relianc working capital

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OBJECTIVES

The research has been undertaken with following objectives.

To study the level of Working Capital among the employees of Reliance Life Insurance.

To study the factors affecting Working Capital among the employees of Reliance Life Insurance

Ltd.

DATA COLLECTION

The task of data collection begins after the research problem has been defined and research

design chalked out. While deciding the method of data collection to be used for the study, the

researcher should keep in mind two types of data viz. Primary and secondary data.

PRIMARY DATA

The primary data are those, which are collected afresh and for the first time and thus happen to

be original in character. The primary data were collected through well-designed and structured

questionnaires based on the objectives.

SECONDARY DATA

The secondary data are those, which have already been collected by someone else and

passed through statistical process. The secondary data required of the research was collected

through various newspapers, and Internet etc.



RESEARCH METHODOLOGY

1. Focus And Objectives of project

Focus of my study is to highlight the significance of human Resource with following

objectives:-

(a) Human beings are complex in nature with potential to grow This resource is creative and

has the ability to contribute in further in the cause of human lives.

(b) The organization require to demonstrate due concern to Recruit & select required talent for

the organizational progress.

2. Approach or Methodology

I was briefed by very guide Reliance Life Insurance He highlighted salient aspects of human

Resource management & importance of proper Recruitment & selection of employees for overall

growth of the organization. He concerned numerous aspects related to recruitment & selection like

the importance, policy, manpower planning, process, objectives & various options available to

recruit the requisite talent.

3. Research Design

The Research design is the blue print for the fulfillment of objectives and answering

questions. It is frame-work which determines the course of action towards the collection and

analysis of required data. It is a master plan specifying the method and procedures for collecting

and analyzing the method information. Descriptive Research is used in this study, as the main aim

is to describe characteristics of the phenomenon or a situation.

4. Data Collection

The Sources of data includes :-

1. Primary Data Sources.

2. Secondary Data Sources.

Primary Data Sources :- Primary Data has been Collectly directly from sample respondents

through questionnaires with the help of interview.

Secondary Data Sources:- Secondary data sources are those which has already been used and kept

as records like website of company, manuals reports etc.

Sample Design:- Sample design is definite plan determines before any data is actually obtained

for a sample from a given population.



Target Population : Employers

Sample Unit : Individual

Sampling Technique : Convenient sampling

Sample size : 100 respondent



COMPANY PROFILE

Reliance Life Insurance Company Limited is a part of Reliance Capital Ltd. of the Reliance – Anil

Dhirubhai Ambani Group. Reliance Capital is one of India‟s leading private sector financial

services companies, and ranks among the top 3 private sector financial services and banking

companies, in terms of net worth. Reliance Capital has interests in asset management and mutual

funds, stock broking, life and general insurance, proprietary investments, private equity and other

activities in financial services.

Reliance Capital Limited (RCL) is a Non-Banking Financial Company (NBFC) registered with the

Reserve Bank of India under section 45-IA of the Reserve Bank of India Act, 1934.

Reliance Capital sees immense potential in the rapidly growing financial services sector in India

and aims to become a dominant player in this industry and offer fully integrated financial services.

Vision

Empowering everyone live their dreams.

Mission

Create unmatched value for everyone through dependable, effective, transparent and profitable life

insurance and pension plans.

Our Goal

Reliance Life Insurance would strive hard to achieve the 3 goals mentioned below:

Emerge as transnational Life Insurer of global scale and standard.

Create best value for Customers, Shareholders and all Stake holders.

Achieve impeccable reputation and credentials through best business practices.



ABSTRACT

India is a country where the average selling of Life insurance policies is still lower than many

Western and Asian countries, with the second largest population in world the Indian insurance

market is looking very prospective to many multinational and Indian insurance companies for

expanding their business and market share. Before the opening of Indian market for Multinational

Insurance Companies, Life Insurance Corporation (LIC) was the only company which dealt in

Life Insurance and after opening of this sector to other private companies, all the world leaders of

life insurance have started their operation in India. With their world market experience and

network, these companies have offered many good schemes to lure all type of Indian consumers but

unfortunately failed to get the major share of market. Still the LIC is the biggest player in the life

insurance market with approx 65% market share. But why Indian consumers do not trust on manycompanies and why the major population of India does not have any life insurance policy or what

are the factors plays major role in buying behaviour of consumers towards life insurance policies.



INTRODUCTION

Life is full of risk and uncertainties. Since we are the social human being we have certain

responsibilities too. Indian consumers have big influence of emotions and rationality on their

buying decisions. They believe in future rather than the present and desire to have a better and

secured future, in this direction life insurance services have its own value in terms of minimizing

risk and uncertainties. Indian economy is developing and having huge middle class societal status

and salaried persons. Their money value for current needs and future desires here the

pendulum moves to another side which generate the reasons behind holding a policy. Here the

attempt has been made in this research paper to study the buying behaviour of consumers

towards life insurance services. Life insurance is one of the best known insurance products

today. People buy these products as investment tools and also as protection for themselves and their families. All the insurance companies the world over are looking at attracting the eye balls

of customer and positioning their solutions innovatively to cater to niche and specific

markets. One of the most critical aspects both from the view point of the customer and the

insurer is getting important and relevant leads that can be beneficial for both.

Origin Of Insurance

Almost 4,500 years ago, in the ancient land of Babylonia, traders used to bear risk of the caravan

trade by giving loans that had to be later repaid with interest when the goods arrived safely. In

2100 BC, the Code of Hammurabi granted legal status to the practice that, perhaps, was how

insurance made its beginning. Life insurance had its origins in ancient Rome, where citizens

formed burial clubs that would meet the funeral expenses of its members as well as help survivors

by making some payments. As European civilization progressed, its social institutions and welfare

practices also got more and more refined. With the discovery of new lands, sea routes and the

consequent growth in trade, Medieval guilds took it upon themselves to protect their member

traders from loss on account of fire, shipwrecks and the like.

