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  • Final Mohit Project

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    sonabeta07
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    Partition of India by Anjali Gupta Bookmark and Share August 15, 1947 was a very significant day for Muslims, Hindus, Sikhs and many others. It marked the day of the British partition of India into a Muslim-controlled Pakistan and a Hindu-dominated India. India won its freedom from colonial rule, ending nearly 200 years of British rule. Many different events lead to the final decision of the partition. During the 18th and 19th centuries, the British gained full power over India. Bitterness towards the British developed as Hindus and Muslims were denied jobs and high positions in the government and army. The Indian National Congress (INC), lead by Jawaharlal Nehru, was created by the end of the 19th Century. Indians demanded equal opportunity and freedom from colonial rule. The British wanted to make the Muslims their allies in order to counter the perceived threat of the Hindu educated class. The British feared the potential threat from the Muslims, since the Muslims were the former rulers of the subcontinent and ruled India for over 300 years under the Mughal Empire. In order to win them over to their side, the British helped support the All-India Muslim Conference. They instilled the notion that the Muslims were a separate political entity and by the beginning of the 1900s they gave the Muslims separate electorates in local government all over British India. Thus the idea of the separateness of Muslims in India was built into the electoral process of India. Muslim leaders led by Mohammed Ali Jinnah felt that the Hindus, by dominating the Indian National Congress, were beginning to dictate decision-making in British India. The Muslims felt they should have their own state in order to protect their Islamic heritage. So in 1940, the All-India Muslim League declared its desire for a separate state. Hindus began to feel uncomfortable about being a minority in a majority Muslim State. Relations between the two groups began to deteriorate. On August 16, 1946, in its demand for a separate Pakistan, the Muslim League called for "Direct Action" day. Direct Action day witnessed thousands of Muslims and Hindus fighting in mixed areas. Calcutta became the scene of the most brutal violence in what became known as the great 'Calcutta killings'. Within 72 hours, more than 5,000 people died, at least 20,000 were seriously injured, and a hundred thousand residents of Calcutta City alone were left homeless. As Jinnah remarked "If not a divided India, then a destroyed India". More violence followed as the rioting spread to the rural areas of Punjab and the Ganges valley. British and Indian leaders such as Nehru and Valla Bhai Patel decided that the only solution to the conflict was a partition. Lord Mountbatten, the last Viceroy of India, was given full power by one of the British leaders to negotiate any agreement he could to help come to some sort of conclusion. Mountbatten saw that the only way for the British to withdraw was to transfer power to two governments, not one. With this in mind, he pressured and finally persuaded congress to accept the idea of a divided India. He made the announcement of the partition and declared the boundaries, which would divide India into two. His plan was to create two separate wings in the areas where the Muslims were the most numerous, in northwest India and in eastern Bengal which together would form Jinnah's Pakistan. This meant that both Bengal and Punjab would be divided between India and Pakistan. Thus, August 14, 1947 saw the birth of the new Islamic Republic of Pakistan- a Muslim nation separate from the predominantly Hindu India. At midnight the next day (on Aug. 15, 1947) India won its freedom from colonial rule. Pakistan was made up of two regions: West Pakistan on the Indus River plain, and East Pakistan, which is now known as Bangladesh. In a speech to the nation in the night of August 14th, Nehru, the first Prime Minister of independent India said "A mome

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    Partition of India by Anjali Gupta Bookmark and Share August 15, 1947 was a very significant day for Muslims, Hindus, Sikhs and many others. It marked the day of the British partition of India into a Muslim-controlled Pakistan and a Hindu-dominated India. India won its freedom from colonial rule, ending nearly 200 years of British rule. Many different events lead to the final decision of the partition. During the 18th and 19th centuries, the British gained full power over India. Bitterness towards the British developed as Hindus and Muslims were denied jobs and high positions in the government and army. The Indian National Congress (INC), lead by Jawaharlal Nehru, was created by the end of the 19th Century. Indians demanded equal opportunity and freedom from colonial rule. The British wanted to make the Muslims their allies in order to counter the perceived threat of the Hindu educated class. The British feared the potential threat from the Muslims, since the Muslims were the former rulers of the subcontinent and ruled India for over 300 years under the Mughal Empire. In order to win them over to their side, the British helped support the All-India Muslim Conference. They instilled the notion that the Muslims were a separate political entity and by the beginning of the 1900s they gave the Muslims separate electorates in local government all over British India. Thus the idea of the separateness of Muslims in India was built into the electoral process of India. Muslim leaders led by Mohammed Ali Jinnah felt that the Hindus, by dominating the Indian National Congress, were beginning to dictate decision-making in British India. The Muslims felt they should have their own state in order to protect their Islamic heritage. So in 1940, the All-India Muslim League declared its desire for a separate state. Hindus began to feel uncomfortable about being a minority in a majority Muslim State. Relations between the two groups began to deteriorate. On August 16, 1946, in its demand for a separate Pakistan, the Muslim League called for "Direct Action" day. Direct Action day witnessed thousands of Muslims and Hindus fighting in mixed areas. Calcutta became the scene of the most brutal violence in what became known as the great 'Calcutta killings'. Within 72 hours, more than 5,000 people died, at least 20,000 were seriously injured, and a hundred thousand residents of Calcutta City alone were left homeless. As Jinnah remarked "If not a divided India, then a destroyed India". More violence followed as the rioting spread to the rural areas of Punjab and the Ganges valley. British and Indian leaders such as Nehru and Valla Bhai Patel decided that the only solution to the conflict was a partition. Lord Mountbatten, the last Viceroy of India, was given full power by one of the British leaders to negotiate any agreement he could to help come to some sort of conclusion. Mountbatten saw that the only way for the British to withdraw was to transfer power to two governments, not one. With this in mind, he pressured and finally persuaded congress to accept the idea of a divided India. He made the announcement of the partition and declared the boundaries, which would divide India into two. His plan was to create two separate wings in the areas where the Muslims were the most numerous, in northwest India and in eastern Bengal which together would form Jinnah's Pakistan. This meant that both Bengal and Punjab would be divided between India and Pakistan. Thus, August 14, 1947 saw the birth of the new Islamic Republic of Pakistan- a Muslim nation separate from the predominantly Hindu India. At midnight the next day (on Aug. 15, 1947) India won its freedom from colonial rule. Pakistan was made up of two regions: West Pakistan on the Indus River plain, and East Pakistan, which is now known as Bangladesh. In a speech to the nation in the night of August 14th, Nehru, the first Prime Minister of independent India said "A mome

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    115 visualizações55 páginas

    Final Mohit Project

    Enviado por

    sonabeta07
    Partition of India by Anjali Gupta Bookmark and Share August 15, 1947 was a very significant day for Muslims, Hindus, Sikhs and many others. It marked the day of the British partition of India into a Muslim-controlled Pakistan and a Hindu-dominated India. India won its freedom from colonial rule, ending nearly 200 years of British rule. Many different events lead to the final decision of the partition. During the 18th and 19th centuries, the British gained full power over India. Bitterness towards the British developed as Hindus and Muslims were denied jobs and high positions in the government and army. The Indian National Congress (INC), lead by Jawaharlal Nehru, was created by the end of the 19th Century. Indians demanded equal opportunity and freedom from colonial rule. The British wanted to make the Muslims their allies in order to counter the perceived threat of the Hindu educated class. The British feared the potential threat from the Muslims, since the Muslims were the former rulers of the subcontinent and ruled India for over 300 years under the Mughal Empire. In order to win them over to their side, the British helped support the All-India Muslim Conference. They instilled the notion that the Muslims were a separate political entity and by the beginning of the 1900s they gave the Muslims separate electorates in local government all over British India. Thus the idea of the separateness of Muslims in India was built into the electoral process of India. Muslim leaders led by Mohammed Ali Jinnah felt that the Hindus, by dominating the Indian National Congress, were beginning to dictate decision-making in British India. The Muslims felt they should have their own state in order to protect their Islamic heritage. So in 1940, the All-India Muslim League declared its desire for a separate state. Hindus began to feel uncomfortable about being a minority in a majority Muslim State. Relations between the two groups began to deteriorate. On August 16, 1946, in its demand for a separate Pakistan, the Muslim League called for "Direct Action" day. Direct Action day witnessed thousands of Muslims and Hindus fighting in mixed areas. Calcutta became the scene of the most brutal violence in what became known as the great 'Calcutta killings'. Within 72 hours, more than 5,000 people died, at least 20,000 were seriously injured, and a hundred thousand residents of Calcutta City alone were left homeless. As Jinnah remarked "If not a divided India, then a destroyed India". More violence followed as the rioting spread to the rural areas of Punjab and the Ganges valley. British and Indian leaders such as Nehru and Valla Bhai Patel decided that the only solution to the conflict was a partition. Lord Mountbatten, the last Viceroy of India, was given full power by one of the British leaders to negotiate any agreement he could to help come to some sort of conclusion. Mountbatten saw that the only way for the British to withdraw was to transfer power to two governments, not one. With this in mind, he pressured and finally persuaded congress to accept the idea of a divided India. He made the announcement of the partition and declared the boundaries, which would divide India into two. His plan was to create two separate wings in the areas where the Muslims were the most numerous, in northwest India and in eastern Bengal which together would form Jinnah's Pakistan. This meant that both Bengal and Punjab would be divided between India and Pakistan. Thus, August 14, 1947 saw the birth of the new Islamic Republic of Pakistan- a Muslim nation separate from the predominantly Hindu India. At midnight the next day (on Aug. 15, 1947) India won its freedom from colonial rule. Pakistan was made up of two regions: West Pakistan on the Indus River plain, and East Pakistan, which is now known as Bangladesh. In a speech to the nation in the night of August 14th, Nehru, the first Prime Minister of independent India said "A mome

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    de 55

    MALWA COTTON SPINNING MILLS LIMITED

    PROJECT REPORT ON WORKING CAPITAL MANAGEMENT OF

    MALWA COTTON SPINNING MILLS LTD

    IN PARTIAL FULFILMENT OF THE REQUIREMENTS FOR THE AWARD OF DEGREE OF MASTER OF BUSINESS ADMINISTRATION

    Submitted To Mr.V.J. Mahajan

    Submitted By Mohit Bembi MBA Roll No. 2312

    Working Capital Management

    Page 1

    MALWA COTTON SPINNING MILLS LIMITED

    PREFACE
    This project report entitled as WORKING CAPITAL MANAGEMENT in MALWA COTTON SPINNING MILLS LTD., LUDHIANA that is well known in hosiery industry was undertaken by me in partial fulfilment of Master of Business Administration. The main purpose of this report is to analyse working capital management in Malwa Cotton Spinning Mills Ltd.I hope this study will prove useful for both academic as well as practiacal purpose.

