“A COMPARATIVE STUDY OF WORKING CAPITAL MANAGEMENT OF SELECTED PAPER COMPANIES IN INDIA”

1. “A COMPARATIVE STUDY OF WORKING
CAPITAL MANAGEMENT OF SELECTED
PAPER COMPANIES IN INDIA”
Dr. P. R. HALANI
(M.COM. B.ED., M.PHIL. GSLET, Ph.D)
ASSISTANT PROFESSOR
SHRI M. P. SHAH COMMERCE COLLEGE –SURENDRANAGAR
panchamhalani1111!@gmail.com
Subjective Assignment 2
for MOOC on
ACADEMIC WRITING(UGC)
REGISTRATION NUMBER
917f38eee4c811e9bc724def2eea1491
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2. Academic Writing
ACKNOWLEDGEMENT-
DR. AJAY SEMALTY
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3. What is working capital ?
Working capital = current assets – current liabilities
What is current liabilities?
 Current assets are the assets which can be converted into cash within an
accounting year.
 Cash, short-term securities , debtors (account receivable or book debts)
bills receivable and stock
What is current liabilities?
 current liabilities are those claims of outsiders which expected to mature
for payment within an accounting year.
 creditors(accounts Payable), bills payables and outstanding expenses
 net working capital can be positive or negative.10/30/2019 3CC BY-SA-NC

4. REVIEW OF LITERATURE
• REVIEW OF LITERATURE divided in two section by the
researcher
1. Theoretical studies – in this section researcher used
various books of financial management and working
capital management written by Indian Authors and
foreign authors.
2. Research studied - in this section researcher included
thesis and research paper overview of different
researchers .
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5. OBJECTIVES OF THE STUDY
• To study the various factors affecting working capital
requirements of selected paper companies in India.
• To analyze and evaluated working capital management with
respect to trade off between liquidity and profitability.
• To analyze relative asset liquidity and relative finance
liquidity of selected paper companies in India.
• To analyze and evaluate inventory management techniques
and performance of selected paper companies in India.
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6. To be continue
• To evaluate and analyze the techniques and strategies of
cash management of selected paper companies in India.
• To evaluate the management of receivables with respect
to credit policy, credit terms and collection policy of
selected paper companies in India.
• To assess the relative significance of marketable
securities where surplus cash could be invested, and to
suggest, on the basis of conclusion, innovations in the
management.
• To assess the relative significance of various sources of
financing working capital management of selected paper
companies in India
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7. RESEARCH METHODOLOGY
• The study was based on secondary data of published
accounts and annual report of selected paper companies
under the study.
• Out of which selected companies were belong in the
public sector and private sector.
• Ten paper companies selected by the researcher for the
present study.
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8. THE SCOPE OF THE STUDY
• Sampling method was convenient and Judgment sampling
also. The samples paper companies had been selected from
the following factor.
• The selected paper companies were selected on the basis of
maximum licenses capacity, installed capacity and sales.
• The selected paper companies should be engaged in the
production and sales of the paper.
• The selected paper companies are listed in the Stock
Exchange of India.
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9. PERIOD OF THE STUDY
• The present study was undertaken by the
researcher for the period of seven (7) Accounting
years from 2005-2006 to 2011-12.
• The researcher had selected the base year 2005-
2006 because this year was normal for the
present research of analysis and evaluation of
data.
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10. SAMPLE COMPANIES OF THE STUDY
By the researcher following companies were had been selected for the
purpose of the present research.
1. The International Andhra Pradesh Paper Mills Limited (IAAPM)
2. Ballarpur Paper Mills Limited(BILT)
3. JK Paper Mills Limited (JKPML)
4. Orient Paper and Industries Limited (OPIL)
5. Seshasayee Paper and Boards Limited (SPBL)
6. Sirpur Paper Mills Limited (SPML)
7. South Indian Paper Mills Limited (SIPML)
8. Star Paper Mills Limited (SPM Ltd)
9. T. N. Newsprint Paper Limited (TNNPL)
10. West Coast Paper Mills Limited (WCPML)
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11. METHOD OF DATA COLLECTION
• The main source of data used for the study
was secondary data.
