A

PROJECT REPORT
ON
“WORKING CAPITAL TOWARDS PROCESS AT
VADILAL ICE CREAM INDUSTRY”

SESSION : (2023-2024)

Submitted in partial fulfillment of the degree of

MASTER OF BUSINESS ADMINISTRATION

SUBMITTED BY:
ANUUJ KUMAR
MBA: IV SEM
ROLL NO. 22MBA07R0395

SYMBIOSIS SKILLS & PROFESSIONAL

UNIVERSITY

1
 ACKNOWLEDGEMENT

The successful completion of that task would not be completed

without the expression of gratitude to the people who made it

possible. I take this opportunity to acknowledge all those who guided,

encouraged and helped me in winding up this project report.

I feel greatly honored for having done my research project report. I

thank them with full zeal and enthusiasm that they gave this big

opportunity to me.

Last but not the least; I would like to extend my deep sense of

gratitude and thanks to my Parents, Friends and God in successful

completion of this project report.

ANUJ KUMAR
MBA IV SEM
ROLL NO. 22MBA07R0395

2
 DECLARATION

I, ANUJ KUMAR, a student of SYMBIOSIS SKILLS &

PROFESSIONAL UNIVERSITY by declare that this research

project report is the record of authentic work carried out by me during

the academic year 2024 and has not been submitted to any other

university or institute towards the awards of any degree .An attempt

has been made by me to provide all relevant and important details

regarding the topic to support the theoretical advice with concrete

research evidence. This will be helpful to clean the fog surrounding

the various aspect of the topic. I hope that this project will be

beneficial.

ANUJ KUMAR
MBA IV SEM
ROLL NO. 22MBA07R0395

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 TABLE OF CONTENTS

CHAPTER – 1
 INTRODUCTION
 VADILAL ICECREAM
 PRODUCT LINE
 PRODUCTION
 VADILAL INDUSTRY

CHAPTER – 2
 WORKING CAPITAL
 FINANCIAL ANALYSIS

CHAPTER – 3
 RATIO ANALYSIS

CHAPTER – 4
CONCLUSION
BIBLIOGRAPHY

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 CHAPTER – 1
INTRODUCTION TO THE
ORGANIZATION
VADILAL ICECREAM
PRODUCT LINE
PRODUCTION
VADILAL AT BAREILLY

5
 INTRODUCTION TO THE TOPIC

Ice creams are a genuine delicacy to one and all. It would indeed be difficult to

trace a sole who actually doesn’t like ice creams. Ice creams are an all time

favourite for people of all ages. How often do we ever give it a thought as to

know about ice creams?

Ice cream market in India-The total market in the ice cream industry is Rs 2000

crores of which the branded ice cream market holds a scoop of Rs 400 crore.

The ice cream market in India is currently estimated to be 210-mn liter valued at

Rs 45 crore (MRP Rs 9 bn). The market growth during the late 80’s and in the

early 90’s was very low at around 2-3 % p.a. since the last 2 years; the market

has been witnessing a much faster growth at around 10-12% p.a. The growth

rate could have been higher but for poor infrastructure high excise duty / sales

tax etc.

In the beginning HLL entered the market through frozen dessert route. Frozen

desserts were technically not reserved for the small scale. There are a number of

brand of ice creams available in the country. Even region has its own special

brand of ice creams.

There lies immense opportunity in the East removal of licensing, restrictions

and investment by new players in capacity and market expansion, is expected to

lead to rapid demand growth in the sector. A 10-20% p.a. volume growth can be

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sustained for a very long period due to the fact that the current base of

consumption is very small.

Ice cream has an ancient history-As for the origins of ice-cream, an equal

amount of folklore abounds. In the fourth century B.C., the Roman Emperor

Nero apparently ordered ice to be brought from the mountains and combined

with fruit toppings. Although legend has it that Marco Polo brought back to

Europe a Chinese method for creating an ice and milk concoction, recent

scholarship indicates that if he did bring back such a recipe, it was probably not

from China but from elsewhere along his route. Over time, recipes for ices,

sherbets, and milk ices evolved and were served in the fashionable Italian and

French royal courts.

The use of ice mixed with salt to lower and control the temperature of the mix

of ingredients proved a major breakthrough in the creation of ice cream as we

know it. The invention of the wooden bucket freezer with rotary paddle

facilitated its manufacture at home, making ice-cream a staple of kitchens

across the land.

A Baltimore company first produced and marketed wholesale ice-cream in

1851. The treat became both distributable and profitable with the introduction of

mechanical refrigeration. The ice-cream shop or soda fountain has since become

an icon of American culture.

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Ice creams is a dairy product comprising of 60% dairy ingredients like Creams,

Butter, Milk and other ingredients such as Sugar, Water, Colors, Flavours,

Stabilizer and emulsifiers. In case of Frozen Desserts the dairy fat is replaced by

vegetable fat such as Palm oil, Coconut oil.

Prevention of Food Adulteration Act requires a min. 10% fat and 40% of other

solid matter in ice creams. The key non- fat solid matter being skimmed milk

powder and sugar.

Ice Creams have good demand all around the globe. It has been seen that U.S.A

accounts for 22 litres per annum consumption per person while Australia ranks

second with an 18 litres figure. India however, shows a figure of only 0.1 liter.

There indeed lies great potential in the Indian market for ice creams.

The ice cream industry here shows a Rs. 2200 Crores total market of which

branded ice creams own only Rs. 500 Crores. Today the country is practically

flooded with a very wide range of ice cream brands. Each region has its own

special brand to harp on.

The major international players in the Bareilly market are Blue Bunny, Baskin

Robbins and Move pick whereas the domestic players include Mother Dairy,

Amul, Kwality Walls, Cream Bell and Vadilal.

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Indian ice cream industry is worth $700 million of which only less than half

($300-350 million) is accounted by organized players like Cream Bell, Amul

Kwality Walls and Mother Dairy.

Among the domestic players Kwality Walls Amul & Mother dairy are the only

brands that can pose maximum competition to Vadilal ice creams. However,

the company has accepted this competition in good spirit and has also made

adequate moves in this regard.

Purpose: Since there is not enough space in normal refrigerator, the retailers

need to keep freezer to stock ice cream .The freezer maintain -18 to -22 degree

C. Our task necessarily involves convincing the retailer to create space for

VADILAL ice cream in his shop , also understand the working of the distributor

& the various issues he handle like retailer grievances ,replacement strategies

cost involved & the other issues he faces.

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 INTRODUCTION TO THE ORGANIZATION

Vadilal group has its humble beginning, more than 95 years ago, when its

founders started manufacturing Ice-cream with a hand cranked machine.

