Hence, it is
also known as revolving or circulating capital.

According to genestenberg, "circulating capital means current assets of a company that are
changed in the ordinary course of business from one form to another, as for example from cash
to inventories, inventories to receivable, receivables into cash".

These are invariably a time lag between the sale of gods and the receipt of cash. There is there
fore need for working capital in the form of current assets to deal with the problem arising out of
lack of immediate realization of cash against goods sold. Therefore sufficient working capital is
necessary to sustain sales activity.
CLASSIFICATION OF WORKING CAPITAL

Working capital can be classified into two ways.

1) On the basis of concept

2) On the basis of time.

CONCEPT OF WORKING CAPITAL

1) Gross working capital

2) Net working capital

GROSS WORKING CAPITAL

The gross working capital refers to the firms' investment in the total current assets of the
enterprise. The current assets are those assets with in the ordinary course of business can
converted into cash with in the short period of normally one accounting year.

NET WORKING CAPITAL

The net working capital can be defined into two ways the most common definition of working
capital is difference between current assets and current liabilities.

Net working capital can also be define as that portion of firm's current assets. Which are financed
with long-term funds.

NEED FOR WORKING CAPITAL

The main objective of financial decision making is to maximize shareholders wealth and to
endeavor this firm should earn sufficient returns requires a successful sales activity. For a
successful sales activity the firm has to invest sufficient funds in current assets. Current assets
are needed because sales do not concert into cash instantaneously. There, is always an "operating
cycle" involved in the conversion of sales into cash.

OPERATING CYCLE

Operating cycle is the time duration required to convert sales after the conversion of
resources into inventories into cash. In other words, an operating cycles refers to length of time
necessary to complete.

The following cycle of events:

1) Conversion of cash into raw materials

2) Conversion of raw materials into work in progress.

3) Conversion of work-in-progress into finished goods.

4) Conversion of finished goods into accounts receivables.

5) Conversion of accounts receivable into cash

Raw material

Working progress

Cash

Finished goods

Accounts receivables Sales

ON THE BASIS OF TIME

1) Permanent or fixed working capital

2) Temporary or variable working capital

PERMANENT WORKING CAPITAL:

Permanent working capital is the minimum amount or minimum level of current assets.
Which is continuously required by the enterprise to carry out its normal business operation. For
e.g., every enterprise has to maintain a minimum level of raw materials. Work-in-progress,
finished goods and cash balance for paying Wages, Salaries, Rent et. during the year. This
minimum level of current assets is called permanent or fixed working capital as this part of
capital is permanently blocked in current assets.

Regular working capital is the amount of working capital needed for the continuous operations of
the business of the company without any breakage.

TEMPORARY OR VARIABLE WORKING CAPITAL:

Temporary working capital is the amount of working capital, which is required to meet the
seasonal and special needs of the business.

1) Seasonal working capital refers to that financial requirement that crop up during a particular
season behind the regular working capital most business require at stated intervals large amount
of current assets to fill the demands of the seasonal busy periods.

2) Special working capital refers to that part of the working capital, which is required to meet
special extengencies such as launching of extensive marketing campaigns or conducting research
etc.,

COMPOSITION OF WORKING CAPITAL

The individual composite items of working capital consist of current asset and current
liabilities.

CURRENT ASSETS

Current assets are those, which can be converted into cash within one year without
effecting the operations of the firm.

List of current assets:

1) Cash in hand & bank balance

2) Bills receivables

3) Sundry debtors

4) Short term loans and advances

 5) Investment

a) Government other trustee securiti9es

b) Fixed deposits with the banks

6) Inventories of stock

a) Raw materials

b) Work in Progress

c) Stores and spares

d) Accrued income

CURRENT LIABILITIES

Current liabilities are those, which are intended to be paid in the ordinary course of
business within a short period of normally one year out of the current assets or the income of the
business.

LIST OF CURRENT LIABILITIES:

1) Bills payable

2) Sundry creditors or accounts payable

3) Short term borrowings

a) Banks

b) Others

a. Unsecured loans

b. Public deposits maturing one year

c. Deposits from dealers, selling again.

 4) Dividends payable

5) Bank overdraft

6) Accrued or outstanding expenses

7) Provision for taxation

8) Sales tax and excise tax.

THEME OF WORKING CAPITAL

Working capital management is considered as one of the most important aspects of firm's
financial management. The goal of working capital management is to manage the firm's current
assets and current liabilities in such a way that the satisfactory level of working capital is
maintained. Each of the current assets should be managed efficiently in order to maintain the
liquidity the firm while not keeping too high a level of any one of them.

The success of business concerns among other depends upon the manner in which its working
capital is managed. The interaction between the current assets and current liabilities is there fore
the main theme of the theory of working capital.

It is a task of financial manager to maintain an appropriate level of working capital i.e. enough
current assets to pay-off current liabilities, either excess nor less because in either cases the result
could be the failure of the business. Excessive working capital impairs firm's profitability, as
ideal investment earns nothing. On the other hand, inadequate amount of working capital can
threaten the solvency of the firm because of its inability to meet its current obligations.

