Chittoor Co-operative Sugars Limited

A STUDY ON
WORKING CAPITAL MANAGEMENT
AT
CHITTOOR CO-OPERATIVE SUGARS LIMITED
A PROJECT REPORT
Submitted in partial fulfllment of the
requirement for the award of the degree of
MASTER OF FINANCIA MANA!EMENT
"#
Mr. K. VIJAY KUMAR
(Reg.No:3560829030)
Under the valuable Guidance of
Mr. K.S. RAM
M.A. (Econ), M.Com., PGDEE, F.C.S, B.G.L.,
F.I.C.W.A, Dip.M.A (Gold Medali!)
Department of MFM
DEPAR"ME#" $F C$MMERCE
SEICOM DEGREE & P.G. COLLEGE
SRI %E#KA"ESWARA &#I%ERSI"'
"IR&PA"I ()*+ ),-
1
Chittoor Co-operative Sugars Limited
-,,+(-,,.
2
Chittoor Co-operative Sugars Limited
SEICOM $E!REE % &'!'
COE!E
SRI %E#KA"ESWARA &#I%ERSI"'
"IR&PA"I / )*+ ),-
Certif(ate
This is to certify that the project entitle )A
&RO*ECT RE&ORT ON +OR,IN! CA&ITA
MANA!EMENT- AT C.ITTOOR CO/O&ERATI0E
S1!AR FACTOR23 has !een carrie o"t !y Mr' ,'
0I*A2 ,1MAR in partial f"l#ll$ent of the re%"ire$ents
of the a&ar of )MASTER OF FINANCIA
MANA!EMENT3 "ring the acae$ic year 200'(2009
in the )epart$ent of *o$$erce+ ,.-. .ni/ersity+
Tir"pati 0 51' 502 (2.3.)
4Co/ordinator 4M'F'M55 &ro6e(t !uide
T'S1REN$RANAT. RE$$2 Mr' ,'S' RAM
)epart$ent of *o$$erce )epart$ent of *o$$erce
,.-. .ni/ersity ,.-. .ni/ersity
3
Chittoor Co-operative Sugars Limited
Tir"pati 0 51' 502 (2.3.) Tir"pati 0 51' 502 (2.3.).
4
Chittoor Co-operative Sugars Limited
AC,NO+E$!EMENT
I am thankful to my project guide Mr' ,'S' Ram-
Department of Commerce for his valuable guidance and
patience for helping me bring this training report to its
fnal form.
I am very much thankful to Mr.G.Babu M.Com,
Project Guide of Chittoor co-operative ugar !actory
for their support and advice in all the stages of the
project.
I ackno"ledge my heart full gratitude to my parents
"ho are al"ays behind me in every moment of my life.
#ast but not least$ I pay thanks to all my friends
"ho are supporting% inspiring and motivating me.
,' 0I*A2
,1MAR
No7
89:;<=>;8;
5
Chittoor Co-operative Sugars Limited
$ECARATION
4 here !y eclare that this project )A ST1$2 ON
+OR,IN! CA&ITA MANA!EMENT3 at the *hittoor
*o(operati/e ,"gar 5actory+ *hittoor is oing one !y
$e "ring 5e!r"ary 0 6arch 2009. The analysis 7
#nings in this report are !ase on the infor$ation
collecte !y $e. 4 ha/e not "plicate this fro$ any
earlier reports s"!$itte pre/io"sly !y any!oy+ any
&here 7 this report has not !een s"!$itte for any !y
$e.
,' 0I*A2
,1MAR
No7
89:;<=>;8;
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Chittoor Co-operative Sugars Limited
Content?
C0ap!er #o. Decrip!ion Pa1e #o.
C0ap!er / I Introdution 1 - 2
Industr! profi"e 3 - 5
Compan! profi"e 6 - #
$rodut $rofi"e % - 12
C0ap!er / II &esearh Methodo"og! 13 - 14
'eed for the stud!
()*etives of the stud!
Soures of data
Sope + Limitations of the stud!
C0ap!er / III Data ,na"!sis and Interpretation 15 - 55
C0ap!er / I%
Findings +
Suggestions
56 - 5-
Con"usion 5#
,nne.ure 5% - 6#
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Chittoor Co-operative Sugars Limited
/i)"iograph! 6%
#
INTRO$1CTI
ON
Chittoor Co-operative Sugars Limited
INTRODUCTION
Financial Management is that managerial activity hich is c!ncerne" ith the
#lanning an" c!ntr!lling !$ the $irm%s $inance. Finance is !ne !$ the $!&n"ati!ns !$ all
'in"s !$ ec!n!mic activities. Finance is the li$e()l!!" !$ a )&siness. The $inancial
management st&"y "eals ith the #r!cess !$ #r!c&ring necessary $inancial res!&rce
an" their *&"ici!&s &se ith a vie t! ma+imi,ing the val&e !$ the $irm an" there )y the
val&e !$ the !ners i.e. e-&ity share h!l"ers in a c!m#any. Practicing managers are
interest in this s&)*ect )eca&se am!ng the m!st cr&cial "ecisi!ns !$ the $irm are th!se
hich relate t! $inance. an" an &n"erstan"ing !$ the the!ry !$ $inancial management
#r!vi"es them ith c!nce#t&al an" analytical insights t! ma'e th!se "ecisi!ns s'ill$&lly.
FINANCIAL MANAGEMENT
Financial Management emerge" as a "istinct $iel" !$ st&"y at the t&rn !$ this
cent&ry many eminent #ers!ns "e$ine" it in the $!ll!ing ays.
DEFINITIONS: -
Acc!r"ing the /O00EVI1E A02 2E3EY45 Financing c!nsists in the rising.
#r!vi"ing an" managing !$ all the m!ney. ca#ital !r $&n"s !$ any 'in" t! )e &se" in
c!nnecti!n ith the )&siness5.
Acc!r"ing t! Pr!$.E6RA 7O1OMA045Financial Management is c!ncerne" ith
the e$$icient &se !$ any im#!rtant ec!n!mic res!&rce. namely ca#ital $&n"s5.
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Chittoor Co-operative Sugars Limited
FI#A#CE F&#C"I$#S2 (
It may )e "i$$ic&lt t! se#arate the $inance $&ncti!ns $r!m #r!"&cti!n. mar'eting
an" !ther $&ncti!ns. )&t the $&ncti!ns themselves can )e rea"ily i"enti$ie". The
$&ncti!ns !$ raising $&n"s investing them in assets an" "istri)&ting ret&rns earne" $r!m
assets t! shareh!l"ers are res#ectively 'n!n as.
8. 1!ng 9 term assets(mi+ :!r; Investment 2ecisi!n
<. Ca#ital 9 Mi+ :!r; Financing 2ecisi!n
=. Pr!$it all!cati!n :!r; 2ivi"en" 2ecisi!n
>. 7h!rt 9 term asset 9Mi+ :!r; 1i-&i"ity 2ecisi!n
GOALS OF FINANCIAL MANAGEMENT
Ma+imi,e the val&e !$ the $irm t! its e-&ity shareh!l"ers.
Ma+imi,ati!n !$ #r!$it
Ma+imi,ati!n !$ earnings #er share.
Ma+imi,ati!n !$ ret&rn !n e-&ity :"e$ine" as e-&ity earnings?net !rth;
Maintenance !$ li-&i" assets in the $irm.
Ens&ring ma+im&m !#erati!nal e$$iciency thr!&gh #lanning "irecting an"
c!ntr!lling !$ the &tili,ati!n !$ the $&n"s.
/&il"ing &# !$ a"e-&ate reserves $!r $inancing gr!th an" e+#ansi!n0
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Chittoor Co-operative Sugars Limited
INDUSTRY PROFILE
7&gar cane is !ne !$ the im#!rtant cr!#s $!r the In"ian $armer. 7&gar an"
Jiggery are the main #r!"&cts that e get $r!m 7&garcane. Other #r!"&cts s&ch
as /i!gases $!r in"&strial &se. M!lasses $!r "istillery. $ilter ca'e. M&" as an
!rganic man&re an" green leaves ith t!#s $!r cattle $ee" are als! availa)le as
)y #r!"&cts )eca&se !$ it%s m&lti &ses 7&garcane has #laye" cr&cial r!le in
In"ian ec!n!my ith rs.<@@@@ c!res t&rn!ver an" i"th >A@ mills #r!vi"ing
assistance t! >A milli!n s&gar cane $armers an" < milli!n 7&garcane $armers an"
< milli!n !r'men "irectly an" in"irectly.
In A.P. s&gar in"&stry is an im#!rtant Agr!()ase" in"&stry. !cc&#ying the
sec!n" #!siti!n ne+t t! te+t tile in"&stry. The ann&al c&ltivate" area is a)!&t 8.BB
lac' hectares ith a yiel" !$ 8>B.>A lac's !$ t!nes "&ring BC(BD. At #resent.
there are =C s&gar $act!ries in the state an" A@E !$ them are in c!(!#erative
sect!r. The c!(!#erative s&gar &nits in the states have )een s&$$ering "&e t! lac'
!$ a"e-&ate cane irrigati!n $acilities. !r'ing ca#ital. )y(#r!"&ct &tili,ati!n.
e+cessive em#l!yment etc...
The s&gar in"&stries hich #r!vi"e "irect em#l!yment t! a)!&t = lac's
#ers!ns !$ s&gar cane $!ll!e" )y /ra,il F C&)a. 7&gar cane e+iste" in In"ia
$r!m =@@@ /.C. The centre #lace !$ !rigin !$ s&gar cane regar"e" as
0!rtheastern In"ian. $r!m s&gar cane seems t! have )een t! China an" !ther
#laces )y early travelers an" n! man%s )eteen 8G@@ an" 8D@@ /.C. later. It as
#enetrate" t! Phili##ines. Jea an" !ther #laces. Act&ally the !r" s&gar
"erive" $r!m a 7ans'rit !r" Hsha'ra5.
In"ia as the !rl"%s largest #r!"&cer !$ s&gar cane !cc&#ies a very #ri"e
#lace in the !rl". In In"ia. the c&ltivati!n !$ s&gar cane is 8@.@@@ miles t!nes.
The average yiel". )eing AC t!nes #er acre !$ t!tal c&ltivating lan" is !cc&#ie" )y
s&gar cane c&ltivati!n. 7&garcane is gr!n in alm!st all #art !$ In"ia. e+ce#t in
c!l"er regi!ns an" e+treme 0!rth Jamm& Kashmir. Iimachal Pra"esh.
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Chittoor Co-operative Sugars Limited
Area wise distribution of suar industr! in A"P"
7.0! 7ect!r 0!. !$
in"&stries
C!stal Area Rayalaseema Telangana
8 C!(!#erative 8G 8< > <
< P&)lic sect!r D 8 8 A
= Private sect!r 88 G < 8
T!tal =C <8 D G
The list !$ C!(!#erative 7&gar $act!ries in A.P.
8. The Chitt!!r C!(!#erative s&gars lt". Chitt!!r.
<. The Ch!"avaram C!(!#erative s&gars lt". Ch!"avaram.
=. The Ana'a#alle C!(!#erative s&gars lt". Ana'a#alle.
>. The Eti'&##a'a C!(!#erative agric&lt&ral !$ in"&strial s!ciety lt". Ethi'&##a'a.
A. 7ir Vi*ayarama Ja*a#athi C!(!#erative s&gars lt".
C. The Ama"avalasa C!(!#erative agric&lt&ral in"&strial s!ciety lt". 7ri'a'&lam.
D. The 3est J!"avari C!(!#erative s&gars lt". El&r&.
G. Pala'!ll& C!(!#erative agric&lt&ral F in"&strial s!ciety lt". Pala'!ll&.
B. The Than"ara C!(!#erative s&gars lt". Visa'a#atnam.
8@. 0i,ama)a" C!(!#erative s&gars lt". 0i,ama)a".
88. 7ir Ven'atesara C!!#erative s&gars lt". Renig&nta.
8<. The C&""a#ah C!(!#erative s&gars lt". Chenn&r.
8=. The 0an"yal C!(!#erative s&gars lt". P!nna#&ram.
8>. The K!v&r C!(!#erative s&gars lt". 0ell!re.
8A. 0agar*&na C!(!#erative s&gars mills lt". J&r,ala.
8C. 0am#aneni Ven'ata Ra! C!(!#erative s&gars lt". Ian&man J&ncti!n.
8D. 7ri Ian&man C!(!#erative s&gars lt". Ian&man J&ncti!n.
8G. Palair C!(!#erative s&gars lt". Ammag&"em.
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Chittoor Co-operative Sugars Limited
SUGAR INDUSTRY NATURE
SEASONALITY
The in"&stry is seas!nal ith the seas!n starting in 0!v an" c!ntin&ing till
A#ril?May. s&gar cane is availa)le "&ring these C(D m!nths an" cr&shing als!
ta'es #lace "&ring these m!nths.
LICENSING SYSTEM
T! #r!tect s&gar 9 #r!"&cing &nits an" ens&re a s&$$icient -&antity !$ ra
material :s&gar cane;. licensing system as intr!"&ce". Un"er this system.
each &nit ha" a c!mman" area $r!m here the s&gar cane as #r!"&ce".
The licensing system #resently in #lace is als! trying t! enc!&rage the
setting &# !$ ne &nits )y #r!vi"ing them ith s!#s an" !ther )ene$its.
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Chittoor Co-operative Sugars Limited
COMPANY PROFILE