Today it is a diversified Business Group with major interests in Ice-creams,

Food Processing, Real Estate Development and Specialty Gases.

Head Quartered in Gujarat, the most industrialized State in India, the Group had

a turnover (1998-99) exceeding Rs.1500 million. Major companies of the Group

are listed in several Stock Exchanges of. India. The Group has a large investor

base and its brand name "Vadilal" commands an excellent equity.

The "Vadilal" philosophy of providing its customers with quality products and

services at affordable prices has resulted in the brand being a household name in

India.

Vadilal Industries Ltd. (VIL) is the flagship company of Vadilal Group.

VIL is a public limited company listed in major Stock Exchanges of India.

VIL's primary interests are in Ice-creams and Food Processing.

Vadilal is having one fourth of the Indian Ice-cream market as its share. With its

successful track record spanning seven decades, Vadilal is synonymous with

Ice-cream in several parts of the country.

The Processed Foods Division processes and markets a wide variety and range

of fruits, vegetables and ready-to-serve Indian Foods. The Division also exports
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several of these products to the European Union, the Middle East, Asia Pacific

Region and the US.

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 VADILAL ICECREAM

Vadilal, the name conjures up images of ice cream laden bowls and a plethora

of new flavours. Starting from one man show with a hand cranked machine in

1926 as a small retail outlet, the ice cream division now has a production

capacity of 1 lacks litters/day at 3 sophisticated plants, located at Ahmedabad,

Pundhra and Bareilly. These ISO 9002 certified plants for Pundhra and Bareilly

are established in such a way that they are in consonance with the market

expansion strategies of the division.

Vadilal has one of the largest cold chain networks in India, comprising of 15

C&F agents, 250 distributors and 15,000 retailers. The network is kept alive by

a large fleet of refrigerated vehicles. Refrigeration equipments and retail

freezers are sourced from world leaders in the technology so as to deliver

quality products to the consumers, which is a commitment at Vadilal.

Vadilal has 25% of the Indian ice cream market as its share. But that's no

surprise considering that the group has the largest range of ice creams in the

country in a variety of flavours, packs and forms. The group has a product

matrix of over 200 SKUs comprising of cones, cups, candies, family and party

bricks and bulk packs. Vadilal introduced the concept of "flavour of the month"

under which the company develops and markets one new flavour every month

for its customers delight.

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Product range

Vadilal has the maximum range of ice-cream products in India i.e. over 200

SKUs. It has preference for tastes as per budgets. There are rich creamy ice

creams for the connoisseurs and low fat frozen desserts for the health conscious.

There are plain favourites, chocolate ecstasies, romantic ripples, nutty delight,

fresh fruit fantasies and are guaranteed to spark your taste buds. Vadilal has

priced its products on the principle of real value for money.

Quality

At Vadilal, commitment to Quality is an Attitude. Vadilal Ice Creams contains

only the best ingredients, be it cashew nuts, almonds, pistachio chocolate or

fresh fruits. Great pains are taken to find the finest ingredients from around the

globe. State-of-the art-technology ensures that each scoop is dense, rich and

filling, with no extra air or ice-flakes. Special care is taken during packaging,

storing, transit and delivery so that consistency in quality is maintained. This is

why when the end product reaches the customer; he is convinced that quality

shines through in everything the group does.

New Launches

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  Recently the group has launched Fresh Fruit Ice-cream with ripples under

the Fantasy range viz. Fresh Orange Fantasy, Fresh Mango Fantasy,

Fresh Strawberry Fantasy and Fresh Black Currant Fantasy.

 Three new Koolfi's have hit the market. Namely Mango Koolfi, Mava

Koolfi and Pista Koolfi, these koolfis priced at Rs.10/- is a big hit in the

market place.

 Two new Sundaes ---- Chocolate Sundae & Strawberry Sundae at Rs.

10/- each have been introduced.

New Promotional Schemes

 .1+1 scheme on cup of butter scotch, kaju kish mish, Mango cup.

 Mango dolly free with Bomber,& Rasb berry dolly free with CONE No 1

 1+1 Party Pack Scheme: Yet another Bumper offer was the scheme of

One party pack free with one.

 Purchase discount with the slab of 5%,6% & 7%

Market Reaction to Vadilal's activities

The recent promotional schemes have a tremendous response from the

consumers. Consumers have been writing letters with requests for the extension

of the scheme period. The growth in sales during the scheme period was ten

times over the normal sales.

Happinezz Parlour

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Vadilal introduced exclusive ice cream parlours under the name "Happinezz

Parlours" to meet the expectations of our valued customers.

Happpinezz provides cosy, nice & cool ambience where one can enjoy world-

class ice creams, ice-cream sundae, shakes and other various ice cream

concoctions to his heart's content.

Presently Vadilal has 23 such parlours in India and it expects to increase its

number very soon. To open a Happinezz parlour following requirements have to

be met.

Operational Requirements

1. A place at a prominent location with at least 15' frontage and at least 400

sq. ft. area reserved for ice creams only.

2. Minimum two display dispensers- one storage deep freezer unit and one

soda fountain freezer unit as equipment are required.

3. Proper space for sitting or standing for serving ice creams.

4. Inside parlour walls should be clean and may have product display to

enhance the general mood and give feeling of excitement.

5. Translite of products with their prices and attractive photograph should be

displayed properly to create the right ambience in the parlour.

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 PRODUCT LINE

Vadilal ice cream division has always been a hot favorite with the people both

inside and outside the organization. In India, the name Vadilal is synonymous

with Ice Cream.

The Ice Cream industry in India today has a turnover of Rs. 15 billion [US$ 330

million]. A quarter of this comes from the house of Vadilal alone. But that’s no

surprise, considering that we have the largest range of Ice Creams in the country

– 120 – plus flavors, in a variety of more than 250 packs and forms. The range

includes cones, candies, bars, ice-lollies, small cups, big cups, family packs, and

economy packs. Something for all tastes, preferences and budgets.

To make it convenient for our consumers to relish our complete range under one

roof, we have set up a chain of Happiness Parlors – ‘Ice Cream boutiques’ so to

say. Hordes of people flock to these parlors daily because they know that our

products contain the purest and creamiest milk, and the freshest and tastiest

fruits and nuts.

Among our products are OneUp Chocobar and King Cone – all-time favorites

which have today attained the generic status. Another hit is our Kulfi –

traditional Indian milk sweet. Some of our products are a combination with

confectioneries.

