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Vishwa Document Transcript

  • 1. 1WORKING CAPITAL MANAGEMENTVishwa Infrastructures & Services Private LimitedPROJECT REPORTSubmitted in partial fulfilment of the requirement for the award ofTwo year full time, Masters in Business Administration.ByDEVI NARASIMHA RAOSubmitted to:PROFESSOR RAJ KUMAR PILLAYM.Sc., M.Phill., MBA., (Ph.D)DEPARTMENT OF MANAGEMENTNOVA BUSINESS SCHOOLHYDERABAD (2011-2013)
  • 2. 2DECLARATIONI hereby declare that the thesis entitled “An Empirical Study of Working Capitaland A Study Vishwa Infrastructures & Services Private Limited ”, is a result ofresearch carried out by me under the guidance of PROF. RAJ KUMARPILLAY, Nova Business School .I further, declare that this thesis has not been submitted previously for the award ofany degree in this University or any other University.DEVI NARASIMHA RAO.M
  • 3. 3CERTIFICATECertified that this thesis entitled “An Empirical Study of Working Capital and AStudy Vishwa Infrastructures & Services Private Limited ”, is a bonafideresearch work carried out by DEVI NARASIMHA RAO .M independently undermy guidance and supervision.Mr. Govardhan Reddy PROF. RAJ KUMAR PILLAYDirector of Finance M.Sc., M.Phill., MBA., (Ph.D)Nova Business School
  • 4. 4AcknowledgementWhatever we do and whatever we achieve during the course of our limited life isjust not done only by our own efforts, but by efforts contributed by other peopleassociated with us indirectly or directly. I thank all those people who contributedto this from the very beginning until its successful end.I sincerely thank Mr. Govardhan Reddy (Director of Finance, VishwaInfrastructures & Services Private Limited), person of amiable personality, forassigning such a challenging project work which has enriched my work experienceand getting me acclimatized in a fit and final working ambience in the premises ofVishwa Infrastructures & Services Private Limited.Prof.Raj kumar pillay and Prof. Vijay Sagar of Roots business school areguided my project on working capital management of Vishwa Infrastructures &Services Private Limited.I acknowledge my gratitude to Mr. Anil kumar, for his extended guidance,encouragement, support and reviews without whom this project would not havebeen a success. Last but not the least I would like to extend my thanks to all theemployees at Vishwa Infrastructures & Services Private Limited and my friendsfor their cooperation, valuable information and feedback during my project.DEVI NARASIMHA RAO
  • 5. 5TABLE OF CONTENTSChapter - I1. EXECUTIVESUMMARY2. INDUSTRY PROFILEChapter - II3. ABOUT THECOMPANYa. Company profileb. Mission & Visionc. Company Leadershipd. Current Projectse. Competitorsf. SWOT Analysis of Vishwa Infrastructures4. OBJECTIVES OF THE STUDY5. SCOPE OF STUDY6. RESEARCH METHDOLOGYChapter - III7. WORKING CAPITAL MANAGEMENTChapter - IV8. WORKING CAPITAL RATIOChapter - V9. FINDINGS10. SUGGESTIONS11. APPENDICES12. BIBILOGROPHY
  • 6. 6Chapter – I
  • 7. 71. Executive SummaryThe project on Working Capital Management has been a very good experience. Everymanufacturing company faces the problem of Working Capital Management in their day-to-dayprocesses. An organizations cost reduced and the profits increased only if it is able to manage itsWorking Capital efficiently. At the same time, the company can provide customer satisfactionand hence can improve their overall productivity and profitability.This project is a sincere effort to study and analyze the Working Capital Management of VishwaInfrastructures. The project focused on making a financial overview of the company byconducting a Working Capital analysis of Vishwa Infrastructures group for the years 2009 to2012 and Ratios & various components of working capital & format emphasizing on WorkingCapital.The internship is a bridge between the institute and the organization. This made me to beinvolved in a project that helped me to employ my theoretical knowledge about the myriad andfascinating facets of finance. Moreover, in the process I could contribute substantially to theorganizations growth. The experience that I gathered over the past two months has certainlyprovided the orientation, which I believe will help me in shouldering any responsibility in future.
  • 8. 82. Industry ProfileThe Construction industry of India is an important indicator of the development as it createsinvestment opportunities across various related sectors. The construction industry hascontributed an estimated 670,778 crore to the national GDP in 2011-12 (a share of around 8%).The industry is fragmented, with a handful of major companies involved in the constructionactivities across all segments; medium sized companies specializing in niche activities activities;and small and medium contractors who work on the subcontractor basis and carry out the workin the field. The sector is labor-intensive and, including indirect jobs, provides employment tomore than 35 million people.HISTORYThe period from 1950 to mid 60’s witnessed the government playing an active role in thedevelopment of these services and most of construction activities during this period were carriedout by state owned enterprises and supported by government departments. In the first five-yearplan, construction of civil works was allotted nearly 50 per cent of the total capital outlay.The first professional consultancy company, National Industrial DevelopmentCorporation (NIDC), was set up in the public sector in 1954. Subsequently, many architectural,design engineering and construction companies were set up in the public sector (IndianRailways Construction Limited (IRCON), National Buildings Construction Corporation(NBCC), Rail India Transportation and Engineering Services (RITES), Engineers IndiaLimited (EIL), etc.) and private sector (M N Dastur and Co., Hindustan Construction Company(HCC), Ansals, etc.).In India Construction has accounted for around 40 per cent of the development investmentduring the past 50 years. Around 16 per cent of the nations working population depends onconstruction for its livelihood. The Indian construction industry employs over 3 crore people andcreates assets worth over 20,000 crore.
  • 9. 9It contributes more than 5 per cent to the nations GDP and 78 per cent to the gross capitalformation. Total capital expenditure of state and central govt. will be touching 8,02,087 croresin 2011-12 from 1,43,587 crores (1999-2000).The share of the Indian construction sector In total gross capital formation (GCF) came downfrom 60 per cent in 1970-71 to 34 per cent in 1990-91. Thereafter, it increased to 48 per cent in1993-94 and stood at 44 per cent in 1999-2000. In the 21 st century, there has been an increase inthe share of the construction sector in GDP and capital formation.GDP from Construction at factor cost (at current prices) increased to 1,74,571 crores (12.02%of the total GDP ) in 2004-05 from 1,16,238 crores (10.39% of the total GDP) in 2000-01.The main reason for this is the increasing emphasis on involving the private sector infrastructuredevelopment through public-private partnerships and mechanisms like build-operate-transfer (BOT), private sector investment has not reached the expected levels.The Indian construction industry comprises 200 firms in the corporate sector. In addition to thesefirms, there are about 1,20,000 class A contractors registered with various governmentconstruction bodies. There are thousands of small contractors, which compete for small jobs orwork as sub-contractors of prime or other contractors. Total sales of construction industry havereached 42,885.38 crores in 2004 05 from 21,451.9 crores in 2000-01, almost 20% of whichis a large contract for Benson & Hedges.
