Download - Ratio Analysis 1012
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A STUDY ON
DETERMINE THE FINANCIAL POSITION THROUGH RATIO ANALYSIS
WITH REFERENCE TO Y.S.R SPINNING AND WEAVING MILL PVT LTD.
A project report su!"tte# to
$NTU% &A&INADA
I' p(rt"())* +u)+"))!e't o+ t,e re-u"re!e'ts
For t,e A(r# o+ t,e #e/ree o+
MASTER OF 0USINESS ADMINISTRATION
Su!"tte# *
&. SURENDRA 0A0U
REGD.NO.12U23E1145
U'#er t,e /u"#('ce o+
G.GURUNATHAM M0A% MA LIT
SRI MITTAPALLI COLLEGE OF ENGINEERINGTu!!()(p()e!% Gu'tur6477788% AP% INDIA
9A++")"(te# to $NTU% &A&INADA:
CERTIFICATE
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T,"s "s to cert"+* t,(t t,"s project e't"t)e# ;( stu#* o' ;DETERMINE
THE FINANCIAL POSITION THROUGH RATIO ANALYSIS "' Y.S.R
SPINNING AND WEAVING MILL% "s ( o'(+"e# or< * &.SURENDRA0A0U u'#er !('(/e!e't /u"#('ce ('# su!"tte# to t,e #ep(rt!e't o+
us"'ess (#!"'"str(t"o'= SRI MITTAPALLI COLLAGE OF
ENGINEERING,T,u!!()(p()e!% Gu'tur "' p(rt"() +u)+"))!e't o+ t,e #e/ree
o+ Master of !s"#ess A$%"#"strat"o#.
I'ter'() e>(!"'er E>ter'()
e>(!"'er
He(# o+ t,e Dep(rt!e't
DECLARATION
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I ,ere * #ec)(re t,(t t,e project report e't"t)e ;( stu#* o' DETERMINE
THE FINANCIAL POSITION THROUGH RATIO ANALYSIS "' Y.S.R.
SPINNING AND WEAVING MILL PVT Lt$?% ,(s ee' prep(re# * !e "'p(rt"() +u)+"))!e't o+ re-u"re!e'ts +or t,e ((r# o+ t,e #e/ree o+ M(ster o+
0us"'ess A#!"'"str(t"o' "' SRI MITTAPALLI COLLAGE OF
ENGINEERING% T,u!!()(p()e!% Gu'tur.
I ()so #ec)(re t,(t t,e project or< "s t,e resu)t o+ !* o' e++orts ('#
t,"s ,(s ee' 'ot su!"tte# to ('* ot,er u'"@ers"t* +or t,e ((r# o+ ('* #e/ree
or #"p)o!(.
&.SURENDRA 0A0U%
Re/ 'o 12U23E11145.
AC&NOWLEDGEMENT
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It /"@es !e /re(t pressure% ,(@"'/ #o'e ( project o+ (' "'terest"'/ B te'# !* s"'cere /r(t"tu#e to(r#s !* p(re'ts% ,o ,(@e ()(*s e'cour(/e#
!e ('# /"@e /re(t support. T,e* ,(@e ee' ( /re(t source o+ !ot"@(t"o' "' t,e
co!p)et"o' o+ !* project.
Ao@e ()) I t,('< t,e ()!"/,t* +or !* success+u) co!p)et"o' o+ t,"s project.
CONTENTS
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C'a(ters s!+e)t
(a-e
C'a(ter/0 3.3 I'tro#uct"o'
3.7 S"/'"+"c('ce o+ t,e stu#*
3.8 Oject"@es o+ t,e stu#*
3. L"!"t(t"o's o+ t,e stu#*
3.4 Rese(rc, Met,o#o)o/*
C'a(ter/II PROFILE OF INDUSTRY 1COMPANY
7.3 I'#ustr* pro+")e
7.7 Co!p('* pro+")e
C'a(ter/III THEORITICAL FRAME WOR&
C'a(ter/IV DATA ANALYSIS 1 INTERPRETATION
C'a(ter/V FINDINGS 1 SUGGESTIONS
CONCLUSION
"*"o-ra('2
INTRODUCTION
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MEANING OF WOR&ING CAPITAL3
Worcess o+ curre't (ssets o@er curre't )"(")"t"es. It "s esse't"()
t,(t ( cert("' proport"o' o+ +u'#s e pe'#"ture. To )(r/e "'@est!e'ts "' curre't (ssets (++ect t,e +"r! pro+"t(")"t*. O' t,e ot,er
,('# too )"tt)e "'@est!e't c(' ()so t,e e>pe's"@e. A)) t,"s "'#"c(tes t,(t proper (ssets o+
or
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Def"#"t"o#;Wore#% ut t,e !ore co!!o' useo+ t,e c(p"t() "s to co's"#er "t (s t,e #"++ere'ce etee' t,e oo< @()ue o+ t,e curre't (ssets
('# t,e curre't )"(")"t"es.?
