Working Capital Management in Bajaj Allianz Life Insurance

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Working Capital Management in Bajaj Allianz Life Insurance

  1. 1. A PROJECT REPORT ON “EVALUATION OF WORKING CAPITAL MANAGEMENT IN BAJAJ ALLIANZ LIFE INSURANCE” SUBMITTED TO UNIVERSITY OF PUNE IN PARTIAL FULLFILMENT OF THE REQUIREMENT FOR THE AWARD OF DEGREE OF MASTER OF BUSINESS ADMINISTRATION BY SURESH KUMAR UNDER THE GUIDANCE OF PROF. SHALAKA SAKHREKAR S.K.N. SINHGAD SCHOOL OF BUSINESS MANAGEMENT, AMBEGAON (BK.), PUNE-411041 2012-14
  2. 2. ACKNOWLEDGEMENT I owe a great many thanks to a great many people who helped and supported me during the completion of project. My deep sense of gratitude to Mr.Santosh Singh Chief Branch Manager for support and guidance. Thanks and appreciation to the helpful people at BAJAJ ALLIANZ LIFE INSURANCE, for their support. I would like to take this opportunity as privilege to express my deep senseof gratitude to Professor M. N. Navale, Honorable Founder President, and Dr. (Mrs.) Sunanda. M. Navale, Secretary, Sinhgad Technical Education Society, Pune &Dr.RajashreeShinde, Director S.K.N. Sinhgad School of Business Management,Ambegaon (BK), Pune for their continuous encouragement, invaluable guidance and help for completing the present research work. They have been a source of inspiration to means I am indebted to them for initiating me in the field of research. My deepest thanks to Mrs. YogitaKadam, Mrs. SadhanaOgale and Mrs. ShalakaSakhrekar the guide of the project for guiding and correcting various documents of mine with attention and care.She has taken pain to go through the project and make necessary correction as and when needed. I would also thanks my institution and my faculty members without whom this project would have been a distant reality. I also extend my heartfelt thanks to my family and well wishers. PLACE: PUNESURESH KUMAR
  3. 3. DECLARATION I here by declare that the project work entitled “ EVALUATION OF WORKING CAPITAL MANAGEMENT IN BAJAJ ALLIANZ LIFE INSURANCE” submitted to the Pune university, is a record of an original work done by me under the guidance of SHALAKA SAKHREKAR, faculty member, from SKN SINHGAD SCHOOL OF BUSINESS MANAGEMENT, PUNE I further declare that this project is the result of my own efforts. Place: Pune Date: SURESH KUMAR
  4. 4. INDEX
  5. 5. Chapter No. Particulars Page No. Executive Summary 1. Introduction 1-3 2. Profile of the organization 4-8 3. Research Methodology 9 4. Conceptual Background 10-24 5. Data presentation and interpretation 25-39 6. Finding, Suggestions and conclusion 40-42 Limitations 43 7. Bibliography Appendix
  6. 6. EXECUTIVE SUMMARY
  7. 7. Executive Summary: Working Capital is the required for maintenance of day to day business operations. The present day competitive market environment calls for an efficient management of working capital. The reason for this is attributed to the fact that an ineffective working capital management mat force the form to stop its business operations, may even lead to bankruptcy. Hence the goal of working capital management is not just concerned with the management of current assets and current liabilities but also in maintaining a satisfactory level of working capital. Holding current assets in substantial amount strengthens the liquidity position and reduces the riskiness but only at the expense of profitability. Therefore achieving risk-return tradeoff is significant in holding of current assets. While cash outflows are predictable it runs contrary in case of case of cash inflows. Sales program of any business concern does not bring back cash immediately. There is a time lag that exists between sale of goods of services and sales realization. The capital requirement during this time lag is maintained by the operating cycle concept. This study gives in detail the working capital management practices in BALIC. Management of each current asset, namely cash management, accounts receivable management is studied permanent to BALIC. Similarly management of accounts payable, deposit are studied to understand the managing of current liabilities. A part from this concept of operating cycle is studied. The research methodology adopted for this study is mainly from secondary source of data which include annual reports of BALIC, and website of the company. The use of primary sources is limited to interviews with few of the employees in credit department. The study of working capital management has shown that BALIC has a strong working capital position. The Company is also enjoying reasonable profits.
  8. 8. INTRODUCTION The overall success of the company depends upon its working capital position. So it should be handled properly because it shows the efficiency & financial strength of a company. WCM is highly important in firms as it is used to generate further returns for the stakeholders. Working Capital Management is a very important fact of financialmanagement due to:  Investments in current assets represent a substantial portion of total investment.  Investment in current assets & the level of current liabilities have tobe geared quickly to change sales. The working capital is the life blood & nerve center of a business firm. The importance of working capital in any industry needs no special emphasis. No business can run effectively without a sufficient quantity of working capital. It is crucial to retain right level of working capital. WCM is one of the most important functions of corporate management. A business enterprises with ample working capital is always in a position to avail advantages of any favorable opportunity either to buy raw material or to implement a special order or to wait for enhanced market status. Working capital can be utilized for operating costs that are involved in the everyday life of business. Even very successful business owners may need working capital funds when the unexpected circumstances arise. WCM is highly important in firms as it is used to generate further return for the stakeholders. When working capital is managed improperly, allocating more than enough of it will render management non-efficient & reduce the benefits of short term investments. On the other hand, if working capital is too low, the company may miss a lot of profitable investment opportunities or suffer short term liquidity crises, leading to degradation of company credit, as it cannot respond effectively to temporary capital requirements. 1
  9. 9. Some the points to be studied under this topic are: How much cash should a firm hold? What should be the firm’s credit policy? How to & when to pay the creditors of the firm? OBJECTIVES The objectives of project on evaluation of working capital are as follows: 1. To study concept of working capital & components of working capital. 2. To study change of working capital. 3. To analyze profitability, liquidity & working capital position of the company. SCOPE The management of working capital helps us to maintain the working capital at asatisfactory level by managing the current assets and current liabilities. It also helps tomaintain proper balance between profitability, risk and liquidity of the businesssignificantly. By managing the working capital, current liabilities are paid in time. If the firm makespayment to it creditors for raw material in time, it can have the availability of rawmaterial regularly, which does not cause any obstacles in production process. Adequateworking capital increases paying capacity of the business but the excess working capitalcauses more inventory, increases the possibility of delay in realization of 2
