A PROJECT REPORT ON

AN ANALYTICAL STUDY OF WORKING CAPITAL OF

TATA CONSULTANCY SERVICES ION PATIALA

Submitted to G.S.S.D.G.S Khalsa College, Patiala in partial

Fulfillment for the award

Of the degree of

BACHELOR OF BUSINESS ADMINISTRATION

(2015-2018)

Project Guide Submitted By

Ms. Kusum Rani Manjot Gill

Assistant Professor Class: BBA III
Roll no: 6728

G.S.S.D.G.S KHALSA COLLEGE

PATIALA

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 CERTIFICATE OF COMPLITION

This is to certify that Mr. MANJOT GILL from BBA (6TH Semester)
as successfully completed his project title “AN ANALYTICAL STUDY
OF WORKING CAPITAL OF TATA CONSULTANCY SERVICES ION
PATIALA’’ under the guidance of Mr. MANISH KUMAR this is in
the partial fulfillment of his BBA curriculum (2015-2018).

Dated

Ms. Kusum Rani

(Project guide)

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 DECLARATION

There by declare that the project entitled “AN ANALYTICAL STUDY OF

WORKING CAPITAL OF TATA CONSULTANCY SERVICES ION
PATIALA’’. Submitted in partial fulfillment of the requirements forward of
the BACHELOR OF BUSINESS ADMINISTRATION at G.S.S.D.G.S Khalsa
College, Patiala Affiliated to Punjabi University, Patiala is an authentic
work and has not been submitted to any other University/Institute
forward of any degree/diploma.

Under the guidance of

PROF. KUSUM RANI MR. MANISH KUMAR

(Assistant professor) (TRAINER)

MANJOT GILL

ROLL NO. 6728

CLASS: BBA III

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 PREFACE

In today’s era off cut throat competition Masters of business administration

(MBA) is sure to have an edge over their counter parts. MBA education
brings its students in direct contact with the real corporate world through
Industrial training .The MBA programmer provides its students with an in
depth study of various managerial activities conducted in various
departments like production, marketing, finance, human resource, export-
import, credit department etc., gives the student a conceptual idea of what
they are expected to manage, how to manage and how to obtain the
maximum output through minimum in puts and how to minimize the
wastage of resources. I have undergone my comprehensive training at TCS –
ION it is one of the leading IT educational company in the country. I feel
great pleasure to prevent this report work after my training at TCS- ION that
produced to be golden opportunity for me by enriching my knowledge, by
comparing my theoretical knowledge with the managerial skills &
applications.

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 ACKNOWLEDGEMENT

Firstly I would like to express our immense gratitude towards our

institution Khalsa College Patiala which created a great platform to attain
profound technical skills in the field BBA there by fulfilling our most
cherished goal.

I would like to thank all the finance department of “TCS - ION “especially
Mr. Manish Kumar, and the employees in the finance department for
guiding me and helping me in successful completion of the project.

I will also specifically thank to Prof. Kusum Rani Department, Head, and
Khalsa College Patiala for the (Internal Guide) for extending the
cooperation in doing this project.

I shall be failing in my duty if I do not acknowledge the affection,

assistance, blessings an moral support given to me by my family,
specially my father who encouraged me and instilled me the self-belief
and never to say die attitude.

Last but not the least; I will like to thank God for blessing me and
giving me such a wonderful opportunity.

Name: Manjot Gill

Roll No: 6728

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 INDEX
CH NO. TOPIC PAGE
NO.
1. Company profile 6-32

2. Introduction of the Topic 33-54

3. Literature Review 55-59

4. Research methodology 60-65

6. Objectives of study 66-67

7. Data Analysis 68-96

8. Findings 97-98

9. Limitations 99-100

10. Conclusion 101-102

11. Bibliography 103-104

12. Annexure 105-109

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 CH 1
COMPANY
PROFILE

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Tata Consultancy Services Limited (TCS)is an Indian multinational
information technology(IT) service, consulting and business solutions
company headquartered in Mumbai, Maharashtra. It is a subsidiary of
the Tata Group and operates in 46 [Link] is one of the largest Indian
companies by market capitalization ($80 billion). TCS is now placed among
the ‘Big 4’ most valuable IT services brands worldwide. In 2015, TCS is
ranked 64th overall in the Forbes World's Most Innovative Companies
ranking, making it both the highest-ranked IT services company and the
first Indian company. It is the world's 10th largest IT services provider,
measured by the revenues.

On 12 January 2017, N. Chandrashekaran was elevated as the chairman for

Tata sons

History:

1968 to 2000:

Tata Consultancy Services Limited was founded in 1968 by a division

of Tata Sons Limited. Its early contracts included punched card services to
sister company TISCO (now Tata Steel), working on an Inter-Branch
Reconciliation System for the Central Bank of India, and providing bureau
services to Unit Trust of India.

In 1975, TCS conducted its first campus interviews, held at IISc, Bangalore
and Mumbai. The recruits comprised 12 Indian Institutes of
Technology graduates and three IISc graduates, who became the first TCS
employees to enter a formal graduate trainee programme.

In 1979, TCS delivered an electronic depository and trading system called

SECOM for the Swiss company SIS SegaInter Settle (deutsch). TCS followed
this up with System X for the Canadian Depository System and automating
the Johannesburg Stock Exchange. TCS associated with a Swiss
partner, TKS Teknosoft, which it later acquired.

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In 1981, TCS established India's first dedicated software research and
development centre, the Tata Research Development and Design Centre
(TRDDC) in Pune.

In 1985, TCS established India's first client-dedicated offshore development

centre, set up for clients Tandem. TCS later (1993) partnered with Canada-
based software factory Integrity Software Corp, which TCS later acquired.

In early the Indian IT outsourcing industry grew rapidly due to the Y2K bug
and the launch of a unified European currency, Euro. Tata Consultancy
Services created the factory model for Y2K conversion and
developed software tools which automated the conversion process and
enabled third-party developer and client implementation

2004 to present

On 25 August 2004, TCS became a publicly listed company.

In 2005, TCS became the first India-based IT services company to enter

the bioinformatics market.

In 2006, TCS designed an ERP system for the Indian Railway Catering and
Tourism Corporation.

In 2009, TCS's e-business activities were generating over US$500 million in

annual revenues.

In 2009, TCS undertook an internal restructuring exercise which aimed to

increase the company's ability.

TCS entered the small and medium enterprises market for the first time in
2011, with cloud-based offerings. On the last trading day of 2001 TCS
overtook RIL to achieve the highest market capitalization of any India-based
company.

In the 2011/12 fiscal year, TCS achieved annual revenues of over US$10
billion for the first time.

In May 2013, TCS was awarded a six-year contract worth over ₹ 1100
Crores to provide services to the Indian Department of Posts.

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In 2014, TCS moved from the 13th position to 10th position in the League of
top 10 global IT services companies

In July 2014, TCS became the first Indian company to cross the Rs 5 lakh
crores mark in market capitalization.

In Jan 2015, TCS ends RIL's 23-year run as most profitable firm.

In Jan 2017, the company announced a partnership with Aurus, Inc., a

payments technology company, to deliever payment solution for retailers
using omnistore, a first of its kind unified store commerce platform.

Products and services:

TCS and its 67 subsidiaries provide a wide range of information technology-
related products and services including application development, business
process outsourcing, capacity planning, consulting, enterprise software,
hardware sizing, payment processing, software management and technology
education services. Its established software products are TCS
BaNCS and TCS MasterCraft.

Service lines:
TCS' services are currently organized into the following service lines
(percentage of total TCS revenues in the 2014-15 fiscal year generated by
each respective service line is shown in parentheses):

Application development and maintenance (43.80%) value;

Asset leverage solutions (2.70%);

Assurance services (7.70%);

Business process outsourcing (12.50%);

Consulting (2.00%);

Engineering and Industrial services (4.60%);

Enterprise solutions (15.21%); and

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IT infrastructure services (11.50%).

Operations:
TCS have 289 offices across 46 countries and 147 delivery centers in 21
countries. At the same date TCS had a total of 58 subsidiary companies.

Locations:
TCS has operations in the following locations:

India: Ahmedabad, Bangalore, Baroda, Bhubaneswar, Chennai, Coimbatore

, Patna, Delhi, Gandhinagar, Goa, Gurgaon,Guwahati, Hyderabad, Bhopal ,

Indore, Jamshedpur, Kochi, Kolkata, Lucknow , Kalyanpur, Mumbai,

Nagpur, Noida, Nashik, Pune, Trivandrum.

Africa: South Africa, Morocco.

Asia(excludingIndia): Bahrain, China, Israel, UAE, Hongkong, Indonesia, Ja

pan, Malaysia, Philippines, Saudi Arabia, Singapore, South
Korea, Taiwan, Thailand, Qatar.

Oceania: Australia

Europe: Belgium, Denmark, Finland, France, Germany, Hungary, Iceland,

Italy, Luxembourg,Netherlands, Norway, Portugal, Spain, Sweden, Switzerla

nd and United Kingdom.

NorthAmerica: Canada, Mexico and UnitedStates.

SouthAmerica: Argentina, Brazil, Chile, Colombia, Ecuador, Peru and Urug
uay.

Tata Research Development and Design Centre:

TCS established the first software research centre in India, the Tata
Research Development and Design Centre, in Pune, India in 1981. TRDDC
undertakes research in Software engineering, Process engineering and

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systems research. Research at TRDDC has also resulted in the development
of Sujal, a low-cost water purifier that can be manufactured using locally
available resources. TCS deployed thousands of these filters in the Indian
Ocean Tsunami disaster of 2004 as part of its relief activities. This product
has been marketed in India as Tata swatch, a low cost water purifier.

Innovation Labs:
In 2007, TCS launched its co-innovation network, a network of innovation
labs, startup alliances, university research departments, and venture
capitalists. In addition, TCS has 19 innovation labs based in three
[Link]' partners include Collabnet, Cassatt, academic institutions
such as IITs, Stanford, MIT, Carnegie Mellon and venture capitalists
like Sequoia and Kleiner Perkins.

Employees:
TCS is one of the largest private sector employers in India, and the second-
largest employer among listed Indian companies (after Coal India Limited).
TCS had a total of over 387000 employees as of December 2016, of which
31% were women. The number of non-Indian nationals was 21,282 as at
March 31, 2013 (7.7%).The employee costs for the FY 2012-13 were
US$4.38 billion, which was approx. 38% of the total revenue of the company
for that period. In the fiscal year 2012-13, TCS recruited a total of 69,728
new staff, of whom 59,276 were based in India and 10,452 were based in
the rest of the world. In the same period, the rate of attrition was 10.6%. The
average age of a TCS employee is 28 years. The employee utilization rate,
excluding trainees, for the FY 2013-15 was 82%. TCS was the fifth-largest
United States visa recipient in 2010 (after Infosys, CTS, Wipro and Mahindra
Satyam).In 2012, the Tata group companies, including TCS, was the second
largest recipient of H-1B visas.

As of June 2017, TCS has over 387,000 employees. It is world's third largest
IT employer behind IBM and HP..

