A PROJECT REPORT

ON
“WORKING CAPITAL MANAGEMENT
AND
ITS APPRASIAL”

BACHELOR OF BUSINESS ADMINISTRATION

PROGRAMME OF

BALASORE INSTITUTE OF TECHNICAL STUDIES

AFFILIATED TO (F.M. UNIVERSITY)

BALASORE

Submitted by- Under Guidance-

Soni Khandelwal Dhirendra Kumar Jena
BBA(Three Year) Lectuer in Finance
Batch(2010-2013) (BITS)
Roll No-63204B10006 Balasore
 GUIDE CERTIFICATE

This is to certify that the dissertation project of FINANCE Titled

“WORKING CAPITAL MANAGEMENT and ITS APPRAISAL” submitted
by Soni Khandelwal, is a 6th semester student of Department of
Business Management BITS affiliated to Fakir Mohan
University, Vyasa Vihar, Balasore, Orissa, for the partial
fulfilment of B.B.A Degree is a record of bonafide research work
carried out by him under my supervision and guidance. The
project work embodies Soni Khandelwal original contribution
and it has not been submitted anywhere else before.

I wish him all the success and bright future.

Mr. Dhirendra Kumar Jena

Lecturer in Finance & Marketing
M.Com, MBA, MSc. (IT)
 BITS

DECLARATION

I Soni Khandelwal hereby declare that the Summer-Training Project of FINANCE

Titled “WORKING CAPITAL MANAGEMENT and ITS APPRAISAL” is an
original work and that this work has not been submitted anywhere in any form.
My indebtedness to other works/publications has been duly acknowledged at the
relevant places. The project work was carried from 1st january to 31st Febuarary
2013 in SINTECH PRECISION PRODUCT LIMITED.

Date:
Signature
Soni Khandelwal
Roll No-63204B10006
 ACKNOWLEDGEMENT
Words are indeed inadequate to convey my deep sense of gratitude to all those who
have helped me in completing this project to the best of my ability. Being a part of
this project has certainly been a unique and a very productive experience on my
part.

I am really thankful to Mr. Dhirendra Kumar Jena for making all kinds of
arrangements to carry the project successfully and for guiding and helping me to
solve all kinds of quarries regarding the project work. His systematic way of working
and incomparable guidance has inspired the pace of the project to a great extent.

I would also like to thank my mentor and project – coordinator, Mr. Parminder
Singh, Asstt. Manager, (Finance & Accounts) for assigning me a project of such a
great learning experience and acquainting me with real life project financing and
appraisal.

Last but not least I would like to thank all the Friends of BITS who have directly or
indirectly helped me with their moral support for the completion of my project.

Soni Khandelwal
TABLE OF CONTENTS

CHAPTERS PAGES

1) Introduction 7-14

2) Industry Profile 15-18

3) Sintech Precision Product Ltd.– An Overview 18-28

4) Conceptual Framework 29-49

5) Working Capital Analysis and its Appraisal 50-70

6) Major Findings 71-72

7) Conclusion 73

8) Suggestions and Recommendations 74

9) Bibliography 75

10) Appendices 76-85

 ABSTRACT

This project is based on the study of working capital management in

Sintech Precision Product Ltd. An insight view of the project will
encompass – what it is all about, what it aims to achieve, what is its purpose
and scope, the various methods used for collecting data and their sources,
including literature survey done, further specifying the limitations of our
study and in the last, drawing inferences from the learning so far.
Sintech Precision Products Ltd., founded in 1986, by an enterprising
technocrat Mr. N.C.Dhingra is recognized as one of the largest pumping
solutions provider today in India. Sintech is an advanced pumping solution
provider for water intensive heavy industries. With a very diverse product
portfolio, Sintech provides solutions for multifarious applications like clear
water, process, slurry, liquid with suspended solids, sewage, acids, alkalies,
seawater and many more. Sintech has branch offices and dealership
network in throughout the nation as well as catering the international
market.
The working capital management refers to the management of working
capital, or precisely to the management of current assets. A firm’s working
capital consists of its investments in current assets, which includes short-
term assets—cash and bank balance, inventories, receivable and
marketable securities.
This project tries to evaluate how the management of working capital is
done in Sintech through inventory ratios, working capital ratios, trends,
computation of cash, inventory and working capital, and short term
financing.

INTRODUCTION

 The problems
 Purpose of study
 Research methodology
 Scope of the study
 Data sources
 Limitations
 INTRODUCTION:

The project undertaken is on ―WORKING CAPITAL MANAGEMENT IN

SINTECH PRECISION PROUCT LTD‖.
It describes about how the company manages its working capital and the
various steps that are required in the management of working capital.
Cash is the lifeline of a company. If this lifeline deteriorates, so does the
company's ability to fund operations, reinvest and meet capital
requirements and payments. Understanding a company's cash flow health
is essential to making investment decisions. A good way to judge a
company's cash flow prospects is to look at its working capital management
(WCM).
Working capital refers to the cash a business requires for day-to-day
operations or, more specifically, for financing the conversion of raw
materials into finished goods, which the company sells for payment. Among
the most important items of working capital are levels of inventory,
accounts receivable, and accounts payable. Analysts look at these items for
signs of a company's efficiency and financial strength.
The working capital is an important yardstick to measure the company’s
operational and financial efficiency. Any company should have a right
amount of cash and lines of credit for its business needs at all times.
This project describes how the management of working capital takes place at
SINTECH.
 The Problems
In the management of working capital, the firm is faced with two key
problems:

1. First, given the level of sales and the relevant cost considerations, what are
the optimal amounts of cash, accounts receivable and inventories that a
firm should choose to maintain?

2. Second, given these optimal amounts, what is the most economical way to
finance these working capital investments? To produce the best possible
results, firms should keep no unproductive assets and should finance with
the cheapest available sources of funds. Why? In general, it is quite
advantageous for the firm to invest in short term assets and to finance
short-term liabilities.
 PURPOSE OF STUDY

The objectives of this project were mainly to study the inventory, cash
and receivable at SINTECH PRECISION PRODUCT LTD., but there
are some more and they are -

 The main purpose of our study is to render a better understanding of

the concept ―Working Capital Management‖.

 To understand the planning and management of working capital at

SINTECH.
 To measure the financial soundness of the company by analyzing
various ratios.
 To suggest ways for better management and control of working
capital at the concern.
 RESEARCH METHODOLOGY

 This project requires a detailed understanding of the concept –

―Working Capital Management‖. Therefore, firstly we need to
have a clear idea of what is working capital, how it is managed in
SINTECH, what are the different ways in which the financing of
working capital is done in the company.

 The management of working capital involves managing

inventories, accounts receivable and payable and cash. Therefore
one also needs to have a sound knowledge about cash
management, inventory management and receivables
management.

 Then comes the financing of working capital requirement, i.e. how

the working capital is financed, what are the various sources
through which it is done.

 And, in the end, suggestions and recommendations on ways for

better management and control of working capital are provided.
 SCOPE OF THE STUDY

This project is vital to me in a significant way. It does have some

importance for the company too. These are as follows –

 This project will be a learning device for the finance student.

 Through this project I would study the various methods of the
working capital management.
 The project will be a learning of planning and financing working
capital.
 The project would also be an effective tool for credit policies of the
companies.
 This will show different methods of holding inventory and dealing
with cash and receivables.
 This will show the liquidity position of the company and also how do
they maintain a particular liquidity position.
 DATA SOURCES:

The following sources have been sought for the preparation report:

 Primary sources such as business magazines, current annual

reports, book on Financial Management by various authors and
internet websites the imp amongst them being :
www.sintechpumps.com, www.indiainfoline.com,
www.studyfinance.com .
 Secondary sources like previous years annual reports, CMA Data,
reports on working capital for research, analysis and comparison
of the data gathered.
 While doing this project, the data relating to working capital, cash
management, receivables management, inventory management
and short term financing was required.
 This data was gathered through the company’s websites, its
corporate intranet, Sintech’s annual reports and CMA Data of the
last three years.
 A detailed study on the actual working processes of the company
is also done through direct interaction with the employees and by
timely studying the happenings at the company.
 Also, various text books on financial management like Khan &
Jain, Prasanna Chandra and I.M.Pandey were consulted to equip
ourselves with the topic.
 LIMITATIONS OF THE STUDY:

 We cannot do comparisons with other companies unless and until we

have the data of other companies on the same subject.
 Only the printed data about the company will be available and not
the back–end details.
 Future plans of the company will not be disclosed to the trainees.
 Lastly, due to shortage of time it is not possible to cover all the
factors and details regarding the subject of study.
 The latest financial data could not be reported as the company’s
websites have not been updated.
 INDUSTRY PROFILE

 Indian Economy

 Pump Industry

 Global pump market outlook and

growth driver
 INTRODUCTION TO THE INDUSTRY

Indian Economy
In the beginning of the year 2008 the economy was on a higher growth path
with the macro-economic fundamentals inspiring confidence and a general
optimism about the medium to long term prospects of the economy. The
economy was expected to slow down marginally from the three years of 9%
plus growth in real GDP reflecting a cyclical downturn in the global economy
and expectations were that the growth would be around 8.5%. High oil prices
and domestic inflation and worsening of international financial crisis which
had surfaced in 2007 have been definite areas of concern. But the global
situation deteriorated massively after mid-September 2008 following collapse
of series of investment banks in the US. This resulted in choking of credit and
global crash in stock markets. Crisis of this magnitude in industrialized
countries has impact around the world especially in the emerging market
countries like India. The Indian economy which started with a strong economic
performance lost the momentum once the ripple effects of the gloom in the
global economy set in. Sensex in January 2008 was all time high at 21206,
came down to around 9000 towards the end. The high cost of crude oil around
US$ 150 per barrel in August, 2008 added to the country‟s woes in terms of
higher import bill. Rupee weakened against dollar sliding down from Rs.39 in
the beginning of the year to Rs.48 towards the end.