  10. 10. debts.On the other hand, absence of adequate working capital leads to decrease in return oninvestment. The goodwill of the firm is also adversely affected due to the inability to paycurrent liabilities in time. Hence, the management of working capital helps to manage all the factors affecting theworking capital in the most profitable manner. Limitation of the study: The scope of the present study has been limited interns of period of study as well as sources and nature of data. The period covered by the study extends over 5 years from F.Y 2008/9 to 2011/12. At the time of study, the data could be available up to 2011/12. The limitations of this study are as follows: 1. The study is mainly on secondary data. It is cone mostly on the basis of and published financial documents, like balance sheet, profit and loss account and other related journals, magazines and books etc. 2. The study follows with specific tools financial ratio analysis. 3. The lack of sufficient time and resources is another limitation of the study. The study is fully based on the student’s financial resources and is to be completed within limited time. The report has taken only 5-years data for the study from year 2008/09 to 2012/13. 4. The study is limited from the point of view of submission on partial fulfillment of the requirement for the Master degree in Business Administration(MBA). 3
  11. 11. BAJAJ ALLIANZ LIFE INSURANCE Name and location of the Company: Name: Bajaj Allianz Life Insurance Company Address: GE Plaza, Airport Road, Yerawada, Pune 411006 Tel: +91 020 66026777 Fax E-mail : +91 020 66026789 : websaleslife@bajajallianz.co.in Introduction: 4
  12. 12. Bajaj Allianz Life Insurance is a union between Allianz SE, one of the largest Insurance Company and Bajaj Finserv. Allianz SE is a leading insurance conglomerate globally and one of the largest asset managers in the world, managing assets worth over a Trillion (Over INR. 55,00,000Crores). Allianz SE has over 119 years of financial experience and is present in over 70 countries around the world. At Bajaj Allianz Life Insurance, customer delight is our guiding principle. Our business philosophy is to ensure excellent insurance and investment solutions by offering customized products, supported by the best technology. Vision:  To be the first choice insurer for customers  To be the preferred employer for staff in the insurance industry  To be the number one insurer for creating shareholder value Mission: As a responsible, customer focused market leader, we will strive to understand the insurance needs of the consumers and translate it into affordable products that deliver value for money. Our Achievements: 5
  13. 13. Bajaj Allianz has received IAAA rating, From ICRA Limited, an associate of Moody’s Investors Service, for Claims Paying ability. This rating indicates highest claims paying ability and a fundamentally strong position. Awards:  Best Insurance Company in Private sector at the IPE Banking Financial Service and Insurance (BFSI) 2013.  SKOCH Financial Inclusion-Organization of the year 2013.  Best Life Insurance Provider (Runner up) at the Outlook Money Award 2012.  Best Investor Education and Category Enhancement.  Best utilization of Information Technology.  SKOCH Financial Inclusion Award. Member in Board of Director: 6
  14. 14. Chairman Rahul Bajaj Niraj Bajaj Sanjiv Bajaj S.H Khan Directors Ranjit Gupta Sanjay Asher Suraj Mehta Manu Tandon 7
  15. 15. FACTSHEET 8
  16. 16. Date of Incorporation 12th March 2001 Started Operation on 3rd August 2001 Head office Pune, India WorldWide Web Address www.bajajallianz.com Toll free number 1800-209-5858 Brand Statement JiyoBefikar Chairman Mr. Sanjiv Bajaj MD & CEO Mr.V.Philip Total assets under Management 38,003 crore* Solvency ratio 643.31%** Claim Settlement Ratio NOP 91.56%** Total no. of lives covered 1.56crore** Total no. of office 992* Latest Award Won 1.SKOCH Financial Inclusion Award 2013- Organization of the Year 2.SKOCH Financial Inclusion Award for Micro Insurance initiatives in the following categories: • Micro Insurance Initiative – Securing the Unsecured • Setting the Claims at Nominee’s doorsteps • Insurance Awareness & Education • Micro Insurance Renewals & Persistency Management 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 Sour product cater to all the financial needs like – Protection, Savings, Retirements, Investment & Health for Individuals and Groups Note: *The value are as on 31st March 2013 ** The values are for FY 2012-13 9
  17. 17. Growing at a breakneck pace with a strong pan Indian presence Bajaj Allianz has emerged as a strong player in India... Bajaj Allianz Life Insurance Company Limited is a joint venture between two leading conglomerates Allianz AG and Bajaj Auto Limited. Characterized by global presence with a local focus and driven by customer orientation to establish high earnings potential and financial strength, Bajaj Allianz Life Insurance Co. Ltd. was incorporated on 12th March 2001. The company received the Insurance Regulatory and Development Authority (IRDA) certificate of Registration (R3) No 116 on 3rd August 2001 to conduct Life Insurance business in India. Product:  Life Insurance  Motor Insurance  Health Insurance  Travel Insurance  Home Insurance Channel Partner: 1. Standard Chartered Bank 2. Dhanlaxmi Bank 10
  18. 18. 3. Team Life Care Co. India Ltd. The data in this project is enabling in secondary in nature. Financial reports, company records were referred for data analysis. The study has been undertaken by collecting relevant data from the balance sheet, profit and loss a/c, annul report & Audit report of the BALIC the company is used financial tools for the analyzing and interpretation data. However primary data is also collected by observation discussing with company officials. This primary data is used to fill in the gaps while preparing this report and to know the latest procedures adopted by the company. This has helped to draw inferences and conclusions. Sources of data This study is based on Secondary data:The secondary data are those, which have been collected by some other and which have been processed. Generally speaking secondary data are information, which have been previously collected by some organization to satisfy his own need. But the department under reference for an entirely different reason is using it. For this project secondary sources used are: 11
  19. 19. 1. Annual reports of the company. 2. Company website 3. Books 4. Other company documents SAMPLING DESIGN 0 Sampling unit : Financial Statements & Audit Reports 1 Sampling Size :Last four years financial statements WORKING CAPITAL: Introduction: Financial management looks after two types of capital need: for fixed capital to invest it tings such as buildings, plants &equipments and working capital principally to pay for stock and to cover the amount of credit extended to customers. Fixed capital, as the name implies, tends not vary in the short but to move up or down in jumps when major investment decisions are made (or assets sold). Working capital on the other hand, is much more fluid and fluctuates with level of business. Working capital is a furnish investment in short term assets. Working capital is the firm’s investment in short term assets cash, short term securities. Account receivables and inventories. Working capital management is the important branch of the financial management which gives answers the questions such as: 12
