THE GADAG CO-OPERATIVE TEXTILE MILL LTD, GADAG.                        EXECUTIVE SUMMARY             The project has been ...
THE GADAG CO-OPERATIVE TEXTILE MILL LTD, GADAG. “To study on working capital management” at The Gadag Co-operative Textile...
THE GADAG CO-OPERATIVE TEXTILE MILL LTD, GADAG.PRIMARY DATA: The information collected from personal interaction with     ...
THE GADAG CO-OPERATIVE TEXTILE MILL LTD, GADAG.             The Indian Textile Industry occupies an important place in the...
THE GADAG CO-OPERATIVE TEXTILE MILL LTD, GADAG.the future of the Indian textile and clothing exports. It is imperative to ...
THE GADAG CO-OPERATIVE TEXTILE MILL LTD, GADAG. Country would have to achieve the ‘preferred’ status, and integrate its ma...
THE GADAG CO-OPERATIVE TEXTILE MILL LTD, GADAG.Famous name              : - The G.C.T.M Ltd HulkotiAddress              : ...
THE GADAG CO-OPERATIVE TEXTILE MILL LTD, GADAG.      The village hulkoti comprises of various sections of people and since...
THE GADAG CO-OPERATIVE TEXTILE MILL LTD, GADAG. the internal resources of the Mills. The Mill replaced Carding Machines, w...
THE GADAG CO-OPERATIVE TEXTILE MILL LTD, GADAG.                  Fiber from seeds    Bale       : A bundle or packages of ...
THE GADAG CO-OPERATIVE TEXTILE MILL LTD, GADAG.                        Hank and Cone. Lower counts indicates coarse       ...
THE GADAG CO-OPERATIVE TEXTILE MILL LTD, GADAG.       The next step is cleaning the minor part and spraying the water to i...
THE GADAG CO-OPERATIVE TEXTILE MILL LTD, GADAG.      QUALITY POLICY: The company will give main importance to the satisfac...
THE GADAG CO-OPERATIVE TEXTILE MILL LTD, GADAG.B. Cac capacity Utilization an        productivity1.     Spdl utilization %...
THE GADAG CO-OPERATIVE TEXTILE MILL LTD, GADAG.      11           Shri S.C. Huilgol                  Director      12     ...
THE GADAG CO-OPERATIVE TEXTILE MILL LTD, GADAG.•   Banhatti co-operative spinning mill. Banhatti.•   Raitara sahakari nool...
THE GADAG CO-OPERATIVE TEXTILE MILL LTD, GADAG.    The mills has got an some awards for continuously three years in the ye...
THE GADAG CO-OPERATIVE TEXTILE MILL LTD, GADAG.SPINNING: The bobbins from the Preparatory process are feed to the drafting...
THE GADAG CO-OPERATIVE TEXTILE MILL LTD, GADAG. DEPARTMENTAL STUDYFINANCE DEPARTMENT   Finance department is the departmen...
THE GADAG CO-OPERATIVE TEXTILE MILL LTD, GADAG.         Mill has funds that may be raised         1)   By issue of Shares ...
THE GADAG CO-OPERATIVE TEXTILE MILL LTD, GADAG.co-operative textile mill there are       744 workers here 85 are staff mem...
THE GADAG CO-OPERATIVE TEXTILE MILL LTD, GADAG.PROCESS OF PRODUTIONMIXING: Bales of different counts are mixed along with ...
THE GADAG CO-OPERATIVE TEXTILE MILL LTD, GADAG.SPINNING: The bobbins from the Preparatory process are feed to the drafting...
THE GADAG CO-OPERATIVE TEXTILE MILL LTD, GADAG.PURCHASE DEPARMENT       The purchasing of cotton is made through the condu...
THE GADAG CO-OPERATIVE TEXTILE MILL LTD, GADAG. 5)       Proper maintenance of all equipments   The mills storage has divi...
THE GADAG CO-OPERATIVE TEXTILE MILL LTD, GADAG.         This is the department which checks out the quality of the cotton ...
THE GADAG CO-OPERATIVE TEXTILE MILL LTD, GADAG.    The marketing department has kept an long relationship with its custome...
THE GADAG CO-OPERATIVE TEXTILE MILL LTD, GADAG.after and make repairs and maintain and look over all machines daily the de...
THE GADAG CO-OPERATIVE TEXTILE MILL LTD, GADAG.2)   Good network of dealers3)   Well connected with roads4)   Well establi...
THE GADAG CO-OPERATIVE TEXTILE MILL LTD, GADAG.1)   Land is available for expansion2)   Company can tie with other reputed...
THE GADAG CO-OPERATIVE TEXTILE MILL LTD, GADAG.     Working capital is the amount of funds which a company has to finance ...
THE GADAG CO-OPERATIVE TEXTILE MILL LTD, GADAG.Shubin         “ Working capital is the amount of funds necessary to the co...
THE GADAG CO-OPERATIVE TEXTILE MILL LTD, GADAG.     Working capital as per this defined in terms of current assets and cur...
THE GADAG CO-OPERATIVE TEXTILE MILL LTD, GADAG.OPERATING CYCLE CHART                    Cash                        Raw Ma...
THE GADAG CO-OPERATIVE TEXTILE MILL LTD, GADAG. called as cash conversion cycle, production cycle etc. It involves the pur...
THE GADAG CO-OPERATIVE TEXTILE MILL LTD, GADAG.                                       KINDS OF                            ...
THE GADAG CO-OPERATIVE TEXTILE MILL LTD, GADAG.          this category are:    1)    Permanent : Some portion of working c...
THE GADAG CO-OPERATIVE TEXTILE MILL LTD, GADAG.             Requirement of working capital differs from one firm to other....
THE GADAG CO-OPERATIVE TEXTILE MILL LTD, GADAG.contrary firms that follow liberal divided policy are firms that do not hav...
THE GADAG CO-OPERATIVE TEXTILE MILL LTD, GADAG.Firstly, the adequate of working capital contributes a lot in raising the c...
THE GADAG CO-OPERATIVE TEXTILE MILL LTD, GADAG.           be received.       4. Deposits under the company scheme.       5...
THE GADAG CO-OPERATIVE TEXTILE MILL LTD, GADAG.            Receivable represents amounts owed to the firm as a result of s...
THE GADAG CO-OPERATIVE TEXTILE MILL LTD, GADAG.            Particulars       As @        As @      Effect                 ...
THE GADAG CO-OPERATIVE TEXTILE MILL LTD, GADAG.     The statement shows that the changes in working capital in the year 20...
THE GADAG CO-OPERATIVE TEXTILE MILL LTD, GADAG.                           Statement of changes in working capital         ...
THE GADAG CO-OPERATIVE TEXTILE MILL LTD, GADAG.INTERPRETATION        This statement shows that the changes in working capi...
THE GADAG CO-OPERATIVE TEXTILE MILL LTD, GADAG.            Particulars              As @                       As @      E...
THE GADAG CO-OPERATIVE TEXTILE MILL LTD, GADAG.INTERPRETATION       The statement shows that the changes in working capita...
THE GADAG CO-OPERATIVE TEXTILE MILL LTD, GADAG.            Particulars          As @          As @              Effect    ...
THE GADAG CO-OPERATIVE TEXTILE MILL LTD, GADAG.     The statement shows that the changes in working capital in the year 20...
THE GADAG CO-OPERATIVE TEXTILE MILL LTD, GADAG.    Investment in working capital is influenced by four key events in the p...
THE GADAG CO-OPERATIVE TEXTILE MILL LTD, GADAG.Sales         231390442         Inventory         46919052      46274537Cos...
THE GADAG CO-OPERATIVE TEXTILE MILL LTD, GADAG.                           =            632633                             ...
THE GADAG CO-OPERATIVE TEXTILE MILL LTD, GADAG.Sales             254655866 Inventory               46274537     50785141Co...
THE GADAG CO-OPERATIVE TEXTILE MILL LTD, GADAG.                             =         565816                              ...
THE GADAG CO-OPERATIVE TEXTILE MILL LTD, GADAG.Sales               274253348 Inventory               55889767     50785141...
THE GADAG CO-OPERATIVE TEXTILE MILL LTD, GADAG.                                 751379                        =        1.5...
THE GADAG CO-OPERATIVE TEXTILE MILL LTD, GADAG.Sales               256739185 Inventory               50785141     39186088...
THE GADAG CO-OPERATIVE TEXTILE MILL LTD, GADAG.                                 703395                        =        2.0...
THE GADAG CO-OPERATIVE TEXTILE MILL LTD, GADAG.2008-09 70.83                2.04            8.08      72.87     64.79     ...
THE GADAG CO-OPERATIVE TEXTILE MILL LTD, GADAG.         RATIO ANALYSISBABASAB PATIL                                     61
THE GADAG CO-OPERATIVE TEXTILE MILL LTD, GADAG.  INTRODUCTION  The ratio analysis is one of the most important and powerfu...
THE GADAG CO-OPERATIVE TEXTILE MILL LTD, GADAG.                  The current ratio of a unit measures firm’s short-term so...
THE GADAG CO-OPERATIVE TEXTILE MILL LTD, GADAG.INTERPRETATION:The standard for current ratio is 2:1 but the firm’s current...
THE GADAG CO-OPERATIVE TEXTILE MILL LTD, GADAG.QUICK RATIO = QUICK ASSETS/QUICK LIABILITESQuick asset = current assets –in...