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 Tata Consultancy Services Limited

Type Public

Traded as BSE; 532540

NSE: TCS

BSE SENSEX Constituent

CNX Nifty Constituent

Industry IT services, IT consulting, IT Education

Founded 1968; 50 years ago

Founder J.R.D Tata, F.C. Kohli

Headquarters Mumbai, Maharashtra, India

Area served Worldwide

Key people N Chandresekaran (Chairman)

Rajesh Gopinathan (CEO & MD)

Services IT, business consulting and outsourcing services

Revenue US$ 17.57 billion (2017)

Operating income US$ 4.51 billion (2017)

Net income US$ 3.92 billion (2017)

Total assets US$ 16.24 billion (2017)

Total equity US$ 13.67 billion (2017)

Parent Tata Group

Subsidaries TCS China

TRDDC

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Slogan Experience certainty

Website [Link]

TCS- ION

Now TCS is dealing in education and web development under the name of
[Link]-ION is at present, the strap idly growing online web Solutions
Company in India, providing IT enabled services, consultation and
outsourcing to companies spread in more than165 countries across 7
continents. Their advanced delivery model blends technology practices
with functional expertise help us improve our business processes and
boost performance.

Their professional website design, Website development, logo design,

Flash design and SEO services among others can goal long way in
determining the success of your business. Custom creation also includes,
but is not limited to, incorporating images, video and other interactive
content in tour site, apart from the unusual text element.

They offer their client sarepertoire of services like e-commerce website

creation and portal development, brand marketing on leading and
networks, digital marketing, web analytics and much more. Their talented
and experienced teams of professionals comprise Web 2.0 development
executive show offer advanced solutions for publishers and advertisers.
They create professional and dynamic pages for us using intelligent and
smart practices.

They also double passed digital marketing agency that serves leading
brands, corporate clients as well as other players. Their cost-effective and
customized web development and online media solutions are tailor-made
to suit our specific needs and requirements. TCS-ION offers us cutting

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edge services for website designing, development and internet marketing.
Their aim is to convert our “Creating Global Profession ate’’.

Get Quality and Economic Web Services

TCS-ION is a web design and development company based in India. A fully

integrated ITEs firm, we provide world-class web design services to their
global client spread across 7 continents and major countries including
USA, UK, Australia, and several throughout Asia and Europe .

TCS-ION provides a wide range of highly cost-effective and customized web

services to companies in varied industries such as entertainment, fashion,
music, finance, environment, business, commerce, IT and
telecommunications, travel and tourism, hospitality, education, etc. Their
affordable web services are ideal for small, medium and large scaled private
and corporate organizations and also start-up businesses and aspiring
entrepreneurs.

TCS-ION is One-stop Shop for Comprehensive Web Services!

Their comprehensive list of web design and development services includes

graphics design, corporate identity design and custom logo design services,
custom web programming, blog customization and e-commerce solutions,
Flash designs, search engine optimization services and much more.

Website Design Services:

At TCS ION India, creative talent meets technical expertise to produce

smart and effective designs with high appeal and usability value. They
understand your need to be different from regular selling of informative
sites, increase visitor in flow and decrease bounce rates. Their professional

15
web designers employ fresh innovative ideas and advanced designing tools
to produce optimized and profit generative websites for you.

Their website design services are focused on producing uniquely

appealing and result-oriented websites for our specialized business. Le

IT - as - a Service:
The IT-as-a Service business model of ION a cloud based ERP solution was
conceptualized by TCS through close interactions with Small and Medium
Businesses (SMB) across relevant stakeholders, developing a deep
understanding of their ICT consumption pattern and business challenges.
An innovative service model, ION uses emerging technologies like cloud
computing and virtualization to create a holistic, fit-for-purpose solution
stack for SMBs integrating hardware, network, software and services. And
all of this is backed by business, technical and consulting services by ION.
The ION Cloud ERP Solution is highly modular, scalable and configurable
giving SMBs the benefits of increased efficiencies; faster go to market,
predictability of technology as well as spend, IT talent on call and better
business results.

You gain from:

Integrated solutions:
We as a Cloud ERP Solution for SMBs offer single- window IT with a pre-
integrated suite of hardware, network, software and services. We ensure that
your functions are digitized, automated and connected. For example, if you
are using a CRM solution along with a core ERP (e.g. a Manufacturing ERP)
and have a document management system to organize supporting files and
an HRMS, we ensure that these solutions are connected and work as one.
So for you, it is simply one IT and not multiple applications. Integrated
applications thus provide a comprehensive view of business enabling better
decisions.

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Increased agility:
We bring in the agility to keep pace with changing processes or a new line of
business. We help you configure the processes to work as you currently do
or the software recommends and allows you to choose industry best
practices based on your business parameters. ION gives you increased
convenience allowing you to perform various tasks from your mobile device,
no matter where you are. Being automatically compliant with statutory
requirements, the solution ensures your company is always audit ready and
legally compliant.

A pay-as-you-use model:
Our model eliminates capital investment up front as we facilitate
procurement of the IT infrastructure and software on rent for the duration of
the contract. Additionally, you only pay for the number of users who
actually use the software. Thus, you pay as you use on a monthly basis
which includes maintenance and training. Typically, with the ION Cloud
ERP the ROI exceeds rental within three months, when best practices are
well followed.

Personalized solution:
Although ION is a cloud service for small and medium businesses, the
software is configurable to each business. You will always get the flavor of
your business by picking and choosing what processes you would need.
Furthermore, the multilingual capability of the software allows you to
customize the solution label names to read in vernacular languages (like
Hindi, Marathi, Tamil etc.) enabling users to learn and operate the solution
with ease.

Automatic upgrades:
We continuously invest in our cloud based ERP solutions to incorporate best
practices. The software is constantly enriched based on user feedback and

17
industry and statutory changes. You will get the upgrades without
disrupting your business operations or any additional cost. Being in
perpetual beta ensures that there is no technology obsolescence.

Enhanced Business Continuity:

Our solution offers optimal performance in normal broadband connectivity
along with a stringent security mechanism to ensure your data privacy is
maintained. The capacity of the ION Cloud ERP solution grows with your
increasing computing needs and reduces the need for IT staff. The solution
is resilient to failures as the service works from back-up data centers in the
event of a disaster, ensuring continuity of business operations.

PARTNER:
ION Partners play a key role in helping organizations of all sizes transform
their businesses. We help customers buy and implement solution that best
fit their unique needs. ION Partners also provide continuous support to
customers after the implementation of the solution.

ION Sales and Implementation Partners

ION Sales and Implementation Partners (SIPs) are specially trained to help
customers choose and implement the best solution from a range of ION
Education solution. SIPs have years of expertise in the educational
technology domain, and are well acquainted with the delivery model of our
solutions.

ION Channel Sales Partners

ION Channel Sales Partners have in-depth understanding of the education
segment. The Channel Sales Partners help customers across different
education segments implement the most appropriate ION solution.

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A Manufacturing nervous system
Recording orders, sales and purchases would have little meaning unless
they were connected. At the heart of our manufacturing solution lies a
production system that ensures that these are in sync. You procure as
much as you produce; and produce as much as you are able to sell. The goal
is as simple as keeping the lowest inventory.
At ION, we tend to make the complex manufacturing process look simple by
connecting the different parts of the operations. The software is organized
into planning and execution. Production plan for instance, would tell your
operations to expect the right amount of sales, and then initiate the right
quantity of procurement. But what happens when the execution slips from
what is planned? Vigilant reports and dashboards would alert you in time.

Solution track

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Power your workforce performance:
Across industries, organizations are looking at new ways to manage their
workforce and measure performance through HR analytics, performance
management systems, and social media.

The ION Human Capital Management (HCM) Solution is an integrated

solution that helps you effectively manage your employees and increase
productivity across your workforce. You can align employee goals with
business objectives, cultivate employee skills, measure and reward
performance. ION HCM is a complete Enterprise Resource Planning (ERP)
solution that automates your human resource management and payroll
processes with on-demand Business Intelligence (BI) reporting capabilities
and dashboards to help make quick decisions while maintaining statutory
compliance ION Human Resources Management Solution (HRMS) manages
your recruitment and performance evaluation processes, while also
managing employee records and validating their financial details ION Payroll
Solution manages every stage of the payroll process, ensuring effective,
accurate payroll cycles and helps in faster decision making with on-demand
business intelligence (BI) reporting capabilities In addition, ION HCM has
additional solution and services to further enhance the productivity and
learning environment in your organization ION Human Capital Management
(HCM) is delivered as a:

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Managed Service: Manages the process end-to-end with the service
delivered as an output.

Implementation Service: Delivers a completely configured system ready for

end users to transact and extract output on a day-to-day basis.

TCS IN EDUCATION:

Campus System:

ION Campus Management System comprises a suite of offerings, catering to

seasonal academic events, mapped to specific departments of an institution.
Our solution facilitates the entire student lifecycle management from

21
enquiry to alumni. Offerings are integrated, yet modular in nature, which
can help automate certain functions within the institution depending on
preference and suitability. With Pre-built business processes and easy-to-
configure solution capabilities, institutions can start using the system with
minimal implementation time and effort. To make the delivery process
smooth and effective for the end users, some of the modules are available in
a Managed Services model as well.

Assessment Management:

ION Assessment Management solution provides end-to-end services to

configure and schedule examinations starting from creating online and
offline assessments to configuring attendance, hall tickets, creating drives,
as well as assigning a test center and exam shift to candidates. The solution
also manages the distribution of question papers, the Evaluation process, in
addition to Results Management and providing Support Service.

Digital evaluation:

ION Digital Evaluation solution enables evaluation of physical answer

scripts made available in electronic form. All the pages of the answer script
and respective tabulated reports can be accessed by the Evaluator,
Supervisor and select members of the Institution. The solution combines
ease of manual evaluation coupled with flexibility, accuracy and efficacy of a
computer.

The manual evaluation method is transformed into a digital process starting

with electronic scanning of answer scripts, where student details are
masked with fictitious code, questions and relevant marking scheme is
uploaded into the solution, evaluators assigned with individual ID and
password, supervisor reviews or re-assigns evaluated scripts in case of
discrepancies and finally the overall status of answer scripts evaluated,
reviewed and pending are known through the detailed Reports functionality.

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Thus, ION Digital Evaluation solution from TCS addresses the major issues
of the current evaluation process like missing answer scripts in transit,
human error in evaluation, tabulation and award lists and most importantly
struggling to announce results on time.

Demat Service:

ION Demat Services helps universities in leveraging IT to manage the entire

lifecycle of issuing certificates; starting from student record collection up to
printing of certificates, along with digital verification in a secured, organized,
and cost-effective manner.

For student records that were maintained in physical registers before

digitization, the services include scanning and digitizing of the records along
with secured storage and retrieval on-demand. The solution makes use of
digital encryption technologies for providing the highest degree of Data
Security and Integrity along with increased speed of certificate issuance and
digital verification.

Communicator:

ION Communicator is the ultimate communication tool for Schools.

Enabling the school administration and teachers to connect with parents
and students in real-time, from anywhere, ION Communicator lets you
communicate almost anything - news, alerts, calendar events, photographs,
activities or homework, from one, easy-to-use system. Giving you the
flexibility to communicate the way you want, it also includes a user-friendly
smartphone app to access all the communications. Be assured, that parents
will never miss a communication, anymore.

