A STUDY ON CASH MANAGEMENT AT Plantation Corporation PDF

A STUDY ON CASH MANAGEMENT AT
PLANTATION CORPORATION OF KERALA Ltd, KOTTAYAM
PROJECT REPORT
Submitted by
SRAVAN PRASAD
MLM16MBA57
Under the guidance of
Mrs. JEENU MATHEW
Assistant Professor
in partial fulfilment of the requirements

for the award of the Degree of
MASTER OF BUSINESS ADMINISTRATION
of
A P J Abdul Kalam Technological University
DEPARTMENT OF MANAGEMENT STUDIES

MANGALAM COLLEGE OF ENGINEERING
ETTUMANOOR, KOTTAYAM
MAY 2018
PLANTATION CORPORATION OF KERALA Ltd
II
III
ACKNOWLEDGEMENT
On the completion of my project, I feel deeply indebted to many. First of all I express my
profound gratitude to the Lord Almighty for the inspiration and guidance throughout this project.
I would like to express my deep felt gratitude to our Principal Dr. M. M. PAULOSE,
M.Tech (IIT-M), PhD, for providing me this valuable opportunity to gain knowledge and
exposure. I extend my whole hearted gratitude to Prof. JOHN T VARUGHESE, M.Com,
M. Phil,DEAN of the Department for his valuable guidance and support throughout the project.
I would like to extend my deep felt gratitude to our Head of the Department: Dr.SIBU C
CHITHRAN, MBA, M.Phil., PhD (Management), FDP (IIMK), AMT (AIMA), MAIMSI
(USA) for encouraging and helping me for completing this project work.
I place my sincere thanks to Mr. SREELAKUMAR. S, General Manager, F&A for

permitting me to do the project work at Plantation Corporation of Kerala Ltd. I would also like
to thank the members of all other departments for their constant support and guidance.
I am very thankful to Mrs JEENU MATHEW, Assistant Professor, and my guide, who
have rendered timely relevant information, valuable suggestions, assistance and encouragement
which I found extremely useful for the project study. Without which it could have been difficult
for me to complete my project study.
Finally, with deep feelings of indebtedness, I express my heartfelt thanks to my parents,
friends and well-wishers who have directly and indirectly contributed towards this organizational
study.
SRAVAN PRASAD
IV
TABLE OFCONTENTS
Sl. No Topics Page No.

1 INTRODUCTION 1-7
1.1 Background of the study 2
1.2 Need and Significance of the study 3
1.3 Statement of the problem 4
1.4 Objectives of the study 5
1.5 Scope of the study 5
1.6 Limitations of the study 6
1.7 Organization of the report 7
2 LITERATURE REVIEW 8-31
2.1 Industry Profile 9
2.2 Company Profile 16
2.3 Review of Literature 29
2.4 Recent studies on the topic 30
3 THEORETICAL FRAMEWORK 32-39
3.1 Introduction 33
3.2 Nature 33
3.3 Advantages and Importance 37
3.4 Limitations 37
3.5 Methodology 39
4 RESEARCH METHODOLOGY 40-61
4.1 Objectives of research 41
4.2 Hypothesis of the study 41
4.3 Research design 42
4.4 Study approach 46
4.5 Sources of data 47
4.6 Primary & Secondary data 50
4.7 Sampling method 51
4.8 Tools for data analysis 51
V
5 DATA ANALYSIS 62-116

5.1 Financial tools 63-106
5.2 Statistical tools 107-116
6 FINDINGS 117-118
6.1 Findings 118
7 RECOMMENDATIONS 119-120
7.1 Recommendations 120
8 CONCLUSION 121-122
8.1 Conclusion 122
References 123-124
Appendices 125-135
VI
LIST OF TABLES
Table
No. Title of the Table Page No.
2.1 Different zones of Indian Rubber producing areas 10
2.2 Major estates of Plantation Corporation 17
5.1 Current ratio 63
5.2 Quick ratio 65
5.3 Absolute liquidity ratio 67
5.4 Inventory/stock turnover ratio 70
5.5 Fixed assets turnover ratio 71
5.6 Working capital turnover ratio 73
5.7 Current assets turnover ratio 75
5.8 Gross profit ratio 77
5.9 Trend analysis of Sales 79
5.10 Trend analysis of Working Capital 81
5.11 Trend analysis of Fixed Assets 83
5.12 Trend analysis of Current Assets 85
5.13 Trend analysis of Current Liabilities 87
5.14 Cash flow statement for the year ended 31.03.2013 90
5.19 Cash budget for the year 2012-13 101
5.24 Correlation between net sales and average inventory 107
5.25 Correlation between current assets and current liabilities 109
5.26 Value of chi-square 112
5.27 Table showing the Regression Analysis 113
VII
LIST OF FIGURES
Page
Fig. No. Title of the Figure No.
4.1 Flow chart of Research Problem 45
4.2 Evaluation of Correlation coefficient between 2 variables 60
5.1 Current ratio 64
5.2 Quick ratio 66
5.3 Absolute liquid ratio 68
5.4 Inventory turnover ratio 70
5.5 Fixed assets turnover ratio 72
5.6 Working capital turnover ratio 74
5.7 Current assets turnover ratio 76
5.8 Gross profit ratio 78
5.9 Trend analysis of sales 80
5.1 Trend analysis of working capital 82
5.11 Trend analysis of fixed assets 84
5.12 Trend analysis of current assets 86
5.13 Trend analysis of current liabilities 88
VIII
EXECUTIVE SUMMARY
Cash is the most crucial component of the working capital of a firm. It is the most liquid
of all current assets. Its effective management is the key determinant of efficient working capital
management. It is needed at all times to keep the business going. Business concern should always
keep sufficient cash for meeting its obligations. Cash is the basic input needed to keep the business
running on a continuous basis; it is also the ultimate output expected to be realized by selling the
services or product manufactured by the firm. Cash management in India is changing in order to
help corporate to compete in the global market. Corporate operating in today’s competitive climate
understands the importance of liquidity. A corporate treasurer needs to have a clear statistical view
of funds available within their organization and the overall market. This will help them to take a
better position in terms of understanding the exact working capital requirements of the
organization, reduce loss of float and discover better investment avenues.
Cash management ensure that the firm has sufficient cash during peak times for purchase
and for other purpose and helps to meet obligatory cash out flows when they fall due. Cash
management assists in planning capital expenditure projects. Here in this project, a study entitled
“A study on Cash Management at PLANTATION CORPORATION of KERALA Ltd.” is an
attempt to evaluate the cash management system.
The main objectives of this study are, to study the existing system of cash management in
Plantation Corporation of Kerala Ltd to appraise the performance of the cash management
system, to analyse the effect of cash changes in the revenue generation of the firm, to find out
the liquidity position of the concern through ratio analysis, to study the operational efficiency of
the firm during the period of study, to analyse the current assets and current liabilities of the
company, to define the impact in dependent variable caused by the changes in independent
variable.
IX
Cash management involves the aspects such as cash planning, managing the cash
outflows, managing optimum cash balance, investing cash. Cash management is also important
because it is difficult to predict cash flows accurately particularly the inflows and there is no
perfect coincidence between inflows and outflows.
The study on cash management system of Plantation Corporation of Kerala Ltd helps to
enlighten on the cash management system followed in Plantation Corporation of Kerala Ltd. This
study enables to analyze the cash management system performed and helps to find out the
drawbacks of the existing system. The study will enable the company to plan for its future and
will acts as a basis for future research works.
Research means search for knowledge. The purpose of research is to discover

answers to questions through the application of scientific procedures. The main aim of research
is to find out the truth which is hidden and which has not been discovered as yet. A hypothesis is
a proposed explanation for a phenomenon. A scientific hypothesis is a proposed explanation of
a phenomenon which still has to be rigorously tested. In contrast, a scientific theory has
undergone extensive testing and is generally accepted to be the accurate explanation behind an
observation. A working hypothesis is a provisionally accepted hypothesis proposed for
further research.
Null Hypothesis:
H0: Existing cash management system of PLANTATION CORPORATION

OF KERALA LTD is not effective.
Alternative Hypothesis:

OF KERALA LTD is effective.
X
CHAPTER – 1
INTRODUCTION
1.1 BACKGROUND OF THE STUDY
Cash is the most crucial component of the working capital of a firm. Its effective
management is the key determinant of efficient working capital management. It is needed at all
times to keep the business going. Business concern should always keep sufficient cash for
meeting its obligations. Cash is the basic input needed to keep the business running on a
continuous basis; it is also the ultimate output expected to be realized by selling the services or
product manufactured by the firm. Managers, therefore spend much time and effort in planning
cash receipts and disbursements to ensure a desirable level of cash and they take great care to
prevent cash from being lost, stolen or misused. Today, the financial manager’s prime function
is not only to manage cash resources of the firm efficiently but also at the same time has to set a
minimum level of cash so that the firm’s liquidity is not jeopardized and the firm’s profitability
is maximized.
Cash is the most liquid of all current assets. A firm should keep required amount of cash
to protect itself from the problems of liquidity and prevent disruptions in the process of
production. For some persons, cash means only in the form of currency. For other persons, cash
means both cash in hand and at bank. Some even include near cash assets in it. They take
marketable securities too as part of cash. These are the securities which can easily be converted
into cash. These viewpoints reflect the degree of freedom of the persons using the cash. The term
cash management is usually used for management of both cash and near cash assets. Although
the concept of cash management is not new, it has assumed greater importance in modern
business due to significant changes in the conduct of business and ever increasing difficulties in
the cost of borrowings. It is the duty of the finance manager to provide adequate cash to all
segments of the business concerns.
The importance of cash in an organization hardly requires any emphasis. A firm will
have to maintain a critical level of cash. If at a time does not have sufficient cash with it, it will
have to borrow from the market for reaching the required level. There remains a gap between
cash inflows and outflows. Sometimes cash receipts are more than the payments or it may be
2
vice-versa at another time. A bank manager tries to synchronize the cash inflows and cash
outflows.
But this situation is seldom found in the real world. Perfect synchronization of receipts and
payments of cash is only ideal situation. Cash is one of the important ingredients of working
capital of a business. It is both the beginning and end of the working capital cycle, irrespective
of its length and breadth. From the point of liquidity, cash is the most liquid of all current assets.
A firm should keep required amount of cash to protect itself from the problems of liquidity and
prevent disruptions in the process of production.
The business units owned, managed and controlled by the central, state or local
government are termed as public sector enterprises or public enterprises. These are also known
as public sector undertakings. A public sector enterprise may be defined as any commercial or
industrial undertaking owned and managed by the government with a view to maximize social
welfare and uphold the public interest. There is mixed economy in our country and the private
as well as the public sector contribute to the development of our economy. The government
establishes its enterprises for a balanced development of the economy and promotes public
welfare. The public enterprise helps in balanced regional development by promoting industries
in every part of the country. The development of public enterprises also prevents concentration
of economic power in the hands of an individual, or a group of individuals. The public enterprises
can help in reducing inequalities with the help of various policies like utilizing the earned profits
in public welfare activities and by selling raw material to the small scale industries at lower
prices.
1.2 NEED AND SIGNIFICANCE OF THE STUDY
Cash management in India is changing in order to help corporate to compete in the

global market. Corporate operating in today’s competitive climate understands the importance
of liquidity. A corporate treasurer needs to have a clear statistical view of funds available within
their organization and the overall market. This will help them to take a better position in terms
of understanding the exact working capital requirements of the organization, reduce loss of float
and discover better investment avenues.
3
The importance of Cash management in any industrial concern cannot be overstressed.

Under the present economic condition, management of Cash is perhaps more important than
even management of profit and this requires greatest attention and efforts of the finance manager.
It needs vigilant attention as each of its components require different types of treatment and it
throws constant attention on exercise of skill and judgment, awareness of economic trend etc.,
due to urgency and complicacy the vital importance of Cash. The bank operations team is under
constant pressure from their customers to release liquidity for addressing the customer needs.
 The study indicates the importance of cash management

 This study helps to judge the profitability and financial soundness of the firm.
 To estimate the speed of working capital cycle.
 This study focuses on the existing system in the company, and suggests measures to
overcome the drawbacks of existing system.
1.3 STATEMENT OF THE PROBLEM
Every business enterprises function with a view to earn profit. Profits are vital for a
concern in order to sustain and ensure a long life. Cash management is concerned with
management of cash in such a way as to achieve the generally accepted objectives of the firm
maximum profitability with maximum liquidity of the firm. It is the management’s ability to
recognize cash problems before they arise, to solve them when they arise and having made
solution available to delegate someone carries them out.
Cash management ensure that the firm has sufficient cash during peak times for purchase
and for other purpose and helps to meet obligatory cash out flows when they fall due. Cash
management assists in planning capital expenditure projects. It helps to arrange for outside
financing at favorable terms and conditions, if necessary, allow the firm to take advantage of
discount, special purchases and business opportunities. And also helps to invest surplus cash for
short or long term periods to keep the idle funds fully employed.
Here in this project, a study entitled “A study on Cash Management at PLANTATION

CORPORATION of KERALA Ltd.” is an attempt to evaluate the cash management system.
4
1.4 OBJECTIVES OF THE STUDY
 To study the existing system of cash management in Plantation Corporation of Kerala Ltd
to appraise the performance of the cash management system
 To analyze the effect of cash changes in the revenue generation of the firm.
 To find out the liquidity position of the concern through ratio analysis.
 To study the operational efficiency of the firm during the period of study.
 To analyze the current assets and current liabilities of the company.
 To make suggestion and recommendation to improve the cash position of Plantation
Corporation of Kerala Ltd.
 To determine the relationship between sales and average inventory.
 To examine the cash position of Plantation Corporation of Kerala Ltd during the period
of the study.
 To check whether the cash management system of Plantation Corporation of Kerala Ltd
is effective or not.
 To define the impact in dependent variable caused by the changes in independent variable.
1.5 SCOPE OF THE STUDY

Cash management involves the aspects such as cash planning, managing the cash outflows,
managing optimum cash balance, investing cash. Cash management is also important because it
is difficult to predict cash flows accurately particularly the inflows and there is no perfect
coincidence between inflows and outflows. Cash management involves the aspects such as cash
planning, managing the cash outflows, managing optimum cash balance, investing cash. Cash
management is also important because it is difficult to predict cash flows accurately particularly
the inflows and there is no perfect coincidence between inflows and outflows.
Cash management involves the aspects such as cash planning, managing the cash outflows,
managing optimum cash balance, investing cash. Cash management is also important because it
is difficult to predict cash flows accurately particularly the inflows and there is no perfect
coincidence between inflows and outflows.
5
The study on cash management system of Plantation Corporation of Kerala Ltd helps
to enlighten on the cash management system followed in Plantation Corporation of Kerala Ltd.
This study enables to analyze the cash management system performed and helps to find out the
drawbacks of the existing system. The study will enable the company to plan for its future and
will acts as a basis for future research works.
1.6 LIMITATIONS OF THE STUDY
 Since data collected used is secondary in nature, this poses the constraints on the validity
and reliability of the data.
 Today, companies are very sensitive regarding their internal data so they are not ready to
provide all the internal data and this causes a hindrance to the study.
 This study was carried out only for 1 month. So it is very difficult to conduct an in-depth
study.
 The findings and suggestions are based only on the secondary sources of information.
 The study covered the data of past 5 years. So any fluctuations before or after the study
period will not be reflected in this study.
 The analysis is done based on the annual reports and journals of the company. There is no
other sources of data is available.
 It is not possible to conduct an elaborate study by using only 5 year financial statements.
6
1.7 ORGANIZATION OF THE REPORT
 Chapter – 1 INTRODUCTION
It includes background of the study, need & significance of the study, statement of the
problem, objectives of the study, scope of the study, limitations of the study and organization of
the report.
 Chapter-2 LITERATURE REVIEW

It includes industry profile, company profile and reviews on research methodology.
 Chapter-3 THEORETICAL FRAMEWORK

It includes an introduction to cash management, nature of cash management,
advantages and importance and limitations.
 Chapter-4 RESEARCH METHODOLOGY

It includes the objectives, hypothesis, research design, sources of data and data
analysis techniques.
 Chapter-5 DATA ANALYSIS

It includes the analysis and interpretations found using various financial tools and
statistical tools.
 Chapter-6 FINDINGS
 Chapter-7 RECOMMENDATIONS
 Chapter-8 CONCLUSIONS
7
CHAPTER – 2
REVIEW OF RELATED LITERATURE