Working capital management @ gadag textile project report
Working capital management @ gadag textile project report
Working capital management @ gadag textile project report
Working capital management @ gadag textile project report
Working capital management @ gadag textile project report
Working capital management @ gadag textile project report
Working capital management @ gadag textile project report
Working capital management @ gadag textile project report
Working capital management @ gadag textile project report
Working capital management @ gadag textile project report
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Working capital management @ gadag textile project report

  1. 1. THE GADAG CO-OPERATIVE TEXTILE MILL LTD, GADAG. EXECUTIVE SUMMARY The project has been under taken under as the part of master of business administration course as per the direction of Karnataka university dharwad. The second year MBA students will take part in this project were the summer inplant project for the period of two months and the project is related to finance and the topic of this project is “The study of working capital management” The Gadag co-operative textile mill ltd established in 1972 by lateshri.K.H.Patil at Hulkoti in Gadag district. It is producing main product as yarn. Thecompany started with a production cost of RS.220lakhs.It is started producing yarn inthe year 1973. A G.C.T.M has an arrangement of different department of the dependentparts of functions and their interrelation in the structure form to provide the necessaryefforts of groups of individuals will be directed towards a common objective. So as toidentify the problems of such a title and give suggestions and conclusions. In addition tothis concept studying the over all organization role of different department functions oftheir respective departments, procedures and policies. The project is mainly focuses on the industry profile, company profile, SWOTanalysis, annual report and about working capital and ratios. this project studiesdifferent department at the Gadag co-operative textile mill ltd. The functions of eachdepartment and the organization in the company along with it covers the duties andresponsibilities of all the staff members type of decision making followed by the milland it also includes quality policy export oriented unit etc of the mill.DESIGN OF THE STUDYTitle of the study BABASAB PATIL 1
  2. 2. THE GADAG CO-OPERATIVE TEXTILE MILL LTD, GADAG. “To study on working capital management” at The Gadag Co-operative Textile Mill Ltd. Hulkoti” OBJECTIVES OF THE STUDY:1) To study the working capital management.2) To know the sources of working capital.3) To study the different components of working capital of the company.4) To calculate the operating cycle of an organization.5) To calculate the working capital of an organization.6) To study the liquidity position of the company with the help of ratios. METHODALOGY BABASAB PATIL 2
  3. 3. THE GADAG CO-OPERATIVE TEXTILE MILL LTD, GADAG.PRIMARY DATA: The information collected from personal interaction with manager and other staffsSECOUNDRY DATA: The annual report of the company and company website INDUSTRY PROFILEBABASAB PATIL 3
  4. 4. THE GADAG CO-OPERATIVE TEXTILE MILL LTD, GADAG. The Indian Textile Industry occupies an important place in the Economyof the Country because of its contribution to the Industrial Output, EmploymentGeneration and Foreign Exchange Earnings. At present, the contribution of the textileIndustry to GDP is about 4 percent. The textile industry provides direct employmentto about more than 35 million people and is the second largest employment providerin India next to agriculture. The contribution of this industry to gross export earningsis about 31% of the country. The Textile Industry is a self-reliant industry from the productionof raw materials to the delivery of final products with considerable value addition ateach stage of processing. The industry was delicensed in 1991 and under the currentpolicy no prior government approval is necessary to set up textile mills. The percapita cloth availability in the country has increased from 24.1 square meters in 1991to 30.7 square meters in 2000-01.The textile sector including the garment sector has acontinual increase in the FDI inflow from Rs.80.99 million to Rs.234.73million. From growing its own raw material (cotton, jute, silk and wool) toproviding value added products to consumers (fabrics and garments), the textileindustry covers a wide range of economic activities, including employment generationin both organized and unorganized sectors. Manmade fibers account for around 40 percent share in a cotton dominated Indian textile industry. India accounts for 15% ofworlds total cotton crop production. And it is the second largest employer after theagriculture sector in both rural and urban areas. India has a large pool of skilled low-cost textile workers, experienced in technical skills. Almost all sectors of the textileindustry have shown significant achievement. Indias cotton textile industry has a highexport potential. Cost competitiveness is driving the penetration of Indian basic yarnsand grey fabrics in international commodity markets. Besides natural fibers such ascotton, jute and silk, synthetic raw material products such as polyester staple fiber,polyester filament yarn, acrylic fiber and viscose fiber are produced in India. From 1st January 2005, all textile and clothing products would betraded internationally without quota-restrictions. And this impending reality brings theissue of competitiveness to the fore for all firms in the textile and clothing sectors,including those in India. With the dismantling of quotas in 2004 under mandate fromthe Agreement in Textile and Clothing of the WTO, the focus has clearly shifted toBABASAB PATIL 4
  5. 5. THE GADAG CO-OPERATIVE TEXTILE MILL LTD, GADAG.the future of the Indian textile and clothing exports. It is imperative to understand thetrue competitiveness of Indian textile and clothing firms in order to make anassessment of what lies over a period of time.Global trade in Textile and clothing -India’s performanceDuring the MFN period, the textile exporters from industrial countries and those fromdeveloping countries merely changed shares between themselves during 24 years .Theshare of industrial countries declined by almost as much (19.2%) as was the gain inthe share of developing countries (18.8%). Clothing exporters, however, exhibitsignificant changes, with the share of top exporters having declined by 13.8%.New entrants have come in as well as some old ones have been knocked out. Of thesenew entrants, most- if not all- are from developing countries, since the share ofindustrial countries has declined during the period, and that of developing countrieshas increased. The countries that are gaining share in clothing exports are theones whose industries are integrated to one or the other advanced countrythrough some policy-induced preferential arrangements. Mexico, Caribbeanregion, East European countries and Mediterranean countries are capturing much ofthe space vacated.There has been a much deeper globalization in clothing than in textiles. Indeed, thathas been one of the principal reasons for the developed countries agreeing to aneventual phase-out in the UR of negotiations. While in textiles, there was aninexorable shift away from developed countries in 1973 to1997 and to developingcountries at large, in clothing the shift away from developed countries is increasinglybeing grabbed by ‘preferred’ developing countries.Thus, in clothing, the non-preferred group of developing countries is fighting amongstthemselves for a pie that is increasingly declining.One should expect a much higher level of intra-industry and intra-firm trade inclothing than in textiles. This is entirely compatible with the fact that it is the trade inClothing that is growing faster than that in textile.And this trend is likely to deepen, as Clothing retailers consolidate, and OutwardProcessing Trade (OPT) traffic increases. The Opportunity clearly lies much more inclothing, though the caveat is the exporting.BABASAB PATIL 5
  6. 6. THE GADAG CO-OPERATIVE TEXTILE MILL LTD, GADAG. Country would have to achieve the ‘preferred’ status, and integrate its manufacturing with that of an importing country in order to continue exporting to the restricted markets. The pressure to export would intensify in the years to come since 80% of additional output during 1995-2005 is expected to be located in developing countries. On the other hand, only 50% of the additional fibre consumption would originate in developing countries. COMPANY PROFILECOMPANY DETAILS:Name of the mill : - The Gadag Co-operative Text Mill Ltd Hulkoti. BABASAB PATIL 6
  7. 7. THE GADAG CO-OPERATIVE TEXTILE MILL LTD, GADAG.Famous name : - The G.C.T.M Ltd HulkotiAddress : - The G.C.T.M Ltd Hulkoti Post: Hulkoti 582205 Tq &Dist: GADAG Karnataka Phone no: 289042, 289371 Mobile: 9449570255 email:gadagcooptex@sanchar.net.inRegistered office : - Hulkoti Tq &dist: GadagRegistration : - The mill has been registered under The Karnataka co-operative society act 1959Registration No : - RCS 2022/72-73Establishment : - 08-07-1972Production began : - 1973Sales turn over : - 25 croresNature of business : - production and sale of yarnBackground of the company BABASAB PATIL 7
  8. 8. THE GADAG CO-OPERATIVE TEXTILE MILL LTD, GADAG. The village hulkoti comprises of various sections of people and since long it hasbeen the cradle of co-operative movement in having the first primary credit co-operative society established in the erstwhile Bombay state. The occupation of thevillage is mainly agriculture. The farmer and farm laborers form a nucleus of this ruralarea. The main crops grown around hulkoti are jowar, cotton, groundnut, chilly andother pluses. Since there are no other major irrigation projects, dry land cultivation is the onlyway for the farming community. Agriculture produce particularly cotton, groundnut,jowar etc. were being marketed to the tune of Rs/90 to 100 crores per annum in andaround gadag. Prior to the emergence of the Gadag Co-operative cotton sale SocietyLtd., Gadag farming community was exploited by private traders and commissionagents. It is at this juncture, realizing the need for upliftment of mach neglected farmerscommunity and to improve the lot of rural area, Late Shri K.H.Patil, a son of soil andveteran co-operator devoted he time fully for the establishment ofa co-operative network around hulkoti providing various amenities and scope fordevelopment of farmers which went ahead against all odds both traditional and politicaltill he transformed a vision into a reality. This Endeavour had transformed into worthyinstitution located on either side of highway no 63 between hulkoti and Gadag After successful setting up of Ginning and pressing unit by the Gadag Co-operative cotton sale society, the next ambition of our Co-operator, was to establish aspinning Mill of 25,000 spindles capacity which would consume the main agricultureproduce by paying remunerative prices to cotton growers and to save the farmingcommunity from the cluthes of private traders It is with this ideal background The Gadag Co-operative mill was established inthe year 1972 with the project cost of Rs 220 lakhs and commenced its trail productionin April 1973 we have a feather in the cap for having installed 25000 spindles capacitymill in a record time in the entire country. MODERNIZATION PROGRAM After a period of 18 years there was a need for upgrading technology of certain machines and to eater to the export needs, the Management proposed a Modernization Programme at a cost of Rs. 429.00 Lakhs. The term, lending institutions sanctioned Rs. 236.69 Lakhs and the balance Rs. 192.31 lakhs was from BABASAB PATIL 8