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Exam management:

TCS ION Exam Management Solution digitizes and automates University

and Boards Examination processes end-to-end, providing uncompromised
'Secrecy' in Examination Question Paper creation and its distribution to
various examination centers with significant reduction in administrative and
logistical overheads and costs. Increasing automation at every step like
enrolling students for each examination, scheduling of exams, exam centre
management, allocating students to exam centers, assigning subjects to
faculties for question paper creation, alerts and notifications to various
stakeholders significantly reduces manual effort, schedule compliance
failures and unforeseen errors.

Course management:

ION In-Course Assessment is designed to enable Institutions delivering

Professional higher education an opportunity to leverage Computer Based
Testing to empower their teaching staff and enhance the value delivered to
students. ION In-Course Assessment allows for secure and collaborative
content development and vetting by faculty, seamless delivery of tests and
capturing of student responses and generation of multiple meaningful
stakeholder specific reports on student performance data.

Leading Exchange:

ION Learning Exchange is a collaborative Learning Platform designed to

provide an incremental and interactive learning environment to enable an
Institute increase participant learning outcomes. Powered by best-in-class
Learning Management System (LMS), the learning spaces are enriched with
a suite of collaboration tools helping learners to learn from one another in a
community structure.

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Empower Learning:

ION Learning Exchange empowers teachers with tools to personalize

learning for every learner. A teacher can design & host course catalogues,
enlist students into learner communities and deliver incremental learning
material in an immersive way using video, audio, power point presentations
and a variety of SCORM Compliant learning aids. External links to world-
class learning material in the world wide web of learning enables the learner
to dip into best resources on a subject or topic. Teacher can co-share
delivery responsibilities with Industry professionals or subject experts to
provide relevancy to curriculum and meet Industry employability
expectations.

Personalized Feedback:

The power to conduct assessments after every learning module and provide
personalized feedback in an on-going manner helps learners to be ahead on
the learning curve. Personalized mentoring can be provided to each learner
using Taxonomy and LOD tagging of assessments linked to feedback and
"incremental assist publishing". Results and Analytics of learner groups help
teachers to undertake remedial interventions for bringing parity in learning.

Peer learning:

Learning outcomes can be paced faster by enabling room for peer learning.
ION Learning Exchange is designed for community based learning where
learners share their expertise and concerns using a suite of collaboration
tools including Forums, Blog, Debate, Surveys, Questions, Wiki and more.
Peer to peer benchmarking and peer speak provide the necessary impetus
for pacing each other for better outcomes.

25
Content Management System:

Create Courses for various topics and subjects engaging members of the
Institution in a collaborative learning environment. Populate course content
in multiple modes (SCORM Compliant) and co-create content repository, co-
deliver curriculum, collaborate with industry and experts across geographies
to bring best of class value delivery to your class rooms.

Testing Engine:

Effectively create, schedule and track Assessments & Assignments, with

multiple modes of response submission (online/offline/both). Create
Question Bank with numerous Question types (Multiple choice multiple
answer, Multiple choice single answer, Fill in the blank, True/False,
Reading comprehension) and enrich the tests by tagging them to Syllabus,
Difficulty Level and Blooms Taxonomy parameters. Create Question Papers
based on Rule Engine, which fetches Questions based on Question Types,
Syllabus, Difficulty Level and Blooms Taxonomy Parameters.

Analytics Engine:

Analyze the assessment results on various parameters and provide

dashboard for providing right learning interventions to the participants of
the Course to improve performance, hence closing the learning-loop of
'Learn-Assess-Improve'.

Communication tools:

Leverage Communication features (Banner/ Multiple In-Focus & Notice-

board items/ Notifications via Email/SMS) to engage and inform members.
All this with the flexibility to communicate with an individual or with all the
members of a Community on general broadcasts.

26
Web programming

Every online business is different from other, even similar niche website.
TCS-ION India understands and respect individual clients needs and
provide custom web programming services to serve unique web
requirements. Their team of qualified professionals uses strategic planning
and smart development process with quick operationally efficient and
productive website. Their aim is to provide smart and practical solutions
from their website. TCS-ION India’s custom website programming services
cause dramatic and measureable growth in their website.

Flash design
Creative heads at TCS-ION India exploit Flash’s vector technology to
produce, beautiful and eye-catching designs for you. From Flash intros,
banners logos and advertisements to full-blown Flash websites, they give
our website the interactive zing it desires. Their creative Flash design
services help transform our website into an effective communication
interface.

Logo design

TCS-ION India's logos are designed to successfully introduce your company

to its consumers and competitors. Their logos are stylish and aesthetic
bearing superb color scheme and graphical detailing that create long-lasting
impressions. Their logo design services give brand a simple, creative, and
appealing quality capable of significant impact on viewers. They guarantee
quality logo design at minimum rates only at TCS-ION India.

27
Branding that delivers your message

The quickest way to increase the value of the company’s brand is with a
well-integrated design theme that is consistent across the web as well as on
paper. A great logo is the keystone of this theme and will attract the
attention you want and deliver the sales that company needs.

Their logos don’t just create an identity; they create a connection with the
audience they speak to and differentiate the product or service being offered.
Their logo and branding should allow their customer to see you as providing
a distinct solution to their unique problem. A logo speaks volumes about
what the company does, what its values are and what it can achieve. They
make sure the logo has as much personality as you do.

SERVICES OF COMPANY

HTML5 & CSS3

At ION they offer PSD to CSS3 / JS / HTML5 services for their custom web
design needs. We will help us in getting the best web site design coded in
HTML5 which is rich in structural functionality and in CSS3 to enhance the
presentation of your website’s content. Also HTML5/CSS3 expert takes into
account page’s loading time, SEO and web browsers compatibility

CMS

Their Content Management Systems (CMS) service revolutionizes the

manner in which we manage our online information and content – from web
copy, published articles, press releases, audio/video files, marketing
brochures and other sales related assets. These applications will help us
enterprise store, maintain version control, publish content on the web and
manage documents or digital assets.

28
Ecommerce Website Development

Ecommerce is a type of business that continues to grow every day. As more

people get comfortable with the Internet, more people are willing to make
purchases and do business in this convenient way. Therefore, ecommerce
website design and development is increasingly important for any business
looking to be successful on the Internet. Let [Link] be our ecommerce
solution provider and they will be sure to have thousands of satisfied
customers. The focus for an ecommerce business will be a website
incorporating product information and the ability to purchase or make
orders online. At [Link] they use the latest database technology to
create ecommerce solutions for our new or existing business.

SEO

Search Engine Optimization (SEO) is a technical cum marketing technique

with which [Link] assists its clients to realize their dream of making
their websites rank high in web searches. Search Engine Optimization is a
process through which websites are honed in order to make them visible to
online searchers. It’s worth pointing out that SEO is not a “magic bullet”
that will necessarily drive traffic and sales through the roof. SEO makes the
website stand out from the crowd, especially if your industry is highly
competitive or if you want to attract a captive audience for a popular
keyword or keywords.

Research

Their research team makes a research using various secondary research

tools to better understand the requirements of the client. They prefer to seek
assistance from the client by asking them various questions related to their
Business (read website), Target Audience, Strategic Keywords, etc. and then
they formulate the clear and measurable objective for the projects.

29
Analyze

After research they analyze the market potential and the present
competition. They analyze the market potential to ensure that the website is
optimized in compliance with search engine guidelines and they study the
competition to identify the potential gap which needs to be addressed by
you.

STRONG RELATIONSHIPS BETWEEN CLIENTS

One of their biggest priorities of all is close collaboration with their clients.
Whatever the size of our company or, indeed, your proposed project, they
take steps here at TCS - ION to ensure that your project is carefully tracked
and monitored, from the initial user analysis to the final stage of usability
testing.

This is certainly a thoroughness of approach that has been appreciated by

our clients down the years, who have included business owners, consultants
and team leaders alike. It gives you all the more reason to contact TCS ION
when your firm next requires a high quality software solution that brings
with it a significant ROI.

WHY CHOOSE TCS- ION?

ION is the company which gives the guarantee that we can help your
business or organization to be the best by improving your profitability and
efficiency.

They understand that you could be concerned about why you should utilize
our services for your requirements. It is but natural that you logically put
these questions to yourself. In an era where there are many others out there

30
offering similar services claiming similar advantages, it is worth considering
the following points. At [Link] we thoroughly undertake the following
globally acknowledged advanced practices.

Latest technologies

They deploy the latest technologies to meet your unmatched IT

requirements.

Excellent support

They offer the most excellent support and dedicated service by a full-fledged
web expert’s team.

Best talent

They hire only the best talent available in the market and ensure that we
utilize the cutting edge top range methodologies and techniques to develop
and execute your projects.

Productive work environment

They share a healthy work environment where our employees continually

learn and mature as a habitual practice.

Strict adherence to quality

Not only do we strictly adhere to the highest international level quality

standards, but they regularly communicate with our clients and keep them
aware of the latest developments.

Satisfied Clientele

Needless to say, they have been able to develop a large list of satisfied clients
in countries around the globe. They are really proud to say that all this is
due to our honest and equilateral commitment in understanding the needs

31
of our clients and providing them with precise solutions in accordance with
their individual requirements.

SERVICES
Their e-commerce solutions are the best blend of:

Website Development
There are many variations of passages of LoremIpsum available, but the joy
has suffered alteration in some format, by injected humor.

Website Designing
There are many variations of passages of LoremIpsum available, but the joy
has suffered alteration in some format, by injected humor.

Internet Marketing
There are many variations of passages of LoremIpsum available, but the joy
has suffered alteration in some format, by injected humor.

Website Maintenance:

Let Your Website Speak For You...Manage It Like Your SALESMAN..!!

They offer you fast and efficient website maintenance services. They will
update, enhance, backup and repair our site quickly and efficiently, while
you can go on running your business. They will maintain the quality of our
website, keeping it fresh for our return clients. If you need to add more
images, new banners, new calendar events, change the content of the site,
back up any important data, add new plug-in and functionality, let us do it
for you . Their website maintenance services are professional and affordable
with quick turn around and delivery times. They always have custom
solutions to website functionality problems at an affordable cost. They offer
professional help with any bagworm is fortunes which may happen to your
site. Their site monitoring is effective and professional. As soon as they

32
receive maintenance requests, the sites get updated or fixed right away. All
the website development and maintenance is being performed in a secure
way, with non-disclosure of the passwords or any site information.

Some other Services they offer:

a) Phone business application development

b) Phone multimedia application development
c) Phone internet apps development
d) Phone GPSB based application development

33
 CH 2
INTRODUCTION
TO THE TOPIC

34
“Working Capital is the Life-Blood and Controlling Nerve
Center of a Business”
No one can start business or run an enterprise without adequate funds.
Every business requires money to start and to carry out its day-to-day
operations as requirement of amount of capital depends on size and nature
of business. To fulfill day to day requirement such as purchase of current
assets or marketable securities which can be easily converted into cash,
purchase of raw material, payment of wages and other routine expenses, an
entrepreneur has required working capital. Those finance which are needed
in short term to carry on operating and short term activities is known as
Working Capital, while long term finance which is required to establish
business through purchase of fixed assets such as Plant & Machinery, Land
and Building, etc.,. Is called Fixed Capital.