  20. 20. 1. How much should we invest in each category of current assets? 2. How should we finance this investment in current assets i.e. appropriate mix of short and long term sources to finance? In most business, funds are deployed in assets which are in the form of cash or bank deposits or will be turned into cash in a relatively short period as part of normal business activities. In short the working capital is the sources of financing current assets and it includes short as well as long term financing. The management of the funds of business can be described as financial management. Financial management is mainly concerned with two aspects. Firstly, Fixed assets and fixed liabilities, in other words, long term investment and sources of funds. Secondly, current assets and current liabilities. Both of these types of funds play a vital role in business finance. Management of working capital usually involves management or administration of current assets, namely cash, marketable securities, account receivables and inventories and also the administration of current liabilities such as creditors, account payable, notes and bills payables, bank overdraft, outstanding expenses, temporary loans and provisions. A firm should always maintain the right cash balance so that flow of funds is maintained at a desirable speed not allowing slowdowns or stoppage. Thus, the enterprises can have a balance between liquidity and profitability. The term working capital is often used to refer the firm’s current assets like primarily cash, marketable securities, account receivables and inventories. Working capital refers to the fact that most of its components have their impact over weeks and month rather than years. 13
  21. 21. For this reason, working capital management is often referred to as short-term finance. The term working capital is closely related to the term funds and has two common meaning. It is used to mean current assets of current assets means current liabilities. Working capital management is concerned with the problems that arise in attempting to manage the current assets. The term current assets refers to those assets which is ordinary course of business can be or will be turned into cash within one year without undergoing a diminution in value and with our disrupting the operations of the firm. The major current assets are cash, marketable securities, account receivables and inventory. Current liabilities are those liabilities, which are intended at their inception to be paid in the ordinary course of business within a year, out of the current assets of earnings of the concern. The basis current liabilities are accounts payable, bank overdraft and outstanding expenses. The goal of working capital management is to management the firm’s current assets and current liabilities in such a way that a satisfactory level of working capital is maintained. This is so because if the firm cannot maintainto satisfactory level of working capital, it is likely to become insolvent and may be forced into bankruptcy. The current assets should be large enough to cover its current liabilities in order to ensure a reasonable margin of safety. Each of the current assets must manage efficiently in order to maintain the liquidity of the firm while not keeping too high level of any of them. Each of the short-team sources of financing must be continuously managed to ensure that they are abstained and used in the best possible way. The interaction between current assets and current liabilities is, therefore, the main theme of the theory of working capital management. 14
  22. 22. Working capital may be defined more particularly as the assets held for current use within a business less the amount due to those who await settlement in short term in whatever form. Working capital is an important aspect manufacturing compares that have so far developed country. Among all available options proper management of working capital is the only best possible option to improve their operational viability. Working capital is the financial management practice in manufacturing enterprises. Working capital represents portion that circulates from one form to another in the ordinary conduct of business. This idea embraces recurring transaction from cash to inventories to receivable to cash that forms the conventional chain of business operations. Fund deployed for short term are mainly for working capital or operational purpose. Towards the day-to-day operation, a firm will have to provide money towards the purchase of raw materials, payment of wage and salaries to extend credit to buyers of goods as well as to meet other day to day operations. By analyzing about the working capital, we concluded that, all the corporations. Weather public or private, manufacturing or nonmanufacturing have just adequate working capital to serve in competitive market. It is because excessive or inadequate working capital is dangerous from the firm’s point of view. Excessive investment on working capital affects a firms’ profitability just idle investment, yields nothing. In the same way, inadequate investment on working capital affects the liquidity position of the company and leads to financial embarrassment and failure of the company. It is therefore, recognized fact that any mistake made in management of working capital can lead to adverse effects in business and reduced the liquidity, turnover, profitability and increases the cost of financing of the enterprises. 15
  23. 23. DEFINITIONS OF WORKING CAPITAL: The following are the most important definitions of Working capital: 1) Working capital is the difference between the inflow and outflow of funds. In other words it is the net cash inflow. 2) Working capital represents the total of all current assets. In other words it is the Gross working capital, it is also known as Circulating capital or Current capital for current assets are rotating in their nature. 3) Working capital is defined as The excess of current assets over current liabilities and provisions. In other words it is the Net Current Assets or Net Working Capital CONCEPTS OF WORKING CAPITAL: There are two concepts of working capital:- gross & net. Gross working capital, simply called working capital, refers to the firm’s investment in current assets. Current assets are the assets which can be converted into cash within an accounting period (or operating cycle)and cash, short-term securities, receivables, debtors and stock (inventory) are included in current assets. Net working capital refers to the difference between current assets and current liabilities. Current liabilities are those claims of outsiders, which are expected to mature for payment within an accounting periodand include creditors, bills payableand outstanding expenses. 1) Gross working capital: According to this concept, total current assets are working capital which presents both owned capital as well as loan capital used for financing current assets. It includes cash, short-term securities and receivables inventories. These assets can be converted into cash within a year. Generally, when it comes to current assets, cash is the most 16
  24. 24. valuable element because it is immediately available to settle bills and debtors are more value than stock which is nearer to being turned into cash. The gross concept of working capital refers to the amount funds invested in short-term assets that are employed in the enterprise. Gross working capital is the firm’s total current asset and net working capital is current assets minus current liabilities. Another name of gross working capital is circulating capital. Circulating capital means circular flow of cash. This is also called operating cycle in case of manufacturing firm. This cycle starts with which is used to pay for raw materials. Raw materials are converted into work-in progress which is again converted into finished goods. When it is ready for sale, it is a circular cash-flow from cash into inventories to receivables and back to cash, this cycle will be repeat again for the whole life of the firm. The value represented by current assets circulates from one working capital to another working capital from purchase accounts to goods manufacturing accounts. From inventory accounts to sales accounts, from sales accounts to cash accounts, this is described as circulating nature of current assets of in other work working capital has circulating nature. The speed of circulating of working capital of the turnover of current assets is an indicator of degree of efficiency of the management. The faster the turnover shows the higher degree of efficiency. The working capital cycle can be presented in the diagram as: 17
