Belgaum Ferrocast Pvt.

Ltd

Karnataka Law Society’s

GOGTE COLLEGE OF COMMERCE

BELAGAVI.

A PROJECT REPORT ON

“A STUDY ON WORKING CAPITAL”

Undertaken At

BELGAUM FERROCAST [Link], BELAGAVI

Submitted to
RANI CHANNAMMA UNIVERSITY, BELAGAVI

2024-2025
Submitted By

SHILKY KUMARI
[Link] VI SEM.
EXAM REG NO: U15BH22C0006

Mentor
Prof. SANDHYA JOSHI

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DECLARATION

I, SHILKY KUMARI, hereby declare that this project titled “A STUDY ON WORKING
CAPITAL” at BELAGAUM FERROCAST [Link], has been prepared by me during
the year 2024-25 as a part of Skill Enhancement Course in RANI CHANNAMMA
UNIVERSITY, BELAGAVI.
It has been done under the guidance of Dr. /Mr. /Ms. ____________ Asst. Professor,
Dept. Of Commerce, KLS’s Gogte College of Commerce, Belagavi, and External
Guide______________, Organization Name.
To the best of my knowledge and belief, this project is original work prepared by me
and has not been submitted earlier to Rani Channamma University, Belagavi or to any other
universities for fulfilment of Skill Enhancement Course in the academic year2024-25.

Place: BELAGAVI Student Name: SHILKY KUMARI

Date: [Link]: U15BH22C0006

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Karnataka Law Society’s

GOGTE COLLEGE OF COMMERCE
BELAGAVI.

Certificate

This is to certify that Mr./Ms. ___________________________ has

satisfactorily completed the Internship Programme entitled “A STUDY ON
WORKING CAPITAL”, at “BELAGAUM FERROCAST [Link]” as a part
of Skill Enhancement Course in RANI CHANNAMMA UNIVERSITY,
BELAGAVI during the academic year 2024-25.

Dr./Mr./Ms._______ Prof. Nayana Raichur Dr. Venugopal Jalihal

Mentor Co-ordinator [Link]. Principal

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CERTIFICATE OF INTERNSHIP

This is to certify that Mr. /Ms. _________ student of

KLS Gogte College of Commerce, Tilakwadi, Belagavi
bearing Reg. No. ______ has successfully completed the
internship programme from _______ to _________in
our organization during the academic year 2024-25.

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ACKNOWLEDGMENT

This project is a great opportunity to express my heartily thanks to those people who

timely supported me a long way in completion of internship report.

First and foremost, I would like to express my sincere thanks to our External Guide

________________, Organization Name for their kind guidance and valuable suggestion for

my project.

I express my deep intelligence of appreciation to Principal Dr. Venugopal Jalihal, and

[Link] Co-Ordinator Prof. Nayana Raichur, Gogte College of Commerce, Belagavi for giving

the opportunity of being the part of this institution and supporting to complete Internship

Programme report.

I would like to thank my Mentor Dr. /Mr. /Ms. _______________, a faculty of Gogte

College of Commerce, Belagavi, for being the continuous guidance and encouragement to the

success of the Internship Programme project report.

I also express my hearty thanks to all my family members and friends who helped me

directly and indirectly for the completion this project.

Place: BELAGAVI Student Name

Date: Reg. No._________

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TABLE OF CONTENT
SI NO. CONTENT PAGE NO.
1 Student declaration

2 Acknowledgment
3 Executive Summary

4 Chapter 1
ORGANISATIONAL PROFILE
 Company Profile
 Industry Profile
 About the organisation
 Mission/vision/objective of BFPL
 Core Value of BFPL
 Customer of BFPL
 Organisational Chart of BFPL
 Departmental Study
 Swot Analysis
 Product Profile
5 Chapter 2
Introduction to the topic
 Definition
 Types of working capital
 Factor determining working
capital
 Components of working capital
 Working capital cycle
6 Chapter 3
Data Collection
7 Chapter 4
Data Analysis and Interpretation
8 Chapter 5
Suggestion and conclusion

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CHAPTER 1
ORGANISATIONAL PROFILE

A. COMPANY PROFILE
NAME OF COMPANY BELGAUM FERROCAST [Link]

REGISTERED OFFICE PLOT NO.8A, [Link].680/2, BEMCIEL INDUSTRIES

ESTATE UDYAMBAG,BELGAUM

SIZE AND NATURE PRIVATE LIMITED

PHONE NUMBER 9480839947

EMAIL ID

WEBSITE [Link].

YEAR OF ESTABLISHMENT 1/12/2006

TOTAL AREA 7800 sq. ft.