OPTIMUM WORKING CAPITAL POSITION:

The firm should maintain a sound working capital position. It should have adequate working
capital to run its business operations. Both excessive as well as inadequate working capital
positions are dangerous from the firm's point of view.

Excessive working capital means idle funds, which earn no profits for the firm. Paucity of
working capital not only impairs the firm's profitability but also results in production interruption
and inefficiencies.

The Danger of excessive working capital are as follow:

1. It results of unnecessary accumulation of inventories. Thus, chance of inventories handling,

wastage, theft and losses increase.

2. It is an indication of defective credit policy and slag credit collection period. Consequently
higher incidence of bad debts results, which adversely affects profits.

3. It makes management complacent, which degenerates into managerial inefficiency.

4. Tendencies of accumulating inventories tend to make speculative profits grow. This may tend
to make dividend policy liberal and difficult to cope with when firm is unable to make
speculative profits.

Inadequate working capital is also bad causes following:

 It stagnates growth. It becomes difficult for the firm to undertake profitable projects due to
inadequate of funds.

 It becomes difficult to implement operating plans and achieve firms profit targets.

 Operating inefficiencies creep in and it becomes difficult even to meet day - to - day
commitments.

 Fixed assets are not efficiently utilized for the lack of working capital funds. Thus the firm's
profit would deteriorate.

 Paucity of working capital fund renders the firm unable to avail attractive credit
opportunities.

 The firms losses its reputations when it is not in a position to honor its short-term obligations.
As a result, the firm tight credits terms.
LIQUID RATIOS

The purpose of liquidity ratio is to measure the ability of the firm to meet its current obligations
and to provide a quick measure of liquidity by current ratio and quick ratio. Infact, analysis of
liquidity needs the preparation of cash budget, cash flow and funds flow statements, but liquidity
ratios by establishing relationship between cash and other current assets to current obligations,
provide a quick measure of liquidity. A firm should ensure that it does not suffer from lack of
liquidity and also that it does not excess liquidity.

The most common ratios, which indicate the extent of liquidity or lack of it, are:

1. Current ratios

2. Quick ratios

3. Net working capital ratios etc.,

FINANCING OF WORKING CAPITAL

There are different types of financing policies in vague for financing working capital
requirements. The requirements of working capital may be for fixed working capital and variable
working capital requirements.

The fixed proportion of working capital should be generally financed from the fixed capital
sources while the variable working requirements of a concern may be met the short - term
sources of capital.
The various sources of financing of working capital are as follows:

Sources of working capital

Long - term financing Short term Financing Spontaneous Financing

Finance Institutions Short - term Credits Trade Creditors

Debenture Loan from Banks Outstanding Expenses

Public Deposits Commercial Cements

Shares Factoring

WORKING CAPITAL POLICIES:

The financial manager should determine the optimum level of current assets, so that the wealth
of shareholders is maximized. A firm needs fixed current assets to support a particular level of
output. However, to support the same level of output, the firm can have different levels of
current assets to fixed assets. Dividing current assets by fixed assets give CA/FA ratio.

CONSERVATIVE WORKING CAPITAL POLICY:

If firm's maintains higher investment on current assets to a constant investment on fixed assets,
i.e. assuming a constant level of fixed assets, a higher CA/FA ratio indicates conservative current
assets policy it implies greater liquidity and lower risks.

AGGRESSIVE WORKING CAPITAL POLICIES:

If a business firm maintains the lower level of current asses to a constant fixed assets that is a
lower CA/FA ratio means an aggressive current policy. Assuming other factors constant. It
indicates higher risks and poor liquidity.

AVERAGE WORKING CAPITAL POLICIES:

If a business firms maintains moderated level of current assets to constant fixed assets. That is
the current assets policy of the most of the firm may fall between in conservative and aggressive
working capital policy, which is called average working capital policy. It indicates moderate
liquidity and risks.

Working capital can be done in the following main methods:

1. Cash Management

2. Receivable Management

3. Inventory Management

CASH MANAGEMENT

Cash, the most liquid asset, is of vital importance to the daily operations of business
firms. While the proportion of corporate assets held in the form of cash is very small, often
between 1&3 percent its efficient management is crucial to the solvency of business in very
important sense cash is the focal point of fund flows in business. In view of its importance, it is
generally referred to as the 'Life blood of a business enterprise'.

NEED FOR HOLDING THE CASH:

John May nard Keynes put forth, there are possible motives for holding cash.

 Transaction Motive: Firms need cash to meet their transactions needs. The collection of
cash (from sale of goods and services, sale of assets and additional financing) is not
perfectly synchronized with the disbursement of cash (for purchase of goods and services
acquisition of capital assets and meeting other obligation). Hence, some cash balance is
required as a buffer.
  Precautionary Motive: There may be some uncertainty about magnitude and timing of
cash inflows from sale of goods and services, sale of assets and issuance of securities.
Like wise there may be uncertainty about cash out flows on account of purchases and
other obligation. To protect it against such uncertainities, a firm may require some cash
balance.