2.1 INDUSTRY PROFILE
Rubber & Rubber Based Product – Manufacturing & Marketing
Natural rubber is an elastic hydrocarbon polymer that naturally occurs as a milky

colloidal suspension, or latex, in the sap of some plants. It can also be synthesized. The entropy
model of rubber was developed in 1934 by Werner Kuhn.
The major commercial source of natural rubber latex is the Para rubber tree, Have
brasiliensis (Euphorbiaceous). This is largely because it responds to wounding by producing
more latex. Henry Wickham gathered thousands of seeds from Brazil in 1876 and they were
germinated in Kew Gardens, England. The seedlings were sent to Colombo, Indonesia,
Singapore and British Malaya. Malaya was later to become the biggest producer of rubber.
Liberia and Nigeria are examples of African rubber-producing countries. Other plants
containing latex include figs (Focus elastic), euphorbias, and the common dandelion. Although
these have not been major sources of rubber, Germany attempted to use such sources during
World War II when it was cut off from rubber supplies. These attempts were later supplanted by
the development of synthetic rubber.
Synthetic rubbers are made by the polymerization of a single monomer or a mixture of

monomers to produce polymers. These form part of a broad range of products extensively studied
by polymer science and rubber technology. Examples are SBR, or styrene-butadiene rubber, BR
or butadiene rubber CR or chloroprene rubber and EPDM (ethylene-propylene-dyne rubber).
9
Indian rubber industry
Indian rubber industry has been growing in along with the strength and importance, as a
part of India’s burgeoning role in the global economy. India is the world’s largest producer and
the third largest consumer of natural rubber and is also one of the fastest growing economies
globally. With a stable annual growth rate of 8-9%’ rising foreign exchange reserves, rapid
expansion in the capital markets and FDI inflow, India proudly stakes its claim as the second
fastest growing major economy in the world. Such factors combined with high concentration of
automobile production and the presence of large and medium industries in south India, Chennai
has become the perfect place for the event India rubber expo-2011.
Production of rubber in the world was considered to be very unstable during the last few
years. Comparatively with worlds India’s production of rubber is consistent at the rate of 6% per
annum. The Indian rubber industry has been growing tremendously over the years.
Indian rubber producing areas divided into two zones – traditional and non- traditional
Table no. 2.1 TABLE SHOWING ZONES OF INDIAN RUBBER PRODUCING AREAS
Traditional zone Non- traditional zone
Kanyakumari in Tamil Nadu Coastal regions of Karnataka
Districts of Kerala Goa
Andhra Pradesh
Odisha
10
History
Ever since the beginning of commercial cultivation of natural rubber (NR) in India during
the earl’s 20th century, the planters in Travancore, Cochin and Malabar regions in Southern India
had been experiencing the necessity for research on problems of rubber planting and up keep.
Initially, the scientific department of the United Planters' Association of Southern India (UPASI)
was largely responsible for the initiative in research on rubber. On their request, the Madras
Government appointed a scientific officer in 1909 to strengthen research activities on rubber.
Subsequently, experiment stations were established in Mundakayam, Thenmalai and Motley for
addressing agronomic and mycological problems concerning rubber. Consequent to the rubber
slump and falling revenue of rubber estates, Thenmalai and Mosley experiment stations were
closed down in 1926 and the Mundakayam station in 1932. Since then, for over two decades, the
Indian rubber plantation industry had been without any organized research support.
When the Indian Rubber Board was established on the 19th April 1947 to look after the
rubber plantation industry in the country, its functions as defined under the Rubber Act, 1947
included the development of the NR industry by devising suitable promotional measures,
undertaking scientific, technological and economic research etc. Even after the establishment of
the Rubber Board, there were only two scientific officers namely, the Rubber Production
Commissioner (RPC) and a Field Officer, and their work confined mainly to advisory services
and distribution of selected planting materials.
The importance of research on rubber was recognized by the Rubber Board as early as in
1949, when the Board in its sixth meeting had resolved that it should establish its own research
stations at suitable places in the plantation districts of Travancore - Cochin. This meeting
approved the appointment of Sri. K.N. Kaimal as the Rubber Production Commissioner. As per
the request of the Rubber Board, the Indian Tariff Board which was entrusted by the Government
of India in 1950 with the task of examining the cost of production of raw rubber and determining
the fair price of various grades was asked to examine the different aspects of protection necessary
for the speedy development of the industry. The Tariff Board in its report dated 28th March 1951
11
recommended establishment of an All India Rubber Research Institute on a scale comparable to

the existing research organizations in the main rubber producing countries. The scheme included
the appointment of a Director, Rubber Production Commissioner, Rubber Chemist, Botanist,
Pathologist, Soil Chemist and a few Assistant Chemists, Assistant Pathologists etc.
On the request of the Government of India, the Indian Council of Agricultural Research
(ICAR) examined the recommendations of the Tariff Board and rejected the scheme as out of
proportion with the requirements and suggested for a small laboratory and essential staff
(Pathologist, Junior chemist and Junior Botanist) to investigate local problems. ICAR also
recommended the establishment of a 100 acre experiment station and also an isolated seed garden
of 15 acres for the production of high yielding seeds. The Rubber Board also rejected the Tariff
Board's proposals as unsuitable for the requirement and being beyond its resources. The Tariff
Commission, in their report dated 27th October 1952 recommended for the implementation of
the revised scheme as suggested by the ICAR for the proposed research station.
Meanwhile the Rubber Board on 27th March 1954 approved a research scheme prepared
by the Rubber Production Commissioner for the establishment of a Rubber Research Institute
with an Experiment Station, with a financial outlay of Rs.10 lakhs and the Government approved
the same in June 1954. According to the scheme, the new Institute was to have four research
divisions namely, Agronomy, Botany, Pathology and Chemistry. Each Division was to have a
research officer and a research assistant and a small experiment station for field experiments. A
beginning was made in 1955 by establishing the Institute at the rented premises of Antheil
Buildings of the Rubber Board in Kottayam town with a temporary laboratory. The foundation
stone of the Rubber Research Institute of India (RRII) building was laid on 4th
February 1956 in the suburbs of Kottayam. During the early years, RRII had only three
divisions namely, Agronomy, Botany and Pathology. Agronomy and Botany divisions had senior
officers only for short periods. Due to lack of enough laboratory space and supporting staff, the
Rubber Research Scheme 1954 could not be implemented fully. The Agronomy and Botany
Divisions collected data pertaining to the response of clones to maturing and locations
respectively. Subsequently the different Divisions were transferred to the RRI building in 1962,
12
when its construction was completed. The Chemistry and Rubber Technology (C&RT) Division
started functioning with the appointment of a Deputy Director on 1st June 1963. Other senior
officers of C&RT and Agronomy Divisions were also appointed 1963.
The Publicity Section of the Administration Department and the Extension Wing of the
Development Department of the Rubber Board were put under the control of the Director in
1964. The Library functioning under the Administration Department since its beginning was also
transferred to the administrative control of the Director from 1st June 1964. The Economic
Research unit, which was functioning as part of the RRII since 1968 and later as part of the
Rubber Production (RP) and Rubber Processing Departments, became the Agricultural
Economics Division of the RRII in September 1986. In 1976, the Biochemistry unit functioning
under the C&RT Division was transferred to the Plant Physiology unit of the Botany Division.
The full-fledged Plant Physiology and Exploitation Division started functioning in 1978 and the
Biotechnology Division in December 1985. The C&RT Division was renamed as Rubber
Chemistry, Physics and Technology (RCPT) Division in 1986. The Germplasm Division was
established in February 1989 and the posts created in the Botany Division during 1978 for
germplasm work were
When the research component of the World Bank Project was implemented in 1994, the
organization set up of RRII has been changed with the creation of 28 new posts under the scheme.
13
RUBBER MANUFACTURES IN KERALA
Karan Group of Companies, Alappuzha
Harrison Malayalam Ltd
Rubber Mark, Kochi
Hindustan Rubber Trading Corporation, Kozhikode
Thomson Ltd, Kottayam
St. Mary’s Rubber PVT Ltd, Kanjirapally
Plantation Corporation, Kottayam
Uses of rubber
The use of rubber is widespread, ranging from household to industrial products, entering
the production stream at the intermediate stage or as final products. Tires and tubes are the largest
consumers of rubber, accounting for around 56% total consumption in 2005. The remaining 44%
are taken up by the general rubber goods (GRG) sector, which includes all products except tires
Other significant uses of rubber are door and window profiles, hoses, belts, and
dampeners for the automotive industry in what is known as the "under the bonnet" products.
Gloves (medical, household and industrial) are also large consumers of rubber and toy balloons,
although the type of rubber used is that of the concentrated latex. Significant tonnage of rubber
is used as adhesives in many manufacturing industries and products, although the two most
noticeable are the paper and the carpet industry.
Additionally, rubber produced as a fiber has significant value for use in the textile
industry because of its excellent elongation and recovery properties. For these purposes,
manufactured rubber fiber is made as either an extruded round fiber or rectangular fibers that are
14
cut into strips from extruded film. Because of its low dye acceptance, its hand and appearance,
the rubber fiber is either covered by yarn of another fiber or directly woven with other yarns into
the fabric. In the early 1900’s, for example, rubber yarns were used in foundation garments.
While rubber is still used in textile manufacturing, its low tenacity limits its use in lightweight
garments because latex lacks resistance to oxidizing agents and is damaged by aging, sunlight,
oil, and perspiration. Seeking a way to address these shortcomings, the textile industry has turned
to Neoprene (chloroprene rubber), a type of synthetic rubber as well as another more commonly
used elastomeric fiber, spandex (also known as eglantine), because of their superiority to rubber
in both strength and durability. Rubber is also commonly used to make rubber bands and
balloons, although latex can be used as well.
Current sources of rubber

Close to 21 million tons of rubber were produced in 2005 of which around 42% was
natural. Today Asia is the main source of natural rubber, accounting for around 94% of output
in 2005. The three largest producing countries (Indonesia, Malaysia and Thailand) together
account for around 75% hypoallergenic rubber can be made from Guayule. Early experiments in
the development of synthetic rubber led to the invention of Silly Putty. Natural rubber is often
vulcanized, a process by which the rubber is heated and sulfur, peroxide or biphenyl are added
to improve resilience and elasticity, and to prevent it from perishing. Vulcanization greatly
improved the durability and utility of rubber from the 1830s on. The successful development of
vulcanization is most closely associated with Charles Goodyear. Carbon black is often used as
an additive to rubber to improve its strength, especially in vehicle.
Kottayam District of Kerala is the leader in rubber production among the states of India.
The rubber plant is not a native plant of India. Dutch colonialists who also cultivated rubber in
their plantations in Indonesia introduced the rubber plant to Kerala, India, because of its similar
tropical climate.
15
2.2 COMPANY PROFILE
India is an agricultural country. One third of the Indies population depends on agriculture
directly or indirectly. Agricultural forms the backbone of the Indian economy. Rubber plantation
industry plays an important role in the Indian economy in terms of output and employment. India
is the 4th largest producer of natural rubber in the world. It produces about 5% of the global
output.
In Kerala there are two sectors of plantation. They are public and private. Twenty
percentages in public sector and eight percent of plantation are in private sector. Plantation under
government is owned by Kerala Forest Development Corporation limited, oil palm India limited,
Plantation Corporation of Kerala, Kerala Agricultural Department, Kerala Forest Department
and Rubber board.
The Plantation Corporation Of Kerala Ltd, the largest plantation company in public sector
was formed in 1962, the government of Kerala with an initial share capital of Rs.750 Lakhs. The
purpose of establishment of the plantation corporation was to accelerate the agro-economic
development of Kerala. No efforts have been spared to achieve this purpose in the four decades
of its existence. The Plantation Corporation Of Kerala Ltd always maintained a very healthy
state of affairs in production and human resource management. The corporation enjoyed profits
rolling in all through its existence. Extensive estate holdings of the Plantation Corporation Of
Kerala Ltd have made it one of the largest plantation owners in the country. From a total 14,020
ha. as much as 6458 ha. are rubber. Cashew plantations make up 6,361 Ha. and oil palm in 705
Ha. while the rest area is planted with cinnamon, areca nuts, coconut, pepper, aecidia, teak and
other miscellaneous trees. Thus rubber and cashew are the two major crops raised by the
plantation corporation. The organization has three rubber processing factories and one rubber
wood processing unit. Total number of employees in organization is 66600. It has 14663 hectares
of estate totally.
16
Table no. 2.2 TABLE SHOWING MAJOR ESTATES OF PLANTATION

CORPORATION ALL OVER KERALA
Place District Hectares
Kodumon Pathanamthitta 1202
Chandhanappally Pathanamthitta 1663
Thannithode Pathanamthitta 668
Perambra Kozhikode 443
Kallala Ernakulam 1592
Athirappally Thrissur 573
Nilamboor Malappuram 573
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Objectives of the firm
To establish rubber plantation.
To establish cashew plantation.
To establish the plantation corps, seed and food crops.
To cultivate spice crops
Classification of employees in PCK
Staffs
Workers
Officers
PRODUCT PROFILE
PCK- PRODUCTS
Cenex(60% Centrifuged Latex)
Block Rubber(ISNR)
Treated Rubber Wood
Cinnamon Oil and Bark
Oil Palm FFB
Raw Cashew Nuts
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Cenex:
The Company is one of the major producers of high quality concentrated latex (Cenex)
in India. At present we can supply 40,000 barrels of 60% concentrated latex in a year, which is
expected to be doubled with the induction of tapping in remaining replanted area in few years.
The cenex produced from both factories maintain the standard higher than the same stipulated
by BIS (Bureau of Indian Standards). Cenex is packed and sold in 205 liter barrels. Presently
the corporation is exploring the possibilities exporting cenex to overseas buyers to bring in price
stability in the domestic market. To achieve this goal, effort for ISO certification has been
initiated.
Block Rubber (ISNR):
Our Block Rubber is one of the best qualities produced in India as per ISI specifications.
The thermal fluid based drying system can produce 6 MT ISNR-10, ISNR-20 grades per day.
We are using only fresh scrap rubber from our own plantations. ISNR is packed and sold in 25
kg units packed in polythene bags.
Treated Rubber Wood:
The Company can produce and supply 85 M3 treated Rubber wood per month. As we
are using only fresh rubber logs from our own rubber plantations, high standard and quality is
maintained in all aspects which is reflected in our products. The processing system is based on
Borax-Boric acid, which is accepted as most eco-friendly treatment. This is a novel attempt by
which deforestation for timber purpose can be checked to a large extend.
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Cinnamon Oil and Bark:
The Company is producing superior quality bleached cinnamon oil and cinnamon bark
from own plantation at Alakode in Kannur District. The present conventional oil distillation
unit can produce 250 kg oil in a year and 2000 kg bark per year. Steps are being taken to
modernize the distillation unit and also to market cinnamon oil and bark in consumer packs
under PCK brand name.
Oil Palm FFB:
As the installation of our own oil palm mill is not yet completed, we are now selling the
FFB (Fresh Fruit Bunches) as such to various oil palm mills located in Kerala, Tamil Nadu,
Karnataka and Goa. PCK is planning to establish an oil palm mill in Kalady Group, by the time
entire area of oil palm come to yielding stage.
Raw Cashew Nuts:
The Cashew crops from the different estates are being auctioned at flowering stage
itself. The estates are equipped with drying yards and god downs. Efforts are now on to obtain
organic certification and also to offer cashew apple as a saleable commodity for value addition.
It is also proposed to process the raw nuts to market cashew kernels in consumer packs under
PCK brand.
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OTHER PRODUCTS
60% centrifuged latex with ISI specification
Low Ammonia Latex
Crumb Rubber(ISNR)
Estate Brown Crepe
Treated Rubber Wood
Dried Coffee seeds
Black Pepper
Processed Cardamom
Processed Cinnamon Bark and Oil
Dried Arecanut
Dried Cashew
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All the products of the Corporation are of superior quality with ISI specification and A-Mark
and are in great demand in the market. The crop from the Rubber plantation are processed in to
various forms of value added products such as Cenex, low ammonia latex, Estate brown crepe,
pale latex crepe and Crumb Rubber. The processing is done in the modern processing units
located in the estates itself. The products of PCK conform to international and national
specifications. They are bought directly to the manufacturing plants from the PCK estates.
DEPARTMENTAL PROFILE
In a large organization the departmentation of the office assures great importance.

