mba summer internship financial management project

1. A
PROJECT REPORT ON
“A STUDY OF WORKING CAPITAL MANAGEMENT”
AT
“SHRI SOMESHWAR SAHAKARI
SAKHAR KARKHANA LTD.”
SOMESHWARNAGAR.
SUBMITTED TO
SAVITRIBAI PHULE PUNE UNIVERSITY
IN PARTIAL FULFILLMENT OF THE REQUIREMENT
FOR THE AWARD OF THE DEGREE OF
MASTER OF BUSINESS ADMINISTRATION
(MBA)
SUBMITTED BY
MR. PRAVIN DATTATRAY JAYPATRE
(BACHELOR OF COMMERCE)
UNDER THE GUIDANCE OF
PROF.Dr. V.H. SHINDE
M.com M. Phill Ph. D
THROUGH
SVPM’S SINSTITUTE OF MANAGEMENT,
MALEGAON (BK.)
TAL. - BARAMATI, DIST. – PUNE- 413115.
(YEAR 2017-2018)

2. DECLARATION
I am, JAYPATRE PRAVIN DATTATRAY, a student of SVPM’S Institute
of Management, Malegaon the undersigned, hereby declare that the Project Report entitled
“A Study of Working capital Management’’ At “Shri Someshwar Sahakari Sakhar
Karkhana Ltd.” Someshwarnagar Written and submitted by me to the Savitribai Phule
Pune University, in partial fulfillment of the requirements for the awards of degree of
Master of Business Administration.
Under the guidance of Prof. Dr. V.H.Shinde it is my original work and the
conclusions drawn therein are based on material collected by myself. Further I also declare
that tried to my best to complete this project with almost sincerely, honestly, and
accurately. Even then if, any mistake or error has crept in project report, I shall most
humbly request to reader to point out those error. Any suggestion regarding this project
report will be most welcome. , is an authentic work and has not been submitted to any
other University/Institute for award of any degree/diploma.
Date: / /2017 Mr. Pravin Dattatray Jaypatre
Place: Malegaon(BK) (Researcher Student)

3. ACKNOWLEDGMENT
I gratefully acknowledge my gratitude and sincere thanks to our Director Dr. N.M.
Khachane and to my project guide Prof. Dr. Shinde V.H for her efforts to make my
project meet professional standards and provided me necessary guidelines, excessive
support and motivated me to carry out the completion of this project.
I am thankful to “Shri Someshwar Sahakari Sakhar Karkhana Ltd”
Someshwarnagar for providing me an opportunity to work on this project “A Study of
Working Capital Management” At “Shri Someshwar Sahakari Sakhar Karkhana.”
Someshwarnagar.
I would like to thank Mr. Suryvanshi sir, Mr. Dhumal sir and Kadam sir At
“Shri Someshwar Sahakari Sakhar Karkhana Ltd.” Someshwarnagar for giving me a
great opportunity to carry out the project in this business organization.
Also would like to solicit my gratitude towards the entire accounts department for
supporting me to work in such a prestigious sugar factory and giving the necessary
information whenever needed. Extending me all the required help, have made it very easy
for me to give proper shape to my project.
Finally thanks to our esteemed institute “S.V.P.M’S Institute of Management,
Malegaon Bk., (Baramati)” for providing us lifetime opportunity. This project is not the
result of an individual effort but is a product of collective wisdom.
Mr. Pravin Dattatray Jaypatre,
(Researcher student)

4. INDEX
SR. NO. TITLE PAGE NO.
1
INRTODUCTION
1.1 Basic Theoretical Background
1.2 Review Of Literature
1.2.1 Meaning
1.2.2 Definition
1.2.3 Ratio Analysis
1.3 Need Of Working Capital
1.4.4 Exploitation Of Favorable Market Conditions
1.5 Scope Of Study
1.6 Objective Of Study
1-10
2
PROFILE OF THE ORGANIZATION
2.1 Name And Address Of Factory
2.2 Profile Of Organization
2.3 Vision And Mission
2.3.1 Vision
2.3.2 Mission
2.4 History
2.5 Organization Of Structure
2.6 Board Of Directors
2.7 Product Of Profile
2.8 Producer Member
2.9 Administrative Set Up
11-17
3
RESEARCH METHODOLOGY
3.1 Title Of Product.
3.2 Duration Of Study
3.3 Research Of Design
3.4 Objective Of Study
3.5 Sources Of Data
3.6 Limitation Of The Research
18-19
4 DATA ANALYSIS AND INTERPRETATION 20-31
5 FINDINGS 32-33
6 Suggestion 34
Concludion 35
BIBLIOGRAPHY 36

5. EXECUTIVE SUMMARY
This summer project “A STUDY OF WORKING CAPITAL IN SOMESHWAR
SAHAKARI SAKHAR KARKHANA LTD.” deals to ascertain this efficiency of working
capital management of the company.
Working capital may be regarded as lifeblood of business. Working capital is needed to
meet the day-to-day requirement of the business unit. The exploitation of working capital assets
is possible only by efficient working capital management. This study on working capital
management is conducted in SHRI SOMESHWAR SAHAKARI SAKHAR KARKHANA
LTD.
Working capital management not only shows the financial efficiency of business, but also its
credit worthiness, which has gained importance in these days of credit squeeze. Therefore, study
of the management of working capital is very necessary. Objective of the project was to study
the pattern and procedures followed for managing various components of working capital, so as
to evaluate the efficiency of working capital management. So, this study intends to
comprehensively evaluate the inventory, receivables, creditors and cash management. The study
also aims to analyze the alternative sources of working capital financing employed by SHRI
SOMESHWAR SAHAKARI SAKHAR KARKHANA LTD
Research Design method is adopted for this study. The required information was collected
through secondary sources.
Secondary data were collected from various sources including the annual reports of
the company for the year 2011-012, 2012-013, 2013-014, 2014-015 and 2015-016.
Ratio analysis is the major tool for analyzing the working capital management of the
SHRI SOMESHWAR SAHAKARI SAKHAR KARKHANA LTD. And Also The Information
For 5 Years Is Collected.
Ratio Analysis has been carried out using Financial Information for last five accounting years i.e.
from 2011to 2015 Ratio have also been analyses