Since most of the trade took place by sea, there was also the fear of pirates. So these guilds even

offered ransom for members held captive by pirates. Burial expenses and support in times of

sickness and poverty were other services offered. Essentially, all these revolved around the concept

of insurance or risk coverage. That's how old these concepts are, really.



In 1347, in Genoa, European maritime nations entered into the earliest known insurance contract

and decided to accept marine insurance as a practice.

The first step

Insurance as we know it today owes its existence to 17th century England. In fact, it began taking

shape in 1688 at a rather interesting place called Lloyd's Coffee House in London, where

merchants, ship-owners and underwriters met to discuss and transact business. By the end of the

18th century, Lloyd's had brewed enough business to become one of the first modern insurance

companies.

Enter companies

The first stock companies to get into the business of insurance were chartered in England in 1720.

The year 1735 saw the birth of the first insurance company in the American colonies in

Charleston, SC. In 1759, the Presbyterian Synod of Philadelphia sponsored the first life insurance

corporation in America for the benefit of ministers and their dependents. However, it was after

1840 that life insurance really took off in a big way. The trigger: reducing opposition from

religious groups.

The growing years

The 19th

century saw huge developments in the field of insurance, with newer products being

devised to meet the growing needs of urbanization and industrialization. In 1835, the infamous

New York fire drew people's attention to the need to provide for sudden and large losses. Two

years later, Massachusetts became the first state to require companies by law to maintain such

reserves. The great Chicago fire of 1871 further emphasized how fires can cause huge lossesin densely populated modern cities. The practice of reinsurance, wherein the risks are spread

among several companies, was devised specifically for such situations. There were more offshoots

of the process of industrialization. In 1897, the British government passed the Workmen's

Compensation Act, which made it mandatory for a company to insure its employees against

industrial accidents. With the advent of the automobile, public liability insurance, which first made

its appearance in the 1880s, gained importance and acceptance.



In the 19th

century, many societies were founded to insure the life and health of their members,

while fraternal orders provided low-cost, members-only insurance.

Even today, such fraternal orders continue to provide insurance coverage to members as do most

labour organizations. Many employers sponsor group insurance policies for their employees,

providing not just life insurance, but sickness and accident benefits and old-age pensions.

Employees contribute a certain percentage of the premium for these policies.

In India

Insurance in India can be traced back to the Vedas. For instance, Yogakshema, the name of Life

Insurance Corporation of India's corporate headquarters, is derived from the Rig Veda. The term

suggests that a form of "community insurance" was prevalent around 1000 BC and practised by the

Aryans. Burial societies of the kind found in ancient Rome were formed in the Buddhist period to

help families build houses, protect widows and children.

Bombay Mutual Assurance Society, the first Indian life assurance society, was formed in 1870.

Other companies like Oriental, Bharat and Empire of India were also set up in the 1870- 90s. It was

during the Swadeshi movement in the early 20th

century that insurance witnessed a big boom in

India with several more companies being set up.

As these companies grew, the government began to exercise control on them. The Insurance Actwas passed in 1912, followed by a detailed and amended Insurance Act of 1938 that looked into

investments, expenditure and management of these companies' funds. By the mid- 1950s, there

were around 170 insurance companies and 80 provident fund societies in the country's life

insurance scene. However, in the absence of regulatory systems, scams and irregularities were

almost a way of life at most of these companies.

As a result, the government decided nationalise the life assurance business in India. The Life

Insurance Corporation of India was set up in 1956 to take over around 250 life companies. For

years thereafter, insurance remained a monopoly of the public sector. It was only after seven years

of deliberation and debate – after the RN Malhotra Committee report of 1994 became the first

serious document calling for the re-opening up of the insurance sector to private players that

the sector was finally opened up to private players in 2001.

The Insurance Regulatory & Development Authority, an autonomous insurance regulator set up in

2000, has extensive powers to oversee the insurance business and regulate in a manner that will

safeguard the interests of the insured.



MEANING OF INSURANCE

Insurance may be described as a social device to reduce or eliminate risk of loss to life and property. Insurance is a collective bearing of risk. Insurance spreads the risks and losses of few

people among a large number of people as people prefer small fixed liability instead of big

uncertain and changing liability. Insurance is a scheme of economic cooperation by which

members of the community share the unavoidable risks.

Insurance can be defined as a legal contract between two parties whereby one party called Insurer

undertakes to pay a fixed amount of money on the happening of a particular event, which may be

certain or uncertain. The other party called Insure or Insurant pays in exchange a fixed sum

known as premium. The insurer and the insurant are also known as Assurer or Underwriter and

Assurant, respectively. The document which embodies the contract is called the policy.



TYPES OF INSURANCE CONTRACT

Life insurance

General insurance

1.3.3.1 Life Insurance

Life insurance is a contract for payment of money to the person assured (or to the person entitled to

receive the same) on the occurrence of an event insured against.

Usually the contract provides for –

Payment of an amount may be on the date of maturity or at specified periodic intervals or after

death, if it occurs earlier.

Periodical payment of insurance premium can be done by the assured to the corporation who provides the insurance.

Who can buy a life insurance policy?

Any person above 18 years of age and who is eligible to enter into a valid contract. Subject to

certain conditions, a policy can be taken on the life of a spouse or children.