According to the estimates released by Central Statistical Organisation (CSO)

the real GDP growth was 7.6% in the second quarter of 2008-09 as compared
to 9.3% of the corresponding quarter of 2007-08, reflecting deceleration in
growth of industry and services. The agricultural production was below the
estimate. The index of industrial production recorded 3.9% as compared to
9.2% in the previous year. India‟s balance of payments position witnessed
widening of trade deficit. The crisis in global financial markets deepened since
mid September, 2008 exerting pressure on financial markets and crashing of
equity markets leading to wide spread volatility. The global turmoil in the
financial markets spilled over the emerging markets. This has finally affected
the manufacturing sector. As a result, authorities in several countries
embarked upon an unprecedented way of policy initiatives to contain
systematic risk, arrest the plunge in asset prices and shore of the confidence
in the international banking system. This has brought about some level of
stability. The Indian Government has not lagged behind. It has been successful
in bringing down inflation from 12.9% in August, 2008 to around 6% towards
the end of the year. The challenges of high growth and now global recession
have become more complex especially with increased globalization of world
economy and growing influence of global developments, economic and no
economic. Upgrading infrastructure – such as energy, roads, inflation
management, promoting growth of industrial sector, stability in financial
market, containing deficit, both domestic and external, promoting exports
amidst global recession are the major challenges that are faced by Indian
economy.

Pumps Industry

Indian pumps, catering to a range of sectors from agriculture to

nuclear power generation, are expected to capture a bigger slice of
the world market. With exports already reaching around 70
countries, the Indian pump industry is poised to register a faster
growth rate than the global average, says an industry study. The
Indian pump industry is set to grow at 6-7 percent over the next
three years (against the 4 percent of the world pump market).

The growth witnessed by the Pumps Industry was in line with the
performance of the Indian economy. The growth in these sectors
mainly came from Energy sector. This was the result of capacity
additions in Super Critical plants including Ultra Mega Plants. On
the other hand, increased forays from Chinese contractors into
Energy Sector continued to exert pressure on the demand. Demand
for Submersible pumps is weather dependent and varies with
geographical location. Growth in standard industrial pumps is
closely linked to the development in the industrial sector of the
economy. Trends in waste water sewage market are encouraging
due to increased Government spending. The earlier buoyant
demand for industrial valves tapered off in the latter part of the year
due to drop in activities in Steel and General Industry.

The industry, now holding euro 500 million worth of global market
share, "is expected to grow at a rate faster than the world pump
market growth, capturing a larger share of the market," states the
study released by the Confederation of Indian Industry
(CII). According to industry estimates, India produces around one
million pumps of various kinds. There are around 800 large,
medium and small units producing the pumps for sectors from
agriculture to nuclear power generation. "Indian pump
manufacturers are able to meet most of the domestic market
demand," said Sarita Nagpal, head of manufacturing services of CII,
which works closely with the Indian Pump Manufacturers
Association.

Exports have registered a 11 percent growth in the last two years

after reversing a negative 11.5 percent trend in 2002-03 to clock 45
percent growth in 2003-04. India has today become a reliable,
technically competent, competitive and enterprising outsourcing
option for many multinational companies in industrial pumps and
systems.

The growth story has emerged through technical collaborations

and joint ventures that Indian companies have had with
multinational majors. Technical know-how of global standard has
thus been well absorbed.
In addition, various research institutes such as the Small Industries
Testing and Research Centre (Si'Tarc) in Coimbatore, have
developed energy-efficient designs for pumps to meet the norms of
Indian standards.

The Indian pump industry has an outstanding record of indigenous

research and development in all three areas of technological
intensities - from mass-produced pumps for agriculture to gigantic
pumps for interlinking rivers, and pumps for critical services such
as nuclear power generation. The Bureau of Indian Standards has
developed 42 specifications for indigenous pumps.
GLOBAL PUMP MARKET OUTLOOK AND GROWTH DRIVERS

The world pump market is governed by the demand in United States, European
Union and Japan. With these countries burdened by recession, market
forecasts up to 2013 have been revised to a compounded average growth rate
of just 0.3% from 3-4%. The global market for centrifugal pumps in 2009 and
2010 is likely to contract, while that for positive displacement pumps will post
good gains. Consolidation of players in the pump industry through mergers
and acquisitions, may catch momentum in 2009 -10 in spite of the present
recessionary trends.

Although water and sewage, power, building services, industry, oil and gas are
major drivers of the global pump market, for KBL, water, power and irrigation
will continue to be chief market drivers.

Factors affecting growth of the global pump industry:

 Per capita availability of water in Asia is less than other continents; and
it will continue to grow rapidly, thus increasing demand for delivery and
treatment of that water. Rising consumption with decreasing supplies of
uncontaminated water is pushing up the market of desalination plants
for treating seawater.

 Urbanization of Asia has seen relocation of more than one billion

migrants from villages to cities. This is creating pressure on the existing
infrastructure including delivery of utility water and removal and
treatment of wastewater.

 Most governments in Asia and in Africa are likely to increase their
spending on infrastructure projects like irrigation and drinking water
schemes.

 The world is moving towards energy efficient products and services to

be able to sustain the growth rates achieved in the past few years with
petroleum being the primary energy source.
Sintech Precision Product Ltd. – An Overview
 Company’s Profile

 Vision, Misson & Quality

 Product Range

 Key Players

 Sectoral Overview

Introduction to the Company

Company Profile

Sintech Precision Products Ltd., founded in 1986, by an enterprising

technocrat Mr. N.C.Dhingra is recognized as one of the largest pumping
solutions provider today in India. With headquarters located in NCR of India,
Ghaziabad, Sintech Precision Products Ltd has built a strong presence in the
domestic market over the past three decades.

Sintech is an advanced pumping solution provider for water intensive heavy

industries. With a very diverse product portfolio, Sintech provides solutions
for multifarious applications like clear water, process, slurry, liquid with
suspended solids, sewage, acids, alkalies, seawater and many more. Sintech
has branch offices and dealership network in throughout the nation as well as
catering the international market.

With tremendous growth potential in future pumping technology market,

Sintech Precision Products Ltd has acquired certification from Moody
International based in UK, who operates in terms of the UKAS license
requirements. Our system is regularly audited for compliance to these
International Standards.

Sintech Precision Products Ltd. an ISO 9001 certified company is now a

leading & respected pump manufacturer in India. Sintech make pumps are
manufactured as per DIN-24256/ISO-2858/IS – 5120 /HIS/IS - 1520 standards
and tested as per IS-9137, API-610 & ISO – 2548 standards. Sintech make
pumps constitutes of highly standardized and is designed with modular
structures and offers the best possible interchangeability. This largely reduces
spares inventory. Sintech has a high production system with two
Manufacturing units.
Sintech Precision Products Ltd. has now expanded in all type of pumps
suitable for diverse multifarious applications like clear water, process, slurry,
liquid with suspended solids, sewage, acids, alkalies, sea water and many
more application.
Till date “SINTECH” has supplied thousands of pumps for various critical and
non critical applications, which are working quietly and efficiently to the entire
customer satisfaction.

Vision

Sintech seeks to be recognised as the Innovator and thought leader of

pumping related products and technologies in domestic and global markets.
Mission

 Improve customer returns

 Create value through a culture of excellence
 Innovate product and service delivery
 Imbibe Quality as company‟s bloodline

Quality

Sintech Precision Products Ltd „s Q3 model is a move in that direction.

Principally based on three quality-integrated pillars, the Q3 model reflects the
inside out approach of the organization, that incorporates -

Q1 Applied engineering expertise

Q2 Superior pumping capabilities
Q3 Exceptional service

QUALITY ASSURANCE PROCEDURES

Our Quality Assurance Department is manned by qualified engineers to ensure

completion of raw materials and final pumps with relevant quality norms. The
activities are divided into raw material inspection, in-process inspection and
final inspection.

Sintech Precision Products Limited has in house facilities and equipments

required for ensuring quality, such as –

 Hydrostatic machine for hydrostatic test of the casing

 Dynamic balancing machine for dynamic balancing of the impeller.

For non-destructive testing such as ultrasonic test magnetic particle test

inspection is carries out through external reputed agencies.A well laid test
field for performance testing having sophisticated flow meter with digital
display by which flow of the liquid can be tested accurately is available at our
works.

Product Range
Type Design Rating Application/Sector

 Boiler Feed
 Mine De-watering
Capacity : upto 1,000  Water Supply
SMS m3/hr  Jockey
Head upto 1,100 m  Condensate Transfer
Multistage Pump  Descaling Operations

 Industrial and
Municipal Water
Supply
 Cooling Towers
 Injection Water
Capacity : upto 10,000
SCS &  Spray Pond
m3/hr
SCSD  Air-conditioning
Head upto 180 m
Horizontal Split  Water
Casing Pump  Treatment Plant
 Fire Fighting
 Irrigation

 Water Supply
 Drip Irrigation
 Cooling Tower
 Condensate handling
 Air-conditioning
 Fire Fighting
Capacity : upto 1,000
SWP &  Service Water
m3/hr
CPS  Chemical Process
Head upto 140 m
Water Pump  Effluent Treatment
Process Pump  Hydrocarbon
 Viscous Liquid
 Acids Juice Pump
 Distillery

 Sea Water
Capacity : upto 20,000  River Water
SAF m3/hr  Canal Water
Head upto 10 m  Sewage
Axial Flow Pump
  Sewage
 Effluent Treatment
 Unscreened Juice
 Slurry
 Drainage
Capacity : upto 2,000
 River water
SSHQ m3/hr
 Sludge
Head upto 60 m
 Grain Wash
Non Clog Pump  Syrup
 Melt
 Mud

 Injection Water
 Sewage
Capacity : upto 7,000  Effluent Treatment
SMF m3/hr  Drainage
Head upto 45 m  River Water
Mixed Flow Pump  Water Supply

 General Water
Supply
 Cooling Tower
SVT Capacity : upto 20,000
 Spray and Injection
SVMF m3/hr
Water
SVAF Vertical Turbine Head upto 300 m
 Irrigation
Vertical Mixed  Hydropower
Flow
Vertical Axial Flow
 Chemicals
 Pharmaceuticals
Free Air Capacity :  Food
upto 4,975 m3/hr  Sugar
SV
Vacuum upto 685  Plastic
Liquid Ring mmHg  Paper
Vacuum  Pulp
Pump