6. 1
Chapter No-1
INTRODUCTION
1.1 Basic theoretical Background
Working capital refers to the cash a factory requires for day-to-day operations, or, more
specifically, for financing the conversion of raw materials into finished goods, which the factory
sell for payment. Among the most important items of working capital are levels of inventory,
debtors and creditors. These items are looked at signs of factory’s efficiency and financial
strength. The better factory manages its working capital, the less the factory needs to borrow.
Even factories with cash surpluses need to manage working capital to ensure that those surpluses
are invested in ways that will generate suitable returns for investors. Working capital the amount
of funds necessary to cover the cost of operating the enterprise.
The working capital is descriptive of that capital which is not fixed. But, the more
common use of working capital is to consider it as the difference between the book value of the
current assets and the current liabilities. Working capital in general practice refers to the excess
of current assets over current liabilities. Management of working capital is concerned with the
problems that arise in attempting to manage the current assets, the current liabilities and the inter
relationship that exists between them. It’s refers to all aspect of administration of both current
assets and current liabilities it is known as revolving or circulating capital or short-term capital.
The working capital management is very important to ensure that the factory has enough
funds to carry on with its day-to-day operation smoothly. A factory should not have very long
cash conversion cycle. A cash conversion cycle measures the time period for which a firm will
be deprived of funds if it increases its investment as a part of its factory growth strategies.
Working capital is used to acquire current assets which get converted into cash in a short period.
The working capital depends on the length of production process, the time sales and waiting
period of the cash receipt. The working capital is constantly converted into cash which again
turns into working capital. The cash is used to purchase current assets and when the goods are
produced and sold out, those current assets are transformed into cash. Working capital is a short-
term capital; it is required always and forever to continue the productive activity of the
enterprise. Working capital is more liquid than fixed capital. They can be converted into cash
within a short period and without much loss.

7. 2
Working Capital Management Working capital management is concern with the problem that
arises in attempting to manage he current assets, the current liabilities and the inter
relationships that exists between them .The term current assets refer to those assets, which in
ordinary course will be or can be turned into cash within one year without undergoing a
decrease in value and inventory. Current liabilities, which are intended at their inception to be
paid in the ordinary course of business within year out of the current assets, are earning of the
concerns
Operating Cycle
Cash flows in a cycle into around and out of a business. It is the business’s life blood and
every manager’s primary task is to help it keep flowing and to use the cash flow to generate
profits.
Definition:-
“The working capital cycle is the period of time between the points at which cash is first
spent on the production of a product and the final collection of cash from a customer.”
The faster a business expands the more cash it will need for working capital and
investments. Good management of working capital will generate cash, will help improve profits
and reduce risks.

8. 3
Operating cycle
Conclusion:-
The use of other people’s money in business is usually an expensive resource. Before
looking for outside finance, examine own working capital cycle to make sure that every rupee of
own internal funds is being fully utilized.

9. 4
1.2. Reviewof Literature
 Meaning of Working Capital
 Definition
 Ratio Analysis
1.2.1 Meaning
Working capital refers to the cash a business requires for its day to day operations or
more specifically for financing the conversion of raw material into finished goods, which the
company sells for payment.
It is calculated by the following formula:-
Working capital= Current Assets- Current Liabilities
If a company’s current assets do not exceed its current liabilities, then it may run into
trouble paying back creditors in the short run. The worst case scenario is bankruptcy. A declining
working capital ratio over a longer time period is also a danger (Red Flag) that warrants further
analysis. Working Capital also gives investors an idea of the company’s underlying operational
efficiency.
1.2.2 DEFINITION:-
“Working capital is the excess of current assets over current liabilities of any
business at any time.”Use to evaluate the liquidity of a company and how well it is positioned
to fund operations in the short term using cash and other assets convertible to cash. Liquid assets
available for conducting the daily affairs of a business can also be called as working capital. It is
used to meet fluctuating needs that will be repaid during the company’s next full operating cycle,
generally, one year. By definition, working capital management entails short term decisions-
generally, relating to the next one year period- which is “reversible”

10. 5
1.2.3 Ratio Analysis
Diverse group are interested in information found in financial statements. These groups
study the statements carefully, analyse and interpret the information that relates to their particular
interest.
The primary uses of financial statements are evaluating past performance and predicting
future facilitated by comparison. Therefore, the focus of financial analysis is always on the
crucial information contained in the financial statements. This depends on the objectives and
purposes of such analysis. The purpose of evaluating such financial statements is different from
person to person depending on its relationship.
Ratio Analysis is the systematic process of determining and interpreting the numerical
relationship of various pairs of items derived from the financial statements of a business.
Absolute figures do not convey much tangible meaning and is not meaningful while
comparing the performance of one business with the other.
It is very important the base (or denominator) selected for each ratio is relevant with the
numerator. The two must be such that one is closely connected with and influenced by the other
Importance of Ratio Analysis:-
Ratio Analysis stands for the process of determining and presenting the relationship of items and
group of items in the financial statements. It is an important technique of financial analysis. It is a
way by which financial stability and health of a concern can be judged. Main points of
importance are as follows:
Useful in financial position analysis;-
Accounting ratios reveal the financial position of the concern. This helps the banks, insurance
companies and other financial institutions in lending and making investment decisions.
Accounting ratios simplify, summarize and systematize the accounting figures in order to make
them more understandable and in lucid form. They highlight the inter-relationship, which exists
between various segments of the business as expressed by accounting statements.