TIE CIITTOOR CO(OPERATIVE 7UJAR7 1IMITE2 is the $irst agr!
)ase" ma*!r in"&stry in Rayalaseema area. It as $irst registere" !n <<.G.8BAA
&n"er the AP7C7 Act. Its area !$ !#erati!n c!m#rises !$ 8B< villages in <8
man"als.$act!ry is l!cate" al!ng c&"al!re('arn!!l nati!nal high ay 0O8G. =
'.m. t!ar"s Karn!!l $r!m Chitt!!r. It !ns GA.BC Acers !$ lan". It as $irst
c!mmissi!ne" !n 8G.8.8BC= ith a license" an" installe" ca#acity !$ 8@@@ t!nes
cane cr&shing #er a "ay #resently $act!ry is !r'ing at an average !$ 8G@@(<@@@
t!nes a "ay.
C!nstit&ti!n4
Electi!n as staye" t! this $act!y "&ring A#ril <@@@ Fr!m then !n 3ar"s4
The !$$icial /!ar" n!minate" )y The J!vernment C!nsists !$4
8. Chitt!!r c!llect!r as #ers!n(n charge.
<. Managing 2irect!r.
The /!ar" !$ Chitt!!r C!(!#erative 7&gar Fact!ry 1t".. &se"
t! meet $re-&ently $r!m time t! time as an" hen re-&ire".
Ann&al general )!"y meetings !$ the mem)ers !$ the s!ciety ere hel" !n
<B(@B(<@@@.<B(@B(<@@8.<B(@>(<@@<.@G(@B(<@@= an" <A(88(<@@=.
At #resent the strength !$ em#l!yees at vari!&s levels4
a; Permanent :n!n seas!nal; CG
); 7eas!nal #ermanent B>
c; C!ns!li"ate agers :sess!nal; 8CD
"; 2aily agers :0MR; <>>
(((((((((((((((((
T!tal n!.!$ Em#l!yees AD=
((((((((((((((((((


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Chittoor Co-operative Sugars Limited
MANAGEMENT
At #resent the electe" )!ar" has ass&me" a charge !n C(>(<@@@. The
#resent
/!ar" !$ "irect!rs as "etaile" )el!4(
Presi"ent 8
/!ar" !$ "irect!rs 8>
Em#l!yee "irect!r 8
There are ma*!r "e#artments4(
A"ministrative
Engineering
Man&$act&ring
Agric&lt&re
Acc!&nts F$inance
PRODUCTS
7UJAR
MO1A77E7
CAPITAL STRUCTURE
Original #r!*ect c!st as R7. 8<G.A@ la'hs. It has )een $&n"e" $r!m
$!ll!ing s!&rces4

I# S$are %a&ita' fro( RS" La)$s
a;cane gr!er mem)ers G.A@
);state g!vernment <A.@@
((((((((((((((((((((((
==.A@
((((((((((((((((((((((
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Chittoor Co-operative Sugars Limited
II# Ter( 'oans RS"La)$s
a;IFCI 0e 2elhi DA.@@
);1ICI /!m)ay <@.@@
((((((((((((
8<G.A@