  • 10. 10Chapter – II
  • 11. 113. About the Companya. Company ProfileVishwa Infrastructures & Services Private Limited is a major player in the infrastructure projectsindustry in India. The company started off as a partnership entity in 1992 (VISHWAConstruction Company) and rapidly evolved into a private limited company by 2004, and therest as they say is history.We provide engineering, procurement and construction activities for infrastructure projects onturnkey basis. We specialize in executing water supply & sewerage infrastructure projects withbackward integration including all allied civil engineering works like manufacturing PSC pipes,MS pipes, RCC pipes, executing pipeline contracts, construction of water treatment plants(WTP) sewage treatment plants (STP), reservoirs (ELSR, GLSR), pump houses, and installationof electro-mechanical equipments (pumping machinery). We are present across India and have astrong reputation for delivering concept to commissioning solutions. Deploying high-endinfrastructure manned by skilled experts and using cutting edge methodologies have given us adistinct advantage.b. Vision"We shall achieve leadership position in our business by delivering high quality products andservices. We shall be a vibrant learning organization striving for the overall growth of ouremployees, shareholders and society. We shall be a modern, model corporate citizen."c. Company Leadership ML SRIDHAR REDDY, Executive Director J. VIKRAM, Director K. VIJAY, Director M. GOVERDHAN REDDY, Director – Finance
  • 12. 12d. Current ProjectsWATER SUPPLY SEWERAGE OTHERSGVMC Delhi Jal Board Highway Division, RITESLtdMunicipal Corporation ofKhandwaThane MunicipalCorporationN.H. Circle, P.W.D., KanpurCMWSSB HMWSSB MPPKVV CompanyIndore.Lot XII,XVIII & XIXBUIDCO CMWSSB AP TRANCOPublic Health Division,NarasaraopetKolhapur MunicipalCorporationSouth Eastern CoalfieldsLimited, BilaspurPHED Bihar Erode City MunicipalCorporationWestern Coalfields Limited,NagpurPIU,Uttarakhand UrbanSector DevelopmentInvestment Prog. MajraPWSSBNMDC Limited BWSSBGMDA
  • 13. 13e. SWOT Analysis of Vishwa InfrastructuresStrengthsDiversified order book: VISHWA has diversified order book with presence across multipleverticals. This provides a unique hedge to the company in case of slowdown in orders from anyparticular segment.Working capital cycle: Construction is a working capital intensive industry. It should be notedthat VISHWA has one of the best working capital cycle in the industry after SimplexInfrastructure.Healthy share of private contracts: Higher share of private contracts ensue higher margins asthey are bagged on a negotiated basis. Private contracts also allow better working capitalmanagement.WeaknessSlowdown in international operations: The recent slowdown in the construction activity inMiddle East markets may impact the top-line of the company in the near term.Exposure to Andhra Pradesh: Although the exposure to Andhra Pradesh is just 10% of theorder book, (immaterial) the company faces execution issues haunting top-line.OpportunitiesNew divisions: New divisions present a great opportunity for the company to cash in on theincremental business.Transportation: VISHWA revenue share from the transportation segment has witnessed asecular decline from FY06. Considering the recent policy thrust on infrastructure and roads inparticular, VISHWA has enough headroom to tap in on this laggard business.
  • 14. 14ThreatsCompetition: The industry operates at wafer thin margins. Unviable bidding by competitors inorder to just gain an entry into the business can impact the top-line of the company.Weaker government finance: Weaker government finances can impact the order inflows of thecompanyf. CompetitorsName Last PriceMarketCap.SalesNet Profit Total Assets(Rs. cr.) TurnoverUnitech 24.4 6,383.77 1,206.32 327.11 12,154.83Mahindra Life 365 1,490.65 468.95 120.16 1,229.98Ashoka Buildcon 186 979.31 1,337.95 104.49 1,064.07Hind Constr 14.25 864.42 3,988.01 -222.25 4,700.90Gammon Infra 10.8 814.72 102.99 32.94 792.44NCC 31.2 800.54 5,250.47 35.98 4,466.80Man Infra 155 767.25 379.48 66.53 536.92IVRCL 19.75 606.1 6,177.96 18.08 4,740.44J Kumar Infra 199.95 555.89 931.59 69.81 583.7Simplex Infra 112 554.09 5,906.76 89.19 3,295.43Pratibha Ind 39.05 394.62 1,503.44 83.24 1,199.85Patel Eng 56.25 392.78 2,640.27 63.49 3,300.26Noida Toll 20.6 383.56 92.95 45.32 543.68Atlanta 47 383.05 170.22 18.88 460.31ILandFS Engg 39.8 357.35 2042.56 -135.31 1689.1Supreme Infra 210.7 352.76 1505.91 92.62 1069.81Ramky Infra 58.65 335.47 2730.52 157.36 1823.05
  • 15. 154. OBJECTIVES OF THE STUDYThe objectives of the study are as follows: To analyze the working capital management of the company. To determine the gross and net operating cycle of the unit. To know the future need of working capital in the running organization. To render recommendations for the effective management of working capital.5. SCOPE OF THE STUDYThe study is conducted at “Vishwa Infrastructures” for 6 weeks duration. The study of W.C.management is purely based on secondary data and all the information is available within thecompany itself in the form of records. To get proper understanding of this concept, I have done thestudy of the balance sheets, profit and loss A/c’s, cash accounts, trial balance, and cost sheets. So,scope of the study is limited up to the availability of official records and information provided bythe employees. The study is supposed to be related to the period of last five years.6. RESEARCH METHDOLOGYINTRODUCTION:Research methodology is a way to systematically solve the research problem. It May beunderstood as a science of studying now research is done systematically. In that various steps,those are generally adopted by a researcher in studying his problem along with the logic behindthem.
  • 16. 16“The procedures by which researcher go about their work of describing, explaining and predictingphenomenon are called methodology”.TYPE OF RESEARCH:This project “A Study on Working Capital Management of Vishwa Infrastructures &Services Private Limited” is considered as an analytical research.Analytical Research is defined as the research in which, researcher has to use facts or informationalready available, and analyze these to make a critical evaluation of the facts, figures, data ormaterial.SOURCE OF RESEARCH DATA:There are mainly two through which the data required for the research is collected.PRIMARY DATA:The primary data is that data which is collected fresh or first hand, and for first time which isoriginal in nature.In this study the Primary data has been collected from Personal Interaction with Finance manageri.e., Mr. Govardhan Reddy and other staff members.
