A PROJECT REPORT ON CRITICAL ANALYSIS OF WORKING CAPITAL MANAGEMENT OF AUTOMOTIVE DIVISION OF MAHINDRA & MAHINDRA LTD.

SUBMITTED TO

RASHTRASANT TUKADOJI MAHARAJ NAGPUR UNIVERSITY NAGPUR IN PARTIAL FULFILMENT FOR AWARD OF BACHELOR OF BUSINESS ADMINISTRATION Submitted by
Mr. NASHIR

GUIDE CO-ORDINATOR
Mr. PANKAJ P. RAUT Dr. R.D. MEHTA

VMV COMMERCE, JMT ARTS & JJP SCIENCE COLLEGE WARDHAMAN NAGAR, Nagpur-08 (2011-2012)

CERTIFICATE

This is to certify that Mr. Nashir Bonafied Student of the Bachelor of Business Administration (BBA) course, Specialization in FINANCIAL MANAGEMENT, session 2010-2011, of the VMV COMMERCE, JMT ART, & JJP SCIENCE, COLLEGE WARDHAMAN NAGAR, NAGPUR.

The candidate has worked under the supervision of MR. PANKAJ RAUT and has satisfactory conducted project work for not less than one academic session. The project submitted by him is his own work and is complete so as to warrant its presentation for examination. This project work entitled CRITICAL ANALYSIS OF WORKING CAPITAL MANAGEMENT OF

AUTOMOTIVE DIVISION OF MAHINDRA & MAHINDRA LTD Which is in LTD partial fulfillment requirement for the above course, is being forwarded to

MR. PANKAJ RAUT (PROJECT GUIDE) (CO-ORDINATOR)

DR.R.D.MEHTA

I Nashir hereby declare that with the exception of the suggestion and guidance received from my supervisor a this project titled CRITICAL ANALYSIS OF WORKING CAPITAL

MANAGEMENT OF AUTOMOTIVE DIVISION OF MAHINDRA & MAHINDRA LTD is my original work. This dissertation as one, LTD which is substantially the same as this has not been submitted by me for any other examination of this university or any other university.

NAGPUR DATE: -

Mr. - Nashir

This project is the outcome of the help and encouragement provided by all faculty members, who were a continuous source of inspiration and who guided me in all my endeavors. I take this opportunity to thank all those who were a great support behind this project and without their unconditional support this project on this paper would not have been completed. First of all I would like to thank my parents for giving me back-up and full support in completing this project. My heartfelt gratitude to Prof Head of Department, VMV COMMERCE, JMT ART, & JJP SCIENCE, COLLEGE WARDHAMAN NAGAR, NAGPUR for making available all the resources. I am indebted to MR. PANKAJ RAUT my chief guide without whose support and timely suggestion this report would not have been completed. I express my sincere thanks to other staff members of my institute who directly or indirectly helped me in preparation of my project. Last but not least I would like to thank all those who are not mentioned, but whose contribution has been instrumental towards completion on of this project. Nashir (BBA IIIrd year)

INDEX

SR. NO. 1 2 3 4 5

NAME OF THE CHAPTER INTRODUCTUION OF FINANCIAL MANAGEMENT OBJECTIVE OF THE STUDY COMPANY PROFILE HYPOTHESIS RESEARCH METHODOLOGY

PAGE NO.

6 7 8 9 10

STUDY OF TOP RATED MUTUAL FUND DATA ANALYSIS AND INTERPRETATION CONCLUSION & SUGGESTIONS BIBLIOGRAPHY QUESTIONNAIRE

INTRODUCTION OF MAHINDRA AND MAHINDRA LTD.

COMPANY HISTORY:
Few groups can identify as closely with India's destiny and industrial progress as the Mahindra Group. In fact, Mahindra is like a microcosm of India. Both were born around the same time, had the same aspirations and both experienced the inevitable troughs and crests in the journey towards their goals. And both continue to march on the path to progress and global recognition.

The birth of Mahindra & Mahindra began when K.C. Mahindra visited the United States of America as Chairman of the India Supply Mission. He met Barney Roos, inventor of the rugged 'general purpose vehicle' or Jeep and had a flash of inspiration: wouldn't a vehicle that had proved its invincibility on the battlefields of World War II be ideal for India's rugged terrain and its kutcharural roads?

Swift action followed this thought. The Mahindra brothers joined hands with a distinguished gentleman called Ghulam Mohammed & on October 2nd, 1945,

Mahindra & Mohammed was set up as a franchise for assembling Jeeps from Willys, USA. Two years later, India became an independent nation and Mahindra & Mohammed changed its name to Mahindra & Mahindra. Ghulam Mohammed migrated to Pakistan post-partition and became the first Finance Minister of Pakistan Since then, Mahindra & Mahindra has grown steadily in size and stature and evolved into a Group that occupies a premier position in almost all key sectors of the economy. The Group's history is studded with milestones. Each one taking the Group forward. In fact, today, its total turnover is about 6.3 billion dollars. Mahindra is a group in a hurry, engaged in an ambitious, sustained and prolonged penetration into the global arena. Its spirit can be encapsulated in the words of the poet Robert Frost, a favourite of India's first Prime Minister, Pandit Jawaharlal Nehru

"The woods are lovely, dark and deep, But I have promises to keep, And miles to go before I sleep, And miles to go before I sleep."

