My Final Report Yash Gupta

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A

SUMMER TRAINING PROJECT REPORT ON

Working Capital Management At

Central Cottage Industries Corporation Ltd. (Noida)

Report submitted for the Partical fulfillment of the Deploma of

POST GRADUATE DIPLOMA IN MANAGEMENT (Session: 2011-13)

SUBMITTED TO: THE DIRECTOR

SUBMITTED BY: YASH GUPTA ROLL NO.- RBMI/11/19

RBMI, Greater Noida

P.G.D.M. 3rd Sem

RAKSHPAL BAHADUR MANAGEMENT INSTITUTE GREATER NOIDA

[AFFILIATED TO AICTE DELHI]

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DECLARATION I hereby declare that the following documented project report titled ―Working Capital Management “is an authentic work done by me as a part of my study on finance. I also further state that the project has been prepared by my own with the secondary data provided in the reports of the company, which were essential for the completion of the project. The project was undertaken as a part of the course curriculum of RBMI, Greater Noida(Affiliated to AICTE,NOIDA) . This has not been submitted to any other Examination body earlier.

YASH GUPTA P.G.D.M.3RD SEM (2011 – 2013) RBMI – GR. NOIDA

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ACKNOWLEDGEMENT

I take this opportunity in expressing my sincere gratitude to my teachers, guide and others who have helped me in completing my project report work in particular and my PGDM course in general.

First of all I would like to express my thanks to the management of the Handi Craft for allowing me to complete my training there. I am thankful to Mr. ABDUL SALAM (ADM. & WELFARE), the Mr.GIRISH TIWARI ( T&D MANAGER), who arranged my training programme in the organization.

I am thankful to Mr.MAHIPAT (Cash Dept.) , my training guide at CCIC Noida for his proper guidance, cooperation and valuable suggestions. It would be difficult task to complete this project report without his co-operation and guidance.

I would like to express my gratefulness to my honorable guide Prof. Archana Mam , whose inspiration and scholarly supervision made it possible to work on this project report. I also cannot forget the contribution of friends who knowingly or unknowingly helped me through out my project report.

YASH GUPTA P.G.D.M. 2011-13 ROLL NO – RBMI/11/19

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PREFACE Summer training is an integral part of our academic curriculum. During the training a student a student gets an opportunity to understand the practical aspects of theory. Training makes the concept clearer. This project report is outcome of the summer training that I have undergone at CCIC LTD. NOIDA for the partial fulfillment of POST GRADUATE DIPLOMA IN MANAGEMENT. The topic allotted to me by the company is “working capital Management”. CCIC LTD. India has given importance to working capital management because decisions management of working capital often represent the most important decisions taken by an organization, and they are extremely important, they sometimes also pose difficulties. The evaluation of projects should be performed by a group of experts who have no axe to grind. It is necessary to ensure that an impartial group scrutinizes projects and that objectivity is maintained in the evaluation process. The criterion selected should be a true measure of the performance of the company, and it should lead to the net increase in the company‘s wealth (that is, its benefits should exceed its cost adjusted for time value and risk). . The ratio analysis methods are most desirable criterion as it is a true measure of performance. The project emphasizes on the financing mix of the company. I have tried to my best to make a good report. However no one can claim perfection in its entirely. So I apologize for the discrepancy, if any, crept in. Preparation of project requires perseverance, initiatives, proper guidance and direction. So it‘s mandatory to take the aid of various departments. Actually a project summarized forms of seven activities. They arePlanning Resource collection Organizing Joint efforts Efficiency Communication Transparency

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TABLE OF CONTENT SL. Particulars No. 1. INTRODUCTION OF THE TOPIC

Page No. 7-24

Concepts of working capital Components and significance of working capital Working Capital Management

Inventory Management An Introduction Accounting standard(AS)-2 (Valuation of Inventories) Inventory Management Inventory management in CCIC

2. OBJECTIVE OF STUDY 3. SCOPE OF THE STUDY 4. COMPANY PROFILE

25 26 27 – 57

CCIC LTD. India A brief profile of CCIC LTD. Noida Mission & Vision Corporate Structure and Subsidiary Companies History of CCIC LTD. Noida

Major Events and Milestone Central Cottage Industries Corporation Ltd.Noida Mission &Vision The Historical March of

CCIC Ltd. Noida Overview of CCIC Ltd Different areas of CCIC and their projects:Products and Services Projects under CCIC Ltd. Noida CCIC Ltd. at a Glance Administrative Setup Organizational Setup

5. RESEARCH METHODOLOGY

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58 – 60

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6. OBSERVATION AND ANALYSIS 7. Cash Management

61 62 – 73

Meaning The cash budget Process of sale Accounting standard -3 AS-3 in CCIC Inventory management in CCIC

8. Debtors Management

74 – 78

Introduction Clients of CCIC Types of debtors Settlement of disputes Securitization Scheme

7.

WORKING CAPITAL ANALYSIS AND INTERPRETATION

79-106

Balance Sheet and profit & loss account for the year 2009,2010,2011

8. 9. 10. 11. 12. 13. 14. 15 .

RESULTS AND FINDINGS CONCLUSION LIMITATION OF STUDY RECOMMENDATION AND SUGGESTION BIBLIOGRAPHY APPENDIX ANNUAL REPORT ANNEXTURE-1

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107 108 109 110 111 112 113-136 137-139

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INTRODUCTION OF THE TOPIC

(Working Capital Management)

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WORKING CAPITAL  Working Capital = Current assets – Current liabilities    

It measures how much in liquid assets a company has available to build its business. A short term loan which provides money to buy earning assets. Allows availing of unexpected opportunities. Positive working capital is required to ensure that a firm is able to continue its operations and that it has sufficient funds to satisfy both maturing short-term debt and upcoming operational expenses. The management of working capital involves managing inventories, accounts receivable and payable and cash.  An increase in working capital indicates that the business has either increased current assets (that is received cash, or other current assets) or has decreased current liabilities, for example has paid off some short-term creditors.

Why working Capital is important? 

Investment in Current Assets represents a substantial portion of total investment.

 Investments in Current Assets and level of Current Liablities have to be geared quickly to changes in sales.

Concepts of Working Capital  Gross Working Capital  Net working Capital

Gross Working Capital: Total Current assets  Where Current assets are the assets that can be converted into cash within an accounting year & include cash, debtors etc.  Referred as ―Economics Concept‖ since assets are employed to derive a rate of return.

Net Working Capital:  Current Assts – Current Liabilities  Referred as ‗point of view of an Accountant‘.  It indicates liquidity position of a firm & suggests the extent to which working capital needs may be financed by permanent sources of funds.

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Components of Working Capital CURRENT ASSETS      

Inventory Sundry Debtors Cash and Bank Balances Short term loans and advances Pre-paid Expenses Accrued Incomes etc.

CURRENT LIABILITIES         

Sundry creditors Short term loans Provisions Bills Payable Dividends Payable & Proposed dividend Statutory liabilities Bank Overdraft Provident Fund Provision for taxation etc.

TYPES OF WORKING CAPITAL  Permanent Working Capital  Variable Working Capital

Permanent Working Capital  There is always a minimum level of current assets which is continuously required by a firm to carry on its business operations.  Thus, the minimum level of investment in current assets that is required to continue the business without interruption is referred as permanent working capital.

Variable Working Capital  This is the amount of investment required to take care of fluctuations in business activity or needed to meet fluctuations in demand consequent upon changes in production & sales as a result of seasonal changes.

SIGNIFICANCE OF WORKING CAPITAL  Positive correlations between sales and current assets: There is a positive correlation between the sale of the firm and its current assets. Increase in the sale of the product increases the current assets must be managed properly. rd

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10  Investment in current assets: Generally, more than half of the total capital in the firm is invested in the current assets, less than half of the capital is blocked in the fixed assets. Therefore, management of working capital is important.  No alternative for current assets: While fixed assets can be required on lease in emergency there is no alternative for current assets. Investment in current assets can be avoided without substantantial loss.  Important for small units: The management of working capital is more important for small units because they do not rely on the long-term capital market and have easy access to short-term financial sources such as trade credit, short-term bank loans etc.

IMPORTANCE OF WORKING CAPITAL: Working capital mismanagement or inadequacy of working capital may be the leading factor for business failures. Any type of neglect of or indifference towards working capital may result into technical insolvency or even liquidation of business entity. Inefficient working capital may cause either inadequate working capital or excessive working capital and both situations are dangerous as discussed below:

Adverse Consequences of Inadequate Working Capital 1.

Growth of company may be stunted with the incapability of it to undertake profitable projects due to non-availability of funds.

2.

It will become difficult to implement the operating plans as a result of which company's goals (profit) may not be achieved.

3.

Difficulties in meeting even the day-to-day commitments may create operational inefficiencies.

4.

Fixed assets may not be efficiently utilised and this may lower down the rate of return on investments.

5.

Inadequacy may prevent the company from availing attractive credit opportunity.

6.

The company may not be in the position to honour its short-term commitments. As a result, it may lose its reputation and is likely to face tight credit terms.

Dangers of Excessive Working Capital 1. Excessive working capital means unnecessary accumulation of inventories. This may increase the chances of inventory mishandling, theft, waste, etc. 2. Excess may serve as an incentive for adopting defective credit policy and also for slackening of collection from receivables .This may result in increased bad debt losses which may adversely affect the profit.

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11 3. Makes management quite complacent leading to managerial inefficiency. 4. May motivate a tendency to accumulate inventories for making speculative profit, resulting into a liberal dividend policy which may not be maintained when the company is unable to make speculative profits.

WORKING CAPITAL MANAGEMENT  Decisions relating to working capital and short term financing are referred to as working capital management. Short term financial management concerned with decisions regarding to CA and CL.  Management of Working capital refers to management of CA as well as CL.  If current assets are less than current liabilities, an entity has a working capital deficiency, also called a working capital deficit.  These involve managing the relationship between a firm's short-term assets and its short-term liabilities.  The goal of working capital management is to ensure that the firm is able to continue its operations and that it has sufficient cash flow to satisfy both maturing short-term debt and upcoming operational expenses.  Businesses face ever increasing pressure on costs and financing requirements as a result of intensified competition on globalised markets. When trying to attain greater efficiency, it is important not to focus exclusively on income and expense items, but to also take into account the capital structure, whose improvement can free up valuable financial resources  The fundamental principles of working capital management are reducing the capital employed and improving efficiency in the areas of receivables, inventories, and payables. Working Capital Management refers to all the aspects of the administration of both current assets and current liabilities. In other words, Working Capital Management is concerned with the problems that arise in attempting to manage the current assets, current liabilities and the interrelationship that exist between them. The basic objective of Working Capital Management is to manage the firm's current assets and current liabilities in such a way that the satisfactory level of Working Capital is maintained, i.e., it is neither inadequate nor excessive. Excessive Working Capital Management means the firm has idle funds which earn no profits for the firm. .Inadequate Working Capital Management means the firm does not have sufficient funds for running its operations which ultimately result in production interruptions and lowering down the profitability. An adequate level of Working capital in the business is indispensable. It should neither be more nor is less than what required. The current assets should be sufficient enough to cover current liabilities in order to maintain a reasonable safety margin. With the determination of the working capital it is also important to consider the optimum level of investments in different current assets and for that level of investment what should be the optimum mix of sort-term liabilities and long-term liabilities. Different components of Working Capital are to be properly balanced. The level of current assets should be

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12 greater than current liabilities in working capital management to avoid technical risks related to the insolvency of the firm. Risk can be evaluated only when we analyze the liquidity position of the concern. Liquidity signifies the ability of the concern to convert assets quickly into cash. Thus, if we want to keep the proportion of current assets at low point, it becomes essential to have more liquidity in such assets; only then we can save the loss of risk. In fact an integrated approach is needed in all these aspects while deterIndustry the volume of working capital. In .order to achieve the objectives, the Finance Manager has to perform basically two functions: • Estimating the amount of Working Capital Management. • Sources from which these funds have to be raised. Issues in working capital management relevant from managers' point of view are: • Time-Working capital management requires much of financial manager's time • Investment- Working capital represents large portion of the total investment in assets. • Criticality-IA/C management has great significance for all firms but it is very critical for small firms. Growth- the need for Working capital is directly related to the firm's growth.

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Inventory Management Inventory: An Introduction Definition Inventories are stock of the product of the company is manufacturing for sale and components that make up for the product. It is also a supply or stock of something. According to international Accounting Standard – 2, inventory is a tangible property which is held: 1) For sale in the ordinary course of business. 2) In the process of manufacturing for sale. 3) For consumption in the process of production of goods and services.

Types of inventory 1. Raw Material: - These are basic inputs which are converted into finished products through the manufacturing process. Raw material inventories are those unites which are purchased and stored for further production.

2. Work in progress: - Sometimes the manufacturing system involves various process for converting raw material might have been issued to the production process but might not have been completed as finished goods. This is known as work in progress. 3. Semi finished goods: - These are those finished goods which are the parts of finished goods and separately it is almost useless. e.g. various parts of a car if stored in various warehouses after manufacturing than it is semi finished goods but a full assembled car from these parts is call Finished goods.

4. Finished goods: - all the full manufactured goods may not be sold immediately these are too be kept in warehouses are call finished goods.

5. Stores and Spares: - These consists those products which serve as the accessories to the main product manufactured for the purpose of sale. e.g.- parts of heavy machines ,spear parts, etc

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Accounting Standard Accounting Standards issued by the ICAI have legal recognition through the Companies Act, 1956, whereby every company is required to comply with the Accounting Standards and the statutory auditors of every company are required to report whether the Accounting Standards have been complied with or not. The above legal provisions have cast a duty upon the management to prepare the financial statements in accordance with the accounting standards.

Accounting standard(AS)-2 (Valuation of Inventories) The objective of this standard is to formulate the method of computation of cost of inventories / stock, determine the value of closing stock / inventory at which the inventory is to be shown in balance sheet till it is not sold and recognized as revenue.

Definitions The following terms are used in this Statement with the meanings Specified:  Inventories are assets;  Held for sale in the ordinary course of business,  In the process of production for such sale; or  In the form of materials or supplies to be consumed in the production process or in the rendering of services.

Inventories are basically in four categories:  Finished Goods  Raw Material of Work In Progress(WIP)  Stores, Spares, Raw Materials, Consumables  Others Note: - Spares which relate to the Fix assets or are irregular are counted in accordance AS- 10

Measurement of Inventories Inventories should be valued at the lower of cost and net realizable value. The closing balances of inventories are calculated on the basis of market value and production value whichever is less. e.g. - market value of inventory is Rs 900 per unit and production value is Rs 2000/unit, than the closing balance of inventory will be valued @Rs 900/unit. As the same if market value of inventory is Rs 900 per unit and production value is Rs 350/unit, than the closing balance of inventory will be valued @Rs 350/unit.

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Measure points for the valuation of the inventories  Determination of the cost of inventories.  Determination of Net Realized value of inventories.  Comparison between Cost and Net Realized value.

Cost of inventories includes  Cost of purchase  Cost of Conversion  Other Cost

Cost of purchase includes     Less:    

Purchase prices Dutise and taxes Frighted inward Other expenditure directly attributable to the aqusition. Duties and taxes Recoverable by interprises from taxing authorities Trade discount Rebate Duty drawback Other similar items

Costs of Conversion include  Direct cost (costs directly related to the units of production)  Fixed and variable production overheads

Other Costs:Other costs are included in the cost of inventories only to the extent that they are incurred in bringing the inventories to their present location and condition. For example, it may be appropriate to include overheads other than production overheads or the costs of designing products for specific customers in the cost of inventories.

AS-2 in CCIC:On the comparison of AS-2 in CCIC we know that the company is following the terms of AS-2. The valuations of inventories on closing balance are calculated on the basis of Market value and production value whichever is less. The CCIC also follow the Weighted Average method for inventory control which is according to AS-2.