  9. 9. THE GADAG CO-OPERATIVE TEXTILE MILL LTD, GADAG. the internal resources of the Mills. The Mill replaced Carding Machines, winding machines and added one Open End Spinning machine and one Imported Auto Conner of latest technology. With the implementation of this Project there was improvement in the productivity and the quality of the finished product. To meet the standards of the quality yarn in demand, both in domestic as well asin International markets, the Management of the Mills thought it inevitable to launchanother Modernization Programme covering Machinery from blow room to Spinningwas planned. This programme, with an estimated cost of Rs. 920 Lakhs was approvedby the national Co-operative Development Corporation (N.C.D.C.) and the Governmentof Karnataka. As part as Modernization Programme, N.C.D.C. has sanctioned Rs. 736.00Lkahs, while Government of Karnataka contributed Rs. 136.00 Lkahs as share capital.The rest amount of Rs. 46.00 Lkahs was mobilized from Members of the Societythrough shares. With successful implementation of 2nd Phase of Modernization Programme, thelatest version of Auto leveler Machinery at Carding and Drawing Sections are inductedand commissioned. Following this, efforts are being made to raise the productivity tohigh standards. Further, completion of Modernization enables us to qualitativerequirement of requirement of International market Standards. BASIC CONCEPTS USED IN TEXTILE MILL Fiber : A slender filament ; a fine thread like part of a substance . Kapas : Cotton with seeds and impurities Lint : Cotton free from seeds and impurities Ginning : The mechanical process of separating the cotton BABASAB PATIL 9
  10. 10. THE GADAG CO-OPERATIVE TEXTILE MILL LTD, GADAG. Fiber from seeds Bale : A bundle or packages of cotton compressed and Bound with cord or wire weight round about 170 Kgs. Spinning : The process of drawing out and twisting the fiber of cotton, Wool etc. Into thread or yarn either by hand or machine. Spindles : The rods or pins of spinning machine known as The ring frame holding the bobbins on the which yarn wound as it is spun . Such spinning is expressed in terms of the number or spindles or rotors. Rotors : In the modern of spinning known as the open end spinning instead of spindles rollers are used. Yarn : A textile thread obtained by twisting of consecutively Disposed and Straightened ultimate composite fibers. Hank & cones: Yarn is supplied to the market in to different forms hank yarn and cone yarn Hank yarn is convenient form of bleaching, and transport but needs winding before placing on the loanIt is used by hand loom weavers .Cone yarn however eliminates the Need form winding and can be directly used in power looms . Count : A count is measure of thickness or fitness of yarn The various counts groups manufactured are 10s, 20s, 24s, 30s,32s,34s,40s, 60s, 80s 100s both inBABASAB PATIL 10
  11. 11. THE GADAG CO-OPERATIVE TEXTILE MILL LTD, GADAG. Hank and Cone. Lower counts indicates coarse yarn and higher counts indicates fine Yarn Objectives of the company  To satisfy customers by integrating their needs in the mill yarn.  To sustain a mill of able and committed employees and provide opportunities for growth and development.  To improve the process of managing mill affairs through proper planning, timely improvement of plan and performance review.  To faster culture innovation with the application of new ideas and methods to solve the business problems.  To provide the employment opportunities to Men& women of rural areaNature of business carried The first step the company purchases the raw material i.e. cotton from the farmersthen it mixes it with different quality of cotton according to the quality of yarn theyneeded. BABASAB PATIL 11
  12. 12. THE GADAG CO-OPERATIVE TEXTILE MILL LTD, GADAG. The next step is cleaning the minor part and spraying the water to it. Then it keptone day in cool place. Next step it goes to the major cleaning part it goes to all thecleaning of the cotton. The next process is carding here the cotton will become smoothly and white.Next goes to the simplex method in this method cotton becomes big layers and it makesthe group of layers The next process is procedure is rolling and grilling here the big layers are rolledand it is separated from the group and comes in the form of loose thread and nextprocess is drafting and twisting and the thread becomes strong and it comes layer bylayer in the form of thin yarn. The next is nothing here if thread goes into two parts themachine will join it and it is called noting process. Finally after all these process the raw material is converted into the finishedgoods which are in the form of yarn. VISION MISSION QUALITY VISION: To be a premier textile company with a clear focus to become globallycompetitive, through growth and technology up gradation committed to excellence inquality service and co-operatives MISSION: To purchase the creation of values for all its customers, share holders,employees and society at large BABASAB PATIL 12
  13. 13. THE GADAG CO-OPERATIVE TEXTILE MILL LTD, GADAG. QUALITY POLICY: The company will give main importance to the satisfaction of the customers by producing good quality yarn and produce yarn to meet with the market position the company will not see with the quality of raw material. The company is also having a quality control department to check out the yarn quality in overall stages to take any corrections required immediately. PRODUCT PROFILE The following table indicates the production performances/ progress since 2003-04 to 2007-08sl Particulars 2003-04 2004-05 2005-06 2006-07 2007-08A. Production1. Cotton consumed 33.37 35.20 32.31 32.49 32.39 kgs in lakhs2. Value in lakhs Rs. 1894.90 1812.25 1375.00 1460.90 1656153. Yarn produced in lakhs 28.01 29.57 26.80 27.53 27.83 kgs BABASAB PATIL 13
  14. 14. THE GADAG CO-OPERATIVE TEXTILE MILL LTD, GADAG.B. Cac capacity Utilization an productivity1. Spdl utilization % 63.57 71.39 73.49 73.97 69.812. Production 84.00 82.37 82.15 83.15 86.20 (converted to 40s)in gram per spindle THE MARKET AREA The mill has its market overall the different areas of the country like N.H.D.C., K.H.D.C., malligov, sollapur, ichalkaranji, Bangalore. OWNERSHIP PATTERN The G.C.T.M. ltd is situated in the village hulkoti of Karnataka. Shri D.R.Patil and H.M.Soppin are the chairman and vice chairman of the G.C.T.M. hulkoti. S.L. Name Designation No: 1 Shri D. R. Patil Chairman 2 Shri H.M. Soppin Vice Chairman 3 Shri R.M. Mulimani Director 4 Shri V.B. Inamati Director 5 Shri T.B. Mundavad Director 6 Shri C.B. Karikatti Director 7 Shri V. R. Naganur Director 8 Shri S.B. Balaraddi Director 9 Shri S.B. Bhasetti Director 10 Shri S.C. Kanavi Director BABASAB PATIL 14
  15. 15. THE GADAG CO-OPERATIVE TEXTILE MILL LTD, GADAG. 11 Shri S.C. Huilgol Director 12 Shri G.N. Patil Director 13 Shri A.S. Patil Director 14 Shri R.B. Hosamani Director 15 Shri B.H. Dyavanashi Director 16 Shri S. K. Kuradagi Director 17 Shri D.S. Odugoudar Director 18 Shri R.Y. Director KempalinganagoudarGeneral Manager District Industries center Gadag Director Deputy Director of Handlooms And Textile Inviters Joint Registrar of Co-operative societies Director Shri T. ShantaveerappaManaging Director DirectorCOMPETITORS INFORMATION The competitors for G.C.T.M areBABASAB PATIL 15
  16. 16. THE GADAG CO-OPERATIVE TEXTILE MILL LTD, GADAG.• Banhatti co-operative spinning mill. Banhatti.• Raitara sahakari noolina girani. Rannebennur.• The farmer’s co-operative spinning mill ltd. Hulkoti.• Sangoola mills solapur. INFRASTRUCTURE FACILITY Head office: The head office of G.C.T.M is located in hulkoti the function of finance, marketing and raw material procurement are carried by head office only it doesn’t have its branch. Land: The mill is established in the rural area near gadag at village hulkoti with approval of the site selection committee. The total area covered is of 90528.25 sq ft out of which build up area is 643.45 sq mt. there is the beautiful garden plantations pollution free and healthy environment in the mill area. Other facilities: The mill has provided an quarters facilities to the workers and there is an rest room for workers and drinking water facility and also cultural activities in independence day, republic day, and workers day will be held and there is also an canteen facility provided by the mill AWARDS BABASAB PATIL 16
  17. 17. THE GADAG CO-OPERATIVE TEXTILE MILL LTD, GADAG. The mills has got an some awards for continuously three years in the year 1978-79,1979-80, 1980-81, the mill has ranked first for India and second for Asia. The two awards were pretend to the mill as per the techno-economic datapresentation which is made by the mill in the Pune on 10th April 2005 the award for theoperating net profit per installed spindle and operating cash profit per installed spindlehas gotWORK FLOW OF MILLMIXING: Bales of different counts are mixed along with usable wastes, ondifferent percentage in the mixing bins, cotton bales of different quality are opened andstacked, called stock mixing, 24 Hours for conditioning before it is process further.BLOW ROOM: Cotton in losses form is spending on mixing bale openers andtaken further of different cleaning points where the cotton is beaten and trash isextracted. Finally converted into Lap form of different length, weigh per yard,depending on the count.CARDING: Lap form Blow room feed to Cards where the cotton is converted fromLap form to sliver form. During this process trash, short fibers and other impurities areextracted the different cleaning points, like licker in, Flats section Units. The sliver isproduced of different Hank depending on the counts.PREPARATORY: Cards sliver is drawn through different drafting Rollers and thesliver is elongated and increasingly the length of the sliver and radiating in the crosssection by passing through different drafting rollers and convert into a suitable packageby giving little twist to the material called Rove and wound on a Bobbin. BABASAB PATIL 17