Working capital is the difference between resources in cash or readily

convertible into cash (current assets) and Current Liabilities. Generally the
enterprise which has higher amounts of working capital is better positioned
for success. The company needs an adequate working capital requirement,
the minimum amount of resources that require to effectively covering the
cost and expenses necessary to operate the business. There should be
match between assets and liabilities of the company. If a company has more
debts than current assets, then working capital would be expressed in
negative number, where as if assets are more than liabilities, a company has
positive working capital.

All such match will be possible when there should be a proper

transformation of sources from one to other referred to as “Circulating
Assets” because of their cyclical nature. Management of working capital is
much important because shortage as well as excess of it may cause the
biggest failure of business in recent times. Meanwhile, the relationship
between firm’s short term assets and liabilities is considered to be working
capital management.

35
The rationale behind this project “study of Working Captal Management” is
to determine the amount of working capital requirement on the basis of
various financial ratios which help a business man to take adequate
decision through proper planning and control over business activities. The
project also depends on study of changes in the uses and sources of working
capital to understand that how a manager can increase the efficiency of
business in management of working capital.

WHAT IS WORKING CAPITAL?

Working capital refers to the investment by the company in short terms

assets such as cash, marketable securities. Net current assets or net
working capital refers to the current assets less current liabilities.
Symbolically, it means,

Net Current Assets = Current Assets-Current Liabilities.

In accounting, “Working capital is the difference between the inflow and

outflow of funds. In other words, it is the net cash inflow. It is defined as the
excess of current assets over current liabilities and provisions. In other
words, it is net current assets or net working capital.”

Working capital represents the total of all current assets. In other words it is
the Gross working capital, it is also known as Circulating capital or Current
capital for current assets are rotating in their nature.

A study of working capital is of major importance to internal and external

analysis because of its close relationship with the day-to-day operations of a
business. Working Capital is the portion of the assets of a business which
are used on or related to current operations, and represented at any one
time by the operating cycle of such items as against receivables, inventories
of raw materials, stores, work in process and finished goods, merchandise,
notes or bill receivables and cash.

36
Working capital comprises current assets which are distinct from other
assets. In the first instance, current assets consist of these assets which are
of short duration. Working capital may be regarded as the life blood of a
business. Its effective provision can do much to ensure the success of a
business while its inefficient management can lead not only to loss of profits
but also to the ultimate downfall of what otherwise might be considered as a
promising concern.

The funds required and acquired by a business may

be invested to two types of assets:

Fixed assets are those which yield the returns in the due course of time.
The various decisions like in which fixed assets funds should be invested
and how much should be invested in the fixed assets etc. are in the form of
capital budgeting decisions. This can be said to be fixed capital
management.

Current Assets are required to ensure smooth and fluent business

operations and can be said to be life blood of the business. There are two
concepts of working capital — gross and net. Gross working capital refers to
gross current assets. Net working capital refers to the difference between
current assets and current liabilities. The term current assets refers to those
assets held by the business which can be converted into cash within a short
period of time of say one year, without reduction in value. The main types of
current assets are stock, receivables and cash. The term current liabilities
refer to those liabilities, which are to be paid off during the course of
business, within a short period of time say one year. They are expected to be
paid out of current assets or earnings of the business. The current liabilities
mainly consist of sundry creditors, bill payable, bank overdraft or cash
credit, outstanding expenses etc.

37
CLASSIFICATION OF WORKING CAPITAL

Working capital may be classified in two ways:

• On the basis of concept.

• On the basis of time.

On the basis of concept working capital can be classified as gross working

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

• Permanent or fixed working capital.

• Temporary or variable working capital

PERMANENT OR FIXED WORKING CAPITAL:

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

ensure effective utilization of fixed facilities and for maintaining the
circulation of current assets. Every firm has to maintain a minimum level of
raw material, work- in-process, finished goods and cash balance. This
minimum level of current assets is called permanent or fixed working capital
as this part of working is permanently blocked in current assets. As the
business grow the requirements of working capital also increases due to
increase in current assets.

TEMPORARY 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. Variable working capital can further be classified as seasonal
working capital and special working capital. The capital required to meet the
seasonal need of the enterprise is called seasonal working capital. Special
working capital is that part of working capital which is required to meet
38
special exigencies such as launching of extensive marketing for conducting
research, etc.

NEED FOR WORKING CAPITAL

Working capital may be regarded as the lifeblood of the business. Without

insufficient working capital, any business organization cannot run smoothly
or successfully. In the business the Working capital is comparable to the
blood of the human body. Therefore the study of working capital is of major
importance to the internal and external analysis because of its close
relationship with the current day to day operations of a business. The
inadequacy or mismanagement of working capital is the leading cause of
business failures.

The need of gross working capital or current assets cannot be

overemphasized. The object of any business is to earn profits. The main
factor affecting the profits is the magnitude of sales of the business. But the
sales cannot be converted into cash immediately. There is a time lag
between the sale of goods and realization of cash. There is a need of working
capital in the form of current assets to fill up this time lag. Technically, this
is called as operating cycle or working capital cycle, which is the heart of
need for working capital. This working capital cycle can be described in the
following words. If the company has a certain amount of cash, it will be
required for purchasing the raw material though some raw material may be
available on credit basis. Then the company has to spend some amount for
labour and factory overheads to convert the raw material in work in
progress, and ultimately finished goods. These finished goods when sold on
credit basis get converted in the form of sundry debtors. Sundry debtors are
converted in cash only after the expiry of credit period. Thus, there is a cycle
in which the originally available cash is converted in the form of cash again
but only after following the stages of raw material, work in progress, finished
goods and sundry debtors. Thus, there is a time gap for the original cash to
get converted in form of cash again. Working Capital needs of company arise

39
to cover the requirement of funds during this time gap, and the quantum of
working capital needs varies as per the length of this time gap.

Thus, some amount of funds is blocked in raw materials, work in progress,

finished goods, sundry debtors and day-to-day requirements. However some
part of these current assets may be financed by the current liabilities also.
E.g. some raw material may be available on credit basis, all the expenses
need not be paid immediately, workers are also to be paid periodically etc.
But still the amounts required to be invested in these current assets is
always higher than the funds available from current liabilities. This is
precise reason why the needs for working capital arise.

WORKING CAPITAL CYCLE

Working capital cycle indicates the length of time between firms’s paying for
materials entering into stock and receiving the cash from sale of finished
goods. In a manufacturing firm, the duration of time required to complete
the sequence of called events is operating.

40
In case of a manufacturing company, the operating cycle is the length of
time necessary to complete the following cycle of events –

• Conversion of cash into raw materials

• Conversion of raw materials into work-in-progress

• Conversion of work-in-progress into finished goods

• Conversion of finished goods into accounts receivables

• Conversion of accounts receivable into cash

The above operating cycle is repeated again and again over the period
depending upon the nature of the business and type of product etc. the
duration of the operating cycle for the purpose of estimating working capital
is equal to the sum of duration allowed by the suppliers.

Working capital cycle can be expressed as

R+W+F+D+C

Where,

R - Raw material storage period = avg. stock of raw material / avg. cost of
production per day

W – Work in progress holding period = avg. work in progress inventory / avg.

cost of production per day

F – Finished goods storage period = avg. stock of finished goods / avg. cost
of goods sold per day

D – Debtors collection period = avg. book debts / avg. credit sales per day

C – Credit period availed = avg. trade

41
WORKING CAPITAL MANAGEMENT

To start any business, First of all we need finance and the success of that
business entirely depends on the proper management of day-to-day finance
and the management of this short term capital or finance of the business is
called Working Capital Management.

Working Capital is the key difference between the long term financial
management and short term financial management in terms of the timing of
cash. Working capital management is a short term financial management.
Working capital management is concerned with the problems that arise in
attempting to manage the current assets, the current liabilities & the inter
relationship that exists between them. The current assets refer to those
assets which can be easily converted into cash in ordinary course of
business, without disrupting the operations of the firm.

Working capital management or short-term financial management is a

significant facet of financial management. It is important due to 2 reasons:

• Investment in current assets represents a substantial portion of total

investment

• Investment in current assets and the level of current liabilities have to

be geared quickly to changes in sales.

Working capital involves activities such as arranging short-term finance,

negotiating favorable credit terms, controlling the movement of cash,
administrating accounts receivables, and monitoring the investment in
inventories also take a great deal of time.

Management of working capital is concerned with the problem that arises in

attempting to manage the current assets, current liabilities. The basic goal
of working capital management is to manage the current assets and current
liabilities of a firm in such a way that a satisfactory level of working capital

42
is maintained, i.e. it is neither adequate nor excessive as both the situations
are bad for any firm. There should be no shortage of funds and also no
working capital should be ideal. WORKING CAPITAL MANAGEMENT
POLICES of a firm has a great on its probability, liquidity and structural
health of the organization. So working capital management is three
dimensional in nature as

1. It concerned with the formulation of policies with regard to

profitability, liquidity and risk.

2. It is concerned with the decision about the composition and level

of current assets.

3. It is concerned with the decision about the composition and level

of current liabilities

43
SIGNIFICANCE OF WORKING CAPITAL MANAGEMENT

The management of working capital is important for several

reasons:

• For one thing, the current assets of a typical manufacturing firm

account for half of its total assets. For a distribution company, they
account for even more.
• Working capital requires continuous day to day supervision. Working
capital has the effect on company's risk, return and share prices.
• There is an inevitable relationship between sales growth and the level
of current assets.
• The target sales level can be achieved only if supported by adequate
working capital Inefficient working capital management may lead to
insolvency

44
IMPORTANCE OR ADVANTAGE OF ADEQUATE
WORKING CAPITAL

Ø Solvency of the business: Adequate working capital helps in

maintaining the solvency of the business by providing uninterrupted
of production.

Ø Goodwill: Sufficient amount of working capital enables a firm to

make prompt payments and makes and maintain the goodwill.

Ø Easy loans: Adequate working capital leads to high solvency and

credit standing can arrange loans from banks and other on easy and
favorable terms.

Ø Cash Discounts: Adequate working capital also enables a concern

to avail cash discounts on the purchases and hence reduces cost.

Ø Regular Supply of Raw Material: Sufficient working capital

ensures regular supply of raw material and continuous production.

Ø Regular Payment of Salaries, Wages and Other Day TO

Day Commitments: It leads to the satisfaction of the employees
and raises the morale of its employees, increases their efficiency,
reduces wastage and costs and enhances production and profits.

Ø Exploitation of Favorable Market Conditions: If a firm is

having adequate working capital then it can exploit the favorable
market conditions such as purchasing its requirements in bulk when
the prices are lower and holdings its inventories for higher prices.

Ø Ability to Face Crises: A concern can face the situation during

the depression.

Ø Quick and Regular Return on Investments: Sufficient

working capital enables a concern to pay quick and regular of

45
 dividends to its investors and gains confidence of the investors and
can raise more funds in future.

