Working capital management of wcl

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Working capital management of wcl

  1. 1. Business Research on Working Capital Management Of WCL ltd By Kamran Khan On 4 th April 2011 Shri Ramdeobaba College Of Engineering & Management , Nagpur
  2. 2. Objectives Of Research <ul><li>To Make Deep Analysis Of The Element Of Working Capital & To Identify The Factors Responsible For The Changes In Working Capital. </li></ul><ul><li>To Study The Relationship Between Current Assets & Current Liability Of Western Coalfields Limited. </li></ul><ul><li>To Analyze The Working Capital By Ratio Analysis Techniques. </li></ul>
  3. 3. Research Methodology <ul><li>Type Of Research </li></ul><ul><li>Collection Of Time Period </li></ul><ul><li>Collection Of Data </li></ul><ul><li>Reliability Of Data </li></ul><ul><li>Analysis Of Data </li></ul><ul><li>Interpret & Report </li></ul>
  4. 4. Hypothesis <ul><li>The Liquidity Position Of A Company Is A Satisfactory. </li></ul><ul><li>There Is A Positive Relationship Between Current Assets & Current Liabilities. </li></ul>
  5. 5. Overview Of Western Coalfields Ltd. <ul><li>WCL Was Incorporated As A Separate Company On 1 st November 1975 After Recognition Of Nationalized Coal Industry Under The Central Umbrella Of Coal India ltd. On That Time Its Jurisdiction Was Spread Over To 130 mines In The State Of Maharashtra & Madhya Pradesh Went To Newly Incorporated Subsidiary “South Eastern Coalfields Limited (SECL)” </li></ul><ul><li>Currently WCL 85 Coal Producing Mines (Open Mines 31, Underground 54) In Nagpur, Chandrapur & Yeotmal District Of Maharashtra & Chindwara & Betul District Of Madhya Pradesh, Which Produced 41.41 Million Tones During Year 2004-05 </li></ul>
  6. 6. Profit & Loss A/c Of WCL Particulars 2004-05 2005-06 2006-07 2007-08 2008-09 Turnover 3882.48 4504.73 4986.32 5012.24 5681.34 Net sales 3359.74 3941.35 4382.35 4392.96 4909.18 Other income 440.08 287.38 328.83 387.13 507.63 Accretion/(Decretion) In Stock 23.87 62.52 83.87 73.07 54.08 Total 3823.69 4291.25 4795.05 4853.16 5362.73 Employee remuneration 1358.221 1646.44 1420.21 1497.59 1910.02 Consumption Of Stores 564.8 667.85 724.64 750.69 762.88 power & fuel 189.21 185.41 184.68 221.56 225.63 Repairs 109.14 98.32 110.7 111.52 117.4 Contractual Expenses 244.85 331.4 383.14 396.1 491.84 Social Overheads 223.81 189.83 211.78 223.81 228.14 Depreciation 182.92 170.91 164.5 178.28 185.65 Interest 25.22 8.29 4.31 5.55 4.33 Provision 57.93 45.25 133 19.07 45.68
  7. 7. Contd… Particulars 2004-05 2005-06 2006-07 2007-08 2008-09 Other Expenses - - - - - OBR Adjustments 15.26 7.6 35.16 158.57 262.77 Others 153.79 127.56 187 223.66 208.32 TOTAL 3082.02 3374.16 3293.12 3748.26 4442.66 PROFIT/LOSS 741.67 917.09 1501.93 1104.9 920.07 Prior Period Adjustments 1.93 18.21 54.97 50.46 10.15 Contribution to CPRA - - - - - Profit & Loss After CPRA 743.6 935.3 1446.96 1054.44 930.22 Provision For Taxation 250.88 283.75 472.03 391.7 487.96 Deferred Tax 31.07 51.36 15.61 19.64 169.52 Profit After Tax 461.65 600.19 990.54 682.38 611.78