 Thick Viscous Liquid

 Dyes
Capacity : upto 150  Coaltar
SGP m3/hr  Mollasses
Head upto 100 m  Soaps
Gear Pump  Paint
 Capacity : upto 100  Thick Mollasses
ST m3/hr  Highly Viscous Liquid
Head upto 50 m
Lobe Pump
/ Star Pump
 Abrasive Slurries
 Sewage
 Industrial Waste
 Sugar
 Pulp and Paper
 Steel
Capacity : upto 1,500
 Power
STF m3/hr
 Fibre
Head upto 100 m
Torque Flow  Textile
Pump  Waste Water
 Grain Wash
 Solid Handling
 Cement Aquaculture

EB Capacity : upto 100  Massecuite

& m3/hr  Magma
EBM Head upto 50 m
Rota Pump

 Sump Drainage
Capacity : upto 250  Dewatering
SSPL m3/hr  Ash Slurry
Head upto 50 m  Wet Scrubber
Self Priming
Pump

SECTORAL OVERVIEW

Power
This business group caters to the needs of power industry - conventional and
renewable. Considering the chronic shortage of power, this sector is bound to
emerge as a major market driver for decades to come. The Power group is
proud
to have successfully completed the sump model test of cooling water system
for India's first ultra mega power project of 4000 MegaWatt (5 x 800 MW) at
Kirloskarvadi. Orders received include:

 Raka Saudia Power & Water - SWRO Barge Project

Co. Ltd.
 Bhakra Beas Management
Board (P.W.)
 Shri Chamundeswari Sugars
 Clear Water Limited
 Clear Water Limited
- Pong Power Project
- Co-gen Plant Limited
(Through Avant Garde)
- 2x250 MW Korba East
- 2x210 MW Rayalaseema
TPS Stage II, Unit 3 & 4

Water Resource Management

This business group addresses the needs of water supply, water treatment and
waste water treatment segments. Water, like power is a major market driver for
the pump industry and equipment peripheral to water industry. Water stressed
regions in the world are on the rise, thanks to uncurbed urbanization, growing
industrialization, increasing pollution levels and absence of sufficient teeth to
the
legislation to deal with water pollution across the world. India is no exception.
Such a scenario demands better and better water management, with latest
technologies, cheaper methods and sustainable operations.
This business group continues to serve municipal corporations, water and
sewerage boards of India. Delhi Jalboard's Vishwakarma project, Nagpur
municipal corporation's Gorewada and Mahadula projects and Maharashtra Jal
Pradhikaran's Malegaon project went on stream this year.

We made significant in-roads in waste water treatment segment in India as well

as overseas, based on the Gondwana Engineers Limited's strengths. Orders
received include:

 Steel Authority of India Llimted, Bhilai for a 30 million liters per day
(MLD) sewage treatment plant
 Vadodara municipal Sewa Sadan for a 8.5 MLD sewage treatment plant
 Pune municipal corporation for a 40 MLD sewage treatment plant
Sugar Industry

Some prestigious projects in sugar industry are:

 Balrampur Chini Mills Limited – Khumbi Project

 Balrampur Chini Mills Limited
 Bajaj Hindusthan Limited
 Bajaj Hindusthan Limited
 Uttam Sugar Mills Limited
 Uttam Sugar Mills Limited
– Gularia Project
- Kinauni Project
- Kinauni Expansion
- Barkatpur Project
- Shermau Project

Paper / Etp / Chemical / Food

Some prestigious projects in Paper / Etp / Chemical / Food are:

 Satyam Industries Pvt. Ltd - Panipat Project

 Clear Water Limited
 Clear Water Limited
 Ghaziabad Organics Ltd.
 Adinath Enterprises
 Winsor Sathyam Engineering
- Bhiwadi Project
- Kanoria Chemical &
Indus.Ltd.
- Ghaziabad Project
- FMC – Satnam Agro Project
- Bombay Rayon Fashion

Steel

Some prestigious projects in steel industry are:

 Maa Chinnamastika Steel & - Steel Project Power

Limited
 IST Steel & Power Limited - Bellary Project
  Shri Mahavir Ferro Alloys P Ltd. - Rourkela Project

Mines

Some prestigious projects in mines industry are:

 Singareni Colleries Co. Ltd. - 15 HP

 Singareni Colleries Co. Ltd. - 40 HP
 Singareni Colleries Co. Ltd. - 75 HP
 Singareni Colleries Co. Ltd. - 125 HP

WORKING CAPITAL MANAGEMENT

CONCEPTUAL FRAMEWORK
 Introduction
 Significance of working capital management
 Liquidity Vs. profitability: Risk – Return trade
off
 Classification of working capital
 Types of working capital needs
 Factors determining working capital
requirements
 Working capital cycle
 Sources of working capital
 Working capital position
 Inventory management
 Cash management
 Receivables management
 Managing payables (Creditors)
 Financing current assets
 Working capital & short-term financing
 Financing Current Assets
 Introduction to working capital

“Working Capital is the Life-Blood and Controlling Nerve Center of a

business”
The working capital management precisely refers to management of current
assets. A firm‟s working capital consists of its investment in current assets,
which include short-term assets such as:
 Cash and bank balance,
 Inventories,
 Receivables (including debtors and bills),
 Marketable securities.
 Working capital is commonly defined as the difference between current
assets and current liabilities.

Working Capital = Current Assets-Current Liabilities

There are two major concepts of working capital:

 Gross working capital
 Net working capital

 Gross working capital:

It refers to firm's investment in current assets. Current assets are the
assets, which can be converted into cash with in a financial year. The gross
working capital points to the need of arranging funds to finance current
assets.
 Net working capital:
It refers to the difference between current assets and current liabilities. Net
working capital can be positive or negative. A positive net working capital
will arise when current assets exceed current liabilities. And vice-versa for
negative net working capital. Net working capital is a qualitative concept. It
indicates the liquidity position of the firm and suggests the extent to which
working capital needs may be financed by permanent sources of funds. Net
working capital also covers the question of judicious mix of long-term and
short-term funds for financing current assets.

Significance Of Working Capital Management

PAYMENT
TO
SUPPLIER
EASY S DIVIDEND
LOAN DISTRIBU-
FROM TION
BANKS SIGNIFICA
N--CE OF
WORKING
INCREASE CAPITAL
INCREASE
EFFECIENY DEBT
CAPACITY
INCREASE
IN FIX
ASSETS
The management of working capital is important for several reasons:
 For one thing, the current assets of a typical manufacturing firm account
for half of its total assets. For a distribution company, they account for
even more.
 Working capital requires continuous day to day supervision. Working
capital has the effect on company's risk, return and share prices,
 There is an inevitable relationship between sales growth and the level of
current assets. The target sales level can be achieved only if supported by
adequate working capital Inefficient working capital management may lead
to insolvency of the firm if it is not in a position to meet its liabilities and
commitments.

Liquidity Vs Profitability: Risk - Return trade off

Another important aspect of a working capital policy is to maintain and

provide sufficient liquidity to the firm. Like the most corporate financial
decisions, the decision on how much working capital be maintained involves
a trade off- having a large net working capital may reduce the liquidity risk
faced by a firm, but it can have a negative effect on the cash flows. Therefore,
the net effect on the value of the firm should be used to determine the optimal
amount of working capital.
Sound working capital involves two fundamental decisions for the firm. They
are the determination of:
 The optimal level of investments in current assets.
 The appropriate mix of short-term and long-term financing used to
support this investment in current assets, a firm should decide
whether or not it should use short-term financing. If short-term
financing has to be used, the firm must determine its portion in total
financing. Short-term financing may be preferred over long-term
financing for two reasons:
 The cost advantage
 Flexibility
But short-term financing is more risky than long-term financing. Following
table will summarize our discussion of short-term versus long-term financing

Maintaining a policy of short term financing for short term or temporary

assets needs (Box 1) and long- term financing for long term or permanent
assets needs (Box 3) would comprise a set of moderate risk –profitability
strategies. But what one gains by following alternative strategies (like by box
2 or box 4) needs to weighed against what you give up.
 CLASSIFICATION OF WORKING CAPITAL
Working capital can be classified as follows:
On the basis of time
On the basis of concept
 Types of Working Capital Needs

Another important aspect of working capital management is to analyze

the total working capital needs of the firm in order to find out the
permanent and temporary working capital. Working capital is required
because of existence of operating cycle. The lengthier the operating
cycle, greater would be the need for working capital. The operating
cycle is a continuous process and therefore, the working capital is
needed constantly and regularly. However, the magnitude and quantum
of working capital required will not be same all the times, rather it will
fluctuate.

The need for current assets tends to shift over time. Some of these
changes reflect permanent changes in the firm as is the case when the
inventory and receivables increases as the firm grows and the sales
become higher and higher. Other changes are seasonal, as is the case
with increased inventory required for a particular festival season. Still
others are random reflecting the uncertainty associated with growth in
sales due to firm's specific or general economic factors.

The working capital needs can be bifurcated as:

 Permanent working capital
 Temporary working capital
 Permanent working capital:
There is always a minimum level of working capital, which is
continuously required by a firm in order to maintain its activities. Every
firm must have a minimum of cash, stock and other current assets, this
minimum level of current assets, which must be maintained by any firm
all the times, is known as permanent working capital for that firm. This
amount of working capital is constantly and regularly required in the
same way as fixed assets are required. So, it may also be called fixed
working capital.
 Temporary working capital:
Any amount over and above the permanent level of working capital is
temporary, fluctuating or variable working capital. The position of the
required working capital is needed to meet fluctuations in demand
consequent upon changes in production and sales as a result of
seasonal changes.