What is a Whole Life Policy?

When most people think of life insurance, they think of a traditional whole life policy. These are

the simplest policies to understand: You pay a fixed premium every year based on your age and

other factors, you earn interest on the policy's cash value as the years roll by, and your

beneficiaries get a fixed benefit after you die.

The policy takes you into old age for the same premium you started out with. Whole life insurance

policies are valuable because they provide permanent protection and accumulate cash values that

can be used for emergencies or to meet specific objectives. The surrender value gives you an extra

source of retirement money if you need it.

What is an Endowment Policy?

Unlike whole life, an endowment life insurance policy is designed primarily to provide a living

benefit and only secondarily to provide life insurance protection. Therefore, it is more of an

investment than a whole life policy. Endowment life insurance pays the face value of the policy

either at the insured's death or at a certain age or after a number of years of premium payment.



Endowment life insurance is a method of accumulating capital for a specific purpose and

protecting this savings program against the saver's premature death. Many investors use

endowment life insurance to fund anticipated financial needs, such as college education or

retirement. Premium for an endowment life policy is much higher than those for a whole life

policy.

What is a Money Back Policy?

This is basically an endowment policy for which a part of the sum assured is paid to the

policyholder in the form of survival benefits, at fixed intervals, before the maturity date. The risk

cover on the life continues for the full sum assured even after payment of survival benefits and

bonus is also calculated on the full sum assured. If the policyholder survives till the end of the

policy term, the survival benefits are deducted from the maturity value.

Why does one need Life Insurance?

Life insurance is designed to protect you and your family against financial uncertainties that

may result due to unfortunate demise or illness. You can also view it as a comprehensive financial

instrument – as a part of your financial planning offering you savings & investment facilities

along with cover against financial loss. By choosing the right policy as per your needs i.e.

customized solutions, you will be able to plan for a secure future for yourself and your loved ones.

Choosing the right plan

Identifying the right plan basis your needs is the first crucial step towards insurance planning. At

RLIC we help customer by identifying their various needs and offering plans that are customized

for you. You may also choose a plan by identifying the life stage you are at.

The following needs of a person can be fulfilled by insurance:

Protection

Need for a sound income protection in case of your unfortunate demise.

Investment

Need to ensure long-term real growth of your money.

Saving

Save for the milestones and protect your savings too.

Pension

Need to save for a comfortable life post retirement.



Once customers have analyzed their needs as per above classification, customers need to

then ascertain important factors such as type of cover, insurance amount as per one's income,

life stage and dependents

Objectives of Life Insurance

1. To spread life insurance and provide life insurance protection to the masses at reasonable

cost.

2. To mobilize peoples savings through insurance-linked savings schemes.

3. To invest the funds to serve the best interests of both the policy holders and the nation.

4. To conduct business with maximum economy, always remembering that the money belongs

to the policy holders.

5. To act as trustees of the policy holders and protect their individual and collective interests.

6. To innovate and adapt to meet the changing life insurance needs of the community.



GENERAL INSURANCE

General (non-life) insurance provides a short-term coverage, usually for a period of one year.

General insurers transact fire insurance, motor insurance, marine insurance, and miscellaneous

insurance business. Among these categories fire and motor insurance business are predominant.

Motor vehicle insurance is compulsory in India and the motor insurance industry.

Moreover, motor insurance due to third party liability claims has substantially contributed to

underwriting losses.

General Insurance Products

Fire Insurance:

Fire Insurance is a comprehensive policy which covers loss on account of fire, earth quake, riots,

floods, strikes, and malicious intent. It can be taken only by the owner of the premises to be

insured.

Motor Insurance: This covers:

In motor insurance, the rates were revised. Upwards twice, once in 1982 and then in1990 as the

high cost of repairs coupled with third party claims had adversely affect the insured loss ratio.

Motor insurance is mandatory leading to good amount of premium collection but it is not being

fancied upon as it could lead to litigation problem.

Marine Cargo Insurance: This covers:

a. Cargo in Transit.

b. Cargo Declaration policy.

It includes insurance of Marine Hull Insurance Inland Vessels, Ocean going Vessels, fishing and

scaling vessels, freight at risk, construction of ships, voyage insurance of various vessels, ship

breaking insurance, oil and energy in respect of onshore and offshore risks, including construction

risk.



OBJECTIVE OF INSURANCE POLICY

1. Life Insurance policy for the rural areas and the socially and economically backward

classes with a view to reach all insurable persons in the country and providing them

adequate financial cover of reasonable cost.

2. Conduct business with utmost economy and with the full realization that the money to the

public.

3. Meet the various life insurance need of the community that would arise in the changing

social and economical environment.

4. Maximize mobilization of peoples‟ saving by making insurance – linked securing

adequately attractive.

5. Involve all people working in the corporation to the best of their capability in furthering the

interests of the insurance public by providing efficient service with courtesy.

6. Bear in mind, the investment of funds, the primary obligation to its policy holders, whose

money it holder in trust, without losing sight of the interest of the community as a whole;

the fund is to be deployed to the best advantage of the investors as the community as

whole, keeping in view national as well as the community attractive return.



BENEFITS TO INSURANCE POLICY HOLDER

(1) Tax Benefits:

Relief in income tax is available for amount paid by way of premium for life insurance.Investmentqualifying for rebate viz. insurance premia, premium paid toward annuity plans for life insurance

are specified under section 88(2) of the income tax Act.

(2) Safety:

In life insurance, on death, the full sum assured is payable (with bonuses wherever applicable)

whereas in other saving scheme, only the amount (saved with interest) is payable.