 Speculation Motive: Firm would like to tap profit making opportunities arising form
fluctuations is commodity prices, security prices, interest rates and foreign exchange
rates. Cash rich firm is better prepared to exploit such bargains. Hence firms, which have
such speculative earnings, may require additional liquidity. However, for the most firms
there reserve borrowing capacity and marketable securities would sufficient to meet their
speculative needs.

GOALS OF CASH MANAGEMENT:

Precisely speaking, the primary goal of cash management in firm is to trade off between liquidity
and profitability in order to maximize long-term profit. This is possible only when the firm aims
at optimizing the use of funds in he working capital pool. This overall objective can be translated
in to the following operation goals.

 To satisfy day business requirements

 To provide for schedule major Payments

 To face un expected cash drains

 To seize Potential opportunities for profitable long term investments

 To meet requirements of bank relationships

 To build image of credit worthiness

 To earn on cash balances

 To build reservoir for net cash in flows till the availability of better uses of funds by
conscious planning
 To minimize the operating cost of cash management

IMPORTANCE OF CASH MANAGEMENT:

Cash management is one of the critical areas of working capital management and assumes
greater significance because it is most liquid asset used to satisfy the firm's obligations but it is a
sterile asset, as it does not yield anything. Therefore finance manager has to manage cash that the
firm maintains its liquidity position without jeopardizing the profitability.

Problem of prognosticating cash flows accurately and absence of perfect to incidence between
the in flows and out flows of cash added to the significance of cash management. In view of
above, at one time affirm may experience dearth of cash because payment of taxes, dividends,
seasonal inventory etc., build up while at othe times, it may have surfeit of cash stemming out of
large sales and quick collections of receivables.

It is interesting to observe that in real life management spends his considerable time in managing
cash, which constitutes relatively small portion of firm's current assets. This is why in recent
years a number of new techniques have been evolved to manage to cash holding of the firm.

RECEIVABLE MANAGEMENT

The term "receivable" refer to the debt owned by the customers for goods purchase from the firm
or services rendered by the ordinary course of business.

The firm is said to have granted trade credit to customers when it sells its products or services
and does not receive cash for it immediately. Trade credit is an essential marketing tool acting as
a bridge for the movement of goods from production and distribution stage to customers finally.
Receivables are also known as accounts receivables, trade receivables or book debts.

The purpose of maintaining or investing in receivables is to meet competition and to increase the
sales and projects.

BASIC FEATURES OF RECEIVABLES ARSING OUT OF CREDIT

1. They involve an element of risk as cash payment has yet to be received.

2. They are based on economic value, which is passed to the buyer immediately at the time of
sale of goods, services while the seller expects an equivalent value to be received later on.

3. The imply futurity as payment for goods or services received by the buyer will be made by
him at future date.

4. Granting credit and creating debtors amount to the blocking of firms funds, thus, there is a
need for careful analysis and proper management of receivables as substantial amounts are tied
up in trade debtors.

OBJECTIVES OF RECEIVABLES MANAGEMENT

The purpose of credit management is not to max sales (if so, firms would sell on credit to all);
nor to min risk (if so, firms would not sell on credit to anyone).

The objective of the firm is to manage its credit a way that sale are expanded to such an extend to
which risk remain with is an acceptable limit.

Main Objectives are:

 Obtain optimum values of sales

 Control the cost of credit and keep it at minimum.

INVENTORY AND ITS PERIMETTER:

The term "inventory" is used to designate aggregate of those items of tangible assets, which are

1) Held for sale in the ordinary course of business.

2) In the process of production for such sale, or

3) To be currently consumed in the production of goods or services to be available for

sale.

Thus, inventory means and includes any one of the following:

 Finished goods (saleable)

 Working progress (convertible)
 Materials and suppliers (consumable)
The above definition is called operational definition of inventory. In financial parlance, inventory
is defined as the sum of the value of raw materials and suppliers includes spares, semi processed
materials or working progressed and finished goods. The inventory is largely depending on the
carried on.

INVENTORY: SOME SPECIAL FEATURES

A comparison of inventory with other positive components of working capital would revels that
it has some special features of its own.

Firstly, on an average, it accounts for lions share of firms investment in working capital.

Secondly, the risk factor in holdings inventory generally is higher than of holding other items of
current assets.

Thirdly, although holding of a more and more inventory may be desirable from the point of view
of functional managers, it affects adversely short-term liquidity.

Fourthly, it involves many types of costs associated with it viz: acquit ion cost, carrying cost,
short cost, etc.

Fifthly, it is the only item of current assets, which has direct influence on the process, and
income of firm.

Finally, it involves almost all the functional areas of management, viz, purchasing, production,
marketing and finance.

OBJECTIVES OF INVENTORY MANAGEMENT

There should be optimum level of investment for any asset, whether it is plant, cash or
inventories. Again, in adequate inventories will disrupt production and lose sales.

All this calls far an effective inventory program the main objectives are:

1. To ensure that materials are available for use in production and production services, as and
when required.

2. To ensure that finished goods are available for delivery to customers to fulfill orders.
3. To minimize investment in inventories.