REGISTERED NUMBER 35442

NUMBER OF EMPLOYEE 250 employees

ACTIVITY CL & SG

ANNUAL TURNOVER 1 CRORE

COMPANY CEO MR SACHIN SABNIS

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B. INDUSTRIAL PROFILE

Belgaum Ferrocast (1) India Private Limited company Established in the year
2006, Belgaum Ferrocast (1), a private limited company is engaged in
manufacturing and supplying gray cast iron components like Inertia Ring, Rubber
Damper, Viscus Damper, Damper Hub, Rubber Damper Hub, Damper Inertia
Ring, C.I Pulleys, Drive Pulleys and Damper Housing.
Our company is a result of merger between two companies Ms S. N. Engineering,
established in 1997 and M/s. Sai Metals, established in 2000. Both the ISO
certified companies are engaged in manufacturing and supplying gray cast iron
components in machined & semi-machined conditions.
We are situated in Belgaum, Karnataka the manufacturing hub of auto
components. Backed by latest machines and professionals we offer wide range of
supreme quality gray iron, ductile iron casting components.
Our Gray cast iron components are available in finish and semi-finished forms
which are used in several industries. Our finished inertia rings, hubs and housings
are used as torsional vibration dampers while pump body, covers, and manifolds
are used in diesel engines.
Further, we tailor made the products with the use of cutting-edge technology
and state-of-the-art machines installed in our foundry division. To increase our
production competence and meet the ever-increasing demands of clients, we are
in the process of establishing another fully mechanized foundry with ARPA
molding

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C. ABOUT THE ORGANIZATION

(Imported Foundry clusters in India)

Belgaum Ferrocast (India) Pvt. Ltd (BFPL) is a private limited

company with headquarters in Belagavi, Karnataka, and a major hub for the
production of automotive components. It is a major manufacturer and supplier of
machinable components made of grey iron and ductile iron to domestic and
international customers. It was established on December 1, 2006, by combining two
businesses: M/S Sai Metals, established in 2000, and S.N. Engineering, established in
1987. Graded Grey Cast and Ductile (S.G. Iron), Casting Components in machined and
semi- machined forms are produced and supplied by BFPL. The city of Belgaum is
where BFPL is situated in the Indian state of Karnataka. One of India's top three
cities, Belgaum has cutting-edge infrastructure to meet domestic and international
casting requirements. It has a machine shop as well as two foundries inside .

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D. CORE VALUE OF BFPL

 Accountability - BFPL believes to have good accountability of their work

and work efficiency to achieve the goals of the organization.
 Speed and efficiency - BFPL always try to perform their activities on time
in speedy and at same time in an effective way.
 Creativity and Innovation - BFPL producers create when innovative
foundry products which is quality oriented.
 Proactive -BFPL is proactive in its work and always have all effective
solutions for problems on right time.
 Fit - BFPL fits all the activities effectively and efficient land produces
quality products is fit to take all the challenges and come up with
creative and innovative products.
 Passion- BFPL has a passion to reach great heights by accomplishing its
objectives as hard working employees who give their best and are
passionate about their work.
 Open minded and courageous-BFPL is always open to new ideas as it as
management who are open minded and courageous to come UP with
new ideas whenever required in order to face the risk and challenges.

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BELGUAM FERROCAST (INDIA) PRIVATE LIMITED

(Foundry: Plot No. 150, BEMCIEL Industrial Estate Mache, Belgaum, Karnataka
Status of Ownership: Private Limited
Number of Employees: Total Employees - 250
Admin - 11
Office Staff - 39
Workers - 20

BELGAUM FERROCAST (INDIA) [Link] Company is a private Ltd

Which is engaged in manufacturing and supply of Gray cast iron and ductile
components in machined and semi machined conditions.

Name of Director Designation

Niranjan Sant Chairman

Sachin Sabnis Managing Director

Vikrant Kangaralkar Director

Mr. Niranjan Sant (Executive Chairman)

Mr. Niranjan Santa is a technocrat with expertise in engineering and
manufacturing with the visionary sight BFPL is achieving substantial growth
both in manufacturing and in machining. The CSR growth is also considerably
expanding under his leadership.
Mr. Sachin Sabnis (Managing Director)
Mr. Sachin Sabnis is a technocrat with expertise in foundry is a technocrat with
expertise in foundry technology changes. With his expertise begum Ferro Cast
was achieved remarkable up gradation of foundry division. New technologies in
foundry industry have been implemented to increase the efficiency and overall
growth of company.

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FUTURE GROWTH
Projection for next three years
Financial year Tonnage (Metric Tons)

2017-18 6500 Mt

2018-19 7800 Mt

2019-20 9360 Mt

* Increasing the customer base, sector wise.

* Supplying casting in 100% machined condition
* Developing products
* Value addition.

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MISSION/VISION/OBJECTIVES
We have been in the industry for almost a decade and doing excellent in the
competitive industry. Our organization is growing with the clear vision to bring
improvements in various segments of manufacturing and continuously
achieving economic value by optimizing resources through constant
innovation, technological advancements.
VISION
"We are committed to serve the interests of all our stake holders by being
maintaining our position at the top in India. One of the best in global business
scenario of foundry business with an exceptional moral business ethics”
MISSION
“To develop expertise in technology of machining of various components to
support the foundry business and be able to be a global supplier of finished
components"
OBJECTIVE
• To remain customer focused by providing the desired quality, cost and
delivery through manufacturing excellence.
• To involve and empower all workers across the organization to achieve
total quality.

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ORGANISATIONAL STRUCTURE

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DEPARTMENTAL STUDY:
DEPARTMENTS:
• Production Department
• Human Resources Department
• Accounts Department
• Purchases Department
• Development Department which also handles Marketing diction

Production Department
It is the most important department in an organisation where the raw
materials are converted into finished products. The quality of final products
depends upon the quality of raw materials and the procedure followed in
producing the products. The production of procedure is followed according to
the plan and schedules prepared by the management. Where the standard
quality of the products is the main objective of the organisation.