• From the annual profit and loss account and
balance sheet figures as found in the annual
reports of the selected paper companies
were used.
• The selected data was complemented
through selected paper companies websites,
capital line software and report
junction.com
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12. METHODS OF DATA INTERPRETATION AND
ANALYSIS
Accounting Techniques
• Use of Financial Ratio
Analysis Like As
 Liquidity ratios
Profitability ratios
Activity ratios
Statistical Techniques
• Arithmetic Mean
• The Standard Deviation
• Co-efficient of Variation
• F-Test (Analysis of
Variance)
• Analysis of Time Series
• Chi -Square Test10/30/2019 12CC BY-SA-NC

13. 1. Working capital management : concept,
importance and objects,
2. Sample profiles of paper companies in India
3. Research methodology
4. Capital structure and financial results of
paper companies in India with profitability
management.
5. Working capital Trends and liquidity
Management
6. Inventory management
7. Cash management
8. Bills Receivables & Bills Payables
management
9. Financing of working capital (Loan And
Advance Management)
10. Summery, findings & suggestion of working
capital management in paper companies
The present
research work is
divided in 10
chapters .
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14. WORKING CAPITAL TRENDS OF
SELECTED PAPER COMPANIES IN INDIA
• In order to analyse the working capital trends of selected paper
companies in India, the following methodology has been adopted:
Figures of working capital have been extracted the various annual
reports of the paper companies.
The period of study from 2005 -2006 to 2011 -2012. For all these
years indices have been calculated assuming 2005-2006, i.e., the first
year of analysis as base year.
As such the figures for this year work out at 100% for each
company while the subsequent figures are its proportion.
While analysing the working capital trends, the null hypothesis has
been that the working capital trend of paper companies will
conform to the straight line calculated by the method of least
squares.10/30/2019 14CC BY-SA-NC

15. INTERNATIONAL ANDHRA PRADESH
PAPER MILLS
Table – 1.1
Working capital Indices and Trend Value of IAPPM
Year (t) NWC (y) Indices x = t-2008-09 x2 xy y = a +bx
2005 -06 1115.82 100.00 -3.00 9.00 -3347.46 5088.76
2006-07 5602.12 502.06 -2.00 4.00 -11204.24 5797.45
2007-08 8665.77 776.63 -1.00 1.00 -8665.77 6506.14
2008-09 7926.33 710.36 0.00 0.00 0.00 7214.83
2009-10 11994.88 1074.98 1.00 1.00 11994.88 7923.52
2010-11 14530.68 1302.24 2.00 4.00 29061.36 8632.21
2011-12 668.18 59.88 3.00 9.00 2004.54 9340.89
50503.78 0.00 28.00 19843.31
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16. In the above table 1.1, y = a + bx in there (a)
and (b) find as under these formulas.
∑y = na +b∑x
50503.78 = 7a +b (0)
50503.78= 7a
a = 50503.78÷7
a = 7214.83
∑xy = a∑x + b∑x2
19843.31 = a(0) + b(28)
19843.31 = 28b
b = 19843÷28
b = 708.69
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17. y = a + bx
Y = a + bx for the year 2005 – 2006
= 7214.83 + 708.69 (-3)
= 7214.83 – 2126.07
= 5088.76
Y = a + bx for the year 2006 – 2007
= 7214.83 + 708.69 (-2)
= 7214.83 – 1414.38
= 5797.45
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18. Hypothesis testing
• H0: Null Hypothesis:
There is no significant difference in actual value and
trend values of working capital of International
Andhra Pradesh Paper mills limited.
• H1 Alternative Hypothesis:
There is significant difference in actual value and
trend values of working capital of International
Andhra Pradesh Paper mills limited.