    Working Capital Management

    Page 2

    MALWA COTTON SPINNING MILLS LIMITED

    ACKNOWLEDGEMENT
    Acknowledgement is an endless ocean and one requires to be supported, guided, inspired and criticized by several specialists in order to drive-out a handful pearls from its depth. As it comes wordlessly, it cannot be acknowledged in words. At the very outset, I hereby express my gratitude to the management of Malwa Cotton Spinning Mills Ltd., for granting me permission to undertake my project work in the organisation and providing me a rich intellectual environment and adequate facilities which are so essential for writing a project of this kind and also enlighten me with real working of the company. I also owe my sincere thanks to Mr.V.J. Mahajan (Asst. Vice President Finance) for providing me the capable guidance and willing help to undertake my project work. I am very greatful to finance department for their valuable co-operation, all employees were friendly towards me and helped me in completing my project report. At last but not the least I am thankful to my parents and friends who provided moral support and contributed in completion of my project.

    Mohit Bembi

    Working Capital Management

    Page 3

    MALWA COTTON SPINNING MILLS LIMITED

    MALWA GROUP The foundation of Malwa Group (formerly called the VSO Group) was laid by Late Lala Vidya Sagar Oswal - a visionary known as much for his perspicacity and sharp business acumen as for his philanthropic pursuits. Driven by a strong desire to achieve what few in his day & time could have dreamt of, he sowed the seeds of the textile powerhouse that Malwa has come to be today, built around the cornerstones of Dedication to Work, Excellence in Product quality & Work Practices, Commitment to its Customers and Daring to think beyond the ordinary. Today, after having been in existence for seven decades, Malwa Group has become an over 10,000-member strong Institution.

    The Group is fully integrated in Textiles with interests in Ginning, Spinning, Weaving, Processing and Garmenting, and is one of the biggest Textile Conglomerates in the Country. The significant business diversification and the major international forays towards expansion are proof of the growing international presence of the Malwa Group.

    Further, in line with the vision of its founder, Malwa Group also runs India's second largest charitable Cancer Hospital.

    GROUP COMPANIES MALWA INDUSTRIES LIMITED (MIL) MALWA INDUSTRIES LIMITED (MIL) - Denim arm of the Malwa Group. In 1997, Mr. Rishi Oswal, the scion of the Oswal family and the Managing Director of Malwa Industries Limited started the denim manufacturing facility in response to the increased market demand for Jeans in the 1990's. Commercial operations started Working Capital Management Page 4

    MALWA COTTON SPINNING MILLS LIMITED in FY97-98 and since then the company has been growing at a fast pace. Malwa's premier denim manufacturing plant is located at Ludhiana in the Punjab region, the heart of the Indian cotton producing belt. Its operations span India (where it is headquartered), Jordan & Italy. Through these operations, its products are exported to over 40countries worldwide where these are sold under some of the biggest denim brands & designer labels that come to mind. With Quality certifications such as the ISO9001, ISO14001, Oekotex & Woolmark, the name Malwa has, today, become synonymous with superlative quality & product excellence. In recognition of its excellent track record in Exports, it has been honoured with Export Performance Awards by the Govt. of India in recent years.

    Equipped with the latest machines imported from Switzerland , Germany , Belgium , Italy , Japan & the US , the facility boasts of some of the best equipment the industry has to offer. With this state-of-the-art technology, MIL achieves a current production capacity of 20 million meters of denim fabrics & 4.50 million pairs of Jeans annually.

    The Jeans manufacturing facility at Jordan (Third Dimension Apparel LLC or more popularly Petra) boasts of an annual capacity of 4.0million pieces. It has the most advanced CAD system which helps in optimizing fabric consumption that minimizes cost, making the product affordable. The Italian venture (Emmetre) is a fully automated state-of-the-art facility for Garment Dyeing & Finishing. It caters to the top end of the market and has a client base comprising of leading designer labels & fashion brands. The facility brings to Malwa's fold, prized knowledge of emerging fashion trends in denim making MIL a trendsetter by virtue of this knowledge. This facility also adds 2.5million pieces annually in capacities to Malwa's denim stable.

    Malwa today stands tall & proud of its stature as one amongst a handful of denim suppliers, globally, to possess capabilities in offering Total Solutions in Denims and that too from a single point interface.

    Oswal Knit India Ltd Established in 1992, Oswal Knit is the market leader for winter wear in the premium segment. Sole Licensee for 'Pringle of Scotland' in India, since 1994, the company Working Capital Management Page 5

    MALWA COTTON SPINNING MILLS LIMITED offers Knitwear, T-shirts, Shirts, Trousers, Jackets and Accessories to complete the life-style through leading MBO's and its own exclusive retail outlets. Its other brand 'Casablanca' offers winter wear to the customer in the mid and upper mid-price segment.

    The Company has a tie-up with an Italian Design Studio that brings the latest international designs, trends and styles to the Indian consumer. For quality reasons the raw materials are sourced from the topmost Italian manufactures. Replenishing the plant with the latest international technology is what has enabled Oswal Knit India Ltd. to retain its leadership status.

    Working Capital Management

    Page 6

    MALWA COTTON SPINNING MILLS LIMITED

    Malwa Cotton Spinning Mills Ltd. (MCSM) Malwa Cotton Spinning Mills Ltd or MCSM is among the top ten textile mills in the Indian sub-continent. The Mills are situated amidst the rich cotton growing belts of India namely Punjab and Himachal Pradesh in Northern India. The total spindleage of both the units is around 140000.

    The mills are equipped with hi-tech state-of-the-art machineries from world-renowned textile machinery manufacturers like Rieter, Trutszler, Crossrol, Schlafhorst and Savio.

    All the above process machines are also equipped with latest on-line quality control equipments combined with computerized information system. World wide recognized & accepted high-reliability Uster quality control equipments form the core of our R&D and constant monitoring quality control department.

    A strong, skilled workforce of 5000 persons including highly experienced textile professionals under the dynamic & able leadership of Mr. Jangi Lal Oswal, the Group Chairman, is committed to meeting the challenges of exacting Global textile standards. Malwa yarn is well sought after by domestic & international markets. An ever-growing demand for our products in the global markets is evident from our expanding export base. Malwa yarn conforms to the most stringent International Quality standards in production. Thus knotless, flawless & high quality yarn confirming to uster standards is produced.

    We procure the best quality acrylic fiber from world-renowned manufacturers and produce Acrylic cotton yarn & high bulk Acrylic yarn. Dye house facility at our Works enables us to produce dyed yarn of exact shades. We also produce polyester Working Capital Management Page 7

    MALWA COTTON SPINNING MILLS LIMITED yarn, polyester cotton yarn, viscose yarn, dyed viscose yarn and viscose cotton yarn. Raw materials like polyester& viscose too are procured only from reputed manufacturers.

    Working Capital Management

    Page 8

    MALWA COTTON SPINNING MILLS LIMITED

    COMPANYS PROFILE

    Name of the industrial concern Ltd Established in Change in to joint sector Commencement of business Present capacity Location

    Malwa Cotton Spinning Mills

    : : : : :

    1976 1980 1st April 1980 70tonnes per day Industrial Area A, Ludhiana-141003

    Agents and Drealers Works

    : : : :

    All Over India Ludhiana Barnala Machhiwara Vardhman Textiles Ltd Punjab National Bank, State

    Competitors of the Company Bankers of the Company

    : :

    Bank of India,Vijaya Bank, IDBI Bank Ltd, IFCI Ltd, The Jammu & Kashmir Bank Ltd. Auditors of the company : S.C.Vasudeva & Co.,Charted Accountants New Delhi

    Working Capital Management

    Page 9

    MALWA COTTON SPINNING MILLS LIMITED HISTORY & BRIEF INTRODUCTION OF THE COMPANY Malwa cotton spinning mills ltd was incorporated in 1976 by Punjab state development corporation limited and came under joint sector with own group in 1980. The company has ceased to be in joint sector with this investment by PSIDC of its shareholding since 1987. At present the company has spinning unit at Barnala dist. Sangrur. two Unit worsted spinning and threads unit at Machhiwara, dist. Ludhiana, Punjab and one spinning unit at Paonta Sahib, Himachal Pradesh.

    In 1980 the implementation of spinning unit with a complement of 25000 spindles for manufacturing of synthetic yarns was taken in hand and completed in March 1983. After gradual expansion over a period, the capacity of Barnala unit was raised to 49696 spindles in 1990. Looking into good response in the domestic and international market, in may 1995, the management decided to expand with 25200 spindles at Barnala under 100% export oriented unit is now deboned.

    1 April 1988 the company started implementation of new spinning project with 12480 spindles at Ponta Sahib and with various expansion up to 1995 the capacity of the unit increased to 63920 spindles.

    To give further inputs to profitability & strengthen the bottom lines the management decided to go for value addition of yarn the company took in hand implementation of dyeing & processing unit for dyeing of fabric yarns & fiber with a capacity of tonnes per day at village Harridan, Machhiwara and distt. Ludhiana(Punjab) in april 1998.