Ø High Morale: Adequate working capital brings an environment of

securities, confidence, high morale which results in overall efficiency
in a business.

46
DISADVANTAGES OF INADEQUATE WORKING CAPITAL
Every business needs some amounts of working capital. The need for
working capital arises due to the time gap between production and
realization of cash from sales. There is an operating cycle involved in sales
and realization of cash. There are time gaps in purchase of raw material and
production; production and sales; and realization of cash.

Thus working capital is needed for the following purposes:

• For the purpose of raw material, components and spares.

• To pay wages and salaries

• To incur day-to-day expenses and overload costs such as office

expenses.

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

• To provide credit facilities to the customer.

• To maintain the inventories of the raw material, work-in-progress,

stores and spares and finished stock.

For studying the need of working capital in a business, one has to study the
business under varying circumstances such as a new concern requires a lot
of funds to meet its initial requirements such as promotion and formation
etc. These expenses are called preliminary expenses and are capitalized. The
amount needed for working capital depends upon the size of the company
and ambitions of its promoters. Greater the size of the business unit,
generally larger will be the requirements of the working capital.

47
FACTORS AFFECTING WORKING CAPITAL MANAGEMENT

The amount of working capital required depends upon a number of factors

which can be stated as below

• NATURE OF BUSINESS

Some businesses are such, due to their very nature, that their requirement
of fixed capital is more rather than working capital. These businesses sell
services and not the commodities and not the commodities and that too on
cash basis. As such, no funds are blocked in piling inventories and also no
funds are blocked in receivables. E.g. Public utility services like railways,
electricity boards, infrastructure oriented projects etc. Their requirement of
working capital is less. On the other hand, there are some business like
trading activity, where the requirement of fixed capital is less but more
money is blocked in inventories and debtors. Their requirement of the
working capital is more.

• LENGTH OF PRODUCTION CYCLE

In some business like machine tool industry, the time gap between the
acquisitions of raw material till the end of final production of finished
product itself is quite high. As such more amounts may be blocked either in
raw materials, or work in progress or finished goods or even in debtors.
Naturally, their needs of working capital are higher. On the other hand, if
the production cycle is shorter, the requirement of working capital is also
less.

• SIZE AND GROWTH OF BUSINESS

In very small companies the working capital requirements are quite high
overheads, higher buying and selling costs etc. As such, the medium sized
companies positively have an edge over the small companies. But if the
business starts growing after a certain limit, the working capital
requirements may be adversely affected by the increasing size.

48
  BUSINESS/TRADE CYCLE

If the company is operating in the period of boom, the working capital

requirements may be more as the company may like to buy more raw
material, may increase the production and sales to take the benefits of
favorable markets, due to the increased sales, there may be more and more
amount of funds blocked in stock and debtors etc. Similarly, in case of
depression also, the working capital requirements may be high as the sales
in terms of value and quantity may be reducing, there may be unnecessary
piling up of stocks without getting sold, the receivables may not be
recovered in time etc.

• RATE OF STOCK TURNOVER

There is an inverse co-relationship between the question of working capital

and the velocity or speed with which the sales are affected. A firm having a
high rate of stock turnover will needs lower amt. of working capital as
compared to a firm having a low rate of turnover.

• CREDIT POLICY

The firm’s credit policy directly affects the working capital

requirement. If the firm has liberal credit policy, hence the more credit
period will be provided to the debtors so this will lead to more working
capital requirement. With the liberal credit policy operating cycle
length increases and vice versa.

• SEASONAL VARIATIONS

In certain industries like raw material is not available throughout the year.
They have to buy raw material in bulk during the season to ensure an
uninterrupted flow and process them during the year. Generally, during the
busy season, a firm requires larger working capital than in slack season.

• EARNING CAPICITY AND DIVIDEND POLICY

Some firms have more earning capacity than other due to quality of their
products, monopoly conditions, etc. Such firms may generate cash profits

49
from operations and contribute to their working capital. The dividend policy
also affects the requirement of working capital. A firm maintaining a steady
high rate of cash dividend irrespective of its profits needs working capital
than the firm that retains larger part of its profits and does not pay so high
rate of cash dividend.

• PRICE LEVEL CHANGES

Changes in the price level also affect the working capital requirements.
Generally rise in prices leads to increase in working capital.

• PRODUCTION POLICY

If the policy is to keep production steady by accumulating inventories it will

require higher working capital.

PLANNING OF WORKING CAPITAL

Working capital is required to run day to day business operations. Firms

differ in their requirement of working capital (WC). Firm s aim is to
maximize the wealth of shareholders and to earn sufficient return from its
operations. WCM is a significant facet of financial management. Its
importance stems from two reasons:

• Investment in current asset represents a substantial portion of total

investment.
• Investment in current assets and level of current liability has to be
geared quickly to change in sales.
Business undertaking required funds for two purposes:

• To create productive capacity through purchase of fixed assets.

• To finance current assets required for running of the business.

The importance of WCM is reflected in the fact that financial managers

spend a great deal of time in managing current assets and current liabilities.

50
The extent to which profit can be earned is dependent upon the magnitude
of sales. Sales are necessary for earning profits. However, sales do not
convert into cash instantly; there is invariably a time lag between sale of
goods and the receipt of cash. WC management effect the profitability and
liquidity of the firm which are inversely proportional to each other, hence
Proper balance should be maintained between two.
To convert the sale of goods into cash, there is need for WC in the form of
current asset to deal with the problem arising out of immediate realization of
cash against good sold. Sufficient WC is necessary to sustain sales activity.
This is referred to as the operating or cash cycle.

INVENTORY MANAGEMENT

Inventories constitute the most important part of the current assets of large
majority of companies. On an average the inventories are approximately
60% of the current assets in public limited companies in India. Because of
the large size of inventories maintained by the firms, a considerable amount
of funds is committed to them. It is therefore, imperative to manage the
inventories efficiently and effectively in order to avoid unnecessary
investment.

Nature of Inventories

Inventories are stock of the product of the company is manufacturing for

sale and components makeup of the product. The various forms of the
inventories in the manufacturing companies are:

• Raw Material: It is the basic input that is converted into the finished
product through the manufacturing process. Raw materials are those
units which have been purchased and stored for future production.

51
 • Work-in-progress: Inventories are semi-manufactured products.
They represent product that need more work they become finished
products for sale.

• Finished Goods: Inventories are those completely manufactured

products which are ready for sale. Stocks of raw materials and work-
in-progress facilitate production, while stock of finished goods is
required for smooth marketing operations. Thus, inventories serve as
a link between the production and consumption of goods.

Inventory Management Techniques

In managing inventories, the firm’s objective should be to be in consonance

with the shareholder wealth maximization principle. To achieve this, the
firm should determine the optimum level of inventory. Efficiently controlled
inventories make the firm flexible. Inefficient inventory control results in
unbalanced inventory and inflexibility-the firm may sometimes run out of
stock and sometimes pile up unnecessary stocks.

• Economic Order Quantity (EOQ): The major problem to be resolved

is how much the inventory should be added when inventory is
replenished. If the firm is buying raw materials, it has to decide lots
in which it has to purchase on replenishment. If the firm is planning
a production run, the issue is how much production to schedule.
These problems are called order quantity problems, and the task of
the firm is to determine the optimum or economic lot size. Determine
an optimum level involves two types of costs:-

 Ordering Costs: This term is used in case of raw material and

includes all the cost of acquiring raw material. They include the costs
incurred in the following activities:

52
  Requisition
 Purchase Ordering
 Transporting
 Receiving
 Inspecting
 Storing

Ordering cost increase with the number of orders placed; thus the
more frequently inventory is acquired, the higher the firm’s ordering
costs. On the other hand, if the firm maintains large inventory’s level,
there will be few orders placed and ordering costs will be relatively
small. Thus, ordering costs decrease with the increasing size of
inventory.

 Carrying Costs: Costs are incurred for maintaining a given level of

inventory are called carrying costs. These include the following
activities:
 Warehousing Cost
 Handling
 Administrative cost
 Insurance
 Deterioration and obsolescence

Carrying costs are varying with inventory size. This behavior is contrary to
that of ordering costs which decline with increase in inventory size. The
economic size of inventory would thus depend on trade-off between carrying
costs and ordering cost.

Financing Current Assets

The firm has to decide about the sources of funds, which can be availed to
make investment in current assets.

53
Long term financing:
It includes ordinary share capital, preference share capital, and
debentures, long term borrowings from financial institutions and reserves
and surplus.

Short term financing:

It is for a period less than one year and includes working capital funds
from banks, public deposits, commercial paper etc.
Depending on the mix of short and long term financing, the
company can follow any of the following approaches.

Matching Approach
In this, the firm follows a financial plan, which matches the expected life of
assets with the expected life of source of funds raised to finance assets.
When the firm follows this approach, long term financing will be used to
finance fixed assets and permanent current assets and short term
financing to finance temporary or variable current assets.

Conservative Approach
In this, the firm finances its permanent assets and also a part of temporary
current assets with long term financing. In the periods when the firm has no
need for temporary current assets, the long-term funds can be invested in
tradable securities to conserve liquidity. In this the firm has less risk of
facing the problem of shortage of funds.

Aggressive Approach

In this, the firm uses more short term financing than warranted by the
matching plan. Under an aggressive plan, the firm finances a part of its
current assets with short term financing.

54
ADVANTAGES OF WORKING CAPITAL MANAGEMENT

 Speed and Flexibility: One advantage of working capital

financing is that most eligible companies can obtain short-term loans,
including accounts receivable credit lines, inventory loans or bank
lines of credit, in a short period of time. The loan amounts are
typically a fraction of revenues and are tied to assets that quickly
convert to cash. Working capital financing is generally flexible, with
varying interest rates and repayment terms. This flexibility can help
companies with seasonal or periodic fluctuations smooth out cash
flow.

• Short-Term Options: Accounts receivable credit lines and

factoring, which occurs when your company sells its receivables to a
third party at a discount, directly tie to your company's accounts
receivables. As your company's revenues and associated receivables
grow, the credit line increases. As your company needs more money,
these working capital options make those funds available. These also
provide a viable choice for smaller or newer companies without the
operational history or balance sheet strength to qualify for a bank
term loan or unsecured line of credit.

• Medium-Term Options: Your Company can also finance working

capital with a term loan. Short-term working capital financing
addresses cyclical needs throughout the fiscal year. Mid-term working
capital financing provides the funds to purchase additional inventory
and generate the receivables that increase working capital. For
companies with growth prospects over the next few years, this option
provides access to a steady stream of capital to cover gaps created by
growth-relate

55
 CH 3
REVIEW OF
LITERATURE

56
Dr. G. Vara Kumar (2014) studied that working capital is the lifeblood and
nerve center of any business. No business can run successfully without
adequate working capital. Hence, working capital management is very
important of corporate finance because it directly affects the liquidity and
profitability of the firm. An efficient working capital management (WCM) has
a significant effect towards the creation of firm’s value. The present paper
gives various review of Literature on working capital management
(conceptual and research). The main objective of this paper is to provide the
wide variety of reviews on working capital management in different
industries and fields to identify the research gap for further studies. The
study has been identified that research studies of general nature relating to
working capital management are limited. Further, research studies touching
upon finance are of Automotive Battery industry are also very limited, while
working capital management in Automotive Battery Industry is hither to a
much neglected area.