11. 6
 Current Ratio:
Small is a measure of the ability of a firm to meet its short-term obligations. It is perhaps
the best known measure of financial strength at a given point of time. In general, a ratio of 2:1 is
usually considered good. Too ratio indicates that some potential difficulty in covering obligations
may exist. A high ratio may indicate that the firm has too many assets tied up in current assets
and is not making efficient use of them.
 ‘Current Ratio Current asset
Current Liabilities
 Acid Test Ratio
This is a narrow measure of liability. Liquid assets mean those assets that are immediately
convertible into cash, without much loss.
Liquid assets = Current Assets – Stock & Prepaid Expenses
Because inventories are usually the least liquid portion of current assets and may be difficult to
dispose of. As per convention, normal quick ratio should be 1:1
‘Liquid ratio = Liquid Assets / Liquid Liabilities’
 Working Capital Turnover Ratio:
Working Capital is the excess of current assets over current liabilities. This ratio
indicates extent of working capital, which should always be moderate. The decline in working
capital indicates that either working capital is in excess of requirements or there is operational
efficiency. It should be stable if not increasing overtime. On contrary, if it is falling, it
indicates large build up current assets or fall in the level of current liabilities or both.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.
‘Working Capital Turnover Ratio = Net Sales / Working Capital’

12. 7
 Current Assets Turnover Ratio:
This ratio shows the productivity of the company’s current assets.
 Inventory Turnover Ratio:
This ratio indicates how efficiently the firm is managing its inventory. This ratio roughly
indicates how many times per year the inventory is replaced. This ratio provides an important
tool to the management for controlling stock of raw material, work in progress and finished
goods. Higher ratio indicates better inventory management.
‘Inventory Turnover Ratio = Cost of goods sold (Sales) / Average Inventory’
 Debtors Turnover Ratio:
Debtors form an important part of current assets. Quality of debtors determines to a great
extent the firm’s liquidity. For determining the quality of debtors two ratios are used debtors
turnover ratio and net collection period ratio.
If sales are regarded as the growth variable of a business, receivables is the first constraint
to such variable. Receivables form the major part of Current Assets. Hence, high debtors’
turnover ratio indicates less percentage of debtors.
‘Debtors Turnover Ratio = Credit Sales / Average Debtors’
Creditors Turnover ratio:It is a ratio of net credit purchases to average trade creditors.
Creditors turnover ratio is also know as payables turnover ratio.
It is on the pattern of debtors turnover ratio. It indicates the speed with which the payments
are made to the trade creditors. It establishes relationship between net credit annual purchases
and average accounts payables. Accounts payables include trade creditors and bills payables.
Average means opening plus closing balance divided by two. In this case also accounts
payables' figure should be considered at gross value i.e. before deducting provision for
discount on creditors

This ratio indicates speed with which payment is made to creditors for the credit
purchases. It is also referred to as average accounts payable.

13. 8
This ratio helps the creditors to have an idea regarding when they will be receiving their
payments. It also helps the company to demand for better discount from the creditors. It is
calculated as follows:
‘Creditors Turnover Ratio = Net Credit Purchases / Average Creditors’
1.3.Need of Working Capital
Not all businesses have the same need to invest in working capital. Much depends on:-
 The Nature of the production process i.e. what and how something is being produce.
 The way in which the product is distributed to the customer.
Reflecting their methods of doing business and what they are selling. The most appropriate a
method of calculating the working capital need of a firm is a concept of ‘Operating cycle’.
 Business different industries have different optimum working capital profiles, with a lot
of cash sales and few credit sales should have minimum trade debtor
Example: Supermarkets.
 Businesses that exist to trade in completed products will only have finished goods in
stock. As compared to this, manufacturers will have to maintain stock of Raw material
and Work in Progress.
 Larger Companies may be able to use their bargaining strength as customers obtain
more favourable, extended credit terms from suppliers. But smaller companies those
have recently started trading (and do not have a track record of credit worthiness) may
be required to pay their suppliers immediately.
 Some businesses will receive their monies at certain times of year, although they may
incur expenses throughout the year at a consistent level. This is known as “Seasonality”
of cash flow.
 Businesses that exist to trade in completed products will only have finished goods in
stock. As compared to this, manufacturers will have to maintain stock of Raw material
and Work in Progres

