1. [Type text] Page 1
“Summer Internship Project Report”
On
““Working Capital Management and Comparison of Cash Management
Performance of Arvind Mills Ltd with Mafatlal Industries Ltd”
AT
ARVIND MILLS LTD.
Project report is submitted to Som Lalit Institute of Management (SLIMS)
In partial fulfilment of the requirement for the award of the degree of
“Post Graduation in Diploma Management”
Submitted By:
Kushangi Shah
Roll No. - 71
Batch:- 2015-2017
Som – Lalit College Of Management Studies, PGP – I
Under the Guidance and Supervision of: -
Mr. Jatin Thakkar
2. [Type text] Page 2
“Declaration”
I (Kushangi Shah) hereby declare that this project report entitled Working Capital
Management and Comparison of Cash Management Performance of Arvind
Mills Ltd with Mafatlal Industries Ltd submitted in partial fulfilment of the PGDM
program of Som Lalit Institute of Management is my original work and the
project is not submitted as project previously to any institution for the award of
any degree, associate ship, fellowship or any other similar titles.
Date:
Place:
3. [Type text] Page 3
PREFACE
In PGDM, theory of any subject is important but without its practical knowledge it
is meaningless particularly for the management students.
As a student of business administration, I have studied many theories and
concepts in the classroom, but only after taking up this project work,I have
experienced and understood these management theories and practices in its
fullest sense which plays a very vital role in the business field today.
The knowledge of management is incomplete without knowing the practical
application of the theories studied. This training provides golden opportunity for
all students especially when the management student does not have perfect
understanding of all the working of a unit.
Hence, this report is designed with the objective to know the Working Capital
Management and Comparison of Cash Management Performance of Arvind Mills
Ltd with Mafatlal Industries Ltd and to get practical experience as well as
knowledge.
I really enjoyed working on this project with ample guidance of all staff members
of Arvind Mills Ltd.
4. [Type text] Page 4
ACKNOWLEGEMENT
The success I have got to accomplishment of this project work is not only due my efforts. So
first of all, I wish to thanks to Som-Lalit College of Management Studies and Arvind Ltd. for
providing me this great opportunity to undergo my summer internship training.
I am heartly thankful to my mentor Mr. Jatin Thakkar for his continuous guidance, regular ideas
and important feedback throughout the course of project.
- Kushangi I Shah
S.L.I.M.S, Ahmedabad.
5. [Type text] Page 5
Table content
Contents
PREFACE............................................................................................................................................3
ACKNOWLEGEMENT...........................................................................................................................4
History of Textile Industry................................................................................................................18
WORKING CAPITAL MANAGEMENT:.................................................................................................47
INTRODUCTION:- .............................................................................................................................47
Net Working Capital/Net Current Asset = CurrentAssets – Current Liabilities.......................................47
WORKING CAPITAL MANAGEMENT:-................................................................................................48
CLASSIFICATION OFWORKING CAPITAL:-..........................................................................................49
Working capital can be classifiedinto following two ways...................................................................49
On the basis of Value:......................................................................................................................50
On the basis of Time:.......................................................................................................................50
Need for Working Capital:................................................................................................................51
Operating Cycle:...............................................................................................................................52
Operating cycle = R + W + F + D – C ...................................................................................................52
Objectives ofWorking Capital :.........................................................................................................53
Balanced Working Capital Position : .................................................................................................54
Importance of Working Capital :.......................................................................................................55
Factors affecting Working Capital :...................................................................................................56
Nature of Business:..........................................................................................................................56
Sales and Demand Conditions:.........................................................................................................57
Technology and Manufacturing Policies:...........................................................................................57
Availability of credit:........................................................................................................................58
Operating efficiency:........................................................................................................................58
Growth and Expansion:....................................................................................................................59
Sources of Working Capital:..............................................................................................................60
6. [Type text] Page 6
Principles ofWorking Capital Management :.....................................................................................64
Objectives of Cash Management:.....................................................................................................65
(a) To meet the cash disbursement needs:.........................................................................................65
(b) To minimize the funds committed to cash balances:......................................................................65
7. [Type text] Page 7
1. INTRODUCTION
This research is done to analyze the working capital management of Arvind Mills
Ltd.
Working Capital is that capital which is needed for day to day transaction or
operating activities of the business. It is necessary that proper management
regarding the amount of working capital is to be done as a large amount of
working capital would mean that the company has idle funds and so it has to pay
huge amount of interest on those unutilized funds and inadequate amount of
working capital would lead to a situation where company is not able to meet its
liabilities and such firms runs the risk of insolvency.
The goal of working capital management is to ensure that the firm is able to meet
its daily financial requirements and it has sufficient cash flow to satisfy both
maturing short term debt and upcoming operational expenses.
Cash management is one of the basic components of working capital
management. Cash is the medium of exchange and therefore it is the most
important component of working capital. Cash balance denotes cash on hand and
bank deposits. Maintaining cash balance at a high level is necessary but at the
same time it is not desirable as cash in its present form is a non-earning asset.
In simple terms, cash management means efficient collection and disbursement of
cash and any temporary investment of cash i.e. maintaining optimum level of cash
in an organization is called cash management.
8. [Type text] Page 8
2. PROBLEM STATEMENT:-
To analyse the working capital management and performance of cash management of
Arvind Mills Ltd with the help of financial statements such as Profit and Loss Account and
Balance Sheet of the last 5years.
3. RESEARCH DESIGN:-
The type of research for the analysis is an analytical research because in analytical
research data ,information are being provided and analysis is being done on the
basis of given information to make a critical evaluation of the material.
In the same manner, for this project, data has been gathered from various sources
and available data such as newspaper, journals and websites is used to make
analysis based on the concept of working capital management.
4. RESEARCH METHODOLOGY:-
In this project report, the research methodology is that there will be analysis and
comparison will be done on two leading textile companies of India that is Arvind
Mills Ltd and Mafatlal Industries Ltd.
5. DATA SOURCES:-
The information and data collected for this project report is only based on
secondary data. The secondary data which is provided by all the Arvind Mills Ltd is
in the form of balance sheets and profit and loss account and will be used for the
analysis and interpretation purpose.
Other secondary sources used in the project report will be:
i. Past articles and reports where relative research have been already undertaken.
ii. Official websites of the selected companies.
iii. Annual reports published by the companies.
9. [Type text] Page 9
iv. Books relating to the topic.
v. Various financial websites.
vi. Newspapers.
vii. Journals.
6. TIME BUDGET:-
The time budget for the completion of the internship and project report will be of Two
Months (8 weeks). The time budget will be as under:
1st Week – Introduction
2nd Week – Understanding of the topic
3rd Week – Understanding the flow of activities
4th Week – Collection of Data
5th Week – Data refining & Preparation
6th Week – Data analysis
7th Week – Interpretation of analyzed data
8th Week – Project reporting & presentation
7. TENTATIVE CHAPTER PLAN:-
Research methodology
Introduction
Literature review
Scope of the study
Research design
Data sources
Time budget
Tentative chapter plan
Objectives of the study
Expected contribution of the study
Limitations of the study
10. [Type text] Page 10
Beneficiaries
A short write up on the research and reason for taking up the project
Analysis and key findings
Secondary data analysis
Conclusion
Recommendation
Bibliography
Annexure
8. EXPECTED CONTRIBUTION OF STUDY:-
Financial position of the company can be known and studied better way.
Efficient ratio analysis has been done so as to classify company’s financial data.
Performance of cash management is also studied.
By studying working capital management, one can come to know the day to day
cash requirements.
9. BENEFICIARIES:-
This project has helped me to analyze the liquidity position of the Arvind Mills
Ltd .And at the same time the practical knowledge has been obtained regarding
how actually working capital management takes place in actual market.
Even the findings may also be helpful to the company .This project is helpful in
knowing the company’s position of funds maintenance and setting the standards
for working capital inventory levels, current ratio level, quick ratio, current asset
turnover ratio etc.
This project is done as a whole entirely. It will give overall view of the
organization and it is useful in further expansion decisions to be taken by
management.
11. [Type text] Page 11
10. REASONS FOR TAKING UP THE PROJECT:-
Selecting finance as a specialization subject helped me to study in depth about its
sub parts of finance.
Understand the company’s financial aspect and give solution for further study of
project.
11.LIMITATION OF THE STUDY:-
The study is mainly carried out based on the secondary data provided in the
financial statements of last five years only.
As the study is based only on the concept of working capital management, the
overall financial position of the company cannot be determined.
12. [Type text] Page 12
INTRODUCTION TO TEXTILE INDUSTRY
The Textile Sector in India ranks next to Agriculture. Textile is one of India’s oldest industries
and has a formidable presence in the national economy in as much as it contributes to about 14
per cent of manufacturing value-addition, accounts for around one-third of our gross export
earnings and provides gainful employment to millions of people. The textile industry occupies a
unique place in our country. One of the earliest to come into existence in India, it accounts for
14% of the total Industrial production, contributes to nearly 30% of the total exports and is the
second largest employment generator after agriculture.
Textile Industry is providing one of the most basic needs of people and the holds importance;
maintaining sustained growth for improving quality of life. It has a unique position as a self-
reliant industry, from the production of raw materials to the delivery of finished products, with
substantial value-addition at each stage of processing; it is a major contribution to the country's
economy.
The Indian textile industry is one of the largest in the world with a massive raw material and
textiles manufacturing base. Our economy is largely dependent on the textile manufacturing
and trade in addition to other major industries. About 27% of the foreign exchange earnings are
on account of export of textiles and clothing alone. The textiles and clothing sector contributes
about 14% to the industrial production and 3% to the gross domestic product of the country.