H. Chandra & A. Selvaraj (2012) studied that working capital is the

backbone of an organization. It refers to a portion of the total fund which
finances the day to day working expenses during the operating cycle.
Management of working capital is one of the most important functions of
corporate management. It is rightly said, “Inadequate working capital is
advantageous, whereas redundant working capital is a criminal waste”. As a
large manufacturing industry, working capital management in the steel
industry involves a large portion of the company's total assets. The optimum
working capital ensures the success of the business, while its inefficient
management will lead to the down fall of the company. Hence, this paper
analyses the working capital management of selected steel companies in
India. Further, to measure the effective utilization of the working capital,
Operating Cycle and Cash Conversion Cycle were used. To measure the
determinants of Cash Conversion Cycle, the Kieschnick model has been
used. Finally, it was concluded that the size of a company plays a vital role
in determining the efficiency of its working capital management.

57
Bhaskar Bagchi (2012)The paper aims to explore the effects of components
of working capital management like cash conversion cycle (CCC), age of
inventory (AI), age of debtors (AD), age of creditors (AC), debt to total assets
(DTA) and debt equity ratio (DER) on profitability of FMCG firms. The
profitability of firms is measured in terms of return on total assets (ROTA)
and return on investment (ROI). Working capital management is considered
to be a vital issue in financial management decision and it affects both
liquidity and profitability of the firm. The secondary data for analysis is
retrieved from Prowess Database of CMIE for ten year period from 2000
01to2009-10.

Amalendu Bhunia (2011) studied that the present study aims to identify
the financial strengths and weaknesses of the Indian public sector
pharmaceutical enterprises by properly establishing relationships between
the items of the balance sheet and profit and loss account. The study covers
two public sector drug and pharmaceutical enterprises listed on BSE. The
study has been undertaken for the period of twelve years from 1997-98 to
2008-09 and the necessary data have been obtained from CMIE database.
The liquidity position was strong in case of both the selected companies
thereby reflecting the ability of the companies to pay short-term obligations
on due dates and they relied more on external funds in terms of long-term
borrowings thereby providing a lower degree of protection to the creditors.
Financial stability of both the selected companies has showed a downward
trend and consequently the financial stability of selected pharmaceutical
companies has been decreasing at an intense rate. The study exclusively
depends on the public sectors published financial data and it does not
compare with private sector pharmaceutical enterprises. This is a major
limitation of the research. The study is of crucial importance to measure the
firm’s liquidity, solvency, profitability, stability and other indicators that the
business is conducted in a rational and normal way; ensuring enough
returns to the shareholders to maintain at least its market value. The study

58
will help investors to identify the nature of Indian pharmaceutical industry
and will also help to take decision regarding investment.

Dr. Huseyin Yilmaz (2011) studied that Cash management could be

thought in a broader perspective. My cash management model covers cash
flow ratio analysis, cash improving activities, management of excessive cash
by classifying as free cash flow and dependent cash flow, and financing cash
gap. The financial statements are Balance Sheet, Income Statement, and
Statement of Cash Flows. Cash flow ratio analysis covers some cash flows
ratios such as cash flow adequacy, long term debt payout, dividend payout,
reinvestment of cash, debt coverage, and depreciation effect. Cash
improvement activities are decreasing cash cycle, improving cash dividend
payout., new payment systems, managing cash in inflation environment,
efficient currency management, barter trade, leasing, using subsidiaries,
cash break event point etc. The model has given me an opinion about new
cash management definition. It will be given on the text.

Dr. Muhammad AZAM and Syed Irfan HAIDER (2011) studied that the
purpose of this study is to investigate the impact of working Capital
Management on firms’ performance for non-financial institutions listed in
Karachi Stock Exchange (KSE- 30) Index. A panel data has been used in this
study for 21 Kse-30 Index listed firms over a period for the year 2001 to
2010. The results are obtained by using Canonical Correlation Analysis for
identifying the relationship between working capital management and firms’
performance. The findings show that working capital management has
significant impact on firms’ performance and it is concluded that managers
can increase value of shareholder and return on asset by reducing their
inventory size, cash conversion cycle and net trading cycle. Increase in
liquidity and time period to supplier will also lead firms’ overall
performances.

59
Ashok Kumar Panigrahi (2010) studied that since the liberalization of
Indian economy, there has been an upsurge in research on company
finance, particularly aimed at understanding how companies finance their
activities and why they finance their activities in these specific ways. In
practice, it is observed that finance managers use different combinations of
debt and equity. The present study is aimed at to find out the trend and
pattern of financing by the Indian companies before and after the
liberalization. The sheer size and diversity of the Indian capital market are,
on their own, more than sufficient reasons for investigating Indian company
financing in depth. In addition, the liberalization of the market offers a
unique laboratory for evaluating the development of companies as
liberalization proceeds. In this study, we attempt to compare and contrast
the capital structure of Indian corporate before and after liberalization.
Going beyond this, we examine the impact of liberalization and changes if
any noticed due to liberalization, on the capital structure of Indian
companies. Effort is also made to analyze the capital structure decisions of
Indian companies in the recent past.

Mohammad Neab and Noriza BMS (2010) worked on crating the

relationship between Working Capital Management (WCM) and performance
of firms. For their analysis they chose the Malaysian listed companies. They
administered the perspective of market valuation and profitability. They
used total of 172 listed companies from the databases of Bloomberg. They
randomly selected five year data (2003-2007). This research likewise the
researches quoted before studied the impact of the dimensions of working
capital component i.e. C.C.C., current ratio (C.R.), current asset to total
asset ratio (C.A.T.A.R), current liabilities to total asset ratio (C.L.T.A.R.), and
debt to asset ratio (D.T.A.R.) in effect to the firm’s performance whereby
firm’s value dimension was taken as Tobin Q (T.Q.) and profitability i.e.
return on asset (R.O.A.) and return on invested capital (R.O.I.C).

60
 CH 4
RESEARCH
METHODOLOGY

61
Research methodology is a systematic way to solve the problem. It may be
understood as a science of study how research is done. We can say that
research methodology has many dimension and research methods do
constitute as a part of research methodology. The study of research
methodology gives the necessary training in gathering material and
arranging them, participation in field work when it required, and also
training in techniques of data collection appropriate to particular problem,
questionnaire and control on data. It helps to sorting the data and
interpreting it. Knowledge of project report plays a key role in project work.

The study of research method provides you with the knowledge and skills
you need to solve the problem and meet the challenges of the fast- based
decision. Marketing environment we define Business Research as a
systematic inquiry whose objective is to provide information to solve
managerial problem.
It seeks to find explanation to unexplored phenomena to clarify the doubtful
facts and to correct the misconceived facts.

Research Type-:
Research is a systematic way activity to achieve the truth. Research includes
the procedure of collecting the data, analysis it, and finding the truth. The
research depends upon the scientific methods.

Research is not a process of gathering information, as is sometimes

suggested. Rather, it is about answering the unanswered question. In much
way the research can be seen as a process of expanding of our ignorance.
There is various type of research like descriptive, experimental, Applied,
Historical, Conceptual, Qualitative etc. According to my study and resource I
have choose descriptive research.

62
Descriptive Research
Descriptive study is a fact- finding investigation with adequate
interpretation. It is the simplest type of research. It is more specific than an
explanatory study, as it has focus on particular aspect of the problem
studied. It is designed to get her descriptive information and provide
information for formulating more sophisticated studies. Data are collected
by using one or more appropriate method, observation, interviewing and
mail questionnaire.
It is also called a statically research. In this I have describe the data and
characteristics of population. In research I tried to find the answer of
questions who, what, when and how. In descriptive research I choose
frequency, average, and other statically calculation. I have conducted a
survey.

Research Design-:
Research Design is a framework to conduct the research.
This study used descriptive research. Descriptive research involves
gathering data that describe events and then organizes, tabulates,
depicts, and describes the data collection . It often uses visual aids such
as graphs and charts to aid the reader in understanding the data
distribution and therefore offered a better clarification on online advertising,
and ultimately give a clear picture on the effectiveness and reliability of
online advertising and its relationship to purchase decision.

Descriptive research is used to describe characteristics of a population or

phenomenon being studied. It does not answer questions about
how/when/why the characteristics occurred. Rather it addresses the "what"
question (what are the characteristics of the population or situation being
studied? characteristics used to describe the situation or population are
usually some kind of categorical scheme also known as descriptive
categories.

Descriptive research generally precedes explanatory research. Hence,

research cannot describe what caused a situation. Thus, descriptive

63
research cannot be used to as the basis of a causal relationship, where one
variable affects another. In other words, descriptive research can be said to
have a low requirement for internal validity.

The description is used for frequencies, averages and other statistical

calculations. Qualitative research often has the aim of description and
researchers may follow-up with examinations of why the observations exist
and what the implications of the findings are.

It has two types one is longitudinal and second is Cross-sectional.

Why I choose descriptive study

The purpose of Descriptive Research

• The most basic form of Research involves the description of the forms,
actions, changes over time of the natural and non-natural
phenomena. It also involves the description of similarities with other
phenomena.

• With the help of descriptive study I able to find the result accurately
as well in good manner.

• I am able to clear my objective.

• It becomes easy to collect the data.

• In descriptive study I able to collect the both data like qualitative and
quantitative.

Data collection

Data collection is the process of gathering and measuring information on

variables of interest, in an established systematic fashion that enables one
to answer stated research questions, test hypotheses, and evaluate
outcomes. The data collection component of research is common to all fields
of study including physical and social sciences, humanities, business, etc.
While methods vary by discipline, the emphasis on ensuring accurate and
64
honest collection remains the same. The goal for all data collection is to
capture quality evidence that then translates to rich data analysis and
allows the building of a convincing and credible answer to questions that
have been posed.

Regardless of the field of study or preference for defining data (quantitative,

qualitative), accurate data collection is essential to maintaining the integrity
of research. Both the selection of appropriate data collection instruments
(existing, modified, or newly developed) and clearly delineated instructions
for their correct use reduce the likelihood of errors occurring.

In my research I have collect data from primary source and secondary

source.

Secondary data-:
It includes the data from internet hyperlinks and books, journals and
newspaper. Mainly I have collected data from internet and books. The main
aim to collect the secondary data is to understand the meaning of
consumer’s behavior, process, and importance.

Secondary data is data which has been collected by individuals or agencies

for purposes other than those of our particular research study. For example,
if a government department has conducted a survey of, say, family food
expenditures, and then a food manufacturer might use this data in the
organization’s evaluations of the total potential market for a new product.
Similarly, statistics prepared by a ministry on agricultural production will
prove useful to a whole host of people and organizations, including those
marketing agricultural supplies.

Secondary data may be available which is entirely appropriate and wholly

adequate to draw conclusions and answer the question or solve the problem.
Sometimes primary data collection simply is not necessary.

It is far cheaper to collect secondary data than to obtain primary data. For
the same level of research budget a thorough examination of secondary

65
sources can yield a great deal more information than can be had through a
primary data collection exercise.