Ho/ )('#
NEED OF THE STUDY
Cas'
P!r)'ase of
Ra4 %ater"a*
Wor5/"#/
Pro-ress
F"#"s'e$ Sto)5
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To oser@e !("'t("' curre't (ssets B curre't )"(")"t"es to ('()*e t,e or
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T,e Worpe'#"ture ,"c, co'ce'tr(tes o' rout"'e
or/('"(t"o' (ct"@"t"es.
It re@e()s t,e (rou'# t,e per+or!('ce o+ #(*6to6#(* (ct"@"t"es.
T,e (!ou't o+ or
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To e@()u(te t,e s,ort ter! ('# )o'/ ter! so)@e'c* pos"t"o' o+ t,e co!p('*.
To ('()*e t,e #et e-u"t* co!pos"t"o' o+ t,e co!p('*.
To stu#* t,e co!p('*=s pro+"t(")"t* pos"t"o'.
To out)"'e t,e tec,'"-ues o+ e@()u(t"'/ t,e per+or!('ce o+ or
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T,e stu#* ,(s ee' co'#ucte# "' t,e or/('"(t"o' to e>(!"'e Wor
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T,e stu#* (s !("')* (se# o' (ccou't"'/ #(t(% ,"c, ere recor#e# (t t,e e'# o+
t,e *e(r ('# e c(' 'ot ter'() +(ctors o' t,(t e++ect t,e +"'('c"() per+or!('ce o+ t,e co!p('* ,(@e 'ot
ee' /"@e' !uc, "!port('ce.
L"!"t(t"o's "' or
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TE8TILE INDUSTRY3
T,e te>t")e "'#ustr* occup"es ( u'"-ue p)(ce "' our Cou'tr* .O'e o+ t,e
e(r)"est to co!e "'to e>"ste'ce "' I'#"(% "t (ccou'ts or 3 o+ t,e tot() I'#ustr"() pro#uct"o'%
co'tr"utes to 'e(r)* 81 o+ t,e tot() e>ports ('# "s t,e seco'# )(r/est e!p)o*!e't /e'er(tor
(+ter (/r"cu)ture.
I'#"( co'tr"utes to (out 74 s,(re "' t,e or)# tr(#e o+ cotto' *(r'. I'#"(%
t,e or)#=s t,"r#6)(r/est pro#ucer o+ cotto' ('# t,e seco'#6 L(r/est pro#ucer o+ cotto' *(r's
('# te>t")es% "s po"se# to p)(* (' "'cre(s"'/)* "!port('t ro)e "' /)o() cotto' ('# te>t")e
!(rt")e +"ers ('#
*(r's. I'#"( "s o'e o+ t,e )(r/est co'su!ers o+ cotto' "' t,e or)#% r('t")e ('# (pp(re) e>ports o+ US J 41 "))"o'
* 7131 o+ ,"c, t,e s,(re o+ /(r!e'ts ")) e US J 74 "))"o'. T,e !("' !(rt")es ('# (pp(re)s (re USA% UAE% U&% Ger!('*% Fr('ce% It()*% Russ"(% C('(#(%
0('/)(#es,% ('# $(p('.CURRENT SCENARIO3
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De@e)op"'/ cou'tr"es "t, ot, te>t")e ('# c)ot,"'/ c(p(c"t* !(* e ()e to prosper
"' t,e 'e co!pet"t"@e e'@"ro'!e't (+ter t,e te>t")e -uot( re/"!e o+ -u('t"t(t"@e "!port
restr"ct"o's u'#er t,e !u)t"6+"er (rr('/e!e't 9MFA: c(!e to (' e'# o' 3st $('u(r*% 7114
u'#er t,e Wor)# Tr(#e Or/('"(t"o' 9WTO: A/ree!e't o' Te>t")es ('# C)ot,"'/.
T,e !oo# "' t,e I'#"(' te>t")e "'#ustr* /"@e' t,e p,(se out o+ t,e -uot( re/"!e o+ t,e
!u)t"6+"er (rr('/e!e't 9MFA: "s upe(t "t, 'e st(te!e't )o"'/ "' ('# "'cre(se# or#ers
+or t,e "'#ustr* (s ( resu)t o+ ,"c, c(p(c"t"es (re +u))* oot")e "'#ustr* "' t,e )(st +"@e *e(rs. N"'e te>t")e !(jors "'@este# Rs.7% 11
crores ('# p)(' to "'@est ('ot,er Rs.% 11 crores.
Furt,er% I'#"(s cotto' pro#uct"o' "'cre(se# * 4K o@er t,e )(st +"@e *e(rs ('# 8
!"))"o' (##"t"o'() sp"'#)es ('# 81%111 s,utt)es6)ess )oo!s ere "'st())e#. T,e "'#ustr*
e>pects "'@est!e't o+ Rs.3% 1%111 crores "' t,"s sector "' t,e post6MFA p,(se.