Vadilal has two ultra modern ice-cream manufacturing plants - one at village

Pundhra, Gujarat and another at Bareilly, U.P. Both plants are ISO: 9001:2000

and HACCP Certified. Certification of Bareilly plant is done by BIS and

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Pundhra plant is done by BVQI under the latest regulations of food safety

system, September 2002. BVQI is a wholly owned subsidiary of Bureau

Veritas, a France-based multinational organization. Our Pundhra plant has

recently received the accreditation from Export Inspection Council of India,

Ministry of Commerce and Industry, Government of India certification for

exports that in itself is a bench mark for hygiene and quality. We, at Vadilal

take utmost care for ice cream, so that it reaches the consumer in the most

hygienic and wholesome way. We have the latest manufacturing equipments

including automated cone-filling, candy-making, cup manufacturing and filling

machines, hardening tunnels, computerized continuous freezers, and machines

to produce.

Since our products are highly perishable, quick transport and proper storage are

of paramount importance. Hence our refrigeration equipment and deep freezes

are imported from companies, which are world leaders in their respective fields.

To ensure sufficient, timely and constant ice cream supply, we have a Cold

Chain Network comprising three manufacturing plants [totaling a production

capacity of 1.25 lakh litre per day], about 23 C&FA, more than 500 Distributors

and over 40,000 Retailers.

They have integrated backward by making biscuit-cones and paper cups; and

forward, by fabricating deep freezers and refrigerated vehicles. These help us to

serve our distributors, some of whom are situated over a thousand miles away.

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In days to come, we plan to further expand our manufacturing facilities to meet

the growing demand of Ice Creams.

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 PRODUCTION

Production facility available at Pundhra Plant.

A- Mix plant ( pundhra)

Mixing tank -2 no., online duplex filter, HTST , flow diversion valve, two stage

Homoginiser,

Turbo blender for dry mixing, storage tanks ( storage cap. 50000 ltr. at

pundhra )

B- ICE CREAM Freezing-pundhra

8 cont. freezer for ice cream and novelties production having different capacity.

2 fill and cap machine for cone and cup production.

5 Hardening tunnel for quick hardening of ice cream, novelties,cone, etc.

C- CANDY PRODUCTION-pundhra

2 Brine tank for manual candy production

1 cont. freezer

1 candy hardening tunnel

candy mould having diff. shape and volume- 125 no.

Candy wrapping machine for pillow packing

D- AUTOMATIC CANDY MAKING MACHINE- pundhra

Neumatic candy making machine

cont. freezer wrapping machine for pillow packing with conveyor.

E- SEMI AUTOMATIC CLEANING SYSTEM- CIP ( cleaning in place)

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F- RAW MATERIAL PROCESSING - pundhra

Seiveing machine,nut cutting machine, Hot air oven, fruit processing

machinery,choclate preparation tank, chikky making machine, cake production

facility.

Bareilly plant details:

In our unit we use modern sofisticated machinery for making high quality ice

cream. We take utmost care during selection and processing of ingredients.In

our mix prperation section we use latest machinary like Homogenizer and

Pasteurizer which ensure our comitment of producing good quality ice cream.

We have very sofisticated imported homogeniger (capcity 3000 lts /hr) and a

automatic pannel based Pasteurizer which esure food safety.

In freezing section we have automatic contineous freezers of capacity ranging

from 300 lts/hr to 2000 lts/hr ice cream.

We have our own raw material processing section which provide very pure and

processed raw material to frezing section .In our raw material processing

section we use ultramodern oven and machinary for heating and other

treatment of fruits and nut which make all these very much safe for human

consumption.

For cone production we have fully automatic cone filling machine . We produce

fully untouched cones.

As we are producing a very sensitive food product we take utmost care about

cleanliness and heigene of our plant. For cleaning we have a central. CIP

20
system. We used to take plant for total CIP before and after every production

shift and sterlize each and every pipe line ,pasteurizer,homozenizer, storage

tank,freezer,balance tank and ice cream filler using steam.

Every workers are trained for their work and they follow strict norms for

cleanliness and heigene during production of ice cream.

All staff who work in production area is being daily checked for their personal

heigene.

Every staff use to pass through a thorough medical check up after a fixed time

interval to ensure whether he/she is fit for working in production department or

not.

Ice Cream is shiffted from production section to despatch section using FIFO

SYSTEM.

1. MIX SECTION : AUTOMATIC HOMOGENIZER AND

PASTERIZER WITH

2. CAPACITY OF 3000 LITRES OF MIX PER HOUR

3. FREEZING SECTION : 9 AUTOMATIC CONTINEOUS FREEZER

CAPACITY RANGING FROM 300 TO 2000 LITRES OF ICE CREAM

PER HOUR.

4. FRUIT FEEDER : 3 AUTOMATIC FRUIT FEEDER FOR PROPER

NUT ADDITION.

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 5. RAW MATERIAL PROCEESS: WE HAVE OUR OWN CAKE

PRODUCTION AS WELL AS A FULLY AUTOMATED OVEN FOR

PROPER HEAT TREATMENT OF NUTS.

QUALITY POLICY

We at Vadilal Industries Limited firmly believe in providing quality products

with innovative features at competitive prices for customer satisfaction.

We shall strive to achieve our Goals by continuously improving and upgrading

Technology, selecting appropriate process and providing vibrant environment

with help of High Quality standards and emphasis on Hygiene.

We aim to be industry leader by recognizing the changing needs of customer

and ensuring full commitment towards implementing Quality Management

System as per ISO 9002.

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 QUALITY ASSURANCE

Pundhra:

Our Pundhra Plant is ISO: 9001:2000 and HACCP Certified. The certification

of this plant has been carried out by BVQI under the latest regulations of food

safety system, September 2002. BVQI is a wholly owned subsidiary of Bureau

Veritas, a France-based multinational organization.

The plant has recently received the Export Inspection Council of India, Ministry

of Commerce and Industry, Government of India certification for exports which

in itself is a benchmark for hygiene and quality.

Bareilly:

Bareilly plant is also having ISO 9001: 2000 & HACCP certification as per

IS/ISO 9001: 2000 & IS 15000: 1998 respectively from Bureau of Indian

Standards (BIS) which is the largest certification authority in India.

Vadilal Industries Limited, Bareilly was established in 1996 for ice cream

manufacturing with an installed capacity of 15000 liters per day. To cater to the

increasing demand of ice cream in India the company expanded the capacity to

60,000 liters per day in 2005. We plan to enhance the capacity by 1,00,000 liters

ice cream per day in near future. This shall be supported by state-of-the-art

machineries from China, Denmark and other foreign countries.

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CHAPTER – 2
WORKING CAPITAL

FINANCIAL ANALYSIS

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 WORKING CAPITAL
INTRODUCTION OF WORKING CAPITAL

The net working capital of business is its current assets less its current

liabilities.