((((((((((((
III#Ca&ita' out'a! Rs" La)$s
1an" <.=G
/&il"ings A.B@
Plant F machinery 8@B.=>
Other assets A.DD
Per !#erative e+#ences >.@@
Vehicles @.BC
(((((((((((
8<G.=A
(((((((((((
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Chittoor Co-operative Sugars Limited
PRODUCT PROFILE
Suar Cane
7&gar cane c&ltivate" )y the gr!ers !r #r!mising varieties in terms !$ s&gar
c!ntent an" yiel". C&ltivati!n techni-&es mat&rity !$ :"eci"e" )y the cane
#ers!nnel; harveste" an" s&##lie" t! the $act!ry in tr&c's $resh less t!#s an"
r!!ts. Tr&c's are eighe" ith cane !n 3eigh /ri"ge an" &nl!a"e" !n the
m!ving cane carrier. Mechanical &n(l!a"ers "! &nl!a"ing. Again em#ty tr&c' is
eighe" t! asserti!n in the eight !$ cane &nl!a"e".
Mi''ins
Pr!vi"e" ith a tan"em !$ $!&r mills lan" each mill is #r!vi"e" ith three
r!llers. On the cane carrie" $!r cane #re#arati!n cane 'nives "riven )y m!t!r
an" $!ll!e" )y a Fi)ri,er "riven steam t&r)ine are #r!vi"e" t! ch!# the cane
int! small #ieces an" $i)er t! ma'e the milling m!ve e$$icient an" t! e+tract
ma+im&m *&ice $r!m the cane. T! ma'e this #r!cess m!re e$$ective ass&re"
-&antity !$ ater is a""e" t! Mills. A$ter e+tracti!n !$ *&ices the aste materials
is calle" )agasse.
*oi'ers
Pr!vi"e" ith < n!s. !$ )!ilers !$ each ater eva#!rati!n ca#acity !$ <A Mts.
Per h!&r steam at =@@ # sig :<8 Kgs;. 7team is &se" $!r "riving the Fi)ri,er. mills
)y t&r)ines an" generat!r #!er. )y steam t&r)ine alternat!r. F!r )!ilers main
$&el is )agasse. 7&r#l&s )agasse is s!l" t! #a#er in"&stries.
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Chittoor Co-operative Sugars Limited
C'arifi%ation
J&ice e+tracte" $!rm s&gar cane in mills is eighte" in a&t!matic eighing
scale. It is #reheate" in *&ice heater t! A@(DA@. Then it is limite" an" s&l#hiete"
sim&ltane!&sly. J&ices ill )e c!ag&late" $!rm an" ill n!t settle. T! in"&ce
settings chea#ly an" a)&n"antly availa)le #!sitive is t! )e a""e" i.e. namely
time in sl&rry $!rm. als! calle" mil' !$ lime. )y &sing a""iti!n !$ s&ch al'aline
me"i&m is again )r!&ght "!n t! nat&ral #I me"i&m )y )&)! ling !$ s&l#h&r
"i!+i"e gas. This gas is #r!"&ce" in s&l#h&r )&rners an" )&))le" in #reheate"
*&ices. /y the ai" !$ c!m#resse" air #assing thr!&gh s&l#h&r )&rners. As s&ch
a *&ice is 'e#t at slightly al'aline me"i&m say D@8 t! D.<. Then this treate" *&ice
is heate" again in !ther r! !$ *&ices heaters t! 8@< C an" t! sen" t! graver.
Jraver is a )ig tan' here settling is ta'ing #lace. C!ntin&!&sly. s&ch *&ices is
sent an" "ran $r!m it ith the "etenti!n time !$ *&ices !$ a)!&t ==@ h!&rs. in K&%
t&)e #rinci#les.
E+a&oration
In graver *&ices ill )e ell settle" an" ill have a g!l"en yell! c!l!r !$
D.@#I :0e&tral;. This clear *&ice ill c!ntain m!re than GAE !$ ater an" the
remaining s!ile" :7&gar Ma+im&m L a little s&gar;. In eva#!rat!rs a)!&t DAE !$
ater is rem!ve" an" ma"e syr&#. This c!nsists !$ !ne va#!r cell an" is
$!ll!e" )y $!&r )!"ies. /!iling is "!ne &n"er vac&&m &sing e+ha&st stream
$r!m t&r)ines t&)es emerging !&t thr!&gh t&)e #lates an" a)!ve this calan"ria
va#!r s#ace !r shell. 7team circ&late" thr!&gh calan"reia an" heating the !&ter
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Chittoor Co-operative Sugars Limited
#!int !$ h&ices is )r!&ght ell )el! its !rigin )!iling #!int. In the va#!r cell
al!ne e+ha&st steam is a"mitte" int! the calan"ria #r!"&ce" va#!r t! its
s&)se-&ent )!"y an" s!!n. Vac&&m is hel#ing is "raing va#!r $r!m the
#rece"ing )!"y an" this )!iling is calle" m&lti e$$ect )!iling an" ma+im&m $&el
ec!n!my. Th&s hen *&ices is emerges !&t $r!m last )!"y it ill )e a syr&#.
l!sing a)!&t DAE !$ ater.
,a%uu( fi'ter
M&" settle" in graver is ta'en in r!tary $ilters t! e+tract *&ices $r!m it an"
aste is calle" $ilter ca'e sent !&t an" &se" as man&re. E+tracte" *&ices is again
mi+e" *&ices $r!m mills a$ter eighment tan' an" ta'es the #ath !$ #r!cess al!ng
ith mills *&ices in acyclic $!rm.
Su'&$itation and s!ru&
The syr&# $r!m eva#!rat!r last )!"y is again s&l#hite" t! )each t! get hite
s&gar an" sent t! #an s&##ly tan's.
Pans
Pan )!"ies are similar t! eva#!rat!rs in c!nstr&cti!n ith "i$$erent "esign.
Materials are invi"i!&sly )!ile" in $!&r n&m)ers &n"er vac&&m. 3hen the syr&#
is $&rther )!il in #ans. 3hen the s&#er sat&rati!n #!int reaches crystals c!me
!&t its is again )!ile" &# )y a""iti!n 'e#t in #an an" the rest < #!rti!ns sent t!
receivers. Then again #an is )!ile". This #r!cess ill hel# gr!th !r crystal as
"esire" )y &s.
Three )!iling are )!ne A. /. C. These are calle" massec&ites. All these
mass c&ties :s&gar L m!lasses; are #&rge" in centri$&gals res#ectively s&gar an"
m!lasses are se#arate". Pans are )!iler !n va#!r #r!"&ce" $!rm va#!r cell.
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Chittoor Co-operative Sugars Limited
Centrifua's
7&ch ma"e massec&ties are "r!##e" in crystalli,ers :a st!rage tan' ith
stirring mechanism;. Fr!m crystalli,es ta'en int! centri$&gal machines an" s&gar
an" m!lasses se#arat!r. Centri$&gal machines c!ntain a )as'et $itte" ith mesh
an" screen !$ small !#ening an" ill n!t all! s&gar crystals t! #ass thr!&gh )&t
!nly m!lasses. 3hen !ne machine change" ith massec&ities an" s#&n at 8A@
RPM m!lasses gets !&t an" c!llects in a tan'. 7&gar remains in )as'et ashe"
an" "rie" )y steam. Then "r!##e" !n h!##er :t! an" !r; sha'ing me"i&m s&gar
ill get "ry hen $l!ing an" galls !n s&gar gra"er :$itte" ith meshes; screene"
an" )agge". /ags eighe" !n P.O scales !$ 8@@'gs. An" sent t! g! "!n.
M!lasses g!t $r!m a massec&itesM s&gar an" m!lasses $!rm / massesc&ties
an" s&gar $!rm c massec&ites :$inal; are again )!ile" in #ans in cyclic manner.
M!lasses g!t $r! c massec&ites calle" $inal m!lasses is a aste an" sent t!
st!rage tan's :Ra material $!r alc!h!l in"&stries;. 7&gar is gra"e" in
acc!r"ance an" large i.e.. 7(<B. 7(=@. As the "eman" in the mar'et is $!r 7(=@ it
is ma"e in the $act.
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Chittoor Co-operative Sugars Limited
21
RESEARC.
MET.O$OO
!2
Chittoor Co-operative Sugars Limited
RESEARC- MET-ODOLOGY
NEED FOR T-E STUDY
In carrying the st&"y )!th #rimary an" sec!n"ary "ata c!llecte" in a#hase"
manner as $!ll!s4
A. Initially #reliminary "isc&ssi!ns ith J.M. sales manager an" acc!&nts
!$$icer carrie" !n.
/. The in$!rmati!n a)!&t #r!$it an" l!ss re#!rts
C. The rati!s are calc&late" )y st&"ying )alance sheet an" the necessary
in$!rmati!n re-&ire" $!r the st&"y as )eing !)taine" $r!m $r&it$&l
interacti!n !$ the researche" ith the em#l!yees !$ the !rgani,ati!n.
2. An" s!me in$!rmati!n gathere" $r!m sec!n"ary "ata an" s!me !$ the
$inancial )!!'s.
O*.ECTI,E OF T-E STUDY
This st&"y is mainly $!c&se" t! e+amine the sh!rt(time $inancial
via)ility !$ chitt!r c!(!#erative s&gars as state" )el!4
T! st&"y h! )est the !r'ing ca#ital is &tili,e" in the c!m#any.
T! st&"y the e$$ectiveness !$ cre"it management !$ the c!m#any.
T! st&"y the sh!rt(term li-&i"ity #!siti!ns !$ c!m#any.
T! &n"erstan" !r'ing ca#ital management !$ a c!m#any.
T! st&"y the changes in !r'ing ca#ital #!siti!n !$ the c!m#any.
T! s&ggest necessary meth!"s )y hich $&t&re im#r!vement may )e ma"e in
its management !$ !r'ing ca#ital.
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Chittoor Co-operative Sugars Limited
SOURCES OF DATA ANALYSIS
The st&"y re-&ire" )!th #rimary an" sec!n"ary "ata.
PRIMARY DATA/0
Primary "ata has )een c!llecte" )y intervieing certain e+ec&tives h!
ere ch!sen !n the )asis !$ their in "e#th 'n!le"ge an" e+#erience in the
c!m#any. The intervies in nat&re are &n"er t! gain as m&ch in$!rmati!n as
#!ssi)le.
SECONDARY DATA/0
7ec!n"ary "ata as !)taine" $r!m the #ast rec!r"s $ile an" re#!rts !$ the
!rgani,ati!n als! $r!m !ther $inancial statements.
TOOLS FOR ANALYSIS OF 1OR2ING CAPITAL/0
The -&ant&m !$ !r'ing ca#ital as ell as its $inancing #attern is s&)*ect
t! c!nstant m!nit!ring an" revies )y the $inancial manager. There are "i$$erent
analytical t!!ls hich can hel# a $inancial manager in m!nit!ring in vieing an"
c!ntr!lling the !r'ing ca#ital. The #!#&larly &se" t!!ls are4
8. 7che"&le !$ changes in !r'ing ca#ital.
<. 3!r'ing ca#ital rati!s.
LIMITATION OF T-E STUDY/0
It is )ase" !n the "ata s&##lie" )y the $act!ry #ers!nnel.
It is )ase" !n c!ns&ltati!n. "ecisi!ns !$ all c!ncerne" !$$icials.
7ince !nly A years "ata is &se" $!r the analysis the !&t c!me may
0!t )e generali,e".
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Chittoor Co-operative Sugars Limited
2&e t! limitati!ns !$ time. it as &na)le t! g! $ar a "e#th st&"y int!
The s&)*ect.
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$ATA
ANA2SIS
Chittoor Co-operative Sugars Limited
INTRODUCTION TO 1OR2ING CAPITAL
H3!r'ing ca#ital His !$ten re$erre" t! as Hli$e)l!!"5 !$ an !rgani,ati!n !$ its
Hthe m!ney re-&ire" $!r carrying !n "ay t!"ay activities !$ an !rgani,ati!n. The
management !$ c&rrent assets is similar t! that !$ $i+e" assets in the sense that
in )!th cases a $irm analysis their e$$ects !n its ret&rn an" ris'.
The management !$ $i+e" an" c&rrent assets. h!ever. "i$$ers in three
im#!rtant ays4 $irst. in managing $i+e" assets. time is very im#!rtant $act!rM
c!nse-&ently. "isc!&nting an" c!m#!&n"ing techni-&es #lay a signi$icant r!le in
ca#ital )&"geting an" a min!r !ne in the management !$ c&rrent assets. 7ec!n".
the large h!l"ing !$ c&rrent assets. es#ecially cash. strengthens the $irms li-&i"ity
#!siti!n :an" re"&ce ris' ness;. )&t als! re"&ces the !verall #r!$ita)ility. Th&s. a
ris'(ret&rn tra"e !$$ is inv!lve" in h!l"ing c&rrent assets. Thir". levels !$ $i+e" as
ell as c&rrent assets "e#en" &#!n e+#ecte" sales $l&ct&ati!ns in the sh!rt r&n.
Th&s the $irm has a greater "egree !$ $le+i)ility in managing c&rrent assets.
3!r'ing ca#ital is #r!)a)le the !$ten &se" $inancial management
c!nce#ts ver)ally an" mis&se" #ractically. In"e#en"ent !$ the nat&re !$ an
!rgani,ati!n. its c!nstit&ti!n an" activity re-&ires !r'ing ca#ital. Many
!rgani,ati!ns have $aile" !r )ec!me sic' mainly "&e t! the mismanagement !$
this H!r'ing ca#ital5.
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MEANING AND DEFINITION
3!r'ing ca#ital management !r a"ministrati!n !$ all as#ects !$ !r'ing
ca#ital. hich manage the $irm%s c&rrent assets an" c&rrent lia)ilities in s&ch a
ay that a satis$act!ry level !$ !r'ing ca#ital is maintaine".
Acc!r"ing t! s(it$ H!r'ing ca#ital management is c!ncerne" ith the
#r!)lem that arise in attem#ting t! manage the c&rrent assets. c&rrent lia)ilities.
an" the inter(relati!nshi# that e+ists )eteen them5
TYPES OF 1OR2ING CAPITAL/0
There are t! ty#es !$ !r'ing ca#ital. They are4
I; !n the )asis !$ c!nce#t
8; Jr!ss !r'ing ca#ital.
<; 0et !r'ing ca#ital.
8" Gross wor)in %a&ita'/0
Re$ers t! the $irm%s investment in c&rrent assets are the assets.
hich can )e c!ncerne" int! an" ith in an acc!&nting year :!r !#erating cycle;
an" incl&"e cash. sh!rt(term sec&rities. "e)t!rs :acc!&nts receiva)les !r )!!'
"e)ts; )ills receiva)le an" st!c' :invent!ry;
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Jr!ss !r'ing ca#itals #!ints t! the arranging !$ $&n"s t! $inance c&rrent
assets.
3" Networ)in %a&ita'/0
Re$ers t! the "i$$erence )eteen c&rrent assets an" c&rrent
lia)ilities. C&rrents lia)ilities are th!se claims !$ !&tsi"ers. hich are e+#ecte" t!
nat&re $!r #ayment ithin acc!&nting years an" incl&"e cre"it!rs :acc!&nts
#aya)le;. /ills Paya)le an" !&tstan"ing e+#enses. 0et!r'ing ca#ital can )e
#!sitive !r negative. A #!sitive net!r'ing ca#ital ill arise hen c&rrent assets.
e+cee" c&rrent lia)ilities an" a negative !r'ing ca#ital ill arise hen c&rrent
lia)ilities are in e+cess !$ c&rrent assets.
II; On the )asis !$ time
8; Permanent?$i+e"?$l&ct&ating !r'ing ca#ital
<; Tem#!rary !r'ing ca#ital
4# Per(anent wor)in %a&ita'/0
The nee" $!r c&rrent assets arises )eca&se !$ the !#erating
cycle. The !#erating cycle is a c!ntin&!&s #r!cess an" there$!re. the nee" $!r
the c&rrent assets is $elt c!nstantly. /&t the magnit&"e !$ c&rrent assets nee"e"
is n!t alays a minim&m level !$ c&rrent assets. hich is c!ntin&!&sly re-&ire"
)y the $irm t! carry !n its )&siness !#erati!ns. This minim&m level !$ c&rrent
assets is re$erre" t! as #ermanent !r $i+e" !r'ing ca#ital.
E5AMPLE/ 0 Every $irm has t! maintain a minim&m level !$ ra materials. !r'(
in(#r!gress. $inishe" g!!"s an" cash )alance. This minim&m level !$ c&rrent
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assets is calle" #ermanent !r $i+e" !r'ing ca#ital as this #art !$ ca#ital is
#ermanently )l!c'e" in c&rrent assets. As the )&siness gr!s. the re-&irements
!$ #ermanent !r'ing ca#ital als! increase "&e t! the increase in c&rrent assets.


Tem#!rary
Or
Fl&ct&ating
Permanent
Time

3" Te(&orar! wor)in %a&ita'/0

2e#en"ing &#!n the changes in #r!"&cti!n an" sales. the nee" $!r
!r'ing ca#ital !ver an" a)!ve #ermanent !r'ing ca#ital. ill have in )e
maintaine" t! s&##!rt the #ea' #r!cee"s !$ sale an" investment in receive may
als! increase "&ring s&ch #eri!"s. On the !ther han". investment in ra
material. !r'ing in #r!gress an" $inishe" g!!"s ill $all i$ the mar'et is slac'.
The e+tra !r'ing ca#ital nee"e" t! s&##!rt the changing #r!"&cti!n an"
sales activities is calle" $l&ct&ating. !r varia)le !r tem#!rary !r'ing ca#ital. The
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$irm t! meet li-&i"ity meas&rement that ill last !nly tem#!rarily creates
tem#!rary !r'ing ca#ital.
Tem#!rary
Or
Fl&ct&ating
Permanent
T-E NEED OR O*.ECTI,ES OF 1OR2ING CAPITAL
The nee" $!r !r'ing ca#ital t! r&n "ay (t! ("ay )&siness activities
cann!t )e !ver em#hasi,e". e ill har"ly $in" )&siness $irm. hich "!esn%t
re-&ire any am!&nt i$ !r'ing ca#ital in"ee". an" $irms "i$$er in their
re-&irements !$ the !r'ing ca#ital. 3e 'n! that a $irm sh!&l" aim at
ma+imi,ing the ealth !$ its share h!l"ers. In its en"eav!r t! "! s!. A $irm
sh!&l" earn s&$$icient ret&rn $r!m its !#erati!ns. Earning a st&"y am!&nt !$ #r!$it
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Chittoor Co-operative Sugars Limited
re-&ire" s&ccess$&lly sale activity. The $irm has t! invest en!&gh $&n"s in c&rrent
assets $!r cash instantane!&sly. There is alays an !#erati!n cycle inv!lve" in
the c!nversi!n !$ sales in t! cash.
,ARIOUS NEEDS OF 1OR2ING CAPITAL IS AS FOLLO1S4(
8. T! #ay ages an" salary.
<. It hel#s t! the #&rchase !$ ra materials. c!m#!nents an" s#ares.
=. It hel#s t! inc&r "ay(t!("ay( e+#enses an" !verhea" c!sts s&ch as
$&el. #!er. an" !$$ice e+#enses etc.
>. It als! t! meet the selling c!st as #ac'ing. a"vertising etc.
A. It #r!vi"es cre"it $acilities t! the c&st!mer.
C. It hel#s t! maintain the invent!ries !$ ra material. !r'ing #r!gress.
st!res an" s#ares an" $inishe" st!c'.
DETERMINATES OF 1OR2ING CAPITAL OR FACTORS AFECTING
The !r'ing ca#ital re-&irement !$ a $irm a$$ecte" )y a n&m)er !$ $act!rs.
The vari!&s $act!rs. hich a$$ect the !r'ing ca#ital re-&irement !$ a c!ncern.
are as $!ll!s4
Internal $act!rs E+ternal $act!rs
0at&re !$ )&siness
/&siness
$l&ct&ati!ns
Pr!"&ct cycle Techn!l!gical
2evel!#ments
/&siness cycle
Trans#!rt an"
Cre"it #!licy C!mm&nicati!n
2evel!#ment
7cale !$ #r!"&cti!n Im#!rt P!licy
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Chittoor Co-operative Sugars Limited