A V"s"o' 7131 +or te>t")es +or!u)(te# * t,e /o@er'!e't (+ter "'te's"@e "'ter(ct"o'
"t, t,e "'#ustr* ('# E>port Pro!ot"o' Cou'c")s to c(p"t()"e o' t,e upe(t !oo# ("!s to
"'cre(se I'#"(s s,(re "' or)#s te>t")e tr(#e +ro! t,e curre't to 5 * 7131 ('# to
(c,"e@e e>port @()ue o+ US J 41 "))"o' * 7131 V"s"o' 7131 +or te>t")es e'@"s(/es /rot, "'
I'#"(' te>t")e eco'o!* +ro! t,e curre't US J 8K "))"o' to J 54 "))"o' * 7131 re(ct"o' o+
37 !"))"o' 'e jos "' t,e te>t")e sector ('# !o#er'"(t"o' ('# co'so)"#(t"o' +or cre(t"'/ (/)o())* co!pet"t"@e te>t")e "'#ustr*.
T,ere ")) e opportu'"t"es (s e)) (s c,())e'/es +or t,e I'#"(' te>t")e "'#ustr* "' t,e
post6MFA er(. 0ut I'#"( ,(s '(tur() (#@('t(/es ,"c, c(' e c(p"t()"e# o' stro'/ r(
!(ter"() (se 6 cotto'% !('6!(#e +"ers% jute% s")
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T,e sce'(r"o o+ "'@est!e't "' t,e I'#"(' te>t")e "'#ustr* st(rte# to c,('/e (+ter t,e
"'cept"o' o+ t,e spec"() ;Te>t")e P(c
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I'#"(' "'#ustr"() sector ,"c, "s (t prese't re@o)@"'/ (rou'# . Te>t")e sectors co'tr"ut"o'
to GDP o+ I'#"( "s ()so s"/'"+"c('t ,"c, curre't)* (!ou'ts to . It ,(s ee' +ou'# out t,(t
I'#"(' te>t")e "'#ustr* s o'e o+ t,e !(jor sources o+ +ore"/' e>c,('/e e(r'"'/s +or I'#"( ('#
co'tr"utes (rou'# 363K.Fro! t,e (o@e #"scuss"o' "t "s -u"te c)e(r to us t,(t t,e !(rp('#"'/ p"e. W"t,
"'cre(s"'/ #e!('# +or t,e pro#ucts o+ I'#"(' Te>t")e I'#ustr*% 'e p)(*ers (re ju!p"'/ "' t,e
)e(/ue to /et ( s)"ce o+ t,e pro+"t()e p"e ('# t,e ()re(#* e>"st"'/ te>t")e !"))s (re r("s"'/ t,e"r
c(p(c"t* +or "'cre(s"'/ t,e"r supp)*. He'ce% t,e e>p('s"o' process o+ t,e #o!est"c "'#ustr* "s
()so 'ot +(r e,"'#. T,us% "t c(' e s("# t,(t t,e ,o)e I'#"(' eco'o!* "s o' ( /ro"'/ tre'#
,"c, ,(s "ts o@"ous "!p(ct o' e@er* poss")e sector "'c)u#"'/ t,e I'#"(' I'#ustr*.
I'#"(' Te>t")e I'#ustr* "s /o"'/ t,rou/, ( !(jor c,('/e "' "ts out)oo< (+ter t,e e>p"r*
o+ Mu)t" F"er A/ree!e't (s "'tro#uce# "' t,e *e(r 32K (s ( s,ort ter! !e(sure #"recte#
to(r#s pro@"#"'/ ( )"!"te# t"!e per"o# to t,e #e@e)ope# cou'tr"es +or (#just"'/ t,e"r te>t")e
"'#ustr"es "' (ccor#('ce "t, t,(t o+ t,e #e@e)op"'/ cou'tr"es. T,e te>t")e "'#ustr"es (re
c,(r(cter"e# * t,e"r )(or "'te's"@e '(ture o+ co!!o#"t* pro#uct"o'. A@(")(")"t* o+ surp)us
)(or "s (u'#('t "' t,e #e@e)op"'/ cou'tr"es. T,ese cou'tr"es ,(@e co!p(r(t"@e (#@('t(/e "'
t,e pro#uct"o' o+ te>t")e re)(te# pro#ucts ('# ,e'ce (re ()e to supp)* /oo#s (t ( @er* )o
pr"ce.T,e (s"c "#e( e,"'# t,"s po)"c* (s to er(#"c(te ()) sorts o+ -uot( s*ste! +ro! t,e
(pp(re) ('# te>t")e "'#ustr* ()) o@er t,e or)# so t,(t ( )e@e) p)(*"'/ +"e)# cou)# e
est()"s,e#.