The permanent level is constant while the temporary working capital is

fluctuating increasing and decreasing in accordance with seasonal
demands as shown in the figure. In the case of an expanding firm, the
permanent working capital line may not be horizontal. This is because
the demand for permanent current assets might be increasing (or
decreasing) to support a rising level of activity. In that case line would
be rising.

FACTORS DETERMINING WORKING CAPITAL REQUIREMENTS

There are many factors that determine working capital needs of an

enterprise. Some of these factors are explained below:
 Nature or Character of Business.
The working capital requirement of a firm is closely related to
the nature of its business. A service firm, like an electricity
undertaking or a transport corporation, which has a short
operating cycle and which sells predominantly on cash basis,
has a modest working capital requirement. Oh the other hand,
a manufacturing concern like a machine tools unit, which has a
long operating cycle and which sells largely on credit, has a
very substantial working capital requirement.
Sintech is a manufacturing concern so this requires them to
keep a very sizeable amount in working capital.

 Size of Business/Scale of Operations.

Sintech has a good position in its segment and they are also
spending their operations in the domestic market as well as in
foreign market. The scale of operations and the size it holds in
the market makes it a must for them to hold their inventory and
current asset at a huge level.

 Rate of Growth of Business.

The rate of growth of sales indicates a need for increase in the
working capital requirements of the firm. As the firm is
projected to increase their sales by 69% from what it was in
2009, it is required to guard them against the increasing
requirements of the net current asset by way of efficient
working capital management. The sales and projected sales
level determine the investment in inventories and receivables.
  Price Level Changes.
Changes in the price level also affect the working capital
requirements. It was the reduced margins in the price of the raw
materials that had prompted them to go for bulk purchases thus
making on additions to their net current assets. They might
have gone for this large-scale procurement for availing
discounts and anticipating a rise in prices, which would have
meant that more funds are required to maintain the same
current assets.

SOURCES OF WORKING CAPITAL

Sintech has the following banks available for the fulfillment of its
working capital requirements in order to carry on its operations
smoothly:
 Banks:
These include the following banks –
o Indian Bank
o Syndicate Bank

NAME OF THE BANK FUND BASED NON-FUND BASED

INDIAN BANK 300 250

SYNDICATE BANK 200 100
TOTAL 500 350
 WORKING CAPITAL CYCLE

The upper portion of the diagram below shows in a simplified form the
chain of events in a manufacturing firm. Each of the boxes in the upper
part of the diagram can be seen as a tank through which funds flow.
These tanks, which are concerned with day-to-day activities, have
funds constantly flowing into and out of them.

CASH RAW
MATERIAL

DEBTORS & OPERATING CYCLE

BILLS WORK IN
RECEIVABL- PROGRESS
ES

SALES
FINISH
GOODS

 The chain starts with the firm buying raw materials on credit.
 In due course this stock will be used in production, work will be
carried out on the stock, and it will become part of the firm‟s work-in-
progress.
 Work will continue on the WIP until it eventually emerges as the
finished product.
 As production progresses, labor costs and overheads need have to
be met.
 Of course at some stage trade creditors will need to be paid.
 When the finished goods are sold on credit, debtors are increased.
 They will eventually pay, so that cash will be injected into the firm.

Each of the areas- Stock (raw materials, WIP, and finished goods), trade
debtors, cash (positive or negative) and trade creditors – can be viewed
as tanks into and from which funds flow.
Working capital is clearly not the only aspect of a business that affects
the amount of cash.

 The business will have to make payments to government for taxation.

 Fixed assets will be purchased and sold
 Lessors of fixed assets will be paid their rent
 Shareholders (existing or new) may provide new funds in the form of
cash
 Some shares may be redeemed for cash
 Dividends may be paid
 Long-term loan creditors (existing or new) may provide loan finance,
loans will need to be repaid from time-to-time, and
 Interest obligations will have to be met by the business

Unlike, movements in the working capital items, most of these „non-

working capital‟ cash transactions are not every day events. Some of
them are annual events (e.g. tax payments, lease payments, dividends,
interest and, possibly, fixed asset purchases and sales). Others (e.g.
new equity and loan finance and redemption of old equity and loan
finance) would typically be rarer events.
 INVENTORY MANAGEMENT
Inventories

Inventories constitute the most important part of the current assets of

large majority of companies. On an average the inventories are
approximately 60% of the current assets in public limited companies in
India. Because of the large size of inventories maintained by the firms, a
considerable amount of funds is committed to them. It is therefore,
imperative to manage the inventories efficiently and effectively in order
to avoid unnecessary investment.

Nature of Inventories

Inventories are stock of the product of the company is manufacturing for

sale and components make up of the product. The various forms of the
inventories in the manufacturing companies are:

 Raw Material: It is the basic input that is converted into the

finished product through the manufacturing process. Raw
materials are those units which have been purchased and stored
for future production.

 Work-in-progress: Inventories are semi-manufactured products.

They represent product that need more work they become
finished products for sale.

 Finished Goods: Inventories are those completely manufactured

products which are ready for sale. Stocks of raw materials and
work-in-progress facilitate production, while stock of finished
goods is required for smooth marketing operations. Thus,
inventories serve as a link between the production and
consumption of goods.
Inventory Management Techniques

In managing inventories, the firm‟s objective should be to be in

consonance with the shareholder wealth maximization principle. To
achieve this, the firm should determine the optimum level of inventory.
Efficiently controlled inventories make the firm flexible. Inefficient
inventory control results in unbalanced inventory and inflexibility-the
firm may sometimes run out of stock and sometimes pile up
unnecessary stocks.

Economic Order Quantity (EOQ): The major problem to be

resolved is how much the inventory should be added when
inventory is replenished. If the firm is buying raw materials, it has
to decide lots in which it has to purchase on replenishment. If the
firm is planning a production run, the issue is how much
production to schedule. These problems are called order quantity
problems, and the task of the firm is to determine the optimum or
economic lot size. Determine an optimum level involves two
types of costs:-
 Ordering Costs: This term is used in case of raw material
and includes all the cost of acquiring raw material. They
include the costs incurred in the following activities:
 Requisition
 Purchase Ordering
 Transporting
 Receiving
 Inspecting
 Storing

Ordering cost increase with the number of orders placed;

thus the more frequently inventory is acquired, the higher
the firm‟s ordering costs. On the other hand, if the firm
maintains large inventory‟s level, there will be few orders
placed and ordering costs will be relatively small. Thus,
ordering costs decrease with the increasing size of
inventory.

 Carrying Costs: Costs are incurred for maintaining a

given level of inventory are called carrying costs. These
include the following activities:
 Warehousing Cost
 Handling
 Administrative cost
 Insurance
 Deterioration and obsolescence
 Carrying costs are varying with inventory size. This
behavior is contrary to that of ordering costs which decline
with increase in inventory size. The economic size of
inventory would thus depend on trade-off between carrying
costs and ordering cost.

 ABC System:

ABC system of inventory keeping is followed in the factories.

Various items are categorized into three different levels in the
order of their importance. For e.g. items such as memory, high
capacity processors and royalty are placed in the „A‟ category.
Large number of firms has to maintain several types of
inventories. It is not desirable the same degree of control all the
items. The firm should pay maximum attention to those items
whose value is highest. The firm should therefore, classify
inventories to identify which items should receive the most effort
in controlling. The firm should be selective in approach to control
investment in various types of inventories. This analytical
approach is called “ABC Analysis”. The high-value items are
classified as “A items” and would be under tightest control. “C
items” represent relatively least value and would require simple
control. “ B items” fall in between the two categories and require
reasonable attention of management.
 CASH MANAGEMENT
Sources of Cash:
Sources of additional working capital include the following:
 Existing cash reserves
 Profits (when you secure it as cash!)
 Payables (credit from suppliers)
 New equity or loans from shareholders
 Bank overdrafts or lines of credit.
 Long-term loans
If you have insufficient working capital and try to increase sales, you
can easily over-stretch the financial resources of the business. This is
called overtrading.
Early warning signs include:
 Pressure on existing cash
 Exceptional cash generating activities e.g. offering high
discounts for early cash payment
 Bank overdraft exceeds authorized limit.
 Seeking greater overdrafts or lines of credit
 Part-paying suppliers or other creditors
 Paying bills in cash to secure additional supplies
 Management pre-occupation with surviving rather than
managing
 Frequent short-term emergency requests to the bank (to help
pay wages, pending receipt of a cheque).
CASH MANAGEMENT IN SINTECH PRECISION PRODUCT
LTD.

The cash management system followed by the SINTECH is mainly lock

box system.
Cash Management System involves the following steps:

1. The branch offices of the company at various locations hold the

collection of cheques of the customers.
2. Those cheques are either handed over to the CMS agencies or
bank of the particular location take charge of whole collection.
3. These CMS agencies or bank send those cheques to the clearing
house to make them realized. These cheques can be local or
outstation.
4. The CMS agencies or bank send information to the central hub of
the company regarding realization/cheque bounced.
5. The central hub passes on the realized funds to the company as
per the agreed agreements.
6. The CMS agencies or concerned bank provides the necessary MIS
to the company as per requirement.

In cash management the collect float taken for the cheques to be

realized into cash is irrelevant and non-interfering because banks such
as Standard Chartered, HDFC and CitiBank who give credit on the basis
of these cheques after charging a very small amount. These credits are
given to immediately and the maximum time taken might be just a day.
The amount they charge is very low and this might cover the threat of
the cheque sent in by two or three customers bouncing. Even otherwise
the time taken for the cheques to be processed is instantaneous. Their
Cash Management System is quite efficient.
 RECEIVABLES MANAGEMENT
Cash flow can be significantly enhanced if the amounts owing to a
business are collected faster. Every business needs to know.... who
owes them money.... how much is owed.... how long it is owing.... for
what it is owed.

Late payments erode profits and can lead to bad debts.

Slow payment has a crippling effect on business; in particular on
small businesses whom can least afford it. If you don't manage
debtors, they will begin to manage your business as you will
gradually lose control due to reduced cash flow and, of course, you
could experience an increased incidence of bad debt.