Chart showing the flow of production department

Production Manager

Supervisor

There are 200 worker engaged in the production process with 12 supervisors

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Human Resource Department

Human resource department is the most important department of an
organization and it has greater impact on the working of an organization.
Following are the steps involved in the recruitment process of BFPL
* Giving Advertisement
* Application
* Interview
* Selection
* Placement
Giving Advertisement
This is the most widely used method where the company gives
Advertisement of the vacancy posts in the newspapers and company's notice
board.
Application
BFPL receives applications and resumes for the particular post from various
applications where it screens all the application and short list candidates.
Interview
Where the management fixes a particular date for the interview where short
listed candidates are called and there interview will be takes by different
executives and managers of the company.
Rounds conducted By Belgaum Ferro cast are
* Aptitude Test
* Personal Interview
Selection
After interview the selection of candidates will be done on their performance
in various rounds and the candidates are selected for the particular post.
Placement

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The selected candidates are introduced and placed in the organization where
he will be told about various departments and rules and regulations of the
company.
Human resource department looks after the welfare and safety of employees
in the organization. The relation between employees and management is
taken care of the personal attention and employees will be provided training
by the management
Structure of Human Resource Department

Managing Director

HR Manager

Accounts Department Accounts department is the most important for an

organization where Accounts department of BFPL looks after maintaining the
books of accounts in systematic manner. Where is responsible for receiving the
cheque and issue to the concerned parties. The most important function of
accounts department is maintaining the books of accounts. They also monitor
the healthy financial position of the company.
Sales and Marketing Department Marketing department looks after sales of
the company and measures increase in the sales of the company and develop
the business enterprise. The company follows first in first out method (FIFO).
Purchase Department
Purchase department is responsible for procurement of raw materials. Thus
has the responsible for the price, delivery and quality of materials purchased
department take care of the raw materials purchased and their storage. This
department keeps the record of incoming and outgoing of materials.
COMPETITON OF BELGAUM FERROCAST (INDIA) [Link]
• Shanti Iron works, Belgaum
• AKP foundries, Belgaum
• Gokul Ferro cast, Belgaum

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SWOT ANALYSIS

STRENGTH
• ISO 9001-2015 quality management is implemented in organization
• Timely delivery of products to customer’s good working condition
• Varieties of products are available in large range
• Skilled employees.
• Varieties of products are available in large range
• Implementation of new technology
WEAKNESS
• Lack of value addition
•Lack of advertisement
• Limited focus on R & D technology
• Machine Upgradition.
OPPORTUNITIES
• High demand for casting products
• New customer segment at global levels
• Adoption of new technology and increase production
• Favourable changes in customer attitude
THREAT
• Competition from large scale industries
• Changing government policies.
• Threat from employee's turnover.
• Availability of skilled foundry employees

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Quality Policy

At Belgaum Ferrocast India Private limited;

manufacturing precision casting machined components will strive to
exceed customer’s needs and expectation by:-
• Delivering the best quality products, that satisfies the present
requirements of our Customer’s on time.
• Upgrading and developing our resources and service providers
Through Risk based thinking and opportunities to meet future
requirements of our Customer’s.
• Ensure that Customer receives the products as per agreed quality
parameters, at the agreed time and in agreed quantity continually.
• Ensuring compliance to applicable statutory, regulatory, safety,
and environmental requirement related to the product and process for
all our contracts.
• Implementing and continually improving our quality
management system to exceed customer satisfaction through clear
objectives and goals with appropriate resources and training.

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CHAPTER 2
INTRODUCTION TO THE TOPIC

Financial management can be divided into two broad areas of

responsibility as the management of long-term capital and the management of
short-term funds or working capital. Working capital means the funds available
and used for day-to-day operations of an enterprise. It consists broadly of that
portion of assets of a business which are used in or related to its current
operations.
Efficient management of working capital is an essential pre–
requisite for the successful operation of a business enterprise and improving its
rate of return on the capital invested in short-term assets.
The components of Working Capital Management are as follows:
• Cash Management
• Inventory Management
• Receivables Management
• Payables Management
➢ TYPES OF WORKING CAPITAL
According to the needs of business, the working capital may be classified as
follows:

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A. ON THE BASIS OF PERIODICITY:

On the basis of periodicity working capital can be divided
under two categories as under:
1) Permanent working capital:
This refers to that minimum amount of investment in all
current assets which is required at all times to carry out minimum level of
business activities. The Tendon Committee has referred to this type of
working capital as ―Core current assets. Fixed working capital can
further be divided into two categories as under:
i) Regular Working capital:
Minimum amount of working capital required to keep
the primary circulation. Some amount of cash is necessary for the
payment of wages, salaries etc.
ii) Reserve Margin Working capital:
Additional working capital may also be required for
contingencies that may arise any time. The reserve working capital is the excess
of capital over the needs of the regular working capital is kept aside as reserve
for contingencies, such as strike business depression etc.
2) Variable or Temporary Working Capital:
The amount of such working capital keeps on fluctuating
from time to time on the basis of business activities. In other words, it
represents additional current assets required at different times during the
operating year. For example, extra inventory has to be maintained to support
sales during peak sales period. The variable working capital may also be
subdivided into following two sub-groups:
i) Seasonal Variable Working capital:
Seasonal working capital is the additional amount which is
required during the active business seasons of the year. Raw materials like raw-
cotton or jute or sugarcane are purchased in particular season. The industry has
to borrow funds for short period. It is particularly suited to a business of a
seasonal nature. In short, seasonal working capital is required to meet the
seasonal liquidity of the business.