  • 17. 17SECONDARY DATA:The secondary data are those which have already collected and stored. Secondary data easily getthose secondary data from records, annual reports of the company etc. It will save the time, moneyand efforts to collect the data.The major source of data for this project was collected through annual reports, profit and lossaccount of 4 year period from 2009-2012 & some more information collected from internet andtext sources.SAMPLING DESIGNSampling unit : Financial Statements.Sampling Size : Last four years financial statements.Tool Used for calculations: - MS-Excel.TOOLS USED FOR ANALYSIS OF DATAThe data were analyzed using the following financial tools. They areRatio analysis.Statement of changes in working capital.
  • 18. 18Chapter – III
  • 19. 19THE ORTICAL BACKGROUND OF WORKING CAPITAL MANAGEMENTWhat is working capital?Working capital refers to the investment by the company in short terms assets such as cash,marketable securities. Net current assets or net working capital refers to the current assets lesscurrent liabilities.Symbolically, it means, Net Current Assets = Current Assets - Current Liabilities.DEFINITIONS OF WORKING CAPITAL:The following are the most important definitions of Working capital:1) “Working capital is the difference between the inflow and outflow of funds. In other words itis the net cash inflow”2) Working capital represents the total of all current assets. In other words it is the “Grossworking capital”, it is also known as “Circulating capital” or “Current capital” forcurrent assets is rotating in their nature.3) Working capital is defined as “The excess of current assets over current liabilities andprovisions”. In other words it is the “Net Current Assets or Net Working Capital”IMPORTANCE OF WORKING CAPITALWorking capital may be regarded as the lifeblood of the business. Without insufficient workingcapital, any business organization cannot run smoothly or successfully.In the business the Working capital is comparable to the blood of the human body. Therefore thestudy of working capital is of major importance to the internal and external analysis because of itsclose relationship with the current day to day operations of a business. The inadequacy ormismanagement of working capital is the leading cause of business failures.
  • 20. 20To meet the current requirements of a business enterprise such as the purchases of services, rawmaterials etc. working capital is essential. It is also pointed out that working capital is nothing but onesegment of the capital structure of a business.In short, the cash and credit in the business, is comparable to the blood in the human body like finance slife and strength i.e. profit of solvency to the business enterprise. Financial management is called uponto maintain always the right cash balance so that flow of fund is maintained at a desirable speed notallowing slow down. Thus enterprise can have a balance between liquidity and profitability. Thereforethe management of working capital is essential in each and every activity.WORKING CAPITAL MANAGEMENTINTRODUCTION:Working Capital is the key difference between the long term financial management and short termfinancial management in terms of the timing of cash.Long term finance involves the cash flow over the extended period of time i.e 5 to 15 years, whileshort term financial decisions involve cash flow within a year or within operating cycle.Working capital management is a short term financial management.Working capital management is concerned with the problems that arise in attempting to manage thecurrent assets, the current liabilities & the inter relationship that exists between them. The currentassets refer to those assets which can be easily converted into cash in ordinary course of business,without disrupting the operations of the firm.
  • 21. 21Composition of working capitalMajor Current Assets1) Cash2) Accounts Receivables3) Inventory4) Marketable SecuritiesMajor Current Liabilities1) Bank Overdraft2) Outstanding Expenses3) Accounts Payable4) Bills PayableThe Goal of Capital Management is to manage the firm s current assets & liabilities, so that thesatisfactory level of working capital is maintained. If the firm cannot maintain the satisfactory levelof working capital, it is likely to become insolvent & may be forced into bankruptcy. To maintainthe margin of safety current asset should be large enough to cover its current assets.Main theme of the theory of working capital management is interaction between the current assets& current liabilities.CONCEPT OF WORKING CAPITAL:
  • 22. 22There are 2 concepts: Gross Working Capital Net Working CapitalThe gross working capital is the capital invested in the total current assets of the enterprisescurrent assets are thoseAssets which can convert in to cash within a short period normally one accounting year.CONSTITUENTS OF CURRENT ASSETS1) Cash in hand and cash at bank2) Bills receivables3) Sundry debtors4) Short term loans and advances.5) Inventories of stock as:a. Raw materialb. Work in processc. Stores and sparesd. Finished goods6. Temporary investment of surplus funds.7. Prepaid expenses8. Accrued incomes.9. Marketable securities.
  • 23. 23In a narrow sense, the term working capital refers to the net working. Net working capital is theexcess of current assets over current liability, or, say:NET WORKING CAPITAL = CURRENT ASSETS – CURRENT LIABILITIES.Net working capital can be positive or negative. When the current assets exceeds the currentliabilities are more than the current assets. Current liabilities are those liabilities, which areintended to be paid in the ordinary course of business within a short period of normally oneaccounting year out of the current assts or the income business.CONSTITUENTS OF CURRENT LIABILITIES1. Accrued or outstanding expenses.2. Short term loans, advances and deposits.3. Dividends payable.4. Bank overdraft.5. Provision for taxation, if it does not amt. to app. Of profit.6. Bills payable.7. Sundry creditors.The gross working capital concept is financial or going concern concept whereas net workingcapital is an accounting concept of working capital. Both the concepts have their own merits.The gross concept is sometimes preferred to the concept of working capital for the followingreasons:1. It enables the enterprise to provide correct amount of working capital at correct time.2. Every management is more interested in total current assets with which it has to operatethen the source from where it is made available.