The following measures will help manage debtors:

1. Have the right mental attitude to the control of credit and make
sure that it gets the priority it deserves.
2. Establish clear credit practices as a matter of company policy.
3. Make sure that these practices are clearly understood by staff,
suppliers and customers.
4. Be professional when accepting new accounts, and especially
largerones.
5. Check out each customer thoroughly before you offer credit. Use
credit agencies, bank references, industry sources etc.
6. Establish credit limits for each customer and stick to them.
7. Continuously review these limits when you suspect tough times
are coming or if operating in a volatile sector.
8. Keep very close to your larger customers.
9. Invoice promptly and clearly.
10. Consider charging penalties on overdue accounts.
11. Consider accepting credit /debit cards as a payment option.
12. Monitor your debtor balances and aging schedules, and don't let
any debts get too old.
Debtors due over 90 days (unless within agreed credit terms) should
generally demand immediate attention. Look for the warning signs of a
future bad debt. For example…..
1. Longer credit terms taken with approval, particularly for smaller
orders.
2. Use of post-dated checks by debtors who normally settle within
agreed terms.
3. Evidence of customers switching to additional suppliers for the
same goods.
4. New customers who are reluctant to give credit references.
5. Receiving part payments from debtors.

Here are few ways in collecting money from debtors: -

 Develop appropriate procedures for handling late payments.

 Track and pursue late payers
 Get external help if you own efforts fail.
 Don‟t feel guilty asking for money... It‟s yours and you are entitled
to it.
 Make that call now. And keep asking until you get some
satisfaction.
 In difficult circumstances, take what you can now and agree terms
for the remainder, it lessens the problem.
 When asking for your money, be hard on the issue – but soft on the
person. Don‟t give the debtor any excuses for not paying.
 Make that your objective is to get the money, not to score points or
get even.
 MANAGING PAYABLES (Creditors)

Creditors are a vital part of effective cash management and should be

managed carefully to enhance the cash position.
Purchasing initiates cash outflows and an over-zealous purchasing
function can create liquidity problems.

Consider the following: -

 Who authorizes purchasing in your company - is it tightly managed

or spread among a number of (junior) people?
 Are purchase quantities geared to demand forecasts?
 Do you use order quantities, which take account of stock holding
and purchasing costs?
 Do you know the cost to the company of carrying stock?
 How many of your suppliers have a return policy?
 Are you in a position to pass on cost increases quickly through
price increases to your customers?
 If a supplier of goods or services lets you down can you charge
back the cost of the delay?

There is an old adage in business that "if you can buy well then you
can sell well". Management of your creditors and suppliers is just as
important as the management of your debtors. It is important to look
after your creditors- slow payment by you may create ill feeling and
can signal that your company is inefficient (or in trouble!).
Remember that a good supplier is someone who will work with you to
enhance the future viability and profitability of your company.
 Financing Current Assets

The firm has to decide about the sources of funds, which can be
availed to make investment in current assets.
Long term financing:
It includes ordinary share capital, preference share capital, debentures,
long term borrowings from financial institutions and reserves and
surplus.
Short term financing:
It is for a period less than one year and includes working capital funds
from banks, public deposits, commercial paper etc.
Depending on the mix of short and long term financing, the company
can follow any of the following approaches.
Matching Approach
In this, the firm follows a financial plan, which matches the expected
life of assets with the expected life of source of funds raised to finance
assets. When the firm follows this approach, long term financing will
be used to finance fixed assets and permanent current assets and
short term financing to finance temporary or variable current assets.
Conservative Approach
In this, the firm finances its permanent assets and also a part of
temporary current assets with long term financing. In the periods when
the firm has no need for temporary current assets, the long-term funds
can be invested in tradable securities to conserve liquidity. In this the
firm has less risk of facing the problem of shortage of funds.

Aggressive Approach

In this, the firm uses more short term financing than warranted by the
matching plan. Under an aggressive plan, the firm finances a part of its
current assets with short term financing.
 WORKING CAPITAL POSITION ANALYSIS IN SINTECH PRECISION
PRODUCT LIMITED

 Net working Capital ( CURRENT ASSETS – CURRENT LIABILITIES)

(Rs.in lacks)

YEAR 31.03.10 31.03.11 31.03.12

CURRENT ASSETS

INVENTORIES 180.26 291.13 653.95

SUNDRY DEBTORS 114.33 390.84 219.79
CASH AND BANK 10.81 34.30 28.22
OTHER CURRENT ASSETS 6.67 28.08 21.99
-
LOANS & ADVANCES 21.44 78.74 83.92
-------------- -------------- ---------------
TOTAL CURRENT ASSESTS 333.51 823.09 1008.67
-------------- -------------- ---------------

LESS:-

CURRENT LIABILITIES AND PROVISIONS

Short term borrowing 94.54 336.70 315.76

Sundry creditors 159.49 256.33
305.99
Advanced received 25.30 18.16 59.88
Provisions 21.56 59.05 64.05
Instalments of term loan 14.66 21.11 72.00
Other current liabilities 16.82 29.36 70.34
-------------- -------------- -----------
---
TOTAL CURRENT LIABILITIES 332.37 720.71 888.02
---------------- ---------------- ------------
---

NET WORKING CAPITAL 1.14 102.38 120.65

52
 NET WORKING CAPITAL
140
120.65
120
102.38
100
AMOUNT(IN LACKS)

80

60

40

20
1.14
0
2010 2011 2012
YEAR

Data Interpretation

If we analysis the three years working capital position of the company, we find out that
company has sufficient working capital to meets its short term liability, it is good
indicator for the company but in 2011, working capital is increased by 101.24 lacs which
shows that a sufficient amount has been blocked in working capital which could be used
for some other more beneficial purpose.

53
INVENTORY ANALYSIS

Inventory means stock of three things :-

1. Raw materials
2. Semi finished goods.
3. Finished goods.

Position of inventory in Sintech Precision Product Ltd.

(Rs.in lacks)

YEAR 31.03.10 31.03.11 31.03.12

Stores, Spare Parts etc. 10.10 .87

25.57
Stock In trade-
Finished Goods 37.04 26.93
41.76
Raw Materials 78.74 184.53
340.08
Material under process 54.38 78.80
246.54
--------------- ---------------- ---------------
180.26 291.13 653.95
------------------- ---------------- -------------
Analysis through chart:

700

600

500

400
AMOUNT (IN
LACKS)
300

200

100

0
2010 2011 2012
YEAR

54
INTERPRETATION:

By analyzing the 3 years data, We are looking increasing pattern in inventories. We can
see that inventories are increased from 180.26 lacs to 291 lacs in the year 2008 and in the
year 2009 it is increased from 291 lacs to 653 lacs. By seeing this pattern we can say that
the company is managing the inventory according to the sale. Company has a great
demand for the pump in the year 2010 that is biggest reason for increase in inventories.
From other point of view we can say that the liquidity of firm is blocked in inventories but
to stock is very good due to uncertainty of availability of raw material in time.

SUNDRY DEBTORS ANALYSIS

Debtors or an account receivable is an important component of working capital and fall
under current assets. Debtors will arise only when credit sales are made.

Position of Sintech Precision Product Ltd.

(Rs.in lacks)

YEAR 31.03.10 31.03.11 31.03.12

Sundry Debtors 114.33 390.84

219.79

------------- ------------- --------

114.33 390.84 219.79
--------------- ---------------- ----------

55
Analysis through chart:

400
350
300
250
AMOUNT ( IN
200
LACKS)
150
100
50
0
2010 2011 2012
YEAR

INTERPRETATION

In the table and figure we see that there is rise in the debtors in the year 2010 and
decrease in the year 2011. A simple logic is that debtors increase only when sales
increase and decrease if sales decrease. In the year 2008, sales is increased by 72.30%
and decreased by 19.24% in the year 2012.
We can say that it is a good sign as well as negative also. Company policy of debtors is
very good but a risk of bad debts is always present in high debtors. When sales is
increasing with a great speed the profit also increases. If company decreases the
Debtors they can use the money in many investment plans.

56
CASH AND BANK BALANCE ANALYSIS
Cash is called the most liquid asset an vital current assets, it is an important component
of working capital. In a narrow sense, cash includes notes, bank draft, cheque etc while
in a broader sense it includes near cash assets such as marketable securities and time
deposits with bank.

Position of Cash and Bank Balance in Sintech Precision Product Limited

(Rs.in lacks)

YEAR 31.03.10 31.03.11 31.03.12

Cash Balance in hand 1.45 27.30 2.90

Bank Balance-
With Scheduled Banks 9.36 7.00 26.12
------------- ------------- ------------
10.81 34.30 29.02
------------- ------------- ------------

Analysis through chart:

35
30
25
AMOUNT ( IN 20
LACKS ) 15
10
5
0
2010 2011 2012
YEAR

INTERPRETATION

If we analyze the above table and chart we find that it follows a uneven pattern. In the
year 2010 it had maintained a low amount of cash and bank balance. But in the year
2011, cash and the bank balances has increased from 10.81 lacs to 34.30 lacs which is
not a good sign for the company because it shows that company is not using its cash for
beneficial activities. Although, in the year 2012, cash has reduced from 34.30 lacs to
29.02 lacs but this is very good sign for company because they are not holding the cash
in hand but using the cash for better projects, but still it is not conducive. From the other
point of view, company will not face the problem of liquidity as company is maintaining
the cash balance.

57
LOANS AND ADVANCES ANALYSIS

Loans and Advances here refers to any to amount given to different parties, company,
employees for a specific period of time and in return they will be liable to make timely
repayment of that amount in addition to interest on that loan.

Position of Other Loans & Advances in Sintech Precision Product Limited

(Rs.in lacks)

YEAR 31.03.10 31.03.11 31.03.12

Advances to suppliers 10.91 39.69

44.62
Advances 10.53 39.05
39.30
Deposits 6.67 28.08 21.99
--------------- --------------- ------------
28.11 106.82 105.91
-------------- ---------------- -----------

Analysis through chart:

120
100
80
AMOUNT ( IN
60
LACKS )
40
20
0
2010 2011 2012
YEAR

INTERPRETATION

If we analyze the table and the chart we can see that it follows an increasing trend which
is a good sign for the company. We can see that from the year 2010 to 2011 it increased
more than triple. We can see that the increase of 275% and 6.08% in 07-08 and 10-11
respectively from previous year.