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ii) Special variable working capital:

Additional working capital may also be needed to provide
additional current assets to meet the unexpected events or special operations
such as extensive marketing campaigns or carrying of special job etc.

B. ON THE BASIS OF CONCEPT:

On the basis of concept working capital is divided into two categories as under:
1) Gross Working Capital:
Gross working capital refers to total investment in current assets.
The current assets employed in business give the idea about the utilization of
working capital and idea about the economic position of the company. Gross
working capital concept is popular and acceptable concept in the field of
finance.
2) Net Working Capital:
Net working capital means current assets minus current liabilities.
The difference between current assets and current liabilities is called the net working
capital. If the net working capital is positive, business is able to meet its current
liabilities. Net working capital concept provides the measurement for determining the
creditworthiness of company.

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➢ FACTORS DETERMINING WORKING CAPITAL

The following factors determine the requirement of working capital:
1. Nature of Companies:
Needs for working capital are determined by the nature of an
enterprise. Small companies have smaller proportions of cash, receivables and
inventory than large corporation. This difference becomes more marked in large
corporations. A public utility, for example, mostly employs fixed assets in its
operations, while a merchandising department depends generally on inventory and
receivable.
2. Nature and Size of Business:
The working capital requirements of a firm are basically
influenced by the nature of its business. Trading and financial firms have a very less
investment in fixed assets, but require a large sum of money to be invested in working
capital. Retail stores, for example, must carry large stocks of a variety of goods to
satisfy the varied and continues demand of their customers.

3. Time:
The level of working capital depends upon the time required to
manufacturing goods. If the time is longer, the size of working capital is great.
Moreover, the amount of working capital depends upon inventory turnover and the
unit cost of the goods that are sold.
4. Volume of Sales:
This is the most important factor affecting the size and
components of working capital. The volume of sales and the size of the working
capital are directly related to each other. As the volume of sales increase, there is an
increase in the investment of working capital-in the cost of operations, in inventories
and receivables.

5. Terms of Purchases and Sales:

If the credit terms of purchases are more favourable and those of sales
liberal, less cash will be invested in inventory. With more favourable credit terms,
working capital requirements can be reduced.

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6. Business Cycle:
Business expands during periods of prosperity and declines during the
period of depression. Consequently, more working capital required during periods of
prosperity and less during the periods of depression.
7. Liquidity and Profitability:
If it is interested in improving its liquidity, it can increase the level
of its working capital. However, this policy is likely to result in a reduction of the
sales volume, and therefore, profitability. A firm should choose between liquidity and
profitability and decide about its working capital requirements accordingly.

➢ COMPONENTS OF WORKING CAPITAL MANAGEMENT

1. CASH MANAGEMENT
Cash management is one of the most important areas in the day-to-day
management of the firm‘s deals with the management of working capital, which is
defined as all the short term assets used in daily operations. This consists primarily of
cash, marketable securities, accounts receivable and inventory. The balances in these
accounts can be highly volatile as they respond very quickly to changes in the firm‘s
operating environment. Healthy circulation of cash in the entire business operation is
the basis of business solvency. Ultimately every transaction in a business results
10 either in an inflow or an outflow of cash. There should be
sufficient cash with a firm all the time to meet the needs of the business. If the cash
balance with a firm at any time is surplus or deficit, it is obvious that the finances are
mismanaged. Cash Management needs strategies to deal with various facets of cash.
Following are some of its facets.

2. INVENTORY MANAGEMENT
Inventory constitutes an important item in the working capital of
many business concerns. Inventory is a major item of current assets. The term
inventory refers to the stocks of the product of a firm is offering for sale and the
components that make up the product Inventory is stores of goods and stocks. This
includes raw materials, work-in-process and finished goods. Raw materials consist of
those units or input which are used to manufactured goods that require further
processing to become finished goods. Finished goods are products ready for sale. The
classification of inventories and the levels of the components vary from organisation
to organisation depending upon the nature of business.

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3. RECEIVABLES MANAGEMENT
Management of Receivables refers to planning and controlling of debt
owed to the firm from customer on account of credit sales.
When large amounts of money is tied up in receivables, there are chances of bad
debts. On the contrary, if the investment in receivables is low, the sales may be low
since competitors offer liberal terms. Therefore, management of receivables require
proper policies and their implementation.
There are basically three aspects of receivables management:
1. Credit Policy
2. Credit Analysis
3. Control of Receivables

4. PAYABLES MANAGEMENT
A considerable segment of procurement of products and services in a
company are on credit conditions to a certain extent. Account Payables Management
refers to the set of policies, procedures, and practices employed by a company with
respect to managing its trade credit purchases. They consist of seeking trade credit
lines, acquiring favourable terms of purchase, and managing the flow and timing of
purchases so as to efficiently control the company’s working capital.

