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SUBMITTED BY
KURRA RANGA NAIK11502076
SECTION Q1529ROLL NO A21
Company: WAHID SANDHAR SUAGR Mill LTD
Presentation on Summer Training
“WORKING CAPITAL MANAGEMENT IN WAHID SANDHAR SUGARS LTD”
CONTENTS
INTRODUCATION COMPANY
OBJECTIVES OF THE STUDY
RESEARCH METHODOLOGY
DATA ANALYSIS/INTERPRETATION
SUGGECTIONS
CONCLUSION
WAHID SANDHAR SUGAR LTD. The Sugar Plant originally established in 1933 by Narang Group of Industries
which was later on taken over by Oswal Group in 1989.
The Plant was later on taken over by Wahid and Sandhar Group in the year 2000
Main Activities of Company The Company is mainly engaged in the business of manufacturing and sale of Sugar. At
present the capacity of the Plant is 5500 M.T. for crushing of sugar cane at Phagwara Sugarcane being the seasonal crop available only for 5 to 6 months.
List of Directors
S. Soukhbir Singh Sandhar S. S. Jaswinder Singh Bains s.s jarnail singh wahid s.s . sandeep singh ( chairman) (Vice-Chairman) ( Managing Director ) ( Director )
OBJECTIVES OF THE STUDYTo understand Planning and Management of Working Capital at Wahid Sandhar Sugar Ltd
To measure the financial soundness of the company by analyzing various ratios.
To determine the gross and net operating cycle of the unit
To know the future need of working capital in the running organization.
To suggest ways for better management and control of working capital at Wahid Sandhar Sugar Ltd
RESEARCH METHODOLOGY
Method of Data Primary Data as well as Secondary Data
Tools Used
Gross operating cycle and net operating cycle
Analysis through working capital ratios
Working capital managementWorking capital refers to that part of total capital which is used for carrying out the routine or regular business operations. In other words, it is the amount of funds used for financing the day-to-day operations
Working capital may be regarded as 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 the organization
CLASSIFICATION OF WORKING CAPITAL
Data AnalysisParticulars Year 2016
Rs in ‘000SalesCost of productionPurchasesAverage raw material stockAverage Working in progressAverage finished goods stockAverage creditorsAverage debtors
3000
2100
600
80
85
180
90
350
Data Analysis1. Raw material = Average raw material / Total raw material *365 = 80/600*365 =49 days
2. Working in progress = Working in progress / total cost of production 85/2100*365
=15 days
3. Finished goods = Average stock /total cost of production *365=180/2100 *365 =31 days
Data Analysis 4. Debtors = Average debtors / total creditors sales *365
= 350/3000 *365=43 days
5. Creditors = Average creditors / total purchase *365
=90/600 *365=55 days
Net operating cycles = 49+15+31+43-55 = 138 days – 55 days = 83 days
OPERATING CYCLE :
0204060
Gross net working capital
Days
Raw m
ateria
l stora
ge pe
riod
WIP Sto
rage P
eriod
Finish
ed Good
Stora
ge Per
iod
Debtor
collec
tion p
eriod
Credit
or Pa
ymen
t Peri
od
Operat
ing Cy
cle Pe
riod
020406080
Net oprtating cycle
Days
Calculation of Ratio
Gross Profit Ratio Net Profit Ratio05
1015202530
PROFIT RATIO
RATIO
Stock Turnover Ra-tio
Debror Turnover Ratio
Creditor Turnover Ratio
0
2
4
6
8
10
12 TURNOVER RATIO
Ratio (in time)
FINDINGS•The operating cycle of the company is 83 days.
• The company has raw material storage period is 49 days.
•Work in Progress storage period is 15 days.
•Finished goods storage period is 31 days.
•The debtor collection period is 43 days. It means sale are more on credit and company provide the 43 days allow to debtor or customer for make a payment.
•Creditor payment period is 55 days. It means company have purchase the goods on credit also and the supplier provide 55 days to the company for make a payment.
•So the operating cycle of the company is 83 days. The company operates 3 operating cycle in a year.
•The Gross Profit ratio is 25% of its sales it is good for the company.
•The net profit ratio is 20% of its sale and the company have only 5% indirect expenses.
•The stock turnover ratio is 3.07 times of its stock . so it helps to company to reduce the indirect expense. So there is no inventory ideal.
•The debtor turnover ratio is 10 so more goods are sold on credit and the debtor collection period is 43 days.
•The creditor turnover ratio is 6.67 so company is also buying the good on credit and the payment period is allowed by company is 55 days for make payment.
•So the payment period is less than the collection period so it helps to maintain the liquidity position of the company.
SUGGECTIONS
•For Wahid Sandhar sugar ltd the working capital management cycles is longer than the industry average however the following points should be above the indicial elements or working capital
•The stock of raw material is considerably higher than average. so there is a need for stock control produces to be reviewed
•The values of creditors is also above average the indicates that Wahid Sandhar sugar is delaying the payments of creditors beyond the credit period although this is an additions source of finance it may result in a higher cost of raw material or Loss of good will among the suppliers
CONCLUSION
Working capital management is of critical importance to all companies. Ensuring that sufficient liquid
resources are available to the company is a pre-requisite for corporate survival. Companies must strike a
balance between minimizing the risk of insolvency (by having sufficient working capital) with the need
to maximize the return on assets, which demands a far less conservative outlook.
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