Around 8% of the total excise revenue collection is contributed by the textile industry. So much
so, the textile industry accounts for as large as 21% of the total employment generated in the
economy. Around 35 million people are directly employed in the textile manufacturing
activities. Indirect employment including the manpower engaged in agricultural based raw-
13. [Type text] Page 13
material production like cotton and related trade and handling could be stated to be around
another 60 million.
A textile is the largest single industry in India (and amongst the biggest in the world),
accounting for about 20% of the total industrial production. It provides direct employment to
around 20 million people. Textile and clothing exports account for one-third of the total value
of exports from the country. There are 1,227 textile mills with a spinning capacity of about 29
million spindles. While yarn is mostly produced in the mills, fabrics are produced in the
powerloom and handloom sectors as well. The Indian textile industry continues to be
predominantly based on cotton, with about 65% of raw materials consumed being cotton. The
yearly output of cotton cloth was about 12.8 billion m (about 42 billion ft). The manufacture of
jute products (1.1 million metric tons) ranks next in importance to cotton weaving. Textile is
one of India’s oldest industries and has a formidable presence in the national economy in as
much as it contributes to about 14 per cent of manufacturing value-addition, accounts for
around one-third of our gross export earnings and provides gainful employment to millions of
people. They include cotton and jute growers, artisans and weavers who are engaged in the
organised as well as decentralised and household sectors spread across the entire country.
Segments in textile industry:-
Readymade garments
Cotton textiles including handlooms
Man-made textiles
Silk textiles
Woollen textiles
Handicrafts including carpets
Coir
Jute
14. [Type text] Page 14
Key facts:-
o Indian Textile Industry is one of the largest and oldest industry in India.
o Indian Textile Industry is highly fragmented industry; at the same time it is an
independent and self-reliant industry that has shown sustainable growth over the
years.
o Indian textile Industry is valued at US$ 36 Billion with exports of US$ 17 Billion in
2005-2006.
o Indian Textile Industry is second largest industry in terms of providing vast
employment opportunities and employs around 35 million people in country after
agriculture sector..
o The Indian Textile Industry plays vital role in economic development and
contributes 14% to industrial production in the country.
o Textile Industry contributes around 4% of GDP, 9% of excise collections, 18% of
employment in industrial sector, and has 16 % share in country’s export.
o Industry has direct and strong linkage with rural and agriculture sector, therefore
it is estimated that, one of every six households in country is directly or indirectly
dependent on this industry.
o Industry contributes around 25% share in the world trade of cotton yarn.
o India is evolved as a major contributor in world’s cotton sector. Indian is the
world’s third-largest producer of cotton and second-largest producer of cotton
yarns and textiles.
o India is the largest exporter of yarn in the international market and has a
share of 25% in world cotton yarn export market.
o India contributes for 12% of the world’s production of textile fibers and
yarn.
o Indian textile industry is second largest after China, in terms of spindleage,
and has share of 23% of the world’s spindle capacity.
o India has around 6% of global rotor capacity.
o The country has the highest loom capacity, including handlooms, and has
share of 61% in world loomage.
o Including textiles and garments, 30% of India's export comes from this
sector.
o Indian Textile Industry is one of the largest industry that provides high
exports and foreign revenue.
15. [Type text] Page 15
o Large and potential domestic & international market, large pool of skilled
and cheap labor, well-established industry, promising export potential etc.
are few strengths of Indian Textile Industry.
o Highly Fragmented, High dependence on cotton sector, Lower productivity,
Unfavorable Labor Laws are few drawbacks of the industry from which it
has to overcome.
16. [Type text] Page 16
TEXTILE INDUSTRY IN INDIA
Until the economic liberalization of Indian economy, the India Textile Industry was
predominantly unorganized industry. The opening up of Indian economy post 1990s led to a
stupendous growth of this industry.
Textile industry in India is the second largest employment generator after agriculture. It holds
significant status in India as it provides one of the most fundamental necessities of the people.
Textile industry was one of the earliest industries to come into existence in India and it
accounts for more than 30% of the total exports. In fact Indian textile industry is the second
largest in the world, second only to china
India Textile Industry is one of the largest textile industries in the world. Today, Indian economy
is largely dependent on textile manufacturing and exports. India earns around 27% of the
foreign exchange from exports of textiles. Further, India Textile Industry contributes about 14%
of the total industrial production of India. Furthermore, its contribution to the gross domestic
product of India is around 3% and the numbers are steadily increasing. India Textile Industry
17. [Type text] Page 17
involves around 35 million workers directly and it accounts for 21% of the total employment
generated in the economy.
Textile industry is unique in the terms that it is an independent industry, from the basic
requirement of raw materials to the final products, with huge value-addition at every stage
of processing. Textile industry in India has vast potential for creation of employment
opportunities in the agricultural, industrial, organized and decentralized sectors & rural and
urban areas, particularly for women and the disadvantaged. Indian textile industry is
constituted of the following segments: readymade garments, cotton textiles including
handlooms, man-made textiles, silk textiles, woolen textiles, handicrafts, coir, and jute.
Till the year 1985, development of textile sector in India took place in terms of general policies.
In 1985, for the first time the importance of textile sector was recognized and a separate policy
statement was announced with regard to development of textile sector. In the year 2000,
national textile policy was announced. its main objective was: to provide cloth of acceptable
quality at reasonable prices for the vast majority of the population of the country, to
increasingly contribute to the provision of sustainable employment and the economic growth of
the nation; and to compete with confidence for an increasing share of the global market. The
policy also aimed at achieving the target of textile and apparel exports of us$ 53 billion by
2011of which the share of garments will be us$ 27 billion
18. [Type text] Page 18
History of Textile Industry
India has been well known for her textile goods since very ancient times. The traditional textile
industry of India was virtually decayed during the colonial regime. However, the modern textile
industry took birth in India in the early nineteenth century when the first textile mill in the
country was established at fort gloster near Calcutta in 1818.
The cotton textile industry, however, made its real beginning in Bombay, in 1850s. The first
cotton textile mill of Bombay was established in 1854 by a Parsi cotton merchant then engaged
in overseas and internal trade. Indeed, the vast majority of the early mills were the handiwork
of Parsi merchants engaged in yarn and cloth trade at home and Chinese and African markets.
The first cotton mill in Ahmedabad, which was eventually to emerge as a rival centre to
Bombay, was established in 1861. The spread of the textile industry to Ahmedabad was largely
due to the Gujarati trading class. The cotton textile industry made rapid progress in the second
half of the nineteenth century and by the end of the century there were 178 cotton textile
mills; but during the year 1900 the cotton textile industry was in bad state due to the great
famine and a number of mills of Bombay and Ahmedabad were to be closed down for long
periods.
The Second World War and the Swadeshi movement provided great stimulus to the Indian
cotton textile industry. However, during the period 1922 to 1937 the industry was in doldrums
and during this period a number of the Bombay mills changed hands. The Second World War,
during which textile import from Japan completely stopped, however, brought about an
unprecedented growth of this industry. The number of mills increased from 178 with 4.05 lakh
looms in 1901 to 249 mills with 13.35 lakh looms in 1921 and further to 396 mills with over 20
lakh looms in 1941. By 1945 there were 417 mills employing 5.10 lakh workers. The cotton
textile industry is rightly described as a Swadeshi industry because it was developed with
indigenous entrepreneurship and capital and in the pre-independence era the Swadeshi
movement stimulated demand for Indian textile in the country.
19. [Type text] Page 19
The partition of the country at the time of independence affected the cotton textile industry
also. The Indian union got 409 out of the 423 textiles mills of the undivided India. 14 mills and
22 per cent of the land under cotton cultivation went to Pakistan. Some mills were closed down
for some time. For a number of years since independence, Indian mills had to import cotton
from Pakistan and other countries.
Government Initiatives:-
The Government of India has promoted a number of export promotion policies for the textile
sector. It has also allowed 100 per cent foreign direct investment (FDI) in the Indian textile
sector through automatic route.
According to the Union Budget 2013-14:
Technology Upgradation Fund Scheme (TUFS) to continue in 12thPlan with an
investment target of Rs 151,000 crore (US$ 27.58 billion)
Rs 50 crore (US$ 9.13 million) were allocated to Ministry of Textile to incentivise setting
up apparel parks within the Scheme for Integrated Textile Parks (SITP) to house apparel
manufacturing units
A new scheme called the Integrated Processing Development Scheme will be
implemented in the 12th Plan to address the environmental concerns of the textile
industry
Working capital and term loans at a concessional interest of 6 per cent to handloom
sector
Scheme of Fund for Regeneration of Traditional Industries (SFURTI) extended to 800
clusters during the 12th Plan
Some of initiatives taken by the Government to further promote the industry are as under:
20. [Type text] Page 20
India and China have signed a memorandum of understanding (MoU) for promotion of
exports of Indian handicrafts
India and Mauritius have signed a MoU to enhance the trade & economic relations by
expanding business and cooperation in the sphere of textiles and clothing including
sericulture and silk and fashion industries
A total of 61 textile parks approved under the SITP are expected to generate over 1
million jobs. Mr Anand Sharma, Union Minister for Commerce, Industry and Textiles,
launched 21 new Textile Parks on April 23, 2013
Mr Anand Sharma, Union Minister for Commerce, Industry and Textiles, Government of
India, has announced a scheme on usage of agro textiles in the North East region of
India with a five year budget of Rs 55 crore (US$ 10.04 million)
Maharashtra has attracted Rs 3,834 crore (US$ 700.03 million) investments in 411 new
textile projects, due to the new textile policy, as per Mr Arif Naseem Khan, Minister for
Textile, Maharashtra.
Road Ahead:-
The Indian textile industry is set for strong growth, buoy by both strong domestic consumption
as well as export demand. The industry is expected to reach US$ 220 billion by 2020, according
to the estimates by Alok Industries Ltd.