No% t,"s er( (+ter MFA "s e"'/ )oo
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He'ce "t "s e@"#e't t,(t t,e perce't(/e "'cre(se "' t,e +(r"c te>t")e pro#uct #ur"'/ t,e per"o#
7116711K('# 711567112 ,(s see' ( r"se o+ (rou'# 3.8K ,ere(s "t (s o')* K.4 #ur"'/
71167114 ('# 7116711K.
NATIONAL TE8TILE POLICY3
3. T,e N(t"o'() Te>t")e Po)"c* (s +or!u)(te# porter o+ c)ot,"'/.
8. M("'te'('ce o+ ( )e(#"'/ pos"t"o' "' t,e #o!est"c !(r
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a. &a(a to *"#t &(p( 9()so t")e !"))s% or s,"ppe# to +ore"/' cou'tr"es.
). Note T,e cotto' see# "s #e)"@ere# to ( see# stor(/e (re( +ro! ,ere "t "s )o(#e# "'to
truc
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II. Pro$!)t"o# of Cotto# See$ O"*3
Process"'/ o+ cotto'see# "' !o#er' !"))s "'@o)@es ( 'u!er o+ steps. T,e* (re (s
+o))os
T,e +"rst step "s "ts e'tr* "'to t,e s,(
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III. Pro$!)t"o# of Cotto#see$ Mea*9Ca5e9&a(as5'a**"3
&(p(s
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O+ t,e '"'e cotto' pro#uc"'/ St(tes "' I'#"(% (@er(/e *"e)#s (re ,"/,est "' Pu'j( ,ere !ost
o+ t,e cotto' (re( "s "rr"/(te# 0ut t,e *"e)#s o+ cotto' "' I'#"( (re )o% "t, (' (@er(/e *"e)#
o+ 418 port "s C,"'(. T,e ot,er !(rports. As ( resu)t o+ t,ese% 'o t,e e>porters (re 'ot re-u"re# to ot("' ('*
cert"+"c(te +ro! t,e Te>t")e Co!!"ss"o'er o' t,e re/"str(t"o'% ())oc(t"o'% -u()"t* ('# -u('t"t*
o+ e>port. I'#"( e>porte# (rou'# 74 per ce't cotto' #ur"'/ 7115612 ('# "t "s est"!(te# 'e(r)*
7 per ce't e>porte# to C,"'(.
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Dur"'/ t,e *e(r 7115612 t,e pr"ces o+ I'#"(' cotto' "' e(r)* p(rt o+ t,e se(so' e"'/ )oer
t,(' t,e "'ter'(t"o'() pr"ces% ,(# ee' (ttr(ct"@e to +ore"/' u*ers ('# t,ere (s /oo#
#e!('# +or I'#"(' cotto'% espec"())* S6% H6 ('# 0u''*% ,"c, ,(# resu)te# "' sust("'e#
cotto' e>ports% ,"c, (re est"!(te# (t 44.11 )(port()e pro#ucts )"tr( Lo'/ st(p)e cotto's% )"
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7.7 COMPANY PROFILE
YARRAM SRIDHAR REDDY SPINNING MILLS"s ( Tec,'ocr(t project set up
* peop)e ,o ere "' e!p)o*!e't e(r)"er u')"
(re( ('# /o@er'!e't o+ A'#,r( Pr(#es, ,(s ( re)"()e sus"#* to t,ose ,o ,(@e "'st())e#
"'#ustr"es "' t,"s #"str"ct.
T,e co!p('* "' sett"'/ up sp"''"'/ !"))s "t, (' UN st())e# c(p(c"t* o+ 2111
sp"'#)es. T,e project ,(s ee' +"'('ce# * t,e S.0.I "t, p(rt"c"p(t"o' "' -u()"t* s,(re c(p"t()
('# "s ()so +"'('ce# * t,e Ce'tr() F"'('c"() I'st"tut"o' S.0.I.% T,e cost o+ t,e project (s
(rou'# 8.4 crores ('# t,e tur' o@er or t,e co!p('* "s (rou'# K crores. T,"s +(ctor* ")) /o (
)o'/ (* to "!pro@e t,e )"@"'/ co'#"t"o's o+ t,e poor ('# e(per"e'ce "' cotto' /("'"'/ !")) +ro! ( !o#est 71%111 sp"'#)es% t,e sp"'#)e
c(p(c"t* to#(* ,(s "'cre(se# to 74%111. T,e S(#(s"@pet u'"t (ccou'ts +or 1%111 sp"'#)es
,")e t,e G('(p(@(r(! p)('t (ccou'ts +or t,e re!("'"'/ 71%111 sp"'#)es. I' t,e course o+
t"!e t,e co!p('* ,(s /("'e# 'ot o')* (' ISO 2113 cert"+"c(t"o' ut ()so t,e st(tus o+ ('
e>port ,ouse. I' t,e *e(r 71167114 t,e co!p('* ,(# re/"stere# ( tur'o@er o+ RS.341 crores.
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T,e co!p('* "s e)) est()"s,e# "' t,e !(rport ,ouse.
