A STUDY ON WORKING CAPITAL MANAGEMENT IN QUILON CO-OPERATIVE SPINNING MILLS LIMITED, CHATHANNOOR

A PROJECT REPORT submitted by SAIF RAWTHER.S Reg. No: 088001113042

Under the guidance of Mrs.A.SUGUNA, MBA, M.Phil. In partial fulfillment of the requirements of Anna University Coimbatore for the award of the degree of MASTER OF BUSINESS ADMINISTRATION

DEPARTMENT OF MANAGEMENT STUDIES MAHARAJA INSTITUTE OF TECHNOLOGY Affiliated to Anna University, Coimbatore. August 2009

DECLARATION

I hereby declare that the summer training report, entitled A STUDY ON WORKING CAPITAL MANAGEMENT IN QUILON CO-OPERATIVE SPINNING MILLS LIMITED, CHATHANNUR, submitted to the Anna University Coimbatore in partial fulfillment of the requirements for the award of degree of MASTER OF BUSINESS ADMINISTRATION is a record of original and independent research work done by me during July 2008 to August 2008 under the supervision and Guidance of Mrs.A.SUGUNA, MBA., M.Phil., Lecturer Management Studies, Maharaja Institute of Technology, Coimbatore and it has not formed the basis for the award of any Degree / Diploma / Associate ship / Fellowship or other similar title to any candidate of any University.

PLACE: DATE :

Signature of the student (SAIF RAWTHER.S)

MAHARAJA INSITUTE OF TECHNOLOGY ARASUR POST, COIMBATORE- 641407 BONAFIDE CERTIFICATE

RAWTHER.S, during the period July 2009 to August 2009 of his/her study in the MANAGEMENT STUDIES at MAHARAJA INSTITUTION OF TECHNOLOGY, COIMBATORE, under the supervision and guidance of Mrs.A.SUGUNA, MBA., M.Phill., and the training report has not formed the basis for the award of any Degree / Diploma / Associateship / Fellowship or other similar title to any candidate of any University.

Faculty Guide

Director / HOD

Viva - Voice Examination held on: _______________________________

Internal Examiner

External Examiner

Date : Place :

ACKNOWLEDGEMENT

I wish to express my heart full thanks to the Management of Maharaja Institution of Technology, Coimbatore. I regard my profound thanks to Dr.G.RAMESH, ME., Ph.D., FIE., Principal, Maharaja Institute of Technology for giving me this opportunity to do this research work. I express sincere and profound thanks to Prof. R.RANGASWAMY, MA., MMS., M.Phil., DSS., Dean, Department of Management Studies for providing timely direction to undergo this project. I am greatly indebted to my faculty guide Mrs.A.SUGUNA MBA., M.Phill., for guiding me at every stage of the study with her in depth knowledge of the subject matter, experience and innovative ideas. I express my heartfelt thanks to Mrs. R.VIJAYALAKSHMI, M.Com., MBA., M.Ed., M.Phil., Ph.D., head of the department for providing me the chance to do the project. I extend my sincere thanks to the Management, QUILON COOPERATIVE SPINNING MILLS LTD., CHATHANNUR, for permitting me to undergo my project work in their esteemed institution.

[SAIF RAWTHER.S]

CONTENTS

CHAPTER
CONTENTS LIST OF TABLES

DESCRIPTION
ACKNOWLEDGEMENT

PAGE NO.

LIST OF CHARTS ABSTRACT 1 INTRODUCTION 1.1 INTRODUCTION ABOUT THE PROJECT ABOUT THE STUDY OBJECTIVES OF THE STUDY SCOPE OF THE STUDY LIMITATIONS OF THE STUDY 1.2 INTRODUCTION ABOUT THE INDUSTRY 1.3 INTRODUCTION ABOUT THE COMPANY 1.4 REVIEW OF LITERATURE 2 3 4 5 6 RESEARCH METHODOLOGY ANALYSIS & INTERPRETATION FINDINGS RECOMMENDATIONS CONCLUSION BIBLIOGRAPHY APPENDIX 1 13 14 15 16 18 24 27 30 57 59 61

LIST OF TABLES

TABLE NO. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

TITLE
Distribution of Venture Capital Capital structure Schedule of Changes in Working Capital (2003-2004) Schedule of Changes in Working Capital (2004-2005) Schedule of Changes in Working Capital (2005-2006) Schedule of Changes in Working Capital (2006-2007) Schedule of Changes in Working Capital (2007-2008) Current Ratio Quick Ratio Absolute Liquid Ratio Working Capital Turnover Ratio Inventory Turnover Ratio Debtors Turnover Ratio Average Collection Period Creditors Turnover Ratio

PAGE NO.
19 21 31 33 35 37 39 41 43 45 47 49 51 53 55

LIST OF CHARTS

CHART NO. 1 2 3 4 5 6 7 8 9 10 11

TITLE
Working Capital Cycle Kinds of Working Capital Organization Chart Current Ratio Quick Ratio Absolute Liquid Ratio Working Capital Turnover Ratio Inventory Turnover Ratio Debtors Turnover Ratio Average Collection Period Creditors Turnover Ratio

PAGE NO.
3 4 23 42 44 46 48 50 52 54 56

ABSTRACT

This is an attempt to understand the relationship and trends to determine weather or not the financial position of the concern and its operational efficient have been satisfactory, the concept of Working Capital Management is typically devoted to evaluate the past, currents and projected performance of the business firm. In general, it is the analysis of the Gross Working Capital, Net Working Capital, and Ratio Analysis etc.

The study period was around one month in the finance department of the company the main sources of data were some informal interviews with executives and other secondary data like periodicals, company magazines, annual reports, and other published results, data was mainly collected from general accounts section of the financial departments.