14. 9
1.4Importance of Working Capital Management
The task of the financial manager in managing working capital efficiency is to ensure sufficient
liquidity in the operations of the enterprise. The liquidity of a business firm is measured by its
ability to satisfy short term obligations as they become due
1.4.1 Time devoted to working capital management:-
Surveys indicate that the largest portion of a financial manager’s time is devoted to the
day to day internal operations of the firm; this may be appropriately subsumed under the heading
“Working Capital Management”
1.4.2Investment in Current Assets:-
Characteristically, current assets represent more than half of the total assets of the business firm.
Because they represent a large investment and it tends to be relatively volatile, current assets are
worth of the financial mangers careful attention.
1.4.3. Importance for Small Firms:-
Working capital management is particularly important for small firms. A small firm may
minimize its investment in fixed assets by renting or by leasing plant and equipment, but there is
no way it can avoid investment in cash, receivables and inventory.
1.4.4. Exploitation of favorable market conditions:-
Only concerns with adequate working capital can exploit favourable market condition
such as purchasing its requirement in bulk when the prices are lower and by holding inventories
for higher price
1.5. Scope of Study
The working capital is taken to be the fund available for meeting the day-to-day requirements of
an enterprise. The working capital can’t be part of fixed or permanent capital is invested in
assets, which kept in the factory permanently long period, of the earning profit.These are usually
known as fixed assets, land and building, plant and machinery, furniture and fitting and
intangibles like goodwill, patent and trademarks and long term of investment.It is part of
permanent capital left in the business for supporting the day-to-day normal operation, is known
as working capital.The working capital generate important element of cost, materials, wages and

15. 10
expenses. These cost usually lead to production and sale in case of manufacturing concerns sales
alone others.The investment from long-term source in current assets which go to make up the
working capital has been mentioned above. But in on-going concern additional provisions for the
maintenance of current assets are received from short-term sources from outside the
business.The long-term and short-term sources are used to provide funds to be used as working
capital.
1.6.Objectives of Study:
The following are the objectives of study
1) To analyses the concept of working capital & various elements of Working Capital.
2) To study the working capital cycle.
3) To discuss the ways & means of arranging funds for effective working capital.
4) To calculate ratios related to working capital and from that determine liquidity position of the
company5) To suggest measures to obtain optimum working capital policy.

16. 11
CHAPTER NO- 2
PROFILE OF THE ORGANIZATION
2.1. Name & Address of Factory
Name ShriSomeshwarSahkariSakharKarkhana Ltd,
Someshwarnagar
Address Someshwarnagar., Tal – Baramati, Dist. Pune-412102,
India
Telegram (02112) 282411
Fax No. (02112) 282412
E-mail Someshwarsakhar@gmail.com
Web Side www.Someshwarsakhar.com
Reg. No. G/281/ 20 Jun 1960
IndustrialPermit
No.
L-25/N-39/61
PAN No. -AAAA52034B
MVATNO. 27730345400V

17. 12
2.2.Profile of the Organization
Introduction of company:
Shree SomeshwarSahkariSakharKarkhana (SSSK.LTD), is located at Someshwarnagar. Shree.
SomeshwarSakharKarkhana Ltd is one of best sugar factories between the other sugar factories
in the Maharashtra.
Sugar is product from the sugarcane. Shree SomeshwarSakharKarkhana Ltd having near about
18243 members. Members are owner of the factory.
Sugarcane is the main raw material for sugar. Farmers who grows sugarcane. Farmers means
member of sugar factory. Sugar factory brings workers from Beed, Ahmednagar, Barshi and
Jamkhed for cutting the sugarcane. After cutting the sugarcane it carries through Bulk cart,
Trolleys, Trucks, from farms to sugar factory.
NowShreeSomeshwarSahkariSakharKarkhana Ltd also uses the advanced technology of cutting
the sugarcane. I.e. Harvester Machine. Shree SomeshwarSakharKarkhana Ltd having its own

18. 13
two machines. It reduce the extra workers cost. After reaching cutter sugarcane in to sugar
factory actual process is start. Firstly tonnage of sugarcane is done
2.3.Visionand mission
2.3.1 Vision:
Our aspiration is to become a leading creator of shareholder in the co-operative sector.
To achieve this, we will use the energy of our shareholders, our farmers, develop &
implement leading edge technologies.
2.3.2 Mission:
1. To attain a zero pollution level with the help of surface aerobic composting project.
2. To study adequate quantity of CO2 gas in the proportion of demand.

19. 14
2.4.History
1. Introduction of Organization: - Shree Someshwar Sahakari Sakhar Karkhana Ltd (SSSSKL)
is a co-operative sugar factory Established in 20th June 1960. Situated in BaramatiTaluka, Pune
District in Maharashtra state. SSSSKL was started as a TCD factory in the year 1961-62,
subsequently upgraded to 2500 TCD in the year 1988-89. The first expanded capacity crushing
took place in the year 1989-90. Presently the crushing capacity including stoppagebetween 3200
to 3600 TCD.
Shree. Someshwar S. S. K Ltd. Having near about 16642 members. Members are the owner of
the factory. Sugarcane is the main raw material for sugar. Farmers who grows sugarcane. Sugar
factory bring workers from Beed, Ahmednagar, Barshi and Jamkhed for cutting the sugarcane.
Now Shree. Someshwar S. S. K. Ltd, also uses the advanced technology of cutting the
sugarcane. I.e. harvester Machine. Shree. Someshwar S. S. K. Ltd. Having its own two machines.
It helps to reduce the extra workers cost. After reaching cutting sugarcane in to sugar factory
actual process is start. Firstly tonnage of sugarcane is done.
2.History of sugar industry in Maharashtra:
In 1945 Late PadmashreeVithalraoVikhePatil pioneered the first successful Co-
operative Sugar Factory in the country at Pravaranagar in Ahmednagar District
ofMaharashtra which was commissioned in 1951.
Maharashtra Sugar Industry is one of the most famous and large-scale sugar
manufacturing sectors in India. Sugar manufacturing has been growing at a massive pace since
past few years and a glance statistics regarding sugar production reveals that Maharashtra is
doing better than other states.
The Sugar industry in Maharashtra is widely popular in the co-operative sector since
farmer possess a share in the sugar factories. Maharashtra has witnessed an outstanding growth
in its sugar industry. Sugarcane is one of the chief crops among all other crops manufactured in
Maharashtra. A number of sugar industries have been established in Maharashtra. Some of the
towns of Maharashtra which have sugar factories are Indapur, Pawarwadi, Nityanadnagar,
Kaunda, Navapura, Kuranewadi, Mankeshwar, Kadepur, Devdaithan, Sujatpur, Sheshnagar,
Radhanagar, and Sipora.