We ,(@e (c,"e@e# ( /re(t ,e"/,t o+ success #ue to t,e ,(r# or< o+ t,e c,("r!(' ('#
MR. Y.SRINIVASULU REDDY% t,e !('(/"'/ #"rector ,(@e ( ,"/,)* sper"e'ce ,(@e ( stro'/ "'+r(structur() (se% ,"c, "s e))
e-u"ppe# "t, t,e (#@"se. We ()(*s e'#e(@or to pro@"#e t,e est o+ (re +(r"cs to our
custo!er c,ec< t,e -u()"t* co'te't o+ t,e +(r"c.
We (re e'/(/e# "' t,e !('u+(ctur"'/ o+ "#e r('/e o+ +"'e cotto' +(r"cs ,(@e (
re!(r
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e(@"'/ !"))s P@t. Lt#.% tur' "' to o'e o+ t,e 311 cotto' *(r's to !(* #o!est"c ('#
e>porte# or"e'te# e(@"'/ !"))s cou'tr*.
VISION
T,e co!p('* ,(s @"s"o' to e>ce) "' ()) +"e)# o+ te>t")e "'#ustr* pro#uce
(s"s.
We ")) e "'te'se)* custo!er +ocuse# ('# ")) o++er pro#ucts pro@"#e t,e est
@()ues +or our custo!ers.
MISSION
To !('u+(cture ( ,"/, -u()"t* *(r' t,ere* "t, st('#"'/ co!pet"t"@e'ess.
De@e)op"'/ ( )o'/ te(! re)(t"o's,"p "t, our custo!ers ('# supp)"ers.
To use )(test tec,'o)o/"c() str(te/"es #ur"'/ pro#uct"o' t,ere * +or (ppro(c,.
To pro@"#e ( s(+e% +u)+"))"'/ ('# re(r#"'/ or< e'@"ro'!e't.
Ser@"c"'/ ('# support"'/ t,e co!"t"es.
PRODUCTION
T,e Te>t")es Sp"''"'/ S*'t,et"c ('# )e'#e# "'#ustr* "s ,"/,)* +r(/!e'te# ('# "'
(##"t"o' to t,e est()"s,e# p)(*er t,ere (re !('* u'or/('"e# p)(*ers t,(t oper(te "' t,e
"'#ustr*. T,e c(p(c"t"es (re "'terc,('/e()e +or sp"''"'/ '(tur() +"er ('# !('!(#e +"er% so
#e+"'"t"@e co!p(r()e "'+or!(t"o' o' co!pet"tors oper(t"'/ "' '(tur() +"ers ('# !('!(#e
+"ers "s 'ot pu)"c)* (@(")()e. A)so PSM oper(tes "' ( custo!er or#er !(r
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MANUFACTURING PROCESS3
R( !(ter"()6Cotto'
COTTON3
T,ere "s 'o pro)e! "' t,e (@(")(")"t* o+ t,e re-u"s"te -u('t"t* o+ r( !(ter"() ('#
t,e co!p('* "s ,(@"'/ re/u)(r supp)"er "t, )o'/ st('#"'/ re)(t"o's,"p +or !eet"'/ "s
re-u"re!e'ts. T,e re-u"re!e'ts o+ t,e r( !(ter"() (re est"!(te# (ccor#"'/ to t,e or#ers "'
,('# ('# pre#"cte# !(r
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u()"t* "+ "'te/r() to e@er*t,"'/ (t Y.S.R. e (#opt ,o)"st"c -u()"t* (ssure "'te/r(te#
s*ste! ,"c, co@ers t,e e't"re pro#uct"o' process. A)) )ot /"@"'/ to !">"'/ e e)"e@e
-u()"t* "s ( co't"'u() process. W"t, ( +ocus c)e(r)* ( #e)"@er ('# ser@"ces% e "'te/r(te to
co'st('t)* "''o@(te ('# e>ce). As ( (ssure# to top 'otc, -u()"t* t,(t "s co's"ste't (cross our
pro#uct r(/e.
VALUE
0* ( c)e(r co!pre,e's"o' o+ t,e !(r
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(se# o' t,e !(ter"() use#% +"er )e'/t, ('# ()"/'!e't% -u('t"t* o+ +"er use# ('# #e/ree o+
t"st. T,e e(r)"est sp"''"'/ pro()* "'@o)@e# s"!p)* t"st"'/ t,e +"ers "' t,e ,('#. L(ter
t,e use o+ st"c< to ,e)p t"st t,e +"er (s "'tro#uce#. Drop sp"''"'/ "'@o)@es t,e use o+ (
st"c< "t, ( ,or) or e"/,t to st(")"e t,e sp"''"'/ o+ t,e st"c
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AWARDS AND RECOGNITIONS
Mr. Yerr(! Sr"#,(r Re##* st(rte# ,"s us"'ess (s cotto' co!!"ss"o' '(t"@e
p)(ce I#upu)(p(#u% I'
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"s ()so #eter!"'e# ;res"#u() +ro! t,e #ec"s"o' just '(!e? +or e>(!p)e% "+ ( +"r! ,(s )(r/e
(ccu!u)(t"o' o+ +"'"s,e# /oo#s "'@e'tor*% "t !(* ,(@e to pro@"#e !ore )"er() cre#"t ter!s or
s,o )(>"t* "' cre#"t ter!s or s,o )(>"t* "' cre#"t co))ect"o'.