The Central Silk Board sets targets for raw silk production and encourages farmers and private
players to grow silk. To achieve these targets, alliances with the private sector, especially major
agro-based industries in pre-cocoon and post-cocoon segments has been encouraged.
21. [Type text] Page 21
For the textile industry, the proposed hike in FDI limit in multi-brand retail will bring in more
players, thereby providing more options to consumers. It will also bring in greater investments
along the entire value chain - from agricultural production to final manufactured goods.
With consumerism and disposable income on the rise, the retail sector has experienced a rapid
growth in the past decade with several international players like Marks & Spencer, Guess and
Next having entered the Indian market. The organised apparel segment is expected to grow at a
compound annual growth rate (CAGR) of more than 13 per cent over a 10-year period.
22. [Type text] Page 22
SWOT-INDIAN TEXTILE INDUSTRY
Strengths
Abundant Raw Material Availability:
Allowing the industry to control cost and reduce over all lead-times across the value
chain.
Low Cost Skilled Labour
Low cost skilled labour providing a distinct competitive advantage for the industry.
Presence across the value-chain
Presence across the value-chain providing a competitive advantage when compared to
countries likes Bangladesh, Srilanka, who have developed primarily as garmenters.
Reduced Lead-times:
Manufacturing capacity present across the entire product range, enabling textile
companies and garmenters do source their material locally and reduce lead-time.
Super Market:
Ability to satisfy customer requirements across multiple product grades- small and large
lot sizes specialized process treatments etc.
Growing Domestic Market
Growing Domestic market which could allow manufacturers to mitigate risks while
allowing them to build competitiveness.
Weaknesses
Fragmented industry
Fragmented industry leading to lower ability to expand and emerge as world-class
players.
Effect of Historical Government Policies
Historical regulations thought relaxed continue to be an impediment to global
competitiveness.
23. [Type text] Page 23
Lower Productivity and Cost Competitiveness
♦ Labour force in India has a much lower productivity as compared to competing
countries like china, Srilanka etc.
♦ The Indian industry lacks adequate economies of scale and is therefore unable to
compete with china, and other countries etc.
♦ Cost like indirect takes, power and interest are relatively high.
Technological Obsolescence
♦ Large portion of the processing capacity is obsolete
♦ While state of the art integrated textile mills exist majority of the capacity lies
currently with the powerloom sector.
♦ This has also resulted in low value addition in the industry.
Opportunities
Post2005challenges
During the year 2005 is a huge opportunity that needs to be capitalised.
Research and Development and Product Development
♦ Indian companies needs to increase focus on product development.
Newer specialized fabric- smart Fabrics , specialized treatement etc.
Faster turn around times for design samples
Investing in design centers and sampling labs.
♦ Increased use of CAD to develop designing capability in the Organisation and
developing greater options.
♦ Investing in trend forecasting to enable growth of the industry in India.
24. [Type text] Page 24
Threats
Competition in Domestic Market
♦ Competition is not likely to remain just in the exports space, the industry is likely to
face competition from cheaper imports as well.
♦ This is likely to affect the domestic industry and may lead to increased consolidation.
Ecological and Social Awareness
♦ Development in the form of increased consumer consciousness on issues such as
usage of child labour unhealthy working conditions etc.
♦ The Indian industry needs to prepare for the fall out of such issues by issues by
improving its working practices.
Regional alliances
♦ Reginal trade blocs play a significant role in the global garment industry with countries
enjoying concessional tariffs by virtue of being members of such blocs/ alliances.
♦ Indian industry would need to be prepared to face the fall out of the post 2005
scenarious in the form of continued barriers for imports.
25. [Type text] Page 25
MAJOR PLAYERS IN THE TEXTILE INDUSTRY IN
INDIA
ArvindLtd.
Arvind Mills is one of the major and fully vertically integrated composite mills players in India. It
has large production in denim, shirting and knitted garments. It is now adding value by
manufacturing denim apparel. Its sales are around US$ 300 million.
Raymond Limited
Raymond’s has the large, diversified integrated business model, which is spread across the
value chain from yarn to retail. It is specialized in Diversified woolen textiles. It already supplies
to some US retailers.
Reliance Textile:
Reliance Textiles is one of the major Textile Company that is in business of fully integrated
manmade fiber. It has capacity of more than 6 million tons per year. It has joint venture
partners like, DuPont, Stone & Webster, Since (Italy) etc
Vardhman Spinning
Vardhman deals in spinning, weaving and processing segment of the industry. It is planning to
double its fabric processing capacity to 50 million meters. It is an approved supplier to global
retailers like Gap, Target and Tommy Hilfiger. Its sales are little over US$ 120 million
Century Textile : (Composite mill, cotton & Man-made)
Mafatlal Textiles : (Fully integrated Composite Mill)
27. [Type text] Page 27
MAP SHOWING MAJOR LOCATION OF TEXTILE
INDUSTRY IN INDIA
28. [Type text] Page 28
MAJOR PLAYERS IN THE TEXTILE INDUSTRY IN
INDIA
29. [Type text] Page 29
ARVIND MILLS LIMITED
OVERVIEW:-
Arvind Ltd was incorporated in the year 1931 as Arvind Mills Ltd by three brothers Kasturbhai,
Narottambhai and Chimanbhai. In the year 1934, they established themselves amongst the
foremost textile units in the country. They are first company to bring globally accepted fabrics
such as Denim, yarn dyed shriting fabrics & wrinkle free gaberdines to India in the year 1986.
Arvind Limited fomerly Arvind Mills is a textile manufacturer and the flagship company of
the Lalbhai Group. Its headquarters is in Ahmedabad, Gujarat, India. It
manufactures cotton shirting, denim, knits and bottomweights (Khakis) fabrics. It is India's
largest denim manufacturer apart from being world’s fourth-largest producer and exporter of
denim.
In the early 1980s, the company brought denim into the domestic market, thus starting the
jeans revolution in India.Today it retails its own brands like Flying Machine, Newport and
Excalibur and licensed international brands like Arrow, Lee, Wrangler and Tommy Hilfiger,
through its nationwide retail network. Arvind also runs a value retail chain, Megamart, which
stocks company brands.
In the regular changing scenario of fashion, company has maintained its focus on its core
product which gives an upper hand in the competition through the world. With its presence
across the textile value chain, the company endeavours to be a one stop shop for leading
garment brands.
It is one of the top three producers of denim in the world and on its way becoming the global
textile conglomerate. It is already making its presence felt in shirting’s, knits and khaki fabrics
apart from being all set to create ripples in the ready to wear garments world wide.
They also entered into marketing pharmaceutical products and B&W and colour television sets
under the name Pyramid. During the year 2001-02, the compnay increased the number of
Spindles and Stitching Machines by 2036 Nos and 38 Nos respectively. In the next year, they
further increased the number of Stitching machines by 7 Nos. During the year 2003-04, the
company expanded their shirts manufacturing capacity from 2.4 million pieces to 4.8 million
30. [Type text] Page 30
pieces per annum. During the same year, their subsidiary company, Arvind Spinning Ltd
commenced their operation. In March 2005, the company commenced their operations of
producing Jeans Pant in Bangalore with the installed capacity of 4 million Pcs per annum.
During the year 2005-06, new Denim collection was launched which was aimed at the Super
Premium brands of the USA, Europe, Japan & Korea. The response to this collection was good
and they have opened new venues for the Denim division.
The company demerged and transfered the Garments Business Division of their 100%
subsidiary company, Arvind Brands Ltd and amalgamate Arvind Fashions Ltd, a 100% subsidiary
of Arvind Brands Ltd with themselves with effect from April 1, 2006. Also The company has a
joint venture company namely Arvind Murjani Brand Pvt Ltd, through which they hold license to
sell Tommy Hilfiger brand apparel in India. The operations of Arvind Brands Limited and their
subsidiaries were merged with the Company with effect from April 1, 2006.
The wholesale branded apparel business of Arvind Fashions Ltd has been sold to VF Arvind
Brands Pvt Ltd with effect from August 31, 2006. In March 2008, the company signed a
exclusive license agreement with The Philips-Van Heusen Corporation for designing,
distribution and reatiling of IZOD brand apparels in India. From May 2008, the company name
was changed from Arvind Mills Ltd to Arvind Ltd.
SHRI KASTURBHAI LALBHAI
31. [Type text] Page 31
COMPANY’S VISSION AND MISSION
The underlying theme running across the broad spectrum of all business activities at Arvind is
that of enhancing lifestyles of people, across all diversities and demographics. To serve that
end, the corporate vision for Arvind states:
PHILOSOPHY:
THEY BELIEVE
In people and their unlimited potential; in content and in focus on problem solving; in teams for
effective performance, in the power of the intellect.
THEY ENDEAVOUR
To select, train and coach people to obtain higher responsibilities; to nurture talent, and to
build leaders for the corporations of tomorrow; to reward, celebrate and activate all intellectual
business contributions.
THEY DREAM
Of excellence in all endeavours; of mutual benefit and prosperity; of making the world a better
place to live in
32. [Type text] Page 32
APPROACH OF ARVIND MILLS LTD
Arvind has a strong focus on Research and Development for process improvement, cost
reduction and new product development. This is evident in the fact that Arvind continuously
modifies its production process to enhance flexibility on the use of various types and quality of
cotton. To further meet customer needs, Arvind has also introduced a new dyeing and
processing method for denims.
State-of-the-art technology and equipment have made Arvind one of the leading producers of
denim in the world, paving the way for the Company to emerge as a global textile
conglomerate. This cutting edge position comes to Arvind courtesy technologies such as Open-
end Spinning, Foam Finishing, Mercerizing, Slasher-dyeing, Rope-dyeing, Air-Jet, Projectile and
Wet Finishing. It’s only natural that Arvind quality fabrics are in high demand in the markets of
Europe, US, West Asia, the Far East and Asia Pacific.