    The project was completed in 2000 also to harmonize and optimise the operation ; the hank dyeing unit at Paonta Sahib is also shifted to Machhiwara. The company took up diversification by setting up of threads capacity in 2001-2002 with 3 tonnes per day which is increased to 9 tonnes peer day in 2004-2005 for polyester,cotton & other high value threads. The threads division is set up to consolidate its existing operation and manufacturing of high value added products.

    The company is equipped with most modern plant & machinery like blow roomfrm TRUTZCHLER of Germany, cards froms CROSSROLL of united kingdom, reiter of Working Capital Management Page 10

    MALWA COTTON SPINNING MILLS LIMITED Switzerland & Indigenous cards from lakshmi machine works limited, comibatore, india, autoconers from savio of Italy, draw frames from cherry hara of Japan indigenous speed frames ang ring frames from lakshmi machine work ltd. Coimbatore,India and other quality testing facilities like uster tester3 evenness tester, teno rapid, spinlab, compusoter & classimate 2 from zwelleger uster of Switzerland.

    Mcsml is manufacturing a wide range of yarn made from cotton, acrylic, plyster, viscose woos and other synthetic fibers, the company is manufacturing cotton yarn bothcarded and combed, acrylic yarn viscose yarn and other blended in dyed and grey. The production capacity of Barnala unit is 38 tonnes per day and Paonta Sahib unit 30 tonnes per day. The capacity of dyeing unit at Machhiwara is 12 tpd for cone dyeing , hank dyeing and fabric dyeing. The sewing threads unit capacity is 9 tonnes per day. At present the capacity of worsted is 4 tpd.

    SOCIAL RESPONSIBILITY

    In 2006 Malwa Commissioned its very own Captive Power Plant with a capacity of 6 MW. It uses renewable and non polluting rice husk as fuel. The Plant provides uninterrupted CPP power supply to Malwa Industries Limited thereby reducing the high cost of power. Electrostatic Precipitator is installed in Captive Power Plant for reduction of particulate matter. Air Pollution Control Devices are also installed in Boiler & Electrostatic Precipitator (ESP) in order to curb & prevent air pollution. Green Fuel usage reflects Malwa's dedication towards cleaner & pollution free environment, while making us more competitive. State of the art Effluent Treatment Plants helps us in using the effluent treated waters which confirms to the WHO portable standards. Treated water is used for Horticulture within the acres ETP of premises thereby maintaining the sprawling green belt in and around the factory. Malwa in a first of its kind initiative in this part of the country has partnered with the state government and Working Capital Management Page 11

    MALWA COTTON SPINNING MILLS LIMITED local village community wherein treated water from our ETP shall irrigate about 600 Acres of land in nearby agricultural fields, leading to conservation of both Water & Electricity. Cotton Waste generated during manufacturing is diverted to hand Carpet Industry for making World Class Carpets. This helps in the optimum utilization of resources. Rain Water Harvesting Rain water harvesting Plant is installed within factory premises at Machhiwara near Ludhiana. It stocks rain water which is provided for irrigation in the near by agricultural fields, free of cost. Rain water harvesting is believed to be one of the best methods of replenishing the water table there by giving back to nature what we take from it. It is yet another contribution of Malwa towards balancing the ecological system.

    Malwa in a first of its kind initiative in this part of the country has partnered with the state government and local village community wherein treated water from our ETP shall irrigate about 600 Acres of land in nearby agricultural fields, thereby supporting the local farming community to over come irrigation problem. Malwa Group runs a 300 bed Charitable Cancer Hospital at Ludhiana (Mohan Dai Cancer Hospital ) which has State of Art facilities. This is second largest Cancer Hospital in the country. Malwa is also running a School to provide subsidized education for the children of its employees & workers

    Malwa Management organizes Yearly Health Camps for Community Welfare, attended in large numbers .

    Working Capital Management

    Page 12

    MALWA COTTON SPINNING MILLS LIMITED Malwa is committed to community development. It actively participated in the construction of the village Community Hall, apart from organizing regular sport events for the local village community. Women Empowerment : Malwa has employed around 800 women workers from near by villages. These Dependent Girls who have come from a conservative background from families of Land Lords & Farmers are now very happy with the step they have taken to come out and work for Malwa. These girls in their young age have now transformed themselves into a Confident, Motivated, Self Independent and Outshining Personalities, apart from financially contributing towards their families. Malwa pursues the policy of No Discrimination on the basis of physical disability which has resulted in the upliftment of the needy & the oppressed.

    HOSPITAL
    MOHAN DAI OSWAL CHARITABLE CANCER HOSPITAL As part of its philanthropic activities, Malwa also runs a fully equipped charitable Cancer Hospital atLudhiana (Mohan Dai Oswal Charitable Cancer Hospital ), which is the country's second largest CancerResearch& Care Hospital.

    Health Awareness Mohan Dai Oswal Cancer Treatment & Research Foundation, Ludhiana A Charitable Organization At present it is the biggest cancer center of the northern India equipped with latest state of art diagnostic & therapeutic equipment Marches Ahead by Approaching the Unapproachable by announcing the opening up of the new City Center Purana Bazar, Ludhiana A Charitable free dispensary at Inder Nagar - Ludhiana A Comprehensive Cancer Care Centre &Multispeciality Hospital With continuous

    dedication and Commitment for the suffering humanity

    Working Capital Management

    Page 13

    MALWA COTTON SPINNING MILLS LIMITED Mohan Dai Oswal Cancer Treatment & Research Foundation was established in 1984 as a charitable institution to extend comprehensive quality treatment for cancer to the masses at an affordable price. It is a 300 bedded hospital located on the Amritsar New Delhi G.T. Road near Sherpur bye pass,Ludhiana. It is housed in a multistoried building. Patient care area is approx. 16,000 sq. Yards spread over 4 floors. In addition there is a mechanical laundry, a workshop, shopping areas, residential accommodation for medical, nursing & paramedical staff and a sarai for poor patients (Free of cost stay). All these are located at convenient distances from each other. The hospital is located in an 8-acre plot & has adequate space for future expansion. Over the period the hospital has developed into a modern, well-equipped comprehensive cancer treatment center and multispeciality hospital. Clinical services are adequately backed by investigative and diagnostic divisions. The hospital registers nearly one-lakh patients in different OPD services every year and nearly over 8000 annual admission in different specialties yearly. Being by the specialized comprehensive care center:On an average 3, 000 to 3,500 new cancer patients are registered in the hospital besides regular follow up patients. This number increases by 10% every year. Daily OPD attendance ranges from 350 to 400 patients (Old and New) These patients include people from all walks of life not only from Punjab but adjacent northern states of India including J&K, HP, UP and Haryana.

    The hospital has made special endeavors to have outreach programme in the rural as well as urban areas by opening up free urban dispensary at InderNagar , Ludhiana, and Charitable City Center at Purana bazaar Ludhiana .The hospital is also having Collaboration with different charitable hospitals and rural centers, where postgraduates participate independently for the diagnosis and treatment of the patient.The post-graduate also take active part in the free medical checkup camps organized in the rural and urban areas from time to time and they also participate in the health awareness activities. It may be of interest to note that we provide the cheapest cancer treatment facilities in the region. Today the hospital is recognized as a centre of excellence and this encourages us to make better efforts to reach greater heights in all fields of patient care. We are thankful to the medical fraternity and people at large without whose faith Working Capital Management Page 14

    MALWA COTTON SPINNING MILLS LIMITED and support it would never have been possible, for us to achieve and maintain our objective of Maximum Benefits, to largest number at minimum cost ". Mohan Dai Oswal Cancer Institution is doing a great service to the patients suffering from dreaded disease of cancer. Besides this it has acquired the status of the postgraduate institute for having been affiliated by the Diplomat National Board in various specialties for the post graduate courses.

    Karam Yogi Lala Vidya Sagar Oswal

    The great warrior, the centurion man Lala vidya Sagar Oswal was born at village Jodhan, Ludhiana in 1908. Lalaji had a long stressfull journey from a simple layman to a successful business Tycoon. He started his life as a simpleemployee in a shope. With his hardwork, patince and intelligence he reached to the higest level of being cosidered as a doyen of industrial revolution in hosiery in Ludhiana and was instrumental in bringing Ludhiana on the Industrial manpof the world, known as Manchester of India. VSO Group has opened a Institute of information Technology a charitable (No Fee) Institution in the Memory of Lala Vidya Sagar Oswal. Opp. Fire Brigade, G.T. Road, Miller Ganj, Ludhiana

    Working Capital Management

    Page 15

    MALWA COTTON SPINNING MILLS LIMITED As founder of Malwa Group, I feel a strong sense of pride and honour to head such an exceptional organization. Exceptional in every regard, be it dedication to work, a sense of commitment to the customer or maintaining quality standards. Most of all, in winning over customers confidence which to us is the prime reason for our success day after day, year after year. Achievement brings with it a sense of pride which further encourages the growth of the people, the company and the product line. As we look back over the years, we have come a long way from whence we began. The road to success has not always been easy to tread but each hurdle overcome gave us strength to go one more step a head. We took each challenge as a part of the bigger process which prepared us for greater things in time to come. The Malwa Group, a vision of the future that is continually expanding itself by the basic qualities, necessary to growth and holds a promise of even greater things to come. I thank every one at the Malwa Group for their unwavering faith and conviction which had made it possible for the vision to come true. Its my distinct privilege to share it with you.