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➢ WORKING CAPITAL CYCLE

Every business organisation needs adequate working capital
because the conversion of cash into finished goods to debtors and back to cash is not
instantaneous. The continuing flow from cash to suppliers, to inventory, to accounts
receivable and back into cash is called the working capital cycle or operating cycle. In
other words, the term operating cycle refers to the length of time which begins with
the acquisition of raw materials of a firm and ends with the final realisation of cash
from debtors. The amount of working capital depends upon the length of working
capital cycle. Longer the working cycle, higher is the need of working capital to be
maintained. This is because the fund will then remain tied-up in various items of
current assets for a longer period. The length of operating cycle varies from industry
to industry and from business to business

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CHAPTER 3.
DATA COLLECTION

JUSTIFICATION OF TOPIC
In today’s competitive world maintaining financial strength on a
day to day basis has become a challenge. Every firm wants to see themselves
financially sound. The financial attributes like liquidity, solvency and profitability can
be improved by effective implementation of the working capital management.
Working capital supports the day to day operations of the firm. As it includes items
like cash, inventory, receivables, payables etc. the working capital shows the
activities of the companies. Empirical studies have shown that ineffective
management of working capital as one of the major cause of industrial sickness. So,
efficient management of working capital is one of the important indicators of
financial soundness.

STATEMENT OF PROBLEM
This Project report tries to evaluate how the management of working capital is
carried out in BELGAUM FERROCAST PVT LTD.

OBJECTIVES OF THE STUDY:

1) To understand the concept of Working Capital Management.
2) To study the components of Working Capital Management.
3) To analyze the efficiency of working capital management in Belgaum ferrocast
company using Intra Firm Ratio Analysis.
4) To find out the changes in working capital of Belgaum ferrocast company using
Comparative Financial Statement Analysis.

AREA OF STUDY
Area of study is Financial Management.

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PERIOD OF STUDY
Data of 5 years (2015-16 to 2019-20) has been collected for the study.

SAMPLE SIZE
The sample for the study has been selected a company named Belgaum ferrocast
company which is one of the market leader in fluid management.

TECHNIQUE OF ANALYSIS
The study is based on secondary data which is collected from the annual reports and
other proprietary reports of Belgaum Ferrocast Company. Ratio Analysis and
Comparative Statement Analysis is used for analysis of the data. The data is
presented using various graphs and charts.

LIMITATIONS OF STUDY
This study is based on secondary data. The period of study is restricted to 5 years.

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Chapter 4
Data analysis and interpretation

LIQUIDITY RATIOS
Liquidity ratios are calculated to measure the short-term solvency of the business,
i.e. the firm’s ability to meet its current obligations. These are analysed by looking at
the amounts of current assets and current liabilities in the balance sheet.
1) CURRENT RATIO
A Current Ratio is that liquidity ratio with which we can identify a
company's ability to pay its short term obligations or those that are to be due within
one year.

Current Ratio = Current assets - Current Liabilities

Conventionally, a current ratio of 2:1 is considered satisfactory. This ratio

can be considered as safe and conservative because even if the current assets get
reduced to half, then also the company will be able to clear off its short term debts
and liabilities. A very high current ratio indicates that a company is unable to utilize
its assets efficiently. A persistent trend of poor current ratio (of less than 1) is a
warning signal of impending sickness.

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YEAR CURRENT ASSET CURRENT CURRENT

(AMT.) LIABILITIES(AMT.) RATIO(IN TIMES)

2015-16 10668.068 9759.669 1.09

2016-17 11026.936 9875.649 1.12
2017-18 13041.904 10609.414 1.23
2018-19 14085.748 11462.187 1.23
2019-20 15058.757 12370.614 1.22

20000
2019-20
2018-19
10000 2017-18
2016-17
0 2015-16

2015-16 2016-17 2017-18 2018-19 2019-20

(FIGURE: 1)

INTERPRETATION:
It can be seen from the above graph that the company’s liquidity position is not ideal
as per the standard ratio 2:1 but still it is greater than 1 which indicates the
company’s ability to pay off its current obligations. A higher ratio means the
company can easily fund its day-to-day operations.
The more working capital a company has, the less it’s likely to have to take on debt
to fund the growth of its business. In the years 2017-18 and 2018-19, the company
has Rs. 1.23 of assets to clear its debt of Rupee 1. The year 2015-16 had the most
unsatisfactory current ratio as compared to the current ratios of other years .The
ratio 1.09 shows there are almost equal current assets and liabilities.

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QUICK RATIO
The ratio provides a measure of the capacity of the business to meet its short-term
obligations. It is calculated to serve as a supplementary check on liquidity position of
the business and is therefore, also known as ‘Acid-Test Ratio’. While calculating quick
assets we exclude the inventories. The quick assets are defined as those assets which
are quickly convertible into cash.

Quick Ratio = Current Assets – inventory / current liabilities

Normally, it is advocated to be safe to have a ratio of 1:1 as unnecessarily low ratio

will be very risky and a high ratio suggests unnecessarily deployment of resources in
otherwise less profitable short-term investment

YEAR CURRENT INVENTORY(AMT.) QUICK ASSET CURRENT QUICK

ASSET (A-B) (AMT.) LIABILITIES RATIO
(AMT.) (AMT.) (IN
TIMES)
2015-16 10668.068 2062.218 8605.85 9759.669 0.88
2016-17 11026.936 2595.112 8431.824 9875.649 0.85
2017-18 13041.904 3126.530 9915.374 10609.414 0.93
2018-19 14085.748 3670.251 10415.497 11462.187 0.91
2019-20 15058.757 4196.971 10861.789 12370.614 0.88

20000

15000

10000

5000

0
1 2 3 4 5 6

CURRENT ASSET (AMT.) INVENTORY(AMT.)