  18. 18. THE GADAG CO-OPERATIVE TEXTILE MILL LTD, GADAG.SPINNING: The bobbins from the Preparatory process are feed to the drafting rollersas final treatment to the material and further increasing the length and reduction thecross section of the material. This process the material process through Ring andTraveler and would on the bobbin to form a suitable package the giving optimum of thetwist depending on count of the yarn.CONE WINDING: Here the yarn spun is cleaned by passing through cleaningdevise called slub catcher and would through suitable package of required length andweight in the form of a Cone.DOUBLING: Here two yarn of the same count are doubled by giving necessarytwist in the form of package called bobbins.REELING: Here single yarn or doubled yarn are wound on the swifting of themachine called Reel in the form of Hank and are make in the form of Knots. There aretwo types, a Plain or Cross Reel.BUNDLING & BALING: Here the number of knots plain or cross is in a pressdepending on the count and weight of the boundless are as per requirements. Bundlesare pressed in the form of Bale depending on the count, Plain or Cross as per therequirement from the market.PACKING: Here number of cones or cheeses is bagged depending on the count ofthe yarn number of cones and weight of the cones. Depending on the requirement of themarket. BABASAB PATIL 18
  19. 19. THE GADAG CO-OPERATIVE TEXTILE MILL LTD, GADAG. DEPARTMENTAL STUDYFINANCE DEPARTMENT Finance department is the department which looks after the financial position of themill and takes over the investment decision, finance decision the mill has started withits project cost of Rs.220 lakhs which contributed of Rs. 40 lakhs from members share,Rs. 80 lakhs is of government share and remaining of Rs 100 lakhs is of termloan(I.F.C.I)MEMBER AND SHARE CAPITAL No of share Paid up share Sl.no Category holders Capital 1 “A”class 3014 Rs.107.47 lakhs ((individual/society) 1 Rs.015.00 lakhs 2 “B” Class (K.A.I.C) 1 Rs.695.26 lakhs 3 “C” Class (State govt) TOTAL 3016 Rs.817.73 lakhs BABASAB PATIL 19
  20. 20. THE GADAG CO-OPERATIVE TEXTILE MILL LTD, GADAG. Mill has funds that may be raised 1) By issue of Shares 2) By receiving deposits from members. 3) By raising loans 4) By entrance fees 5) By accepting donations, subsidies and grants. 6) By commercial institutions. After starting of mill after the 18 years the mill has been modernized at cost ofRs. 429 lakhs the leading institutions has sanctioned of Rs.236.69 lakhs and remainingbalance of Rs.192.31 is from the mill itself and 2nd time modernization has done of Rs920 lakhs which the amount is given by the N.C.D.C.( national co-operativedevelopment co-operation) and government of Karnataka as the part N.C.D.C hassanctioned Rs.736 lakhs and 136 lakhs by govt of Karnataka and rest of amount Rs. 46lakhs is from members of society The mill is invested of Rs 1771.45 lakhs and of Rs. 40 lakhs share capital to the stategovernment and paid the loan amount of Rs.100 lakhs of Rs. I.F.C.I term loan and alsopaid the first modernization loan of Rs. 236.69 lakhs The mill will be raised its fund by issuing of share, receiving deposit from membersby taking loans and debentures and also accepting subsidies and donations and thesources of finance for the mill is from the K.C.C bank, N.C.D.C. loan, and bijapurD.C.C. bank ltd.HUMAN RESOURCE DEPARTMENT The human resource department of the mill is recruiting, selecting seeing welfare ofthe employees and providing necessary facilities for the workers. Were as in the Gadag BABASAB PATIL 20
  21. 21. THE GADAG CO-OPERATIVE TEXTILE MILL LTD, GADAG.co-operative textile mill there are 744 workers here 85 are staff members, 650workers and 9 are securities The facilities for the worker are transportation, medical, canteen, provident fund,gratuity There are 3types of workers are there first selected (fresh) workers will betaken as a trainee and in trainee there are two stages first stage trainee and second stagetrainee and after trainee they will be treated as badli and then as permit. The mill works for 24 hours which is in 3 shifts no women workers are permittedfor night shift and the labour turnover is of 30 to 35 the over time duty is also there andwill be paid in double as per there working hours The salary for the workers are paid in as the basic salary + ESI (employee stateinsurance) + provident fund of 12% and bonus of 8.33% will be given and salary for 1ststage trainee is Rs.60 and for 2nd stage trainee Rs.65 and for badlis it depend on therework which is of Rs.75-103 and for permits also depend on there work load and shiftallowance of Rs.250 for 26 days and of Rs 312 is attendance allowance for 26attendance per month. The recruiting of staff will be done by managing director, generalmanager, asst manager and H.R. manager and other workers will be selected by the H.Rdepartment The G.C.T.M also provided quarters for workers with rent of Rs.20 per month andhas a transportation facility from Gadag to hulkoti and in the G.C.TM. the culturalactivities also be held on independence day republic day, and on workers day.PRODUCTION DEPARTMENT The G.C.T.M. is the mill which produces the yarn which are in of two types oneis in cone and another as hank .The product has been done from cotton to final producti.e yarn. In the mill it has purchased machines from m/s lakshmi from coimbatore The mill works 24hour of its production and it has 3shifts the first shift is handledby production manager and 2nd shift by deputy spinning master and 3rd shift is handledby spinning supervisor and the has 7500kg of daily production BABASAB PATIL 21
  22. 22. THE GADAG CO-OPERATIVE TEXTILE MILL LTD, GADAG.PROCESS OF PRODUTIONMIXING: Bales of different counts are mixed along with usable wastes, ondifferent percentage in the mixing bins, cotton bales of different quality are opened andstacked, called stock mixing, 24 Hours for conditioning before it is process further.BLOW ROOM: Cotton in losses form is spending on mixing bale openers andtaken further of different cleaning points where the cotton is beaten and trash isextracted. Finally converted into Lap form of different length, weigh per yard,depending on the count.CARDING: Lap form Blow room feed to Cards where the cotton is converted fromLap form to sliver form. During this process trash, short fibers and other impurities areextracted the different cleaning points, like licker in, Flats section Units. The sliver isproduced of different Hank depending on the counts.PREPARATORY: Cards sliver is drawn through different drafting Rollers and thesliver is elongated and increasingly the length of the sliver and radiating in the crosssection by passing through different drafting rollers and convert into a suitable packageby giving little twist to the material called Rove and wound on a Bobbin. BABASAB PATIL 22
  23. 23. THE GADAG CO-OPERATIVE TEXTILE MILL LTD, GADAG.SPINNING: The bobbins from the Preparatory process are feed to the drafting rollersas final treatment to the material and further increasing the length and reduction thecross section of the material. This process the material process through Ring andTraveler and would on the bobbin to form a suitable package the giving optimum of thetwist depending on count of the yarn.CONE WINDING: Here the yarn spun is cleaned by passing through cleaningdevise called slub catcher and would through suitable package of required length andweight in the form of a Cone.DOUBLING: Here two yarn of the same count are doubled by giving necessarytwist in the form of package called bobbins.REELING: Here single yarn or doubled yarn are wound on the swifting of themachine called Reel in the form of Hank and are make in the form of Knots. There aretwo types, a Plain or Cross Reel.BUNDLING & BALING: Here the number of knots plain or cross is in a pressdepending on the count and weight of the boundless are as per requirements. Bundlesare pressed in the form of Bale depending on the count, Plain or Cross as per therequirement from the market.PACKING: Here number of cones or cheeses is bagged depending on the count ofthe yarn number of cones and weight of the cones. Depending on the requirement of themarket. The mill has 32.39 lakh kg of cotton has consumed in 2007-08 and 27.86 lakh kgsof yarn is produced and 69.81% of spindle has been utilized BABASAB PATIL 23
  24. 24. THE GADAG CO-OPERATIVE TEXTILE MILL LTD, GADAG.PURCHASE DEPARMENT The purchasing of cotton is made through the conducting business committeemeeting were as the purchasing of cotton is made on every weekly of 500 to 600 baleswere as every one bale consists of 165 kgs the mill purchases different variety of cottonsuch as NH44, J34, MBCH, BHARAMA, 26MM, and 28MM The purchase of cotton is made from local which is at open auction market by theGadag co-op cotton sale society, T.A.P.C.S.M of annigeri were as these local cotton isgraded by the A.P.M.C authority. The purchases are also made from CCI (cotton co-operation of India, maharastra co-operative federation, shanthi textile Mumbai, baradiacotton company Mumbai and B.M. kollar from gokak The price for the local is more of Rs.100-150 than the market rates and were as thedepartment purchase right material, right quality, and right quantity of cotton for themill and the mill collects the sample and makes the laboratory test and make sure ofquality which they requires and make business committee meeting and gives order ofpurchasing and the payment of purchased material is made after 30 days of purchasingto the suppliersSTORE DEPARTMENT Objectives of the Stores Department : 1) Concentrating towards smooth running of the production process. 2) Facilitating all required equipments on time . 3) Reduction of Inventory equipments on time . 4) Working like a traffic signal to signalize to all equipments. BABASAB PATIL 24