S"!")(r)*% "+ ( co!p('* "s +(c"'/ )"-u"#"t* cru'c,% "t !uc, ,(@e to o++er
/e'erous #"scou'ts.
FACTORS INFLUENCING WOR&ING CAPITAL RE>UIREMENTS
T,e or
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. Prof"ts *ee*s3
A co!p('* c(rr*"'/ ,u/e (!ou't o+ pro+"t c(' (## to t,e or
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c(p"t(). To c(rr* o' t,e us*'ess% cert("' !"'"!u! )e@e) o+ orUACY OF WOR&ING CAPITAL3
Wor
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A#e-u(te orp)o"t +(@or()e !(r
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NEED FOR WOR&ING CAPITAL MANAGEMENT3
For t,e purpose o+ r( !(ter"()
To p(* (/es ('# s()(r"es.
To "'curre# #(*6to6#(* e>pe'ses ('# o@er ,e(#s costs% suc, (s +ue)% poer ('# o++"ce
e>pe'ses etc.%
To !eet t,e se))"'/ costs (s p(cpecte# to '(ture +or p(*!e't "t, "' ('
(ccou't"'/ *e(r ('# "'c)u#e cre#"tors% 0P ('# out st('#"'/ e>pe'ses. Net or
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SOURCES OF WOR&ING CAPITAL RE>UIREMETS3
T,e source o+ ore#
source ('# @(r"()e source t,e* (re (s +o))os
A. F"e$ So!r)e3
S,(res.
Dee'tures
Pu)"c Depos"ts
P)(/u"'/ (c< o+ pro+"ts.
Lo('s +ro! +"'('c"() "'st"tut"o's.
. Var"a*e So!r)e3
Co!!erc"() ('pe'ses
Co%(os"t"o# of Wor5"#- Ca("ta*3
Wor
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Goa*s of Wor5"#- Ca("ta*3
0. M"#"%"at"o# of R"s53
T,e se)ect"o' o+ "ts source o+ +"'('c"'/ p(*()es ('# ot,er S,ort Ter! L"(")"t"es !(*
"'@o)@e re)(t"@e)* )o costs. T,e +"r! !ust e'sure t,(t t,ese 'e(r ter!s o)"/(t"o's #o 'ot
eco!e e>cess"@e co!p(re# to t,e Curre't Assets o' ,('# to p(* t,e!. T,e !(tc,"'/ o+
(ssets ('# )"(")"t"es (!o'/ curre't (ccou'ts "s ( t(s< o+ !"'"!""'/ t,e r"s< o+ e"'/ u'()e
to p(* "))s ('# ot,er o)"/(t"o's.
7. Co#tr"!te to Ma"%""#- F"r%s Va*!e3
T,e +"r! ,o)#s Wor"!"e t,e @()ue o+ t,e +"r!.
?. Est"%at"o# of Wor5"#- Ca("ta* Re:!"re%e#ts3
I' or#er to #eter!"'e t,e (!ou't o+ Worp('s"o' (out e(c, o+ t,ese +(ctors ,(s ()re(#* #"scusse# (o@e.
0es"#es t,"s% F"'('ce M('(/er c(' (pp)* ('* o'e o+ t,e +o))o"'/ tec,'"-ues% +or (ssess"'/
t,e Wor
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"= Per)e#ta-e of Sa*es Met'o$3
It "s ( tr(#"t"o'() ('# s"!p)e !et,o# o+ #eter!"'"'/ t,e )e@e) o+ Wor
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Aera-e Wor5/"#/(ro-ress I#e#tor2
W //////////////////////////////////////////////////
Aera-e Cost of Pro$!)t"o# (er $a2
Aera-e F"#"s'e$ Sto)5 I#e#tor2
F //////////////////////////////////////////////////////
Aera-e Cost of -oo$s so*$ (er $a2
Aera-e oo5 Dets
D /////////////////////////////////////////////////////
Aera-e Cre$"t Sa*es (er $a2
Aera-e Tra$e Cre$"tors
C /////////////////////////////////////////////////////
Aera-e Cre$"t P!r)'ases (er $a2
Nu!er o+ oper(t"'/ #(*s "' ( c*c)e "s #"@"#"'/ 84 #(*s. T,e tot()
oper(t"'/ e>pe'#"ture "' t,e *e(r% ,e' #"@"#e# * t,e No. o+ oper(t"'/ c*c)es "' ( *e(r "))
/"@e t,e (@er(/e (!ou't o+ Wor
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OPERATING CYCLE OF WOR&ING CAPITAL MANAGEMENT
O(erat"#- C2)*e
It re+ers to t,e t"!e #ur(t"o' re-u"re# to co'@ert s()es (+ter t,e co'@ers"o' o+
resources "'to "'@e'tor"es% "'to c(s,. T,"s c*c)e "'@o)@es 8 p,(ses.