  • 24. 243. It take into consideration of the fact every increase in the funds of the enterprise wouldincrease its working capital.4. This concept is also useful in determining the rate of return on investments in workingcapital. The net working capital concept, however, is also important for followingreasons:It is qualitative concept, which indicates the firm’s ability to meet to itsoperating expenses and short-term liabilities.IT indicates the margin of protection available to the short term creditors.It is an indicator of the financial soundness of enterprises.It suggests the need of financing a part of working capital requirement out ofthe permanent sources of funds.CLASSIFICATION OF WORKING CAPITALWorking capital may be classified in two ways:On the basis of concept.On the basis of time.On the basis of concept working capital can be classified as gross working capital and net workingcapital. On the basis of time, working capital may be classified as:Permanent or fixed working capital.Temporary or variable working capitalPERMANENT OR FIXED WORKING CAPITALPermanent or fixed working capital is minimum amount which is required to ensure effectiveutilization of fixed facilities and for maintaining the circulation of current assets. Every firm has tomaintain a minimum level of raw material, work- in-process, finished goods and cash balance.This minimum level of current assets is called permanent or fixed working capital as this part of
  • 25. 25working is permanently blocked in current assets. As the business grow the requirements ofworking capital also increases due to increase in current assets.TEMPORARY OR VARIABLE WORKING CAPITALTemporary or variable working capital is the amount of working capital which is required to meetthe seasonal demands and some special exigencies. Variable working capital can further beclassified as seasonal working capital and special working capital. The capital required to meet theseasonal need of the enterprise is called seasonal working capital. Special working capital is thatpart of working capital which is required to meet special exigencies such as launching of extensivemarketing for conducting research, etc.Temporary working capital differs from permanent working capital in the sense that is required forshort periods and cannot be permanently employed gainfully in the business.Implications of Net Working Capital:Net working capital is necessary because the cash outflows and inflows do not coincide. In generalthe cash outflows resulting from payments of current liability are relatively predictable. The cashinflows are however difficult to predict. More predictable the cash inflows are, the less NWC willbe required. But where the cash inflows are uncertain, it will be necessary to maintain currentassets at level adequate to cover current liabilities that are there must be NWC. Investments in current asset represent a substantial portion of total investment. Investments in current asset and level of current liability have to be geared quickly tochange in sales.Business undertaking required funds for two purposes: To create productive capacity through purchase of fixed assets. The finance current assets required for running of the business.
  • 26. 26The importance of WCM is reflected in the fact that financial manager spend a great deal of time inmanaging current asset and current liability.The extent to which profit can be earned is dependent upon the magnitude of sale. Sales arenecessary for earning profit. However, sales do not for evaluating NWC position, an importantconsideration is trade off between probability and risk.The term profitability is measured by profits after expenses. The term risk is defined as theprofitability that a firm will become technically insolvent so that it will not be able to meet itsobligations when they become due for payment. The risk of becoming technically insolvent ismeasured by NWC.If the firm wants to increase profitability, the risk will definitely increase. If firm wants to reducethe risk, the profitability will decrease.PLANNING OF WORKING CAPITAL:Working capital is required to run day to day business operations. Firms differ in their requirementof working capital (WC). Firm s aim is to maximize the wealth of share holders and to earnsufficient return from its operations.WCM is a significant facet of financial management. Its importance stems from two reasons: Investment in current asset represents a substantial portion of total investment. Investment in current assets and level of current liability has to be geared quickly to changein sales.Business undertaking required funds for two purposes: To create productive capacity through purchase of fixed assets.
  • 27. 27 To finance current assets required for running of the business. The importance of WCM isreflected in the fact that financial managers spend a great deal of time in managing currentassets and current liabilities.The extent to which profit can be earned is dependent upon the magnitude of sales. Sales arenecessary for earning profits. However, sales do not convert into cash instantly; there is invariablya time lag between sale of goods and the receipt of cash. WC management affect the profitabilityand liquidity of the firm which are inversely proportional to each other, hence proper balanceshould be maintained between two.To convert the sale of goods into cash, there is need for WC in the form of current asset to dealwith the problem arising out of immediate realization of cash against good sold. Sufficient WC isnecessary to sustain sales activity. This is referred to as the operating or cash cycle.WORKING CAPITAL CYCLE:
  • 28. 28A firm requires many years to recover initial investment in fixed assets. On contrary the investmentin current asset is turned over many times a year. Investment in such current assets is realizedduring the operating cycle of the firm.Each component of working capital (namely inventory, receivables and payables) has twodimensions ... TIME ......... and MONEY. When it comes to managing working capital -TIME ISMONEY. If you can get money to move faster around the cycle (e.g. collect dues from debtorsmore quickly) or reduce the amount of money tied up (e.g. reduce inventory levels relative tosales), the business will generate more cash or it will need to borrow less money to fund workingcapital. As a consequence, you could reduce the cost of bank interest or youll have additional freemoney available to support additional sales growth or investment. Similarly, if you can negotiateimproved terms with suppliers e.g. get longer credit or an increased credit limit; you effectivelycreate free finance to help fund future sales.It can be tempting to pay cash, if available, for fixed assets e.g. computers, plant, vehicles etc. Ifyou do pay cash, remember that this is now longer available for working capital. Therefore, if cashis tight, consider other ways of financing capital investment -loans, equity, leasing etc. Similarly, ifyou pay dividends or increase drawings, these are cash outflows and, like water flowing down aplughole, they remove liquidity from the business.If you ThenCollect receivables (debtors) faster. You release cash from the cycle.Collect receivables (debtors) slower. Your receivables soak up cash.Get better credit (in term of duration oramount) from suppliers.Your increase your cash recourse.Shift inventory (stocks) faster. You free up cash.Move inventory (stocks) slower. You consume more cash.
  • 29. 29Operating cycle:The working capital cycle refers to the length of time between the firms paying the cash formaterials, etc., entering into production process/stock & the inflow of cash from debtors (sales),suppose a company has certain amount of cash it will need raw materials. Some raw materials willbe available on credit but, cash will be paid out for the other part immediately. Then it has to paylabour costs & incurs factory overheads. These three combined together will constitute work inprogress. After the production cycle is complete, work in progress will get converted into sundrydebtors. Sundry debtors will be realized in cash after the expiry of the credit period. This cash canbe again used for financing raw material, work in progress etc. thus there is complete cycle fromcash to cash wherein cash gets converted into raw material, work in progress, finished goods andfinally into cash again. Short term funds are required to meet the requirements of funds during thistime period. This time period is dependent upon the length of time within which the original cashgets converted into cash again. The cycle is also known as operating cycle or cash cycle.Working capital cycle can be determined by adding the number of days required for each stage inthe cycle. For example, company holds raw material on average for 60 days, it gets credit from thesupplier for 15 days, finished goods are held for 30 days & 30 days credit is extended to debtors.The total days are 120, i.e., 60 -15 + 15 + 15 + 30 + 30 days is the total of working capital.
