Renuka Agri Food Company manages its working capital and long term investments effectively. For working capital, the company focuses on inventory management, timely vendor payments, receivables processing, and debt management. It funds working capital mainly through bank loans, overdrafts, and trade credit. For long term investments, Renuka evaluates projects using NPV, IRR, and payback period. It funds long term requirements primarily through retained earnings, equity shares, and term loans. The company's working capital and investment management allow it to operate successfully.

1. 1
Acknowledgement
In completing my assignment, I had to take help and guidelines from some respected
people including my dearest lecturers who deserve my greatest gratitude. I would like to
thank Mr Mahasen Senanayake giving me this great opportunity to do this assignment as
well as for providing me with the most accurate guidelines and assistance on the
completion of my assignment.
I would also like to make this an opportunity to thank my dear friends of SLIM-Kandy
institute for making valuable comments and suggestions on this proposal which gave me
a great inspiration to improve this assignment and for sacrificing their valuable time
expecting to get a successful outcome from the overall assignment.
Lastly, I would like to thank the staff of SLIM-Kandy institute for providing us with a
very comfortable environment to study.

2. 2
Content
Page Number
Executive Summary 2
Introduction 3
Task 01 4-5
Task 02 6-12
Task 03 15-18
Conclusion 19
Annexures 20

3. 3
Executive Summary
I have given three tasks to complete
In Task 01, I have given a introduction of Renuka Agri Food Company and their business
activities.
In Task 02, I have discussed and report how renuka company managing and funding their
working capital requirments.
In Task 03, I have discussed and report renuka companies managing and funding their
fixed assets and long term investments.

4. 4
Task 01
1.1 Introduction of the Renuka Agri Food Company
Renuka Agri Food PLC is the one of the most profitable company in Renuka
Enterprises Ltd. This company is an Agri business organization listed on the Colombo
Stock exchange in 2010.
They are an organization engaged in plantations, manufacturing and distribution
integrated across the value chain. They focused on result, the emphasis has been towards
the certain of long term shareholder value in all their business, while being a socially
responsible corporate citizen.
 Renuka Agri Foods PLC’s vision
“To be a leading global manufacturer and marketer of branded Agriculture based food
and beverage products”
 Renuka Agri Food PLC’s culture and value
In here they always try to build a good workplace with full of responsive, enterprising,
nurturing, unrelenting, knowledgeable and accountable qualities. Also from this
workplace they build good relationship between client and colleagues on honestly and

5. 5
trust. This all things cause to deliver grate goods and services and to generate long term
financial performance to their shake holder.
 Manufacturing
They are manufacturing coconut based food and beverages. They focused on local and
international market. Their production facilities is geared to meet the demand set out by
clientele the world over and bring out the best states in difference forms of packaging.
 Main product of the company

6. 6
Task 02
2.1 Working capital calculation of Renuka Agri Food Company
Working capital is the available current or short term assets of a firm such as cash,
receivables, inventory and marketable securities that are used to finance its day-to-day
operations.
The Renuka Agri Food Company has proper working capital management.
According to the financial position of Renuka Agri Food PLC,
In 2016
Amount of Current Assets = Rs. 767,907,198
Amount of Current Liabilities = Rs. 435,031,467
Working Capital =Rs. 767,907,198 – Rs. 435,031,467
= Rs.332,875,731
In 2017
Amount of current Assets = Rs. 993,443,169
Amount of Current Liabilities = Rs. 703,425,544
Working Capital = Rs. 993,443,169 – Rs. 703,425,544
= Rs. 290,017,625
Working capital = Current Assets – Current Liabilities

7. 7
The amounts of current liabilities and current assets in 2016 and 2017 are given in the
following table.
Current Assets 2016 2017
Inventories 431,874,276 519,502,511
Trade & other receivables 225,674,724 304,246,268
Tax receivable 10,477,117 24,133,911
Amounts due from related companies 23,131,075 19,617,151
Cash & Cash equivalents 76,750,006 125,943,328
Total Current Assets 767,907,198 993,443,169
Current Liabilities
Loans & Borrowings 183,218,858 311,574,251
Finance lease obligation - -
Trade & other payables 195,551,393 244,430,805
Amounts due to related companies 3,849,083 45,595,624
Dividend payable 3,263,637 3,722,685
Income tax payable 10,260,970 34,299,922
Bank overdraft 38,887,526 63,802,257
Total Current Assets 435,031,467 703,425,544