  25. 25. CREDITORS CASH COLLECTION PAYMENTS RAW MATERIALS DEBTORS SALES PRODUCTION WORK-INPROGRESS FINISHED GOODS VALUE ADDED CONVERSION Figure: 4.1 The working capital cycle of manufacturing firms. If the business is profitable the firm’s assets at the end of each cycle will be greater than the original investment. In this manner, each cycle will produce a gross profit, and the amount of net earnings for the year will depend. In part, on number of times the cycle occurs or how measured by the ratio of sales to current assets. The higher the ratio, the more 18
  26. 26. efficiency the operations, fewer current assets are needed to support each dollar of sales. The flow of working capital does not always proceeds as it is preplanned when it moves through different stage of cash cycle, for example, sales may decline due to can in consumer taste, slow economy and receivable become more difficult to collect the working capital cycle will be interrupted. This leads to decline in profitability and firm could suffer bankruptcy if this adverse situation prevails for sometimes. There is also a much shorter cycle of activity where in goods and materials are held for manufacture and sale, and credit is advanced to customers for rapid conversion into cash to provide the funds with which to continue in business and to make a profit distribution possible. The working capital cycle shown in figure 4.1 is theoperating cycle for non- manufacturing firm where, cash is required to purchase raw materials which are needed to convert into work-in- progress, which is again converted into finished goods. Are sold for cash and credit and ultimately debtors will be realized. The non manufacturing firms such as wholesalers and retailers do not manufacture goods. So, they have the direct conversion of cash into stock of finished goods into debtors and then into cash. This can be shown graphically as: CASH 19
  27. 27. DEBTORS STOCK OF FINISHED GOODS Figure: 4.2 Operation cycle of non-manufacturing firms. Sometimes service and financial concerns may not have any inventory. In this case the operations cycle will be shortest as follows: CASH DEBTORS Figure: 4.3 Operating cycle of service and financial firms. The gross capital working capital focuses on two aspects of current assets management: a) Optimum investment in current assets: As state earlier, both excessive and inadequate investment is harmful for the business. This aspectsthus, emphasis on the optimum adequate level of current assets, working capital depends upon the business activated. It also changes with the change in business activities. This may cause excess or shortage of working capital frequently. The management should be active and alert to correct the imbalance. b) Financing of current assets: This aspect focus on the need of arranging funds to finance current assets when more working capital is required due to the increase in business activities. 20
  28. 28. Then the arrangement should be made quickly. Similarly, when surplus funds arise, then they should be invested in short term securities. 2) Net working capital: Net working capital comprises short term net assets: stock, debtors and cash less creditors. Working capital management then is to do with management of all aspects of both current assets and current liabilities, so as to minimize the risk of insolvency while maximizing return on assets. Net working capital represents the excess of total current assets over total current liabilities. It is a qualitative concept which shows the financial soundness of current financial position. Net working capital may be positive or negative according to the size of current assets and current liabilities. Current assets should be sufficiently in excess of current liabilities for the positive working capital. This concept lives idea about the case and cost of raising working capital to the management. Not only for the management, is it also a major importance to investors and lenders. They always like a company to maintain current assets should be two fold of current liabilities and these concepts is measured by the current ratio via current assets ÷current liabilities. Which should be 4:1. A large ratio indicates greater solvency and makes it unsafe and unsound. A negative working capital denotes negative liquidity which is also dangerous for the company. Management should always be alert to improve the imbalance in the liquidity position of the firm. Mathematically, it is presented as: Net working capital ˭ Current assets – Current liabilities 21
  29. 29. An alternatives definition of net working capital is that portion of a firm’s current assets financed with long term funds. For every firm today, minimum portion of working capital is financed with the permanent sources of funds such as owners’ capital, debentures, long-term debt, and preference capital or retained earnings; this portion of working capital which is financed with long term funds is called permanent working capital. Management must therefore, decide the extent to which current assets should be financed with equity capital or/ and borrowed capital. Both the concepts of working capital, gross and net, are not mutually exclusive, however. They are equally important from the management point of view in the gross concept points out two important aspects of current assets: (i) Optimum investment in each of the component of current assets and (ii)Financing of these current assets; while the net concept indicates (i) The liquidity position and (ii) The extent to which working capital may be financed by permanent sources of funds. Both the concepts have their own advantages and disadvantages, which concept to choose depend upon the purpose of the firm. The concept of gross capital is a financial concept where as that of net concept is an accounting concept. Management is interested in current assets to operate the business with efficiency. To evaluate the efficiency, gross concept is appropriate. On the other hand interest of investors and lenders is in concept of net working capital because it helps in the judgment if liquidity position of the enterprise. 4.3) Objective of Working capital: 22
  30. 30. Even profitability companies fail if they have inadequate cash flow. Liabilities dare settled with cash and net profits. The primary objective of working capital management is to ensure that sufficient cash is available to: • Meet day to day cash flow needs; • Pay wages and salaries when they fall due; • Pay creditors to ensure continued suppliers of goods and services; • Pay government taxation and providers of cash dividends; and • Ensure the long term survival of the business entity. 4.4) IMPORTANCE OF WORKING CAPITAL Working capital may be regarded as the lifeblood of the business. Without insufficient working capital, any business organization cannot run smoothly or successfully. In the business the Working capital is comparable to the blood of the human body. Therefore 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. To meet the current requirements of a business enterprise such as the purchases of services, raw materials etc. working capital is essential. It is also pointed out that workings. 23