    Lala Vidya Sagar Oswal

    THE MANAGEMENT
    BOARD OF DIRECTORS MR. JANGI LAL OSWAL (Chairman-cum Managing Director) MR. RISHI OSWAL MR. RAHUL OSWAL MR. SURENDRA PRASAD BHATT (Nominee of IFCI) Working Capital Management Page 16

    MALWA COTTON SPINNING MILLS LIMITED MR.YASHPAL BARAR (Nominee od PNB) MR.SANJAY KUMAR SUROYA (Nominee of IDBI) MR.G.BANSAL MR.SURINDER KUMAR VIG AUDITORS S.C. VASUDEVA & CO., NEW DELHI

    BANKERS Punjab National Bank State Bank of India Vijaya Bank The Jammu & Kashmir Bank Ltd. IDBI Bank LTd. IFCI Ltd.

    REGISTERED OFFICE Industrial Area A, Ludhiana-141003 Punjab

    WORKS 1) Village Harigarh, Raikot Road, Barnala (Punjab) 2) Village Patlian, Paonta Sahib (Himachal Pradesh) 3) Village Harian, Kohara-Machhiwara Road, Distt. Ludhiana (Punjab)

    AWARDS & RECOGNITION


    YEAR March 2001 April 2001 AWARDS & RECOGNITION Obtained ISO 9002 certification from BVQI, London Achieved Export-House Status under Government of India Guidelines Working Capital Management Page 17

    MALWA COTTON SPINNING MILLS LIMITED March 2002 Obtained ISO 9001:2000 certification (revised) from BVQI, London October 2002 Honoured with the Texprocil Award by the Government of India for outstanding export performance June 2003 October 2003 Achieved Rs 1 billion in revenues Honoured by the Government of India with the Texprocil award for the second successive year for outstanding export performance June 2005 July 2005 March 2007 March 2007 May 2007 March 2007 February 2008 Obtained Oeko Tex Certification from Testex, Zurich Obtained ISO 14001:2004 Certification from BVQI, London SKAL for Organic Cotton by Control Union Certification WRAP (Worldwide Responsible Apparel Production) by SGS ETI Sedex by SGS Cleared CTPAT audit by Pricewaterhouse Coopers Control Union Certifications, Netherlands (2 times in the month of February on 4th and 25th February, 2008.) May 2008 June 2008 Oeko-Tex certification from Testex, Zurich ISO 14001:2004 from BSI Management Systems India Private Limited June 2008 ISO 9001:2000 from BSI Management Systems India Private Limited

    TECHNOLOGY USED BY GROUP


    MCSM The unit at Paonta Sahib is equipped with the latest machinery imported mainly to expand the existing infrastructure. It has a C 1/3 LR and tandem cards, Savio autoconeln Lacs. Cherry Hara Draw Frames, other quality testing equipments like UT 3 Evenness Tester, Tenso Rapid, Spinlab, Compusorter and Classimate11. Spinning out from the unit is wide range of yarns made from Cotton, Acylic, Polyester, Viscose and other synthetic fibers, Cotton yarns produced is both carded and combed, then there is Acrylic yarn, polyester viscose yarn and other blends in dyed and Grey. The production capacity of the Barnala unit is 30 tonnes per day and Working Capital Management Page 18

    MALWA COTTON SPINNING MILLS LIMITED the Paonta Sahib unit spins out 38 tonnes per day. The product is versatile and finds use in many different ways in the textile and clothing industry of which it forms the essential ingredient. The high quality of the product has carved for itself an export market where all kinds of cotton yarns, synthetic yarns and their blends are exported. Export growths have been phenomenal and predict the future trends. Malwa Cotton Spinning Mills Ltd. have been marked from the beginning to spin a success story of their own. Our experienced cotton selectors are spread over the cotton belt of Punjab. Control on quality of cotton is exercised right to keep it contamination free from picking stage. Cotton is ginned in our modern Ginning Unit comprising of both Saw and Roller Gin. Each bale passes out of Ginning Factory after it meets Malwas Quality Standards. All thecontamination free bales produced in our Ginning Factory meet Uster HV1900 Grade. Cotton is produced in our mills under controlled conditions created by sophisticated State of Art, Humidity and Textile Air Engineering system produced by Luwa Humidification System. Each process conforms to stringent quality norms specified by Textile Research Associations of India. Our quality assurance department (QAD) has latest equipment like: Uster HVI-900 Uster Tester-111 with Hairiness Tester Uster Auto sorter Uster Tensorapid uster Classimat Mini Uster

    We constantly monitor the quality of the product at various stages of yarn manufacturing. Our Savio winders are equipped with third generation contamination control Uster cleaners & coupled with Air spliceIn Lacs. The Knotless, Flawless & High Quality yarn confirming to Uster Standards is

    produced. We procure Acrylic Fiber from world renowned manufactures and we produce Acrylic Yarn, Acrylic Cotton Yarn & High Bulk Acrylic Yarn. Dye House Facility at our works enables us to produce dyed yarn of Exact Shades. We also produce Polyester Cotton Yarn, Viscose Yarn and Viscose Cotton Yarn, Dyed Viscose Yarn. Raw materials like Polyester, Viscose are produced from reputed manufactureIn Lacs. Working Capital Management Page 19

    MALWA COTTON SPINNING MILLS LIMITED

    MIL Technology

    Malwa's premier denim plant in India and its facilities across Jordan & Italy are state-of-the-art units equipped with the latest machines from Switzerland, Germany, Belgium, Italy, Japan & the US. These include:

    Morrisons of USA for Rope-Dyeing & Finishing, Zinser Ring-frames from Germany for Spinning, Picanols (from Belgium) and Sulzers (from Switzerland) for Weaving VI Be Mac, Juki, Pegasus & Brother for Garment manufacturing and the world famous Tonellos from Italy for Garment Washing

    (which also make Malwa the finest denim washing facility in India) The most advanced CAD system from Gerber & Lectra, that helps keep production costs low that eventually gets passed down to its customers.

    With state-of-the-art technology such as this, Malwa is able to consistently maintain high productivity and quality levels Malwa continuously strives to upgrade our technology according to the latest trends in the denim industry. As a result of it now has the latest technological addition in the development, processing and finishing of our denim fabrics: 1. ORGANIC Organic Denim is made of organically grown cotton. Organic cotton is grown without use of harmful chemicals & pesticides, etc as such it is completely natural and free of chemicals. Even during fabric and finishing stages, special treatment is given to these fabrics to retain the organic character by using environment friendly chemicals. The colours are deeper and nicer and the fabric feel is amazing!!!

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    MALWA COTTON SPINNING MILLS LIMITED

    2. JAPANESE CHIMICA FINISH The finishing machine used for this finish is one of its kinds. It gives a special finish to the fabric, soft to feel & better to handle. The character or drape of the fabric gives a better lusture and sheen to the fabric. The colors are embedded deeper, as the denim fades naturally it gives an excellent depth to the fabric color. The process is innovative & requires special chemicals & expertise for finishing the fabric.

    3. MOLECULAR FINISH Molecular finish is a high blend and combination of chemicals & colors whereby it gives a very fine coat on the fabric. The finish penetrates deep in the fabric, deep to the molecular level, to give the fabric a new look.

    MILESTONES TO SUCCESS
    Mcsml is flagship Company of Malwa Group. The company is looked after by sh. Jangi lal Oswal, chairman cum managing director who has varied experience & well known in industry. Mcsml is regular exporter & exporting all type of yarn & their blends. Its exports have grown over last twenty yeaIn Lacs. From Rs 7.84 lacs in 1989 to Rs 8854 lacs in 2007- 08. The company had come under top 100 companies of India & awarded corporate excellence awards of year 1995. The company has been awarded special status of export house by govt of India The cotton textile export promotion Council (texprocil) of India awarded two silver trophies to company for the year 1996-97 for outstanding performance in yarn amongst. 1. for top exporters (mills) 2. for non-quota exports

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    MALWA COTTON SPINNING MILLS LIMITED The company has awarded a quality system Certificate of ISO-9002 for manufacturing for its products.

    PRODUCTS

    DENIM Malwa made a foray into cotton denims almost a decade ago in 1997. Since then, there has been no looking back and Malwa's presence in denims has gone from strength to strength. Being situated in the heart of the cotton producing belt in India, Malwa has access to a consistent and uninterrupted supply of best quality raw material thereby ensuring finest cotton Denim fabrics to its valued customers. In sync with the emerging trends in Denim, Malwa's in-house Design team works closely with leading International Design Consultants to come out with an array of breathtaking designs & finishes in denim a year ahead for every season. Through its state-of-the-art denim plant in India , Malwa rolls out premium and basic denim fabrics employing - Ring yarns , - Open-end yarns , - Slubs , - Mixed Warps , - Multi-count yarns & - Colored yarns in weft as well as in warp . Working Capital Management Page 22

    MALWA COTTON SPINNING MILLS LIMITED From classical to contemporary, basic twills to fil-a-fils , cross-hatches to stripes and from vintage to raw, Malwa belts out a staggering range of denims through clever variations that are sometimes pronounced and sometimes subtle ; each variation distinct & different from the other and unique in its own right. Add to this Malwa's vast repertoire of advanced wash effects & finishes and you step into a world of infinite possibilities to choose from. Season Theme

    The Spring / Summer 2009 collection is a unique blend of sophisticated and raw looks created through an intriguing play of Colors, Weaves, Yarns & Fibers. With real time knowledge of the latest trends, finishes & looks in denimwear from its Italian promises to leave you spellbound).

    Spring / Summer '11/12 Autumn / Winter '10/11 Spring / Summer '10 INDIGO WOOL Indigo wool is a range of indigo, warp dyed wool products that have been developed and produced by unique manufacturing techniques. Introduced by Malwa to enable the consistent commercial production of wool and wool blend garments,this new breakthrough in wool products uses unique modern technology and advanced indigo dyestuffs. Commercially developed by Malwa, in conjunction with The Wool Mark Company, the method takes thousands of yarn ends at one time and dyes them through a commercial continous wrap dyeing system. After dyeing, the yarns are woven using technically challenging methods which are adapted to process the softer wool yarns. Following an extensive trial period, Malwa has now created a continous method of producing indigo dyed wool Indigo Wool.