Departmentalization may be defined as the “process of grouping activities in to units and sub
units for the purpose of administration”. The administrative units and sub units may be designed
as divisions, units, branches, sections, jobs or by some other names. The progress of
departmentation takes place at all levels in the organization. The chief executive, groups the
activities in to major divisions such as production, sales, finance, etc…
The PCK is grouping their activities according to the functions like sales, personnel,
finance etc. In PCK there are several sub departments.
Departments of Plantation Corporation are the following; it is done on the basis of

functions of department.
1. Personnel department.
2. Purchase department.
3. Finance and accounting department.
4. Sales department.
5. Engineering department.
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Personnel Department
In plantation corporation departments function is to look after welfare of employee. For

the purpose of achieving the goals of the Plantation Corporation, personnel department helps in
development, integration and maintenance of personnel, and thereby achieving the objectives.
Here total work force will be under control of personnel department. Several planning,
organizing, directing functions take place in personnel department. Workers are motivated to
achieve plantation’s objective. Human resource is treated as a source for further development of
organization. Personnel department will provide all facilities to improve the performance of
workers. Performance appraisal, Employee counseling, career developing are some of the
important functions. These programs will make employees of Plantation Corporation to improve
their capability to perform bettering all their respective jobs.
In Plantation Corporation, General Manager of personnel and administrative department

is the head. Below him there are two subordinates, they are personnel officer and manager of
personnel and administrative department.
Functions of Personnel Department
To regulate attendance and punctuality of all employees in the office.
To maintain the personnel records like service book, incumbent, register etc.
To take disciplinary proceedings against delinquent employees and take follow up

actions.
To arrange for purchase and provide stationary and other office equipment’s to the
office staffs.
To prepare and implement rules and regulations.
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To arrange for proper receipt and distribution of mails and communications.
To attend all legal matters relating to personnel department.
To advice board of directors on staff selection.
To solve grievances of employees.
Purchase Department
Purchase department performs several complex functions. Plantation has to purchase raw
materials from every estate. These must be done in utmost importance.
For making their finished goods they have to acquire goods to accomplish the goals of
the organization. The purchase department usually issues purchase orders for supplies, services
equipment and raw materials. In case of plantation corporation purchasing manager is the person
who guides the organization in acquisition, procedures and standards.
Before making purchase decisions the plantation corporation has to identify potential
suppliers for specified supplies. Here suppliers are selected on the basis of some criteria’s.
In plantation corporation head offices receives the list, which is to be purchased. Tenders
or quotations notices are published by plantation. The most economical ones are selected on the
basis of low price and high quality and purchase order is issued to selected vendors. The details
are then sending to accounting departments.
Finance and Accounting Department
The effectiveness of management depends on efficient utilization of its financial

resources. Plantation Corporation have succeeded and established very well because of proper
use of finance. Finance and accounting department of plantation record all the financial details
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and financial functions in a systematic manner. Financial department carefully monitors each
and
every activity of all departments. Every function that involves finance are carefully monitored
and recorded. Accounting department functions will be under control of several charted
accountants. Accounting department helps in preparing budgets and provides very accurate
information about financial details about each and every department. In Plantation Corporation
General Manager is the head. The general manager is supported by three subordinates.
Objectives of Finance and Accounting Department:
Budget results (Actual) to be collected from various units by 9th day of every
succeeding month and subsequently budget variance to be analysed and reported
by 11th and simultaneously variance to be reduced to the practical extent.
Quarterly Profit & Loss Account for the previous quarter to be finalized before 9th
of the second month of every succeeding quarter.
Product cost and proportionate margin to be projected monthly (based on the cost
per unit of various estates) and actual cost and margin earned for the previous
month to be evaluated.
Significant variance in the profit highlighted vide the Half Yearly P&L Account
and Annual Provisional P&L Account shall be critically evaluated for identifying
the root cause of variance. The variation of the Annual Profit reported vide
provisional P&L Account finalized in the month of April with respect to the
previous F.Y. and that of the finalized P&L Accounts to be maintained below 15%.
The Payments to be done at the earliest in the specified pattern.
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Highlighting the strength and weakness of PCK as a whole, and its various
Estates/Units based on the financial and balance sheet ratio.
Engineering Department
In Plantation Corporation Engineering department performs activities which provide

technical information to the management. Engineering department helps Plantation Corporation
in designing production function and also helps in taking managerial decision.
Several processes related to various estates are handled by engineering department. It

helps the plantation corporation to adopt new technology in processing 60% centrifuged latex.
Complex machineries are used in processing certain products, so engineering department is an
essential one in Plantation Corporation. Chief construction engineer is the head of the
department. There will be several engineers in each estate and factories under his control.
Sales Department
In Plantation Corporation sales department performs activities related to sales and

marketing. Sales department performs functions of sales and other marketing functions.
60% centrifuged latex is the main product of the plantation corporation. In Plantation
Corporation marketing improves the selling environment. Departmental coordination is very
good in case of Plantation Corporation. This is because both are integrated in sales department.
One of the main goals of the sales department is to improve the interaction between the
customer and the sales facility or mechanism. Plantation corporation is trying their best to
coordinate them effectively. Several managers appointed directly under General Manager for
maintaining a proper co-ordination. One of the most important functions performed by sales
department is to collect orders from prospective customers. Then they have to properly analyze
it and has to make several eliminations out of it. Only after these steps goods are issued to
customers.
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Main functions of the sales department as follows, for Plantation Corporation.
1. To attract and retain customers.
2. To analyze the demands of the market.
3. To prepare sales budget.
4. To fix sales target.
5. To explore new market.
6. Finding out appropriate dealers.
7. Taking steps to increase sales volume.
8. Co-coordinating sales related activities.
9. Performing marketing departmental activities.
In case of plantation corporation sales department is responsible for generating revenue

through exchange process. There is an efficient sales force in the department and their main
objective is to control. Co-ordinate, promote activities related sales and marketing. Preparation
of sales strategy, collecting market information is also done by sales department. Top
management will take several important decisions after analyzing this collected information.
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Sales promotion
Several steps are taken by sales department to promote sales. All activities other than
advertising, publicity, which stimulate dealers to purchase from Plantation Corporation is
classified in to sales promotion. Some tools are used in sales promotion are free samples, free
trial, coupons, cash refund etc…
Some of the important tools used by sales department to promote sales are:
Free samples
Free trial
Coupons
Cash refund
Free samples
A sample simply means a part of anything presented for inspection. Plantation

Corporation will provide 60% centrifuged latex as a sample, to dealers to inspect quality. Free
samples are very helpful to motivate dealers. Dealers can test the quality of 60% centrifuged latex
and it is very helpful to make purchase decision.
Free trial
One of the main differences between free samples and free trials of Plantation
Corporation is that, free samples can’t be used for commercial purpose. Simply free samples
can’t be used for reselling. But in case of free trial, the dealers can sell it to their customers.
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Coupons
Coupons of plantation corporation are simply an advertising, that entitles the bearer to
certain benefits, such as cash refund, gift etc…Normally plantation corporation is providing a
certain amount of discount. Normally coupons are used very less.
Cash refund
Cash refund is a simple technique; here a certain amount is provided as a discount on

purchase. But this technique is used only very rarely.
2.3 REVIEW OF LITERATURE:
Research is an organized & systematic way of finding answers to questions. It should be

systematic because there are definite set of procedures & steps which the researcher has to
follow. It should be organized because there is a structure or method in doing research. It is a
planned procedure. Research work cannot be done spontaneous.
Cash management is concerned with the management of cash inflows, outflows and cash
flows within the firm. It also includes the matters relating to financing of deficit and investment
of surplus cash so as to maintain optimum cash balance. Hence in order to solve the problems as
well as issues related to the cash management, a research process is being carried out with the
set hypothesis. This will results into the analysis of the statement of the problems related to the
cash management issues followed by the data collection and hence will leads to attainment of
the objectives by using the cash management techniques such as cash flow analysis, cash budget,
ratio analysis, trend analysis etc.
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2.4 RECENT STUDIES ON THE TOPIC
Dotsey, M, Cash Is Any Medium Of Exchange, Which Is Immediately Negotiable. It must be

free of restriction for any business purpose. Cash has to meet the prime requirements of general
acceptability and availability for instant use in purchasing and payment of debt.
Hampton, cash is the money which a firm can disburse immediately without any restriction. The
term cash includes coins, currency and cheques held by the firm, and balances in its banks
accounts.
Johnson and Aggarwal, Defined as Cash Management as to involve managing the money of
the firm in order to attain maximum interest income on idle funds.
Kytonen, presented some preliminary evidence regarding relationships between cash

management and a firm’s performance. He investigated cash management behavior using the
ratios of financial statement analysis as explanatory variables in the firm’s demand for money
function addition to some macro-variables.
Baumol suggested that cash balances could be treated in the same way as inventories of goods.
A stock of cash is it its holder’s inventory, and like an inventory of a commodity, cash is held
because it can be given up at the appropriate moment, serving then as its processor’s part of the
bargain in an exchange.
Lee, cash management involves the administration of liquid assets and liabilities, and the raising
of funds to finance a business. Cash flow control is therefore crucial to ensuring that a business
remain liquid and able to meet payment obligations.
Lynch, noted that one of the major aims of cash management is to accelerate cash flows and
delay cash out f flows. However, Lynch warned that both positions have associated dangers.
Once cash inflows are accelerated, the cost of management and cash collection will most likely
reduce will probability will be enhanced, however the reduction of the credit period might
negatively affect sales which most likely reduce profit.
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Milne and Robertson and Perry et al, utilized the diffusion process for cash flows. Milne and
Robertson studied the behavior of a firm whose cash flows is determined by a diffusion process
which faces liquidation if the internal cash balance falls below some threshold value.
Mills Geoffrey, one of the primary objectives of cashier is to maintain a sound liquid position
of the school in order to meet motives of holding cash.
Nadiri, real cash balances serve as productive inputs. Like any other capital investment, an
increase in cash balance results in a decrease in cash flows, and vice versa. They are part of the
working capital of the firm facilitating its productive process, often by direct means, such as
hedging against changes in the prices of capital, labor and interest rate.
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CHAPTER – 3
THEORETICAL FRAMEWORK
3.1 INTRODUCTION
Cash is the most liquid assets of vital importance of the daily operations of business
firm. Cash is the basic input needed to keep the business running on continues basis. It is also an
ultimate output expected to be realized by selling the service of product manufactured by the
firm. Cash is the life blood of every business, so a manager can aware about how to manage the
cash management of the firm. After the preparation of cash budget, the financial manager should
also ensure that are no significant differences between the expected/budgeted cash flows and the
actual cash flows. This requires controlling and reviewing of the whole exercise on a regular
basis. The financial manager should take appropriate steps for preventing any unexpected
deviation in both the inflows as well as outflows.
Cash Management originally means the management of liquidity in order to meet their
day -today commitment. There are many companies that do not put enough focus on managing
the liquidity of the firm. The result of poor focus on cash management often means that the
financial assets are bound. Instead of being bound, it could be used to invest for example in
material. According to recent studies they found that small businesses have a poor cash
management attention
3.2 NATURE
For some persons, cash means only in the form of currency. For other persons, cash
means both cash in hand and at bank. Some even include near cash assets in it. They take
marketable securities too as part of cash. These are the securities which can easily be converted
into cash. These viewpoints reflect the degree of freedom of the persons using the cash. Whether
a person’s wants to use it immediately or can wait for a time to use it depends upon the needs of
the concerned persons. Cash itself does not produce goods or services. It is used as a medium to
acquire other assets. It is the other assets which are used in manufacturing goods or providing
services. The idle cash can be deposited in bank to earn interest.
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Business has to keep required cash for meeting various needs. The assets acquired by cash again
help the business in producing cash. The goods manufactured or services produced are sold to
acquire cash. A firm will have to maintain a critical level of cash. If at a time does not have
sufficient cash with it, it will have to borrow from the market for reaching the required level.
MOTIVES FOR HOLDING CASH
The firms need for cash may be attributed to the following needs:
 Transaction motive
 Precautionary motive
 Speculative motive
Some peoples are of the view that a business requires cash only for the first two motives
while others feel that speculative motive also remains. These are discussed as follows:
1. Transaction Motive:
A firm needs cash for making transactions in the day to day operations. The cash is
needed to make purchase, pay expenses, taxes, dividend etc. The transaction needs of cash can
be anticipated because the expected payments in near future can be estimated. The receipts in
future may also be anticipated but the things do not happen as desired.
2. Precautionary Motives:
A firm is required to keep cash for meeting various contingencies. Though cash inflows
and cash outflows are anticipated but there may be variations in these estimates. A firm should
keep some cash for such contingencies or it should be in a position to raise finance at a short
period. The cash maintained contingency is not productive or it remains ideal. However, such
cash may be invested in short – period or low –risk marketable securities which may provide
cash such as and when necessary.
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3. Speculative Motive:
The speculative motive relates to holding of cash for investing in profitable opportunities
as and when they arise .Such opportunities do not come in a regular manner. These opportunities
cannot be scientifically predicted but only conjectures can be made about their occurrence. The
primary motive of a firm is not to indulge in speculative transactions but such investments may
be made at times.
CASH MANAGEMENT
Cash management is concerned with the managing of: (i) Cash flows into and out of the
firm, (ii) Cash flows within the firm, and (iii) Cash balances held by the firm at a point of time
by financing deficit or investing surplus cash. It can be represented by a cash management cycle.
Sales generate cash which has to be disbursed out. The surplus cash has to be invested while
deficit this cycle at a minimum cost. At the same time, it also seeks to achieve liquidity and
control. Cash management assumes more importance than other current assets because cash is
the most significant and the least productive asset that a firm’s holds. It is significant because it
is used to pay the firm’s obligations. However, cash is unproductive. Unlike fixed assets or
inventories, it does not produce goods for sale. Therefore, the aim of cash management is to
maintain adequate control over cash position to keep the firm sufficiently liquid and to use excess
cash in some profitable way.
In simple words Cash management has assumed importance because it is the most
significant of all the current assets. It is required to meet business obligations and it is
unproductive when not used.
Cash management deals with the following:
 Cash inflows and outflows

 Cash flows within the firm
 Cash balances held by the firm at a point of time.
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FUNCTIONS OF CASH MANAGEMENT
Cash management is the treasury function of a business, responsible for achieving optimal
efficiency in two key areas: Receivables which is cash coming in, and Payables, which is cash
going out.
1. Receivables Management
When a business issues an invoice it is reported as a receivable, which is cash earned but yet
to be received. Depending on the terms of the invoice, the business may have to wait 30, 60 or
90 days for the cash to be received. It is common for a business to report increasing sales, yet
still run into a cash crunch because of slow or poorly managed receivables. There are a number
of things a business can do to accelerate its receivables and reduce payment float, including
clarifying billing terms with customers, using an automated billing service to bill customers
immediately, using electronic payment processing through a bank to collect payments, and
staying on top of collections with an aging receivables report.
2. Payables Management
When a business controls its payables, it can better control its cash flow. By improving the
overall efficiency of the payables process, a business can reduce costs and keep more cash
working in the business. Payables management solutions, such as electronic payment processing,
direct payroll deposit, and controlled disbursement can streamline and automate the payable
functions.
Most of the receivables and payables management functions can be automated using business
banking solutions. The digital age has opened up opportunities for smaller businesses to access
the same large-scale cash management technologies used by bigger companies. The cost savings
generated from more efficient cash management techniques easily offsets the costs. More
importantly, management will be able to reallocate precious resources to growing the business.
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3.3 ADVANTAGES AND IMPORTANCE OF CASH MANAGEMENT
 The availability of cash may be a matter of life or death. A sufficient of cash keeps an
unsuccessful firm going despite losses.
 Cash may be sold like the blood stream in a living body; for it is much the lifeblood of
business.
 The first priority of my business is survival, and this cannot be assured, even in the short
run, unless a company remains both liquid and solvent.
 Cash management involves balance sheet changes and other cash flows that do not appear
in the profit and loss account such as capital expenditure.
 It views problem in a dynamic context over a period of time.
 It yields a plan as an integral part of the procedure.
3.4 LIMITATIONS OF CASH MANAGEMENT
 It may offer a solution of compensation which is not justified on the basis of a concentrate
notation, particular when the business economy in an uncertain word.
 It considers economic recession as the main sources of uncertainty but ignores
technological developments, shifts in consumer preference, political changes, etc.;
moreover, recessions are not the sources of economic unhappiness.
 The cost of holding cash is the profit that could have been earned had the funds been put
to another use.
 Financial distress usually is a matter of degree, while the declaration of the bank raptly is
an indication of this distress in an extreme form. .Middle firms of financial distress occur
when a firms cash flow fall below expectations.
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CASH FLOW ANALYSIS
The cash flow analysis is done with the help of cash flow statement. A cash flow
statement is a statement depicting changes in cash position from one period to another. It is an
important planning tool. Cash flow statement gives a clear picture of the source of cash, the uses
of cash and the net changes in cash. The primary purpose of cash flow statement is to show that
as to where from the cash to be acquired and where to use them.
IMPORTANCE OF CASH FLOW ANALYSIS

