6. The term working capital refers to the amount of
capital which is readily available to an
organization. The term working capital commonly
used for the capital required for day-to-day
operations in a business concern. Such as
purchasing raw materials, salaries, wages, rent
rates advertising etc.
The working capital is the difference between
resources in cash or readily convertible into cash
(Current Assets) and organizational commitments
for which cash will soon be required (Current
Liabilities).
It means
Working capital = Current Assets – Current Liabilities
INTRODUCTION OF WORKING CAPITAL
7. DEFINITION
• “Working capital is the amount of funds necessary
to cover the cost of operating the enterprise”.
• “Working Capital Management is concerned with
the problem that arise in attempting to manage
the current assets, current liabilities and the inter-
relationship that exists between them”
-- Smith
8. TYPES OF WORKING CAPITAL
Gross working capital :
The gross working capital simply called as 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 year (or operating cycle) and include cash, short-
term securities, debtors, bills receivables, inventories and
prepaid expenses.
Gross Working Capital = Total of Current Assets
Net working capital
• The Term Net Working Capital, can be defined in two ways
• “The Excess of Current assets over Current liabilities”.
(or)
• “That portion of a firm’s current assets which is financed with
long term funds
Net Working Capital=Current Assets - Current Liabilities
10. INDUSTRY PROFILE
The first commercial design was three-wheeler built by
Edward Butler in Great Britain in 1884. A horizontal
single-cylinder gasoline engine mounted between two
steer able front wheels and connected by a drive chain to
the rear wheel.
Gottiieb Daimler who credited with the building the first
motorcycle in 1885.
It was constructed mostly of wood, the wheels were of the
iron-banded wooden-spooked wagon-type and it definitely
had a “bone-crusher” chassis!
The next notable two-wheeler though was the Hildebrand
& Wolf Mueller, patented in Munich in 1894.
In 1895, the French firm of DeDion-button built and
engine that was to make the mass production and
common use of motorcycle possible.
11. India is the second largest manufacturer and producer to
two wheelers in the World.
The Indian two-wheelers industry made a small
beginning in the early 50s when Automobile products of
India (API) started manufacturing scooters in the
country. Until 1958, API and Enfield were the sole
producers.
12. COMPANY PROFILE
Bajaj motors is promoted by the highly qualified and
experienced promoters having a successful track record
of more than 40 years of experience in the manufacture
of auto parts.
GROUP OF COMPANIES OF BAJAJ
Bajaj Auto is the flagship of the Bajaj group of
companies. The group comprises of 27 companies and
was founded in the year 1926.
13. Bajaj Auto Ltd. Mukand International Ltd.
Mukand Ltd. Mukand Engineers Ltd.
Bajaj Electricals Ltd. Mukand Global Finance Ltd.
Bajaj Hindustan Ltd. Bachhraj Factories Pvt. Ltd.
Maharashtra Scooters Ltd. Bajaj Consumer Care Ltd.
Bajaj Auto Finance Ltd. Bajaj Auto Holdings Ltd.
Hercules Hoists Ltd. Jamnalal Sons Pvt. Ltd.
Bajaj Sevashram Pvt Ltd. Bachhraj & Company Pvt. Ltd.
Hind Lamps Ltd. Jeevan Ltd.
Bajaj Ventures Ltd. The Hindustan Housing Co Ltd.
Bajaj International Pvt Ltd. Baroda Industries Pvt Ltd.
Hind Musafir Agency Pvt Ltd. Stainless India Ltd.
Bajaj Allianz General Insurance Company Ltd. Bombay Forgings Ltd.
Bajaj Allianz Life Insurance Company Ltd. -
The companies in the group are:
14. • To study the sources and uses of the working
capital.
• To study the liquidity position through various
working capital related ratios.
• To study the working capital components such as
receivables accounts, Cash management,
Inventory management.
• To make suggestions based on the finding of the
study.
OBJECTIVES OF THE STUDY
15. NEED FOR THE STUDY
• The study has been conducted for gaining
practical knowledge about Working Capital
Management & activities of Bajaj Automobiles.
• The study is undertaken as a part of the MBA
curriculum in the form of summer in plant
training for the fulfillment of the requirement of
MBA degree.
16. SCOPE OF THE STUDY
The main scope of the study was to put into
practical the theoretical aspect of the study into
real life work experience.
The study of working capital is based on tools like
Ratio Analysis, Statement of changes in working
capital.
Further the study is based on last 5 years Annual
Reports of Bajaj Automobiles.
17. RESEARCH METHODOLOGY
In preparing of this project the information collected
from the following sources.
Primary data:
The Primary data has been collected from Personal
Interaction with Finance manager and other staff
members.
Secondary data:
The major source of data for this project was
collected through annual reports, profit and loss
account of 5 year period from 2012-2017 & some
more information collected from internet and text
sources.
18. LIMITATIONS OF THE STUDY
• The study duration (summer in plant) is short.