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    MALWA COTTON SPINNING MILLS LIMITED KNITWEAR Oswal Knit offers a range of premium woolen knitwear and clothing through Pringle of Scotland and Casablanca lines. As the sole licencee of international brand Pringle of Scotland it manufactures top-of-the-line

    Woolen Knitwear, T-shirts, Shirts, Trousers, Jackets and Accessories to complement the life-style of the crme-de-la-crme segment. Its home-grown brand 'Casablanca' offers winter wear to the customer in the mid and upper mid-price segment and gives the company, presence across all major price segments. A strategic tie-up with an Italian Design Studio ensures that Oswal Knit has access to the latest international designs, trends and styles which gets translated into a line of high fashion contemporary clothing for the Indian consumer. To ensure quality of the highest order, raw materials are sourced from the topmost Italian manufacturers and the technology is replenished and updated from time to time to ensure that it has the requisite cutting edge.

    YARNS

    Malwa Cotton Spinning Mills Limited (MCSM) is a major yarn producer and manufactures a wide range of yarns at its state-of-the-art units across Punjab & Himachal Pradesh. Yarns ranging from Ne 10 to 40 in single, double and multi folds are manufactured. These include 100 % Cotton Combed Raw White Yarns (range includes 20, 24, 30, 32, 34 & 40) 100 % Cotton Carded Raw White Yarns (range includes 10, 12, 16, 20, 30 & 36) 100 % Cotton Dyed Yarns (ranging from Ne 10 to 40) 100 % Cotton Mlange Dyed Yarns (range includes 16, 24, 30 & 40) Cotton-Viscose blended Dyed Mlange Yarns (range includes Ne 16, 24 & 30) Working Capital Management Page 24

    MALWA COTTON SPINNING MILLS LIMITED Yarns in blends of Lycra & Cotton and Lycra & Acrylic Acrylic-Cotton yarns (Dyed & Grey) in any blend ratio using Combed as well as Carded Cotton {For Combed category, yarn range includes 30 & 2/18. For Carded category, yarn range includes 10, 12, 16, 20, 30 & 2/16, 2/18 & 2/30}. Polyester-Cotton yarns (Dyed & Grey) in any blend ratio using Combed as well as Carded Cotton (range includes Ne 20/1, 24/1, 30/1, 34/1, 36/1, 40/1 & 42/1 ) 100% Acrylic High bulk dyed yarns on Hanks/Cones ( range includes 2/10, 2/19, 2/24, 2/28, 2/32, 3/8, 4/8, 1/15 etc) 100% Acrylic Raw white yarns suitable for Bulking (range includes 2/10, 2/19, 2/24, 2/28, 2/32, 3/8, 4/8, 1/15 etc) 100% Acrylic non-bulk Raw white & Dyed yarns (range includes 33/1, 40/1, 50/1, 2/40, 2/30 etc). 100% Polyester Raw White & Dyed yarns Polyester-Viscose Raw White & Dyed yarns in any blend ratio Worsted yarns for suiting fabrics

    MARKETS

    Malwas exports span America, Europe, Middle East, Far East & Africa and are well accepted by discerning customers across the world on the strength of their exemplary quality, range & design. The major countries where our products are being exported include: Asia Japan China Korea U.A.E. Hongkong Singapore Working Capital Management Europe Germany U.K. Russia Spain Italy Switzerland Africa South Egypt Kenya Mauritius Nigeria Sudan Page 25 America AfricaUSA Canada Panama Cuba

    MALWA COTTON SPINNING MILLS LIMITED Cyprus Israel Malaysia Taiwan Turkey Vietnam Bangladesh Belgium Greece Portugal Slovenia Sweden Tanzania

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    MALWA COTTON SPINNING MILLS LIMITED

    WORKING CAPITAL MANAGEMENT

    Working Capital Management

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    MALWA COTTON SPINNING MILLS LIMITED

    OBJECTIVES
    The main objectives to undertake this project to study: Analyse the operating cycle of the company. To study management of working capital by the company. To study which factors affects the working capital of the company To properly and effectively operate the working capital cycle of the management. To analyze the day-to-day working of the company, whether they are able to meet their daily expenses. To determine the liquidity position of the company.

    DATA COLLECTION Primary as well as secondary data is used for the project. The research management. Secondary data is collected from annual reports, relevant records of Avon Cycle Limited.

    ANALYSIS OF DATA Analysis is done in terms of theoretical concepts. Analysis of working capital performance is done with help of percentages by showing graphs, ratios ets.

    INTRODUCTION Working capital means the part of the total assets of the business that change from one form to another from in the ordinary course of business The word working capital is made of two words: Working Capital The word working means day to operation of the business, whereas the word capital means monetary value of all assets of the business.

    WORKING CAPITAL Working capital may be regarded as the life blood of business. working capital is of major importance to internal and external analysis because of its close relationship with the current day-to-day operations of a business.

    Every business needs funds for two purpose:-

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    Long-term funds are required to create production facilities through purchase of fixed assets such as plants, machineries, lands, buildings etc. Short-term funds are required for the purchase of raw materials, payments of wages, and other day-to-day expenses. It is otherwise known as revolving or circulating capital. In other words, working capital refers to that part of the firms capital, which is required for financing short-term current assets such as cash, marketable securities, bill receivable, debtors, inventories etc. However, working capital is also known as Revolving or circulating Capital. Businesses use capital for construction, renovation, furniture, software, equipment, or machinery. It also commonly used to purchase inventory, or to make payroll. Working capital is essential for any business to succeed. It is becoming increasingly important to have access to more working capital when we need it.

    NEED FOR WORKING CAPITAL


    The basic objectives of financial management is to maximize shareholders wealth. This is possible only when the company earns sufficient profit. The amount of such profit largely depend upon the magnitude of sales. However, sales do not convert into cash instantaneously. There is always time gap between the sale of goods and receipt of cash. Working capital is required for this period in order to sustain the sales activity.

    Working capital is needed for the following purpose: For purchase of raw material, components and spares. To pay wages and salaries. To incur daily expenses and overhead cost such as fuel, power and office expenses etc. To maintain the inventories of raw material, work in progress, spares and finished stock. To provide credit facility to customeIn Lacs. To meet the selling costs.

    MANAGEMENT OF WORKING CAPITAL


    Working capital, in general practice, refers to the excess of current assets over current liabilities positions are bad for any business. Management of working capital therefore, is concerned with the problems that arise in attempting to manage the current assets, the current liabilities and the inter relationship that exits between them. In other words, it refers to all aspects of administration of both current assets and current liabilities. The basic goal of working capital management is to manage the current assets and current liabilities of the firm

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    MALWA COTTON SPINNING MILLS LIMITED


    in such a way that a satisfactory level of working capital is maintained, i.e., it is neither inadequate nor excessive. This is so because both inadequate as well as excessive working capital positions are bad for any business. Inadequacy of working capital may lead a firm to insolvency and excessive working capital implies idle funds, which earn no profits for the business. Working capital management policies of a firm have a great effect on its profitability, liquidity and structural health of the organization. In this context, working capital management is three dimensional in nature:Dimension I is concerned with the formation of the policies with regard to profitability, risk and liquidity. Dimension II is concerned with the decisions regarding the composition and level of current assets. Dimension III is concerned with the decisions about the composition and level of current liabilities. There is a definite inverse relationship between the degree of risk and profitability. A conservation management prefers to minimize risk by maintaining a higher level of current assets while a liberal management assumes greater risk by reducing working capital.

    TYPES OF WORKING CAPITAL

    Types of Working Capital


    On the basis of B/S Concept On the basis of time Permanent Working Capital Temporary Working Capital Seasonal Working Capital Specific Working Capital

    Gross Working Capital

    Net Working Capital

    ON THE BASIS OF BALANCE SHEET CONCEPT


    There are two interpretation of working capital under the balance sheet concept: Gross Working Capital Net Working Capital

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    a) Gross Working Capital


    In the board sense, the term working capital refer to the gross working capital and represents the amount of funds invested in current assets. Thus, the gross working capital is the invested in total current assets of the enterprise. Current assets are those assets, which in the ordinary course of business can be converted into cash with in a short period of normally one accounting year.

    Gross Working Capital = Current Assets


    Particulars As 31.3.2012 (in Lacs) Current Assets Inventories Sundry Debtors Cash and Bank balance Loan and Advances 1400.52 13777.00 504.79 2406.65 15139.52 12265.29 315.53 2283.85 30004.19 12395.91 13060.05 339.94 2310.12 28105.42 10588.42 12847.03 402.33 2471.31 26309.09 at As at As at As at

    31.3.2011 (in Lacs)

    31.3.2010 (in Lacs)

    31.3.2009 (in Lacs)

    Gross Working capital and Total 31088.96 Current Assets

    INTERPRETATION
    The above figures indicate the gross working capital is increasing every year. In 2009 it was 26309.09 which increase to Rs. 28105.42 lac, Rs. 30004.19 lac and Rs. 31088.96 lac in the year 2010, 2011 and 2012 respectively. As sales are increasing so not much funds are blocked in current assets as gross working capital, which indicate that it is not alarming situation.