20. 15
The co-operative sugar industry in Maharashtra is growing by leaps and bounds and has
decided to implement a new resolution called futures trade in the sugar manufacturing.
The concept of futures trading is not very clear with the people involved in Maharashtra
industry. But according to Mr. PrakashNaiknavare, Managing Director of Maharashtra State Co-
op Sugar Factories Federation, the concept of futures trading should be taken positively and the
industry should adapt itself to the changing times.
Some of the units of Maharashtra sugar industry of late are running out of control and
have got derailed from the actual track that was supposed to be followed. Till now, 14 units all
over India have sought commendation for futures trading in the sugar mills.
The Maharashtra sugar industry contributes almost 40 percent to India’s total sugar
production. During 2001-02, sugar industry in Maharashtra is estimated to have produced 50-67
lakes tone of sugar. The sugarcane price stood up to Rs. 600 per ton as has been stated by an
administrative unit of federation. The sugar industry in Maharashtra has also decided to
introduce technologies in the sugar and sugarcane production.

21. 16
2.5. Organizational Structure
Shareholder
Managing Directors
Board of Directors
E]Security
Department
D]
HR
C]HDTCB]General
Manager by
product
Branch
A]Work
Manager
Skilled
Labor
Manager
Unskilled
Labor
Manager
Helper
Labor
Manager
Transport
Department
Custom
Manager

22. 17
2.6. Board of Directors (From 19/4/2015)
Sir,No Name Directors
1 Mr.PurushottamJagtap Chairman
2 Mr LaxmanGophane Vice-Chairman
3 Mr.MahandraKakade Directors
4 Mr.DilipThopate Directors
5 Mr.DaulatSalunke Directors
6 Mr.vishalGaikwad Directors
7 Mr.NamdevShingate Directors
8 Mr.UttamDhumal Directors
9 Mr sangramsinhRajenimbalkar Directors
10 Mr.KailasTaware Directors
11 Mr.SunilBhagat Directors
12 Mr.SachinKhalate Directors
13 Mr.LalasoMalshikare Directors
14 Mr.MohanJagtap Directors
15 Mr.ShantaramKapare Directors
16 Mr.KishorBhosale Directors
17 Mr.Dadasaheb More Directors
18 Mis. RutujaDhumal Directors
19 Mis. HirabaiWayal Directors
20 Mr.ShailendraRaskar Directors
21 Mr.SiddhartGite Directors
22 Mr. Adv. Mahesh Rane Directors
23 Mr. Bharat Khaire Directors
24 Mr.DigambarDurgade Directors
25 Mr.SureshTaware Managing Director

23. 18
2.7. Product Profile:
1. Biogas Plant:Biogas is generated is supplied as a fuel.
2. Co-generation power:in factory, about 4000500 unit electricity is generated & the same is
supplied to M.S.E.B
3. Surface Aerobic composting:press mud & spent wash are mixed together in a specific
quantity in which surface aerobic composting micro-organisms are mixed to covert the same
into compost fertilizer
4. Ethanol/ E.N.A/Rectified spirit (Distillery):By using 35,000 metric tonne molasses, the
factory has generated about 8950000 litres of rectified spirit & 6525000 litres of E.N.A.
2.8.Classification of Members:
There are four categories of Membership:
1) Producer Members.
2) Ordinary or non-producer Members.
3) Nominal Members.
4) Beneficiary Members.
Producer members are the agriculturists cultivating sugarcane. Ordinary membership is open to
Govt. and Co-op. institutions in the area of operation of the factory. Nominal members are the
contractors and suppliers of various material required by the factory. Beneficiary members are

24. 19
those who would be benefited by the developmental schemes undertaken by a. voting right is
confined to producer members.
2.9.Administrative Set Up
1) 18 Members elected by producer members
2) 3 Female Members elected by producer members.
3) 1 Member elected by ordinary members.
4) 1 Member from Weaker section.
5) 1 Member from Scheduled caste.
6) 1 Member from OBC.
7) 1 Member from NT/SC.
8) 1 Nominee of central Financing Agency.
9) 1 Nominee of Registrar of Co-op Societies (State Govt. Nominee)
10) 1 Director co-opted as Expert by Board of Directors in consultation.