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Inventory Management Inventory consists of raw material, semi-manufactured products and completely manufactured products. It has been defined by the Accounting Principles Board as ―The aggregate of those items of tangible personal property which (a) are held for sale in the ordinary course of business, (b) are in the process of production for such sales, or (c) are to be currently consumed in the production of goods or services to be available for sale‖. Every firm invests a huge amount to maintain a certain level of inventory, or say stocks. Thus a large portion of working capital is involved in stock. On an average, inventories are approximately 60% of the total current assets in public limited companies in India. The level of inventories for a firm depends upon the nature of its business. A manufacturing firm will have high level of all three types of inventories, while a retail or wholesale firm will have a very high level of finished goods, no raw material and no work in progress inventories. Firm also maintain a fourth kind of inventory suppliers OR stores and spares. It includes office and plant cleaning materials like soap, brooms, oil, bulb etc. These materials do not directly enter in production but are necessary for production process. Because of the large size of inventory and the considerable fund engaged in Inventories it is become necessary to manage it in an effective and efficient manner. Material is as much cash as cash as cash itself and any theft, waste and excessive use of materials leads to immediate and direct financial loss. The process of managing inventory is called INVENTORY MANAGEMENT.

OBJECTIVES OF INVENTORY MANAGEMENT The objective of inventory management is to maintain sufficient inventory for the smooth production and sales operations and to avoid excessive and inadequate levels of inventory. Some other objectives are as below;  Ensure a continuous supply of raw material to facilitate uninterrupted production.  Maintained sufficient stock of raw material in period of short supply and anticipate price changes.  Maintain sufficient finished goods inventory for smooth sales operation and efficient customer service.  Minimise the carrying cost and time and  Control investment in inventories and keep it at an optimum level.

INVENTORIES MANAGEMENT TECHNIQUES Various techniques commonly used for inventory control are listed below:  ABC technique  Stock level – minimum, maximum and re-order level  Economic order quantity (EOQ)  VED (Vital Essential Desirable)  HML(High Medium Low)  Methods of pricing of material

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INVENTORY MANAGEMENT IN CCIC In CCIC inventory are basically consist of five items:  Stock of Handi Craft  Stock of stores and spears  Workshop job (work in progress)  Press  Medicine (central hospital)

Types of inventory use in CCIC

Stock of Handi Craft

Stock of Stores & Spears

Production through underground Industry

Stock of Press Materials

For the printing of various documents and job cards etc.

Stock of Medicines

CCIC having its own central hospitals

Production through overcast Industry

Stock for Workshop

Central, regional and unit workshop For the maintenan ce of machines

Spears of washeries s

Spears of HEMM (Heavy Earth Moving Machines)

Spears of safety materials.

Consumable spears

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Stock of Handi Craft :The measure functional area of CCIC is producing Handi Craft . The CCIC produce Handi Craft from its 13 producing areas. The company produce Handi Craft to fulfill the need of commercial energy of the country and with basic objective of getting maximum consumer satisfaction from Industry activities of Handi Craft . It basically fulfills the need of thermal power plants. About 80% of the county‘s power generation is met by Handi Craft . The produced Handi Craft s are of following types.  Raw Handi Craft  Washed Non-Coking Handi Craft  Washed Medium Coking Handi Craft  Hard Coke  Handi Craft Tar There are two types of Industry areas are carried out in CCIC.  Underground Industry  Opencast Industry CCIC has 58 Operative Industry comprising 21 underground Industry and 37 opencast Industry.

Stock of Stores & Spears These consists those products which serve as the accessories to the main product manufactured for the purpose of sale. e.g.- parts of heavy machines ,spear parts, etc. Stock of Stores & Spears are divided in four parts.  Spears of washeries :- CCIC have 4 Coking Handi Craft Washeries and 3 Non Coking Handi Craft Washeries.  Spears of HEMM (Heavy Earth Moving Machines): Spears of safety materials:- sefty spers aer those spares wsefty which used for the sefty purpose. It includes Machines for the in Industry,  Tools,  Helmet, globes, boots, torch etc. for workers  Consumable spears: - those spares which are consumed completely during process.

Stock of Press Materials:CCIC has its own press area for the printing of various documents, Job cards etc. So CCIC has to keep stock of printing items like, cartage, printing papers, parts of printing machine

Stock of Medicines:CCIC has its own central hospitals for its employee welfare. Following are the details of hospitals:  Two central hospitals at Ranchi and Nai Sarai equipped with all modern facilities for testing, diagnosis and treatment.  Regional Hospitals at Kargali, Dhori, Katahara, Rajhara (Daltonganj), Dakra and Kedla.  Hospitals/dispensaries for immediate medical aid at each Project (Colliery).

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Stock for Workshop:  A Central Workshop located at Barkakana with full infrastructural facilities.  3 Regional Repair Shops at Jarangdih, Tapin North and Dakra for a group of Industry which cater for overhauling of sub-assemblies of HEMM, System repairs of equipment and other major repairs beyond the scope of project / unit workshops.  Project / Unit workshop at every project for daily, periodic, scheduled maintenance requirements, running breakdown maintenance and replacement of spares and sub-assemblies

MAINTAINNCES OF INVENTORY To maintain these inventories there is central store unit in Barkakhana. There are total 11 areas (or projects) with their regional stores which maintain their inventory, which is completely managed by their staff members and is headed by the project manager. Inventories are also maintained at unit stores. Each 11 areas GM (general manager) sit at Darbhanga House(HQ,Ranchi).

11 areas’ are: 1) Barkasayal 2) Argada 3) North Karanpura 4) Rajhara 5) Piparwar 6) Rajrappa 7) Kuju 8) Hazaribag 9) Bokaro & Kargali 10) Dhori 11) Kathara

Budgeting for the inventory CCIC has a separate Material management department which deals with the purchasing of inventories according to need or demand of all areas. According to these budgets the the purchases are done for the store and issue. Before purchasing of inventory there are a fix estimated amount which is calls Budget. Budgets are prepared by budgetary control department at the head quarter where it is reconciled and then indent sent for store budget preparation and approval. Overall stores budget is prepared by combining each area material sent by each of the 13 areas.

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Material Management Department Of CCIC

Storage

Purchase

Issue

Centralized purchase is done through Headquarters Centralized purchase

Purchase:Decentralized purchase is done through Area

Decentralized purchase

Process of centralized Purchase: First there is a requirement and then manger prepare the budget.  After preparing the budget it is forward to the CIL headquarters.  After preparing the budget It is analyses by the management.  After the analysis the budget is approved by the management.  Approved budget funds are than sent to different area of distribution. Requiremen t

Budgetin g

Headquart er

Analysis

Approval by CIL

Distributio n

Note: - this is a process of procuring fund from the CCIC head office for the heavy machines and spears and large amount of fund required

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Process of Decentralized Purchase: Area manager is allotted with some amount of funds.  The allotted quota is for petty purchase in daily requirements.  A committee is formed to look after such petty expenses.

Area Manager

Allocated Quota

Small Committee

Local Purchase

Points should be considered on purchase of inventory:    

Right Quality Right Quantity Right Price Right Time Right Source

Mainly the purchase is done through Tender. Tenders are basically four types: Advertisement Tender  National Tender  Global Tender  Limited Tender  Single Tender  Emergency Purchase

Process of Tender:There are basically two sides of every tender at CCIC.  Technical Bid:- technical bid includes all the technical aspect of purchase, eg.- size, shape, quality, quantity, etc.  Financial Bid:-Financial bid includes the cost of purchase. When the company satisfied with technical aspect of purchase from the sample of interested parties than on basis of lowest cost value tender goes to the interested party. We can understand it better through following diagram:

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Tender

Technical Bid

Financial Bid

When technical bid OK than on the basis of lowest financial bid tender goes to interested party.

Checking of supplied material that it is according to given conditions or not

Store:For storage of purchased inventory the CCIC use ABC inventory controls technique.

ABC Inventory Control Technique (ALWAYS BETTER CONTROL) ABC Technique is a value based system of material control. In this technique material are analyzed according to their value so that costly and more valuable materials are given greater attention and care. All items are classified according to their value ie, high, medium and low values, which are known as A, B and C items respectively.

A items: High in value and low in quantity. These items engage 70% of funds and 10% of space in the inventory. B items: Medium in value and medium in quantity. These items engage 20% of funds and 20% of space in the inventory. C items: Low in value and high in quantity. These items engage only 10% of fund and 70% of space in the inventory. Thus the ratio between A, B and C is as follows:1. PRICE WISE – 7:2:1 2. QUANTITY WISE – 1:2:7

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EOQ (Economic Order Quantity) 1. Economic Order Quantity: It is the inventory level which minimizes the total of ordering and carrying cost 2.

Ordering Cost: This is used especially in the case of raw materials and is included in the

cost incurred in acquiring the raw material. It is proportional to the number of orders and inversely proportional to the size of inventory 3.

Carrying Cost: There are the costs which are incurred for holding a given amount of

inventory, they include opportunity cost of funds invested is inventories insurance, taxes, storage cost and the cost of deterioration and obsolescence 4.

Reorder Points: Reorder point is the inventory level at which an order must be placed to

replenish the inventory and evade the risk of running out of raw material 5.

Safety Stocks: Therefore in order to guard against the stock out, the company may keep

some buffer stock as a cushion against expected increased and/or delay in delivery .This buffer stock is called as safety stock.

Issue:Some important methods of issue are as follows:  LIFO (Last in fast out)  FIFO (First in first out)  HIFO(Highest in First out)  NIFO(in first out)  Simple Average Price method  Weighted Average Price method In C.C.L. The Weighted Average Price Method is Follow. Under the weighted average inventory method, the cost of goods aveliable for sale is devided by the number of unites aveliable for the sale to obtain a weighted average cost per unit. Inding inventory and cost of goods sold are than priced at this average cost Following is the Inventory position of CCIC for the year 2010-11

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Central Handi Craft field Limited, Ranchi Inventories Account (For the year ending 31st March 2011) Particulars 1. Stock Stores and spares Less: Provision

Amount (Rs. In Lakh) 17594.53 3619.07 13975.46

Add: In transit/Under inspection Stock Adjustment

380.84 0.00 14356.3

2.Stock of Handi Craft Raw Handi Craft Revenue Industry Capital Industry

108433.63 0.00 108433.63

Coke Soft Coke Hard Coke Washery Products Washed Handi Craft Middilings/Slurry Magnetite Handi Craft tar and other by products

3. Workshop Jobs: 4. Press Work In Progress/ Finished goods 5. Medicines(central Hospital) 6. Non-CIL Block TOTAL

0.72 64.43

65.15

5985.73 14701.02 20686.75 1.61 44.07 129231.21 129231.21 296.57 81.24 37.2 696.92 144699.44

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OBJECTIVES OF THE STUDY  To study and analyze the working capital policy of the CENTRAL COTTAGE INDUSTRIES CORPORATION (CCIC)To study the affairs of the company with reference to the working capital management and methods of its estimation used in the company.  To understand the general performance of the company.  To use quantities data for defining company‘s financial performance.  To know the profitability, production and efficiency of the firm.  To study the methods of financing working capital.  To analyses the performance effectiveness of the company.

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Scope of the study

The scope of the study is identified after and during the study is conducted. The study of working capital is based on tools like trend Analysis, Ratio Analysis, working capital leverage, operating cycle etc. factors like competitor‘s analysis, industry analysis were not considered while preparing this project.

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Company Profile

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CENTRAL COTTAGE OF INDUSTRIES CORPORATION LTD. India. A Country that has been an enigma to many across the globe. A Country that has inspired trends aroused curiousity delighted tourists and at the end of it, all left an impression on the minds of every body who has visited it. The cottage has been India‘s window to the World nearly over 50 years. The emporium has attracted a number of heads of States, Prime Ministers, Ambassadors, a host of other dignitaries from across the globe What began as an endeavour to preserve the traditional craftsmanship and excellence of skill as a part of national heritage has now become a cultural movement in its own way. It has brought about a togetherness in all the various forms of arts, crafts and apparel of India under one roof. From a tiny sales depot the emporium has now been developed into the largest single emporium in the Country with extensive reputation and a stamp of ethnicity, authenticity and quality on all the merchandise it shelters. Come & discover the magic of India through the eyes of the Cottge. Envisaged as a showcase of the creations of Indian craftsmen, weavers and folk artists the Central Cottage Industries Emporium has been a favourite with customers in India and the World over. It has taken special care to make sure that you get a feel of what the real India is all about through its products the décor the exhibition and everything else that goes with it. This unique store has tackled Handicrafts sales on a multilateral front embracing market research, hand picked buying, imaginative promotion design development, impeccable merchandise, careful inventories and variety of auxiliary services to make it a complete shopping experience. Cottage has been surging ahead with its emporia in five cities vis-a vis Delhi, Mumbai, Kolkatta, Chennai, Bangalore and franchise showrooms at Gurgaon and Jaipur which houses products from every state in the Country. In addition, Cottage has two exclusive product showrooms at Rajiv Gandhi Handicrafts Bhawan in Delhi - Cottage Carpets & Cottage Art Gallery. Our only aim is to give the customer the best and to bring forth the skill of all those numerous artists and craftsmen who otherwise would fade into oblivion and offering them a viable and honoured future by giving them a direct access to the markets. Simultaneously we have direct interaction with artisians thereby reviving some of the age-old crafts on one hand and keeping control on the costs on the other. So, now we feel that we can proudly say welcome to the world of Cottage, welcome to India.

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% SHARE OF COMMERCIAL PRIMARY ENERGY RESOURCES - INDIA India plans to grow its share in global handicrafts trade to about 4% in the next 3 years from the present level of less than 2%, this goal can be achieved by organizing Handicrafts and Gift Fairs. A 5 day long Indian Handicrafts & Gift Fair, Autumn edition, organized by EPCH, at India Expo Center, Greater Noida began last week. The fair is expected to generate trade enquiries and export orders in the range of Rs. 1500 crores. Indian Handicrafts exports have also been growing during the last one-decade on an average of 10% per annum. Even though the growth in exports during the last year was more than 11.46%, yet India has to undertake very aggressive marketing for achieving 4% share in global trade. Commenting on the periodicity of the fair Sudhir Tyagi, chairman EPCH said that the Indian Handicrafts and Gifts Fair held twice every year has established itself as the most effective marketing medium for the Indian Companies. Giving details of availabilities of the products in the fair Tyagi said that a whole range of utility items ranging from home furnishings, floorings, houseware, homeware decorative, gifts, furniture, chappals & sandals, costume & fashion Jewellery and fashion accessories etc will be on display in the fair. Raw material used will vary from metal, wood, natural fibers, man made fibers, stone, animal horns and other byproducts, leather, jute, silk, cotton, wool, terracotta to cane and bamboo etc. There will be an exclusive display of North Eastern products this year also in the Indian Handicrafts & Gifts Fair. Indian Handicrafts & Gifts Fair has now become MECCA in a loose sense. It is almost necessary for the Indian exporter looking for overseas buyers to participate in this fair. It is also necessary for overseas buyers to visit this fair to source their requirement. The fair not only provides a very large choice to overseas buyers both in terms of suppliers and in terms of range of products but also offers very competitively priced products, which helps them to increase their profit levels in the international market.

MISSION / VISION To be a premier organization in Developing, Promoting and Marketing of Quality Indian Handloom and Handicraft products.