  • 30. 30Thus the working capital cycle helps in the forecast, control & management of working capital. Itindicates the total time lag & the relative significance of its constituent parts. The duration mayvary depending upon the business policies. In light of the facts discusses above we can broadlyclassify the operating cycle of a firm into three phases viz.1 Acquisition of resources.2 Manufacture of the product and3 Sales of the product (cash / credit).First and second phase of the operating cycle result in cash outflows, and be predicted withreliability once the production targets and cost of inputs are known.However, the third phase results in cash inflows which are not certain because sales and collectionwhich give rise to cash inflows are difficult to forecast accurately.Operating cycle consists of the following: Conversion of cash into raw-materials; Conversion of raw-material into work-in-progress; Conversion of work-in-progress into finished stock; Conversion of finished stock into accounts receivable through sales; and Conversion of accounts receivable into cash.In the form of an equation, the operating cycle process can be expressed as follows:Operating cycle = R + W + F + D-CR = Raw material storage periodW = Work in progress holding period
  • 31. 31F = Finished goods storage periodD = Debtors collection periodC = Credit period availed(1) Raw Material Conversion Period (RMCP) = Average Raw Material StockAverage Raw Materials consumed during the year105.25156.51193.7359.880.0050.00100.00150.00200.00250.0012-11 11-10 10-09 09-08RMCPParticulars 12-11 11-10 10-09 09-08Average Rawmaterial Stock33065118 33352213.5 20819151 13076063Raw Materialconsumedduring theyear314166.03 213093.45 107464.04 218371.65RMCP 105.25 156.51 193.73 59.88
  • 32. 32(2) Work in Progress Conversion Period (WIPCP) = Average stock in progressAverage Cost of Production(3) Finished Goods Conversion Period (FGCP) = Average finished goods inventoryAverage cost of sold goods41.0337.9328.7626.770.005.0010.0015.0020.0025.0030.0035.0040.0045.0012-11 11-10 10-09 09-08WICPParticulars 12-11 11-10 10-09 09-08Average stock inprogress7834151.5 8313099.5 5586013 4818821.5Avg cost ofproduction190952.86 211273.02 194248.64 180015.22WICP 41.03 37.93 28.76 26.77
  • 33. 33Particulars 12-11 11-10 10-09 09-08Average finishedgoods inventory14911159 13149905.5 5004497 6396225Cost of goodssold1955523.98 1648540.72 1398222.17 1260173FGCP 7.63 7.98 3.58 5.08(4) Debtors Conversion Period (DCP) = Days in year company operatingDebtor’s turnoverParticulars 12-11 11-10 10-09 09-08Days in year companyoperating360 360 360 360Debtors turnover21.66 22.89 18.41 15.82DCP 16.62 15.73 19.55 22.767.63 7.983.585.080.002.004.006.008.0010.0012-11 11-10 10-09 09-08FGCP
  • 34. 34(5) Credit Conversion Period (CCP) = Days in year company operatingCreditors’ turnoverParticulars 12-11 11-10 10-09 09-08Days in yearcompany operating360 360 360 360Creditors’ turnover27.15 26.02 39.5 22.77CCP 13.26 13.84 9.11 15.8116.62 15.7319.5522.760.005.0010.0015.0020.0025.0012-11 11-10 10-09 09-08DCP13.26 13.849.1115.810.005.0010.0015.0020.0012-11 11-10 10-09 09-08CCP
  • 35. 35GROSS OPERATING CYCLE FOR Vishwa Infrastructures:year RMCP WICP FGCP DCP GOC12-11 105.25 41.03 7.63 16.62 170.5211-10 156.52 37.93 7.98 15.72 218.1510-09 193.73 28.76 3.58 19.55 245.6209-08 59.88 26.77 5.08 22.76 114.48NET OPERATING CYCLE:year GOC CCP NOC12-11 170.5213.26 157.2611-10 218.15 13.84 204.3110-09 245.62 9.11 236.5109-08 114.48 15.81 98.67170.52218.15245.62114.480.0050.00100.00150.00200.00250.00300.0012-11 11-10 10-09 09-08GOC
  • 36. 36ANALYSISIt claimed that gross operating cycle of Vishwa Infrastructure is increasing in year 2007-08 andin the year 2008-09 it decreasing up to certain extent. In year 2007-08, it is 129.88 days then itdecreased to 114.48 days in year 2009-08 due to contraction in raw material. In 2010-09, it is onthe highest point of 245.62 days. The main reason of increasing gross operating cycle in 2010-09is due to more availability of raw material in the stores. In year 2010-09 the company purchased abulk of raw material due to market variations the GOC is increased. However, when we came toyear 2011-10 the GOC for Vishwa infrastructures has shown a significant decrement of 204.31days from the year 2010-09 to 245.62. When in next year 2012-11, it came out to be 170.52 days.The GOP for satisfactory as it Varies as the market requirements and changes in form of meet thecustomers requirements largely.But when we came to the NOC of Vishwa infrastructures it we can see that Creditors paymentperiod OR Average payment period of Vishwa infrastructures is on a average of 15 days in each(5) five years so does not make more effect on GOC. Therefore, it is somehow near of the GOC.That is why the companys NOC 98.67, 236.51, 204.31, and 157.26 in the years 2009, 2010, 2011and 2012. Therefore, we can say that there is a significant change in the NOC of the Vishwainfrastructures.157.26204.31236.5198.670.0050.00100.00150.00200.00250.0012-11 11-10 10-09 09-08NOC
  • 37. 37Chapter – IVWorking Capital Ratio
  • 38. 38RATIO ANALYSISRatio analysis is a technique of analysis and interpretation of financial statements. It is the processof establishing and interpreting various ratios for helping in making decisions. It only means ofbetter understanding of financial strengths and weaknesses of a firm. The main emphasis has beenon calculating the ratios related to a working capital management.LIQUIDITY RATIOS: These are the ratios which measures the short term solvency or financialposition of a firm. In other words, it refers to the ability of a concern to meet its currentobligations as and when these become due. To measure the liquidity of a firm, the following ratioscan be calculated.CURRENT RATIO:It may be defined as the relationship between current assets and current liabilities. This ratio isalso known as working capital ratio and measures the ability of the firm to meet current liabilities.High current ratio indicates firm is liquid and has the ability to pay its current obligations in timeas and when they become due.A ratio equal or near to the rule of thumb of 2:1 i.e. current assets double the current liabilities isconsidered to be satisfactory.Current Ratio = Current AssetsCurrent LiabilitiesYear Current assetsCurrentliabilitiesCurrentRatio2012 7,13,36,89,252 5,41,95,52,265 1.322011 5,20,10,96,577 3,99,07,99,155 1.302010 3,11,14,57,035 2,59,92,13,099 1.202009 1,70,39,28,805 1,39,17,79,068 1.22
  • 39. 39Interpretation:-The current ratio of the vishwa infrastructure is above the standard and it guarantees the paymentof dues in time. The current ratio of the company has been considerably high because they hadmade over investment in inventories, which is the main reason for the high ratio of current assets.Inventories are high because of seasonal availability of raw material. The overall position ofcurrent ratio for vishwa infrastructure is satisfactory.The current ratio of dye house has shown a remarkable increment from 1.22 in 2009-08 to 1.20 in2010-09 to 1.30 in 2011-10 and then to 1.32 in 2012-11. The ratio was satisfactory especially forthe year 2012-11.LIQUID RATIO:This ratio is also known as quick ratio or acid test ratio. It is a more rigorous test of liquidity thanthe current ratio. It is based on those current assets which are highly liquid. Inventory and prepaidexpenses are excluded because they are deemed to be least liquid component of current assets. Ahigh quick ratio is the indication that the firm is liquid and has the ability to meet its currentliabilities in time and on the other hand low ratio represents liquidity position is not good.Quick Ratio = Quick or Liquid AssetsCurrent liabilities1.32%1.30%1.20%1.22%1.10%1.15%1.20%1.25%1.30%1.35%2012-11 2011-10 2010-09 2009-08Current Ratio