A Cash flow analysis is an important financial tool for the management. Its chief
advantages are as follows.
1. Helps in efficient cash management

Cash flow analysis helps in evaluating financial policies and cash position. Cash is the basis
for all operation and hence a projected cash flow statement will enable the management to plan
and co-ordinate the financial operations properly. The management can know how much cash
is needed from which source it will be derived, how much can be generated, how much can be
utilized.
2. Helps in internal financial management

Cash flow analysis information about funds, which will be available from operations. This
will helps the management in repayment of long-term debt, dividend policies etc.
3. Discloses the movements of Cash

Cash flow statement discloses the complete picture of cash movement. The increase in and
decrease of cash and the reasons therefore can be known. It discloses the reasons for low cash
balance in spite of heavy operation profits on for heavy cash balance in spite of low profits.
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4. Discloses success or failure of cash planning
The extent of success or failure of cash planning will be known by comparing the projected
cash flow statement with the actual cash flow statement and necessary remedial measures can be
taken.
3.5 METHODOLOGY OF THE STUDY
The research methodology is a way of systematically solve the research problem. It is the
science of studying how research is done scientifically for getting pertinent information on a
specific topic long with the logic behind. Meet the objectives mentioned, the methodology
adopted is a detailed study of the cash in order to management system. The study follows a
research method. Firstly the main objectives of the study were set and then the hypotheses were
formulated. Data used in this study are of both primary and secondary in nature. Primary data
collection includes personnel interaction with the staff of PLANTATION CORPORATION OF
KERALA LTD and the secondary data was collected from Annual reports of the companies,
Company Websites, Manual Reports. The data collected from these reports where compiled as
per the requirements of the study. Some data’s where grouped and sub grouped to arrive at
various financial indicators. The collected compiled data was processed with the help of
electronic medium to reduce the chances of human error.
Tools used for data collection:
 Personnel interaction with the GM of F&A and other staff in finance department of
PLANTATION CORPORATION OF KERALA LTD, Kottayam.
 Annual reports of last few years.
 Method of analysis: cash flow statement, ratio analysis, cash budget, correlation, Trend
analysis, regression and chi- squire test.
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CHAPTER – 4
RESEARCH METHODOLOGY
Research means search for knowledge. It aims at discovering the truth. It is an

essential and powerful tool in leading men towards progress. It is undertaken to discover answers
to questions by applying scientific method. It is the search for knowledge through objective and
systematic method of finding solution to problems. Therefore research is a process of systematic
and in-depth study or search of any particular topic, subject or area of investigation backed by
collection, computation, presentation & interpretation of relevant data. Research methodology is
a science. It is a method that can be used to solve the research problems. It helps in studying how
research is done scientifically. Research Methodology provides various steps that can be adopted
by the researcher in studying his research problems.
4.1 OBJECTIVES
The purpose of research is to discover answers to questions through the application of scientific
procedures. The main aim of research is to find out the truth which is hidden and which has not
been discovered as yet.
1. To gain familiarity with a phenomenon or to achieve new insights into it.

2. To portray accurately the characteristics of a particular individual, situation or a group.
3. To determine the frequency with which something occurs or with which it is associated
with something else.
4. To test a hypothesis of a causal relationship between variables.
4.2 HYPOTHESIS OF THE STUDY

A hypothesis is a proposed explanation for a phenomenon. For a hypothesis to be
a scientific hypothesis, the scientific method requires that one can test it. Scientists generally
base scientific hypotheses on previous observations that cannot satisfactorily be explained with
the available scientific theories. Even though the words "hypothesis" and "theory" are often used
synonymously, a scientific hypothesis is not the same as a scientific theory.
A scientific hypothesis is a proposed explanation of a phenomenon which still has to be

rigorously tested. In contrast, a scientific theory has undergone extensive testing and is generally
41
accepted to be the accurate explanation behind an observation. A working hypothesis is a

provisionally accepted hypothesis proposed for further research.
Null Hypothesis:

OF KERALA LTD is not effective.
Alternative Hypothesis:

OF KERALA LTD is effective.
4.3 RESEARCH DESIGN
A research design is a map developed to guide the research. It is a part of the planning
stage of research, a blue print for the collection, measurement and analysis of data. A good
research design serves three important functions; firstly, it gives a blueprint for research,
secondly, it limits the boundaries of research activity and makes systematic investigation
possible. Thirdly, it enables a researcher to anticipate potential problems that he may encounter
the future.
A practical research design comprises of four phases:
 The sampling design which deals with the method of selecting items to be observed for
the given study
 The observational design which relates to the conditions under which the observations
are to be made.
 The statistical design which concerns with the question of how many items are to be
observed and how the information and data gathered are to be analyzed.
 The operational design which deals with the techniques by which the procedures
specified in the sampling, statistical and observational designs can be carried out.
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Research design has some important features. It is a plan that specifies the sources and
types of information relevant to the research problem. It is a strategy specifying which approach
will be used for gathering and analyzing the data. It also includes the time and cost budgets since
most studies are done under these two constraints. This study has its research design as follows:
Types of research
Research may be broadly classified as following:
Fundamental research and applied research
Fundamental research is mainly concerned with generalization with formulation of a theory. It

is a research concerning principles or laws or rules. It aims at the achievement of knowledge and
truth. Research study concentrating on some natural phenomenon or relating to pure mathematics
are examples of fundamental research .Basic research aims at some theoretical conclusions.
Applied Research is concerned with the solution of particular problems. It aims at

finding a solution for an immediate problem facing a society or an industrial organization.
Applied Research is empirical and practical. It is concerned with applied aspect of life. Research
to identify social, economic or political trends that may affect a particular institution, or the
marketing research, evaluation research etc. are examples of applied research.
Descriptive Research and Analytical Research
Descriptive Research includes survey and fact finding enquiries of different kinds. The
major purpose of Descriptive Research is the description of the state of affairs as it exists at
present. The main characteristics of this type research are that the researcher has no control over
the variables. He can only report what has happening.
In Analytical Research one has to use facts or information already available and these to
make a critical evaluation of the material.
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Quantitative Research and Qualitative Research
Quantitative Research is applicable to phenomena that are measurable so that they can be
expressed in terms of quantity. Qualitative Research is concerned with qualitative phenomenon.
Research designed to find out how people feel or what they think about a particular subject is a
qualitative research.
Qualitative Research is especially important in the behavioural science where the aim is
to discover underlying motives of human behaviour.
Conceptual Research and Empirical Research
Conceptual Research is that related to some abstract ideas or theory. It is generally used
by philosophers and thinkers to develop new concepts or to reinterpret existing one. Empirical
Research relies on experience or observation alone. It is data based research coming up with
conclusions capable of being verified by observations and experiment. It can be Empirical
Research. In Empirical Research, the research, the searchers as to first set up a hypothesis or
guess as to the probable results.
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Define the problem
Review of literature
Formulate hypothesis
Design research
Collect data
Data analysis
Interpretation and report
Fig No. 4.1 FLOW CHART OF RESEARCH PROBLEM
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4.4 STUDY APPROACH
Research is an organized & systematic way of finding answers to questions. It should be

systematic because there are definite set of procedures & steps which the researcher has to
follow. It should be organized because there is a structure or method in doing research. It is a
planned procedure. Research work cannot be done spontaneous. To attain the objectives of this
project the following research methods were used.
 Quantitative approach
 Qualitative approach
Quantitative Approach
In the research is based on measurable quantities. There for in this approach, are
available in the quantitative from. This approach can further classified into inferential,
experimental and simulation approaches. The inferential approach aims at forming a data base
from which to infer characteristics or relationships of population. In this approach a simple is
selected from the population and it is studied to determine the characteristics of the sample. This
approach some variables are manipulated to observe their effects on other variables.
Qualitative Approach
Qualitative approach to research is concerned with subjective assessment of attitudes,

opinions and behaviours. Research in such situations is a function of researcher’s insight and
impressions. Such an approach generates results either in non- quantitative forms or in the form
which are not subjected to rigorous quantitative analysis. Generally, the techniques of focus
group interview, projective techniques and depth interview are used.
46
4.5 SOURCES OF DATA
Data collection is the process of gathering and measuring information on variables of

interest, in an established systematic fashion that enables one to answer stated research
questions, test hypotheses, and evaluate outcomes. The data collection component of research is
common to all fields of study including physical and social sciences, humanities, business, etc.
While methods vary by discipline, the emphasis on ensuring accurate and honest collection
remains the same. The goal for all data collection is to capture quality evidence that then
translates to rich data analysis and allows the building of a convincing and credible answer to
questions that have been posed.
A researcher can collect his required information from the two sources namely; primary
and secondary. Thus he is provided with two types of data known as;
Techniques of data collection consists of,

 Primary Data
 Secondary Data
Primary Data
Primary data are those data which are collected for the first time. These data are
information collected by a researcher specifically for a research assignment. In other words,
primary data are information that a company must gather because no one has compiled and
published the information in a forum accessible to the public. Companies generally take the time
and allocate the resources required to gather 8 primary data only when a question, issue or
problem presents itself that is sufficiently important or unique that it warrants the expenditure
necessary to gather the primary data.
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Primary data are original in nature and directly related to the issue or problem and current data.
Primary data are the data which the researcher collects through various methods like interviews,
surveys, questionnaires etc.
Advantages of Primary Data

 They are the first hand information
 The data collected are reliable as they are collected by the investigator himself.
 Primary data are starting point in the process of collection of information of a research.
Others can use this information later for their purpose.
 The primary data are useful for knowing opinion, qualities and attitude of the respondents.
Disadvantages of Primary Data

 Collection of primary data is very expensive.
 It is time consuming
 There is a scope for bias for the researcher unless the researcher is fair to the respondents
and methods of data collection.
 Selection of a representative sample is not an easy task in the case of primary data.
 Non –cooperation on the part of the respondents, inappropriate methods used for
collection of data etc. May influence the information gathered by this technique.
Secondary Data
Secondary data consists of those data which are already available. These data have been
used mostly for the study for the reference purpose. The analysis and interpretation that have
been made in this study is based on the Secondary data that is available in the company and it is
in the form of annual reports, details of inventories etc, Secondary data are the data collected by
a party not related to the research study but collected these data for some other purpose and at
different time in the past.
If the researcher uses these data then these become secondary data for the current users. These
may be available in written, typed or in electronic forms. A variety of secondary information
48
sources is available to the researcher gathering data on an industry, potential product applications
and the market place. Secondary data is also used to gain initial insight into the research problem.
Secondary data is classified in terms of its source – either internal or external. Internal, or in-
house data, is secondary information acquired within the organization where research is being
carried out. External secondary data is obtained from outside sources.
Advantages of Secondary data:

 The primary advantage of secondary data is that it is cheaper and faster to access
 Secondly, it provides a way to access the work of the best scholars all over the world
 Thirdly, secondary data gives a frame of mind to the researcher that in which direction he/she
should go for the specific research.
 Fourthly secondary data save time, efforts and money and add to the value of the research
study.
Disadvantages of Secondary data:
 The data collected by the third party may not be a reliable party so the reliability and
accuracy of data go down.
 Data collected in one location may not be suitable for the other one due variable
environmental factor.
 With the passage of time the data becomes obsolete and very old
 Secondary data collected can distort the results of the research. For using secondary data a
special care is required to amend or modify for use
 Secondary data can also raise issues of authenticity and copyright.
Keeping in view the advantages and disadvantages of sources of data requirement of

the research study and time factor, both sources of data i.e. primary and secondary data have
been selected. These are used in combination to give proper coverage to the topic.
49
4.6 PRIMARY AND SECONDARY DATA
PRIMARY DATA COLLECTION METHODS

 Interview Method
Interview method is a direct method of collecting data and is the most important method
of data collection. It is a verbal method of securing data in the field of surveys. Through this
method we can know the views and ideas of other persons. Interview method the researcher tries
to present deeply into the feelings of the respondents.
In this project I had conducted an interview with the General Manager and other
employees of Finance & Accounts department from which I got enough information about how
the funds are used, which all are the amounts to be taken for finding out the ratios etc.
 Observation Method
Observation may be defined as a systematic viewing of a phenomenon in the proper

setting for the specific purpose of gathering data for a particular study. Observation method as
the name itself indicates is based on observation. Observation means watching things with a
purpose. Observation is keen and scientific study of a problem. It is the purpose of acquiring
knowledge through the use of sense organs. Observation has three components namely sensation,
attention and presentation. Sensation is derived from sense organs. Attention is related to the
ability to concentrate on the subject matter of study. Presentation enables the mind to recognize
the facts by identifying sensations and drawing upon experience and interview.
CHARACTERISTICS
 Behavior is observed in a natural situation.
 It enables understanding significant events affecting social relations of the participants.
 It determines reality from the viewpoint of the observed person/ researcher.
 It avoids manipulation in the variables.
 Recording of data is not selective.
50
SECONDARY DATA COLLECTION METHODS
Secondary data may either be published data or unpublished data. Secondary data collected
here is from published data of financial reports of five years.
4.7 SAMPLING METHOD

There are several methods available for selecting sampling. These are being grouped in to
two major heads such as probability sampling and non-probability sampling. Probability
sampling is also known as Random sampling. In this method each item has its own chance for
being selected. Non probability sampling is that sampling procedure which does not afford any
basis for estimating the probability for each item to be included in the sample.
During the study of Cash Management system in Plantation Corporation of Kerala Ltd.,
the technique used is Probability Sampling or Simple Random Sampling. It is used during the
calculation of financial tools and statistical tools where I have to take two or more variables to
calculate different ratios, trend analysis, and correlation etc. The data selected is for five years,
that is, 2012 to 2016.
4.8 TOOLS FOR DATA ANALYSIS

FINANCIAL TOOLS
I. RATIO ANALYSIS
Ratio analysis is a powerful tool for the analysis of the financial performance. It is an
important technique of financial analysis. Ratio is one number expressed in terms of another and
can be worked out by dividing.
 It makes it easy to grasp the relationship between various items and help in understanding
the financial statement.
 It helps in a simple assessment of liquidity ,profitability, solvency and efficiency of the
firm
 Ratio may be used as measures of efficiency
51
 It throws light on the degree of efficiency of the management and the utilization of the
assets and that is why it is called surveyor of efficiency.
A. LIQUIDITY RATIO
Liquidity is the ability of the firm to meet its current liabilities as they fall due. Since
liquidity is basic to continuous operations of the firm it is necessary to determine the degree of
liquidity of the firm.
 Current Ratio
 Quick Ratio
 Absolute Liquidity Ratio
1. CURRENT RATIO:
The current ratio is mainly used to give an idea of the company's ability to pay back its
liabilities (debt and accounts payable) with its assets (cash, marketable securities, inventory, and
accounts receivable). As such, current ratio can be used to take a rough measurement of a
company’s financial health. The higher the current ratio, the more capable the company is of
paying its obligations, as it has a larger proportion of asset value relative to the value of its
liabilities. The current ratio is called “current” because, unlike some other liquidity ratios, it
incorporates all current assets and liabilities. The current ratio is also known as the working
capital ratio. The formula for calculating a current ratio, is
𝑪𝒖𝒓𝒓𝒆𝒏𝒕 𝑨𝒔𝒔𝒆𝒕𝒔
𝑪𝒖𝒓𝒓𝒆𝒏𝒕 𝑹𝒂𝒕𝒊𝒐 =
𝑪𝒖𝒓𝒓𝒆𝒏𝒕 𝑳𝒊𝒂𝒃𝒊𝒍𝒊𝒕𝒚
52
2. QUICK RATIO
The quick ratio is an indicator of a company’s short-term liquidity. The quick ratio is
more conservative than the current ratio because it excludes inventories from current assets. The
ratio derives its name presumably from the fact that assets such as cash and marketable securities
are quick sources of cash. Inventories generally take time to be converted into cash, and if they
have to be sold quickly, the company may have to accept a lower price than book value of these
inventories. As a result, they are justifiably excluded from assets that are ready sources of
immediate cash, and are calculated as follows:
𝑸𝒖𝒊𝒄𝒌 𝑨𝒔𝒔𝒆𝒕𝒔
𝑸𝒖𝒊𝒄𝒌 𝑹𝒂𝒕𝒊𝒐 =
𝑪𝒖𝒓𝒓𝒆𝒏𝒕 𝑳𝒊𝒂𝒃𝒊𝒍𝒊𝒕𝒊𝒆𝒔
Quick assets = (Current assets – Inventories and Prepaid Expenses)
3. ABSOLUTE LIQUIDITY RATIO
Absolute liquidity ratio extends the logic further and eliminates accounts receivable (sundry
debtors and bills receivables) also. Though receivables are more liquid as comparable to
inventory but still there may be doubts considering their time and amount of realization.
Therefore, absolute liquidity ratio relates cash, bank and marketable securities to the current
liabilities. Since absolute liquidity ratio lays down very strict and exacting standard of liquidity,
therefore, acceptable norm of this ratio is 50 percent. It means absolute liquid assets worth one
half of the value of current liabilities are sufficient for satisfactory liquid position of a business.
However, this ratio is not as popular as the previous two ratios discussed.
𝑨𝒃𝒔𝒐𝒍𝒖𝒕𝒆 𝑳𝒊𝒒𝒖𝒊𝒅 𝑨𝒔𝒔𝒆𝒕𝒔