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Corporate Structure and Subsidiary Companies CCIC has been very active in the local market since its formation. The tenth anniversary of the company existence marks the fulfillment of its founding objective: to become the preeminent full service Chinese investment institution operating with international standards in both domestic and cross border markets. CCIC has a number of branches, wholly-owned and holding subsidiaries around the country, including Guangxi branch, Shenzhen branch, Beijing Science & Technology Development Co., Co.,. The predecessor of CCICC is Jianyin Center, which was built in 1995 and incorporated by China Construction Bank, under the approval of the People‘s Bank of China and the State Administration for Industry and Commerce. In September 2004, pursuant to the shareholding system reform plan of China Construction Bank approved by the State Council, Jianyin Center became a company wholly funded by and directly affiliated to the China Investment Limited. Through the Shareholding system reform in 2007, the company was formally renamed as China Central Investment Co., Ltd., whose controlling shareholder is China Central Investment Limited.Adhering to the core value of corporate culture ―To get down to earnest work and act after reasonable and considerate thinking‖, CCICC is committed to provide the financial customers with the all-direction integrated services comprising systems integration services, application development services, financial support services, financial data processing services, Nowadays, the company has service companies in 46 countries in the whole world.CCICC has a local professional team who possesses rich industrial experiences and international concept can satisfy the customers‘ requirements and has been constantly providing innovative services. There are a team of executives who have decades of experiences and background in the banking department, and a group of experts who are masters in the financial industry , as well as a batch of energetic investors who are in the prime of their working lives.Relying on the scientific management, optimized resource allocation, highly efficient technical innovation, abundant banking

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31 experiences and professional technicians, CCICC aims at building itself a first-class professional, collective and international enterprise.Our mother company and major shareholder, CCICC Investment Ltd. ("CCICC") is a state-owned investment company established under the Company Law of the People's Republic of China. CCICC, which is headquartered in Beijing, was established in December 2003 and mandated to exercise the rights and the obligations as an investor in major state-owned financial enterprises, on behalf of the State. In September 2007, the Ministry of Finance issued special treasury bonds and acquired all the shares of CCICC from the People's Bank of China. The acquired shares were injected into China Investment Corporation ("CIC") as part of its initial capital contribution. However, CCICC's principal shareholder rights are exercised by the State Council. The members of CCICC's Board of Directors and Board of Supervisors are appointed by and are accountable to the State Council. CCICC, in accordance with authorization by the State Council, conducts investments into major Chinese state-owned financial enterprises. CCICC, in accordance with authorization by the State Council, makes equity investments in major state-owned financial enterprises, and shall, to the extent of its capital contribution, exercise the rights and perform the obligations as an investor on behalf of the State in accordance with applicable laws, to achieve the goal of preserving and enhancing the value of state-owned financial assets. CCICC does not conduct any other business or commercial activity. It does not intervene in the day-to-day business operations of the firms in which it invests. Currently, CCICC holds stakes in the institutions listed below: China Development Bank, Industrial and Commercial Bank of China Limited, Agricultural Bank of China Limited，Bank of China Limited, China Construction Bank Corporation, China Everbright Bank Corporation Limited, China Reinsurance (Group) Corporation, New China Life Insurance Company Co., Ltd.，China Jianyin Investment Limited, China Galaxy Financial Holding Company Limited, Shenyin & Wanguo Securities Co.,Ltd., China International Capital Corporation Limited，Guotai Junan Securities Co.,Ltd.，China Securities Co., Ltd.，China Everbright Industry Group Limited，Jiantou Zhongxin Asset Management Co., Ltd.. CIC holds the shares of CCICC in accordance with relevant directive issued by the State Council. However, the investment business of CIC and the share management function conducted on behalf of the State Council by CCICC are completely separated.

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Subsidiaries: "Indian" Bharat Handi Craft Ltd. (Mumbai)

Central Cottage of Industrial Ltd. (Ranchi) Handi Craft Planning & Design Institute Ltd. (kolkata) Eastern Handi Craft Ltd. (Sanctoria near Asansol)

Mahanadi Handi Craft Ltd. (Ahmdabad) Northern Handi Craft Ltd. (Singrauli) South Eastern Handi Craft Ltd. (Assam)

Western Handi Craft Ltd. (Nagpur)

Direct Subsidiaries: International Handi Craft Ltd. India Africana Limitada.

Indirect Subsidiaries Handi Craft Global Market Buisness CCIC Limited.

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Corporate Structure of Handi Craft India Ltd.

President of India acting through Ministry of Handi Craft Administration of India.

Public share holding

70%

30%

CCIC India Ltd.

100%

100%

100%

100%

100%

100%

100%

100%

100%

Handi Craft Planning & Design Institute Ltd.

Eastern Handi loom Ltd.

Northern Handi Craft and Handi looms ltd.

South Eastern Handi Craft and Handi Looms Ltd.

Western Handi Craft and Handi Looms Ltd.

Mahanadi Handi Craft and Handi looms Ltd.

Central Handi Craft and Handi Looms Ltd.

Bharat Handi Craft and Handi Looms Ltd.

CCIC India Africana Limitada.

70%

60%

Handi Craft Global Market Buisness

CCIC Limited

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History of Central Cottage of Industries Corporation Ltd.

HISTORY Caves of Ajanta and Ellora, temples of Konark and Khajuraho are rich examples of a resplendent past of Indian arts and crafts. These arts and crafts embody the essence of India. They are popular to the visitors and have been patronised by Kings and connoisseurs for centuries. The Central Cottage Industries Emporium, popularly known as "Cottage", "CCIC", "CCICCE" and "Cottage Emporium" is a mirror setting of Handicrafts and Handlooms, in the Indian art & craft scenario for over 50 years. It preserves and nurtures the rich heritage of a culture dating back to over 5000 years, unfolding a rich saga of breathtaking masterpieces by skilled artisans. To preserve and share traditional craftsmanship globally, the Cottage was formed in the year 1948. It is a breathtaking showcase of handicrafts and handlooms sourced from all over the country from dedicated artisans famed nationally and internationally. Thus transforming itself into an effective and efficient enterprise to present a part of the dynamic Indian culture. Over the last 50 years, the Emporium has attracted well-known personalities like Queen Elizabeth II of England, Queen Farah of Iran, Jacquiline Kennedy and a host of dignitaries from across the world. Today, the Cottage and its logo “The Bankura Horse”constitute a hallmark of tradition, quality and authenticity. It is a fair trading partner, with an overriding motto of servicing the interests of the craftsmen and availability of high quality product to its customers.

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Central Cottage Of Industrial Corporatition India Limited (New Delhi) India. A Country that has been an enigma to many across the globe. A Country that has inspired trends aroused curiousity delighted tourists and at the end of it, all left an impression on the minds of every body who has visited it. The cottage has been India‘s window to the World nearly over 50 years. The emporium has attracted a number of heads of States, Prime Ministers, Ambassadors, a host of other dignitaries from across the globe What began as an endeavour to preserve the traditional craftsmanship and excellence of skill as a part of national heritage has now become a cultural movement in its own way. It has brought about togetherness in all the various forms of arts, crafts and apparel of India under one roof. From a tiny sales depot the emporium has now been developed into the largest single emporium in the Country with extensive reputation and a stamp of ethnicity, authenticity and quality on all the merchandise it shelters. Come & discover the magic of India through the eyes of the Cottage. Envisaged as a showcase of the creations of Indian craftsmen, weavers and folk artists the Central Cottage Industries Emporium has been a favourite with customers in India and the World over. It has taken special care to make sure that you get a feel of what the real India is all about through its products the décor the exhibition and everything else that goes with it. This unique store has tackled Handicrafts sales on a multilateral front embracing market research, hand picked buying, imaginative promotion design development, impeccable merchandise, careful inventories and variety of auxiliary services to make it a complete shopping experience. Cottage has been surging ahead with its emporia in five cities vis-a vis Delhi, Mumbai, Kolkata, Chennai, Bangalore and franchise showrooms at Patna, Bodhgaya, Rajgir and Copenhagen(Denmark) which houses products from every state in the Country. In addition, Cottage has two exclusive product showrooms at Rajiv Gandhi Handicrafts Bhawan in Delhi - Cottage Carpets & Cottage Art Gallery. Our only aim is to give the customer the best and to bring forth the skill of all those numerous artists and craftsmen who otherwise would fade into oblivion and offering them a viable and honoured future by giving them a direct access to the markets. Simultaneously we have direct interaction with artisians thereby reviving some of the age-old crafts on one hand and keeping control on the costs on the other. So, now we feel that we can proudly say welcome to the world of Cottage, welcome to India.

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MISSION/VISION To be a premier organization in Developing, Promoting and Marketing of Quality Indian Handloom andHandicraftproducts.

Business/objective: CCIC‘s major objective is to promote and develop markets for quality Indian handi crafts and hand loom product sin Indiaand a broad.

OBJECTIVES  To produce, procure and sell quality handicrafts and handloom products and to develop markets for these products in India and abroad.  To continue to improve the quality of Indian Handicrafts and to upgrade and produce new designs.  To strengthen and expand the marketing network of the organization.  To generate adequate returns on Net Worth.  To manage trading activities so as to optimize sales and earnings and reduce expenditure.

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The Historical March of Central Cottage of Industrial corporation Limited Central Cottage Industries Corporations of India Limited was incorporated on 04-02-1976 with the objective to promote, develop, aid, and assist Cottage Industries by organizing product sales in India and abroad CCICIC is a Schedule-‘C‘ CPSE in Trading & Marketing sector under the administrative control of M/o Textiles with 100% shareholding by the Administration of India. Its Registered and Corporate offices are in New Delhi.

Strategic issue CCICIC procures merchandise from handicraft and handloom clusters and from a large number of artisans, craftsmen, weavers, etc. spread throughout the country and also from National Awardees, State Awardees, women organizations, minority and from weaker sections, etc. The retails prices and quality of products of CCICIC are considered a benchmark in the trade.

Performance Highlights The operational performance of the company along with performance indicators and selected financial ratios during the period 2008-09 to 2010-11 can be seen on the opposite page. The Company registered a reduction of ` 4.25 crore in total income during 2010-11 which went down to ` 68.25 crore in 201011 from ` 72.50 crore during 2009-10. The net loss of the company increased to ` 0.88 crore, an increase of ` 0.69 crore over the previous year‘s loss of ` 0.19 core due to decline in turnover. During the year, the Gurgoan franchisee was closed and operation of new showrooms at Mumbai started from June/ July2010.

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Formation of CCIC CCIC had a proud past. As HCHL, it heralded the beginning of nationalization of Handi Craft Industry in India. National Handi Craft Development Corporation Ltd. (HCHL) was set up in October, 1956 as Administration-owned Company in pursuance of the Industrial Policy Resolutions of 1948 and 1956 of the Administration of India. It was started with a nucleus of 11 old state collieries (owned by the Railways) having a total annual production of 2.9 million tonnes of Handi Craft . Until the formation of HCHL, Handi Craft Industry in India was largely confined to the DelhiHandi Craft belt in West Bengal and the Noida Handi Craft fields in Delhi(now in Noida), besides a few other areas in Delhi (now in Noida) and a part of Madhya Pradesh (now Chattishgarh also) and Mumbai. From its very beginning, HCHL addressed itself to the task of increasing Handi Craft production and developing new Handi Craft resources in the outlying areas, besides introducing modern and scientific techniques of Handi Craft Industry. f In the Second Five Year Plan (1956-1961) HCHL was called upon to increase its production from new collieries, to be opened mainly in areas away from the already developed Delhiand Noida Handi Craft fields. Eight new collieries were opened during this period and the production increased to 8.05 million tonnes by the end of Second Plan. During Third Five Year Plan (1961-1966), though the Corporation had built up a much larger production capacity, it could not be utilized due to a sluggish domestic Handi Craft market. Production had, therefore, to be pegged down and the development of several collieries undertaken from the early part of the Plan period, had to be suspended. By this time, the contribution of HCHL to the nation‘s Handi Craft production (67.72 million tones) increased to around 9.6 million tonnes.

With gradual rise in the demand of Handi Craft due to commissioning of new power plants and development of other Handi Craft -based industries during Fourth Five Year Plan (1969-1974), HCHL‘s production increased to 15.55 million tonnes by the terminal year of Fourth Five Year Plan, i.e, 1973-74. HCHL played a pioneering role in India‘s Handi Craft industry by introducing large-scale mechanization and modern and scientific methods of Handi Craft Industry for promoting conservation of high grades of Handi Craft and exploiting deep coking Handi Craft seams necessitating heavy capital investment and sophisticated technical skill. HCHL went in for foreign collaboration with countries such as Poland and the USSR besides limited collaboration with Japan, West Germany and France. HCHL‘s role can be truly assessed by its contribution towards growth of new Handi Craft resources in, what are known as, the outlying areas. The opening of new Industry in Madhya Pradesh, Mumbai and Maharashtra brought about a significant change in these regions by creating new opportunities of industrialization and employment. Development of the Noida Handi Craft fields has brought Handi Craft almost to the door steps of northern India.

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39 With the development and application of improved Industry techniques, emphasis on planning, design and research; introduction of modern mine management systems and an enlightened industrial relations policy, HCHL was able to provide the infrastructure for the total nationalization of Handi Craft industry in the country.

Nationalisation of Handi Craft Industry: A major event in the history of Indian Handi Craft industry during the Fourth Plan Period (1969-74) was the nationalisation of the erstwhile privately owned Handi Craft Industry in two phases. In the first phase, the management of coking Handi Craft Industry was taken over by the Administration of India on 17th Oct. 1971 and nationalization was effective from 5th January 1972. A state owned company, Bharat Coking Handi Craft Ltd. was formed for managing coking Handi Craft Industry. For convenience of management, BCCIC collieries in the East Bokaro Handi Craft fields in Delhi(now Noida) were transferred to HCHL, and its projects in Central Noida region viz., Sudamdih and Moonidih deep shaft Industry were handed over, in stages to BCCIC. In the second phase of nationalisation, the management of non-coking Handi Craft Industry in the country, excepting the captive Handi Craft Industry of the two steel plants, viz, TISCO and IISCO, was taken over by the Administration on 31st January 1973. These Industry were subsequently nationalized with effect from 1st May 1973 and another state-owned company, Handi Craft Industry Authority Ltd. (CMAL) came into being with headquarters at Calcutta (now Kolkata) to manage and develop HCHL collieries and other newly nationalized units. HCHL itself, in this process, became a division of CMAL which owned 36 collieries under commercial production in Bihar, Mumbai, Madhya Pradesh and Maharashtra, besides four Handi Craft washeries, one by-product coke oven plant, two large central workshops and manpower of about 71,000. The formation of CMAL witnessed regrouping of the Handi Craft Industry into three divisions, namely, Western, Central and Eastern. The regrouping had to be done for the convenience of management, keeping in view the geographical location of the collieries. 

As a result, HCHL units located in the States of Maharashtra and Madhya Pradesh, with the exception of Noida Handi Craft fields, became a part of the Western Division.



The Central Division consisted of all the old collieries of HCHL in Mumbaiand Delhi(except Sudamdih and Moonidih which had been handed over to BCCIC) and those acquired by CMAL after take-over in Giridih, East Bokaro, West Bokaro, South Karanpura, North Karanpura, Hutar & Daltongunj Handi Craft fields in Bihar. The Central Division consisted of 64 collieries, four Handi Craft washeries, one by-product coke oven plat, on bee-hive coke plant and one central workshop having a manpower of 1,11,500



Formation of CCIC



The CMAL, with its three divisions continued upto 1st November 1975 when it was renamed as Handi Craft India Limited (CIL) following the decision of Govt. of India to restructure the Handi Craft industry. The Central Division of CMAL came to be known as Central Handi Craft fields Limited and became a separate company with the status of a subsidiary of CIL, which became the holding company.

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Different areas of CCIC and their projects:BRANCHES & FRANCHISEE Central Cottage Industries Corporation Of India Limited Mrs. Anjali Rai (Chairperson) Jawahar Vyapar Bhavan, Janpath New Delhi, 110 001 (India) Phone : +(91)-(11)-41522077 Fax : +(91)-(11)-23328354 E-Mail : [email protected] Mrs. Alka Arora (Managing Director) Jawahar Vyapar Bhavan, Janpath, New Delhi, 110 001 (India) Phone : +91–11- 23323825, 23730374 Fax : +91-11-23328354 E-Mail : [email protected] Mrs. Kavita Prasad (Chief Vigilance Officer) Jawahar Vyapar Bhavan, Janpath New Delhi, 110 001 (India) Phone : +(91)-(11)-23326790 Fax : +(91)-(11)-23328354 E-Mail : [email protected] Mr. Pramod Nagpal (Senior General Manager) Jawahar Vyapar Bhavan, Janpath New Delhi, 110 001 (India) Phone : +(91)-(11)-23320554 Fax : +(91)-(11)-23328354 E-Mail : [email protected] Mr. R. K. Singh (Senior General Manager) Jawahar Vyapar Bhavan, Janpath New Delhi, 110 001 (India) Phone :+(91)-(11)-23701168 Fax :+(91)-(11)-23328354 E-Mail : [email protected]

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41 Our showrooms opan all 7 days in week from 10:00AM to 07:00 PM S. Place No.