8. 8
2.2 How Renuka Agri Food PLC manage their working capital
Efficient working capital management helps to improve company profit. Renuka Agri
Food manages their working capital by using following ways.
1. Managing Procurement and inventory
Renuka promotes better communication between departments and forecasting demand
which are steps taken in order to prevent company from holding unnecessary levels of
stocks.
Prudent inventory management is an important factor in making the most of Renuka
company working capital. Also Renuka company manages the excessive stocks can be
placed in heavy border on the cash resources of any business.
2. Pay vendors on time
Renuka company that pay on time develop better relationship with their suppliers and
are in a strong position to negotiate better deals, payment terms and accounts.. So, they
can keep their suppliers happy. So, they can save money in long run when it comes to
getting longer discount to build buying.
3. Improve the receivables process
Renuka Company using technology to deliver invoices electronically in order to speed
up billing and collection and shorten the cash conversion cycle.

9. 9
4. Manage debater effectively
Renuka use this way to ensure that working capital is to make sure money is coming in
on time
5. Make informed financing decision
Working capital allows Renuka Company to make strategic investment decision. This
drives operational performance and efficiencies. It‟s very important to regularly discuss
plans and requirements internally with the senior management team and with external
financial providers. So that companies can caretolly plan and assess the working capital
2.3 The way of Renuka Agri food Company funding working capital requirements
Renuka Agri Food funding their working capital requirement through,
- Shares (by issuing ordinary shares and preference shares)
- By issuing debentures
- By getting an internal loan
- By getting a bank loan
- By getting bank overdraft
- Trade credit
 Shares
Year 2016 2017
Stated Capital 1,194,452,950 1,194,452,950
According to the above details there is no difference between 2016 and 2016. The
Renuka Agri Food did not issue the shares in 2017. Because of that we can decide they
don‟t raise funds from issuing shares for their investments.

10. 10
 Bank Overdraft
Year 2016 2017
Bank Overdraft 38,887,526 63,802,257
When compare the Bank overdraft of Renuka Agri Food in 2016 and 2017, in 2017 they
have taken much overdraft.
 Trades Credit
Year 2016 2017
Trades and other payables 199,770,304 248,606,489
In 2017 trade credit earning is higher than 2016.
 Bank loans:
Loan and Borrowing
2016 2017
Balance at the beginning of the year 233,139,411 183,218,858
Disposal of subsidiary - -
Borrowings during the year 183,013,050 311,574,251
They borrowed some loans from financial institutions as follows,
1. Packing credit loans
- Packing credit loan are borrowed by Renuka Agri Food for fulfilling the customer
order. They have to bond the approved customer order to get packing credit loan.
They can get 85% amount from total earning of order without interest.
Financial institutions related Renuka Agri Food:
- Development Finance Corporation of Ceylon (DFCC)
- Hatton National Bank (HNB)
- Hong Kong and Shanghai Banking Corporation (HSBC)
- National Development Bank (NDB)
-

11. 11
2.4 Advantages and Disadvantages of each method
1. Issue Shares
Advantage Disadvantage
 That does not have to repaid
 No interest is charge
 Large sums can be raised
 Shareholders will expect dividend
to be paid
 Original owner may lose control of
the company
 3.Take some time to arrange
 Can be expensive to organize
2. Bank Overdraft
Advantage Disadvantage
 Most flexible form of financing
 Interest is only payable on the
amount overdrawn
 Can be cheaper than the loan if
overdrawn period is kept short
 Interest rates are higher than for a
loan
 A fee is often charged for having
that facility
 Not available for a long period of
time
 There will be an upper limit to the
facility

12. 12
3. Trade credit
Advantage Disadvantage
 Receiving an interest – free loan for
a month or two
 Allows the business to sell goods
before paying for them
 Supplier may refuse to send more
supplies if payments are left too long
 Cannot obtain the discount for
paying the supplier quickly
 Limited to a period no longer than
60 days
 Short term loan
Advantage Disadvantage
 Can take easily
 Flexible
 No borrower‟s pledge necessary
1. Have to pay in a short period

2. High interest rate
3. Fees may be high
 Long term loan
Advantage Disadvantage
 Low interest rates
 Fees may be low
 Quick to arrange
 Long must be repaid
 Interest is charged and must be paid
 Collateral or security is often
required

13. 13
Task 03
Introduction about Fixed assets and long term investment
 Fixed assets
Fixed assets are tangible assets that a company owns and uses in its production of
goods and services.
Fixed assets generally include,
- Building
- Office equipment
- Manufacturing equipment
- Furniture etc.
 Long term investment
A long term is an account of the assets side of a company‟s balance sheet that
represents the company‟s investments; include stock, bond, real estate and cash, which it
intends to hold for more than one year.