  31. 31. Growth and Expansion Activities As a company grows, logically, larger amount of working capital will be needed, though it is difficult to state any firm rules regarding the relationship between growth in the volume of a firm's business and its working capital needs. The fact to recognize is that the need for increased working capital funds may precede the growth in business activities, rather than following it. The shift in composition of working capital in a company may be observed with changes in economic circumstances and corporate practices. Growing industries require more working capital than those that are static. Operating Efficiency Operating efficiency means optimum utilization of resources. The firm can minimize its need for working capital by efficiently controlling its operating costs. With in-creased operating efficiency the use of working capital is improved and pace of cash cycle is accelerated. Better utilization of resources improves profitability and helps in relieving the pressure on working capital. Price Level Changes Generally, rising price level requires a higher investment in working capital. With increasing prices the same levels of current assets need enhanced investment. However, firms which can immediately revise prices of their products upwards may not face a severe working capital problem in periods of rising levels. The effects of increasing price level may, however, be felt differently by different firms due to variations in individual prices. It is possible that some companies may not be affected by the rising prices, whereas others may be badly hit by it. Other Factors 24
  32. 32. There are some other factors, which affect the determination of the need for working capital. A high net profit margin contributes towards the working capital pool. The net profit is a source of working capital to the extent it has been earned in cash. The cash inflow can be calculated by adjusting non-cash items such as depreciation, outstanding expenses, losses written off, etc, from the net profit, (as discussed in Unit 6). The firm's appropriation policy, that is, the policy to retain or distribute profits also has a bearing on working capital. Payment of dividend consumes cash resources and thus reduces the firm ',s working capital to that extent. If the profits are retained in the business, the firm's working capital position will be strengthened. In general, working capital needs also depend upon the means of transport and communication. If they are not well developed, the industries will have to keep huge stocks of raw materials, spares, finished goods, etc. at places of production, as well as at distribution outlets. 4.5) Determinants of working capital: There are no hard and fast rules or certain formulae to determine the working capital requirement of the firm. The importance of efficient working capital management is an aspect of overall financial management. Thus a firm plans its operations with adequate working capital requirement or it should have neither too excess nor too inadequate working capital. A number of factors affect the working capital. Generally, the following factors affect the working capital requirement of the firm. i)Nature and size of business: The working capital requirement of a firm is basically related size and nature of the business. If the size of the firm is bigger, then or requires 25
  33. 33. more working capital whereas small firm needs less working capital relatively to public utilities. ii) Manufacturing Cycle: Working capital requirement of an enterprise are also influenced by the manufacturing or production cycle. It refers to the time involved to make finished goods from the raw materials. During the process of manufacturing cycle funds are tied up longer the manufacturing cycle, the larger will be working capital requirement and vice-versa. iii) Production Policy: Working capital requirement is also determined by its production policy. If a firm produces seasonal foods, the its production and sales volume fluctuate with different seasons. This type of fluctuating policy affects the working capital policy of the firm. iv) Credit Policy: Credit policy affects the working capital of a firm. Working capital requirement depends on terms of sales. Different term may be followed by different customers according to their credit worthiness. If the firm follows the liberal credit policy, then it requires more working capital. Conversely, if a firm follows the stringent policy, it requires less working capital. v) Availability of Credit: Availability of credit facility is another factor that affects the working capital requirement. If the creditors avail a liberal credit terms then the firm will need less working capital and vice-versa. In other works, the firm can get credit facility easily on favorable conditions. Thus, it requires less working capital to run the firm otherwise more working capital is required to operate the firm smoothly. 26
  34. 34. vi) Growth and Expansion: Growth and expansion also affects the working capital requirement of firm. However, it is difficult to precise; determine the relationship between the growth and expansion of the firm and working capital needs, however, the other things being the same growing firms needs more working capital than those static ones. vii) Price level Change: Price level change also affects the working capital requirement of a firm. Generally, a firm requires maintaining the higher amount of working capital, if the price level rises. Because the same level of current assets needs more due to the increasing price. In conclusion, the implications of changing price level of working capital position will vary from firm to firm depending on the nature and another relevant consideration of the operation of the conserned firm. viii) Operating Efficiency: Operating efficiency is also an important factor, which influences the working capital requirements of the firm. It refers to the efficient utilization of available resources at minimum cost. Thus, financial manager can contribute to strong working capital position through operating efficiency. If a firm has strong operation efficiency then it needs lesser amount of working capital and vice-versa. ix) Profit Margin: The level of profit margin differs from firm to firm. It depends upon the nature and quality of product has a sound marketing management and enjoy the monopoly power in the market then it earns quite high profit and vice-versa. Profit is sources of working capital because it contributes towards the working capital as a pol by generating more internal funds. x) Level of Taxes 27
  35. 35. The level of taxes also influences working capital requirement of firm. The amount of taxes to be paid in advances is determined by the prevailing tax regulations. But the firm’s profit is not constant, or can note be predetermined. Tax liability in asense of short-term liquidity is payable in cash. Therefore, the provision for tax amount is one of the important aspects of working capital planning. If tax liability increase, it needs to increase the working capital and vice-versa. 4.6) Financing of Working Capital: The firm’s working capital assets policy is never set in a vacuum; it is always established in conjunction with the firm’s working capital policy. Every manufacturing concern of industry requires additional assets whether they are instable or growing conditions. The most important function of financial manager is to determine the level of working capital and to decide how it is to financed. Financial of any assets is concerned with two major factors- cost and risk. Therefore, the financial manager must determine an appropriate financing mix, or decide how current liabilities should be used to finance current assets. However, a number of financing mixes are available to the financial manager. He can resort generally there kinds of financing. i) Long-term financing: Long-term financing has high liquidity and low profitability, Ordinary share, Debenture, Preference share; retained earnings and long-term debt of financial institution are major sources of longterm finance. ii) Short-term financing: 28