Contact Person Mr. Deepak Kumar Addl. General Manager

1.

New Delhi

2.

Mumbai

Mr. Shoaib Shaikh Manager

3.

Mumbai

Mr. Shoaib Shaikh Manager

Mumbai

Mr. Shoaib Shaikh Managerr

Mumbai

Mr. Shoaib Shaikh Manager

6.

Kolkata

Mr. Aroop Sinha Dy. Manager

7.

Mr. S. Mukherji Bengaluru Addl. General Manager

4.

5.

Address Jawahar Vyapar Bhawan, Janpath, New Delhi - 110 001 34, Chhatrapati Shivaji Maharaj Marg, Mumbai 400 039 Shopper's Stop Home Stop division, 2nd Level, Inorbit Mall, Link Road, Malad (West), Mumbai - 400 064 Inorbit Mall, Unit No.G-50, Ground Floor, Sector No.30A, Taluka Vashi, New Bombay - 400 705 Weaver's Service Centre, 15 A, Mama Parmanand Marg, Opera House, Ground Floor, Hotel Regal Palace, Mumbai 400 004

Phone

Fax

Email

01123320439, 23326790

mgrsroom@ 011cottageemporium.in, 23328354 CCIC@ cottageemporium.in

02222850754, 22027537

CCICmumbai@ 022cottageemporium.in, 22021101 [email protected]

02228768329

CCICmumbai@ 022cottageemporium.in, 22021101 [email protected]

02227814685

CCICmumbai@ 022cottageemporium.in, 22021101 [email protected]

02223610348

CCICmumbai@ 022cottageemporium.in, 22021101 [email protected]

7, Jawaharlal 033Nehru Road, 22283205, Chowringhee, 22446072 Kolkata - 700 013

0332283205

144, M. G. Road, Banglore - 560 001

CCICbengaluru@ 080cottageemporium.in, 25593129 [email protected]

08025589515, 25584083

CCICkolkata@ cottageemporium.in, [email protected]

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8.

9.

10.

Shop No.44, 3rd Block, BDA Commercial 080Complex, HSR 25725660 Layout, Bangalore – 560034

CCICbengaluru@ 080cottageemporium.in, 25593129 [email protected]

Chennai

Mr. M. Anantharaj Addl. General Manager

Temple Tower, Anna Salai, Nandanam, Chennai - 600 035

04424330226, 24330809, 24351182

CCICchennai@ 044cottageemporium.in, 24330226 [email protected]

New Delhi

COTTAGE CARPETS Mr. Rakesh Kumar Asst. Manager

10, Rajiv Gandhi Handicrafts Bhawan, Baba Kharak Singh Marg, New Delhi - 110 001

01123365611

Sh. V. K. Goel.

Kontant Foto A/S, Kobmagergade 44, 1150 Coperhagan, Denamark

+45 33120029/ +45 33120091/ +45 33136622

Mr. S. Mukherji Bengaluru Addl. General Manager

11. Denmark

+45 33121148

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Products and Services EXCLUSIVE ARTIFACTS 1 Durga 2.Ganesha 3.Mahavir 4. Vishnu 5. Ganesha in Green Stone 6. Natraj 7. Devi 8. Krishna in Wood 9. Krishna in Bronze 10. Buddha in Wood

There are six types of services SERVICE Interior Designing Corporate Gifts Event Management Tenders Careers Customer Services 1. Interior Designing 2. CORPORATE GIFTS Gifting is a wonderful medium of building relationships. The Cottage is a treasure-trove of gifting ideas for the corporate world having a wide selection of high-quality hand-selected gift items. Please call us to help you with your specific gifting occasion. We offer customization options for your gifts. You could either print a company logo or any special message pertaining to the nature of the occasion. We would gladly assist you for any corporate gift plans and packages. Write to us or call at the following numbers

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1. ART OBJECT

Maeble Gold – Leaf Work

Wood Carving

Brass & Bronze Aartifacts

Wood Carving

Camel Wooden Painted

Wooden Dholamaru

Dar ban Wooden Painted

Wooden Statue

Wooden Ambawari

Wooden Painted Darban Wooden Musician

Ambawari

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Maeble Gold – Leaf Work

Marble Jar Marble Flower Vase

Marble Tray With round Box Marble Plate

Marble Vase

Marble Plate

Marble Plate Marble Elephant

Brass & Bronze Aartifacts

Nataraj

Brass Chess Men

Hexagonal Planter

Buddha in sitting posture

Sitting Ganesh In Brass

Elephant candle Stand

Brass Ganesh Sitting

Brass Lakshmi Sitting

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2. BANKURA SILVER

Silver Enamel

Filigree Work

Silver ware

Silver Enamel

Silver Enameled Elephant

Silver meena Box

Enamel Box

Raj Hans

Hand Mirror

Silver Enamel Pescock

Silver Enamel Ambawari

Silver Enameled Procession

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Filigree Work

Silver Filigree Bowl

Silver Filigree Plate

Silver Leaf Plate

Filigiri Heart Box

Filigiri Pen with Silver Covering

Silver Filigree Plate

Silver ware

Silver Kashmiri Bowl

Jalli Bowl

Silver Oxidized Hand fan

Oval Tray

Fruit Bowl

Candle Stand

Silver Bowl

Kalash

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TEA AND HERBALS

Premium Tea

Natural Oils/ Soaps

Herbal & Perfume

Premium Tea

Tea Vintage

Natural Oils/ Soaps

NILL

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Herbal & Perfume

Soap Stone diffuser set

Potpourri

Incense Gift Box

Incense cones 4 fragrances

Sandalwood powder

4. DRESS FABRICS

Cotton Fabric

Silk and Woollen Fabric

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Cotton Fabric

Handloom Cotton

Cotton Dabu Prints

Cotton Mangalagir (Stripes)

Kalamkari Cotton Prints Cotton Prints

Chenderi SKD Set

Chicken Emb Skd Set

Kaniha Hand Emb Fabric

Silk and Woollen Fabric

Tanchoi Silk

Printed Tussar

Plain Crepe

Printed Crepe

Woollen Fabric

Printed Silk

Banaras Brocade

Dupion Silk

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5. GARMENTS

Women’s Wear

Men’s Wear

Children’s wear

Saree

Men’s Wear

Cotton Printed Shirt

Silk Long Dress

Silk Shirt Woolen Jacket

Printed Silk Tie 2 Pcs Set Linen Kurta Shirt

Silk Dressing

Silk Wool Tanchoi Muffler

Women’s Wear

Banaras Silk Dupatta

Cotton Salwar Kameez Set

Cotton Salwar Kurta Dupatta Set

Silk Salwar Kameez Set

Cotton salwar Kameez Set

Dressing Gown

Cotton Salwar Kurta Dupatta Set

Silk Salwar Kameez Set

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Lengha choli

Salwar Kurta Set

Jacket

Salwar Kameez Set

Kurta Pvjama

Salwar kameez set

Jacket

Kurta Pavjama Set

Saree

Banaras Silk Saree

Printed Cotton Saree

Lucknow chikankari saree

Block Printed Saree

Lucknow Chikankari Saree

Gadwal Saree (Andhra Pradesh)

Patola Saree

Cotton Dabu Printed Saree

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Mega Projects under Central Handi Craft field Limited 

Central Sector Projects- In the central sector there were altogether 607 projects under implementation as on 31 March, 2011 of which 157 projects were Mega projects (each costing Rs. 1,000 crore and above), 450 Major projects (each costing between Rs. 100 crore and Rs. 1000 crore). The total estimated cost of these 607 projects works out to be Rs. 7,76,715.89 crore. The total expenditure incurred on 607 Mega and Major projects stands at Rs. 3,55,698.64 crore as on 31 March, 2011.



CPSEs Projects - Out of these 607 projects in the central sector, 170 projects (costing Rs. 500 crores and above) belonged to Central Public Sector Enterprises (CPSEs). Of these 170 projects, 113 were Mega projects and 57 were Major projects. The total estimated cost in respect of these 210 projects of CPSEs stood at Rs. 4,59,799 crore, while the revised/anticipated cost is equal to Rs. 5,07,459 crore.



Atomic Energy - There were 4 projects in atomic Energy sector under implementation as on 31 March, 2011. These projects belonged to the Nuclear Power Corporation of India Limited, Uranium Corporation of India Ltd. and Bhavini Limited and cost above Rs. 500 crore.



Civil Aviation - There were 9 projects in the civil aviation sector under implementation, as on 31 March, 2011. Of these, 2 were in Mega category, 7 in Major category. All these projects belonged to Airport Authority of India Limited.



Coal - There were 45 projects in the coal sector under implementation, as on 31 March, 2011. Of these, 7 were in Mega category, 38 in Major category. These projects belonged to Central Coal Fields Limited, South-Eastern Coal Fields Limited, Northern Coal Fields Limited, Singareni Colliers Company Limited and NeyveliLignite Corporation Ltd.



Fertilizers - There were 6 projects in the fertilisers sector under implementation as on 31 March, 2011. Of these, 3 were in Mega category, 3 in Major category. All these projects belonged to National Fertilisers Limited.



Mines - There was only one Mega project in the mining sector as on 31 March, 2011. This belonged to National Aluminium Company Limited.



Petroleum - There were 82 projects in the petroleum sector under implementation, as on 31 March, 2011. Of these, 40 were in Mega category and 42 in Major category. These projects belonged to Bharat Petroleum Corporation Limited, Bongaigaon Refinery & Petrochemicals Ltd., Gas Authority of India Limited, Hindustan Petroleum Corporation Limited, Indian Oil Corporation Limited and Oil & Natural Gas Corporation Limited.

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Power - There were 87 projects in the power sector under implementation, as on 31 March, 2011. Of these, 44 were in Mega category and 43 in Major category. All these projects belonged to National Hydro-Electric Power Corporation, National Thermal Power Corporation, North East Electric Power Corporation,Satluj Jal Vidyut Nigam Limited, Power Grid Corporation of India Limited, and Tehri Hydro Development Corporation Limited.



Shipping & Ports - There were 26 projects in the Shipping & Ports sector under implementation, as on 31 March, 2011. Of these, 7 were in Mega category and 19 in Major category. These belonged to Mumbai Port Trust and Shipping Corporation of India.



Steel - There were 19 projects under implementation in the steel sector, as on 31 March, 2011. Of these, 6 were in Mega category and 13 in Major category. These projects belonged to National Mineral Development Corporation, Rastriya Ispat Nigam Limited and Steel Authority of India.



Telecommunication - There were 41 projects under implementation in the telecommunication sector as on 31 March, 2011. Of these, 3 were in Mega category and 38 in Major category. These projects belonged to Bharat Sanchar Nigam Limited.



CPSEs Under Construction - There are some CPSEs which yet to go on regular production on a commercial scale as they are at construction stage. Many of these CPSEs are subsidiary companies set up by (Holding) CPSEs. Some of these subsidiary companies are ‗shell companies‘ which have been set up tentatively to facilitate the establishment of Ultra Mega Power Projects (UMPP) or similar other Projects. The objective of ‗shell companies‘ for UPMM is to develop large capacities of power generation in the different parts of the country. It brings in the potential investors in UMPP after obtaining the necessary clearances. The Power Finance Corporation Limited (PFCL) was selected as the Nodal Agency for the development of suchpower projects by the Central Electricity Authority. Many of the ‗shell companies‘ are subsidiary companies of PFCL. As on 31 March, 2011, there were altogether 28 CPSEs ‗under construction‘, as against 32 as on 31 March, 2010. While seven CPSEs ‗under construction‘ existing in 2009-10 have been left out, three CPSEs have been added to this list during the financial year 2010-11.

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CENTRAL HANDI CRAFT FIELD LIMITED AT A GLANCE Palampur is situated in the Kangra valley, near the Dhauladhar ranges on an altitude of 1,220 m above sea level, 30 km from Dharamshala. It is the tea capital of North India. A pleasant little town surrounded by tea plantations is not only known for its numerous tea gardens and paddy fields but it also known for its colonial architecture and temples. The place enjoys a healthy climate and the pine scented air is said to have curative properties. The scenery presents a sublime and beautiful contrastthe plain presents a picture of rural loveliness and repose, while the hills are majestic. Behind this town stands high ranges of Dhauladhar mountains, whose tops remain covered for most part of the year. The weather in Palampur is moderate. Summers (April-June) are mild and winters (November-February) are cold but pleasant. It experiences southwestern monsoon rains in July-September. However, the best time to visit Palampur is between March to June and mid-September to November. Several trek routes lead out of Palampur, particularly over the Dhauladhar Mountains towards the town of Chamba. Some important treks are over the Sanghar pass to Bharmaur via Holi and from Baijnath over the Jalsu pass to Bharmaur. By Air Palampur does not have an airport or railway station. Nearest airport is at Gaggal after which it is accessible by road. By Train The nearest railway station is at Maranda, which is 2 km from Palampur and on the narrow-gauge line between Pathankot and Jogindernagar. By Road Palampur is also accessible by road and there are many buses from Dharamshala 40 kms, Kangra 18 kms, Kulu-Manali 205 kms & Shimla 259 kms.

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ADMINISTRATIVE SETUP IN CCIC While everyone talked of the challenges, opportunities and learnings from the operation of ―captive units‖ for major US corporations, I had to pitch in with the supply side, specifically the issue of industry-academia interaction. Based on my years of industry interaction I had put together the 5-levels of interaction (that matures over the years) on the lines of five levels of SEI CMM Model The first level is Supplier Buyer relationship where the primary focus is on recruitment After a couple of years of successful recruitment drive, the corporates invests (though in small amounts) in the form of scholarships and sponsorship for student events (CulFest, TechFest); I call it Donor-donee relationship. At the next level is Consultant – User relationship where the trust has gone up; corporations utilize faculty by way of consulting projects (short duration projects) With some more trust building on the part of corporation and delivery capability on the faculty part the relationship matures to Sponsor – Receiver relationship where large projects (with multiple faculty members and multi-year projects) are endowed at the Institutes. The final stage of relationship is what I call come on board – where faculty members are invited to sit on the boards of corporations and senior executives occupy board level position in the University Senate / Board Ultimately such a mature relationship should lead to 

Intellectual gains (Turing award winners, Academy winners, Fellows (IEEE / ACM)



Wealth creation for individuals and corporations



Generation of amazing products & services (iPod or iPhone like products)



Creation of marquee companies that create jobs (next generation Infosys)



Research-led institutes (like Stanford University) right in Bangalore

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Organizational Setup

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Research Methodology Used

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Research Methodology Used METHODOLOGY The study is based on personal decision, interview schedules, documentary observation; the data has been collected from the executives of the organization and through the published sources. RESEARCH The research work is restricted only to the BEETEL DISTRIBUTION SYSTEM. The study is based on the outcomes of personal interviews and documentary observation. But the extreme care has been taken to involve the constructive suggestion from the executives. The success of research basically depends upon the method, which is adopted to solve the research problem i.e. a) To collect desired information and data in a systematic manner. b) Appropriate selection of method is necessary. RESEARCH DESIGN: Exploratory. TOOLS AND TECHNIQUES: In order to conduct the study the following methods were adopted.

1. Personal Discussion: There is certain information related to the subject which is known to employees of the office so through connecting with the employees and executives the information is gathered. Like, about the company profile, its inception, growth etc.

2. Direct Personal Interviews: The investigator personally approaches the concerned people and asks them to furnish information, which is of material input for the enquiry. Therefore these ideas, suggestions views are collected on the topic through interview.

3. Documentary observation: The investigator consults the secondary sources like journals, annual reports, magazines, books, unpublished material from library, internet and the area office.

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60 SAMPLING DESIGN Sampling unit

: Financial Statements.

Sampling Size

: Last five years financial statements and 60 respondent

TOOLS USED FOR ANALYSIS OF DATA The data were analyzed using the following financial tools. They are  Ratio analysis.  Statement of changes in working capital.