Jr!th an" E+#ansi!n !$ )&siness Ta+ati!n #!licy
O#erating e$$iciency

INTERNAL FACTORS
4" NATURE OF *USINESS4(
The !r'ing ca#ital re-&irements !$ enter#rises are )asically
relate" t! the c!n"&ct !$ )&siness. P&)lic &tilities have certain $eat&res hich
have a )earing !n their !r'ing ca#ital nee"s. They "! n!t maintain )ig
invent!ries ari" have. there$!re. #r!)a)ly the least re-&irement !$ !r'ing
ca#ital. On the !ther han" tra"ing an" man&$act&ring c!ncern re-&ire" large
am!&nt !$ !r'ing ca#ital t! maintain a s&$$icient am!&nt !$ cash invent!ries an"
)!!' "e)ts.
3" PRODUCTION CYCLE4 (
The term #r!"&cti!n !r man&$act&ring cycle re$ers t! the s#an
)eteen the #r!c&rement !$ ra materials an" c!m#leti!n !$ the man&$act&ring
#r!cess lea"ing t! the #r!"&cti!n !$ $inishe" g!!"s. In !ther !r"s. there is a
s!me time ga# )e$!re ra materials )ec!me $inishe" g!!"s. There$!re the
l!nger the time s#an. the larger ill )e the !r'ing ca#ital nee"e" an" vice
versa.
6"*USINESS CYCLE4(
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Chittoor Co-operative Sugars Limited
The )&siness $l&ct&ati!ns in$l&ence the si,e !$ !r'ing ca#ital mainly
"&ring &#"ate" #hase hen )!!m c!n"iti!ns #revail. the nee" $!r !r'ing ca#ital
is li'ely t! c!ver the lag )eteen increases sales an" recei#t !$ cash as ell as
invest in #lant an" machinery t! meet the increase" "eman". The "!n sing an
!##!site e$$ect !n the level !$ !r'ing ca#ital re-&irement.
7"CREDIT POLICY/0
The cre"it #!licy relating t! sales an" #&rchases als! a$$ects the !r'ing
ca#ital. The cre"it #!licy in in$l&ences the re-&irements !$ !r'ing ca#ital in t!
ays4
Th!&gh cre"it terms grante" )y the $irm t! its c&st!mers?)&yers !$ g!!"s
cre"it terms availa)le t! the $irm $r!m its cre"it!rs. A $irm. hich m!re cre"it
sales an" cash #&rchase re-&ire" high !r'ing ca#ital than a $irm having m!re
cre"it #&rchase an" cash sales.
8"SCALE OF PRODUCTION/0
A c!ncern carrying !n activities !n a small scale !$ nee"s less !r'ing
ca#ital. On the !ther han" a c!ncern &n"erta'ing activities !n large scale
0ee"s large am!&nt !$ !r'ing ca#ital.
9" GRO1T- AND E5PANSION OF *USINESS4(
The gr!th an" e+#ansi!n !$ )&siness als! a$$ect the !r'ing ca#ital
re-&irement. 3hen there is gr!th an" e+#ansi!n in the )&siness !$ a $irm the
!r'ing ca#ital nee"s !$ the $irm ill als! increase.
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Chittoor Co-operative Sugars Limited
:"OPERTAING EFFICIENCY4(
The !#erating e$$iciency !$ the management is als! im#!rtant "eterminant
!$ the level !$ !r'ing ca#ital. A $irm en*!ying !#erating e$$iciency can eliminate
astage an" &se its res!&rces e$$iciently an" there)y re"&ce its !r'ing ca#ital
nee"s c!nsi"era)ly.
E5TERNAL FACTORS
4" *USINESS FLUCTUATIONS/0
/&siness enter#rises &s&ally e+#eriences $l&ct&ati!ns in
"eman" $!r their #r!"&cts an" services )eca&se !$ changes in ec!n!mic
c!n"iti!ns. In vie !$ this. !r'ing ca#ital re-&irements !$ these enter#rises are
a$$ecte". Th&s. in the event !$ ec!n!mic #r!s#erity. general "eman" !$ the
g!!"s an" services ten"s t! sh!!t &#. T! c!#e ith increase" "eman" an"
c!nse-&ently increase" #r!"&cti!n. the $irm ill re-&ire a""iti!nal !r'ing
ca#ital.
3" TEC-NOLOGICAL DE,ELOPMENTS/0
Techn!l!gical "evel!#ments in the area !$ #r!"&cti!n can
have shar# e$$ects !n the nee" $!r !r'ing ca#ital. I$ a $irm sitches !ver t! ne
man&$act&ring #r!cess an" installs ne e-&i#ments ith hich it is a)le t! c&t
#eri!" inv!lve" in c!nverting ra materials int! $inishe" g!!"s. #ermanent
!r'ing ca#ital re-&irements !$ the $irm ill "ecrease.
6" TRANSPORT AND COMMUNICATION DE,ELOPMENTS/0
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Chittoor Co-operative Sugars Limited
3here the means !$ trans#!rt an" c!mm&nicati!n in a
c!&ntry are n!t ell "evel!#e". in"&stries may nee" a""iti!nal $&n"s t! maintain
)ig invent!ry !$ ra materials an" !ther access!ries hich !&l" !therise n!t
)e nee"e" here the trans#!rt an" c!mm&nicati!ns systems are highly
"evel!#e".
7" IMPORT POLICY/0
Im#!rt #!licy !$ the g!vernment may als! have its )earing
!n the levels !$ !r'ing ca#ital !$ the enter#rises since they have t! arrange
$&n"s $!r im#!rting g!!"s at s#eci$ie" times.
8" TA5ATION POLICY/0
3!r'ing ca#ital nee"s !$ )&siness enter#rises are a$$ecte"
shar#ly )y ta+ati!n #!licy !$ the g!vernment. In the event !$ regressive ta+ati!n
#!licy !$ the g!vernment. as it e+ists t!"ay in In"ia. im#!sing heavy ta+ )&r"ens
!n )&siness enter#rises leaves very little #r!$its $!r "istri)&ti!n an" retenti!n
#&r#!ses.
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Chittoor Co-operative Sugars Limited
SOURCES OF 1OR2ING CAPITAL/0
Am!ng the vari!&s s!&rces availa)le $!r $inancing !r'ing ca#ital nee"s
$inance manager has t! select the )est s&ita)le s!&rce "e#en"ing !n !r'ing
ca#ital nee" !$ c!m#any.
SOURCES OF 1OR2ING CAPITAL
1!ng term s!&rces 7h!rt term s!&rces
Internal s!&rces E+ternal s!&rces
/an'
3ith "raing the
2e#reciati!n $&n" Tra"e cre"it
Using the ren!&ncement /ills !$
F!r ta+ati!n e+change

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Chittoor Co-operative Sugars Limited
P!st#!nement !$ #ayment J!vt.
Accr&e" e+#enses assistance
P&)lic "e#!sits