(3) Liquidity:

Loans can be raised on sole security of the policy which has acquired a paid-up value. Besides, a

Life Insurance policy is also generally accepted as security for even a commercial loan/housing

loan.

(4) Aid to Thrift:

Life Insurance encourages „thrift‟ Long term saving can be made in a relatively painless manner

because of „easy instalment facility‟ (Premium can be made through monthly, quarterly, half-

yearly or yearly instalment). The Salary Saving Scheme, popularly known as SSS provide a

convenient method if paying premium each month through deduction from one‟s salary. The

Salary Saving Scheme can be introduced in an institution of establishment subject to specified

terms and condition.

(5) Money at the time of Requirements:

A suitable insurance plan or a combination of different plans can be taken to meet specific needs

that are likely to arise in future such as children‟s education, start in-life or marriage provision or

even periodical needs for cash ones a predetermined stretch of time. Alternatively, policy money

can be so arranged to be used for other investments subject to certain conditions, loans are granted

to policy holders for house or for purchase of flats.

(6) Insurance affords peace of mind:

The security is the prime motivating factor. The security ends the tension and finally leads to peace

to mind.



(7) Insurance Eliminate Dependency

At the death of husband or the father or any lead person, the family would suffer a lot. The

insurance is here to assist then like to provide adequate amount at the time of suffering. The

economic dependency if the family is reduced.

(8) Insurance encourages savings:

In most of the life policies, element of saving is predominant, this policies combine of programme

of Insurance and saving. Saving with insurance has certain extra advantage.

(9) Economic Growth of the country:

For the growth of the country insurance provides string hand and mid to protect against loss of

death. From the insurance government get more financial resource and utilize strengthen the

economic condition of the country.



Meaning of Working Capital

Capital required for a business can be classified under two main categories via,

1) Fixed Capital

2) Working Capital

Every business needs funds for two purposes for its establishment and to carry out its day- to-

day operations. Long terms funds are required to create production facilities through purchase of

fixed assets such as p&m, land, building, furniture, etc. Investments in these assets represent that

part of firm‟s capital which is blocked on permanent or fixed basis and is called fixed capital.

Funds are also needed for short-term purposes for the purchase of raw material, payment of wages

and other day – today expenses etc.

These funds are known as working capital. In simple words, working capital refers to that part of

the firm‟s capital which is required for financing short- term or current assets such as cash,

marketable securities, debtors & inventories. Funds, thus, invested in current assts keep revolving

fast and are being constantly converted in to cash and this cash flows out again in exchange for

other current assets. Hence, it is also known as revolving or circulating capital or short term capital.



CONCEPT OF WORKING CAPITAL

There are two concepts of working capital:

1. Gross working capital

2. Net working capital

The gross working capital is the capital invested in the total current assets of the enterprises current

assets are those

Assets which can convert in to cash within a short period normally one accounting year.

CONSTITUENTS OF CURRENT ASSETS

1) Cash in hand and cash at bank

2) Bills receivables

3) Sundry debtors

4) Short term loans and advances.

5) Inventories of stock as:

a. Raw material

b. Work in process

c. Stores and spares

d. Finished goods

6. Temporary investment of surplus funds.

7. Prepaid expenses8. Accrued incomes.

9. Marketable securities.

In a narrow sense, the term working capital refers to the net working. Net working capital is the

excess of current assets over current liability, or, say:

NET WORKING CAPITAL = CURRENT ASSETS – CURRENT LIABILITIES.

Net working capital can be positive or negative. When the current assets exceeds the current

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

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

accounting year out of the current assts or the income business.



CONSTITUENTS OF CURRENT LIABILITIES

1. Accrued or outstanding expenses.

2. Short term loans, advances and deposits.

3. Dividends payable.

4. Bank overdraft.

5. Provision for taxation , if it does not amt. to app. Of profit.

6. Bills payable.

7. Sundry creditors.

The gross working capital concept is financial or going concern concept whereas net working

capital is an accounting concept of working capital. Both the concepts have their own merits.

The gross concept is sometimes preferred to the concept of working capital for the following

reasons:

1. It enables the enterprise to provide correct amount of working capital at correct time.

2. Every management is more interested in total current assets with which it has to operate then

the source from where it is made available.

3. It take into consideration of the fact every increase in the funds of the enterprise would

increase its working capital.

4. This concept is also useful in determining the rate of return on investments in working capital.

The net working capital concept, however, is also important for following reasons:

• It is qualitative concept, which indicates the firm‟s ability to meet to its operating expenses

and short-term liabilities.

• IT indicates the margin of protection available to the short term creditors.

• It is an indicator of the financial soundness of enterprises.

• It suggests the need of financing a part of working capital requirement out of the permanent

sources of funds.



CLASSIFICATION OF WORKING CAPITAL

Working capital may be classified in to ways:

o On the basis of concept.

o 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

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 assts 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 beclassified 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 special exigencies such as launching of extensive

marketing for conducting research, etc.

Temporary working capital differs from permanent working capital in the sense that is required for

short periods and cannot be permanently employed gainfully in the business.



IMPORTANCE OR ADVANTAGE OF ADEQUATE WORKING CAPITAL

HE BUSINESS: Adequate working capital helps in maintaining the

solvency of the business by providing uninterrupted of production.

makes and maintain the goodwill.

loans from banks and other on easy and favorable terms.

the purchases and hence reduces cost.

material and continuous production.

e

satisfaction of the employees and raises the morale of its employees, increases their efficiency,

reduces wastage and costs and enhances production and profits.

tal

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.

on.

pay quick and regular of dividends to its investors and gains confidence of the investors and can

raise more funds in future.

king capital brings an environment of securities, confidence, high

morale which results in overall efficiency in a business.