  25. 25. THE GADAG CO-OPERATIVE TEXTILE MILL LTD, GADAG. 5) Proper maintenance of all equipments The mills storage has divided in 2 sub department which one is of material store andgeneral stores and there are 11000 items are maintained in these department and themill has an 7500 metric ton of storage capacity and stock of 2000 metric ton of capacityin godown. The store department’s construction costs of Rs 13.18 crores and thedepartment is using two ledgers one is material receipt ledger and material issuedledger. QUALITY CONTROL DEPARTMENT FUNCTION OF THE QUALITY CONTROL DEPARTMENT :  Random lab weight checking  Within lap variation  Cleaning efficiency  Waste study speeds  Wrapping checking  Naps study  Uniformity checking  Idle spindle  Top roller pressure checking  Rewinding study  Gauge and tension weight checking  Knot inspection  Knot weight checking BABASAB PATIL 25
  26. 26. THE GADAG CO-OPERATIVE TEXTILE MILL LTD, GADAG. This is the department which checks out the quality of the cotton and theproduced yarn in the mill. The department which checks quality before purchasing ofcotton by taking sample from supplier. the G.C.T.M has its laboratory for testing of thecotton and the lab has installed of 1.25 crore worth of machines which is ofcomputerized machines the quality control also helps in minimizing cost and improvesin working condition it also helps the G.C.T.M to know the cost of there product The cotton testing is having some steps of testing of cotton the cotton testing ismade on H.V.I (high volume instrument) the testing of material is made out of one balehalf kg will be taken testing is made of its length, strength (grass per tex), informativeratio, maturity ratio the mill is using 26mm type of cotton for coarser, 28mm for 30s,34s, and 40s yarn, and 31mm for 60s and above. In blow room lap weight checking its speed and settings cleaning efficiency andnext in carding department checking of the waste and C.V%(coefficient variation)unevenness testing 120mtrs of sliver and variation of length is made by oster testingmonthly there will be wheel checking and next drawing is made and in drawingwrapping checking is made it is of weight checking and study of breakage and setting ofan weight is by automation and next in simplex department spindles are checks hanksare also checks and its stretching percentage is tested and in spinning departmentchecking of single yarn strength and double yarn strength and checks yarn fast per kmsand next is of winding which in winding it is made of rewinding of auto counts andmakes cone weight checking and next is reeling were as knot has been tested which isof starting end to finishing end has been checked and next is doubling in this checkingfor the covering of doubling and lastly baling and packing which checks the baleweight, packet weight, bundle weight and tare weight checking is madeMARKETING DEPARTMENT BABASAB PATIL 26
  27. 27. THE GADAG CO-OPERATIVE TEXTILE MILL LTD, GADAG. The marketing department has kept an long relationship with its customers frompurchasers and suppliers. The mill manufacture hank yarn and cone yarn as per themarket demands the sale of hank yarn and cone yarn is of 40:60 the daily production ofyarn is about 7500 kgsWere mill works 24 hours for all seven days a weak The selling of yarn is given to the weavers co-operative apex organization andKarnataka handloom development corporation the mill gets order by phones by thereown sales depot and by local agents. The marketing department fixes the price of yarnbefore fixing of price the department look after the total cost of production and marketdemand and checking competitors price rate and quality and customers ability ofpurchasing The mill has direct and indirect channels of distribution were as in the direct channelis from direct mill to the traders and indirect channel it is from mill to the agents andthen to the customersADMINISTRATIVE DEPARTMENT The administrative department is the department which looks after the paymentof salaries, income tax purchasing and the department which maintains the files andrecords etc. up to the date and collecting and presenting data of record and thedepartment which maintains office and provides the necessary required facilities The administration department which decides on giving yearly bonus and toprovide the finance to all department and the department which conducts the meeting,implementing the polices, controlling of different department and finally it is adepartment which controls over all the activity of the mill.MAINTENANCE DEPARTMENT It is the department which has an relationship with the productiondepartment. This department helps in maintaining of plant and machinery which towork properly. If there is of any cause in machines the technicians are there to look BABASAB PATIL 27
  28. 28. THE GADAG CO-OPERATIVE TEXTILE MILL LTD, GADAG.after and make repairs and maintain and look over all machines daily the departmentkeeps the stock of important spare parts of machine and it maintains. The department which looks over the blow rooms its new lines, pre opener,mbo, mono-cylinder, unimix, ERM, VXL, in blow room these all machines will makecleaning for every 10 days and while cleaning if there is any repair then it that part willmake repair if it is need of replacement it will be replaced. In carding room half settingis done for once in 15 days and full setting is done once in 3 months and larrikin wirechanging has been done for every 9 months In the simplex department the general cleaning will be done for every 15 daysand in spinning department there is also general cleaning will be done for every 10 daysand spindle oil changing for every 6 months and spindle gauge also for 6 months and inwinding general cleaning has been done once in a week and spindle servicing is doneonce in 30 days and in reeling oiling will been made once in a month and in packagingcleaning once in a month will be done like these the maintenance department willmaintain the all department of the G.C.T.M. SWOT ANALYSIS STRENGTHS1) Good reputation in the market BABASAB PATIL 28
  29. 29. THE GADAG CO-OPERATIVE TEXTILE MILL LTD, GADAG.2) Good network of dealers3) Well connected with roads4) Well established in infrastructure facilities5) 45% share capital given by the government6) New specialized types of machines7) Good support from the farmers as well as from the society8) Financially strong WEAKNESSES1) No nation wide brands2) Less sales promotion activities3) Large work force4) Partly automated5) Lack of R&D6) Low labour productivity7) Not concentrating towards competition OPPORTUNITIES BABASAB PATIL 29
  30. 30. THE GADAG CO-OPERATIVE TEXTILE MILL LTD, GADAG.1) Land is available for expansion2) Company can tie with other reputed company3) Existence of a large market4) Possibility of 100% automations5) Market expansion6) They are shortly getting the ISO 9001 THREATS1) Decreasing in agricultural production2) Globalization and liberalization3) Cut through the competition4) Taste and fashion of customers turning towards the ready Made Garments5) Negligence of Government as well as less guidance and low Support from the Government WORKING CAPITALMEANING AND DEFINITION OF WORKING CAPITAL BABASAB PATIL 30
  31. 31. THE GADAG CO-OPERATIVE TEXTILE MILL LTD, GADAG. Working capital is the amount of funds which a company has to finance its day today operations it can be regards as the part of capitals which the capitals is basicallyclassified into fixed and working. Fixed capital is normally invested in fixed assets and working capital in currentassets. It is used in day to day operations. These are the funds that are invested incurrent assets. The form of these current assets keeps on changing. Ex: Raw material towork in progress to finished product. , so it is also called circulating capital. A study of working capital is of major part of the external and internal analysisbecause of its close relationship with the current day to day operation of the business.Working capital consists of broadly for that the assets of a business that are used atrelated current operation and is represented by raw material, stores, work in progress,and finished goods merchandise, bills receivable.Definition of working capitalGerstenberg “working capital means current assets of company that are changed in theordinary course of business from one form to another, ex: from cash to inventories,inventories to receivables, receivables into cash” BABASAB PATIL 31
  32. 32. THE GADAG CO-OPERATIVE TEXTILE MILL LTD, GADAG.Shubin “ Working capital is the amount of funds necessary to the cost of operating theenterprise. Operating expenses involve investment in current assets, payment towardsoverhead and expenses. Investment made in these heads is classified as workingcapital”.J. smith “ The sum of the current assets is the working capital of the business” ’’WORKING CAPITAL = CURRENT ASSETS – CURRENT LIABILITY”CONCEPT OF WORKING CAPITALThere are two concepts of working capital that are: 1) Balance sheet concept 2) Operating cycle concept. 1) Balance sheet concept: BABASAB PATIL 32
  33. 33. THE GADAG CO-OPERATIVE TEXTILE MILL LTD, GADAG. Working capital as per this defined in terms of current assets and current liabilities.Balance sheet concept further classifies working capital into a) gross and b) net workingcapital. a) Gross working capital: it refers to total investment made in current assets. It is also called circulating rotating from one head to another. Ex. Cash to raw material, raw material to finished products, finished products to debtors, and debtors to cash. This concept stresses on quantity aspect; i.e. to refer to total investment made in different current assets. Bonneville and beway have defined gross working capital as ’’ any fund received which increases the current assets”. b) Net Working capital: as per this concept working capital is the difference between current assets and current liabilities. This concept stresses on quality aspect of working capital. The difference between current assets highlights on liquidity aspect and quality of current assets. A firm that has excess of current assets over liabilities is said to possess adequate liquidity. On the contrary firm that has excess of current liability over current assets means it does not have adequate liquidity. It means that part of current assets of such firm are financed through fixed assets. 2) Operating cycle concept: Operating Cycle or Working Capital Cycle indicates the length of time between affirms paying for raw materials entering into finished stock and receiving cash on the sales of such Finished Stock. This operating cycle differs from firm to firm. Longer the operating cycle greater will be the amount of Working Capital required and vice versa. Thus it plays an important role in determining the Working Capital needs of a firm. BABASAB PATIL 33