  • 40. 40Quick Assets = Current Assets – Inventory – Prepaid ExpensesYearQuick assets (Current Assets- Inventory)CurrentliabilitiesQuickRatio2012 6,89,16,35,655 5,41,95,52,265 1.272011 5,07,73,98,551 3,99,07,99,155 1.272010 2,33,65,61,3512,59,92,13,0990.902009 1,45,76,95,538 1,39,17,79,068 1.05Interpretation:-According to rule of thumb, it should be 1:1. For vishwa infrastructure, the liquid ratio present auneven change over the past three years. It was 1.05 in 2009-08 and decreased to 0.90 in 2010-09and increased to 1.27 in 2011-10 and then to 2012-11. The decrement in the ratio is notsatisfactory, however the ratio 0.90 in 2010-09 is more than the rule of thumb but it should bequite more than the rule of thumb.1.27% 1.27%0.90%1.05%0.00%0.20%0.40%0.60%0.80%1.00%1.20%1.40%2012-11 2011-10 2010-09 2009-08Quick Ratio
  • 41. 41WORKING CAPITAL TURNOVER RATIO:Working capital turnover ratio indicates the velocity of the utilization of net working capital. Thisratio measures the efficiency with which the working capital is being used by a firm.Working Capital Turnover Ratio = COGS OR SalesNet Working CapitalYear Sales / RevenueNet WorkingCapitalWCTR2012 6,32,46,67,720 1,71,41,36,987 3.692011 6,13,73,22,172 1,92,02,97,422 3.202010 4,06,88,667 1,25,86,543 3.232009 2,24,214 1,28,675 1.743.69%3.20% 3.23%1.74%0.00%0.50%1.00%1.50%2.00%2.50%3.00%3.50%4.00%2012-11 2011-10 2010-09 2009-08WCTR
  • 42. 42Interpretation:-A high working capital turnover ratio indicates efficiency in utilization of resources and the ratiohas improved from 1.74 in 2009-08 to 3.69 in 2012-11. Hence we can see that the component ofworking capital is consistently reducing which is considered as a positive sign from the point viewof the financeSTOCK TURNOVER RATIOThis ratio tells the story by which stock is converted into sales. A high stock turnover ratio revealsthe liquidity of the inventory i.e., how many times on an average, inventory is turned over or soldduring the year.STOCK OR INVENTORY TURNOVER RATIO = COGS OR SALESAVERAGE STOCKYear Sales Average Stock STR2012 703988635 55810428.5 12.612011 593474659.7 23981268.5 24.752010 503359979.5 31409661 16.032009 453662278.7 24291109 18.68
  • 43. 43INTERPRETATION: -By analyzing the four-years data it seen, that it follows an uneven trend. We see that from the year2009 to 2008, it moves on a slow pace means, the ratio is increased in very nominal figures i.e.(2.65) times, which has been rectified in the year 2011-10. In 2011-10 there is a huge increase ininventory due to this ratio the company maintains is very high in 2011-10 and the company isrequired to take measures to lower down this ratio as it affects the working capital cycle ofcompany and the flow of cash in the company. In 2012, we saw company take measure to lowerdown its ratio which is good for company because a low stock turnover ratio reveals un desirableaccumulation of obsolete stock.Inventory Turnover Ratio:Inventory turnover ratio is the ratio, which indicates the number of times the stock is turned overi.e., sold during the year. This measures the efficiency of the sales and stock levels of a company.A high ratio means high sales, fast stock turnover and a low stock level. A low stock turnoverratio means the business is slowing down or with a high stock level.Inventory Turnover Ratio = Net SalesClosing Inventory12.6124.7516.0318.680.005.0010.0015.0020.0025.0030.002012-11 2011-10 2010-09 2009-08STR
  • 44. 44YearTotal SalesAverageInventoryITR2012 6,32,46,67,720 31,20,53,597 0.202011 6,13,73,22,172 45,36,98,026 0.142010 4,06,88,667 77,48,95,684 0.0012009 2,24,214 24,62,33,267 0.00001INTERPRETATION: -It is seen from the above chart that During the year 2009-08 the Inventory t/o ratio is 0.000009times, in the year 2010-09 it increased to 0.001 times. There was a subsequent increase in the year2011-10 and 2012-11 to 0.14 times and 0.20 times respectively.This shows the company has moresales.Total Asset Ratio:The total asset turnover ratio measures the ability of a company to use its assets to efficientlygenerate sales. This ratio considers all assets, current and fixed. Those assets include fixed assets,like plant and equipment, as well as inventory, accounts receivable, as well as any other currentassets.0.200.140.001 0.0000090.000.050.100.150.200.252012-11 2011-10 2010-09 2009-08ITR
  • 45. 45Total Assets Ratio = Total Sales / Total AssetsYear Total Sales Total Assets TAR2012 6,32,46,67,720 8,90,03,19,337 0.012011 6,13,73,22,172 6,26,34,54,935 0.012010 4,06,88,667 1,80,89,18,784 0.00022009 2,24,214 1,04,59,93,207 0.000002Interpretation: -There is a continuous increase in sales. In the year 2010-09 there was an increase in average totalassets, so the ratio increased from 0.000002 to 0.0002, in 2011-10 and 2012-11 there is a changein average assets and increase)in average total assets, so ratio increased from 0.01 to 0.01.0.010.010.0002 0.0000020.000.000.000.010.010.010.012012-11 2011-10 2010-09 2009-08TAR
  • 46. 46Debt Equity Ratio:A measure of a companys financial leverage calculated by dividing its total liabilities bystockholders equity. It indicates what proportion of equity and debt the company is using tofinance its assets.Debt Equity Ratio = Total Debts / EquityYear Total debt Equity DER2012 5,421 3,587 1.512011 6,599 3,446 1.912010 7,377 3,361 2.202009 7,697 3,324 2.32Interpretation: -The D/E ratio is 1:1; it implies that for every rupee of outside liability. In case of our organizationthere is an improvement in the D/E ratio year by year. There is continuous decrease in total debtand there is continuous increase in shareholder s equity (i.e. Reserves and Surpluses) withincreasing rate so the ratio is decreasing from 2.32 to 2.20 in 2010-09, to 1.91 in 2011-10 and to1.51 in 2012-11.1.511.912.202.320.000.501.001.502.002.502012-11 2011-10 2010-09 2009-08DER
  • 47. 47Chapter – V
  • 48. 48FINDINGS.Working capital of the Vishwa Infrastructure & Service Pvt Ltd. was increasing and showingpositive working capital per year.The Vishwa Infrastructure & Service Pvt Ltd has higher current and quick ratios are i.e., 1.32and 1.27 respectively. Inventory turnover ratio is very low in the year 2010-09. In the year 2011-10 it has increased by0.134 times as compared to 2010-09 and in the last year 2012-11 it has again increased by 0.067times as compared to 2011-10.Working capital turnover ratio is very low in the year 2009-08. In the year 2010-09 it hasincreased by 1.49 times as compared to 2009-08 and in the last year 2012-11 it has again increasedby 0.46 times.SUGGESTIONS. Working capital of the company has increasing every year. Profit also increasing every year this isgood sign for the company. It has to maintain it further, to run the business long term. The Current and quick ratios are almost up to the standard requirement. So the Working capitalmanagement. Vishwa Infrastructure & Service Pvt Ltd. is satisfactory and it has to maintain itfurther. The company has sufficient working capital and has better liquidity position. By efficient utilizingthis short-term capital, then it should increase the turnover.