4. To protect the inventory against deterioration, obsolescence and un authorized use.

ADEQUACY OF WORKING CAPITAL:

A firm must adequate working capital i.e., as much needed by the firm. It should neither be
excessive or inadequate. Both the situations are harmful to the concern. Excessive working
capital means the firm has idle funds, which earn no profits for the firm inadequate working
capital ultimately results in production interruptions and lowering down of the profitability.

It will be interesting to understanding the relationship between working capital, risk and return,
In a manufacturing concern. It is generally accepted that higher levels of working capital
decrease the risk and have the potential of increasing the profitability also.

The principle is based on the following assumptions:

 There is a direct relationship between risk and profitability, higher the risk higher is the
profitability, while lower the risk lowers is the profitability.

 Current assets are less profitable than fixed assets.

 Short-tern funds are less expensive than long term funds.

On accounts of the above principle, an increase in the ratio of current assets to total assets
will results in the decline of the profitability of the firm. This is because investment in
current assets as stated above is less profitable than in the fixed assets. However an increase
in the ratio would decrease the risk of the firm of the becoming technically insolvent. On the
other hand a decrease in the ratio of current assets to total assets is would increase the
profitability of the firm because investment in current assets.

However these increase the risk of the becoming technically insolvent on accounts of its
possible inability in meeting its commitments in time due to shortage of funds.
TYPE OF WORKING CAPITAL:

Working capital can be divided into categories on the basis of time:

 Permanent working capital

 Variable or temporary working capital

Permanent working refers to the minimum amount of investment in all current assets which is
required at all times to carryout minimum level of business activities in other words. It represents
the current assets required on a counting basis over the entire yea the Tendon committee has
referred tot his type of working capital as “Core current assets”.

Temporary working capital refers to that amount of working capital, which keeps on fluctuating,
from time to time on the basis of business activities. In other words it represents additional
current assets required at different times the operating year.

GROSS WORKING CAPITAL:

It is the total of all current assets which include inventories, sundry debtors, cash in hand
& bank, advances, investments, short term deposits etc.,

NET WORKING CAPITAL:

It is the excess of current assets over current liabilities. Current liabilities include sundry
creditors, advances from customers, provision for taxation etc.,

DETERMINING WORKING CAPITAL REQUIREMENTS:

Prudent principal of financial management calls for holing as small amount of working capital as
possible. So long as the firm is not exposed to undo solvency risks. In order to forecast the
working capital requirements more objectively the financial manager often makes use of
percentage sales methods, trend method, or operating cycle method. Operating cycle method
calls for a precise estimation of the length of time (in weeks/months) required for converting the
raw material into finished goods and holding the finished stock and debtors as well. Thus it
indirectly takes into account the policy requirements of inventory and credit management apart
from the cash.

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

NATURE OF BUSINESS:

The nature of business has an important bearing on its working capital needs. Some ventures like
retail stores, construction company etc., require on abundance of working capital in order cases,
such as power generation and supply, the current assets play a minor and secondary role.

MANUFACTURING CYCLE:

An extended time span, between the raw material purchase and the completion of the
manufacturing process yielding the finished product, will obviously mean a larger tie-up of funds
in the form of enhanced working capital needs. In such cases management should endeavor to
contain the intervening period and effect economy in working capital needs, through process
changes where possible, or though effective organization and coordination at all levels of
enterprise activity to ensure that the operating cycle time is minimal. Frequent changes in set-
ups, waiting for material, tools or instructions and accumulations of work-in-progress have the
inevitable consequence of extending the cycle time freezing.

CREDIT TERMS TO CUSTOMERS:

The credit terms to customers influence the working capital level by determining the level of
investment in block debts. Management has to decide on suitable credit policy relevant to each
customer based on the merits of his case. Unduly liberal credit policies and slack collection
procedures or permissive attitude in the matter of collection of out standing can look up funds
that would otherwise be available for operating needs.

VAGARIES IN SUPPLY OF RAW MATERIAL:

The sources of certain raw material are few and irregular and pose problems in the matter of
procurement and holding, using up moiré funds. Materials that are available only in certain
seasons have to be obtained and stored, in advance, for the lean months. The working capital
requirements, in such instances, will show seasonal fluctuations.

SHIFTS IN DEMAND FOR PRODUCTS:

Some manufactured are subject to seasonal fluctuations in sales. In the interest of utilization of
capacity, steady production will have to be maintained, independent of shifts on demand for
finished products. Finished goods inventories will, therefore pile up during off-season and will
require increased amounts of working capital to be provided. Financial planning will have to
incorporate this pattern of funds requirement associated with steady production and seasonal
seals

PRODUCTION POLICIES:

To off-set the problems of having to find funds to support the mounting inventory levels of
finished goods until they got off-loaded in the peak seasonal, some company report to
diversification of activities, enabling production of the main product to follow the seasonal
pattern of demand.