  34. 34. THE GADAG CO-OPERATIVE TEXTILE MILL LTD, GADAG.OPERATING CYCLE CHART Cash Raw Materials Debtors Sales Finished good Work In Process Operating Cycle is the time duration required to convert sales, after the conversion of resources into inventories, into cash. The operating cycle of a G.C.T.M involves three phases. 1. Acquisition of resources such as raw material, labour, power and fuel etc. 2. Manufacture of the product which includes conversion of raw material into work-In- progress into finished goods. 3.Sales of the product either for cash or on credit. Credit sales creates book Debts for collection. In the THE GADAG CO-OPERATIVE TEXTILE MILL LTD (manufacturing concern), the working capital operating cycle starts with the purchase of raw materials and ends with the realization of cash from the sale of finished products. It is also BABASAB PATIL 34
  35. 35. THE GADAG CO-OPERATIVE TEXTILE MILL LTD, GADAG. called as cash conversion cycle, production cycle etc. It involves the purchase of raw materials and stores, its into stocks of finished goods through the work-in-Progress with the progressive increment of labor and service costs, conversion of finished goods (Yarn Products) into sales, Debtors and receivables and ultimately realization of cash and this cycle continuous again from cash to purchases of raw material and so on.CLASSIFICATION OF WORKING CAPITAL Working capital can be classified on the basis of concept and on the basis of time.Various types of working capital are as follows BABASAB PATIL 35
  36. 36. THE GADAG CO-OPERATIVE TEXTILE MILL LTD, GADAG. KINDS OF WORKING CAPITAL 1. ON THE 2. ON THE BASIS OF BASIS OF CONCEPT TIME GROSS NET TEMPORAR PERMANEN WORKING WORKING Y OR T OR FIXED VARIABLE CAPITAL CAPITAL REGULAR RESERVE SEASONAL SPECIAL1) On the basis of concept : Working capital on this basis of concept is classified into A) Gross working capital: It refers to total investment made in current asset. Current assets are the asset which can be converted into cash within a short period of an accounting year. Current assets include cash, debtors, bills receivables and short term securities etc. B) Net working capital: It is the difference between current assets and current liabilities. Current liabilities are those claims of outsiders which are expected to mature for payment within an accounting year and include creditors, bills payable and outstanding expenses. Net working capital can be positive or negative. Positive net working capital will arise when current asset exceeds current liabilities. A negative net working capital occurs when current liabilities are in excess of current assets. 2) On the basis of time : Classification of working capital in this case is made on the basis of time for which investment is required. Kinds of working capital in BABASAB PATIL 36
  37. 37. THE GADAG CO-OPERATIVE TEXTILE MILL LTD, GADAG. this category are: 1) Permanent : Some portion of working capital always remain permanent or fixed. This refers to minimum investment a firm has to make and keep in certain current assets. Firm has to always maintain minimum cash balance, inventory, debtors etc. as there current assets are required permanently. They are normally financed through long term capital. Such permanent working capital is further classified into a) regular and b) reserve a) Regular: regular permanent working capital is used in routine business operations. b) Reserve: reserve working capital refers to some portion of working capital that is kept as reserve to meet any contingency. 2) Temporary working capital: required of such capital varies or fluctuates depending on season. Its requirement is not continous it is normally finance through short term sources, like overdraft, cash credit and other short term liabilities. Temporary working capital is further classified into: A) Seasonal working capital: requirement of working capital is based on particular seasons ex; winter, summer or festival seasons etc during these seasons there will be additional demand for the products. To meet out such demand firm has to make additional arrangement of working capital. B) Special working capital: requirement of such working capital is necessitated to meet demands of special occasion’s ex. Occasion of world cup cricket, Olympics, kumba mela, elections. During these special occasions demand for goods and service will increase. To meet such special demand firm has to make temporary arrangement of working capitalDETERMINANTS OF WORKING CAPITAL BABASAB PATIL 37
  38. 38. THE GADAG CO-OPERATIVE TEXTILE MILL LTD, GADAG. Requirement of working capital differs from one firm to other. This is because of business conditions and policies of conducting business differ. Working capital required by each from is determined by following factors.1) Nature of business: important factor that determines requirement of working capital is nature of business a firm is undertaking. Firm that are engaged in production and marketing need more working capital compared to the firm that are in trading or service oriented business. This is because manufacturing units need more current assets compared to service oriented units.2) Size of business: Size of the business obviously determines the requirement of the working capital bigger the size more is the requirement of the working capital. Larger the scale of operations, larger the investment required in current assets.3) Operating cycle: Operating cycle means period from which investment is locked up in different operations. Longer the period of inventory holding, work in progress, finished goods etc more is the investment needed in the operations. This necessities more investment in current assets.4) Stock turn over: stock turnover refers to number of times stock is turned over that is it refers to sales. Quicker the stock turn over (quick sales) less is the working capital. Slow pace of stock turnover demands more investment is locked up in operation.5) Credit policy: Credit policy of the firm will influence requirements of working capital. Firms that offer liberal credit to the debtor have make more investment in production operations. Such firms need more working capital to keep their production operation continuous. Requirement of working capital will be much more if the firm buys on cash and sells on credit. On the contrary firms that buy on credit and sell on cash basis need less working capital.6) Production policy: Firms that undertakes all production operations within the organization need more working capital. Such firms have to make investment to manufacture every component or part. On the contrary, firms which undertake outsourcing that is buying some of the components or parts from out side agencies need less working capital.7) Growth of business: Firms that are experiencing growth need more working capital. Such firms have to constantly increase their production levels. To meet rising needs of sales targets. They need to continuously increase investment in current assets.8) Earning capacity and its appropriation: firms that earn sufficient profits and invest a portion of profit in business needs less working capital. Ploughing back of profits and accumulated reserves will minimize dependency on external capital for working capital needs. On the BABASAB PATIL 38
  39. 39. THE GADAG CO-OPERATIVE TEXTILE MILL LTD, GADAG.contrary firms that follow liberal divided policy are firms that do not have adequate surplusneed to borrow more to meet regular working capital needs. Needs of Working Capital: The need for working capital to run the day-to-day business activities cannot be overemphasized. We will hardly find a business firm which does not required any amount of working capital. Indeed, firms differ in their requirements of the working capital. The firm’s aim is that maximizing the wealth of shareholders. Earning a steady amount of profit requires successful sales activity. The firm has to invest enough funds in current assets for generating of sales activity. Current assets are needed because sales do not convert into cash instantaneously. There is always an operating cycle involved in the conversion of sales into cash. Therefore Working Capital required for: 1) To meet the cost of inventories including total of raw materials purchased parts, operating Supplies, work in progress, finished goods. 2) To pay wages, salaries, for indirect labor, clerical staff, managerial and supervision staff. 3) To meet overhead costs, including those of maintenance services activities, fuel, power charges, taxes and general expense administration. 4) To bear the expansion (with regard to promotion of sales) e.g. expenses on packing, advertisement, salesmanship, Sales Servicing, After requires, Credit Facilities, Delivery Services, etc. IMPORTANCE OF WORKING CAPITAL Even though the skills for maintaining the working capital are somewhat unique, the goals are the same-viz. to make an efficient use of funds for minimizing the risk of loss to attain profit objectives. BABASAB PATIL 39
  40. 40. THE GADAG CO-OPERATIVE TEXTILE MILL LTD, GADAG.Firstly, the adequate of working capital contributes a lot in raising the credit-standingof a corporation in terms of favorable rates of interest on bank loan, better terms ongoods purchased, reduced cost of production on account of the receipt of cashdiscounts, etc.Secondly, a company with sufficient working capital is always in a position to takethe advantage of any favorable opportunity either to purchase raw materials or toexecute a special order or to wait for better market position.In the third place, the ability to meet all reasonable demands for cash withoutinordinate delay is a great psychological factor to improve the all rounds efficiency ofthe business.Lastly, during slump the demand for working capital, instead of coming down, shootsup. A good amount of working capital is locked up in the inventories and book debts.Concerns having ample resources can tide over that period of depression.Thus, working capital is regarded as one of the conditioning factors in the long runoperations of the firm, which is often inclined to treat it as an issue of short runanalysis and decision making.Components of Working Capital: There are two components of Working Capital A. Current Assets B. Current LiabilitiesA) Current Assets: Components of Current Assets are as follows: 1. Cash & Bank Balance 2. Stock of Raw Material at cost- work in process and Finished Goods. 3. Advanced Recoverable in Cash or kind or kind or for value toBABASAB PATIL 40