25. 20
CHAPTER No-3
RESEARCH METHODOLOGY
3.1. Title of Project:
“Study ofWorking Capital Management Practices with Respect to Shree Someshwar Co-
Operative Sugar Factory, Someshwernagar.
3.2 Duration of study:
50 Days working in factory
3.3.Research Design:-
I used casual type of research design because the objective of study is to investigate the
importance of working capital management in the company and why there is need to study
working capital management and ratio analysis.
3.4 Objectives of Study
The following are the objectives of study
1) To analyses the concept of working capital & various elements of Working Capital.
2) To study the working capital cycle.
3) To discuss the ways & means of arranging funds for effective working capital.
4) To calculate ratios related to working capital and from that determine liquidity position of the
company.
5) To suggest measures to obtain optimum working capital policy.
3.5. Sources of Data:
There are two methods of data collection. Such as primary and secondary method
1. Primary Data: Primary data is the data which is collected a fresh and for the first time, thus
happen to be original in character for this project. The primary data has been collected by using
following methods:
1) Observation Method Personal Interview with Chief Accountant.

26. 21
3. Secondary Data:
The secondary Data is the data which have already collected by someone else and which have
been already been passed through the statistical process. For the purpose of study financial data is
collected from the financial statements given in annual reports income and expenditure
statements various books.
3.6. Limitations of the study
1) These financial statements are prepared at the end of the financial year. So, it gives a view on
particular date.
2) The main limitation of the research is the data source. The data is collected from the audited
financial statements, which are prepared on the historical cost basis
3) Period of observation is of years. So, long term observation for the period more than 4years
cannot be ascertained

27. 21
CHPTER NO- 4
DATA ANALYSIS & INTEPRETATION
1. Total Current Assets
Table No: 4.1: Total Current Assets (Rs. In Cr)
Sr.
No
Particular
2011-12 2012-13 2013-14 2014-15 2015-16
1
Cash in Hand
0.03 0.04 0.02 0.01 0.02
2
Cash at Bank
1.66 0.53 6.05 11.36 53.038
3
Investment
3.14 3.42 3.42 3.42 3.42
4
Advance
12.30 10.31 7.36 13.35 6.20
5
Deposits
1.75 1.26 4.07 4.42 4.53
6
Other Assets
31.21 38.68 37.42 40.14 45.91
7
Stores & spares
11.36 7.88 7.66 7.10 7.06
8
Stock of sugar &other
206.85 213.83 119.09 155.25 229.15
9
Prepaid expenses
0.14 0.07 0.13 0.08 0.013
Total 268.44 276.02 185.22 235.13 349.34

28. 22
2. Total Current Liabilities
Table No. 4.2: Total Current Liabilities (Rs. In Cr)
Sr.
No
Particulars 2011-12 2012-13 2013-14 2014-15 2015-16
1 Deposits 22.45 19.70 25.93 24.75 25.52
2 Government dues 0.61 0.83 7.32 7.14 7.13
3 Outstanding sugarcane bill 20.52 15.92 72.95 15.12 12.58
4 Other liabilities 140.64 86.89 61.95 81.70 87.03
5 Bonus 3.87 3.69 1.64 0.71 0.78
6 Outstanding interest 2.20 2.06 7.24 7.47 10.66
Total 190.29 129.09 177.03 136.88 142.998

29. 23
3. Total working Capital
Table No. 4.3: Total working Capital (Rs. In.Cr)
Sr.
No
Particular 2011-12 2012-13 2013-14 2014-15 2015-16
(A) Current Assets
1 Cash in Hand 0.03 0.04 0.02 0.01 0.02
2 Cash at Bank 1.66 0.53 6.05 11.36 53.08
3 Investment 3.14 3.42 3.42 3.42 3.42
4 Advance 12.30 10.31 7.36 13.35 6.20
5 Deposits 1.75 1.26 4.07 4.42 4.53
6 Other Assets 31.21 38.68 37.42 40.14 45.91
7 Stores & spares 11.36 7.88 7.66 7.10 7.06
8 Stock of sugar &other 206.85 213.83 119.09 155.25 229.15
9 Prepaid expenses 0.14 0.07 0.13 0.08 0.013
Total 268.44 276.02 265.22 235.13 349.383
(B) Current Liabilities
Sr.
No
Particulars 2011-12 2012-13 2013-14 2014-15 2015-16
1 Deposits 22.45 19.70 25.93 24.75 25.52
2 Government dues 0.61 0.83 7.32 7.14 7.13
3 Outstanding sugarcane
bill
20.52 15.92 72.95 15.12 12.58
4 Other liabilities 140.64 86.89 61.95 81.70 87.03
5 Bonus 3.87 3.69 1.64 0.71 0.78
6 Outstanding interest 2.20 2.06 7.24 7.47 10.66
Total 190.29 129.09 177.03 136.88 206.385
(C) Net Working Capital
(A-B)
78.15 146.93 88.19 98.25 142.998

30. 24
1.41
2.13
1.04
1.73
2.44
0
0.5
1
1.5
2
2.5
3
2011-12 2012-13 2013-14 2014-15 2015-16
series 1
4.Current Ratio
Current Ratio= Current Assets / Current Liabilities
Table No 4.4: Current Ratio (Rs. In Cr)
Graph No 4.1: Current Ratio
Interpretation: the above graph shows that the current ratio for financial 2015-16 is higher I.e.
2.44 as compared to remaining years it has decreased in year 2013-2014 i.e. 1.04.Higher current
ratio shows the ability of the company to pay off its current liabilities efficiently. The same time
high current asset ratio this way result in increase in profitability due to blocking of large fund in
working capital
Particulars 2011-12 2012-13 2013-14 2014-15 2015-16
Current Assets 268.44 276.02 185.22 235.13 349.34
Current Liabilities 190.32 129.09 177.03 136.88 142.998
Current Ratio (%) 1.41 2.13 1.04 1.73 2.44