EXCESS OR INADEQUATE WORKING CAPITAL

Every business concern should have adequate amount of working capital to run its business

operations. It should have neither redundant or excess working capital nor inadequate nor shortages

of working capital. Both excess as well as short working capital positions are bad for any business.

However, it is the inadequate working capital which is more dangerous from the point of view of

the firm.

DISADVANTAGES OF REDUNDANT OR EXCESSIVE WORKING CAPITAL

1. Excessive working capital means ideal funds which earn no profit for the firm and business

cannot earn the required rate of return on its investments.

2. Redundant working capital leads to unnecessary purchasing and accumulation of inventories.

3. Excessive working capital implies excessive debtors and defective credit policy which causes

higher incidence of bad debts.

4. It may reduce the overall efficiency of the business.

5. If a firm is having excessive working capital then the relations with banks and other financial

institution may not be maintained.

6. Due to lower rate of return n investments, the values of shares may also fall.

7. The redundant working capital gives rise to speculative transactions

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.

The requirement of the working capital goes on increasing with the growth and expensing of the

business till it gains maturity. At maturity the amount of working capital required is called normal

working capital.

There are others factors also influence the need of working capital in a business.



FACTORS DETERMINING THE WORKING CAPITAL REQUIREMENTS

1. NATURE OF BUSINESS: The requirements of working is very limited in public utility

undertakings such as electricity, water supply and railways because they offer cash sale only and

supply services not products, and no funds are tied up in inventories and receivables. On the other

hand the trading and financial firms requires less investment in fixed assets but have to invest large

amt. of working capital along with fixed investments.

2. SIZE OF THE BUSINESS: Greater the size of the business, greater is the requirement of

working capital.

3. PRODUCTION POLICY: If the policy is to keep production steady by accumulating

inventories it will require higher working capital.

4. LENTH OF PRDUCTION CYCLE: The longer the manufacturing time the raw material and

other supplies have to be carried for a longer in the process with progressive increment of labor and

service costs before the final product is obtained. So working capital is directly proportional to the

length of the manufacturing process.

5. SEASONALS VARIATIONS: Generally, during the busy season, a firm requires larger

working capital than in slack season.

6. WORKING CAPITAL CYCLE: The speed with which the working cycle completes one cycle

determines the requirements of working capital. Longer the cycle larger is the requirement of

working capital.

7. 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 wuill needs lower amt. of working capital as compared to a firm having a low

rate of turnover.

8. CREDIT POLICY: A concern that purchases its requirements on credit and sales its product /

services on cash requires lesser amt. of working capital and vice-versa.

9. BUSINESS CYCLE: In period of boom, when the business is prosperous, there is need for

larger amt. of working capital due to rise in sales, rise in prices, optimistic expansion of business,

etc. On the contrary in time of depression, the business contracts, sales decline, difficulties are

faced in collection from debtor and the firm may have a large amt. of working capital.

10. RATE OF GROWTH OF BUSINESS: In faster growing concern, we shall require large amt. of

working capital.



11. EARNING CAPACITY 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 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.

12. PRICE LEVEL CHANGES: Changes in the price level also affect the working capital

requirements. Generally rise in prices leads to increase in working capital.

Others FACTORS: These are:

Operating efficiency.

Management ability.

Irregularities of supply.

Import policy.

Asset structure.

Importance of labor.



MANAGEMENT OF WORKING CAPITAL

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 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.

WORKING CAPITAL ANALYSIS

As we know working capital is the life blood and the centre of a business. Adequate amount of

working capital is very much essential for the smooth running of the business. And the most

important part is the efficient management of working capital in right time. The liquidity position

of the firm is totally effected by the management of working capital. So, a study of changes in the

uses and sources of working capital is necessary to evaluate the efficiency with which the workingcapital is employed in a business. This involves the need of working capital analysis.

The analysis of working capital can be conducted through a number of devices, such as:

1. Ratio analysis.

2. Fund flow analysis.

3. Budgeting.

1. RATIO ANALYSIS

A ratio is a simple arithmetical expression one number to another. The technique of ratio analysis

can be employed for measuring short-term liquidity or working capital position of a firm. The

following ratios can be calculated for these purposes:

1. Current ratio.

2. Quick ratio

3. Absolute liquid ratio

4. Inventory turnover.

5. Receivables turnover.

6. Payable turnover ratio.



7. Working capital turnover ratio.

8. Working capital leverage

9. Ratio of current liabilities to tangible net worth.

2. FUND FLOW ANALYSIS

Fund flow analysis is a technical device designated to the study the source from which additional

funds were derived and the use to which these sources were put. The fund flow analysis consists of:

a. Preparing schedule of changes of working capital

b. Statement of sources and application of funds.

It is an effective management tool to study the changes in financial position (working capital)

business enterprise between beginning and ending of the financial dates.

3. WORKING CAPITAL BUDGET

A budget is a financial and / or quantitative expression of business plans and polices to be pursued

in the future period time. Working capital budget as a part of the total budge ting process of a

business is prepared estimating future long term and short term working capital needs and sources

to finance them, and then comparing the budgeted figures with actual performance for calculating

the variances, if any, so that corrective actions may be taken in future. He objective working capital

budget is to ensure availability of funds as and needed, and to ensure effective utilization of these

resources. The successful implementation of working capital budget involves the preparing of

separate budget for each element of working capital, such as, cash, inventories and receivables etc.