The main objective of the study is to determine the long-term and short-term solvency of the Business and to analysis in detail the progress of the company, and then objectives are to give valuable suggestions to the company as regards its financial performance and to evaluate the efficiency of the organization in these aspects.

Working Capital Management is mainly carried out tools like ratio analysis and schedule of changes in working capital of the previous years. Inference are made out of these tools and based on the inference findings and suggestions are recommended.

BIBLIOGRAPHY

1. R.K.SHARAMA, SHASHI K. GUPTHA, FINANCIAL MANAGEMENT: Principles and Practice, (5th reprint; New Delhi: Kalyani publishers Ludhina, 2007) pp 20.120.15. 2. S.N.MAHESHWARI, S.K.MAHESHWARI, ACCOUNTING FOR MANAGEMENT, (5th reprint; New Delhi: Vikas Publishing house Pvt Ltd., 2007) pp 3.1. 3. I.M.PANDY, FINANCIAL MANAGEMENT, (9th edition; New Delhi: Vikas Publishing house Pvt Ltd., 2004) pp 577. 4. PRASANNA CHANDRA, FINANCIAL MANAGEMENT: Theory and practice, (10th reprint; New Delhi: Tata McGraw-Hill publishing company Ltd., 2007) pp 691.

5. M.Y KHAN AND P.K GAIN, FINANCIAL MANAGEMENT, (5th edition; New Delhi: Tata McGraw-Hill publishing company Ltd., 2007) pp 13.3-13.45. 6. C.R. KOTHARI, RESEARCH METHODOLOGY: Methods and techniques, edition; New Delhi: International Pvt. Ltd., 2005) pp 7. www.google.com 8. www.bing.com 9. www.dictionary.com 10. www.answer.com (3rd

BALANCESHEET AS ON 31-3-2003

Particulars

Schedule No.

Amount

Sources of funds 1. Shareholders funds:a) Share capital b) Reserves and surplus 2. Loan funds:a) Secured loan b) Unsecured loan 106766077.25 TOTAL Application of funds 1. Fixed assets 2. Investments Current assets, loans and advances Less: Current liabilities and provisions Net current assets Profit and loss account (Loss) 5828116.00 123000.00 23361232.83 43994430.43 20633197.60 121448158.85 III IV 29359606.26 36518329.00 I II 27285506.00 13609635.99

V VI VII VIII (-) IX

106766077.25 TOTAL BALANCESHEET AS ON 31-3-2004

Particulars

Schedule No.

Amount

Sources of funds 1. Shareholders funds:a) Share capital b) Reserves and surplus 2. Loan funds:a) Secured loan b) Unsecured loan 127498768.25 TOTAL Application of funds 1. Fixed assets 2. Investments Current assets, loans and advances Less: Current liabilities and provisions Net current assets Profit and loss account (Loss) III IV 34361061.26 5249565.00 I II 27278506.00 13609635.99

V VI VII VIII (-) IX

5746325.00 123000.00 22786669.63 58734780.43 35948119.80 157577563.05

127498768.25 TOTAL

BALANCESHEET AS ON 31-3-2005 Particulars Schedule No. Amount

Sources of funds 1. Shareholders funds:a) Share capital b) Reserves and surplus 2. Loan funds:a) Secured loan b) Unsecured loan 161091814.25 TOTAL Application of funds 1. Fixed assets 2. Investments Current assets, loans and advances Less: Current liabilities and provisions Net current assets Profit and loss account (Loss) III IV 40078297.26 80125375.00 I II 27278506.00 13609635.99

V VI VII VIII (-) IX

5223951.00 123000.00 18227994.41 57041960.78 38813966.37 19458829.62

161091814.25 TOTAL

BALANCESHEET AS ON 31-3-2006 Particulars Schedule No. Amount

Sources of funds 1. Shareholders funds:a) Share capital b) Reserves and surplus 2. Loan funds:a) Secured loan b) Unsecured loan 170835881.25 TOTAL Application of funds 1. Fixed assets 2. Investments Current assets, loans and advances Less: Current liabilities and provisions Net current assets Profit and loss account (Loss) III IV 46882364.26 83065375.00 I II 27278506.00 13609635.99

V VI VII VIII (-) IX

4767932.00 123000.00 15901791.72 85403903.32 69502111.60 2355447060.85

TOTAL

170835881.25

BALANCESHEET AS ON 31-3-2007 Particulars Schedule No. Amount

Sources of funds 1. Shareholders funds:a) Share capital b) Reserves and surplus 2. Loan funds:a) Secured loan b) Unsecured loan 177086565.25 TOTAL V Application of funds 1. Fixed assets 2. Investments Current assets, loans and advances Less: Current liabilities and provisions Net current assets Profit and loss account (Loss) VI VII VIII (-) IX 4378492.00 123000.00 18186704.11 112097679.30 93910974.19 266506048.44 III IV 47568059.26 88640364.00 I II 27278506.00 13609635.99

1770865665.25 TOTAL BALANCESHEET AS ON 31-3-2008 Particulars Schedule No. Amount

Sources of funds 1. Shareholders funds:a) Share capital b) Reserves and surplus 2. Loan funds:a) Secured loan b) Unsecured loan 213623145.25 TOTAL III IV 55485135.26 117249869.00 I II 27278506.00 13609635.99

V Application of funds 1. Fixed assets 2. Investments Current assets, loans and advances Less: Current liabilities and provisions Net current assets Profit and loss account (Loss) VI VII VIII (-) IX

4057545.00 123000.00 20703963.90 120350346.70 99646382.80 309088984.05

213623145.25 TOTAL