  36. 36. A firm must arrange its short-term credit in advance. The sources of short-term financing of working capital are trade credit and bank borrowing. Bank credit: Bank credit is the primary institutional sources for working capital financing for the purpose of bank credit, amount of working capital requirement has to be estimated by the borrowers and banks areapproached with the necessary supporting data. After availability of this data, bank determines the maximum credit based on the margin requirements of the security. The types of loan provided by commercial banks are loan arrangement, overdraft arrangement, commercial paper etc. 4.7) APPROACHES TO MANAGING WORKING CAPITAL Two approaches are generally followed for the management of working capital: (i) the conventional approach, and (ii) the operating cycle approach. The Conventional Approach This approach implies managing the individual components of working capital (i.e. inventory, receivables, payables, etc.) efficiently and economically so that there are neither idle funds nor paucity of funds. Techniques have been evolved for the management of each of these components. In India, more emphasis is given to the management of debtors because they generally constitute the largest share of the investment in working capital. On the other hand, inventory control has not yet been practised on a wide scale perhaps due to scarcity of goods (or commodities) and ever rising prices. The Operating Cycle Approach 29
  37. 37. This approach views working capital as a function of the volume of operating expenses. Under this approach the working capital is determined by the duration of the operating cycle and the operating expenses needed for completing the cycle. The duration of the operating cycle is the number of day involved in the various stages, commencing with acquisition of raw materials to the realization of proceeds from debtors. The credit period allowed by creditors will have to be set off in the process. The optimum level of working capital will be the requirement of operating expenses for an operating cycle, calculated on the basis of operating expenses required for a year. In India, most of the organizations use to follow the conventional approach earlier, but now the practice is shifting in favour of the operating cycle approach. The banks usually apply this approach while granting credit facilities to their clients. ADEQUACY OF WORKING CAPITAL The firm should maintain a sound working capital position. It should haveadequate working capital to run its business operations. Both excessive aswell as inadequate working capital positions are dangerous from the firms point of view. Excessive working capital not only impairs the firmsprofitability but also result in production interruptions 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. 30
  38. 38.  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 is also bad and has the following dangers:  It stagnates growth. It becomes difficult for the firm to undertake profitable projects for non- availability of working capital funds.  It becomes difficult to implement operating plans and achieve the firm s profit target.  Operating inefficiencies creep in when it becomes difficult even to meet day commitments.  Fixed assets are not efficiently utilized for the lack of working capital funds. Thus, the firm s profitability would deteriorate.  Paucity of working capital funds render the firm unable to avail attractive credit opportunities etc.  The firm loses its reputation when it is not in a position to honor its 31
  39. 39. short-term obligations. An enlightened management should, therefore, maintain the right amount of working capital on a continuous basis. Only then a proper functioning of business operations will be ensured. Sound financial and statistical techniques, supported by judgment, should be used to predict the quantum of working capital needed at different time periods. A firm s net working capital position is not only important as an index of liquidity but it is also used as a measure of the firm’s risk. Risk in this regard means chances of the firm being unable to meet its obligations on due date. The lender considers a positive net working as a measure of safety. All other things being equal, the more the net working capital a firm has, the less likely that it will default in meeting its current financial obligations. Lenders such as commercial banks insist that the firmshould maintain a minimum net working capital position. In this study four years data ( 2008 to 2012 have been presented and analyzed. It covers to analyze the ratio as well trend and composition of working capital, which means current assets, current liabilities, liquidity, turnover, leverage and profitability of BALIC. 5.1) Components of current assets: For the day to day business operation different types of current assets are required. Current assets refer those assets that are cash or can be converted into cash within a year. The composition of current assets or the main components of current assets at BALIC are cash and bank balance, loan and advances and government securities. Miscellaneous current assets are also a component of current assets. Prepaid expenses, outstanding income like interest receivable and other current assets are also included in miscellaneous current assets. The following table shows the amount of cash and bank balance, money at call or short notice, loan and advanced government securities and other current assets of Bajaj Allianz Life Insurance Company Pvt. Ltd. 32
  40. 40. Table 1 : Current Assets Fiscal Year Sundry Debtors Cash and balance Bank Loan advance and Other C.A 2008/09 639,948 3,515,993 76,970 1,148,475 5,381,386 2009/10 1,089,070 2,186,908 130,275 2,022,560 5,298,538 2010/11 1,341,359 4,285,098 147,078 2,344,020 8,217,555 2011/12 1,223,706 4,520,165 170,660 3,832,457 9,746,988 Source:- Annual Report of BALIC From 2008/09 to 2012/13 Assets of Company was amounted to Rs. 5,460,356 which included Rs. 3,552963 of cash and bank balance, Rs. 76,970 of loan and advance, Rs. 1,828,423 of miscellaneous current assets. Current assets of the company increase in all four years. 33 Total
  41. 41. INTERPRETATION 1 : As stated in above figure the current assets of BALIC increases all the four year from FY 2008/09 t0 2011/12. In the cash of FY 2009/10, the increasing trend is low from FY 2008/09. But the overall increasing trend of current assets is higher. 5.2) Component of Current Liabilities: Current liabilities is a short-term obligation which is payable within a year. The composition of current liabilities or the main components of current liabilities. Tax provision, staff bonus, proposed dividend payable and other liabilities are included in other current liabilities. The following table shows the amount of deposit and other accounts, short term loan, bills payable and other current liabilities of BALIC. Table 2 : Current Liabilities 34