COMPETITIVE CONDITION:

In a competitive market, wining and retaining customer’s satisfaction on a continuing basis will
involve extra costs and present a variety of working capital problems. To offer the customer the
benefit of choice, a variety of products will have to be manufactured and stocked. This would
mean higher levels of inventories in all stages and, therefore additional working capital funds.
More generous credit terms may have to be extended and the investments in account receivable
may have to be higher, requiring additional funds. The degree of competition is thus an
important factor influencing working capital requirements

GROWTH AND EXPANSION PROGRAMS:

As businesses grow, additional working has to be found. In fact, the need for increased working
capital does not follow the growth in business activities, but precedes it. An advance planning of
working capital is thus a containing necessary for a growing concern. Or else, the company may
give substantial earning but little cash. With fast growth they may be under constant financial
pressure for external funds to reinforce internal generation. Forward planning and continuous
review there of are absolutely necessary for such company.

PROFIT LEVELS:

By the very nature of things, some enterprises generate high margins compared to others. The
product category and the firm’s position in the market may have conferred this advantage. Other
may have struggle in a highly competitive environment. But, profits cannot be considered as
available cash at the end of the period. Even as the company’s operations are in progress cash is
used up for augmenting stocks, books debts and cash inflows, at short intervals, assume
importance. For the projected surpluses, appropriate effective uses can be planned. The funds
application then occurs by design and not be accident.

TAXATION:

Tax liability is inescapable element in working capital planning. It is a shore-term liability in

cash. Advance taxes may have to be remitted in installments. On the basis of estimated profits.
Period of high taxation impose additional stain on working capital. To be able to get the best out
of the operating plans of the company in advance and steer the resources towards research and
development. Exports or other direction, which promise tax, benefits and promote the company’s
earnings.

DIVIDEND POLICY:

Management has to preserve cash resources, but at the same time, it cannot fail to satisfy investor
expectations, market prestige for the shares of the company has also to be natured and
maintained in its long-run interests. During periods of low profits, maintained of steady
dividends will involve draining of resources but may needed to preserve the company’s image.

RESERVES POLICY:

One of the cherished goal of enterprise management is to build up adequate reserves out of
profits, the urge of retain profits may as a major constraint on the dividend policy, the funds
position getting priority of consideration over dividend policy.
DEPRECIATION POLICY:

Depreciation policy centers on the determination of the amount to be provided as depreciation

charge to make up the ultimate resource for replacement for worn out obsolete assets. The
depreciation charges do not involve any cash flow. Enhanced rates of depreciation have the
effect of reducing profits corresponding, which in turn can help in holding back distribution of
dividends. This process conserves cash. Depreciation policies, thus, exert influence on the status
of working capital in the enterprise from time to time.

PRICE LEVEL CHANGES:

Rapidly rising prices create the need for more for funds for maintaining the present volume of
activity. For same levels of inventories, higher cash outlays are needed. In an inflationary setup,
even operating expenses will grow for given levels of activity. Some company may be able to
compensate parts of these cost increases through increase in prices levels on working capital
position will vary from company to company depending on the nature of its, operations and its
standing in the market.

OPERATING EFFICIENCY:

There is an obvious relationship between the operating efficiency of a company and its working
capital position. Waste elimination, improved co-ordinate to cut delays, higher efficiency in
operations and fuller utilization of resources are among the initiatives taken to avert erosion of
profits. They also have the effect of getting more out of a given volume of working capital.
Efficiency of operations accelerates the pace of the cash cycle, and improves the working
turnover. It releases the pressure on working capital by improving profitability and aiding added
internal generation of funds.

With a multiplicity of factors exerting varied degrees of influence on working capital status, the
management has to alert to the developments, internal, external and environmental, and has to
plan and review constantly its working needs and storage’s.
CHAPTER IV

DATA ANALYSIS &

INTERPRETATION
WORKING CAPITAL MANAGEMENT IN CORAMANDEL AGRO PRODUCTS
AND OILS LIMITED

Working capital management refers to optimum utilization of the available funds

in an efficient way. The growth of the any organization will always depend upon the
proper usage of the available funds for the organization line “CAPOL” working capital
management plays a crucial role as the dairy with operations of huge funds. When huge
funds are involved both the short term and long term obligations and implications should
be well maintained by the CAPOL Working capital is the difference of current assets and
current liabilities of CAPOL are follows

Current Assets Current liabilities

1. Cash in Hand 1. Bills Payable

2. Cash at Bank 2. Sundry Creditors
3. Bills Receivable 3. Accrued Expenses
4. Inventories 4. Short-Term Loans
5. Prepaid Expenses 5. Dividends Payable
6. Accrued Income 6. Bank over Draft
7. Short- Term Investment 7. Provision for Taxes

8. Working Progress

9. Finished Goods

10. Stores and Spares

11. Advanced to Suppliers

12. Investments

13. Trade Debtors

Statement showing changes in Working Capital of Coramandel Agro products and Oils
Limited during the period March 2013 to March 2014

Table -4.1 (₹ in lakhs)

2013 2014 Effect on Working

PARTICULARS
(₹) (₹) Capital
A Current assets Increase (₹) Decrease (₹)