The time involved in searching secondary sources is much less than that
needed to complete primary data collection.

Secondary sources of information can yield more accurate data than that
obtained through primary research. This is not always true but where a
government or international agency has undertaken a large scale survey, or
even a census, this is likely to yield far more accurate results than custom
designed and executed surveys when these are based on relatively small
sample sizes.

It should not be forgotten that secondary data can play a substantial role in
the exploratory phase of the research when the task at hand is to define the
research problem and to generate hypotheses. The assembly and analysis of
secondary data almost invariably improves the researcher's understanding
of the marketing problem, the various lines of inquiry that could or should
be followed and the alternative courses of action which might be pursued.

Secondary sources help define the population. Secondary data can be

extremely useful both in defining the population and in structuring the
sample to be taken. For instance, government statistics on a country's
agriculture will help decide how to stratify a sample and, once sample
estimates have been calculated, these can be used to project those estimates
to the population.

Problem of secondary data-:

• The research is totally dependent on the other. No personal judgment
is there.

• Market is changeable, so result is not accurate.

• Lot of error occurs in secondary based research.

• Difficulties in measurement.

• The data is less reliable as compare to the primary source

66
 CH 5
OBJECTIVES OF
STUDY

67
The major objectives of this project are:

• To study the maintenance of the working capital at appropriate level.

• To study the availability of funds for setting the working capital

standards.

• To determine the components of working capital.

• To study the management of the optimal cash amounts, accounts

receivables and inventories.

• To determine the effect of working capital on business profitability.

• To study operating cycle of working capital.

68
 CH 6
DATA ANALYSIS
AND
INTERPRETATION

69
 CURRENT RATIO:

The current ratio is calculated by dividing current assets by current

liabilities:

Current ratio = Current Assets

Current Liabilities

The current ratio is a measure of the firms’ short-term solvency. It indicates

the availability of current assets in rupees for every one rupee of current
liability.

(Amount in Rs.)

Current Ratio

Year Current Assets Current Liabilities Ratio

2015 72,021,081 16,065,621 4.48

2016 91,328,208 47,117,199 1.94

2017 115,642,068 30,266,661 3.82

70
 CURRENT RATIOS
5
4.5
4
3.5
3
2.5
4.48
2 3.82
1.5
1 1.94
0.5
0
2015 2016 2017

Interpretation

As a rule, the current ratio with 2:1 (or) more is considered as satisfactory
position of the firm.

When compared with 2016, there is an increase in the provision for tax,
because the debtors are raised and for that the provision is created. The
current liabilities majorly included of company for consultancy additional
services.

The sundry debtors have increased due to the increase to corporate taxes.

In the year 2016, the cash and bank balance is reduced because that is
used for payment of dividends. In the year 2017, the loans and advances
include majorly the advances to employees and deposits to government. The
loans and advances reduced because the employees set off their claims. The
other current assets include the interest attained from the deposits. The
deposits reduced due to the declaration of dividends. So the other current
assets decreased.

The huge increase in sundry debtors resulted an increase in the ratio, which
is above the benchmark level of 2:1 which shows the comfortable position of
the firm.

71
QUICK RATIO

It establishes a relationship between quick, or liquid, assets and current

liabilities. An asset is liquid if it can be converted into cash immediately or
reasonably soon without a loss of value. Cash is the most liquid asset. -
Inventories are considered to be less liquid.

Quick ratio = Liquid assets

Liquid liabilities

Liquid Assets = Current Assets – Inventories.

(Amount in Rs.)

Quick Ratio

Year Quick Assets Current Liabilities Ratio

2015 69,883,268 16,065,620 4.35

2016 89,433,596 47,117,199 1.9

2017 115,431,868 30,266,661 3.81

72
GRAPHICAL REPRESENTATION:

QUICK RATIOS
5

4.5

4 4.35

3.5 3.81

2.5

2
1.9
1.5

0.5

0
2015 2016 2017

Interpretation

Quick assets are those assets which can be converted into cash within a
short period of time, say to six months. So, here the sundry debtors which
are with the long period does not include in the quick assets.

Compare with 2016, the Quick ratio is increased because the sundry
debtors are increased due to the increase in the corporate tax and for that
the provision created is also increased. So, the ratio is also increased with
the 2016.

73
ABOSULTE LIQUIDITY RATIO:

Absolute Liquid Assets include cash in hand and at bank and marketable
securities or temporary investments. The acceptable norm for this ratio is
50% or 0.5: 1 or 1: 2 i.e. Re. 1 worth absolute liquid assets are considered
adequate to pay Rs. 2 worth current liabilities in time as all the creditors are
not expected to demand cash at the same time and then cash may also be
realized from debtors and inventories.

(Amount in Rs.)

Absolute Cash Ratio

Year Absolute Liquid Assets Current Liabilities Ratio

2015 39,466,542 16,065,620 2.46

2016 53,850,852 47,117,199 1.14

2017 35,649,070 30,266,661 1.18

GRAPHICAL REPRESENTATION

LIQUIDITY RATIOS
3

2.5
2.46
2

1.5

1 1.18
1.14
0.5

0
2015 2016 2017

74
Interpretation

The current assets which are ready in the form of cash are considered as
absolute liquid assets. Here, the cash and bank balance and the interest on
fixed assets are absolute liquid assets.

In the year 2016, the cash and bank balance is decreased due to decrease in
the deposits and the current liabilities are also reduced because of the
payment of dividend. That causes a slight increase in the current year’s
ratio.

75
LEVERAGE RATIOS

PROPRIETORY RATIO:

The proprietary ratio (also known as the equity ratio) is the proportion of
shareholders' equity to total assets, and as such provides a rough estimate
of the amount of capitalization currently used to support a business

(Amount in Rs.)

Proprietary Ratio

Year Share Holders Funds Total Assets Ratio

2015 70,231,061 89,158,391 0.79

2016 56,473,652 106,385,201 0.53

2017 97,060,013 129,805,102 0.75

GRAPHICAL REPRESENTATION

76
 PROPRIETARY RATIOS
0.9

0.8
0.79
0.7 0.75
0.6

0.5
0.53
0.4

0.3

0.2

0.1

0
2015 2016 2017

Interpretation

The proprietary ratio establishes the relationship between shareholders’

funds to total assets. It determines the long-term solvency of the firm. This
ratio indicates the extent to which the assets of the company can be lost
without affecting the interest of the company.

The shareholder’s funds include capital and reserves and surplus. The
reserves and surplus is increased due to the increase in balance in profit
and loss account, which is caused by the increase of income from services.

Total assets, includes fixed and current assets. The fixed assets are reduced
because of the depreciation and there are no major increments in the fixed
assets. The current assets are increased compared with the year 2016. Total
assets are also increased than precious year, which resulted an increase in
the ratio than old.

77
ACTIVITY RATIOS

WORKING CAPITAL TURNOVER RATIO:

The working capital turnover ratio measures how well a company is utilizing
its working capital to support a given level of sales. Working capital is
current assets minus current liabilities. A high turnover ratio indicates that
management is being extremely efficient in using a firm's short-term assets
and liabilities to support sales. Conversely, a low ratio indicates that a
business is investing in too many accounts receivable and inventory assets
to support its sales, which could eventually lead to an excessive amount of
bad debts and obsolete inventory.

(Amount in Rs.)

Working Capital Turnover Ratio

Year Income From Services Working Capital Ratio

2015 72,728,759 55,355,460 1.31

2016 55,550,649 44,211,009 1.26

2017 96,654,902 85,375,407 1.13

GRAPHICAL REPRESENTATION

1.35
WORKING CAPITAL TURNOVER RATIOS
1.3
1.31
1.25
1.26
1.2
1.15
1.1 1.13
1.05
1
2015 2016 2017

78
Interpretation

Income from services is greatly increased due to the extra invoice for
Operations & Maintenance fee and the working capital is also increased
greater due to the increase in from services because the huge increase in
current assets.

The income from services is raised and the current assets are also raised
together resulted in the decrease of the ratio of 2017 compared with 2016.

79
FIXED ASSETS TURNOVER RATIO:

Formula: Net sales/ fixed assets

(Amount in Rs.)

Fixed Assets Turnover Ratio

Year Income From Services Net Fixed Assets Ratio

2015 72,728,759 17,137,310 4.24

2016 55,550,649 15,056,993 3.69

2017 96,654,902 14,163,034 6.82

GRAPHICAL REPRSENTATION

FIXEDS ASSETS TURNOVER RATIOS

7
6.82
6

4
4.24
3 3.69

0
2015 2016 2017

80
Interpretation

Fixed assets are used in the business for producing the goods to be sold.
This ratio shows the firm’s ability in generating sales from all financial
resources committed to total assets. The ratio indicates the account of one
rupee investment in fixed assets.

The income from services is greatly increased in the current year due to the
increase in the Operations & Maintenance fee due to the increase in extra
invoice and the net fixed assets are reduced because of the increased charge
of depreciation. Finally, that effected a huge increase in the ratio compared
with the previous year’s ratio.

81
CAPITAL TURNOVER RATIO

(Amount in Rs.)

Capital Turnover Ratio

Year Income From Services Capital Employed Ratio

2015 72,728,759 70,231,061 1.04

2016 55,550,649 56,473,652 0.98

2017 96,654,902 97,060,013 1.00

GRAPHICAL REPRESENTATION

CAPITAL TURNOVER RATIOS

1.05

1.04
1.04
1.03

1.02

1.01

1
1
0.99

0.98
0.98
0.97

0.96

0.95
2015 2016 2017

82
Interpretation

This is another ratio to judge the efficiency and effectiveness of the

company like profitability ratio.

The income from services is greatly increased compared with the previous
year and the total capital employed includes capital and reserves &
surplus. Due to huge increase in the net profit the capital employed is
also increased along with income from services. Both are effected in the
increment of the ratio of current year.

83
CURRENT ASSETS TO FIXED ASSETS RATIO

(Amount in Rs.)

Current Assets To Fixed Assets Ratio

Year Current Assets Fixed Assets Ratio

2015 72,021,081 17,137,310 4.20

2016 91,328,208 15,056,993 6.07

2017 115,642,068 14,163,034 8.17

GRAPHICAL REPRESENTATION

CURRENT ASSETS TO FIXED ASSETS RATIOS

9

8
8.17

6
6.07

4
4.2

0
2015 2016 2017

84
Interpretation

Current assets are increased due to the increase in the sundry debtors
and the net fixed assets of the firm are decreased due to the charge of
depreciation and there is no major increment in the fixed assets.

The increment in current assets and the decrease in fixed assets resulted
an increase in the ratio compared with the previous year

85
PROFITABILITY RATIOS

GENERAL PROFITABILITY RATIOS

1. NET PROFIT RATIO

Formula: Net profit after tax/ Income from services

(Amount in Rs.)