Ac-u"s"t"o' o+ resources6
It re+ers +ro! suc, (s r( !(ter"()% )(our% poer ('# +ue) etc.
M('u+(cture o+ t,e pro#uct6
It "'c)u#es co'@ers"o' o+ r( !(ter"() "'to or< "' pro/ress "'to +"'"s,e#
/oo#s.
S()e o+ t,e pro#uct6
It re+ers +ro! e"t,er +or c(s, or o' cre#"t s()es cre(te (ccou'ts rece"@()e
+or co))ect"o'
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STATEMENT SHOWING CHANGES IN WOR&ING CAPITAL FOR THE
YEAR
7@/7
PARTICULARS 7@ 7 INCREASE DECREASE
CURRENT
ASSETS
I'@e'tor"es 38128835 317K713 2885K58 6
Su'#r* #etors 355KK13 84KK5K 7K5185 6
C(s, B ('< ()('ce 31K474 31547 6 355558
Lo('s B (#@('ces 8883173 4KK773 74811
Tota* C.A
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CURRENT
ASSETS
I'@e'tor"es 317K713 3425K142 32425328 6
Su'#r* #etors 84KK5K K5K45K 87855151 6
C(s, B ('< ()('ce 31547 54558K 6 3525324
Lo('s B (#@('ces 4KK773 3117521 7554 6Tota* C.A
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LIAILITIES
Ot,er )"(")"t"es 333K323 3854818 6 727337
Pro@"s"o's 3574111 827111 6 3548K111
Tota* C.L
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STATEMENT SHOWING CHANGES IN WOR&ING CAPITAL FOR THE
YEAR
7/70
PARTICULARS 7 70 INCREASE DECREASE
CURRENT
ASSETS
I'@e'tor"es 37273841 44K8K535 34535 6
Su'#r* #etors 317821 38K7K12 827134 6
C(s, B ('< ()('ce 771377 33834822 238433K8 6
Lo('s B (#@('ces 3438K7342 7757KK7 K21718 6
Tota* C.A
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STATEMENT SHOWING CHANGES IN
GROSS WOR&ING CAPITAL 1 NET WOR&ING CAPITAL
(art")!*ar
s
7 7B 7J 7K 7 70
C!rre#t
assets
I'@e'tor"es 317K71
3
3425K142
35221384
1
7514817
8
3727384
1
44K8K535
Su'#r*
Detors
84KK5K K5K45K 383123
8
3755854
2
31782
1
38K7K12
C(s, B0('UID ASSETS CURRENT
LIAILITIES
RATIO
71167114 3315441 37188K14K 1.24
71146711 35K28371 381352323 3.
7116711K 728275KK 3K435818 3.5
711K67115 321253713 734432 1.52
711567112 7K4K51874 35825K821 3.41
711267131 K52474K 374KK354 8.53
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I#ter(retat"o#3 T,e )"-u"# r(t"o +or t,e *e(r 71167114 "s 1.24. It (s "'cre(se# to 8.53 "' t,e *e(r
711267131. T,e co!p('* !("'t("'"'/ /oo# r(t"o.
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WOR&ING CAPITAL RATIO3
T,"s R(t"o !(
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I#ter(retat"o#3
T,e or
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NET WOR&ING CAPITAL RATIO3
T,e #"++ere'ce etee' Curre't Assets ('# Curre't L"(")"t"es.
Net Wor5"#- Ca("ta* Rat"o Net Wor5"#- Ca("ta*
Net assets
Year 7 7B 7J 7K 7 70
Curre'tAssets
74551243 8K588K3 5857577K 4524217 35K13K4 31888774
Curre't
L"(")"t"es
37188K14K 381352323 3K435818 734432 35825K821 374KK354
Net
Wor5"#-
Ca("ta*
0?@@?K@ 70JB@@7? ?K@7@ ?J@K?B@? 7?@J0@7K 0B7@
F">e#
Assets
8444773 2741 41458557 5448437 7418 5KK1255
Net
Assets
@0B0? J00KKK K0@7@KJBB KBB?J0 BB077J70 0J??B77K
NWC
R(t"o
1.7K 1.83 1.85 1.8 1.84 1.4K
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I#ter(retat"o#3
T,e 'et or
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It c(' e use# +or e# (ssets
!(* re'#er co!p(r"so' o+ +"r!=s per+or!('ce o@er !e('"'/)ess. T,ere+ore /ross +">e# (ssets
!(* e use# +or ( !e('"'/+u) co!p(r"so'
F"e$ Assets T!r# Oer Rat"o Sa*es
F"e$ Assets
YEAR SALES FI8ED ASSETS RATIO
71167114 4153338 8444773 3.8
71146711 K8K8474K 2741 3.2
7116711K 3124357 41458557 7.3K
711K67115 387K873 5448437 7.K
711567112 3844812 7418 8.35
711267131 3822524 5KK1255 7.38
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I#ter(retat"o#3
T,e +">e# (ssets tur' o@er r(t"o (s 3.8 "' *e(r 71167114. It ,(s "'cre(se# 7.38 "' t,e
*e(r 711267131 t,e *e(r 711267131 "s recor#e# ,"/, "'@e'tor* tur' o@er r(t"o "t "s 7.38. It
s,os /oo# per+or!('ce o+ t,e co!p('*.