Method used for Data Collection  PRIMARY DATA- ―Primary data can be described as those data that have been observed and recorded for the first time to their knowledge.‖

Primary data regarding this research is collected from the management and

through the person interviews and questionnaire.  SECONDARY DATA – ―Secondary data are statistics not gathered for the immediate study at hand but for some other purposes.‖

Secondary data is primary collected from the website of the organization

annual report and other resources available in the library of the company

and some other website.

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Observations & (Working Capital Management at CCIC) Working Capital Management

Calculation of Working Capital:Working Capital = Current Assets - Current Liabilities In balance sheets of C.C.L. four years the current assets and current liabilities are given as follows-

Rs. in lakhs Turnover

2010-11

2009-10

Sales- Domestic

6055.88

6403.20

Sales- Export

219.72

253.46

Services/ Others

58.22

101.90

Total Turnover

6333.82

6758.56

Less;Tread Discount

25.22

129.27

Excise Duty Paid

4.72

-

Total

6303.8

6629.39

Working capital management in CCIC occurs at three levels:  Management of cash  Management of inventory

 Management of Debtors (receivables)

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Cash Management

Cash Management  Common cause of business failure: Cash crisis!  A business can be earning a profit and be forced to close because it runs out of cash.  Cash management includes forecasting, collecting, disbursing, investing, and planning for the cash Cash, the most liquid asset and also referred to as the life blood of a business enterprise is of vital importance to the daily operations of business firms. Its efficient management is crucial to the solvency of the business because cash is the focal point of the funds flow in a business. Cash plays a very important role in the entire economic life of an organization. A firm needs cash to make payments to its suppliers, to incur day to day expenses and to pay salaries, wages, interest and dividend etc. Cash is money that is easily accessible either in the bank or any business. It is very essential for a business to maintain an adequate balance of cash. But many a times a concern operates profitably and yet it becomes very difficult to pay taxes and dividends. This may be because:  Although huge profit have been earned yet cash may not have been received because of large credit sale was made.  Even if cash has been received, it may have drained out (used for some other purposes). This movement of cash is of vital importance to the management, so proper management of cash is very important.

Benefits of Cash Management          

Increase amount and speed of cash flowing into the company Reduce the amount and speed of cash flowing out Make the most efficient use of available cash Take advantage of money-saving opportunities such as cash discounts Finance seasonal business needs Develop a sound borrowing and repayment program Impress lenders and investors Reduce borrowing costs by borrowing only when necessary Provide funds for expansion Plan for investing surplus cash

The organization’s maximum cash balance depends on: • Available (short-term) investment opportunities – e.g. money market funds, CDs, commercial paper • Expected return on investment opportunities. – e.g. If expected returns are high, organizations should be quick to invest excess cash • Transaction cost of withdrawing cash and making an investment • Demand for Cash for daily transactions – (Cash Budget helpful) rd

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The Cash Budget  A ―cash map,‖ showing the amount and the timing of a firm's cash receipts and cash disbursements over time.  Predicts the amount of cash a company will need to operate smoothly.  A helpful tool for visualizing the firm's cash receipts and cash disbursements and the resulting cash balance.

Preparing a Cash Budget  Determine a Minimum Cash Balance  Forecast Sales  Forecast Cash Receipts  Forecast Cash Disbursements  Estimate End-of-Month Cash Balance

Forecast Sales  The heart of the cash budget.  Sales are ultimately transformed into cash receipts and cash disbursements.  Cash forecast is only as accurate as the sales forecast from which it is derived.  Forecast Cash Receipts  Record all cash receipts when actually received (i.e., the cash method of accounting).  Determine the collection pattern for credit sales; then add cash sales.  Monitor closely slow and nonpayers.

Forecast Cash Disbursements    

Record disbursements when you expect to make them. Start with those disbursements that are fixed amounts due on certain dates. Review the business checkbook to ensure accurate estimates. Don‘t know where to begin? Try making a daily list of the items that generate cash and those that consume it.

Estimate End-of-Month Balance    

Take Beginning Cash Balance... Add Cash Receipts... Subtract Cash Disbursements Result is Cash Surplus or Cash Shortage (Repay or Borrow?)

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At present CCIC Sale its Handi Craft 10% in Cash and 90% on credit.

Sale of Handi Craft at CCIC

Cash Sale Customers: Private companies, Road Sale, Small scale industries

Cash sale directly deal by CCIC Headquarter

Credit Sale Customers: Export In Foreign Countries

Credit Sale is deal by two departments of CCIC.  CCIC headquarter  Kolkata Credit sale office

Cash Sales The sales which are done on cash payments and first they receive the cash and then they dispatch the Handi Craft . It is the source of cash in the company because all the transaction is done in cash, demand drafts, RTGS etc. this helps in meeting up with the day to day expenditure. Most of the sale is done through credit sales. The day to day requirement is met through cash sales. There are two types of cash sale done in CCIC. They are as follows: 1. Road Sales 2. Rail Sales 3. E-auction 4. Forward E-auction

Process of Cash Sale in CCIC:-

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Cash receive (In advance)

Handi Craft quality check

Dispach

Refund of extra money (if any)

CCIC sold Handi Craft to private parties on advance payment basis. In this, they take payment of Handi Craft in form of cheque or DD before dispatching the Handi Craft . When DD/cheque is cleared bills is received and delivery is made within 72 hrs of it. If the party takes less Handi Craft as per order than extra deposit money is to be refund. This kind of sale is also calls Road sale. Handi Craft is not sold in credit to private parties. Credit is only given to the govt. parties. Parties send cheques or demand drafts in two centers of CCIC.  At Kolkata district office  At Ranchi headquarter

Money Requirements at CCIC The major money requirements for CCIC are for:  Wages and salaries  Vendor payment  Handi Craft transporting  CHP-Handi Craft handling plant The money requirements are met by 60% realization from Kolkata office and 40% realization from CCIC, Ranchi. Over all CCIC arises Rs.650Cr. per month.

Sources of cash/Steps to increase in cash: Cash Sale: -Cash sale is a majored source of cash generation. The CCIC sales its Handi Craft to private companies in cash and receive all money in advance through cheque or DD.  CLTD (Corporate limited thrash deposit): - bank accounts are two types Saving A/c (for individuals), Current A/c (for organizations). CCIC also maintains Current A/c, but to keep huge money in current A/c is a big loss from interest point of view. So CCIC Maintain a CLTD A/c (Corporate limited thrash deposit)in which the, organization set a thrash limit on current A/c means the excess of thrash limit transferred to CLTD A/c in which the organization receives a higher returns.  Investment: - apart from CLTD A/c the CCIC also do investments in various companies and Bonds. According to financial information 31st march 2011 CCIC has invested Rs.2140 Crore. rd

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Investment of surplus cash Surplus fund is identified based on current and future expenditure. The surplus cash investment is done by Kolkata office. The period of investment on to when cash is required is basically done through nationalized banks. It is basically given on higher returns.

Shortage of liquidity in CCIC:-

CCIC is basically as on date a cash rich company. At end of financial year as on 31st march 2011 CCIC Transferred Rs.24,400,000,000 as dividend to Handi Craft India head office. This so there is no question of shortage of funds.

How cash is provided to production centers? CCIC follow a pre planned structure for distribution of cash to its various areas. All the possible expenses are already budgeted. If the area or production centers needed cash it send report to headquarter and demand for cash as per expense in various categories. Headquarter provide cash in few hours to area.

Utilization of cash in units. The demands of cash in units are according to budget. Besides this the units have to keep details of expenses of money for audit so there are no chances of misuse of money.

Cash Audit. Every year CCIC do cash audit for cash control and reduce misuse of cash. In cash audit the auditor Tally the vouchers with cash book and balance it.

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ACCOUNTING SATNDARD -3 (Cash Flow Statement) Cash flow is one of the important tools of cash management because it throws light on the cash inflow and outflows of cash and cash equivalents during a specific period. The management of cash also assumes importance because it is difficult to predict cash inflows and outflows accurately and there is no perfect coincidence between the inflows and outflow of cash giving rise to either cash outflows exceeding inflows and inflows exceeding cash outflows. ―Cash Flow Statement is a statement sitting out the flows of cash under different heads of Sources and their utilization to determine the requirements of cash during the given period and to prepare for its adequate provisions.” -- I.C.W.A.(India)

Preparation of cash flow statement (As per AS-3 Revised) Accounting Standard (AS-3), Changes in ‗Financial Poisition‘issued in 1981 has been replaced by AS3 (Revised), ‗Cash Flow Statement‘ in April 1997.

Applicability

He standard has been made mandatory w.e.f. 1st April 2001 in respect of the following:  This standard applies to the enterprises whose equity or debt securities are listed on a recognized stock exchange in India; and the enterprises that are in the process of issuing equity or debt securities that will be listed on a recognized Stock Exchange in India as evidence by the Boards of directors‘ resolution in this regard.  All the commercial, industries and business reporting enterprises, whose turnover more than Rs. 50 Crores in a financial year.

Presentation of cash flow statement:  The cash flow statement should report cash flows during the period classified by operating, investing and financing activities.  An enterprise presents its cash flows from operating, investing and financing activities in a manner which is most appropriate to its business. Classification by activity provides information that allows users to assess the impact of those activities on the financial position of the enterprise and the amount of its cash and cash equivalents. This information may also be used to evaluate the relationships among those activities.  A single transaction may include cash flows that are classified differently. For example, when the installment paid in respect of a fixed asset acquired on deferred payment basis includes both interest and loan, the interest element is classified under financing activities and the loan element is classified under investing activities.

According to AS-3(Revised), Cash Flow Statement should be presented in a manner that it reports cash flows during the period classifying by: 1. Cash Flows from Operating Activities, 2. Cash Flows from Investing Activities,

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1] Cash Flows from Operating Activities:Operating Activities are the principle revenue generating activities of the enterprises. AS-3 (Revised) suggests two methods of reporting cash flows from operating activities:

Direct Method: In this method, gross receipts and gross payments of cash are considered. Indirect Method: In this method, profit and loss account is adjusted for the effects of transaction of non-cash nature. Note: - Indirect method helps to explaining the reason for difference between net income and net cash inflow from operating activities. Hence, most of the companies use the indirect method.

2] Cash Flows from Investing Activities: Investing activities include the acquisition and disposal of long term of assets and other investments not include in cash equivalents.

3] Cash Flows from Financing Activities: Financing activities are activities are activities that result in change in the size and composition of the owner‘s capital (including preference share capital) in the case of a company and borrowing of enterprise.

Definitions:  Cash comprises cash on hand and demand deposits with banks.  Cash equivalents are short term, highly liquid investments that are readily convertible into known amounts of cash and which are subject to an insignificant risk of changes in value.  Cash flows are inflows and outflows of cash and cash equivalents.  Operating activities are the principal revenue-producing activities of the enterprise and other activities that are not investing or financing activities.  Investing activities are the acquisition and disposal of long-term assets and other investments not included in cash equivalents.  Financing activities are activities that result in changes in the size and composition of the owners‘ capital (including preference share capital in the case of a company) and borrowings of the enterprise.

Scope:  An enterprise should prepare a cash flow statement and should present it for each period for which financial statements are presented.  Users of an enterprise's financial statements are interested in how the enterprise generates and uses cash and cash equivalents. This is the rd

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69 case regardless of the nature of the enterprise's activities and irrespective of whether cash can be viewed as the product of the enterprise, as may be the case with a financial enterprise. Enterprises need cash for essentially the same reasons, however different their principal revenue producing activities might be. They need cash to conduct their operations, to pay their obligations, and to provide returns to their investors.

Benefits of Cash Flow Information  A cash flow statement, when used in conjunction with the other financial statements, provides information that enables users to evaluate the changes in net assets of an enterprise, its financial structure (including its liquidity and solvency) and its ability to affect the amounts and timing of cash flows in order to adapt to changing circumstances and opportunities. Cash flow information is useful in assessing the ability of the enterprise to generate cash and cash equivalents and enables users to develop models to assess and compare the present value of the future cash flows of different enterprises. It also enhances the comparability of the reporting of operating performance by different enterprises because it eliminates the effects of using different accounting treatments for the same transactions and events.  Historical cash flow information is often used as an indicator of the amount, timing and certainty of future cash flows. It is also useful in checking the accuracy of past assessments of future cash flows and in exaIndustry the relationship between profitability and net cash flow and the impact of changing prices.

Method adopted by CCIC for preparing Cash Flow Statement CCIC follows AS-3 for preparation of Cash flow Statement because its yearly turnover is above Rs.50 crore. CCIC uses Direct Method as well as Indirect Method for preparing cash flow statement. Direct method is prepared for internal information about total gross receipt and total gross payment. But the Indirect method is follow for preparation of Balance Sheet and correct information about cash and bank within a specific time period. CCIC maintains daily cash Flow Statement on the basis of daily transactions and cash flows of its various areas. On the basis of these cash Flow Statement CCIC prepares a monthly cash Flow Statement which is goes to CIL (Handi Craft India Ltd) office.

Production areas of CCIC (Prepare daily Cash flow Statement and send to Headquarter)

CCIC Headquarter (On the basis of daily transaction report and areas’ cash flow the HQ prepares daily, monthly & yearly Cash flow Statement and send report to CCIC.

Following is the Cash Flow Statement of CCIC for a single day.

Handi Craft India Ltd. (Handi Craft india is the parent company of CCICwhich receives informations from its all subsuideries and prepare an final cash flow statement) rd

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Cash Flow Statement of Central Handi Craft field Ltd. (As on 26 July 2011) Rupees in Lakhs 21150.21

Opening Balance Add: Receipts Delhi Mumbai CCSO Himachal Pradesh Kolkata Road Sale Interests CCIC EGGCAS

2500.00

2500.00

23650.21

Less: Payments Royalty TDS Service tax CCICEGGCAS Misc. Clean Engy. Cess C. Excise Duty Wealth tax Sales Tax Adv. Sales tax Adv. I.T. Salary/Wages Pension O.T. LTC/LLTC Gratuity Q. Bonus Ex- gratia Arrear VRS Timber POL Lubricant

0.00 0.00 2.31 0.00 0.00 252.17 0.00 0.00 0.00 0.00 0.00 4.00 0.00 36.00 15.00 3.00 0.00 0.00 0.00 0.00 0.00 0.00 2.00

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71 Magnetite RRS HEMM PI HEMM bill E&M PI O. Stores E. Bill E. Bill(DLF/IFPL) Other Contr. OBR Purchase Repair Handi Craft Transport Sand Transport Misc. ED Sales tax Refund EM/ SM etc. Handi Craft Sale Refund Capital Closing Balance

0.00 0.00 11.00 0.00 0.00 32.00 5.00 22.00 33.00 19.00 10.00 169.00 2.00 47.00 0.00 0.00 10.00 0.00 0.00

674.48 22975.73

Interpretation: The above Cash Flow Statement is for one day cash receipts and payments. So exact interpretation is not possible. But on the basis of above cash flow statement we can say that the CCIC is doing well and not going to face cash crisis in near future because as per given cash flow statement its daily receipts of cash is Rs 2500.00lakh but its payment of cash(application of cash)is Rs 674.48 lakh and daily net cash receipt is Rs 1825.52lakh which is a good sign for the company and its liquidity position.