31. 25
5. Quick Ratio
Quick Ratio= Quick Asset / Quick Liability
Table No 4.5: Quick Ratio (Rs. In Cr)
Graph No. 4.2: Quick Ratio
Interpretation: This ratio is indicates whether the organization has the ability to pay it short
term liability. The ideal ratio is assumed to be 1:1. The above graph shows that the quick ratio
for financial year 2015-16 is higher I.e. 0.84 as compared to other years. It has decreased in year
2011-12 I.e. 0.32.
0.32
0.48
0.37
0.58
0.84
0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.9
2011-12 2012-13 2013-14 2014-15 2015-16
Particular 2011 -12 2012-13 2013-14 2014-15 2015-16
Quick Assets 61.45 62.12 66.00 79.8 120.19
Quick Liabilities 190.29 129.09 177.03 136.88 142.998
Quick Ratio (%) 0.32 0.48 0.37 0.58 0.84

32. 26
6. Working Capital Turnover Ratio
Working Capital Turnover Ratio: Net sale/ Working Capital
Table No. 4.6: working Capital Turnover Ratio (Rs. In Cr)
Particular 2011-12 2012-13 2013-14 2014-15 2015-16
Net Sales 401.39 281.92 220.29 263.79 303.84
Working Capital 78.15 146.93 88.19 98.25 142.99
WCTOR( Times) 5.13 1.91 2.49 2.68 2.12
Graph No. 4.4: Working Capital Turnover Ratio
Interpretation: The Working Capital to ratio Indicate firms capacity to utilize the working
capital in efficient way. The above graph shows that the working capital turnover ratio for
financial year 2011-12 is higher i.e. 5.13 as compared to other year. It has decreased in next year
2012-13 to 1.91. In 2012-13 it is ratio Indicate the lower working capital. Very high working
capital ratio is a sign of trading and organization may face shortage of working capital
5.13
1.91
2.49 2.68
2.12
0
1
2
3
4
5
6
2011-12 2012-13 2013-14 2014-15 2015-16

33. 27
7. Creditors Turnover Ratio
Creditors Turnover Ratio: Net Credit Purchase/ Average Creditors
Able No. 4.7: Creditors Turnover Ratio (Rs. In Cr)
Particular 2011-12 2012-13 2013-14 2014-15 2015-16
Purchases 318.00 205.49 170.55 222.93 223.52
Opening Creditors 40.18 20.52 15.93 72.93 15.12
Closing Creditors 20.52 15.92 72.93 15.12 12.58
Average Creditors 30.35 18.22 44.43 44.03 13.85
Creditors Turnover Ratio (Times) 10.28 11.27 4.95 5.06 16.13
Graph No. 4.6: Creditors Turnover Ratio
Interpretation: The above graph shows that the creditors turnover ratio for financial year 2015-
16 is higher i.e. 16.1. It has decreased in year 2013-14 i.e. 4.95. A high turnover ratio it indicate
that the payment to creditor is quite prompt.
10.28
11.27
4.95 5.06
16.1
0
2
4
6
8
10
12
14
16
18
2011-12 2012-13 2013-14 2014-15 2015-16

34. 28
8. Debtors Turnover Ratio
Debtors Turnover Ratio: Net Credit Sales/ Average Debtors.
Table No. 4.8: Debtors Turnover Ratio (Rs. In Cr)
Particular 2011-12 2012-13 2013-14 2014-15 2015-16
Sale 401.39 287.92 220.29 263.79 303.84
Opening Debtors 56.42 45.27 50.25 48.86 56.91
Closing Debtors 45.27 50.27 48.86 56.91 56.64
Average Debtors 50.84 47.76 49.55 52.88 56.77
DR.TO.R (times) 7.89 5.90 4.44 4.98 5.35
Graph No. 4.7: Debtors Turnover Ratio
Interpretation: The above graph shows that the debtors turnover ratio for financial year 2011-
12 is higher i.e. 7.89. It has decreased in year 2013-14 i.e. 4.44. A high debtors turnover ratio
indicate lower is the collection of period
7.89
5.9
4.44
4.98 5.35
0
1
2
3
4
5
6
7
8
9
2011-12 2012-13 2013-14 2014-15 2015-16

35. 29
9. Current Assets Turnover Ratio
Current Assets Turnover Ratio: Net Sales / Current Assets
Table No. 4.9: Current Assets Turnover Ratio (Rs. In Cr)
Particular 2011-12 2012-13 2013-14 2014-15 2015-16
Sales 401.39 281.92 220.29 263.79 303.84
Current Assets 268.34 276.02 185.22 235.13 349.34
CATOR (Times) 1.49 1.02 1.18 1.12 0.86
Graph No. 4.8: Current Assets Turnover Ratio
Interpretation: Current Assets Turnover Ratio indicates that the current assets are turned over
in the form of sales more number of times. A high current assets turnover ratio indicates the
capability of the organization to achieve maximum sales with the minimum investment in current
assets. The above graph shows that the current assets turnover ratio for financial year 2011-12 is
higher i.e. 1.49 as compared to year,2012-13, 2013-14, 2014-15, 2015-16 as well as it has
decreased in year 2015-016 i.e. 0.86
1.49
1.02
1.18 1.12
0.86
0
0.2
0.4
0.6
0.8
1
1.2
1.4
1.6
2011-12 2012-13 2013-14 2014-15 2015-16