  41. 41. THE GADAG CO-OPERATIVE TEXTILE MILL LTD, GADAG. be received. 4. Deposits under the company scheme. 5. Advanced payment of income takes credit certificates.. 6. Outstanding debts for a period exceeding six months. 7. Balance with central excise authorities. B) Current Liabilities: Components of Current Liabilities are as follows: 1. Sundry Creditors for the goods and expenses. 2. Income tax deducted at sources from contractors. 3. Expenses Payable. 4. Unclaimed Dividend. 5. Security Deposits. 6. Liabilities for bills discounted. 7. Bank Overdraft Acceptance.Working Capital Management concerned with the following aspects:1. Cash Management: Cash is the important current asset for the operation of the business. cash isthe basic input needed to keep the business running on a continuous basis; it is alsothe ultimate output expected to be realized by selling the service or productmanufactured by the firm. The firm should keep sufficient cash, neither more nor less. Cash is the liquid form of an asset. It is the ready money available in thefirm or with the business, essential for its operations. A firm needs the cash for thefollowing three purposes:(a) The Transaction Motive:(b) The Precautionary Motive:(c) The Speculative Motive:2. Receivables Management:BABASAB PATIL 41
  42. 42. THE GADAG CO-OPERATIVE TEXTILE MILL LTD, GADAG. Receivable represents amounts owed to the firm as a result of sale ofgoods or services on the ordinary course of business. These are claims of thefirm against its customers and form part of its current assets. These receivablesare carried for the customers. The period of credit and extent of receivablesdepends upon the credit policy followed by the firm. The main purpose ofmaintaining or investing in receivables is to meet competitors, to increase sales,and to maintain a cordial relationship with the clients.3. Inventory management: Every enterprise needs inventory for smooth running of its activities. Itserves as a link between production and distribution process. There is, generally atime lag between the recognition of a need and its fulfillment. The greater the timelag, the higher the requirements for inventory. The unforeseen fluctuations indemand and supply of goods necessitate the need for inventory. Moreover, itprovides a cushion for future price fluctuations.ANALYSIS AND INTERPRETATION Statement of changes in working capitalBABASAB PATIL 42
  43. 43. THE GADAG CO-OPERATIVE TEXTILE MILL LTD, GADAG. Particulars As @ As @ Effect 31/3/05 31/3/06 of wc decrease IncreaseA. Current assetsCash on hand 15143 41550 26407 4634497 392952Cash at bank 5027449F.D with bank 16051822 246822 15805000Deposits 4628150 4630150 2000Sundry debtors 35371142 51579031 16207888Pre university college 255296 255296Loan to FCSM 8500000 8500000Advances 1616172 4062468 2446296Other receivables 633633 631633 2000Closing stock 52948390 53043163 94773Total current assets 125047200 127624611B. Current liabilitiesCurrent liabilities 40050746 49098335 9047589Bonus provision payable 1280042 25794 1254248Other payables 2090328 2713579 623252Total current liability 43395322 53091956Net working capital(A-B) 81651878 18777364 25896587 74532655Increase or decrease in 7119223 7119223working capitalTotal working capital 81651878 81651878 25896588 25896558 INTERPRETATION BABASAB PATIL 43
  44. 44. THE GADAG CO-OPERATIVE TEXTILE MILL LTD, GADAG. The statement shows that the changes in working capital in the year 2004-05 and2005-06. It shows how the current assets and current liabilities are changes in twoyears the different between current asset and current liabilities i.e. net working capitalof two years 2004-05 and 2005-06 is Rs 81651878 and Rs 74532655 respectively itshows the working capital decreases of Rs 7119223 in 2005-06 which compare to2004-05. Here due to decrease the firm is not satisfactory with its working capitalIn current assets 1. cash in hand increases of Rs 26407 2. cash at bank is decreasing of Rs 392953 3. F.D with banks is also decreased Rs 15805000 4. deposits has increased of Rs 2000 5. sundry debtors has increased of Rs 16207888 6. advances has increased to Rs 2446296 7. other receivables has decreases of Rs 2000 8. closing stock has increased to Rs 94773In current liabilities 1. bonus provision is increasing of Rs 25794 2. other payables is increasing of Rs 623252 3. other liabilities are increased to Rs 9047589BABASAB PATIL 44
  45. 45. THE GADAG CO-OPERATIVE TEXTILE MILL LTD, GADAG. Statement of changes in working capital Particulars As @ As @ Effect 31/3/06 31/3/07 of wc Decrease Increase A. Current assetsCash on hand 41550 20530 21020 18446450 13811952Cash at bank 4634497F.D with bank 265078 18256 246822Deposits 4630150 4630150Sundry debtors 47320434 4258597 51579031Pre university college 255296 255297Loan to FCSM ltd 8500000 8500000Advances 4062468 5151421 1088953Other receivables 500000 131633 631633Closing stock 53043163 62356456 9313293Total current assets 127624611 147445816B. Current liabilitiesCurrent liabilities 49098335 58462247 9363912Bonus provision payable 1280042 1395879 115837Other payables 2713579 2972036 258457Total current liability 53091956 62830162Net working capital(A-B) 74532655 84615654 24232454 14149456Increase or decrease in 10082999 10082999working capitalTotal working capital 84615654 84615654 24232454 24232454 BABASAB PATIL 45
  46. 46. THE GADAG CO-OPERATIVE TEXTILE MILL LTD, GADAG.INTERPRETATION This statement shows that the changes in working capital in the year 2005-06and 2006-07. it shows the current assets and current liabilities i.e net working capitalof two years is 2005-06 and 2006-07 is rs 74532655 and rs 84615654 respectively. Itshows the working capital increases Rs 10082999 in the year 2006-07 compare to2005-06 by increasing the firm is satisfactory with its working capital.In current assets 1. cash in hand has decreased by Rs 21020 2. cash at bank is increased to Rs 13811952 3. F.D with bank is increasing of Rs 18256 4. there is no increase or decrease in deposits 5. sundry debtors is decreased to Rs 4258597 6. advances paying increased to Rs 1088953 7. other receivables has decreased to r 131633 8. closing stock is increased to Rs 9313293In current liabilities 1. bonus provision is increased of Rs 115837 2. other payable is also increased of Rs 258457 3. other liabilities is increased to Rs 9363912 Statement of changes in working capitalBABASAB PATIL 46
  47. 47. THE GADAG CO-OPERATIVE TEXTILE MILL LTD, GADAG. Particulars As @ As @ Effect 31/3/07 31/3/08 of wc decrease IncreaseA. Current assetsCash on hand 20530 40460 19930 18446450 16228726 2217724Cash at bankFd with bank 265078 275078 10000Deposits 4630150 4431466 198684Sundry debtors 47320434 51709943 4389509Pre university college 255297 255297Loan to fcsm ltd hulkoti 8500000 8500000Advances 5151421 5687379 535958Other receivables 500000 535374 35374Closing stock 62356456 58071755 4284700Recvd from NCDC - -------------------------- 1319412 1319412Total current assets 147445816 147054890B. Current liabilitiesCurrent liabilities 58462247 49593596 8868651Bonus provision payable 1395879 1564000 168121Other payables 2972036 2971114 922NCDC payable 1319412 1319412Total current liability 62830162 55448122 84615654 91606768Net current assets(A-B) 15179756 8188641Increase or decrease in 6991114 6991114working capitalTotal working capital 91606768 91606768 15179756 15179756 BABASAB PATIL 47
  48. 48. THE GADAG CO-OPERATIVE TEXTILE MILL LTD, GADAG.INTERPRETATION The statement shows that the changes in working capital in the year 2006-07and 2007-08 it shows how the current assets and current liabilities are changes in thetwo years the difference between current assets and current liabilities i.e. net workingcapital of the two years is 2006-07 and 2007-08 is Rs 84615654 and 91606768respectively. It shows the working capital increases of Rs 6991114 in the year2007-08 compare to 2006-07 by the increase in the net working capital firm issatisfactory with its working capitalIn current asset 1. cash in hand increased of Rs 19930 2. cash at bank increased of Rs 2217724 3. F.D. with bank has increased of Rs 10000 4. deposits has decreased to Rs 198684 5. sundry debtors has increased to Rs 4389509 6. advances paying is increased to Rs 535958 7. other receivables also increases of Rs 35374 8. closing stock has decreased of Rs 4284700 9. there is a receivables from NCDC of Rs 1319412In current liability 1. bonus provision has increased of Rs 168121 2. other payable has decreased of Rs 922 3. payable of received of NCDC of Rs 131912 4. other liabilities has decreased to Rs 8868651 Statement of changes in working capitalBABASAB PATIL 48
  49. 49. THE GADAG CO-OPERATIVE TEXTILE MILL LTD, GADAG. Particulars As @ As @ Effect 31/3/08 31/3/09 of wc decrease Increase A. Current assetsCash on hand 40460 277094 13366Cash at bank 16228726 19346310 3117584Fd with bank 275078 275078Deposits 4431466 4052950 378516Sundry debtors 51709943 51003132 706810Pre university college 255297 255297Loan to fcsm ltd hulkoti 8500000 8500000Advances 5687379 4858428Other receivables 535374 828951 1021508 486134Closing stock 58071755 46289123 1319412 11782632Recvd from NCDC ----------- 1319412Total current assets 147054890 135628920B. Current liabilitiesCurrent liabilities 49593596 52486226 1564000 2892630Bonus provision payable 1227535 336465Other payables 2971114 4744789 1773675NCDC payable 1319412 1319412Total current liability 55448122 58458550Net working capital (A-B) 91606768 77170370 5259595 19695992Increase or decrease in 14436398 14436398working capitalTotal working capital 91606768 91606768 19695992 19695992 INTERPRETATION BABASAB PATIL 49
  50. 50. THE GADAG CO-OPERATIVE TEXTILE MILL LTD, GADAG. The statement shows that the changes in working capital in the year 2007-08 and2008-09 it shows how the current assets and current liabilities are changes in the twoyears the difference between current assets and current liabilities i.e. net workingcapital of the two years 2007-08 and 2008-09 is Rs 91606768 and Rs 77170370respectively it shows the decreasing of Rs 14436398 in 2008-09 which compare to2007-08 by decreasing in net working capital the firm is not satisfactory with itsworking capitalIn current assets 1. cash in hand has decreased of Rs 13366 2. cash at bank is increased of Rs 3117584 3. F.D with bank has no changes 4. deposits has been decreased of Rs 378516 5. sundry debtors has decreased to Rs 706810 6. advances is decreased of rs828951 7. other receivables has increased of Rs 486134 8. closing stock is decreased to Rs 11782632 9. received from NCDC of Rs 1319412 is decreasedIn current liability 1. bonus provision is decreased to Rs 336465 2. other payables is increases of Rs 1773675 3. NCDC payables in decreased of Rs 1319412 4. other liabilities has increased of Rs 2892630CALCULATION OF OPERATING CYCLE OF THE G.C.T.M. LTDBABASAB PATIL 50