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    b) Net working capital


    In a narrow sense, the term working capital refers to the net working capital. Net working capital. Net working capital is the excess of current assets over current liabilities, or Net working capital may be positive or negative. When the current assets exceed the current liabilities, the working capital is positive and the negative working capital results when the current liabilities are more than the current assets. Current liabilities, which are intended to be paid in the ordinary course of business within a short period of normally one accounting year out of the current assets or the income of the business. Net Working Capital = Total Current Assets Total Current Liabilities

    Particulars

    As 31.3.2012 (in Lacs)

    at As 31.3.2011 (in Lacs)

    at As 31.3.2010 (in Lacs)

    at As 31.3.2009 (in Lacs)

    at

    Current Assets Inventories Sundry Debtors Cash and Bank balance Loan and Advances Total Current Assets Current liabilities & Provisions Sundry creditors Short term borrowing Other current liabilities Provisions Total current liabilities
    Net working capital{I-II}

    14400.52 133777.00 504.79 2406.65 31088.96

    15139.52 12265.29 315.53 2283.85 30004.19

    12395.31 13060.05 339.94 2310.12 28105.12

    10588.42 12847.03 402.33 2471.31 26309.09

    7052 8882.59 3734.40

    7100.15 6622.52 2474.06

    8963.85

    9227.11

    387.25 22056.24
    9032.72

    260.22 16454.04
    13550.15

    961.59 9925.44
    18179.98

    896.89 10124.00
    16185.09

    Interpretation In the year 2009 Net working capital is Rs.16185.09 lac which was increased to Rs. 18179.88 lacs in the 2010 year, but it decreased to Rs. 13550.015 lacs and Rs. 9032.72 lacs in the year 2011 and 2012 respectively due to increase in the current liabilities.

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    ON THE BASIS OF TIME


    Permanent working capital Temporary or variable working capital

    a) Permanent Working Capital


    The refers to that minimum amount of investment in all current assets which is required to all times to carry out minimum level of business activities. It represents the current assets required on a continuing basis over the entire year. The following are the characteristics of this type of working capital: Amount of permanent working capital remains in the business in one form or another. This is particularly important from the point of view of financing. The suppliers of such working capital should not expect its return during the lifetime of the firm. It also grows with the size of the business. Permanent working capital is permanently needed for the business and therefore it should be financed out of long-term funds. Permanent working capital is permanently needed for the business and therefore it should be financed out of long-term funds. This is the reason why the current ratio has to be substantially more than I .

    b) Temporary or Variable Working Capital The amount of working capital is required to meet the seasonal demands and some special exigencies. The amount of such working capital keeps on fluctuating from time to time on the basis of business activities.

    In another words, it represents additional current assets required at different times during the operating year.

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    MALWA COTTON SPINNING MILLS LIMITED

    Working Capital Management

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    MALWA COTTON SPINNING MILLS LIMITED

    OPERATING CYCLE

    Debtors

    Cash

    Sales

    Raw material

    Finished Goods

    Work in Progress

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    Operating cycle is the time duration required to convert sales, after the conversion of resources, into cash. Cash inflows are not certain because sales & collection, which give rise to cash inflows, are difficult to forecast accurately. Cash outflows, on other hand are relatively certain. The firm is, therefore, required to invest in current assets for smooth, uninterrupted functioning. It needs to maintain liquidity to purchase raw material liquidity to purchase raw materials & pay expenses such as wages & taxes as there is hardly a matching between cash inflows and cash outflows.

    Cash is hold to meet any future exigencies. Stock of raw material and work in-progress and kept to ensure smooth production and to guard against non-availability of raw material and other components. The firm holds stock of finished goods to meet the demand of customers on continuous basis and sudden demand from some customerIn Lacs. Thus, a firm makes adequate investment in inventories, for smooth, uninterrupted production and sale.

    Operating Cycle Analysis In order to understood the length of times which reports are committed to various components of working capital, operating cycle analysis has been done. The operating cycle of a firm with the acquisition of raw material and ends with the collection of receivable. There are four aspects of operating cycle, which involves commitment of resources, a material stage, and accounts finished stage.

    Gross Operating Cycle Period = RMCP + WIPCP + FMCG + RCP

    RMCP WIPCP FMCG RCP

    = Raw Material Conversion Period = Work-in-Progress Conversion Period = Finished Goods Conversion Period = Receivables Conversion period

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    A. Raw Material Conversion Period


    RMCP = Average Stock of Raw Material ----------------------------------------Raw Material Consumption per Day

    a)

    Average Stock of Ram Material = (Opening Stock + Closing Stock) / 2

    Particulars Opening Stock of Raw Material Closing Stock of Raw Material Average Stock of Raw Material [ (I + II ) / 2}

    As at 31.3.2012 (In Lacs.) 1839.63 1396.94 1618.285

    As at 31.3.2011 (In Lacs.) 2044.41 1839.63 1942.02

    As at 31.3.2010 (In Lacs.) 1054.42 2044.41 1549.415

    As at 31.3.2009 (In Lacs.) 1980.05 1054.42 1517.235

    I II

    b)

    Raw Material Consumption per Day = (Opening Stock + Purchases - Closing Stock) / 365

    I II III

    Opening Stock of Raw Material Purchases Closing Stock of Raw Material Raw Material Consumption Per Day [(I + II - III) / 365}

    1839.63 23550.96 1396.94 66

    2044.41 28914.83 1839.63 80

    1054.42 28616.74 2044.41 76

    1980.05 28074.76 1054.42 79

    A)

    Raw Material Conversion Period {a / b}

    25 days approx.

    24 days approx.

    20 days approx.

    19 days approx.

    B. Work-in-progress conversion period


    WIPCP = Average Stock of Work-in-Progress --------------------------------------------Total Cost of Production per day

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    a)

    Average Stock of Work-in-Progress = (Opening Stock + Closing Stock) / 2

    Particulars Opening Stock of Work-inProgress Closing Stock of Work-inProgress Average Stock of Work-inProgress {(I + II) / 2}

    As at 31.3.2012 (In Lacs.) 5190.27 4906.40 5048.34

    As at 31.3.2011 (In Lacs.) 3377.71 5190.27 4283.99

    As at 31.3.2010 (In Lacs.) 2445.86 3377.71 2911.79

    As at 31.3.2009 (In Lacs.) 2372.40 2445.86 2409.13

    I II

    b)

    Total Cost of Production per day = (Opening Stock [Raw Material & Work-in-Progress] + Purchases + Direct Expenses [Manufacturing Expenses] - Closing Stock [Raw Material & Work-in-Progress]) / 365

    Opening Stock Raw Material Work-in-Progress 1839.63 5190.27 23550.96 2044.41 3377.71 28914.83 1054.42 2445.86 28616.74 1980.05 2372.4 28074.76

    II III

    Purchases Direct Expenses Manufacturing Expenses Personnel Expenses Depreciation

    7119.71 4569.20 434.32

    8672.87 5182.28 473.31

    8057.44 4787.06 581.22

    8493.32 4518.33 738.07

    IV

    Closing Stock Raw Material Work-in-Progress Total Cost of Production per day {(I + II + III - IV) / 365} 1396.94 4906.40 99.73 1839.63 5190.27 114.07 2044.41 3377.71 109.92 1054.42 2445.86 116.92

    B)

    Work-in-Progress Conversion Period [a / b]

    51 days approx.

    38 days approx.

    26 days approx.

    21 days approx.

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    MALWA COTTON SPINNING MILLS LIMITED

    C. Finished Goods Conversion Period


    FGCP = Average Stock of Finished Goods --------------------------------------------Total Cost of Goods Sold per day Average Stock of Finished Goods = (Opening Stock + Closing Stock) / 2

    a)

    Particulars

    As at 31.3.2012 (In Lacs.)

    As at 31.3.2011 (In Lacs.)

    As at 31.3.2010 (In Lacs.) 6404.42 6256.18 6330.30

    As at 31.3.200 9 (In Lacs.) 7888.35 6404.42 7146.39

    I II

    Opening Stock of Finished Goods Closing Stock of Finished Goods Average Stock of Finished Goods [(I + II) / 2}

    7413.81 7456.17 7434.99

    6256.18 7413.81 6835.00

    b)

    Total Cost of Goods Sold per Day = (Opening Stock [Raw Material, Finished Goods & Work-in-Progress] + Purchases + Direct Expenses [Manufacturing Expenses] Closing Stock [Raw Material, Finished Goods & Work-in-Progress]) / 365

    Opening Stock Raw Material Finished Goods Work-in-Progress 1839.63 7413.81 5190.27 23550.96 2044.41 6256.18 3377.71 28914.83 1054.42 6404.42 2445.86 28616.74 1980.05 7888.35 2372.4 28074.76

    II III

    Purchases Direct Expenses Manufacturing Personnel Expenses Depreciation

    7119.71 4569.20 434.32

    8672.87 5182.28 473.31

    8057.44 4787.06 581.22

    8493.32 4518.33 738.07

    IV

    Closing Stock Raw Material Finished Goods 1396.94 7456.17 1839.63 7413.81 2044.41 6256.18 1054.42 6404.42

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    Work-in-Progress Total Cost of Goods Sold per day {(I + II + III - IV) / 365}

    4906.40 100

    5190.27 111

    3377.71 110

    2445.86 121

    C)

    Finished Stock Conversion Period {a / b}

    74 days approx.

    62 days approx.

    58 days approx.

    59 days approx.

    D. Receivables Conversion Period


    RCP = Average Debtors --------------------------------------Net Credit Sales per day

    a)

    Average Debtors = (Opening Stock + Closing Stock) / 2

    Particulars Opening Stock of Debtors Closing Stock of Debtors Average Debtors {(I + II) / 2}

    As at 31.3.2012 (In Lacs.) 12265.29 13777.00 13021.15

    As at 31.3.2011 (In Lacs.) 13060.05 12265.29 12662.67

    As at 31.3.2010 (In Lacs.) 12847.03 13060.05 12953.54

    As at 31.3.2009 (In Lacs.) 12201.84 12847.03 12524.44

    I II

    b)

    Net Credit Sales Per Day = Sales / 365

    Sales

    39823.24

    45504.23

    43241.4

    45890.1

    Net Credit Sales per Day {I / 365}

    109.10

    124.67

    118.47

    125.73

    D)

    Receivables Conversion Period {a / b}

    119 days approx.