The increasing pattern shows that company is giving advances for the expansion of
plants and machinery which is good sign for better production of pumps and other
goods. Although company‟s cash is blocked but this is good that company is doing
modernization of plants In time to compete with other competitors in market.

58
CURRENT LIABILITIES ANALYSIS
Current liabilities are any liabilities that are incurred by the firm on a short term basis or
current liabilities that has to be paid by the firm with in one year.

Position of Other Current Liabilities in Sintech Precision Product Limited

(Rs.in lacks)

YEAR 31.03.10 31.03.11 31.03.12

Current Liabilities –
Sundry Creditors 159.49 256.33 305.99
Bank Loan 94.54 336.70 315.76
Advance Received 25.30 18.16 59.88
Provisions for taxes 21.56 59.05 64.05
Other Liabilities 16.82 29.36 70.34
----------------- ----------------- ----------------
-
332.37 720.71 888.02
----------------- ----------------- ----------------
-

Analysis through chart:

1000
800

AMOUNT ( IN 600
LACKS ) 400
200
0
2010 2011 2012
YEAR

INTERPRETATION

If we analyze the above table then we can see that it follow an uneven trend. The
important component of current liabilities is sundry creditors and other liabilities. In 07-
08 it decreased from 359.41 lacs to 256.33 lacs and in 11-12 it increased from 256.33 lacs
to 305.99 lacs. This is liability for company so this should be less. when company have
minimum liabilities it creates a better goodwill in market. High current liabilities indicate
that company is using credit facilities by creditors.

59
SUNDRY CREDITORS ANALYSIS
Creditors or an account payable is an important component of working capital and fall
under current liability. Creditors will arise only when credit purchases are made.

Position of Sundry Creditors in Sintech Precision Product Limited

(Rs.in lacks)

YEAR 31.03.10 31.03.11 31.03.12

Sundry Creditors 159.49 256.33

305.99
------------- ------------- ---------
159.49 256.33 305.99

--------------- ---------------- ----------

Analysis through chart:

350
300
250

AMOUNT ( IN 200
LACKS) 150
100
50
0
2010 2011 2012
YEAR

INTERPRETATION

In the table and figure we see that there is continuous rise in the creditors in the
company in the successive years. A simple logic is that creditors increase only when
purchases increase and if purchase increases on credit it is not good sign for growth.
This is liability for company so this should be less. When company has minimum
liabilities it creates a better goodwill in market. High current liabilities indicate that
company is using credit facilities by creditors.

60
BANK LOANS AND ADVANCES ANALYSIS

Position of Bank Loans & Advances in Birla Corporation Limited

(Rs.in
lacks)

YEAR 31.03.10 31.03.11 31.03.12

Bank Loan 94.54 336.70 315.76

Advances from the customers 25.30 18.16 59.88
--------------- --------------- ------------
122.84 354.86 375.64
-------------- ---------------- -----------

Analysis through chart:

400
350
300
250
AMOUNT ( IN
200
LACKS )
150
100
50
0
2010 2011 2012
YEAR

INTERPRETATION

If we analyze the table and the chart we can see that it follows an increasing trend which
is not a good sign for the company. We can see that from the year 2010 to 2011 it
increased more than double. The increasing pattern shows that company is taking loan
for the expansion of plants and machinerecy which is not a good sign because company
depends on the external source. On the other hand, company has reduced the bank loan
in 2012 and increase in advances received from the customer; this is good sign for
company.

61
PROVISIONS ANALYSIS
Position of Other Provisions in Sintech Precision Product Limited
(Rs.in lacks)

YEAR 31.03.10 31.03.11 31.03.12

Provision for Taxes 21.56 59.05 64.05

--------------- --------------- -------------
21.56 59.05 64.05
--------------- ---------------- ------------

Analysis through chart:

70

60

50

40
AMOUNT ( IN
LACKS )
30

20

10

0
2010 2011 2012
YEAR

INTERPRETATION

From the above table we can see that provision shows an increasing trend and the huge
amount is being kept in these provisions. Though the profits of the company are
increased income tax is also increased which is good that company is creating goodwill
in market by paying income tax in time. Although company is paying more income tax
but also they are earning more. Other provisions are also for the benefit of employees
and public. This is good sign for Company growth.

62
63
Position of WORKING CAPITAL RATIO in Sintech Precision Product Limited

FORMULA

INVENTORY + RECIVEABLE - PAYABLE

WORKING CAPITAL RATIO= -------------------------------------------------------------
(AS % OF SALES) SALES

YEAR 31.03.10 31.03.11 31.03.12

WORKING CAPITAL RATIO 18 32 53

Analysis through chart:

60
50
40
AS %

30
20
10
0
2010 2011 2012
YEAR

INTERPRETATION

This ratio indicates whether the investments in current assets or net current assets ( i.e.,
working capital ) have been properly utilized. In order words it shows the relationship
between sales and working capital. Higher the ratio lower is the investment in working
capital and higher is the profitability. But too high ratio indicates over trading.

64
This ratio is an important indicator about the working capital position. Now if we analyze
the three years data, we find that it follows an increasing trend which means that its
investment in working capital is lower and the company is utilizing more of its profit. But
we find that ratio is increasing at a very fast rate which is not a good sign for the
company and the company is required to look into these matters closely.

Position of CURRENT RATIO in Sintech Precision Product Limited

FORMULA
TOTAL CURRENT ASSETS
CURRENT RATIO= --------------------------------------------
TOTAL CURRENT LIABILITIES

YEAR 31.03.10 31.03.11 31.03.12

CURRENT RATIO 1.00 1.14 1.14

Analysis through chart:

1.2
1.15
1.1
1.05
1
0.95
0.9
2010 2011 2012
YAER

INTERPRETATION

This ratio reflects the financial stability of the enterprise. The standard of the normal
ratio is 2:1 but in most of companies‟ standard is taken according to Tandon Committee
which is taken as 1.33:1.
Now if we analyze the three years data it can be predicted that it holds a stable position
all through out period but it is seen that it holds a low position than the standard one and
the company is required to improve its position.

65
Position of QUICK RATIO in Sintech Precision Product Limited

FORMULA

TOTAL CURRENT ASSETS - INVENTORIES

QUICK RATIO= -----------------------------------------------------------------
TOTAL CURRENT LIABILITIES

YEAR 31.03.10 31.03.11 31.03.12

QUICK RATIO 0.46 0.74 0.40

Analysis through chart:

0.8
0.7
0.6
0.5
0.4
0.3
0.2
0.1
0
2010 2011 2012
YEAR

INTERPRETATION

It is the ratio between quick liquid assets and quick liabilities. The normal value for such
ratio is taken to be 1:1. It is used as an assessment tool for testing the liquidity position
of the firm. It indicates the relationship between strictly liquid assets whose realizable
value is almost certain on one hand and strictly liquid liabilities on the other hand. Liquid
assets comprise all current assets minus stock.

By analyzing the three years data it can be said that its position was weak in the year
2010 but it improved significantly in the next year and again it is declined during the
2012. It is to be said that it does not meet with the standard but in the year 2011 it was
very close to the standard and it can be said that its liquidity position is not good &
stable.

66
Position of CURRENT ASSETS TO FIXED ASSETS RATIO in Sintech Precision Product
Limited

FORMULA
CURRENT ASSETS
CA TO FA RATIO = -----------------------------
FIXED ASSETS

YEAR 31.03.10 31.03.11 31.03.12

CATO FA RATIO 1.65 2.93 3.21

Analysis through chart:

3.5
3
2.5
DAYS

2
1.5
1
0.5
0
2010 2011 2012
YEAR

INTERPRETATION

Assuming a constant level of fixed assets, a higher CA/FA ratio indicates a conservative
current assets policy and a lower CA/FA ratio means an aggressive current assets policy
assuming other factors to be constant. A conservative policy i.e. higher CA/FA ratio
implies greater liquidity and lower risk; while an aggressive policy i.e. lower CA/FA ratio
indicates higher risk and poor liquidity.

Now if we analyze the three year data we find the CA TO FA Ration in increasing pattern,
so we can say that company is following the conservative policy to finance its short term
capital requirement.

67
Position of INVENTORY TURNOVER RATIO in Sintech Precision Product Limited

FORMULA

AVERAGE STOCK
STOCK TURN OVER RATIO ( IN DAYS )= --------------------------------------- * 365
COST OF GOODS SOLD

YEAR 31.03.10 31.03.11 31.03.12

INVENTORY TURNOVER RATIO 104 79 227

( in Days)

Analysis through chart:

250
200
DAYS

150
100
50
0
2010 2011 2012
YEAR

INTERPRETATION

This ratio tells the story by which stock is converted into sales. A high stock turnover
ratio reveals the liquidity of the inventory i.e., how many times on an average, inventory
is turned over or sold during the year. If a firm maintains a minimum stock level in order
to maximize sales by quick rotation of inventory and the holding cost of inventory will be
minimum. A low stock turn over ratio reveals undesirable accumulation of obsolete
stock.

By analyzing the three year data it seen that it follows an uneven trend. We see that it is
reduced to 79 from the 104 days in 2011 and in 2012 it is increased by 148 days, Which is
not a good indicator for the company. Company should have to reduce the inventory
conversion period in order to reduce the cost.

68
Position of RECEIVABLE RATIO in Sintech Precision Product Limited

FORMULA
DEBTORS
RECEIVABLE RATIO = ---------------- * 365
SALES

YEAR 31.03.10 31.03.11 31.03.12

RECEIVABLE RATIO (IN DAYS) 54 70 104

Analysis through chart:

120

100

80
DAYS

60

40

20

0
2010 2011 2012
YEAR

INTERPRETATION

Generally a low debtor‟s turnover ratio implies that it considered congenial for the
business as it implies better cash flow. The ratio indicates the time at which the debts
are collected on an average during the year. Needless to say that a high Debtors
Turnover Ratio implies a shorter collection period which indicates prompt payment made
by the customer.