𝑨𝒃𝒔𝒐𝒍𝒖𝒕𝒆 𝑳𝒊𝒒𝒖𝒊𝒅𝒊𝒕𝒚 𝑹𝒂𝒕𝒊𝒐 =
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B. ACTIVITY RATIO/TURNOVER RATIO
Activity ratios are also referred as Turnover ratio .this ratio highlights upon the activity
and operational efficiency of the business concern.
 Inventory turnover Ratio

 Fixed asset turnover Ratio
 Working capital turnover Ratio
 Current assets turnover Ratio
1. INVENTORY TURNOVER RATIO OR STOCK TURNOVER RATIO
Inventory turnover is the ratio of cost of goods sold by a business to its average
inventory during a given accounting period. It is an activity ratio measuring the number of times
per period. This ratio reveals the number of times finished stock is turned over during a given
accounting period. Higher the ratio better, it is because it shows that finished stock is rapidly
turned over and low turnover ratio is not desirable because it reveals the accumulation of obsolete
stock. The ratio is calculated as follows:
𝑵𝒆𝒕 𝑺𝒂𝒍𝒆𝒔
𝑺𝒕𝒐𝒄𝒌 𝑻𝒖𝒓𝒏𝒐𝒗𝒆𝒓 𝑹𝒂𝒕𝒊𝒐 =
𝑨𝒗𝒆𝒓𝒂𝒈𝒆 𝑺𝒕𝒐𝒄𝒌
𝑂𝑝𝑒𝑛𝑖𝑛𝑔 𝑠𝑡𝑜𝑐𝑘+𝐶𝑙𝑜𝑠𝑖𝑛𝑔 𝑠𝑡𝑜𝑐𝑘

Average Stock =
2
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2. FIXED ASSETS TURNOVER RATIO
In this activity ratio is calculated to measure the efficiency with which resources of a firm have
been utilized it is also known as turnover ratios
𝑭𝒊𝒙𝒆𝒅 𝑨𝒔𝒔𝒆𝒕𝒔 𝑻𝒖𝒓𝒏𝒐𝒗𝒆𝒓 𝑹𝒂𝒕𝒊𝒐 =
𝑭𝒊𝒙𝒆𝒅 𝑨𝒔𝒔𝒆𝒕𝒔
Fixed asset include net fixed assets that is original cost- depreciation to date and trade
investment including shares in subsidiaries.
3. WORKING CAPITAL TURNOVER RATIO

Working capital turnover is a measurement comparing the depletion of working capital
used to fund operations and purchase inventory, which is then converted into sales revenue for
the company. The working capital turnover ratio is used to analyze the relationship between the
money that funds operations and the sales generated from these operations. For example, a
company with current assets of $10 million and current liabilities of $9 million has $1 million in
working capital, which may be used in fundamental analysis.
𝑾𝒐𝒓𝒌𝒊𝒏𝒈 𝑪𝒂𝒑𝒊𝒕𝒂𝒍 𝑻𝒖𝒓𝒏𝒐𝒗𝒆𝒓 𝑹𝒂𝒕𝒊𝒐 =
𝑵𝒆𝒕 𝑾𝒐𝒓𝒌𝒊𝒏𝒈 𝑪𝒂𝒑𝒊𝒕𝒂𝒍
Working Capital= Current Assets – Current Liabilities
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4. CURRENT ASSETS TURNOVER RATIO

Current assets turnover ratio indicates that the current assets are turned over in the form of sales
more number of times. A high current assets turnover ratio indicates the capability of the
organization to achieve maximum sales with the minimum investment in current assets. Higher
the current assets ratio better will be the situation.
𝑪𝒖𝒓𝒓𝒆𝒏𝒕 𝑨𝒔𝒔𝒆𝒕𝒔 𝑻𝒖𝒓𝒏𝒐𝒗𝒆𝒓 𝑹𝒂𝒕𝒊𝒐 =
Current Assets = Total Assets – Fixed Assets
C. PROFITABILITY RATIO
Business firm is basically a profit earning organization. The income statement of the firm
shows the profit earned by the firm during the accounting period. Profitability is an indication of
with the operation of the business is carried out.
 Gross profit Ratio

 Net profit Ratio
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1. GROSS PROFIT RATIO

Gross profit ratio is the ratio of gross profit of a business to its sales. It is a profitability
ratio measuring what proportion of revenue is converted into gross profit (i.e. revenue less cost
of goods sold). An important factor which will affect the ratio of Gross Profit to sales is that of
the practice of increasing or reducing the sales price of goods sold by “mark-ups” and “mark-
downs”. In many industries there is more or less recognized gross profit ratio and experience
will indicate whether the ratio of the enterprise being analyzed is satisfactory or not.
𝑮𝒓𝒐𝒔𝒔 𝑷𝒓𝒐𝒇𝒊𝒕
𝑮𝒓𝒐𝒔𝒔 𝑷𝒓𝒐𝒇𝒊𝒕 𝑹𝒂𝒕𝒊𝒐 = ∗ 𝟏𝟎𝟎
2. NET PROFIT RATIO
This ratio explains per rupee profit generating capacity of sales. If the cost of sales is
lower, then the net profit will be higher and then we divide it with sales, the result is the sakes
efficiency. This ratio is very useful to the proprietors and prospective investors because it reveals
the overall profitability of the concern.
𝑵𝒆𝒕 𝑷𝒓𝒐𝒇𝒊𝒕
𝑵𝒆𝒕 𝑷𝒓𝒐𝒇𝒊𝒕 𝑹𝒂𝒕𝒊𝒐 = ∗ 𝟏𝟎𝟎
57
II. TREND ANALYSIS
This is an important tool of horizontal financial analysis. This method is immensely

helpful in making a comparative study of the financial information over the years. Not only that,
it forms a basis for future projections and also help to detect anomalies in financial data. Under
this method, trend percentages are calculated for each item with reference to that item value in
the base year. Usually the first year of the period under analysis is considered as the base year.
𝑪𝒖𝒓𝒓𝒆𝒏𝒕 𝒚𝒆𝒂𝒓
𝑻𝒓𝒆𝒏𝒅 𝑷𝒆𝒓𝒄𝒆𝒏𝒕𝒂𝒈𝒆 = × 𝟏𝟎𝟎
𝑩𝒂𝒔𝒆 𝒀𝒆𝒂𝒓
III. CASH FLOW STATEMENT
The cash flow statement shows how much cash comes in and goes out of the company
over the quarter or the year. At first glance, that sounds a lot like the income statement in that it
records financial performance over a specified period. But there is a big difference between the
two. Cash flow statement is a statement depicting change in the cash position from one period
to another. It explains the reasons for the inflow or outflow of cash; it also helps the management
in making plans for the immediate future. A projected cash flow statement will help the
management in ascertaining how much cash will be available to meet obligations to trade
creditors, to pay bank loans and to pay dividend to shareholders.
IV. CASH BUDGET

Cash budget is a forecast of the cash position by time period for a specific duration of
time .Cash budget or cash forecast is the most significant device for planning and controlling the
use of cash. It states the estimated amount of cash receipts and estimation of cash payments and
likely balance of cash in hand at the end of the different periods.
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STATISTICAL TOOLS
It is difficult for everybody to understand or remember a large set of facts. Therefore one
would like to know certain values which will represent or summarize all these facts. After all,
the basic purpose of statistical analysis is to develop summary measures which can describe the
data adequately.
1. KARL PEARSON’S CORRELATION COEFFICIENT

The correlation coefficient is a statistical measure of the degree to which changes to the
value of one variable predict change to the value of another. In statistics, the Pearson product-
moment correlation coefficient (r) is a common measure of the correlation between two variables
X and Y. Pearson's correlation reflects the degree of linear relationship between two variables.
If there is correlation between the variables then the change in one variable is accompanied
by a proportionate change in the other variable. The change can occur in both directions. If the
increase in one variable causes increase in the other variable then the 2 variables are said to be
positively correlated. If the increase in one variable results in decrease of the other variable then
the correlation is negative.
The linear correlation between 2 variables can be measured using “Karl Pearson’s
Correlation Coefficient” (usually denoted as ‘r’). The equation of the Karl Pearson’s correlation
coefficient is calculated by considering the 2 variables as ‘X’ and ‘Y’.
The mathematical formula for computing r is:
59
Perfect Inverse Correlation r = -1
No correlation r=0
Perfect Positive Correlation r = +1
Negative Correlation r<0
Positive Correlation r>0
Fig No. 4.2 EVALUATION OF CORRELATION COEFFICIENT BETWEEN 2

VARIABLES
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2. CHI-SQUARE TEST
A chi-square test is any statistical hypothesis test in which the sampling distribution of
the test statistic is a chi-square distribution when the null hypothesis is true, or any in which this
is asymptotically true, meaning that the sampling distribution can be made to approximate a chi-
square distribution as closely as desired by making the sample size large enough.
The formula for calculating chi-square (𝜒 2) is:
(𝑶−𝑬)𝟐
𝝌𝟐 = ∑
𝑬
H0 = Null Hypothesis
H1 = Alternative Hypothesis
3. REGRESSION
Regression means the estimations or predictions of unknown value of a variable from

the known value of other variable. Here one variable is dependent and other one is independent.
The functional relationship between two or more correlated variables that is often empirically
determined from data and is used especially to predict values of one variable when given value
of the others.
Regression on Y on X Regression on X on Y
𝑦 − 𝑦̅ = 𝑏𝑦𝑥 (𝑥 − 𝑥̅ ) 𝑥 − 𝑥̅ = 𝑏𝑥𝑦 (𝑦 − 𝑦̅)
𝑛 ∑ 𝑥𝑦−(∑ 𝑥 ∗ ∑ 𝑦) 𝑛 ∑ 𝑥𝑦−(∑ 𝑥 ∗ ∑ 𝑦)
𝑏𝑦𝑥 = 𝑏𝑥𝑦 =
𝑛 ∑ 𝑥 2 −(∑ 𝑥)2 𝑛 ∑ 𝑦 2 −(∑ 𝑦)2
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CHAPTER - 5
DATA ANALYSIS
5.1 FINANCIAL TOOLS

I RATIO ANALYSIS
Ratio analysis is a powerful tool for the analysis of the financial performance. It is an important
technique of financial analysis. .
A. LIQUIDITY RATIOS
1. CURRENT RATIO
This is the most widely used ratio. It is the ratio of current assets to current
liabilities. It shows a firm’s ability to cover its current liabilities with its current assets. The
current ratio is mainly used to give an idea of the company's ability to pay back its current
liabilities with its current assets. As such, current ratio can be used to take a rough measurement
of a company’s financial health. Current ratio of 2:1 is considered as ideal ratio or standard ratio.
A high ratio indicates sound solvency position and a low ratio indicates inadequate working
capital.
𝑪𝒖𝒓𝒓𝒆𝒏𝒕 𝑹𝒂𝒕𝒊𝒐 =
𝑪𝒖𝒓𝒓𝒆𝒏𝒕 𝑳𝒊𝒂𝒃𝒊𝒍𝒊𝒕𝒚
Table no. 5.1 TABLE SHOWING CURRENT RATIO
Year Current Assets Current Liabilities Ratio
2012-13 2605788537 1774755578 1.47
2013-14 2508730306 1576843437 1.59
2014-15 2462950783 1515694697 1.62
2015-16 2096836483 1418814556 1.47
2016-17 1944919496 1421617362 1.36
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Current Ratio
1.65 1.62
1.59
1.6
1.55
1.5 1.47 1.47
1.45
1.4
1.36
1.35
1.3
1.25
1.2
2012-13 2013-14 2014-15 2015-16 2016-17
Current Ratio
Fig. No. 5.1 FIGURE SHOWING CURRENT RATIO
INTERPRETATION
The standard current ratio is 2:1. It provides a margin of safety to the creditors. It
is an index of the firm’s financial stability. It is observed from the table that from 2012 to 2014
it shows an increasing trend and after that it starts decreasing till 2016. The ratio was high during
2014 that is 1.62; this indicates that there was sufficient amount of current assets to meet the
current liabilities. During those 5 consecutive years the current ratio remains almost same but
having a slight changes in it. A relatively high value of current ratio is considered as an indication
that the company has the ability to meets its short term obligation on time.
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2. QUICK RATIO
The acid test ratio or quick ratio is very similar to the current ratio except for the fact that
it excludes inventory. This is the ratio of liquid assets to liquid liabilities. It shows a firm’s ability
to meet current liabilities with its most liquid assets. The ratio 1:1 is considered as ideal ratio for
a concern because it is wise to keep the liquid assets at least equal to the liquid liabilities at all
times. Liquid liabilities include all items of current liabilities except bank overdraft.
𝑸𝒖𝒊𝒄𝒌 𝑨𝒔𝒔𝒆𝒕𝒔
𝑸𝒖𝒊𝒄𝒌 𝑹𝒂𝒕𝒊𝒐 =
Quick asset = (Current assets – Inventories – Prepaid Expenses)
Table no. 5.2 TABLE SHOWING QUICK RATIO
Year Quick Assets Current Liabilities Ratio
2012-13 2457978273 1774755578 1.38
2013-14 2268654175 1576843437 1.44
2014-15 2138816422 1515694697 1.41
2015-16 1785822002 1418814556 1.25
2016-17 155078207 1421617362 0.11
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Quick Ratio
1.6
1.44 1.41
1.38
1.4
1.25
1.2
0.8
0.6
0.4
0.2 0.11
0
2012-13 2013-14 2014-15 2015-16 2016-17
Quick Ratio
Fig. No. 5.2 FIGURE SHOWING QUICK RATIO
INTERPRETATION
Quick ratio shows the relationship between quick assets and current liabilities.
The standard quick ratio is 1:1. In 2012 quick ratio was 1.38 and in the year 2013 it was 1.44.
After 2013 there is a decreasing trend, this is because of an increase in current liabilities and a
decrease in quick assets mainly due to low cash and bank balances. The quick ratio shows a
satisfactory level from 2012 to 2015 because it is more than the standard level but it is too low
in the year 2016 which is 0.11 below the minimum average level.
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3. ABSOLUTE LIQUIDITY RATIO
Absolute liquidity ratio relates cash, bank and marketable securities to the current
liabilities. Since absolute liquidity ratio lays down very strict and exacting standard of liquidity,
therefore, acceptable norm of this ratio is 50 percent or 0.5: 1 or 2:1. It means absolute liquid
assets worth one half of the value of current liabilities are sufficient for satisfactory liquid
position of a business.
𝑨𝒃𝒔𝒐𝒍𝒖𝒕𝒆 𝑳𝒊𝒒𝒖𝒊𝒅 𝑨𝒔𝒔𝒆𝒕𝒔

𝑨𝒃𝒔𝒐𝒍𝒖𝒕𝒆 𝑳𝒊𝒒𝒖𝒊𝒅𝒊𝒕𝒚 𝑹𝒂𝒕𝒊𝒐 =
Absolute Liquid Assets = Cash + Bank + Marketable Securities
Table no 5.3 TABLE SHOWING ABSOLUTE LIQUIDITY RATIO
Year Absolute Liquid Asset Current liabilities Ratio
2012-13 1200188841 17774755578 0.67
2013-14 1311374148 1576843437 0.83
2014-15 1142428596 1515694697 0.75
2015-16 686141764 1418814556 0.48
2016-17 507441529 1421617362 0.36
67
Absolute Liquidity Ratio
1 0.83
0.75
0.8 0.67
0.6 0.48
0.36
0.4
0.2
0
2012-13 2013-14 2014-15 2015-16 2016-17
Absolute Liquidity Ratio
Fig. No. 5.3 FIGURE SHOWING ABSOLUTE LIQUIDITY RATIO
INTERPRETATION
The absolute liquidity ratio includes cash in hand and cash at bank. Absolute Liquidity
Ratio shows the relationship between absolute liquid assets and current liabilities. In the year
2012 the absolute liquidity ratio was 0.67 and it has increased to 0.83 in 2013. The ratio has
decreased to 0.75, 0.48 and 0.36 during 2014, 2015, 2016 respectively. Here, the ratio shows a
fluctuating trend. The highest ratio is 0.83 in 2013 and lowest ratio in 2016 as 0.36. The Company
is not in a good liquidity position. Company is needed to maintain sufficient liquid assets to
ensure smooth running of the firms operation.
68
B. ACTIVITY OR TURNOVER RATIO
The published accounts of a firm also provide a useful data for the measurement of the
company’s level of activities. These ratios are also called as “Turnover ratios”. This ratio
highlights upon the activity and operational efficiency of the business concern. Activity ratios
measure how efficiently the assets are employed by the firm.
1. INVENTORY/STOCK TURNOVER RATIO