Current Assets include:

 Stock of Raw Material

 Work in Progress

 Finished Goods

 Trade Debtors

 Prepayments

 Cash Balances

Current Liabilities include:

 Trade Creditors

 Accruals

 Taxation Payable

 Dividends Payable

 Short term Loans

Every business needs adequate liquid resources in order to maintain day to day

cash flows. It needs enough cash to by wages and salaries as they fall due and
25
to pay creditors if it is to keep its workforce and ensure its supplies.

Maintaining adequate working capital; is not just important in the short term.

Sufficient liquidity must be maintained in order to ensure the survival of

business in the long term as well. Even a profitable business may fail if it does

not have adequate cash flows to meet its liabilities as they fall a due. Therefore

when business make investment decisions they must not only consider the

financial outlay involved with acquiring the new machine or the new building

etc, but must also take account of the additional current assets that are usually

involved with any expansion of activity .

Increase production tends to engender a need to hold additional stocks of raw

material & work in progress.

Increased sales usually mean that the level of debtor will increase. A general

increase in the firm’s scales of operation tends to imply a need for greater

level of cash.

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 INTRODUCTION OF COMPANY

The introduction of company can be described in two parts:

 Company Details

 Company Overview

27
 RESEARCH METHODOLOGY

STATEMENT OF PROJECT

 Evaluation, analysis & interpretation of working capital management of

United Engineering Services.

 Suggesting ways to improve its working capital utilization.

OBJECTIVE OF RESEARCH

 Estimation of working capital requirement

 Evaluation of working capital management

 Evaluation of Liquidity position & working capital utilization

 Analysis of relationship between working capital and profitability

 Analysis & sources of working capital

 Analyzing the level of current assets with relation to current liabilities.

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COLLECTION OF DATA:

 Data has been collected from various sources like:

 Annual reports of last three years

 Manual of concerned departments

 Consultants and personnel of United Engineering Services.

METHODS OF QUANTATIVE ANALYSIS

 Calculation of net working capital requirements.

 Ratio analysis

 Operating cycle & cash cycle

 Cash flow analysis

 Determining the Financing mix

 Statistical tools like graphical presentation

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ASSUMPTIONS

 Year is taken of 365 days

 All purchases have been taken as credit purchases and all sales have been

taken as credit sales.

 In the absence of relevant data the data from internet site is taken as the

relevant information.

LIMITATIONS

 The data is mostly secondary in nature

 Data has been recalculated & regrouped wherever necessary

 In the absence of sufficient data personnel judgment have been taken on

reasonable assumption.

 In the absence of sufficient data in-depth study of cash, Receivables and

inventory management was not possible.

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 THEORY OF WORKING CAPITAL

MEANING OF WORKING CAPITAL:

Capital required for a business can be classifies under two main categories:

 Fixed Capital

 Working Capital

Every business needs funds for two purposes for its establishments and to carry

out day to day operations. Long term funds are required to create production

facilities through purchase of fixed assets such as plant and machinery, land and

building, furniture etc. Investments in these assets are representing that part of

firm’s capital which is blocked on a permanent or fixed basis and is called fixed

capital. Funds are also needed for short term purposes for the purchasing of raw

materials, payments of wages and other day to day expenses etc. These funds

are known as working capital. In simple words, Working capital refers to that

part of the firm’s capital which is required for financing short term or current

assets such as cash, marketable securities, debtors and inventories.

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CONCEPTS OF WORKING CAPITAL:

There are two concepts of working capital:

 Balance Sheet concepts

 Operating Cycle or circular flow concept

BALANCE SHEET CONCEPT:

There are two interpretation of working capital under the balance sheet concept:

 Gross Working Capital

 Net Working Capital

The term working capital refers to the Gross working capital and represents the

amount of funds invested in current assets . Thus, the gross working capital is

the capital invested in total current assets of the enterprises. Current assets are

those assets which are converted into cash within short periods of normally one

accounting year. Example of current assets is:

Constituents of Current Assets:

 Cash in hand and Bank balance

 Bills Receivable

 Sundry Debtors

 Short term Loans and Advances

 Inventories of Stock as:

 Raw Materials

 Work in Process

 Stores and Spaces

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  Finished Goods

 Temporary Investments of Surplus Funds

 Prepaid Expenses

 Accrued Incomes

The term working capital refers to the net working capital. Net working capital

is the excess of current assets over current liabilities or say:

Net Working Capital = Current Assets – Current Liabilities.

NET WORKING CAPITAL MAY BE NEGATIVE OR POSITIVE:

When the current assets exceed the current liabilities, the working capital is

positive and the negative working capital results when the current liabilities are

more than the current assets. Current liabilities are those liabilities which are

intended to be paid in the ordinary course of business within a short period of

normally one accounting year of the current assets or the income of the

business. Examples of current liabilities are:

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CONSTITUENTS OF CURRENT LIBILITIES:

 Bills Payable

 Sundry Creditors or Account Payable

 Accrued or Outstanding Expenses

 Short term Loans, Advances and Deposits

 Dividends Payable

 Bank Overdraft

 Provision for Taxation, If does not amount to appropriation of profits

The gross working capital concept is financial or going concern concept

whereas net working capital is an accounting concept of working capital.

OPERATING CYCLE OR CIRCULATING CASH FORMAT:

Working Capital refers to that part of firm’s capital which is required

for financing short term or current assets such as cash, marketable

securities, debtors and inventories. Funds thus invested in current

assets keep revolving fast and being constantly converted into cash

and these cash flows out again in exchange for other current assets.

Hence it is also known as revolving or circulating capital. The circular

flow concept of working capital is based upon this operating or

working capital cycle of a firm. The cycle starts with the purchase of

raw material and other resources

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And ends with the realization of cash from the sales of finished goods.

It involves purchase of raw material and stores, its conversion into

stocks of finished goods through work in progress with progressive

increment of labor and service cost, conversion of finished stocks into

sales, debtors and receivables and ultimately realization of cash and

this cycle continuous again from cash to purchase of raw materials

and so on. The speed/ time of duration required to complete one cycle

determines the requirements of working capital longer the period of

cycle, larger is the requirement of working capital.

35
 Receivable conversion period Raw material storage
(RCP) conversion period (RMSCP)

Cash received form

Debtors and paid to suppliers
Of raw materials

Sales of finished Raw materials

Goods introduced into process

Finished Goods
Produced

Finished goods conversion Work in process

Period (FGCP) Conversion period
(WIPCP)
The gross operating cycle of a firm is equal to the length of the inventories and

receivables conversion periods. Thus,

Gross Operating Cycle = RMCP + WIPCP + FGCP + RCP

Where,

RMCP = Raw Material Conversion Period

WIPCP = Work –in- Process Conversion Period

FGCP = Finished Goods Conversion Period

RCP = Receivables Conversion Period

However, a firm may acquire some resources on credit and thus defer payments

for certain period. In that case, net operating cycle period can be calculated as

below:

Net Operating Cycle Period = Gross Operating Cycle Period – Payable Deferral period
36
Further, following formula can be used to determine the conversion periods.