36. 30
10. Components of working capital
I. Total Current Asset (In percentage)
Sr. No Particular 2011-12 2012-13 2013-14 2014-15 2015-16
1 Cash in Hand 0.01% 0.01% 0.01% 0.00% 0.057%
2 Cash at Bank 0.61% 0.19% 3.26% 4.83% 15.19%
3 Investment 1.17% 1.23% 1.84% 1.45% 0.97%
4 Advance 4.58% 3.73% 3.97% 5.67% 1.77%
5 Deposits 0.65% 0.45% 2.19% 1.87% 1.29%
6 Other Assets 11.62% 14.01% 20.20% 17.07% 13.14%
7 Stores & spares 4.23% 2.85% 4.13% 3.01% 2.02%
8 Stock of sugar &other 77.05% 77.46% 64.29% 66.02% 65.59%
9 Prepaid expenses 0.05% 0.02% 0.07% 0.03% 0.037%
Total 100 100 100 100 100

37. 31
Components of working capital
II. Total Current Liabilities (In percentage)
Sr.
No
Particulars 2011-12 2012-13 2013-14 2014-15 2015-16
1 Deposits 11.79% 15.26% 14.64% 18.08% 17.84%
2 Government dues 0.32% 0.64% 4.13% 5.21% 4.98%
3 Outstanding sugarcane bill 10.78% 12.33% 41.20% 11.04% 8.79%
4 Other liabilities 73.90% 67.30% 34.99% 59.68% 60.86%
5 Bonus 2.03% 2.85% 0.92% 0.51% 0.054%
6 Outstanding interest 1.15% 1.59% 4.08% 5.45% 7.45%
Total 100 100 100 100 100

38. 32
CHAPTER NO- 5
FINDINGS
Findings Related to Various Elements of Working Capital
 Cash: There is stability in the proportion of cash maintained every year. As cash balance in
current assets is minimum it indicates that there is less idle cash and also indicates proper
utilisation of cash. By proper accounting of cash liquidity levels of the company can be
determined and accordingly future cash requirements can be easily worked out.
 Receivables: Debtors form the major part of current assets. The Debtors collection period is
on the decrease which means the customers are making payments faster which is a good sign
for the company.
 Inventory: Inventory includes Raw Material, Work in progress, Finished Goods and Packing
Material. The main Raw Material of company is sugarcane. As the proportion of Inventory to
Total Current Assets is being increased on year on year basis, it means that inventory control
system adopted by the company is not satisfactory.
 Net Working Capital: It is the difference between current assets and current liabilities. The
net working capital has increased in 2015-16. This is due to the tremendous rise in the current
assets and comparatively a slow rise in current liabilities. A continuous rise in the net
working capital is a positive sign.

39. 33
Findings Related to Working Capital Ratios
1) The Working Capital position of factory for the period 2011-2016 is good.
2) Organization quick ratio is always less than one & it is also lower than current ratio which
means the organization current assets are higher depend on inventory.
2) The working capital turnover ratio is very high in year 2015-16 it has decreased in 2011-12
implying inefficient utilization of working capital. Proper and efficient inventory control
techniques would help to increase the working capital turnover.
4) Creditor’s turnover ratio reveals the no of times the creditors turn on the average each year
2011-2012 and 2012-13 tell at what speed the creditors are paid. In 2011-12 payment to
creditors is delayed so the organization bear burden of debt service charges. In year 2013-14
and 2014-15 ratio is decreased 4.95 and 5.06.

40. 34
Chapter No-6
Suggestions
1) The proportion of debtors to total current assets is high. So, the following suggestions are
made to the company for reducing the debtor’s collection period as it extends the operating
cycle period of the company.
 There should be a great deal of accuracy in billing.
 There should not be any ambiguity in terms of contract.
 Company should provide cash discount to its customers.
 Proper checks should be conducted while dispatching the goods
2) Company’s investment in current assets is increasing so proper control should be exercised, so
that funds will not get blocked in current assets.
3) The firm has invested more on fixed asset. By investing in fixed asset is useless because they
cannot be converted into cash major problem of the firm is that it does not have sufficient
balance, so I personally feel that the firm better to invest in current asset instead of having high
inventory
4) As it well known fact that sugarcane grown is not only produces sugar. It can produce many
other products also like molasses, cartons, electricity and beverages therefore company
need to focus in these areas also.

41. 35
Chapter No- 7
CONCLUSION
Learning from the project:-
When I analyzed the financial performance, the firm’s commitment to meet short obligation is
good i.e liquidity position of the company is good. And in respect cash balance, the firm has not
sufficient balance. as result of the , it may affect the working capital so totally the firms
struggling to meet its current expenses and with regard to resources, the firms not utilizing the
asset properly and similarly the firm has a maintained high inventory

42. 36

43. BIBLIOGRAPHY
Books Name:
1) Khan & Jain, “Financial Management”, 5th Edition 2004, Tata McGraw Hill Publishing,
New Delhi.
2) Dr. P. Periasamy, Working Capital Management”, Himalaya Publishing House Pvt. Ltd.
Mumbai.
3) I. M. Pandey, “Financial Management”, 9th Edition 2009 by Vikas Publishing House Pvt.
Ltd., New Delhi
4) Cooper & Schindler, Business Research Methods, Tata McGraw Hill Publishing, New
Delhi. 9th Edition 2006.
Annual Report:
1) Annual Reports of last five Years i.e. 2011-12 to 2015-16 of Shree Someshwar S. S. K. Ltd.
Website:
1) www.financeworld.com
2) www.Someshwarsakhar.com