Every firm has to maintain a certain level of inventory or stock of finished goods so as to
meet the requirements of the business. But the level of inventory should neither be too high nor
too low. The standard value of stock velocity is 6 times. Inventory turnover is the ratio of cost of
goods sold by a business to its average inventory during a given accounting period. This ratio
reveals the number of times finished stock is turned over during a given accounting period.
𝑰𝒏𝒗𝒆𝒏𝒕𝒐𝒓𝒚 𝑻𝒖𝒓𝒏𝒐𝒗𝒆𝒓 𝑹𝒂𝒕𝒊𝒐 =
𝑨𝒗𝒆𝒓𝒂𝒈𝒆 𝑺𝒕𝒐𝒄𝒌
Average Stock = (Opening stock + Closing stock) / 2
Table no. 5.4 TABLE SHOWING STOCK TURNOVER RATIO
Year Net Sales Average Stock Ratio
2012-13 1242659995 81637411 15.22
2013-14 923897998 122822338 7.52
2014-15 730106233 206450776 3.53
2015-16 689414629 250179914 2.75
2016-17 738840685 292070916 2.52
69
Inventory Turnover Ratio
15.22
16
14
12
10
7.52
8
6
3.53
4 2.75 2.52
0
2012-13 2013-14 2014-15 2015-16 2016-17
Inventory Turnover Ratio
Fig. No. 5.4 FIGURE SHOWING INVENTORY TURNOVER RATIO
INTERPRETATION
The inventory turnover ratio signifies the liquidity of the inventory. A high
inventory turnover ratio indicates the efficiency of the management in converting stock into cash
quickly, sound liquidity position and quality of goods maintained. The inventory turnover ratio
of PCK Ltd. is not satisfactory. They had a ratio of 15.22 in the year 2012 and had a sudden
decrease to half of it in the next year of 2013 and it continued with the ratios of 3.53, 2.75 and
2.52 in the followed consecutive years till 2016.
70
2. FIXED ASSETS TURNOVER RATIO
Fixed asset ratio indicates the extent to which the investments in fixed assets
contributed towards sales. If it compared with a previous period, it indicates whether the
investment in fixed assets has been judicious or not.
𝑭𝒊𝒙𝒆𝒅 𝑨𝒔𝒔𝒆𝒕𝒔 𝑹𝒂𝒕𝒊𝒐 =
𝑭𝒊𝒙𝒆𝒅 𝑨𝒔𝒔𝒆𝒕𝒔
Table no. 5.5 TABLE SHOWING FIXED ASSETS TURNOVER RATIO
Year Net sales Net fixed assets Ratio
2012-13 1242659995 776657718 1.6
2013-14 923897998 864334830 1.06
2014-15 730106233 918234064 0.79
2015-16 689414629 1017599812 0.67
2016-17 738840685 1094395388 0.67
71
Fixed Assets Turnover Ratio

1.6
1.6
1.4
1.2 1.06
1
0.79
0.8 0.67 0.67
0.6
0.4
0.2
0
2012-13 2013-14 2014-15 2015-16 2016-17
Fig. No. 5.5 FIGURE SHOWING FIXED ASSETS TURNOVER RATIO
INTERPRETATION
This ratio is calculated to measure the adequacy of investment in fixed assets. Fixed
assets ratio should not be more than 1. Here the fixed assets ratio is more than 1 in first two years,
which is 2012 and 2013. If fixed assets ratio is less than 1, it shows that a part of working capital
has been financed through long term funds. It is less than 1 in 2014, 2015 and 2016.
72
3. WORKING CAPITAL TURNOVER RATIO
Working capital turnover is a measurement comparing the depletion of working capital

used to fund operations and purchase inventory, which is then converted into sales revenue for
the company. The working capital turnover ratio is used to analyze the relationship between the
money that funds operations and the sales generated from these operations
𝑾𝒐𝒓𝒌𝒊𝒏𝒈 𝑪𝒂𝒑𝒊𝒕𝒂𝒍 𝑻𝒖𝒓𝒏𝒐𝒗𝒆𝒓 𝑹𝒂𝒕𝒊𝒐 =
𝑵𝒆𝒕 𝑾𝒐𝒓𝒌𝒊𝒏𝒈 𝑪𝒂𝒑𝒊𝒕𝒂𝒍
Working Capital = Current Assets – Current Liabilities
Table no. 5.6 TABLE SHOWING WORKING CAPITAL TURNOVER RATIO
Year Net Sales Working capital Ratio
2012-13 1242659995 831032959 1.49
2013-14 923897998 931886869 0.99
2014-15 730106233 947256086 0.77
2015-16 689414629 678021927 1.01
2016-17 738840685 523302134 1.14
73
Working Capital Turnover Ratio
1.49
1.41
1.5
0.99 1.01
1 0.77
0.5
0
2012-13 2013-14 2014-15 2015-16 2016-17
Working Capital Turnover Ratio
Fig. No. 5.6 FIGURE SHOWING WORKING CAPITAL TURNOVER RATIO
INTERPRETATION
The working capital turnover ratio measures how well a company is utilizing its
working capital for supporting a given level of sales. Here, after 2014 there is an increasing trend.
The least working capital ratio of PCK Ltd is 0.77 during 2014. This may lead to an excessive
amount of bad debts and obsolete inventory. The company has a highest ratio of 1.49 in the year
2012 which shows that the firm has a greater efficiency in the use of working capital.
74
4. CURRENT ASSETS TURNOVER RATIO

Current assets turnover ratio expresses the relation between sales and current assets.
Current assets turnover ratio indicates that the current assets are turned over in the form of sales
more number of times. A high current assets turnover ratio indicates the capability of the
organization to achieve maximum sales with the minimum investment in current assets.
𝑪𝒖𝒓𝒓𝒆𝒏𝒕 𝑨𝒔𝒔𝒆𝒕𝒔 𝑻𝒖𝒓𝒏𝒐𝒗𝒆𝒓 𝑹𝒂𝒕𝒊𝒐 =
Current Assets = Total Assets – Fixed Assets
Table no. 5.7 TABLE SHOWING CURRENT ASSETS TURNOVER RATIO
Year Net Sales Current Assets Ratio
2012-13 1242659995 2605788537 0.47
2013-14 923897998 2508730306 0.36
2014-15 730106233 2462950783 0.29
2015-16 689414629 2096836483 0.32
2016-17 738840685 1944919496 0.37
75
Current Assets Turnover Ratio
0.47
0.5
0.45
0.36 0.37
0.4
0.32
0.35 0.29
0.3
0.25
0.2
0.15
0.1
0.05
0
2012-13 2013-14 2014-15 2015-16 2016-17
Current Assets Turnover Ratio
Fig. No. 5.7 FIGURE SHOWING CURRENT ASSETS TURNOVER RATIO
INTERPRETATION
The current assets turnover ratio of PCK Ltd. is varying each year. In the year 2012 the
current assets ratio is 0.47 and in the next two years the current ratio is reduced to 0.36 and 0.29.
then it had a slight increase to 0.32 and 0.37 in the following years A high current assets turnover
ratio indicates the capability of the organization to achieve maximum sales with the minimum
investments in current assets.
76
C. PROFITABILITY RATIO
Profit can be used for determining the efficiency of management and employees. It is
also useful for providing security to the creditors. The profitability status shows the efficiency
of the management, worth of investments, taxpaying capacity of the firm and its overall
effectiveness.
1. GROSS PROFIT RATIO

Gross profit ratio is the ratio of gross profit of a business to its sales. It is a profitability
ratio measuring what proportion of revenue is converted into gross profit. The gross profit ratio
indicates the extent to which selling prices of goods per units May decline without resulting in
losses on operation of a firm. A low gross profit generally indicates high cost of goods sold due
to unfavorable Purchasing policies, lesser sales, lower selling prices, excessive competition, over
investment in plant and machinery.
𝑮𝒓𝒐𝒔𝒔 𝑷𝒓𝒐𝒇𝒊𝒕
𝑮𝒓𝒐𝒔𝒔 𝑷𝒓𝒐𝒇𝒊𝒕 𝑹𝒂𝒕𝒊𝒐 = ∗ 𝟏𝟎𝟎
Table no. 5.8 TABLE SHOWING GROSS PROFIT RATIO

Year Gross Profit Net Sales3 Ratio
2012-13 926441846 1242659995 74.55
2013-14 --668992570 923897998 72.40
2014-15 432083000 730106233 59.18
2015-16 264778615 689414629 38.40
2016-17 391864689 738840685 53.03
77
Gross Profit Ratio
80 74.55 72.4
59.18
60 53.03
38.4
40
20
0
2012-13 2013-14 2014-15 2015-16 2016-17
Gross Profit Ratio
Fig. No. 5.8 FIGURE SHOWING GROSS PROFIT RATIO
INTERPRETATION
Gross profit ratio measures the relationship of gross profit to net sales. Here we can see
that a fluctuating trend of gross profit to net sales of PCK Ltd. The highest gross profit ratio is
74.55 in the year 2012 and then it had a slight decrease to 72.4 in 2013. During 2014 and 2015
the ratio decreased to 59.18 and 38.4 and had an increase to 53.03 in 2016. The low gross profit
ratio indicates the high cost of goods sold due to number of internal and external reasons.
78
II TREND ANALYSIS
This study and analysis of index number relating to the change in various items of
financial statement of a company over a period of time(accounting year). Although trend analysis
is often used to predict future events, it could be used to estimate uncertain events in the past.
Trend analysis is based on the idea that what has happened in the past gives traders an idea of
what will happen in the future
𝑪𝒖𝒓𝒓𝒆𝒏𝒕 𝒚𝒆𝒂𝒓
𝑻𝒓𝒆𝒏𝒅 𝑷𝒆𝒓𝒄𝒆𝒏𝒕𝒂𝒈𝒆 = × 𝟏𝟎𝟎
𝑩𝒂𝒔𝒆 𝒀𝒆𝒂𝒓
1. TREND ANALYSIS OF SALES
To analyze the sales pattern of PCK Ltd, this trend analysis is made on the basis of Sales
determined during the past five years. 2012 is taken as base year.
Table No. 5.9 TABLE SHOWING TREND ANALYSIS OF SALES
Year Sales Trend Percentage
2012-13 1242659995 100%
2013-14 923897998 74.34%
2014-15 730106233 58.75%
2015-16 689414629 55.47%
2016-17 738840685 59.45%
79
Trend In Sales
120%
100%
100%
80% 74.34%
58.75% 59.45%
60% 55.47%
40%
20%
0%
2012-13 2013-14 2014-15 2015-16 2016-17
Trend in Sales
Fig. No. 5.9 FIGURE SHOWING THE TREND ANALYSIS OF NET SALES
INTERPRETATION
It shows a decreasing trend from the past five years. During 2012 to 2015 there is a
decrease nearly to half in the trend percentage. Trend analysis helps to know the direction of
movement of the activity of the business i.e. whether upward or downward. Increasing net sales
causes an increase in the cash inflow of the company.
80
2. TREND ANALYSIS OF WORKING CAPITAL
To analyze the working capital pattern of PCK Ltd., this trend analysis is made on the
basis of working capital determined during the past five years. 2012 is taken as base year.
Table No. 5.10 TABLE SHOWING TREND ANALYSIS OF WORKING
CAPITAL
Year Working capital Trend Percentage
2012-13 831032959 100%
2013-14 931886869 112%
2014-15 947256086 114%
2015-16 678021927 82%
2016-17 523302134 63%
81
Trend in Working Capital

120% 112% 114%
100%
100%
82%
80%
63%
60%
40%
20%
0%
2012-13 2013-14 2014-15 2015-16 2016-17
Fig. No. 5.10 FIGURE SHOWING TREND ANALYSIS OF WORKING
CAPITAL
INTERPRETATION
The trend analysis of working capital of PCK Ltd. from 2012 to 2016 shows a fluctuating
trend percentage. The least trend percentage occurs in the year 2016 i.e. 63%. There is an
increasing trend during 2012 to 2014 and then it falls down from 114% to 82%. Sufficient
working capital ensures the liquidity position of the company. Increased working capital
indicates that the company having sufficient current assets.
82
3. TREND ANALYSIS OF FIXED ASSETS
To analyze the fixed assets pattern of PCK Ltd., this trend analysis is made on the basis
of fixed assets determined during the past five years. 2012 is taken as base year.
Table No. 5.11 TABLE SHOWING TREND ANALYSIS OF FIXED ASSETS
Year Fixed Assets Trend Percentage
2012-13 776657718 100%
2013-14 864334830 111%
2014-15 918234064 118%
2015-16 1017599812 131%
2016-17 1094395388 141%
83
Trend on Fixed Assets

160%
141%
140% 131%
118%
120% 111%
100%
100%
80%
60%
40%
20%
0%
2012 2013 2014 2015 2016
Trend on Fixed Assets
Fig. No. 5.11 FIGURE SHOWING THE TREND ANALYSIS OF FIXED
ASSETS
INTERPRETATION
The trend analysis of fixed assets of PCK Ltd. from 2012 to 2016 shows an increasing
trend percentage. It shows the effectiveness of investments in fixed assets. 2012 is taken as base
year. We can easily understand that the 2016 financial year gains 141% of increase in fixed assets
based on the base year (2012).
84
4. TREND ANALYSIS OF CURRENT ASSETS
To analyze the current assets pattern of PCK Ltd., this trend analysis is made on the basis
of current assets determined during the past five years. 2012 is taken as base year.
Table No. 5.12 TABLE SHOWING TREND ANALYSIS OF CURRENT
ASSETS
Year Current Assets Trend Percentage
2012-13 2605788537 100%
2013-14 2508730306 96%
2014-15 2462950783 94%
2015-16 2096836483 80%
2016-17 1944919496 75%
85
120%
Trend on Current Assets
100%
96% 94%
100%
80%
80% 75%
60%
40%
20%
0%
2012 2013 2014 2015 2016
Trend on Current Assets
Fig. No. 5.12 FIGURE SHOWING TREND ANALYSIS OF CURRENT
ASSETS
INTERPRETATION
The trend analysis of current assets of PCK Ltd from 2012 to 2016 shows a decreasing
trend percentage. It shows the liquidity position of the company. Here 2012 is taken as the base
year, when compared to currents assets in the year 2012, there is 25% decrease in 2016.
86
5. TREND ANALYSIS OF CURRENT LIABILITY
To analyze the current liability pattern of PCK Ltd., this trend analysis is made on the
basis of current liability determined during the past five years. 2012 is taken as base year.
Table No 5.13 TABLE SHOWING TREND ANALYSIS OF CURRENT
LIABILITY
Year Current Liability Trend Percentage
2012-13 1774755578 100%
2013-14 1576843437 89%
2014-15 1515694697 85%
2015-16 1418814556 80%
2016-17 1421617362 80%
87
120%
Trend on Current Liability
100% 100%
89%
85%
80% 80% 80%
60%
40%
20%
0%
2012 2013 2014 2015 2016
Trend on Current Liability
Fig. No. 5.13 CHART SHOWING THE TREND ANALYSIS OF CURRENT

LIABILITY
INTERPRETATION
The trend analysis of current liability of PCK Ltd. from 2012 to 2016 shows a decreasing
trend percentage. 2012 is taken as the base year, when compared to the base year the trend
percentage of 2013 is 89% and shows a decreasing trend during the period. In 2015 and 2016 the
trend percentage remains the same i.e. 80%.
88
III. CASH FLOW STATEMENTS
The cash flow statement deals with flow of cash which include cash and cash equivalents.
It shows how much cash comes in and goes out of the company over the quarter or the year. This
statement is an additional information to the user of financial statements. It is prepared to know
clearly the various items of inflow and outflow of cash. It assesses the capacity of the enterprise
to generate cash and utilize it. It is an essential tool for short term financial analysis and is very
helpful in evaluating the current liquidity of a business concern. A projected cash flow statement
will help the management in ascertaining how much cash will be available to meet obligations
to trade creditors, to pay bank loans and to pay dividend to shareholders.
The statement deals with the provisions of information about the historical changes in cash
and cash equivalents of an enterprise by means of a cash flow statement which classifies cash
flows during the period from operating, investing and financial activities.
89
Table No 5.18 TABLE SHOWING CASH FLOW STATEMENT FOR THE
YEAR ENDED 31.03.2017
Particulars Rs
A. Cash Flow from Operating Activities:
Profit before tax and exceptional item (10,03,91,553)
Non- cash adjustment to reconcile profit before tax to net cash flows
Depreciation and amortization expense including amount
charged to Reserves 2,60,95,192
Dividend on Investments (14,10,553)
Interest on Investments (4,68,10,016)
Interest on Loans and Advances (29,12,048)
Operating profit before working capital (12,54,28,978)

changes
Movements in working capital:

3,73,02,171
Increase/(decrease) in other liabilities
Increase/(decrease) in provisions (1,04,82,422)
Increase/(decrease) in trade payables 12,90,764
Decrease/(increase) in loans and advances 1,90,76,162
Decrease/(increase) in inventories (8,31,22,708)
Decrease/(increase) in trade receivables 27,66,152
Cash generated from/(used in) operations (15,85,98,858)

Direct tax paid (net of refunds) (64,14,060)
-
Net cash flow from/(used in) operating activities (A)

(16,50,12,919)
B. Cash Flow from Investing Activities:

Purchase of fixed assets, including intangible assets, CWIP and
capital advance (4,42,65,003)
Development of Property (5,91,34,017)
Investment in shares -
Receipt of Subsidy 5,08,252
90
Dividend on Investment 14,10,553

Interest received on Loans & Advances 29,12,048
Net (Deposits)/Withdrawals on Fixed Deposits 18,64,64,320
Investment in NABARD 2,98,00,000
Interest received on Investments 8,48,80,852
Net cash flow from/(used in) investing activities (B) 20,25,77,005
C. Cash Flow from Financing Activities:

Payment of Dividend -
Dividend Distribution Tax -
Net cash flow from/(used in) financing activities (C) -
Net increase /(decrease) in cash and cash equivalents (A+B+C) 3,75,64,087

Cash and cash equivalents at the beginning of the year 9,13,46,363
Cash and cash equivalents at the end of the year 12,89,10,450
91
Particulars Rs
Profit before tax and exceptional item (142,497,324)
charged to Reserves 27,886,664
Interest on Investments (85,160,396)
Profit on sale of Assets -
Subsidy written back -
Operating profit before working capital

changes (203,242,458)

Increase/(decrease) in other liabilities (55,316,579)
Increase/(decrease) in provisions (6,581,894)
Increase/(decrease) in trade payables (6,171,985)
Decrease/(increase) in loans and advances (90,650,479)
Decrease/(increase) in inventories 13,119,880
Decrease/(increase) in trade receivables (1,842,286)
Cash generated from/(used in) operations (350,685,801)

Direct tax paid (net of refunds) (42,653,266)
-
Net cash flow from/(used in) operating activities (A) (393,339,067)
92

Purchase of fixed assets, including intangible assets, CWIP and (26,883,361)
Development of Property (100,369,052)
Investment in shares (6,422,100)
Net (Deposits)/Withdrawals on Fixed Deposits 376,992,275
Investment in NABARD 23,200,000
Interest received on Investments 73,770,563
Net cash flow from/(used in) investing activities (B) 343,759,727

Payment of Dividend (5,568,800)
Dividend Distribution Tax (946,418)
Net cash flow from/(used in) financing activities (C) (6,515,218)
Net increase /(decrease) in cash and cash equivalents (A+B+C) (56,094,558)

Cash and cash equivalents at the beginning of the year 147,440,921
Cash and cash equivalents at the end of the year 91,346,363
93
Particulars Rs
Profit before tax and exceptional item 8,25,91,095
charged to Reserves 4,73,02,783
Interest on Investments (13,95,18,390)
Profit on sale of Assets -
Subsidy written back 14,91,720)
Operating profit before working capital (1,46,73,532)

changes

Increase/(decrease) in other liabilities (63,98,100)
Increase/(decrease) in provisions 18,48,402
Decrease/(increase) in loans and advances (9,30,99,239)
Decrease/(increase) in trade receivables 32,73,487
Cash generated from/(used in) operations

(19,02,03,750)
Direct tax paid (net of refunds)
(10,77,88,470)
Cash flow before Extra-Ordinary Items
(29,79,92,220)
Extra Ordinary Items
-
Net cash flow from/(used in) operating activities (A) (29,79,92,220)

Purchase of fixed assets, including intangible assets, CWIP and (4,80,72,312)
Development of Property (6,85,39,021)
Proceeds from sale of fixed assets -
Receipt of Subsidy
94

Net (Deposits)/Withdrawals on Fixed Deposits 29,48,84,461
Investment in NABARD (2,30,00,000)
Interest received on Investments 24,21,00,699

Payment of Dividend -
Dividend Distribution Tax -
Net cash flow from/(used in) financing activities (C) -
Net increase /(decrease) in cash and cash equivalents (A+B+C) 10,29,38,909
Cash and cash equivalents at the end of the year 14,74,40,921
95
Particulars Rs
A. Cash flows from Operating Activities:
Profit before tax and exceptional item 27,96,78,573
Depreciation and amortization expense 2,04,96,956
Proceeds from sale of trees (3,59,96,238)
Dividend on investments (9,00,000)
Interest on investments (10,83,13,236)
Interest on loans and advances (17,62,900)
Profit on sale of assets (55,000)
Extra ordinary items -
Accounts written off -
Subsidy written back -
Prior period expenses -
Operating profit before working capital changes 15,31,48,155

Increase/(decrease) in other liabilities 2,66,14,919
Increase/(decrease) in provisions (13,92,451)
Decrease/(increase) in loans and advances (1,52,00,901)
Decrease/(increase) in trade receivables (16,46,596)
Cash generated from/(used in) operations 7,02,39,231

Direct tax paid (net of refunds) (10,85,84,731)
Cash flow before extra-ordinary items (3,83,45,500)
Extra ordinary items (26,06,25,000)
Net cash flow from/(used in) operating activities (A) (29,89,70,500)
B. Cash Flow from Investing

Activities:
Purchase of fixed assets, including intangible assets,

CWIP and capital advances (2,78,48,590)
Development of property (8,17,39,527)
Proceeds from sale of fixed assets 3,09,050
Sale of trees 3,59,96,238
Receipt of subsidy 14,91,720
96
Dividend on investment 9,00,000

Interest received on loans & advances 17,62,900
Net (deposits)/withdrawals on fixed deposit 55,75,86,814

Investment in NABARD (3,00,00,000)
Interest received on investments 6,33,48,929

-
Payment of dividend -
Dividend distribution tax -
Net cash flow from/(used in) financing activities (C)
Net increase /(decrease) in cash and cash equivalents 22,28,37,034

(A+B+C)
Cash and cash equivalents at the end of the year

25,50,37,204
97
Particulars Rs
Profit before tax and after extraordinary item (7,62,03,690)
Depreciation & Amortization 2,18,70,015.15
Write off 16,43,435.35
Interest on Investments (15,15,59,194.8)
Profit on Sale of Trees (8,47,75,136.00)
Profit on Sale of Assets (3,16,720.86)
Dividend Received (8,00,000.00)
Subsidy Written back (10,80,640.00)
Prior Period Expenses 3,07,044.00
Interest Income on Loans & Advances (30,97,059.35)
Extraordinary items 60,21,75,000.00
Operating profit before working capital

changes 30,81,63,053.75

Increase /(Decrease) in Provisions (7,57,30,662.00
Increase/(Decrease) in Current Liabilities (2,37,01,989.19)
(Increase)/Decrease in Inventories (6,95,579.43
(Increase)/Decrease in Debtors (57,55,193.00)
(Increase)/Decrease in Advance & Deposits 16,42,071.15
Cash Generated from Operations 20,39,21,701.28
Income Tax Paid (9,40,38,731.00)
Cash flow before Extraordinary items 10,98,82,970.28
Contribution to CM’s DRF -
Extraordinary items (27,04,25,000)
Net cash flow from/(used in) operating activities (A) (16,05,42,029.72)

Purchase of Fixed Assets (3,75,41,621.10)
Development Property (6,49,03,261.71)
Sale of Fixed Assets 3,80,600.00
98
Sale of Trees 8,47,75,136.00

Interest Received on Investments 8,55,72,303.00
Interest Received on Loans & Advances 30,97,059.35
Subsidy Received 17,29,098.00
Dividend Received 8,00,000.00
Net cash flow from/(used in) investing activities (B) 7,39,09,313.54

Payment of Dividend (27,84,400.00)
Dividend Distribution Tax (4,51,700.00)
Net cash flow from/(used in) financing activities (C) (32,36,100)
Net increase /(decrease) in cash and cash equivalents (A+B+C) (8,98,68,816.18)

Cash and cash equivalents at the beginning of the year 1,70,59,92,745.21
Cash and cash equivalents at the end of the year 1,61,61,23,929.03
INTERPRETATION
The company maintains an adequate closing cash balance during the past five years. It
indicates the efficiency of the management. There is a decreasing trend in the closing balance of
cash except the year 2016. The company maintains positive cash balance through greater cash
inflows than the cash outflows. The highest closing cash balance is 1,61,61,23,929 which is
occurred in the year 2012 and the lowest balance is 9,13,46,364 which is occurred in the year
2015.
99
IV. CASH BUDGET

Cash budget is a forecast of the cash position by time period for a specific duration of
time .Cash budget or cash forecast is the most significant device for planning and controlling the
use of cash. It states the estimated amount of cash receipts and estimation of cash payments and
likely balance of cash in hand at the end of the different periods.
Following tables shows five years of cash budget, which is prepared to know the actual
cash balance of PCK Ltd.
100
Table No. 5.23 TABLE SHOWING CASH BUDGET FOR THE YEAR 2016-17
Particulars Rs
Opening cash balance 2396602967
Add: Estimated receipts of cash
Cash sales 738840685
Collection of debtors 4634340
Other incomes 60324699
Prior Period Income 121200
Total of Receipts 320052391
Less: Estimated payments of cash
Payments to Creditors 6318302
Cost of materials 429129217
Employee benefits expenses 412934031
Administration & other expenses 113665118
Prior period expenses 7800
Total Payments 962054468
Closing Balance of Cash (Surplus) 2238469423
101
Particulars Rs
102
Particulars Rs
103
Particulars Rs
104
Particulars Rs
Purchase of goods 336029
105
INTERPRETATION
The company maintains an adequate cash balance during the past five years. It indicates
the efficiency of the management. From the last five years data the highest cash balance is
2510469455 which is occurred in the year 2014-15 and the lowest cash balance is 2238469423
which is occurred in the year 2016-17. For the first three years the closing cash balances of each
year was having an increasing trend and for the rest it was just opposite. The company maintains
positive cash balance through grater cash inflows than the cash outflows.
106
5.2 STATISTICAL TOOLS
1. KARL PEARSON’S CO-EFFICIENT OF CORRELATION
Correlation is the study of relationship between two variables. Correlation is a

statistical measure that indicates the extent to which two or more variables fluctuate together. A
positive correlation indicates the extent to which those variables increase or decrease in parallel;
a negative correlation indicates the extent to which one variable increases as the other decrease.
Here we are analyzing the correlation between current assets and current liabilities and the net
sales and average inventory.
Table No 5.24 TABLE SHOWING CORRELATION BETWEEN NET SALES
AND AVERAGE INVENTORY
Year Sales (X) Average XY X2 Y2

Inventory (Y)
2012 124.26 16.33 2029.16 15440.54 266.67
2013 92.39 24.60 2272.80 8535.91 605.16
2014 73.01 41.30 3015.31 5330.46 1705.69
2015 68.94 50.03 3449.07 4752.72 2503
2016 73.88 58.41 4315.33 5458.25 3411.72
Total 432.49 190.67 15081.67 39517.88 8492.24
(in Cr.)
107
𝑛 ∑𝑋𝑌 − ∑𝑋. ∑𝑌
𝑟=
√ 𝑛∑𝑋 2 − (∑𝑋)𝟐 √𝑛 ∑𝑌𝟐 − (∑𝑌)𝟐
r= 5 * 15081.67 – (432.49) (190.67)
5 * 39517.88 – (432.49)2 5 * 8492.24 – (190.67)2
= 75408.35 – 82462.86
197589.4 – 187047.60 42461.2 – 36355.04
= - 7054.51
10541.8 6106.16
= - 7054.51 = - 7054.51
102.67 * 78.14 8022.63
r = - 0.88
Here the correlation coefficient r = -0.88, that means there is a negative correlation between
net sales and average inventory. It indicates the inverse correlation between net sales and average
inventory. That is, a decrease in net sales causes an increase in average inventory and vice versa.
108
Table No. 5.25 TABLE SHOWING CORRELATION BETWEEN CURRENT
ASSETS AND CURRENT LIABILITIES
Year C. A (X) C. L (Y) XY X2 Y2
2012-13 260.57 177.47 46243.36 67896.72 31495.60
2013 250.87 157.68 39557.18 62935.75 24862.98
2014 246.29 151.56 37327.71 60658.76 22970.43
2015 209.68 141.88 29749.39 43965.70 20129.93
2016 194.49 142.16 27648.70 37826.36 20209.46
Total 1161.9 770.75 180526.34 273283.29 119668.4
(in Cr.)
109
𝑛 ∑𝑋𝑌 − ∑𝑋. ∑𝑌
𝑟=
√ 𝑛∑𝑋 2 − ∑(𝑋)𝟐 √𝑛 ∑𝑌𝟐 − ∑(𝑌)𝟐
r= 5 * 180526.34 – (1161.9) (770.75)
5 * 273283.29 – (1161.9)2 5 * 119668.4 – (770.75)2
= 902631.7 – 895534.42
1366416.45 – 1350011.61 598342 – 594055.56
= 7097.78
1 16404.84 4286.44
= 7097.78 = 7097.78
128.08 * 65.47 8385.39
r = 0.84
Here the correlation coefficient r = 0.84 that means there is a positive correlation between
current assets and current liabilities. It indicates there is a direct correlation between the two
variables. That is, an increase in current assets causes an increase in current liability.
110
2. CHI- SQUARE TEST
A chi-square test is any statistical hypothesis test in which the sampling distribution of
the test statistic is a chi-square distribution when the null hypothesis is true, or any in which this
is asymptotically true, meaning that the sampling distribution can be made to approximate a chi-
square distribution as closely as desired by making the sample size large enough. The chi-
square test is always testing what scientist call the null hypothesis, which states that there is no
significant difference between the expected and observed results.
(𝑶−𝑬)𝟐
𝝌𝟐 = ∑ 𝑬
Where “E” is the Expected Frequency.
“O” is the Observed Frequency.
Degree of freedom = n – 1 (n = No. of observations)
Here, Observed frequency is taken from the closing cash balance of cash budget and the
expected frequency is the average of sum of the observed frequency.
H0: The cash management system of PCK Ltd is effective.
H1: The cash management system of PCK Ltd is not effective.
Level of significance = 5%
111
Table No. 5.26 TABLE SHOWING THE VALUE OF CHI-SQUARE
Year Observed Expected (O-E) (O-E)2 (O-E)2/E

frequency (O) frequency (E)
2012-13 225.27 237.40 -12.13 147.13 0.62
2013-14 247.20 237.40 9.8 96.04 0.40
2014-15 251.04 237.40 13.64 186.04 0.78
2015-16 239.66 237.40 2.26 5.10 0.02
2016-17 223.84 237.40 -13.56 183.87 0.77
𝝌𝟐 = 2.59
(𝑶−𝑬)𝟐
𝝌𝟐 = ∑
𝑬
𝝌𝟐 = 2.59
The calculated value is = 2.59
Degree of freedom = 5 – 1 = 4
The table value at the rate 5% level of significance is = 9.488
INTERPRETATION
The calculated value is less than the table value so, we accept the null hypothesis and
reject the alternate hypothesis that means the existing cash management system of Plantation
Corporation of Kerala Ltd is not effective.
112
3. REGRESSION ANALYSIS
Regression means the estimations or predictions of unknown value of a variable from the
known value of other variable. Here one variable is dependent and other one is independent. The
functional relationship between two or more correlated variables that is often empirically
determined from data and is used especially to predict values of one variable when given value
of the others.
As per the data
Here, X = Sales
Y = Net Profit/ (Loss)
Table No. 5.27 TABLE SHOWING THE REGRESSION ANALYSIS
YEAR X Y XY X2 Y2
2012 124.26 (17.62) (2189.46) 15440.54 310.46
2013 92.39 17.96 1659.32 8535.91 322.56
2014 73.01 9.37 684.10 5330.46 87.79
2015 68.94 (16.74) 1154.05 4752.72 280.22
2016 73.88 (7.67) 566.65 5458.25 58.82
TOTAL 432.48 (14.7) 1874.66 39517.88 1059.85
(in Cr.)
113
∑𝑥
𝑥̅ = = 432.48 = 86.496
𝑛
5
∑𝑦
𝑦̅ = = -14.7 = -2.94
𝑛
5
Regression equation of Y on X
̅ = 𝒃𝒚𝒙 (𝒙 − 𝒙
𝒚 −𝒚 ̅)
𝒏 ∑ 𝒙𝒚 − (∑ 𝒙 ∗ ∑ 𝒚)
𝒃𝒚𝒙 =
𝒏 ∑ 𝒙𝟐 − (∑ 𝒙)𝟐
= 5 × 1874.66 – (432.48 × -14.7)