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Following is the Yearly Cash Flow statement of Central Handi Craft field Limited:-

Central Handi Craft field Ltd. Cash Flow Statement (Indirect Method) For the year ending 31st March 2011 Particulars [A] CASH FLOW FROM OPERATING ACTIVITIES Net Profit before tax and extra-ordinary items Adjustment For: Depreciation Deferred Tax O.B.R. Adjustment Interest on investment (Tax free Bonds Interest on Surplus Fund parked with Handi Craft India Limited Interest on Short Term Deposit Interest & Finance Charges Operating Profit before working capital Changes

Amount (Rs. In Lakh) 187029.65 6123.62 1412.22 10062.66 -460.55 -13965.76 -949.61 1052.89 3275.47 190305.12

Adjustment For: Increase(+)/Decrease(-) in Loans & Advances Increase(+)/Decrease(-) in Debtors Increase(+)/Decrease(-) in Inventories Increase(+)/Decrease(-) in Other Current Assets Increase(+)/Decrease(-) in Other Current Liabilities

-18681.70 -42919.19 -26981.91 -11166.86 -45541.61

-145291.27

Cash Flow Before Extra-ordinary Items Prior Period Adjustment Cash Flow From Operating Activities Tax Provision

45013.85 -1007.97 44005.88 -61338.81

Net Cash Flow From Operating

-17332.93

[B] CASH FLOW FROM INVESTING ACTIVITIES Purchase/Acquisition of Fixed Assets(Net of Adjustment) Interest on short term deposit Redemption of Tax Free Power Bonds Interest on surplus fund Parked with CIL Interest on investment (Tax Free Bonds)

356.66 13965.76 942.30 949.61 460.55

[C] CASH FLOW FROM FINANCING ACTIVITIES World Bank Loan Through CIL (Exchange Fluctuation) Repayment of World Bank Loan Repayment of CIL Loan

635.06 -1347.97 0.00

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73 Interest and Finance Charges

-1052.89

Net Increase/Decrease in Cash and Cash Equivalent(A+B+C) Cash and Cash equivalent as on 01.04.2010 (Refer to Sch.K of the Balance Sheet Cash and Cash equivalent as on 31.12.2010 (Refer to Sch.K of the Balance Sheet

-1765.80 -2423.85 260700.75 258276.90 -2423.85

Interpretation:CCIC has not faced any kind of liquidity crunch in past five years. This indicates that CCIC maintain a sufficient cash balance.If any surplus arises in CCIC then this surplus fund is deposited with varying period of maturity of fixed deposit. Listed bank are decided by the board of directors of CCIC. They decided any bank on the basis of net worth of that bank. There is no bank loan in respect of CCIC to fulfil their working capital need. This shows that CCIC has enough cash balance to fulfil its day to day requirement of cash. CCIC has taken a loan from World Bank to fulfil their fixed capital requirement

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Debtors Management Debtors Management Debtors: - In simple words ―The persons who purchase something on credit from a company is call Debtor for that company‖. In other words ‗Debtors are persons or other entities who own to an enterprise an amount for buying goods and services on credit. The total amount standing against such persons or entities on the closing date is shown in the balance sheet as sundry debtors in assets side.‘

Objective of Debtor management: The basic objectives of the debtor‘s management are to optimize the return on investment on the assets. Its main aim is to promote sales and profit until that point is reached where the return on investment is further funding of debtors is less than the cost of funds raised to finance that additional credit. When a firm makes sale of goods and services and does not receive payment, it grants trade credit and creates Debtors accounts, which would be collected in the future. These represent the extension of credit on an open A/c by the firm to its customers, as the substantial amount is tied up in trade debtors; it needs careful analysis and proper management. At present CCIC Sale its Handi Craft 30% in Cash and 70% on credit.

Sale Of Coal at CCIC Cahh Sale

Credit Sale 30%

70%

Process of Sale:Cash Sale Cash receive Handi Craft Dispach

Credit Sale Dispach of Handi Craft Bill Receiving of cash

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Reason for sale in credit: The most of Clients of CCIC are Administration Sector Companies and Specially Power sectors. In India 75% electricity is manufacture with Handi Craft and only 25% from other sources. So today Handi Craft is a major source of power. As it is an open secret that most of Administration Sector are bearing loss and always having liquidity problem. If these Power Houses will not get Handi Craft for producing Electricity than the whole nation will have face electricity crises and the days of darkness. Therefore to save the nation from that kind of miss happenings the CCIC provide Handi Craft to these companies on credit.

Steel Plants: - CCIC also produce Handi Craft to steel producers. The steel producers are the second largest sector where CCIC supply its Handi Craft . There are two types of steel plants.

Other sectors: -The CCIC also produce Handi Craft for the domestic use.the domestic users of Handi Craft are,  Small scale industries  Handi Craft users

Yash Gupta RBMI Greater Noida Knowledge Park 3rd

76 Solution of this problem: - to solve this problem CCIC follow following techniques. 1. Joint Sampling: - in joint sampling method the experts of both parties go to each other‘s loading and delivery places, check the sample and find the category of Handi Craft .

2. Third Party Sampling: -Some time both parties agree on third party sampling in which both parties jointly hire any private lab expert who check the samples and gives the result that the quality or category of Handi Craft .

3. Factory: -If any one party is not agree with the result of third party than matter goes to Factory and the sample testing result of Factory is final result which every party have to accept. The Factory HCHL

Quantity Problem: Quantity problems arise because parties not getting the dispatched quantity of Handi Craft because of theft and loss due to transportation. For example CCIC dispatch 100, 000 Pieces Handi Craft to a party but party only receives 90,800 Pieces Handi Craft finally. This creates problems in payment because CCIC wanted full payment of 1,00, 000 Tones Handi Craft but party gives payment of only 90,800 Pieces Handi Craft . Duty or charge:Sometimes due to sudden increase in duty , carriage or charges also affect the supply and payment. Handi Craft & Handi Looms Problem:In stone problem party arguments that, there is large amount of stones are presented in Handi Craft which he receives. So he wanted to give payment after deducting the amount equal to the value of Handi Craft & Handi Looms he received in the total Handi Craft .

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77

Settlement of Disputes:-

For the settlement of following disputed debtors CCIC follow the given process. Meeting: - the first process is the both parties try to solve the problem through a general meeting in which both parties keeps their own side and try to solve the problem. The problem

Administration: -if problem do not solve through meeting than the matter goes to Administration where both parties try to solve the problem.

Umpire: -if problem is not solved through Administration also than the both parties solve this dispute through an umpire. The above settlement process can be detailed from the following:If any dispute arises between CCIC and parties then, there are two methods used to settle the disputes:  Internal Settlement  External Settlement  Internal Settlement If both parties wanted to settle the disputes by their mutual agreement, this is called ―Internal Settlement‖. In internal settlement both parties wanted to settle the dispute through ―Negotiation‖ carried out in good faith.

Yash Gupta RBMI Greater Noida Knowledge Park 3rd

78 For the purpose of conducting negotiation, each party shall designate in writing to the other party a representative, who shall be authorized to negotiate on its behalf with a view to resolving any dispute. Each such representative shall remain authorized until his replacement by the party he represents.

The representative of the party which considers that a dispute has arisen shall give to the representative of the other party a written notice setting out the material particulars of the ―Dispute Notice‖. Within thirty days, or such longer period as may be mutually agreed, of the dispute notice having been delivered to the other party. The representatives of both parties shall meet in person, to attempt in good faith and using their best endeavors at all times, to resolve the dispute. Once the dispute is resolved, the terms of the settlement shall be reduced in writing and signed by the representatives of the parties.  External Settlement If any dispute is not resolved by internal settlement then, this dispute goes for the External Settlement. In external settlement firstly CCIC write letter to middle management of related party to settle the dispute and if middle management not take any kind of action to resolve the dispute then, matter goes to top management. If top management is also not clear the dispute then matter finally goes to Administration. For settlement of dispute Administration appointed five zonal umpires these are: Eastern Umpire Western Umpire Northern Umpire Southern Umpire Central Umpire The matter related to that zone, the umpire of that zone listen to both party‘s argument. After analyzing the both party‘s argument, he gives the final decision which both parties must be accepted. After taking the decision, if party said that he is not able to pay the disputed amount at a time. Then Administration imposed ―Securitization Scheme‖

Yash Gupta RBMI Greater Noida Knowledge Park 3rd

79

Working CapitalAnalysis & Interpretations

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80

Working Capital level The guiding principle for working capital is called the hedging principle or principle of self-liquidating debt or matching principle (different from the matching principle used in measuring accounting profit). It is an accepted belief in business that the term of a funding arrangement must match the term of the investment itself. This means that any funds used for short-term assets or purposes should be financed from short-term sources. Likewise investments in long term-assets should be funded from long-term sources. Therefore a key criterion for acquiring additional finance is matching up the life of the assets acquired with the term of the loan or other method of funding. For example, the buying of an unusually large quantity of inventory should be financed by a loan, or credit, with a repayment period of less than one year. The level of any long-term assets funded by short-term debt shows the firm's level of 'aggression' in its financing policy. Although this type of action may increase profits (due to the lower cost of short-term debt) it greatly increases the risk of cash shortages if short-term financing can't be renewed.

Table - Size of Working Capital SOURCE: COMPANY REPORT EXTRACTED FROM AUDITED BALANCE SHEET OF CCIC INDUSTRIES LLC 2004

2005

45,595

196,786

2006

2007

2008

562,828

143,351

2009

CURRENT ASSET

Bank Balances

Trade Debtors

Inventory

Work in Progress

2,188,348 2,921,799

112,639

67,900

1,892,372

7,702,727 12,543,178 20,194,201 13,437,981

459,404

160,412

373,118

563,989

724,145

1,758,719 2,142,770

2,773,635

1,275,523

1,422,625

2,274,690

Dues from Related

Yash Gupta RBMI Greater Noida Knowledge Park 3rd

81 Parties

Other Receivables

-

-

214,325

191,658

316,956

4,632,789

349,388

52,319

725,857

512,228

336,700

99,243

TOTAL CURRENT ASSETS

4,454,689 5,773,078 11,644,857 15,458,533 22,977,822 23,061,219

-

-

-

-

-

-

-

-

-

-

-

-

340,867

900,676

2,049,745

-

2,015,753

553,812

147,493

184,717

498,801

1,436,567

1,503,569

2,188,446

1,171,301 3,013,726

5,154,023

6,840,688 10,293,795

6,186,854

CURRENT LIABILITIES Short-term Borrowings Current Portion of Long Term loan

Trade Creditors Dues to Related Parties

Provisions - Tax

Other Payables

449,842

2,043

23,504

31,073

1,499,973

420,900

-

27,422

182,064

175,183

402,530

922,451

1,217,574 1,533,552

3,489,970

6,652,454

6,948,035

5,588,569

TOTAL CURRENT LIABILITIES NET WORKING CAPITAL - (A-B)

3,327,077 5,662,135 11,398,106 15,135,965 22,663,655 15,861,031 1,127,612

110,943

246,751

322,568

314,167

Yash Gupta RBMI Greater Noida Knowledge Park 3rd

7,200,188

82

WORKING CAPITAL TREND ANALYSIS Trend analysis is an improvement over the year to year analysis. When a comparison of Financial Statements covering more than 3 years is undertaken, the year to year analysis becomes cumbersome. In trend analysis, the changes are calculated for several successive years instead of two or three years. Therefore the trend analysis is a company's financial position over a long period of time. Trend analysis is important as it may point to basic changes in the nature of business and also helps in drawing meaningful conclusions regarding the operating performance over several years and the financial position of the enterprise. It is based on the idea that what has happened in the past gives an idea of what will happen in the future. In working capital analysis the direction at changes over a period of time is of crucial importance. Working capital is one of the important fields of management. It is therefore very essential for an annalist to make a study about the trend and direction of working capital over a period of time. Such analysis enables as to study the upward and downward trend in current assets and current liabilities and it‘s effect on the working capital position. 

In the words of S.P. Gupta ―The term trend is very commonly used in day-today conversion trend, also called secular or long term need is the basic tendency of population, sales, income, current assets, and current liabilities to grow or decline over a period of time‖.



According to R.C.Galeziem ―The trend is defined as smooth irreversible movement in the series. It can be increasing or decreasing.‖

Emphasizing the importance of working capital trends, Man Mohan and Goyal have pointed out that ―analysis of working capital trends provide as base to judge whether the practice and privilege policy of the management with regard to working capital is good enough or an important is to be made in managing the working capital funds.

Further, any one trend by it self is not very informative and therefore comparison with Illustrated their ideas in these words, ―An upwards trends coupled with downward trend or sells, accompanied by marked increase in plant investment especially if the increase in planning investment by fixed interest obligation‖ One of the main goals of trend analysis is to forecast future values of the series. It allows a researcher to look at a pattern of change over a long period of time rather than at a single discrete point in time or over a short time so that better conclusions can be drawn.

Yash Gupta RBMI Greater Noida Knowledge Park 3rd

83

Table – Working Capital Variance Analysis.

ANALYSIS OF VARIANCE OF WORKING CAPITAL YEARS TOTAL CURRENT

2004

2005

2006

2007

2008

2009

4,454,68

5,773,07

11,644,85

15,458,53

22,977,82

23,061,21

9

8

7

3

2

9

3,327,07

5,662,13

11,398,10

15,135,96

22,663,65

15,861,03

7

5

6

5

5

1

110,943

246,751

322,568

314,167

7,200,188

9.84%

21.88%

28.61%

27.86%

638.53%

ASSETS TOTAL CURRENT LIABILITIES NET WORKING

1,127,61

CAPITAL - (A-B)

2

W-C VARIATION –in

100%

%

(“Index

100 X Index Year Amount / Base Year Amount”)

=

Chart- Working capital index WORKING CAPITAL INDEX

25,000,000

VALUE

20,000,000

TOTAL CURRENT ASSETS

15,000,000

TOTAL CURRENT LIABILITIES

10,000,000

NET WORKING CAPITAL - (A-B) W-C VARIATION –in %

5,000,000

0 2004

2005

2006

2007

2008

2009

YEARS

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84

Table -Working capital size ANALYSIS OF VARIANCE OF WORKING CAPITAL YEARS TOTAL CURRENT

2004

2005

2006

2007

2008

2009

4,454,68

5,773,07

11,644,85

15,458,53

22,977,82

23,061,21

9

8

7

3

2

9

3,327,07

5,662,13

11,398,10

15,135,96

22,663,65

15,861,03

7

5

6

5

5

1

110,943

246,751

322,568

314,167

7,200,188

ASSETS TOTAL CURRENT LIABILITIES NET WORKING

1,127,61

CAPITAL - (A-B) W-C VARIATION –in %

2 100%

9.84%

21.88%

28.61%

27.86%

638.53%

The computation of a series of Index Numbers requires the choice of a base year that will for all times have an index number of 100. The base period should be a normal year with regard to business conditions, since the base year used as a reference should be representative. Generally, the earliest year is selected as a base year. However, where the earliest year is selected as the normal year then another year is chosen. All Index numbers are computed with reference to the base year using this formula OBSERVATIONS It was observed that major source of liquidity problem is the mismatch between current payments and current receipts from the Comparison of funds flow statements of AI LLC for six years. It was observed that in the year 2005 current assets increased by around 29.6% compared to 2004 and current liabilities increased by 70.18% which affect as working capital reduced by 9.84% in the year 2005 compared to 2004.because the net working capital was OMR 1,127,612/- in 2004 but in 2005 it was reduced to OMR 110,943/- in the year 2005 due to the increase in current liability of 70% compared to 2004. In 2004 current liability was OMR 3,327,077, where as in 2005 it was increased by OMR 2,335,058/-; a total liability of OMR 5,662,135/- in 2005. In the year 2006, 2007, 2008 a tremendous increase we can see in current liability by 172.4%, 112.35%, and 226.26% res. and current asset also increased accordingly compared to 2004 like 131.8%, 85.61% and 168.79% during the year 2006, 2007, 2008. In the year 2009 we can see the rd

Yash Gupta RBMI Greater Noida Knowledge Park 3

85 growth of current asset is very less compared to 2004 with a percentage of only 1.87% where as in the current liability we can see there is a slop of -2004.46% compared to 2004, where as an increase in current asset for 73.478% compared to 2004 and a good nest asset (WC reserve) is with the firm for an increased percentage of 638.53% in the year 2009. The position of working capital is very good in 2009 because the bank balance in 2008 was only 143,351/- OMR where as in 2009 it is increased to OMR 1,892,372/-; ie. 1220% compared to 2008, which is quite good and also we can see that there is receivable from related parties is 4,632,789/- in the year 2009, where as in 2008 it was only OMR 316,956/-; that means an increase is for 1361% in the year 2009 compared to 2008. That means the fund position is quite good for 2009. While compared to 2004 current assets have been increased by 417.68% and current liabilities have been increased by 376.73%. But compared to 2008 and 2009 there is a short fall of -30.02% in current liabilities, where as an increase in current asset is only an increase of .36%. The bank balance is increased to OMR 1,892,372/- in 2009 from OMR 143,351/- in the year 2008.It shows that management is using only it‘s own fund for the short term requirements and WC has been increased to OMR 7,200,186/- in the year 2009-A growth of 638.53%. This two together pushed down the net working capital to the present level. The increase in working capital is a clear indication that the company is utilizing its own funds and resources with efficiency. Table –Variance Analysis of Current Asset and Current Liability. OBSERVATION OF WORKING CAPITAL YEARS

2004

2005

2006

2007

2008

2009

686666

1385071

1838680

2733045

2742964

156813

698405

453609

894365

9920

100

29.60

131.81

85.61

168.79

1.87

100

29.60

101.71

32.75

48.64

0.36

TOTAL CURRENT ASSETS

529853

YEARLY

100

VARIATION GROWT COMPARED

TO

2004 YEARLY GROWTH IN %

Yash Gupta RBMI Greater Noida Knowledge Park 3rd

86 TOTAL CURRENT LIABILITIES

395732

673470

1355722

1800313

2695677

1886554

395732

673470

1355722

1800313

2695677

1886554

70.18

172.40

112.35

226.26

(204.46)

70.18

101.30

32.79

49.73

(30.02)

134121

13196

29349

38367

37368

856410

100

9.84

21.88

28.61

27.86

638.53

1308827.29

2203192.03

2213111.56

YEARLY VARIATION GROWTH COMPARED

TO

2004

100

YEARLY GROWTH IN % NET

100 WORKING

CAPITAL - (A-B) WORKING CAPITAL SIZE TOTAL CURRENT ASSETS

156812.7 100

6

855218.25

5

5

5

100

29.6

161.41

247.02

415.81

417.68

959990.26

1404581.44

2299945.45

VARIATION COMPARED

TO

2004 TOTAL CURRENT LIABILITIES

100

277738.2

5

5

5

1490822.82

100

70.18

242.59

354.93

581.19

376.73

VARIATION COMPARED 2004

TO

CURRENT ASSETS A balance sheet item which equals the sum of cash and cash equivalents, accounts receivable, inventory, marketable securities, prepaid expenses, and other assets that could be converted to cash in less than one year. A company's creditors will often be interested in how much that company has in current assets, since these assets can be easily liquidated in case the company goes bankrupt. In addition, current assets are important to most companies as a source of funds for day-to-day operations.