ANALYSIS OF SHORT

The short – term creditors of a company such as suppliers of goods of credit and commercial banks

short-term loans are primarily interested to know the ability of a firm to meet its obligations in

time. The short term obligations of a firm can be met in time only when it is having sufficient

liquid assets. So to with the confidence of investors, creditors, the smooth functioning of the firm

and the efficient use of fixed assets the liquid position of the firm must be strong. But a very high

degree of liquidity of the firm being tied – up in current assets. Therefore, it is important proper

balance in regard to the liquidity of the firm. Two types of ratios can be calculated for measuring

short-term financial position or short-term solvency position of the firm.

1. Liquidity ratios.

2. Current assets movements „ratios.

A) LIQUIDITY RATIOS

Liquidity refers to the ability of a firm to meet its current obligations as and when these become

due. The short-term obligations are met by realizing amounts from current, floating or circulating

assts. The current assets should either be liquid or near about liquidity. These should be convertible

in cash for paying obligations of short-term nature. The sufficiency or insufficiency of current

assets should be assessed by comparing them with short-term liabilities. If current assets can pay

off the current liabilities then the liquidity position is satisfactory. On the other hand, if the current

liabilities cannot be met out of the current assets then the liquidity position is bad. To measure theliquidity of a firm, the following ratios can be calculated:

1. CURRENT RATIO

2. QUICK RATIO

3. ABSOLUTE LIQUID RATIO

1. CURRENT RATIO

Current Ratio, also known as working capital ratio is a measure of general liquidity and its most

widely used to make the analysis of short-term financial position or liquidity of a firm. It is defined

as the relation between current assets and current liabilities. Thus,

CURRENT RATIO = CURRENT ASSETS

CURRENT LIABILITES



The two components of this ratio are:

1) CURRENT ASSETS

2) CURRENT LIABILITES

Current assets include cash, marketable securities, bill receivables, sundry debtors, inventories and

work-in-progresses. Current liabilities include outstanding expenses, bill payable, dividend payable

etc.

A relatively high current ratio is an indication that the firm is liquid and has the ability to pay its

current obligations in time. On the hand a low current ratio represents that the liquidity position of

the firm is not good and the firm shall not be able to pay its current liabilities in time. A ratio equal

or near to the rule of thumb of 2:1 i.e. current assets double the current liabilities is considered to

be satisfactory.

B) CURRENT ASSETS MOVEMENT RATIOS

Funds are invested in various assets in business to make sales and earn profits. The efficiency with

which assets are managed directly affects the volume of sales. The better the management of assets,

large is the amount of sales and profits. Current assets movement ratios measure the efficiency with

which a firm manages its resources. These ratios are called turnover ratios because they indicate

the speed with which assets are converted or turned over into sales. Depending upon the purpose, a

number of turnover ratios can be calculated. These are :

1. Inventory Turnover Ratio

2. Debtors Turnover Ratio

3. Creditors Turnover Ratio

4. Working Capital Turnover Ratio

The current ratio and quick ratio give misleading results if current assets include high amount of

debtors due to slow credit collections and moreover if the assets include high amount of slow

moving inventories. As both the ratios ignore the movement of current assets, it is important to

calculate the turnover ratio.



WORKING CAPITAL TURNOVER RATIO

Working capital turnover ratio indicates the velocity of utilization of net working capital. This ratio

indicates the number of times the working capital is turned over in the course of the year. This ratio

measures the efficiency with which the working capital is used by the firm. A higher ratio indicates

efficient utilization of working capital and a low ratio indicates otherwise. But a very high working

capital turnover is not a good situation for any firm.

Working Capital Turnover Ratio = Cost of Sales

Net Working Capital

Working Capital Turnover = Sales

Networking Capital

e.g.

Year 2006 2007 2008

Sales 166.0 151.5 169.5

Networking Capital 53.87 62.52 103.09

Working Capital Turnover 3.08 2.4 1.64

Interpretation :This ratio indicates low much net working capital requires for sales. In 2008, the reciprocal

of this ratio (1/1.64 = .609) shows that for sales of Rs. 1 the company requires 60 paisa as working

capital. Thus this ratio is helpful to forecast the working capital requirement on the basis of sale.

INVENTORIES

(Rs. in Crores)

Year 2005-2006 2006-2007 2007-2008

Inventories 37.15 35.69 75.01

Interpretation :

Inventories is a major part of current assets. If any company wants to manage its working

capital efficiency, it has to manage its inventories efficiently. The graph shows that inventory in

2005-2006 is 45%, in 2006-2007 is 43% and in 2007-2008 is 54% of their current assets. The

company should try to reduce the inventory upto 10% or 20% of current assets.



CASH BNAK BALANCE :

(Rs. in Crores)

Year 2005-2006 2006-2007 2007-2008

Cash Bank Balance 4.69 1.79 5.05

Interpretation :

Cash is basic input or component of working capital. Cash is needed to keep the business

running on a continuous basis. So the organization should have sufficient cash to meet various

requirements. The above graph is indicate that in 2006 the cash is 4.69 crores but in 2007 it has

decrease to 1.79. The result of that it disturb the firms manufacturing operations. In 2008, it is

increased upto approx. 5.1% cash balance. So in 2008, the company has no problem for meeting its

requirement as compare to 2007.



TYPE OF RESEARCH

Exploratory Research design

These designs are the first step to start any research & are absolutely essential to obtain the

proper definition of the problem. It helps in classifying the concepts of the study. The major

emphasis is the discovery of ideas and insights by studying the available information.

Descriptive Research Design

These are concerned with describing the characteristics of a particulars phenomenon in detail the

descriptive study requires a clear specifications of who, what, when, where, why & how aspects

of research.