Now if we analyze the three year data we can say that it holds a good position while
receiving its money from its debtors. The ratios are in a decreasing ternd, which implies
that recovery position is not good company and Company have to reduce the receivable
period.

69
Position of PAYABLE RATIO in Sintech Precision Product Limited

FORMULA
CREDITORS
PAYABLE RATIO= ----------------------------- * 365
COST OF SALES

YEAR 31.03.10 31.03.11 31.03.12

PAYABLE RATIO (IN DAYS) 92 69 135

Analysis through chart:

160
140
120
100
DAYS

80
60
40
20
0
2010 2011 2012
YAER

INTERPRETATION

Actually this ratio reveals the ability of the firm to avail the credit facility from the
suppliers throughout the year. Generally a low creditor‟s turnover ratio implies favorable
since the firm enjoys lengthy credit period
Now if we analyze the three years data we find that in the year 2011 the
ratio was very high which means that its position of creditors that year was not good, but
in the 2012 it is seen that it has followed a decreasing trend which is very good sign for
the company. So we can say it enjoys a very good credit facility from the from the
suppliers.

70
Position of Operating Cycle in Sintech Precision Product Limited

Formula = Inventory Conversion Period + Receivable Conversion Period – Deferral

Period

Calculation of Operating Cycle at Sintech:- ( All Figures in Days)

Particulars 2010-11 2011-12 2012-13

ICP 104 79 227
RCP 54 70 104
Gross Operating 158 149 431
Cycle
DP 92 69 135
Net OP 66 80 296

Analysis through chart:

350
300
250
Days

200
150
100
50
0
2010-11 2011-12 2012-13
YEAR

Interpretation

When a company has lower d/e ratio, it means that company is utilizing its own funds
and reserves rather than taking loans from outsiders. Company have a uneven trend in
d/e ratio. In the year 2010 it was 1.02 but in the year 2011 it is declined to .55 so we can
say that now company is using more its fund as compare to previous year, but still the
ratio is high. Company has to reduce the ratio.

71
 MAJOR FINDINGS
Statement Showing Difference from Previous Year
(amt. in lacks)

Particulars 10-11 11-12

Working Capital 102 121
↑ by 5000% ↑ by
19%
Sales 1323 -1069
↑ by 72% ↓ by
19.10%
Current Assets 823 1009
Sundry Debtors 391 220 ↑ by 146% ↑ by
↑ by 243% ↓ by 44% 23%

Inventories 291 654

↑ by 62% ↑ by 125%

Cash & Bank 34 -29

↑ by 209% ↓ by 15%

Bank Loan and 107 106

Advances ↑by 269% ↓ by .93
Current Liabilities 721 888
↑ by 117% ↑ by
Sundry Creditors 256 306 23%
↓ by 42% ↑ by 19.53%

Bank Loan and 355 376

Advances ↑by 196% ↑by 6%

Provisions & 80.16 136

Deposits ↑by121.31% ↑by70%

Other Liabilities 29.36 70.34

↓ by 74.55% ↑ by 139.5%

72
1. Working Capital is increased by 19% only in 2011-12 as compare to 5000%
increase in 2010-11 and if we analysis the working capital with sales, the sales is
decreased by 19% in 2011-12, that‟s why working capital is increased by 19% only.

2. Current assets and Current liabilities are increased by 23% in 2011-12 as compare
to previous year but current assets are increased by 146% in 2010-11 as compare
to 117% increase in current liabilities, so we can say that working capital is
increased because of increase in current assets.

1. Inventory is increased by 125% in 2011-12 as compare to 2010-11, so

we can say that current assets are increased due to the increase in
the inventory.

2. Cash and the bank balances are decreased by 15% which shows
company might face the liquidity problem.

3. Debtors are decreased by 44% in 2011-12 whereas creditors are

increased by 19.37% in 2008-09, which shows that company enjoys
the good payable period and goodwill among the creditors.

4. Bank loan and Advances are increased by 6% only as compare to

196% increase in 2010-11, which shows that company using more of
its debt to fund the short term requirements.

3. Operating cycle of the company is increasing which shows the poor

Receivable collection policy.

73
 CONCLUDING ANAYSIS

 The working capital position of the company is sound and the various
sources through which it is funded are optimal.
 The company has used its purchasing, financing and investment decisions to
good effect can be seen from the inferences made earlier in the project.
 The debts doubtful have been doubled over the years but their percentage
on the debts has almost become half. This implies a sales and collection
policy that get along with the receivables management of the firm.
 The various ratios calculated are an indicator as to the fact that the
profitability of the firm and sales are on a rise and also the deletion of the
inefficiencies in the working capital management.
 The firm has not compromised on profitability despite the high liquidity is
commendable.
 Sintech Precision Product Ltd. has reached a position where the default
costs are as low as negligible and where they can readily factor their
accounts receivables for availing finance is noteworthy.

74
 SUGGESTIONS AND RECOMMENDATIONS

The management of working capital plays a vital role in running of a successful

business. So, things should go with a proper understanding for managing cash,
receivables and inventory.
Sintech Precision Product Ltd. is managing its working capital in a good manner,
but still there is some scope for improvement in its management. This can help the
company in raising its profit level by making less investment in accounts
receivables and stocks etc. This will ultimately improve the efficiency of its
operations. Following are few recommendations given to the company in achieving
its desired objectives:

The business runs successfully with adequate amount of the working capital
but the company should see to it that the cash should not be tied up in
excessive amount of working capital.
Though the present collection system is near perfect, the company as due to
the increasing sales should adopt more effective measures so as to counter the
threat of bad debts.
The over purchasing function should be avoided as it could lead to liquidity
problems.
The investment of cash in marketable securities should be increased, as it is
very profitable for the company.
Holding of excessive and insufficient stock must be avoided as it creates a
burden on the cash resources of a business and results in lost sales, delays for
customers, etc respectively.

75
 BIBLIOGRAPHY

Following sources have been sought for the preparation of this report:
Corporate Intranet
Financial Statements (Annual Reports)
CMA Data
Direct interaction with the employees of the company
Internet ----
o www.sintechpumps.co.in
o www.scribd.com
o www.indianpumpsindustry.com
Textbooks on financial management -
 I.M.Pandey
 Khan and Jain

76
77
CRITICAL MANAGEMENT ANALYSIS DATA (CMA)
BALANCE SHEET
LIABILITIES STATEMENT

Sheet 1 AS PER BALANCE SHEET AS AT 31st MARCH

Lacs
Sintech Precision Products 2010 2011 2012 2013
Limited Aud Aud Est. Proj
CURRENT LIABILITIES I II III IV

Short-term borrowings from

banks(including bills purchased,
discounted & excess borrowing
placed on repayment basis)
(i.) From applicant banks 0.00 336.70 400.00 400.00

(ii.) From other banks 94.54 0.00 0.00 0.00

(iii) Of which BP & BD

SUB TOTAL 94.54 336.70 400.00 400.00

Short term borrowings from others

Sundry Creditors (Trade) 159.49 256.33 90.77 133.33

Advance payments from custo- 25.30 18.16 20.00 50.00

mers/deposits from dealers

Provision for taxes 21.56 59.05 8.05 30.68

Dividend payable

Other statutory liabilities

(due within one year)

Deposits/instalments of term 14.66 58.55 43.76 24.53

loans/DPGs/Debentures,etc.
(due within one year)
Other current liabilities &
provisions(due within 1 Yr)
(specify major items) 16.82 29.36 25.00 30.00
Liabilities for Expenses 16.82 29.36 25.00 30.00

SUB-TOTAL (B) 237.83 421.45 187.58 268.54

TOTAL CURRENT LIABILITIES 332.37 758.15 587.58 668.54

78
TERM LIABILITIES
Rs. In
----------------------------------- Lacs
Sintech Precision Products 2010 2011 2012 2013
Form III : Sheet 2 Aud Aud Aud Est. Proj
Debentures (not maturing
within one year)

Preference shares
(redeemable after one year)

Term loans(excluding instalment) 5.84 0.00 0.00 0.00

payable within one year)

Deferred Payment Credits(car Loans) 16.20 95.93 27.97 3.44

(excluding instalments due
within one year)
Term deposits (repayable 68.51 60.25 180.25 180.25
after one year)
Other term liabilities 0.00 0.00 0.00 0.00

TOTAL TERM LIABILITIES 90.55 156.18 208.22 183.69

TOTAL OUTSIDE LIABILITIES 422.92 914.33 795.80 852.23

NET WORTH
-------------------------

Ordinary share capital 24.91 24.91 44.91 44.91

General reserve

Revaluation reserve

Other reserve (excluding

provisions)
Surplus (+) or deficit (-) in 73.56 85.50 112.45 204.50
Profit & Loss Account
Others (specify)
Deferred Tax Liability 15.13 23.32 23.32 23.32
Share Application Money 0.70 0.00 0.00 0.00
Share Premium 0.00 0.00 80.00 80.00

NET WORTH 114.30 133.73 260.68 352.73

TOTAL LIABILITIES 537.22 1048.06 1056.48 1204.96

Closing Balance Of TL(Check) 20.50 58.55 43.76 24.53

79
Sintech Precision Products Rs. in Lacs
FIXED ASSETS 2010 2011 2012 2013
Form III : Sheet 4 Aud Aud Est. Proj
Gross Block(Land & Building 228.40 255.94 285.94 285.94
machinery, work-in-process)
Depreciation to date 29.41 47.86 66.46 85.06
NET BLOCK 198.99 208.08 219.48 200.88