  42. 42. Fiscal Year Creditors Deposit Bills Payable Other C.L Total 2008/09 2,249,357 3,318,900 87,607 2,396,492 8,052,356 2009/10 3,701,079 4,129,900 196,168 2,491,564 10,518711 2010/11 3,281,079 4,430,900 98,372 1,690,564 9,500,915 2011/12 4,246,449 4,142,491 97,087 2,368,827 10,654,854 In the above table, the component of current liabilities which consists deposits.Source annual report of company. Current Liabilities 6000000 5000000 4000000 3000000 2000000 1000000 0 2008/09 2009/10 Deposits 2010/11 Other C.L Total INTERPRETATION 2 : In the above figure shows that the current liabilities of the company is increasing In fiscal year 2008/09 the total amount of current liabilities Rs. 8,052,356 for the increasing impact of deposits and other current liabilities. In all four year deposits and other current liabilities are increased. 5.3) Working capital of BALIC: Working capital is required to run business smoothly and efficiently in the context of set objectives. It is no doubt that no organization can achieve its goal without proper use of working capital. It means money invested on working capital should be neither more nor less because both the position of working capital affects not only liquidity but also profitability of the organization. The investment decision should be 35 2011/12
  43. 43. made on any type of current assets by considering their role in company and determining which one is more beneficial to the company and which is not. The following table shows the amount of working capital of BALIC of the study period. Table 3 : Working capital of Company Fiscal Year Total C.A Total C.L WC= CA-CL 2008/09 5,381,386 8,052,356 4,470,970 2009/10 5,298,538 9,500,915 4,202,377 2010/11 8,217,555 10,518,711 2,301,156 2011/12 9,746,988 10,654,854 907,866 Sources: Annual Report of company. INTERPRETATION3: In the above figure we clearly show the current assets, current liabilities and working capital condition of BALIC from fiscal year 2008/09 to 2011/12. Working capital condition of the company is at satisfactory level. All the year of the study period the working capital of the company is negative. • Liquidity Ratio: 36
  44. 44. Liquidity ratios measures ability of the firms to meet its shortterm obligations. Liquidity of any business organization is directly related with working capital or current assets and current liabilities of that organization. In other words, one of the main objectives of working capital management is keeping sound liquidity position. Company is a different organization which is engaged in Mobilization of funds. So, without sound liquidity position of ability to meet its short-term obligation various liquidity ratios are calculated and to know the trend of liquidity are trend analysis of major liquidity ratios have been considered. 5.4) Current Ratio: This ratio indicates the short-term solvency position of bank. In other words current ratio indicates better liquidity position. It is calculated as follows: Current assets (CA) Current liabilities (CL) The following table shows the current ratio to compare the following capital management of BALIC. Table 4 : Current ratio 37
  45. 45. INTERPRETATION4 : The above table shows the CA, CL and current ratio of the BALIC. The current ratio of the BALIC is fluctuating over the year. The highest current ratio is in fiscal year 2011/12 0.91. And in all year it is increasing. The average ratio is 0.74. 5.6) Cash and bank balance to Current Assets: The cash and bank balance is almost liquids from the current assets, this ratio shows the percentage of readily available fund within the banks. It can be calculated by dividing cash and bank balance by current assets, which is given below. Cash and bank balance Current assets This ratio shows that the percentage of current assets cover cash and bank balance. The following table and figure shows the cash and bank balance to current assets ratio of BALIC over the study period. 38
  46. 46. Table 5 : Cash and Bank to Current Assets Ratio of BALIC Fiscal Year 2008/09 Cash& Bank Balance 3,552,963 Current Assets Ratio (%) 5,381,386 0.67 2009/10 2,186,908 5,298,538 0.41 2010/11 4,385,098 8,217,555 0.53 2011/12 4,382.396 9,746,988 0.44 Sources: Annual Report of Company INTERPRETATION5 : Cash and Bank balance to current assets ratio of the company is in 2009/10 decreased and in 2010/11 it increased and again in 2011/12 is decreased. 39
  47. 47. 5.7) Cash and Bank Balance to Total deposit: The ratio shows the ability of bank immediate funds to cover their deposits. It can be calculated by dividing cash and bank balance by deposits. The ratio can be expressed as: The following table and figure shows the cash and bank balance to total deposits ratio of the BALIC over the study period. Table 6 : Cash and Bank balance to total Deposit Ratio of BALIC Fiscal Year Cash & bank Total deposit Ratio 2008/09 3,552,963 2,318,900 1.53 2009/10 2,186,908 2,123,900 1.03 2010/11 4,385,098 2,899,500 1.51 2011/12 4,382.396 3,857,000 1.14 Sources: Annual report of Company 40
  48. 48. INTERPRETATION6 : The above figure depicts that the cash and bank balance to total deposit of BALIC has been slightly decreasing in FY 2009/10, 2010/11, 2011/12. 5.8) Net Profit to Total Assets: This ratio is very much crucial for measuring the profitability of funds invested in the bank assets. It measures the return on assets it computed by using the following formula. Net profit after tax Total assets Table 7 Net Profit to Total assets Ratio of BALIC Fiscal Year Net Profit Total assets Ratio(%) 2008/09 5,605,846 5,336,042 1.05 2009/10 6,182,978 5,298,538 1.17 41
  49. 49. 2010/11 10,387,412 8,217,555 1.26 2011/12 23,499,431 9,746,988 2.41 Sources: Annual Report of company INTERPRETATION7: Net Profit to total asset ratio in 2008/09 1.05 and it increasing slightly in financial year 2009/10, 2010/11 and 2011/12. 5.9) Debtors Turnover Ratio: Concept: Debtors are expected to be converted into cash over a short period of time and therefore are included in current assets. It shows how many times debtors are converted into cash in a year. Debtors Turnover Ratio = Net credit sales Average Debtors Table 8 : Debtors Turnover Ratio Year Credit sales 42 Average Debtors Ratio
  50. 50. 2008/09 102,199,181 19,080,194 5.35 2009/10 132,858,985 27,192,101 4.88 2010/11 171,671,451 36,302,837 4.72 2011/12 221,246,824 42,584,634 5.19 Diagram:- INTERPRETATION8 : The debtor’s turnover ratio was very less in the year 2010/11 at 4.72 times, but them it has increased to 5.19, 5.66 times in the year 2011/12 and 2008-09. This shows that the company is making all the offers to speed up the collection process. 5.9) Creditors Turnover Ratio: Concept: Creditors’ turnover ratio establishes relationship between not credit purchases and average trade creditors and accounts payable. The ratio indicates the velocity with which the creditors are turned over in relation to purchases. Creditors Turnover Ratio = Net Credit Purchases Average creditors 43
  51. 51. Table 9 : Creditors Turnover Ratio Year Credit Purchases Average Creditors Ratio 2008/09 96,724,469 82,074,994 1.17 2009/10 127,553,879 112,554,635 1.13 2010/11 165,680,148 146,617,013 1.13 2011/12 213,323,185 189,501,666 1.12 INTERPRETATION9 : The creditors turnover ratio was 1.17 times in the year 2008/09& it decreased to 1.13 times in the year 2009-2010 but creditor turnover will be remain same two year 2009/10 and 2011/12. 5.10)Working Capital Turnover Ratio:It is taken as one of the primary indicators of the short-term solvency of the business. It establishes the relationship with the net sales. It measures the efficiency with which the working capital is being used by the firm. WORKING CAPITAL TURNOVER RATIO = Net Sales Net Working Capital 44