BOARD OF DIRECTORS:-
NAME DESIGNATION
SanjayS Lalbhai Chairman& Managing Director
SanjayS Lalbhai Chairman& Managing Director
KulinSLalbhai Executive Director
SudhirMehta Director
RenukaRamnath Director
VallabhBhanshali IndependentDirector
PunitS Lalbhai Executive Director
JayeshKShah Director& CFO
Bakul Dholakia Director
PrabhakarDalal Nominee Director
DileepCChoksi IndependentDirector
33. [Type text] Page 33
Business Division
Denim– Arvind is a leading producer of denim worldwide. Design, Innovations and
Sustainability have been its core competency and have played a key role in its success.
The use of sophisticated ultramodern technology under the guidance of world–
renowned designers has enabled Arvind to deliver many firsts in the international
markets.
Woven Fabrics– Shirting & Bottom weights: Arvinds shirting fabrics have consistently
fetched a premium in the local and international markets. Its state of the art facility is
capable of producing a total of 65 million meters per annum of Shirting and bottom
weight fabrics.
Voiles:- Arvind has been well poised as a leading manufacturer of super fine fabrics in
India. An uncontested market–leader in the manufacture of voiles, Arvind still continues
to manufacture the traditional fabric for both domestic and international markets.
Knits Fabrics– Arvind knits department has an annual knitting capacity of 5,000 tons.
The knits vertical has a fabric dyeing capacity of 5000 tons per annum and yarn dyeing
capacity of 1800 tons per annum.
Garment Exports– A world without boundaries is a promise of a global marketplace. At
Arvind, its range of fabrics is universal in appeal. The company aim to inspire a diverse
mix of customers enriching lifestyles globally.
Advanced Materials– The Company has created the Advanced Textiles Business.
Building further on its legacy of innovation, it has brought a new level of sophistication
to manufacturing fabrics.
Arvind Brands– Arvind is amongst a few organizations worldwide with a portfolio of
brands that are as distinctive and relevant across diverse consumers. At Arvind, brands
work across multiple channels, price points and consumer segments.
Mega Mart Retail– Arvind runs India's largest Value Retail Chain – Megamart. The
MegaMart format offers a unique and differentiated proposition to the consumers. It
offers mega brands at amazingly low prices and provides a retail experience of a high–
end department store.
34. [Type text] Page 34
The Arvind Store– After decades of ruling the national and international fabric markets,
Arvind has now introduced The Arvind Store, a unique concept in fabrics and apparel
retail. The Arvind Store bring together, under one roof, the best that Arvind has to offer.
Engineering– ANUP Engineering: The Anup Engineering Limited (established in 1963), is
the flagship Engineering Company of the Lalbhai Group, and is a subsidiary of Arvind
Limited. It is an accredited stamp and ISO–9001: 2008 certified company, conforming to
specified standards
Telecom–Arya Omnitalk: Arya Omnitalk is a 50:50 Joint Venture between India's highly
reputed business houses, the J M Baxi Group & Arvind. The joint venture offers the
following services – GPS based Fleet Automation & Management for City–wide Walky
Talky services and Highway Traffic Management Solutions with CSSI.
Syntel: Syntel is a division of Arvind. With more than a million users as on date, Syntel
has a dominant position in the Business Communication Solutions landscape offering a
range of Analog and Digital EPABX based enterprise communication solutions for SMEs
and leading Corporates.Some of our esteemed clientele includes – Wipro, Whirlpool,
Ashok Leyland, Blue Dart, Sahara Airlines, The Indian Armed Forces, State Bank of India,
The World Bank, ICICI Lombard, etc.
Real Estate– Arvind recent foray into real estate has seen it become one of the
prominent developers of the City of Ahmedabad. The company leverage its state of the
art, sustainable construction techniques and engage the best architects to deliver high
standards of excellence that Arvind is known for.
35. [Type text] Page 35
ARVIND BRANDS
Arvind is amongst a few organizations worldwide with a portfolio of brands that are distinctive
and relevant across diverse consumers. At Arvind, brands work across multiple channels, price
points and consumer segments.
OWN BRANDS:
1. MAINSTREAM:-
EXCALIBUR
FLYING MACHINE
2. POPULAR:-
RUFF & TUFF
NEW PORT UNIVERSITY
LICENSED BRANDS:-
1. BRIDGE TO LUXURY
GANT,USA 1949
2. PREMIUM
USPA
SansaBelt
Izod
Pier Cardin Paris
Arrow
3. POPULAR
CHEROKEE
JOINT VENTURE BRANDS:-
1. BRIDGE TO LUXURY
TOMMY HILFIGER
NAUTICA
2. PREMIUM
LEE
WRANGLER
3. POPULAR
WRANGLER HEROS
RIDERS
37. [Type text] Page 37
Percentage contribution to total power brands
Revenue
Arrow
44%
US Pollo
30%
Tommy
15%
Flying
machine
11%
38. [Type text] Page 38
MAFATLAL INDUSTRIES LIMITED
OVERVIEW:-
The story of the Mafatlal Group is a stirring saga of a blend of traditional values and modern
technology triumphing over circumstances. Mr. Mafatlal Gagalbhai the founder, was born in
1873, to a weaver of Ahmedabad. His father, who was neither educated nor prosperous, made
a living by doing odd jobs. It wasn't long before a young Mafatlal, who was still in his early
teens, had to leave school to help his father peddle textile products. With goods hanging from
their shoulders, both father and son would scour the countryside in search of buyers. Some of
the buyers proved to be Mr. Mafatlal's benefactors in later years, when he metamorphosed
into an industrialist. They not only provided him with capital, but also gave it at low rates of
interest.
Driven by curiosity and ambition, he took up a job as a mill-hand. He wanted to understand the
entire gamut of operations; his big break came only at the age of 31. Alongwith Chandulal
Mahadevia, a friend, and Arthur Shorrock, an Englishman who knew some British textile-
machinery manufacturers in Lancashire, he took over the management of a small mill in
Ahmedabad, and named it the Shorrock Mill. Of the initial equity capital of Rs 3.25 lakhs, Mr.
Mafatlal picked up 30 shares of Rs 1,000 each while his father picked up another 30 shares.
Along with his partners, he evolved an innovative scheme to raise the rest of the funds. In those
days, business concerns were run by managing agencies. So, the enterprising partners promised
investors a share in the managing agency.
The first mill did extremely well, and Mr. Mafatlal developed an appetite for expansion. Six
years later, in 1912, he bought a mill in neighbouring Nadiad for Rs 6.26 lakhs. The second mill
was christened New Shorrock. For Mafatlal and the others in the textile business, the War years
were the years of prosperity and expansion. Although the partnership was doing well, Mr.
Mafatlal wanted to do something on his own. So, in 1916, he bought Jaffer Ali Mill, which was
founded by the Nawab of Surat and renamed it Surat Cotton Spinning & Weaving Mills. Three
years later, Mr. Mafatlal came to Mumbai, taking over the China Mill, which had been set up by
a Parsi family in 1887.
It was in the 1970's and 1980's, under the leadership of Mr. Arvind Mafatlal, that the existing
business was consolidated. The Group also diversified into Information Technology, Chemicals
and the Engineering Industry. The late 1980's saw the Group further diversifying into the
39. [Type text] Page 39
Financial Service Industry, Gas Distribution and later into Healthcare business. From 1995
onwards, the strategy has been to focus on the Core Competence viz. Textiles and Chemicals
and divest from other businesses. Today, Chairman Mr. Hrishikesh Mafatlal, provides the
strategic vision for Arvind Mafatlal Group, as it strides ahead with ambitious plans for the
future.
Founder,
Late Mr. Mafatlal Gagalbhai Late Mr. Arvind Mafatlal Mr. Hrishikesh AMafatl al
40. [Type text] Page 40
MISSION:
BUSINESS EXCELLENCE WITHOUT COMPROMISE
“THEIR MISSION IS TO PROVIDE CLOTHING FOR THE FAMILY, FROM EVERY WALK AND STAGE OF
LIFE, FOR EVERY OCCASION, WITH A WIDE VARIETY OF EXCELLENT QUALITY FABRICS AND
GARMENTS”.
Quality Policy
Provide their customers in National and International Markets products and services of
agreed standards. Have committed to extend the Quality concept to all phases of their
business by strengthening partnership with their customers and suppliers.
Endeavours to develop new products and markets, especially for exports.
Have developed information system for regular feed back on product quality
performance, and acceptance from external customers to prepare themselves to meet
the future requirements.
Pay special attention to Health, Safety & Environmental requirement.
Provide skills and training to their employees and promote open communication to
maximise their contribution in achieving quality excellence.
They shall continue with ISO 9001:2008 series of quality standards to ensure total
customer satisfaction by supplying their products which conform to contractual
requirements.
41. [Type text] Page 41
BOARD OF DIRECTORS:-
NAME DESIGNATION
Shri Hrishikesh A. Mafatlal CHAIRMAN
Shri Vishad P. Mafatlal VICE CHAIRMAN
Shri Rajiv Dalal MANAGING DIRECTOR & C.E.O
Shri Praful R Amin DIRECTOR
Shri N.K. Parikh DIRECTOR
Shri A.K. Shrivastava DIRECTOR
Shri V.R. Gupte DIRECTOR
Shri P.N. Kapadia DIRECTOR
MILESTONE ACHIEVED:
1905 Sets up first textile mill in Ahmedabad, India
1912 Purchased a second textile mill in neighbouring Nadiad, India.
1916 Purchased another mill in Surat.
1919 Shifts base to Mumbai with the purchase of a textile mill.
1931 Establishes one more textile mill in Navsari.
1944 Shri Navichandra Mafatlal takes over the family business, after the sad demise of
42. [Type text] Page 42
the founder, Shri Mafatlal Gagalbhai.