The methodology adopted to achieve the project objective involved descriptive

research method



TOOLS AND TECHNIQUES OF ANALYSIS

Tools - Questionnaire and Interview

Data presentations- Table and Pie-chart

Tables and Pie-chart are used in order to analyse the primary and secondary data from various

sources.



DATA ANALYSISAND

INTERPRETATION



DATA ANALYSIS AND INTERPRETATION

After data have been collected, the researcher turns to the task of analyzing them. The analysis of data

requires a number of closely related operations such as establishment of categories, the application of

these categories to raw data through tabulation and drawing statically inferences.

Tabulation is the part of technical procedure where in the classified data are put in the form of tables.

After analyzing the data, the researcher should have to explain the findings on the basis of some theory.

It is known as interpretation

The data has been collected from 100 employees of Reliance Life Insurance through

questionnaire. The data thus collected was in the form of master table.

That made possible counting of classified data easy. From the master table various summery tables

were prepared. They have been presented along with their interpretation in this manner.



Q Do you feel that your job suits your educational qualification?

YES 70%

NO 30%

INTERPRETATION

There was 100% response from the employees. Out of which 70% of the employees have supported the

statement i.e, they have opted the option “Yes”. And remaining 30% of the employees had been opposing

the statement i.e., they had opted the option “No”.

This analysis clearly conveys that majority of the employees are working according to their qualification. And some

of the employees are not appointed according to their qualification.

70

30

YES

NO



Q What is your level of satisfaction regarding superior – subordinate and colleague

relationship?

Highly Satisfied 40%

Satisfied 60%

Dissatisfied -

Interpretation

According to the response from the employees to whom the questionnaire were distributed, almost every

employee is having an healthy relationship with his superior ,subordinate and colleague. According to the

tabular form, 40% of the employees agreed that they are highly satisfied with the relationship and 60% of

the employees are satisfied with the relationship in the organization. And none of the employees

supported the third option.

This is a good sign for the organization to enhance its future performance.

40

60

Highly Satisfied

Satisfied

Dissatisfied



Q Are you satisfied with your pay package?

Yes 75%

No 25%

INTERPRETATION

In this, 75% of the employees have agreed that they are satisfied with the pay package. And 25% of the

employees had not satisfied with the pay package. Of course, the satisfaction level differs from employee

to employee but the dissatisfaction may effect the work and the productivity. So the measures must be

taken to avoid the dissatisfaction.

75

25

YES

NO



Q What is your level of satisfaction regarding the work environment?

High 45%

Medium 27%

low 28%

INTERPRETATION

Regarding the work environment, 45% of the employees have been satisfied with the present working

conditions. And 28% of the employees have been medium satisfied. 27% of the employee are not

satisfied.

We all know the importance of the working conditions and slight changes may be done to make the

unsatisfied as satisfied employees.

45

27

28

high

medium

low



Q Does the company provide you flexible working hours?

YES 100%

NO -

INTERPRETATION

There was 100% response from the employees out of which 100% of the employees has supported the

statement i.e. they agreed that the company is providing the flexible working hours. Providing the flexible

working hours may reduce the stress to an extent and this is one of the good features of an organization.

100

YES

NO



Q Is there any opportunity for you to use new technology?

ALWAYS 80%

SOMETIMES 20%

NEVER -

INTERPRETATION

The opportunity to use new technology may enhance the skills of the employees. In this regard, 80% of

the employees had agreed that the company provides the opportunity to use the new technology. And

20% agreed sometimes that company provides the opportunity to use new technology

As the majority agreed it, this is fare on the part of the company.

80

20

Always

SOMETIME

NEVER



Q Are you satisfied with the Canteen Facility provided by Organization?

Agree 95%

Disagree 5%

INTERPRETATION

Regarding the Canteen Facility, 95% of the employees have been agreed with the facilities. And 5% of

the employees have not been agreed due to improper hygienic food.

95

5

AgreeDisagreee



Q Are you satisfied with the implementation of rules and responsibilities?

INTERPRETATION:

In this70% of employee are satisfied with the rules and responsibilities and 30% of employee are not

satisfied with the rules and responsibilities.

70

30

May

May not be

May 70%

May not be 30%



Q Are you satisfied with job security?

Always 98%

Sometimes 2%

Never

INTERPRETATION:

In this 98%employees are satisfied with the job security and 2% employees are not satisfied with their job

security.

98

2

Always

Never

Sometime



Q Are you satisfied with the performance appraisal system?

INTERPRETATION:

In this 80% of the employee are agreed with the performance appraisal system and 20% of the

employee are not agreed with the performance appraisal system.

80

20

Agree

disagree

Agree 80%

Disagree 20%



Q Are you satisfied with the lighting and other arrangement in the office?

YES 90%

No 10%

INTERPRETATION:

In this 90% of the employees are satisfied with of the lightning and the arrangement in the office and 10%

of the are not satisfied with of the lightning and the arrangement in the office.

90

10



Q Are you satisfied with the safety measures provided by your company?

Good 25%

Excellent 70%

Poor 5%

INTERPRETATION:

In this 25% employee are good satisfied with the safety measures provided by the company and 70%

employees are excellent satisfied with the safety measures provided by the company and 5% not very

good satisfied with the safety measures provided by the company .

25

70

5

good



Q How long have you worked for company?

1-3 years 85%

4-6 years 10%

7-10 years 5%

10 years -

INTERPRETATION:

In this 85% of the employees who have been working long for the company and 5% of the employee

are working for less than 10years.

85

105

1-3 yrs

4-6 yrs7-10 yrs

10 yrs



Q Are you satisfied with the training provided for your current job?