For Mahindra & Mahindra, this translates into many more milestones to be set up before it rests. If ever

MAHINDRA GROUP AT A GLANCE

Automotive

Domestic Operartions

International Operations

Mahindra Renault Private Limited (MRPL)

Mahindra Navistar Automotives Limited (MNAL)

Mahindra Navistar Engines Private Limited (MNEPL)

After-Market Sector

Mahindra Spares Business

Mahindra First Choice

Mahindra First Choice Wheels Ltd.

Farm Equipment Sector

Domestic Operartions

International Operations

Mahindra Gujarat Tractor

Mahindra Agribusiness

Mahindra Powerol

Mahindra USA

Mahindra Australia

Mahindra China Tractors

Financial Services Sector

Mahindra & Mahindra Financial Services Ltd (Mahindra Finance)

Mahindra Insurance Brokers Ltd.

Mahindra Rural Housing Finance Ltd (MRHFL)

Infrastructure Development Sector

Mahindra Holidays & Resorts

Mahindra Life spaces Developers Limited

Mahindra World City

Mahindra Infrastructure Developers

Acres Consulting Engineers

Information Technology Sector

Tech Mahindra

Bristlecone

MAHINDRA 2 WHEELERS
Mahindra Systech

Forgings

Mahindra Forgings Limited - India Mahindra Forgings Europe - Ag

- GSA - Schonoweiss & Co GMBH - JECO - Stokes UK - Falkenroth

Engineering Services

Mahindra Engineering Engines Engineering Italy Mahindra Aerospace

Stampings

Steel

Ferrites

Contract Sourcing

Telematics

Composites

Castings

Gears

Mahindra Sar Transmissions Metalcastello Italy

Speciality Businesses

Mumbai Mantra

Mahindra Defence System

Mahindra Partners

Mahindra Odyssea

Mahindra Intertrade

Mahindra Steel Service Center

Mahindra MiddleEast Electrical Steel Service Centre (MMESSC)

Mahindra Logistics Ltd.

Mahindra Retail

RESEARCH OBJECTIVE

1. 2.

Apply the management of working capital theory in practical situation. To gain and experience in different practical aspect. To study the asset liability & net working capital of the Mahindra and Mahindra Ltd.

3.

To observe the growth in current asset, current liabilities & working capital in the firm.

4.

To study the present financial condition of the concern by calculating the working capital.

5. 6. 7.

To analysis the change in working capital requirement in four consecutive years. To analysis the significance of working capital by calculating financial ratio. The analysis of working capital is necessary for the effective working capital Management

8.

The financial management must have a close watch on the changes in different effectively & speedily.

HYPOTHESIS

(i)

To minimize the amount of capital employed in financing the current assets. This will also lead to an improvement in the "Return on capital employed".

(ii)

To manage current assets in such a way that the marginal return on investment in these assets in not less than the cost of capital acquired to finance them. This will ensure me maximization of the value of the business unit.

(iii)

To maintain the proper balance between the amount of current assets and the current liabilities in such a way that the firm is always able to meet its financial obligations. a. To maintain also proper balance among the different components of current assets to ensure satisfactory liquidity position. b. The objective is to ensure the maintenance of satisfactory level of working Capital in such a way that it is neither inadequate nor excessive. It should not only be sufficient to cover the current liabilities but ensure a reasonable margin of safety also.

RESEARCH METHODOLOGY

Generally research is considered as an Endeavour to arrive at the answer to intellectual and practical problem through the application of scientific methods to the knowledge universe. It is movement from known to unknown. Research is essentially a logical and an organized enquiry seeking facts through objective verifiable methods in order to discover the relation among them and to refer from the board principles or laws. It is really a method of critical thinking. Research may be defined as a systematic and objective analysis and recording of controlled observations that may lead to the development of generalization of principles or theories resulting in predicting and possibly ultimate control of events. Methodology is often used in a narrow sense to refer to methods, technology or tools employed for the collection data as well as its processing. This is also used sometimes to designate data collection to arrive at the conclusion. Infects, it describes that what should have been done. It provides answers to some of the major questions while search like what must be done, how it will be employed, how sources of data will be analyzed to arrive at the conclusion. For systematic research scientific approach is necessary. It is therefore essential to follow systematic methodology to arrive at a proper conclusion. The procedures involved in the concept of research methodology are:1) Selection of subject. 2) Selection of project title. 3) Selection of time period. 4) Collection of data. 5) Reliability of data. 6) Analysis of data. 7) Reporting.

DATA COLLECTION

Collection of data refers to purposive gathering of information relevant to the subject matter under study and the methods used depend mainly on the nature, purpose and scope of the enquiry to be undertaken, as well as on the availability of resources and time.