 Raw Material Conversion Period = Average Stock of Raw Material.

Raw Material Consumption per day

 Work in process Conversion Period = Average Stock of Work-in-Progress

Total Cost of Production per day

 Finished Goods Conversion Period = Average Stock of Finished Goods

Total Cost of Goods sold per day

 Receivables Conversion Period = Average Accounts Receivables

Net Credit Sales per day

 Payable Deferral Period = Average Payable

Net Credit Purchase per day

37
 CLASSIFICATION OR KIND OF WORKING CAPITAL:

Working capital may be classified in two ways:

 On the basis of concept

 On the basis of time

Om the basis of concept, working capital is classified as gross working

capital and net working capital. The classification is important from the

point of view of the financial manager.

On the basis of time, working capital may be classified as:

 Permanent or Fixed working capital

 Temporary or Variable working capital.

38
 Kinds of Working Capital

On the basis of concept On the basis of time

Permanent or
Fixed Working Temporary or
Gross Working Net Working Variable Working
Capital Capital Capital
Capital
t

Regular Reserve Working Special Working

Working Capital Capital Capital

1. PERMANENT OR FIXED WORKING CAPITAL:

Permanent or fixed working capital is the minimum amount which is required to

ensure effective utilization of fixed facilities and for maintaining the circulation

of current assets. There is always a minimum level of current assets which is

continuously required by the enterprises to carry out its normal business

operations.

39
2. TEMPRORAY OR VARIABLE WORKING CAPITAL:

Temporary or variable working capital is the amount of working capital which

is required to meet the seasonal demands and some special exigencies.Varibles

working capital can be further classified as second working capital and special

working capital. The capital required to meet the seasonal needs of the

enterprises is called the seasonal working capital.

Temporary working capital differs from permanent working capital in the sense

that is required for short periods and cannot be permanently employed gainfully

in the business

IMPORATNCE OR ADVANTAGE OF ADEQUATE WORKING

CAPITAL:

Working capital is the life blood and nerve centre of a business . just a

circulation of a blood is essential in the human body for maintaining life,

working capital is very essential to maintain the smooth running of a business.

No business can run successfully without an adequate amount of working

capital. The main advantages of maintaining adequate amount of working

capital are as follows:

 Solvency of the Business

 Goodwill

 Easy Loans

 Cash discounts

 Regular supply of Raw Materials

40
  Regular payments of salaries, wages & other day to day commitments.

 Exploitation of favorable market conditions

 Ability of crisis

 Quick and regular return on investments

 High morals

THE NEED OR OBJECTS OF WORKING CAPITAL:

The need for working capital cannot be emphasized. Every business needs some

amount of working capital. The need of working capital arises due to the time

gap between production and realization of cash from sales. There is an

operating cycle involved in the sales and realization of cash. There are time

gaps in purchase of raw materials and production, production and sales,

And sales, and realization of cash, thus , working capital is needed for the

following purposes:

 For the purchase of raw materials , components and spaces

 To pay wages and salaries

 To incur day to day expenses and overhead costs such as fuel, power and

office expenses etc.

 To meet the selling costs as packing, advertising etc.

 To provide credit facilities to the customers.

 To maintain the inventories of raw materials, work –in- progress, stores

and spares and finished stock.

41
FACTORS DETERMING THE WORKING CAPITAL REQUIRMENT:

The working capital requirements of a concern depend upon a large number of

factors such as nature and size of the business, the characteristics of their

operations, the length of production cycle , the rate of stock turnover and the

state of economic situation. However the following are the important factors

generally influencing the working capital requirements.

 NATURE OR CHARACTERSTICS OF A BUSINESS : The nature

and the working capital requirement of enterprises are interlinked. While

a manufacturing industry has a long cycle of operation of the working

capital, the same would be short in an enterprises involve in providing

services. The amount required also varies as per the nature, an enterprises

involved in production would required more working capital then a

service sector enterprise.

 MANAFACTURE PRODUCTION POLICY: Each enterprises in the

manufacturing sector has its own production policy, some follow the

policy of uniform production even if the demand varies from time to time

and other may follow the principles of demand based production in which

production is based on the demand during the particular phase of time.

Accordingly the working capital requirements vary for both of them.

 OPERATIONS: The requirement of working capital fluctuates for

seasonal business. The working capital needs of such business may

increase considerably during the busy season and decrease during the

42
 MARKET CONDITION: If there is a high competition in the chosen

project category then one shall need to offer sops like credit, immediate

delivery of goods etc for which the working capital requirement will be

high. Otherwise if there is no competition or less competition in the

market then the working capital requirements will be low.

 AVABILITY OF RAW MATERIAL: If raw material is readily

available then one need not maintain a large stock of the same thereby

reducing the working capital investment in the raw material stock . On

other hand if raw material is not readily available then a large inventory

stocks need to be maintained, there by calling for substantial investment

in the same.

 GROWTH AND EXAPNSION: Growth and Expansions in the volume

of business result in enhancement of the working capital requirements. As

business growth and expands it needs a larger amount of the working

capital. Normally the needs for increased working capital funds processed

growth in business activities.

 PRICE LEVEL CHANGES : Generally raising price level require a

higher investment in the working capital. With increasing prices, the

same levels of current assets needs enhanced investments.

 MANAFACTURING CYCLE: The manufacturing cycle starts with the

purchase of raw material and is completed with the production of finished

goods. If the manufacturing cycle involves a longer period the need for

43
 working capital would be more. At time business needs to estimate the

requirement of working capital in advance for proper control and

management. The factors discussed above influence the quantum of

working capital in the business. The assessment of the working capital

requirement is made keeping this factor in view. Each constituents of the

working capital retains it form for a certain period and that holding period

is determined by the factors discussed above. So for correct assessment of

the working capital requirement the duration at various stages of the

working capital cycle is estimated. Thereafter proper value is assigned to

the respective current assets, depending on its level of completion. The

basis for assigning value to each component is given below:

COMPONENTS OF WORKING
CAPITAL BASIS OF VALUATION
Stock of Raw Material Purchase of Raw Material
Stock of Work -in- Process At cost of Market value which is lower
Stock of finished Goods Cost of Production
Debtors Cost of Sales or Sales Value
Cah Working Expenses

Each constituent of the working capital is valued on the basis of valuation

Enumerated above for the holding period estimated. The total of all such

valuation becomes the total estimated working capital requirement.

