SYNOPSIS OF THE PROPOSED RESEARCH WORK ON

“WORKING CAPITAL MANAGEMENT IN ANANTHA PVC PIPES PVT

LTD.”
BY
D. ANIL KUMAR
(1HK20BA005)
SUBMITTED TO

VISVESVARYA TECHNOLOGICAL UNIVERSITY, BELAGAVI

IN PARTIAL FULFILMENT OF THE REQUIREMENT FOR THE AWARD OF THE
DEGREE OF “MASTER OF BUSINESS ADMINISTRATION”

UNDER THE GUIDENCE OF:

INTERNAL GUIDE: EXTERNAL GUIDE:

Prof. Nalini Kantha.C Mr. Venkatesh D
Asst. prof., Finance and Accounting executive
Dept. of MBA Anantha pvc pipes pvt ltd.
HKBKCE, Bengaluru.

HKBK COLLEGE OF ENGINEERING

DEPARTMENT OF MANAGEMENT STUDIES
BENGALURU-560045
 MAY - 2022

TABLE OF CONTENTS
S.NO TOPIC PAGE
NO.
1 INTRODUCTION

2 LITERATURE REVIEW

3 OBJECTIVES OF THE STUDY:

4 RESEARCH METHODOLOGY:
 INTRODUCTION
INDUSTRY PROFILE:

Anantha PVC Pipes Pvt Ltd. was incorporated in the year Feb 2002. The factory is situated at
NH-7, Hampapuram village, Raptadu mandal, and Anantapur district. It was taken over by Nandi
group company. Its annual production capacity is 18,000 mts. And it is one of the leading
manufacturers of PVC pipes in south India. This company is equipped with technical
collaboration from Batten field of West Germany. It has made possible few other small ventures.
Pipes are sold under the brand names of MONARCH, KOHINOOR and KRISHNA.

Anantha PVC Pipes with their good quality, trouble free services, durability and commercial use
are a better choice than mild steel, galvanized steel, cast iron and plastic pipes.The company is
managed by a term of professionals under the guidance of a young, experienced and well
qualified dynamic managing director Mr. Sreedhar Reddy.

A dynamic entrepreneur Sri S.P.Y.Reddy was established a black pipes manufacturing company
in 1977 and the name of the company is Nandi Pipes Pvt Ltd at Nandyal, Kurnool district.
Anantha PVC Pipes Pvt Ltd was incorporated in the year 2002. The factory is situated at NH-7,
Hampapuram village, Raptadu mandal, and Anantapur district and it was taken over by Nandi
Group Company. The company is managed by team of professionals under the guidance of
young, experienced, and well qualified dynamic managing director Mr.S.Sreedhar Reddy.

Capital:
Capital is a wide phrase that can refer to anything that provides value or advantage to its owner,
such as a factory and its machinery, intellectual property such as patents, or a company's or
individual's financial assets. While money can be considered capital, it is most commonly linked
with cash that is put to use for productive or investing reasons.

The term "capital" refers to cash or liquid assets retained or gained for spending. In a wider
sense, the phrase can refer to any monetary-valued assets owned by a corporation, such as
equipment, real estate, and inventories. When it comes to budgeting, though, cash flow is capital.
Capital required for business can be classified as follows

 Working Capital

 Fixed Capital

Working Capital:

Fund needed for short term purpose for a purchase of raw materials, payments of
wages and other day-to-day expenses etc. these funds are known as working capital, simple
working capital refers to the firm capital which is required for financing short term are current
assets such as cash, marketable security, debtors and inventories working capital is also known
as revaluing or circulating capital or short-term capital.

1.1 CLASSIFICATION OF WORKING CAPITAL

Working capital may be classified in to two types

1. On the basis of concepts

2. On the basis of time

ON THE BASIS OF CONCEPT

Gross Working Capital:

In border sense the term working capitals refers to the gross working capital and
represents the amount of funds in current assets. Thus gross working capital is capital invested in
total current assets of the enterprise.

The GWC= Total of current assets.

Net Working Capital:

In narrow sense the term working capital refers to net working capital.

Net working capital is the excess of current assets of current liabilities.