QUICK ASSET (A-B) (AMT.) CURRENT LIABILITIES (AMT.)
QUICK RATIO (IN TIMES)

(FIGURE: 2)

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INTERPRETATION:
In all the years, BFPL has ratio less than 1. A company which has a
quick ratio of less than 1 may not be able to fully pay off its current liabilities in the
short term. Higher the ratio result, the better a company's liquidity and financial
health and the lower the ratio, the more likely the company will struggle with paying
debts.

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A COMPARISON OF CURRENT ASSETS AND CURRENT LIABILITIES

Positive working capital is the excess of current assets over current
liabilities. In other words, when the net working capital is a positive figure, it is said
that the firm has a positive working. Working capital can be negative if a company's
current assets are less than its current liabilities (FIGURE: 2).

16000

14000

12000

10000

8000

6000

4000

2000

0
2015-16 2016-17 2017-18 2018-19 2019-20

CURRENT ASSET (AMT.) CURRENT LIABILITIES (AMT.)

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INTERPRETATION:
 The provided bar chart compares a company's current assets and current
liabilities from 2015-16 to 2019-20. It visually represents the company's
working capital position over these years.
 Throughout the period, the company's current assets (blue bars) are
consistently higher than its current liabilities (grey line), indicating positive
working capital.
 Both current assets and current liabilities show an upward trend over the five
years, indicating growth in both. However, the growth in current assets
appears more pronounced, further strengthening the company's working
capital position.
 Analysis:
2015-16: Current assets are approximately 10,500 (in unspecified units), and
current liabilities are around 9,500.
2016-17: Current assets are slightly above 11,000, while current liabilities are
just under 10,000.
2017-18: Current assets are around 12,800, and current liabilities are
approximately 10,500.
2018-19: Current assets reach about 13,800, and current liabilities are close to
11,000.
2019-20: Current assets peak at approximately 14,200, with current liabilities
around 11,500.

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➢ ANALYSIS OF WORKING CAPITAL COMPONENTS

INVENTORY:

INVENTORY(AMT.)
2062.218
4196.971

2595.112

3670.251 3126.53

1 2 3 4 5 6

INTERPRETATION:
Advantages of Higher Side (Profitability):
Ensures adequate stockholding and increases profitability. The highest inventory
was in 2019-20 at 4196.971.
• Advantages of lower side (Liquidity):
Lower Inventory requires less capital but holding low stocks can affect goodwill
adversely if the demands of customers is not met. Lowest inventory holding was in
2015-16 at 2062.218.
• Trade-off between Profitability and liquidity:
Using techniques like Economic Ordering Quantity (EOQ), Just in Time (JIT) can help
to carry optimum level of inventory

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➢ COMPARATIVE ANALYSIS OF WORKING CAPITAL

1. CHANGES IN WORKING CAPITAL FOR THE YEAR 2019-2020
PARTICULAR 31 MARCH 31 MARCH 20 INCREASE AND % CHANGE
19 DECREASE
Current asset: 3670.251 4196.971 526.72 14.35
Inventories
Financial asset:
1 Investment Nil 450.285 450.285 Nil
2 Trade receivable 4712.743 3390.557 (1322.186) (28.05)
3 Cash and cash 333.002 1946.069 1613.067 484.40
equivalent
4 Other bank balance 21.064 21.787 0.723 3.43
5 Loan 950.007 1139.455 189.448 19.94
6 Other financial 19.459 41.460 22.001 113.06
asset
7 Other current asset 4379.222 3872.173 (507.049) (11.57)
Total current asset 14085.748 15058.757 973.009 6.9
Gross working 14085.748 15058.757 973.009 6.9
capital

(-) current liabilities

Financial liabilities
1 borrowing 1237.703 2250.000 1012.297 81.78
2 trade payable
a) MSME 1042.931 (369.291) (35.4)
673.640
b) Other 4326.889 3832.750 (494.139) (11.42)
Other financial 771.839 1407.152 635.313 82.31
liabilities
Other current 3666.831 3778.968 112.137 3.05
liabilities
Provision 415.994 428.104 12.11 2.91
Total current 11462.187 12370.614 908.427 7.92
liabilities
Net working capital 2623.561 2688.143 64.582 2.46
(Amounts in Million Rupees)

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CHANGE IN AMOUNT

INCREASE AND DECREASE (AMT)

2000

1500

1000

500

0
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23
-500

-1000

-1500

CHANGE IN %

% CHANGE
600
500
400
300
200
100
0
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23
-100

INTERPRETATION:
We can see from the above table that there is an increase of 2.46% in the Net
Working Capital.
If the Net Working capital is increasing, we can conclude that the company’s liquidity
is increasing. It could indicate that the company is able to utilize its existing resources
in a better way. This can be attributed to the major increase in the Cash & Cash
Equivalents(C & CE) and
Other Financial Assets. Cash & Cash Equivalents were at 333.002 MN. Rs. in 2018-19
which increased to 1946.069 MN. Rs in 2019-20. The change in C & CE was
484.40%.Companies with a healthy amount of cash and cash equivalents can reflect
positively in their ability to meet their Hort-term debt obligations. Other Financial
Assets increased by 113.06%.