1945-54 Group invests heavily in cotton textile mills and their modernization to become
the third largest mill owner in India. Establishes a strong foothold in Mumbai.
1954 Shri Arvind Mafatlal takes over the reins of the group companies and starts
diversification of the Group businesses.
1970 Mafatlal promotes ace cricketers and football players thereby gaining tremendous
mileage.
1979 After division of the Mafatlal Group business, the Arvind Mafatlal Group focuses
on textiles, petro chemicals, rubber chemicals and fluoro chemicals.
1980-90 Consolidates its position in textiles, expanding the textile machinery activities.
Mr. Hrishikesh Mafatlal takes over the reins of the company.
1994
1996
Obtains ISO-9001 certification.
Joint Venture (50%:50%) with Burlington Industries, USA called Mafatlal
Burlington Industries Ltd. for manufacturing denim fabrics.
2000
2006
Major expansion in the area of corporate uniform and work wear fabric.
Paved a new path to success by acquiring the entire stake of Burlington
Industries, USA to setup Mafatlal Denim Ltd.
2007
2009
Introduce largest collection of school uniform fabrics in domestic market.
Mafatlal Denim Ltd. establishes itself as the largest supplier of denim material in
India, and as a reliable supply chain partner for value added and fashion denims.
2011 The sad demise of the Chairman Emeritus Shri Arvind Mafatlal.
2012 Launches home furnishing range with terry towels and bedsheets.
2013 Mafatlal Denim Ltd. amalgamated with Mafatlal Industries Ltd.
Modernisation of Nadiad unit.
Capacity expansion of Navsari unit.
47. [Type text] Page 47
WORKING CAPITAL MANAGEMENT:
INTRODUCTION:-
Working capital refers to that part of the firm’s capital, which is required for financing short
term requirements or day-to-day transactions. Working capital is the difference between
resources in cash or readily convertible into cash and organizational commitments for which
cash will soon be required or within one year without undergoing a diminution in value and
without disrupting the operation of the firm. Funds invested in current assets keep revolving
fast and are being constantly converted into cash and this cash flow out again in exchange for
other current assets. Because of this working capital is also known as revolving or circulating
capital or short term capital. Working capital can be termed as a measure of a company’s
liquidity, efficiency and overall performance. Working capital reflects the results of a host of
company activities, including inventory management, debt management, revenue collection
and payment to suppliers.
Net Working Capital/Net Current Asset = Current Assets – Current Liabilities
Positive working capital generally indicates that a company is able to pay off its short-term
liabilities almost immediately. Negative working capital generally indicates a company is unable
to do so. This is why analysts are sensitive to decreases in working capital; they suggest a
company is becoming overleveraged, is struggling to maintain or grow sales, is paying bills too
quickly, or is collecting receivables too slowly. Increases in working capital, on the other hand,
suggest the opposite. There are several ways to evaluate a company's working capital further,
including calculating the inventory-turnover ratio, the receivables ratio, days payable,
the current ratio, and the quick ratio.
48. [Type text] Page 48
WORKING CAPITAL MANAGEMENT:-
Working Capital Management is no doubt significant for all firms, but its significance is
enhanced in cases of small firms. A small firm has more investment in current assets than fixed
assets and therefore current assets should be efficiently managed.
The study of working capital is of major importance to the internal and external analysis
because of its close relationship with the current day to day operations of a business. The
inadequacy or mismanagement of working capital is the leading cause of business failures. The
goal of working capital management is to manage the firm’s current assets and current
liabilities in such way that the satisfactory level of working capital is mentioned. The
current assets should be large enough to cover its current liabilities in order to ensure a
reasonable margin of the safety. If the firm cannot maintain the satisfactory level of working
capital, it is like to become insolvent and may be forced into bankruptcy. In other words, we
can say that the goal of working capital management is to ensure that the firm is able to
continue its operations and that it has sufficient cash flow to satisfy both maturing short term
debt and upcoming operational expenses.
49. [Type text] Page 49
CLASSIFICATION OF WORKING CAPITAL:-
Working capital can be classified into following two ways
On the basis of Concept
On the basis of Time
Working Capital
On the basis of
Value
Gross Working
Capital
Net Working Capita
On the basis of
Time
PermanentWorking
Capital
Regular Working
Capital
Initial Working
Capital
Temporary Working
Capital
Special Working
Capital
SeasonalWorking
Capital
50. [Type text] Page 50
On the basis of Value:
On the basis of value working capital can be classified as Gross Working Capital and Net
Working Capital. Gross working capital is the amount of funds invested in various components
of current assets. This concept enables a firm to realize the greatest return on its investment.
Gross working capital provides the correct amount of working capital at the right time. Net
Working Capital can be explained as the difference between current assets and current
liabilities. Net working capital as a measure of liquidity is useful for internal control and not
useful for comparing the performance of different firms. Gross Working Capital can be
considered as quantitative aspect of working capital whereas, Net Working Capital can be
considered as qualitative aspect of working capital.
On the basis of Time:
On the basis of time working capital can be classified as Permanent Working Capital and
Temporary Working Capital. To carry on business, a certain level of working capital is necessary
on a continuous and uninterrupted basis. For all practical purposes, this requirement has to be
met permanently as with other fixed assets. This requirement is referred as Permanent
Working Capital. In other words it can be explained as that minimum level of current assets
which is required to be maintained to carry out its normal business operations. The need for
initial working capital is to consolidate the position of the company. At the forming stage, each
company is required to have enough cash to meet its obligations. Regular Working Capital
refers to the minimum amount of liquid capital required to keep up the circulation of the
capital from the cash inventories to accounts receivables and from account receivables to cash
again.
Whereas, Temporary Working Capital is the amount of working capital which is required to
meet the seasonal demands and some special necessities. The capital required to meet the
51. [Type text] Page 51
seasonal needs of the enterprise is known as Seasonal working capital. The working capital
required to meet any special operations is referred as special working capital.
Need for Working Capital:
Working capital is needed in every business for daily operating activities of business. When a
business is started, working capital is required for purchasing raw-materials which are needed
for the production of goods. After purchasing raw materials, some additional cost is being
incurred and these are transferred into a finished product. Thus, finished products are being
sold into the market. It is not necessary that goods are on cash basis i.e. sale is not being
converted into cash instantly because part of sales may be done on the credit basis. Thus, there
exists a time lag between sale of goods and receipts of cash. During this period, cash is needed
for routine transactions and for this purpose working capital is needed in the business for
smooth operations. The time period which is required to convert raw materials into cash can
also be explained as an operating cycle or cash cycle.
52. [Type text] Page 52
Operating Cycle:
Need for working capital depends upon period of operating cycle. Greater the period is, more
amount of working capital is required as the amount of cash will be realized after longer period
of time. The more amount of working capital is required in manufacturing concern than trading
concern. Operating cycle can be explained by following diagram.
Need for working capital does not come to an end after the completion of operating cycle.
Since the operating cycle is a continuous process, there always remains a continuous supply of
working capital. The amount of working capital does not remain constant throughout the year
but it keeps fluctuating according to the requirement in a business.
Operating cycle = R + W + F + D – C
Where,
R = Raw material storage period
W = Work in progress holding period
F = Finished goods storage period
D = Debtors collection period
C = Credit period availed
Cash
Raw
Materials
Work-in-
progress
Finished
Goods
Debtors
53. [Type text] Page 53
Objectives of Working Capital :
The two main objectives of working capital management are as following:
• To ensure the organization has sufficient working capital resources to function and grow
• To improve profitability by keeping the investment in working capital to the minimum
required
Thus, the main aim of working capital management is to manage the firm’s current assets and
current liabilities in such a way that a satisfactory level of working capital is maintained and the
short-term obligations are met as and when they arise. The main theme of working capital
management is the interaction between the current assets and current liabilities and arrives at
the optimum level of both. The optimum level thus arrived must have provision for
contingencies.
The level of a firm’s Net working capital has a bearing on its profitability as well as risk. The
term profitability used in this context is measured by profits after expenses. The term risk is
defined as the probability that a firm will become technically insolvent so that it will not be able
to meet its obligations when they become due for payment. The risk of becoming technically
insolvent is measured using Net Working Capital. The greater the net working capital, the more
liquid the firm is and therefore the less likelihood of it becoming technically insolvent. The
relationship between liquidity, net working capital and risk is such that if either net working
capital or liquidity increases, the firm's risk decreases.
Apart from this, various objectives of working capital management can be classified as follow:
- Deciding Optimum Level of Investment in various current assets
- Decide Optimal Mix of Short Term and Long Term Capital
- Decide appropriate means of Short Term Financing
54. [Type text] Page 54
Balanced Working Capital Position :
The firm should maintain a sound working capital position. It should have adequate working
capital to run its business operations. Both excessive as well as inadequate working capital
positions are dangerous from the firm’s point of view. Excessive working capital not only
impairs the firm’s profitability but also result in production interruption and inefficiencies.
The dangers of excessive working capital are as follows:
It results in unnecessary accumulation of inventories. Thus, chances of inventory
mishandling, waste, theft and losses increase.
It is an indication of defective credit policy slack collections period. Consequently, higher
incidence of bad debts results, which adversely affects profits.
Excessive working capital makes management complacent which degenerates into
managerial inefficiency.
Tendencies of accumulating inventories tend to make speculative profits grow. This may
tend to make dividend policy liberal and difficult to cope with in future when the firm is
unable to make speculative profits.