5 × 39517.88 – (432.48)2
= 9373.3 – (-6357.45)
197589.4 – 187038.95
= 15730.75
10550.45
byx = 1.49
̅ = 𝒃𝒚𝒙 (𝒙 − 𝒙
𝒚 −𝒚 ̅)
y – (-2.94) = 1.49 (x – 86.496)
y = 1.49x – 128.88 -2.94
The regression equation of y on x y = 1.49x – 131.82
114
Suppose if the sale (X) for the year 2017 is =172.95, then the net profit (Y) will be,
Y= (1.49 x 172.95) – 131.82
= 257.69 – 131.82
Y = 125.87
Suppose if the sale (X) for the year 2018 is = 321.55, then the net profit (Y) will be,
Y= (1.49 x 321.55) – 131.82
= 479.10 – 131.82
Y = 347.28
Suppose if the sale (X) for the year 2019 is = 544.45, then the net profit (Y) will be,
Y= (1.49 x 544.45) – 131.82
= 811.23 – 131.82
Y = 679.41
Table No. 5.28 TABLE SHOWING THE VALUE OF “Y”
Year Sales Estimated Profit/(Loss)
2017 172.95 125.87
2018 321.55 347.28
2019 544.45 679.41
115
INTERPRETATION
Here I have estimated the value of net profit/ (loss) (unknown value) from the net sales
(known value). When the sale is 172.95 the profit will be 125.87 and there will be 347.28 profits
if there is a sale of 321.55. It shows that, increasing sales will results an increase in profits.
116
CHAPTER - 6
FINDINGS
6.1 FINDINGS OF THE STUDY
An attempt is made in this chapter to summarize the major findings of the study and to
present the major conclusion drawn from the findings. It is also attempted to suggest measures
for the improvement based on the findings of the study.
 The current ratios shows a satisfactory level.

 Quick ratio of PCK Ltd. also shows a satisfactory level because it is more than the standard
level. It means the company had liquid assets sufficient to cover the current liabilities.
 The company is not in a good liquidity position. The company is needed to maintain
sufficient liquid assets to ensure smooth running of the firms operations.
 The decreasing trend of stock turnover ratio indicates the blocking of funds in inventory.
 The working capital turnover ratio indicates the increasing and decreasing trend of
utilization of working capital for generating a given level of sales.
 The increasing trend of net sales of PCK Ltd. causes a negative impact in the net profit of
the company.
 The overall cash management of Plantation Corporation of Kerala Ltd. is not satisfactory.
118
CHAPTER – 7
RECOMMENDATIONS
7.1 RECOMMENDATIONS
 Introduce some efficient measures that boost up sales with lesser cost of production in order
to increase the profitability.
 Company should improve the present liquidity position.
 The company should maintain an effective cash management model in order to find out the
optimum cash balance.
 Sold out unnecessary assets and this can improve the liquidity position.
 The company should invest more in fixed assets in order to improve the profitability
position.
 To meet the short term obligations on time the company should maintain sufficient working
capital.
To the use of external long term financial resources for the acquisition of fixed assets rather than
the internal sources. It will maintain a sufficient liquidity position.
120
CHAPTER – 8
CONCLUSION
8.1 CONCLUSION
The main purpose of keeping cash is to meet day-to-day requirements along with sufficient
liquidity and adequate profitability. A financial analyst has come to the conclusion that "business
enterprises should keep its cash and near-cash reserves below the requirements of one month's
normal expenditure. If cash and near cash reserves happen to be more than this limit, it should
be taken for granted that excessive cash is being carried by the concern. In fact, a concern should
go for optimizing its cash holdings without impairing the overall liquidity requirements. This
can be possibly executed only if a firm exercises tight control over cash flows. A concern in this
respect may develop a trend or pattern from its past records and experience or a comparative
study of its own cash balances with that of other concerns of the same industry may also be
conducted for framing a line of control. This may help the concern in determining the extent of
cash balances and in avoiding risk of holding excess cash balance in the business.
122
REFERENCES
BIBIOGRAPHY
 R. Choyal, Financial Management of State Enterprise, Print well Publishers, Jaipur.
 D. Chandra Bose “Fundamentals of Financial Management”.
 Kothari c r, Research Methodology, New Delhi, Vikas Publishing House, 1990.
 M.Y. Khan & P.K. Jain “Financial Management”, New Delhi, Tata McGraw-Hill
Publications, 2002.
 Prasanna Chandra, “Fundamentals of Financial Management”, Tata McGraw-Hill

Publishing Company Limited, New Delhi, 1995. pp.495-498
 S.M.Maheswari “Financial Accounting”, Vikas publication.
WEBLIOGRAPHY
 http://www.pcklimited.in/mainsubmenu.php?mainpage=89&subcontent=184
124
APPENDICES
PROFIT AND LOSS STATEMENT FOR THE YEAR ENDED 31.03.2013
crores
Particulars 2012-13
I. Revenue from operations 1,24,26,59,995.78

II. Other Income 18,95,27,825.24
III Prior Period Income 12,11,452.40
Total Revenue 1,43,33,99,273.42
IV. Expenses:
Cost of materials consumed 31, 68,24,590.66
Purchase of Stock-in-Trade 3,36,029.00
Changes in inventories (9,42,470.00)
Employee benefit expense 40,32,19,935.57
Depreciation and amortization expense 2,18,70 ,015.15
Administrative and Other expenses 16,54,29,980.50
Prior Period Expense 6,89,883.00
Total Expenses 90,74,27,963.88
V. Profit before extraordinary items and tax 52,59,71,309.54
VI. Extraordinary Items 60,21,75,000.00
VII. Profit before tax (V-VI) (7,62,03,690.46)
VIII. Tax expense:
Current tax 10,00,00,000.00
IX. Profit/(Loss) for the period (VII-VIII) (17,62,03,690.46)
126
crores
Particulars 2013-14
I Revenue from operations 92,38,97,998.45

II Other income 12,28,86,031.34
III Prior period income 1,37,05,480.00
Total Revenue ( 1 + 2 +3 ) 1,06,04,89,509.79
IV Expenses
Cost of materials consumed and direct expenses 33,63,32,812.92
Changes in inventories of finished goods, work-in-
progress
and stock-in-trade (8,14,27,384.00)
Employee benefits expenses 35,62,93,352.82
Depreciation and amortization expenses 2,04,96,955.55
Administrative and others expenses 14,68,21,459.43
Prior period expenses 22,93,740.00
Total expenses 78,08,10,936.72
V Profit / (Loss) before exceptional and extraordinary
items and tax ( 4 - 6 ) 27,96,78,573.07
VI Extraordinary items -
VII Profit / (Loss) before tax ( 7 - 8 ) 27,96,78,573.07
VIII Tax expense:
Current tax expenses 10,00,00,000.00
IX Profit / (Loss) for the period ( 9 - 10 ) 17,96,78,573.07
127
crores
Particulars 2014-15
Total Revenue 87,74,62,740.16
IV. Expenses:
Cost of materials consumed 38,38,52,725.19

Changes in inventories (8,58,29,492.00)
Depreciation and amortization expense 4,73,02,783.29
Prior Period Expense 34,922.00
V. Profit before tax 8,25,91,095.48
VI. Tax expense:
Current tax 4,00,00,000.00
Excess provision for Current Tax
for the F.Y.2013-14 written back (5,11,17,193.00)
Total (1,11,17,193.00)
VII. Profit/(Loss) for the period (V-VI) 9,37,08,288.48
128
crores
Particulars 2015-16
I. Revenue from operations 689,414,629.78

II. Other Income 93,347,109.28
III. Prior Period Income -
Total Revenue 782,761,739.06
IV. Expenses
Cost of materials consumed and Direct Expenses 426,264,797.76
Changes in inventories -1,628,783.00
Employee benefit expense 344,111,018.48
Depreciation and amortization expense 27,886,664.00
Administrative and Other expenses 128,625,365.77
Prior Period Expense -
Total Expenses 925,259,063.01
V. Profit before tax -142,497,323.95
VI. Tax expense:
Current tax 23,599,363.00
(Excess) / Short provision for Current Tax for earlier
years 1,400,637.00
Total 25,000,000.00
VII. Profit/(Loss) for the period (V-VI) -167,497,323.95
129
crores
Particulars 2016-17
I. Revenue from operations 73,88,40,685.71

Total Revenue 79,92,86,585.34
IV. Expenses:
Cost of materials consumed and Direct Expenses 42,91,29,217.25
Changes in inventories (8,21,53,221.00)
Depreciation and amortization expense 2,60,95,191.95
Prior Period Expense 7,800.00
V. Profit before tax (10,03,91,552.83)
VI. Tax expense:
Current tax -
(Excess) / Short provision for Current Tax for earlier years (2,35,99,363.00)
Total (2,35,99,363.00)
VII. Profit/(Loss) for the period (V-VI) (7,67,92,189.83)
130
BALANCE SHEET AS AT 31ST MARCH 2013
Particulars 2012-13
EQUITY AND LIABILITIES
I) Shareholder’s Funds
a) Share Capital 5,56,88,000.00
b) Reserves and Surplus 1,60,55,17,873.18
II) Non-Current Liabilities
a) Long-term borrowings 48,20,960.51
III) Current Liabilities
a) Trade payables 73,14,090.80
b) Other current liabilities 29, 30,26,043.45
c) Short-term provisions 1,47,44,15,444.07
Total 3,44,07,82,412.01
ASSETS
IV) Non-current assets
a) Fixed assets
i) Tangible assets 76,85,49,281.94
ii) Intangible assets 3,75,803.00
iii) Capital work-in-progress 77,32,634.95
b) Non-current investments 1,50,01,000.00
c) Long term loans and advances 4,33,35,155.07
V) Current assets
a) Inventories 14,78,10,264.81
b) Trade receivables 71,85,097.20
c) Cash and cash equivalents 1,61,61,23,929.03
d) Short term loans and advances 71,00,19,988.06
e) Other current assets 12,46,49,257.95
Total 3,44,07,82,412.01
131
Particulars 2013-14
A EQUITY AND LIABILITIES
I Shareholders’ funds
(a) Share capital 5,56,88,000.00
(b) Reserves and surplus 1,78,34,30,557.25
Share application money pending allotment
II Non-current liabilities
(a) Long-term borrowings 48,20,960.51
(b) Long-term provisions 2,03,87,734.00
III Current liabilities
(a) Trade payables 82,96,061.82
(b) Other current liabilities 31,76,95,701.17
(c) Short-term provisions 1,25,08,51,674.07
TOTAL 3,44,11,70,688.82
B ASSETS
IV Non-current assets
(a) Fixed assets -
(i) Tangible assets 85,55,75,095.44
(ii) Intangible assets 3,41,905.90
(iii) Capital work-in-progress 84,17,828.95
(b) Non-current investments 1,50,01,000.00
(c) Long-term loans and advances 5,31,04,552.49
V Current assets
(a) Inventories 24,00,76,131.54
(b) Trade receivables 88,31,693.20
(c) Cash and cash equivalents 1,31,13,74,148.43
(d) Short-term loans and advances 77,88,34,768.44
(e) Other current assets 16,96,13,564.43
TOTAL 3,44,11,70,688.82
132
Particulars 2014-15

b) Long-term provisions 2,31,47,848.00
a) Trade payables 1,11,99,523.80
b) Other current liabilities 31,12,97,602.76
TOTAL 3,45,63,31,705.85
ASSETS
a) Fixed assets
i) Tangible assets 88,04,13,999.07
ii) Intangible assets -
iii) Capital work-in-progress 3,78,20,065.15
V) Current assets
c) Cash and cash equivalents 1,14,24,28,596.01
TOTAL 3,45,63,31,705.85
133
Particulars 2015-16
a) Share Capital 55,688,000.00
b) Reserves and Surplus 1,689,482,875.76
b) Long-term provisions 29,041,677.00
b) Other current liabilities 255,981,023.56
c) Short-term provisions 1,157,805,993.45
Total 3,197,848,069.08
ASSETS
a) Fixed assets
i) Tangible assets 978,703,908.26
ii) Capital work-in-progress 38,895,904.15
b) Non-current investments 21,423,100.00
c) Long term loans and advances 61,988,673.89
V) Current assets
a) Inventories 311,014,481.70
c) Cash and cash equivalents 686,141,764.11
e) Other current assets 78,421,088.30
Total 3,197,848,069.08
134
Particulars 2016-17

b) Long-term provisions 3,07,50,019.00
b) Other current liabilities 29,32,83,192.71
Total 3,12,55,67,028.40
ASSETS
a) Fixed assets
i) Tangible assets 1,02,85,03,335.68
ii) Intangible assets 66,225.00
iii) Capital work-in-progress 6,58,25,828.15
V) Current assets
c) Cash and cash equivalents 50,74,41,529.72
Total 3,12,55,67,028.40
135

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A STUDY ON CASH MANAGEMENT AT

PLANTATION CORPORATION OF KERALA Ltd, KOTTAYAM

in partial fulfilment of the requirements

DEPARTMENT OF MANAGEMENT STUDIES

I place my sincere thanks to Mr. SREELAKUMAR. S, General Manager, F&A for

Sl. No Topics Page No.

5 DATA ANALYSIS 62-116

4.2 Evaluation of Correlation coefficient between 2 variables 60

5.1 Current ratio 64

5.2 Quick ratio 66

5.3 Absolute liquid ratio 68

5.4 Inventory turnover ratio 70

5.5 Fixed assets turnover ratio 72

5.6 Working capital turnover ratio 74

5.7 Current assets turnover ratio 76

5.8 Gross profit ratio 78

5.9 Trend analysis of sales 80

5.1 Trend analysis of working capital 82

5.11 Trend analysis of fixed assets 84

5.12 Trend analysis of current assets 86

5.13 Trend analysis of current liabilities 88

Research means search for knowledge. The purpose of research is to discover

H0: Existing cash management system of PLANTATION CORPORATION

H1: Existing cash management system of PLANTATION CORPORATION

1.1 BACKGROUND OF THE STUDY

1.2 NEED AND SIGNIFICANCE OF THE STUDY

Cash management in India is changing in order to help corporate to compete in the

The importance of Cash management in any industrial concern cannot be overstressed.

 The study indicates the importance of cash management

1.3 STATEMENT OF THE PROBLEM

Here in this project, a study entitled “A study on Cash Management at PLANTATION

1.4 OBJECTIVES OF THE STUDY

1.5 SCOPE OF THE STUDY

1.6 LIMITATIONS OF THE STUDY

1.7 ORGANIZATION OF THE REPORT

 Chapter-2 LITERATURE REVIEW

 Chapter-3 THEORETICAL FRAMEWORK

 Chapter-4 RESEARCH METHODOLOGY

 Chapter-5 DATA ANALYSIS

REVIEW OF RELATED LITERATURE

2.1 INDUSTRY PROFILE

Rubber & Rubber Based Product – Manufacturing & Marketing

Natural rubber is an elastic hydrocarbon polymer that naturally occurs as a milky

Synthetic rubbers are made by the polymerization of a single monomer or a mixture of

Indian rubber industry

Kanyakumari in Tamil Nadu Coastal regions of Karnataka

Districts of Kerala Goa

recommended establishment of an All India Rubber Research Institute on a scale comparable to

RUBBER MANUFACTURES IN KERALA

Karan Group of Companies, Alappuzha

Harrison Malayalam Ltd

Rubber Mark, Kochi

Hindustan Rubber Trading Corporation, Kozhikode

Thomson Ltd, Kottayam

St. Mary’s Rubber PVT Ltd, Kanjirapally

Plantation Corporation, Kottayam

Current sources of rubber

2.2 COMPANY PROFILE

Table no. 2.2 TABLE SHOWING MAJOR ESTATES OF PLANTATION