  • 49. 49 The company should take precautionary measures for investing and collecting funds fromreceivables and to reduce the bad debts. The company has sufficient working capital and has better liquidity position. By efficient utilizingthis short-term capital, then it should increase the turnover. The company is utilizing working capital effectively this is good for the company. It has tomaintain it further.CONCLUSIONS.The study on working capital management conducted in Vishwa Infrastructure & Service Pvt Ltd. toanalyze the financial position of the company. The company’s financial position is analyzed by using thetool of annual reports from 2009-08 to 2012-11.The financial status of Vishwa Infrastructure & Service Pvt Ltd. is good.In the last year the inventory turnover has increased, this is good sign for the company.The company’s liquidity position is very good With regard to the investments in current assets there areadequate funds invested in it. Care should be taken by the company not to make further investments incurrent assets, as it would block the funds, which could otherwise be effectively utilized for someproductive purpose. On the whole, the company is moving forward with excellent management.
  • 50. 50Appendices
  • 51. 51Vishwa Infrastructure LimitedAudit for the year ended 31 March 2012 and 31 March 2011Planning analyticalSource of informationAs at As at31 Mar 2012* 31 Mar 2011EQUITY AND LIABILITIESShareholders fundsShare capital 14,35,45,060.00 14,35,45,060.00Reserves and surplus 2,65,48,90,110.00 2,46,58,75,010.00Money received against share warrants 1,81,81,697.002,81,66,16,867.00 2,60,94,20,070.00Non-current liabilitiesLong-term borrowings 63,64,49,675.00 34,35,08,107.00Deferred tax liabilities (net) 2,38,47,429.00 2,68,80,781.00Long-term provisions 38,53,101.00 28,46,822.0066,41,50,205.00 37,32,35,710.00Current liabilitiesShort-term borrowings 2,46,71,19,355.00 91,84,79,278.00Trade payables 1,83,63,33,102.00 1,80,77,10,092.00Other current liabilities 1,08,71,09,263.00 53,83,27,109.00Short-term provisions 2,89,90,545.00 1,62,82,676.005,41,95,52,265.00 3,28,07,99,155.008,90,03,19,337.00 6,26,34,54,935.00
  • 52. 52ASSETSNon-current assetsFixed assets:(a) Tangible assets 1,18,48,40,773.00 64,41,30,239.00(b) Intangible assets 56,54,347.00 30,01,630.00(c) Capital work-in-progress - 17,91,868.00(d) Intangible assets underDevelopment 6,36,31,304.00 -1,25,41,26,424.00 64,89,23,737.00Non-current investments 3,84,00,000.00 4,08,00,000.00Long-term loans and advances 41,67,17,794.00 17,36,99,658.00Other non-current assets 5,73,85,867.00 19,89,34,963.001,76,66,30,085.00 1,06,23,58,358.00Current assetsCurrent investment - 5,00,10,117.00Inventories 31,20,53,597.00 12,36,98,026.00Trade receivables 2,13,84,76,493.00 2,18,40,67,041.00Cash and bank balances 58,60,08,875.00 44,95,61,062.00Short-term loan and advances 38,61,94,344.00 37,83,62,833.00Other current assets 3,71,09,55,943.00 2,01,53,97,498.007,13,36,89,252.00 5,20,10,96,577.008,90,03,19,336.99 6,26,34,54,934.99Note:1. We have considered 31 December 2012 figures for Balance Sheet ratios.2. We have extrapolated 31 December 2012 to 31 March 2013 based on previous years trend forprofitability analysis.