  8. 8. Balance Sheet Of WCL Particulars 2004-05 2005-06 2006-07 2007-08 2008-09 LIABILITIES: Share Capital 297.1 297.1 297.1 297.1 297.1 Reserve & Surplus 522.5 604.92 788.67 1049.59 1343.88 Profit & Loss 926.38 1061.78 1429.36 1673.1 1794.26 Loan Fund (secured) 204.03 - - - - Loan Fund (unsecured) 159.77 148.02 135.49 122.97 112.98 Deferred Tax Liability 125.98 105.07 63.1 32.65 29.18 TOTAL 2235.76 2216.89 2713.72 3175.41 3577.4
  9. 9. Contd… Particulars 2004-05 2005-06 2006-07 2007-08 2008-09 ASSETS: Fixed assets: Gross Block 3218.69 3365.83 3480.99 3668.24 3782.45 Less: Depreciation 1814.25 1956.82 2072.22 2251.34 2398.13 Less : impsirment - 71.37 81.93 80.63 85.75 Net Block 1404.44 1337.64 1326.84 1336.27 1298.57 Capital WIP 182.96 183.06 204.41 174.85 187.65 Survey Off Assets 6.19 8.02 10.49 11.29 11.36 Investment 320.9 320.9 320.9 288.81 272.77 Deferred Tax Assets 249.7 177.42 151.07 140.25 315.83
  10. 10. Contd… Particulars 2004-05 2005-06 2006-07 2007-08 2008-09 Current Assets: Inventories 151.59 210.15 287.77 363.97 310.43 Sundry Debtors 319.59 389.95 235.06 238.14 126.02 Cash & Bank Balance 340.22 761.6 1513.75 1296.62 2262.2 Loan & Advances 988.67 1236.5 1518.6 1983.95 2490.98 Sub Total 1800.07 2598.2 3555.38 3882.68 5180.63 LESS :Current Liability 1728.5 2408.35 2855.37 2658.74 3689.41 Net Current Assets 71.57 189.85 700.01 1223.94 1491.22 Misc Expenses - - - - - Profit & Loss A/c - - - - - TOTAL 2235.76 2216.89 2713.72 3175.41 3577.4
  11. 11. Working Capital Of WCL YEAR CURRENT ASSETS CURRENT LIABILITY NET WORKING CAPITAL INCREASE/DECREASE IN WORKING CAPITAL 2004-05 1800.7 1728.5 71.57 Nil 2005-06 2598.2 2408.35 189.85 118.28 2006-07 3555.38 2855.37 700.01 510.16 2007-08 3882.68 2658.74 1223.94 523.93 2008-09 5180.63 3689.41 1491.22 267.28 AVERAGE 3403.39 2668.07 735.32 GROWTH 189.80% 113.45% 1983.58%
  12. 12. Components Of Working Capital YEAR INVENTORY TO NET WORKING CAPITAL RECEIVABLES TO NET WORKING CAPITAL CASH & BANK TO NET WORKING CAPITAL LOAN & ADVANCES TO NET WORKING 2004-05 211.80% 446.54% 475.37% 1381.40% 2005-06 110.69% 205.40% 401.16% 651.30% 2006-07 41.11% 33.58% 216.25% 216.97% 2007-08 29.74% 19.46% 105.94% 162.09% 2008-09 20.21% 8.45% 151.94% 167.04% MEAN 82.71% 142.62% 270.08% 515.76%
  13. 13. Liquidity Ratios Of WCL YEAR CURRENT RATIO ACID TEST RATIO INVENTORY TO SALES RECEIVABLE TO SALES RATIO WORKING CAPITAL TURNOVER RATIO CURRENT TO TOTAL ASSETS RATIIO CURRENT ASSETS TO SALES RATIO 2004-05 1.04 0.954 0.045 0.095 0.014 0.454 0.535 2005-06 1.08 0.991 0.053 0.099 0.042 0.562 0.659 2006-07 1.25 1.114 0.065 0.053 0.14 0.638 0.811 2007-08 1.46 1.323 0.083 0.054 0.244 0.665 0.883 2008-09 1.4 1.322 0.061 0.026 0.262 0.713 0.055 MEAN 1.246 1.147 0.061 0.066 0.142 0.606 0.789
  14. 14. Conclusion <ul><li>Working Capital Position Of Western Coalfields Limited Is Analyzed By Ratio Analysis Technique & It Is Found That The Position Of Current Ratio, Receivables Turnover Ratio Are Not Up To The Standard Bench Mark. The Ratio Are Continuously Increasing From 2004-05 To 2008-09 Specially In Case Of Working Capital Turnover Ratio Because There Was Huge Increase In Current Assets & Low Increase In Current Liability. Receivables Turnover Ratio Is Also Increasing Continuously. Overall Ratio Analysis We Can Say That This Changes In Working Capital Leads To Short Term Solvency. </li></ul>

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