The data collection can be grouped under two types:-

Primary data Secondary data

PRIMARY DATA:-

Primary data are those which are collected for the first time. They are original in character. They are collected by the researcher for the first time for her own use. The source of primary data includes: 1) Direct personal investigation 2) Interview

DIRECT PERSONAL INVESTIGATION:This implies the situation where the researcher goes into the field of study in person for the collection of required data. Also, the investigation of this nature is normally confined to a single locality and the information gathered is capital in nature.

INTERVIEW METHODE:Every interview has got its own balance of revaluation and has withheld information, an interview can be effective informal verbal and non verbal conversation initiated for the specific purpose focus on a certain planned contained areas.

SECONDARY DATA:Secondary data are those which have already been collected by others. When it is not possible to collect data in primary form, the researcher may take the help of secondary data. They are thus which have already been collected for serving the objectives other then what the researcher might have in his mind.

The sources of secondary data includes:1) Books 2) Websites 3) Journals 1. BOOKS A book is a collection of paper or other material with text, pictures, or both written on them, bound together along one edge, usually with covers. In library and information science, a book is calling a monograph to distinguish it from serial periodicals such as magazines journals or newspapers.

2. WEBSITE
A website may be the work of an individual, a business or other organization and is typically dedicated to some particular topic or purpose. Any website can content s hyperlink to any other website, so the distinction between individual sites, as perceived by the user, may sometimes to blurred.

3. JOURNALS:May publication issued at stated intervals, such as magazines or the record of the transactions of a society, are often called journals. In academic use, a journals refers to a serious, scholarly publication, most often peer-reviewed. The purpose of a journal is to provide a place for the introduction a scrutiny of new research and often a forum for the critique of existing research.

DATA ANALYSIS AND INTERPRETATION

WORKING CAPITAL STATEMENT ESTIMATION OF WORKING CAPITAL REQUIREMENT

RATIO ANA LYSIS OF WORKING CAPITAL OF MAHINDRA AND MAHINDRA LTD (AUTOMOTIVE SECTOR)

COOELATION ANALYSIS OF ACTUAL AND ESTIMATED WORKING CAPITAL MAHINDRA AND MAHINDRA LTD (AUTOMOTIVE SECTOR)

WORKING CAPITAL STATEMEN ON YEAR ENDED 31st ' MARCH (Rs.000)

PARTICULAR CURRENT ASSET a) Inventory b) Sundry debtors c) Cash & bank balance d) Loan & advances TOTAL CURRENT ASSET Less CURRENT LIABILITY a) Acceptance b) Sundry credible c) Interest & commitment Charges d) Other liabilities e) Provision for Expenses f) Provision for taxation TOTAL CURRENT LIABILITY

2007

2008

2009

531344 866213 58189 243661 1699407

717797 792161 66320 254103 1830381

715248 703784 75976 352578 1847586

285080 209956 3061

390838 242494 2388

358187 329497 1553

24931 105278 18779

35204 135715 24344

14941 156313 10376

647085

830983

870867

NET WORKING CAPITAL

1054322

999398

976719

2008 2007

SUGGESTION

1)

From above analysis it is concluded that in all the year current ratio are above the std. Years quick ratio is also above norms, therefore the Mahindra and Mahindra company have the strong position.

2)

Inventory term of ratio the also decreases from 2007 to 2009

3)

Average collection period decreases or debtors turnover decreases. It means company recovery policy is in improving nature.

4)

Fix assets turnover ratio increases it means high fix asset turnover ratio indicates efficient utilization of fix assets in generating sales to the company.

5)

From above analysis it is concluded that due to above reasons company's working capital decreases for per year &company running efficiently.

CONCLUSION

1. 2.

The company has got a very good organization setup with a group of professional managing at various levels. Company has a settled to a reasonable extent; there is still scope for development in its internal controlling system. For Example: As explained in the inventory management has to develop a via media by which the incoming material approved for release of payment without any abnormal delay.

3.

After getting medium positive relation between actual and estimated working capital conclusion can be made that there is good efficiency in managing working capital. While doing ratio analysis of relevant ratio of working capital it was found that company is doing very well in all liquidity ratio, which confirms sound liquid position of company.

4.

5.

In studied year current & liquid ratio's are very high then the ideal ratio's wise indicate that level of working capital investment in respect of total fund of company was increased which is good from working capital point of view. Under operational efficiency analysis current asset to sales ratio is observed which indicates company was doing very well in terms of efficient employment of working capital funds. Inventory turnover ratio indicates that company had carried or been able to manage its inventory very impressively.

6.

From companies working capital financing (small amount of short term debt, large amount of financing from long term debt) it is clear that company fellow's conservative approach for financing its working capital requirement. Conservative approach least risky because it yields highest current ratio that help company to meets its financial obligation as they become due. From on the analysis which researcher did during the project it is clear that Mahindra and Mahindra company is doing very well as far as working capital management is concern.

BIBLIOGRAPHY
Books:

Financial Management R.P. Rustogi Financial Management M.Y. Khan & P.K. Jain Financial Management Ravi M. Kishore

Websites:

www.google.com www.mahindraandMahindra.com www.mahindra&mahindraannualreport.com www.rediffmail.com