14. 14
3.1. How Renuka Agri Food planning and evaluating long term investment
1. Diversity
Renuk Agri foods make sure that they have a mix of investment across various
categories. Also to make sure that they properly diversified they look into resources like
target date funds and robo advisors, which automatically create a diversified portfolio of
both stocks and bonds for customers.
2. Pick the best account
Renuka‟s biggest long term goal is saving the retirement. To get started they make
sure of talking advantage of any company. Choosing the right type of account is „equally
as important as setting up the proper investment”.
3. Choose the right level of risks
Renuka has identified that the stock market goes up and down very frequently and
they follow the news they would think that every day is impending doom for the stock
market and that can be scary.

15. 15
3.2. What methods they are using to planning and evaluating long term investment
They usually invest in at least two projects during a year. When they take an
investment decision they consider how this decision affects to the company. Therefore,
they calculate Net Present Value(NPV), Payback Period(PBP), Internal Rate of
Return(IRR).
 Net Present Value (NPV)
Net present value consider all relevant cash flows associated with a project over the
whole its life and adjusted those occurring in the future years to their “present value “ by
discounting at a rate called the cost capital.
 Payback period (PBP)
The payback period is a easy method, and can be valuable when the key investment
goal is to find projects where the initial investment is quickly recovered. This method is
deficient in that it does not take into account the time value of money.
 Internal Rate of Return (IRR)
It is very similar to NVP. That method involves comparing the rate of return expected
from the project calculated on a discount cash flow basis with rate as used as the cost
capital.
3.3. How Renuka Agri Food funding long term requirement
They funding their long term requirement by,
 Equity shares
 Preference shares
 Retained earning
 Term loan
 Foreign currency loan

16. 16
Advantages and Disadvantages of each methods
1. Equity shares
Advantage Disadvantage
1. High return
2. Easily transferable
3. Easily liquidated
4. Equity share holders have the right
to oppose any of the decision taken
by the board of direction.
5. Right to vote
1. Original investment is not
guaranteed
2. Stock is only as good as the
company
3. High Risk
2. Preference shares
Advantage Disadvantage
1. Dividend r at a fixed rate or a fixed
amount on preferred shares before
any dividend on equity shares.
2. Returns of preference share capital
before the return of equity share
capital at the time of winding up of
the company
3. It‟s a hybrid instrument having
some of the characteristics of
debentures and equity shares
1. They do not provide the investor
with any of the voting rights.
2. If the company gets huge profits
then they won‟t get any extra bonus

17. 17
3. Retained earning
Advantage Disadvantage
1. It is cheaper
2. Very flexible
3. Do not dilute the ownership of the
company
1. Danger of hoarding cash
2. Shareholders may prefer dividends
if the business is not earning a
sufficient return on investment
3. High profits and cash flows would
suggest the business could afford
debt
4. Term loan
Advantage Disadvantage
1. Cost of capital lower
2. Term loan do not result in dilution
of control
3. That is preferred since they are
backed by security.
1. Not carry voting rights.
2. Generally do not represent
negotiable securities
3. Upon facility to repay or delay in
payment beyond 1 years entails
serious consequences

18. 18
3.4. Renuka Agry Food;s planning / investment metods
Renuka Agri Food Company calculates these capital budgeting techniques by manual
methods. As they said, they use manual methods for calculating these techniques because
it is cost effective as they take least number of investment decisions for a year.
Five-year summary which are related to the investment: (Rs:000)
Year 2017 2016 2015 2014 2013
Investment Property - - 20,000 - 283,495
Investment 1,074,233 997,491 - - -
When we compare this year investment amount with the last years‟ investments there is
an increase of their investment in this year.

19. 19
Conclusion
Working capital management is the most prominent function of the company, because
it wake ups the firms operations for long term of short terms purpose cash on hand is not
a big deal what proper utilization of the capital become the overcome of all the issues
faced by the company renuka agri food company proper working capital management. So
that they don‟t want to get loan facilities to manage their working capital.
Renuka agri Food Company is a standard which deal with fixed assets. It in facts helps
solved some problems related to the accounting of tangible assets.

20. 20
Annexure