• The analysis is limited to just five years of data
study (from year 2012 to year 2017) for financial
analysis.
• Limited interaction with the concerned heads
due to their busy schedule.
• The findings of the study are based on the
information retrieved by the selected unit.
19. Classification of Working Capital
WORKING CAPITAL
On The Basis of Concepts On The Basis of Time
Gross Working
Capital
Net Working
Capital
Permanent / Fixed
Working Capital
Temporary /
Fluctuating
Working Capital
Initial Working
Capital
Regular Working
Capital
Seasonal
Working Capital
Special Working
Capital
20. Format for the Determination of Working Capital:
S.No PARTICULARS AMOUNT
1
2
ESTIMATION OF CURRENT ASSETS
1) Minimum desired cash and Bank balances. xxx
2) Inventories
Raw material xxx
Work-in-progress xxx
Finished stock xxx
3) Debtors xxx
Total Current Assets
ESTIMATION OF CURRENT LIABILITIES
1) Creditors xxx
2) Wages xxx
3) Overheads xxx
Total current liabilities
NET WORKING CAPITAL
(Total Current assets – Total Current liabilities)
Add : Margin for contingency net
Working capital requirement
XXX
XXX
-----------------
XXX
XX
-----------------------
XXXX
21. Statement of Changes in Working Capital for the
Year 2017-2018
Particulars As on 31-3-2017 As on 31-3-2018
Effect on Working Capital
Increase Decrease
CURRENT ASSETS
Inventories 2622901 2360611 __ 262290
Sundry debtors 3787274 4355365 568091 __
Cash & Bank balance 1720815 1978938 258123 __
Other current assets 206206 185585 __ 20621
Loans and Advances 2666232 3066167 399935 __
(A)Total Current Assets 11003428 11946666
CURRENT LIABILITIES
Sundry creditors 2658999 3057849 __ 398850
Provisions 1230900 1107810 123090 __
(B)Total Current Liabilities 3889899 4165659
(A)-(B) Net Working Capital 7113529 7781007
Increase in Working Capital 667478* --- --- 667478*
TOTAL 8270981 8270981 1349239 1349239
22. FINDINGS
• Working capital of the Bajaj Automobiles. was increasing and showing
positive working capital per year.
• The Bajaj Automobiles has higher current and quick ratios are i.e., 2.87
and 2.30 respectively.
• Inventory turnover ratio is very low in the year 2014-15. In the year
2016-17 it has increased by 6.32 times as compared to 2015-16 and in
the last year 2015-16 it has again increased by 3.26 times as compared
to 2017-18.
• Debtor’s turnover ratio is very high in the year 2014-15. In the year
2015-16 it has decreased by 5.28 times as compared to 2014-15 and in
the last year 2016-17 it has again decreased by 0.44 times as compared
to 2015-16.
• Creditor’s turnover ratio has increased in the years of 2015-16 and
2016-17. It is same in the last year 2016-17 as compared to 2017-18.
• Working capital turnover ratio is very low in the year 2015-16. In the
year 2016-17 it has increased by 0.95 times as compared to 2015-16
and in the last year 2017-2018 it has again increased by 0.03 times.
23. SUGGESTIONS
Working capital of the company has increasing every
year. Profit also increasing every year this is good sign
for the company. It has to maintain it further, to run the
business long term.
The Current and quick ratios are almost up to the
standard requirement. So the Working capital
management. Bajaj Automobiles. is satisfactory and it
has to maintain it further.
The company has sufficient working capital and has
better liquidity position. By efficient utilizing this short-
term capital, then it should increase the turnover.
The company should take precautionary measures for
investing and collecting funds from receivables and to
reduce the bad debts.
24. The company has sufficient working capital and has better
liquidity position. By efficient utilizing this short-term
capital, then it should increase the turnover.
Creditor’s turnover ratio has increasing from 2014-15 to
2015-16 and in the last year 2016-2017 it is same as
compared to 2015-16. Company is making prompt
payment to its creditors. This is good sign for the company.
On-time payment to suppliers will increase the credibility
of the firm. It has maintain it further to survive in the
market.
The company is utilizing working capital effectively this is
good for the company. It has to maintain it further.
The company should take precautionary measures for
investing and collecting funds from receivables and to
reduce the bad debts.
25. CONCLUSION
• The study on working capital management
conducted in Bajaj Automobiles. to analyze the
financial position of the company.
• The company’s financial position is analyzed by
using the tool of annual reports from 2013-14 to
2017-18.
• The financial status of Bajaj Automobiles. is good.
• In the last year the inventory turnover has
increased, this is good sign for the company.
• The company’s liquidity position is very good.
26. • With regard to the investments in current assets
there are adequate funds invested in it.
• Care should be taken by the company not to make
further investments in current assets, as it would
block the funds, which could otherwise be
effectively utilized for some productive purpose.
• On the whole, the company is moving forward with
excellent management.