 Thus NWC=current assets- current liabilities

Refers to the difference current assets and current liabilities, currents liabilities are those
claims of outsiders, which are expected to nature for payment within accounting years and
include creditors (accounts payable). Bills payable and outstanding expenses. Networking capital
can be positive or negative. A positive networking capital will arise when current assets, exceed
current liabilities and a negative working capital will arise when current liabilities are in excess
of current assets.

ON THE BASIS OF TIME

1. Permanent / fixed / fluctuating working capital

2. Temporary working capital

Permanent working capital:

The need for current assets arises because of the operating cycle. The operating cycle is
a continuous process and therefore, the need for the current assets is felt constantly. But the
magnitude of current assets needed is not always a minimum level of current assets, which is
continuously required by the firm to carry on its business operations. This minimum level of
current assets is referred to as permanent or fixed working capital.

1. Regular working capital

2. Reserve working capital

Regular fixed working capital required to ensure circulation of current assets from as to
inventories to receivables to cash and so on.

Temporary working capital:

Temporary variable working capital is the amount of working capital which is required to
the meet the seasonal demand and some special exigencies this can classified as
  Seasonal working capital

 Special working capital

The capital required to meet to seasonal need of the enterprise is called

seasonal working capital

Seasonal working capital is a part of working capital which is require to meet special
exigencies such as launching of extensive marketing campaigns for conducting research etc,

Fixed capital:

Long term funds are required to create production facilities through purchases of
fixed assets such as plants and machinery, lands, buildings; furniture’s etc. investing in these
assets represent that part of firm’s capital, which is blotched on a permanent or fixed capital.

LITERATURE REVIEW

 Arun kumar O. N. and Jayakumar S. (2010) explain how working capital is

considered to be the lifeblood and controlling nerve centre of the business. Profitability
and solvency are two vital aspects of working capital management. The survival and
growth of the company depends upon the ability to meet profitability and solvency. Here
the authors have concentrated on the analysis of liquidity and solvency position of the
major Public Sector Electrical Industries in Kerala such as Kerala Electrical and Allied
Engineering Company Ltd (KEL)and Transformers and Electrical Kerala Ltd (TELK) for
the financial years1997-98 to 2007-08 and 1997-98 to 2005-06 respectively. In
conclusion the authors have made a few important observations with regard to the
companies. Both the companies show a trend of very low level of solvency position. The
liquidity position of the companies is below the normal value. KEL has a lower level of
net profit compared to TELK for the stated period. In comparison with KEL, the
sensitivity of changes in the level of current assets is high in case of TELK.
 Rahman Mohammad M. (2011) focuses on the co-relation between working capital and
profitability. An effective working capital management has a positive impact on
profitability of firms. From the study it is seen that in the textile industry profitability and
working capital management position are found to be up to the mark.

 Sunday Kehinde James (2011) focuses on effective working capital management with
in small and medium scale enterprises (SMEs). Most of the SMEs have Little regard for
their working capital position and they don‟t even have standard Credit policy. They
have Very weak financial position, and rely on credit facility to finance their operations.
This credit facility is available from accounts payable most of the time. In conclusion the
authors recommend that for SMEs to survive within the Nigeria economy they must
design a standard credit policy and ensure good financial report and control system.
Besides, they must give adequate cognizance to the management of working capital. All
this require essystematic planning for the management of working capital to ensure
continuity, growth and solvency.

 Dr Kaddumi Thair A. and Dr Ramadan Imad Z. (2012) assess the effect of working
capital management on the profitability in a sample of 49 Jordanian Industrial
corporations listed at Amman Stock Exchange (2005 to 2009). And using two alternative
measures of profitability as proxy for the performance and five proxies for the working
capital management, estimation of 20 models panel data cross- sectional time series have
been tested employing two regression models- the fixed effects model and the ordinary
least model. The findings of the study were found to be significantly consistent with the
view of the traditional working capital theory.

 Ramadu Janaki P. and Parasuraman N. R. (2012) focus on the growth and sales
compared with the changes in profitability and in working capital of Indian
Pharmaceutical Industries. The study revealed that the growth rate in profits was
disproportional to the sales and working capital components like inventory and debtors.
The study ends with the view that there was no rationale or relationship between the sales
growth and other components like net working capital, inventory turnover and debtors
 turnover. Further, it can be deduced that growth rate in sales need not reflect the growth
rate in profitability and inventory turnover, and debtors turnover also need not exercise
any impact on profitability of the firms.