Inadequate working capital has the following dangers:
It becomes difficult for the firm to undertake profitable projects for non-availability of
working capital funds. So it indirectly affects the growth of a company.
It becomes difficult to implement operating plans and achieve the firm’s profit budget.
Operating inefficiencies creep in when it becomes difficult even to meet day
commitments.
The firm loses its reputation when it is not in a position to honor its short term
obligations.
55. [Type text] Page 55
Importance of Working Capital :
Working capital is an important metric for all businesses, regardless of their size. Working
capital is a signal for operating liquidity of a company. Having enough working capital means
the company should be able to pay for all its short term expenses and liabilities. On one hand,
working capital is important because it is a measure to check operating efficiency of a company.
On other hand, it is not the only measure, and it is certainly not a guarantee of a company’s
ability to pay. A company may have positive working capital, but not enough cash to pay an
expense tomorrow. Similarly, a company may have negative working capital, but may be able to
adjust some of their debt into long-term debt in order to reduce their current liabilities.
Maintaining adequate working capital is not just important in the short term. Sufficient liquidity
must be maintained in order to ensure the survival of the business in long term as well. When
business makes investment decisions, they must not only consider the financial outlay involved
with acquiring the new fixed asset, but must also take account of the additional current assets
that are usually required with any expansion of activity.
Working capital management always ensures sufficient cash flow in a business. This allows
companies to pay their liabilities without delay and more importantly protects them
bankruptcy. Successful working capital management allows a business to pay all debts as they
mature, or come due, while continuing profitable business operations. At the very least,
successful working capital management allows a business to break even. Therefore, working
capital management is directly responsible for the avoidance of bankruptcy. Unsuccessful
working capital management can lead directly to bankruptcy by preventing a business from
paying off liabilities or by preventing the generation of new capital with which to pay future
debts. With an efficient working management, companies have the advantage of a positive
working capital which allows them to take on higher risks in business. Companies need to
analyze their current assets and liabilities regularly in order to manage their working capital. A
successful working capital management can face emergencies caused by market changes and
competitor activities. Good cash flow is always an asset to a company’s growth and success.
56. [Type text] Page 56
Factors affecting Working Capital :
A firm should have neither too much nor too little working capital. A large number of factors,
each has a different importance, influencing working capital need of a business firm. The
importance of factors also changes for a firm over time. Therefore, an analysis of relevant
factors should be made in order to determine total investment into working capital. The
following is the description of factors which generally influence the need of working capital.
Nature of business
Sales and Demand conditions
Technology and Manufacturing Policies
Credit Policy
Availability of Credit
Operating Efficiency
Price level changes
Growth and Expansion
Nature of Business:
Working capital requirements of a firm are basically influenced by the nature of its business.
Those firms involved with an operation of trading or in financial functions, have a very small
investment in fixed assets, but require a large amount to be invested in working capital. On
other hand, public utilities have a very limited need for working capital and they need to invest
more funds for acquisition of fixed assets. Working capital requires most of the manufacturing
concerns to fall between the two extreme requirements of trading firms and public utilities.
Such concerns have to make adequate investment in current assets depending upon the total
assets structure and other variables.
57. [Type text] Page 57
Sales and Demand Conditions:
It is difficult to precisely determine the relationship between the volume of sales and working
capital needs. In practice, current assets will have to be employed before growth takes place.
Seasonal fluctuations not only affect working capital requirement but also create problems
regarding production for the firm. During peak demand, increasing production may be
expensive for the firm. On the other hand it will be more expensive for the firm during slack
period when the firm has to sustain its working force and physical facilities without adequate
production and sales. The increasing level of inventories during the slack season will require
increasing funds to be tied up in the working capital for some months. Unlike cyclical
fluctuations, seasonal fluctuations generally conform to a steady pattern. Therefore, financial
arrangements for seasonal working capital requirements can be made in advance.
Technology and Manufacturing Policies:
The manufacturing cycle is comprised of purchase and use of raw material and final production
of the finished goods. The longer the manufacturing process, the larger amount of working
capital is required. An extended manufacturing time span means a larger tie-up of funds in
inventories. Thus, if there are alternate technologies available for manufacturing a product, the
process with the shortest manufacturing cycle may be chosen according to the situation. A
strategy of constant production may be maintained in order to resolve the working capital
problems arising due to seasonal changes in the demand for the firm product. If costs and risks
of maintaining a constant production policy, varying its production utilized for manufacturing
varied products, can have the advantage of diversified activities and solve their working capital
problems. Thus, these policies affect the requirement for working capital.Production policy also
determines the working capital level of a firm. If the firm has steady production policy, it may
require need of continuous working capital. But if the firms adopt a fluctuating
production policy means to produce more during the lead demand season then the
58. [Type text] Page 58
more working capital may require at that time but not in other period during a financial year.
So the different productions policy arise different type of need of working capital.
Credit Policy:
The credit policy of the firm affects the working capital by influencing the level of debtors. The
credit terms to be granted to customers may depend upon the norms of the industry to which
the firm belongs. A liberal credit policy, without rating the credit-worthiness ofcustomers, will
be detrimental to the firm and will create a problem of collections. A high collection period will
mean tie-up of large funds in book debts. In order to ensure that unnecessary funds are not tied
up in debtors, the firm should follow a rationalized credit policy based on the credit standing of
customers and periodically review the creditworthiness of the existing customers. The case of
delayed payments should be thoroughly investigated.
Availability of credit:
The working capital requirement of a firm is also affected by credit terms granted by its
creditors. A firm will need less working capital if liberal credit terms are available to it. Similarly,
the availability of credit from banks also influences the working capital needs of a firm. A firm
which can bank credit easily on a favorable condition will operate with less amount of working
capital than a firm without such a facility.
Operating efficiency:
The operating efficiency of the firm relates to the optimum utilization of resources at minimum
costs. The firm will be effectively contributing in keeping the working capital investment at a
lower level if it is efficient in controlling operating costs and utilizing current assets. The use of
working capital is improved and pace of cash conversion cycle is accelerated with operating
efficiency. Better utilization of resources improves profitability and, thus, helps in releasing the
59. [Type text] Page 59
pressure on working capital. Although it may not be possible for a firm to control prices of
materials or wages of labour, it can certainly ensure efficiency and effective use of its materials,
labour and other resources.
Growth and Expansion:
Growth and Expansions in the volume of business result in enhancement of the working
capital requirements. As business growth and expands it needs a larger amount of the working
capital. Normally the needs for increased working capital funds processed growth in business
activities.
60. [Type text] Page 60
Sources of Working Capital:
Long termsources
[Fixedworking
capital]
Loan from
financial
institution
Floating of
debentures
Accepting
public
deposit
Issue of
shares
Cash credit
Commercial
paper
Short termsources
[Temporary
workingcapital]
Trade credit
Bank
borrowings
Factoring of
receivables
Inter
corporate
deposits
Bill
discounting
Factoring
61. [Type text] Page 61
Loans from Commercial Banks: Small scale industries can raise loans from the commercial
banks with or without security. This method of financing does not require any legal
formality except that of creating a mortgage on the assets. Loan can be paid in lump sum
or in parts. The short-term loans can also be obtained from banks on the personal security
of the directors of a country. Such loans are known as clean advances. Bank finance is
made available to Small scale industries at concessional rate of interest. Hence, it is
generally a cheaper source of financing working capital requirement of enterprise.
However, this method of raising funds for working capital is a time-consuming process.
Public Deposits: Often companies find it easy and convenient to raise, short-term funds
by inviting shareholders, employees and the general public to deposit their savings with
the company. It is a simple method of raising funds from public for which the company
has only to advertise and inform the public that it is authorized by the Companies Act, to
accept public deposits. Public deposits can be invited by offering a higher rate of interest
than the interest allowed on bank deposits.
Trade Credit: Just as the companies sell goods on credit, they also buy raw materials,
components and other goods on credit from their suppliers. Thus, outstanding amounts
payable to the suppliers’ trade creditors for credit purchase are regarded as sources of
finance. Generally, suppliers grant credit to their clients for a period of 3 to 6 months.
Thus, they provide in a way, short-term finance to the purchasing company. As a matter
of fact, availability of this type of finance largely depends upon the volume of business.
More the volume of business more will be availability of this type of finance and vice
versa.
62. [Type text] Page 62
Factoring: Factoring is a financial service designed to help firms in managing their book
debts and receivables in a better manner. The book debts and receivables are assigned to
a bank called the factor and cash is realized in advance from the bank. For rendering
these services, the fee or commission charged is usually a percentage of the value of the
book debts and receivables factored. This is a method of raising short-term capital and
known as factoring. On the one hand, it helps the supplier companies to secure finance
against their book debts and receivables, and on the other, it also helps in saving the
effort of collecting the book debts. The disadvantage of factoring is that customers who
are really in genuine difficulty do not get the opportunity of delaying payment which they
might have otherwise got from the supplier company.
Discounting Bills of Exchange: When goods are sold on credit, bills of exchange are
generally drawn for acceptance by the buyers of goods. The bills are generally drawn for a
period of 3 to 6 months. In practice, the writer of the bill, instead of holding the bill till the
date of maturity, prefers to discount them with commercial banks on payment of a charge
known as discount. The term discounting of bills is used in case of time bills whereas the
term purchasing of bills is used in respect of demand bills. The rate of discount to be
charged by the bank is prescribed by the Reserve Bank of India from time to time. It
generally amounts to the interest for the period from the date of discounting to the date
of maturity of bills.
Bank Overdraft and Cash Credit: Overdraft is a facility extended by the banks to their
current account holders for a short-period generally a week. A current account holder is
allowed to withdraw from its current deposit account up to a certain limit over the
balance with the bank. The interest is charged only on the amount actually overdrawn.