Yash Gupta RBMI Greater Noida Knowledge Park 3rd

87

Table -Current Asset Size

CURRENT ASSET 2004

2005

2006

2007

2008

2009

46,198

199,387

68,798

570,267

145,245

1,917,381

2,217,26

2,960,41

12,708,94

20,461,08

13,615,57

9

3

7,804,526

7

5

6

114,127

465,475

162,532

378,049

571,443

733,715

1,781,96

2,171,08

2

8

2,810,291

1,292,380

1,441,426

2,304,752

-

-

217,158

194,191

321,144

4,694,015

354,006

53,010

735,450

518,997

341,150

100,555

4,513,56

5,849,37

11,798,75

15,662,83

23,281,49

23,365,99

1

4

4

1

4

3

100

129.60

261.41

347.02

515.81

517.68

CURRENT ASSET - A Bank Balances / Deposits Trade Debtors (Net of Provisions)

Inventory

Work in Progress

Dues from Related Parties Other Receivables

TOTAL CURRENT ASSETS CURRENT ASSET INDEX

Yash Gupta RBMI Greater Noida Knowledge Park 3rd

88

Chart - Current Asset Index.

CURRENT ASSET INDEX

600 500 400 VALUE

300 200

515.81

517.68

2008

2009

CURRENT ASSET INDEX

347.02 261.41

100 100

129.60

0 2004

2005

2006

2007

YEAR

Composition of current assets Analysis of current assets components enable one to examine in which components the working capital fund has locked. A large tie up of funds in inventories affects the profitability of the business or the major portion of current assets is made up cash alone, the profitability will be decreased because cash is non earning asset Table -Composition of Current Assets CURRENT ASSET COMPOSITION 2004

2005

2006

2007

2008

2009

Bank Balances

1.02

3.41

0.58

3.64

0.62

8.21

Trade Debtors

49.12

50.61

66.15

81.14

87.89

58.27

2.53

7.96

1.38

2.41

2.45

3.14

39.48

37.12

23.82

8.25

6.19

9.86

-

-

1.84

1.24

1.38

20.09

CURRENT ASSET - A

Inventory Work in Progress Dues from Related Parties

Yash Gupta RBMI Greater Noida Knowledge Park 3rd

89 Other Receivables CURRENT ASSET INDEX

7.84

0.91

6.23

3.31

100

100

100

100

1.47

0.43

100

100

Chart - Current Asset Components

CURRENT ASSET COMPOSITION Other Receivables

100% Dues f rom Related Parties

VARIATION IN %

80%

1.1.1 O

Work in Progress

bserv

Inventory

ations

60%

40% Trade Debtors (Net of Provisions)

20% Bank Balances / Deposits

0% 2004

2005

2006

2007

2008

2009

YEARS

It was observ ed that

the size of current assets is increasing with increases in the sales. The excess of current assets is showing positive liquidity position of the firm but it is not always good because excess current assets then required, it may adversely affects on profitability.. We can see in each year there is tremendous growth in current asset. Compared to 2007 the growth in current asset in 2008, there is a growth of 48.64%, where as in 2009 the growth rate is only .36%. The reason is that the debtors receivable in 2008 is 20,461,085 but in 2009 it has been reduced to 13,615,576/-, a drop of OMR 6,845,509/- ie. 33.46%. These shows that the a good cash collection from receivables in 2009 which shows a good working capital reserve of OMR 6,845,509/- which used to pay back the current liabilities of sundry creditors, other payables and due to related parties. Compared to 2008 in 2009 the bank balance also increased to OMR 1,917,381/-from OMR 145,245/in the year 2008. Cash balance of the company increased in the year 2009 because company had done good in it‘s collection process, which provides a good financial position in 2009. Current assets components show sundry debtors are the major part in current assets it indicates that the efficiency in collection management. Over investment in the debtors may affects liquidity of firm for that company has raised funds from other sources like short term loan which incurred the interest. Other main

Yash Gupta RBMI Greater Noida Knowledge Park 3rd

90 achievement is that, if we compare the purchase level with inventory, we can see that inventory level is not increased as compared to the volume of purchase. But same time we can see that the receivable from related parties and work in progress has been increased substantially. These show the proper utilization of materials and resources. Current liabilities Current liabilities are debts, accounts payable, interest due, trade credit, loans, and other obligations that are due and payable within one year. Current liabilities are calculated and identified on a business' balance sheet. Current liabilities as a total are information that is used as one measure of the financial condition of a company, especially in association with current assets to calculate the level of working capital. Table-Current liabilities size 2004

2005

2006

2007

2008

2009

345,371

912,579

2,076,834

0

2,042,393

561,131

149,443

187,158

505,393

1,455,553

1,523,440

2,217,368

1,186,78

3,053,55

0

5

5,222,137

6,931,094

455,788

2,070

23,814

31,484

1,519,796

426,463

0

27,784

184,470

177,498

407,850

934,642

1,233,66

1,553,81

5

9

3,536,092

6,740,372

7,039,860

5,662,426

3,371,04

5,736,96

11,548,74

15,336,00

22,963,17

16,070,64

7

5

2

0

5

9

100.000

170.183

342.586

454.933

681.188

CURRENT LIABILITIES – B Short-term Borrowings Current Portion of Long Term Debt Trade Creditors Dues to Related Parties Provisions – Tax Other Payables TOTAL CURRENT LIABILITIES VARIATION

10,429,83 6

6,268,619

IN

CURRENT LIABILITIES IN %

Yash Gupta RBMI Greater Noida Knowledge Park 3rd

476.726

91

Chart - Current Liability Index

VARIATION IN CURRENT LIABILITIES

800 700

681.188

VARIATION

600 500 454.933

476.7258

400

VARIATION IN CURRENT LIABILITIES

342.586 300 200

170.183

100

100

0 2004

2005

2006

2007

2008

2009

YEARS

Observations Current liabilities show a tremendous growth till 2008, because company creates the credit in the market by good transaction. To get maximum credit from supplier which is profitable to the company it reduces the need of working capital of firm. As the current liability increase in the year 2007, 2008 by 455% and 682 % res. it increases the working capital size in the same year. But subsequently it the liability has been reduced to 477%. But due to the good collection process the change in working capital is not affected much and the company enjoyed good credit terms over creditors which may include indirect cost of credit terms. From the graph we can see that the requirementof working capital has been increased drastically during the year 2006-2007-2008and it has been paid and cleared n 2009, and still the firm is having a good reserve in it‘s working capital. This shows the efficiency in it‘s collection policy. Changes in working capital

Yash Gupta RBMI Greater Noida Knowledge Park 3rd

92 The excess of current assets over current liabilities is referred to as the company‘s working capital. The difference between the working capital for two given reporting periods is called the change in working capital.

Benefit Changes in working capital is included in cash flow from operations because companies typically increase and decrease their current assets and current liabilities to fund their ongoing operations. When a company increases its current assets, it‘s a cash outflow: The company had to shell out money to buy the extra assets. Likewise, when a company increases its current liabilities, it‘s a cash inflow: The added liabilities, such as short-term debt, provide money. Changes in working capital simply shows the net affect on cash flows of this adding and subtracting from current assets and current liabilities. When changes in working capital is negative, the company is investing heavily in its current assets, or else drastically reducing its current liabilities. When a change in working capital is positive, the company is either selling off current assets or else raising its current liabilities. Origin This information is found in the Statement of Cash Flow of the company‘s financial statement. For the Processing: For many growing companies, changes in working capital is a little like capital spending: It‘s money the company is investing—in things like inventory—in order to grow. To get a true picture of the cash a company is generating before investment, one can add back changes in working capital to cash flow from operations. Another point: A negative value for changes in working capital could mean the company is investing heavily in growth, or that something‘s gone wrong. If a company is having trouble selling its goods, inventories will balloon, and changes in working capital will turn sharply negative. There are so many reasons to changes in working capital as follows:-

Yash Gupta RBMI Greater Noida Knowledge Park 3rd

93 1. CHANGES IN SALES AND OPERATING EXPANSES:The changes in sales and operating expanses may be due to three reasons A) There may be long run trend of change e.g. The price of row material say steel may constantly raise necessity the holding of large inventory. B) Cyclical changes in economy dealing to ups and downs in business activity will influence the level of working capital both permanent and temporary. C) Changes in seasonality in sales activities 2. Policy changes:The second major case of changes in the level of working capital is because of policy changes initiated by management. The term current assets policy may be refined as the relationship between current assets and sales volume. 3. Technology changes:The third major point if changes in working capital are changes in technology because change sin technology to install that technology in our business more working capital is required A change in operating expanses rise or full will have similar effects on the levels of working following working capital statement is prepared on the base of balance sheet of last two year. “Net change in working capital is the difference in working capital levels from one year to the next. When more cash is tied up in working capital than the previous year, the increase in working capital is treated as a cost against free cash flow” .

Table-Changes in Working Capital

CHANGES IN WORKING CAPITAL 2008

2009

145,245.00

1,917,381.20

20,461,085.2

13,615,575.6

0

5

changes

CHANGES IN W C INCREASE

DECREASE

1,403.12

1,772,136.20

-

(38.47)

-

6,845,509.55

in %

CURRENT ASSET - A Bank Balances / Deposits

Trade Debtors (Net of Provisions) Inventory

Yash Gupta RBMI Greater Noida Knowledge Park 3rd

94 571,443.05

733,714.95

32.66

162,271.90

-

1,441,426.10

2,304,751.80

68.88

863,325.70

-

321,144.40

4,694,014.80

1,565.90

4,372,870.40

-

341,149.80

100,554.85

(81.10)

#VALUE!

240,594.95

23,281,493.5

23,365,993.2

5

5

-

-

-

-

-

-

-

-

-

-

-

-

-

2,042,393.10

561,131.00

(83.40)

1,481,262.10

-

Term Debt

1,523,439.50

2,217,367.90

52.38

-

693,928.40

Trade Creditors

10,429,836.4 5

6,268,618.95

(45.88)

4,161,217.50

-

1,519,796.30

426,462.55

(82.73)

1,093,333.75

-

407,849.80

934,641.80

148.54

-

526,792.00

7,039,859.55

5,662,426.35

(22.50)

1,377,433.20

-

22,963,174.7

16,070,648.5

0

5

-

-

-

Work in Progress

Dues from Related Parties

Other Receivables

TOTAL CURRENT ASSETS-A

CURRENT LIABILITIES -B Short-term Borrowings Current Portion of Long

Dues to Related Parties

Provisions - Tax

Other Payables

TOTAL CURRENT LIABILITIES-B NET WORKING

Yash Gupta RBMI Greater Noida Knowledge Park 3rd

95 CAPITAL - (A-B) NET INCREASE IN WC

318,318.85

7,295,344.70

-

-

-

6,977,025.85

-

-

-

6,977,025.85

15,283,850.7

15,283,850.7

5

5

TOTAL 7,295,344.70

7,295,344.70

-

Chart - Changes in Working Capital CHANGES IN WORKING CAPITAL

7,000,000

VARIATION

6,000,000 5,000,000 4,000,000

DECREASE INCREASE

3,000,000 2,000,000 1,000,000

20 08

YEARS

Observations Working capital has been increased in the year 2008 to 2009 because: 

Trade Receivables in the year 2008, for OMR 20,461085/- has been reduced to OMR 13,615,575/-, ie. 33.45% less, compared to 2008. That means there was a good cash collection effected in 2009, and therefore the bank balance also has been increased from OMR 145,245/- to OMR 1,917,381/-, an increase of 1220%, where cost of raw material purchased increased by 28.4%.



When the trade receivable has reduced in 2009, simultaneously there was a decrease in trade creditors also. In 2008 trade creditors was 10,429,836/-, but in 2009 it has been reduced to OMR 6,268,618/-, a reduction of 39.9%. That means an increase in Working Capital is OMR 4,161,217/-. Same way, Due to related parties; it was OMR 1,519,796/- in the year of 2008, but it

Yash Gupta RBMI Greater Noida Knowledge Park 3rd

96 has been reduced to OMR 426,462/. A reduction of 71.9%. That means the there is an increase in Working Capital for OMR.1, 093,333/-. 

In the case of short-term borrowing; in the year 2008 the short-term borrowing was OMR 2,042,393/-. But in 2009 it has been reduced to 561,131/-. There is a decrease of 72.5%. That means there is an in crease in working capital for 1,481,262/-.



Even though the trade receivables and other receivables are reduced the fund received from receivables has been utilized to clear the liabilities. This leads to show a good performance and result in it‘s working capital.

OPERATING CYCLE OR WORKING CAPITAL CYCLE Working capital is also known as revolving capital and a circular path of conversion/recon version takes place. This revolution of cycle is called as the Operating Cycle Available cash tends to be tied up in what is known as the Working Capital Cycle (WCC). Every business, regardless of what they do operates this cycle. To start any business cash is required; this cash is then used to purchase stock in order to generate a sale. When the stock is sold it is either by way of a cash sale or is charged to an account, creating a debtor. When the debt is collected the WCC continues on. In a service industry the stock is client base or the service provided. The need of working capital arrived because of time gap between production of goods and their actual realization after sale. This time gap is called ―Operating Cycle‖ or ―Working Capital Cycle‖. The operating cycle of a company consist of time period between procurement of inventory and the collection of cash from receivables. The operating cycle is the length of time between the company‘s outlay on raw materials, wages and other expanses and inflow of cash from sales of goods. Thus a revolution or cycle from cash to raw materials to Work-in-Progress, to finished goods, to debtors, and back to cash takes place. This revolution is called as operating cycle. While waiting for cash to to return, more stock has to be purchased to keep the business operating and to do so, many businesses use their overdraft facility which is costing them money. If there is no overdraft they are using credit funds that could be better utilised elsewhere. The faster you can turn the WCC the faster the dollar returns and the less overdraft or credit funds you have to use. This is where efficiency in debt collection and stock turnover is the key.