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2. CHANGES IN WORKING CAPITAL FOR THE YEAR 2018- 19

PARTICULAR 31 MARCH 18 31 MARCH 19 INCREASE
AND %
DECREASE CHANGE
Current asset: 543.721
Inventories 3126.530 3670.251 17.39
Financial asset:

1 Investment NIL NIL NIL NIL

2 Trade receivable 3817.850 4712.743 894.893 23.43
3 Cash and cash 582.763 333.002 (249.761) (42.85)
equivalent
40 Ot0her bank 24.619 21.064 (3.555) (14.44)
balance
5 Loan 975.737 950.007 (25.73) (2.63)
6 Other financial 20.306 19.459 (0.847) (4.17)
asset
7 Other current 4494.099 4379.222 (114.877) (2.55)
asset
Total current asset 13041.904 14085.748 1043.844 8.00
Gross working 13041.904 14085.748 1043.844 8.00
capital

(-) current liabilities

Financial liabilities
1 borrowing 1168.980 1237.703 68.723 5.87
2 trade payable
c) MSME 654.408 1042.931 388.523 59.37
d) Other 3765.555 4326.889 561.334 14.90
Other financial 826.116 771.839 (54.277) (6.57)
liabilities
Other current 3810.573 3666.831 (143.742) (3.77)
liabilities
Provision 383.782 415.994 32.212 8.39
Total current 10609.414 11462.187 852.773 8.03
liabilities
Net working capital 2432.490 2623.561 191.071 7.85

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INCREASE AND DECREASE (AMT)

1200
1000
800
600
400
200
0
-200 INCREASE AND DECREASE
-400

Series1 Series3 Series4 Series5 Series6 Series7

Series8 Series9 Series10 Series11 Series15 Series17
Series18 Series19 Series20 Series21 Series22 Series23

% CHANGES
80
60
40
20
0
-20
-40
-60

Series2 Series4 Series5 Series6 Series7 Series8

Series9 Series10 Series11 Series12 Series16 Series18
Series19 Series20 Series21 Series22 Series23 Series24

INTERPRETATION:
The Net working Capital has increased by 7.85%. There is a decrease in many
components of Financial Assets. The Trade Payables have increased
considerably. The amount payable to MSME has increased by 59.37% and the
Other Trade Payables have increased by 14.9%.If Average Payables increases
over a period, it means the company is buying more goods or services on
credit, rather than paying cash.

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3. CHANGES IN WORKING CAPITAL FOR THE YEAR 2017-2018

PARTICULAR 31 MARCH 17 31 MARCH 18 INCREASE

AND %
DECREASE CHANGE
Current asset: 2595.112 3126.530 531.418 20.47
Inventories
Financial asset:

1 Investment NIL NIL NIL NIL

2 Trade receivable 3399.728 3817.850 418.122 12.29
3 Cash and cash 223.753 582.763 359.01 160.44
equivalent
40 Other bank 30.913 24.619 (6.294) (20.36)
balance
5 Loan 933.927 975.737 41.81 4.47
6 Other financial 28.455 20.306 (8.149) (28.63)
asset
7 Other current 3815.048 4494.099 679.051 17.79
asset
Total current asset 11026.936 13041.904 2014.968 18.27
Gross working 11026.936 13041.904 2014.968 18.27
capital

(-) current liabilities

Financial liabilities
1 borrowing 1877.632 1168.980 (708.652) (37.74)
2 trade payable
a) MSME 648.965 654.408 5.443 0.83
b) Other 3489.906 3765.555 275.649 7.89
Other financial 816.159 826.116 9.957 1.21
liabilities
Other current 2671.613 3810.573 1138.960 42.63
liabilities
Provision 371.374 383.782 12.408 3.34
Total current 9875.649 10609.414 733.765 7.43
liabilities
Net working capital 1151.287 2432.49 1218.203 111.28

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INCREASE AND DECREASE (AMT)

2500
2000
1500
1000
500
0
-500
-1000

Series2 Series4 Series5 Series6 Series7 Series8

Series9 Series10 Series11 Series12 Series16 Series18
Series19 Series20 Series21 Series22 Series23 Series24

% CHANGES
200

150

100

50

-50

Series1 Series3 Series4 Series5 Series6 Series7

Series8 Series9 Series10 Series11 Series15 Series17
Series18 Series19 Series20 Series21 Series22 Series23

INTERPRETATION:
The Inventories have increased by 20.47% .The Cash Balance has increased by
160.44%.The Borrowing have reduced by 37.74%.There is a substantial
increase in the Net Working Capital by 111.28%.