 Chandra H. and Selvaraj A. (2012) analyses the working capital management of

selected Steel Companies in India for the period from 2000-01 to 2009-10. To measure
the effective utilization of working capital, operating cycle and cash conversion cycle
were used. Besides, to measure the determinants of cash conversion cycle, the Kieschnick
model was used. The study concludes with the observation that the size of a company
plays a vital role in determining the efficiency of its working capital management. The
working capital ratios across the small, medium and large sized steel companies have
played a vital role in determining the working capital management of the selected Indian
steel companies.

 Joshi Lalitkumar and Ghosh Sudipta (2012) study the working capital performance of
Cipla Ltd during the period 2004-05 to 2008-09. Financial ratio shave been applied in
measuring the working capital performance, and statisticalas well as econometric
techniques have been used. It was observed that the selected ratios show satisfactory
performance, and significant negative relationship between liquidity and profitability is
found to exist.

 Joseph Jisha (2014) closely examines the study of working capital management in
Ashok Leyland and points out that the liquidity and profitability position of the company
is not satisfactory, and needed to be strengthened in order to be able to meet its
obligations in time.

 Madhavi K. (2014) Makes an empirical study of the co-relation between liquidity

position and profitability of the paper mills in Andhra Pradesh. It has been observed that
Inefficient working capital management makes a negative impact on profitability and
liquidity position of the paper mills.
  Gurumurthy N. and Reddy Jayachandra K. (2014) have conducted a study on the
working capital management of four pharmaceutical companies APSPDCL,APEPDCL,
APNPDCL and APCPDCL and have come to the conclusion that the existing system of
working capital management was not up to the mark and needed to be improved.

STATEMENT PROBLEM

Working capital is an important aspect of financial management. It plays an essential role in

organizations financial success. The nature of such working capital is very liquid. Valuation of
working capital elements like cash, debtors, stock and creditors itself is a difficult task for any
organization. So there arises a requirement for assessing working capital requirements,
monitoring and managing it, from time to time for greater efficiencies.

RESEARCH GAP
Working capital management (WCM) represents operating liquidity which companies need for
day-to-day operations. The objective is to be able to put together fixed assets such as plant and
equipment because working capital is considered as part of the operating capital. This shows
clearly that companies need to put more emphasis on working capital management in order to
bridge the gap on liquidity because it is critical in the day to day running of the business. It is
common for a company to be endowed with asset and profitability but it is short of liquidity if
assets cannot be readily converted into cash. Surprising studies that have been conducted are so
few and have not addressed the issue of liquidity in companies. In conclusion, this study will
revile the effect of working capital management on profitability and liquidity of the firm.

TOOLS FOR ANALYSIS:

To analyze the data acquired from the secondary sources the following tools are used:
 Ratio analysis.
 Percentage method
  Operating cycle method

RESEARCH DESIGN

The research design will be used in this study is both Descriptive and exploratory.

SOURCE OF RESEARCH DATA

The data is collected from the secondary sources of annual and financial statements of the
company.

SAMPLING DESIGN
Sampling unit : Financial Statements
Sampling Size : Last five years financial statements

OBJECTIVES OF THE STUDY

 To study the structure of working capital.
 To study on how the liquidity of company is causing profitability.
 To calculate and compare the operating cycle.
 To analyse the working capital management of company.
 To give feasible solutions to improve liquidity performance of company.

SCOPE AND PERIOD OF THE STUDY

The scope of the study is defined below in terms of concepts adopted and period under focus.

First, the study management of working capital i.e. gross and net are used in measuring
profitability and liquidity respectively and also to arrive at various objectives of the study.

Secondly, the study is based on the annual reports of the company for a period of five
years from 2013-2014 to 2016-17 (so we study 2013, 2014, 2015, 2016, 2017).
LIMITATIONS
 As most of the financial information was considered confidential, the access to the
information was restricted.
 The results of the study are limited to the available information.
 Due to frequent camps and workload of the staff in the organization much time could not
be spared by them for the project.
 The project is based mainly on secondary sources of information.

REFERENCE

WWW.Wikipidia.com
WWW.google.com