The nee" !$ !r'ing ca#ital is increase" )y raising #rices !$ en"
#r!"&cts an" relative in#&ts. On the !ther han" the g!vernment an" m!netary
a&th!rities #lay their !n r!le t! c&r" the malice in #eri!"s !$ in$lati!n. The
c!ntr!l meas&res !$ten ta'e the $irm !$ "ear m!ney #!licy an" restricti!n cre"it.
Financing !$ a""iti!nal !r'ing ca#ital in s&ch an am&sement )ec!mes a real
#r!)lem t! $inance manager !$ a c!ncerne" &nit. C!mmercial )an's #lay the
m!st signi$icant r!le in #r!vi"ing !r'ing ca#ital $inance. #artic&larly in In"ians
c!nte+t. In vie !$ m!&nting in$lati!n. the R./.I has ta'en &# certain s!cial
meas&res t! chec' the m!ney s&##ly in the ec!n!my. The )alancing nee" has
t! )e manage" either )y l!ng(term )!rr!ings !r )y iss&ing e-&ity !r )y earning
s&$$icient #r!$its an" retaining the same !$ c!#ing ith the a""iti!nal !r'ing
ca#ital re-&irements. The $irst ch!ice )e$!re a $inance manager. here )an's "!
n!t #r!vi"e a #art !$ a""iti!nal !r'ing ca#ital. is t! ta'e the l!ng(term s!&rces !$
$iancN.
LONG TERM FINANCING4(
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Chittoor Co-operative Sugars Limited
1!ans $r!m $inancial instit&ti!n the !#ti!n is n!rmally r&les !&t. )eca&se
$inancial instit&ti!ns "! n!t #r!vi"e $inance $!r !r'ing ca#ital re-&irements.
F&rther this $acility is n!t availa)le t! all c!m#anies this !#ti!n is n!t #ractical.
FLOATING OF DE*ENTURES/0
The #r!$ita)ility !$ a s&ccess$&l $l!ating !$ "e)ent&res seems t! )e rather
merging. In In"ian ca#ital mar'et. $l!ating !$ "e)ent&res has still t! gain
#!#&larly "e)ent&res iss&es !$ c!m#anies in #rivate sect!r n!t ass!ciate" ith
certain re#&te" gr!&#s generally $aile" t! attract invest!rs t! invest their $&n"s in
c!m#anies. In this c!nte+t the m!"e !$ raising $&n"s )y iss&ing c!nverti)le
"e)ent&re?)!n"s is als! gaining.
ACCEPTING PU*LIC DEPOSITS/0
The iss&e !$ ta##ing "e#!sits is "irectly t! the image !$ the c!m#any
see'ing t! invite #&)lic "e#!sits.
ISSUE OF S-ARES/0
3ith a vie !$ $inancing a""iti!nal ca#ital nee"s. iss&e !$ a""iti!nal e-&ity
share c!&l" )e c!nsi"ere". Many In"ian c!m#any have still t! g! ahea" t!
c!mman" res#ect !$ invest!rs in the c!nte+t l! #r!$it margin as ell as lac' !
'n!le"ge a)!&t c!m#any ma'e the s&ccess !$ a ca#ital
Iss&e very "im.
RAISING FUNDS *Y INTERNAL FINANCING/0
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Chittoor Co-operative Sugars Limited
Raising $&n"s $r!m !#erati!nal #r!$it #!ses #r!)lems $!r many c!m#anies.
)eca&se #rice !$ their en" #r!"&cts are c!ntr!lle" an" "! n!t #ermit c!m#anies
t! earn #r!$it s&$$icient re-&irements t! $inance a""iti!nal !r'ing assets. still a
largely $easi)le s!l&ti!n lies in increase #r!$ita)ility thr!&gh c!st c!ntr!l an" c!st
re"&cti!n meas&res managing the cash !#erating cycle. rati!nali,ing invent!ry
st!c' an" s! !n.
PRO*LEMS ASSOCIATED 1IT- E5CESS ; IN ADE<UATE 1OR2ING
CAPITAL/0
DANGERS OF E5CESS 1OR2ING CAPITAL/0
8; It res&lts in &nnecessary acc&m&lati!n !$ invent!ries. Th&s the
changes !$ invent!ry mishan"ling. the l!sses increase.
<; It is an in"icati!n !$ "e$ective cre"it #!licy an" st!c' c!llecti!n #eri!".
=; E+cessive !r'ing ca#ital ma'es management C!m#liment. hich
"egenerates int! managerial e$$iciency.
>; Ten"encies !$ acc&m&lating t! ma'e s#ec&lative #r!$its gr!. This may ten"
t! ma'e "ivi"en" #!licy li)eral an" "i$$ic&lt t! c!#e ith in $&t&re hen the $irm is
&na)le t! ma'e s#ec&lati!n #r!$its.
DANGERS INADE<UATE 1OR2ING CAPITAL/0
8; It 7trategies gr!th. It )ec!mes "i$$ic&lt t! &n"erta'e #r!$ita)le #r!*ect "&e t!
n!n(availa)ility !$ the !r'ing ca#ital $&n"s.
<; It )ec!mes "i$$ic&lt t! im#lement t !#erating #lans an" achieve the $irms #r!$it
target.
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Chittoor Co-operative Sugars Limited
=; O#erating ine$$iciencies cree# in hen it )ec!mes "i$$ic&lt even t! meet "ay(t!(
"ay c!mmitments.
>; Fi+e" assets are n!t e$$iciently &tili,e" $!r the !r'ing ca#ital $&n"s. Th&s. the
rate !$ ret&rn !n. investment sl&m#s.
A; Pa&city !$ !r'ing ca#ital $&n"s ren"ers the $irm &na)le t! avail !$ attractive
cre"it !##!rt&nities etc.The $irm l!sses it re#&tati!n hen it is n!t in a #!siti!n t!
t&rn!ver sh!rt(term !)ligati!n.
MET-ODS FOR ESTIMATING 1OR2ING CAPITAL RE<UIRMENTS
Three i"ely &se" meth!"s $!r "etermining !r'ing ca#ital re-&irements
!$ a $irm are4
Percentage !$ sales meth!"
Regressi!n analysis meth!"
O#erating cycle meth!"
4" PERCENTAGE OF SALES MET-OD4(
In this meth!". level !$ !r'ing ca#ital re-&irements is "eci"e" !n the
)asis !$ #ast e+#erience. The #ast relati!nshi# )eteen sales an" !r'ing
ca#ital is ta'en as a )ase $!r "etermining the si,e !$ !r'ing ca#ital
re-&irements $!r $&t&re. It is. h!ever. #res&me" that the relati!nshi# )eteen
sales an" !r'ing ca#ital that has e+iste" in the #ast has )een sta)le. This may
)e e+#laine" ith the hel# !$ the $!ll!ing ill&strati!n.
Percentage !$ sales meth!" is a sim#le an" easily &n"erst!!" meth!"
an" #ractically &se" $!r ascertaining sh!rt(term changes in !r'ing ca#ital in
3%
Chittoor Co-operative Sugars Limited
$&t&re. I!ever this meth!" lac's relia)ility inasm&ch as its )asic ass&m#ti!n !$
linear relati!nshi# )eteen sales an" !r'ing ca#ital "!es n!t h!l" tr&e in all the
cases. As s&ch. this meth!" cann!t )e rec!mmen"e" $!r &niversal a##licati!n.
3" REGRESSION ANALYSIS MET-OD/0
This is a statistical meth!" !$ "etermining !r'ing ca#ital re-&irements )y
esta)lishing the average relati!nshi# )eteen sales an" !r'ing ca#ital an" its
vari!&s c!m#!nents in the #ast years. In this regar" the meth!" !$ least s-&ares
is em#l!ye" an" the relati!nshi# )eteen sales an" !r'ing ca#ital is e+#resse"
)y the e-&ati!n4
YOaL)+
The val&es !$ Ka% an" K)% is !)taine" )y the s!l&ti!n !$ sim&ltane!&s linear
e-&ati!ns given as &n"er4
3here aO$i+e" c!m#!nent
)Ovaria)le c!m#!nent
+Osales
yOinvent!ry
nOn&m)er !$ !)servati!n
41
Chittoor Co-operative Sugars Limited
6" OPERATING CYCLE APPROAC-/0
O#erating cycle re$ers t! the length !$ time necessary t! c!m#lete the
$!ll!ing cycle !$ events.
C!nversi!n !$ cash int! invent!ry.
C!nversi!n !$ invent!ry int! receiva)le
C!nversi!n !$ receiva)le int! cash
I$ the !#erating cycle is length than the !r'ing ca#ital re-&irement ill )e
m!re !n the !ther han"s. i$ the !#erating cycle is sh!rter than the !r'ing ca#ital
re-&irement ill )e less.
Acc!r"ing t! this a##r!ach. si,e !$ !r'ing ca#ital re-&irements !$ a $irm
is "etermine" )y m&lti#lying the "&rati!n !$ the !#erating cycle )y c!st !$
!#erati!ns. The "&rati!n !$ the !#erating cycle may )e $!&n" ith the hel# !$ the
$!ll!ing $!rm&la4
OOR L 3 L F L A 9 P
3here. OO2&rati!n !$ !#erating cycle
RO2&rati!n !$ ra materials
3O2&rati!n !$ !r'(in(#r!cess
FO2&rati!n !$ $inishe" g!!"s
AO2&rati!n !$ acc!&nts receiva)le
PO2&rati!n !$ acc!&nts #aya)le
Duration of raw (ateria's/0
41
Chittoor Co-operative Sugars Limited
It re$lects the n&m)er !$ "ays $!r hich ra materials remain in
invent!ry )e$!re they are iss&e" $!r #r!"&cti!n. The $!ll!ing $!rm&la can )e
&se" t! "etermine "&rati!n !$ ra materials.
Average st!c' !$ ra materials
R O ((((((((((((((((((((((((((((((((((((((((((((((((((((
Per "ay c!ns&m#ti!n !$ ra materials
Duration of t$e wor)0in0&ro%ess/0
It "en!tes the n&m)er !$ "ays re-&ire" in the !r'(in(#r!cess
stage. It may )e ascertaine" ith the hel# !$ the $!ll!ing $!rm&la4
Average !r'(in(#r!cess invent!ry
3 O ((((((((((((((((((((((((((((((((((((((((((((((((((
Average #r!"&cti!n #er "ay
Duration of finis$ed oods/0
It re$ers t! the n&m)er !$ "ays $!r hich $inishe" g!!"s remain in
invent!ry )e$!re they are s!l". This can )e c!m#&te" )y the $!ll!ing $!rm&la4
Average $inishe" g!!"s invent!ry
F O ((((((((((((((((((((((((((((((((((((((((((((((
Per "ay sale !$ g!!"s
Duration of t$e a%%ounts re%ei+ab'e/0
42
Chittoor Co-operative Sugars Limited
It re#resents the n&m)er !$ "ays re-&ire" t! c!llect the acc!&nts
receiva)le. This may )e calc&late" as &n"er4
Average )!!' "e)ts
A O (((((((((((((((((((((((((((((((((((((((((((((
Average cre"it sales #er "ay
Duration of a%%ounts &a!ab'e/0
It re$ers t! the n&m)er !$ "ays $!r hich the s&##liers !$ ra
materials !$$er cre"it. This may )e meas&re" ith the hel# !$ the $!ll!ing
$!rm&la4
Average tra"e cre"it!rs
P O (((((((((((((((((((((((((((((((((((((((((((((((
Average cre"it #&rchases #er "ay
OPERATING CYCLES/0
43
MANUFACTURER
CA7I
RA3MATERIA17
FI0I7IE2 JOO27
2E/TOR7
Chittoor Co-operative Sugars Limited
44
3ORK I0 PROJRE77
TRADER
CA7I
FI0I7II0J JOO27
2E/TOR7
FI#A#CIAL I#S"I"&"I$#S
C,S2
Chittoor Co-operative Sugars Limited
TANDON COMMITTEE REPORT
Reserve /an' !$ In"ia set &# a c!mmittee &n"er the chairmanshi# !$ shri
P.1. Tan"!n in J&ly 8BD>. The terms !$ re$erence !$ the c!mmittee ere4
T! s&ggest g&i"elines $!r c!mmercial )an's t! $!ll! &# an" s&#ervise
cre"it $r!m the #!int !$ vie !$ ens&ring #r!#er en" &se !$ $&n"s an" 'ee#ing a
atch !n the sa$ety !$ a"vances.
T! s&ggest the ty#e !$ !#erati!nal "ata an" !ther in$!rmati!n that may
)e !)taine" )y )an's #eri!"ically $r!m the )!rr!ers an" )y the reserve )an' !$
In"ia $r!m the lea"ing )an's.
T! ma'e s&ggesti!ns $!r #rescri)ing invent!ry n!rms $!r the "i$$erent
in"&stries. )!th in the #rivate an" #&)lic sect!rs an" in"icate the )r!a" criteria
$!r "eviating $r!m these n!rms.
T! ma'e rec!mmen"ati!ns regar"ing res!&rces $!r $inancing the
minim&m !r'ing ca#ital re-&irements.
45
D3/4(&S
Chittoor Co-operative Sugars Limited
T! s&ggest criteria regar"ing satis$act!ry ca#ital str&ct&re an" s!&n"
$inancial )asis in relati!n t! )!rr!ings.
T! ma'e rec!mmen"ati!ns as t! hether the e+isting #attern !$
$inancing !r'ing ca#ital re-&irements )y cash cre"it?!ver"ra$t system etc..
re-&ires t! )e m!"i$ie". i$ s!. t! s&ggest s&ita)le m!"i$icati!ns.
CRETERIA FOR .UDGING T-E EFFICIENCY OF 1OR2ING CAPITAL
MANAGEMENT/0
The e$$iciency !$ !r'ing ca#ital management can )e *&"ge" thr!&gh
acc!&nting rati!s. The im#!rtant acc!&nting rati!%s that c!&l" )e &se" $!r *&"ging
the e$$iciency !$ !r'ing ca#ital management are4

C&rrent rati!
P&ic' rati!
Invent!ry t&rn!ver rati!
C&rrent assets t&rn!ver rati!
Cash #!siti!n rati!
3!r'ing ca#ital t&rn!ver rati!.
46
Chittoor Co-operative Sugars Limited
SC-EDULE OF C-ANGES IN 1OR2ING CAPITAL FOR T-E YEAR 3==30=6
PARTICULARS 3==3 3==6
Effe%t of wor)in %a&ita'
In%rease De%rease
CURRENT ASSETS/
Cas$ on $and 7348>">4 43?6>?="37 4374?3="66 0000000000000
*a'an%es wit$ ban) 7>7>86"49 7=>836>"39 69==3?9"4= 0000000000000
Interest Re%ei+ab'e 4?397??"8: 4?397??"8: 000000000000 000000000000
C'osin sto%) 3>39>3489"3= 34>993?=6":= 000000000000 :6=3>683"8=
Tota' %urrent assets 0A 3>8=88:8:"?= 339?9?844":=
LIA*ILITIES/
Out standin Interest 773>?3>"78 9=>77::">= 000000000000 499797?"78
Tota' %urrent 'iabi'ities 0* 773>?3>"78 9=>77::">=
1or)in Ca&ita' @A0*# 3>=938>3?"6= 33=::7=66"?=
Net de%rease in wor)in
Ca&ita'
9>?84?>7"8= 9>?84?>7"8=
3>=938>3?"6= 3>=938>3?"6= :79>7===">8 :79>7===">8
INTERPRETATION/
The net !r'ing ca#ital re-&irement !$ the c!m#any "&ring the year <@@<
has )een increase" in <@@=. an" the net !r'ing ca#ital !$ the c!m#any as
rec!r"e" R7. <<.@D.D>.@==.G@ an" it as )een increase" t! Rs. <B.@C. <A.B<G.=@
in the year <@@<.
4-
Chittoor Co-operative Sugars Limited
SC-EDULE OF C-ANGES IN 1OR2ING CAPITAL FOR T-E YEAR 3==60=7
PARTICULARS 3==6 3==7
Effe%t of wor)in %a&ita'
In%rease De%rease
CURRENT ASSETS/
Cas$ on $and 43?6>?="37 338:8"3= 000000000000 43947=8"=7
*a'an%es wit$ ban) 7=>836>"39 48??44?>"7? 44:?8>8="33 000000000000
Interest Re%ei+ab'e 4?397??"8: 4?397??"8: 000000000000 000000000000
C'osin sto%) 34>993?=6":= >9?7>:7="3: 000000000000 433?46=96"7=
Tota' %urrent assets 0A 339?9?844":= 4478:>>>6"8=
LIA*ILITIES/
Out standin Interest 9=>77::">= 3:4>=9??"7= 000000000000 34=>934="8=
Tota' %urrent 'iabi'ities 0* 9=>77::">= 3:4>=9??"7=
1or)in Ca&ita' @A0*# 33=::7=66"?= ?:6?>6=8"4=
Net de%rease in wor)in
Ca&ita'
4666?7:3?":= 4666?7:3?":=
33=::7=66"?= 33=::7=66"?= 4784:=9:?">= 4784:=9:?">=
INTERPRETATION/
The net !r'ing ca#ital re-&irement !$ the c!m#any "&ring the year <@@=
has )een increase" in <@@>. an" the net !r'ing ca#ital !$ the c!m#any as
rec!r"e" R7. G.D=.GB.=@A.8@ an" it as )een increase" t! Rs. <<.@D.D>.@==.G@
in the year <@@=.
SC-EDULE OF C-ANGES IN 1OR2ING CAPITAL FOR T-E YEAR 3==70=8
PARTICULARS 3==7 3==8
Effe%t of wor)in %a&ita'
In%rease De%rease
CURRENT ASSETS/
4#
Chittoor Co-operative Sugars Limited
Cas$ on $and 338:8"3= 4?:?>64"=9 4?89688"?9 0000000000000
*a'an%es wit$ ban) 48??44?>"7? 4?47==6:"7> 338??7?"=4 0000000000000
Interest Re%ei+ab'e 4?397??"8: 4?397??"8: 000000000000 0000000000000
C'osin sto%) >9?7>:7="3: 44==7648>"== 464>674?":6 0000000000000
Tota' %urrent assets 0A 4478:>>>6"8= 464???949"4=
LIA*ILITIES/
Out standin Interest 3:4>=9??"7= 7=838:>?"7= 000000000000 4666844="==
Tota' %urrent 'iabi'ities 0* 3:4>=9??"7= 7=838:>?"7=
1or)in Ca&ita' @A0*# ?:6?>6=8"4= >4693?4:":=
Net In%rease in wor)in
Ca&ita'
6>:6843"9= 6>:6843"9=
>4693?4:":= >4693?4:":= 4:6=?933"9= 4:6=?933"9=
INTERPRETATION/
The net !r'ing ca#ital re-&irement !$ the c!m#any "&ring the year <@@A
has )een increase" in <@@>. an" the net !r'ing ca#ital !$ the c!m#any as
rec!r"e" R7. G.D=.GB.=@A.8@ an" it as )een increase" t! Rs. B.8=.C<.G8D.D@ in
the year <@@A.
SC-EDULE OF C-ANGES IN 1OR2ING CAPITAL FOR T-E YEAR 3==80=9
PARTICULARS 3==8 3==9
Effe%t of wor)in %a&ita'
In%rease De%rease
CURRENT ASSETS/
Cas$ on $and 4?:?>64"=9 47434?"?= 00000000000000