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CHAPTER 5
FINDING, SUGGESTION
AND CONCLUSION

CONCLUSION:

Based on the analysis of liquidity ratios and working capital components from 2015-16 to
2019-20, the company has demonstrated a generally stable ability to meet its short-term
obligations, although certain areas need attention. Here are some key takeaways:

1. Current Ratio: Over the five-year period, the company maintained a current ratio
greater than 1, which signifies that it has enough assets to cover its liabilities in the
short term. However, the ratio never reached the ideal 2:1 mark, indicating that there
is room for improvement. The current ratio was lowest in 2015-16 (1.09), which
suggests that the company may have faced some liquidity pressure during that year.
The ratio gradually improved in the following years, peaking at 1.23 in 2017-18 and
2018-19, indicating better short-term solvency.
2. Quick Ratio: The quick ratio remained consistently below the ideal 1:1 mark
throughout the analysis period. This suggests that the company might struggle to pay
off its short-term obligations if they all came due simultaneously without relying on
the sale of inventory. The quick ratio was weakest in 2016-17 (0.85), which could be
a point of concern, although it showed some improvement in 2017-18 (0.93).
3. Working Capital: The analysis of working capital reveals a positive trend, with a
steady increase in net working capital from 2015-16 to 2019-20. This is a good sign,
as it indicates the company is gradually improving its liquidity. The increase in
working capital was most significant in 2017-18, where it grew by 111.28%. This
increase can be attributed to improvements in cash balances and a reduction in
borrowings.
4. Changes in Working Capital (2019-2020): During 2019-20, the company saw a
notable increase in cash and cash equivalents (484.4%) and other financial assets
(113.06%). This indicates better liquidity management, allowing the company to meet
its short-term obligations more easily. On the downside, trade receivables dropped by
28.05%, which could be a red flag, as it suggests difficulties in collecting payments
from customers.
5. Inventory Management: The Company maintained an increasing level of inventory
over the years, which could positively affect profitability by ensuring adequate stock
levels. However, higher inventories can strain liquidity if stock is not sold quickly.
Techniques like Economic Order Quantity (EOQ) or Just-In-Time (JIT) could help
optimize inventory levels and improve cash flow.

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SUGGESTION:

 Improving Quick Ratio: The quick ratio has been consistently below 1, which is a cause
for concern. To address this, the company should focus on reducing inventory levels or
improving the liquidity of its current assets, such as increasing the cash balance or liquidating
underperforming assets.

 Optimizing Inventory Levels: While having enough inventory to meet demand is crucial
for operations, carrying excessive stock can tie up working capital. The company should
consider adopting inventory management practices like EOQ or JIT to optimize inventory
levels and improve liquidity.

 Focusing on Accounts Receivable: The drop in trade receivables in 2019-20 (a decrease

of 28.05%) could indicate problems with collections or credit policies. The company should
review its receivables management and consider tightening its credit policies to ensure timely
payments from customers.

 Maintain a Strong Cash Position: The significant increase in cash and cash equivalents in
2019-20 is a positive sign. The company should continue to maintain a healthy cash buffer,
especially in times of economic uncertainty or if it plans to expand.

 Reducing Debt: Although the company has managed to reduce borrowings (e.g., a 37.74%
reduction in borrowings in 2017-18), it could further reduce long-term liabilities to improve
its financial flexibility. This could help reduce the burden of interest payments and provide
more capital for investment in business growth.

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FINDINGS:

 The current ratio and quick ratio indicate that the company has adequate short-term
liquidity but still faces challenges in quickly converting assets into cash without relying on
inventory. A further improvement in the quick ratio should be a priority.

 Inventory levels have been increasing steadily, indicating the company may be
overstocking, which can strain liquidity. Efficient inventory management should be
emphasized to optimize working capital utilization.

 Working capital has been improving steadily, reflecting a growing ability to meet current
liabilities. However, improvements in inventory management and accounts receivable would
further enhance the company's liquidity position.

 The company has had a positive trend in increasing cash and cash equivalents, which
significantly boosted its working capital in 2019-20, showcasing improved liquidity
management.

 The increase in trade payables, particularly towards MSMEs, might suggest that the
company is increasingly relying on credit to manage its cash flow, which could affect
supplier relationships and credit terms.

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PHOTO GALLERY
BFPL has two units:
Unit 1 – In Udyam Bagh Area
Unit 2 – In Machhe Area

Machine shop of BFPL at Udyambag

Various industrial sectors receive all components in finfish and semi- finished form
including -
* Vehicles: Hubs and rings with inertia.
* Engine-related water pump bodies and pulleys.
* Systematics: Traction Sheaves for elevators.
* Irrigation and agriculture: Body and disc for the butterfly valve industry.
* The Hydraulic sector: Castings for hydraulic gear pumps, including the
body, flange and covers.

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Leadership Team:
Mr. Niranjan Sant is a technocrat who has worked in manufacturing and engineering.
BFPL has experienced significant expansion as a result of his foresight.
Dr. Sachin Sabnis is a technocrat who is always one step ahead and has expertise in
foundry technology. BFPL has achieved remarkable technological advancements in its
foundry divisions as a result of his expertise in implementing novel technological
changes.

Figure.1 of Udyambag Unit

Figure.2

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CUSTOMER OF BFPL

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PRODUCT PROFIL OF BFPL

HYDRAULICS

INFRASTRUCTURE

PUMP (WATER / OIL)

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TRANSMISSION

INDUSTRIAL EQUIPMENTS

HEAVY STATIONARY ENGINE COMPONENTS

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AUTOMOBILE PULLEYS

VALVE INDUSTRY

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AWARDS AND ACHIEVEMENTS

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