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97 Managing cash in any business is important. Many profitable businesses end up closing down simply because they could not get the cash to carry them in the short term. Beyond Survival Workshops emphasize the difference between cash flow and profits, constructs a cash flow budget for a business and analyses where does all the cash go. It will demonstrate the importance on the efficient operation of the working capital cycle, how to improve debtor collection and stock turnover to help increase cash holdings and reduce the overdraft limit.

OPERATING CYCLE.

Thus, the term operating cycle, otherwise called as cash cycle refers to the length of time necessary to complete the following cycle of events: 1

Conversion of cash into inventory

2

Conversion of inventory into debtors

3

Conversion of debtors into cash

Stage 1: Cash to Inventory – In this stage, cash first gets converted into raw materials, then work-in progress and then finished goods in a typical manufacturing concern. As regards non-manufacturing concerns, when the goods are purchased, cash gets converted into inventory . Stage 2: Inventory to Debtors – The inventory thus produced or purchased, gets converted into debtors or receivables upon credit sales. Stage 3: Debtors to Cash -The debtors or accounts receivables get in turn converted back into cash when they make payment .

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98 LENGTH OF OPERATING CYCLE: When raw materials remain in store pending issue for production for a less duration, when raw materials gets converted into WIP in a short duration, when finished goods remain in warehouse pending for sales for a short duration only, and when cash realizations out of sales are made quickly and finally when payment to creditors is made slowly, the operating cycle would be smaller and consequently the working capital will also be reasonable. Thus shorter duration of operating cycle indicates an efficient working capital management. Operating cycle is an important concept in management of cash and management of cash working capital. The operating cycle reveals the time that elapses between outlays of cash and inflow of cash. Quicker the operating cycle less amount of investment in working capital is needed and it improves profitability. The duration of the operating cycle depends on nature of industries and efficiency in working capital management. OPERATING CYCLE APPROACH OR WORKING CAPITAL CYCLE APPROACH According to this approach, the requirements of working capital depend upon the operating cycle of the business. The operating cycle begins with the acquisition of raw materials and ends with the collection of receivables It may be broadly classified into the following four stages viz. 1. Raw materials and stores storage stage. 2. Work-in-progress stage. 3. Finished goods inventory stage. 4. Receivables collection stage. CALCULATION OF OPERATING CYCLE OR WORKING CAPITAL CYCLE To calculate the operating cycle of AI LLC, used last five year data. Operating cycle of the AI LLC vary year to year as changes in policy of management about credit policy and operating control. The duration of the operating cycle for the purpose of estimating Working capital requirements is equivalent to the sum of the durations of each of these stages less the credit period allowed by the suppliers of the firm. Symbolically the duration of the working capital cycle can be put as follows: -

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99

O=R+W+F+R-C

The gross operating cycle of a firm is equal to the length of the inventories and receivables conversion periods. Therefore Gross Operating Cycle = RMCP + WIPCP + FGCP + RCP - CPP



RMCP

=

Raw Material Conversion Period



WIPCP

=

Work–In-Process Conversion Period



FGCP

=

Finished Goods Conversion Period



RCP

=

Receivables Conversion Period



CPP

=

Creditors Payment Period

However, a firm may acquire some resources on credit and thus defer payments for certain period. In that case, Net Operating Cycle Period can be calculated as below: Net Operating Cycle Period = Gross Operating Cycle Period – Payable Deferral period

Further, following formula can be used to determine the conversion periods. Each of the components of the Operating Cycle can be calculated as follows:Raw Material Conversion Period = Average Stock of Raw Material / Raw Material Consumption per day Work in process Conversion Period = Average Stock of Work-in-Progress / Total Cost of Production per day Finished Goods Conversion Period = Average Stock of Finished Goods / Total Cost of Goods sold per day

Receivables Conversion Period = Average Accounts Receivables / Net Credit Sales per day Payable Deferral Period = Average trade Creditors / Average Credit Purchase per day After computing the period of one operating cycle, the total number of operating cycles that can be computed during a year can be computed by dividing 365 days with number of operating days in a

Yash Gupta RBMI Greater Noida Knowledge Park 3rd

100 cycle. The total expenditure in the year when year when divided by the number of operating cycles in a year will give the average amount of the working capital requirement.

OPERATING CYCLE/WORKING CAPITALCYCLE

IF THE FIRM-

THEN THE FIRM WILL-

Collect receivables (debtors) faster

Release cash from the cycle

Collect receivables (debtors) slower

Receivables soak up cash

Get better credit (in terms of duration or amount) from suppliers

Increase THE cash resources

Shift inventory (stocks) faster

Free up cash

Move inventory (stocks) slower

Consume more cash

CASH CONVERSION CYCLE OR NET OPERATING CYCLE Operating cycle and cash cycle are two important components of working capital management.

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101 Together they determine the efficiency of a firm regarding working capital management. While the operating cycle is the time period from inventory purchase until the receipt of cash, the cash cycle is the time period from when cash is paid out, to when cash is received. Refers to the delay between the buying of raw materials and the receipt of cash from sales proceeds. In other words, operating cycle refers to the number of days taken for the conversion of cash to inventory through the conversion of accounts receivable to cash. It indicates towards the time period for which cash is engaged in inventory and accounts receivable. If an operating cycle is long, then there is lower accessibility to cash for satisfying liabilities for the short term. Operating cycle takes into consideration the following elements: accounts payable, cash, accounts receivable, and inventory replacement. The following formula is used for calculating operating cycle: (1) Disregarding the capacity to defer payables, the cash conversion cycle is the length of time between the payment of cash for inventory and receipt of cash from accounts receivable. (a) If a firm holds its inventory 50 days and collects its accounts receivable in 30 days, then it would take 80 days for the original investment to be converted back into cash. (b) However, if the firm has the option of creating an accounts payable for 20 days, the cash conversion cycle can be reduced from 80 days to 60 days. (2) The cash conversion cycle is equal to the inventory conversion period, plus the receivables collection period, minus the payables deferral period. (a) The inventory conversion period is the average time between buying inventory and selling the goods. We have: inventory conversion period = inventory/(cost of sales/365) = 365/(inventory turnover). (b) The receivables collection period, or days' sales outstanding (DSO), is the average number of days that it takes to collect on accounts receivable. We have: receivables collection period = receivables/(sales/365) = 365/receivables turnover. (c) The payables deferral period is (the accounts payable + wages, benefits, and payroll taxes payable) / ([the cost of sales + selling, general, and administrative expenses]/365).

Table- Operating cycle (No. of Days) YEARS

2006

2007

2008

2009

Days Debtors

83

78

136

96

Days Inventory

80

45

18

17

Days Payable

75

66

84

55

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Chart - Net Operating Cycle

NET OPERATING CYCLE

100% 90%

75

66

80

45

84

55

18

17

80% 70% 60% DAYS

Days Payable

50%

Days Inventory Days Debtors

40% 136

30% 20%

83

96

78

10% 0% 2006

2007

2008

2009

YEARS

THE FIRMS GROSS OPERATING PROFIT (GOC) CAN BE DETERMINED AS:INVENTORY CONVERSIONPERIOD (ICP) + DEBTORS CONVERSION PERIOD (DCP).

GOC=ICP+DCP

ICP+RMCP+WIPCP

Observations Operating cycle of AI LLC shows the numbers of day are decreasing in recent year it is reflect the efficiency of management. Days of operating cycle shows period of lack of funds in current assets, if no of day are more than it increases the cost of funds as taken from outside of the business. In 2008/09 shows the high no. of days because of reduced of creditors holding period. WORKING CAPITAL LEVERAGE OR GEARING OF WORKING CAPITAL

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103 In finance, leverage (also known as gearing or levering) refers to the use of debt capital to supplement equity capital. Companies usually leverage to attempt to increase returns on equity capital, as it can increase the scope for gains or losses. The temporary increases in stock prices due to leverage at some banks have been blamed for the unusually high overall remuneration for top executives during the financial crisis of 2007–2010, since gains in stock prices were often rewarded regardless of how they were achieved. Deleveraging is the action of reducing borrowings. In macroeconomics, a key measure of leverage is the debt to GDP ratio.

One of the important objectives of working capital management is by maintaining the optimum level of investment in current assets and by reducing the level of investment in current assets and by reducing the level of current liabilities the company can minimize the investment in the working capital thereby improvement in return on capital employed is achieved. The term working capital leverage refers to the impact of level of working capital on company‘s profitability. The working capital management should improve the productivity of investment in current assets and ultimately it will increase the return on capital employed. Higher level of investment in current assets than is actually required means increase in the cost of Interest charges on short term loans and working capital finance raised from banks etc. and will result in lower return on capital employed and vice versa. Working responsiveness

capital

leverage

measures

the

of

ROCE (Return on Capital

Employed) for changes

in current assets. It is

measures by applying

the following formula,

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104 The working capital leverage reflects the sensitivity of return on capital employed to changes in level of current assets. Working capital leverage would be less in the case of capital intensive capital employed is same working capital leverage expresses the relation of efficiency of working capital management with the profitability of the company.

WORKING CAPITAL LEVERAGE = % CHANGES IN ROCE / % CHANGES IN CURRENT ASSETS

RETURN ON CAPITAL EMPLOYED – (ROCE) = EBIT / TOTAL ASSETS

Table - Calculation of working capital leverages. YEARS

2006

2007

2008

2009

ROCE

630%

1650%

1960%

2460%

3.37

3.23

3.14

1.8

WC LEVERAGE Chart - Working Capital Leverage

WORKING CAPITAL LEVERAGE

24.60%

25.00%

19.60%

20.00% 16.50%

ROCE

15.00% % CHANGES

WC LEVERAGE 10.00% 6.30% 5.00%

3.37%

3.23%

3.14% 1.80%

0.00% 2006

2007

2008

2009

YEARS

Working capital leverage of the company has decreased in the year 2009 as compare to the year 2006, and increase in working capital shows the efficient current assets management. In the year 2006 and 2007 the current assets has increased by high rate of 261% and 347% respectively. It tends to increase ROCE, which increased at the rate of 6.3% and 16.5% respectively, that resulted in push down the working capital leverage to 3.37% and 2.32% respectively. When investment in current assets and fixed asset will help the firm to run with sufficient fund without any overdraft or interrupt in it‘s fund flow.

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FINDINGS Working capital management is important aspect of financial management. The study of working capital management of central Handi Craft fields ltd. has revealed that the current ratio was as per the standard industrial practice but the liquidity position of the company showed an increasing trend. The study has been conducted on working capital ratio analysis, working capital leverage, working capital components which helped the company to manage its working capital efficiency and affectively. 

Working capital of the company is increasing and showing positive working capital per year. It shows good liquidity position.



Positive working capital indicates that company has the ability to pay the short terms liabilities.



Working capital has increased because there is more decrement in current liability than current assets.



Company‘s current assets were always more than requirement and it affects in the positive manner for the profitability of the company.



Current assets components shows sundry debtors were the major part in Current assets it shows that the debtors collection is inefficiently managed.

 Inventory is supporting to sales, thus inventory turnover ratio was increasing, but company has increased the raw material holding period.

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CONCLUSION The summer internship at this huge company called Handi Craft India Limited has been a great learning experience. It has given me a chance to study and understand the things which are very crucial for any organization. I have to know an industry of which I was not totally aware of and at the same time a sector that has a bright future.

Apart from that, I learnt about Working Capital Management as my project topic which enhanced my knowledge regarding organizations norms, rules, and regulations.

The work culture taught me much. One important thing I learnt was that respect comes by work and not by words. This was realized because it was the culture to call everybody by the first name. And secondly I learnt a most important lesson from my guide Mr.A.D.WADHWA i.e. being a remarkable identity; however he always treats everyone with great enthusiasm and zeal. So, it broke hierarchy level and ideas flew easily and communication was easy and smooth. It acted in a positive manner and I think this is the big reason for the success of the organization.

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LIMITATION OF STUDY

Even though CCIC Delhi is doing a great work in today‘s competitive world in the public sector and maintain its monopoly in Indian Handi Craft market; then also I personally found some of the limitations while completing my training and project report from this organization.

1. It‘s a challenge to enter into the company premises (appointment). 2. They hesitate to disclose their internal information. 3. Many respondents gave false information. 4. Time is the biggest constraint here because managers were not having the time to fill the questionnaire. 5. To find out the network in a company in order to get information. 6. Other limitations:Limited data: 

This project has completed with annual reports; it just constitutes one part of data collection i.e. secondary. There were limitations for primary data collection because of confidentiality.

Limited period: 

This project is based on three year annual reports. Conclusions and recommendations are based on such limited data. The trend of last three year may or may not reflect the real working capital position of the company.

Limited area: 

Also it was difficult to collect the data regarding the competitors and their financial information. Industry figures were also difficult to get.



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SUGGESTIONS AND RECOMMENDATIONS Recommendation can be used for the betterment of the company after doing study project report on the working capital management. I would like to recommend:

and analysis of

1) Company should take control on debtors‘ collection period which is major part of current assets. 2) Company has to take control on cash balance because cash is non-earning assets and increasing cost of funds. 3) Company should reduce the inventory holding period. 4) Company can try to take more unsecured loan , which it is currently having from world bank. As it has no time period for return and is helpful for funds of company. Over all company has good liquidity position and sufficient funds for repayment of liabilities. Company has accepted conservative financial policy and thus maintaining more current assets balance. Company is increasing sales volume per year

-0

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BIBLIOGRAPHY Books Referred 

I. M. Pandey - Financial Management - Vikas Publishing House Pvt. Ltd. - tenth Edition 2006



M.Y. Khan and P.K. Jain, Financial management – Vikas Publishing house ltd., New Delhi.



K.V. Smith- Management of Working Capital- Mc-GrowHill New York



Dr. S.K. Singh-Accountancy, Rajeev’s Sahitya Bhawan- Agra



Dr. B.P. Agrawal & Dr. B.P. Mehta- Management Accounting- S.B.P.D. Publication Agra



D.S. Rawat-Students tried to Accounting Standards

Websites References 

www.CCIC.gov.in



www.Handi Craft india.nic.in



www. wikipedia.org



www.workingcapitalmanagement.com



www.saralaccounts.com



www.answer.com.



www.google.co.in

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112

Appendix For the primary data collection I preferred Open ended questionnaire because Working Capital Management of a company is most large concept and it is not easy to get maximum information through Close ended questionnaire.

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Interpretation: Usually lenders follow a norm of 2:1 of debt-equity ratio; they do not lend money to firm who exceeds these norms. In this case we can see that firm‘s debt –equity ratio is going on decreasing from 0.22 in year 2007-08 to 0.14 in 2008-09 and 0.04 in 09-10 to finally 0.03 in the current year 2010-11. This condition is mainly because CCIC is continuously decreasing its debt and moving towards debt free company. As we can see in the year 07-08 22% of debt was used remaining 78% being shareholder‘s fund .In 0809 debt percentage has decreased from 22% to 14% and again this pattern continues in 09-10 and debt comes down to 4% finally in current year 2011-12 it has been decreased to 3%. This is good for firm as during low profit debt servicing will be less burdensome for a company with low Debt Equity Ratio.

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QUESTIONNAIRE Objective- To know the working capital policy of different banks

Name of Concerned Person …………………………………………………. Designation ………………………………………………….... Contact No. ……………………………………………………

Q.1. Does your bank have an overall policy for the management of its working capital?

Formal Policy

No Policy

Informal Policy

Q.2. Who sets the management policy for working capital for your bank?

Board of Management

President/ Chairman

Finance Committee

Financial Controller

Other

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Q.3. How often the management policy for working capital reviewed?

Monthly

Quarterly

Semi-annually

Annually

Whenever necessary

Q.4. How would you describe your policy for the management of working capital?

Cautious

Aggressive

Situational

Changes overtime

Q.5. Is the working capital based on your operating cycle?

Yes

No

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139 Q.6. How do you arrange for additional working capital?

Q.7. Does your demand vary as per season?

Yes

No

Q.8. Do you get credit facility from your supplier?

Yes

No

Q.9. Do you give credit facility to your customer?

Yes

No

Q.10. Do you use banking source to finance your working capital?

Yes

No

Thank you for your precious time!!

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