  51. 51. THE GADAG CO-OPERATIVE TEXTILE MILL LTD, GADAG. Investment in working capital is influenced by four key events in the productionand sales cycle of the G.C.T.M • Purchases of raw materials • Payment of raw materials • Sale of finished goods • Collection of cash for sale The firm begins with the purchase of raw material which are paid for after adelay which represent the account payable period. The firm converts the raw materialinto finished goods and then sells the same. The time lag between the purchase of rawmaterials and sale of finished goods is the inventory period customers pay there billssome time after the sales. The period that elapses between the date of sales and date ofcollection of receivable is the accounts payable period. The time that elapses between the purchase of raw materials and thecollection of cash for sales is referred to as the operating cycle. Where as the timelength between the payment for raw material purchases and the collection of cash forsales is referred to as the cash cycle. The operating cycle is the sum of the inventoryperiod and the accounts receivable period, whereas the cash cycle is equal to theoperating cycle less the accounts payable period. From the financial statement of the firm we can estimate the inventory period,the accounts receivable period and accounts payable period. Inventory period = average inventory Annual cost of goods sold/365Average receivable period = average accounts receivable Annual salesAccounts payable period = average accounts payable Annual cost of goods sold/365Financial information of THE G.C.T.M. Ltd 2005-2006Particulars P&l a/c data Particular Beginning EndingBABASAB PATIL 51
  52. 52. THE GADAG CO-OPERATIVE TEXTILE MILL LTD, GADAG.Sales 231390442 Inventory 46919052 46274537Cost of 206149519 A/c receivable 633633 631633goods sold A/c payable 1254248 1280042Sales = sales + yarn sales + other sales 228943400 + 700864 + 1746178 = 231390442Cost of production 210628618Add opening stock of finished goods 20107336 230735954Less closing stock of finished goods 24586435 Cost of goods sold 206149519 Inventory period = average inventory Annual cost of goods sold/365 = 46596794 206149519/365 = 46596794 564793 = 82.50Average receivable period = average accounts receivable Annual salesBABASAB PATIL 52
  53. 53. THE GADAG CO-OPERATIVE TEXTILE MILL LTD, GADAG. = 632633 231390442/365 = 632633 633946 = 0.99Accounts payable period = average accounts payable Annual cost of goods sold/365 = 1267145 206149519/365 = 1267145 56479320 = 2.24Operating cycle = inventory period + accounts receivable period = 82.50 + 0.99 = 83.49Cash cycle = operating cycle – accounts payable period = 83.49 – 2.24 = 83.49Financial information of THE G.C.T.M. Ltd 2006-2007Particulars P&l a/c data Particular Beginning EndingBABASAB PATIL 53
  54. 54. THE GADAG CO-OPERATIVE TEXTILE MILL LTD, GADAG.Sales 254655866 Inventory 46274537 50785141Cost of 215192439 A/c receivable 631633 500000goods sold A/c payable 1280042 2972036Sales = sales + yarn sales + other sales 3484623 + 250490529 + 680714 = 254655866Cost of production 220852642Add opening stock of finished goods 24586435 245439077Less closing stock of finished goods 30246638 Cost of goods sold 215192439 Inventory period = average inventory Annual cost of goods sold/365 = 48529839 21519439/365 = 48529839 589568 = 82.31Average receivable period = average accounts receivable Annual sales = 565816 254655866/365BABASAB PATIL 54
  55. 55. THE GADAG CO-OPERATIVE TEXTILE MILL LTD, GADAG. = 565816 697687 = 0.81Accounts payable period = average accounts payable Annual cost of goods sold/365 = 2126039 215192439/365 = 2126039 589568 = 3.60Operating cycle = inventory period + accounts receivable period = 82.31 + .81 = 83.12Cash cycle = operating cycle – accounts payable period = 83.12 – 3.60 = 79.52Financial information of THE G.C.T.M. Ltd 2007-2008Particulars P&l a/c data Particular Beginning EndingBABASAB PATIL 55
  56. 56. THE GADAG CO-OPERATIVE TEXTILE MILL LTD, GADAG.Sales 274253348 Inventory 55889767 50785141Cost of 244014252 A/c receivable 500000 1854786goods sold A/c payable 2972036 4290526Sales = sales + yarn sales + other sales 262156033 + 1131833 + 10965481 = 274253348Cost of production 235780335Add opening stock of finished goods 30246638 266026973Less closing stock of finished goods 22012721 Cost of goods sold 244014252 Inventory period = average inventory Annual cost of goods sold/365 = 106674908/2 244014252/365 = 53337454 668532 = 79.78Average receivable period = average accounts receivable Annual sales = 2354786/2 274253348/365 = 1177393BABASAB PATIL 56
  57. 57. THE GADAG CO-OPERATIVE TEXTILE MILL LTD, GADAG. 751379 = 1.56Accounts payable period = average accounts payable Annual cost of goods sold/365 = 7262562/2 244014252/365 = 3631281 668532 = 5.43Operating cycle = inventory period + accounts receivable period = 79.78 + 1.56 = 81.34Cash cycle = operating cycle – accounts payable period = 81.34 – 5.43 = 75.91Financial information of THE G.C.T.M. Ltd 2008-2009Particulars P&l a/c data Particular Beginning EndingBABASAB PATIL 57
  58. 58. THE GADAG CO-OPERATIVE TEXTILE MILL LTD, GADAG.Sales 256739185 Inventory 50785141 39186088Cost of 231802183 A/c receivable 1854786 1021508goods sold A/c payable 4290526 5972323Sales = sales + yarn sales + other sales 13609228 + 242486231 + 643726 = 256739185Cost of production 233038800Add opening stock of finished goods 22012721 255051521Less closing stock of finished goods 23249338 Cost of goods sold 231802183 Inventory period = average inventory Annual cost of goods sold/365 = 89971229/2 231802183/365 = 44985614 635074 = 70.83Average receivable period = average accounts receivable Annual sales = 2876294/2 256739185/365 = 1438147BABASAB PATIL 58
  59. 59. THE GADAG CO-OPERATIVE TEXTILE MILL LTD, GADAG. 703395 = 2.04Accounts payable period = average accounts payable Annual cost of goods sold/365 = 10262849/2 231802183/365 = 5131424 635074 = 8.08Operating cycle = inventory period + accounts receivable period = 70.83 + 2.04 = 72.87Cash cycle = operating cycle – accounts payable period = 72.87 – 8.08 = 64.79Years Inventory Account Account Operating Cash period receivable payable cycle cycle period period2005-06 82.50 0.99 2.24 83.49 81.252006-07 82.31 0.81 3.60 83.12 79.522007-08 79.78 1.56 5.43 81.34 75.91BABASAB PATIL 59
  60. 60. THE GADAG CO-OPERATIVE TEXTILE MILL LTD, GADAG.2008-09 70.83 2.04 8.08 72.87 64.79 operating cycle 86 84 82 80 78 days 76 Series1 74 72 70 68 66 2005-06 2006-07 2007-08 2008-09 yearsINTERPRETATION : Here the firm’s operating cycle has continuously decreased from 83 daysduring 2005-06 to 73 days during 2008-09. The operating cycle of the firm issatisfactory because it has come down by 10 days. The firm’s cash cycle is alsosatisfactory as it has decreased from 82 days to 65 days during 2005-06 to 2008-09.However it is also observed that the debtor’s collection period has increased from0.99 days to 2.08 days during the same time period.BABASAB PATIL 60
  61. 61. THE GADAG CO-OPERATIVE TEXTILE MILL LTD, GADAG. RATIO ANALYSISBABASAB PATIL 61
  62. 62. THE GADAG CO-OPERATIVE TEXTILE MILL LTD, GADAG. INTRODUCTION The ratio analysis is one of the most important and powerful tools of financial analysis. It is the process of establishing and interpreting various ratios. It is with the help of ratios that the ratios that the financial statement can be analyzed more clearly and decisions made from such analysis. CONCEPT OF RATIO A ratio is a simple arithmetical expression of the relationship of one number to another. It may be defined as the indicated quotient of two mathematical expressions. According to Accountant’s handbook by Wixonkell and Bedford, a ratio “is an expression of the quantitative relationship between two numbers”. RATIO ANALYSIS Ratio analysis is the technique of calculation of number of accounting ratios from the data found in the financial statements, the comparison of the accounting ratios with those of the previous years or with those of other concerns engaged in similar line of activities or with those of standard ratios and the interpretation of the comparison.CURRENT RATIOBABASAB PATIL 62
  63. 63. THE GADAG CO-OPERATIVE TEXTILE MILL LTD, GADAG. The current ratio of a unit measures firm’s short-term solvency, that is, itsability to meet short-term obligations. It is the ratio of total current assets to totalcurrent liabilities. The current ratio measures the ability of the firm to meet its current liabilities-current assets get converted into cash in the operating cycle of the firm and providethe funds needed to pay current liabilities. It is calculated by dividing total current assets by total current liabilities:CURRENT RATIO = CURRENT ASSETS/CURRENT LIABILITESSl.no Years Current Current Current ratio assets liability1 2004-05 125047200 43395322 2.882 2005-06 127624611 53091956 2.403 2006-07 147445816 62830162 2.344 2007-08 147054890 55448122 2.655 2008-09 135628920 58458550 2.32 current ratio 3.5 3 2.5 2 ratio Series1 1.5 1 0.5 0 2004- 2005- 2006- 2007- 2008- 05 06 07 08 09 yearsBABASAB PATIL 63
  64. 64. THE GADAG CO-OPERATIVE TEXTILE MILL LTD, GADAG.INTERPRETATION:The standard for current ratio is 2:1 but the firm’s current ratios are more than thestandard the highest ratio is 2.88 in the year 2004-05 and the lowest ratio is 2.31 in theyear 2008-09. And also it found that there is an excess amount in current assets itsshows that the firm is not utilizing the funds from current assets properly the firmneed to concentrate on its excess amount.QUICK RATIO This ratio is also termed as Acid-test ratio. A Quick ratio is concernedwith, the relationship between quick assets and current liabilities.It is a measure of liquidity calculated dividing current assets minus inventory andprepaid expenses by current liabilities.The Quick Ratio is the ratio between quick current assets and current liabilities.It is calculated by dividing the Quick Current Assets by the Current Liabilities.BABASAB PATIL 64
  65. 65. THE GADAG CO-OPERATIVE TEXTILE MILL LTD, GADAG.QUICK RATIO = QUICK ASSETS/QUICK LIABILITESQuick asset = current assets –inventory, prepaid expensesQuick liability = current liability – bank overdraftSl.no Years Quick assets Quick Quick ratio liability1 2004-05 72098810 30847985 2.332 2005-06 74581448 53091956 1.403 2006-07 85089360 62830162 1.354 2007-08 88983135 55448122 1.605 2008-09 89339797 58458550 1.52 quick ratio 2.5 2 1.5 ratio Series1 1 0.5 0 2004- 2005- 2006- 2007- 2008- 05 06 07 08 09 yearsINTERPRETATION: The standard ratio for quick ratio is 1:1 but the firms quick ratio are more than thestandard the highest quick ratio is 2.33 and lowest quick ratio is 1.35 so it found thatthere is quick ratio is more than the standard by having more the ratio it shows that th.So the has to concentrate for collection of funds.BABASAB PATIL 65

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