Investment/bookdebts/advances/ 3.61 16.70 73.20 13.20

deposits which are not current
assets
(i) a) Investment in subsidiary
Co./affiliates
b) Other Investments
(ii) Advances to suppliers of 0.00 0.00 0.00 0.00
capital goods & contractors
(iii)Deferred receivables (maturity
exceeding one year)
(iv)Others (a) Debtors> 6 months 2.72 13.50 70.00 10.00
(b) Security Deposits 0.89 3.20 3.20 3.20
(c) Others
Non-consumables stores &
spares
Other non-current assets incl- 1.11 0.00 0.00 0.00
uding dues from Directors
TOTAL OTHER NON-CURR. ASSETS 4.72 16.70 73.20 13.20
Intangible assets (patents, 0.00 0.00 0.00 0.00
goodwill, prelim.expenses, bad/
doubtful exp.not provided for etc)
TOTAL ASSETS(34+37+41+42) 537.22 1047.87 1056.29 1204.77

80
 ASSESSMENT OF WORKING CAPITAL REQUIREMENT

FORM II : OPERATING STATEMENT

----------------------------------------------------
Sheet 1
Amount
in Lacs
Branch INDIAN BANK, GHAZIABAD
As per profit and loss account actuals/
estimates for the year ending 31st March
Sintech Precision Products 2010 2011 2012 2013
Limited Aud Aud Est. Proj
1 GROSS SALES I II III IV

i. Domestic sales 871.45 1458.04 1529.71 2206.00

ii. Export sales 0.00 0.00 0.00 0.00

Add other revenue income
Job Work 3.73 3.14 5.00 8.50
Total 875.18 1461.18 1534.71 2214.50

2 Less excise duty 107.19 137.86 129.71 206.00

Deduct other items

3 Net sales ( item 1 - item 2 ) 767.99 1323.32 1405.00 2008.50

4 % age rise (+) or fall (-) in net 75.59 72.31 6.17 42.95
sales compared to previous
year (annualized)
5 Cost of Sales

i.) Raw materials (including 476.99 682.05 874.00 1210.00

stores and other items used
in the process of manufacture)
(a) imported

(b) Indigenous 476.99 682.05 874.00 1210.00

ii) Other spares 72.87 111.85 139.00 193.00

(a) Imported

(b) Indigenous 72.87 111.85 139.00 193.00

iii) Power and fuel 12.53 17.34 21.85 31.25

iv) Direct labour 8.34 61.24 74.25 78.75

(Factory wages & salary)
v) Other mfg. Expenses 64.42 99.52 124.00 172.00
vi) Depreciation 9.56 18.45 18.60 18.60

vii) SUB TOTAL (I TO VI) 644.71 990.45 1251.70 1703.60

viii) ADD: Opening stocks-in-Process) 72.46 54.38 78.80 148.25

Sub-total 717.17 1044.83 1330.50 1851.85

81
 Form II : Sheet 2 2010 2011 2012 2013
Sintech Precision Products Aud Aud Est. Proj
ix) Deduct : Closing stocks-in-
Process 54.38 78.80 148.25 205.75

x) Cost of Production 662.79 966.03 1182.25 1646.10

xi) Add : Opening stock of
finished goods 3.19 37.04 26.93 71.35

SUB-TOTAL 665.98 1003.07 1209.18 1717.45

xii) Deduct closing stock of
finished goods 37.04 26.93 71.35 100.88

xiii) SUB-TOTAL (Total cost of Sales) 628.94 976.14 1137.83 1616.57

6 Selling general and administrative
Expenses 82.59 143.09 158.00 190.00

7 SUB-TOTAL (5+6) 711.53 1119.23 1295.83 1806.57

8 Operating profit before interest 56.46 204.09 109.17 201.93

( 3-7 )

9 Interest 12.31 60.23 76.17 81.20

10 Operating profit after interest (8-9) 44.15 143.86 33.00 120.73

11 (i) Add other non-operating income
(a) Bank Interest on FDRs 0.15 1.43 2.00 2.00
(b)
(c)
(d)
Sub-total ( income ) 0.15 1.43 2.00 2.00
(ii) Deduct other non-operating expenses

(a) P&P expense inncluding 0.09 0.00 0.00 0.00

all book entries written off
(b)
Sub-total ( expenses ) 0.09 0.00 0.00 0.00
(iii) Net of other non-operating 0.06 1.43 2.00 2.00
income/expenses
12 Profit before tax/loss[10+11(iii)] 44.21 145.29 35.00 122.73

13 Provision for taxes 17.13 12.62 8.05 30.68

14 Prior Years Adjustment(if any)# 0.00 0.00 0.00 0.00
15 Net profit/loss for the year ( 12-13 ) 27.08 132.67 26.95 92.05
16 (a) Equity dividend paid-amt
(Already paid+ B.S. provision)
(b) Dividend Rate
17 Retained profit ( 14-15 ) 27.08 132.67 26.95 92.05
18 Retained profit/Net profit (% age) 100.00 100.00 100.00 100.00
# (-)ve for expense/provisions and (+) ve for gains

82
FUND FLOW STATEMENT
FUND FLOW (DETAILED)

Sintech Precision Products Lacs

Limited 2010 2011 2012 2013
1 SOURCES Aud Aud Est. Proj
a. Net Profit (After Tax) 27.08 132.67 26.95 92.05
b. Depreciation 9.55 18.45 18.60 18.60
c Increase in Capital (incl. Share Premium) 0.00 0.00 100.00 0.00
d. Increase In TL. Incl.public deposits 46.75 65.63 52.04 0.00
e. Decrease in
i.) Fixed Assets 0.00 0.00 0.00 0.00
ii.) Other Non Current Assets 3.94 0.00 0.00 60.00
f Others 2.20 7.41 0.00 0.00
g. Total 89.52 224.16 197.59 170.65

2 USES
a. Net Loss 0.00 0.00 0.00 0.00
b. Dec.in Term Liab. incl. Pub.Dep. 0.00 0.00 0.00 24.53
c. Increase in
i) Fixed Assets 86.19 27.54 30.00 0.00
ii) Other Non current assets 0.00 11.98 56.50 0.00
d. Dividend Payment 0.00 0.00 0.00 0.00
e Others 0.00 0.00 0.00 0.00
f Total 86.19 39.52 86.50 24.53
FUNDS FLOW STATEMENT
(Summary)
Lacs
2010 2011 2012 2013
Particulars Aud Aud Est. Proj
3 I Long Term Surplus/Deficit 3.33 184.64 111.09 146.12
4 ii Increase/decrease in Curr. Assts. 119.17 489.58 -59.48 227.08
-
5 iii Inc./Dec. in CL other than BB 86.63 183.62 233.87 80.96
6 iv Inc./Dec. in WC Gap 32.54 305.96 174.39 146.12
-
7 v Net Surplus (+) Deficit (-) -29.21 121.32 -63.30 0.00
8 vi Inc./Dec. in Bank Borrowings 29.21 242.16 63.30 0.00

83
 FUNDS FLOW STATEMENT

Lacs
2010 2011 2012 2013
Particulars Aud Aud Est. Proj

Long Term Sources 89.52 224.16 197.59 170.65

Long Term Uses 86.19 39.52 86.50 24.53
Surplus/Deficit 3.33 184.64 111.09 146.12

Movement of TNW (Corporate)

Lacs
2010 2011 2012 2013
Particulars Aud Aud Est. Proj

Opening balance 84.93 108.61 248.69 375.64

1 Add.
i Profit/(-)Loss after Tax 27.08 132.67 26.95 92.05
ii Increase in Capital 0.00 0.00 100.00 0.00
iii Dec./(-) Inc.in Intangible Assets 0.09 0.00 0.00 0.00
iv Inc../(-) \ Dec.in Reserves 2.20 7.41 0.00 0.00
v. Adjust prior year expenses -0.07 0.00 0.00 0.00
2 Less
Div Paid(Incl.Div.Tax)/ Withdrawals 0.00 0.00 0.00 0.00
TNW 114.30 248.69 375.64 467.69

FUND FLOW (DETAILED)

Sintech Precision Products Lacs

Limited 2010 2011 2012 2013
1 SOURCES Aud Aud Aud Est. Proj
a. Net Profit (After Tax) 0.00 132.67 26.95 92.05
b. Depreciation 9.55 18.45 18.60 18.60
c Increase in Capital (incl. Share Premium) 0.00 0.00 100.00 0.00
d. Increase In TL. Incl.public deposits 0.00 65.63 52.04 0.00
e. Decrease in
i.) Fixed Assets 0.00 0.00 0.00 0.00
ii.) Other Non Current Assets 0.00 0.00 0.00 60.00
f Others 0.00 7.41 0.00 0.00
g. Total 9.55 224.16 197.59 170.65

84
2 USES
a. Net Loss 5.69 0.00 0.00 0.00
b. Dec.in Term Liab. incl. Pub.Dep. 0.00 0.00 0.00 24.53
c. Increase in
i) Fixed Assets 0.00 27.54 30.00 0.00
ii) Other Non current assets 0.00 11.98 56.50 0.00
d. Dividend Payment 0.00 0.00 0.00 0.00
e Others 0.00 0.00 0.00 0.00
f Total 5.69 39.52 86.50 24.53

FUNDS FLOW STATEMENT

(Summary)
Lacs
2010 2011 2012 2013
Au
Particulars d Aud Aud Est. Proj
184.6 111.0 146.1
3 I Long Term Surplus/Deficit 3.86 4 9 2
489.5 227.0
4 ii Increase/decrease in Curr. Assts. 0.00 8 -59.48 8
-
183.6 233.8
5 iii Inc./Dec. in CL other than BB 0.00 2 7 80.96
i 305.9 174.3 146.1
6 v Inc./Dec. in WC Gap 0.00 6 9 2
-
121.3
7 v Net Surplus (+) Deficit (-) 3.86 2 -63.30 0.00
v 242.1
8 i Inc./Dec. in Bank Borrowings 0.00 6 63.30 0.00

FUNDS FLOW STATEMENT

Lacs
2010 2011 2012 2013
Au
Particulars d Aud Aud Est. Proj

224.1 197.5 170.6

Long Term Sources 9.55 6 9 5
Long Term Uses 5.69 39.52 86.50 24.53
184.6 111.0 146.1
Surplus/Deficit 3.86 4 9 2

85