The assessment of the working capital should be accurate even in the case

of small and micro enterprises where business operation is not very large. We

know that working capital has a very close relationship with day-to-day

operations of a business. Negligence in proper assessment of the working

44
capital, therefore, can affect the day-to-day operations severely. It may lead to

cash crisis and ultimately to liquidation. An inaccurate assessment of the

working capital may cause either under-assessment or over-assessment of the

working capital and both of them are dangerous.

45
 PRINCIPLES OF WORKING CAPITAL MANAGEMENT POLICY:

The following are the general principles of a sound working capital

management policy:

PRINCIPLES OF WORKING CAPITAL MANAGEMNT POLICY

PRINCIPLES OF PRINCIPLES OF PRINCIPLES OF PRINCIPLES OF

RISK COST OF EQUITY MATURITY OF
VARIATIONS CAPITAL PRINCIPLES PAYMENTS

46
 PRINCIPLE OF RISK VARAITAION (CURRENT ASSETS

POLICY)

Risk here refers to the inability of a firm to meet its obligations as and when

they become due for payment. Larger investment in current Assets with less

dependence on short term borrowings, increase liquidity, reduces risk and

thereby decreases the opportunity for gain or loss. On the other hand less

investments in current assets with greater dependence on short term borrowings,

reduces liquidity and increase profitability. In other words there is a definite

inverse relationship between the degree of risk and profitability. In other words,

there is a definite inverse relationship between the risk and profitability. A

conservative management prefers to minimize risk by maintaining a higher level

of current assets or working capital while a liberal management assumes greater

risk by reducing working capital. However, the goal of management should be

to establish a suitable trade off between profitability and risk.

2. PRINCIPLES OF COST OF CAPITAL: The various source of raising

working capital finance have different cost of capital and the degree of risk

involved. Generally, higher and risk however the risk lower is the cost and

lower the risk higher is the cost. A sound working capital management should

always try to achieve a proper balance between these two.

47
3.PRINCIPLE OF EQUITY POSITION: The principle is concerned with

planning the total investments in current assets. According to this principle, the

amount of working capital invested in each component should be adequately

justified by a firm’s equity position. Every rupee invested in current assets

should contribute to the net worth of the firm. The level of current assets may be

measured with the help of two ratios:

1. Current assets as a percentage of total assets and

2. Current assets as a percentage of total sales

While deciding about the composition of current assets, the financial manager

may consider the relevant industrial averages.

4. PRINCIPLES OF MATURITY OF PAYMENT: The principle is

concerned with planning the source of finance for working capital. According to

the principles, a firm should make every effort to relate maturities of payment to

its flow of internally generated funds. Maturity pattern of various current

obligations is an important factor in risk assumptions and risk assessments.

Generally shorter the maturity schedule of current liabilities in relation to

expected cash inflows, the greater the inability to meet its obligations in time.

48
 CONSEQUENCES OF UNDER ASSESMENT OF WORKING

CAPITAL

 Growth may be stunted. It may become difficult for the enterprises to

undertake profitable projects due to non availability of working capital.

 Implementations of operating plans may brome difficult and consequently

the profit goals may not be achieved.

 Cash crisis may emerge due to paucity of working funds.

 Optimum capacity utilization of fixed assets may not be achieved due to

non availability of the working capital.

The business may fail to honour its commitment in time thereby adversely

affecting its creditability. This situation may lead to business closure.

The business may be compelled to by raw materials on credit and sell finished

goods on cash. In the process it may end up with increasing cost of purchase

and reducing selling price by offering discounts . both the situation would affect

profitable adversely.

Now avaibility of stocks due to non availability of funds may result in

production stoppage. While underassessment of working capital has disastrous

implications on business overassesments of working capital also has its own

dangerous.

49
CONSEQUENCES OF OUR OWN ASSESMNET OF WORKING

CAPITAL:

 Excess of working capital may result in un necessary accumulation of

inventories.

 It may lead to offer too liberal credit terms to buyers and very poor

recovery system & cash management.

 It may make management complacent leading to its inefficiency.

 Over investment in working capital makes capital less productive and

may reduce return on investment.

Working Capital is very essential for success of business & therefore needs

efficient management and control. Each of the components of working capital

needs proper management to optimize profit.

INVENTORY MANAGEMNT: Inventory includes all type of stocks. For

effective working capital management, inventory needs to be managed

effectively. The level of inventory should be such that the total cost of ordering

and holding inventory is the least. Simultaneously stock out costs should be

minimized. Business therefore should fix the minimum safety stock level

reorder level of ordering quantity so that the inventory costs is reduced and outs

management become efficient.

50
RECEIVABLE MANAGEMENT: Given a choice, every business would

prefer selling its produce on cash basis. However, due to factors like trade

policies , prevailing market conditions etc. Business are compelled to sells their

goods on credit. In certain circumstances a business may deliberately extend

credit as a strategy of increasing sales. Extending credit means creating current

assets in the form of debtors or account receivables. Investment in the type of

current assets needs proper and effective management as, it gives rise to costs

such as :

 Cost of carrying receivables

 Cost of bad debts losses

Thus the objective of any management policy pertaining to accounts

receivables would be to ensure the benefits arising due to the receivables are

more then the costs incurred for the receivables and the gap between benefit

51
 and costs increased resulting in increase profits. An effective control of

receivables

Help a great deal in properly managing it. Each business should therefore try to

find out coverage credit extends to its clients using the below given formula:

Average Credit = Total amount of receivable

(Extend in days) Average credit sale per day

Each business should project expected sales and expected investments in

receivable based on various factor, which influence the working capital

requirement. From this it would be possible to find out the average credit

days using the above given formula. A business should continuously try to

monitor the credit days and see that the average. Credit offer to clients is not

crossing the budgeted period otherwise the requirement of investment in the

working capital would increase and as a result, activities may get squeezed.

This may lead to cash crisis.

52
CASH BUDGET: Cash budget basically incorporates estimates of future

inflow and outflows of cash cover a projected short period of time which

may usually be a year, a half or a quarter year . effective cash management is

facilated if the cash budget is further broken down into months, weeks or

even a daily basis.