DETORS TURN OVER RATIO3
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It "s t,e r(t"o o+ s()es ('# (@er(/e #etor=s. F"r! s()es /oo#s% +or c(s, ('# cre#"t
"s use# (s !(r
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I#ter(retat"o#3
I' t,e *e(r o+ 711614 t,e #etors tur'o@er r(t"o (s 31.2K% I' 711461 "t #ecre(se# to
2.8% I' 71161K "t #ecre(se# to 5.87% I' 711K615 "t "'cre(se# to 31.7% I' 7115612 "t
"'cre(se# to 38.7% I' 7112631 "t #ecre(se# to 31.K.
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I#e#tor2 "%(a)t o# 4or5"#- )a("ta* 3
YEARS Working Capital INVENTORY
2004-05 134543894 140272401
2005-06 217644523 159870594
2006-07 308409924 189901350
2007-08 374083643 280530263
2008-09 234714285 142921350
2009-10 910565240 557378168
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I#ter(retat"o#3
Co!p('* !("'t("' !"'"!u! stoc< )e@e)s e>cept 7115612.0ec(use "'@e'tor* stor(/e
cost ")) e ,"/, o'ce t,e co!p('* #o'e su++"c"e't s()es (t !"'"!u! co))ect"o' per"o#. T,e'
/et t,e !ore pro+"ts.
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Detors "%(a)t o# 4or5"#- )a("ta*3
years working capital Debtors
2004-05 134543894 46357787
2005-06 217644523 78745867
2006-07 308409924 131609613
2007-08 374083643 128834859
2008-09 234714285 102346940
2009-10 910565240 137267096
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I#ter(retat"o#3
T,e Detors "s #"rect)* proport"o'(te to 'etor
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Sa*es I%(a)t o# Wor5"#- Ca("ta*3
years working capital sales
2004-05 134543894 508611613
2005-06 217644523 737352457
2006-07 308409924 1095641682
2007-08 374083643 1342763421
2008-09 234714285 1355360694
2009-10 910565240 1463998945
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I#ter(retat"o#3
S()es ('# or
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FINDINGS
T,e perce't(/es o+ "'cre(s"'/ curre't (ssets ere !ore t,(' t,e "'cre(s"'/
perce't(/e "' curre't )"(")"t"es. It te))s t,(t t,e +"r! !("'t("'"'/ ( /oo# or
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SUGGESTIONS
As t,e stu#* oser@e# t,e curre't (ssets pos"t"o' (s "'cre(se# ()) t,e +"@e *e(rs "t "s
su//este# to t,e co!p('* to !("'t("' proper curre't (ssets +or etter s,ort ter! +u'#
!('(/e!e't.
T,e +">e# (ssets tur'o@er r(t"o "s "' ( s(t"s+(ctor* pos"t"o' "t "s su//este# to t,e
co!p('* to "!pro@e t,e +">e# (ssets tur'o@er r(t"o +or e++ect"@e ut")"(t"o' o+ t,e
+">e# (ssets.
T,e co!p('* s,ou)# re#uce t,e oper(t"'/ e>pe'ses to "'cre(se t,e pro+"t(")"t* o+ t,e
+"r!.
T,e or
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CONCLUSION
A+ter 1 D(*s o+ M* S"'cere Wor< (t Y.S.R sp"''"'/ M"))s Pr"@(te L"!"te# Is
F"'('c"() A@er(/e.
I' H('#)"'/ o+ t,e F"'('c"() St(te!e'ts Pro+ess"o'()"s! M(* 0e E'cour(/e.
T,e Co!p('*=s O@er()) Pos"t"o' Is S(t"s+(ctor*.
Dur"'/ M* Project Wor< I H(@e Got Goo# E>per"e'ce Re/(r#"'/ t,e Y.S.R sp"''"'/
M"))s Pr"@(te L"!"te#.
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ILIOGRAPHY
A!t'or Na%e T"t*e of t'e oo5
I.M.P('#e* F"'('c"() M('(/e!e't
Pr(s(''( C,('#r( F"'('c"() M('(/e!e't
G.Pr(s(# Accou'ts +or M('(/ers
A''u() Reports o+ YSR SPINNING MILLS
Wes"te
."c!te>.co!
./oo/)e.co!