4:6::43"3=
*a'an%es wit$ ban) 4?47==6:"7> :387>76"47 00000000000000 4=??8=>7"68
Interest Re%ei+ab'e 4?397??"8: 4?397??"8: 00000000000000 00000000000000
C'osin sto%) 44==7648>"== 6=797477>"8= 4>78>?3>="8= 00000000000000
Tota' %urrent assets 0A 464???949"4= 646?974=="==
LIA*ILITIES/
Out standin Interest 7=838:>?"7= 7>=37>??">= 00000000000000 ?7>>4>="8=
Tota' %urrent 'iabi'ities 0* 7=838:>?"7= 7>=37>??">=
1or)in Ca&ita' @A0*# >4693?4:":= 397?6>444"4=
Net in%rease in wor)in
Ca&ita' 4:67:93>6"7= 4:67:93>6"7=
397?6>444"4= 397?6>444"4= 4>78>?3>="8= 4>78>?3>="8=
4%
Chittoor Co-operative Sugars Limited
INTERPRETATION/
The net !r'ing ca#ital re-&irement !$ the c!m#any "&ring the year <@@C
has )een increase" in <@@A. an" the net !r'ing ca#ital !$ the c!m#any as
rec!r"e" R7. B.8=.C<.G8D.D@ an" it as )een increase" t! Rs. <C.>G.=B.888.8@
in the year <@@C.
SC-EDULE OF C-ANGES IN 1OR2ING CAPITAL FOR T-E YEAR 3==90=:
PARTICULARS 3==9 3==:
Effe%t of wor)in %a&ita'
In%rease De%rease
CURRENT ASSETS/
Cas$ on $and 47434?"?= >8=?3">3 000000000000 79468"??
*a'an%es wit$ ban) :387>76"47 4:?7>8?6"74 4=8>797="3: 000000000000
Interest Re%ei+ab'e 4?397??"8: 4?397??"8: 000000000000 000000000000
C'osin sto%) 6=797477>"8= 3?48?34>?"6= 000000000000 36=8>384"3=
Tota' %urrent assets 0A 646?974=="== 6=4686686"3=
LIA*ILITIES/
Out standin Interest 7>=37>??">= 79>3?6=4"97 3=>99?:"39 000000000000
Tota' %urrent 'iabi'ities 0* 7>=37>??">= 79>3?6=4"97
1or)in Ca&ita' @A0*# 397?6>444"4= 387738=84"8=
Net De%rease in wor)in
Ca&ita' 4=747=8>"9= 4=747=8>"9=

397?6>444"4= 397?6>444"4= 364=86?:"=? 364=86?:"=?
INTERPRETATION/
The net !r'ing ca#ital re-&irement !$ the c!m#any "&ring the year <@@C
has )een increase" in <@@D. an" the net !r'ing ca#ital !$ the c!m#any as
51
Chittoor Co-operative Sugars Limited
rec!r"e" R7. <A.>>.<A.@A8.A@ an" it as )een increase" t! Rs. <C.>G.=B.888.8@
in the year <@@C.
RATIO ANALYSIS
Over several years scienti$ic t!!ls have )een ev!lve" $!r "etermine
!#tim&m level !$ !r'ing ca#ital !nline assessment !$ each !$ the c!m#!nents !$
c&rrent assets $!r selective a##licati!n !$ management c!ntr!l. Un"is#&te"ly the
rati! analysis !cc&#ies #lace !$ #rime im#!rtance. Rati!% are c!m#lie" an"
st&"ie" $!r #r!$ita)ility% assessment !$ $inancial #!siti!n s&$$iciency !$ !r'ing
ca#ital strategies #er&se" )y the !rgani,ati!n sh!rt term an" l!ng term s!lvency
li-&i"ity etc. I !&l" "eal ith s!me !$ the #re"!minant rati!ns m!re relevantly
a##lica)le net !r'ing ca#ital management st&"ies.

CURRENT RATIO

C&rrent rati! in"icates a)ility !$ the c!m#any t! meet the c&rrent !)ligati!n
i.e.. the c&rrent assets m&st )e s&$$icient t! #ay as an" hen the latter matrices.
The stan"ar" rati! is <48. the c&rrent rati! is calc&late" )y &sing the $!rm&la4
C&rrent assets
C&rrent rati! O ((((((((((((((((((((((
C&rrent lia)ilities
YEAR CURRENT ASSETS CURRENT
LIA*ILITIES
RATIO
<@@<(<@@= <=.==.=@.=BA.8= 8G.B@.@C.AA<.8D 8.<=>
<@@=(<@@> 8<.@B.CC.C<=.<8 8>.<<.8@.DC<.8G @.GA@
51
Chittoor Co-operative Sugars Limited
<@@>(<@@A 8>.8=.<C.@>@.>8 8>.DG.C@.88D.<> @.BAA
<@@A(<@@C =<.=@.8B.<GG.BB <@.=G.GA.@CD.8B 8.AG>
<@@C(<@@D =8.=<.BA.G<B.8= <8.B=.<D.B@<.DB 8.><G


INTERPRETATION
The c&rrent rati! is )el! satis$act!ry level !$ 84AG "&ring the year <@@<(
<@@= an" the year <@@=(<@@> a)!ve the satis$act!ry level. I!ever there is a
"ecrease "&ring the years <@@>(<@@A t! <@@C(<@@D the "ecrease in the c&rrent
rati! in"icates )a" tren" !$ c!m#any.
52
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Chittoor Co-operative Sugars Limited
<UIC2 RATIO
P&ic' rati! are aci" test rati! ign!res less li-&i"ity assets li'e
invent!ry. This ta'es acc!&nt rea"ily availa)le cash an" !ther assets hich are
-&ic'ly c!nverte" int! cash. The stan"ar" is rati! is848. The general #rinci#le !$
-&ic' rati! is as $!ll!s4
LiAuid Assets
<ui%) ratio B 00000000000000000000000000000000
Current 'iabi'ities
YEAR <UIC2 ASSETS CURRENT
LIA*ILITIES
RATIO
<@@<(<@@= 8.=C.CD.AB8.G= 8G.B@.@C.AA<.8D @.@D<
<@@=(<@@> <.>>.8C.GG<.B> 8>.<<.8@.DC<.8G @.8CB
<@@>(<@@A <.G=.B@.G8<.@C 8>.DG.C@.88D.<> @.8B<
<@@A(<@@C 8.GC.=G.>C8.AD <@.=G.GA.@CD.8B @.@B8
<@@C(<@@D =.=B.AB.>BC.B8 <8.B=.<D.B@<.DB @.8A>
53
Chittoor Co-operative Sugars Limited
INTERPRETATION

The P&ic' rati! is )el! satis$act!ry level !$ @4@D< "&ring the year <@@<(
<@@= an" the year <@@=(<@@> a)!ve the satis$act!ry level. I!ever there is a
increase "&ring the years <@@>(<@@A this year #!siti!n is <@@A(<@@Ct! <@@C(
<@@D the increase in the P&ic' rati! in"icates satis$y tren" !$ c!m#any.

IN,ENTORY TURNO,ER RATIO
54
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Chittoor Co-operative Sugars Limited
T&rn!ver rati! is als! 'n!n as st!c' vel!city. This rati! is calc&late" t!
c!nsi"er the a"e-&acy !$ the -&ant&m !$ ca#ital an" its instit&ti!n $!r investing in
invent!ry.
A $irm m&st have reas!na)le st!c' in ca#aris!n t! sales. It is the rati! !$
c!st !$ sales an" average invent!ry !$. This rati! hel#s the $inancial managers t!
calc&late invent!ry #!licy. This rati! reveals the n&m)er !$ times $inishe" st!c' is
t&rne" !ver "&ring a given acc!&nting #eri!". The rati! is &se" $!r meas&ring the
#r!$ita)ility. These are the vari!&s ays in hich st!c' t&rn!ver rati! may )e
calc&late".
0et sales
Invent!ry t&rn!ver rati! O ((((((((((((((((((((((((((((((((
Average Invent!ry
YEAR NETSALES A,ERAGE
IN,ENTORY
RATIO
<@@<(<@@= <@.8>.GC.AD=.=C <=.>8.>D.GGB.C8@ @.GC@
<@@=(<@@> 8=.@A.8D.>=C.B@ 8=.DA.BD.BDB.C8@ @.B>G
<@@>(<@@A B.CC.A>.=C@.B@ G.=8.CA.@8@.><A 8.8C<
<@@A(<@@C 8<.=D.8B.C8C.DA 8@.=@.@=.=G>.G8A 8.<@8
<@@C(<@@D =C.GG.A=.ACC.GB 8G.>D.D8.C<A.@<@ 8.BBC
55
Chittoor Co-operative Sugars Limited

INTERPRETATION
The invent!ries are "ecrease" in <@@<(<@@=.<@@=(<@@> an" <@@>(<@@A.
the rati! is increases <@@A(<@@C an" i$ "ecreases in<@@C(<@@D.
CURRENT ASSETS TURNO,ER RATIO
56
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Chittoor Co-operative Sugars Limited

C&rrent assets t&rn!ver rati! in"icates the e+tent t! hich the investments
in c&rrent assets c!ntri)&te t!ar"s sales. It c!m#!rte" ith a #revi!&s #eri!". It
in"icates hether the investment is $i+e" assets has )een *&"ici!&s !r n!t.
0et 7ales
C&rrent assets t&rn!ver rati!O ((((((((((((((((((((((
C&rrent Assets
YEAR NET SALES CURRENT
ASSETS
RATIO
<@@<(<@@= <@.8>.GC.AD=.=C <=.=D.C8.A8>.8C @.GC8
<@@=(<@@> 8=.@A.8D.>=C.G8 8<.@B.CC.C<=.<8 8.@DG
<@@>(<@@A B.CC.A>.=C@.B@ 8>.8=.<C.@>@.>8 @.CG=
<@@A(<@@C 8<.=D.8B.C8C.DA =<.=@.8B.<GG.BB @.=G=
<@@C(<@@D =C.GG.A=.ACC.GB =8.=<.BA.G<B.8= 8.8DD