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19. Chi Square Table
Table - 1.1.1
Chi Square Test Result of NWC and Trend Value of IAPPM
NWC (y)= (O) y = a +bx = (E) (O - E) (O - E)2 (O - E)2/E
1115.82 5088.76 -3972.94 15784226.70 3101.78
5602.12 5797.45 -195.33 38152.41 6.58
8665.77 6506.14 2159.63 4664018.71 716.86
7926.33 7214.83 711.50 506238.35 70.17
11994.88 7923.52 4071.36 16576010.06 2092.00
14530.68 8632.21 5898.48 34792007.33 4030.49
668.18 9340.89 -8672.71 75215979.28 8052.33
Chi- Square value 18070.2210/30/2019 19CC BY-SA-NC

20. Results of Chi-Square test
• Degree of freedom = r - 1,
• = 7 – 1
• = 6,
• The above table no - 1.1.1 shows the calculated value of Chi –
Square is 18070.22 while the table value of Chi –Square is only
12.59 at 5% level of significance of the IAPPM.
• Chi - Square calculated > Chi –Square table value.
• Thus the null hypothesis of straight line assumptions is rejected.
• Hence, it can be concluded that in IAPPM the difference
between the actual and trend values of working capital.
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21. CURRENT RATIO
• Meaning
• This Ratio establishes a relationship between current assets and
current liabilities.
• Objective
• The objective of this ratio is to measure the safety margin
available for short –term creditors.
• Components
• Current Assets: it’s refers to those assets which are held for
their conversation into to cash normally within a year.
• Current Liabilities: it’s refers to those liabilities which are
expected to be matured normally within a year.
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22. Calculation of Current Ratio
• This ratio is computed by dividing the current assets and
current liabilities. This ratio is usually express as a pure ratio
e.g. 2:1. In the form of a formula, this ratio may be express as
follows:
• = 15602.95 / 14787.13
• = 1.08
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23. Table No. 1.2
Current Ratio From 2005 –’06 To 2011 –’12
YEAR COMPANY NAME
IAPPM
BILtd
JKPM
OPIL
SPBL
SPML
SIPL
SPM
Ltd
TNNPL
WCPM
L
2005-2006 1.08 3.71 2.81 1.92 1.41 1.00 2.27 0.92 1.73 1.97
2006-2007 1.45 3.05 2.17 1.87 1.54 1.21 2.49 1.25 1.42 2.58
2007-2008 1.65 4.11 2.39 1.84 1.42 0.93 2.54 1.29 1.26 2.92
2008-2009 1.50 3.70 2.75 1.42 1.80 1.21 3.18 1.34 1.64 2.98
2009-2010 1.93 1.77 2.17 1.58 2.15 1.30 3.12 1.01 1.78 2.44
2010-2011 2.01 1.82 2.14 1.73 3.33 1.08 3.24 0.91 1.75 2.87
2011-2012 1.02 1.14 1.30 0.98 1.05 0.90 1.86 0.64 0.67 0.75
Average 1.52 2.76 2.25 1.62 1.81 1.09 2.67 1.05 1.46 2.36
S.D. 0.38 1.17 0.50 0.33 0.75 0.15 0.53 0.25 0.40 0.79
C.V. 25.19 42.34 22.28 20.57 41.52 14.14 19.68 24.18 27.24 33.53
Min 1.02 1.14 1.30 0.98 1.05 0.90 1.86 0.64 0.67 0.75
Max 2.01 4.11 2.81 1.92 3.33 1.30 3.24 1.34 1.78 2.98
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24. Calculation of Current Ratio Average
• By the researcher calculated Average of selected companies
under this formula. As per easy understanding here show
one calculation of IAPPM Company
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25. STANDARD DEVIATION
• Standard Deviation – in the present research work
researcher has been calculated standard Deviation in
the below formula as under.
• Its calculation also used in Microsoft Office Excel
programme in the computer. Here, researcher has
shown only one company calculation of IAPPM for
example.
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26. = 0.3817
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27. CO-EFFICIENT OF VARIATION
• Co-efficient of variation has been calculated by the
researcher as below formula for the selected paper
companies.
• Here, only shown one calculation of IAAPM for example.