Inventories 180.04 203.26 23.22

Sundry debtors 70.00 88.70 18.70

Cash & bank balance 6.00 9.00 3.00

Other current Assets 114.20 192.39 78.19

Total current Assets 370.24 493.35

B Current Liabilities

Liabilities 300.12 383.13 83.01

Total Current Assets 300.12 383.13

A–B Net Working capital 70.12 110.22

Net Increase in 40.10 40.10

working capital
Total 110.22 110.22 123.11 123.11

INTERPRETATION:
It was found that from the above analysis the total current assets are increased from Rs.370.24
lakhs to Rs.493.35 lakhs because of the inventories are increased. The total current liabilities are
increased from Rs.300.12 lakhs to 383.13 lakhs because of increasing of other liabilities.

It was observed that the networking capital of Coramandel Agro products and Oils Limited was
increased to Rs.40.10 lakhs because of increasing total current assets.
Statement showing changes in working Capital of Coramandel Agro products and Oils
Limited during the period March 2014 to March 2015

(₹ in
Table -4.2 lakhs)

2014 2015 Effect Working

PARTICULARS (₹) (₹) Capital
A Current assets Increase (₹) Decrease(₹)
Inventories 203.26 219.96 16.7

Sundry debtors 88.70 93.54 4.84

Cash & bank balance 9.00 10.90 1.9

Other current Assets 192.39 202.46 10.07

Total current Assets 493.35 526.86

B Current Liabilities

Liabilities 383.13 400.30 17.17

Total current 383.13 400.30

liabilities
A–B Net Working capital 110.22 126.56

Net Increase in 16.34 16.34

working capital
Total 126.56 126.56 33.51 33.51
INTERPRETATION:

It was found that from the above analysis the total current assets are increased from Rs.526.86
lakhs to Rs.603.96 lakhs because of the inventories are increased. The total current liabilities are
increased from Rs.400.30 lakhs to Rs.424.53 lakhs because of increasing of other liabilities.

It was observed that the Net working capital of Coramandel Agro products and Oils Limited was
increased to Rs.52.87 lakhs because of increasing total current assets.
Statement showing changes in working Capital of Coramandel Agro products and Oils
Limited during the period March 2015 to March 2016

Table -4.3 (₹ in lakhs)

2015 2016 Effect on Working

PARTICULARS (₹) (₹) Capital

A Current assets Increase (₹) Decrease(₹)
Inventories 219.96 264.77 44.81

Sundry debtors 93.54 107.62 14.08

Cash & bank balance 10.90 12.70 1.80

Other current Assets 202.46 218.87 16.41

Total current Assets 526.86 603.96

B Current Liabilities

Liabilities 400.30 424.53 24.23

Total current 400.30 424.53

liabilities
A–B Net Working capital 126.56 179.43

Net Increase in 52.87 52.87

working capital
Total 179.43 179.43 77.1 77.1

INTERPRETATION:
It was found that from the above analysis the total current assets are increased from Rs.526.86
lakhs to Rs.603.96 lakhs because of the inventories are increased. The total current liabilities are
increased from Rs.400.30 lakhs to Rs.424.53 lakhs because of increasing of other liabilities.

It was observed that the networking capital of Coramandel Agro products and Oils Limited was
increased to Rs.52.87 lakhs because of increasing total current assets.
Statement showing changes in working Capital of Coramandel Agro products and Oils
Limited during the period March 2016 to March 2017

Table -4.4 (₹ in lakhs)

2016 2017 Effect on Working

PARTICULARS (₹) (₹) Capital

A Current assets Increase (₹) Decrease(₹)

Inventories 264.77 609.45 344.68

Sundry debtors 107.62 112.87 5.25

Cash & bank balance 12.70 28.52 15.82

Other current Assets 218.87 312.06 93.19

Total current Assets 603.96 1062.90

B Current Liabilities

Liabilities 424.53 956.22 531.69

Total current 424.53 956.22

liabilities
A–B Net Working capital 179.43 106.68

Decrease in working 72.75 72.75

capital
Total 179.43 179.43 531.69 531.69
INTERPRETATION:

It was found that from the above analysis the total current assets are increased from Rs.603.96
lakhs to Rs.1062.90lakhs because of the inventories are increased. The total current liabilities are
increased from Rs.424.53 lakhs to Rs.956.22 lakhs because of increasing of other liabilities.

It was observed that the Net Working Capital of Coramandel Agro products and Oils Limited
was decreased Rs.72.75 lakhs because of increasing total current liabilities.
Statement showing changes in working Capital of Coramandel Agro products and Oils
Limited during the period March 2017 to March 2018

( ₹ in
Table -4.5 lakhs)

2017 2018 Effect on Working

PARTICULARS (₹) (₹) Capital

A Current assets Increase Decrease
Inventories 609.45 1087.48 478.03

Sundry debtors 112.87 484.77 371.90

Cash & bank balance 28.52 11.89 16.63

Other current Assets 312.06 388.20 76.14

Total current Assets 1062.90 1972.34

B Current Liabilities

Liabilities 956.22 1515.09 558.87

Total current 956.22 1515.09

liabilities
A–B Net Working capital 106.68 457.25

Net increase in 350.57 350.57

working capital
Total 457.25 457.25 926.07 926.07
INTERPRETATION:

It was found that from the above analysis the total current assets are increased from Rs.1062.90
lakhs to Rs.1972.34 lakhs because of the inventories are increased. The total current liabilities
are increased from Rs.106.68 lakhs to Rs.457.25 lakhs because of increasing of other liabilities.