    102 days approx.

    109 days approx.

    100 days approx.

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    MALWA COTTON SPINNING MILLS LIMITED

    Gross Operating Cycle Period

    Gross Operating Cycle Period = RMCP (A) + WIPCP (B) + FGCP + RCP (D)

    Particulars

    As at 31.3.2012 (In Lacs.)

    As at As at As at 31.3.2011 31.3.2010 31.3.2009 (In Lacs.) (In Lacs.) (In Lacs.) 24 days approx. 38 days 62 days approx. 102 days approx. 226 day approx. 20 days approx. 26 days 58 days approx. 109 days approx. 213 day approx. 19 days approx. 21 days 59 days approx. 100 days approx. 199 day approx.

    A) B) C) D)

    Raw Material Conversion Period Work-in-Progress Conversion Period Finished Stock Conversion Period Receivables Conversion Period Gross Operating Cycle Period [A + B + C + D}

    25 days approx. 51 days 74 days approx. 119 days approx. 269 day approx.

    Interpretation Gross operating cycle is 269 days in 2012 which was decreased to 2011 days in the year 2010 respectively but in the year 2012 it increased to 269 days.

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    MALWA COTTON SPINNING MILLS LIMITED

    Net Operating Cycle


    Net Operating Cycle = Gross Operating Cycle Period - Payable Deferred Period

    E. Payable Deferred Period


    Average Creditors --------------------------------------Credit Purchases per day

    Payable Deferred Period =

    a)

    Average Creditors = (Opening Stock + Closing Stock) / 2

    Particulars

    As at 31.3.2012 (In Lacs.) 8931.27 12229.74 10580.51

    As at 31.3.2011 (In Lacs.) 8963.85 8931.27 8947.56

    As at 31.3.2010 (In Lacs.) 9227.11 8963.85 9095.48

    As at 31.3.2009 (In Lacs.) 5386.06 9227.11 7306.59

    I II

    Opening Stock of Creditors Closing Stock of Creditors Average Creditors {(I + II) / 2}

    b)

    Net Crediot Purchases per day = Purchases / 365

    Purchases Net Credit Purchases per day [I / 365} Payable Deferred Period {a / b}

    23550.96 65

    28914.83 79

    28616.74 78

    28074.76 77

    E)

    163 day approx.

    113 day approx.

    117 day approx.

    95 day approx.

    Net Operating Cycle = Gross Operating Cycle Period - Payable Deferred Period (E)

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    MALWA COTTON SPINNING MILLS LIMITED

    Particulars

    As at As at As at As at 31.3.2012 31.3.2011 31.3.2010 31.3.2009 (In Lacs.) (In Lacs.) (In Lacs.) (In Lacs.) 269 day approx. 163 day approx. 106 days approx. 226 day approx. 113 day approx. 113 days approx. 213 day approx. 117 day approx. 96 days approx. 199 day approx. 95 day approx. 104 days approx.

    Gross Operating Cycle Period

    II

    Payable Deferred Period

    Net Operating Cycle {I - II}

    Interpretation Net Operating Cycle has been from the year 2008-09 is 104 days respectively but in 2009-10 it has been decreased to 96 days. In the year 2010-11 net operating cycle has been also increased to 113 days and 2011-12 it has been decreased to 106 days approx respectively.

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    MALWA COTTON SPINNING MILLS LIMITED

    RATIO ANALYSIS
    In modern credit analysis, ratio analysis is one the integral part and conclusions are drawn / based on the ratio analysis for credit decisions. There are different methods by which ratios are worked out. The figures are taken out from the financial statements and the ratios are calculated for each year separately. A ratio is an arithmetical relationship between two figures. Financial ratio analysis is a study of ratios between various items or groups of item in financial statement, turnover ratios have been used for analysis.

    Ratio analysis is the powerful tool of financial analysis of accounting data. The relationship of the figures should be meaningful. The ratios calculated for the period of about three years will indicate the manner in which the business enterprise has progressed or otherwise both in respect of working results and financial position. This will help forecast the future trend of the business. Financial analysis & ratio is used as an index or yardstick for measuring performance of the firm. Working capital is that part of total capital, which is important in current assets, to get better insights about the working capital position, it is better to utilize ratio analysis.

    Analysis of Short-Term Financial Position Liquidity Ratios Current Ratio Quick or Acid Test or Liquid Ratio Current Assets Movements or Efficiency or Activity Ratios Inventory / Stock Turnover Ratio Debtors Turnover Ratio Creditors / Payables Turnover Ratio Working Capital Turnover Ratio

    Liquidity Ratios
    The liquidity aspect is essential for both the creditors as well as management of a business enterprise. These ratios are used to judge a firm's ability to meet short-term obligations. From them much insight can be obtained to present cash solvency of the firm and its ability to remain solvent in the event of adversities. We wish to compare shot-term obligations with the short-term sources available to meet these obligations.

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    MALWA COTTON SPINNING MILLS LIMITED

    A. Current Ratio
    The current ratio is very popular financial ratio measure as the ability of the firm to met current liabilities. Current assets are converted into cash for the payment of current liabilities. Apparently, higher the current ratio the greater the short term solvency. The ratio may be expressed asCurrent Assets ----------------------------Current Liabilities As at As at As at As at 31.3.2012 31.3.2011 31.3.2010 31.3.2009 (In Lacs.) (In Lacs.) (In Lacs.) (In Lacs.)

    Current Ratio =

    Particulars

    Current Assets Inventories Sundry Debtors Cash & Bank Balances Loans & Advances Total Current Assets 14400.52 13777.00 504.79 2406.65 31088.96 15139.52 12665.29 315.53 2283.85 30404.19 13295.31 13060.05 339.94 2310.12 29005.42 10588.42 12847.03 402.33 2471.31 26309.09

    II

    Current Liabilities Sundry Creditors Total outstanding Dues industrial undertaking to small scale 12229.74 22.29 1778.32 210.49 14240.84 2.18 8931.27 21.30 1614.01 195.81 10762.39 2.83 8963.85 25.30 1474.6 18.90 10482.65 2.77 9227.11 23.30 1324.84 10575.25 2.49

    Total outstanding Dues of creditors other than small scale Trade deposits and advances Other Liabilities Unclaimed Dividends Interest accrued but not due Total Current Liabilities Current Ratio {I / II}

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    MALWA COTTON SPINNING MILLS LIMITED INTERPRETATION As a conventional rule, a current ratio of 2:1 or more is consider satisfactory ratio for the concern. So the current ratio of firm shows from the year 2006 which is 3:95:1 respectively but in the year 2007 and 2008 it decrease to 3.35:1 to 2.70:1 which is satisfactory to the firm.

    B. Quick or Acid Test or Liquid Ratio


    Although current ratio is a valuable indicator of liquidity, yet it may lead to misleading conclusion, in case of inventories forms a major component of current assets, the quick ratio is a stringent measure of liquidity. It is based on those current assets which are the highly liquid or which are easily converted into cash. Inventories and prepaid expenses are excluded from this category, because these are the best liquid component of and has the ability to pay its current liabilities in time when these are due, the ratio may be expressed as :Quick/Liquid Assets ----------------------------Current Liabilities

    Quick/Liquid or Acid Test Ratio =

    Liquid Assets = Current Assets - (Inventories + Prepaid Expenses)

    Particulars

    As at 31.3.2012 (In Lacs.)

    As at 31.3.2011 (In Lacs.)

    As at 31.3.2010 (In Lacs.)

    As at 31.3.2009 (In Lacs.)

    Current Assets Inventories Sundry Debtors Cash & Bank Balances Loan & Advances 14400.52 13777.00 504.79 2406.65 15139.52 12265.29 315.53 2283.85 13295.31 13060.05 339.94 2310.12 10588.42 12847.03 402.33 2471.31

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    MALWA COTTON SPINNING MILLS LIMITED

    Total Current Assets Less Inventories Liquid Inventories II Current Liabilities Sundry Creditors Total outstanding Dues to small scale industrial undertaking Total outstanding Dues of creditors other than small scale

    31088.96 (14400.52) 16688.44

    30004.19

    29005.42

    26309.09

    (15139.52) (13295.31) (10588.42) 14864.67 15710.11 15720.67

    12229.74 22.29 1778.32 210.49 14240.84

    8931.27 21.30 1614.01 195.81 10762.39 1.38 : 1

    8963.85 25.30 1474.60 18.90 10482.65 1.5 : 1

    9227.11 23.30 1324.84 10575.25 1.49 : 1

    Trade deposits and advances Other Liabilities Unclaimed Dividends Interest accrued but not due

    Quick/Liquid or Acid Test Ratio {I / II}

    1.17 : 1

    Interpretation Quick ratio is generally considered satisfactory if ratio is 1:1. Above figures show that the quick ratio has been from 2006 is 2.52:1 respectively but in the year 2007 and 2008 it decrease to 1.91:1 to 1.44:1 although it is satisfactory to the firm.

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    MALWA COTTON SPINNING MILLS LIMITED

    CURRENT ASSETS MOVEMENTS OR EFFICIENCY OR ACTIVITY RATIOS


    Funds are invested in various assets in business to make sales and earn profits. The efficiency with which assets are managed directly affect the value of sales. The better the management of assets, the larger is the amount of sales and the profits. Activity ratios measure the efficiency or effectiveness with which a firm manages its resources or assets. These ratios are also called Turnover Ratios because they indicate the speed with which assets are converted or turned over into sales.