  52. 52. Table 10 : Year Net Sales Net Working Capital Ratio 2008/09 102,199,181 20,229,751 5.05 2009/10 132,858,985 23,244,807 5.72 2010/11 171,671,451 36,879,727 4.65 2011/12 221,246,824 32,265,850 6.86 Source: Annual report of BALIC INTERPRETATION10 : In The year 2008/09 working capital t/o ratio was5.05 time ,5.72 time in the year 2009/10. In the year 2009/10 the working capital has increases. And in financial year 2010/11 it decreased and again in financial year 2011/12 it increased. Table 11 : Statement of changes in working Capital for the year 2009/10 Particulars 31-3-2009 45 31-3-2010 Increase Decreas
  53. 53. Current assets Sundry debtors 639,948 1,089,070 449,122 Cash& bank balance 3,515,993 2,186,908 Loan& advance 76,970 130,275 53,310 Other C.A 1,148,475 2,022,560 834,085 Total 5,381,386 5,298,538 1,336,517 1,366,05 Current Liabilities Sundry creditors 2,249,357 3,701,079 1,451,722 Deposit 3,318,900 4,129,900 811,000 Bills payable 87,607 196,168 108,561 Other C.L 2,396,492 Total 8,052,356 2,491,564 95,072 10,518,711 2,466,355 INTERPRETATION 11 : Current assets for the year 2009/10 is increases and it is good condition for the company and current liabilities of the company is increased by 2,466,355.and by putting formula (W.C= C.AC.L)working capital of the company for year 2009/10 is 4,470,970. Here working capital of company is increasing that means profitability of company also increasing. Table 12 : Statement of changes in working Capital for the year 2m,010/11 46 1,366,05
  54. 54. Particulars 31-3-2010 31-3-2011 Increase Sundry debtors 1,089,070 1,341,359 298,850 Cash& bank balance 2,186,908 4,285,098 2,198,190 Loan& advance 130,275 147,078 16,803 Other C.A 2,022,560 2,344,020 468,538 Total 5,298,538 8,217,555 Decrease 2,982,381 Current assets Current Liabilities Sundry creditors 3,701,079 3,281,079 Deposit 4,129,900 4,430,900 196,168 98,372 97,796 2,491,564 1,690,564 801,000 Bills Payable Other C.L Total 10,518,711 9,500,915 420,000 301,000 301,000 INTERPRETATION12 : Current assets for the year 2009/10 is increases and it is good condition for the company and current liabilities of the company is decreased by 1,017,796 that’s shows the working capital of the company is increased. Here debtors increased means cash balance of company decreased. 47 1,318,796
  55. 55. Table 13 : Statement of changes in working Capital for the year 2011/12 Particulars 31-3-2011 31-3-2012 Increase 1,341,359 1,223,706 bank 4,285,098 4,520,165 Decrease 235,067 Current assets Sundry debtors Cash& balance 117,653 Loan& advance 147,078 170,660 23,582 Other C.A 2,344,020 3,832,457 1,488,437 Total 8,217,555 9,746,988 1,747,086 117,653 Current liabilities Sundry creditors 3,281,079 4,246,449 765,370 Deposit 4,430,900 4,142,491 - 98,372 97,087 1,690,564 2,368,827 678,263 10,654,854 1,443,633 Bills payable Other C.L Total 9,500,915 1,285 INTERPRETATION13 : Current assets for the year 2009/10 is increases and it is good condition for the company and current liabilities of the company is increased by 1,153,939 that’s shows working capital of company decreased. Here debtors decreased that’s good for company it shows cash of company increased. 48 288,409 289,694
  56. 56. FINDINGS 1. Current assets for the year 2009/10 is decreases and its application for the company and current liabilities of the company is increased by 2,466,355.and by putting formula (W.C= C.A- C.L)working capital of the company for year 2009/10 is 4,470,970. 2. Current assets for the year 2009/10 is increases and it is good condition for the company and current liabilities of the company is decreased by 1,017,796 that’s shows the working capital of the company is increased. Here debtors increased means cash balance of company decreased. 3. Current assets for the year 2009/10 is increases and it is good condition for the company and current liabilities of the company is increased by 1,153,939 that’s shows working capital of company decreased. Here debtors decreased that’s good for company it shows cash of company increased. 4. Current ratio (C.R) of fiscal year 2008/09 to 2011/12 showed slightly increase i.e. 0.67 to 0.91. But in fiscal year 2009/10 C.R decreased comparatively in deposits and in fiscal year 2010/11 C.R is again increase 0.86 due to increase in factors which influence it. 5. Cash and Bank balance to current assets ratio of the company is in 2009/10 decreased and in 2010/11 it increased and again in 2011/12 is decreased. 6. The above figure depicts that the cash and bank balance to total deposit of BALIC has been slightly decreasing in FY 2009/10, 2010/11, 2011/12. 49
  57. 57. 7. Net profit to total asset ratio in 2008/09 1.05 and it increasing slightly in financial year 2009/10, 2010/11 and 2011/12. 8. The debtor’s turnover ratio was very less in the year 2010/11 at 4.72 times, but them it has increased to 5.19, 5.66 times in the year 2011/12 and 2008-09. This shows that the company is making all the offers to speed up the collection process. 9. The creditors turnover ratio was 1.17 times in the year 2008/09& decreased to 1.13 times in the year 2009-2010 but creditor turnover will be remain same two year 2009/10 and 2011/12. 10. In The year 2008/09 working capital t/o ratio was5.05 time , 5.72 time in the year 2009/10. In the year 2009/10 the working capital has increases. And in financial year 2010/11 decreased and again in financial year 2011/12 increased. SUGGESTION On the basis of the analysis and observation an attempt made to present some suggestions. 1. In the year 2009-2010 the current assets of the company has declined and current liability of the company has increases therefore the net working capital declined. There for the current ratio has declined. The net working capital of the company has increased remaining year. 2. The company has able to repay the liability of the creditors because the profit of the company has increased every year. 50
  58. 58. 3. Because of the current assets has declined in the year 20102011 but profit of the company has increased in the year 20082009. There for the return on current assets is high. 4. Company has able to full fill the standard level of current ratio i.e. 2:1 .There for the company has able to repay the liability and loan of company. CONCLUSION At the end it is stated that the working capital management is a part of money invested in the business.Working capital may be regarded as lifeblood of a business. Its effective provision can do much to ensure the success of a business. The Working Capital Management contributes much in the over all management of the organization affairs, efficiency of organization operations depend on how it manages its short term business dealings. Working Capital management contributes for the firm efficiency as well as the finance manager is proper utilizing the available wealth and maintaining the required liquidity. 51
  59. 59. Working capital is considered to be an important tool for progress. Working capital management techniques are playing significant role in assisting the management for decision making. The study of working capital management at Bajaj Allianz Life Insurance Pvt. Ltd.Is found to be very effective. The working capital contains the management of Cash, Debtors, and creditors. The Bajaj Allianz Life Insurance Pvt. Ltd has profit oriented company .The profit of the company will be increases every year .The company has able to the repay the amount of the creditor. The company has more working capital and also sale has increases year to year. LIMITATIONS 1. The analysis is limited to three years of data study (for the year 2008/09 to 2011/12 ) for financial analysis. 52
  60. 60. 2. The estimation and expectation made in the financial statements may differ from actual performance due to various economic conditions, government policies and other related factors. 3. All the data accumulated and presented in this project is procured from secondary sources which may have been subject to stealthy biased nature. 53

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