  • 53. 53Vishwa Infrastructures and Services Private LimitedBalance Sheet as at 31 March 2010 and 31 March 2009(All amounts in Indian Rupees, except share data and where otherwise stated)As at As atSchedule 31 March 2010 31 March 2009SOURCES OF FUNDSShareholders fundsShare capital 112,77,55,000 4,25,85,000Reserves and surplus 21,08,51,25,969 89,00,97,898Loan fundsSecured loans 357,31,44,929 8,63,62,482Unsecured loans 4 - 2,55,000Deferred tax liability (net) 20 (3)2,28,92,886 2,66,92,8271,80,89,18,784 1,04,59,93,207APPLICATION OF FUNDSFixed assets 5Gross block35,00,76,800 27,01,27,468Less: Accumulated depreciation(9,38,14,260) (4,23,02,176)Net block25,62,62,539 22,78,25,292Capital work-in-progress (including capitaladvances)21,12,309 60,18,17825,83,74,848 23,38,43,470
  • 54. 54Investments63,83,00,000-Current assets, loans and advancesInventories 777,48,95,684 24,62,33,267Sundry debtors 81,27,06,01,462 81,00,22,080Cash and bank balances 947,41,60,803 28,48,85,938Loans and advances 1059,17,99,086 36,27,87,5203,11,14,57,035 1,70,39,28,805Current liabilities and provisionsCurrent liabilities 111,56,27,09,638 88,04,15,806Provisions 123,65,03,461 1,13,63,2621,59,92,13,099 89,17,79,068Net current assets 1,51,22,43,936 81,21,49,7371,80,89,18,784 1,04,59,93,207
  • 55. 55Vishwa infrastructures and service private limitedStatement of Profit & Loss 31 March 2012 and 31 March 2011(All amount in Indian rupees, expect share data and where otherwise stated)NoteFor the year ended 31March 2012For the year ended 31March 2011IncomeRevenue from operations 2.18 6,32,46,67,720 6,13,73,22,172Other income 2.19 9,00,65,656 4,57,14,373Total Revenue 6,41,47,33,376 6,18,30,36,545Expenses :Materials and supplies consumed 1,36,21,05,603 2,22,89,60,078Contract expenses 2.20 3,69,02,62,970 2,72,28,05,391Employee benefits expense 2.21 26,86,64,688 16,68,72,996Finance costs 2.22 43,42,10,114 22,81,51,259Depreciation and amortizationexpense 2.90 15,59,51,371 7,12,47,821Other expenses 2.23 23,92,12,724 13,83,96,295Total expenses 6,15,04,07,470 5,55,64,33,840Profit before tax 26,43,25,906 62,66,02,705Tax expense 2.24- Current tax 7,83,44,158 20,42,67,732- Deferred tax -30,33,352 39,87,8957,53,10,806 20,82,55,627Profit after tax 18,90,15,100 41,83,47,078Earning per equity share - par valueof Rs. 10 per share 2.27- Basic 13.17 32.14- Diluted 13.15 32.14
  • 56. 56Vishwa Infrastructures and Services Private LimitedProfit and Loss Account for the year ended 31 March 2010 and 31 March 2009(All amounts in Indian Rupees, except share data and where otherwise stated)For the year ended For the year endedSchedule 31 March 2010 31 March 2009IncomeContract revenues 13 4,06,88,66,709 2,24,21,38,864Less: Excise duty (64,56,902) (1,31,78,585)Income from operations 4,06,24,09,807 2,22,89,60,279Other income 14 3,46,43,248 3,14,87,4924,09,70,53,055 2,26,04,47,771ExpenditureContract costs 15 3,30,02,65,447 1,80,54,57,358Personnel costs 16 9,56,10,499 5,13,21,939Administrative and other expenses 17 7,86,36,727 5,57,43,483Finance charges 18 12,38,05,890 7,38,67,170Depreciation 5 5,15,49,364 3,07,19,590Less: Effect of change in accounting policy fromWDV to SLM (Refer note 13 of Schedule 20) - (1,69,30,242)3,64,98,67,927 2,00,01,79,297Profit before tax 44,71,85,128 26,02,68,474Tax expense 19 15,70,22,593 9,55,27,444Profit after tax 29,01,62,535 16,47,41,029Balance in profit and loss account brought forward 29,41,83,902 13,94,07,337Amount available for appropriation 58,43,46,437 30,41,48,366Appropriations:Interim dividend 85,17,000 85,17,000Tax on interim dividend 14,47,464 14,47,464Transferred to general reserve 2,17,62,190 -Balance carried forward to balance sheet 55,26,19,783 29,41,83,902Earnings per shareBasic and diluted - par value of Rs. 10 per share 20(4) 22.71 12.90
  • 57. 57
  • 58. 58Vishwa Infrastructures and Services Private LimitedCash flow statement for the year ended 31 March 2010 and 31 March 2009(All amounts in Indian rupees, except share data and where otherwise stated)For the year ended31 March 2010For the yearended31 March 2009Cash flows from operating activitiesProfit before tax 44,71,85,128 26,02,68,474Adjustments:Depreciation 5,15,49,364 1,37,89,348Interest income (1,74,19,587) (1,09,11,631)Finance charges 12,38,05,890 7,38,67,170Loss / (profit) on disposal of fixed assets (3,000) 1,08,925Operating cash flows before working capitalchanges and other assets 60,51,17,795 33,71,22,285(Increase) / decrease in sundry debtors (46,05,79,382) (66,95,26,543)(Increase) / decrease in loans and advances (22,02,43,660) (24,47,98,692)(Increase) / decrease in inventories (52,86,62,417) 3,58,83,842
  • 59. 59Increase / (decrease) in current liabilities andprovisions 68,23,55,286 51,54,89,686Cash generated from operations 7,79,87,622 (2,58,29,422)Income taxes paid, net (14,04,28,431) (6,63,52,019)Net cash used in operating activities (6,24,40,809) (9,21,81,441)Cash flows from investing activitiesPurchase of fixed assets (7,99,86,611) (16,61,17,494)Sale of fixed assets 3,000 1,17,984Investements (3,83,00,000) -Interest received 1,72,42,191 1,00,18,787Net cash used in investing activities (10,10,41,420) (15,59,80,723)Cash flows from financing activitiesProceeds from issue of share capital - 20,00,05,616Acceptance of secured loan 50,19,60,349 7,24,51,745Repayment of secured loan (1,51,77,902) (1,14,98,940)Repayment of unsecured loan (2,55,000) (31,14,381)Dividends paid (including dividend tax) (99,64,464) (99,64,464)Finance charges paid (12,38,05,890) (7,38,67,170)Net cash generated from financing activities 35,27,57,093 17,40,12,406Net increase / (decrease) in cash and cashequivalents 18,92,74,865 (7,41,49,759)Cash and cash equivalents at the beginning of theyear 28,48,85,938 35,90,35,697Cash and cash equivalents at the end of the year(Note 1) 47,41,60,803 28,48,85,938
  • 60. 60Notes:As at As at1. Cash and cash equivalents comprise: 31 March 2010 31 March 2009Cash in hand 4,43,104 2,56,399Balances with scheduled banks- in current accounts 24,66,32,016 13,35,99,457- in deposit accounts 22,61,46,915 15,10,30,082Balances with non-scheduled banks- in current accounts 9,38,768 -47,41,60,803 28,48,85,938
  • 61. 61BIBLIOGRAPHY
  • 62. 62TEXT BOOKS M.Y.Khan / P.K Jain, Financial Management Text, Problem’s Cases, 5THEdition,TataMcGraw –Hill Publishing Company Limited, New Delhi, 2007. Prasanna Chandra, Financial Management Theory and Practice, 5THEdition, TataMcGraw –Hill Publishing Company Limited, New Delhi, 2001. Annual Report of Vishwa Infrastructures & Services Private LimitedWEB SITE VISITED www.google.com www.wikipedia.org www.transtutors.com