    A). Inventory Turnover Ratio Inventory turnover ratio is also known as stock velocity. This ratio indicates the efficiency of the firm in selling its products. It shows how rapidly the inventory is turning in to receivable through sales. It is calculate by dividing the cost of goods sold by the average inventory. It can be expressed as:
    Cost of Goods Sold Inventory Turnover Ratio = --------------------------------Average Inventory at Cost

    a)

    Cost of Goods Sold = Opening Stock [Raw Material, Finished Goods & Work-in-Progress] + Purchases + Direct Expenses [Manufacturing Expenses] - Closing Stock [Raw Material, Finished goods & Work-inProgress] As at 31.3.201 1 (In Lacs.) 2044.41 6256.18 3377.71 28914.83

    Particulars I Opening Stock Raw Material Finished Goods Work-in-Progress II Purchases

    As at 31.3.2012 (In Lacs.)

    As at 31.3.2010 (In Lacs.)

    As at 31.3.2009 (In Lacs.)

    1839.63 7413.81 5190.27 23550.96

    1054.42 6404.42 2445.86 28616.74

    1980.05 7888.35 2372.4 28074.76

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    MALWA COTTON SPINNING MILLS LIMITED

    III

    Direct Expenses Manufacturing Personnel Expenses Deprection 7119.71 4569.2 434.32 8672.87 5182.28 473.31 8057.44 4787.06 581.22 8493.32 4518.33 738.07

    IV

    Closing Stock Raw Material Finished Goods Work-in-Progress Cost of Goods Sold {I + II + III - IV} 1396.94 7456.17 4906.4 36358.39 1839.63 7413.81 5190.27 40477.88 2044.41 6256.18 3377.71 40268.86 1054.42 6404.42 2445.86 44160.58

    b)

    Average Inventory = (Opening Stock + Closing Stock) / 2

    Opening Stock Raw Material Finished Goods Work-in-Progress 1839.63 7413.81 5190.27 2044.41 6256.18 3377.71 1054.42 6404.42 2445.86 1980.05 7888.35 2372.4

    II

    Closing Stock Raw Material Finished Goods Work-in-Progress 1396.94 7456.17 4906.4 14101.61 1839.63 7413.81 5190.27 13061.005 2044.41 6256.18 3377.71 10791.5 1054.42 6404.42 2445.86 11072.75

    Average Inventory at Cost [(I + II) / 2}

    Inventory Turnover Ratio {a / b}

    3 times

    3 times

    4 times

    4 times

    Interpretation The inventory turnover ratio is decreasing in every yaer i.e. in the year 2005-06 it was 9 which was decreased to 4 and 3 in the year 2006-07 and 2007-08 respectively. It indicates that the firm is converting its inventory of finished goods into sale efficiently.

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    MALWA COTTON SPINNING MILLS LIMITED

    B) Inventory Conversion Period


    It may be taken to see average time taken for clearing the stocks. This can be possible by calculating inventory conversion period. The formula may be as :Inventory Conversion Period = Days in a year (365) --------------------------------Inventory Turnover Ratio

    Particulars

    As at 31.3.2012 (In Lacs.) 3 times 122 days approx.

    As at 31.3.2011 (In Lacs.) 3 times 122 days approx.

    As at 31.3.2010 (In Lacs.) 4 times 91 days approx.

    As at 31.3.2009 (In Lacs.) 4 times 91 days approx.

    Inventory Turnover Ratio Inventory Conversion Period {365 / I}

    Interpretation Inventory conversion period is continuously increasing from 2010-11 to 2012-13 from 91 days to 122 days.

    C) Debtors or Receivables Turnover Period


    Debtor turnover ratio indicates the velocity of debt collection of the firm. It can be expressed as:Debtors or Receivables Turnover Period a) Net Credit Sales = Sales Net Credit Annual Sales = --------------------------------Average Trade Debtors

    Particulars

    As at 31.3.2012 (In Lacs.) 39823.24

    As at 31.3.2011 (In Lacs.) 45504.23

    As at 31.3.2010 (In Lacs.) 43241.40

    As at 31.3.2009 (In Lacs.) 45890.1

    Net Credit Sales or Sales

    b)

    Average Debtors = (Opening Stock + Closing Stock) / 2

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    MALWA COTTON SPINNING MILLS LIMITED

    Particulars

    As at 31.3.2012 (In Lacs.) 12265.29 13777.00 13021.15

    As at 31.3.2011 (In Lacs.) 13060.05 12265.29 12662.67

    As at 31.3.2010 (In Lacs.) 12847.03 13060.05 12953.54

    As at 31.3.2009 (In Lacs.) 12201.84 12847.03 12524.44

    I II

    Opening Stock of Debtors Closing Stock of Debtors Average Debtors {(I + II) / 2}

    Debtors or Receivables Turnover Ratio {a / b}

    3.06 times

    3.59 times

    3.34 times

    3.66 times

    Interpretation Debtors Turnover Ratio is continuously decreasing from 2009-10 to 2012-13 from 3.06 days to 119 days.

    D). Average Collection Period


    The average collection period represents the average number of days from which a firm has to wait before its receivable are converted into cash. The ratio can be calculated as follows:
    Days in year (365) -----------------------------Debtors Turnover Ratio

    Average Collection Period

    Particulars Debtors or Receivables Turnover Ratio Average Collection Period {365 / I}

    As at 31.3.2012 (In Lacs.) 3.06 times 119 days approx.

    As at 31.3.2011 (In Lacs.) 3.59 times 102 days approx.

    As at 31.3.2010 (In Lacs.) 3.34 times 109 days approx.

    As at 31.3.2009 (In Lacs.) 3.66 times 100 days approx.

    Interpretation Average Conversion is continuously increasing from 2009-10 to 2012-13 days 119.

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    MALWA COTTON SPINNING MILLS LIMITED

    E). Creditors/Payable Turnover Ratio


    A firm has to make credit purchases and incur short-term liabilities. A supplier of goods, i.e. credit is naturally interested in finding out how much time the firm is likely to take in repaying its trade creditor In Lacs. The ratio can be expressed as follows :Net Credit Annual Purchase ----------------------------------Average Trade Creditors

    Creditors/Payable Turnover Ratio

    a)

    Net Crediot Purchases = Purchases

    Particulars

    As at 31.3.2012 (In Lacs.) 23550.96

    As at 31.3.2011 (In Lacs.) 28914.83

    As at 31.3.2010 (In Lacs.) 28616.74

    As at 31.3.2009 (In Lacs.) 28074.76

    Purchases

    b)

    Average Creditors = (Opening Stock + Closing Stock) / 2

    I II

    Opening Stock of Creditors Closing Stock of Creditors Average Creditors {(I + II) / 2}

    8931.27 12229.74 10580.505

    8963.85 8931.27 8947.560

    9227.11 8963.85 9095.480

    5386.06 9227.11 7306.585

    Creditors / Payable Turnover Ratio {a / b}

    2.23 times

    3.23 times

    3.15 times

    3.84 times

    Interpretation Creditors Turnover Ratio is continuously decreasing from 2009-10 to 2012-13 from 3.84 times to 2.23 times.

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    F). Creditors/Payable Turnover Ratio


    The average payment period ratio represents the average number of days taken by the firm to pay its creditors in Lacs. The ratio can be expressed as :Debtors or Receivables Turnover Period Net Credit Annual Sales = --------------------------------Average Trade Debtors

    Particulars

    As at 31.3.2012 (In Lacs.) 2.23 times 164 days approx.

    As at 31.3.2011 (In Lacs.) 3.23 times 113 days approx.

    As at 31.3.2010 (In Lacs.) 3.15 times 116 days approx.

    As at 31.3.2009 (In Lacs.) 3.84 times 95 days approx.

    Creditors / Payable Turnover Ratio Average Payment Period {365 / I}

    Interpretation Creditor conversion period is decreasing in every year. In the year 2009 it was 95 days. But in the year 2012 it was increased to 164 days. It was due to increased in the creditors and increase in the purchase.

    G). Working Capital Turnover Ratio


    Net working capital turnover ratio indicates the velocity of the utilization of working capital. A higher ratio indicates the effective utilization of working capital and a law ratio indicates otherwise, the ratio can be expressed:
    Cost of Sales --------------------------------Average Working Capital

    Working Capital Turnover Period

    a)

    Cost of Sale = Cost of Goods Sold

    Particulars Cost of Sale / Cost of Goods Sold b)

    As at 31.3.2012 (In Lacs.) 36358.39

    As at 31.3.2011 (In Lacs.) 40477.88

    As at 31.3.2010 (In Lacs.)

    As at 31.3.2009 (In Lacs.) 44160.58

    40268.86

    Average Working Capital = (Opening + Closing) / 2

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    MALWA COTTON SPINNING MILLS LIMITED

    I II

    Opening Working Capital Closing Working Capital Average Working Capital {(I + II) / 2}

    12265.29 13777.00 13021.145

    13060.05 12265.29 12662.670

    12847.03 13060.05 12953.540

    12201.84 12847.03 12524.435

    Working Capital Turnover Ratio {a / b}

    2.79 times

    3.19 times

    3.10 times

    3.52 times

    Interpretation Working capital turnover ratio indicate that in the year 2009, ratio was 3.52 times which means that in a that year 3.10 times working capital is turned over i.e. converted into cash but it also increased in the year 2010 and 2011 to 3.19 and 2.79 times respectively.

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    MALWA COTTON SPINNING MILLS LIMITED

    CONCLUSION
    On making overall analysis of company. We arrive at conclusion that companys performing satisfactorily. It should make effort to reduce the operating cycle period, debtors conversion period and increasing creditors conversion period so as to realize early profits and cash. The liquidity position of company is satisfactory. It can pay off its obligation in time. A company is managing its inventory properly but efforts must be made to reduce the yearly holding of inventory with the company it is having conservative approach in financing of working capital. Current ratio of the firm is according to the rule to which is 2:1 and the quick ratio of the company is also satisfactory. The working capital turnover ratio of the company is fluctuating year by year. Inventory turnover ratio is decreased year by year which indicate that its inventory of finished good convert into sales efficiently. Management of cash by the company is good.

    Working Capital Management

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