It was observed that the Net Working Capital of Coramandel Agro products and Oils Limited
was increased to Rs.350.57 lakhs because of increasing total current assets.
CURRENT RATIO

Current ratio expresses relationship b/w current assets and current liabilities. It is compared by
dividing current assets by current liabilities. The ratio is calculated on the basis of the following
formation.

Current ratio = Current assets / Current liabilities

 Current assets are the assets which are realizable within a span of one year are called
Current Assets.

 Current liabilities are the liabilities which are repayable within a span of one year are
called current liabilities.

 Current assets are cash in hand, cash at bank, debtors, bills receivables, stock, prepaid
expenses and short term investments etc.

 Current Liabilities is creditors, bills payable, outstanding expenses, short term loan and
bank overdraft etc

 A higher current ratio explains that the company will be able to pay its debts maturing
within a year. On other hand, a low current ratio points to the possibility that the
company may not be able to its short term debts. A current ratio of 2:1 is considered as
minimum in a sound business.
Current Ratio of Coramandel Agro products and Oils Limited. During period of 2013-
14 TO 2017-18

Table -4.6

Years Current Assets (₹) Current Liabilities (₹) Ratio (%)

2013-2014 493.15 383.13 1.28

2014-2015 526.86 400.30 1.31

2015-2016 603.96 424.53 1.42

2016-2017 1062.90 956.22 1.11

2017-2018 1972.34 1515.09 1.30

 CHART

INTERPRETATION:

From the above analysis, it was observed that the Current Ratio of a firm is fluctuating because
of total current liabilities are increasing year by year.

The company’s liquidity position is not satisfactory through the study period, because it was not
reached the standard ratio 2:1
QUICK RATIO OR ACID TEST RATIO

Quick ratio is a measure of judging the immediate abilities of the company to pay off its current
obligations. It is obtained by dividing quick current assets by current liabilities. Quick ratio is
used to calculated by

Quick Ratio = Quick assets / Current liabilities s

Where

QA = CA- stock –prepaid expenses

QL = CL –Bank OD- Cash credit

CL = are creditors, bills payable, O/s expenses, Short term loans& bank OD etc.

Quick ratio is also kowaris liquid ratio quick ratio of 1:1 is usually considered adequate.
Quick Ratio of the Coramandel Agro products and Oils Limited during period of 2013-14
TO 2017-18

Table -4.7

Years Current Inventory Quick Current Ratio

Assets (₹) Assets Liabilities

(₹) (₹) (₹)

2013-2014 493.15 203.26 289.89 383.13 0.76

2014-2015 526.86 219.96 306.9 400.30 0.77

2015-2016 603.96 264.77 339.19 424.53 0.80

2016-2017 1062.90 609.45 453.45 956.22 0.47

2017-2018 1972.34 1087.48 884.86 1515.09 0.58

CHART

INTERPRETATION:

From the above analysis it was observed that the Quick Ratio is fluctuating throughout the years
because of total current liabilities are increasing year by year.

The company’s liquidity position is not satisfactory through the study period, because it was not
reached the standard ratio 1:1.
DEBTORS TURNOVER RATIO

It is also known as receivables turnover ratio. It establishes relationship between credit sales and
average debtors, this ratio is calculated on the basis of the formula.

Debtors Turnover Ratio = Net sales / Closing Debtors

It measures whether the amount of resources that are tied up in debtors is reasonable and whether
the company has been efficient in converting debtors into cash i.e., how many times average
debtors changing.

Debtors Turnover Debtors Turnover Ratio of the Coramandel Agro products and Oils
Limited during period of 2013-14 TO 2017-18

Table -4.8

Years Net Sales (₹) Debtors (₹) Ratio

2013-2014 2030.33 88.70 22.89

2014-2015 2156.74 93.54 23.06

2015-2016 2250.75 107.62 20.91

2016-2017 2475.99 112.87 21.94

2017-2018 4136.73 484.77 8.533

CHART

INTERPRETATION:

From the above analysis it was observed that the debtors turnover ratio is 22.89% in 2013-2014,
23.06% in 2014-2015, then it was decreased to 20.91% in 2015-2016. The lowest ratio is 8.533%
in 2017-2018.

The company credit management is satisfactory through the study period.