The Overdraft facility is also granted against securities.
63. [Type text] Page 63
Advances from Customers: One way of raising funds for short-term requirement is to
demand for advance from one’s own customers. Example of advances from the
customers is advanced at the time of booking a car, a telephone connection, a flat. This
has become an increasingly popular source of short-term finance among the companies
mainly due to two reasons. First, the companies do not pay any interest on advances from
their customers. Second, if any company pays interest on advances, that too at a nominal
rate. Thus, advances from customers become one of the cheapest sources of raising funds
for meeting working capital requirements of companies.
Accrual Accounts: Generally, there is a certain amount of time gap between incomes is
earned and is actually received or expenditure becomes due and is actually paid. Salaries,
wages and taxes, for example, become due at the end of the month but are usually paid
in the first week of the next month. Thus, the outstanding salaries and wages, say,
expenses for a week help the enterprise in meeting their working capital requirements.
This source of raising funds does not involve any cost.
64. [Type text] Page 64
Principles of Working Capital Management :
Following are the principles of working capital management:
Principles of the risk variation: Risk here refers to the inability of firm to maintain
sufficient current assets to pay its obligations. If working capital is varied relative to
sales, the amount of risk that a firm assumes is also varied and the opportunity for gain
or loss is increased. In other words, there is a definite relationship between the degree
of risk and the rate of return. As a firm assumes more risk, the opportunity for gain or
loss increases. As the level of working capital relative to sales decreases, the degree of
risk increases. When the degree of risk increases, the opportunity for gain and loss also
increases. Thus, if the level of working capital goes up, amount of risk goes down, and
vice-versa, the opportunity for gain is like-wise adversely affected.
Principle of equity position: According to this principle, the amount of working capital
invested in each component should be adequately justified by a firm’s equity position.
Every rupee invested in the working capital should contribute to the net worth of the
firm.
Principle of cost of capital: This principle emphasizes that different sources of finance
have different cost of capital. It should be remembered that the cost of capital moves
inversely with risk. Thus, additional risk capital results in decline in the cost of capital.
Principle of maturity of payment: A company should make every effort to relate
maturity of payments to its flow of internally generated funds. There should be the least
disparity between the maturities of a firm’s short-term debt instruments and its flow of
internally generated funds, because a greater risk is generated with greater disparity. A
margin of safety should, however, be provided for any short-term debt payment
65. [Type text] Page 65
Objectives of Cash Management:
(a) To meet the cash disbursement needs:
In the normal course of business firms have to make payment of cash on a continuous and
regular basis to the supplier of goods, employees and so son. Also the collection is done from
the debtors. Basic objective is to meet payment schedule that is to have sufficient cash to meet
the cash disbursement needs of the firm.
(b) To minimize the funds committed to cash balances:
First of all if we keep high cash balance, it will ensure prompt payment together with all the
advantages. But it also implied that the large funds will remain idle, as cash is the non-earning
asset and firm will have to forego profits. On the other hand, low cash balance mean failure to
meet payment schedule. Therefore we should have optimum level of cash balance.
66. [Type text] Page 66
RATIO ANALYSIS
Ratio Analysis is a powerful tool of financial analysis. Alexander Hall first presented it in 1991 in
Federal Reserve Bulletin. It can be explained as a process of comparison of one figure against
other, which makes a ration and the appraisal of the ratios to make proper analysis about the
strengths and weakness of the firm’s operations. A ratio is defined as the indicated quotient of
two mathematical expressions and as the relationship between two or more things. Ratio helps
to summaries large quantities of financial data and to make qualitative judgments regarding
financial position of a company.
Short-term creditors’ main interest is in liquidity position or the short-term solvency of the firm.
Long-term creditors, on the other hand, are more interested in the long term solvency and
profitability of the firm. Similarly, owners concentrate on the firm’s profitability and strong
financial conditions. Management is interested in evaluating every aspect of the firm’s
performance. They have to protect the interest of all the parties related to the firm and to
make sure that firm is achieving the prescribed goals and objectives.
Ratio analysis helps to appraise the firms in the term of their profitability and efficiency of
performance, either individually or in relation to other firms in the same industry. Ratio analysis
is one of the best possible techniques available to management to impart the basic functions
like planning and control. As future is closely related to the immediately past, ratios calculated
on the basis of historical financial data may be of good assistance to predict the future. Ratio
analysis may be able to locate various points where the management needs to pay more
attention in order to improve the situation.
67. [Type text] Page 67
Classification of Working Capital Ratio:
Working Capital Ratio means ratios which are related with the working capital management e.g.
current assets, current liabilities, profitability and risk return tradeoff etc. Further these ratios
can be classified as under:
Efficiency Ratio
Liquidity Ratio
Efficiency Ratio:
The ratios compounded under this group indicate the efficiency of the organization to use the
various kinds of assets by converting them in the form of sales. This ratio is also called as
activity ratio or asset management ratio. As the assets basically categorized as fixed assets and
current assets and the current assets are further classified according to various individual
components of current assets. Activity ratio measures the efficiency and the effectiveness with
which firm manages its resources and assets. The important efficiency ratios are as follow:
Working Capital Turnover Ratio
Inventory Turnover Ratio
Receivables Turnover Ratio
Current assets Turnover Ratio
68. [Type text] Page 68
Liquidity Ratio:
The liquidity refers to the maintenance of cash, bank balance and those assets, which are easily
convertible into cash in order to meet the liabilities as and when arising. So it is right to say that
these ratios study the firm’s short-term solvency and its ability to pay off the liabilities. The
ratios grouped under this head indicate the short-term position of the organization and also
indicate the efficiency with which the working capital is being used. The most important ratios
under this group are as follow:
Current Ratio
Quick Ratio
Absolute Liquid Ratio
Working Capital Turnover Ratio
This ratio indicates that for an amount of sales, a relative amount of working capital is needed.
If any increase in sales is contemplated working capital should be adequate and thus this ratio
helps management to maintain the adequate level of working capital. A high working capital
turnover ratio indicates efficiently utilization of the firm’s funds. However, a management
should take care of this that it doesn’t result in over trading.
Working Capital Turnover Ratio =
Cost of Goods Sold / Net Sales
Net Working Capital
69. [Type text] Page 69
Inventory Turnover Ratio
Inventory Turnover Ratio is the ratio, which indicates the number of times the stock is turned
over i.e. sold during the year. This measures the efficiency of the sales and stock levels of a
company. A high turnover ratio indicates higher sales, fast stock turnover and a low stock level
in a company. Whereas, a lower stock turnover ratio indicates that a business is slowing down
or it works with higher stock level remaining within a firm. It is a sign of ineffective inventory
management because inventory usually has a zero rate of return and higher storage cost. In
short, we can say that a lower turnover implies poor sales and excess inventory and a higher
ratio implies either strong sales or ineffective buying.
Inventory Turnover Ratio =
Net Sales
Closing Inventory
Inventory Holding Period indicates the speed with which the stock or inventory gets converted
into cash i.e. the lower the credit period allowed to customers, the better liquidity of the
inventory is there.
Inventory Holding Period =
No. of Days in a Year
Inventory Turnover Ratio
70. [Type text] Page 70
Receivables Turnover Ratio
Book debts are expected to be converted into cash over a short period and therefore included
in current assets. Debtors Turnover Ratio or Accounts Receivable Turnover Ratio indicates the
velocity of debt collection of a firm. The analysis of this ratio supplements the information
regarding the liquidity of one item of current assets of the firm. The ratio measures how rapidly
receivables are controlled. In short, this ratio computes the number of times debtors have been
turned over during the particular period. The two basic components of account receivables
ratio are net credit sales and average trade debtors. The trade debtors for this purpose include
the amount of debtors as well as bills receivables. It should be noted that provision for bad and
doubtful debts should not be deducted as this may give an impression that some amount of
receivables has already been collected.
Debtors Turnover Ratio =
Net Sales
Average Debtors
Debtor’s collection period measures the quality of debtors since it measures the rapidity or the
slowness with which money is collected from them. A shorter collection period implies prompt
payment by debtors. It reduces the chances of bad debts. A longer collection period implies too
liberal and inefficient credit collection performance.
Debtors Collection Period =
No. of Days in a Year
Debtors Turnover Ratio
71. [Type text] Page 71
Current Asset Turnover Ratio:
Current assets are a major component of the balance sheet and represent assets that are
expected to be sold or used within a short period of time i.e. approx within a year. Current
assets have become a very important factor in evaluating the financial strength of a company.
Current Assets Turnover Ratio shows the productivity of the company’s current assets. Current
assets turnover ratio is calculated to know the firm’s efficiency of utilizing the current assets
which includes the assets like inventories, sundry debtors, bills receivables, and cash in hand,
marketable securities and short term loan and advances.
Current Assets Turnover Ratio =
Net Sales
Current Assets
Current Ratio :
Current ratio may be defined as the relationship between current assets and current liabilities.
It measures the firm’s ability to meet its current liabilities. It indicates the availability of current
assets in rupees for every one rupee of current liabilities. A ratio of greater than one means
that the firm has more current assets than current liabilities claims against them. A ratio under
1 suggests that the company would be unable to pay of its obligations if they came due at that
time. While this shows the company is not in good financial health, it does not necessarily mean
that it will go bankrupt because there are many ways to access financing but it is definitely not
a good sign. The current ratio can give a sense of the efficiency of a company’s operating cycle
or its ability to turn its product into cash. But the analysis of this ratio should be carried on very
carefully because this ratio can be very easily manipulated by overvaluing the current assets. An
equal increase in both current assets and current liabilities would decrease the ratio and
similarly equal decrease in current assets and current liabilities would increase current ratio.