There are two components of cash budget are:

1. Cash inflows

2. Cash outflows

The main source for thses flows are given here under:

1. Cash Sales

2. Cash received from debtors

3. Cash received from Loans, deposits etc.

4. Cash receipts other revenue income

5. Cash received from sale of investment or assets.

53
CASH OUTFLOWS:

1. Cash Purchase

2. Cash payments to Creditors

3. Cash payment for other revenue expenditure

4. Cash payment for assets creation

5. Cash payments for withdrawals, taxes.

6. Repayments of Loan etc.

54
 FINANCIAL ANALYSIS

Financial analysis is the process of evaluating businesses, projects, budgets, and

other finance-related transactions to determine their performance and suitability.
Typically, financial analysis is used to analyze whether an entity is
stable, solvent, liquid, or profitable enough to warrant a monetary investment.
KEY TAKEAWAYS

 If conducted internally, financial analysis can help managers make future

business decisions or review historical trends for past successes.
 If conducted externally, financial analysis can help investors choose the
best possible investment opportunities.
 There are two main types of financial analysis: fundamental analysis and
technical analysis.
 Fundamental analysis uses ratios and financial statement data to
determine the intrinsic value of a security.
 Technical analysis assumes a security's value is already determined by its
price, and it focuses instead on trends in value over time.

55
 UNDERSTANDING FINANCIAL ANALYSIS
Financial analysis is used to evaluate economic trends, set financial policy,
build long-term plans for business activity, and identify projects or companies
for investment. This is done through the synthesis of financial numbers and
data. A financial analyst will thoroughly examine a company's financial
statements—the income statement, balance sheet, and cash flow statement.
Financial analysis can be conducted in both corporate finance and investment
finance settings.

One of the most common ways to analyze financial data is to calculate ratios
from the data in the financial statements to compare against those of other
companies or against the company's own historical performance.

For example, return on assets (ROA) is a common ratio used to determine how
efficient a company is at using its assets and as a measure of profitability. This
ratio could be calculated for several companies in the same industry and
compared to one another as part of a larger analysis.

Corporate Financial Analysis

In corporate finance, the analysis is conducted internally by the accounting
department and shared with management in order to improve business decision
making. This type of internal analysis may include ratios such as net present
value (NPV) and internal rate of return (IRR) to find projects worth executing.

Many companies extend credit to their customers. As a result, the cash receipt
from sales may be delayed for a period of time. For companies with large
receivable balances, it is useful to track days sales outstanding (DSO), which
helps the company identify the length of time it takes to turn a credit sale into
cash. The average collection period is an important aspect in a company's
overall cash conversion cycle.

56
A key area of corporate financial analysis involves extrapolating a company's
past performance, such as net earnings or profit margin, into an estimate of the
company's future performance. This type of historical trend analysis is
beneficial to identify seasonal trends.

For example, retailers may see a drastic upswing in sales in the few months
leading up to Christmas. This allows the business to forecast budgets and make
decisions, such as necessary minimum inventory levels, based on past trends.

Investment Financial Analysis

In investment finance, an analyst external to the company conducts an analysis
for investment purposes. Analysts can either conduct a top-down or bottom-up
investment approach. A top-down approach first looks
for macroeconomic opportunities, such as high-performing sectors, and then
drills down to find the best companies within that sector. From this point, they
further analyze the stocks of specific companies to choose potentially successful
ones as investments by looking last at a particular company's fundamentals.

A bottom-up approach, on the other hand, looks at a specific company and

conducts similar ratio analysis to the ones used in corporate financial analysis,
looking at past performance and expected future performance as investment
indicators. Bottom-up investing forces investors to
consider microeconomic factors first and foremost. These factors include a
company's overall financial health, analysis of financial statements, the products
and services offered, supply and demand, and other individual indicators of
corporate performance over time.

57
Types of Financial Analysis
There are two types of financial analysis: fundamental analysis and technical
analysis.

Fundamental Analysis
Fundamental analysis uses ratios gathered from data within the financial
statements, such as a company's earnings per share (EPS), in order to determine
the business's value. Using ratio analysis in addition to a thorough review of
economic and financial situations surrounding the company, the analyst is able
to arrive at an intrinsic value for the security. The end goal is to arrive at a
number that an investor can compare with a security's current price in order to
see whether the security is undervalued or overvalued.

Technical Analysis
Technical analysis uses statistical trends gathered from trading activity, such
as moving averages (MA). Essentially, technical analysis assumes that a
security’s price already reflects all publicly-available information and instead
focuses on the statistical analysis of price movements. Technical analysis
attempts to understand the market sentiment behind price trends by looking for
patterns and trends rather than analyzing a security’s fundamental attributes.

58
CHAPTER – 3
RATIO ANALYSIS

59
 RATIO ANALYSIS
Chart Showing Various ratios Of Vadilal Industry for last three
years

Ratio 2019 2020 2021

Liquidity Ratios

Current 1.7:1 1.5:1 2.03:1

Quick 1:1 1:1 1.4:1

Leverage Ratios

Debt-Equity .67:1 .71:1 1.02:1

Interest Coverage* 9.3:1 7.2:1 8.2:1
Capital Employed to Net worth 2.5:1 2.4:1 2.03:1

Profitability Ratios

Gross Profit Margin 52.42% 52.38% 53.56%

Operating Profit Margin 39.96% 40.67% 39.93%
Net Profit Ratio 22.86% 19.9% 22.10%
Return on Investment 9.93% 9.25% 12.70%

Equity Related Ratios

Return on Equity 31.17% 28.39% 33.23%

Earning per Share Rs. 186.07 Rs. Rs.80.34
45.66/186.0
7
Dividend Per Share Rs. 10 Rs. 12 Rs. 2.50
Dividend Payout 5.37% 6.44% 3.11%

Activity Ratios

Inventory Turn Over 6.27 5.81 6.66

Net Asset Turn Over 53.18% 54.8% 66.6 %
Total Asset Turnover Ratio 44.9% 46.31% 55.57%
Working Capital Turnover 4.37 Times 5.66 Times 3.22Times

60
Current ratio
The current ratio of the firm measures its short term solvency. Higher the ratio better is
firm,s ability to meet its obligation. On observing Vadilal Industry current ratio it is found
that company has good current ratio. The company has increased its current ratio from 1.5:1
in 2017 to 2.03:1 in 2018.
There is no hard and fast rule ,conventionally, a current ratio 2:1 is considered satisfactory
but there is also under lying object that 50% drop in ratio is also acceptable.
From creditors and bankers point of view , in short term, there investment is safe in the
hands of Vadilal Industry is capable to meet its current obligation.

Current Ratio = Current asset/Current Liability

Particular 2021(in cr.) 2020(in cr.) 2019 (in cr.)

Current Asset 3299.57 1801.66 1490.45
Current liability 1620.81 1180.35 898.11
Current Ratio 2.03:1 1.53:1 1.7:1

Quick Ratio
Its is a rigorous measure of firms ability to servies short term liability.convientionally it is
found that acid test /quick ratio is 1:1 is considered the best ratio.
In Vadilal Industry in 2017 it was 1:1 and it increased to 1.4:1 in 2021. It show that its
working capital is less blocked in inventories and the better ability to meet its current

61
liability. As per the information there are less debtor and good cash balance. Company is
able to meet its operating expense without any current obligation.