Net Profit Ratio

Year Net Profit After Tax Income from Services Ratio

2015 16,929,227 72,728,759 0.23

2016 18,259,580 55,550,649 0.33

2017 40,586,359 96,654,902 0.42

GRAPHICAL REPRESENTATION

NET PROFIT RATIOS

0.45

0.4 0.42

0.35

0.3 0.33

0.25

0.2 0.23

0.15

0.1

0.05

0
2015 2016 2017

86
 Interpretation

The net profit ratio is the overall measure of the firm’s ability to turn each
rupee of income from services in net profit. If the net margin is inadequate
the firm will fail to achieve return on shareholder’s funds. High net profit
ratio will help the firm service in the fall of income from services, rise in cost
of production or declining demand.

The net profit is increased because the income from services is increased.
The increment resulted a slight increase in 2017 ratio compared with the
year 2016.

87
2. OPERATING PROFIT RATIOS

Formula: Operating income/ Income from services

(Amount in Rs.)

Operating Profit

Year Operating Profit Income From Services Ratio

2015 29,540,599 72,728,759 0.41

2016 31,586,718 55,550,649 0.57

2017 67,192,677 96,654,902 0.70

GRAPHICAL REPRESENTATION

OPERATING PROFIT RATIOS

0.8

0.7
0.7
0.6

0.57
0.5

0.4
0.41

0.3

0.2

0.1

0
2015 2016 2017

88
Interpretation

The operating profit ratio is used to measure the relationship between net
profits and sales of a firm. Depending on the concept, it will decide.

The operating profit ratio is increased compared with the last year. The
earnings are increased due to the increase in the income from services
because of Operations & Maintenance fee. So, the ratio is increased slightly
compared with the previous year.

89
3. RETURN ON TOTAL ASSETS RATIO

Formula: Net profit After Tax/ Total assets

(Amount in Rs.)

Return on Total Assets Ratio

Year Net Profit After Tax Total Assets Ratio

2015 16,929,227 89,158,391 0.19

2016 18,259,580 106,385,201 0.17

2017 40,586,359 129,805,102 0.31

GRAPHICAL REPRESENTATION

RETURN ON TOTAL ASSETS RATIO

0.35

0.3 0.31

0.25

0.2
0.19
0.15 0.17

0.1

0.05

0
2015 2016 2017

90
Interpretation

This is the ratio between net profit and total assets. The ratio indicates the
return on total assets in the form of profits.

The net profit is increased in the current year because of the increment in
the income from services due to the increase in Operations & Maintenance
fee. The fixed assets are reduced due to the charge of depreciation and no
major increments in fixed assets but the current assets are increased
because of sundry debtors and that effects an increase in the ratio
compared with the last year i.e. 2017.

91
4. RESERVES & SURPLUS TO CAPITAL RATIO

Formula: Reserves and surplus/Total Share Capital

(Amount in Rs.)

Reserves & Surplus To Capital Ratio

Year Reserves & Surplus Capital Ratio

2015 51,511,781 18,719,280 2.75

2016 37,754,372 18,719,280 2.02

2017 78,340,733 18,719,280 4.19

GRAPHICAL REPRESENTATION

RESERVES AND SURPLUS TO CAPITAL RATIOS

4.5

4 4.19

3.5

2.5 2.75

2
2.02

1.5

0.5

0
2015 2016 2017

92
Interpretation

The ratio is used to reveal the policy pursued by the company a very high
ratio indicates a conservative dividend policy and vice-versa. Higher the ratio
better will be the position.

The reserves & surplus is decreased in the year 2016, due to the payment of
dividends and in the year 2017 the profit is increased. So the increase in the
reserves & surplus caused a greater increase in the current year’s ratio
compared with the older.

OVERALL PROFITABILITY RATIOS

93
1. EARNINGS PER SHARE
Formula: Net profit After Tax/ No. of equity shares

(Amount in Rs.)

Earnings Per Share

Year Net Profit After Tax No of Equity Shares Ratio

2015 16,929,227 1,871,928 9.04

2016 18,259,580 1,871,928 9.75

2017 40,586,359 1,871,928 21.68

GRAPHICAL REPRESENTATION

EARNINGS PER SHARE RATIOS

25

20

15

10

9.04 9.75 21.68

0
2015 2016 2017

Interpretation

94
Earnings per share ratio are used to find out the return that the
shareholder’s earn from their shares. After charging depreciation and after
payment of tax, the remaining amount will be distributed by all the
shareholders.

Net profit after tax is increased due to the huge increase in the income from
services. That is the amount which is available to the shareholders to take.
There are 1,871,928 shares of Rs.10/- each. Due to the huge increase in net
profit the earnings per share is greatly increased in 2017.

2. PRICE EARNINGS (P/E) RATIO

Formula: Market price per share/Earning per share

95
(Amount in Rs.)

Price Earning (P/E) Ratio

Year Market Price Per Share Earnings Per Share Ratio

2015 37.52 9.04 4.15

2016 30.17 9.75 3.09

2017 51.85 21.68 2.39

GRAPHICAL REPRESENTATION

PRICE EARNINS RATIOS

4.5

4 4.15

3.5

3
3.09

2.5
2.39
2

1.5

0.5

0
2015 2016 2017

Interpretation

The ratio is calculated to make an estimate of application in the value of

96
share of a company.

The market price per share is increased due to the increase in the reserves
& surplus. The earnings per share are also increased greatly compared with
the last year because of increase in the net profit. So, the ratio is decreased
compared with the previous year.

97
 CH 7
FINDINGS

98
 Current ratio is decreasing as compare to the ratios of last years and it is
not up to this mark as per as rule of thumb is concerned. This shows
that company’s liquidity position is not so much good although Current
Asset more than Current Liabilities.
 Quick ratio is also not in such a sufficient position than the previous
year’s quick ratio.
 Current asset turnover ratio is increasing from 2015 – 2016 but it’s
decreased in the year of 2017.
 Working capital turnover ratio has increased in 2015to 2017.
 Debtor turnover ratio is deceased because debtors are decreasing due to
decreased in sales.
 Net profit of company going negative where gross profit is also coming
down but still its positive which states that company is still in a position
of profit.
 Company has more borrowed funds as comparing to cash fund or
business fund.
 Company is not maintaining its stocks properly as what we got from the
above data interpretation

99
 CH 8
LIMITATIONS

100
1. The study is being conducted under time and money constraints.
2. Due to shortage of time the study is conducted on very small scale i.e.
based upon material and information provided by the company.
3. I have faced a lot of problem in collecting the information about the
company because the company has refused to provide most of the
information being confidential in nature.

101
 CH 9
CONCLUSION

102
On the basis of above discussion I conclude that working capital
management is must be followed by every business of both level large as well
as small levels because it helps company to understand there financial
position as well working capital position in the market .

This analysis includes such kinds of tools which help whole company and
there all employees to position out there company in stock market properly.

Working capital management gives lots of knowledge about market as my

study gives lots of knowledge his company name TCS ION Patiala (Punjab).

After reading out this project report or go through of this project report I
conclude that the position of this company not so strong in the market but
it does not says that this company has no market value.

It has, as it sales are increased 7-8% in the last three years. As income of
this company is not crossed its breakeven point but it still going well in the
form of production and sales.

103
 CH 10
BIBLOGRAPHY

104
 [Link]
 [Link]
O&oq=4.+ABOSULTE+LIQUIDITY+RATIO&aqs=chrome..69i57.2906j0j
8&sourceid=chrome&espv=2&es_sm=93&ie=UTF-
8#q=WORKING+CAPITAL+TURNOVER+RATIOital-turnover-ratio
 [Link]
O&oq=4.+ABOSULTE+LIQUIDITY+RATIO&aqs=chrome..69i57.2906j0j
8&sourceid=chrome&espv=2&es_sm=93&ie=UTF-
8#q=WORKING+CAPITAL+TURNOVER+RATIO
 [Link]
to-calculate-absolute-liquid-ratio-or-cash-ratio-with-equations-test-of-
liquidity/67030/
 [Link]
 [Link]
statement-analysis/working-capital-869

105
 CH 11
ANNEXURES

106
Balance sheet of Tata In rupees crores
consultancy services

Mar17 Mar16 Mar15

12 moths 12 moths 12 months

EQUITIES AND LIABILITIES

SHAREHOLDER’S FUNDS

Equity share capital 197.04 195.87 195,87

Preference share capital 0.00 0.00 0.00

Total share capital 197.04 195.87 195.87

Revenues and Surplus 58669.82 45220.57 43.856.01

Total Revenues and Surplus 78340.73 37754.37 51511.78

Total Shareholders’ Funds 97060.01 56473.65 70231.06

NON-CURRENT LIABILITIES

Long term borrowing 50.06 64.71 89.69

Deferred tax liabilities (Net) 365.52 271.46 226.87

Other long term liabilities 591.15 722.15 690.44

Long term provisions 88.66 126.91 279.61

Total non- current assets 1095.39 1185.23 1286.61

CURRENT LIABILITIES

Short term borrowing 112.96 185.56 0.00

Trade payables 5369.90 6767.25 3977.55

Other current liabilities 4003.84 2491.47 2460.32

107
Short term provisions 8219.59 7019.35 5827.83

Total current liabilities 30266.66 47117.19 16065.62

ASSETS

NON-CURRENT ASSETS

Tangible assets 9689.22 7964.88 5887.09

Intangible assets 24.06 31.41 42.10

Capital work in progress 1641.84 2706.94 3047.53

Fixed assets 14163.03 15056.99 17137.31

Non-Current investments 2228.28 2651.23 5098.55

Deferred tax assets (Net) 465,83 303.47 273.58

Long term loans and advances 9750.92 8452.55 6875.74

Other non-current assets 572.52 524.68 1544.99

Total non-current assets 24372.67 22635.16 22769.38

CURRENT ASSETS

Current investment 21847.39 747.47 733.87

Inventories 8.99 12.34 8.57

Trade receivables 19058.20 17036.76 14471.89

Cash and cash equivalents 4806.37 16502.50 12566.26

Short term loan and advances 4675.78 3352.18 3688.12

Other current assets 2899.14 2778.89 3366.10

Total current assets 115642.06 91328.20 72021.08

Total assets 129805.10 106385.20 89158.39

108
OTHER ADDITIONAL
INFORMATION

CONTIGENT LIABILITIES,
COMMITMENTS

Contingent liabilities 19695.42 9161.54 10880.43

CIF VALUE OF IMPORTS

Raw materials 27.66 47.37 32.96

Stores, spares and loose tools 0.31 0.03 0.00

Capital goods 474.13 523.21 589.60

EXPENDITURE IN FOREIGN
EXCHANGE

Expenditure in foreign currency 29554.53 24745.56 20275.40

REMITTANCES IN FOREIGN
CURRENCIES FOR DVIDENDS

Dividend remittances in foreign 1366.16 2456.13 786.40

currency

EARNING IN FOREIGN
EXCHANGE

FOB value of goods 81193.85 70680.70 60634.96

Other earnings 690.88 1137.62 1625.88

BONUS DETAILS

Bonus equity share capital 155.90 155.90 155.90

NON-CURRENT INVESTMENTS

Non-current investments quoted - 2974.41 2151.32

109
market value

Non-current investments unquoted 2228.28 2271.34 4718.66

book value

CURRENT INVESTMENTS

Current investments quoted 20253.65 - -

market value

Current investments unquoted 1675.44 747.47 733.87

book value

110
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