Small presentation on the study of working capital management for a multinational connectors and Gps making company .

1. A Study on
“WORKING CAPITAL MANAGEMENT(WCM)”
For
DELPHI CONNECTIONS SYSTEMS INDIA PVT. LTD
Sumit Kr Singh
Fk-2777
PGDM-24(Finance)

2. COMPANY PROFILE
GLOBAL SCENARIO
• Headquartered in Gill Ingham, U.K
• Manufacturing sites and customer support services in 44 countries
• Turnover of 15.16 Billion USD.
• 1, 73,000 Employees Globally
• 19,000 Scientists and Engineers
STATE SCENARIO
• Operation started in 2012 (Kerala ,cochin)
• Production and sale of Connectors and safety restrains(connection system, Driver
Interface, Electricals, fuel cells )
• 7(SEVEN) Departments
• Total no of employees 468 (including non executive employee 333)

3. RESEARCH METHODOLOGY
OBJECTIVES OF THE STUDY
• To understand Impact of WCM on the profitability
• To study the different components of working capital and its impact on the
performance of the company
• To measure the financial soundness of the firm through ratio analysis
RESEARCH DESIGN
• Type of research : Descriptive research design
• Sampling Plan : Five years of quantitative data
• Data collection : Primary data and Secondary data
• Data Analysis : Comparative ,trend and ratio analysis
• Limitations of the study : Limited time period and less interaction

4. DATA ANALYSIS & INTERPRETATION
Trend analysis of Working Capital and Profitability (Amounts are In Indian Rupees)
March 31, 2012 March 31, 2013 March 31, 2014 March 31, 2015 March 31, 2016
GROSS WORKING
CAPITAL 724,384,714 698,498,398 1,034,409,175 1,077,730,334 1,300,746,865
NET WORKING
CAPITAL(NWC) 157,529,714 161,384,374 390,948,302 495,767,502 762,860,952
% change (NWC) 100% 102% 248% 315% 484%
Profit/(Loss) for
the year 6,444,294 (67,649,638) 91,396,834 59,980,952 351,056,257
% change in Profit 100% -1050% 1418% 931% 5448%

5. Comparative Analysis of Liquidity and the Profitability Ratios
Year
Current
Ratio(times)
Quick
Ratio(times)
Absolute
liquidity
ratio(times)
Operating
ratio(%)
Net profit
ratio(%)
2011-12 1.28 0.88 0.07 98% 1.55%
2012-13 1.30 0.89 0.04 104% -3.43%
2013-14 1.61 1.23 0.18 96% 4.25%
2014-15 1.85 1.38 0.28 96% 2.68%
2015-16 2.42 1.72 0.55 87% 14.38%

6. Comparative Analysis of Turnover Ratios and Profitability Ratio
Year
Inventory
Turnover
Ratio(times)
Account
Receivables
Turnover
Ratios(times)
Account
Payables
Ratio(times)
Fixed Assets
Turnover
Ratio(times)
Working
Capital
Turnover
Ratio(times)
Net Profit
Ratio(%)
2011-12 2.97 1.13 0.55 0.53 2.64 1.55%
2012-13 11.00 5.25 3.79 2.61 12.23 -3.43%
2013-14 9.31 5.15 3.14 3.37 5.50 4.25%
2014-15 8.68 4.87 3.29 3.72 4.52 2.68%
2015-16 7.53 5.05 3.70 3.51 3.20 14.38%

7. Comparative Analysis of Cash Conversion Cycle and Net Profit Ratio
Year
Inventory
Holding
Period(Days)
(A)
Average
Collection
Period(Days)(B)
Gross
Operating
Cycle(A+B)(
Days)
Payables
payment
Period(c) (Days)
Net
Operating
cycle(A+B-
C)(DAYS)
Net
profit
ratio
2011-12 123 323 446 658 -212 2%
2012-13 33 70 103 96 6 -3%
2013-14 39 71 110 116 -6 4%
2014-15 42 75 117 111 6 3%
2015-16 48 72 121 99 22 14%

8. FINDINGS
• A positive increase in Working Capital of Rs 157,529,714 (2012) to Rs 762,860,952 (2016).
• Profitability trend from the year 2013 to 2016 it reached from (-1050) % to 5448%.
• Current Ratio has increased 1.28 (2012) to 2.42 (2016) in times.
• Account receivables turnover ratio increased from 1.13 times(2012) to 5.05 times(2016)
• Inventory turnover ratio showing decreasing trend from 11 times (2013) to 7.53 times (2016) .
• Creditor’s turnover ratio increased 0.55 times(2012) to 3.79 times (2016) .
• Working capital turnover ratio showing highest in the 12.23 times (2013) and reached 3.20 times (2016).
• Working capital cycle is showing the negative days of -212 days in the year 2011-12 then again in the
year 2012-13 it shows the negative -6 days after that it reached to positive 22 days in the year 2016.

9. CONCLUSIONS
• Sustainable fund is available with the company.
• Continuous decrease in operating expenses.
• Increase in inventories, trade receivables and cash and decrease in
payables.
• Macro economic effect and just in time inventory policy for some
lines.
• Decrease in credit days and collection of accounts receivable are
efficient.
• Increase in the credit term allowed by the Vendor.
• Decreasing trend of the current obligations.
• Overall improvement in the Working capital component that reflected
through cash conversion cycle.

10. SUGGESTIONS AND RECOMMENDATIONS
• Profit and WC of the company is increasing year on year ,it has to maintain it further.
• The Current and quick ratios has almost reached to the standard requirement but cash
ratio should be 0.5 times.
• There should be an improvement in its inventory turnover ratio to 9 times and holding
days should be 20-25 days.
• The collection period days should maintain for maximum 70 days that will reduce the
cash conversion cycle.
• Company is making good use of fixed asset of the company.
• Possibly it should maintain a negative or at least a minimum 2 days of cash cycle.