Quick Ratio = Current Asset – Inventories/Current Liability

particular 2021(in cr.) 2020(in cr.) 2019(in cr.)

Current Asset 3299.57 1801.66 1490.45
Current 1620.81 1180.35 898.11
liability
Inventory 980.56 642.44 568.65
Quick Ratio 1.4:1 1:1 1:1

Leverage Ratio/Capital Structure Ratio

The long term creditors are interested in knowing the soundness of the
firm on the basis of long term strength measured in the terms of its
ability to pay the interest regularly as well as repay the installment of
the their principal on due date or in lump-sum at the time of maturity.
It can be examined by leverage ratio. There are different types of
leverage ratio.
 Debt-Equity Ratio
 Interest Coverage Ratio
 Capital employed to Net Worth

Debt-Equity Ratio
It shows the relationship between borrowed fund and owner’s equity
in measuring long term financial solvency of the firm. It reflect the
62
relative claim of the creditors and shareholder against the asset of the
firm. Alternatively, it also indicates the relative proportion of the debt
and equity in the financing the asset of the firm.
It has been found that Vadilal Industry has increased its debt in
debt/equity in financing the asset of the firm. Due to its good earning
capacity Vadilal Industry is able to raise its debt compare to equity.
Its increased D/E ratio 43.6% from 2021.

D/E Ratio = Debt / Equity

particula 2021(in cr.) 2020(in 2019(in cr.)

r cr.)
Debt 3863.35 2496.73 1844.71
Equity 3756.38 3507.72 2745.37
D/E Ratio 1.02:1 .71:1 .67:1

1.2
Debt Equity Ratio
1
0.8
Debt Equity Ratio
0.6
0.4
0.2
0
2006 2007 2008

Interest Coverage Ratio

This ratio measures the debt servicing capacity of the firm insofar as fixed interest on long-
term long is concerned. As the name suggest ,show how many times the interest charged are
covered by EBIT out of which they will be paid.
The ratio of 8.20 times is high and hence the company has very sound financial position. It
has no tension of paying interests over its loans as it creates much more wealth from the debts
than the interest to be paid. It has increased 13.8% since last year.

63
Interest coverage Ratio= EBIT/Interest

Particular 2021(in cr.) 2020(in cr.) 2019(in cr.)

Interest 208.59 150.26 87.31
EBIT (EBT+ Interest) 1711.10 1095.10 815.16
Interest coverage 8.2:1 7.2:1 9.3:1
Ratio

Interest Coverage Ratio

10
9
8
7
6 Interest Coverage Ratio
5
4
3
2
1
0
2006 2007 2008

Capital Employed to Net Worth Ratio

There is yet another alternative way of expressing the basic relationship between debt and
equity. One may want to now: How much funds are being contributed together by lenders and
owners for each rupee of the owners contribution?

The ratio of 2.03 times Shows that the total net worth of the company is approximate half of
the total investment made by the company’s promoters and hence the company has very
sound financial position. We can also derive that the promoters finance around 50% of the
total net worth of the company.

64
C\N Ratio = Capital Employed/Net Worth
Particular 2021(in cr.) 2020(in cr.) 2019(in cr.)
Capital 7585.45 5982.89 4583.29
Employed
(Debt +Net Worth)
Net Worth 3722.12 2475.17 1837.92
C\NRatio 2.03:1 2.4:1 2.5:1

Capital Employed to Net Worth

3
2.5
2
Capital Employed to
1.5 Net Worth

1
0.5
0
2006 2007 2008

Profitability Ratio
A company should earn profits to survive and grow over a long period of time. The
profitability ratio are calculated to measure the operating efficiency of the company. Besides
management of the company, creditors and owners are also interested in the profitability of
the firm. There are different type of profitability ratio:

 Gross Profit Ratio

 Operating Profit Ratio

 Net Profit Ratio
 Return on Investment

Gross Profit Ratio

Gross Profit is the result of the relationship between prices, sales, volume and cost.A high
GP ratio is sign of good management as it implies that the cost of production of the firm is
relatively low and vice versa.
In Vadilal Industry , company has shown rising trend in its GP ratio, which show that
Vadilal Industry has increasing its efficiency with period of time there was certain foreign
fluctuating ,shut down in 2021 which decreased its GP ratio in 2017 there by its again
recovered its position in 2020 and 2019.

65
66
G\P Ratio =Gross Profit \Net Sales

Particular 2021(in 2020(in cr.) 2019(in cr.)

cr.)
Gross Profit 2848.55 1859.22 1393.59
Net Sales 5410.75 3519.81 2590.25
G\P Ratio 52.42% 52.38% 53.56%

GP RATIO
54

53.5

53 GP RATIO

52.5

52

51.5
2006 2007 2008

67
Operating Profit Ratio

Operating Profit ensures adequate coverage for operating expense of the firm
and sufficient return to the owners of the business.
Comparing various factors of operating profit it found that from 2020 to 2021
their was tremous change in depreciation, interest and tax as compare to 2019.

O/P Ratio=Operating Profit/Net Sales

Particular 2021(in 2020(in cr.) 2019(in cr.)

cr.)
Operating Profit 2162.61 1431.58 1034.33
(PBIDT)
Net Sales 5410.75 3519.81 2590.25
O\P Ratio 39.96% 40.67% 39.93%

OPERATING PROFIT
40.8
40.6
40.4
40.2
OPERATING PROFIT
40
39.8
39.6
39.4

68
CHAPTER – 4
CONCLUSION
BIBLIOGRAPHY

69
 CONCLUSION

Based on the analysis through the questionnaire responses the following is the

conclusion of the study.

The organization follows the rules and regulation involved in their working

capital management Procedure of the organization. However, there is some

scope for improvement with regard to following:

1. The managers are fully satisfied with the existing working capital

management procedure.

2. The working capital management procedure should not be lengthy.

3. To some extent a clear picture of required candidates should be made in

order to search for appropriate candidates.

4. The working capital management procedure should be impartial.

5. In Vadilal Ice Cream, a proper Financial Analysis is followed.

70
 BIBLIOGRAPHY

 S. S. Khanka, Organisational Behaviour, Third Edition, S. Chand &

Company

 C. R. Kothari, Research Methodology, Second Revised Edition, New

Age International Publishers

 Fred Luthans, Organisational Behaviour, Eighth Edition, Mc Graw

Hill

 Stephen p. Robbins & Seema Sanghi, organizational Behaviour,

Eleventh Edition, Pearson Education

WEB SITES:

 www.google.com

 www.managementparadise.com

 www.naukri.com

 www.citehr.com

 www.wikipedia.com

 www.hr.com

71