INVENTORY TURNOVER RATIO

This ratio gives the no. of times the inventory is replaced during a given period. I.e., usually a
year. Promptness of sale indicates better performance of the business. It also shows efficiency of
the concern. The inventory turnover ratio is calculated by

Inventory Turnover Ratio = Average inventory / Cost of sales or net sales

Inventory Turnover Ratio of the Coramandel Agro products and Oils Limited during
period of 2013-14 TO 2017-18

Table -4.9

Years Sales (₹) Inventory (₹) Ratio

2013-2014 2030.33 203.26 9.99

2014-2015 2156.74 219.96 9.81

2015-2016 2250.75 264.77 8.5

2016-2017 2475.99 609.45 4.06

2017-2018 4136.73 1087.48 3.8

CHART

INTERPRETATION:

From the above analysis it was observed that the Inventory turnover ratio is 9.99% in 2013-2014,
9.81% in 2014-2015, then it was decreased to 8.5% in 2015-2016. The lowest ratio is 3.8 in the
year 2017-2018.

The company’s credit management is not satisfactory through my study period.

WORKING CAPITAL TURNOVER RATIO

This ratio measures the relationship between working capital and sales. The ratio shows the no.
of times a units invested in working capital produces sales. Working capital as usual is the excess
for current formula is used to measure the ratio.

Working Capital Turnover Ratio = Net sales or cost of sales / net Working capital

Working Capital Turnover Ratio of the Coramandel Agro products and Oils Limited
during period of 2013-14 TO 2017-18

Table -4.10

Years Sales (₹) Working Capital (₹) Ratio

2013-2014 2030.33 110.22 18.42

2014-2015 2156.74 126.56 17.04

2015-2016 2250.75 179.43 12.54

2016-2017 2475.99 106.68 23.21

2017-2018 4136.73 457.25 9.047

CHART

INTERPRETATION:

It was observed that the working capital turnover ratio is 18.42%in 2013-2014 then it was
decreased to 17.04% in 2014-2105, 12.54% in 2015-2016 and it was increased to 23.21% in
2016-2017. It was reached to the lowest ratio is 9.04% in 2017-2018.

The company inventory management is not satisfactory through my study period.

CHAPTER VI

FINDINGS, SUGGESTIONS

AND SUMMARY
FINDINGS

 It was found that the net working capital of Coramandel Agro products and Oils Limited
is decreasing in the year 2014-2015 and the remaining years are increasing.

 It was observed that the current ratio of Coramandel Agro products and Oils Limited is
fluctuating year by year through the study period.

 It was observed that the quick ratio of Coramandel Agro products and Oils Limited is
fluctuating year by year during the study period.

 It was identified that debtors turnover ratio of Coramandel Agro products and Oils
Limited is high in the year 2014-2013 i.e., 23.06% then it was started to decreased to
8.53% in the year 2015-2016.

 The inventory turnover ratio of Coramandel Agro products and Oils Limited is high in
the year 2013-2014 (9.99%) then it was started to decreasing 3.80 in the year 2015-2016.
SUGGESTIONS

 The suggestions for more efficient to management of Working Capital in

Coramandel Agro products and Oils Limited., are as follows.

 It is suggested that they need to increase the volume of current assets and decrease
the proportion of current liabilities to meet the working capital requirements.

 It is suggested to Coramandel Agro products and Oils Limited that they need to
increase the cash volume at least half of the current liabilities for the purpose to
meet day to day financial requirements.

 It is suggested that they should increase the volume of sales to improve the
turnover of the Company.

 It is suggested that they need to increase the total assets if total debt should be less
than the total assets otherwise it leads to dissatisfaction.

 It is suggested to increase the debtors levels which will in turn improve the
current assets volume.
SUMMARY

The study was conducted among the Working Capital of the Coramandel Agro products and Oils
Limited, Chirala. It was undertaken with a view to explore the scope for improvement. A number
of suggestion have been made at the conclusions and suggestion will contribute for improving
the effectiveness and efficiency of the present working capital management the company achieve
the highest with full – fledged effort of top management and its employees with their
commitment and sincerity towards goal. The company can take a challenge with its competitive
and high spirits to face the market situation.

For over three decades, the Coramandel Agro products and Oils Ltd has been a prime mover and
catalyst behind key power sector reforms in the state - measures that have spiraled steady growth
witnessed in both industrial and economic areas. Right from the year of inception, in 1970,
CAPOL set its sights on “growth from within” meeting growing industry needs and reaching out
to touch the lives of the common man, in more ways than one. From the study it was also
concluded that though the company’s earnings was increasing every year, the company’s funds
are not properly utilized. Therefore CAPOL should try to improve its financial positions in the
coming years. At last it can be conclude that company financial position was seeing to be sound
because the company tries to increase its production and also net profit.
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Book Name Author Publisher Edition

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Financial M.Y.Khan &P.K Tata McGraw hill 4 edition

Management Jain

Financial
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Management Dr.S.N.Maheshwari Sultan chand 17 edition
&sons

Financial
th
Management Prasanna Chandra Tata McGraw hill 5 edition

th
Financial Ashok Banerjee excel books 4 edition

Management
th
Financial Ramachandran Tata McGraw hill 5 edition

Management

rd
Accounting For S.K.Maheswari vikas publishing 3 edition

Managers