INTERPRETATION

In this 75% of the employees are satisfied with the training which are provided by the companyand 25% of the employees are not satisfied with the training which are provided by the

company.

yes

no

Yes 75%

No 25%



FINDINGS



FINDINGS

All the findings are drawn based on the analysis and interpretation of the primary data

regarding the Working Capital of the employees of Reliance Life Insurance

From the analysis and interpretation, it is concluded that 80 % of the employees are

satisfied with the workplace and only 20% employees are not satisfied with the workplace,

which are negligible in number. And similarly in case of infrastructure 70% of the

employees are satisfied and very small number of employees are not happy with the

infrastructure of Reliance Life Insurance

and the canteen facilities. It means the workplace and infrastructure of Reliance Life

Insurance

is good or satisfactory.

It is notice that near about 84% the employees are satisfied with

implementation of rules and responsibilities. And only some of them are not seems to

be satisfied with the implementing rules and responsibilities. Therefore it shows that

implementation of rule and responsibility is done fairly.

From the study it is clear that the 70% percentage of employees are happy

with the freedom at work given by management but only some of them are not

feeling satisfied with the freedom given at work place.

According to analysis and interpretation, 60% of the employees are satisfied

with the team spirit built in organization and only few are not happy with team

spirit in the organization. From this it seems that the team spirit in the organization is

strong.

This study shows that only few employees strongly feel that the working hoursdecided by organization are most convenient for them. Other is not in favor with

these working hours. So it is clear that the management kept the main consideration

about working conditions and the hours, which satisfies the employees.

The study shows that very small numbers (32%) of employees are satisfied with the job

security.



And remaining most of the employees are not satisfied with the

job

Security provided by the organization. Hence from this analysis it is cleared that there is

feeling of fear of job loss in the employees of Reliance Life Insurance

An analysis shows that about 75% of employees are strongly in favor that

the targets given are achievable and only are not feels that the targets given are

achievable. Hence the targets set by management are achievable.



SUGGESTIONS

The suggestions are drawn from the analysis and observations. Few suggestions are given as

under:

In case of working hours decided by the organization are not convenient for the employees

of Reliance Life Insurance

The working hours are 6 hours per day that from 8.30AM to 5 PM. These hours should

minimize up to 5 hours.

The criteria for Job security is not much satisfactory so management need to concentrate on

job security of employees so that they can work without fear of job loss in the

organization.

Opportunities of growth of employees are very less so that there can be employee

turnover hence management has to give emphasis on increasing the promotion

opportunities for according to the performance of employees.

From analysis we concluded that the period of in house training is very short that is of

only 3 days, which is not sufficient to get complete knowledge about the work. Hence the

training period should extend up to 5 days.

As there is an active participation of employees in decision making but rarely the

suggestions given by them are drawn in action. Hence the confidence of employees gets

demotivated.



LIMITATIONS OF THE STUDY

Short span of time: The main limitation is the availability of time.

Due to short span of time, some inaccuracy may have occurred.

Biasness on the part of respondents: Some respondents were not

ready to reveal the true information.

Inaccurate access: Due to short span of time it was not possible to

access all employees as factory is wide.

Some were not interested in filling the questionnaires and they did

not give back the questionnaires.



CONCLUSIONS

The employees are working according to their qualifications.

There is a healthy environment in the company.

The majority of the employees are satisfied with pay package.

The working conditions are favorable to the employees.

The working hours are flexible.

All the employees are satisfies with the benefits.

New technology is implemented by the company.

Overall evaluation says that employees are satisfied.

Some employees have given suggestions.



BIBLIOGRAPHY

Web-sites

1. http://en.wikipedia.org/wiki/Job_satisfaction

2. http://www.careerkey.org/asp/career-options/job-satisfaction.html

3. http://www.google.co.in/

Books: -

.Awasthappa, K “Human Resource and Personnel Management” Published by

Tata

McGrraw-Hill Publishing Company :Limited, New Dehli.

.Armstrong, Michael (1988), “ A Handbook of Personnel Managment Practice.”

Published By Kagon , London.

. KS Kothari, Research methodology

. Chabra, T.N.,Human resource management, 5th revised edition

http://en.wikipedia.org/wiki/Job_satisfaction

http://www.careerkey.org/asp/career-options/job-satisfaction.html

http://www.google.co.in/

http://www.google.co.in/

http://www.careerkey.org/asp/career-options/job-satisfaction.html

http://en.wikipedia.org/wiki/Job_satisfaction



ANNEXTURE

Questionnaire

NAME- MOBILE No.-

AGE- OCCUPATION-

Q: Do you feel that your job suits your educational qualification?

Yes

No

Q: what is your level of satisfication regarding superior- subordinate and collague

relationship?

Highly satisfied

Satisfied

Dissatisfied

Q: Are you satisfied with your pay package?

Yes

No

Q: what is your level of satisfication regarding the work environment?

High

Medium

Low

Q: Does the company provide you flexible working hours?

Yes

No

Q: Is there any opportunity for you to use new technology ?



Always

Sometimes

Never

Q: Are satisfied with the job security?

Always

Sometimes

Never

Q Are you satisfied with the performance appraisal?

Agree

Disagree

Q: Are satisfied with the lightning and other arrangeement in the office?

Yes

No

Q:Are you satisfied with the canteen facitily provided by organization?

• Agree

• Disagree

Q Are you satisfied with the implementation of rules and responsibilities?

• May

• May not be

Q: Are you satisfied with the safety measure provided by your company?

Good

Excellent

Poor

Q: How long have you worked for company?

1-3 years

4-6years

7-10years

10years

relianc working capital

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