Its also calculated in Microsoft Excel directly by the
researcher.
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28. ANOVA TEST OF CURRENT RATIO
• Ho: Null Hypothesis: -
• There is no significant difference in Current Ratio of selected
paper companies in India.
• H1: Alternative Hypothesis:-
• There is significant difference in Current Ratio of selected
paper companies in India.
• Level of Significance: 5%
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29. Calculation of one way ANOVA in Microsoft
Excel
Table : -1.2.2
ANOVA ( F- Test Result) of Current Ratio
Source of Variation SS D.F MS F P-value F crit
Between Groups 24.1348 9 2.6816 7.4733 3.1088 2.0401
Within Groups 21.5297 60 0.3588
Total 45.6646 69
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30. ANOVA test Results
• Degree of freedom = 70-1= 69
• Table Value of ‘F’ =2.0401
• Calculate Value of ‘F’ = 7.4733
• F calculate > F table
• 7.4733 > 2.0401
• Table No-1.2.2 indicates the calculate value of ‘F’ is 7.4733 and the table value
of ‘F’ at 5% level of significance is 2.0401 so, the calculate value of ‘F’ which
is greater than the table value.
• It indicates that the Null Hypothesis is rejected and Alternate Hypothesis is
accepted.
• It indicates that there is significant difference in current ratio of selected
paper companies in India.
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31. Suggestion For Improving Current Ratio
• The Current Ratio of selected paper companies in India shown
an average 1.859 times. It means Current Liabilities less than
Current Assets.
• It also means that company is in position to reflect its Current
Liabilities properly but it is suggested that International Andhra
Pradesh Paper Mills, Orient Paper and Industries Limited
Seshasayee Paper and Boards Limited, Sirpur Paper Mills
Limited, Star Paper Mills Limited and T. N. Newsprint Paper
Mills Limited, should decreased the Current Liabilities as early
as possible, and try to increase the Current Assets.
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32. LIMITATIONS OF THE STUDY
• The study is based on secondary data and secondary
data has its own limitation.
• The study is based on 10 companies of listed in Bombay
stock exchange and national stock exchange.
• The different methods of analysis of working capital
management of selected paper companies in India in
this connection view of experts differ from one other.
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33. LIMITATIONS ARE CONTINUE
• The study is largely based on the financial tool of ratio
analysis, which has its own limitations that also applies to
the study.
• The study could not define throughout relationship
between working capital and exports of selected paper
companies in India.
• Suggestion are based on study of 10 selected paper
companies only, such are not properly apply to all paper
companies in India.
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34. SCOPE FOR THE FURTHER RESEARCH
• The present study “A COMPARATIVE STUDY OF
WORKING CAPITAL MANAGEMENT OF SELECTED
PAPER COMPANIES IN INDIA”. It is expected that the
present study would encourage and provide further research
on various aspects of working capital management. A few
recommendations are given for further studies are as follows.
1. The coverage of the present study is confined to only seven
years and ten paper companies of India. This can further be
increased in order to broaden up the scope of the present
study.
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35. 2. Separate in depth studies can be made for each aspect of
working capital management of foreign paper companies in
order to compare the working capital management of
Indian paper companies.
3. Specific study can be carried out to compare working
capital management of paper companies with other capital
intensive companies in India.
4. The present study can be further compared with the
working capital management of pre-liberalization period of
paper companies in India and pre-liberalization working
capital management and liquidity & profitability should
also be measured.10/30/2019 35CC BY-SA-NC

36. Video
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37. Feedback for Academic Writing Course
• First of all I would like thank the coordinators of this course to have spent
their time and efforts to compile these modules for the benefit of the entire
professional community.
• It is extremely important for an educator to have good writing skills as
everyone is not a born writer and goes through various experiences that
contribute to his/her journey of learning and expression.
• Each and every module is explained very clearly and content was very well
carved out.
• I am definitely going to take suggestions from the current ‘Academic
Writing Course’ that I’m attending. I sincerely hope to continuously strive
to excel as a professional writer.
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