5-
Chittoor Co-operative Sugars Limited
INTERPRETATION
The rati! is increasing c!ntin&!&sly $r!m <@@<(<@@= t! <@@=(<@@> an"
a$ter year<@@>(<@@A t! <@@C(<@@D it increase". It in"icates that the c&rrent
assets ere &se".
CAS- POSITION RATIO
5#
53,&S
&
,
4
I
(
S
Chittoor Co-operative Sugars Limited
Cash in the m!st li-&i" asset. a $inancial analyst may e+amine the rati!n
!$ cash an" its e-&ivalent t! c&rrent lia)ilities. Tra"e investment !r mar'eta)le
sec&rities are e-&ivalent !$ cash. there$!re. they may )e incl&"e" in the
c!m#&tati!n !$ cash #!siti!n rati!.
CashL mar'eta)le sec&rities
Cash P!siti!n Rati!O (((((((((((((((((((((((((((((((((((((((((((((
C&rrent lia)ilities
YEAR CA7ILMARKETA(/1E
7ECURITIE7
CURRE0T
1IA/I1ITIE7
RATIO
<@@<(<@@= A=.DB.<8B.A@ 8G.B@.@C.AA<.8D @.@<G
<@@=(<@@> 8.AB.@=.DC>.CG 8>.<<.8@.DC<.8G @.888
<@@>(<@@A <.@@.8G.BB8.AA 8>.DG.C@.88D.<> @.8=A
<@@A(<@@C DB.A8.GGG.GC <@.=G.GA.@CD.8B @.@=B
<@@C(<@@D >.AC.>>.CA>.BC <8.B=.<D.B@<.DB @.<@G

5%
Chittoor Co-operative Sugars Limited
INTERPRETATION
The cash #!siti!n rati! is ina"e-&ate as there are &#s an" "!ns "&ring
the year. The a)!ve rati! in"icates that the c!m#any is &na)le t! -&ic'ly reali,e
its c&rrent lia)ilities it is n!t g!!" en!&gh.
1OR2ING CAPITAL TURNO,ER RATIO
61
53,&S
&
,
4
I
(
S
Chittoor Co-operative Sugars Limited
3!r'ing ca#ital !$ a c!ncern is "irectly relate" t! sales. The c&rrent assets
li'e "e)t!rs. )ills receiva)le. cash. an" st!c' etc.. change ith the increase !r
"ecrease in sales. The !r'ing ca#ital is ta'en as4
3!r'ing ca#ital Oc&rrent assets(c&rrent lia)ilities
This rati! in"icates the vel!city !$ the &tili,ati!n !$ net !r'ing ca#ital. This
rati! in"icates the n&m)er !$ times the !r'ing ca#ital is t&rne" !ver in the
c!&rse !$ a year. The rati! meas&res the e$$iciency ith hich the !r'ing ca#ital
is )eing &se" )y a $irm. A higher rati! in"icates the e$$icient &tili,ati!n !$ !r'ing
ca#ital an" the l! rati! in"icates ine$$icient &tili,ati!n !$ !r'ing ca#ital.
7A1E7
3ORKI0J CAPITA1 TUR0OVER RATIO O (((((((((((((((((((((((((((((((
0ET 3ORKI0J
CAPITA1
Year 0ET7A1E7 0ET 3ORKI0J
CAPITA1
RATIO
<@@<(<@@= <@.8>.GC.AD=.=C >.>=.<=.G><.BC >.A>A
<@@=(<@@> 8=.@A.8D.>=C.G8 <.8<.>>.8=G.BD C.8>=
<@@>(<@@A B.CC.A>.=C@.B@ 8.=A.=>.@DC.G= D.8>8
<@@A(<@@C 8<.=D.8B.C8C.DA 88.B8.=>.<<8.G@ 8.@=G
<@@C(<@@D =C.GG.A=.ACC.GB B.=B.CD.B<C.=> =.B<A
61
Chittoor Co-operative Sugars Limited

INTERPRETATION
This rati! in"icates the n&m)er !$ times the net sales met ith the !r'ing
ca#ital $!r the year. The t&rn!ver !$ the !r'ing ca#ital has highly increasing $r!m
<@@@(<@@8 t!<@@A(<@@C.
TOTAL ASSET TURNO,ER RATIO
62
53,&S
&
,
4
I
(
S
Chittoor Co-operative Sugars Limited
This rati! in"icates the sales generate" #er r&#ee !$ investment in t!tal assets.
Alth!&ght $i+e" assets are "irectly c!ncerne" ith the generati!n !$ sales. /&t
!ther assets als! c!ntri)&te t! the #r!"&cti!n an" sales activities !$ the $irm. The
$irm m&st manage its t!tal assets e$$iciency an" sh!&l" generate ma+im&m sales
thr!&gh their #r!#er &tili,ati!n.
The t!tal assets t&rn!ver is &se" 'n! h! many times the t!tal assets
are )eing c!nverte" int! sales. I$ sales are n!t availa)le c!st !$ g!!"s is t! )e
c!nsi"ere". It sh!s in h! many times the t!tal sales are )eing c!ncerte" int!
t!tal assets. The rati! is calc&late" )y "ivi"ing the c!st !$ g!!"s s!l" as sales )y
t!tal assets. The general #rinci#le $!r the calc&lati!n !$ this as $!ll!s
7ales
T!tal assets t&rn!ver rati! O ((((((((((((((((((
T!tal assets
YEAR NETSALES TOTALASSETS RATIO
<@@<(<@@= <@.8>.GC.AD=.=C <=.==.=@.=BA.8= @.GC=
<@@=(<@@> 8=.@A.8D.>=C.G8 8<.@B.CC.C<=.<8 8.@DG
<@@>(<@@A B.CC.A>.=C@.B@ 8>.8=.<C.@>@.>8 @.CG=
<@@A(<@@C 8<.=D.8B.C8C.DA =<.=@.8B.<GG.BB @.=G=
<@@C(<@@D =C.GG.A=.ACC.GB =8.=<.BA.G<B.8= 8.8DD
63
Chittoor Co-operative Sugars Limited
INTERPRETATION
The t!tal asset t&rn!ver rati! increase in <@@<(<@@= an" <@@=(<@@>
a$ter it "ecrease" in <@@>(<@@C an" a$ter the increase t&rn!ver rati! <@@C(<@@D.
64
53,&S
&
,
4
I
(
S
Chittoor Co-operative Sugars Limited
65
FIN$IN!S
%
S1!!ESTIONS
Chittoor Co-operative Sugars Limited
FINDINGS
In the !ver all eval&ati!n !$ the 3!r'ing Ca#ital Management at each an"
every as#ect. the $!ll!ing are the $in"ings.
8. 3!r'ing Ca#ital rati! !$ the chitt!!r C!(!#erative 7&gar 1t" is "ecreasing
in all the years hich in"icate #!!r li-&i"ity #!siti!n !$ the c!m#any.
<. Invent!ry t&rn !ver rati! !$ the Chitt!!r C!(!#erative 7&gar 1t" is g!!" in
all the A years !$ st&"y. hich in"icates the e$$icient management !$
invent!ry.
=. Fi+e" Assets t! 0et !rth Rati! !$ the Chitt!!r C!(!#erative 7&gars 1t" is
greater than 8E hich in"icates the Oner%s $&n"s are s&$$icient t!
Finance Fi+e" Assets.
>. Fi+e" Assets T&rn !ver Rati! !$ the Chitt!!r C!(!#erative 7&gar 1t" is
highest <.> in the year <@@<(@=. hich the management is e$$icient in
&tili,ing the Fi+e" Assets.
A. C&rrent rati! !$ Chitt!!r C!(!#erative 7&gars 1t" is highest C.8B in the
year <@@<(@=. hich is the management !$ e$$ective an" e$$icient &tili,ati!n
C. The c!m#any sales have )een "ecrease" in all the year.
D. The reserves an" s&r#l&s is alays acc&m&lating every year. The
c!m#any can ca#itali,e the reserves an" 7&r#l&s.
66
Chittoor Co-operative Sugars Limited
SUGGESTIONS
The c!m#any sh!&l" &tili,e the reserves an" s&r#l&s )y either
ca#itali,ing !r invest the m!ney s!me here as investment t! get
)ene$its.
The c!m#any sh!&l" maintain a"e-&ate !r'ing ca#ital
The c!m#any sh!&l" maintain the high li-&i"ity #!siti!n
The c!m#any is &n"er l!ss ,!ne. s! it nee"s s!me s&)si"y )y
g!vernment t! "evel!# its #!siti!n.
/y merging the c!m#any ith !ther #r!$ita)le c!m#any. the $irm may
Im#r!ve its #er$!rmance.
/y selling m!lasses t! !ther #lant the c!m#any can earn a""iti!nal
#r!$it.
/y &sing the s&gar can scra# the $irm can generate it%s electrically
s&##ly.
/y selling the scra# t! )i!(#lants it can generate $&n"s.
6-
Chittoor Co-operative Sugars Limited
6#
CONC1SI
ON
Chittoor Co-operative Sugars Limited
CONCLUSION
Fr!m the analysis !n the !r'ing ca#ital management at Chitt!!r C!(
!#erative 7&gar 1t". c!ncl&"e in s#ite !$ all s&ggesti!ns. the c!m#any has t!
re"&ce its #r!"&cti!n c!st t! increase #r!$it.
The invent!ry t&rn !ver is g!!" in all the $ive years. The c!m#any sh!&l"
try t! increase their sales. It sh!&l" maintain the high li-&i"ity #!siti!n. Ience.
the s&ggesti!ns given are realistic hich ill lea" t! increase in the #r!$ita)ility !$
the c!m#any. The c!m#any sh!&l" try t! ta# the mar'et an" set in )ran" val&e
an" "! the )est.
6%
Chittoor Co-operative Sugars Limited
-1
ANNE@1R
E
Chittoor Co-operative Sugars Limited
T-E C-ITTOOR CO0OPERATI,E SUGARS LIMITED// C-ITTOOR
TRADING ACCOUNT FOR T-E YEAR 3==6
PARTICULARS AMOUNT
Rs" Ps"
PARTICULARS AMOUNT
Rs" Ps"
8.OPE0I0J 7TOCK4
a; 7&gar

); M!lasses
<. PURCIA7E74
a; Fertilisers F
#estici"es
=. E+#en"it&re
"e)ita)le t! tra"ing a?c
>. C!st !$ #r!"&cti!n
Trans$erre" $r!m
Man&$act&ring
a?c
<C.88.=B.@<>.=G
G<.A<.==<.<>
8A.8<@.@@
8.DA.GC.CD=.<G
8C.G<.>>.<<@.D@
(((((((((((((((((((((
>A.A<.=D.=D@.C@
(((((((((((((((((((((
8. OPE0I0J 7TOCK4
a; 7&gar

); M!lasses
<. sales
=. Misc. inc!me
Cre"ita)le t!
Tra"ing a?c
>. Jr!ss l!ss
8B.8B.BC.B>D.G@
CB.@D.>D>.G@
<@.8>.GC.AD=.=C
8.D<.@@.=8C.A>
=.DC.>A.AAG.8@
((((((((((((((((((((((
>A.A<.=D.=D@.C@
((((((((((((((((((((((
-1
Chittoor Co-operative Sugars Limited
T-E C-ITTOOR CO0OPERATI,E SUGARS LIMITED // C-ITTOOR
*ALANCE S-EET AS ON 3==6
LIA*ILITIES Rs" ASSETS Rs"
8. 7hare ca#ital
<.2EPO7IT7 F
/ORRO3I0J74
a; 2e#!sits
); /!rr!ings
=. O&t stan"ing
Interest #aya)le
>. A"*&sting hea"s
H 2&e )y5
A. Reserves
C. U.2.P
D. A&"it $&n"
G. Reserve $&n" yet
T! )e investe"
B. Vysya )an' )alance
8@. /an' !$ In"ia
88. Canara )an'
8<. In"ian )an'
8=. In"ian !verseas
/an'
8>. 7.V. Jrameena
/an'
8A. 7tate )an' !$
In"ia
8C. Uni!n )an' !$
In"ia
8D. C2CC )an'.
Chitt!!r
8G. C!r#!rati!n )an'
1E774
2i$$erence )eteen
Assets F lia)ilites