72. [Type text] Page 72
The current ratio indicates the availability of funds to pay the current liabilities in the form of
current assets. A higher ratio indicates that there were sufficient assets available with the
organization which can be converted in cash without any reduction in the value. The higher the
ratio, the more liquid the company is. A lower current ratio can be supported by a strong
operating cash flow. It can lead to higher return on assets. Generally current ratio of 2:1 is
considered ideal for the firm.
Current Ratio =
Current Assets
Current Liabilities
Quick Ratio :
The quick ratio, defined also as the acid test ratio, reveals a company’s ability to meet short-
term operating needs by using its liquid assets. The difference between these two is that the
quick ratio subtracts inventory from current assets and compares the quick asset to the current
liabilities. Quick ratio is often explained as measures of a company’s ability to pay their current
debt liabilities without relying on the sale of inventory. Compared to current ratio, quick ratio is
more conservative because it does not include inventories which can sometimes be difficult to
liquidate. Although a quick ratio gives investors a better picture of a company’s ability to meet
current obligation the current ratio, investors should be aware that the quick ratio does not
apply to the handful of companies where inventory is almost immediately convertible into cash.
If the quick ratio is greater than one, there would seem to be no danger that the firm would not
be able to meet its current obligations. If the quick ratio is less than one, but the current ratio is
considerably above one, the status of the firm is more complex.
Quick Ratio =
Current Assets – Inventories
Current Liabilities
73. [Type text] Page 73
Absolute Liquidity Ratio :
Absolute liquid ratio is the ratio, which express the relationship between absolute liquid assets
and quick liabilities. Absolute liquid assets include cash in hand and bank and readily
marketable securities. Quick liabilities include outstanding expenses, bills payable, sundry
creditors, short-term advances, income tax payables etc. This ratio shows very clearly whether
a concern is liquid or not. In other words, it is the real measure of the liquidity or short term
solvency of a concern. Even though debtors and bills receivables are considered as more liquid
then inventories; it cannot be converted into cash immediately or in time. Therefore, while
calculating this ratio only above absolute liquid assets are taken into consideration.
Absolute Liquidity Ratio =
Cash& Bank Balance
Current Liabilities
74. [Type text] Page 74
PERFORMANCE EVALUATION THROUGH CASH
MANAGEMENT
Cash being a medium of exchange is one of the important components of working capital.
Generally speaking, cash balance denotes cash on hand and bank deposits. Maintaining cash
balance at a high level is a necessary but at the same time it is not desirable as cash in its
present form is a non-earning assets. The main objective for this study is to make comparative
study on cash management performance between Jindal Worldwide Ltd and Aarvee Denims
and Exports in the Indian Textile industry. Here, the study is based on the hypothesis that there
are significant differences in average cash management performance between these two
sample companies.
Cash management performance of the sample companies are examined with the help of the
following three ratios:
Cash Turnover Ratio
Cash Return on Assets
Cash Flow Margin Ratio
75. [Type text] Page 75
Cash Turnover Ratio
A company’s Cash Turnover Ratio measures how many times per year it replenishes its cash
balance with its sales revenue. A higher cash turnover ratio is generally better than a lower one.
Analyzing the cash turnover ratio can help in determining how efficiently a firm keeps cash
flowing through a small business. Comparing ratio over time can help a firm in determining how
efficiently a firm turns over its cash relative to other accounting period. If the ratio is increasing,
a firm turns over its cash balance more times per year and takes fewer days to replenish it. It
means a better utilization of cash than letting it sit idle cash as it generates low returns.
Cash Turnover Ratio =
Annual Sales
Average Cash & Cash Equivalents
Cash Return on Assets Ratio :
A ratio is used to compare a business’s performance among other industry members. The ratio
can be used internally by the company's analysts, or by potential and current investors. The
ratio does not however include any future commitments regarding assets, nor does it include
the cost of replacing older ones. A high cash return on assets ratio can indicate that a higher
return is to be expected. This is because the higher the ratio, the more cash the company has
available for reintegration into the company, whether it is in upgrades, replacements or other
areas.This calculation is especially important to evaluating companies with large investments in
assets, such as manufacturing and processors of raw materials. These companies need to
maximize their investments, as new manufacturing plants and off-shore oil drilling rigs are
critical investments and purchases of big-ticket items like these are large enough to alter
financial statement results significantly.
Cash Return on Asset Ratio =
Cash Flow from operating activities
Total Assets
76. [Type text] Page 76
Cash Flow Margin Ratio :
Also called Operating Cash Flow Margin and Margin Ratio, the Cash Flow Margin measures how
well a company's daily operations can transform sales of their products and services into cash.
A key profitability ratio, relating Cash Flow from Operations to Net Sales provides powerful
view into the inner workings of a company using two crucial measures of company
performance.Cash is what a company needs to generate to pay its expenses and purchase
assets, and how well a company can convert sales into cash is crucial. Knowing that a company
is continually improving its Cash Flow Margin is extremely valuable and is a key indicator of
performance.Companies that end up generating a negative cash flow are losing money as they
generate sales and any company cannot keep this up over an extended period of time. With a
negative cash flow, the company will have to rely on cash reserves or take on more debt as they
continue the business.
Cash Flow Margin Ratio =
Cash Flow from operating activities
Net Sales
77. [Type text] Page 77
Financial Ratios Of Arvind
Mar 15 Mar 14 Mar 13
Investment Valuation Ratios
Face Value 10.00 10.00 10.00
Dividend Per Share 2.55 2.35 1.65
Operating Profit Per Share (Rs) 32.07 30.77 22.74
Net Operating Profit Per Share (Rs) 202.32 184.97 146.50
Free Reserves Per Share (Rs) - - -
Bonus in Equity Capital 1.52 1.52 1.52
Profitability Ratios
Operating Profit Margin(%) 15.83 16.63 15.51
Profit Before Interest And Tax Margin(%) 13.10 13.10 11.26
Gross Profit Margin(%) 13.42 13.33 11.53
Cash Profit Margin(%) 10.00 11.01 10.62
Adjusted Cash Margin(%) 10.00 11.01 10.62
Net Profit Margin(%) 7.22 7.56 6.91
Adjusted Net Profit Margin(%) 7.05 7.43 6.74
Return On Capital Employed(%) 16.33 15.64 13.29
Return On Net Worth(%) 14.64 15.30 12.92
Adjusted Return on Net Worth(%) 15.89 15.99 12.92
Return on Assets Excluding Revaluations 99.77 91.47 78.35
Return on Assets Including Revaluations 110.18 102.11 89.11
Return on Long Term Funds(%) 22.13 20.51 17.84
78. [Type text] Page 78
Liquidity And Solvency Ratios
Current Ratio 0.83 0.85 0.75
Quick Ratio 1.56 1.59 1.34
Debt Equity Ratio 0.97 0.95 0.97
Long Term Debt Equity Ratio 0.45 0.49 0.47
Debt Coverage Ratios
Interest Cover 2.59 2.43 1.97
Total Debt to Owners Fund 0.97 0.95 0.97
Financial Charges Coverage Ratio 2.99 2.96 2.53
Financial Charges Coverage Ratio Post Tax 2.57 2.75 2.53
Management Efficiency Ratios
Inventory Turnover Ratio 5.02 5.07 4.32
Debtors Turnover Ratio 10.65 9.93 8.92
Investments Turnover Ratio 5.02 5.07 4.32
Fixed Assets Turnover Ratio 1.20 1.18 1.00
Total Assets Turnover Ratio 1.03 1.04 0.95
Asset Turnover Ratio 1.02 1.04 0.96
Average Raw Material Holding - - -
Average Finished Goods Held - - -
Number of Days In Working Capital 102.19 103.22 91.54
Profit & Loss Account Ratios
Material Cost Composition 51.78 53.34 53.77
Imported Composition of Raw Materials
Consumed
17.22 11.77 17.06
Selling Distribution Cost Composition - - -
79. [Type text] Page 79
Expenses as Composition of Total Sales 37.87 39.15 38.28
Cash Flow Indicator Ratios
Dividend Payout Ratio Net Profit 17.44 16.78 16.30
Dividend Payout Ratio Cash Profit 13.08 11.69 10.34
Earning Retention Ratio 83.92 83.95 83.70
Cash Earning Retention Ratio 87.70 88.67 89.66
AdjustedCash Flow Times 4.68 4.20 4.77
![[Type text] Page 1
“Summer Internship Project Report”
On
““Working Capital Management and Comparison of Cash Management
Performance of Arvind Mills Ltd with Mafatlal Industries Ltd”
AT
ARVIND MILLS LTD.
Project report is submitted to Som Lalit Institute of Management (SLIMS)
In partial fulfilment of the requirement for the award of the degree of
“Post Graduation in Diploma Management”
Submitted By:
Kushangi Shah
Roll No. - 71
Batch:- 2015-2017
Som – Lalit College Of Management Studies, PGP – I
Under the Guidance and Supervision of: -
Mr. Jatin Thakkar](https://image.slidesharecdn.com/d87d1b1c-614c-4340-9362-ee3d232b1dd9-160919103650/85/kushangi_71-1-320.jpg)
![[Type text] Page 2
“Declaration”
I (Kushangi Shah) hereby declare that this project report entitled Working Capital
Management and Comparison of Cash Management Performance of Arvind
Mills Ltd with Mafatlal Industries Ltd submitted in partial fulfilment of the PGDM
program of Som Lalit Institute of Management is my original work and the
project is not submitted as project previously to any institution for the award of
any degree, associate ship, fellowship or any other similar titles.
Date:
Place:](data:image/gif;base64,R0lGODlhAQABAIAAAAAAAP///yH5BAEAAAAALAAAAAABAAEAAAIBRAA7)