T!tal
8>.@B.AG.D@@.@@
<.GG.=C.A=C.@A
<=.AC.8C.<8@.<G
C@.B>.>DD.B@
8G.<B.8<.@D>.<D
<8.B=.AD.8GD.GC
C>.<<C.GG
B.CBA.AD
<>.D@<.CB
( ( (
( ( (
( ( (
( ( (
( ( (
( ( (
( ( (
( ( (
( ( (
( ( (
(((((((((((((((((((((((
G8.=G.D=.G88.A@
<B.B<.8=.@@=.BG
(((((((((((((((((((((((
A8.>C.C@.G@D.A<
(((((((((((((((((((((((
8. Cash !n han"
<. /A1A0CE 3ITI
/A0K74
a; c&rrent acc!&nt
); savings acc!&nt
=. 7hares in !ther
C!(!#. instit&ti!ns
>. 2e#!sits ith
Vari!&s agencies
A. F.2%s ith )an's
C. 1!ans F a"vances
T! mem)ers
D. 1!ans t! !ther
C!(!#. s&gar
Fact!ries
G. A2J. hea"s
H"&e t!5
B. Interest receiva)le
8@. Val&e !$ assets
88. Rval&ati!n !$
Assets
8<. VA1UE OF
C1O7I0J 7TOCK4
a; 7t!res st!c's
); Pac'ing material
c; 7tati!nary
"; 7&gar
e; 7&gar in #r!cess
$; M!lasses
g; M!lasses in
#r!cess
h; FMP ra
material F $ee"
8=. 2e$icits
T!tal
8<.G=.BG@.<>
8D.8A.@BB.<D
<=.G@.8=B.BB
<.<G.AA@.@@
8<.A>.G<A.DD
<.A@.@@@.@@
C>.C8.GG=.=8
=@.@@.@@@.@@
A.>>.8<.=C8.8A
8G.<C.>GG.AD
8<.C<.@C.>C@.<<
B.AB.=@.<D8.D=
<.@<.CB.D@G.B=
8.DG.<>@.>A
<C.=DA.A@
8B.8B.BC.B>D.G@
<.A>.=G<.@D
CB.@D.>D>.G@
B.<B@.@@
<@.>D>.<@
>D.B>=.A<
((((((((((((((((((((((
A8.>C.C@.G@D.A<
((((((((((((((((((((((
-2
Chittoor Co-operative Sugars Limited
T-E C-ITTOOR CO0OPERATI,E SUGARS LIMITED// C-ITTOOR
TRADING ACCOUNT FOR T-E YEAR 3==7
PARTICULARS AMOUNT
Rs" Ps"
PARTICULARS AMOUNT
Rs" Ps"
8.OPE0I0J 7TOCK4
a; 7&gar

); M!lasses
<. E+#en"it&re
"e)ita)le t! tra"ing a?c
=. C!st !$ #r!"&cti!n
Trans$erre" $r!m
Man&$act&ring
a?c
8B.8B.BC.B>D.G@
CB.@D.>D>.G@
8.8G.>C.@DD
.>C
=.<C.8C.D@D.@@
(((((((((((((((((((((
<>.==.CD.<@D.@C
((((((((((((((((((((((
8. OPE0I0J 7TOCK4
a; 7&gar

); M!lasses
<. sales
=. Misc. inc!me
Cre"ita)le t!
Tra"ing a?c
>. Jr!ss l!ss
D.C@.@A.>>A.8@
<.GC.@B<.@@
8=.@A.8D.>=C.G8
8.8A.@8.8B@.><
<.A@.AD.C><.D=
((((((((((((((((((((((
<>.==.CD.<@D.@C
(((((((((((((((((((((((
-3
Chittoor Co-operative Sugars Limited
T-E C-ITTOOR CO0OPERATI,E SUGARS LIMITED // C-ITTOOR
*ALANCE S-EET AS ON 3==7
LIA*ILITIES Rs" ASSETS Rs"
8. 7hare ca#ital
<.2EPO7IT7 F
/ORRO3I0J74
a; 2e#!sits
); /!rr!ings
=. O&t stan"ing
Interest #aya)le
>. A"*&sting hea"s
H 2&e )y5
A. Reserves
C. U.2.P
D. A&"it $&n"
G. Reserve $&n" yet
T! )e investe"
1E774
2i$$erence )eteen
Assets F lia)ilites

T!tal
8>.@B.C@.=@@.@@
<.GG.8<.>AC.CG
<<.=G.<<.>C<.AD
<.D8.B@.CGG.>@
88.A@.<@.@D=.DG
<<.GD.<D.GG>.@8
C>.<<C.GG
B.CBA.AD
<>.D@<.CB
(((((((((((((((((((((((
DC.>C.=<.>B@.AG
=C.8G.>C.D@G.@A
(((((((((((((((((((((((
>@.<D.GA.DG<.A=
(((((((((((((((((((((((
8. Cash !n han"
<. /A1A0CE 3ITI
/A0K74
a; c&rrent acc!&nt
); savings acc!&nt
=. 7hares in !ther
C!(!#. instit&ti!ns
>. 2e#!sits ith
Vari!&s agencies
A. F.2%s ith )an's
C. 1!ans F a"vances
T! mem)ers
D. 1!ans t! !ther
C!(!#. s&gar
Fact!ries
G. A2J. hea"s
H"&e t!5
B. Interest receiva)le
8@. Val&e !$ assets
88. Rval&ati!n !$
Assets
8<. VA1UE OF
C1O7I0J 7TOCK4
a; 7t!res st!c's
); Pac'ing material
c; 7tati!nary
"; 7&gar
e; 7&gar in #r!cess
$; M!lasses
g; M!lasses in
#r!cess
h; FMP ra
material F $ee"
8=. 2e$icits
T!tal
<<.ADA.<@
8=.>B.><8.D>
8.>A.=8.DCD.D>
<.<G.AA@.@@
8<.C8.<<A.DD
<<.A@.@@@.@@
C=.GC.C<B.CB
8@.@@.@@@.@@
A.>G.B>.D@G.@G
8G.<C.>GG.AD
8<.C<.@C.>C@.<<
B.AB.=@.<D8.D=
<.@8.@@.<C>.C<
8.DG.<>@.>A
8G.CD8.@@
D.C@.@A.>>A.8@
<.=>.G@<.B@
<.GC.@B<.@@
A.DA@.@@
<@.>D>.<@
>D.B>=.A<
((((((((((((((((((((((
>@.<D.GA.DG<.A=
((((((((((((((((((((((
-4
Chittoor Co-operative Sugars Limited
T-E C-ITTOOR CO0OPERATI,E SUGARS LIMITED// C-ITTOOR
TRADING ACCOUNT FOR T-E YEAR 3==8
PARTICULARS AMOUNT
Rs" Ps"
PARTICULARS AMOUNT
Rs" Ps"
8.OPE0I0J 7TOCK4
a; 7&gar

); M!lasses
<. PURCIA7E74
a; Fertilisers F
#estici"es
=. E+#en"it&re
"e)ita)le t! tra"ing a?c
>. C!st !$ #r!"&cti!n
Trans$erre" $r!m
Man&$act&ring
a?c
D.C@.@A.>>A.8@
<.GC.@B<.@@
A.@>.@@@.@@
CB.>A.=CC.G=
88.A<.>C.=DA.8>
(((((((((((((((((((((
8B.GB.GD.<DB.@D
(((((((((((((((((((((
8. OPE0I0J 7TOCK4
a; 7&gar

); M!lasses
c; Pestici"es
<. sales
=. Misc. inc!me
Cre"ita)le t!
Tra"ing a?c
>. Jr!ss l!ss
D.GG.8C.>@>.<@
8.@C.C@.CG=.=A
=.C<.<A@.@@
B.CB.<@.=B>.=@
CB.@>.@C>.GA
A=<=>G<.=D
((((((((((((((((((((((
8B.GB.GD.<DB.@D
((((((((((((((((((((((
-5
Chittoor Co-operative Sugars Limited
T-E C-ITTOOR CO0OPERATI,E SUGARS LIMITED // C-ITTOOR
*ALANCE S-EET AS ON 3==8
LIA*ILITIES Rs" ASSETS Rs"
8. 7hare ca#ital
<.2EPO7IT7 F
/ORRO3I0J74
a; 2e#!sits
); /!rr!ings
=. O&t stan"ing
Interest #aya)le
>. A"*&sting hea"s
H 2&e )y5
A. Reserves
C. U.2.P
D. A&"it $&n"
G. Reserve $&n" yet
T! )e investe"
1E774
2i$$erence )eteen
Assets F lia)ilites


T!tal
8>.@B.C8.>@@.@@
<.B8.A>.8DB.C8
<C.C@.D=.AGD.BA
>.@A.<A.DBG.>@
8@.G8.@D.AB<.8B
<>.G@.GG.@@>.@<
C>.<<C.GG
B.CBA.AD
<>.D@<.CB
(((((((((((((((((((((((
G=.=@.@B.8GD.=8
=B.D8.@=.=<=.@=
(((((((((((((((((((((((
>=.AB.@A.GC>.<G
(((((((((((((((((((((((
8. Cash !n han"
<. /A1A0CE 3ITI
/A0K74
a; c&rrent acc!&nt
); savings acc!&nt
=. 7hares in !ther
C!(!#. instit&ti!ns
>. 2e#!sits ith
Vari!&s agencies
A. F.2%s ith )an's
C. 1!ans F a"vances
T! mem)ers
D. 1!ans t! !ther
C!(!#. s&gar
Fact!ries
G. A2J. hea"s
H"&e t!5
B. Interest receiva)le
8@. Val&e !$ assets
88. Rval&ati!n !$
Assets
8<. VA1UE OF
C1O7I0J 7TOCK4
a; 7t!res st!c's
); Pac'ing material
c; 7tati!nary
"; 7&gar
e; 7&gar in #r!cess
$; M!lasses
g; M!lasses in
#r!cess
h; Pestici"es
h; FMP ra
material F $ee"
8=. 2e$icits
T!tal
8G.DG.B=8.@C
B8.D<.GC8.=C
GB.CD.8DC.8=
<.<G.AA@.@@
8<.D8.<<A.DD
<D.A@.@@@.@@
B@.GA.<=A.B>
8@.@@.@@@.@@
C.D@.AC.A88.B>
8G.<C.>GG.AD
8<.CC.>D.A@B.<<
B.AB.=@.<D8.D=
<.@@.>C.A<@.C>
B=.8@@.@@
>=.D<C.CA
D.GG.8C.>@>.<@
((((((((
8.@C.C@.CG=.=A

(((((((((
=.C<.<A@.@@
<@.>D>.<@
>D.B>=.A<
((((((((((((((((((((((
>=.AB.@A.GC>.<G
((((((((((((((((((((((
-6
Chittoor Co-operative Sugars Limited
T-E C-ITTOOR CO0OPERATI,E SUGARS LIMITED// C-ITTOOR
TRADING ACCOUNT FOR T-E YEAR 3==9
PARTICULARS AMOUNT
Rs" Ps"
PARTICULARS AMOUNT
Rs" Ps"
8.OPE0I0J 7TOCK4
a; 7&gar

); M!lasses
c; Pestici"es
<. PURCIA7E74
a; Fertilisers F
#estici"es
=. E+#en"it&re
"e)ita)le t! tra"ing
a?c
>. C!st !$ #r!"&cti!n
Trans$erre" $r!m
Man&$act&ring
a?c
A. Jr!ss Pr!$it
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T-E C-ITTOOR CO0OPERATI,E SUGARS LIMITED// C-ITTOOR
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-#
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T-E C-ITTOOR CO0OPERATI,E SUGARS LIMITED// C-ITTOOR
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#1
Chittoor Co-operative Sugars Limited

#1
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.2
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*I*LOGRAP-Y
TIE $!ll!ing )!!'s have re$$ere" "&ring the #re#arari!n !$ this #r!*ect4(
I.M.#an"ey ( Financial management( Vi'as #&)lishing h!&se PVT 1T2.
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R.K.7harma an" 7hashi K.J&#ta (Management acc!&nting Kalyani
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A"vance" $inancial management ( P&)lishes )y "irect!r !$ st&"ies( IC3AI. 9
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#2